HC Deb 06 May 1999 vol 330 cc1070-3
4. Sir Sydney Chapman (Chipping Barnet)

What assessment he has made of the prospects for exporters in the present financial year. [82360]

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

The Treasury and independent forecasters expect the volume of exports of goods and services to grow both this year and next.

Sir Sydney Chapman

As unemployment is expected to rise over the next two years, and, contrary to what the Secretary of State has just said, the Confederation of British Industry forecasts that economic growth will be sharply down this year, does the right hon. Gentleman agree with the Financial Times editorial yesterday, which advocated a weaker currency? What representations is he making to his right hon. Friend the Chancellor to reduce interest rates—although, of course, the Chancellor no longer has the power to do that? Does the Secretary of State not bitterly regret that fact?

Mr. Byers

The Government made it clear that we would not play short-term party politics with interest rates. We have given independence to the Monetary Policy Committee of the Bank of England, and we will support decisions taken by the Bank on interest rates. It is largely because of that independence that we now have the lowest long-term interest rates for 40 years, which is good news for exporters and for the economy in general.

Mr. Geraint Davies (Croydon, Central)

Does my right hon. Friend agree that today's historic change in Britain's constitution will herald a new era for exporters in which each region can consolidate in partnership to export and compete in the global marketplace? The new regional development agencies and the Welsh Development Agency can help in that. Does he also agree, first, that the political fallout will precipitate a change in the Opposition leadership, which will become more Euro-friendly and therefore build confidence in our key export markets; and, secondly, that today is a great day for British exports?

Mr. Byers

I do not intend to attack the Conservative Opposition, because they are very good at doing that for themselves. It will be an historic day, with the votes being cast in Wales and Scotland. I have no doubt that when people cast their votes they will reflect on the success of this Government, with some 400,000 new jobs having been created since we took office. Some 3,000 new jobs were announced in Scotland during the election campaign and 6,500 jobs have been created in south Wales, with the Baglan bay energy project. For the two years this Government have been in office, a job has been created every two minutes. We are proud of that and we are confident that, when people cast their votes today, they will acknowledge the Government's success.

Dr. Vincent Cable (Twickenham)

Does the Minister accept the estimate of the influential National Institute of Economic and Social Research this week that the pound is currently 15 to 16 per cent. overvalued in terms of the underlying competitiveness of the British economy? If he does not agree, will he explain why?

Mr. Byers

What I do know is that, if hon. Members consider sterling in terms of its appreciation against other currencies, they will see that its current position bears no comparison with the dramatic increase that we saw before the 1997 general election. Two thirds of the drop in exports last year was not in exports to those countries where our currency has appreciated in value but because of the decline in the south-east Asian markets. That is where the problem arose.

Mr. Jeffrey Donaldson (Lagan Valley)

The Secretary of State will be aware that one of the important components in the competitiveness of British industry in exporting goods is the cost of transporting those goods. In Northern Ireland, we are heavily reliant on the road haulage industry for the export of goods from our part of the United Kingdom. Is he aware that £100 will purchase 129 litres of diesel in Northern Ireland, but 227 litres in the Irish Republic; and that the additional burden placed on road hauliers by the Chancellor of the Exchequer through increases in excise duties is making it much more difficult to export goods from Northern Ireland, compared with our competitors in the Irish Republic? Will the Secretary of State make representations to the Chancellor on behalf of the road haulage industry to see whether that burden can be eased in any way?

Mr. Byers

There are many companies in Northern Ireland that are doing well in exports and I was pleased to present the Northern Ireland exporter of the year awards last year. I hear the concerns expressed by the hon. Gentleman. He will be aware that my colleague the Minister of Transport has set up a group with the industry to consider the problems it faces, and I hope that the group will produce some recommendations that will address the very real difficulties that the hon. Gentleman has mentioned.

Mr. Christopher Chope (Christchurch)

Why does the Secretary of State show such dismissive contempt for a significant group of British exporters who are the innocent victims of United States trade sanctions? I have asked questions that the Secretary of State has not answered, and firms that are badly affected have written to him and received no response. He was quick to provide £40 million in compensation for the cashmere industry, so why will he not supply some help for a firm such as Beamglow in Cambridgeshire, which employs 100 people and recently invested £2.5 million in new machinery to supply the United States export market? That market has been completely cut off to that firm as a result of the sanctions, and the Government are not doing anything about it.

Mr. Byers

That was all totally wrong. There is no dismissive contempt. The Government offered support to the cashmere industry in Scotland—and in England as well—because the time at which the levy was raised by the United States customs and excise coincided with the period in which cashmere exports were going to the United States. It is a seasonal industry, and the period covering late March and April was one of particular difficulty.

As we discussed in the House last week, the real solution is to resolve the trade disputes. The Government are committed to achieving that long-term solution to the problems. The solution to the problems that companies such as Beamglow face lies in the Government using our best efforts to ensure that the trade disputes with the United States are resolved and that free trade and commerce are able to flourish. The message has to be clear—that protectionism anywhere is a threat to prosperity everywhere. That is what we believe, and that is why we shall support measures to ensure open commerce and free trade.