Manufactured Goods: UK Share of Trade (Hansard, 31 January 1989)

§ Lord Young of Graffham
My Lords, the Autumn Statement forecast shows that the United Kingdom's share of world trade in manufactures has changed little since 1981, after decades of decline.

The Viscount of Oxfuird
My Lords, I thank my noble friend the Secretary of State for that reply. Can he tell the House how he views the recent report of Mr. Henry Neuburger, which has been submitted to the Leader of the Opposition in another place, particularly as regards the comment on the future of manufacturing industry in 1992?

§ Lord Young of Graffham
My Lords, I was puzzled by that statement. From looking at the actual facts I find that since this decade began British manufacturing industry has increased productivity at a rate greater than that of any nation in the world including Japan. Our manufactured exports continue to increase the whole time; and this country is being recognised internationally as the right environment for manufacturing industry. I believe that 1992 will present a great opportunity for manufacturing industry in the United Kingdom and not be the subject of such doom and gloom, as that forecast seems to suppose.

Lord Bruce of Donington
My Lords, is the noble Lord aware that, according to the figures issued by 993 his own department on Friday last, there is a deficit in our visible trade of over £20 billion, of which no less than £17 billion is in relation to manufactured goods? Is the noble Lord further aware that he cannot ride away with the suggestion that most of this is comprised of capital goods because they occupied only 17 per cent. of our imports in 1988? Does the noble Lord believe that he can continue to gloss over this whole question indefinitely?

§ Lord Young of Graffham
No, my Lords. What the noble Lord describes as a gloss I would describe as a repetition of the facts. It is true that we have adeficit on manufactured goods. I was recently shown the report of a Professor Supple who declared that not since 1800 has the visibles sector been in credit. Well over 100 years ago the nation was concerned about the apparent deficit in visibles and the increase in invisibles. In important sector after important sector, like aerospace, radio and electronic capital goods, the iron and steel industry, basic electrical equipment, electrical instruments and control systems, the nation still runs at a surplus. It is important that the nation itself should be prosperous and that it should be seen to have the right environment. That is neither a matter for government Ministers nor, with the greatest respect, for those opposite who form that view. The outside world is forming that view as we have seen in the past few days.

§ Baroness Seear
My Lords, does the noble Lord not agree that the most recent issue of the Economist shows that this country ranks sixth in terms of increased industrial production among the 13 industrial nations quoted? Does the noble Lord not agree that the boasted increase in industrial production to which he so frequently calls our attention is an increase from an extremely low base? Is it not correct that it is always much easier to get an increase from a low base than from a high base? Will the Minister not agree that, bearing in mind those two facts and the statement he has made this afternoon, there has been no UK share increase in the volume of trade in industry and that he is somewhat overdoing his enthusiasm concerning improvements in the British economy?

§ Lord Young of Graffham
My Lords, I understand and I appreciate everything that the noble Baroness has said. Before we talk too much of the low base of the United Kingdom, it is well to remember that we still export more manufactured goodsper capita than Japan. The famed disappearance of the industrial base should be looked at in that light.
When I look at the value share of world trade in manufactured goods, I find that the provisional figures for 1986, 1987 and 1988 show that the British share is 5.7 per cent., 6 per cent. and 6.2 per cent. We went through decade after decade of decline both in the volume and the value share. We have now seen that the volume share has stabilised over the past few years. Over the past three years we have seen an increase in the value share. I believe that those figures give an indication of the way in which matters are going.

§ Lord Jay
My Lords, is the noble Lord aware that, though our visibles trade in total has always shown a deficit, our trade in manufactures showed a surplus until a very few years ago?

§ Lord Young of Graffham
My Lords, that may well be so. It is no good looking at particular sectors. We have to realise that the world changes and that the balance of manufactured goods themselves has changed. Perhaps in 1820 we produced half of the world's steel and over half of the world's textiles, but since then other nations have learnt the secret of producing both steel and textiles. If we are to keep our place under the sun and to have productivity and an economy that will maintain standards that citizens wish to see, then we have to create wealth. Often the creation of wealth is in the provision of services and not necessarily in the making of products. That is the important matter to which the Government must continue to pay attention.

§ Lord Rochester
My Lords, despite what the Secretary of State has said about the past three years, according to statistics prepared this month by his department, the United Kingdom share by value of world trade in manufacturing industries is still very much lower than it was in 1980?

§ Lord Young of Graffham
My Lords, it is true that in 1980 the share by value was 7.8 per cent. It dropped very rapidly in a few years after that. We are talking about share of world trade. World trade continues to expand. We are but one nation of some 60 million people or less sharing in that world trade. In the past three years we have seen that share increase until today it stands at a level that has not been seen since the early 1980s. The important matter is that we continue to maintain our place and even to improve it in the face of rapidly expanding world trade.

§ Lord Dean of Beswick
My Lords, does the noble Lord not agree that according to his Answer we shall have to do much better than we are doing? We have been almost static since 1981 in percentage terms. Does the Minister not agree that we have to bear in mind that in the foreseeable future the Government will lose, or will suffer a very large diminution of the benefit arising from our oil revenues? Does he not agree that that is the time of reckoning, and that we should be doing much better than we are in order to cushion the effects of that situation when it happens?

§ Lord Young of Graffham
No, my Lords. The Government have lost a share of oil revenues due to accidental causes in the past six or so months. What we have seen is British productivity in manufacturing industry increasing at a rate faster than anywhere else. In the past three months to December the export of manufactures was 3 per cent. higher than a year ago. The Autumn Statement forecasts growth in manufacturing exports of over 8 per cent. in 1989 which is close to the projected growth of world trade. We have seen the United Kingdom export of manufactured goods continue to increase.

§ Lord Wolfson
My Lords, as 1992 approaches what steps are the Government taking to improve the 995 financial arrangements in Europe where two-thirds of our visible deficit lies? Perhaps there could be some arrangement on the lines of the old sterling area where balances were cleared quite comfortably.

§ Lord Young of Graffham
My Lords, I am very grateful to my noble friend Lord Wolfson. If, by an interesting method, the noble Lord is introducing the concept of exchange rate mechanism or any other system in Europe, that is an entirely different question.