Balance of Trade: Manufactured Goods (Hansard, 29 February 1984)

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

§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)
My Lords, the deficit, on a balance of payments basis, was £2.1 billion.

§ Lord Hatch of Lusby
My Lords, I wonder whether the noble Lord the Minister has been able to look up the matter since I last asked him a similar Question last year. Can he confirm that I am correct in stating that this is the first time since the beginning of the Industrial Revolution that Britain has had a deficit in the balance of trade figures on manufactured goods?

§ Lord Cockfield
My Lords, a lot of other changes have occurred since the beginning of the Industrial Revolution. Last year our total exports of manufactured goods amounted to £40 billion: that is a very considerable achievement and we look forward to doing better in the coming year.

§ Lord Hatch of Lusby
My Lords, would the noble Lord be kind enough to answer my question?

§ Lord Cockfield
My Lords, the noble Lord's historical researches are no doubt of great interest to himself. The data available going back to the times of the Industrial Revolution are suspect, but it appears that there was a surplus in our trade of manufactures for most, if not all, of the intervening period. Nevertheless, the important point is that very great changes do take place over a period of time as long as this, and the important thing is to adapt to those changes and to take advantage of them. This is in fact what we are doing.

§ Lord Barnett
My Lords, is the noble Lord really saying that he is pleased with the balance of trade, excluding North Sea oil?

§ Lord Cockfield
My Lords, a very great number of changes have taken place in recent years. The fact that our manufacturing industry is not doing better than it is is well illustrated by the fact that in the 20 years between 1960 and 1980 our share of world trade was halved and import penetration increased by 50 per cent. Most of this was associated with a falling degree of competitiveness in British industry, most of which was due to excessive increases in pay not matched by rises in productivity. In recent years that trend has been changed and productivity in manufactures now shows an increase of approximately 11 per cent. per man as compared with the figures for 1979.

§ Lord Barnett
My Lords, so could the noble Lord tell us—

Noble Lords
Order! order!

§ Lord Barnett
—why the situation does not improve?

§ Lord Cockfield
The situation, my Lords, is changing. Last year our total exports of manufactures amounted to £40 billion compared with £37.3 billion in the year before: and in the coming year we expect to see an increase of 4 per cent. in volume terms. In addition, there has been a substantial surplus on the balance of payments, while in 1979 there was a deficit on the balance of payments.

§ Lord Boardman
My Lords, to put these figures into context, could my noble friend confirm that the net overseas earnings from invisibles in the private sector have been running in the region of £7,000 million per annum? Would he also remind his right honourable friend the Chancellor before 13th March that the largest contributors to that were the banks?

§ Lord Cockfield
My Lords, the general point made by my noble friend is entirely valid. We earn a substantial surplus on our balance of payments on invisibles, including services.

§ Lord Kilmarnock
My Lords, can the noble Lord tell the House when North Sea oil production is expected to peak?

§ Lord Cockfield
No, my Lords, not without notice.

§ Lord Thorneycroft
My Lords, would my noble friend not agree that the exporting industries of this country can take an immense pride in the fact that we are selling overseas per head more than the Japanese, more than the Americans and more than most other manufacturing countries in this world?

§ Lord Cockfield
My Lords, the point made by my noble friend is entirely valid. We export about 30 per cent. of our total output of goods and services. Japan exports about 12 per cent. or 13 per cent. only.

§ Lord Hatch of Lusby
My Lords, would the noble Lord agree that as consumer spending has apparently 1273 increased quite substantially over the past year, this rise must have been very largely absorbing the imported goods of other countries rather than stimulating the maufacturing industry of this country?

§ Lord Cockfield
My Lords, this goes well outside the ambit of the Question on the Order Paper. It is normal in the early stages of a recovery for consumer expenditure to increase, but then that very rapidly moves over to an increase in investment, exports and manufacturing activity. This in fact is what is happening.

§ Lord Ezra
My Lords, would the noble Lord agree that, despite the great efforts of exporters which have been referred to by the noble Lord, Lord Thorneycroft, this is indeed a very serious trend in view of the likely prospect over the next few years with North Sea oil revenues diminishing? Would he indicate his views as to what the likely trend in the balance of our manufacturing goods is likely to be in the coming year?

§ Lord Cockfield
My Lords, on the last part of the noble Lord's supplementary, we expect to see an increase in exports of manufactured goods in line with the estimate given by my right honourable friend the Chancellor of the Exchequer—namely, about 4 per cent.