SWEDEN (UNITED KINGDOM REPRESENTATION) (Hansard, 4 December 1979)

§ Mr. Richard Alexander (Newark)

I welcome the opportunity to raise the question of the commercial representation of the United Kingdom in Sweden and in particular in Gothenburg. The subject arouses wide interest outside if not inside the House.

When one thinks of Sweden, one immediately thinks of Stockholm, but from the the point of view of imports from Britain the port of Gothenburg is considerably more significant. Last year it had a total cargo turnover of 20 million tons while Stockholm had only 4 million tons. Of that 20 million tons, 1 million tons came in from, or went to, British ports. About 54 per cent. of goods entering Sweden enter through Gothenburg.

Sweden is the third largest export market—after Switzerland and the United States—of the United Kingdom, excluding the EEC. With its population of 8 million, Sweden purchased £1,170 million worth of British goods last year.

386 The staff in our consulate-general in Gothenburg has for more than 200 years provided a significant service in achieving those figures. It numbers 16 and last weekend all were given notice of dismissal. All that will remain will be two freshly employed secretaries, supervised from Stockholm, and a diplomatic career officer without significant commercial experience in Sweden who is being posted from America.

The staff are all bilingual. They know the agents and distributors and have contacts with the retailers and wholesalers over an ever-increasing area. Their total cost to this country is £150,000. To cut down on that expenditure, which helps to earn this country £1,170 million from exports, we are leaving Gothenburg with a staff of two, a non-Swedish diplomat and overall supervision from Stockholm, from where someone will travel from time to time. All files will be transferred to Stockholm and the remaining back-up in Stockholm will be diplomatic and not primarily commercial.

I accept that the Civil Service must bear its due share of Government economies, but I argue that if the Government had been in possession of all the facts that I have enunciated the cuts in our representation would not have been made in Gothenburg. Ignoring the cavalier way in which the loyal staff have all been dismissed—and they have given us many years of service—it must be conceded that a cost of £150,000 is a mere drop in the ocean compared with what is earned for this country in terms of trade.

It is not realistic to argue that one Diplomatic Service officer can maintain and build up the contacts that a bilingual staff of 16 have done up to now. Over the past 15 years, the Plowden committee, the Duncan Commission and the Berrill report have all made abundantly clear that the priority for British representation abroad is to maintain a commercial presence. In friendly countries, the diplomatic niceties are not as vital as the maintenance of our trade links.

Gothenburg may be Sweden's second city, but in Europe as a whole, and in Scandinavia in particular, it enjoys equal status with the capital. Decentralisation has been a feature of Sweden for many years and the distance between Gothenburg and Stockholm is something like the distance between Edinburgh and London.

387 Could we imagine someone in London travelling from time to time to Edinburgh with any pretence of knowledge of the distributors, wholesalers and others involved in Edinburgh's commercial life? What nonsense it would be if we tried to run Edinburgh's commercial life from London. When talking about costs, we must add the cost of servicing if someone will have to travel from Stockholm to Gothenburg.

For only a small saving we are putting at risk the field work built up over many years by bilingual commercial officers who know the agents, distributors, wholesalers and importers—those who buy from Britain. I ask my hon. Friend whether a diplomatic officer who does not speak the language can by travelling the country as usefully search out the business community firms interested in obtaining their supplies from Britain. Can he, with the same intimate knowledge, report on trade news and general market intelligence to our exporters here?

The cost of maintaining locally engaged commercial officers is approximately 40 per cent. of the cost of a third secretary diplomat. Therefore, before this decision is implemented, I ask my hon. Friend at the very least to keep two of the local commercial officers instead of importing the Diplomatic Service officer.

Only 18 months ago, we had more than 100 staff in the British Embassy in Tehran. We must have hundreds in Paris, NATO, Belgium and in the EEC. Could we not, in common sense, and with British interests firmly in mind, make the 16 savings from one of those five embassies and leave Gothenburg as it is, or at least leave it not so significantly reduced? Even Stockholm itself, bearing in mind that Gothenburg takes 54 per cent. of Sweden's imports, has suffered no cuts at all, although the press attaché has volutarily decided to take early retirement. That cannot be fair. Even if cutting out representation in Sweden was the last throe of a dying economic policy, for the survival of Britain it cannot be right that on the figures that I have given Stockholm loses a press attaché and Gothenburg loses 16 personnel to be replaced by two secretaries, Gothenburg being the area within which 65 per cent. of Sweden's population lives.

388 If Britain leaves the scene in this way, others will be only too ready to fill the vaccum. The German Democratic Republic already has a trade centre in Gothenburg, and, while the United States closed down its consulate during the Nixon era because of the disagreement over the handling of the Vietnam war, it soon found that it had to reopen it because of the adverse effect on its trade. Sweden is politically neutral, but Russia knows its value. Its consul-general's office had been described to me as rather like a department store.

To have a second secretary who divides his time between fleet visits and other ceremonial functions trying to take over from 16 highly trained local bilinguists who have built up a multi-million pound trading connection with this country does not make sense. Ignoring the lack of consultation with the staff, and the ill-feeling that that has generated, this has been a short-sighted decision, contrary to the interests of both Britain and Sweden. The only beneficiaries will, I believe, be the Eastern bloc. There is no justification in logic, humanity or in commercial realism why our presence in Gothenburg has been virtually destroyed in the way that I have described. I urge my hon. Friend to take a fresh look to see whether he can do something before irreparable harm is done to our trading interests with Sweden.

§ The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd)

I am glad that we are having this debate, and I congratulate my hon. Friend the Member for Newark (Mr. Alexander) on his choice of subject and on the way in which he has deployed his case. I agree entirely with many of the points that he raised, particularly with what he said about the priority which commercial work should have in the Diplomatic Service at the present time.

This debate gives me a welcome opportunity to state in context the economies which we have had to make in the Foreign Service. It is common ground that public spending in this country must be reined back. It is so much easier—and I do not say this as a reproach—to commend economies in general, and condemn economies in particular. It is the little drops in the ocean which, taken 389 together, amount to the necessary economies. Without a whole series of relatively small decisions by every Government Department, it would not be possible to achieve the economic objectives of the Government.

We all know that economies bear hard on the people and services of this country. It is not possible to expect that the home services that our constituents enjoy should be cut back and that no contribution to the process should be made by the services for which the Foreign Office is responsible.

We have had a lot of coming and going about the BBC External Services, and the impression has been created that the Foreign and Commonwealth Office is cutting the services on its Vote, such as the BBC, but at the same time is living off the fat of the land, protecting itself and not making any economies in its establishment. My hon. Friend's case shows that that is not so.

We have had to announce the closure of 15 consulates-general, and consulates. That is a painful business. There is an impression in some places that there are all kinds of spivs and parasites in Whitehall who do nothing, and it is only a matter of sacking them to realise our objectives. That is not so. The objectives of our economies can be achieved only by a whole series of painful measures—cutting services of undoubted use, which are rather nice, but which are not necessary.

We have had to close our consulates-general in Rotterdam, Strasbourg, Winnipeg, Adelaide and other cities. These are cities with which Britain has had a close financial, trading and social relationship over many years. But these consulates have actually had to close.

In a few days' time my hon. Friend will read the announcement by the Lord President of further economies in the manpower of the Civil Service, and then he will understand that we are undertaking to reduce staffs in some of the major embassies that he mentioned and in the Foreign Office at home. In this context of actually having to close a substantial number of consulates-general and consulates in major cities across the world, we had to look closely at the arrangements in Sweden.

390 The facts are as my hon. Friend described them. I do not quarrel with his statement of the facts. We decided not to close Gothenburg, but to retain it and reduce the numbers in the knowledge that Sweden is a very important market for us. It is our eighth largest market, and we are its best customer. Much of this trade—indeed most of it—is carried on without official services. One cannot measure the success of an export drive or our interest in a city like Gothenburg by the extent of the British official presence.

The West Germans, who are one of our most effective competitors, maintain an enormously successful export drive without any of the effort financed by the West German taxpayers. They have a different system of export promotion, based on chambers of commerce. Therefore, the interest that we or our exporters take in any country or city cannot necessarily be measured by the amount of services financed by the taxpayer. Nevertheless, we believe that our official services have a part to play, otherwise we would not organise and finance them. We have considered carefully how this can best be done in the knowledge that some economies were required in Sweden.

Before the reductions we had eight officers in Stockholm and 11 support staff. There were four officers in Gothenburg and four support staff, and one officer in Malmo with two support staff. Under the new arrangements Malmo will be closed and Gothenburg will have one Diplomatic Service officer and two support staff. This will save £30,000 at Malmo and £177,000 at Gothenburg. There will still be a consulate at Gothenburg. This is in contrast with what has happened in the other major cities I have mentioned. The consul will concentrate on commercial work.

I had the welcome opportunity to go over this ground with the Lord Mayor of Gothenburg who was courteous enough to come to London to discuss the matter with me. I explained these points to him and he put forward, as others have done, the idea that if cuts were necessary they should be differently distributed in the interests of decentralisation. My hon. Friend made the point that Stockholm is not Sweden and that it would be sensible to post people out of the capital rather than concentrate our efforts there.

391 We looked at that suggestion carefully before coming to a decision and I have looked at it again in the light of the representations that have been made by several of my hon. Friends and by the Lord Mayor of Gothenburg. Substantial cuts were made in Stockholm last year, under the previous Administration, and we have to take that into account.

We decided that where resources had to be carefully husbanded it was sensible to have them directed and controlled by the ambassador in Stockholm and to deploy them across the country as needed. They will not always be needed in the same place at the same time. This trend has developed in recent months. Our commercial staff, based on Stockholm, are not geographically specialised and do not think and work on the Stockholm scene only. They are functionally specialised and deal with commercial work right across Sweden.

An example is the Volvo car and truck division in the Gothenburg area which has been visited nine times in the past two years by embassy commercial staff from Stockholm. That was the most sensible way of organising the visits. The Volvo Flygmotar has been visited by members of the Stockholm military staff three times this year because that was the most effective way of carrying out the visits and keeping close contacts.

Today—and without any knowledge of the initiative of my hon. Friend in securing this debate—the first secretary in the commercial department from Stockholm was going to Gothenburg to discuss with the port authority the Swedish decision to return to coal as a fuel. That is a matter on which he has been working for a month. It was sensible that the specialist concerned should go to Gothenburg from Stockholm to discuss this particular commercial matter. The secretary is not concentrating on Stockholm but is available, under the direction of the ambassador, to go wherever in Sweden his skills are needed. That concept has grown recently because of our search for economies. The new consul in Gothenburg will be the new point of contact but the ambassador will be able to deploy the resources available to him as the need arises. The need will differ from time to time.

392 The reduction will lead to staff being retired. That is sad and I regret it. The staff have served us well and we have expressed thanks for all that they have done. Compensation will be in accord with good Swedish practice. We are working out the details.

When the Lord Mayor called on me a fortnight ago I discussed these matters with him. Of course, he was not satisfied—nobody in his position would be. I have received many cogent letters expressing the same view as that of my hon. Friend. Of course people regret what is happening and are sceptical. They do not believe that the new arrangements will be as good as the old arrangements. I explained to the Lord Mayor why we could not change our decision. I asked him to give the new arrangements time to run and to let me know how they work out after what seems to him to be a reasonable time. I asked him to tell me how the new flexibility works out.

I make the same suggestion to my hon. Friend and to those business men who are anxious about our effort in this part of Sweden. We have to make some contribution to the search for economies—although this one could be regarded as a drop in the ocean. I hope that we can set up the new system. We are prepared to examine the new system after it has been in operation for a time to see whether our resources are being deployed in the best way. Given the need for economy, it is sensible to try to base the new system on the principle of flexibility, see how it goes and adjust it if necessary after a reasonable time.

The decision is sad. Nobody is happy to see the effort of Britain overseas representation diminished. On the whole the services which the Diplomatic Service provides for British exporters and British subjects generally are effective and respected. It is regretted when such links are curtailed. The policy is designed to revive the prosperity of this country. Of course, we all hope that with that revival we shall be able to continue with the full effort overseas which our interests require. I hope that we shall, after a period of curtailment and stability, be able to re-establish our presence in Sweden on the scale to which we are accustomed. However, that depends on the revival of the prosperity of our 393 country, which we have not yet achieved. That revival must depend substantially on a thorough search for economies in the public sector.

I appeal to my hon. Friend to allow the new system in Sweden to run for a little, to keep in touch with it and to let us know after a period, with the benefit of his experience and his contacts, how he thinks that it is working. We shall 394 be doing the same through our system of inspectorates and our close contacts with our overseas posts. If there are defects that we can correct within our resources we shall do so. It is not possible to review or revise the decision that has been taken on Gothenburg.