House of Commons Hansard Debates for 6 Dec 1996 (pt 11)

12.21 pm

Mr. Michael Stephen (Shoreham): I welcome the opportunity to contribute to this debate as I am an officer of the all-party export group and an adviser to the Ricardo Engineering group, whose scientists and engineers do excellent work to keep Britain at the forefront of the technological revolution and whose skills and expertise are exported every day to earn foreign currency for Britain.

We need to export for two reasons: first, to earn the foreign currency to pay for the goods and services that we have to import; secondly, to provide a buffer for businesses and employees in this country against the inevitable economic cycles to which all economies are subject.

The world has changed. Only a few years ago, we were the world's workshop and just about everybody else was either our low-cost supplier or our customer. More and more of those countries are now our competitors--and very effective competitors they are, too. They are competitive not just in low-tech industries but in the highest technology imaginable.

There has been a computer revolution in the past 10 years, and more and more of our national effort, brains and expertise are being devoted to computer-related industries rather than to tangible metal-bashing manufacturing industries. As I said in an intervention, that tends to distort the trade figures. There is a difference of opinion as to whether the development and creation of software is a manufacturing or a service activity. That industry is becoming increasingly important in all the developed economies.

The construction industry is a major export earner for Britain and we should salute the efforts that it makes throughout the world. Bidding for a large construction

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contract in a foreign country is an expensive and risky business, and Britain's construction industry is grateful for the overseas project fund that the Government offer. The OPF contributes 50 per cent. of eligible costs of British companies tendering for major overseas contracts. Those grants are repaid, plus a supplement of at least 20 per cent., if the company succeeds in winning the contract.

That assistance is available only for high-risk marginal projects, for which the companies concerned would not otherwise have bid. A company making an application must show that the contract will generate substantial UK content, usually at least £50 million. The figures for 1992-93 show that for an outlay of £3 million by the OPF, British companies won contracts with a total UK content of no less than £550 million. That is a good investment by any standards.

Unfortunately, the amount of money that my right hon. and learned Friend the Chancellor has been able to devote to the OPF is now not enough to support the potential opportunities that British construction and other major companies have identified in world markets. Even at a time when budgetary constraints are tight, as clearly they are at present, the fund represents not a drain on our resources, but an investment opportunity. I urge my right hon. Friend the President of the Board of Trade to take account of that and to convey the point to the Chancellor.

Asia is a major area of export opportunity for British companies. The aid and trade provision has been enormously helpful to British companies seeking to profit from those markets. Unfortunately, there is a moratorium on Asia because the budget for that part of the world is overspent. I urge the Government to restore the budget as soon as possible, as that is the part of the world where the greatest opportunities exist for profitable business for British companies.

I also urge the Government to shift more of the money available for overseas aid out of multilateral programmes into bilateral programmes, which can be focused much more carefully on those areas where British companies are likely to benefit than is the case with multilateral programmes.

During the debate several hon. Members referred to Britain's relations with Europe. Britain's future in Europe is central to a debate on how Britain earns its living in the world. Conservative Members agree that Britain must be at the heart of Europe. As my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) observed, we were the architects of the single market. My right hon. Friend Lady Thatcher was in the forefront of European leaders arguing for a single market within which all European companies could compete on a level playing field. She did more than any other European leader to create the single market, and her successor, my right hon. Friend the Prime Minister, has continued that crusade.

But we in the Conservative party have some problems with the single market, and we reflect the divisions that exist within our country on that great issue. The press have made us appear to be a divided party, but we are articulating the differing views that exist out there in the country. Our constituents have sent us here to express their views and to debate those great issues.

We have some difficulty with the social chapter, not only because, as has been pointed out, it would be damaging to Britain's competitiveness in the world--as it

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is already damaging continental Europe's competitiveness in the world--but because we see it as running flatly contrary to the doctrine of subsidiarity. Matters with which the social chapter deals, such as how many hours may be worked in a week, are essentially not matters for supra-national regulation. They are issues for each member state to decide, having regard to its culture and economic conditions. This House must take those decisions on behalf of the people whom we represent.

We also have some difficulty with the European Court of Justice--I speak now as a lawyer. We and the Irish are the only member states whose legal systems are based on common law: all other member states' legal systems are based on the civil law. When a common law lawyer examines the words of a statute or a treaty, he construes them strictly. A civil lawyer does not do that: he looks at the preamble to the Act or the treaty and says, "I know what the small print says, but my job is to interpret the spirit of the treaty which I derive from the preamble."

Therefore, a judge can interpret a treaty to mean just about anything he likes. That is the difficulty that we face: we sign international obligations on the basis of our common law understanding of their meaning, but through a process of creative interpretation the European Court of Justice then imposes on our people obligations to which we have never agreed. That causes serious concerns for all our constituents.

Mr. MacShane: Has not Britain won more cases in the European Court of Justice as a result of that interpretive, purposeful method of lawyering, which benefits Britain more than those European countries which have sought to halt our exports, for example?

Mr. Stephen: It is not a quantitative analysis: we cannot say that because we have won 50 and lost 30 we are necessarily better off. I would rather lose cases that are not firmly based on the wording of the obligation to which we agreed. I want to see certainty in our relationship with the European Union: I do not want to be exposed to a system which is totally unpredictable and will tell me tomorrow that the agreement that I signed yesterday does not mean what I thought it meant. That grave difficulty must be addressed at the intergovernmental conference--although I have no confidence that we shall make any meaningful progress there.

The House and the nation must send a clear message to the European Court of Justice that if it does not take account of the fears that I have expressed it risks losing the confidence of the British people. The same can be said for the European Court of Human Rights. I am glad that my right hon. Friend the Lord Chancellor visited the court recently and, in the tactful manner for which he is renowned, told the judges of our concerns about the way they perform their duties.

There is also a problem with the single European currency. In view of the fudging that is going on in France, Italy and other countries which are trying to squeeze a quart into a pint pot and to conform to economic criteria that they clearly do not satisfy, I do not see how a properly based, workable single currency can be created within the next five years. It is most unlikely that this

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country will consider it appropriate to join, even on economic grounds. If business men in the City of London or in our constituencies were to say, "You must get into the single currency; it is absolutely vital and we must have it," and if it were clear that we would derive economic benefit from it, I might be prepared to tell my constituents, "Here is a huge economic prize for us: let's forget about historical concepts, cultural differences and constitutional theories of sovereignty and go for it." But I am not in a position to say that. Instead, everyone I speak to--economists, business men and political colleagues--says, "It is not proven whether it would be a benefit to us to join the single currency." Is it worth giving up the sovereignty that would be involved in joining a single currency to reap some intangible and rather peripheral benefits? At present, I am not so persuaded.

No one says that we should not give up some sovereignty. Whenever we enter into an international treaty we cede some sovereignty: we give up our legal right to act in a way that is inconsistent with the treaty. There comes a time, however, when the process of giving away our rights begins to invade the very core of sovereignty. I fear that if we were to join a single currency we would go beyond that point. From what I know about my constituents' views and the country generally, I do not feel that our country is ready to do that. What our children and grandchildren may decide to do is a matter for them, having regard to world economic conditions at the time, but that is not for us to decide.

It appears that of 3.6 million companies in this country, only 100,000 export regularly. Sixty per cent. of medium-sized companies do not export at all. In a recent survey conducted by the Association of British Chambers of Commerce, 45 per cent. of companies stated that they do not export because of fear of the unknown.

That is where the Government, chambers of commerce and organisations such as the Confederation of British Industry and the Institute of Export can help. It is essential that small and medium-sized enterprises are given information about market opportunities. It must be a proactive process. We cannot sit and wait for them to ask for information. Information must be made available to them on the Internet.

Our posts abroad are doing an excellent job to promote Britain throughout the world. I had the great pleasure of meeting the staff of some of them this year in Singapore, Malaysia, Thailand, Syria, Lebanon and Sweden. They all impressed me as people who saw it as their role to promote Britain. They were doing an excellent job and I congratulate them. We must remind them from time to time, however, that they must be proactive. They must get on the phone to British companies or British trade associations and say, "Do you know about this opportunity that is just about to come up?" I can assure the House that that is what the French are doing, and the Americans. To a large extent, the British are doing that as well, but our posts abroad must be reminded of the need to take that approach.

Exporting is an exciting business, but it can be a risky one. A role that the Government can play is to help potential exporters to benefit from the mistakes of those who have already exported. Export clubs are an excellent idea and something that the Government should encourage.

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Much training could also be undertaken with the use of modern technology. I should like to see CD training packages provided for small and medium-sized enterprises so that they can educate themselves in their own time using their own computers.

The ECGD does an excellent job, but as an officer of the all-party export group I have heard complaints that it sometimes bases its assessment of a certain country on out-dated information. I hope that my right hon. Friend the President of the Board of Trade will ask the ECGD to examine its database and satisfy itself that it is acting on the latest information.