Information Technology: Trade Balance (Hansard, 7 February 1990)

§ The Minister of State, Department of Trade and Industry (Lord Trefgarne)
My Lords, in 1988 the United Kingdom had a trade deficit of £2.5 billion in the manufactured products of the electronics and information technology industry; £409 million of that deficit was accounted for by semiconductors and integrated circuits.

§ Lord Dean of Beswick
My Lords, is the Minister aware that the figure of £2.5 billion that he quoted is a five-fold increase in that deficit since this Government took office? Bearing in mind that only a few years ago this field of activity was described as a "sunrise industry", can he tell us whether the Government have any plans, or are contemplating any further action, to reduce the present trend (I say "trend" because it is getting worse all the time), arrest it and finally reverse it? Otherwise, we shall be in serious difficulty in the future.

§ Lord Trefgarne
My Lords, I should perhaps say that total exports in this sector from United Kingdom manufacturers are very substantial. I believe that the figure is of the order of £13 billion or £14 billion per annum. Although, clearly, the imports are even greater, those imports are also contributing very significantly to the efficiency of the business sector which uses so many of those products.

§ Lord Williams of Elvel
My Lords, has the Minister had an opportunity to glance at the figures produced by his department with regard to these matters and high technology goods? Exports in 1988 (which 841 include that category but also other categories) came to £11.4 billion, rather than the figure that the noble Lord has just mentioned; imports came to £15.3 billion. That makes a deficit which in fact is worsening and is shown as about £4.9 billion in the figures that his department produced up to the end of November 1989. Do the Government have any view on that or do they simply not care about high technology deficits?

§ Lord Trefgarne
My Lords, what is important is to look at the balance of payments overall and not to be mesmerised by particular sectors. Overall, our exports are doing very well. The gap between exports and imports is narrowing, as the noble Lord will have seen from recent figures. In some cases it is important and indeed quite acceptable to import products which the United Kingdom is not particularly well placed to manufacture. In this area and in relation to the products to which I referred there is a substantial British export industry. The figures are further confused, if I may so describe it, by the so-called entrepôt activities of some firms in this area. They are perfectly respectable but are not separately identified in the figures to which I have referred.

§ Lord Williams of Elvel
My Lords, is the noble Lord therefore confirming my view that the Government do not care about this sector and are perfectly happy that it should be made up with other exports in other sectors?

§ Lord Trefgarne
My Lords, on the contrary, we care about all sectors of British industry. We look to the overall figures that are published on a regular basis, as the noble Lord will be aware. We have been supporting this industry, for example, with assistance in research and development both on a United Kingdom basis and on a multilateral European basis.

§ Lord Hailsham of Saint Marylebone
My Lords, is my noble friend aware that in my home there is a cartoon dated about 1906 called "A very modern Moses", depicting the late Joseph Chamberlain as a Moses shooing away the quails from the desert? In future I shall be putting a picture of the head of the noble Lord, Lord Williams of Elvel, in place of that of Joseph Chamberlain.

§ Lord Trefgarne
My Lords, I am interested to hear about the cartoons on the wall of my noble and leanrned friend's home. However, I was not responsible for the trade policy of 1906.

§ Lord Williams of Elvel
My Lords, will the noble Lord be good enough to clarify to the House what on earth his noble and learned friend is talking about?

§ Lord Trefgarne
My Lords, I think that my noble and learned friend was pointing to the shortcomings of the policies of noble Lords opposite.

§ Lord Hailsham of Saint Marylebone
Hear, hear!

§ Lord Dean of Beswick
My Lords, the second part of the Minister's answer indicated that the section of industry widely known as the silicon chip industry shows a deficit of nearly £500 million at present, if I understand the figure correctly. Does the Minister accept that a large slice of the blame for that situation is due to the Government's political stupidity in privatising Inmos by selling it off to EMI Thorn which then sold it off to one of our competitors on the Continent, thus exacerbating a situation that was already deteriorating?

§ Lord Trefgarne
My Lords, no, I accept no such thing. A number of these products are imported into this country because they are not manufactured here. They are subsequently incorporated in major products being exported again to other countries. For example, the aerospace industry acquires some of its electronic components from overseas. These are now forming a major part of our export success.