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Mr. Stephen : I am sure that Conservative Members are as concerned as the hon. Gentleman about the serious decline in the British machine tool industry, but he offered no explanation of how that decline occurred and why. Could it, I wonder, have had anything to do with the strikes and restrictive practices that were so prevalent in British industry throughout the 1960s and 1970s and were encouraged by his hon. Friends in the Labour party?
Mr. Fatchett : An argument based on variables must be time-related. Unfortunately, the events to which the hon. Gentleman referred, even if they occurred and damaged industry as he suggests--that is a matter for argument--occurred earlier than the rundown in capacity, which happened mainly in the 1980s. I suggest that that decline had much to do with the Government's policies.
Over the same 20-year period, figures for domestic household products show that the production of fridges and freezers in Britain fell from 61 to 53 per cent. That is a less substantial decline than in the machine-tool industry, but it certainly is a decline. The production of washing machines fell from 82 to 49 per cent. The production of shoes fell from 69 to 30 per cent. The production of motor cycles--a subject that may take some hon. Members back to their youth--fell from 66 per cent. to only 4 per cent.--a total wipe-out of an industry. The clothing industry, which is dear to our hearts in Leeds because it was one of the most important clothing centres, has experienced a fall from 79 to 56 per cent. Those figures show the extent of the problem, to which the Minister did not refer and I can understand why.
In two weeks' time, I shall visit the Raleigh factory in Nottingham. It is a successful company, but the cycle industry is a classic example of the decline of a very important British industry. Of the 2.75 million bicycles that were sold in the United Kingdom in 1991, 58.2 per cent. were imported. There have been questions--I know
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that the Minister has been involved--about the nature of imports from various countries into the United Kingdom. I know that companies such as Raleigh are concerned about the nature of that trade in terms of dumping and the extent to which those imports are subsidised. Nevertheless, there has been a substantial collapse in Britain's ability to produce and to meet capacity. The Daily Telegraph also deals with what has happened to our glassware and cutlery industries, but I shall conclude with a further example from my constituency.Mr. Fabricant : Could not the same litany of industries in which manufacturing has declined in the United Kingdom--and it undoubtedly has because of imports--be read out for the United States and Germany? The hon. Gentleman is talking about imports from former eastern bloc countries and the Pacific rim, where, as I said earlier, wage rates are substantially lower.
Mr. Fatchett : The simple answer to the hon. Gentleman is that a comparison does not reveal such a sharp decline. The crucial consideration is the collapse in the United Kingdom's manufacturing industry and the loss of jobs and capacity.
I shall give one further example that follows from my earlier point about the balance of payments and shows the extent to which Government policies link together and undermine our manufacturing base. Following privatisation of the bus industry in the mid-1980s, orders for new buses and coaches have declined considerably. At the same time, because of that pressure and the Government's economic recession, Britain's bus-building capacity has been reduced significantly. If, as we hope, we are coming out of recession, if, as we hope for our safety and comfort, Britain's coach and bus operators decide to buy more buses and coaches, and if demand for buses and coaches returns to the levels of the mid-1980s, we shall be able to supply only about two thirds of the demand of the mid-1980s. DAF, Volvo and others will fill the gap. We shall import again. Britain's industrial base is being undermined, our manufacturing industry cannot meet demand and we will therefore have to pull in more imports.
The Minister is right to talk about exports. Hon. Members agree that we need to increase exports and that we need policies designed to achieve that objective, but there are two sides to the equation and I have been dwelling on the second. I noticed that the press reported yesterday some disagreement within the Conservative party about contact with overseas business people, but I shall ignore those internal party difficulties about funding the Conservative party. It is clear--this is where Conservative and Labour Members differ--that a country cannot maintain its standard of living if it is running a substantial balance of payments deficit. That is why we must emphasise both sides of the equation--exports and Britain's ability to provide for itself. I am not talking about import substitution in the sense of barriers or saying that Britain must impose import controls. I want British products that can succeed in the home market by being competitive, with British industry having the capacity to produce those goods.
The Government did not consider that in their industrial strategy, with the clear consequence that our balance of payments deficit will pull us back again into
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high interest rates, overvalued currency and further economic doom and gloom. Every downturn in the British economy since the 1960s, whatever party has been in office, has reduced our manufacturing capacity and increased the number of long-term unemployed people. We start from a higher point in terms of unemployment and a lower one in terms of capacity.Not only imports but exports must be considered, because if any Government of either party are to provide the personal, social and public services that this country deserves as it enters the 21st century, they must confront its balance of payments problems. Britain must pay its way in the world and that means attending to exports as well as to imports.
10.39 am
Mr. Warren Hawksley (Halesowen and Stourbridge) : Thank you, Mr. Deputy Speaker, for calling me so early in the debate. It is interesting that there is so little Opposition support for the motion--I congratulate the Government on the motion. In fact, there is almost a total absence of Opposition Members in the Chamber for this debate. The hon. Member for Leeds, Central (Mr. Fatchett) spent more time dealing with imports and deficits than with the Government's success story on export growth. We are pleased to put that success story on record. In the final quarter of 1992, there was a 5.5 per cent. increase in exports by volume over the previous year. In March, in the non-EEC sector, exports rose by 3 per cent. We can be proud of that record.
Exporters need not just the Government help to which the motion refers but a domestic economy that offers home industries encouragement and confidence. The Government have provided that by bringing inflation under control, reducing interest rates--to encourage the investment that many exporters must make if they are to sell their products abroad--and lowering the level of the pound by withdrawing from the exchange rate mechanism. The hon. Member for Leeds, Central was critical of the Government for not withdrawing earlier from the ERM, but I hope that he at least acknowledges the benefits now of that action.
Exporters must make sure that the quality of their products is high enough. In days of old, Britain could not export abroad because its potential customers were unsure that our goods would be delivered on time.
Mr. Hawksley : My hon. Friend is right to remind the House of that point.
Mr. Fabricant : Does my hon. Friend not consider it extraordinary that the hon. Member for Leeds, Central (Mr. Fatchett), who was once a lecturer in industrial relations--despite having no background in industry himself--did not care to mention that important fact and to endorse my hon. Friend's observation?
Mr. Hawksley : I thank my hon. Friend for reminding me of the hon. Gentleman's previous incarnation. In the late 1970s, our exports suffered because of the fear among potential foreign customers that the quality of British goods would not be high enough and that delivery would be unreliable. In contrast, last year this country enjoyed the best industrial relations in the 100 years since records
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began. That is very different from 1978-79, when the perception of foreign customers after the winter of discontent gave them cause for second thoughts.It is not enough for the Government to produce money, leadership or even just advice and encouragement. British industry has a great responsibility- -having been given that help, advice and
encouragement--to sell its goods. My hon. Friend the Minister rightly referred to the partnership that must exist between industry and the Government which has helped industry considerably.
The overseas trade service has been restructured and extended, and even the Opposition welcomed changes in the Export Credits Guarantee Department scheme--£2 billion more cover for projected exports was made available last autumn and the rates are now 25 per cent. lower than in 1991-92, to bring them into line with the average of our competitors.
If exports are to grow, foreign markets must improve. The recession that occurred not only in this country but world wide harmed opportunities for British exporters. That was brought home to me two years ago, when I visited a factory in my constituency that had exported boilers for 40 years. Its owner told me that, for the first time, all his markets were down simultaneously. Normally, if the export climate in Europe were bad, he relied on America, Australia or the far east--one area was always doing reasonably well. Two years ago, that was no longer the case. Today, thank goodness, some economies--including our own--are improving.
As someone who has rebelled against the Maastricht treaty on many occasions and who has grave reservations about events in Europe, I believe that the Government should place even greater emphasis on achieving a settlement on the general agreement on tariffs and trade. That is more important than anything that the House has debated for many hours recently. Mr. Delors must be persuaded never again to interfere in the name of France, or as part of his campaign to become President of France, and mess up the GATT agreement discussions. A new agreement having the full support of Europe and America must be introduced quickly. That would help us more than anything else. As someone who is sceptical of actions that are often taken in our name in Brussels, I am not sure whether we are allowed any longer to talk about exports to Europe. I am uncertain whether, after the introduction of the single market, we are now part of one common market that does not have imports and exports between those who are in it. I spoke from the no platform during the referendum campaign on Europe and have consistently advocated a free trade area--trade between the United Kingdom and Europe should be free and fair. Our exporters are at a disadvantage in two respects. What is being done to ensure no repetition of those scenes of French farmers and fishermen blocking our exports? At the time, we heard that compensation was being claimed and that the Government were putting strong pressure on the French.
Government help to exporters must include expression of the strong view that such action will not be tolerated. Every few years, the French farmers or the French fishermen get upset and start closing down the ports. What will the Government do to ensure that such incidents are not repeated yet again?
The export of steel and steel products is of especial concern to my constituency. I am told by my steel
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producers that they cannot compete with the Italian price. They know that the price at which steel is sold in Italy is lower than the cost of producing it. Are the Government doing all that they can to ensure that we trade fairly within the Community in commodities such as steel? If a subsidy is being paid, as my producers suggest, it is not an approved subsidy, but an unfair one. That makes it much harder for my producers to export to many of the markets into which they would like to go.I pay tribute on behalf of my constituents to the regional offices of the Department of Trade and Industry. My constituents find that the regional offices have changed their attitude considerably in the past 18 months to two years. In the old days, they found that if they contacted the Department at regional level in the west midlands, the answers that they were given were typical civil servants' answers and almost predictable. In the past two years, they have noticed a considerable change. They have noticed that the Department at regional level is very much more helpful. It not only answers the questions that my producers ask but has introduced initiatives and gives help and encouragement. That is very much appreciated by many exporters in the west midlands.
It is interesting that there was a brief from the Confederation of British Industry before the debate. The hon. Member for Leeds, Central spoke about representations from the CBI. It is interesting that the CBI went on record as saying :
"The Government's export support services both at home and abroad have shown considerable improvements and increased professionalism in recent years and it is essential that this is now built upon." That is what my constituents tell me of the Department at regional level, and I welcome that very much.
I raise another constituency problem that involves exports on which I have had discussions with the Department--the support that is given for those who wish to participate in international exhibitions and shows. Some constituents in the west midlands recently had problems with participating in the Hanover fair. Most of them run small businesses. In previous years, up to 10 businesses from the Dudley area have participated in the show. They have been supported by the Birmingham chamber of commerce and have come through the scheme organised by the Department.
This year, those businesses found that they had to commit themselves as early as 15 October to paying for the right to be at the exhibition. In the present climate and with their present cash-flow problems, that was far too early for them. I hope that the Department can help by covering the period up to the show, so that those businesses do not have to pay too far in advance, or by persuading people on an international basis that applications to participate in international exhibitions can be submitted later. Perhaps the Government could make the booking and then sell it on at a later date.
Mr. Douglas French (Gloucester) : Does my hon. Friend know whether the terms for overseas companies required by the organisers of the Hanover Fair will obtain in respect of German-based companies?
Mr. Hawksley : I do not know. I have had correspondence with the Department. Baroness Denton wrote to me, saying :
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"The timing of cut-off dates' for applications is alway the subject of discussion between officials and group sponsors but, invariably, they are set in relation to the space booking deadlines set by exhibition organisers."It is the organisers who set the date ; I do not know whether it is the same date for all participants. My hon. Friend the Minister may be able to tell us whether the date set for the German exhibitors differed from the date set for the British exhibitors.
The Foreign Office has increased its commercial expertise. The hon. Member for Leeds, Central said that some people had gone around many embassies in the world. I have not been to many. However, over the past few years, the few that I have visited have shown more understanding of the needs of business men and of those who are trying to export.
I mention one story in the press this week which caused some concern to those of us who read it. The Prince of Wales made a trip to Pol an organisation in Poland to sell its vehicles and it has opened an office there. Unfortunately, the Polish authorities made the Prince travel in a Volvo. The two British Jaguars were allowed to go in the procession, but were not used by him. Such incidents are a great disappointment to exporters. We do not always use to the best of our ability the opportunities that are given by not only ministerial visits but royal visits and other special occasions to push and to encourage the use of British commodities.
I turn with some trepidation to defence exports. It was in my constituency that Walter Somers produced the Iraqi pipe or gun, depending on one's interpretation of the piece of metal exported. Defence exports have not been mentioned at any great length in our debate, although I appreciate the fact that there was a debate a couple of days ago when they were raised. We should realise what a market there is in defence and how successful the British Government have managed to be in conjunction with our exporters. This is one area in which Government-to-Government experience and relationships are important. That is not so true in other areas, but in defence exports, it is invariably Governments who carry out the negotiations. I have some experience of the matter from my previous constituency of The Wrekin, where GKN produced the Warrior. On occasions, GKN found that Government-to-Government discussions were necessary to conclude satisfactory deals.
In 1982, we sold £1.7 billion of defence exports. That figure is now up to £5.1 billion, and is rising year on year. That is a success which we should try to foster and encourage. I again stress the need for playing fields to be level--a phrase often used in the House. I am nervous because in defence exports, when Governments are dealing with Governments, some purchasers do not use the ethics that British business men use. I am keen that the Foreign Office should do all that it can to ensure that the countries with which it deals treat our bids on the same basis as those from other countries. The suggestion that other countries and other organisations offer bribes on occasions is a common accusation. It is not easy to prove, but it has been made many times. It is important that the Government do all that they can to help those in defence exports to ensure that there is a level playing field on which they can put in
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their bids at a competitive level. If that happened, we should be able to increase our defence exports. We have about 20 per cent. of the world market in defence exports. That highlights the importance of defence to our exporters. We welcome the Government's help through the Defence Export Services Organisation.Exports are even more important to those Members with defence-related industries in their constituencies. Because of the so-called peace dividend, many countries, including our own, will naturally reduce their defence expenditure over the next few years. The defence budgets of Britain and the United States will be cut considerably, but opportunities are available that will ensure that our defence-related industries do not lose out at that time. More opportunities than ever are now available to them to compete in the export market.
I congratulate the Government on their success. The Opposition were not charitable enough to congratulate the Government. They tried to highlight the other side of coin and suggested that our import levels were too high. They may be too high, but we should encourage and congratulate the Government and industry on what they have done. Following devaluation of the pound and the reduction in interest rates, which will lead to further investment in this country, the time is now better than ever for British industry to export. I am sure that the Government will continue to give industry the support that is necessary.
11.1 am
Sir David Steel (Tweeddale, Ettrick and Lauderdale) : I disagree with the final point made by the hon. Member for Halesowen and Stourbridge (Mr. Hawksley) about defence exports, but I shall deal with it later in my speech.
The hon. Gentleman began, with great courtesy, by thanking you, Mr. Deputy Speaker, for calling him early in the debate. I am sorry that I cannot make an equally felicitous observation to you, since it seems to me that you did not have much option in my case. When I made an unkind reference earlier to the fact that only the Labour spokesman, the hon. Member for Leeds, Central (Mr. Fatchett), was present on behalf of the official Opposition, he said, sotto voce to me, that he thought that I had been a Member of the House long enough not to have to be here on a Friday. I repeat that publicly only so that the managers of my party may read the Christian and charitable observation that was offered by the Opposition and take note of it for the future.
Mr. Fatchett : And I will write the right hon. Gentleman a reference.
Sir David Steel : Before the hon. Gentleman is encouraged to go too far, may I say that the view taken by my party was that, since I do more travelling than anybody else in my party, this was an ideal opportunity for me to give the House the benefit of my experience. I am glad to be able to participate in this debate on Government support for exporters. I come from a noted exporting part of the country. I shall be critical of the Government later in my speech, so let me heap praise on them to start with by saying that Scotland as a whole is pleased that in his Budget the Chancellor recognised the importance of the Scotch whisky industry to the total exporting drive of this country. We are very grateful to him for that.
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My part of Scotland has an unrivalled record in exporting high-quality knitwear, tweed and leather clothing to all parts of the world. The secret of our survival of the recession and the general trend towards import substitution in clothing is the emphasis that we place on quality, both in manufacture and design. There are world famous names in my constituency, such as Ballantyne Sportswear, as well as many lesser known but successful small businesses. When I was in Buenos Aires a few weeks ago, I turned a street corner and found, to my great delight, a large corner shop with the name "Pringle of Scotland" above it. That is another firm in the Borders region. I went in to see how it was getting on and discovered that the shop had been open for only two weeks. That, again, is a good sign that the Scottish knitwear trade is booming in different parts of the world.The boom does not apply just to my own area and it does not apply only to the traditional industries. Chemicals, printed circuits and so on are doing well. The general economic lesson is that those firms that engage heavily in the export drive have ridden out the recession better than those that did not.
There is a particular constituency point that I wish to mention before I turn to the wider picture. My local enterprise company has pointed out to me that the grant support for enterprise initiative programmes in the non- assisted areas--I represent a non-assisted area--has dropped from 50 per cent. to a third. It has put forward a good argument, to which I hope the Minister will respond : that for export-dedicated programmes the grant level should be reinstated at 50 per cent. If grant support could be focused on export efforts, it would be worth while increasing the grant level again.
I want to put forward three propositions by means of which the Government could improve what I accept is not a bad record in assistance to exporters. The first relates to the Export Credits Guarantee Department. It is good news that the money allocated for that purpose is to be increased, but I draw the Minister's attention to criticisms that have been made of the recent changes in the Department. Those criticisms are not made by me. They were put to me by a firm that has had 25 years' experience of dealing with the ECGD. In its letter to me it said :
"ECGD was a great help. When we made an application for cover to give credit to a foreign customer, it was vetted by ECGD and in all cases we got the go ahead. This meant we could comfortably give credit and in the event of any loss we would recover 90 per cent. from ECGD."
The letter went on to say that the firm had made only one claim throughout its 25 years experience of dealing with ECGD and that that was for a sum of less than £3,000. The company argues that over that period of a quarter of a century the ECGD has made very good money out of it. The letter also said that, since ECGD was transferred to a private company, NCM Credit Insurance, it has had nothing but trouble from that firm. The Minister may be able to comment on that. I hope that it is not a typical experience, but it is a disturbing one. The letter went on to say :
"For a start the staff are offhand, unhelpful and arrogant." The firm went on to give me three recent cases where it had been refused cover. For commercial reasons, I do not think that I should give in the Chamber the names of the companies involved. However, they are in different parts of the world--Africa, eastern Europe and the middle east.
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All of them are well-established organisations in their own countries. The firm then says that because of the refusal of cover it has been"obliged to ask for letters of credit (confirmed by a London Clearing Bank) or cash up front. This makes selling difficult and therefore does not help exports. I am sure we can go out and export much more provided we are given the necessary background support. The more we export the more jobs we create and the more foreign currency we earn."
I hope that the Minister will take note of that criticism. If he wants the details I shall supply them to him. If that is in any way part of a wider picture, I trust that the company that now operates ECGD will be given a bit of stimulus by the Department of Trade and Industry.
My second proposition is that we can do even more through our embassies. I have observed that more people from the DTI are now working in our embassies, but can the Minister give us any figures? This is a helpful trend. I should like the commercial sections of our embassies to be much more of a mixture between traditional Foreign Office appointments and persons assigned from the DTI. My experience suggests that that is happening, but it would be interesting to know to what extent that is the case and to what extent the DTI is planning to increase its representation.
Not all commercial sections of all embassies are at the moment attuned to the needs of small businesses. Small businesses frequently criticise the fact that nationally known companies get red carpet treatment from the embassies whereas they do not. To some extent, that is inevitable, but I hope that our embassies are under instructions to give all possible assistance to smaller firms. One thing that they object to is the fact that the Government, no doubt as part of their cost-cutting exercises, are starting to demand payment for the services of the commercial section of our embassies. That is a rather penny-pinching approach. After all, every time a job is created through export orders obtained, some £9,000 of public expenditure in Britain on unemployment benefit and income support is saved. The Government should consider that in their search for reductions in public expenditure, which is currently focusing on social security. To make life difficult for the small firms that are trying to earn export orders seems an odd way to go about saving public expenditure.
I agree with what the hon. Member for Halesowen and Stourbridge said about foreign exhibitions ; he referred to Hanover in particular. I do not know whether it is a general DTI rule, but it appears that small firms cease to receive support after they have appeared at the same exhibition on three occasions. I do not understand the logic of that. If a firm has exhibited in a particular place and finds it worth while going back, surely it should continue to receive support. There should not be a cut-off rule--if, indeed, there is. I should be interested to know. Such exhibitions are of enormous value, especially to small firms. As I keep saying, smaller firms have greater export potential.
My third observation again relates mainly to the small business sector. There is still a feeling that our banks are less kind to the industrial sector than is the case in other countries. I do not know what the DTI can do about that. I pose the question, without expecting an answer, but the DTI should attempt to encourage and exhort the banks to
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be more sympathetic to commercial lending. Companies have had to look for ways to tighten their belts during the recession, and consequently there has been a trimming of support for research and development and exporting missions. That might make good short -term sense, but it certainly does not make sense in the long term. If firms need access to working capital to expand both research and development and exporting missions, they should be encouraged and enabled by the banks in that.In both Japan and Germany--two of our major industrial competitors--co- operation between industry, the banking sector and the Government is much closer than it is in Britain. I am aware that the Government have a scheme that guarantees 85 per cent. of a bank loan, but I am told that many firms believe that they must be almost bankrupt before they qualify. Could that scheme be expanded to encourage more commercial lending?
I said earlier that there were some points about the arms trade on which I would disagree with the hon. Member for Halesowen and Stourbridge. It is an extremely difficult issue, and one of particular sensitivity for him coming from the constituency that he does. However, the House must recognise that there is growing public opinion, not just in this country but world wide, that over-reliance on the arms trade is not something of which we should be proud. In both the Falklands and the Gulf wars, our service men found themselves up against weaponry and technology that we had sold to Argentina and Iraq. Surely the lesson is that we must be far more careful about reliance on the arms trade. The House has had many debates about Bosnia. One reason why early air cover was not provided by either fixed-wing aircraft or helicopters was that surplus weaponry from the Afghan war, supplied by the Americans to the Afghan rebels, had found its way to the former Yugoslavia. Among that weaponry were shoulder-operated, surface-to- air missiles. Once those are scattered around, it is difficult to provide air cover with any safety.
Mr. Hawksley : I accept that our arms exports have been used against our troops in the past, but if we had not supplied them would they not have been supplied by other countries anyway?
Sir David Steel : I was about to come to that point ; I have not completed my argument.
I said at the outset that this is a difficult issue. However, one step forward has been made during the past year or two, with considerable support from the Prime Minister, and that is the establishment of the United Nations arms register. That is the beginning of getting international control over the spread of weaponry.
I recognise, and in this the hon. Gentleman makes a fair point, that currently one of the biggest sources of arms is the former Soviet Union. A tremendous amount of Soviet Union weaponry is washing around the world fuelling many of the trouble spots, especially in Africa. I have said previously in foreign affairs debates that I was told that AK47s were being sold on the streets of Mozambique for $2 each. The world must stop and take stock of that and ask whether we are right to continue to encourage our armaments suppliers on the same scale as at present.
The hon. Gentleman was correct to suggest that international action is required. However, I do not share the rather cavalier attitude that export credit facilities
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should be offered to the arms trade. Surely that is one way in which Britain can contribute to reducing that trade. Export credit facilities should be run down and the DTI should concentrate on encouraging firms to move out of the arms trade and into other areas. I accept that that is a long-term ambition, but there must be a deliberate switch in policy to achieve it. I have been slightly side-tracked into discussing the discouragement of certain exports, but it is an important issue.The Government lost about £21 billion of taxpayers' money in the poll tax fiasco. They lost an unquantifiable amount in their bungling of the European exchange rate mechanism. Therefore, in asking the Government to pump more investment into industry and to encourage exports, we are asking for only a fraction of what they have lost through some of their bungled policies. Let us thank them for what they have done so far, but also encourage them to do even more. 11.17 am
Mr. Douglas French (Gloucester) : I declare a business interest as I am a long-standing director of P. W. Merkle Ltd., a company which specialises in the import and export of processing machinery for the plastics, rubber and leather industries. It is my experience with that company which leads me to begin my remarks by concentating on the speech of the hon. Member for Leeds, Central (Mr. Fatchett). He said that recently he had increasingly noticed the presence of foreign-made machine tools in the factories when he visited in his constituency and elsewhere. He is correct in what he says, but he has underestimated the time period during which the change has occurred. It was evident not only in the 1980s and 1970s, but in the 1960s and 1950s. Indeed, for non-ferrous processing machinery the change can be traced back to the 1930s and even the 1920s.
Shortly after the turn of the century, this country stopped producing certain types of processing machinery and had to rely on imports. There were deep and technical reasons for that. I subscribe to some of the views expressed over the years by Mr. Correlli Barnett about the real origins of the change. We must accept that it has not been a recent change ; it has been with us for most of the century. For metalworking machinery, the trend has, if anything, begun to be reversed in that some United Kingdom sources probably have a stronger market position now than they had 10, 15 or 20 years ago. Britain has a remarkable record of export achievements because it exports a quarter of everything that it makes. As the Minister said, exports are still increasing. In 1992, the figure increased by 3.5 per cent. and in January this year we reached the highest-ever export figure-- £4.3 billion--to non-EC countries. That is a very great achievement, but it is not good enough because, as the hon. Member for Leeds, Central was at pains to point out, we have a significant visible trade deficit. Last year, exports stood at £108.2 billion and imports at £125 billion. We certainly need to improve in that respect, but what worries me is our trading position with Europe with which we currently have a deficit of £5.1 billion--£65.6 billion of imports and £60.5 billion of exports. We have a trade deficit with all but three of the EC countries. We manage a surplus only with Ireland, Greece and Spain. With Germany, our main trading partner, we have a significant imbalance which now stands at £4 billion.
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However, we can be fairly sure that the reason for that imbalance is no longer the lack of quality products, which it certainly was at one time. It is no longer a question of price or delivery, which used to be the bane of British exporters. In most cases, we are now able to deliver on time as promised. The imbalance is to some extent the result of gaps in the range of products that we have to offer, the origin of which goes back a long time, but it is more due to our marketing skills needing to be sharpened, a lack of promotion, the need for smooth administration of export procedures and inadequate determination to pull out all the stops to win business. We must ensure that the Government give as much support as they can to British exporters, and at least as much as exporters from other countries receive from their national Governments.I congratulate the President of the Board of Trade and the Under-Secretary of State for Technology on the progress that they have made. In outlining his Department's progress, the
Under-Secretary was, if anything, rather modest about his achievements. The Department has developed many initiatives : there are now many more foreign visits and a systematic opening of new markets and reworking of older markets with, as the Under-Secretary said, particular emphasis on India, China and other countries in the far east, as well as countries in Africa, such as Ghana in particular.
Wherever possible, the Department has backed British exporters. It has done so against a background of changes in economic policy, which the Minister mentioned, such as the simplification of the tax system and a reduction in the tax burden. Much hard work is also being carried out to try to secure a satisfactory result to the GATT round, as my hon. Friend the Member for Halesowen and Stourbridge (Mr. Hawksley) said. In addition, there is a continual development of the single market. By any standards, there has been an enormous improvement. I stress that because I should not like the Department to feel that the few shortcomings which I wish to mention detract from the substantial achievements that have been made.
If one considers the views of the Confederation of British Industry, which was quick enough to supply a brief for the debate, one finds an interesting contrast between what it is saying now and what it said two or three years ago. Two or three years ago, it was very conscious of the Government's shortcomings in supporting exporters, but there has been a gradual change in the views expressed by CBI members. They used to speak of the significant bureaucratic obstacles and excessive paperwork for exporters. They used to emphasise disguised subsidies to foreign competitors and speak of the lack of hard commercial experience of embassy staff and Whitehall personnel. They used to focus in particular on inadequate export credit insurance facilities, but the complaints and criticism are no longer on the same scale.
The Institute of Directors, which represents many exporting companies, has undergone a similar transformation but remains critical in some respects. In December 1992, the IOD made a submission to the Select Committee on Trade and Industry. It reported on the findings of a survey that it had undertaken. In the context of trade with Europe, the survey had identified legal difficulties, administrative red tape, problems with cross-border transaction costs and a high level of subsidies still prevailing in some European countires, and sometimes unfair subsidies at that. They were seen as barriers to the successful promotion of products by British exporters.
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One in four of the IOD's members referred to legal problems and one in three referred to administrative difficulties and too many regulations.The IOD's report stated :
"The IOD calls upon the Department of Trade and Industry to play a more supportive role for UK business in dismantling obstacles to trade.
The key to the creation of the European internal market-- the principle of mutual recognition'--is being eroded by a multitude of protectionist non- tariff barriers which block market access" and
"distort competition".
France and Germany were singled out as offenders in that respect. In some ways, that is not surprising as France and Germany are our largest trading partners in Europe.
Nevertheless, one should not underestimate Franco guile. We recall the infamous occasion a few years ago when the French Government sought by rather devious means to limit the import of Japanese video recorders by declaring that, although they were not placing on them any value or quantity limit, it would in future be necessary for them to clear customs at Poitiers. Hon. Members who are familiar with the geography of France will know that Poitiers is not the most accessible place for customs clearance. I believe that the French placed one customs man in a nissen hut to undertake that task. It was an effective method of limiting Japanese imports. Although it is very difficult to identify further examples, most business men say that such obstacles exist and must be rooted out. It must be the responsibility of national Governments to ensure that other members of the European Community are playing fair, which is not always the case at present.
There is no doubt that the Department of Trade and Industry has made massive progress and I pay tribute to the President of the Board of Trade for his latest initiatives. However, I couple that tribute with a slight reservation that it has perhaps taken longer than it should have done for the message conveyed by British exporters to be translated into action in the Department. One example of its taking too long is the question of export credit insurance, to which the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) referred a moment ago.
There has been concern about the availability of medium and long-term export credit insurance. One acknowledges the changes that were made in the Budget--a 7.5 per cent. reduction in export insurance premium rates--coming on top of a 20 per cent. reduction last year and additional export credit cover of £1.3 billion targeted especially at Hong Kong, China and other far east countries. While one is grateful for those changes, it remains the case that the CBI, in its brief issued for today, none the less says :
"Although the increased funding in the Chancellor's Autumn Statement and March Budget was welcomed, some problems remain e.g.--the lack of cover for some markets ; the ceilings on cover for others ; markedly higher premiums than those paid by UK's competitors ; and, for short-term business, uncertainties about the Government's willingness to continue reinsurance of political risk."
In the light of that up-to-date comment from the CBI, I urge the Minister to re-examine the issue of export credit cover. The Minister said that the premium rates cannot always be the cheapest and the most competitive across the board. However, it is the case that the CBI, having
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consulted its members, would not continue to make that point unless it still had worries about the matter. I hope and feel sure that the Minister will give his attention to the matter, perhaps in conjunction with my right hon. Friend the Chancellor.The lesson repeatedly is that the Government need to realise more quickly some of the difficulties which exporters encounter. My hon. Friend the Minister referred to the three ministerial visits to China in 1992. That is commendable, but some commentators point out that those visits were made to boost business with China at a time when adequate credit cover or cover at an adequate price was not available so that when exporters made their quotations and delivery promises--if business opportunities arose--they were handicapped because of the lack of essential cover. It is a question not only of having the cover in place at the right price but of knowing in advance when negotiating the order that the cover will be available. if it takes--as one hears of some examples--two to three months to get confirmation of whether the cover will be available, an order can be lost before it is started.
I shall refer to the point made by my hon. Friend the Member for Halesowen and Stourbridge about the ethics of doing export business. I hope and feel sure that exporters in the United Kingdom play by the rules--at least, we play by the British rules. By any international standards, our rules must be commended. However, it is a sad fact that other countries do not always play by the rules and there are countless examples of orders being won by our competitors as a result, especially, of the bribing of officials. There is no point in turning a blind eye to that--everyone knows that it happens. We are faced with the dilemma : do we indulge in the same sort of practices, or maintain a more ethical way of conducting ourselves?
It should be possible for the United Kingdom exporters to stand their ground and always deal honourably. I am not for one moment suggesting that we should indulge in bribes. I am suggesting that we need to be acutely aware of the results of such bribes, the fact that they are being made and the need for us to be able to offer something with an equivalent attraction --not in the form of bribe, but in the form of a better deal or better delivery, or something
equivalent--which makes it harder for the would-be recipient of the bribe to accept what is being offered. Otherwise, I fear that we shall lose export business, as we are doing at present.
A small firm in my constituency, Agriculture Polymers, has had direct experience of doing export business with Kenya and losing out as a result of the alleged bribing of local officials. That is one tiny example to which I refer, but many companies have encountered the same thing in other places.
Sir David Steel : I entirely agree with the point that the hon. Gentleman is making. Since he mentioned Kenya, is not the only way that we can help by having a general attitude in our foreign policy that backs up world financial institutions, as part of the programme of good government, to stamp out corruption in a much tougher way than we have done so far?
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