§ Mr. Richard Alexander (Newark)
I beg to move,That this House recognises the importance of exports to the British economy which was highlighted in debates on the Gracious Speech; welcomes the further initiatives outlined in the Chancellor's Budget Statement; welcomes the initiatives taken by the Minister of Agriculture, Fisheries and Food to improve the marketing of British food and reduce the trade gap in food and agricultural products; supports the work of "Food From Britain" in improving the marketing of United Kingdom produce and, in particular, its new focus on export promotion; recognises that British manufacturers are amongst the more competitive in Europe; and urges continuing Government encouragement for export promotion for the benefit of the economy, employment, growers and processors, and those involved in the important work of export promotion.I move this motion in a week when a sharp drop in the trade deficit has boosted the prospects for a solid economic recovery in this country.
§ Notice being taken that strangers were present, MADAM SPEAKER, pursuant to Standing Order No. 143 (Withdrawal of strangers from the House), put forthwith the Question, That strangers do withdraw:—
§ The House divided: Ayes 0, Noes 65.438
|Division No. 67]||[9.36 am|
|Tellers for the Ayes:|
|Mr. Michael Trend and|
|Mr. James Clappison.|
|Alexander, Richard||Hughes, Simon (Southwark)|
|Arbuthnot, James||Hunt, Sir John (Ravensbourne)|
|Baker, Nicholas (Dorset North)||Jenkin, Bernard|
|Barnes, Harry||Kirkhope, Timothy|
|Beggs, Roy||Kirkwood, Archy|
|Bell, Stuart||Knapman, Roger|
|Booth, Hartley||Knight, Greg (Derby N)|
|Bottomley, Peter (Eltham)||Kynoch, George (Kincardine)|
|Bruce, Ian (S Dorset)||Lait, Mrs Jacqui|
|Clapham, Michael||Legg, Barry|
|Conway, Derek||Lester, Jim (Broxtowe)|
|Coombs, Simon (Swindon)||Lewis, Terry|
|Cummings, John||Lord, Michael|
|Deva, Nirj Joseph||Luff, Peter|
|Dicks, Terry||MacKay, Andrew|
|Duncan, Alan||Madel, Sir David|
|Duncan-Smith, Iain||Marland, Paul|
|Fishburn, Dudley||Marshall, John (Hendon S)|
|Forth, Eric||Mitchell, Andrew (Gedling)|
|Foster, Rt Hon Derek||Montgomery, Sir Fergus|
|Gorman, Mrs Teresa||Neubert, Sir Michael|
|Greenway, Harry (Ealing N)||Nicholson, David (Taunton)|
|Hanley, Jeremy||Norris, Steve|
|Hawksley, Warren||O'Brien, Michael (N W'kshire)|
|Heald, Oliver||Prescott, John|
|Hughes Robert G. (Harrow W)||Roberts, Rt Hon Sir Wyn|
|Ryder, Rt Hon Richard||Waller, Gary|
|Sackville, Tom||Waterson, Nigel|
|Shaw, David (Dover)||Widdecombe, Ann|
|Shersby, Michael||Wood, Timothy|
|Soames, Nicholas||Tellers for the Noes:|
|Taylar, Ian (Esher)||Mr. Sydney Chapman and|
|Tracey, Richard||Mr. Michael Brown.|
§ Question accordingly negatived.
§ Mr. Alexander
I hope that we may now proceed.
I began by explaining to the House the appropriateness of having the debate this week. The provisional figures show that the gap between exports and imports fell from £1,087 million in September to £578 million in October. Imports have fallen, and the value of October's exports —at £10.51 billion—was 2.5 per cent. up on the previous month. Exports outside the EEC are up by 12 per cent. on a year ago.
I pay tribute to the firms, companies and employees who have achieved such figures. I also wish to pay tribute to the economic policies of Her Majesty's Government, which have helped to achieve them. Towards the end of last summer, colleagues from both Houses and I formed the all-party parliamentary group for exports, of which I have the honour to be joint chairman. The object of the group —as of today's motion—is to underline the importance of exports to the British economy, to draw together various aspects of the subject and to see how Government and Parliament can be more proactive in helping to overcome obstacles that prevent this country from achieving an even more successful export performance.
Because the British exporter competes and survives in increasingly competitive markets overseas, sometimes it seems to the outsider—by definition we, as generally full-time parliamentarians, must be regarded as outsiders —that a coherent voice for the exporter is lacking. One asks, is better training the answer? Is the answer to ensure that the Government back up exporters to the extent that those in competitor economies are backed up? Or is a national exporters' council needed, to provide the necessary focus and direction? I shall consider one or two of those options.
I have the honour to serve on the Select Committee on Agriculture. Just before the last election, we produced a short report, entitled "The Trade Gap in Food and Drink". It emphasised the importance of food in the export scene.
We are delighted to have with us this morning the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, my hon. Friend the Member for Crawley (Mr. Soames). We shall listen with interest to his contribution to the debate. I am sure that the House will join me in congratulating him on his personal happiness.
§ Mr. Alexander
People in other countries enjoy eating Britain's food, and I am certain that they will be happy to consume more. It is good, it is nutritious and it is safe to the highest standards, thanks to recent Government food legislation. We know that; British housewives know that; but our food needs a continuing high standard of marketing, so that people in other countries can be made 439 aware of that and react accordingly. The Select Committee report showed the enormous scope for reducing the gap in food and drink trade.
In crude terms, I suppose that one could say that it is a sprat to catch a mackerel, but the message must be got across.
The motion asks the House to welcome and support the work of Food From Britain, which was set up in 1983 with 60 per cent. of its funding from MAFF and the remaining 40 per cent. from British industry under its own initiatives. The Agriculture Select Committee shared that welcome, but pointed out that the less co-ordinated marketing arrangements in agriculture and the agriculture supply industry often seem to blunt companies' competitive edge.
The Committee also felt that Food From Britain was significantly underfunded in comparison with its European counterparts, and that it should receive £1 from the taxpayer for every £1 from a non-Government source. At present, the figure is £1 for every £3 so received. We can all spend someone else's money better than they can, and the Government must be careful to spend taxpayers' money as prudently as possible, but pound-for-pound support is also favoured by the National Farmers Union.
As hon. Members know, when a Select Committee report is produced, the Government have to respond in a short period. The Government responded to the recommendation. Their comment was that if one goes as far as pound for pound, it will cost £2 million more of taxpayers' money and will take the proportion of Government funding to about 69 per cent., making it higher than what the corresponding organisation receives even in France.
As much of what I shall say this morning asks that our exporters receive equivalent to what exporters receive in other countries, I hope that there may be some scope for compromise. In other words, let us not give more than other countries are giving to their food organisations, but let us give at least what our main competitors are giving.
§ Mr. Roy Beggs (Antrim, East)
The hon. Gentleman must be aware that, on Wednesday, there was an Adjourment debate in the House, drawing attention to the difficulties experienced by the Scottish salmon farming industry because of unfair subsidisation by Norway of the Norwegian industry. That has a bad impact on salmon farming in Scotland and Northern Ireland. Does he agree that where others give advantage, we should give at least equal support to our industry?
§ Mr. Alexander
I am grateful to the hon. Gentleman for his comment. I hope that he will be called in the debate to expand on those remarks, but that is very much what I am arguing for, especially when considering food and the possibility for greater exports and for cutting down some of the imports.
I shall conclude this section of my comments about food and Food From Britain by underlining the fact that the current MAFF expenditure plans and statistics show that there has been a healthy increase in the export of food, animal feed and drink in recent years. I welcome that, as I am sure does the House. I have last year's report only, so, as this year's report is likely to be produced in a month's time, I hope that my hon. Freind the Minister will be able 440 to update us on the exact figures and on current thinking on support for Food From Britain. I know that he shares my enthusiasm for the success of Food From Britain.
With my specific interest in agriculture, I have referred in the motion to food, and the remainder of my comments will include food, as it is an important part of the exporting scene. I shall now comment on that exporting scene more generally.
The motion draws attention to the welcome help and further initiatives contained in the recent Budget of my right hon. and learned Friend the Chancellor of the Exchequer. He announced reductions in export credit guarantee premiums for markets in Mexico, India and Turkey. It is important, when we consider what was done in the Budget, that we realise that those reductions come on top of increased cover of £2 billion announced in last year's autumn statement and last year's Budget. The measures recognised that export credit guarantees are crucial for many markets.
I ask the House to share my worry that the Treasury still seems penny-pinching when it considers export credit guarantees. There is some evidence to suggest that it is anxious to cut back on the commitment given on privatisation of the insurance services division of the Export Credits Guarantee Department, known as the national interest facility. Especially, it has decided that business in Kuwait is sufficiently good for that facility to be withdrawn. As a result, business men have to use short-term letters of credit. That is irritating to business men, and I understand that some £32 million of exports could be at risk because of the Treasury's decision.
§ Mr. Terry Dicks (Hayes and Harlington)
I am grateful to my hon. Friend for raising that issue. I spend a great deal of time in the recesses visiting Qatar, where there is a great demand for British goods. The help given to companies such as British Aerospace, Westland and Thorn-EMI in my constituency is somewhat lax. My right hon. Friend the Prime Minister has been supportive, as has my hon. Friend the Minister of State for Defence Procurement. The middle east is important, and my hon. Friend is right to speak about it. I hope that people will pay heed to what he says, because contracts and markets are there to be won by British companies, but they need Government support.
§ Mr. Alexander
I am grateful to my hon. Friend for underlining what I was about to say about Treasury support. I have the feeling that, by hardening credit terms, the Treasury is in danger of undermining business men's confidence, stability and continuity of cover.
Surely the object of export credit guarantees is not to provide cover as cheaply as possible but to enable business men to export with confidence. Such confidence is often fragile enough, and in the case of Kuwait—my hon. Friend the Member for Hayes and Harlington (Mr. Dicks) gave another example—it is inappropriate to cut the national interest facility commitment given on privatisation.
Prospects for exporters were greatly enhanced by the successful conclusion of the general agreement on tariffs and trade negotiations on 15 December. That agreement should bring down barriers against our exporters, particularly those who export food, electronics and manufactured goods. It will benefit not just our exporting companies, because it should also bring down prices for consumers, which was partly the object of the exercise in the first place. At long last, the trading practices of 441 countries against which our exporters compete will go in the face of strengthened new rules on competition, subsidies and dumping. They should be a great improvement on the current GATT rules.
The debate is timely, because it draws attention to the opportunities that the GATT settlement affords, and those opportunities are on top of an already strong export position. We are now the fifth largest exporter of goods and commercial services. We export more per person than the United States of even Japan. I have already paid tribute to the companies that have achieved that and I underline it.
The people who go out and achieve these orders show expertise, determination and hard work, for which they should be thanked. They show those qualities in parts of the world where travelling and subsistence are usually difficult and often dangerous. It is in such difficult markets that such excellent increases in exports have been achieved.
Exports to China more than doubled last year and those to Korea and Japan increased by a third and a fifth respectively. The people who obtain those orders are often young, with young families, and they win those orders at a great deal of personal and family cost. The markets in which they work are often less stable and more demanding than they have ever been.
Given the right encouragement, much of our export-led success can come from the small and medium-sized enterprises, which Britain has in abundance. Future growth in the economy and in employment and exports will come from that source. But because such companies are generally quite small, they must be sensibly linked with export opportunities.
Such small companies do not need brochures and information. In common with hon. Members, companies large and small are awash with information and, like us, they find that much of it is badly targeted. They do not have time to read, review and absorb everything in case some of it may be of use some day. I hope that those who read the report of this debate will take note of the effectiveness of their lobbying of hon. Members.
The small company with export potential will decide that if information is not immediately relevant, it will be ignored. Somehow we must get relevant and topical information to small potential exporters which need it and can use it.
In terms of the small business sector, are the rules restricting the number of subsidised attendances at trade fairs monitored for effectiveness? No one wants to waste money. Big companies will go to trade fairs anyway, but smaller companies need continuing help until they have found their feet in international markets.
I pose another question to which I have no answer. Can the Government do more to encourage smaller firms to export directly and make them aware of the value of exporting? Such smaller firms often rely for basic exports on being sub-contractors and suppliers to larger firms. They should have more easily obtainable advice on such basics as market research on other countries, the availability of finance and how to go about appointing agents or distributors.
Exporters tell me that they regret the passing of the Export Credits Guarantee Department comprehensive short-term bankers guarantee scheme, which gave ⅝ per cent. over base rate discount finance. I understand that that was of great value to small and medium-sized enterprises, 442 which financed their export growth in that way. My plea is for smaller businesses to receive better targeting of information and of financial assistance.
I spoke about the personnel involved in exporting, and what I am about to say does not denigrate in any way many excellent exporters. Because of my interest in the subject, I have received representations from constituents and others that too often there is a lack of professional and specialised training by exporters. A recent Dun and Bradstreet report showed that 38 per cent. of exporters took no outside advice on exporting, and that an amazing 87 per cent. provided no specialised training for their export staff.
The firm of Yvonne Palmer International in Nottingham, which specialises in export personnel, says that while companies are properly prepared to invest in plant and machinery, they are reluctant to invest in personnel who will best produce export sales. It says that they need to be better paid and better trained, and that companies often opt for a recent graduate with no specialised training or experience.
Just because a young man or woman has an honours degree in Spanish does not mean that, by definition or on its own, he or she will make a suitable export sales manager for Mexico or some other Spanish speaking country. To assume that is non-productive and can be damaging, but Yvonne Palmer International tells me that such a pattern is being repeated time and again.
The DTI has recently seconded 100 people from industry to help exporters. So far, so good—that has to be welcomed—but I pose the question to the Government whether perhaps that is just tinkering with the problem, which is much vaster than 100 personnel can possibly cope with, bearing in mind the potential for exports.
In any event, the export strategy of those larger companies, which have released 100 senior personnel to help, must surely be of a different character and pattern from those of companies that have to pioneer new markets, make suitable arrangements and set up agents and distributors. The answer may be for the Government to set up high-level marketing courses for senior, and potentially senior, exporting personnel. They could do that possibly through a national export college, set up and managed under the auspices of the institute of exports.
I am calling not for Government finance, but for co-ordination and training at a very high level. Perhaps the next step might be the formation of a national export council, joining together the experience of exporters, at all levels, who could then decide what specific training would fit the bill. That should not be too difficult a task. The CBI has already established a national manufacturing council. The precedents are there.
There are times and issues in the life of Parliament, and the House of Commons in particular, when party political controversy plays little part in our deliberations. I believe that today's subject is one of them. I have tried to highlight the importance of export markets, particularly food. I have tried to point out the ways in which the industry seeks help, interest and commitments from the Government. If I have succeeded and obtained that, encouraged better opportunities for our exporters and obtained an even greater commitment from Government towards the importance of their work, the debate and the time that we are spending on it today will have been worth while.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
It is a pleasure to follow the hon. Member for Newark (Mr. Alexander). He is a well-known and acknowledged expert, as someone who has taken an interest in exports. I agree strongly with his concluding remarks, that it should not be a matter for hard party political controversy, and that we all have a common interest in trying to provide the conditions and the background against which exporters in this country can prosper in future.
Through his work in the House, the hon. Gentleman has contributed a great deal towards that end, and I think that the whole House is grateful to him for that and for raising the subject today. In my experience, Friday debates are perhaps the most constructive of all in many ways, because people listen to what is said, and the atmosphere is a good deal more conducive to constructive discussion and argument. I welcome the opportunity to contribute to the debate.
Against a background of difficult trading conditions recently, the Government have done quite a bit to try to do what they can to help, but I think that right hon. and hon. Members on both sides of the House will agree that more can be done.
From my political perspective, one of the consequences of the Government's policy of adopting a more free market approach is that there is a price to be paid in having a less coherent overall strategy. That is a perfectly legitimate position for the Government to take. I guess that they will argue, and the Secretary of State for Wales is busy writing books, about the global economy. I well understand that there are real challenges in the global economy and all that that means.
I had the privilege of being the guest of the Hong Kong Government for five days in the autumn of last year, and I was astonished at the economic momentum that the Pacific basin has now acquired. There is no doubt that it is easier to do business where tax has a ceiling rate of 15 per cent. The Government must recognise, as I am sure they do, that that puts our manufacturing industry in particular at a severe disadvantage, which we must take account of.
§ Mr. Dicks
The hon. Gentleman makes a valid point about the Pacific rim, but does he agree that the Government—of both parties over the years—take a short-term view of where the export interest is? France, Germany and Japan, again in GATT, which I know well, are anticipating gas coming in from new gas fields in 10 years' time. We are still thinking about a job for tomorrow: the rest are seeing it way into the future.
§ Mr. Kirkwood
He is right. The system that we have evolved, rightly or wrongly, is short-term in a party political sense. If we had coalition government, proportional representation and single-member seats, with all that that brings, we would have a better chance of achieving that. That is true in Germany. I will not develop that thought because of the risk of rupturing the sense of cross-party co-operation in this important debate.
444 The Government should look at the longer term. We should try to steer them in the direction of getting a more coherent, long-term approach. That would be welcome to hon. Members on both sides of the House.
An important part, too, of refining things in future in a positive way would be an attempt to focus more on manufacturing industry. I perfectly understand that, in their 14 years of office, the Government have paid considerable attention to the service sector. The hon. Member for Newark rightly adverted to the fact that we are the fifth biggest exporter of goods and services. However, the emphasis is probably on service, and that was argued by the Government in their political prospectus. I do not argue against that. We have expertise in the service sector.
From my experience as a Scottish Member, I know that Edinburgh has a good financial base, which does Scotland and the rest of the country a great service. I think that we have ignored the pressures that manufacturing industry has been under in the past few years. That is particularly true, as the hon. Member for Newark mentioned, of the way in which it affects small businesees. When I talk about small businesses, in terms of the Borders of Scotland, I am talking about firms of 10, 12 or perhaps 20 employees at the most.
The United Kingdom has a good system for dealing with bigger companies. The ICIs, the GECs and the rest have a sensible method for dealing with the problems they face. But smaller firms struggle. If we are in a new global economy and are trying to help our export effort, we must pay more attention to manufacturing and try to concentrate as much as we can the scarce available resources in the direction of small businesses.
§ Mr. Bernard Jenkin (Colchester, North)
The Opposition are fond of saying that we must pay more heed to manufacturing. Throughout the 1980s, Secretaries of State for Trade and Industry paid due heed to the needs of manufacturers. Of course we all know that we must do all we can for the manufacturing industry. When the hon. Gentleman says that we must pay more heed to manufacturing, what does he mean? That is never explained. For the hon. Gentleman just to make that point and then go on to his next point is part of the vacuous argument that we need to do away with.
§ Mr. Kirkwood
I am grateful to the hon. Gentleman, as he anticipates the next paragraph of my speech, which refers to an extremely good report on smaller businesses by Professor Bolton in the 1970s. A whole series of recommendations are gathering dust on civil servants' shelves. If the hon. Gentleman is asking me what I would like to do, I would specifically start with recommendation 1. It is a bit out of date, because it was done years ago, and would have to be brought up to date.
The Government should look at the report of the Bolton royal commission into the needs of small businesses. Royal commissions may be a little out of fashion, it might take too long, and there might be a quicker way of doing it, but that is precisely the kind of thing that we should be doing.
§ Mr. Jenkin
What was the recommendation? If the report is so old and out of date, we can be forgiven for not recalling its recommendations in detail.
§ Mr. Kirkwood
All I am saying is that Governments in previous incarnations paid more attention to the needs of small businesses in the manufacturing sector. The hon. Gentleman asked me what I would recommend, and that is precisely what I would recommend. I do not have time to go into the report's recommendations in detail, but I shall refer to some of them in passing.
I am sure that we all get representations from our constituency saying that the Government have a duty rigorously to monitor the practices of other countries to ensure that they are staying within the rules. There is evidence that some of the rules in the single European market and in GATT are being flouted and side deals are being done in a way that is prejudicial to the interests of our exporters.
§ Mr. Oliver Heald (Hertfordshire, North)
Would the hon. Gentleman like to pay tribute to the Department of Trade and Industry for setting up the new compliance unit, which will do exactly what he is suggesting?
§ Mr. Kirkwood
I was going to do just that. As a Member of Parliament representing a textile area, I was concerned until recently about the breaches committed by China, which was flooding the market with shipments of cashmere garments way over the quotas established under the bilateral deal under GATT. We went to the DTI and, with its assistance, got a mechanism put in place that gave us some assurance that such breaches would be dealt with in future. I think that such breaches are still happening, and I noticed with great interest that the United States took the step of retaliating against China because of the way in which it was dumping, indirectly through places such as Honduras, a lot of Chinese cashmere textiles.
The compliance unit has done a great deal in that direction, but that is only one example, and it had to be specifically requested. The DTI had to go to Europe and get the system put in place. The Government are in a good position to monitor such practices rigorously, and we have to do that through our relations within the European Union.
Probably more than anything else, exporters want from the Government an economic framework that will give them confidence that there will be some economic stability. It is easy to have wish lists and for Opposition parties to ask for them. However, it is important that the Government eliminate uncertainty as much as possible.
In that context, I notice that the pound has been rising steadily; that will have consequences and implications for exporters if it gets out of hand. Although interest rates are lower than they have been for some time, some businesses in my constituency are paying 4 per cent. over base rate, which means that they face relatively high interest rates. That needs urgent attention. The exchange rate has to be set in a way that makes our products more competitive.
§ Mr. Kirkwood
I have given way enough, and I have a long speech to make.
An independent central bank that can monitor some of those matters would be in exporters' interests, and I believe that that is being considered. The Government can also help exporters by setting out the rules of trade clearly. The single European market is a great improvement, giving us an opportunity of which I hope our exporters will take advantage. Is enough being done to maximise the 446 opportunity provided by the single market and to police the rules as practised by other countries? My constituency experience leads me to say that we need to open the French and German markets, because efforts are being made in those countries to make it difficult for our exporters to prevail and prosper.
Will the Parliamentary Secretary say something about GATT? Obviously, he will have a direct interest in the agriculture section of GATT, which is important. However, it is also important—if he cannot do anything today, perhaps he will refer the point to his right hon. and hon. Friends in the DTI—that we know more about what exactly has been done to strengthen the textile rules and disciplines within GATT. They have not been properly clarified.
I have been unable to find out what the detailed textile agreement amounts to. Strengthened rules and disciplines are vital to the industry. It would have been sensible to argue for a review period within the phase-out of the multi-fibre arrangement, but that suggestion might not have found favour with other countries within the European Union in negotiating GATT. We must find out what access to third-country markets GATT gives our textile industry.
Will the Minister also say something about how the Government are coping with eastern Europe? The emerging countries of eastern Europe are in a difficult position, and we in the European Union must give them assistance. However, that assistance must be balanced by the fact that, if they get preferential treatment on access, both in agriculture and textiles, once their industries are sorted out that will have severe implications for our industries. I accept that a balance must be struck, and it would be helpful if the Minister could tell us what the Government's thinking is, and useful if he could do it today.
Exporters tell me that they need, in addition to stability and economic certainty, the amount of investment in infrastructure that enables them to compete on equal terms with their opposite numbers, particularly on the continent of Europe. That means having sensible road, rail, air and sea links. That is particularly important for areas such as mine in Scotland, which are that much more remote from the central points of the market within Europe. The key to the European markets for us will be how effective the new channel tunnel, which I welcome, will be in making it easier for my exporters to deliver their goods to the markets they want to serve.
I support what the hon. Member for Newark said about export credit guarantees. The recent improvements are extremely welcome, but they do not go far enough. The Treasury must be put under pressure—I hope that the DTI and the Ministry of Agriculture will continue to do that —to acknowledge and recognise the points made by the hon. Member for Newark. It is difficult for businesses exporting to some of the areas that are not covered to get the export credit guarantees they need.
One of the representations that I most often receive from exporters in my constituency is that they need better assistance for marketing from the Government. That is particularly apposite for agricultural produce. Much has been done, but much more could be done. Scotland is operating a Scottish quality food mark—proposed by the Scottish Office—which is entirely welcome and working well.
§ Mr. Soames
Perhaps the hon. Gentleman will allow me to comment on that important point, because I may not be able to do so when I wind up.
I pay tribute to the outstanding work done in Scotland on agricultural quality assurance, which serves as a role model for many other parts of that industry. I was pleased to assist at the launch of a quality assurance scheme for trout farming in Glasgow, and was hugely impressed by the work done there. I am sure that the hon. Gentleman will take back to Scotland our appreciation of that work, from which we are doing our best to learn.
§ Mr. Kirkwood
I am grateful for the Minister's helpful intervention, and I will certainly do as he says.
The hon. Member for Newark mentioned exhibition and trade fair costs. Arrangements in place through local enterprise companies and Scottish Enterprise allow firms to play a larger part in international trade fairs, but more could be done—particularly for agriculture. The quality of Scottish agricultural products should be promoted more vigorously and robustly. The industry has its own part to play in that, but the Government could do more.
The Bolton report referred also to the need for better customer orientation, design technology and training, and for a different attitude towards exporting in manufacturing industry in particular.
I pay tribute to the work done by Scottish Enterprise in the Scottish export assistance scheme. Although it runs well, it, too, could be improved. It allows 50 per cent. of planned export marketing costs to be covered over two years, up to a ceiling of £30,000. However, firms that participate in that scheme are required to pay a 5 per cent. royalty, up to ceiling of twice the assistance they receive. That penalises successful companies, and the scheme should be re-examined.
§ Mr. Paul Marland (Gloucestershire, West)
In trying to be helpful and to understand what the hon. Gentleman is recommending, perhaps I could ask him to be more specific about the Bolton recommendations that he would like the Government to implement. We are anxious to know the right way forward. If the hon. Gentleman would spend more time speaking about the Bolton report, it would be helpful.
§ Mr. Kirkwood
I described some of the report's recommendations, such as export assistance schemes of the kind that Scottish Enterprise has developed, which could be further improved and developed. The Scottish export assistance scheme could be enhanced by reducing the amount that must be reimbursed by companies that successfully participate. If the amount on which the royalty is payable were reduced from twice the amount of support extended to one and a half times, or even to only the amount provided, that would encourage more firms to enter the scheme.
South-east Scotland has an export initiative covering the Borders that helps small firms in the way that Bolton recommended. Scottish Borders Enterprise established a scheme that provides support, encouragement and intelligence to help Borders companies with their export activities.
Is it not the case that schemes available to exporters in other countries offer preferential treatment? In Canada, for example, firms in British Columbia can obtain financial support that effectively provides working capital if they win access to export orders—provided that they can prove 448 their manufacturing capacity and financial solvency, and that their customers are creditworthy. That flexible, one-stop shop approach on attractive financial terms could be adopted in this country.
I will conclude with one or two references specific to my constituency. I appreciate that the Minister does not have responsibility for agriculture or for trade and industry north of the border, but the consideration currently being given by the European Union to objective 5b status and funding is crucial to exporters in that region. That is particularly so in terms of infrastructure support and development. The Scottish Office has given stout assistance in trying to achieve eligibility for objective 5b status, and the Government should do all they can to help. I hope that the Minister will relay that sentiment to the appropriate Scottish Office division.
The development of the Al and A7 and of Eyemouth harbour are sensible infrastructure projects that could be financed in a non-inflationary way, and would help exporters in the Borders.
§ Mr. Soames
As the hon. Gentleman knows, I spend a good deal of time in that part of the world, and I have long held that Scotland has the best road system in Britain. How would the improvements that he suggests, per pound invested, significantly help the export efforts of Borders companies?
§ Mr. Kirkwood
The next time that the Minister visits Kelso, I will invite some people to discuss that matter with him over tea at the Ednam House hotel—for which I will pay, if not for the fishing. If the Minister uses the west coast route, travels up the A6, then turns north-east at Carlisle and uses the A7 south of Hawick, he would find himself on a road that he, as an objective man, would consider sub-standard for the requirements of a modern exporting economy. The textile industry sends all its production to the top of the M6 motorway. I appreciate, however, that developing the Al dualling competes for the scarce resources available for all trunk roads.
Last Friday marked the 25th anniversary of the Waverley rail route closing. My right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) was on the last night sleeper to run on that line, and played a part in preventing a host of protesters from being incarcerated after they demonstrated against the closure in those bygone days. There is no railway station left in the Borders region, so it must rely on the road network. I am sure that the Minister can be persuaded that longer-term assistance is needed to improve roads in that region.
Much has been done, but more could and should be done in the long term, with particular emphasis on smaller manufacturing businesses. We should examine the constructive incremental steps that could be taken. If the matter were attended to in the way that I suggest, small manufacturers could contribute even more to this country's export efforts than they have been able to do in the recent past.
§ Mr. Paul Marland (Gloucestershire, West)
This is an important debate, as other hon. Members have said, because there is no doubt that exporting creates wealth for this country—as does adding value at home and supplying our own markets. The Government have rightly said—and 449 deeply believe—that farmers, retailers and manufacturers must work together to increase our share of the European and international food markets.
We have heard some interesting suggestions from my hon. Friend the Member for Newark (Mr. Alexander)—and, to be fair, other hon. Members—about what can be done to encourage small firms to export. There is absolutely no doubt that, in many respects, our small firms are the wealth creators of the future. In my view, they will certainly be the ones to sort out our unemployment difficulties and we must do all that we can to smooth the way for them. That is why I was interested to hear more about the Bolton report. I am grateful to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) for referring to that report: it is a document which I shall read with considerable interest myself.
I approach the debate from a slightly different perspective. I hold the view that we should do more to fill our own market with raw materials and added value products and to prevent the importation of food and drink products into Britain by supplying them from our own manufacture. Most food products are highly price sensitive and competition to fill demand for foodstuffs is to be found not only Europe-wide but worldwide. If a few pence can be shaved off the price of an article in a supermarket or shop, housewives, who are canny buyers, will descend on it, recognising that it represents good value.
Within Europe, it is vital that we achieve the same terms and conditions as our partners for production, transportation and processing. We need a level playing field. I know that people do not like that expression, but it is highly illustrative. We need to ensure that we can supply our own markets and go into the markets of our competitors—or, rather, our partners—and it is therefore most important to ensure that the same rules apply throughout Europe and that everyone abides by them. It does not matter how many times we say that: we can go on repeating it. The manufacturers in my constituency with whom I come into contact are above all anxious that they should be subject to the same rules as those that exist elsewhere in Europe.
All too often, we hear that it is easier to do something elsewhere in Europe and that is because the rules that apply here do not apply elsewhere. Let me give an example. I have great respect for my neighbouring farmer. He is a man who embraces the latest technology and does his very best to make ends meet on the farm that he runs. He does a fine job. He recently took a holiday in Spain. Being interested in farming, he was naturally interested in what was going on in the Spanish countryside. He found a Spanish farmer spraying a crop. I cannot give the details of the crop because I do not know them, but my neighbour could tell from the smell what the spray was. When he went to see how the job was progressing, he discovered that the spray operator was wearing no protective clothing and no gloves to protect his hands from the concentrated spray and the tractor had no power take-off guard. In this country, that would have been illegal: if one does not have trained spray operators or a power take-off guard, one can be prosecuted. But it appears that that is not so in Spain.
§ Mr. Heald
Given the increasing spirit of European co-operation, does my hon. Friend think that it might be helpful if we lent some of our MAFF inspectors to the Spanish and perhaps also to the French and invited some of their inspectors here? Then we could ascertain whether the level playing field for which we all hoped is a reality.
§ Mr. Marland
That is not a bad suggestion. As my hon. Friend the Member for Newark remarked earlier, we recently conducted an inquiry into the preservation of fish stocks. We make great efforts in this country—as they do in Norway and elsewhere—to look after our sea fish stocks. It was put to us that Spain had seven fisheries inspectors—
§ Mr. Marland
We were told that the Spanish had 15 fishery inspection officers, all of whom were based in Madrid. We thought it important to go and find out for ourselves precisely what the situation was. Admittedly, it was not quite as bad as we had been led to believe, but none the less that is a fine example of a case in which our European partners do not abide by the same rules as we do.
§ Mr. Soames
My hon. Friend is a farmer himself and therefore knows a great deal about the business. Of course I accept his strictures about the level playing field—as he knows well because we have discussed the matter regularly. We want our farm labourers and work force to be properly protected and my hon. Friend would be the first person to be furious if a tractor of his did not carry the right protective equipment. But others of our European partners, including Spain, are not wholly developed countries in the sense that we are and the example to which my hon. Friend referred does not represent a competitive factor that affects our trading position in the world. My hon. Friend knows that where the level playing field really matters is in real trade agreements. By building trade and prosperity across the single market, we shall ensure developments in those rather more backward countries, to the benefit of their citizens as well as ours.
§ Mr. Marland
I thank my hon. Friend for that intervention and accept what he says. Nevertheless, it is extremely irritating for a British farmer who is under the impression that we have all signed up to the treaties, that there is a level playing field and that we are living by the same rules, to go on holiday to Spain and find a Spanish farmer spraying crops with no protective clothing and no power take-off guard. I try to talk about such matters from a practical point of view.
§ Mr. Jenkin
Is not it also a fact that our Health and Safety Executive employs thousands of people all over the country who are engaged in checking not only agricultural businesses but all kinds of business, whereas the French equivalent employs only a few hundred people, who are all based in Paris and who do not travel around a great deal? Is not there a danger in constantly invoking the level playing field and allowing others—particularly European Community institutions—to do the same? By doing that, we simply give a pretext for endless Government intervention and regulation, which we, in our decency, always implement to the letter, but which other countries have absolutely no intention of implementing. Is not the level playing field a concept of which we should become a little more suspicious? Would not we be better off doing more of our own thing and making more of our own laws, with accountability to this House, rather than letting the institutions of the European Community dictate endlessly to us?
§ Mr. Marland
I undserstand my hon. Friend's point. That is why I responded so warmly to the suggestion of my 451 hon. Friend the Member for Hertfordshire, North (Mr. Heald) that it might not be a bad idea for us to lend some of our inspectors to our Spanish friends and see how things developed from there.
My next point concerns slaughterhouses. I have two modern slaughterhouses in my constituency. One of them has spent considerable sums on upgrading its premises and the other is in the process of doing so. I have been on a very interesting tour of one of them and have corresponded with the other. On my tour, I was shown the way in which the operators—the men who cut up the animals—have to wash their hands. The House may think that that is a pretty straightforward operation. In an operating theatre, where human beings are being dealt with, it is, indeed, a straightforward operation: one uses elbow taps. We have such taps in the facilities—if I may call them that—in the Lobbies. But one is not allowed to use elbow taps in slaughterhouses—certainly not in Gloucestershire. One has to use a foot or knee tap, which is much more expensive to install and adds substantially to the cost of modernising a slaughterhouse. Yet I understand from an hon. Member who has a cottage in France that the farmer next door to him kills sheep on the farm, virtually with his own hands. When asked about the regulations governing hygiene and slaughter and the duty of care, that French farmer shrugged his shoulders, knocked the ash off his cigarette and said, "These rules are only for the English."
There is some irritation among medium-sized slaughterers in this country about the derogation for small slaughterhouses, which now permits more animals to be slaughtered without the slaughterhouse having to be brought up to EC standards. That is contrary to what they were originally told.
There is substantial duplication of inspection when animals go for slaughter. A slaughterhouse in my constituency is spending between £28,000 and £30,000 a year on ante-mortem inspection. Its animals are often bought at the stock market in Gloucester, where the sale of stock is supervised not only by a vet but by the RSPCA and a local animal health officer. I question whether it is necessary to have so much inspection, which all costs money and makes it more expensive and more difficult for our slaughterers to compete with imports and more expensive for them to export.
As my hon. Friend the Minister said, we rightly react positively to health scares. We do not want our citizens to be poisoned by food produced in this country or injured on the farm because there is no power take-off guard on a tractor.
The Ministry of Agriculture, Fisheries and Food responded positively to the incidence of lead in cattle feed and of salmonella in eggs. Many would say that there was overkill because enormous numbers of laying hens were slaughtered, but what happened to the eggs? Some egg retailers simply imported eggs from abroad. Eggs from Poland were repacked here and labelled "Packed in England" to reassure buyers that they were salmonella-free. When we asked continuously why eggs could not be tested at the point of importation, we were told that they would have been consumed by the time that the results were known. There is no level playing field for many British producers.
452 My hon. Friend the Member for Newark and I are members of the Select Committee on Agriculture, which is currently looking into the chicken industry, the vaccination of broiler chickens and how quickly vaccines are cleared by the Ministry so that they can be used on United Kingdom stock. My hon. Friend the Minister will be aware that the process is quite slow. In some cases, our producers are disadvantaged by not being allowed to use vaccines, but our friends in Europe use them and we import chicken meat that has been treated with vaccines which our farmers are not allowed to use. There are many examples of there not being a level playing field for exports and imports in Europe.
The United Kingdom imposes rigorous animal welfare standards, with which I do not argue, for pigs, battery cages for chickens and livestock transportation. The Ministry of Agriculture and my hon. Friend the Minister should get due recognition for their diligent and caring approach.
Farmers are concerned about the new ear tags for cattle. Today a cow's ear tag has five digits. It needs to be quite large so that farmers can read the numbers without too much difficulty, but under EC regulation it must have 15 digits. Can hon. Members imagine the size of the tag in the animal's ear if the farmer is going to be able to read it without difficulty? Many farmers, like Members of Parliament, are short-sighted and would have difficulty reading such a tag. Some attention should be paid to the fact that ear tags must not be too uncomfortable for animals.
Does better animal welfare increase sales? Do happy pigs encourage more housewives to buy their pork? I wonder. The RSPCA told the latest sitting of the Select Committee that free-range eggs and eggs produced by happy chickens will sell more than those produced in a battery. I am not sure about that and I do not have much respect for the way in which the RSPCA is treating many Members of Parliament, who are seeking to do what we can to improve the welfare of animals. I disapprove of its recent advertising, which showed some pretty repulsive sights.
§ Mr. Soames
I am grateful to my hon. Friend for raising the crucial point of animal welfare at transport. He and I wish to see our high standards applied across Europe and I endorse his point about the level playing field. Does he agree that the RSPCA should spend its time worrying not about what we think, because we have led animal welfare in Europe, but about what is happening in Spain, France, Italy and the southern Community states? It should devote its attention to that instead of sucking up to its supporters in big advertising campaigns which imply that animal welfare is bad in this country. It is of a high order and we need to see a dramatic improvement across Europe if there is to be a level playing field.
§ Mr. Marland
I am not terribly happy with that intervention. My hon. Friend has filched my next point.
§ Mr. Marland
That is all right, but he should be more careful in future.
I was going to mention ritual slaughter. There was an embarrassed silence in the Committee when that was mentioned. What does the RSPCA do to prevent ritual slaughter in this country and elsewhere? The answer is nothing. As my hon. Friend the Minister said, it spends too 453 much time sucking up to its own members to try to justify its own existence. It should tackle problems that are a great deal more difficult rather than having a go at hon. Members, who are on its side.
§ Mr. Jenkin
Is my hon. Friend aware that the requirement to allow the live transportation of animals is damaging the reputation of British food producers by allowing diseased animals into this country? In areas surrounding and within my constituency, pig blue ear disease has re-emerged as a problem as a result of the transportation of live animals.
§ Mr. Marland
I must be more careful about giving way so readily—I was coming to that myself.
We are proud of the high quality of our livestock. We export much pedigree livestock—race horses, breeding stock and dogs. Britain has a fine reputation for high-quality livestock. It is most important that we seek to maintain and, where possible, improve on those standards.
What can the Government do to seek to maintain the high standards of livestock in this country? As my hon. Friend the Member for Colchester, North (Mr. Jenkin) said, there is evidence that we are importing diseases. We appear to be doing so from Europe—I suspect from eastern Europe. An in-calf heifer in eastern Europe costs £100, but in Gloucester market it sells for £1,500. I have an auction catalogue from Gloucester market. Twelve French Hostein Friesians—it says that they are French and I have no reason to doubt it; they were definitely imported—and 15 six-month-old Dutch-bred Holstein Friesian calves were being auctioned. We do not know where they were treated or whether there was any relevant information in their accompanying documents, but, as my hon. Friend the Member for Colchester, North said, disease is being imported and it causes substantial difficulties for our farmers. If there is an outbreak of disease, who pays?
I have details of a recent warble fly outbreak near Stroud which was traced to imported cattle that had not been dressed against warble fly. All cattle within three miles of the outbreak had to be treated. In total, 34 farmers had to treat their cattle. It cost one farmer more than £500, but who pays? In the end, of course, farmers have to pay, but they are not happy about it because it adds to their costs. If the problem is caused by careless importation or careless categorisation of cattle, action should be taken. I know that my hon. Friend the Minister is aware of the issue because my right hon. Friend the Minister of Agriculture, Fisheries and Food has spoken about it—more power to her elbow for doing so.
Tuberculosis in badgers is also a problem in some parts of the country. I again pay tribute to my hon. Friend the Minister for his efforts to devise and improve trapping techniques for badgers. Badgers spread tuberculosis to cattle and if infected badgers are found on a farm that farm is "shut up". The farmer is unable to sell his produce because of the possibility of tuberculosis in the stock. I know that my hon. Friend is aware of the problem and is doing something about it. I am sure that all my hon. Friends will be delighted to know that he has received many compliments in Gloucestershire and the west country for his efforts, and I thank him, too.
I deal now with the vexed question of milk marketing at home and, one hopes, abroad. Even if we are not self-sufficient in milk, which we are not, there is no reason why a well-run milk industry should not be able to 454 maximise business at home and export at the top end of added value products, which is what we produce. That is how wealth is created—one adds value and tries to sell added value products abroad so that one imports only low value added products. That leads to a positive balance of trade with our partners in Europe and further afield.
Changes are taking place, but they engender concern and that is nowhere more evident than in the reorganisation of the milk marketing boards and Milk Marque. The farmers and processors need to work together, but things are not going too well. I compliment my hon. Friend the Minister on his Department's handling of the consultative process involving the milk marketing board's proposals and its willingness to continue the consultation even when things are not going as smoothly as they might.
The milk marketing board has gone back to the drawing board. The Department's willingness to continue to listen to farmers and other interested parties is much appreciated. My hon. Friend has acted prudently in taking heed of the key issues raised by those who responded during the consultation because they realise that their efforts have not been in vain. They realise that the Government listen to what people have to say and the Government are getting the credit that they deserve.
No one wants to see 60 years of the milk marketing board or 50 years of local farmers supplying, for example, the Cotteswold dairy in Tewkesbury, which I recently had the privilege of visiting, overturned in five minutes.
§ Mr. Marland
It is indeed a good dairy. I am grateful for my hon. Friend's support. I am sure that the directors of the Cotteswold dairy will be pleased to know that the dairy has another supporter in the House. It is only one example and I am sure that there are many other local dairies that hon. Members could mention. If they wish to do so, I should be happy to give way. One cannot overturn 50 years of tradition and successful trading merely because the milk marketing board is about to change its role slightly. We must handle the change with kid gloves.
It has not been easy for my hon. Friend and his colleagues to send back the milk marketing board's proposals for further consideration. It would have been easier for them to approve the scheme submitted by the milk marketing board and leave it to be sorted out by the competition authorities and the European Commission. After two years of Milk Marque, the European Commission will hold a review and sort out any problems. It would have been much easier for the Ministry of Agriculture, Fisheries and Food to have left it to other authorities to deal with the matter, but my right hon. Friend the Minister is to careful and too good a Minister to walk away and leave things in an unsatisfactory state; and a jolly good thing, too.
Leaving the problem to others would have led to Milk Marque being undermined by the competition authorities just as the milk marketing board has been, which would have further undermined the United Kingdom dairy industry. It would also have shaken the industry's confidence, made it less easy to fulfil the home market and probably made it more difficult to export high value added products, which is what we want to achieve. Any other course of action by the Ministry would not have been in the interests of the producers, processors or consumers of milk.
455 A few of my constituents who are milk producers think that Milk Marque should be able to take all that it can unto itself and to blazes with everyone else. I am trying to do my best to persuade them to take a more realistic view of life and to explain that that is not how it will work out. I hope that I am winning.
However, the main concern about the milk marketing board's proposals is that those involved want more openness. They want Milk Marque to talk straight and not to try to steal a march on them. They need to know exactly what they are dealing with to ensure a smooth relationship. They want a far less complicated selling and allocation system for milk than that being proposed by the milk marketing board, which has different levels of service and supply and a range of price options about which little detailed information is available. Milk Marque has also been trying to bounce processors into early contracts, which is thoroughly unsatisfactory.
Milk Marque must state the price that it wants for a steady supply of milk rather than try to coerce processors into a range of price and service alternatives. It is highly likely that Milk Marque will get up to 75 per cent. of the milk from farms and it must act responsibly. The whole point of the changes is to free the market and if Milk Marque tries to keep all that milk to itself, we shall not get very far. If Milk Marque is behaving in this way even before the game has started, I do not hold out much hope for the future.
We are not dealing only with the short term. Producers need processors who in turn need customers in the United Kingdom and elsewhere. They should have a smooth business relationship, not one in which one party tries to hold the other to ransom. Anyone who is or has been involved in business knows that it is a partnership. There is always a tomorrow and one needs a smooth relationship with a satisfied customer. Everyone must make an effort to fulfil his part of the bargain.
There is also concern about the milk marketing board's proposals for haulage. The processors do not want the single option of milk at a delivered price. Many have large fleets of vehicles that they want to use not only for themselves—
§ Mr. Marland
Perhaps they want to use them for export, but they also want to reduce the costs of operating their vehicles. It is important that they should have the opportunity to do so. If the processors want a delivered price from Milk Marque, that is fair enough, but if they want the option of collecting the milk themselves, it should undoubtedly be available to them.
We should also consider traceability. In today's world of "duty of care", it is important that the processors should know precisely where the milk has come from and that it has been tested by their own standards, because if they are held accountable, they must be allowed to know where the milk has come from. It is blurring the issue to say that they would test the milk and that it would all be delivered in good order. I am sure that it would be, but the processors want to know precisely what has happened to the milk.
We should consider the distribution of assets of the milk marketing boards, too, as my right hon. Friend the Minister has already recognised.
§ Mr. Marland
If the hon. Member for Roxburgh and Berwickshire wants to intervene, he should do so. However, I wish that he would shut up quibbling.
§ Mr. Kirkwood
The matters that the hon. Gentleman is raising are important, but I am struggling to work out what Milk Marque and the milk marketing boards have got to do with the exportation of milk.
§ Mr. Marland
I want to see the processors and the value-adders in a position to sell high-value products abroad. They need the raw material and Milk Marque is seeking to hedge round its supply of milk to the processors. Does the hon. Gentleman understand the point that I am trying to make? It is straying a bit far from exports—
§ Madam Deputy Speaker (Dame Janet Fookes)
Order. We cannot have semi-private conversations between two Members.
§ Mr. Marland
Between us, I think that we have made the point and sorted it out. Thank you, Madam Deputy Speaker.
It must be ensured that the distribution of assets is fair and reasonable to all concerned. The distribution of assets applies not only to any accumulated cash that the milk marketing boards may be holding on behalf of their members, but to any future value to milk producers in enterprises such as GENUS and national milk records. Although it is widely put about that those two enterprises have no value today, who knows what could develop in the hands of an upwardly mobile company?
Concern has also been voiced about the possibility of Milk Marque seeking to get back into milk manufacturing. If that co-operative collects 75 per cent. of the nation's milk, the temptation to return to manufacturing could be more than Milk Marque would be able to resist. We must make absolutely sure that that is not allowed to happen, because if it does, we shall be back to square one and the present situation with the milk marketing board.
Obviously, there is concern among farmers, manufacturers, and the boards' employees and shareholders, as well as their customers, about what the future holds. Certainly, there is disappointment that the original vesting day of 1 April will not now be achieved. I hope that 1 July, the next date that those involved have in their sights, will be achieved. The milk marketing board has been a little naughty in trying to gather for itself more than it should have done and has tried to corner the market before the game has started. I am glad that my hon. Friend the Minister has sympathy with that view.
The question of a regulator was widely discussed in Committee. I ask my hon. Friend the Parliamentary Secretary to pass on to our right hon. Friend the Minister the fact that there is great concern in the market and that the appointment of a regulator for the first two years of operation of Milk Marque would be a great help. Sir Terence Beckett is the present regulator and I understand that it would be acceptable to all concerned if he were asked to stay on for a further two years if he would do so. I wish my hon. Friend on the Front Bench and his partners in the Department of Agriculture, Fisheries and Food the best of luck in sorting out that difficult situation and I hope that some of my remarks may find favour with them.
As my hon. Friend the Minister knows, my constituency covers the royal forest of Dean. There are opportunities in 457 forestry for us to export timber as well as import it if we have a proper, well-run forestry industry, although we are big importers. I am not saying that we do not have a well-run industry, but there are opportunities for more domestic production, which would be a big import saver. My hon. Friend the Parliamentary Secretary is aware that the forestry review group, which was set up by his Department, has been asked to examine three aspects of forestry in Britain: timber production, environmental impact and recreation.
First, how efficient is timber production? Can it be improved or increased or can more value be added to the raw timber produced so that we can have more success in exporting value-added products?
§ Mr. Marland
I am glad that there are nods of assent from the Opposition Benches. Any Government should ask their various Departments to consider the way in which they are operating to see whether they are functioning as efficiently as they can. We should ensure that the Forestry Commission is run as efficiently as possible.
Secondly, the environmental impact of some of the large, dark blocks of Forestry Commission land with acres and acres of conifer trees is not a pretty sight in some parts of the country. That should also be considered. The felling and replanting of forestry land should be done as aesthetically as possible. Are those who currently run our forests doing what they can to support bird and flower life? In the royal forest of Dean we have verderers, whose important duty it is to look after the flora and fauna and deer there. I am pleased that my noble and learned Friend in another place has recently dicussed with the verderers whether matters are satisfactory and whether there was any threat to the future of the royal forest of Dean from the forestry review group.
Perhaps the most controversial of the aspects which the review group has been asked to consider is recreation. That is important to the public and I know that many hon. Members share my view. It is important that we should take account of the thousands of people who enjoy the freedom to roam, cycle, bird watch, have picnics, go camping or whatever else people do in the estate of the Forestry Commission. The Forestry Commission is good at encouraging such activities. It has extremely well-organised camp sites and picnic sites in my constituency which are all beautifully signposted. It has built barbecue pits and has taken a great deal of trouble and time to ensure that its visitors are well looked after. There is immense support throughout the country for the activities of the Forestry Commission and it is widely respected. Two local employees of the Forestry Commission in the forest of Dean were recognised in the recent honours list for their work for the organisation and I am happy to pay tribute to that work and to them.
Since 1981, the Forestry Commission has been empowered to sell standing timber. There is considerable concern among many of my constituents that when the Forestry Commission sells off part of its estate, the freedom to roam and that access will be denied by the new owners. I know that that concern has been registered with my hon. Friend and I hope that when the review group reports, some attention will paid to that. I have no argument with the Forestry Commission standing on its feet. It is, after all, a £3 billion enterprise.
458 I must once again draw hon. Members' attention to the forest of Dean, whose unique status was recognised by the House in 1981. The legislation passed to enable the Forestry Commission to sell off standing timber also stated that it could not sell any part of the ancient forest of Dean and I am anxious that that should remain the case. In fact, I put it on the record that I have not been sent here by my constituents to see the Government privatise the royal forest of Dean and I shall not stand by and let it happen. I am anxious that there should be no misunderstanding, so I shall repeat that: I have not been sent here by my constituents to see the Government privatise the royal forest of Dean. I worked hard to ensure that the uniqueness of the forest was recognised and to get the Forestry Act 1981 passed and I warn my hon. Friend the Minister that if the Government ever seek to privatise the forest, or to go back on that commitment, I shall be left with no alternative but to fight them tooth and nail—
§ Madam Deputy Speaker
Order. Could the hon. Member enlighten me as to how that relates in any way to exports?
§ Mr. Marland
I keep emphasising, for the benefit of the hon. Member for Roxburgh and Berwickshire, that I feel that a well run—[Laughter.]—industry can add to our opportunities to export timber and dairy products. Perhaps, in the interests of greater efficiency, some tightening up of the way in which the Forestry Commission is managed may be necessary, but it is my earnest hope that the forestry review group will recommend that the maintenance of the status quo is the right way forward. I know that I am not alone in that aspiration because many other hon. Members in the House—[Laughter.]—and their constituents share that view—
§ Madam Deputy Speaker
Order. This reminds me of my teaching days, when small boys dissolved in helpless giggles. I thought that we had moved on from there, but evidently not.
§ Mr. Marland
You will be very pleased to hear, Madam Deputy Speaker, that we are moving on now. I shall turn more directly to the subject of exports and the Department of Trade and Industry. My hon. Friend the Parliamentary Secretary and I spend as much time as possible in the countryside. We know that two professions have done more than any other to care for it—the farmers and the metal recyclers, who have been around longer and done much more for conservation than the present group of trendy, woolly hatted environmentalists. Fair enough, metal recyclers have made money out of stopping the dumping of old cars in ditches, but so have farmers. The export of processed metal, in the form of furnace feed, is now big business for the United Kingdom, but there is a cloud on the horizon which may inhibit the trade's development. I am bringing that to my hon. Friends attention so that he can pass it on to his opposite number in the Department of Trade and Industry.
The export of furnace feed from the United Kingdom is big business and represented the movement of about 4 million tonnes of material last year, which brought in foreign currency to the value of about £300 million. There are no controls on the export of furnace feed from the European Community to third countries, but the fact that the material has been wrongly catalogued by Customs and Excise as waste has led to a serious threat to the business.
459 Since the mid-1980s, many countries have become aware of the disposal of hazardous wastes from developed to developing countries, which is often done in dubious circumstances. While companies engaged in that activity usually operate outside the law, their activities have focused minds—not least those of members of Greenpeace —on the problems of hazardous waste disposal. Much more attention is now paid to any cargo classified as waste, whether hazardous or not.
The Basel convention has dealt with the problem and drafted rules for the disposal of hazardous waste, especially waste that crosses international borders. The convention also sought to distinguish between hazardous and non-hazardous wastes such as furnace feed. However, even for non-hazardous waste, the bureaucracy is horrendous. The likely administrative and bureaucratic delays could cause serious interference in legitimate trade in that material. This country is a signatory to the Basel convention and the rules are generally a sensible precaution when applied to hazardous material, but they can be a nightmare when applied to non-hazardous wastes. As Greenpeace is having trouble distinguishing between hazardous and non-hazardous cargoes because they are simply labelled as waste, it also sometimes causes unnecessary difficulties.
The European Community is trying to frame rules to control the trans-frontier shipment of waste, but while it is doing so I urge my hon. Friend to persuade the Department of Trade and Industry to note the anomalies that are being created, which may damage the trade in recyclable material.
On the subject of exports—you will be relieved to hear that, Madam Deputy Speaker—of reusable materials, I refer to the trade in second-hand clothing, which is an astonishing business and is one that is worthwhile in every aspect. Quite apart from the admirable thrift of the business, it saves natural resources. The textile and clothing recyclers work hand in hand with many charities. The industry is labour intensive and employs many people, some of whom would have a hard task finding work elsewhere. The industry supplies many people in this country with inexpensive clothing, often through car boot sales or market stalls. It supplies textile wiping cloths to industry and a huge amount of raw material for furniture filling, carpet underlay, insulation, blankets and even car dashboards. The advantage of the material is that it does not burn readily or give off noxious gases when it does burn, so hon. Members will realise how popular it is and how responsible it is of furniture manufacturers to use the material to stuff cushions and the backs of their comfortable furniture.
However, third-world countries are the main source of sales for sorted reusable clothing. They buy such goods from this country by the container load and it is a valuable trade, but there is an alarming development. Elsewhere in Europe, certain charities are trying to block such exports by arguing that they harm the economy of the importing country. Informed opinion shows that nothing could be further from the truth. The inhabitants of third-world countries are desperate for the clothing. That is not a problem for United Kingdom textile exporters at present, 460 but I want to make my hon. Friend aware of the problem in case it develops here, too. I hope that he will pass on the information to the Department of Trade and Industry.
§ Mr. Marland
I thank my hon. Friend.
I accept that I have made a diverse speech on agriculture and exporting. I earnestly hope that some of what I have said will be heard in the higher echelons of Government and that my hon. Friend the Minister will pass on the messages that I have sought to give him.
§ Mr. Iain Duncan Smith (Chingford)
On a point of order, Madam Deputy Speaker. I seek your guidance on a matter that I consider to be very important. Will you bear with me while I try to explain a little? As we heard yesterday, the auditor has made a statement about his findings concerning Westminster city council. During his statement he made it quite clear that, under section 30 of the Local Government Finance Act 1982, criminal sanctions are applied to anyone who received or discloses information or the full report, which was given to certain named people. I also gather that a case which has a grave bearing on the matter—Bookbinder v. Tebbit—made clear what is meant by the statement in section 30(1)(a) of the Act, which clearly states that no information shall be disclosed exceptwith the consent of the body or person to whom the information relates".That case made it clear that it is not sufficient for one person alone to give permission to release information, but that everyone concerned must give their permission. I understand that members of the Press Gallery have received copies of the full report and perhaps others have as well. I consider that to be a criminal breach and I ask you for your guidance and recommendation, Madam Deputy Speaker.
§ Madam Deputy Speaker
Order. The duties of the Chair may be onerous, but they do not extend to a definitive interpretation of the laws of the land. If the hon. Member seeks that, I am quite sure that the serried ranks of barristers will be only too happy to give him an opinion. As he will know, the ultimate authority is the court.
§ Mr. Jenkin
As a result of the auditor's statement yesterday, widespread press coverage has been given to his allegations. They remain only allegations at this stage, however, and they do not constitute a comprehensive accusation. He has said only that he is minded to bring criminal proceedings. He specifically says that he has not cast any doubt on the characters of those named in his report.
Given that some of the press coverage is reporting those allegations as though they were a judgment made against the people named, may I ask for your guidance, Madam 461 Deputy Speaker? Would it be appropriate to ask the Attorney-General to make a statement about the unfair reporting of those allegations and the likely miscarriage of justice that may occur because of the unfair coverage?
§ Madam Deputy Speaker
The hon. Gentleman has made his point, but it is not a matter in which the Chair can interfere.
§ Mr. Stuart Bell (Middlesborough)
I will refrain from commenting on those points of order, although the Opposition would welcome an appearance by the Attorney-General so that we could have a short debate on the auditor's report.
I greatly enjoyed the speech of the hon. Member for Gloucestershire, West (Mr. Marland), just as I enjoyed his speech on insider trading the other night. On that occasion he gained the respect of the House with a forthright and incisive intervention on Lloyd's. Today, his speech ranged far and wide in relation to the trade gap in food and agricultural products. It was nice to note, however, that the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food gave a commitment, from a sedentary position, that the royal forest of Dean would not be privatised by the Government. I assure the hon. Member for Gloucestershire, West that, in the event of a Labour Government, we would not export the forest. We would ensure that it stays where it is, in comfort, so that it can give pleasure to his constituents and many others for years to come.
The hon. Gentleman made an important and valid point about import penetration in relation to food and drink. That is the other side of the coin from exports, but it is all part of the balance when one talks about exports and their value. The hon. Member for Newark (Mr. Alexander) said that exports were worth £10.2 billion last month, but their value must be compared with the level of import penetration.
The hon. Gentleman referred a great deal to the level playing field, aided and abetted by the hon. Member for Colchester, North (Mr. Jenkin). I take the view that the level playing field is nothing short of a literary al fusion, and that in terms of economics it is a delusion. I shall elaborate on that later. The Minister did say, however, that he had taken on board the strictures of his hon. Friends about that level playing field.
The hon. Member for Newark has rendered a service to the House by having this debate today. Friday debates are sometimes better than those during the rest of the week. Lloyd George made his name in the House during such debates. I tend to think that they are of a better standard because they are able to range far and wide, in a spirit of objectivity rather than combativity.
The hon. Member for Newark made an interesting point about the hours worked by exporters. I remember talking to one major exporter who said that the test of the great exporter is whether he decides to take up the chance to do business in China on 23 December. That exporter must decide whether to leave Britain for a meeting on 23 and 24 December and to stay for a further 10 days to conduct further negotiations. That expample reminds me of the younger members of my party who come to me and say that they want to get on in politics. I reply, "Would you like to address the North Shields Fabian Society on 24 December?" Judging from the response, I can decide 462 whether those people are serious in their intent. The business man to whom I referred decided to go to China on 23 December and spent 10 days there. He won a major contract and was told that he may be invited back there next year, at the same time. The hon. Member for Newark was perfectly right to refer to the hours worked by exporters, because they are the people who make it all possible.
The hon. Gentleman also referred to the statement in the Budget that further reductions will be made in the export credit guarantee premium. The Department of Trade and Industry was right to vaunt that Budget statement. The President of the Board of Trade was able to obtain so-called substantial reductions only for a limited number of markets in Argentina, India, Mexico, Poland, Slovakia and Turkey. He was unable to offer the same reductions in premiums for China and the Pacific rim, of which we have heard a great deal today, or for Malaysia, to which the Prime Minister recently led a delegation. The premiums should be reduced for those markets, because we need to compete with our French and German counterparts. No doubt there will be further discussion of that today.
It is true that the Budget offered cover of £3..2 billion for 1996–97 on export credit guarantees for the so-called amber zone markets, covering China, Malaysia, South Africa and Indonesia. We need to do more, however, for our exporters through those export credit guarantees.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) mentioned his concern about the GATT rules on the textile trade and how they will develop. The accord reached in Geneva before Christmas is the first step along the highway of trade, because bilateral discussions between the European Union and the United States, within the framework of GATT, must be concluded to reach agreement on subsidies for civil aircraft. That is a matter of interest to all our civil aircraft manufacturers. Negotiations will also be conducted on financial services, including those connected with Japan, and on labour services, shipping and basic telecommunications. It is clear that the GATT round is far from complete.
The endorsement reached before Christmas was important, but negotiations are still continuing within the old GATT round. The new World Trade Organisation, which will come out of those negotiations, has still to have its structures and membership defined and its work programme agreed to. It must also agree a new programme to initiate negotiations on conformity in relation to common standards for professional services, beginning with accountancy. The endorsement reached before Christmas is just one stage of a lengthy process, because the implementation of the new tariffs will not come into effect before July 1995.
This is the first time I have appeared at the Dispatch Box opposite the Minister. It is always a pleasure to see him. In times gone by we shared a flight from Paris to London. I must tell the House that I am a little dubious about the invitation offered by the hon. Member for Roxburgh and Berwickshire to the Minister. We shared that flight, but we had separate seats. We did not hold hands on the aeroplane—
§ Mr. Bell
No, we kept away from each other. Although I am happy to see the hon. Gentleman here, I am sorry that the Minister for Trade is not present, although he has 463 explained why he cannot be here and his reasons are perfectly acceptable. I am sorry that he is not here because he has a good tale to tell on exports. He has played a significant role in the past 18 months and I am grateful to him for letting me see his Department's programmes and how the Department is working. He has shown me a great deal of work on partnership with exporters: how exporters face the challenge of global world trade and the opening up of markets as far away as China, his rolling business plans, his market-by-market approach, his "Priority Japan" campaign, and his north American campaign. Those are all significant programmes. The hon. Member for Roxburgh and Berwickshire said that we can always do better in exports, and we must do better.
I am sure that the House also misses the presence of the former Minister for Trade, Mr. Alan Clark. Those of us who followed his career and read his diaries with interest know that he was Minister for Trade for some time. I read in his diaries that at one stage he visited Bulgaria to boost exports. He saw a set of garden cane furniture that he liked, bought it for $270 and had it shipped to England. Although that was a great boost to the Bulgarian export trade, I am not sure what he did for British exports on that trip. However, the Bulgarians were happy with him and delivered the furniture to his castle home in Kent. We can thus see that Ministers for Trade work hard on foreign missions.
§ Mr. Jenkin
I appreciate the hon. Gentleman's amusing story, but does it not contain the kernel of a much more serious point? It is in our interest, and that of Europe as a whole, to import from eastern Europe. Is it not more important to work hard to open up trade between eastern and western Europe than to allow the European Community to remain a protectionist fortress so far as eastern European economies are concerned? It will be impossible to stabilise politics in eastern European countries unless they can develop their economies by exporting their much cheaper goods to us.
§ Mr. Bell
That is an interesting point. It touches on the point made by the hon. Member for Gloucestershire, West, who made an important speech on behalf of his constituents. As the hon. Member for Colchester, North said, products from eastern Europe are cheaper than ours. We therefore have to explain to our constituents why cheap steel and other products are flooding into Europe from the east and doing down our export programme.
Three points can be made in answer to the hon. Gentleman's intervention, although it is always a mistake to say that there are three points because one invariably forgets the third. The third point is that the hon. Gentleman referred to the "European Community" rather than the European Union. There are two ways to proceed in relation to eastern Europe: first, to invest in those countries to develop their economies; secondly, in so doing, to open our own markets to their products.
As the hon. Gentleman implied, we are moving in an area of trade blocks: the European Union, the so-called "Pacific rim", and now the American free trade area. There is therefore a danger of those three trade blocks developing and becoming protectionist. I hope that I have responded to the hon. Gentleman on that important point.
464 Not surprisingly, until recently, under the Administration of the past few years, neither exporting nor manufacturing has been particularly valued. Exporters have told me and many others that Government policy was working against their interests. Export credit premiums were increasing and cover was becoming harder to obtain. The pound was also overvalued in the exchange rate mechanism, which had a serious impact on our exports.
We have welcomed the change in emphasis in the past 18 months and the fact that the Government have accepted not only the Opposition's criticism but many of the policies that we would have carried out. But however hard the Department of Trade and Industry works, and however well meaning it is, the influence of the Treasury looms over the Department. The hon. Member for Newark discussed exports to Kuwait and said that the Treasury was in danger of undermining the confidence and stability of exporters, and we endorse that significant point.
The Treasury has recognised its shortcomings in that area and announced before Christmas that it sought to reorganise itself by setting up a new directorate to handle policies affecting industry, including education and employment. Although that will be useful, it does not deal with the main question that has come from a centralising Government who, over the years, centralised themselves in the Treasury.
We had a chance to do a lot of reading in the recess and read all the memoirs, diaries and autobiographies. In his autobiography on the so-called Thatcher years, Lord Lawson vaunted the accretion of power to the Treasury, but that power is so extensive that the Chief Secretary to the Treasury can have a view on whether angling certificates should be issued by post offices. We therefore see that the Treasury has extended its influence and authority into every Government Department.
We welcomed the visit of the President of the Board of Trade to Japan last week. He must bow and curtsey to the Treasury each time he wheedles out of it additional export credit guarantees. The Minister for Trade can say how the overseas aid provision has been saved. Labour is often accused of being interventionist, but who has played a more negative interventionist role than the Treasury in the past few years? Who has put forward the view that manufacturing, the balance of payments and import penetration do not matter? Who has said that, so long as the balance of payments deficit can be covered across the exchanges, exports do not matter either? Treasury Ministers standing at the Dispatch Box, with the First Lord of the Treasury in the shape of the former Prime Minister, have led the way in that philosophy. Although that position has changed somewhat, over the years we have seen the dead hand of Treasury intervention lying across our industrial and productive sectors, and therefore across our exports. The true overseer of our economic imperatives should be the Department of Trade and Industry, not the Treasury.
The true assessor of what is required, both in terms of assisted aid and export credit guarantees, should be the Department of Trade and Industry. Our assisted trade provision is not only good for our large exporters: there is a three-way benefit—for the United Kingdom economy, for the exporter and for the developing country.
§ Mr. Jenkin
I am grateful to the hon. Gentleman for giving way to me yet again. It is true that during the 1980s the Government correctly ceased to bias their assistance 465 against the service sector. There was a rapid increase and development of this country's service sector which had previously been underdeveloped. Can the hon. Gentleman give an example of a Minister ever saying that manufacturing did not matter? That is a myth.
§ Mr. Bell
During the years when the hon. Gentleman was not here, but his father was. If one reads Lord Lawson's autobiography carefully one can find many places where he makes that assertion.
The hon. Gentleman is right that the service sector should be strengthened. The service sector and the manufacturing sector are not mutually exclusive. The manufacturing sector matters. The Government—including the Minister for Trade and the Prime Minister—have said from the Dispatch Box in the past 18 months that manufacturing matters, but for 10 years the role of the manufacturing sector in our economy was not given the importance that it should have had. As I said earlier, the Government believed that the balance of payments deficit was acceptable so long as it was financed across the exchanges. There is no point in arguing about that or saying that it was wrong—it is a part of history and we cannot go back. However, the hon. Gentleman can find many statements to that effect if he reads carefully.
§ Mr. Soames
I am grateful to the hon. Gentleman, who is approaching the subject in a typically sensible and pragmatic way. Does he agree that it is not the service industry or the manufacturing industry that is important, but industry itself? Industry, enterprise and commerce of all sorts are the heart and lifeblood of this country, and no Government, of whatever colour, can afford to neglect any part of industry.
§ Mr. Bell
I entirely agree with the Parliamentary Secretary, as did the negotiators at the general agreement on tariffs and trade who, for the first time, linked industry and services as well as agriculture. However, I was speaking in a more legalistic sense when I said that the service sector and the manufacturing sector were not mutually exclusive but could and should be advanced together.
I shall return to the issue of overseas trade provision and the ubiquitous Alan Clark, who pops up all over the place. He had the audacity to say to the then Prime Minister that the Overseas Development Administration should be given to the Department of Trade and Industry as part of an overhaul of the machinery of government. The then Prime Minister, Lady Thatcher, did not take up his suggestion. I invite the Department of Trade and Industry to reconsider that aspect of its commerce. I think that a review of the possibility of transferring the Overseas Development Administration to the Department of Trade and Industry would be beneficial. We know that overseas trade is not particularly popular with the Treasury, which wants to see it eliminated, but the programme for industrial projects—about £100 million a year—was saved in the latest spending round review before the Budget.
The budget of the ODA is part of the Foreign and Commonwealth Office and is administered by the Minister for Overseas Development, who sits in the House of Lords. The Treasury seems to link export credit guarantees with aid and trade provision, so, rather than negotiating with the 466 Foreign and Commonwealth Office—with the Department of Trade and Industry sticking its oar in here and there—the Government should consider whether it might be more appropriate for the Department of Trade and Industry to handle the subject.
The President of the Board of Trade rightly says that the amount available for export credit guarantees should be balanced with the needs of the taxpayer, who has to foot the bill. The hon. Member for Newark said that the taxpayers' money should be used as prudently as possible. However, that is not necessarily the only source of money for the Treasury or the Department of Trade and Industry to use in its export credit guarantees programme. There are ways in which—[Interruption.] That is the first time in the House that we have been interrupted by an intervention of that sort. A young member of the community obviously does not like what I am saying about exports, and must have more perspicacity than the rest of us put together.
I invite the Department of Trade and Industry to investigate other ways of raising finance for export credit guarantees and overseas trade provision. I should like the Department of Trade and Industry to see whether it can raise its own long-term bonds in the City of London and so raise more money than the taxpayer is willing or able to pay. It can increase export credit guarantees and the woefully inadequate £100 million provision for assisted aid. It could be said that if it is a technique worthy of the City, it is worthy of the Government, as off-balance sheet investment.
We live in the global market place. The Uruguay round has been endorsed, the Americans are entering their new free trade area with Canada and Mexico, and the economic area of the European Union is being extended. As the hon. Member for Colchester, North said, there are openings into eastern Europe and Russia. Governments on the so-called Pacific rim are opening their frontiers to more and more trade. We need to give our exporters not just a boost but a certainty that if they can expand their trade the appropriate export credit and assisted aid will be available.
I hope that the Government and the Department of Trade and Industry, with the President of the Board of Trade, can somehow break out of the present financial orthodoxy and get out from under the dead hand of the Treasury so that the President of the Board of Trade does not have to beg, plead and wheedle for every pound and penny from the Treasury, having to persuade the Treasury about the expanding marketplace before he can persuade anyone else. Conservative Members wish the President of the Board of Trade to be, in the words of the apparition of a bloody child in "Macbeth", "bloody, bold, and resolute". We wish him to be bold in relation to exporters and exports and resolute in relation to the Treasury in obtaining more money for the exporters.
The President of the Board of Trade has said that he genuinely believes that his Department is doing a good job and that if it is not doing a good job he wants to know about it. He has had some advice today from the hon. Member for Newark and I shall be glad to give him other advice which I have received from people in the export business. People in the capital goods industry, the trading houses, the banks and the export credit insurance world want to keep under constant review the Export Credits Guarantee Department medium-term finance and cover, and especially premium rates to ensure their competitiveness with other Organisation for Economic Co-operation and Development export credit agencies.
467 Exporters to Argentina, for example, tell us that there is still no level playing field in relation to premium rates and availability of terms. Where our premium rate for export credit guarantee insurance is 10 to 13 per cent., for German exporters it is 6 to 6.5 per cent. To echo the words of the hon. Member for Newark, our exporters should receive what other exporters receive. We ask for the so-called optical illusion of the level playing field.
Exporters to Kuwait tell us—as was mentioned, not only by the hon. Member for Newark, but, in an intervention, by the hon. Member for Hayes and Harlington (Mr. Dicks)—that in relation to the national interest facility operated by ECGD, support for exports, at the behest of the Treasury, has now to be on letter of credit terms, thus adding to the difficulties of exporters. They also tell us that appropriate export credit guarantee cover significantly affects jobs, foreign currency earnings, retention of skills and diversification of contracts away from the Ministry of Defence contracts, and that there must be a European Union harmonisation of medium-term export credits, with some unease at the direction of a draft European directive which could be to the detriment of our exporters.
Those exporters are also concerned to know what the political risk reinsurance cover will be for 1994, having noticed that the cover last year was put in place only in October, at the time of the Conservative party conference, and had to be dragged out of the Treasury. Notwithstanding the efforts beng made by the Minister of Trade, exporters are asking for better co-ordination between Government Departments, especially in relation to ministerial visits abroad. Are the people who make the trips fully briefed? Have they told the exporters where they are going?
Exporters ask for ever-closer liaison between Government and exporters and draw attention to the fact that visits to boost trade should be made primarily to countries with adequate credit insurance cover. They want to establish an exporters' forum—also mentioned by the hon. Member for Newark—with direct links to the President of the Board of Trade and the dreaded Treasury. They tell us that they want a stronger representation in Brussels, to ensure maximum benefit for the United Kingdom and to ensure that other European countries, especially France and Italy—also referred to by the hon. Member for Hayes and Harlington—comply with the European Union directives on fair competition and subsidy of manufacturing companies. The exporters emphasise, however—and the Government accept—that they want support and not subsidy.
As I said earlier, it is always a pleasure to speak in the sensible debates that are held on Fridays. As the hon. Member for Roxburgh and Berwickshire said, they are the best debates. I have referred to him extensively as he is my only Opposition collaborator in the debate. I always like to throw in a few lines of poetry at this stage on a Friday. That has the merit of gaining the attention of the whole House because no one knows what is coming next. Most of the time I stand corrected on my poetry. People write and say, "You have the wrong poet," or, "You got the lines wrong." I think that it was Browning who saida man's reach should exceed his grasp,Or what's a heaven for?468 Exporters in a nation that has been built on trade and has perhaps slumbered too long—notwithstanding the £10.5 billion of exports last month referred to by the hon. Member for Newark—now see massive opportunities for expansion in the global economy. They see a need to cast their eyes beyond the European Union with its slow growth; they recognise the strong and wilful competition from other industrialised countries such as Germany, France and Italy, quite apart from that of the industrial giants the United States and Japan: and they recognise that it is important to work in partnership with a Government who comprehend. The Government have an ideal opportunity to work with exporters for the good of our economy and our country and, to end with an erstwhile political slogan, it is up to the Government not to chuck it away.
§ 12 noon
§ The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Nicholas Soames)
I congratulate my hon. Friend the Member for Newark (Mr. Alexander) on initiating this extremely important debate. He was remarkably successful in drawing the motion. As the House knows, and as my hon. Friend so kindly said, under normal circumstances my hon. Friend the Minister for Trade would respond to the debate. However, as he told my hon. Friend, he is at an important meeting with colleagues in the Department, and I have been deputed to respond.
My hon. Friend the Member for Newark is an acknowledged expert not only on export matters. He is a member of the Select Committee on Agriculture and is uniquely placed to initiate a debate that has already stimulated a wide range of comments from all parts of the House. That underlines the importance that we all attach to the subject.
As the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) rightly said, by and large Friday debates have a tenor and tempo and a civilised and more deliberative nature than other debates—except those on fox hunting. Such debates are well worth taking part in and listening to.
All hon. Members know that we must foster with all the means at our command a healthy export culture. I shall come later to the speech by my hon. Friend the Member for Newark, but I should like to deal first with the thoughtful and well-informed speech by the hon. Member for Roxburgh and Berwickshire. He was possibly not quite as well informed on the Bolton report as he might have liked to be, although that comment may be extremely unfair. The hon. Gentleman probably knows it from cover to cover, but he may have temporarily mislaid it.
I remember the Bolton report, which has regularly been prayed in aid in all parts of the House. I agree that it was an important report, and I am quite sure that, from time to time, officials and Ministers return to it when they wish to reframe or, as our much-lamented friend the hon. Member for Eastbourne, Ian Gow, used to say, refashion—policy. Just because the reports were written some time ago does not mean that the ideas they contain are not still fresh and worthy. I am sure that there is good stuff in the Bolton report, even if it comprises some part of the Liberal Democrat manifesto. On a non-partisan occasion such as 469 this, I believe, as he does, that we should try to deal in a serious and sensible way, as he did, with the many important points that the House will wish to discuss.
The hon. Member for Roxburgh and Berwickshire rightly drew the attention of the House to the great opportunities, which he saw when visiting Hong Kong, of, for and in the Pacific rim. I am happy to say that the hon. Member for Middlesbrough (Mr. Bell) is more than a colleague in the House—he has been a friend of mine for many years. As he said, he and I used to travel to Paris on Sunday evenings, when he was working in a great Anglo-French commerical enterprise.
We used to travel across together on Monday evenings. Of course, he came back on Thursday nights, because he was a rich lawyer, and I came back goat class on British Airways on the last flight on Friday evening, if I was lucky. He has a profound understanding and knowledge of industry and of the matters that we have discussed today. The House will have listened with care and attention to what he had to say, and I shall deal with his point about export credits later on.
The hon. Member for Roxburgh and Berwickshire mentioned the level playing field and GATT, as did my hon. Friend the Member for Gloucestershire, West (Mr. Marland). Other colleagues will wish to speak in the debate, and will also rightly be angry on behalf of their constituents and the enterprises within their constituencies. They will insist on the level playing field—one of the most hackneyed phrases in the English language, but nevertheless one which conveys the real anxieties of people in the country—and that we should enforce the law, because we are a law-abiding country.
We should regard that trait as a great plus, not a minus. The law means something here. The fact is that those less favoured countries where the legal system is quite different possibly do not have the same high regard, not only for the law, although that might be quite untrue, but for its enforcement.
The hon. Member for Roxburgh and Berwickshire said that the conclusion of the GATT talks was important for the country. He is quite right. I particularly noted his point about objective 5b status for the Borders. My view on the Borders is that they have quite enough already. In my judgment, they are the most beautiful part of the whole of the United Kingdom. To go banging on asking for more money is asking for more than they are entitled to. It is a prosperous, healthy and wonderful place. I wish the hon. Gentleman every success with it, although I can think of one or two places that are perhaps more deserving than the Borders. I hope that that goes down well up there.
My hon. Friend the Member for Gloucestershire, West made what I can only describe as a truly remarkable speech. It was one of the most remarkable speeches that I have heard in the short time that I have been in the House. Like my hon. Friend the Member for Newark, my hon. Friend the Member for Gloucestershire, West is a member of the Select Committee on Agriculture, and chairman of the Back-Bench committee on agriculture. He is also a member of that very sadly vanishing tribe within the House—in his own right, he is a farmer; he knows what he is talking about.
My hon. Friend dealt with a whole range of problems not immediately concerned with the motion, but I shall try to deal with them one by one. On his question about the level playing field, everyone understands what he means. I understand the irritation that his farmer friend feels when 470 he goes to Spain and sees a tractor not properly fitted with safety equipment, and the man spraying without proper equipment. I perfectly understand that, and did take the point.
To me, the issues of the level playing field, as my hon. Friend knows, because he knows the system better than I do, are more profound than that. It will come in time. The single market has been in place for a year precisely. We have to travel an enormous distance, as everyone knows, before we get truly level competition.
§ Mr. Jenkin
On the level playing field point, the set-aside rules are universal to all member states. Because we in the north-west of Europe, particularly in East Anglia, are having rather a wet time, sugar beet farmers have not been able to get their sugar beet out of the ground in time to meet the set-aside target, which is tomorrow. Is there any possibility of the rules being relaxed, or of a derogation being obtained, so that gound in which sugar beet is left after tomorrow will still qualify for set-aside in the following year?
§ Mr. Soames
My hon. Friend has raised a point which is of profound concern to sugar beet farmers, some of whom are having a difficult time. I am pleased to be able to tell my hon. Friend that, thanks to the efforts of my right hon. Friend the Minister and our officials in Brussels, the Commission agreed yesterday that farmers will be able to harvest crops from flooded or waterlogged set-aside land up the end of February. That is good news and I hope that it will calm some of the anxieties of the sugar beet farmers of East Anglia.
My hon. Friend the Member for Gloucestershire, West spoke about slaughterhouses and health scares. He and I have been through a couple of those since he became chairman of the Back-Bench committee and I became the Parliamentary Secretary. We have been round the course of slaughterhouses on many occasions. I am fully aware of the concerns of the industry. I should be grateful if my hon. Friend would talk to me about his concerns about the two slaughterhouses. I should be happy to visit them with him. One of the less agreeable tasks performed by the Parliamentary Secretary—the rear gunner's brief—is visiting slaughterhouses. I shall be happy to go down and look at those two to see how they are getting on.
As I am sure many hon. Members know, the slaughterhouse industry faces many problems, which are not just connected with the new hygiene regulations, although those have played a major part. The industry is also suffering from huge over-capacity. We are anxious to help to manage the transition of the industry within the context of the new meat hygiene rules, which are necessary. I agree with every hon. Member who has raised points on the issue over the years by correspondence, question and debate about the necessity for pragmatic, sensible and realistic enforcement, rather than enforcement that drives small businesses to the wall. I assure the House that ensuring that is at the top of our list. We believe that when the new meat hygiene service comes to fruition, its advantages will be seen. New regulations going out to consultation will make the inspections about which my hon. Friends complained—understandably, because they are expensive—more effective and less expensive.
A number of hon. Members have commented on animal health within the context of the single market. It is true that the relaxation of the single market has led to farmers being 471 rightly worried about the import of animals from countries whose animal health standards are not as high as ours, which are the highest in the world.
I share the concern of my hon. Friend the Member for Colchester, North (Mr. Jenkin) about pig blue ear disease. For years, without any help from the Government, the pig industry has maintained high standards, as a result of which our pigs are wanted and exported all over the world. I share the anxieties and concerns expressed by hon. Members, and I assure them that we have built in a proper defence and proper checks and balances to ensure that we maintain our high animal health standards.
§ Mr. Kirkwood
Will the Parliamentary Secretary look at that question the other way round, and consider the equally important ban on the export from the United Kingdom of pedigree livestock, because of unwarranted scares about BSE? Are the Government doing what they can to get that export side of the trade sorted out as early as possible?
§ Mr. Soames
I agree with the hon. Gentleman: that is an important point about the impact of BSE on our exports. A number of countries are behaving unreasonably. Others are beginning to change their minds, and a consignment of Galloway cattle went to the former Czechoslovakia the other day. The Germans, however, remain difficult, and we have mountains to climb before we get our business back in that country. That matter is of prime importance and great concern to any Minister concerned with trade—particularly the cattle trade.
At the Smithfield show, I talked to a number of breeders who shared the hon. Gentleman's anxieties. Animal health is an important issue and I am grateful to my hon. Friend the Member for Gloucestershire, West for his remarks about tuberculosis in badgers. What with slaughterhouses, badgers, rabies and everything else, right hon. and hon. Members can see what an attractive brief I have. TB in badgers is a peculiarly intransigent problem, which gravely affects not only the health of cattle but the economic interests of farmers. My hon. Friend is right to emphasise the awful effect it has when a farm must be shut.
Recently, I was not far from the constituency of the hon. Member for Middlesbrough, where I watched badger-trapping operations and the sophisticated new tests to ascertain whether a badger has TB. If it does, it is destroyed immediately. I hope that that new regime, which has secured almost the consensus of the badger panel on our advisory group, will command also the confidence of farmers. We wait to see. TB remains an aspect of great concern.
I refer finally to the peroration by my hon. Friend on the privatisation of the forest of Dean, which I love. My hon. Friend has done an enormous amount for it, and spoke vigorously in its defence. I was glad to hear the hon. Member for Middlesbrough say that, if Labour ever returned to power, it would not export the forest of Dean. It is not for me as a junior Minister to pronounce on such weighty matters, but I will ensure that my hon. Friend's warning—I noticed that the Whip present at the time quivered in his shoes—will be passed on to my noble Friend Lord Arran, who has responsibility for the forestry 472 review group. My preliminary advice to people concerned about my hon. Friend's remarks is that they need not be over-worried.
My hon. Friend made much of the export of furnace feed. I found it difficult to follow his argument initially, but I did so eventually. It is plainly an important matter, and I will ensure that his views are drawn to the attention of the Department of Trade and Industry.
The hon. Member for Middlesbrough made a measured, sensible speech with which none of us could find much to disagree. I was grateful for his kind words about my hon. Friend the Minister for Trade.
The hon. Gentleman said that, over the past 18 months, the Exprot Credits Guarantee Department has made substantial reductions in its premiums and improvements in the availability of cover for the United Kingdom's key markets. ECGD premiums are now about the average charged by the export credit agencies of other G7 countries, and the Government will keep those rates and cover availability under close review. We are well aware of their importance to UK exporters, and I will ensure that my hon. Friend the Minister for Trade is made aware of the comments in today's debate.
The Government's overall economic objective is to promote sustained economic growth and higher living standards by ensuring that markets work properly and establishing a stable economic environment in which business may have confidence for the future. The hon. Member for Roxburgh and Berwickshire was right to stress the importance of that. That requires directing monetary and fiscal policy at the key objectives of low inflation on a permanent basis, as we now have, and sound public finances.
We also have responsibility for ensuring that markets work properly. Economic growth is generated by businesses and employees, not Governments. With the notable exception of the hon. Member for Middlesbrough, that lesson has not been learnt by Labour.
The reforms of the 1980s fostered small and medium-sized businesses, promoted self-employment and restored respect for entrepreneurship, management and wealth creation. They swept away the effects of the dead hand of socialism—probably for ever. We are continuing those reforms by pressing ahead with privatisation and deregulation, by cutting out waste and by fighting for open and competitive markets. Those policies are demonstrably working, and my hon. Friend the Member for Newark paid handsome tribute to their success. We are a true exporting country—a country whose lifeblood is exports—but without such proper economic policies, we would be unable to operate a proper export policy and our companies would achieve little.
My right hon. and learned Friend's Budget has placed public finances on a sound footing. Gross domestic product was nearly 2 per cent. higher in the third quarter of 1993 than it was a year earlier, and has now risen for six consecutive quarters.
§ Mr. Heald
Would my hon. Friend like to pay tribute to the chemical industry, including Johnson Matthey in my constituency, which has this year won both the Queen's export award and the Queen's award for the environment? I ask because the chemical industry is our top exporting industry, contributing £3.5 billion net to the balance of trade each year. My hon. Friend may feel that more attention should be paid to that industry's achievements.
473 Secondly, does my hon. Friend agree with Dr. Keith Humphreys, the president of the Chemical Industries Association, that the White Paper "Realising our Potential", which deals with improvements in our science base, makes an important contribution to the debate about how to achieve sustainable development?
§ Mr. Soames
I wholeheartedly agree with my hon. Friend on both points. I pay a warm and handsome tribute to the chemical industry, which is a fantastic business. We are lucky to have such a marvellous industry and one that is doing so well. I wholly endorse the remarks that my hon. Friend cited. The expansion and development of our science base will be critical as we seize the opportunities of the 1990s, which I predict will be Britain's years. We must push ahead with the report in question, and I will pass my hon. Friend's remarks to my right hon. Friend the Chancellor of the Duchy of Lancaster, with whom I shall be spending tomorrow and who is responsible for it.
Gross domestic product in the third quarter of 1993 was nearly 2 per cent. higher than it was a year earlier, and has now risen for six consecutive quarters. That is very good news. Export volumes, excluding oil and erratics, were 4 per cent. higher in the third quarter than they were a year earlier, with imports more or less unchanged.
My hon. Friend the Member for Newark rightly paid tribute, as I should like to do, to all the companies and people involved. Exporting is a difficult game, which involves people being separated from their families, sometimes in hostile parts of the world, but it is a business which Britain is fantastically good at. We should continue to be good at it and to cultivate the ideas and policies that have made Britain a great trading and merchant power of which we should be very proud indeed.
That growth has occurred at a time when the world, and especially the European, economies are weak. Inflation has been below 2 per cent. in each of the past 10 months—something not seen since 1960. The underlying rate of 2.5 per cent. is the lowest for more than 25 years and, at 5.5 per cent., base rates are at the lowest since 1977 and the lowest in Europe.
With the rise in productivity—in my judgment, we still need to make improvements—unit wage costs u n the second quarter fell by more than 1 per cent. over the year, the largest fall since records began. I hope that, irrespective of our politics, we shall all agree that exporters have never been better placed to take advantage of this country's uniquely favourable economic climate and the many opportunities that are becoming apparent to us in emerging and new markets—quite apart from existing and mature ones.
It was because of the Government's determination that markets should be allowed to function freely that the United Kingdom did not sign the social chapter. The Government believe that, by taking this course, we have avoided the imposition of extensive centralised rules, which would have damaged competitiveness, destroyed jobs and hindered exports. All those matters are of grave concern to many of our European partners, whose social costs are much higher than ours but whose benefits are not much better than ours. That puts Britain in a good position.
Our approach to the market economy, including our rejection of the social chapter, is the main reason why we have been so successful in attracting such a remarkable 474 amount of inward investment, which has greatly strengthened our ability to compete. Those investors are very welcome in Britain.
The success of our policy is becoming clear. In 1992, the United Kingdom was the largest recipient of foreign direct investment among OECD countries for the second year running. The United Kingdom attracted about 40 per cent. of Japanese and American investment in the Community in 1992, and I am confident that this exceptional performance will continue, because the Government are truly committed to helping British industry to compete at home and in world markets.
It is on world markets that we depend for much of our prosperity. Exports are therefore absolutely vital to Britain's economic well-being and we are grateful to my hon. Friend the Member for Newark for moving the motion and allowing the House to discuss them today.
The importance of exports to the United Kingdom economy is often not well understood. They provide a major source of employment, wages and profits for United Kingdom citizens. The value of our exports of goods and services is equivalent to more than one quarter of our gross domestic product and, as I said earlier but have no hesitation in banging on about it again, Britain is, by any standards, truly a great merchant nation.
Exports enable United Kingdom producers to sell to a wider market. This can help firms to spread their overheads over a higher level of sales, lowering the unit costs of goods and services destined for the domestic market. Exports spread the risk that markets face: when the market in one country is depressed, others will be buoyant, and this helps firms to invest and innovate for the future. My hon. Friend the Member for Hertfordshire, North (Mr. Heald) mentioned the chemical industry, which is a tremendous example of an industry that for many years has used its size, technical expertise and spread to deal with its problems.
Britain has a clear and enviable competitive advantage, which is one of the reasons why I cannot understand why people try to run down our economy. It lies in our flexibility and in our long experience of world trade and world affairs—two matters which we should not ignore. As my right hon. Friend the Foreign Secretary has rightly said so often, we are managing to punch well above our weight precisely because of our experience and our knowledge of world affairs and our position at the high table in so many international organisations.
Britain needs to fight even harder to keep its share of world markets. It is crucial that firms look to exporting as an absolutely integral long-term part of their business strategy, not merely an ad hoc way of disposing of domestic surplus. The Government are more than ever committed to helping United Kingdom companies to win in overseas markets, and hon. Members on both sides of the House have suggested how we should best do it.
To achieve this, we are developing a long-term export strategy involving a partnership between Government and industry. We intend to give exports the highest priority. I pay a warm tribute to my hon. Friend the Minister for Trade, whose energy, devotion and imagination have paid remarkable dividends for British trade in the past few years.
The United Kingdom has an historic commitment to free and open trade. The single most important recent event on the world trading scene was the completion of the GATT Uruguay round last month—a result for which the 475 Government fought hard, and which has been welcomed on both sides of the House. Let me remind the House why the Government are so wholly committed to free trade.
First, the economy as a whole works more efficiently if we concentrate on manufacturing goods and providing services in those spheres where we are efficient and import in those where others are more efficient. My hon. Friend the Member for Gloucestershire, West made a very good point with particular reference to the milk industry. Secondly, by opening markets, we all benefit as consumers from the widest possible choice and best quality at the very keenest prices. Thirdly, by forcing industry to compete and innovate, open markets allow us to allocate scarce resources efficiently without supporting uncompetitive industries.
GATT has served us very well. I note the concerns expressed by the hon. Member for Roxburgh and Berwickshire about the textile industry, and I shall ensure that his views are passed to my hon. Friend the Minister for Trade. GATT was set up as a response to the experience of the 1930s when protectionism was rife. Since 1947, when GATT was established, tariffs on imports of goods to industrialised countries have fallen from an average of 40 per cent. to 5 per cent., while the volume of trade has increased twelvefold. The importance of free trade can therefore hardly be overstated.
The OECD predicts that, by the end of the decade, the planned cuts in tariff and non-tariff barriers on industrial and agricultural products could increase total world income by more than $200 billion a year, but the Uruguay round involves much more than trade in goods. Huge benefits to the United Kingdom will accrue from the extension for the first time of GATT rules from goods to invisible trade to services, intellectual property and investment.
Although there was some discussion and va-et-vient about services as against manufacturing industry, services are now the fastest growing sector of the world economy and account for 69 per cent. of our output. The hon. Member for Roxburgh and Berwickshire would probably say that that was too high; perhaps it is, but the balance is reflected in terms of world trade, and that is merely a response to it. There is substantial potential for growth not only in the service industries but in manufacturing industry.
By promising a stable and predictable climate for international trade, the conclusion of the GATT round has brought an immediate boost to world business confidence. Those involved in overseas trade can now plan ahead with a much reduced threat of trade disputes boiling over into wider protectionism. My hon. Friend the Member for Newark will be glad to know that, prior to the signing of GATT, the signing was the most important concern expressed at my Department's regular meetings with the food industry, individually or with its representative groups. The impact of the signing on the food industry will be dramatic. As a result of the agreement, consumers can look forward to lower prices and greater choice.
As for GATT and the food and agriculture industries, after seven long years, we now have agreements—especially on agriculture—which mark a significant and irreversible step forward. I am confident that British food and drink processors will be keen to explore the new 476 opportunities for access to third country markets. It will help to ensure that non-tariff barriers and similar restrictions on trade—hidden and not so hidden—are replaced by more transparent tariff equivalents.
Moreover, all GATT contracting partners are firmly committed to ensuring that tariffs and tariff equivalents will be significantly reduced over the six-year lifetime of the agreement. There will be cuts of 36 per cent. across all sectors, with a minimum cut of 15 per cent. for any single product line. That is the first step towards a much better reduction of barriers to trade, giving better market access especially to key sectors in north America and the far east.
In some cases, offers of improved access have already surpassed that required by the letter of the agreement. For example, thanks to the agreement reached at the Tokyo summit last July, exports of Scotch whisky, which are already worth about £2 billion a year to United Kingdom companies, will now have the tremendous advantage of the complete removal of large import duties in far eastern markets such as Japan, Korea and Singapore. That is indeed progress compared to the enormous barrier of some duties being as high as 250 per cent., on which exports of Scotch whisky have had to make headway in the past.
Cuts in the tariffs on import of goods will be supplemented where volumes were previously low by new preferential import opportunities.
By the beginning of the next century, that will guarantee that up to 5 per cent. of any domestic consumption will be satisfied by imports. UK exports in a number of sectors are well placed to take advantage of that, and I am sure they will.
Some markets in developing countries and the far east have also posed particular problems for United Kingdom exporters because of inadequate copyright and patent protection. Here, the GATT agreement marks another huge step forward. The promotion and marketing of high value-added products in third countries requires a significant investment in advertising, the consistent supply of a quality product and the establishment of a brand identity.
Sadly, that investment has sometimes been undermined regularly by counterfeit inferior products produced and sold locally. The GATT agreement will, for the first time, provide basic protection against trade in counterfeit goods. I know that that will be especially welcome to United Kingdom food and drink manufacturers.
Finally, on GATT, what will be the impact of the agreement on British agriculture, and how will that relate to exports of farm produce? I know that some farmers view the agreement with disquiet, but I am sure that much of the anxiety is misplaced. They have a good deal to gain under a common agricultural policy which develops in a more stable framework, free from the uncertainty of challenge in the GATT.
The farmers also have much to gain in the longer term from a CAP which is less heavily dependent on artificially high prices, and closer to the needs of the marketplace. That is because a significant reduction in the volume of subsidised farm exports on world markets should help to firm up world prices and so increase the share of revenue that the farmer gets from the market rather than the taxpayer. British agriculture is undoubtedly among the most competitive in the world. Efficient British farmers therefore have little to fear from that liberalisation of trade. They, and the processors who depend on them, can only 477 gain from a steady trend towards more realistic pricing, less Government intervention and greater responsiveness to world markets.
The exceptionally favourable economic conditions that the Government have brought about and the new GATT agreement augur well for businesses in every part of the United Kingdom. However, that is not the end of the good news. The introduction of the European single market, with all the problems that were associated with it, the new European Economic Area agreement and the prospects of further enlargement of the Community, all point to even greater opportunities ahead.
The completion last January of the single market programme provides increased opportunities in Europe for exporters in a market of 350 million consumers. It is the most sophisticated and prosperous trading market anywhere in the world. The sweeping away of border controls has in many cases yielded tangible savings for exporters in reduced transit times and associated costs. The successful negotiation of a series of Community-wide measures such as those for animal health, which we have talked about, and hygiene means that in most areas, exporters know that if they sell a product here, it can be sold anywhere else in Europe.
In the year ahead, the Community will be developing ideas to ensure that the single market directives operate effectively. I note and applaud the concerns of my hon. Friend the Member for Gloucestershire, West about the need for a level playing field in the single market. It will come in time. Rome was not built in a day. Until it comes, I am afraid that there will always be a degree of irritation across a vast range of areas in which enforcement is not carried out in the same way.
The Government fully support the practical approach to enforcement and making it better. As the hon. Member for Middlesbrough knows, the Department of Trade and Industry has set up a compliance department to monitor such work and, under the Maastricht agreement, we shall be able to get satisfaction in the European courts.
This month marks the entry into force of the European Economic Area agreement; as a result, the tariff-free market for exports of process goods will expand by a further 25 million consumers. We also have the imminent prospect of four EFTA countries—Sweden, Finland, Norway and Austria—joining the Community, further opening up markets as they apply the CAP and the single market rules for food. Taken together, the single market and the growing size of the Community mean that the opportunities for our exporters have never been greater.
I should like to deal with the point made by the hon. Member for Roxburgh and Berwickshire about the enlargement of trade with eastern Europe. The United Kingdom is committed to progressive liberalisation of trade between the European Union and east European countries. Under the association agreements, there will be increasing prospects for investment and co-operation in many sectors—in Poland, Hungary, the former Czechoslovakia, Romania and Bulgaria. I am leading a trade mission to Hungary and Czechoslovakia in October, which I am sure the hon. Member for Roxburgh and Berwickshire would like to join.
The European Union is also developing closer ties with Albania and the Baltic states, in co-operation with Russia. United Kingdom companies will be well placed to take great advantage of project and consultancy work arising from European Union bilateral and multilateral assistance 478 programmes, targeted in the region. The hon. Gentleman is right to have raised the matter; it is important, and a huge and opening market for our industry. At the same time, we must stick rigidly by the rules on free trade if we are to give those countries any chance to emerge from the years of communism, which so damaged their economies.
My hon. Friend the Member for Gloucestershire, West dealt at great length with the dairy industry and its place in agricultural exports, which was also referred to by my hon. Friend the Member for Newark. The dairy industry is on the threshold of the most important and sweeping reform of the milk marketing system for 60 years; a reform which is all the more important with the opportunities created by the single European market and the GATT settlement.
I note the points that my hon. Friend the Member for Gloucestershire, West made about the need to get those matters settled, and I am grateful to him for the way in which he phrased it. My right hon. Friend the Minister has done exactly the right thing. It would be absolutely wrong to have such a major change if we did not get it right. It must be right from day one. It is better to take time, and I hope that farmers will understand that it will be done as quickly as possible but meanwhile they should be patient until the matter can be resolved, as it will very shortly.
Farming conditions in the UK are ideally suited to milk production, and our dairy industry is capable of producing high-quality products, which can take on and beat the competition, whether on the domestic market or overseas. I wholly agree with the arguments on that subject of some of the hon. Members who have spoken in those terms.
Mozzarella is a good example. We are now the second largest producer of that variety of cheese in Europe and, what is more, we export it to Italy. Somerset brie and camembert are also now a familiar sight on our supermarket shelves, along with a host of speciality cheeses from processors who are carving out their own niche market.
Despite all that, however, the UK dairy industry's ability to respond to market opportunities is hampered by EC production quotas; we simply do not have enough milk quota to meet all our needs. The Government's ultimate objective is therefore to get rid of the quotas and to expose the dairy industry throughout the Community to the free market forces of supply and demand. That is not going to be achieved overnight, so, in the meantime, we must make the best of the present arrangements and minimise the burden that the quota system places on the industry.
We can do that in three ways. First, we must avoid arbitrary quota cuts. We have been successful during the past two years in doing so, and have even succeeded in securing a small increase in quota last year to meet needs arising from recent European Court rulings.
Secondly, we must ensure that our national quota is fully utilised and that the operation of the quota system does not impair the development of fair competition under the new milk marketing arrangements. We have already published proposals for amending the quota regulations to take account of those new arrangements and to remove restrictions that would distort competition between producers.
Thirdly, we can continue to press in Brussels for the maximum flexibility for transferring quota from one producer to another, including transfers across national boundaries. Clearly, it would make sense to allow quota to migrate to those parts of the Community, like the United Kingdom, where milk can be produced most efficiently and 479 effectively. The Government are committed to achieving that in the long run and, in the meantime, to minimising the burden of the quota system.
For its part, the United Kingdom dairy industry must make the most of the limited supplies of milk that are available. By innovation and by adding as much value as possible to the milk, the trade gap in the dairy sector can be reduced.
I know that my hon. Friend the Member for Newark was a member of the committee that wrote the report on the trade gap for the Select Committee on Trade and Industry, which has so informed and guided the Department in the way that we are seeking to go about reducing that gap. He will be pleased to hear that my right hon. Friend the Minister has set in train a range of initiatives to see where we can make a real difference, and where we can put producers together with processors in a way that has never happened before. Were my hon. Friend and his colleagues on the Select Committee to produce a further report in a couple of years' time, I hope that they would find that the Ministry had made great progress.
Another success story is that of the red meat sector. Although trade data for 1993 have yet to be finalised, it is clear that United Kingdom meat exports have increased considerably. The devaluation of sterling in September 1992 and the abolition of the monetary compensation amounts at the end of the year increased the competitive position of the United Kingdom on the continental market.
It is estimated that United Kingdom beef exports increased by more than 20 per cent. in the first six months of 1993, and that total United Kingdom beef exports will have risen by some 18 per cent. in 1993, to almost 150,000 tonnes. That is a major achievement by our exporters, especially considering the low level of supplies available on the domestic market.
Another strong export performance by the United Kingdom in 1993 was achieved by the sheepmeat industry. With our natural advantages and the quality and efficiency of our production, our sheepmeat producers stand in a unique position to exploit the fully harmonised single market. The value of United Kingdom exports of sheep and sheepmeat has increased from £87 million in 1983 to £277 million in 1992. That trend has continued during 1993.
For some time, cereals has been one of the few agricultural sectors in which the United Kingdom has enjoyed a positive trade balance. In 1992, this amounted to more than 2.6 million tonnes. That was achieved despite our need to import a certain proportion of the cereals we use because of climatic factors.
Another highlight is the thriving export trade in malt. For many years, we have been a leading world supplier of top quality malting barley and malt. In 1992, the United Kingdom exported some 380,000 tonnes of malt, more than three times as much as we imported. It is important to remember that the positive trade balance in grain has been produced in the context of high support prices and high export refunds; these were unsustainable and helped lead to the recent reform of the common agricultural policy.
We took an important step forward when we negotiated new support arrangements with lower prices and compensatory area payments linked to a set-aside requirement. Those will, of course, lead to reduced cereals production and less grain will be available for export.
480 The GATT settlement will also affect exports. There are likely to be reductions in the level of subsidised exports and improved access to the European market for third-country cereals. So we will face increased competition in our market, but, equally, our exporters will be able to compete on fairer terms with other countries on the world market without the distortions that the system of subsidised exports brought about.
§ Mr. Jenkin
Does my hon. Friend agree that the £940 per family cost of the common agricultural policy is still unacceptably high? Does he also agree that British farmers are in the best position, being among the most efficient farmers in the Community, to profit from the reforms that we are implementing?
§ Mr. Soames
I will not be drawn on my hon. Friend's first question. I quite agree with his second question. Because British farmers are so efficient, they are uniquely placed to respond to a market—oriented agricultural policy. My hon. Friend is aware that my Department's policy remains to move to far more market-oriented common agricultural policy. The problem that we face is rather like that of the Royal Society for the Prevention of Cruelty to Animals in its campaign to promote animal welfare—the problem does not lie in this country, but elsewhere in Europe. We must persuade our European partners of that. The sums involved are subject to increasing scrutiny and I believe that public opinion may well dictate that the process towards a more market-oriented agricultural economy is speeded up. My hon. Friend and I would welcome that.
A more perplexing case than the success achieved in the beef and other agricultural sectors, is that of the fruit and vegetable sector, which accounted for some £2.8 billion of the United Kingdom's trade deficit in 1992. That was considered at great length in the Select Committee report. That is surprising in a country with such a technologically advanced and innovative industry.
In the same year, we exported only £300 million-worth of fruit and vegetables, which is a tiny proportion of our total production, and I am sure that we can do better. My hon. Friend the Minister of State is chairing a special committee that seeks to see what it can do to encourage horticultural exports and beef up the industry's marketing success.
However, there have been some spectacular successes in the whole horticultural sector: the Cambridge salad producer who exported five million heads of lettuce and celery in 1992, much of it to Spain and Italy ; the Somerset firm that has sold 50,000 date palms worth £750,000 to the middle east; and a total of £48 million-worth of exports of potatoes and potato products.
As with milk, once our potato growers are released from the constraints imposed by the dead hand of the potato marketing scheme, we expect our industry to be able to improve its performance dramatically.
Our food and drink industry is one of the most highly developed and sophisticated in Europe. In my judgment, as one of the Ministers responsible for it, we are lucky to have such a fantastic food industry. We have a remarkably successful bunch of companies. I have visited factories of all sizes, manufacturing various products, throughout Britain and have seen for myself the efficiency of their modern manufacturing technology, the skill of their 481 employees and their huge investment in food safety and hygiene, which makes them pre-eminent among many of this country's industries.
Our manufacturers produce excellent, wholesome products designed to meet the requirements of modern British consumers—requirements which have been exacting as consumers have become more selective and their tastes more sophisticated. We all expect our food to be attractive, healthy, convenient and, above all, enjoyable. If manufacturers can meet that specification—in my experience they can—they will be able to sell their wares anywhere in the world. And they do. They export pizza bases from Manchester to Italy; sliced bread from Bolton to France; and lemonade from Glasgow to Spain. Marks and Spencer sell over 14,000 sandwiches a week in Europe. The House will be pleased to hear that the best-selling beer in Marks and Spencer's store in Paris is called "Black Sheep"—no pun intended. In 1992, exports of biscuits were worth almost 20 per cent. more than in the previous year, and cake exports were up by more than half. The praise for those achievements belongs to the British firms whose hard work and skill has made them possible.
It would be a serious omission if I did not mention one of our major export success stories—our alcoholic drinks industry, which has made an impressive and ever-increasing positive contribution to our balance of trade for many years. It is an area where Britain is the dominant international force, with three of the world's top four companies British-owned. Our export of spirits, beers and wines totalled £2.37 billion in 1992, a 50 per cent. increase over five years and our largest export earner in the food and drink sector by far.
That excellent achievement is fundamentally based on the success story of the Scotch whisky industry. The 110 Scottish distilleries generated export sales of £1.95 billion in 190 countries in 1992, making the industry Scotland's second largest exporter. It directly employs 15,000 people in production, and many times that figure in support and other associated industries.
Our producers of white spirits, like gin and vodka, also make an important contribution; and our brewers are having increasing success in introducing the world to fine traditional British ales. In 1992, beer exports increased by over 20 per cent. and stand at around twice their level of five years ago in both value and volume.
My hon. Friend the Member for Newark discussed some of the tangible, practical things that we are doing to help our industries and exporters take advantage of this dynamic world marketplace. I begin with Food From Britain, quite rightly mentioned in the motion. Again, my hon. Friend spoke with great authority about Food From Britain, as he was a member of the Select Committee that examined the food trade gap.
As the House will know, last year my right hon. Friend the Prime Minister called together leaders of the agriculture and food industries to No. 10 to discuss the importance of marketing abroad and at home.
Following that seminar, Dennis Stevenson was asked to review the role and functions of Food From Britain. On the basis of his report, my right hon. Friend the Minister announced that Food From Britain would focus its efforts on promoting exports.
The report concluded that Food From Britain has been doing valuable work in supporting British food firms, particularly small and medium-sized firms, in export markets. We firmly believe that Food From Britain is the 482 right 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, 483 with 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 484 energetic 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.
485 The 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 486 Minister 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.
487 Today'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 488 business 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 489 from 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 490 operate 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 491 form 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 492 one 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 493 infancy. 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 494 designed 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 495 welcome 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 496 need 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.
§ 2.2 pm
§ 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 497 world trade. Industrial tariffs were 40 per cent. in i he 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 498 France, 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.
499 By 1992, the net book value of British overseas investments was estimated at £360 billion. That comes from institutions, firms and citizens of the United Kingdom. When we compare that with the total value of the capitalisation of our stock market—which is put at £1.1 trillion, or £1,100 billion—we see that over 35 per cent. of our national assets are held overseas, and the amount is growing. Last year, we earned £26 billion in dividends and earnings from overseas investments.
It is an extraordinary story and it should be understood by the country. We should shout it from the rooftops. The growth of our direct investment abroad is shown by the fact that between 1987 and 1989 it reached 4.5 per cent. of gross domestic product, a percentage not matched by any European country. In the decade to 1990, the value of British corporate acquisitions in America stood at £90 billion, more than double that of Japan. I could go on, but I am conscious that some of my hon. Friends wish to take part in the debate.
During the Christmas recess, I was privileged to be invited by the Government of India to visit India to see the progress of the India-British partnership initiated last year by my right hon. Friend the Prime Minister. As we heard in the debate, 70 memoranda of understanding have been signed and £1.2 billion of joint investment is being made. We have identified in India a new, emerging market of 200 million people with the purchasing parity of western Europeans, and they will be coming on stream in the next seven years.
It is a vast opportunity, particularly because we have a common language, a shared history, the same institutional arrangements and the same commercial law and because the process of doing business is the same. India's huge industrial infrastructure needs to be upgraded. For example, British Aerospace has formed a joint venture to promote and sell software engineering processes to the rest of the world. Those are the sort of challenges that are being met by our business community. It is a story about which one should hear in the media. Our people should understand what is going on around the world while we sit here and debate other matters.
§ Mr. Heald
Does my hon. Friend agree that one of the great benefits of joint ventures and investment overseas by British companies is that this country can justify much greater research and development facilities than we might otherwise do, so that companies such as BAe, ICI and so on have substantial R and D facilities in Britain, which are servicing companies and sites across the world?
§ Mr. Deva
I am grateful to my hon. Friend for making that important point. Science parks are emerging in India, which will benefit from technical expertise, as my hon. Friend said.
In summary, we are back and we will seize, for the betterment of the United Kingdom economy, the opportunity for growth, prosperity and jobs at home, a sound economy, sound money to keep inflation low, and a positive balance of payments so that we can go forward towards 2000 with one of the most successful, competitive productive economies in the world and again become the envy of the world.
§ Mr. Dudley Fishburn (Kensington)
I should first, in what may be the last speech in the debate, thank the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, my hon. Friend the Member for Crawley (Mr. Soames), for such a wide-ranging and thorough speech. He stood in at the last moment and has shown that his grasp of international commerce is as good as his appetite for international cuisine. I also thank my hon. Friend the Member for Newark (Mr. Alexander) for raising the subject for debate. I shall not dwell on some of the more agricultural aspects raised today, as the warble fly, of which we heard from my hon. Friend the Member for Gloucestershire, West (Mr. Marland), is hardly the main topic of conversation in the wine bars of Kensington high street, although the well-manicured lawns of Kensington park are regarded with the same passion as my hon. Friend regards the forest of Dean.
The essence of the debate is not only the future prosperity of the United Kingdom, but something more important. It is about the very thing that makes us tick: in what direction do we want to take this country? In what way do we wish to bustle over the next generation? We make the choice either to bustle internationally and be fully part of the world, or perhaps retreat into a rather attractive theme park in which we let history pass us by.
One prediction that we can make with confidence during these next few years is that Britain's economy, relative to that of the rest of the world, will get smaller. That is not controversial. We are, after all, a static and aging population of about 56 million people. We live in a world that is ever younger, ever more capitalist and growing at a much faster rate than any of the countries of western Europe. The population of the United Kingdom currently constitutes just 1 per cent. of the world's population. Within the next generation, that will fall to a much lower percentage.
Even now, China, Mexico, Brazil, India and Russia are, by the size of their gross national product alone, able or worthy of being members of the group of seven largest industrial nations in the world. All of them are larger than Canada and, in size of their gross national product, are biting at the heels of the United Kingdom. There is little doubt that in the next decade or so they will overtake the United Kingdom in size.
All those facts point to its being ever more important that Britain's future should be entirely cosmopolitan and international, part of a world that is flourishing and exciting. At the start of the century, 20 per cent. of the world's wealth rested within the shores of these islands. Despite all the great empire, it was not necessary to bustle in the world to be commercially successful because there was enough wealth within our borders. By the end of the century, Britain's wealth might constitute 3 per cent. of the world's gross national product. Therefore, it is all the more important for our prosperity, and our morale and feeling of vigour in intellectual and commercial life, that we should be entirely international.
The prosperity of the United Kingdom rests on one thing and one thing alone—whether other people over whom we have no control and over whom, thank goodness, our politicians have no sway, choose to buy British goods because they find them competitive, good value for money, the right thing. Success in terms both of the volume of British exports and of the fast growth in their value shows 501 that, at last, we are on the right track. It matters not at all whether the goods that we export are manufactured goods or service goods.
§ Mr. Michael Clapham (Barnsley, West and Penistone)
In this debate on exports we have heard some excellent speeches, but not one has referred to an industry which has made enormous steps forward—the British coal industry. We are now producing coal at world market prices. Does the hon. Gentleman feel that Britain could export its coal to Scandinavia or the European Union while ensuring strategic supplies and thus maintain the future productivity of British industry when, because of the change in world circumstances, gas prices are likely to be pushed up within the short to medium term?
§ Mr. Fishburn
I should be the first to welcome the export of British coal to any market in the world. What matters is that it should be desired by other people and purchased by them, rather than produced against that market. If there is that market for British coal, I only hope that it flourishes and succeeds. It does not make any difference whether what is sold abroad is a manufactured product or a service industry. The hon. Member for Middlesbrough (Mr. Bell) made that point, and we debated it.
In the early 19th century, a number of old buffers, most of whom would now be Labour Members, said that the new industrial revolution bringing in steel, coal and textiles was of no worth and that only agriculture mattered. What nonsense that was, and what nonsense it is today when people say that wealth lies in coal, steel and textiles rather than in services. Wealth comes from what other people are willing to buy. The most rapid developments in British exports have come in the service industry, but greatly to be welcomed is the growth in manufacturing industry as well.
§ Mr. Dennis Skinner (Bolsover)
The hon. Gentleman began by talking about the glorious halcyon days of the turn of the century when Britain was exporting all around the world and dominating all those pink parts of the map. Much of the exports were in coal, but the hon. Gentleman gives the impression that, somehow or the other, we have lost that wonderful position by accident. The truth is that most of the countries now exporting to us, and other countries, support their own industries. As the Parliamentary Secretary is here, that big bladder of lard—[HON. MEMBERS: "Order!"] He has accepted it before, so it is surely in order.
Will the Parliamentary Secretary understand that if coal had had the subsidies that agriculture has had for decades we would not only be exporting coal to every part of the world but giving it away? Why does he not concentrate on the fact that it is possible to export? As my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) said, we are competitive, and productivity in the pits has gone up by 360 per cent. since 1984.
§ Mr. Fishburn
Had the hon. Gentleman been in the Chamber for any part of the past four hours, he would have heard exactly how the Government are encouraging 502 exports that the world is willing to buy, which is making all the difference to Britain's export performance and balance of payments.
The future for the next generation will depend not only on exports by traditional industries but on something greater. Britain must be the cosmopolitan centre for the eight hours in which the sun shines on our part of the world and the world market comes to rest here. That ambition is not just for London but for the whole of Britain. We have heard of the overwhelming growth in the population of Asia and the southern hemisphere, but there is no doubt that there will continue to be great prosperity and enormous opportunities in the peaceful and prosperous part of the globe that our eight hours of the market represent.
It is crucial that the United Kingdom should be the chosen centre of that cosmopolitan and international trade. Already, one job in three in Britain rests with international trade. As time passes, it will be a major success if that proportion increases to one job in two, and eventually if every job in the United Kingdom—including in the coal and gas industries—is completely integrated with international markets. The world's future presents dramatic opportunities for Britain as an historic trading nation which trades more of its wealth overseas than Japan or the United States.
If Britain can sustain the success that it has enjoyed over the past four years in terms of export volumes and value, it will provide for its citizens a truly excellent and valuable way of life and sense of purpose—which we shall risk losing if we turn our back on the opportunities, grow smaller by comparison with other countries of the world, and become just a theme park. Opportunities exist, and my hon. Friend the Minister clearly spelled out the way in which the Government are seizing them.
§ Mr. David Amess (Basildon)
I congratulate my hon. Friend the Member for Newark (Mr. Alexander) on his choice of subject for this debate. Unfortunately, I was detained earlier by a constituency engagement, but I enjoyed the stirring speech of my hon. Friend the Minister, who sounded exactly the right note. Many of us are sick of people running this country down and suggesting that it does not produce fine goods and services that can be sold abroad.
The House will join me in wishing my hon. Friend the Minister well and every happiness in his marriage which took place during the Christmas recess.
§ Mr. Skinner
Is the hon. Gentleman aware that there is a plan afoot to get rid of the present chairman of the Tory party, who has been a bumbling idiot during the course of the past few weeks, and replace him with the hon. Member for Crawley (Mr. Soames)?
§ Mr. Amess
I had better not comment on that.
Over the past few years, I have done my best to promote the town that I represent. Last week, I was in Omaha in Nebraska, as the guest of First Data Resources, which has an office in my constituency but headquarters in Omaha. I was treated extremely well, and I was offered the key to the city and had talks with the governor and the mayor. As a result of my trip, businesses in my constituency have much to which they can look forward in respect of export opportunities in the months and years ahead.
503 Basildon is a thriving export centre of 20 manufacturing and service sectors. I have a long list of firms in my constituency that have achieved magnificent export records over the past year. The first is Hawtal Whiting, nearly 50 per cent. of whose turnover goes in exports. Some 25 per cent. of the turnover of Brentpak plastic packaging goes in exports. Gilbarco's exports are steadily growing—it exports all over Europe and throughout the world. Burlington air express, a new company formed last year, has quadrupled its labour force and exports more than 90 per cent. of its product. Fisherman's Friend is also in my constituency and 93 per cent. of its product goes in exports. The tractor plant, now run by Fiat, produces the finest tractors in the world and has managed to keep its export share. Last year, I was privileged to open an automated machinery company called Froehlich whose export sector is growing—
§ It being half-past Two o'clock, the debate stood adjourned.