Overseas Trade Forecast (Hansard, 18 November 1992)

§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, the deficit on the balance of visible trade is forecast to be £19½ billion in 1993. Forecasts for later years are not available.

§ Viscount Caldecote
My Lords, I thank my noble friend for that clear but somewhat limited reply. Does he not agree that that figure of £19½ billion deficit for 1993 is a matter of grave concern? Will he give an assurance that Her Majesty's Government now accept that an increase in output of manufacturing industry is of prime importance if we are to achieve a situation of sustainable growth in the economy? Can he assure us that the Government will do everything possible to encourage that increase?

§ Lord Henley
My Lords, obviously I accept what my noble friend says. The figure is of grave concern but I emphasise that it is only an estimate. I accept what my noble friend has to say about the importance of manufacturing output, but I would also say that obviously the key to success in the world export markets must be for the United Kingdom producers themselves to keep quality high and costs low; that is, to produce goods which people overseas wish to buy.

Lord Bruce of Donington
My Lords, will the noble Lord give the House an indication as to how much of the £19½ billion trade deficit he has forecast will be incurred between ourselves and the remainder of the European Community countries, the deficit of which at the moment is running at £51½ billion per annum? Is the noble Lord aware that in the first six months of next year it will be difficult to determine what the total visible trade deficit is because we shall be without any statistics relating to our trade with the remaining countries of the EC?

§ Lord Henley
My Lords, I do not accept the noble Lord's figures. The latest full year figures which I have are the figures for 1991 and the deficit with our European partners is only £½ billion. It is estimated that our deficit for this year will be £2½ billion but not the £5 billion that the noble Lord is saying. As regards the second part of the noble Lord's question, I think 614 we dealt with that quite adequately on 22nd June last year when we discussed the new statistics that will be coming out as from next year.

Lord Bruce of Doningto
My Lords, is the noble Lord aware that there is already a £4 billion deficit this year?

§ Lord Taylor of Gryfe
My Lords, in view of the figures he has just quoted, does the Minister consider that import saving is of as much importance as exports? If so, will the Minister pay attention to the fact that we import timber and timber products to the extent of £6.25 billion per annum? In those circumstances, would it not be wise to have a more active forestry policy in this country?

§ Lord Henley
My Lords, I am not going to be drawn into the question of a more active forestry policy. Obviously we would like to limit the amount of imports wherever possible, but without using any unfair methods. Clearly we cannot discriminate against imports due to our various EC and GATT obligations. We do not believe in protectionism.

Lord Morris
My Lords, arising from the question of the noble Lord, Lord Bruce of Donington, why is it that fellow members of the European Community buy goods cheap from us and sell dear to us?

§ Lord Henley
My Lords, I am not quite sure if I follow what my noble friend is getting at. I was trying to say that I did not accept the figures of the noble Lord, Lord Bruce. Our estimate for this year is a deficit with our European partners of some £2½ billion. I have to say that the share of the United Kingdom's exports to the EC has been steadily increasing throughout the last 10 years and is now something of the order of 58 per cent.

§ Baroness O'Cathain
My Lords, is it not true that that figure of £19.5 billion includes some success stories in terms of lowering the deficit? The very fact that the noble Lord, Lord Taylor, brought the attention of the House to the forestry problem also makes me want to make the point that there is a deficit of £6 billion on the food account. Will the Minister confirm that the motor industry account, for example, is no longer likely to be in deficit this year and that that is a true success story?

§ Lord Henley
My Lords, obviously there are successes in the figures. I do not have in front of me the particular figures for the motor industry, but I am certainly prepared to write to the noble Baroness. Returning to the question of our trade balance with Europe, the deficit has been steadily falling since about 1988 and it is, as I said, this year estimated to be something of the order of £2½ billion.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that that figure is half the estimate of £5 billion put forward by the noble Lord, Lord Bruce? The noble Lord's figure is hardly in accord with the actual figures for this year so far, which are on public record.

§ Lord Henley
My Lords, I do not have the figures my noble friend has, nor the figures quoted by the noble Lord, Lord Bruce. The figure I have in front of me is an estimated deficit for this year of some £2½ billion.

§ Lord Callaghan of Cardiff
My Lords, has the noble Lord observed that for the first time during a recession this country is running a deficit in its balance of payments whereas in all previous recessions within history we have run a surplus? Have the Government reached any conclusion as to why that should be so?

§ Lord Henley
My Lords, our share of world trade has stabilised in the 1980s after a steady fall in the years since the war. It has now stabilised at around 5 per cent. of world trade. That shows that United Kingdom exporters are competing successfully in world markets and it belies the notion of there being any structural problems in industry. I should have thought that the vast amount of inward investment we are receiving from both Japan and the United States is some indication that the hard-headed people making those investment decisions do not see the structural problems in British industry which the noble Lord implied.

§ Lord Callaghan of Cardiff
My Lords, the Minister did not answer my question. Have the Government reached any conclusion? Is it due to the rundown in our manufacturing industry that we are running a deficit instead of a surplus, which has always been the case in previous recessions?

§ Lord Henley
My Lords, what I was trying to say was that I do not think that the fact that there is a deficit during this recession, whereas in the past there has not been a deficit, indicates that there are any structural weaknesses in British industry.

§ Lord Annan
My Lords, could one answer to the question of the noble Lord, Lord Callaghan, be that there has been a change in government policy, because it was not so long ago that we listened to the noble Lord, Lord Young, at the Dispatch Box saying that the level of manufacturing industry was a matter of indifference and what mattered was service industries? The noble Viscount, Lord Caldecote, is quite right to ask this Question.

§ Lord Henley
My Lords, in answering my noble friend Lord Caldecote I emphasised that the Government do believe that manufacturing industry is of prime importance.

§ Lord Dean of Beswick
My Lords, is not the Minister aware that in his supplementary question the noble Viscount put his finger on the most dangerous facet of what is taking place; namely, the reduction in our manufacturing base? Does not the Minister understand that the only target which has been hit so far is the prediction by all those involved in such matters that approximately 30,000 jobs a year would be lost in the manufacturing sector? That is the only target which the Government have hit so far. When is it going to end?

§ Lord Henley
My Lords, the noble Lord is not correct. Export volumes are at a very high level. They reached their peak—at record levels—last May. That belies what the noble Lord said.

§ Lord Donoughue
My Lords, does the Minister agree that the accumulated deficit since 1990, including the forecast he gave, is over £50 billion and that the accumulated deficit since the general election of 1987 is over £80 billion? Is that not a barometer of economic mismanagement? Do the Government have any policies to bring trade back into balance, apart from massive devaluation?

§ Lord Henley
My Lords, obviously the change in the value of the pound will provide a great many opportunities for exporters, but we have never set that as the sole panacea in terms of encouraging exports and improving our trade figures. We already spend very large amounts of money, in both the Foreign Office and the Department of Trade and Industry, in encouraging exports. Some 2,000 staff are employed by the DTI on those very activities. As I said, the fall in the value of the pound will provide new opportunities for exporters, but it must in the end be a matter for British industry to produce the right goods at the right price so as to sell them abroad.