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House of Commons

Friday 21 May 1993

The House met at half-past Nine o'clock

PRAYERS

[Madam Speaker-- in the Chair ]

PETITION

British Rail Pensioners

9.34 am

Mr. John Heppell (Nottingham, East) : I wish to present a petition from thousands of British Rail pensioners and deferred pensioners from all parts of the country who have seen the Government's options in the rail privatisation Bill and have rejected those options. They suggest another option to the House that will protect them in the future from Maxwell-style plundering by any party, including Her Majesty's Government.

Wherefore your petitioners pray that your honourable House ensure that the Railways Bill be so amended as to guarantee that the resources of the British Rail Pension Fund are the property of the pensioners and of the contributors to the fund.

And your Petitioners, as duty bound, will ever pray, etc. To lie upon the Table.


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Points of Order

9.35 am

Ms Glenda Jackson (Hampstead and Highgate) : On a point of order, Madam Speaker. Today's newspapers carry reports of a press conference called yesterday by the Secretary of State for Transport at which he announced the Government's abandonment of their proposed takeover of part of the British Rail pension fund.

As existing British Rail pensioners and, indeed, employees of British Rail regard such a takeover as common theft on the part of the Government, and as you, Madam Speaker, have deprecated important statements on Government policy being made for the first time outside the confines of the House, is there anything that you can do to ask the Secretary of State for Transport to come to the Dispatch Box this morning and make the House privy to the Government's considerations with regard to the British Rail pensions fund which have caused enormous anxiety to pensioners and employees?

Madam Speaker : Perhaps I might draw the hon. Lady's attention to a question that was answered yesterday. It appears in column 237 of Hansard and relates directly to railway pensions. The Minister made a statement in that form.

Mr. Dafydd Wigley (Caernarfon) : On a point of order, Madam Speaker. In view of the reports on the radio and television this morning of Judge Stephen Tumim's conclusions on the appalling conditions in Cardiff prison, have you had any request from the Government to make a statement on the matter this morning?

Madam Speaker : I must inform the hon. Gentleman that no Minister has let me know that he wishes to make a statement this morning on that matter.


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Exporters (Government Support)

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Chapman.]

9.37 am

The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh) : I am grateful for the opportunity to explain what thGovernment are doing to help the United Kingdom to win in world markets. Exports are crucial to our economic well-being. Our export performance has been impressive. I intend to tell the House how the Government plan to build on that success. We lead by example. Ministers are not sitting on their backsides basking in the glow of our current good export performance--and it is good. We are constantly helping industry to do battle with the competition by, among other things, visiting overseas markets with business men.

In 10 days my hon. Friend the Minister for Trade will travel to the far east with 25 British business representatives to fight for Britain in the world's fastest growing market. Department of Trade and Industry Ministers come with knowledge of industry. They have worked and succeeded in business. We know what industrialists and business men require and we are determined to deliver.

Since April last year, as Under-Secretary of State for Technology, I have visited nine overseas markets. My ministerial colleagues in the DTI are planning to lead at least 14 trade missions to some 17 countries in the forthcoming year, covering markets as diverse as Kazakhstan, Colombia and Korea. Much good business flows from such activity.

I shall give some examples of the value of such visits. On my last trip to Latin America I was struck by the huge potential for our consultancy and banking sectors to help countries to take forward their privatisation programme. In both Argentina and Paraguay, where President Rodriguez personally stressed to me his commitment to the importance of privatisation, I plugged the United Kingdom's unrivalled expertise in that sphere. It is now up to United Kingdom business to fight for its share, and I have no doubt that it will come out winning. The Opposition may not like that, but we have a worldwide record in successfully introducing privatisation. As a result, our companies are winning in the world markets. [Interruption.] The hon. Member for Jarrow (Mr. Dixon), an Opposition Whip, keeps making quiet sedentary remarks--if he wishes to come to the Dispatch Box to comment on our export performance, I am sure that the House will be delighted to listen to him. If not, I shall continue to describe what the Government are doing to ensure that this country wins in world markets.

In India I was impressed with the efforts being made to throw off decades of socialist dogma in an attempt to reap the benefits of a free market. India offers an increasingly attractive proposition for United Kingdom business, on whose behalf I lobbied extensively. With one sixth of the world's population and, as a Unilever representative said to me, one third of the world's hair, India is a market which no United Kingdom company with global pretensions can ignore. The Prime Minister recognised that and took a high-level delegation of business people there earlier this year. During the trip, GEC Alsthom


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landed a £140 million order and British Gas signed up for a 35 per cent. stake in a £100 million joint venture to supply gas to Bombay. Another market that I have visited recently is Ghana--our second largest market in sub-Saharan Africa. The United Kingdom is responsible for nearly 30 per cent. of Organisation for Economic Co- operation and Development exports to Ghana, but we can and will do better. The business representatives who accompanied me are writing a report on the prospects for increased trade and investment which I intend to launch at a major conference in London in July. In the past year, my hon. Friend the Minister for Trade has visited China no fewer than three times, as well as Japan, Hong Kong, Thailand, Indonesia, Korea, Italy, Germany, France, Spain, Portugal and Belgium. He has done all that, and still managed to remain in the good books of my hon. Friends in the Whips Office. Ministers at the Department of Trade and Industry are committed to improving the United Kingdom's export performances, as are all our ambassadors overseas. The potential overseas is enormous--in our traditional markets in Europe and north America and in the dynamic thrusting economies of the Pacific rim, including China. The opening up of that market and the move towards a market-led rather than a state-planned approach will offer enormous export opportunities in the next decade.

Industry has followed my hon. Friend the Minister's lead. We doubled our exports to China in the first two months of this year, on top of a significant increase last year. Industry and Government have to roll up their sleeves, get stuck in and fight, as partners, for business. In such difficult and potentially lucrative markets, we have to do better than our competitors. That is why my hon. Friend the Minister for Trade has visited China three times in the past year, and is going there again soon.

Our export infrastructure is sound. Export performance is excellent and getting better. There are many success stories. The economic outlook is much more promising. All the ingredients are there for export-led growth. I do not want to bore the House with statistics, but shall quote a few to illustrate my point. In 1992, visible export earnings were £108 billion--3 per cent. up on 1991's record figures. In 1992, invisible earnings stood at £108 billion, second only to the United States of America.

In the past three years, the volume of United Kingdom manufacturing exports has risen faster than that of Germany or Japan. In the first quarter of 1993, visible exports to non-EC markets were up 12 per cent. in volume terms over the same period in 1992. I think that my hon. Friends will agree that those figures are not too bad. Despite all the doom and gloom that we hear from the Labour party, the figures show that this country is winning.

After three decades of decline, our volume share of world trade has now stabilised. I could go on, but the House will have got the message. The important issue is how to build on that success. As well as the economic environment, we want the trading environment to be right. We have simplified the tax regime, cut corporation tax by one third, and reduced the tax burden on business by £1 billion in this year's Budget. We have given a high priority to reducing the burdens on business.

We have worked hard to achieve a sensible world trading system. We have worked with the European Commission, other EC countries and the other key players


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in the Uruguay round. We have used our recent presidency of the EC to press forward with the completion of the single market. We remain committed to encouraging free trade wherever possible. We like to feel that this country leads the movement towards world free trade. We have also been looking at the way in which we provide support to exporters. With the Foreign and Commonwealth Office, we provide a comprehensive package of support to United Kingdom exporters through overseas trade services. We have more than 2,000 staff in the United Kingdom and overseas. We provide support from basic market research through to supporting 7,000 companies in major trade fairs overseas each year. We provide advice to exporters, small and large, on opportunities world wide. We work with large companies on major projects overseas--if we cannot help, we know a man who can. We have been working since 1989 to make overselves more customer-driven and, with the excellent work undertaken by Foreign Office staff in nearly 200 posts overseas, we have succeeded.

There has been a significant improvement in the quality of the services we provide. That is not our perception ; it is what the market tells us. Demand for our charged information services has quadrupled since 1989. Independent research tells us that 90 per cent. of customers say that they would use our services again. However, we cannot be complacent. Our market research has also indentified some weaknesses. We take too long to provide some services--always a criticism of government--so we are working hard to improve where necessary.

Our export promotion effort is constantly evolving to meet the new challenges that we face. I shall tell the House about the specific action that we already have in hand. My hon. Friend the Minister for Trade outlined in a speech to the Institute of Export last November how our commercial export strategy would work. Our aim is to maximise our strengths and minimise our weaknesses. The key is partnership between the Government and industry. We must ensure that Government support to exporters is efficient and industry's response effective. At a national level, we must match the Department's organisation to business needs.

That strategy provided the framework for the fundamental restructuring of my Department's export services announced by the President of the Board of Trade last week. Our objective is to sharpen the focus of our export promotion effort. Changes include the appointment of the new director general of export promotion, the allocation of up to 60 more staff to help and the establishment of two export promotion divisions. The new divisions will develop our capabilities and expertise. They will also draw up strategies for each of our top 80 export markets.

Those new divisions will also work closely with the 100 export promoters being seconded from the private sector. Some 30 secondees are now in place. My colleagues and I have been impressed with the calibre of those that industry has sent us. DTI Ministers recently had a meeting with the secondees, and their quality and enthusiasm were striking. That just shows the value of Departments having an infusion of new blood from the private sector. My right hon. Friend the President of the Board of Trade is determined increasingly to put the DTI alongside industry and that there should be continuous crossovers of staff between the private sector and the DTI. In that way, the DTI will become more responsive to industry's needs.


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We believe that the initiative of promoting industrial secondees as export promoters is an excellent idea. We hope to have about 100 of them by December, and we hope that as new people arrive they will bring with them fresh contacts. They will also have, and will gradually acquire, more expertise in their target markets, and that in turn will enable them to spot new export opportunities and to encourage companies to exploit them.

This reorganisation follows hard on the heels of four other notable changes which further benefit United Kingdom exporters. In addition to the £700 million announced last autumn, the Chancellor has announced that a further £1.3 billion of cover for key export markets over the next three years will be given. Premium rates have also been cut again to about the average charged by our principal competitors. This has been a considerable achievement for the President of the Board of Trade. I have been a DTI Minister for two and a half years, and I know that there have been many complaints about the degree of our support for the Export Credits Guarantee Department. Now the President has come out fighting for it. In difficult economic circumstances, and in a tight spending round, he has managed to persuade Treasury colleagues to grant an extra £2 billion to the ECGD, and that is a tribute to my right hon. Friend. We have now ensured that the ECGD is competitive across the world. We can never ensure that it will match the best rates in any one market. For instance, in south America it may be difficult to match the high levels of support provided by the Americans, but, thanks to the hard work of my right hon. Friend and his commitment to exporters, we have ensured that the ECGD is competitive. I am sure that my hon. Friends attending this debate welcome that.

Our support does not end there. We are responsive to industry's needs. We have also provided $500 million of ECGD cover as part of the international package for the former Soviet Union. No doubt that will please one of our new export promoters, Nigel Peters, who tells us :

"The potential in Kazakhstan is enormous in a market which will be one of the star performers of the 21st century".

That is why we are planning a ministerial-led business mission to Kazakhstan.

We have also just reorganised the Overseas Projects Board into new sector groups covering our main capital goods exports. These groups will be headed by leading business people and they will encourage United Kingdom companies to work together more efficiently in pursuit of major project contracts. We aim to double existing sales to non-OECD markets by the end of the decade-- quite an aim. Whether we will meet the target I do not know, but we will fight hard to do so. We have also launched a series of major campaigns aimed at our three largest markets--Europe, north America and Japan. We have created the Whitehall export promotion committee, which will ensure that a constant approach to export support is adopted across Government Departments.

The President's attitude to create a national network of one-stop shops will also assist our export performance. He is wholly committed to the initiative, which will in the end create as many as 200 one-stop shops, dramatically improving the Government's ability to deliver key services to business throughout the country. The initiative will


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significantly increase awareness of overseas opportunities and provide access to export services locally, be it in Bury, Bolton or Lincoln.

The first one-stop shops will open in the next few months. They will be instrumental in driving home the message that all businesses should consider the opportunities that exporting offers. One-stop shops will fill a large gap in our business support structure. We believe that we now have the right structure in place. The recent announcement is the final piece in the jigsaw. Our organisation is now a valuable mix of public and private sector skills. To be successful in Government we must have a partnership between the private and public sectors. Ministers also have access to the valuable advice of the chairman of the British Overseas Trade Board, Sir Derek Hornby, and of the 200 business men and women who sit on the board and its area advisory groups.

While we have been refining our strategy and structure and scouring the world for business opportunities in the past year, what has the Labour party been doing? It has launched an industry campaign which failed to pay serious attention to the economic importance of exporting. For once, showing good judgment, the party promptly recommended that we make all the changes that we already had. Phrases about horses and stable doors come to mind.

The Labour party said that we should

"provide a new analysis of the problems that are holding Britain back".

That is an interesting suggestion, and it is why we set up our industrial competitiveness division immediately after the last election. Labour said that we should

"offer a new partnership between Government and industry". Where has the Labour party been for the past 12 months? My ministerial colleagues and I will soon be accused of not leaving British companies alone long enough to let them get on with their real work. The President is well known for his open door to industry, and the same can be said of my other ministerial colleagues. My right hon. Friend has ensured that the Department is being reorganised to provide an effective voice in Whitehall.

Yet another new idea from the Labour party is that we should set about identifying the export markets of tomorrow--

Sir David Steel (Tweeddale, Ettrick and Lauderdale) : I am not sure why the Minister is wasting the time of the House with this part of his speech, unless he intends to propose a toast to absent friends.

Mr. Leigh : That is a good comment. A Labour Front-Bench spokesman has managed to be with us today, impressively enough, but I can see an ocean of empty space behind him. Behind me, by contrast, are a number of my hon. Friends who are waiting to speak. Hansard will show the interest that Conservative Members take in exports. As I was saying, the Labour party had an idea that we should set about identifying the export markets of tomorrow --just what we have been doing since 1990. Our 100 export promoters will continue to advance this work.

All this invokes a sense of deja vu. It reminds me of one of Labour's manifesto pledges last year, when it promised to create a


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"revitalised and integrated export service, combining the trade functions of the DTI, Foreign Office and the British Overseas Trade Board".

That pledge brings Labour's familiarity with Whitehall into question. We had already set up the DTI/FCO joint directorate to co-ordinate the Government's export promotion programme 12 months earlier. Labour will be advocating votes for women next!

The Labour party says that other countries will steam ahead and leave us behind. The Opposition do not seem to recognise that we are foremost in forging links with our competitors, and we shall be up there with the best of them, if not in the lead, in everything from outward investment, inward investment, strategic alliances and technology transfer to joint ventures. Our policy speaks for itself : the Government have responded to the internationalisation of trade like no other nation.

Of course, creating the right environment and restructuring our export support structure would be no good if companies could not run with the exporting baton. Ultimately, it is the creative flair, energy, commitment and dynamic entrepreneurial skills of British business that will succeed. Our flair for international trading must be reinforced by new generations of industrialists and business men. I am continually reassured by the success stories of British industry which cross my desk or which I come across in my travels. The President told me of a visit he had made to Vosper Thornycroft on Monday of this week. He was struck by its successful turnround since the management buy-out in 1985, despite the difficulties created by a combination of defence cuts and the recession. The company's outstanding export record since privatisation and the speed at which it has diversified into new market sectors must represent one of the most remarkable industrial success stories of recent years. Some 118 exporters were awarded the Queen's award for export achievement in 1993. We received 1,582 applications for export and technology awards, the highest for many years. The export winners represent success stories across the industrial spectrum. They range from breadcrumb, cream liqueur and pizza-base manufacturers to a company that developed an automatic cattle dewormer and, for the first time, an entire orchestra.

Since its formation in 1959, the orchestra of the Academy of St. Martin-in- the-Fields, Britain's only non-subsidised orchestra, has made more than 1,000 recordings, including the sound track of the successful film "Amadeus". From a pig improvement company in Abingdon, genetically superior master pigs fly the world, improving breeding stock in markets as diverse as the United States, the Ukraine and Cuba.

All those are examples of the ingenuity and skill which add value to our efforts to improve export performance. I shall give a few other recent examples. North-West Water and Severn Trent Water each won contracts worth more than $350 million to provide water and waste services to a number of municipalities in Mexico City. An international consortium, including the United Kingdom arm of Bechtel, has won a $1.4 billion turnkey project to develop Abu Dhabi's onshore gas production. The project will employ 425 people in Hammersmith and will be worth £200 million to £250 million to the United Kingdom in engineering services and equipment purchases. As an example of the partnership with industry, Bechtel is making a presentation in our offices next week to


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publicise this excellent opportunity for United Kingdom industry. Not surprisingly, the presentation is vastly oversubscribed. Our intention is to build on this success. We already export a quarter of what we produce, and per head of population we export more than the United States or even Japan.

As I have said, export volumes have been going up, even over the past few years. Many of our firms are benefiting from a competitive exchange rate, and we are exporting leading edge goods in aerospace, pharmaceutical, electronics and other industries. Let no one say that nobody wants to buy our goods. It is a little perceived fact that on capital goods--often the most sophisticated--we have a favourable balance with the rest of the world.

We shall continue to develop new initiatives. We are not complacent : we know the challenges facing us. We have devised a thorough-going export strategy and we intend to embed it throughout the trading base of the United Kingdom at local and national levels and within government. We have the structure right and we are using the recent changes to galvanise industry interest in the enormous overseas opportunities.

As I have demonstrated, our intention is to lead this export drive with vigour and enthusiasm. The partnership between industry and the Government must succeed, and it will.

10.2 am

Mr. Derek Fatchett (Leeds, Central) : I congratulate the Government on allowing time to debate this important issue. It enables us to draw attention to crucial facts about Britain's balance of payments. It is interesting that the Government should wish to devote time to discussing that, because the Chancellor predicted that the deficit would be £17 billion in 1993 and the Oxford economic forecasting group has suggested that, by 1995, the deficit will be more than £20 billion.

The Minister rightly emphasised the importance of exports, but we must look at both sides of the equation by examining the increase in imports. I shall illustrate the problem in relation to manufactured imports over the past decade. The figures that I shall quote are all contained in parliamentary answers by the Minister. The value of manufactured goods from Taiwan increased from £211 million in 1979 to £1,250 million in 1991, an increase of 492 per cent. Japanese manufactured goods imported into the United Kingdom rose from £1,441 million in 1979 to £6,655 million in 1991, an increase of 362 per cent. South Korean manufactured goods increased from £265 million in 1979 to £905 million in 1991, an increase of 254 per cent.

Mr. Roger Evans (Monmouth) : Does not that show the benefits to the British consumer of a much higher standard of living and the advantage of cheap electronic goods from the countries that the hon. Gentleman mentions? It is an old-fashioned view to say that we must manufacture everything ourselves.

Mr. Fatchett : It may be an old-fashioned view, but I am a realist and I should like to see Britain manufacturing a more substantial proportion of the goods that we consume. This country cannot run a £17 billion trade deficit with an expectation that it will increase. I am sure that the hon. Gentleman has a passing knowledge of economics which is sufficient to enable him to understand that that will again lead to an increase in interest rates.


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Mr. Roger Evans rose --

Mr. Fatchett : The hon. Gentleman is hyperactive. He should restrain himself. He has obviously waited a whole week for this debate, so I shall give way to him once more.

Mr. Evans : What is the point of the hon. Gentleman's figures? He should realise that there is a £30 billion unaccounted item in the published figures for the balance of payments. The balance of payment figures for all the leading countries simply do not add up. This is old- fashioned economic analysis and is totally exploded.

Mr. Fatchett : Given the hon. Gentleman's figures, he was notably in charge of the Maxwell pension fund. To the City and other financial sectors, a £17 billion trade deficit is not looked upon approvingly.

I shall quote some more figures to put the issue in perspective. The United Kingdom's trade deficit in manufactured goods with the rest of the OECD has more than doubled over the past decade from £3, 948 million in 1979 to £10,146 million in 1991. Our trade deficit in manufactured goods with the United States has quadrupled from £535 million in 1979 to £2,328 million in 1991. We have a manufactured goods deficit of £4,726 with Japan, £3,920 million with Germany, and £1,651 million with Switzerland.

This country did not have a manufactures trade deficit until 1982, but it has had one in every subsequent year and there is now only one continent with which Britain has a manufactures trade surplus, and that is Africa. The Government are right to draw attention to our overal trade performance, but it is something of an own goal that they should devote time to a debate on the balance of payments deficit.

The previous Prime Minister, Baroness Thatcher, used to lecture us about our need to pay our way in the world. There may have been an element of Yorkshire thrift in the speech by the Minister, who is from Lincolnshire. Baroness Thatcher said that no country can continue to have a deficit of this sort and try to maintain living standards. The pressure of that trade deficit will cause a series of economic problems. It has to be financed and that may be done through higher interest rates. That may push up the value of the pound to a level that is unhealthy for Britain's exports and we shall be again in a downward spiral rather than an upward virtuous one.

I have a statistical point in relation to the Minister's speech. I am delighted with the success of British exporters. The Minister was kind enough to refer to the Labour party's industrial policy document, a document that was warmly received throughout the industry and which showed that the Labour party understands the problems faced by Britain's industrial sector. The Minister quoted from it Labour's support for exporters and our suggestions for further policy developments. He can look forward to a further series of documents, which will show that the Labour party is creating a new partnership with British industry, understands its needs and is looking forward to bringing that partnership into practice when in government. One figure that the Minister used showed that Britain exports more per head of population than the United States or Japan. The Prime Minister has also quoted those figures and the hon. Member for Mid- Staffordshire (Mr. Fabricant) has read the central office brief and come up with the same ones. That is reassuring. I always enjoy the in the Conservative party which comes from the use of central office briefs. That may have been shattered over the past few months and there may be slightly less discipline, but Tory Members are still able to learn a small number of facts. Perhaps what has coloured the Government's education policies is the Tory party's approach--if one can learn one or two facts and repeat them, one has all the ability that is needed to become a Tory Back Bencher.

That figure comparing exports per head with those in the United States and Japan is accurate, but has to be taken in context. Perhaps I can help the hon. Member for Mid-Staffordshire to flesh out his brief from Conservative central office and perhaps I can help the Minister as well. In 1979, the United Kingdom also exported more per capita than Japan or the United States. I have taken from various figures a list of 25 countries with which to compare Britain's performance on invisible exports between 1979 and 1992.

After 13 years of Conservative Government, in which we have been through a series of economic miracles, with occasional mishaps on the way, our position in the league table has not changed. One or two of the countries below us, and thus one or two of the countries above us, have changed, but Britain remains in the same position. On my league table, we are seventh from bottom, or, if the Minister would like it more positively, 18th from the top.

Let me give a flavour of the countries that do better in exports per capita. They include Singapore and Hong Kong and, in Europe, they include Holland, Belgium, Norway, Ireland, Denmark, Sweden, Iceland, Austria, Germany and France. That interesting league table is not in the central office brief, but it is useful in making valid comparisons with other countries.

I welcome the debate and I shall spend some time talking about imports, but I shall first pick up some of the points that the Minister made. I welcome the emphasis on exports because it shows one thing above all else. After 13 years, after some fashionable economics in the mid-1980s, the Government have at last recognised the importance of manufacturing industry.

The Vice-Chamberlain of Her Majesty's Household (Mr. Sydney Chapman) : That is a year out of date

Mr. Fatchett : I realise that keeping quiet for a whole week is difficult for the Whip and that he feels that he has to tell us that, after 13 years in office, the Government recognised the importance of manufacturing industry a year ago. That is encouraging, but I suspect that it may take a little time to persuade manufacturing employers and companies that they have a true friend and a real partner in the Government. The simple fact is that many Conservative Members subscribed to the fashionable theory in the mid-1980s that Britain's future was to be found in the service sector, in no-technology, low-technology industry. That theory came from both No. 10 and No. 11 Downing street when the then Chancellor, now Lord Lawson, and the then Prime Minister, now Lady Thatcher, were still talking to each other.

What is crucial and what is easily understood by most people is that if we are to export, manufactured goods rather than services are what we will export. It would be foolish of me to say that we do not export some services,


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because clearly we do, but overwhelmingly we export manufactured goods. That further underpins the importance of the manufacturing sector. It makes the point that the Labour party made in its industrial strategy document : that the country needs an industrial strategy and a Government who understand its industrial base and give it priority.

Two nights ago, we had a debate about Britain's defence companies-- companies which have a proud record on exports and a substantial investment in skills and research and development. Such companies rely on the Government's procurement policies for their United Kingdom market and on exports. That is a clear relationship. An important element of the defence industry is shipbuilding and my hon. Friend the Member for Jarrow (Mr. Dixon), the Deputy Chief Whip, knows the shipbuilding industry better than anybody.

My hon. Friend knows also that the European Community figures on shipbuilding and the potential for growth in shipbuilding orders predict a 100 per cent. growth in orders for new ships over the next decade. Despite that potential for growth, our industrial base--our ability to meet those new orders--is being reduced. Thus, we have the tragic situation of Swan Hunter, where substantial numbers of highly skilled workers who deal with sophisticated technology are this morning facing the prospect of job losses.

I can imagine us, in a few years' time, having a debate similar to this. Whichever party is in office, we shall be saying that opportunities in shipbuilding have been lost to the United Kingdom because our capacity to compete has disappeared as a result of the reckless decisions taken in the early 1990s. That is the link between industrial strategy and exports and the shipbuilding industry is a good example.

Mr. Michael Fabricant (Mid-Staffordshire) : Is the hon. Gentleman suggesting that the shipbuilding industry of the north-east, Jarrow and other parts of the United Kingdom should adopt the same wage rates as those in Korea?

Mr. Fatchett : I am not sure how anybody could have come to such a conclusion, but it is good to see a fertile and active mind at work, even though there is no logical basis for what the hon. Gentleman said. Of course, I am not saying that. Shipbuilding capacity has decreased more quickly and more sharply in the United Kingdom than in any other European Community country. That is true in terms of tonnage, capacity and employment. One reason for that is that the Government have given no consideration to the plight of Britain's shipyards, which have built for the military for many years. Those warship yards could have been converted to civilian yards. They could have had access to intervention funds from Brussels so that extra would have been made available to help them. Swan Hunter could have competed for that growth in civilian orders. Instead, the Government were obsessed with privatisation. The Minister wanted to sell privatisation to the world. That obsession led them to sell Britain's shipbuilding history and future for their ideological purposes. They did it without giving British shipyards access to the intervention funds. They agreed that with the Commission. They sold our history and future at that point. We are talking of reckless Ministers and a reckless Government, which is why we demand that,


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when we discuss exports, we link the discussion to our manufacturing and industrial base. The future must be linked on that basis.

The Minister talked about the improvement in Britain's export figures in recent months. There may be a simple reason for that. Britain's currency has been devalued and that has given our exporters a competitive edge. How many Conservative Members present today advocated devaluation as an export strategy before devaluation took place in September? I will give way to any Conservative Member who did not go along with the Prime Minister when he said in September that devaluation was fool's gold. Who of them will rise and say bravely that he or she, before September 1992, argued for devaluation, the real cause of the medium to short-term growth in Britain's exports?

It is good to see British companies taking advantage of that, but I await the comments of the brave Conservative Members, the people of principle, who are willing to take up my offer. I hear the Minister coughing. That is probably the most appropriate reaction in his case because I will let the House into a secret. I suspect that in private he is called a Eurosceptic.

Mr. Michael Stephen (Shoreham) : Does the hon. Gentleman accept that he and his hon. Friends were even more enthusiastic than were Conservative Members for joining the exchange rate mechanism in the first place?

Mr. Fatchett : That was not the most passionate defence of the Minister or the position taken by Conservative Members before September.

Mr. Stephen : Answer my question.

Mr. Fatchett : It is easily answered. The shadow Chancellor of the Exchequer and shadow Secretary of State for Trade and Industry were making statements from the early spring of last year to the effect that Britain should favour a general realignment within the ERM. The Labour party's position has been clear on the issue. The Government were arguing that any form of devaluation was fool's gold. I shall willingly give way to the Minister if he wishes to say whether he believes that returning to the ERM would be advantageous for Britain's exporters. It seems that he does not intend to respond. Will any other Conservative Member defend the position? As I say, the immediate short-term increase in exports has been largely due to the fact that Britain devalued, giving us a competitive currency rate. I must move on because it is clear that the Minister is not keen to enter the debate about the ERM-- [Interruption.] I gather from the Minister's demeanour that he may comment on the matter when he replies to the debate. We look forward to his comments on the virtues of the ERM and our future membership of it, from the point of view of Britain's exporters.

My hon. Friends and I are pleased to see extra money being made available for export credit guarantees. But the Minister will be aware of our concern lest some short-term risks are not fully covered. That could damage Britain's exporters, an argument which is adduced not just by the Labour party but by the CBI and many British companies. I hope that the Minister will relate his remarks to those short-term risks and our ability to cover them.


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The CBI welcomes the Governments' comment that Foreign and Commonwealth Office expertise will be used more effectively to promote Britain's exports. I do not have a large sample of the efforts of Britain's embassies overseas in that respect. I appreciate that some hon. Members make it their business to visit as many British embassies as possible, presumably to help in the export drive and as part of the fact-finding process of being an hon. Member. As I say, I have a small sample, but I congratulate the efforts made by our embassies on the exporting front, although I remain concerned over the CBI figures, which suggest that since 1989 there has been a cut in the Foreign and Commonwealth Office budget devoted to export promotion and similar commercial activities. The CBI fears that that reduction is likely to continue. If so, all the good intentions of the Department of Trade and Industry will not necessarily be reproduced in practical terms.

May we be assured that a clear dialogue is taking place between the DTI and the Foreign and Commonwealth Office on those issues? May we also be assured that the Foreign and Commonwealth Office is not cutting its commercial and export promotion staff, a move which could be extremely damaging? Hon. Members in all parts of the House could suggest alternative ways by which the Foreign and Commonwealth Office could make more effective cuts in the interest of the United Kingdom economy.

The Minister omitted to refer to small businesses, an important area of growth in the British economy. The vast majority of small businesses are, by the nature of their services and products, not exporters. But an important group of small businesses, often engaged in high-tech activities, export a great deal. I am frequently told that, for a number of reasons, small businesses find it difficult to export ; perhaps the Minister will comment on the issues involved. They say that they find it difficult to get through the DTI bureaucracy and to receive the support and services that they need. The Minister referred to the one-stop shop, a concept which is supported by all, but we must consider other ways to help small businesses to export. Their representatives have frequently floated to me the idea that it may be essential for the Government to pay more attention and provide more resources--I suspect that small sums are involved--to bringing small businesses into a relationship with larger organisations across sectors to help those small businesses get their products into export markets. They have in mind almost a mental relationship, as it were, across sectors.

The DTI may have considered the idea, but it needs examining in greater detail because we must encourage small businesses, particularly those in the high-tech sector, to export, thereby enabling them and the economy to grow. The risks that such small businesses face, by their nature and the capital involved, are great. They need support and it is more likely to come from the Government than from the banks and other commercial institutions.

I began my remarks by relating exports to our overall balance of payments. Crucial to today's debate is Britain's ability, through manufactured goods, to satisfy our domestic requirements. That relates to the balance of payments deficit and I cite some figures from a newspaper that is widely read and respected by Conservative Members. I have no doubt that the figures in The Daily Telegraph came from Government sources, so they can be regarded as authoritative in this context.


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Neil Collins, City editor of The Daily Telegraph wrote an interesting article in which he examined the way in which Britain relies on imported goods. He referred to six products in which Britain is now more reliant on imports and the figures give a flavour of the problem. In 1971, 70 per cent. of Britain's machine tools were produced by British manufacturers, but by 1991 the figure had fallen to 40 per cent. Any hon. Member who visits a British factory will find that, sadly, more new machine tools in British factories are not produced in the United Kingdom. As I visit factories, I make it a regular practice to ask whether machines were made in the United Kingdom or whether there is a British equivalent. I am told that they had to go to Japan, Germany, Switzerland or Sweden. I do not believe that those senior managers are unpatriotic or are trying to sell Britain short. They would like to buy British, but Britain simply does not have the capacity.

I represent a Leeds constituency. In much of south Leeds, factories produced machine tools that became household names, but sadly they have now all disappeared. The Minister may say that I am old-fashioned, but no effective manufacturing and exporting country can compete and succeed without being able to produce its own machine tools. The figures that I have given show the extent to which that capacity has disappeared.


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