HC Deb 12 November 1992 vol 213 cc981-2
6. Mr. Hall

To ask the Chancellor of the Exchequer what measures he is taking to reduce the United Kingdom's balance of payments deficit.

Mr. Portillo

The recent reductions in interest rates, our low inflation and the competitive level of sterling offer significant opportunities to exporters and to firms competing against imports in domestic markets. The key to long-term success remains United Kingdom producers' ability to keep costs down and quality high.

Mr. Hall

Is the Minister aware that PowerGen has decided to import 6 million tonnes of coal from Colombia and China through the Liverpool docks? That will serve only to increase our balance of trade deficit. It will result in the closure of Parkside colliery, the only remining pit in the Lancashire coalfield, and it has threatened the jobs at the Point of Ayr colliery. Will the Minister join me in condemning the politics of the madhouse, which we see here this afternoon?

Mr. Portillo

If coal is imported, clearly the balance of payments suffers to that extent—but that is not by any means the end of the story. If British industry is obliged to take electricity and other fuel supplies at prices higher than those paid by our competitors, that is bad for both imports and exports. The hon. Gentleman will know that my right hon. Friend the President of the Board of Trade is considering a broad range of issues in relation to the coal industry. The hon. Gentleman should not be allowed to get away with such a simplistic statement about the economics as they affect this country.

Mr. David Shaw

Will my right hon. Friend confirm that the balance of payments deficit is relatively small compared with our gross national product and that it is well financed by the massive increase in overseas earnings from interest and dividends from successful British companies and investment overseas?

Mr. Portillo

The balance of payments is indeed financeable, but I should not like to say that it is small—clearly, it is a matter of concern to the Government, and that is why we pursue policies to enable our economy to grow and our manufacturers to do well in export markets. My hon. Friend made a good point about inward investment. As a result of Nissan's investment in this country, that company now exports half what it produces in Sunderland, and the United Kingdom is set to become a net exporter of television sets.

Mr. Andrew Smith

Is it not a measure of the Government's utter industrial failure that our balance of payments deficit is now running at £1 billion a month? When will the Government start backing British exporters, as other countries back theirs? What action will the Minister take to cut the export guarantee insurance premiums which so undermine the efforts of British exporters?

Mr. Portillo

There has been a substantial increase in the cover provided by the Export Credits Guarantee Department for our exporters. Last year, that cover provided for £2 billion worth of British exports. We have been fighting hard in the European Community to reduce trade barriers, and I believe that the single market is worth £400 million in savings to British business. We have successively cut the rate of corporation tax on businesses, which has given them a tremendous competitive advantage. My right hon. Friend the Prime Minister has led the fight to keep alive the general agreement on tariffs and trade negotiations, because that is the most important development possible for British exporters. All those measures have been substantial commitments to British business.

What is more, we have created a climate in Britain that has enabled us to attract half the investment into Europe from Japan and the United States. All that improves our export opportunities.