UK-EC: Visible Trade Figures (Hansard, 3 April 1989)

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)
My Lords, the United Kingdom visible trade with the other countries of :he European Community was in deficit by £9 billion in 1987 and by £13.3 billion in 1988.

§ Lord Jay
My Lords, this country had no visible trade deficit with those other countries before we joined the EC. As the deficit has become worse in almost every year since that time, what reason has the Minister for believing that if further restraints on imports are removed in 1992 the situation will not become even worse?

§ Lord Young of Graffham
My Lords, in 1992 there will be further economic activity within the entire Community. Over the past year or two we have seen problems of success because the growth of this country's economy has increased demand so much. Public purchasing pressure has grown faster than our manufacturing capacity can presently supply. That is a problem of success and I expect that over the next few years the situation will right itself.

§ Lord Barnett
My Lords, does the Secretary of State recognise that most of us disagree with the views of the noble Lord, Lord Jay, on the Common Market?

Noble Lords
Order, order!

§ Lord Barnett
My Lords, the Secretary of State will recognise that most of us disagree with the noble Lord, Lord Jay, and his views on the Common Market. Nevertheless, will the Minister accept that the Chancellor's views on a high exchange rate are unlikely to help the balance of trade either with the Common Market or with anyone else?

§ Lord Young of Graffham
My Lords, I am very grateful to the noble Lord, Lord Barnett. I appreciate that the views of the noble Lord, Lord Jay, are not universally accepted throughout your Lordships' 895 House. I say to him that at the end of the day it is not price that sells goods: it is design, quality, after-sales service, delivery and all the matters that have enabled the Japanese to succeed over the past 20 years and, alas for British industry, have led to it not always succeeding.

Lord Chelwood
My Lords, does my noble friend recollect that among the outright opponents of our joining the EC the noble Lord, LordJay—who was certainly one of the more intelligent and respected —used to argue that being outside the tariff barrier of the Community would not matter very much because of perfectly good alternative markets? Does my noble friend know whether that is still his view?

§ Lord Young of Graffham
My Lords, I believe that we have gone beyond the point of looking at tariff barriers. The whole process as regards 1992 is to look towards the removal of non-tariff barriers; namely, those much more subtle barriers which will slow down the growth of the economy of Europe as a whole. I do not believe that there is time left for us to be "Little Englanders" and live in an island state by ourselves. We are now part of the greater Community in Europe and we must maximise that opportunity in order to ensure that the people of the United Kingdom benefit most from it.

§ Lord Mason of Barnsley
My Lords, is the Secretary of State aware that eight years ago we had a trade surplus with Western Europe of £500 million? In the past year there has been a deficit of over £8,000 million and £4,000 million of that deficit was with West Germany. I would not regard that as a success. If I were the President of the Board of Trade or the Secretary of State for Trade and Industry, I would regard that as a colossal trade failure. If that trend continues until 1992 we shall be swamped with European products. Is the noble Lord going to reverse that trend or not?

§ Lord Young of Graffham
My Lords, the noble Lord, Lord Mason, may well be still of the view that it is government who make goods and who design and manufacture products. I suggest to the noble Lord that he leaves your Lordships'House—only temporarilyߞand goes out to Barnsley and other places around the country to see the new spirit of enterprise that exists in our land. He should experience the feeling that exists and visit places in the one country in Europe that has seen unemployment decline for 30 months. The noble Lord should also experience the situation in the one country in Europe that has unemployment at a lower level than the average of any of the large industrialised nations. The noble Lord should then judge for himself.

§ Lord Bruce-Gardyne
My Lords, perhaps I may ask my noble friend whether your Lordships should regard the figures that he gave in his initial Answer as a sign of considerable progress. Is it not the fact that nowadays you can only sell goods abroad by giving people the money to buy them whereas imports are provided by the suppliers and they give 896 you the money? As a result exports are consumption foregone to no conceivable purpose and imports are the benefits of other people's work that you are paid to receive. Therefore are not the figures highly satisfactory?

§ Lord Young of Graffham
My Lords, I am not sure that I follow the exact logic of my noble friend's argument. If anyone tells me that my figures are satisfactory I accept his remarks with thanks.

§ Lord Jay
My Lords, if an ever-growing deficit is a sign of success are we to expect it to increase indefinitely?

§ Lord Young of Graffham
My Lords, I am sure that the noble Lord, Lord Jay, will understand the answer which I shall give him now. If he looks at the cause of the increase in the deficit he will see that a substantial part of it relates to capital equipment, semi-manufactured goods and raw materials. It is part of the process of British industry gearing itself up and the benefit of that will be apparent in the years to come.

§ Lord Ezra
My Lords, the noble Lord was quite right in his answer to the noble Lord, Lord Mason: it is not for government to create exports, but they can provide the climate in which exports can be developed. In that connection will the Minister indicate what is the Government's present policy towards the British Overseas Trade Board? To my knowledge it has had its resources progressively diminished over recent years. Can the Minister say whether that trend is now going to be reversed and that we are going to make a real effort to improve our trade balance with our European partners?

§ Lord Young of Graffham
My Lords, I am very grateful to the noble Lord, Lord Ezra. As regards what the Government are doing to create a climate to promote exports, that point can best be answered by the figures that we see continually relating to those from overseas who settle within our shores in order to manufacture in this country. We have the lowest rate of corporation and payroll tax. Those who come to the United Kingdom come here in preference to anywhere else in the Community because the climate is right in this country. Those who come here will be manufacturing goods to be exported. Those goods will form part of our export surplus in the future. As regards the British Overseas Trade Board, I pay a great tribute to the valuable work done by the chairman and by all the members of that body. We have looked at its work and we have continued to support it. We have refined that support. That body is greatly appreciated and I for one value immensely the work that it does.

§ Lord Hatch of Lusby
My Lords, the noble Lord boasts about the proportion of capital goods that are imported into this country. He characterises that as part of the Government's success. Is it not the case that part of the capital goods consists of items such as machine tools? Those items used to be made in this country but are no longer made here, and are imported from abroad as a result of the decline 897 of our own manufacturing industry because of the Government's policy over the past 10 years.

§ Lord Young of Graffham
My Lords, perhaps I may say to the noble Lord that I do not claim success for the Government in industry or commerce in this country. It is the success of the people of our nation. They are the people who produce the goods and design the products. As regards the noble Lord's interest in machine tools, it is true that in the past we lost a large part of our machine tool capability because we did not keep abreast of the times. However, I must tell the House that as I go round the country I see more and more evidence of the machine tool industry reasserting itself. British goods, British machine tools are now being designed in a form in which they can not only be used by British industry but can be exported.