§ 2.58 p.m.
§ Lord PARRY
rose to call attention to the vital importance of the service sectors of British industry to the health of the economy; and to move for Papers. The noble Lord said: My Lords, this nation is in crisis and, despite the sometimes myopic view we have of it, it is not a crisis that has been created by one or other of the two major political parties that have, almost equally, shared the Government of this country over the last 50 years. Indeed, the longer view of history will record that Great Britain was moving into crisis—without recognising it; certainly without doing anything substantial about it—in that long-ago period of the last Liberal Government of this country. Nor, indeed, can that Government be blamed.
There are principles that divide this House; I have seen them at play this afternoon. In a system of democracy, such as ours, not only must there be Government and Opposition to Government, but there must be a radical and a conservative concept of government. What is more, Governments—whatever their label—may be conservatively radical or radically conservative. Time will tell the real nature of the Government elected by the British people on Thursday, 3rd May 1979. I think that just at this moment the Government are living up to a description made from their Front Bench a moment ago, as appearing to move a little faster than they might be.
Speaking in this House as a democrat, though not democratically placed here, I should like to congratulate those noble Members who have been chosen by their democratically-elected Prime Minister to serve in her Administration. In this debate in particular I would wish—not as 1493 a politeness but as a personal pleasure—to congratulate and to extend good wishes to the young and able London Welshman, the noble Lord, Lord Trefgarne, of Cleddau, who is to reply to the debate on behalf of the Government.
The word, Cleddau, is the Welsh word for a sword. It is not traditional for me, standing here, in this place, in this House, to call the noble Lord, Lord Trefgarne, my noble friend. But I think he is noble, and I think lie is my friend, none the less, in the best possible sense. He is named for the Cleddau, and is of the family of a Welsh non-Conformist Minister—a radical, indeed. I was born and grew up beside the Cleddau—that great two-edged sword of a river that divides Pembrokeshire—and my father, too, was a Welsh non-Conformist Minister, and a radical! Our debate then should have a sharp edge, but we will not, I think, be slashing at each other, nor emphasising division. The times and the circumstances are too serious for that. And the people of this nation are rightly contemptuous of the cat-calling and back-biting that too often has passed for political debate. Indeed, we have had it for so long that it threatened participatory democracy itself.
I supported the Labour Party in Government, and I support it in Opposition. Having congratulated my Conservative Peers, I congratulate and thank my political noble friends seated around me. Especially, I congratulate the noble Lords and Baronesses who served this House, their party, and their nation in the last Administration. I saw, from very close to them, how desperately hard they worked and how dedicated they were in office. The new Government will, as they have a mandate to do, change the emphasis and the nature of their policies, but they will not better their dedication to, nor their love of, Great Britain.
Having said that, I have to plead the Addison Rules—since I am chairman of the Wales Tourist Board and a member of the British Tourist Authority—and make it clear that, in moving this debate, on a "friendly" Motion, I do so as a rank-and-file Member of your Lordships' House. None of the bodies on which I serve is implicated in my remarks, though some of them might hold similar views to those expressed by me.
1494 One of those views I have already articulated here. Since your Lordships will not remember my last "utterance", much less what it was that I uttered, I have to repeat it. Great Britain and its empire— "upon which the sun never sets"—passed, at about the time I have already indicated and almost without knowing it, into the long, evening shadows of post-imperialism. In the too often quoted sentence of the American statesman, Dean Acheson, "Britain lost an empire and failed to find a role". Certainly, in losing its empire—and we lost it more gracefully and with less bloodshed than most imperial powers—Britain lost access to cheap, often disgracefully cheap, raw materials. At the same time, at home, the law of rising expectations was compounding the problems. Powers, forces, confidences created by the explosion of our heavy-industrial revolution, were coalescing. New bases for power within society were forming. As the system weakened, they grew stronger and their influence on events was multiplied.
The only sinister thing about that was that this nation, instead of addressing itself to the basic facts—the inevitably changing nature of our British economy—indulged instead in the irrelevancies of dated ideas. Our ideals were probably all right. It was our ideas that were formed and held by what had passed, rather than being challenged by what was yet to be.
My second point is, then, that—just as she passed from an imperial power into a post-imperial country, of great potential, and, indeed, actual influence, without making the proper acknowledgements or corrections of emphasis—Great Britain passed, too, into a post-heavy industrial economy. Your Lordships will know that this thesis has been explored by Herman Kahn and his colleagues at the Hudson Institute. If there is time, I will return to one of their forecasts in: The Next 200 Years. I do not intend to speak for that long. That is the title of the report.
Personally, I have also been encouraged by similar judgments in Bernard D. Nossiter's book, Britain: A Future That Works. The transition, that did not work, was not anyone's fault. The day-to-day management of it could certainly 1495 have been bettered. The teaching of the fact of it—through our educational system and the media—could obviously have been improved. But rapid evolutionary change—accelerating into revolutionary change in many of those very areas where we taught democracy, probably inadequately, probably to too few, probably too late—had overtaken our own national capacity for, and our will to, change.
The British motor car industry probably gives us an adequate example of what happened. Once we led the world. Twice, during major wars, that industry helped to win peace. Then, in the aftermath of war, as the nation emerged from austerity into "consumer production", it was offered a choice of route. It could either gear itself for the long-term future, by exploiting and developing the overseas markets, or it could go for the easier, rapidly-growing, home demand for cars and motor bikes. There were honourable exceptions, but in the main we went for the cheap and easy market.
Most of the problems of that great industry sprang from that one central fact. In a weakening context, strengths and powers were redisposed. While we enjoyed the luxury of the home, cars and suffered the internicine strikes within the industry, our competitors in Germany and Japan, moving from an almost nonexistent base into dominance, took over the markets of the world, and—in the final irony—stormed the British market.
Anyone disposed to blame only the trade unions, or only the managements, for that, needs to raise his, or her, sights. The fault lies in all of us because we create the national mood. Here, we have an even greater responsibility in this House to analyse rather than to blame, because—at least for a while longer!—this House even influences the national mood. Most of our heavy industries have followed the same route. Our heavy industrial revolution, burning itself out, had to compete with artificially stimulated industrial explosions in Germany and Japan. For a while, heavy industrial expansion there motivated a remarkable boom that still reflects itself in the strength of the deutschmark and of the yen in the international money markets.
But, my third claim is that there are already signs of the passing of the heavy industrial revolution from Western Europe, 1496 including Germany; from the farthest of the Far East; and equal signs that it is basing itself now in Korea, along the eastern Mediterranean, in Venezuela—and indeed in much of South America. And the pace of that change will accelerate. Only in these countries does an indigenous and therefore relatively cheap fuel source coincide with an actually cheap labour force. That labour force, too, is rapidly being aided by the latest technologies known to man. While warning of the challenge that this presents to our own economy, I, for one, will not wring my hands over the fact that Korea—once the cockpit of war—is rapidly emerging as a silicon chip, and, therefore, a blue chip economy. It is a far better long-term prospect for the world than the flotsam and jetsam, exiled and persecuted, boat people of tragic Vietnam.
Light industry in Britain plays—as it will play—a massively important part in our economy. Aided by high technology, much of it developed here, it has to be our sheet anchor against drift into deeper difficulty. Government, I think, will need to reassure us all that our inventors, investors and front-running workers are being aided in all that they are doing to develop new techniques and technologies. The silicon chip adds an enchanting and, for the layman like me, an almost science fiction dimension. But it is not fiction; it is fact. I do the Government the credit of believing that they will be able to give strong responses to its possibilities.
So then my main contention and my reason for raising this debate today: Throughout this massive change that represents nothing less than the redisposition of the world's industrial and political base, throughout the decline of empire and shaky, and sometimes feeble, adjustments to post-imperialism, through the decline of the pound sterling and the rise of the dollar, the mark, and the yen, there has been one positive factor. Since that positive factor is—in the general gloom—understated, I choose to emphasise it in this Motion. I move it as much to give a new Government an opportunity to expand on the expressions of their Manifesto as to give those other noble Lords—who have so kindly joined me in this debate—the opportunity to address the House on the subject from their specialist positions. 1497 This is the positive factor. When we have had a balance of payments surplus in our overseas trading account in recent years, most, if not all, of the credit for that has rested, even though it has not always been given to them, with the service sectors of the economy, and particularly with invisible exports. The Committee on Invisible Exports defines them as:The earnings (whether foreign currency or sterling) from the provision of services to people living abroad".They see them as in direct contrast to visible earnings which are derived from "the sale of physical goods abroad." That committee go on to say:Either they are the interest, profit or dividends earned by individuals here from investment in foreign enterprises, or they are money received from foreigners in return for the provision of services".I leave that simple definition; its detail will be taken up by various speakers in the next couple of hours. Artistic tours, shipping, accounting advice, consultancy fees, insurance and capital borrowings could all come into this debate.
To lift out but one example, United Kingdom ships are among the country's biggest invisible earners. The General Council of British Shipping tells me that British ships grossed over £2½ billion in 1977. Their contribution to the balance of payments in net direct foreign exchange earnings was over £1 billion. In addition, they accounted for gross import savings of £497 million. Furthermore, British shipping companies employed about 76,000 United Kingdom nationals afloat and, directly or indirectly, provided employment for many thousands ashore at the end of 1978. To add to that one general fact, the United Kingdom's share of world invisibles brought in 23,240 million dollars in 1976. Let us light the gloom, my Lords. Only the mighty United States could top that, but the exalted economies of West Germany and Japan, artificially stimulated, trailed behind us.
The one invisible earner I intend to detail is my particular interest, tourism. It pleases me very much that my noble friend Lord Ponsonhy of Shulbrede will be speaking from the Opposition Front Bench. He is momentarily away from us but no doubt he is refreshing his notes.
§ Lord PARRY
My noble friend and I once shared the glories of responding to the loyal Address. I believe both of us express similar loyalty to national wellbeing this afternoon. In this connection, perhaps I might return to Herman Kahn:It seems reasonable to assume that by the end of the century tourism will be one of the largest industries in the world, if not the largest".Kahn forecast an increase by 10 per cent. to 20 per cent. a year until about the year 2000. Despite the difficulties I named earlier, total exports from Britain rose over the decade 1968 to 1978. Our total exports in 1968 were valued at £10 billion; in 1976 they were valued at £39 billion; in 1968 we earned invisibly nearly £4 billion; and by 1976 that had grown to £14 The real success story, then, is that tourism, catering for overseas visitors coming to this country, increased its share of the total export market. In 1968 the tourism industry earned us £383 million, and by 1978 that figure had multiplied more than eight times; we earned £3 billion in that year from foreign visitors. Tourism represented 14 per cent. of all invisibles and accounted for 4.7 per cent. of all exports.
Government—not this Administration because they are too young, but I refer to previous Governments—can take credit for that. They will share it with the effects of a falling pound and particular national attractions like Jubilee Year, but there is direct political credit to he drawn. Development grants or tourism projects, in the last eight years of that decade, created new jobs at a cost to the taxpayer which, in today's prices, averaged out at between £2,000 and £4,000, which is very much cheaper than the cost of creating jobs in other sectors.
The Government spokesman, who is Lord-in-Waiting to the Queen, may wish to comment on the slow growth of interest—outside the trade, which is very conscious of it, and of the educational institutions, which are increasingly so—in what I would call the technology of 1499 tourism. He will have been impressed. as I have been, with the internationally acclaimed professionalism and marketing know-how of our great hotel groups. Throughout the industry, and the tourism organisations that serve it, there is great expertise in promoting tourism. All other industries could not claim as much. Would it be unkind to say that some have moaned about the draining away of their strength when a trade mission in the sunshine selling Great Britain harder might have improved their general health?
I would claim that the overseas managers of British service industry outlets and the professionals who promote British tourism in other countries are the true trade ambassadors of this nation today. They know there is no point in trying to sell Britain as a destination for foreign travellers if, as emissaries, they spend their off-duty time emphasising or even misinterpreting Britain's national problems. It is an important point, insufficiently acknowledged, that some industries might have saved themselves had they developed the techniques now being employed selling tourism. Some hurt themselves by sending inexperienced representatives overseas where they dwelt as much on the "terrible difficulties at home" as they did on promoting the product. At one stage friends of mine in America wondered whether they should send my family food parcels.
I do not underestimate the reality of the difficulties nor minimise the effects of holiday-time airport strikes on the morale of the travelling public, but as the world fuel crisis illustrates—and others in this debate will highlight its effects—problems are not unique to Britain. Those that we represent as epidemic at home are in fact endemic to a changing industrial pattern at home and abroad. Creating job opportunities through the service sector will be as attractive to a Government facing rising unemployment as it is to me. Investment in tourism, for example, has the great benefit of creating new strength in the local community. It involves skilled, semi-skilled and unskilled workers. It adds, too, a supplementary income for those whom it employs part-time. In rural areas, it is often the only source, within distance, of such chances.
1500 In the recent past we have seen the great traditional employers pay off men and women. Service trades could not compete with the mass employers, but steel is ailing in Britain and coal is no longer king, even in Wales, though OPEC oil price increases already offer a stimulant to our aging monarch. In the United Kingdom, the percentage of people employed in the manufacturing utilities and in mining went down from 45 to 35 per cent. between 1956 and 1973, while the percentage employed mainly in services went up from 45 to 62 per cent. It used to anger me that, during the days of the depression and afterwards, it was the plight of the urban worker—because it was expressed in mass numbers—that excited greater sympathy. Those of us who grew up in the rural extremities of Britain knew the corrosive degradation of living standards, the outward migration of youth and talent, the absence of jobs, even "in service", for women, and hardly ever could the rural wife supplement family income as her city sisters did.
Slowly but surely tourism has been growing into that gap. Indeed, it has become a positive benefit for an area to have missed out on the Industrial Revolution. Virgin places are at a premium in our crowded world. Even where the Industrial Revolution, before it learned social conscience, did its foul worst, we now have the startling growth of industrial archaeology and "ethnic roots" tourism as a phenomenon attracting visitors and encouraging the rebirth of despoiled places. It seems that history is, even yet, a better guide than economics. Britain must grasp the opportunities for development. It must stop mourning some aspects of its past—those that will never return—and extol and develop those that will form a part of the future. The Hudson Institute's study is again relevant:People seem to have an almost insatiable desire to travel, and for increasing numbers the money and the time available for travel have been growing, while the facilities for travel have become more convenient and less expensive".London, though Londoners may not believe it, needs to be planning more hotels. I would insert at this point, at the request of somebody else in this House, that the pricing of hotel accommodation in London is crucial to the whole tourism industry in Great Britain, and if price rises seem in London to be intolerably 1501 high, the effect on travellers through London as the gateway to our nation will be great. Strategically-placed hotels are needed in the provinces, too—the better to manage the flow of tourist traffic.
The very success of our airline operators in building up traffic out of Britain is being aided by our grudging summer, but British tourist spending overseas is a debit on our national account. Last year stimulation of the home market effected a tourism credit balance of trade. There has of late been a sucking-in of imports to Britain; and it is as essential to promote our internal holiday market as it is to attract overseas visitors.
Do we appreciate the import-saving significance of holidays spent in Britain by our own people? If we do not, we shall fail to understand the significance of the Canadian Government's spending on a massive "See Canada First" campaign. I do not want to anticipate what the noble Lord, Lord Ponsonby of Shulbrede, will say, but London—his city—is not just a gateway to the provinces, as I have already indicated, but is one of the major reasons why people visit them. Kahn anticipates some of the problems that this implies. He says:Being host to hordes of tourists is not necessarily a pleasant way to facilitate economic development. But for those who wish to develop rapidly, or even slowly, many sacrifices may be required, of which playing host to tourists could be one of the least onerous".As we drove into London today through the main lane of traffic we did not come across a single notice saying, "Keep tourists out of London", or "out of Britain", although this has had heavy emphasis in the media. But in every pane of glass in every window I read, "Save London—Ban the Juggernauts." This City's arterial lines are being choked by massive lorries passing through.
Tourism in particular among the other service trades must invest in advertising and promotion at home and overseas. The British Tourist Authority is the conduit for overseas marketing. The national boards in England, Scotland, Wales and Northern Ireland, and indeed in the Irish Republic, increasingly see mutual advantage in encouraging the flow of nationals within the United Kingdom. But there must be no lessening of initiative and effort.
1502 Increased marketing budgeting is essential if we are to apply our residual expertise—developed to meet the demands of our own industrial revolution—to servicing all the emerging opportunities growing out of heavy industrial expansion elsewhere. Also essential is the increasing of funds for development projects to promote tourism growth and tourism attractions, as the Act allows.
Given a fair wind, and better weather than we have had of late, we might create a quarter of a million additional jobs in tourism in the next decade and double the spending by our overseas guests in British shops, buying British goods, made by British workers. Soon those countries of the world of which we spoke recently and patronisingly as "emerging nations" and "under-privileged areas" will add to the world flow of travellers. As the Germans are doing now and as the Japanese do—more particularly in continental Europe—other newly leisured peoples will come on paid holidays. Theirs will be the strong currency then. We must win our share of their interest and be ready to service it.
I have a suspicion that the noble Lord who will reply to the debate understands, and perhaps even shares, my enthusiasm. I look forward to his assurances on tourism as on all the other services trade. My Lords, this debate is not about decline, decadence, and pessimism. It is about an alternative economic strategy for a still great Britain.
§ 3.24 p.m.
§ Lord ROCHESTER
My Lords, I am sure that I speak for the whole House in saying how glad we are to welcome back the noble Lord, Lord Parry, and in thanking him for the way in which he has introduced this important debate. I share with him a love of that part of Dyfed—and I hope that those of your Lordships who are practised Welsh linguists will forgive my pronunciation—which used to be called Pembrokeshire. My wife's father was born and brought up there and we visit it every year without fail. I have little direct experience of the service sectors of industry, however they may be defined, but I am quite sure that the noble Lord, Lord Parry, is right to call our attention to the vital importance of those sectors to the health of our 1503 economy, not least because, as he pointed out, encouragement of tourism, for example, can create so many more job opportunities.
In the debate on unemployment last week the noble Lord, Lord Roberthall (whom I am glad to see in his place) reminded us that the causes of unemployment arise largely from our failure to adapt to change. In my experience successful adaptation to change involves building on strengths, rather than constantly analysing our weaknesses. I am a firm believer in the continuing importance of manufacturing industry for our economic health, particularly in exports; but as the noble Lord, Lord Parry, has pointed out, almost throughout the 19th and 20th centuries there has been a deficit in our visible trade. Indeed, I believe it is the case that since 1796 there have been only eight years in all when that was not so. We have prospered only because that deficit has been covered by exports of services and by profits on our overseas investments.
As the noble Lord also pointed out, so far as jobs are concerned, more particularly in the last 15 years, the employment of our people in manufacturing industry has declined as a proportion of total employment, while the proportion of people employed in the service sectors has increased; and we must see that it continues to do so. This shift in employment has resulted from a number of factors —from technological change, from rationalisation, from changes in demand, and particularly from changes in the structure of industry, as labour-intensive industries, such as textiles and clothing, have had to meet increased competition from countries with lower labour costs.
As Mr. Philip Sadler, principal of Ashridge Management College, pointed out in what I thought was an excellent article in The Times about a year ago, instead of seeking to obstruct the shift towards service sector employment, we should positively welcome it as being desirable on both economic and social grounds. It is desirable economically for at least two reasons. The elimination of overmanning and consequential improvement in productivity enables manufacturing industry to remain competitive abroad. Secondly, in the long run Britain will not be able to compete with developing 1504 countries in labour-intensive industries, and we shall have to learn to earn our living to a greater extent by concentrating on industries which involve advanced technology and on service industries. The shift in employment is desirable on social grounds because, I suggest, a reduced reliance on labour-intensive industries and processes will lead to an improvement in the general quality of working life in this country.
We hear much nowadays about the need to create more wealth to finance schools, hospitals, and other desirable social services, and I subscribe to it all wholeheartedly. But I believe it is sometimes forgotten that economic activity is concerned with the satisfaction of needs generally, and wealth surely consists of all those things for which a market exists or can be found. Thus our standard of living nowadays is a function of access to services such as holidays, entertainment, and sport, just as much as to goods; and for the benefit of our international trade that access must be made available to visitors from abroad to the greatest possible extent. Only yesterday, in the Financial Times, I came across a good example of a service, management training, which is being successfully marketed abroad—so much, incidentally, for the fallacy that British industrial management does not bear comparison with the very best in the eyes of the world.
The shedding of labour by manufacturing industry may involve redundancies, and it is not always possible to absorb production workers into service industries because of mismatched skills and because of differences in geographical location between service and manufacturing industries. Solutions to these problems lie largely in the field of Government policy, as I am sure the noble Lord, Lord Trefgarne, would recognise. Instead of trying to save jobs in declining industries, the Government should concentrate on retraining people for growth industries, including those in the service sector; on providing inducements for the relocation of service industries in regions of high unemployment; and on creating conditions which will encourage the development of small enterprises, including services, in innovative fields.
It is true that service activities such as advertising depend on manufacturing 1505 industry, but, equally, much of manufacturing industry exists only because of a demand for certain services. For example, the manufacture of passenger aircraft is dependent on the demand for travel and for tourism. Service industries can thus create wealth just as much as can manufacturing industry. They satisfy consumer demands; they produce profits, which can be taxed to help pay for social services, for defence, for overseas aid and so on; they provide a great deal of employment; and they enable us to earn substantial sums of foreign currency.
My Lords, sound national economic health involves building on strengths as well as eliminating weaknesses. We should certainly continue to do all we can to make our manufacturing industries more competitive, but we must also see to it that the lead we have in the service sector is maintained and strengthened. It is that objective, as I understand it, which the noble Lord, Lord Parry, has in introducing his Motion today, and I am glad to give it support from these Benches.
§ 3.34 p.m.
§ Lord POLWARTH
My Lords, this debate has been opened and will be wound up by the Welsh. There will be a strong English contribution, need I say London contribution, towards the conclusion, I suspect, from the noble Lord, Lord Ponsonby; so perhaps I may be forgiven one word on behalf of Scotland before I move on to the main theme of my speech, which is of more general application. I am very glad that the noble Lord, Lord Parry, has put this emphasis on tourism, and I should like to emphasise its vital importance to Scotland. This is not just its importance as a currency earner. It is a vital part of our economy. I am told that in one way or another it employs some 115,000 people in Scotland. It is particularly vital to the Highlands and Islands, where it is the largest single employer. That is an area where the other principal occupations are, by and large, declining in employment —agriculture, fishing and forestry —however healthy they may be in themselves.
So I should like to make a plea. I think it is likely—indeed, I believe it has been announced—that, among the 1506 necessary cuts in public expenditure, the grants and support for tourism are to be curtailed. I would make a plea for thought to be given to the way in which those cuts are applied, because I believe that when we look at London and the South-East area we see an enormous concentration of tourist activities; we see a concentration of the tourist-operating organisations of all kinds, transport and otherwise; and we cannot help seeing crowds of tourists—indeed, it strikes me that we are nearly submerged by them, almost to the very precints of this Palace, and certainly of Buckingham Palace. With no disrespect to those who are trying to further tourism in the South. I would make a plea that support is still needed in the outlying areas, whether of Scotland, Wales or the regions of England, because that is where the greatest scope for growth of tourism must remain. So, if the axe is to be applied—and I do not think we should plead for it not to be applied at all—let it be applied with due regard to sparing the trees with the greatest prospect of growth and those which, in the long run, will make the greatest contribution to the forest as a whole.
Having said that, I should like to move on to another subject altogether. I was sorry to be absent from your Lordships' House during the very interesting debate last week on the state of our economy. I can only plead that perhaps I was doing something which may have been contributing towards its well-being; namely, leading a City of London mission to the Province of Alberta in Western Canada under the auspices of that esoterically-named body to which Lord Parry referred, the Committee on Invisible Exports. What were we doing there as a group, some dozen of us, that individual members could not have been doing in their ordinary course of business? We were a bunch of bankers and investment experts in general. I think the answer was that we were able to put across the message of the great range of financial services and skills concentrated here, mainly in the City of London but in other parts of the country, too—skills and experience which we can put at the disposal of any part of the world—and we were able to put that message across in one of the most dynamically-growing places in the Free World today. 1507 In four days we were able to give two full-scale presentations to leading business groups, one in Edmonton and one in Calgary; we spent a day in discussions with Ministers and officials of the Provincial Government and their agencies; we attended a seminar on the proposed Alaska gaspipeline—surely an opportunity, if it is built, for British enterprise by way of participation; we visited the vast tar sands deposits in Northern Alberta, on which I suspect that one day we shall be dependent, when North Sea oil begins to decline; we gave some 15 interviews in all to various branches of the media; and at the end we have invited back representatives of a wide variety of institutions so that they may see what we can offer on the ground and, very important, by way of opportunities to learn and be trained in financial and other skills—again, an overseas earner for us.
It is that kind of organised effort which makes an impact, and it is typical of missions regularly organised to different parts of the world with good growth prospects by the Commission on Invisible Exports. Those parts of the world need the sophisticated services which we can offer, and there is no doubt in my mind that these missions are increasing our earnings overseas. What is more, they will lead to a fall-out in visible exports as well. For example, in Alberta there are already established branches of five British banks, and, with the shortly to come relaxation in Canada of controls on banking, I am sure that many more will soon be there. They will not only be earning from their own efforts; they will be making contracts, bringing opportunities for export, for joint venture and so on to the notice of their customers. So visible exports will again gain from this, too.
These missions are one activity of the Commission on Invisible Exports. From my experience it is a highly effective, tightly and economically run body in which the total staff is only six souls. It operates under the wing of the British Overseas Trade Board, and I am glad to say that that body is now under the chairmanship of a Member of your Lordships' House, the noble Earl, Lord Limerick. It does a fine job, too, making known widely the importance and achievements of the whole invisible sector and 1508 finding ways to make it more effective. I would be the last to belittle the importance of our visible exports: that is to say, those things which go through the Customs and can be felt and seen. The fact is in the past 16 years only once was our visible trade balance—the balance of physical exports and imports—in net surplus. It was left to the invisibles to counter this deficit and also offset the net outflow of Government spending overseas, the inevitable debt servicing, defence expenditure and the many other things on which we have to spend overseas.
As a result of the invisibles, an overall surplus on current account resulted in eight out of the 16 years, which was not a bad effort. There are a number of very interesting facts about the invisibles. We are the second biggest earner on invisible account in the private sector in the whole world, second only to the United States. The invisibles account for nearly one-third of the country's whole foreign earnings, and they are equivalent to nearly half our whole bill for imported goods. Within those figures, the city sector, banking, insurance and so on—and I give insurance pride of place with much the largest contribution; practically half of it—accounts for something like 40 per cent. of all invisible private earnings. The range is, however, as we have heard already, quite considerably wider, and other noble Lords will be talking about other aspects of it. Such things as Scottish banks in a syndicated Eurodollar loan to a South American country; a Liverpool broker dealing in cotton; a Southampton shipping agent filling up documents; a contractor in Manchester designing and building a project in the Middle East; and of course a multitude of individuals in the tourist industry about which we have already heard. All of these are playing a part in our invisible trade.
Those of us involved in it—and I should declare my interest as a part-time banker—are grateful for the support of successive Governments. There has been no political aspect to this in the party sense whatever. We ask for that support to continue. I am glad that we have had a recent relaxation in exchange controls; this will encourage greater investment overseas and consequently greater returns. I hope these only presage more to come. I hope that the Government 1509 will help to make clear some slight obscurities about the figures. There are some problems over separating the Government and the private sector figures in the monthly basis. That has not yet been achieved, I hope it may become possible. I hope also that they will explain publicly why there has been some levelling off and decrease in the net surplus in the past three years. It is due mainly to two things: on the Government side, there has been a substantial increase in our payments to the European Community. On the private side, paradoxically there is the impact of North Sea oil. Of course it is of substantial benefit to our visible exports and our saving on imports; but what is not so often realised is that there is an opposite effect. We have to pay for the technical services we have had to import and increasingly in dividends and interest on the investment made here from overseas, without which investment, let us face it, we could not have developed the North Sea.
Apart from that, perhaps I could end with one warning note: as the European Community develops, so does the pressure —and we all know it in your Lordships' House—to harmonise institutions within it, sometimes one feels for the sake of harmonisation alone, and the City and financial institutions are no exception. Undoubtedly there is scope and need for a greater degree of common practice, but this process must be watched. One reason for the development of the City of London as such a great international financial centre has been the degree of self-regulation afforded to the different institutions rather than a straitjacket of statutory control.
In general, the City has been ridden on a light rein, and in general it has responded responsibly and well. That has been one of the reasons for its success internationally. With only some 15 per cent. of our net invisibles arising from the European Community it would be a disaster if we were to be subjected to unduly restrictive regulations for regulations' sake to the detriment of the remaining 85 per cent. of our invisible trade. Where harmonisation is needed, rather let our Government give a strong lead—and I hope they will—to see that it is towards our model of institutions, based as they are on such long, great and wide experience. All we ask for as invisible exporters 1510 is the Government's interest, support and help in matters such as these. I am sure that we shall continue to increase our earnings from abroad, not only by brawn but by brain, and so contribute to that much needed improvement in our country's health.