HC Deb 15 March 1989 vol 149 cc394-6
3. Mr. Wallace

To ask the Chancellor of the Duchy of Lancaster what is his latest estimate of the deficit in trade in manufactured goods for the last 12 months in respect of which figures are available.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins)

In the 12 months ended January 1989, trade in maufactured goods is provisionally estimated to have been in deficit by £14.9 billion.

Mr. Wallace

Until recently the Chancellor of the Exchequer seemed to be saying that the impact of his policies would be to reduce that trade deficit, but yesterday he said that he did not expect to see it come down from its present record level. Can the Under-Secretary of State say what has changed, and is he concerned about it?

Mr. Atkins

It is not for me to make judgments at the Dispatch Box about what my right hon. Friend the Chancellor of the Exchequer said yesterday as my right hon. Friend is in a better position than anyone to be in control of the facts. He said that the deficit this year would be much the same as last year and suggested again this morning that the deficit would fall. It is, however, nothing like the kind of deficit that we have had in the past as most of the imports are of components, semi-manufactured goods and other capital equipment—very much the sort of things that Opposition Members have been urging us to encourage industry to use.

Mr. Neil Hamilton

Does my hon. Friend agree that people buy goods from abroad because they find them cheaper and of better quality than goods from this country, so the answer to our trade deficit is in the hands of British industry? Does he further agree that the panaceas suggested by the Confederation of British Industry to keep the exchange rate down are not likely to succeed? Is my hon. Friend aware that the Japanese yen has appreciated against other currencies by almost 100 per cent. in the past two years, yet Japan's trade surplus is increasing?

Mr. Atkins

With his usual perspicacity, my hon. Friend has hit the nail on the head. He is right that this provides an opportunity for British industry to fulfil the requirements of those consumers, both commercial and private, who wish to buy equipment or material. At present, such consumers have to buy from abroad. It would clearly be better and in everyone's interests if they were to buy from home, giving British companies the opportunity to make such products.

Mr. Rees

With the manufacturing trade deficit in mind, I looked around Leeds last weekend and this morning. The centre of the city is booming—with banking, commerce and distribution. New buildings are being erected in which nothing is manufactured but from which goods from the rest of the world are distributed. Yet Leeds was once a proud manufacturing city. I do not say that the decline has occurred only in the past 10 years, but it has certainly got worse in the past 10 years. It is a long-term problem. Will it ever end? Is there anything that the Government can do, or think that they can do, to help manufacturing in our once-great northern manufacturing cities?

Mr. Atkins

The right hon. Gentleman is a fair man and he knows that there have been changes in the manufacturing capacity of western industrialised countries compared with what is happening in parts of the far east and the Third world. I think that the right hon. Gentleman will recognise that that change will continue. By the same token, the Government have tried, like many other Governments of European countries, to ensure that in the future high technology manufactured goods and other areas of activity are improved and given attention. The right hon. Gentleman will know, as I do, that when one travels abroad one sees that the impact of British manufactured goods is great and that we are doing well. Of course, change is always difficult to bear, and we must ensure that that change is carried through in the most efficient way, both for the consumers and for those who manufacture the goods.

Mr. Brandon-Bravo

Does my hon. Friend agree that part of the trade deficit results from imports which enter other than on a level playing field—for instance, supposedly duty-free imports of manufactured goods from the so-called Third world? Is my hon. Friend aware that China manufactures 30 million bicycles per year and EEC rules allow Chinese bicycles to be imported with the result that imports to this country have increased from 600,000 units to 1.3 million units, which is not good news for my constituency which has Raleigh in its centre?

Mr. Atkins

My hon. Friend knows that Raleigh has recently increased its work force by about 300 people and that the company is doing exceptionally well. That is a tribute largely to the work that has been put in and to the quality of the cycles produced. I had always understood that Raleigh itself encouraged the import of some Chinese bicycles because they are sold in this country at a price level at which Raleigh does not compete. In those circumstances, the imports fit in with Raleigh's own range. If my hon. Friend has any further information or evidence of an adverse impact on Raleigh, perhaps he will write or come to see me so that we can pursue the matter.

Mr. John Garrett

According to yesterday's Red Book, growth in domestic demand from last year to next year is forecast to fall by 75 per cent., so why is the trade deficit forecast to be only slightly lower next year? Does not that tell us something about the Government's view of our competitiveness?

Mr. Atkins

If the hon. Gentleman will wait a little longer, he will be able to put that question to Treasury Ministers who discussed that matter yesterday.