Manufactured Goods: Balance of Trade (Hansard, 30 June 1983)

§ Lord Hatch of Lusby
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)
My Lords, in the first four months of 1983 the United Kingdom's balance of trade in manufactured goods is estimated to be in deficit by £1 billion.

§ Lord Hatch of Lusby
My Lords, is the noble Lord the Minister himself not shocked at having to reveal this figure? Is it not the case that this country depends for its vital imports of food and raw materials on exports of manufactures—which at one time, as recently as 1977, had risen to a figure of £5 billion? What has happened to the Government's claim that British productivity has risen so rapidly over the past year, if we now find that the increase in retail sales is being met by foreign manufacturers?

§ Lord Belstead
My Lords, I am not shocked by the Answer I have given the noble Lord. Growth of imports is evidence of increased industrial activity and of rising consumer demand, both of which offer increased opportunities to British industry. It is very heartening (as was said by my noble friend Lord Cockfield in yesterday's debate) that the CBI's industrial trends inquiry showed an increase in output and improved order books for the fifth month in succession.
364 The noble Lord mentioned productivity and the year 1977. It might be of interest to the House to know that every day £120 million-worth of manufactured goods are exported from this country. That means that over the 12 months to the end of May this year we exported £10 billion-worth more of manufactured goods than in the last year of the Labour Government.

§ Lord Shinwell
My Lords, can the noble Lord say whether the term "manufactured goods" includes the sale of arms to other countries, and to what extent they have been paid for?

§ Lord Belstead
My Lords, I cannot answer that question; but, yes, of course, arms sales are included.

§ Lord Diamond
My Lords, are the figures the noble Lord gives in real terms or in cash terms? Would he be good enough on every occasion in future, as we have had this difficulty with him in the past, to make it clear to the House what information he is giving to your Lordships, lest the House be misled by his answers?

§ Lord Belstead
My Lords, unless I say to the contrary, the figures I give are in cash terms.

§ Lord Ezra
My Lords, in spite of the answers given by the noble Lord the Minister, I should still like to suggest that this is a very disturbing trend. May I ask the noble Lord what measures the Government propose to take, either through the British Overseas Trade Board or in other ways, to reverse this trend?

§ Lord Belstead
My Lords, I think it is fair to say that in the Budgets of the past two years incentives have been given to both new and expanding businesses. Of course, through the work of the British Overseas Trade Board and other agencies I believe that, with output continuing to rise, so jobs will begin to come back.

§ Lord Molloy
My Lords, would the Minister not agree that in terms of manufactured goods an increase in manufacturing will not merely be good for the country as a whole but, what is perhaps most important, will make a real contribution to bringing down the scourge this country suffers from at the moment—extremely high unemployment?

§ Lord Belstead
My Lords, in case there is any misunderstanding I must make it clear that manufacturing output in the first four months of this year—the only months for which I have figures—is most definitely up.

§ Lord Hatch of Lusby
My Lords, is the noble Lord aware that over the past year manufacturing production has been down? Would he answer my previous question as to whether it is not still necessary for this country to have a surplus in manufacturing trade in order to obtain our essential imports of food and raw materials? Could he say what Government policy is going to be when they find the buffer of North Sea oil is beginning to run out?

§ Lord Belstead
My Lords, the Government do not agree with the noble Lord that it is necessary, or even desirable, to have a surplus in trade on every single 365 commodity. We are in surplus on oil and services, and we are in a strong overall position—a £3,050 million surplus last year.

§ Lord Hatch of Lusby
My Lords, I am asking the noble Lord about manufactured goods. What is his answer on manufactured goods?

§ Lord Belstead
My Lords, my answer to the noble Lord remains the same as it was in my answer to his original supplementary question; that is, that growth in imports is evidence of increased industrial activity and of rising consumer demand. There is evidence, whether or not the noble Lord agrees, that British industry is now beginning to take advantage of those opportunities, in contradistinction to other countries in the OECD, which, as my noble friend Lord Gowrie pointed out in the debate yesterday, were on a downward trend at the beginning of this year so far as manufacturing output is concerned, while this country, despite all our difficulties, was on an upward curve.

§ Lord Cledwyn of Penrhos
My Lords, notwithstanding what the noble Lord has said, is it not a distressing fact that we are for the first time in a century importing more manufactured goods than we are exporting? Is that not the problem which the Government have to solve, especially taking into account the fact that oil is part of our exports?

§ Lord Belstead
My Lords, the noble Lord, Lord Cledwyn, is habitually fair, and I am sure the noble Lord would recognise the force of the information which my noble friend Lord Gowrie gave in the debate yesterday. I repeat that at a time when the countries of the OECD, including our leading industrial competitors, were on a downward curve in manufacturing output, this country was at the beginning of an upward curve. When the noble Lord asks what the Government are going to do, we are going to try to keep prices stable, we are going to try to keep interest rates down, and we are going to continue to give adequate incentives to industry.

§ Lord Jacques
My Lords, if we are so much more competitive, why is it that our figure for unemployment was only half a point more than the OECD figure in 1979 and is now 5½ per cent. more? That surely takes some explaining.

§ Lord Belstead
My Lords, like all other countries, during the recession it has been difficult to increase manufacturing output. We are now beginning to do so. If we can continue to do so then it is possible that the jobs will follow.