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Column 482right organisation to help the British food industry to benefit from the export opportunities that are opening up in Europe and elsewhere.
I note what my hon. Friend the Member for Newark said about the request for pound-for-pound funding. As he knows, the Government already provide core funding for Food From Britain, plus £1 for every £3 raised from the industry--60 per cent. It receives a higher proportion from public funds than does its equivalent in any other country.
In agreeing on the independent Stevenson report on Food From Britain, we have made it clear that FFB needs to raise a higher proportion of its funds from industry. We will maintain our contribution--this year, it is £5 million. FFB is for the benefit of the industry, which must raise its own contribution.
My hon. Friend also asked how Food From Britain compared with its equivalent in other countries. The United Kingdom's funding for FFB is more favourable than that of France and Germany. Our contribution is 60 per cent. In France, Sopexa receives about 50 per cent. from the Government, and the equivalent in Germany receives nothing from the Government and is entirely funded through a levy on the industry. I hope that those figures will interest my hon. Friend.
I appreciate how my hon. Friend feels, as, when I go to trade fairs, I see what appears to be fantastically lavish expenditure by other countries. However, it is largely generated by the companies in those countries. We accepted the recommendation that the savings generated by rationalisation should be used to increase export effort. I pay tribute to the remarkable work that Food From Britain does for specialty food producers--the small businesses that produce the high-class specialist foods so prized in this country. That affects the constituencies of all hon. Members, particularly the rural districts. Food From Britain has done a remarkable job, including the staging just before Christmas of a three-week food fair at Selfridges, which was visited by the Prince of Wales. It was an outstanding success, and resulted in Selfridges selling only British bacon. Thas shows what can be done when people try and one is able to put buyers in touch with producers.
The specialty food producers in this country have unique opportunities for exporting. Food From Britain is the right organisation to look after them. It is now under the new and energetic leadership of Geoffrey John, the highly successful former chairman of the Meat and Livestock Commission. Mary Curnock Cook runs the specialty food section. The organisation is doing a marvellous job, and I am glad to be able to report that FFB is an agency of which we can be proud. It will go on to make considerable improvements, strides and progress. I warmly congratulate it and I am sure that the House wishes it well in promoting British exports. We know that Ministers and civil servants are not always the best people to diagnose economic or business problems. That is why my right hon. Friend the Prime Minister hosted two seminars in Downing street for the leaders of the industry to tell us what they think. The momentum of those seminars is being effectively maintained by the group of industrialists called together by David Naish following the last seminar. That is why we set up the Ministry's market task force to develop close contacts with the movers and shakers in the industry and,
Column 483with them, to address the sticking points. That has been a tremendous success, and I hope that it will produce some valuable work.
We have held seminars for exporting companies--nearly 150 of them--to hear what problems they face and how the Government can help, either by doing something or by ceasing from doing something, by deregulating. The Ministry is launching a major initiative in 1994 to alert British food suppliers to opportunities on the continent. The continental challenge, as it is to be called, begins next week with a conference in London that is to be opened by my right hon. Friend the Minister. An audience of food suppliers will be addressed by leading continental retailers and successful British exporters about the opportunities that are available to them and the ways to exploit them. The conference will be followed up in the succeeding months by a practical programme to help companies to find out more about individual markets and to prepare their approach to the continental buyer.
My Department has consulted the industry about proposals for a range of new grants to help to develop the best marketing and export practice in the United Kingdom. That will be developed mainly to help the small and medium- sized companies that have the opportunities and the products, but not the experience. We have had an exceptionally positive response, showing that we are speaking the right language to the industries that we sponsor.
The hon. Member for Middlesbrough, in an excellent speech, mentioned that the Minister for Trade would have been here but is elsewhere, at an important meeting. It therefore falls to me to say a few words on behalf of the Department of Trade and Industry. My right hon. Friend the President of the Board of Trade, together with the Prime Minister, as the House knows, is leading the most dynamic and important export drive that the country has witnessed in decades. I pay tribute especially to my hon. Friend the Member for Wiltshire, North (Mr. Needham), the Minister for Trade. I believe that, with his unbelievable energy, enthusiasm and drive, he beats people into buying the goods. That is the way in which I think he does it.
Mr. Soames : Exactly. His energy and enthusiasm are harnessing and driving that export achievement in the private and public sectors. As the hon. Member said, remarkable gains have been made in the past year in China, India and many other places.
The DTI and the Foreign and Commonwealth Office jointly provide a first- class information, advice and support service for United Kingdom exporters under the banner of overseas trade services. I noted what my hon. Friend the Member for Newark said about the importance of providing that information concisely so that everyone can understand it and I shall say something about that later. Listening to business is a vital part of our strategy. I listened carefully to what was said about export credits, and I will ensure that those views are passed on to the Department of Trade and Industry and the Treasury.
The Government's principal adviser on trade promotion activity is the British Overseas Trade Board. Under the
Column 484energetic chairmanship of Sir Derek Hornby, the board is made up of a dozen senior British business people, who freely give their time and experience to help to determine the best use of our export promotion funds.
In addition to the board, there is a network of more than 200 business people with experience of markets around the world, who help through 14 area advisory groups. They ensure that the needs of business are reflected in the operations of the overseas trade services and they help to formulate initiatives to increase trade. One such initiative is the "North America Now" campaign, which the President of the Board of Trade launched last March. That aims to help British industry to reinforce its trading position in the United States and Canada and to increase its market share by 25 per cent. in the next three years. That is a very ambitious target. It means increasing our visible exports by at least £3 billion. We have every confidence that British business will rise to that challenge and secure that important business for our country and our people. The "North America Now" initiative, the "Priority Japan" and "Business in Europe" campaigns help to raise the profile of the trading opportunities that are available to British businesses.
The hon. Member for Roxburgh and Berwickshire mentioned a substantial issue about trade fairs. The Department of Trade and Industry provides tangible support for British companies in their efforts to promote their goods and services abroad. The support for overseas trade fairs and missions will account for £16.6 million this year, with an estimated 290 trade fairs supported. The trade fairs scheme is under review, and I will ensure that the Department takes account of the hon. Gentleman's comments.
The House may wish to know that, from time to time, I have the opportunity to visit trade fairs. I visited Anuga in Germany last year, the most remarkable food fair that I have ever attended, where the British had a stand. There was a large area in which hundreds of companies displayed their goods. Those companies went there to sell their goods, and the event was outstandingly well run and set up. Such trade fairs are important, but the key is to separate the very important ones from those that are not so important, and to decide where to allocate fairly scarce resources. A particularly good example of partnership between Government and business is the export promoter scheme. The DTI is recruiting people with expert private sector experience as export promoters. Some 60 are already in post and actively helping business, and those secondees bring to government a business-orientated way of tackling problems and promoting expert opportunities. They add enormous value to our operation, because they understand what our customers want and help us to deliver it effectively.
As part of the overall strategy for export promotion, market plans are being drawn for each of the United Kingdom's top 80 overseas markets to guide future export promotion work programmes. This will help to ensure that resources are focused to best effect. Small and medium-sized enterprises in particular often need help to develop their export potential, and the Government are making sure that they get the right kind of help, where and when they need it. They can take advantage of personal support and advice from export promotion executives and export development advisers attached to chambers of commerce. These work hand in hand with business to get them ready and able to export.
Column 485The range of support that the Government offer is indeed wide. It includes grants towards the cost of participating in overseas trade exhibitions, visiting foreign markets with an organised mission and hosting visits by important overseas buyers to United Kingdom- based companies. Our support has increased from some £15 million in 1990-91 to an estimated £16.6 million in the current year. However, large United Kingdom companies make the biggest contribution to United Kingdom exports, and they, too, need Government support.
The Government, through the Overseas Projects Board, are committed to supporting major overseas projects. Specialised groups have been created to promote capital exports in sectors such as airports, power, transport, water, and education and training. Further groups will cover telecommunications, oil and gas. The aim is to target overseas projects more effectively and encourage businesses to work more closely than they have in the past.
We recognise, as my hon. Friend the Member for Newark rightly said, that the diversity and range of this help may at times be bewildering to the very people it is designed to help--and perhaps especially to smaller companies, which do not have the experience and the spare people to find out about it. That has led the President of the Board of Trade to create business links, the offices of which are local partnerships of all those who can deliver business support services. Those include chambers of commerce, training and enterprise councils, local authorities, educational establishments, local enterprise agencies, the DTI and others.
With Government support, these new partnerships will create hard-headed, practical, effective business support tailored to local business needs. That is an important and fundamental change in the approach to business support. I am sure that my hon. Friend the Member for Newark will feel that that has covered the point that he raised and that the partnerships will be a great help to companies which use them. We aim to have 200 business links in place in the next few years, and help for exporters is one of the key services that they will offer.
The services that I have described so far represent the bedrock of export promotion. In addition, Ministers and members of the royal family undertake a series of high-level visits each year with business representatives. I mention particularly the outstandingly successful visit by the Prince of Wales to Saudi Arabia and the Gulf. In the past year, there have been a number of successful overseas visits to promote British trade. My right hon. Friend the Prime Minister, the Minister for Trade, the chairman of the British Overseas Trade Board and others have visited many countries, including China, India, Hong Kong, Malaysia, Japan, Korea, Singapore, Qatar, the United Arab Emirates, Austria, France, Germany, Spain, Slovakia and, of course, the European countries that are visited as a matter of course.
Ministers from my Department have led export visits to Uruguay and Paraguay, to which my right hon. Friend the Minister paid an outstandingly successful and productive visit and from which has flowed some hopeful agricultural orders. My hon. Friend the Minister of State paid a successful visit to India, which will be followed up this year, and he also visited Turkey. My noble Friend Earl Howe paid a successful visit to South Africa in 1992.
Taking just one of those as an example, let me show how those visits are helping Britain to increase its world share of trade. When my right hon. Friend the Prime
Column 486Minister visited India, he was accompanied by a team of 17 captains of industry. During that visit, he and his Indian counterpart launched the Indo-British partnership initiative, designed to maximise the opportunities for further trade and investment between the two countries.
As a result of that initiative, more than 10,000 British companies now know that India is a market on the move, offering immense potential for business development and very real opportunities. The year's highlight was the visit of the royal yacht to Bombay in November for an Indo-British week of trade. Deals worth £1.2 billion were agreed during that week alone. If I may say so, that is a very good reason for keeping the royal yacht.
Britain has always been a great trading nation. We currently export more per head of population than the United States. We even export more than Japan. We are truly a merchant country. Exporting is something which we are very good at. The opportunities are greater than ever before. The GATT round is concluded, with all the advantages to trade that that will bring. The single market in Europe is complete and is beginning to make a real difference to businesses, large and small, that have woken up to it and realised the opportunities that exist for it.
The European Economic Area is in place and we look forward to the further enlargement of the Community and the opportunities that that will bring. The channel tunnel will open this year, undoubtedly boosting opportunities for trade through improved communications. I cannot think of a time when the climate for exports was more propitious. We have exceptionally favourable economic conditions at home : that should not be a matter for political argument. The respectable economic opinion is that the 1990s could be absolutely brilliant for Britain. Certainly, at the present time, the British and American economies are bright beacons burning in a pretty dismal picture. We have low inflation and low interest rates, brought about by the Government. Britain has a remarkable ability to innovate. People from all over the world come to Britain to look for ideas and learn from our people.
We must ensure that we capitalise on that. We have a committed and competitive work force, who, when well led and well run, are one of the best in the world. In the industry that I know, we have the highest standards of food safety, hygiene, welfare, innovation, research and development in production, anywhere. We have a Government who are truly committed to helping to build on those assets and drive forward a great export-orientated economy for the benefit of all those who live in this country.
With those advantages and the tremendous opportunities open to us, I am quite confident that Great Britain will continue to show the world that, at our best, we are the best.
Mr. George Kynoch (Kincardine and Deeside) : It gives me great pleasure to take part in the debate, for several reasons. First, in my business life before I joined this place, I was heavily involved in exports and the Scottish textile trade--a number of medium to small-sized companies were referred to earlier. Secondly, I come from Kincardine and Deeside, which is largely an agricultural constituency and, therefore, one which has a great bearing on today's debate. Thirdly, I come from Scotland, which is a major exporting nation and has a record second to none.
Column 487Today's debate is indeed propitious. As a past exporter, I know very much that, when embarking on exports, the one thing that business looks for is stable conditions, which must begin at home. They have to start with the economy and, given the current economic climate, there is no better time for exporters to go out and export. The debate is not just about exporting but about how exporters can be helped to export. No business likes interference from Government, and Government should not interfere in the workings of business, particularly not in export matters. Rather, they should be there to assist, encourage and develop. Having come from an industry where competition from abroad, particularly from the far east, was significant, I know only too well the assistance that the Government have given to a major core exporter, the textile industry. I had the privilege of chairing for several years the Scottish Woollen Publicity Council, which was the promotional arm of the Scottish wool and textiles industry. It is important that, in its exporting efforts, an industry first gets the product right. Any assistance given to it must be directed towards helping with market research. I must sing great praises of the British Overseas Trade Board and, in Scotland, the then Scottish Development Agency, now Scottish Enterprise, for the significant efforts that they have put into trying to give corporate assistance in market research and development.
Throughout the 1980s, the textile industry in Scotland, which was traditional in that it had traditional products and export markets, largely in Europe, needed to break into new markets in north America and the far east. Until almost the present day, the tariff barrier against Scottish wool textile products in the USA has been 38 to 40 per cent. That barrier must be broken and I am pleased with the outcome of the GATT negotiations. It has taken seven years to get there, but I am glad to know that, at least, the American tariff barriers are beginning to come down. I believe that they have further to go and that our textile industry deserves better.
The Scottish Development Agency worked closely with the Scottish textile industry in promoting exports for their quality and origin. The Government can help best by helping not individual companies but the industry as a whole. Those in the industry must get together and follow the classic example of the food industry in Scotland. Reference has already been made to quality assurance. The textile industry also had a good trade organisation which worked well. Each individual company could not, on its own, put in the effort required to break into new markets, but, once having established that group, it could go out and build on that.
The Scottish Development Agency gave pump-priming assistance to that trade body of about £150,000 over three years. That may not seem a lot, but it got the exercise going. Sadly, it was necessary to continue that assistance because the industry then went through difficult times. We need a flexible approach from Government to ensure that, when they have started something good, help is not cut off just when it is needed for a little longer. We run into the danger of industry believing that the Government will carry on funding it, so it does not need to put in anything itself. The basic responsibility of industry is to fund its own
Column 488business so as to get the rewards. However, flexibility is sometimes required to ensure that the initial pump priming does not go to waste.
Trade fairs are a classic example of short-termism--particularly in the far east, which has major export potential, but is difficult to penetrate. I visited Japan twice a year for 12 or 13 years and discovered that relationships and trust must be fostered. It is not just a matter of parachuting in and spending 10 days there. Reference was made to a visit to China just before Christmas. It may be a gesture of commitment, but the timing may not be convenient, at least to the exporter. It is necessary to make repeat visits, to convince potential markets that one is serious and will return year after year. One must also convince those markets that one is listening to their needs. When it comes to the crunch, one cannot export --with all the Government assistance in the world--if one does not have the right product at the right price.
The Government can contribute to market research and significantly to trade fairs. The British Overseas Trade Board already does so, but sometimes it reduces its support too early. I know from experience the cost of exhibiting at major trade shows in Hong Kong, Tokyo and Osaka. Those costs are significant in the budgets of small to medium-sized businesses, particularly when one does not know how quickly one will enjoy any return. I urge the DTI to take a longer-term view of assisting businesses with trade fairs in particular--but it should not necessarily promise help ad infinitum. Almost every export industry argues that competitors receive more assistance. We should not try to match support by interfering and intervening in British business, but should try to ensure fair competition and an open market.
There has been a change of attitude among British embassies. On my first visit to the United States to break into that market with textile products, I arranged through the BOTB a visit to the British embassy, to obtain the names of agents and potential customers. A large proportion of the individuals identified were either no longer with the companies listed or even in the industry.
I know from constituents that that situation has changed dramatically in recent years. There is clearly significant and welcome co-operation between the DTI and the Foreign and Commonwealth Office. I pay tribute to my hon. Friend the Minister for Trade for his considerable efforts abroad. In October, I had the privilege of being the guest of the Hong Kong Government. I know from the comments of members of the chamber of commerce there how much they appreciate my hon. Friend's involvement in knocking again on doors, to ensure that British quality of service and product and commitment to exporting is shouted from the roof tops.
I hope that British business will follow the Government's example. The Hong Kong chamber of commerce said, "Please ensure that not just the sales representative or manager is made to believe that this is a major market. Please make sure that it is the senior director, the chairman of the company or managing director who clearly sees the growth rate in, say, China and the potential for marketing in this area in the years to come." One reason why the Americans had high import tariffs was to protect their domestic industry. They had to do that because America was not a very good exporting nation. I am afraid to say that the Americans are catching on fast and are now much better at exporting. The message
Column 489from Hong Kong was that if the British do not get a move on the Americans will be there in such large numbers that the trade will have gone. I hope that business will go out and grab the opportunities and use the assistance offered to it by the Government.
Another factor must be got right if one is to export : there must be competitive economic conditions. Today's debate has so far kept fairly clear of party political points. I must say, however, that some of the Labour party's suggestions and policies
Mr. Kynoch : My hon. Friend makes a valid point. I must now make a party political point, however : some of the social and employment policies of the Labour party would make it exceedingly difficult for British business to be competitive because they would remove flexibility. I refer, for example, to the imposition of a minimum wage.
I firmly believe that British business needs stable conditions and it needs to know that the Government will not hamper it with false costs through conditions of employment. In the not-too-distant past, Arthur Scargill, the president of the National Union of Mineworkers, said on "Question Time" that the solution for all economic ills in Britain and throughout Europe-- unemployment in particular--was to move to a four-day week with no reduction in pay. Even the simplest of us would know the increase in costs that that would bring to British or European industry. We live in a highly competitive world and we must give our businesses maximum flexibility so that they have the best possible opportunity to compete equally in world markets in terms of prices.
The Export Credits Guarantee Department has been refered to. I warmly welcome the announcements made at the time of the Budget about the premium reductions in ECGD. I can well remember using ECGD for all our exports-- indeed, it made sure that our business continued uninterrupted despite the failure of a major customer in, of all places, West Germany. I have nothing but praise for ECGD--especially in the light of the Minister's announcement today that the rates are clearly in line with the G7 average. We must maintain that state of affairs so that our exporters have the best possible security before they export.
One point has not been mentioned, however. In the announcement made at the time of the Budget, we heard of the 20 per cent. premium reductions in respect of Argentina, India, Mexico, Poland, Slovakia and Turkey. In addition--and I quote from the relevant press-- "the President also announced that cover of £3.2 billion will be available for 1996-97 for Amber Zone' markets (where the risk is significant or ECGD's exposure is most concentrated) eg China, South Africa and Indonesia. This represents a near doubling of the annual allocation of Amber Zone cover since 1991-92, bringing the total cover available for Amber Zone markets over the next three years to over £9 billion."
In the past, the ECGD has been conservative and prudent in taking steps to help our exporters in markets where there is a risk. I welcome the steps that it has taken.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who is no longer in his place, expressed disappointment that the short-term bank guarantee operated by the ECGD was no longer in existence. I have news for him. I suspect that the reason is that many banks
Column 490operate an exporter scheme for small and medium-sized businesses and do so probably more efficiently and with less administration than the ECGD. They still use the ECGD cover as the guarantee for the scheme, but they offer favourable financing rates.
The major industry in my constituency is the oil industry. Although it is not situated in my constituency, it is adjacent to it and many executives and employees live there. At a time of transition and change in the North sea, companies in my region are now having to look to export. I should like to single out Grampian Enterprise and Scottish Enterprise for the significant support, guidance and encouragement that they are giving, particularly to the smaller oil service companies that need assistance and guidance in seeking exports. One might imagine that the oil industry is the same world over, but it is not. The method of taking oil out of the North sea is not the same as that used in Russia. I hope that the efforts of Government agencies such as Scottish Enterprise will be maintained and encouraged and that when a business can sustain itself, that help will be weaned down so that the business carries on and invests. That leads me aptly to agriculture. We have heard reference to the quality assurance schemes in Scotland. We should be able to export Scottish agricultural products--and well. Scottish exports tend to succeed because their quality is high. It might interest you, Mr. Deputy Speaker, to know that the value of manufacturing exports per employee in Scotland in 1991, which I think was the last recorded year, was more than £22,990 per employee--some 19 per cent. above the United Kingdom figure. I am pleased to be standing here as a Scottish Member and I am proud that Scotland is leading the way in business, as it leads the way in so many other sectors.
The quality assurance schemes should promote the quality of the product so that it can achieve a premium price. If we can achieve premium prices for our farmers, we will help with the capacity problem because the requirement to produce so much may not be so great. The problem, however, as was pointed out to me the other night at a meeting in my constituency with the local National Farmers Union, is that the farmer is reluctant to contribute towards the schemes. Again, I ask that the Departments of Agriculture, both in Scotland and south of the border, do everything possible to encourage farmers to participate in the quality assurance schemes, to recognise their benefits and to work towards making a major contribution to them. Our exports will succeed only if we have a quality product.
I recently had the privilege to attend the opening of an expansion programme at a local slaughterhouse run by McIntosh Donald with my hon. Friend the Member for Dumfries (Sir H. Monro), the Minister responsible for agriculture in the Scottish Office.
It has spent £3.5 million on a programme of expansion, modernisation, effluent treatment and the general upgrading of its facilities to keep itself at the forefront of the industry in the United Kingdom and to try to break into more export markets. McIntosh Donald has a turnover of £65 million, approximately 20 per cent. of which is exported. It is seeking to increase that to 30 per cent. with an export drive. Its current markets, in which it is very active, are Italy, Belgium, France, Germany, Holland and Switzerland, but it believes that, with a quality product and with quality promotion, it can also target Spain and Portugal. The company exports beef and the sheep in meat
Column 491form and promotes the fact that, as we all know, the north-east of Scotland produces the best beef in the world in the form of the Aberdeen Angus.
It would be wrong of me not to mention Food From Britain, which does an excellent job. As for the quality assurance scheme to which the Minister referred, I believe that lessons can be learnt which are relevant to the agriculture industry as a whole.
I must also mention Scottish salmon farmers. It has already been said, but I feel bound to repeat that the industry is having an exceedingly difficult time. There is no point in talking about exports if there is no industry. Due to the prices being charged by the Norwegian salmon farmers, there is a grave risk that the Scottish industry will soon cease to exist. The industry's figures show that it is currently losing about £1 million a week. That may not sound much, but it employs 6,000 people across Scotland in key locations and in the countryside where there is no other employment. The chairman of the Scottish Salmon Growers Association says the association has employed Ernst and Young to research the Norwegian market. I urge salmon growers to ensure that any evidence that they may have of Norwegian contravention of trade agreements is passed quickly to the Scottish Office and the Ministry of Agriculture. The industry wants and needs a level playing field. It has an excellent quality product, but the premium for quality needs to be far greater than is achievable at current prices.
Another major exporting industry in Scotland that has also been mentioned is the Scotch whisky industry. Before the Budget, my right hon. and learned Friend the Chancellor was kind enough to listen to the industry's lobbying about the importance of the duty system in the United Kingdom. If we do not have a good home industry, we cannot build a good export industry, although the GATT reductions in tariffs in Japan will be of significant benefits to this major exporting industry.
The Government have done a tremendous amount to help exports. To judge from the days when I began exporting, I know that there is now a great difference in attitude and a great desire to ensure that British industry is at the forefront of the export market. I hope that, with the lead given by the Government, exporting manufacturers will seize the new opportunities, grow and do even better.
Mr. Simon Coombs (Swindon) : I begin by congratulating my hon. Friend the Member for Newark (Mr. Alexander) on securing the debate and for the way in which he introduced it. I also congratulate him on his chairmanship of the all-party exports group in the House, of which I am happy to be one of the two vice-chairmen. I also congratulate my hon. Friend the Parliamentary Secretary for a speech which was both a tour de force and tour d'horizon and set in context many of the issues raised by hon. Members today.
Britain has been described over the years as many things, but perhaps most frequently as a nation that trades or dies. There can be no doubting the importance of today's debate in highlighting the issues that concern the House and the nation in seeking to ensure that we continue to be a successful exporting and trading nation in years to come. I have had the opportunity in the past few months to visit
Column 492one or two overseas countries and I have been struck each time by the enthusiasm of the people that I have met for the chance to trade with the United Kingdom. Of course they wish to export their goods as well, but, equally significantly, they want to have the opportunity of doing business with Britain, which means that we should export to them.
I have been to Tunisia already this year and I was impressed by the friendly attitude of the people I met there towards Britain and their desire to trade with the United Kingdom. Some 15 or 16 months ago, I was in the United Arab Emirates, where exactly the same point was made. Britain was regarded as a country which can be relied on in its trading relations and can be trusted to do business on an honourable basis and as a country with which those countries would be pleased to commit more business in future.
Having said that, in each of those countries I was told that there were other nations around the world that seemed far more determined to seek trading links with them than the United Kingdom seemed. The House will not be surprised to hear that the names of Germany, France and the United States came up frequently. I do not want to denigrate in any way what my hon. Friend the Parliamentary Secretary said, or to imply that Britain's trading record is not one of which to be proud, but that suggests that there is more to be done. This not only concerns companies in Britain that seek to expand their activities by trade ; it is a matter for the Government, and that is why we have the debate in the House today.
I shall concentrate my remarks on manufacturing exports because it seems that they are ultimately crucial to the success of this country's export effort. I took advice from the National Manufacturing Council, which was recently established with the support of the Confederation of British Industry and came up with a checklist of what it felt were the essential elements of a successful exporting economy. First, it identified the need for an economic climate conducive to sustainable growth. We have precisely that climate at the moment as a result of the policies pursued by the Government over recent years.
Secondly, the council strongly advocated the need for enhancing capital allowances to encourage an investment-led recovery. That is a debate in itself and not the one that we are having today, so I will merely put it on the record and leave it as it stands.
Thirdly, the council identified the need to achieve national targets for education and training--again, a subject for a separate debate. I am sure that the House would agree that it is crucial to ensure high standards in those areas for those who set out to export from Britain.
Fourthly, the councils said that there was a need for investment in transport infrastructure--a point which was well made by my hon. Friend the Parliamentary Secretary, who mentioned the channel tunnel, which will be the most significant single contribution to the transport infrastructure that is designed to help exporting in Britain's entire history. It levels the playing field between this country and other members of the European Union in a way in which nothing else has or could. I look forward to the day when an ever-increasing amount of freight will travel through the tunnel. Fifthly, there is a need for the improved policing of the single market and action to remove unfair distortions. As hon. Members have said, much progress has already been made in that direction, but the single market is still in its
Column 493infancy. I hope that the Government will look carefully at the arguments made during the debate about the need for policing fair trade within the European Union. That seems to be essential if we are to achieve the best interests of British exporters.
Sixthly, effective support is required for exporters, in line with competitor countries. That comes close to the nub of what this debate is and should be about and I shall return to that subject. Finally, there must be genuine industry involvement in the setting of priorities for science and technology. The Government made an important contribution by the publication last year of their White Paper, "Realising Our Potential". I have no doubt that further progress will be made in that direction as a result of the White Paper and the responses to it already being received by the Government.
Manufacturing output in the United Kingdom increased by 2 per cent. and manufacturing productivity by 7.3 per cent. in the first half of 1993. Similarly, exports were up 15 per cent. in the year to August 1993 ; much has therefore been done, much has been achieved and all the evidence shows that upward trends of that nature are continuing satisfactorily.
I contend that the key to our success is not to be found in the raw figures that I have just given but in the degree of competitiveness that this country has with the countries with which it is competing daily. In that context, the GATT agreement on 15 December 1993 was historic and vital to our country's interests as a trading nation. Lower tariffs, the ending of restrictions and controlling subsidies will all help, but it will be the policing of the new agreement that will achieve success and enable this country to benefit. If the arrangements being put into force and coming into effect next year are not adequately policed, the problems will remain and we shall continue to hear, as I heard last week in Tunisia, of such things as soft loans designed to encourage support for a company from a particular country. If each country does not back its companies to seek trade overseas with the same enthusiasm, the playing field is not level. If that sort of soft loan--only the tip of an iceberg which involves a little lower down some things that might be described as dirty tricks--is not dealt with, whatever our exporters achieve, Britain will stand to lose out considerably. We must decide whether we should join in with the sort of behaviour that puts some companies from certain countries at an advantage or whether we should stay out of it and seek to prevent other countries from indulging in such behaviour. I have no doubt that the Government would wish to pursue the latter course, but British exporters will want to know that the Government are being rigorous in their pursuit of countries which seek to deflect from the honest and straightforward path of equal terms of trade.
I welcome the setting up of the export promotion team by the Department of Trade and Industry and I pay a warm tribute to my geographical neighbour, the Minister for Trade, who represents the rural part of north Wiltshire while I represent the urban part. We work together as a team at local level and I am delighted to support him in what he is seeking to do in the Department of Trade and Industry. I wish that the Foreign Office was not at the same time reducing its commitment to commercial work within our embassies around the world. I appreciate that the growth in the export promotion effort by the DTI is
Column 494designed to balance that reduction, but how I wish that both efforts could continue to offer full support to British exporters around the world.
I hope that the target of 100 export promoters can be achieved quickly and that, if so, a new target can be set to enable those promoters to achieve even wider coverage of potential markets. We are still missing out on export opportunities for the lack of those promoters in some parts of the world. I draw the House's attention specifically to those countries that used to make up the Soviet Union. Those newly independent states are desperately anxious to form partnerships with the United Kingdom. They hold our country in the same high regard as those other nations that I mentioned earlier. They are conscious, however, that far greater effort is being make towards trade promotion by Germany, France and the United States. Support from our Government is crucial in difficult new markets such as Kazakhstan, because our would-be exporters will otherwise find it difficult to make the kind of necessary links and to make them fast enough to get ahead of the existing competition. I ask for nothing that is not within the spirit and the letter of the recently signed GATT agreement. We need such support, however, because we are missing out, despite the efforts of the Minister for Trade--a fact which is, I am afraid, all too easily verifiable by those who have sought opportunities in such countries.
The south-west is keen to participate in increased export activity. According to a recent survey conducted by the Confederation of British Industry, 50 per cent. of firms said that they expected their growth to be driven by increased sales in overseas markets in the foreseeable future. The recession in mainland Europe will not make that easy because, traditionally, British firms have sought trading links in Europe as their first port of call. It has been a recent development, perhaps driven by the economic circumstances in western Europe, that those companies have sought to extend their activities to far-flung parts of the world.
Another survey conducted by the Swindon chamber of industry and commerce suggested that some United Kingdom firms with United States parents are actively discouraged from seeking export opportunities in the Pacific rim and other parts of the far east because that is the territory of their American parents. Looking at the globe, one can see the logic behind that. For that reason, the activities of some companies in this country may be subject to an inevitable trading depression. That aspect must also be addressed.
Firms can and must do a great deal to help themsleves. I would not want to give the impression that I regard the Government as wholly responsible for the success of our exporters. Firms must develop their language skills, because the time has long gone when British personnel could travel overseas in the belief that they merely had to speak English louder to attract attention and business.
The development of personal links overseas is crucial in any prospective market. I agree with my hon. Friend the Member for Kincardine and Deeside (Mr. Kynoch) that they are achieved through long-haul effort and that we cannot rely on short-term quick fixes to establish good connections in overseas markets. It is not a matter of just going to China for Christmas but of going back there again and again to win the confidence of those with whom we seek to trade. The survey of firms in the south-west also raised the question of the kind of help that firms sought from the Government. It is clear that help can be given and I
Column 495welcome the Department of Transport's commitment to rail franchises long enough to ensure investment in the electrification of the Great Western line. That is a key feature of transport infrastructure in the south west, linking it with the national network and the channel tunnel, without which firms in the south west will find it much more difficult to achieve long-term export potential.
The region needs support to obtain the maximum available funding from the European Union with particular reference to defence industry contraction. CBI members would also like more marketing by the DTI of the export promotion scheme. I have paid tribute to the scheme's work, but have some doubt about the effectiveness of the marketing of its availability. The scheme's launch at the recent CBI conference was a great success and most helpful, but clearly more needs to be done to make medium-sized firms aware of the help that they can obtain from the scheme. I hope that my hon. Friend the Minister for Trade will take my remarks on board.
It would be helpful to know whether the Government are minded to support joint initiatives in the south-west to promote the region to obtain funding to support export activities. I believe that my hon. Friend the Minister will be keen to help in any way he can. Again, I pay tribute to him for the positive and helpful attitude that he has sought to bring to his job in dealing with firms in our region. In my constituency, a majority of exporting firms are involved in manufacturing, mainly in high technology areas. Some two thirds of the manufacturing process of those firms is undertaken in my constituency and Queen's awards for export are by no means uncommon in my constituency.
We have heard much about manufacturing and food, but so far we have heard little about service industries' contribution to exports. The decision by the Department for the Environment to approve the opening of THORP is much to be welcomed and I hope that the legal process now in train will not delay its operation for too long. We need the thermal oxide reprocessing plant at Sellafield open not only to show our commitment--we have made commitments to overseas users of the facility--but to show that the Government are prepared to stand up to those who wrong-headedly try to stop such investment in any industry in which Britain leads the world.
I also pay tribute to consulting firms such as that of Sir William Halcrow in Swindon which has a deservedly high reputation and earns huge returns for the United Kingdom economy through its work in civil engineering all around the world.
British Gas was frequently mentioned to me during my recent visit to Tunisia. All around the world, British Gas is developing consultancies and other contracts that will bring much-needed revenue to this country. I hope that nothing currently under discussion in the Department of Trade and Industry about the internal arrangements for our gas industry will do anything to prevent British Gas from continuing to be a player on the world stage in consultancy and other activities. A balance must be struck between competition at home and the ability to compete overseas, a point which I hope will not be lost on the President of the Board of Trade and his Ministers. The tourism industry makes a huge contribution in the form of revenue from incoming tourists. There is a great
Column 496need to narrow the gap between inflows and outflows by implementing the most vigorous marketing policy for British tourist attractions. Many countries lost a valuable link with Britain a few years ago when grants and scholarships to overseas students were cut in the mid-1980s. At the time, it was seen as a cost-cutting measure and was supported by many of us as a way of helping to balance the British economy, but, over the years, it has come to be seen by many of us as a mistake. The policy led to the transfer of allegiance of many of the future leaders of foreign countries from this country to, for example, the United States, where they now go to learn the English language rather than coming to this country. That policy should be reviewed and reversed if Britain's interests are to be best served. Many other hon. Members wish to speak, so I shall conclude by saying that Britain has made tremendous strides in its export potential in recent years. There is more to be done, but with a Minister for Trade such as my hon. Friend the Member for Wiltshire, North (Mr. Needham) in charge of our activities, I have no doubt that a most positive attitude will be taken towards the problems and challenges that lie ahead, and that the greatest success will attend his and the Government's future efforts.
Mr. Nirj Joseph Deva (Brentford and Isleworth) : I commend to the House the powerful, comprehensive and robust speech of my hon. Friend the Parliamentary Secretary. He covered a wide range of topics, on some of which I shall elaborate. I also wish to discuss in detail the other side of our export market : project finance, capital flows and obtaining dividends from joint ventures around the world. I am blessed by having in my constituency some of the largest multinational companies, which have chosen to locate their headquarters in Brentford and Isleworth. Doubtless the fact that Heathrow airport is a mere two miles away has some bearing on the matter. I am proud to say that I represent firms such as SmithKline Beecham, a world giant in the pharmaceutical industry, Gillette, the blade manufacturer, which I do not use very much, and Data General, a computer company with a worldwide network of export opportunities. My constituency also houses Pharos Marine, a company which makes lighthouses. Last year it won a large contract worth about £20 million to supply lighthouses to the Philippines. There is also Black Arrow, an office furniture manufacturer with a world wide reputation, as well as Fullers brewery, Wang, a computer company, Bull, Alfa Laval, which manufactures machinery for the food industry, Mercury, Heidelburg, which manufactures printing machinery and Honda Cars (UK). There are also other companies such as the Blenheim Group. Today's debate takes place in the aftermath of the successful completion of the Uruguay round of negotiations on the general agreement on tariffs and trade. I congratulate my right hon. Friend the Prime Minister and Sir Leon Brittan and the others involved in bringing that important matter to a successful conclusion. GATT has changed the future of world trade and Britain's trading opportunities. The signing of the agreement has added 4 per cent. to Britain's national output and generated up to 400,000 new jobs for the coming decade. It is estimated that it has added about $700 billion to the total sum of
Column 497world trade. Industrial tariffs were 40 per cent. in the late 1940s and have come down to no more than 5 per cent., with 42 per cent. of imports entering this country duty free. That has helped provide access to world markets for both developed and newly industrialised countries. It has added to global interdependence and the growth of comparative industrial advantage, increased the number of jobs, both here and abroad, and helped the consumer by providing cheaper goods. In agriculture, GATT will also lead to low food prices in currently protected countries, giving better market opportunities for efficient producers such as Britain.
The agreement is a boost for trade in services, especially in financial services, telecommunications, air transport and the movement of labour. It will have a profound impact on the current $900 billion trade in services and the $3,000 billion trade in the business of foreign subsidiaries. In that respect, Brentford and Isleworth is well placed, as the headquarters of many multinational companies, to take advantage of the new agreement.
The intellectual property rights agreement on patents, copyrights, performing rights and trademarks is a tremendous boost to foreign investment and technology transfers. The multi-fibre arrangement, dismantling quotas progressively in 10 years, will enable developing companies to sell more textiles and clothing abroad, which will in turn enable them to earn hard currency to import more value-added, high-tech goods from developed countries such as Britain, to the benefit of both.
Safeguards against dumping, subsidised exports, transparency in Government procurements and more global technical standards will all contribute massively to the growth of world trade, to the advantage of the richer and the developing countries. We need to view Britain and her trading opportunities in the context of that worldwide trade liberalisation as we move towards the millennium
It is no secret that the next century will belong to Asia. More than 1,000 million new consumers are poised to emerge, with the purchasing power parity of western Europeans, into the world marketplace in the next seven years. More than 70 per cent. of them will be in Asia, with the balance in Latin America. The economic miracles of the Asian tigers, especially in the ASEAN countries of the Pacific rim, is beginning to be repeated in the vaster, enormous markets of China and India. Instead of being frightened by their emergence into the world marketplace, we must remain challenged and prepared to seize the opportunities that are now being presented to create once again, after nearly 50 years of slumbering, a worldwide trading network, which this country, above all others, understands as a result of our shared history of the past 300 years.
We seize those opportunities in a post-war period when cyclical economic factors are finally being played out. The giants of the 1970s and the 1980s are beginning to lose their vigour and zest. The Japanese economic miracle, it appears, is over and Germany, with the problems of reunification, is in no state to take part in the great worldwide adventure. The oil-rich kingdoms are no longer that rich. The United States, with its extraordinary ability to change and remain dynamic, has put in place the North American Free Trade Agreement, which opens up a vast new market in Latin America with cheaper labour. The next phase of dominance--I use that word advisedly --in world trade belongs to us, and by "us" I mean Britain, until
Column 498France, having laboured and failed under socialism, has put her house in order and until Germany has come to a final and equitable reckoning on the cost of reunification. Britain's window of opportunity is now--not next year or the year after, but now. That opportunity would never have been available to us had the Labour party been elected to govern the country. We have had an agreeable debate this morning and we have not made many political points, but, with respect, that opportunity would have passed us by had we remained a country dominated by trade union power, motivated by sectional interests and overwhelmed by protectionist sentiment. That opportunity would have never been possible if the Labour party had, in government, done in the past few years that which they are prone to do, as they did in the 1970s, when they gave us high taxes, high inflation, exchange controls and a flight of capital, with the gnomes of Zurich and the International Monetary Fund having to bail Britain out.
That opportunity is now available to us because successive Conservative Governments have worked to make the country one of the most competitive, innovative and forward-thinking. In the United Kingdom, as we heard this morning, inflation is at a 30-year low and, as a result of the fall in interest rates, industry has saved about £12.5 billion, which it can invest profitably elsewhere.
The matters that I have mentioned are without doubt the reasons for the United Kingdom's recent success. In the past five years, the United Kingdom has become the largest recipient of overseas investment. Government policies have resulted in British manufacturing moving from what it was in the 1970s to what it is today. The conditions created by the Government have led to vast increases in the investment portfolio and direct investment by foreign firms in the United Kingdom. However, there is another side to that--the fact of British investment all over the world. One of the main policies of Conservative Governments since 1979 was the privatisation of many nationalised industries, such as British Telecom, gas and electricity. That handed back the nation's utilities to the private sector and to ordinary people, and the concept of privatisation set a trend throughout the world. It became the fashion not only for Britain but for developing countries and for the newly emerging nations of eastern Europe to divest themselves of their loss-making nationalised industries.
The World bank and the International Finance Corporation, which is its private sector arm, the IMF and the Asian and African development banks have encouraged developing countries to help themselves by selling off their loss-making state industries to the private sector and international investors. It was not anticipated in the debates about privatisation that newly privatised British companies would take or manage large shares in newly privatised companies in the developing world.
Today, British Telecom, British Gas, Thames Water, National Power and PowerGen are pursing large market shares in the privatised utilities of the developing world. They own, or jointly own, power companies, water companies, airports and gas and oil exploration companies in many parts of the rapidly growing Pacific and ASEAN countries. They are followed by institutional money. The portfolio investors of the pensions and savings funds of the City of London are ploughing huge amounts through the capital markets of Hong Kong and Singapore into these joint ventures.