Exports and the Balance of Payments (Hansard, 9 November 1988)

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)
My Lords, the White Paper DTI: The Department for Enterprise which was published in January stated that in the light of advice from the British Overseas Trade Board the department's export services would be reorganised later this year to reflect exporters' needs better. As I told my noble friend Lord Campbell of Alloway on 7th November, I am continuing to examine ways in which our export services can be improved including increasing the role played by private sector organisations. I hope to announce the result of the review shortly.

§ Lord Ezra
My Lords, in thanking the noble Lord for his Answer, can I ask how he reconciles the Government's evident intention of promoting exports with the fact that expenditure on export promotion has fallen in the last three years from £27.7 million in 1985–86 to an estimated £25.3 million last year? Would it not have been more desirable to have had increased effort in this sector in view of our present position?

§ Lord Young of Graffham
My Lords, the quality of the spend is, we believe, more relevant than absolute quantity. Export figures actually reached a record last August and manufacturing industry continues to perform well. In the three months to August exports of manufactures including erratics were 8½ per cent. higher than a year ago, while manufacturing output was over 6½ per cent. higher. It is more important that we see the performance of our manufacturers improved than that we worry about government assistance to industry.

§ Lord Williams of Elvel
My Lords, is it not the case that the Autumn Statement forecasts that in volume terms our share of world trade in manufactures will 618 go down both in 1988 and in 1989? How can that prospect be described as anything other than very depressing?

§ Lord Young of Graffham
My Lords, simply, it matters little that the volume share of world trade goes down so long as the absolute share and performance of the United Kingdom go up. If world trade is expanding faster than that of the United Kingdom, our concern is to see British exports continuing to expand and manufacturers making their contribution towards solving the present problems we have with the balance of payments.

§ Viscount Caldecote
My Lords, will the noble Lord agree that a most important factor in improving the balance between imports and exports is for manufacturing companies to invest more in new product development? Will Her Majesty's Government do everything possible to stimulate that?

§ Lord Young of Graffham
My Lords, the simple truth is that the most important single factor, not only for improving our exports performance but also for ensuring that more British manufactured goods are bought by the British people, is that those goods are better designed and more reliable and that they are delivered to time and work well. That is the secret of improving all these figures.

§ Lord Taylor of Gryfe
My Lords, does the Minister agree that import substitution is as important as export promotion? Is he aware that this year's total bill for timber imports is £6 billion and that as a result of government policy tree planting in this country is diminishing?

§ Lord Young of Graffham
My Lords, I am aware of occasional complaints from some Members of your Lordships' House who live north of the Border that too many parts of the country are being planted with trees. The balance is difficult. We must ensure that we produce the goods and the products that we buy at home. There has been a vast increase in the amount of timber required for paper and other purposes. I hope that in the fullness of time we shall narrow the gap; but we shall never close it.

§ Lord Northfield
My Lords, Japanese companies which have established manufacturing bases in this country are increasingly concerned that entry of their products into the European Community is being stemmed. The noble Lord knows of the problems with Nissan. Can he assure such companies that they will receive the full protection of Her Majesty's Government once they are British companies and that they will share in the benefits of export promotion?

§ Lord Young of Graffham
My Lords, goods manufactured in this country, whether in factories owned by British resident companies, British companies, Japanese or other foreign-owned companies, providing that over 60 per cent. of the content is of European origin, are free to be sold throughout the Community. The Government stand 619 by that decision, and I am sure that in one particular instance the Government of France will also stand by it.

The Earl of Selkirk
My Lords, if it is important to buy goods manufactured in this country, can the Minister say how one can discover where a motor car is built?

§ Lord Young of Graffham
My Lords, in a world of integrated plants with parts of cars being manufactured in different countries, it is becoming increasingly difficult to know exactly where the vehicles are manufactured. It is important that products, whether components or finished items, are made by British companies to standards that customers want to buy.

§ Lord Ezra
My Lords, in answering my Question the noble Lord said that the quantum of government support and export promotion was not the only factor; that another was the effort made by the private sector. Can he assure the House that, in respect of export promotion, the combined efforts of government and the private sector are rising year by year?

§ Lord Young of Graffham
My Lords, I assure all noble Lords that the efforts of government will be more effective year by year. The quantum of spend is different from the quality of spend. Too many people concentrate on inputs and not on outputs.

§ Lord Mackie of Benshie
My Lords, is it not a fact that British industry's competitors have a tremendous advantage in that they pay reasonable interest rates? Have there not been many calls from the CBI conference for the Government to tackle overspending in another way?

§ Lord Young of Graffham
My Lords, I have heard many siren songs emanating from the vicinity of Torquay. But the figures do not stand up. In examining long-term interest rates relative to rates of inflation, noble Lords will realise that ours are among the cheapest terms of interest in the top seven countries. In respect of shorter term interest rates, we are about halfway there. We must compare our rates of interest with the rate of inflation.

§ Baroness Seear
My Lords, the noble Lord said that it does not matter that we were losing out in the share of world markets if our volume of exports is rising. Does that not bode ill for our future competitive position because it must mean that our competitors are doing even better?

§ Lord Young of Graffham
No, my Lords, because more countries in the world are exporting more manufactured goods. All Members of your Lordships' House occasionally forget the fact that we live by invisible exports as well as by the sale of manufactured goods. It is important that sales of British goods continue to expand in absolute terms. If we ensure that they continue to rise at the present rate we shall soon solve our problems.

§ Lord Williams of Elvel
My Lords, will the noble Lord confirm that we are also losing our share of world invisible trade?

§ Lord Young of Graffham
My Lords, no, not to my knowledge.

§ Lord Mowbray and Stourton
My Lords, is my noble friend aware that some noble Lords who are associated with companies exporting to West Africa—both British and French ex-colonies—have noted with interest that the ex-French empire is now interested in buying from Britain and that ex-British colonies, which have been independent for 30 years, are also entering the market? Is the Minister aware that we are most grateful for the help we are receiving from the Government?

§ Lord Young of Graffham
My Lords, I suggest that, rather than studying debating points within your Lordships' House, we look at the reputation around the world of British goods and services. That reputation stands infinitely higher than it did 10 years ago: it is my hope that it continues to rise.