Export Promotion

HL Deb 30 March 1994 vol 553 cc1168-96

8.53 p.m.

Viscount Waverley rose to ask Her Majesty's Government what are their current policies and activities in the field of export promotion, and whether they could be made more effective.

The noble Viscount said: My Lords, because of the late hour, I hope that I shall be excused for motoring through my delivery.

Every responsible government must seek to develop sound strategies in the field of export promotion. Exports will lead to economic growth and bring stability and prosperity to the nation. We must continue to identify and explore avenues to improve trade performance both in traditional and new markets. In this House we must play our part in assisting UK business to achieve sustained increases. This Question serves to draw attention to the need for continual discussion on such matters and frequent assessments of the Government's role and performance in this area.

A primary responsibility of government is to create the right macro-economic conditions at home to allow our companies to be competitive abroad. Essential objectives must be to maintain low inflation and low interest rates combined with stable competitive exchange rates. Her Majesty's Government must also establish and sustain friendly relations with countries important to the trade programme, and continue to influence trading partners in areas such as tariffs and standards.

Sound in-depth market knowledge is important. I can inform your Lordships that the Institute of Export has been instrumental in proposing a preliminary study of support services for small and medium enterprises, commonly referred to as SME's. An evaluation of six European countries in phase 1 of its report has been approved. That is encouraging, although I believe that phase 2 would be of equal interest, when countries of the Pacific Rim and Latin America are expected to be included. Much can be learnt from export-driven success stories such as Japan and Brazil. We need to instil the same sense of urgency into our exporters, with early recognition of opportunities and quick responses.

Advice for domestic and export issues will be channelled through the Business Link operation, of which there are expected to be 200 offices in place over the next three years. It will serve as a sign-posting operation to specialist advisers, either in the Chamber of Commerce movement or elsewhere. One must be allowed to query the efficacy of this: Business Links presently displays little knowledge of the export arena, whereas the DTI is a veritable storehouse of vital information. Indeed, I commend the Minister on the recent addition of 60 officers to the complement of DTI officials in market branches. That ensures that there are enough staff to allow for at least one dedicated desk officer for each of the UK's top 80 export markets.

It may be that the Minister is able to assure us of plans for close liaison and co-ordination between the DTI and Business Links to consolidate expertise. A period of some confusion while that programme is in its transitional stage would be detrimental to credibility and future viability. Is Business Links to succeed DTI regional offices? There then follows the question of guaranteed funding for Business Links after the three year set-up period. I ask the Minister to address this tonight, as many are concerned about this point.

A principal conduit of the Government's policies is the 70. of a proposed complement of 100, so-called export promoters. Their purpose is to liaise between UK and overseas companies, identifying projects and markets, and advising business people on local conditions and requirements. They can assist in determining the viability of schemes, and the reliability of partners. Using local knowledge and experience, coupled with multinational company training, they help exporters and investors to make a success of their endeavours.

Initial reaction to the scheme has been cool in some quarters, possibly as a result of not being well marketed. I believe that it is making a valid contribution. The job description is open-ended, allowing development of the export promoters' own ideas, and they are able to point out weaknesses in the system, bridging gaps between office-bound civil-servants and the world outside.

Perhaps the Minister would tell us something of the number of enterprises visited, and outline some successes that can be attributed to the effectiveness of the export promoters. It would also be useful to be apprised of the future prospects of this scheme. Most are on two-year assignments, some shorter, with others due for renewal shortly.

The Overseas Projects Board has formed groups to match specific major overseas project opportunities with their respective UK commercial sectors. Would the Minister share some of the success stories under this scheme, and tell us something of the strategies designed to increase those successes? Are there sufficient promoters covering such key markets as Latin America and the Pacific Rim?

Exporters must be encouraged to work more closely together, even bidding jointly for large projects, if UK Plc is to take the lead, ahead of France and Japan, in establishing conditions for companies to bid competitively for, and win, large international contracts. To illustrate: North West Water and Thames Water lost a large contract in Buenos Aires to Générale des Eaux of France after competition between them led to neither arranging export finance in time.

That highlights the Minister of Trade's point, that: a single bid will improve the UK's chances of securing major business, on the selection of one company, or one group of companies, putting forward the most effective national bid, when several companies are competing for a particular project. I had been concerned that there was no single point of contact and co-ordination for all the initiatives. I am therefore delighted to learn that a director general of export promotion has now been appointed. I understand his job will be to co-ordinate all the overseas trade services export initiatives and to ensure that the resources devoted to exporting are utilised to full effect. Will he be working closely with the Whitehall export promotion committee? If so, this should promote the integration of departments in Whitehall and the co-ordination of the export promotion programme. Co-ordination would also be enhanced by granting responsibility at Cabinet level for all export promotion activities in all relevant Ministries to the President of the Board of Trade.

It is essential that the drive is well informed and supported by the Foreign Office. Emphasis must be away from consular services—now possible with future joint operations with our European partners—and towards trade development. With the transition to a single market and the opportunities that present themselves to British companies as a result of the completion of the last GATT round, our missions in worldwide capitals must lend themselves to the drive to increase British exports in world markets.

I hope the House will allow me to comment on a recent fact finding visit I made to the Directorate General for Trade and Investment in Dusseldorf. I was favourably struck by the quality of senior civil servants working there to maximise British exports to Germany. They operate in a highly professional manner with dedication and in-depth knowledge of their market. We should recognise those attributes. I would encourage any exporter to draw upon those resources, and similar offices located in such diverse economic centres as New York and Milan. Budgets should be utilised to increase the coverage by commercial staff, in bare-bones operations, in less-obvious target areas around the world than at present.

Locally employed personnel are an excellent alternative to complement transient British commercial officers; they are cost effective and give continuity and local knowledge. Leipzig is an example of a new-look lean operation, and the prognosis is good. The importance of inward investment must not be forgotten, and our commercial staff in posts around the world must always encourage companies to base their European manufacturing bases in the UK. Some 40 per cent. of the total Japanese investment into the European Union comes to our shores. We should become fully aware of the reasons for this and capitalise upon them.

The old Export Intelligence Service is now distributed by Prelink. It is a service that relies essentially on the publication of quality and timely export leads. The information is collated from 200 posts worldwide, at the average rate per post of one new inquiry daily. This is indeed a valuable system in theory, but there still continues to be criticism, which is not aimed at Prelink directly, but at the quality of information emanating from the posts.

Information must be sent more expeditiously, and be complete in content. Application of the inquiry, more detailed specifications and information on the potential client would offer valuable additional assistance to our exporters. This service needs improvement and monitoring. There is a lack of resources to obtain intelligence information. Part of a mandatory national registration fee could be used to invest in more detailed coverage of overseas markets. If there were linkage between the coding procedures of Prelink and registered exporters, tremendous potential could be developed and exploited. Is current information, for example, circulated gratis to all exporter promoters?

There are many advantages of a registration scheme. UK businesses need to be well prepared for the opportunities which come about from an active export programme. British exporters are at a disadvantage in being unable to have their international marketing efforts supplemented by a system of dealing with sourcing inquiries which targets potential suppliers accurately and quickly. This is a well known criticism, and we are losing considerable market opportunities. Voluntary schemes have failed and leave UK commerce and industry at a disadvantage. In a modern and competitive economy we must provide a solution to incomplete business information.

At the same time both trade associations and the Chambers of Commerce movement are in need of a major overhaul. Proposals for the Association of British Chambers of Commerce to set performance standards are to be actively encouraged. If it has been assigned an important part to play in the new Business Link strategy, it is imperative that it be positively vetted and standards maintained.

I turn now to the subject of credit guarantee insurance. Ability to qualify, its availability and cost, are causing concern. To what extent are low-risk countries subsidising those that are high risk, thereby ensuring more comprehensive worldwide coverage?

British firms are losing millions of pounds of potential export business because their European competitors are securing more attractive terms. Options to help smaller exporters to protect their business must be examined and developed, either on a loan guarantee basis, or by offering greater access to managed credit insurance, or a mixture of grants and loans. The Government would doubtless wish to discount the theory that they do considerably less than other governments in this area. Is the amount of ECGD support available for the next three years going to be sufficient to meet increased demand as a result of the export drive? Additional amounts must be increased by the Treasury as exports multiply.

Is it the case that the majority of ECGD support is focused on the top 10 per cent. of companies which produce 60 per cent. of British exports? If so, what support are the medium-sized exporters receiving? I shall illustrate that point. A signed contract for £900,000 to Pakistan was unable to receive ECGD cover because the line was fully utilised owing to a pending large contract that was due shortly.

A Written Answer addressed to me stated: a new three year rolling strategy to provide for high exposure markets, enabling industry to plan ahead, has been detailed. £2 billion of extra cover is also to be made available, with an additional £1.4 billion of reinsurance cover for exports on short term credit". Nevertheless, I fear that there is a gap in the export initiative here, and growth will be restricted unless these problems are anticipated and addressed.

Trade missions are an invaluable method by which companies can travel in like-minded groups and have doors opened which may otherwise be hard to achieve alone. Trade missions and trade fair support should be targeted to those most in need in the small and medium enterprises sector. It is said there are too many visits too close together; moreover, the DTI now announces the programme of trade missions at six monthly intervals, instead of an annual programme. That could cause problems for the larger chambers in forward planning. In the interest of information sharing and target marketing, mandatory debriefing after such trips should be obligatory.

A DTI initiative to focus on the importance of language skills to the exporters would offer additional benefits on those trade missions. The British are not widely recognised as great linguists and so often fail to gain real understanding of other cultures which would offer a business edge. In tandem with expressing the need for greater proficiency in languages, Her Majesty's Government must further, whenever possible, the global spread of the English language.

In a list of the top 20 of the world's largest trade fair sites the UK appears once only, offering a mere 125,000 square metres. That compares with Germany's huge 1.7 million square metres. No one would deny the benefit of permanent sites to display to the world the best of British. What we are lacking is the necessary space in easily accessible locations. I suggest to your Lordships that if the Commonwealth Institute loses its struggle for survival and funding is withdrawn after 1996, consideration might be given to transforming that building into a permanent exhibition centre for avant garde British products.

Our aid policy should, for the greater part, be designed to encourage trade. An exception is humanitarian aid. Information about bilateral and multilateral aid finance procurement opportunities must be circulated to UK companies with as much advance notice as possible. Competitive UK companies should be the beneficiaries of those contracts.

I mentioned this evening the recent matter of the trade difficulties with Malaysia only to urge all the parties to spare no effort in reaching an early amicable solution.

The media obviously have a tremendous role to play in this export drive. Circulation could be boosted by reporting the many success stories of British industry overseas and instilling a sense of pride about our achievements.

To summarise, the DTI's export promotion services generally appear to be highly valued, and I believe that there is all-party support. The Government must convince the country, however, that the measures are a carefully constructed programme designed for the long haul and should identify for clarity the precise sections of industry targeted. A clear goal would be more pro-active marketing of the services to non-users. Not enough companies are aware of those services or how to access them.

There may be merit in a sessional Select Committee being organised, with reasonably broad terms of reference targeted directly towards the export arena. I realise that that might impinge on the Select Committee on Trade and Industry in another place, but in line with the President of the Board of Trade's desire to separate export promotion from trade policy, considerable benefits could derive from a regular interrogation of export initiatives and the airing of the concerns of our exporters and allied services.

I ask the noble Lord, Lord Strathclyde, to share his thoughts on that and the other points raised this evening.

9.10 p.m.

The Earl of Limerick

My Lords, 26 years ago—from the very Bench from which the noble Viscount, Lord Waverley, opened this debate—I made my maiden speech, on the subject of invisible exports. We should be grateful for the lead that the noble Viscount has given in this discussion. He has approached the subject in a comprehensive and analytical manner which will lead to useful conclusions being drawn and useful lines being followed.

Since that day I retained some connection with the export world. For two years I was in the DTI, having responsibility among other things for the ECGD. I spent four years as chairman of the British Overseas Trade Board followed by seven years as chairman of British Invisibles. For the past 10 years I have been president of the Institute of Export.

That gives me a problem because with that background it would be assumed that one would know all the answers; but I am quite conscious that I do not. Between times I was working on the other side of the fence as a client of those services, generally seeking finance for projects overseas.

It might be interesting to look in retrospect at what has changed over those years. In the 1960s and early 1970s without doubt Britain was at the forefront of development of techniques for export support, witness the formulation of the buyer credit guarantee backed by ECGD. I had a part in negotiating the first contract financed by that means, which was for an oil pipeline in Algeria. If my memory, is correct, the sum involved was £7 million, which seemed mind-bogglingly large in those days. A very good job was done by the department, working closely with the clients, in developing those new techniques.

Sadly, there has been a change. That change occurred when the world fell into economic decline in the 1970s. ECGD had operated independently because as an agency it commanded its own reserves—about £60 million at the peak, which again seemed a lot of money. But shortly thereafter came the problems—not in millions, tens of millions but in hundreds of millions of pounds—of the bad and doubtful debts; and the Export Credit Guarantee Department fell into the thrall of the Treasury.

The story continued in that way until about two years ago when privatisation became the watchword. Developments have taken place which on the whole have been constructive although in some sense such developments have yet to bed down and show that they are fully competitive compared with what other countries are able to offer.

Meanwhile, as one would expect, the system was regularly reviewed. I refer to the Duncan review, the Berrill review (which, happily, was not much implemented), and the increasing role of the FCO. The process started with the unification of the Foreign Office, the Commonwealth Office, and the old Trade Commission service, with the recognition that part of the career path of a foreign servant was. to become expert in and adept at trade promotion. Nowadays ambassadors who wish to discuss their roles as they move to new posts tend to say, "I am there primarily to promote trade. If not, I don't quite know why I am going". Most have had some previous commercial experience; and that is a welcome message. Therefore we have witnessed a raising in the standard of service that we receive from our representatives overseas. That should immediately be acknowledged.

There has, too, been a steady development in the other services available to exporters. The noble Lord, Lord Ezra, and I have sat together on a trade board. He will remember the discussions year by year about the development of the Fairs and Promotions Service, the export intelligence service, and so on.

The noble Viscount, Lord Waverley, dealt with the EIS and its successor Prelink, and made some valid comments. The numbers have changed; hut in the days that I remember the EIS had about 7,000 subscribers. That seemed a devisively low number compared with the number of companies known to be engaged in exporting. The cards that were sent out at that time cost about 35p including first class postage. They now go by more rapid means. The hit rate for export orders—I do not refer simply to inquiries—was one in 10. Why would anyone not use a service which was at the front end, collecting information overseas, bringing it to one's desk and saying, "There is someone out there who says that he wants to buy what you say you want to sell"? If one bought 10 cards, one had an export order for £3.50. That would not get you to your local town to see your bank manager.

Why was that service not used more? The noble Viscount referred to criticisms. They were of a distressingly familiar kind. I suspect that they have not changed. People said, "This service is not relevant. It gives us material that we do not want". There was never more than one answer to that criticism. It was this. "If you receive information that you do not want, that is your fault. You define your own profile. You get what you ask for and pay for. So first look at what you have profiled yourself to need and see if the difficulty lies there".

It was also said that the information came too late. That is a perpetual difficulty. Commercial officers in posts overseas, sadly, have become thinner on the ground as cuts have bitten into the service. They cannot be up and about all the time. They are often supported by first class, locally employed people—a breed whose merits are substantially underestimated but who can, under the right conditions, provide an invaluable, upfront, eyes-and-ears service.

I endorse the noble Viscount's comments about classification. If that can be sharpened, the complaint about information not being relevant might be expected to fall away.

I wish to touch on some current issues which affect the exporting community. The first is the use of the aid and trade provision. In markets such as China currently, that can be the key to vast opportunities. I very much hope that such provision will not be downplayed, still less written off, as a result of the spotlight that has recently fallen on Pergau. The use of aid funds in properly defined conditions, alongside trade credit in countries which have needs and which can be seen to be needful of such extra assistance, is not only respectable but highly desirable.

Equally, I hope that the arms to Iraq fiasco will not inhibit the thought process whereby the Government plan to assist exports; or alternatively plan to assist exporters. The two are not always the same.

It is clearly difficult to devise regimes that cater, at one end of the spectrum, for the first time SMEs who are looking to venture overseas and at the other end for the companies engaged in vast project bids which are undertaken by the likes of GEC, Rolls-Royce and Balfour Beatty. I therefore echo the need for selectivity in bid support and add to that a plea that there should be enhanced team work—it is pretty good, but there is always room for it to be improved —between the specialists concerned in the FCO, the Overseas Project Board, the Projects and Export Policy Division of the DTI, ECGD, ODA and others.

It is a recurring theme that our overseas competitors receive more of that kind of assistance than we do. The focus shifts from time to time, frequently it is on the French. Evidence of that is hard to come by; attempts have been made and I was party to one a couple of years ago when from the guild of world traders we financed a thesis by two PhD students on the subject of the level playing field. They came up with some helpful insights which we shared with the departments concerned.

The question is not only the one suggested by the noble Viscount, Lord Waverley, on whether an export insurer should subsidise bad risks with the premiums from good risks, but it also goes beyond that, it is the subsidy implicit when credit insurers write what in commercial terms would be uninsurable risks. That has been done by all exporting nations to a degree at some time. It is our belief which can be well substantiated that we do less of that now than others. One can see that in comparing the premiums quoted, for example, to British companies bidding in South Africa with the premiums quoted for identical finance to our French competitors. In that case, it was four or five to one in favour of the French, and not just a matter of a few per cent. A differential of that kind will destroy any prospect of profit on an overseas contract bid, other things being equal.

The noble Viscount was right when he said that we should look at the issues on the basis that we will do what is reasonably required in line with what other countries are doing. It is well and fine to take the moral high ground and say that we are doing the right thing; others will come and join us. It is well and fine, but not so good if you stand there proclaiming the purity of your policy and starve because no one has joined you.

Of the issues currently on the agenda for discussion, it is worth commenting that the services now provided by the DTI export promotion team are highly valued by existing users. Those who are engaged in them are seen as both proactive and productive, and we are fortunate in having a trade Minister —Richard Needham—who sees that clearly and is very responsive.

We need to try all the time to market the services more effectively to non-users, to get more companies into the exporting frame of mind. We should like to see the progress of the current strategic plan left unimpeded by too much influence from outside. The DTI has been putting this together with an overarching strategy embracing about 80 sub-plans. That is against the background that there is a large number of departments of Government which have an interest in exporting. I need only mention health; defence; MAFF; environment; education; and many agencies —up to 15 by some accounts—which are in one way or another engaged in this same exercise. It is tempting to ask: why do we not do as the Japanese do; namely, put all those areas together in a ministry of international trade? That would be one answer. It has never been thought to be the British answer. We have to do the best that we can by getting a high level of co-operation, and, it should also be said, a level of non-overlap and non-interference. It is quite confusing when there are Ministers from many departments going around commissioning their own studies. One hopes that the mechanism of co-ordination will be improved.

I hope that the DTI will be encouraged to continue with the process of seeking inward secondments for experienced people and developing professional career structures for its own staff.

I have one final word, on the subject of resources. Ever since I can remember, available resources for export promotion purposes have declined in real terms. The officials in government departments and in the agencies that work alongside them are in the main dedicated, hard-working people. They are supported by literally hundreds of businessmen who give up their time, in the area advisory groups, for example, which support the British Overseas Trade Board, in chambers of commerce around the country, in the Institute of Exports and in all sorts of other ways. That is a vast and under-appreciated asset. It needs a modicum of resources to enable it to do its job. The quest for economy has gone rather too far. There is a strong case to be made for restoring a small incremental value to the budget that is available to assist those efforts.

9.27 p.m.

Lord Sefton of Garston

My Lords, the House should be very grateful to the noble Viscount for introducing this subject. When I say "the House" I hope that all noble Lords who are absent will read his speech with great care. One thing is absolutely certain. Despite the poor attendance and the lateness of the hour, the subject that we are discussing is considerably more important than the one that was debated for five hours this afternoon. Upon this kind of debate depends whether or not we have a local government in this country. I extend my thanks to the noble Viscount. But I would not dream of moving down the same path. I am neither capable nor experienced enough to deal in that field. I am very content to leave it to him. When I was asked to take part in this debate I thought that that would be the situation.

That does not mean that as a layman I do not appreciate the importance of exports. I am quite sure that there is no disagreement on either side of this House as to the importance of manufactured goods being made in such a way that they can be exported to the rest of the world and help us to earn our living. That is a simple statement. It is a statement of social and economic fact that everybody should continue to emphasis. We are moving into a very serious situation.

I do not want to talk about those kinds of exports at all tonight. I should like to concentrate on other exports. Some of them were not very welcome among the exports from this country. I refer particularly to the machine tools and the various methods of production that were snapped up in sales when the manufacturing industry in this country was being run down for one reason or another and they were moved to the Pacific Rim. The same machine tools were being used with cheap labour. And now where are we? The goods produced by those machine tools are in some cases coming back to this country.

In discussing the economy with the noble Lord, Lord Wade, in this House, I mentioned that in the place where I lived at least 15 major factories had been producing goods for over 40 years. I do not talk about it being in my lifetime because I am getting too old to talk about lifetimes, but in a short time all except one of them had completely gone. That one factory was the Bryant and May's match factory. So there was still one factory, but now that too has gone. If noble Lords want matches, they will have to buy foreign made goods. They cannot buy any matches made in Britain because no matches are being made here. That is a bad situation.

That story ties in with what has happened recently with regard to BMW and Rover. I thought that the partnership which developed between Honda and Rover was an excellent relationship. For their part the Japanese were committing themselves to a long-term presence in England. The Government rightly boasted about it. The Japanese thought of it as an entry into Europe. It was in their interest to develop that long-term relationship. But, as I said in my maiden speech in this House in 1978 —it was a long time ago and we were discussing devolution—when people spoke about the devolution of power in this country they were laughed at. The same happened when they spoke about devolution of power to Scotland or Wales or even to parliamentary government in Westminster because real power rested in the hands of those who ran industry.

At that time I pointed out that there was a very real danger that power which had moved down from the North to the South would move from the South East of England and might even jump the Channel and go to the north coast of France. People said that I was only a layman who knew nothing about the matter. In a subsequent speech, when debating the Budget, I said that we should not kid ourselves that the financial centre of London was as secure as one might think. In that same week the Financial Times opened an office in Frankfurt. That newspaper knew what was happening.

In 1979 I forecast that there was a very great danger that because of the chaos that existed in London at the time, we could well frighten away the financial world. Nobody believed me. But is not that happening? Is it not true that there is a danger to the financial centre in London and that Frankfurt may take over its functions?

I come back to my point about BMW. I do not know whether the Government knew what was happening with BMW and Rover. I never had any doubt about it. I was always of the opinion that as soon as British Aerospace could do so, it would sell off Rover in order to put money into its coffers. The company would say that it was done in order to develop a new model. It would say that it was done for the core business. I say, as the noble Lord will no doubt expect me to say, that it was done to put money in the company's pockets. Certainly it was not out of any consideration for the national interest. If one were to chose between BMW owning Rover and Honda owning Rover, there would he no doubt about that.

There is another matter that we ought to reflect upon. We should ask ourselves whether or not the permanence of the motor industry is as secure as we think or whether, because of the phenomenal success of Nissan —I acknowledge that the Government engineered it—which has now become our largest exporter of cars to Europe, there may well be a cut-back in the car industry.

As a driver of a Rover arid someone who refuses to drive any other car—cars like most of those I see in the car park of this venerable place—I know that BMW can compete with Rover. If there was a cut back, I know where it would be. It would not be in Britain; it would be in Germany. The company is only interested in Europe. Japan would not do that because it uses its stake here in order to get into Europe. That is a problem that needs to be considered.

I asked the Department of Trade and Industry what action it intended to take to ensure that the companies which manufacture the 125 executive aircraft—they are manufactured in Broughton near Chester, not far from Liverpool, a place close to my heart—Rolls Royce and Rover Cars, remain in British control. I received a reply from the noble Baroness, Lady Denton, and what a wonderful answer it was. She said, The Government take the view that in general it is the company itself which is best placed to decide on changes in ownership or control".—[Official Report, 19/5/92; col. 549.] Some may say that that is free enterprise and no doubt the Minister would say that too—"Leave it to them, they know how to sell those things". I questioned the Minister again on the same day, at col. 550, and asked whether it was right that, the Government intend to do nothing at all to prevent these firms going into foreign ownership". I received a very blistering reply, once again at col. 550, from the noble Baroness, Lady Denton, who said, we are very anxious indeed about the position of industry in this country. The resource which allows our industry to continue and for new models to be developed will be focused on with fierce concentration". I want to know whether the Government are still concentrating so fiercely on the question of BMW. There now seems to be a rift developing. In the Financial Times today it said that BMW is to enter into an agreement with Honda. The chairman of BMW is saying, "We will obtain an agreement with Honda to satisfy the employees of Rover and BMW". He does not say what Honda says about that. My guess is that it will not enter into an agreement; it will set up in competition for the same type of car. If it does, we shall be in real trouble.

I have watched factories move from the North West to the South East in a continuous steady stream. The last one will leave Garston, my birthplace—it was a match works—next month. I have seen them move to the South East where all the power is. I have warned that they will go further to where the real "golden triangle" is; that is, somewhere around Brussels.

Now the Channel Tunnel is coming. At least, it has arrived at the north coast of France; it has not yet come here because we are still hesitating about whether or not to provide a link to London. We are told that there will not be a link to Liverpool, where there is a potential capacity for 2 million passengers. We are told clearly that the Government have said there will be no link to Liverpool. The Merseyside transport network deals with 2 million people. If anybody there wants to take a train to the continent, they must go from Preston or Manchester—they must go from somewhere other than Liverpool.

That indicates that it will be much easier for people to travel by the fast railway system in the South East of England. That perturbed me, so I asked another question. I had just seen a television programme which seemed to have all the information. I asked if somebody could tell me how many factories and distribution centres were moving from Britain to the north coast of France. It is fairly cheap in that area, where many grants are available, and the French Government went in well before the tunnel was being built in order to develop it.

I asked the DTI. When I received its reply I wondered what the devil the DTI was doing over there, apart from moving from one side of Victoria to another side of Victoria and spending more than £1.5 million in doing so. I am told that it is going to spend another £1.5 million moving back to the other side. The offices will be refurbished by the owners —a land company—and the DTI will occupy them again. In fact, the DTI is going to spend about £85 million.

I often wonder what the DTI does because I can get the information from other sources, and evidently television companies can get the information from other sources. So again I ask the question. Perhaps the Minister will tell us tonight—he has had warning of my question—how many British factories are moving to the north coast of France; and, more importantly, how many continental factories are coming to the South East of England.

The reply I received to my question stated, "There is no central register kept in Europe so we cannot answer the question". That reply came from what was hailed as the Department for Enterprise. It was hailed as such by our friend Heseltine, who was supposed to have cured Liverpool. All he has left in the place of the Tate & Lyle sugar company is the Tate Gallery; and, my God, when I see some of the things in it, he should have kept it down here. This is the Department for Enterprise. We cannot even get a proper answer to a simple question like that. Does the answer mean that no central register is kept and that the department cannot find out how many companies have come into Kent? That seems to be the case.

I do not want to go on too long because that would be unfair.

Noble Lords

Hear, hear!

Lord Sefton of Garston

My Lords, noble Lords say "Hear, hear", but I want to get home myself. I conclude on this note. We have had a bit of fun but there are more serious issues still facing us. It is only recently that we debated the question of high electricity prices with regard to ICI. There is a real threat that if ICI cannot be provided with prices competitive with those charged to other producers, the company will be in serious trouble. I should like to know what contact the DTI has had with ICI to discuss the problem since it was discussed in your Lordships' House. I do not believe there has been any discussion. Next month ICI will be joining the rest of the chemical industries in Europe to discuss research and the pooling of resources. It could well be that, with France being much nearer the centre of the European market than Great Britain and its companies having access to cheap electricity, ICI makes a move. It is no use coming along afterwards, as in the case of BMW, and saying that we did have talks. I want to know whether or not those talks are taking place now and whether the Government are prepared to give to ICI the same kind of benefits it would receive from foreign governments.

I could ask questions on other subjects but I think it would be a waste of time. I have asked several questions of the DTI and never received an answer. I shall put down some more for Written Answer so I do not delay other people who want to go home. I conclude by saying that the lack of information coming out of the DTI suggests to me that it is not looking long term and that it is suffering the British disease of short-termism. Unless it livens up and does something there will be more and more losses from this country to the rest of Europe and perhaps to the rest of the world.

9.44 p.m.

Lord Wade of Chorlton

My Lords, I thank the noble Viscount, Lord Waverley, for raising this issue and allowing us to debate it this evening. It is always a great pleasure for me, as I often seem to do, to follow the noble Lord, Lord Sefton, who, as he has already mentioned, comes from the same part of the world as I do. Although our concerns about the North West are the same, our solutions are slightly different.

I should like to say to him that he raised a very important point by drawing our attention to the fact that what this is all about is competition. This country relies wholeheartedly and foremost on its ability to export and to create wealth from those exports. We have to do that in such a way that we are competitive with the rest of the world. So we have to look very carefully at our ability to produce efficiently and effectively.

I say to the noble Lord opposite—I have great affection for him because, like me, he stands for the North West—that some of the issues he raised about the change in the industrial aspect of Liverpool have to do with the fact that the companies were not competitive. Many of them were started and developed through the use of government money, but they were never efficient in world terms. The demise of many of those companies draws our attention to the fact that, if we are to have effective exports of products throughout the world, we must produce them in the most efficient way. I do not believe that the loss of those major companies is the problem or is anything like as serious as the noble Lord believes. I say that for this reason: looking at the North West alone, as those companies have failed many others have come in their place.

I intend to speak on two issues. As regards exports; one is technology and the other is food. As regards technology, I am involved with the North West Technology Centre, which is responsible for the export of technology from the North West. With the great support of the DTI—which I found enormously supportive of anything to do with this area—we have recently developed Eurotech North West. That organisation is designed to market the technology from small companies throughout Europe and the rest of the world. We had the launch meeting in Liverpool. We had identified 200 companies in the Merseyside area which had technology which could be marketed to the benefit of the North West as a whole. Over 100 companies came to the meeting. They were not large companies, but those which had been started by people who had been involved in the major industries when they were running but who have now moved out into their own businesses. They were all extremely successful in developing new technologies for the future markets which are required. I was very encouraged. A company has to pay £500 to join the scheme in order to gain the benefits. The Liverpool Corporation said that for the companies within its area it would pay half the start-up costs, which would encourage more companies to join the scheme.

I certainly see now a reduction in the number of large companies who were the main employers in Liverpool. But all that energy and resource has moved into a vast number of smaller companies which are at the very forefront of technology and ideas. That was not happening with the major companies, which were bogged down with bureaucracy and all the activities which prevented them from being at the forefront of technology and competitiveness. Although I understand the noble Lord's problems, what is happening now is very much more encouraging than seeing massive companies which were uncompetitive in the world marketplace. That is the key to exporting; namely, to be able to produce at such a level that we can be competitive in any marketplace in the world. I believe very strongly that what the DTI is doing, to encourage new start-ups, new businesses and new opportunities is the right way to go. I have been very supportive of the great number of initiatives and projects which the DTI is now working to develop in this area.

I know that the noble Lord, Lord Ezra, will be speaking in this debate. He and I have a mutual interest in Combined Heat and Power. One of the things about which I might possibly complain bitterly to the DTI is that we are trying very hard to get its support for a trade mission to market Combined Heat and Power in Russia, but we have had very little success. We have tried on two or three occasions. It may be that my noble friend sitting on the Front Bench with his legs on the table will —when he leaves this place and when we make our next application to sell Combined Heat and Power in Russia —give us a little more positive support.

Following on from that, the other great aspect of exporting is that most people do it for the adventure to begin with. It is not easy to pack your bag and set off for a foreign country where you may know very few people, nor to create a new market by meeting people, gaining their confidence, understanding what they want and perhaps learning their language. People who do that are taking the first great risk, which is what exporting is about, first and foremost. That is something that the DTI and the Government never quite understand. We are talking about a very different sort of person with the courage and ability to go out and create a new market for a new product.

The markets that are now opening up in the world, and in which Britain must have an important say, tend to be in the more "adventurous" places such as Russia, China and the Far East. Those are places to which our exporters have not gone historically. Doing that needs a little more impetus and support than setting out for, say, Germany, where we might expect to make contacts. I should like to see much more encouragement given to help people to take that first very brave step of going to a new country and opening up and developing markets. That is why we need support for export refunds, for trade missions and for the individuals who are prepared to take the risk. That is an important early element in encouraging people to enter new markets.

I should like to refer to the food industry, which is the area in which I have had most experience in exports. I should declare an interest, in that I am now involved in a company which is a major exporter of food products. As I was discussing with the noble Viscount, Lord Waverley, before the debate, we can use promotions in two ways. One can think up a specific promotion in which one develops promotional activities or one may encounter a general climate which encourages exports.

The food industry has Food From Britain, which has the job of doing the actual promotion. When one compares that with what happens in any other country in Europe, one realises that it is ridiculously underfunded. In fact, it is so ridiculously underfunded as to be hardly worth while. On top of that, the organisation makes large charges to the companies that want to use its services. Britain will never have the opportunities for the export of foodstuffs that exist in France, Germany, Holland and Denmark unless we look very much more positively at the support that we give to promotional activities.

We need to look at this matter very much more carefully given the impact of GATT on food exports. Whatever way one looks at the impact of GATT, it will enormously reduce the amount of food that we shall be able to export. It will squeeze our home production. It will increase imports and squeeze exports, yet we already have a massive £6 billion deficit on the import of food as against our exports. The added value of quality British food could present us with an enormously important export commodity. However, if that is to happen, we must look seriously at the sort of support that the Government should provide, especially given the new GATT arrangements. These will put tremendous pressure on everybody, particularly those involved with certain commodities, such as milk powder, which it will suddenly not be possible to market at a profit.

I should like to refer to two other issues. It is not just a question of promotion, but of the Government's attitude to the mechanics of exporting. Great Britain could do a lot of business marketing products through EC countries to third world countries. One might, for example, ship a load of cheese from Crewe to Marseille, with another exporter then taking it on to Algeria or North Africa. Every other country in Europe deals with that problem effectively. However, our Government insist that they need to know the name of the end user. The British exporter might not know who that is. That gives our exporters an added problem that does not have to be faced by exporters from Holland, Germany or any other part of Europe. That is a matter which has been raised by the UK Provision Trade Association and many others in the business who have tried to get MAFF to look more closely at it and to simplify the procedures. That has not yet been done but perhaps my noble friend, with his renewed energy, can bring some pressure to bear to try to simplify the procedure.

I should like to refer to another problem. Cheshire has one of Europe's major salt producers. It is an efficient and profitable company which receives no support from anyone. However, a Dutch company has now decided to put up a salt factory, using public funds. This will be in direct competition with our British operation. That is another aspect of food exports, and the development of food exports, which needs to be studied by the Government. If there is a business in Britain which can make a profit on the open market and market throughout the world without government support, is it right to allow another European government to use their taxpayers' funds to create a company which is in direct competition with ours? I could give a number of similar examples which need to be looked at more closely.

We have debated in this House on many occasions the subject of fraud in the EC, especially in relation to food and the CAP. As a result, the Customs and Excise are more vigilant. They open and look in containers. They have gone from doing nothing to doing everything. It seems odd that companies that have been traditional and well qualified exporters for many years under the new regulations now have a large number of their containers opened at considerable expense. If a container is opened and all the products are gone through, that can easily cost £1,000. That is an area that my noble friend might look at. He could inquire whether that procedure is being carried out in a sensible and efficient way to see that we are not penalising many exporters by controlling what they are trying to do.

I believe strongly that this Government, above all others, realise the importance of exports and, through the DTI, have taken enormous steps to encourage and support the development of exports. But, as in all things, there is always more to do. In fact the more that is done the more there is to do. I hope that, in addition to the many things that the Government have done, they will continue to work at the many things that still need to be done.

9.57 p.m.

Lord Wedgwood

My Lords, I too congratulate the noble Viscount, Lord Waverley, on introducing this timely debate and on his most constructive and detailed speech. I must declare an interest as I spend much of my time travelling the globe, assisting in the export promotion of a British product. In that task I have been fortified by the knowledge of the excellence that is the proud tradition of British manufacturing.

Those of us who travel, either for business or pleasure, are constantly made aware that we live in a global village. Similar products are bought and sold wherever one goes. Undoubtedly, the customs and legislation of individual countries, near and far, will help determine the variants of pricing available for any one product, sometimes with great distortions, as we can witness in some South American countries where exceedingly high tariffs are imposed. But, in general, one can buy the same goods at competitive prices at many destinations.

However, each year our competition becomes more and more exacting as advanced technology is improved and as our communications systems become increasingly sophisticated. As my noble friend Lord Wade of Chorlton suggested, we must reinvest in our businesses continually in order to keep pace with the constant and, at times, radical changes.

Our exporting techniques must also become more creative and competitive to maintain and increase our superiority. Not so long ago this country was feeding an empire that had an enormous appetite for the comforts of home. That empire is now part of the global village, with a not so dissimilar appetite, consuming a multitude of products available from worldwide resources.

Many of our manufacturers have struggled and are struggling to ensure the legacies of quality and in many instances the level of skilled craftsmanship that is the envy of our competitors. While that is commendable, it is not sufficient to combat the competition. The scenario of rapid increase in world competition emphasises the paramount importance forced upon us to aid and abet this effort in a more challenging and effective manner. Manufacturing programmes must be interwoven in the efforts of the marketing and sales teams. The general trend among retailers has been to reduce inventories so that stocks can be quickly turned. The effect is that marketing and sales personnel must be efficient and knowledgeable forecasters in order to keep manufacturing in line.

It is most reassuring to see my honourable friend the Minister for Trade giving enormous support and encouragement to our manufacturing base. His genuine concern and creative approach to this problem have already paid dividends. By spearheading a number of overseas trips, especially to the Pacific rim countries, he has identified many profitable opportunities in the expanding economies that are generating a high proportion of the world growth. It is therefore essential for British manufacturers to establish a strong foothold. Your Lordships will be aware of the enormous opportunities in China—the country, that is, although I am bound to say that the ceramic products have an exciting future too. I suggest that well planned business missions to China, such as the successful November 1992 Group of 100, should be given priority.

Clearly, the President of the Board of Trade has given much emphasis to this topic. The allocation of personnel and the separation of export promotion from other activities such as trade policy will strongly assist our endeavours in overseas markets. However, we must ask whether the range of government support in this process is sufficient and whether there is appropriate accountability to make the constant necessary adjustments. It is all very well to have the grand vision and expectancy, but we must set tough goals to be achieved by our export support services. In this manner we will generate the excitement and enthusiasm that are infectious to all agencies. Around the world I can envisage our consuls and embassy staffs walking taller and straighter and shouting our praises rather than taking the softer options that are more prevalent today.

It is right that the British Overseas Trade Board has identified the United States as a key target for British firms. For more than two centuries manufacturers have enjoyed this very lucrative market, albeit with a short intermission following our dispute in 1776. Americans harbour a great respect for the quality of British products. North America is also the target of manufacturers from other countries. We can never forget that its ability to produce is constantly upgraded. Are we realistically attacking this vital area to meet the optimistic goal of a 2:5 per cent. increase in our share of the American market by 1995?

I followed with great interest the recent visit to the United States of His Royal Highness Prince Michael of Kent. His endeavours on behalf of British products, emphasising the excellence of their manufacture, should be commended. I am not suggesting that our Royal Family should become super salesmen and road warriors of the world. But it is clear that we have an enormous advantage that could contribute to our winning edge. His Royal Highness the Prince of Wales, if given the support and direction, could enhance our opportunities dramatically. His Royal Highness already participates in this area in his overseas trips, but a more specific role needs to be developed in order to enhance and increase the support that he is able to provide.

I believe that we shall realise that the Prince of Wales is an enormous asset to this country. This time the Palace and Whitehall handlers have the opportunity to correct the mistakes and inefficiences of the past and provide a creative but respectful platform from which His Royal Highness can operate. That, coupled with his own forward thinking and sensitivity, would provide inspiration and encouragement. The Prince of Wales could then become the champion of a new and hungry generation that will support him well into the next millennium, when we can reasonably expect his accession to the Throne.

At home we are often critical of our industries' inadequacies to compete; and we have heard about that this evening. Abroad we are sometimes ridiculed for not seizing our obvious advantages. Time is running out and the rest of the world is about to catch up. It is time to take off the gloves and fight more vigorously for our share of the pie; and not only for our share of the pie, but more.

10.6 p.m.

Lord Ezra

My Lords, like all other noble Lords who have spoken, I congratulate the noble Viscount on the timeliness and importance of the Question that he has raised this evening.

There is not the slightest doubt that enormous efforts are being made by exporters to increase our trade abroad and that there is a more positive and pro-active attitude on the part of the DTI than there has been for many years. But we must see all those efforts in the context of what is happening to our overseas trade; and the position is not particularly encouraging, in spite of all those efforts.

I had occasion to ask a question the other day of the noble Lord, Lord Strathclyde, on this very issue; namely, that, in spite of the efforts, we showed last year, according to the latest figures, a deficit of over £13 billion on our visible trade. According to the Central Statistical Office, that trend is rising. There are indeed some financial institutions which consider that that figure is understated, because, as your Lordships will probably recall, there has been a complete change in the way in which those statistics are now being collected.

Exports have indeed risen from £100 billion in 1992 to £113 billion in 1993; that is an extremely commendable performance. Unfortunately, imports have risen faster, from £115 billion in I992 to £128 billion in 1993, and the gap is widening. Therefore, one must ask whether we are unfortunately getting back into the old familiar cycle that, as the economy recovers, so we bring in proportionately more from abroad than we send abroad. That is similar to the situation which arose some 10 years ago. It was about 10 years ago that we began to show a progressively increased deficiency on our visible trade. That situation gave rise to the establishment of a committee of inquiry into overseas trade which was presided over extremely efficiently by the noble Lord, Lord Aldington. Its report was published in 1985.

I should like to read out the reason why the committee was set up, because those words could be written today. It was explained that: The committee's appointment followed expressions of concern on many sides of the House that the mounting deficit in the balance of trade in manufactures required close scrutiny". If your Lordships look at the conclusions of that report, it will be seen that many of the recommendations still need to be taken up. Some but by no means all have been acted upon. There is no need to have another inquiry into overseas trade because all that we need to know is in the report published 10 years ago.

Therefore, we must ask ourselves what we are going to do about that situation and how we can get ourselves free from the stranglehold. As many noble Lords have said, it is not just a question of export promotion; it is a question of macro-economic policies, currencies and many other factors. However, this evening we are concentrating on export promotion.

Many initiatives have been taken. For example, the noble Viscount referred to the export promoters scheme, which seems to me to be an extremely innovative proposition, though we still have to see how effective it will be. There are many other initiatives, too.

I wish to follow up the point made by the noble Earl, Lord Limerick, who has had remarkable experience in export promotion. I had the honour of serving under him at BOTB when he was chairman of that organisation. I was as concerned then as I am now about the progressive diminution in the funds made available for export promotion. It seemed to me then, and it seems to me now, that expenditure on export promotion, perhaps by someone in the recesses of the Treasury, is regarded as a residuary activity and something to be cut at the end of the day when the final few million pounds are in the accounts.

This, I am afraid, is borne out by the figures which I have drawn from the Government's expenditure plans for trade and industry for 1994-–95 to 1996–97. It is shown there that total expenditure on international trade and export promotion in 1992–93 was £63.1 million. I am sure noble Lords would consider that a modest sum but that was what it was. In 1993–94 the estimate is £56.7 million, in 1994–95 £57 million, in 1995–96 £60.3 million and so on. In other words, the funding is being progressively cut back at the very time when we require greater expansion in that expenditure.

I have examined the make-up of the expenditure and I have looked at trade fairs, to which the noble Viscount referred. I was amazed to see that while in 1992–93 support was given for 325 trade fairs—that is, for British exhibits—in the following year that figure was cut to 285. It is explained that the reason for that is that, with the devaluation of sterling in September 1992, there was not enough money to go round. I find that a most extraordinary conclusion to reach because the devaluation of sterling was one of the biggest boosts that our export potential could have received for many years. That situation does not last very long. One devalues the currency and one obtains a short-term benefit for one's competitiveness. That would have been the very time—if thought had been given to it —that we should have redoubled our efforts to exhibit our goods abroad, not cut them back.

I wonder who brings these two strands of policy together. On the one hand efforts need to be made—a lot of ideas emanate from the DTI—but on the other hand all this seems to be diminished by the people who hold the purse strings. Should we not for once have another look at this? Should we not start from the opposite end and decide in the light of all the many suggestions made by your Lordships tonight what we should be spending in order to close this export/import gap? Perhaps that might be done at the expense of some other item but exporting is the lifeblood of the country. I believe we need to consider seriously this aspect of the way in which we are progressively diminishing our expenditure on export promotion.

10.14 p.m.

Lord Haskel

My Lords, I, too, wish to thank the noble Viscount, Lord Waverley, for raising this important matter. I share with my noble friend Lord Sefton his views on the importance of this debate. I shall not delay your Lordships by summing up what has been said. I shall confine myself to making some suggestions which I hope will be helpful. I will try not to repeat too many of the points which have been made by other noble Lords.

I recently counted almost a dozen services provided by the DTI and the Foreign and Commonwealth Office to exporters, all of them apparently valued by the users, as most noble Lords have implied this evening. Among them are the export credit guarantee services and the services provided by the British Overseas Trade Board. There are special initiatives such as "North America Now", to bring trading opportunities to the notice of British business. There is the Overseas Projects Board. There is a Director General of Export Promotion, with a target of 100 men and women from the private sector to work on export promotion and co-ordination. There are Pre-link, Business Link and trips overseas by senior politicians, members of the Royal Family and others to promote British business. Recently those services have become better co-ordinated, as many noble Lords have pointed out, and therefore have become more effective.

For a Government who seek less involvement with the private sector and believe in leaving matters to the market, that is indeed an impressive list. It is a list for which we on these Benches have been calling for many years because of our concern about the deteriorating balance of payments. Exporting is not easy and exporters need a helping hand. They do not need hand-outs.

The first question which must be asked is why those services were not working properly four or five years ago when our manufacturing sector was in serious decline. The high ECGD rates at that time, the lack of co-ordination and leaving exporters to fend for themselves must have caused some of the irreparable damage to the manufacturing sector to which my noble friend Lord Sefton referred. The improvement, though late, is welcome. However, there is no cause for complacency, because those improvements probably bring us up to the level of service enjoyed by our competitors.

Nor is our balance of payments deficit improving, as the noble Lord, Lord Ezra, pointed out. Last November exports were predicted to rise by 5.75 per cent. in 1994, but the latest figures released on 24th March show that they are actually falling. We must do better. I should like to suggest a few ways in which we might achieve that.

First and foremost, we must encourage more firms to use those services. According to the Institute of Export there are some 40,000 exporters in the UK, and the DTI is in touch with approximately 6,000. Perhaps a further 4,000 do not need the DTI's services because they can manage very well on their own, but what about the other 30,000? They are probably small and medium-sized enterprises which could benefit greatly from the DTI's services. We must find a way of getting in touch with them and help them to export more.

I am well aware of the need to reduce red tape and regulations, but I am also aware of the need to enlarge the use of the export services. Perhaps from the information at Companies House, the Inland Revenue and HM Customs and Excise, the DTI can identify those 30,000 exporters who can benefit from its assistance. Only the Government know whether that information is available and the cost and time involved in extracting it.

Alternatively, as other noble Lords have asked, have the Government considered registration, as on the Continent? That will be quick and accurate. Compulsory registration with Chambers of Commerce provides an accurate record of business activity which is essential for targeting. I share the doubts of the noble Viscount, Lord Waverley. This is far too important to be left to the as yet untried Business Link initiative.

There is an added bonus in that we could then seek reciprocity with Chambers of Commerce in the rest of Europe so that we could make use of their services. That would facilitate trade and provide valuable marketing information. Much business is done in Europe through the Chambers of Commerce. Companies and people do business, not government departments, but you have to know who the people are.

That brings me to Europe. The European Union is on the verge of enlargement and, if I remember rightly, the whole purpose of the Union was to create a single market. The Financial Times reported on 4th January this year that a survey of 6,400 companies found that almost 50 per cent. of the respondents felt that they had received no benefit from the completion of the single market a year earlier. That was largely because deliveries were neither faster nor cheaper, probably because of bureaucratic barriers.

The problem seems to me that the DTI still treat; Europe as an export market. I suspect that that is because of the ambivalent attitude towards Europe of the noble Lords opposite. The Department of Trade and Industry has to make the mental leap of moving from an exporting exercise to a marketing exercise with regard to the Union.

There is a difference. If the mental leap is made, Ministers would be more careful about showing their hostility to Europe. Instead of concentrating on documentation and administration for Europe, the DTI could encourage paperless selling. With electronic data interchange, transport today does not need a piece of paper. Customs check at the suppliers or at the customers, or just check that the systems are working properly. That would encourage more marketing exercises such as Food from Britain. What about pots and pans from Britain, or home furnishings from. Britain?

The other attitude which needs to be changed is that. towards manufacturing. Thankfully the Government now accept the importance of manufacturing, but while their attention was elsewhere, the DTI may not have noticed that manufacturing itself is changing. It is changing from mass production to lean production.

Lean production has been a personal crusade of mine for many years. Of course, the famous examples are the Japanese car manufacturers and their component suppliers. But that philosophy is taking hold in every sector of business and industry world wide. Its effects are everywhere. Only last week one of our major companies, W.H. Smith, announced 400 redundancies because, in future, they will have only two layers of managers per store instead of four. That is an example of lean management where any factor which does not give added value is eliminated. That is how we shall see our economy becoming more competitive. Therefore the attitude in the DTI Exports Services Division has to adapt.

Size is not important in this new style relationship; but attitude and ability are. Knowing the Minister's enthusiasm for small and medium sized enterprises, he may find that thought of special interest.

Customers in Europe and elsewhere are anxious to buy from "lean" suppliers and to build up relationships with them. Purchasers nowadays spend a long time trying to find suppliers who can work in that way, and our Export Services can provide a very useful service by introducing them to those suppliers in the UK who can operate in that way and, if necessary, vouch for them.

The President of the Board of Trade has identified encouraging best practice as one of the ways of increasing our competitiveness, and here is a way Export Services can help. The impact on manufacturing in the UK could be important.

Once our export services adapt to lean thinking, they will find all sorts of new ways of being helpful. For instance, take letters of credit. Some two years ago I remember a survey undertaken by an organisation dedicated to simplifying export documentation. The survey found that 60 per cent. of letters of credit are rejected on first presentation. In preparing for the debate, I asked whether a new survey had been undertaken, and I was told no, but the reject rate still seems to be much the same.

We live in an age of "right first time" and "zero rejects". Would not the Minister agree that that record is awful? I am not sure how much money that represents, but it must be many millions of pounds. If letters of credit are cashed on first presentation, all this money, instead of being in the banking system, would be in the cash flow of the small and medium-sized enterprises which are probably the firms presenting their letters of credit more than once. Also it could make a one-time reduction in our balance of payments deficit. This must be an opportunity for specialist training which the export services division could organise.

While on the subject of money, perhaps the Minister will clear up one more question about export credit guarantee rates which many noble Lords have mentioned. Although the rates have come down—and this is welcome—how do the rates compare with those of our competitors? There seems to be no comparison made and some companies wonder whether their competitors overseas are being subsidised by uneconomic rates.

Finally, exporting of know-how and technology: the noble Lord, Lord Wade, referred to the Eurotech scheme. The GATT is yet to be fully ratified; but the problems of regulating this kind of business have been addressed by the GATT. When it is ratified, the lack of protection which has inhibited our exports in intellectual property should no longer apply and this should be an important area of business for the UK. The transfer of intellectual property is a growing sector and although ECGD cover is available, what plans do the DTI have to promote it? We seem to be quite good at marketing other people's know-how and technology as well as our own.

The export services are of value and are especially valued by those who use them. But the number of firms using them is far too low and registration is a way of targeting the services so that they become more widely used. The export services department must throw out some of their old concepts about exporting and manufacturing and keep pace with the changes. In doing so, their services will become more valuable than ever.

The service to exporters at the DTI has improved during the last 18 months and because of this a new government are not likely radically to alter them. This is important because exporting is a long-term business and exporters must be sure of continuity of service. This is why the short-term funding of some of the services causes some anxiety, as other noble Lords have said. Business Link is funded for three years and the co-ordinators for two years. If these are not self-supporting after this period of time, what is going to happen? Will there be yet another U-turn? Perhaps the Minister can reassure us of his department's long-term commitment, especially in view of the reducing expenditure so dramatically explained by the noble Lord, Lord Ezra.

The Earl of Limerick

My Lords, before the noble Lord sits down, I did not wish to interrupt his flow but perhaps I may support one point he made. It was in relation to being right first time particularly with letters of credit, and the need for training. The Institute of Export exists precisely for the purpose of delivering that training. At any one time thousands of people are taking the courses which are aimed to deliver precisely that high level of expertise. I think it would be helpful for the House to be aware of that.

Lord Haskel

My Lords, I entirely agree and compliment the Institute of Export on the excellent work it is doing.

10.28 p.m.

The Minister of State, Department of Trade and Industry (Lord Strathclyde)

My Lords, it is always a pleasure to take part in a debate with so many noble Lords who have great experience and knowledge on the subject under discussion. I join others in welcoming and thanking the noble Viscount, Lord Waverley, for putting down this Unstarred Question and making an excellent and well researched speech. He raised a number of issues, many of which I shall touch on during my reply. Many other noble Lords raised questions and if I do not answer them all tonight I shall certainly consider whether I can answer them by letter.

I also wish to congratulate the noble Lord, Lord Haskel. I know that it is his first time at the Dispatch Box on the Opposition Front Bench and he takes up a notable position. I hope that he will very soon be a senior Opposition spokesman and long may he remain that: senior and in Opposition.

The noble Lord was absolutely right to raise the whole question of quality and about being right first time. I thank my noble friend Lord Limerick for the way in which he explained some of the work that is being done. It is absolutely crucial that we get things right first time.

The noble Lord, Lord Sefton, made, in parts, a magnificent speech. He started particularly well. I agreed—perhaps surprisingly to the noble Lord—with a great deal of what he said. In his brief diatribe against the devolutionists he explained that he was not so much a trade unionist as a Great British unionist.

The noble Lord spoke about cheap labour abroad and the export of jobs. Perhaps I may tell him of an experience that I had only a few weeks ago when I was on a trade mission to Taiwan. I came across a company that had a factory in the United Kingdom and one in Taiwan. That company paid its workers in Taiwan more than it paid its workers in the United Kingdom. The workers in Taiwan were 50 per cent. more productive than those in the British company. That is why the key to this whole debate about the future of British industry comes down to one word; namely, competitiveness. My noble friend Lord Wade concentrated so much of his speech on that issue. It is the key.

Many factors influence our competitiveness. I hope that in the course of the next few months we shall have many opportunities to discuss those factors. I say to my noble friend Lord Wade that I should certainly be interested in investigating further his question about the export of CHP, which is such a valuable technology, to Russia.

The noble Lord, Lord Ezra, concentrated on expenditure rather than on output. I believe that over the course of the past few years, and particularly since April 1992, the output in terms of the promotion that we expect for the money that we spend has been vastly improved.

The United Kingdom has always been a great trading nation. We already export 25 per cent. of what we produce, and per head of the population we export more than the USA and even Japan. Recently we have seen dramatic increases in exports to markets as diverse as Hong Kong, South Korea and the USA, but the opportunities are still vast.

As a Government, we have a key role to play in ensuring that firms find those opportunities and make exporting an integral part of their business strategy. As part of that, my right honourable friend the President of the Board of Trade is leading the most dynamic and important export drive this country has seen in decades. I believe that that fact was recognised by many noble Lords who spoke this evening.

The single most important recent event on the world trading scene was the completion of the GATT Uruguay Round negotiations. As a result of the round there will be large reductions in import duties on industrial goods. Our largest export markets will move towards zero tariffs in many sectors, including pharmaceuticals, steel and spirits, and harmonised lower tariffs on chemicals.

My noble friend Lord Wade mentioned the export of foodstuffs perhaps coming under increased pressure because of the GAIT round. I pay great tribute to the work done by Food from Britain and many other organisations up arid down the country, particularly in Scotland, Wales and. Northern Ireland, which work tirelessly to improve the overall level of our food exports. But all those exporters can of course still use the upgraded, sharper focused export services that are now provided on a national basis by the DTI and its sister bodies.

Of course the Uruguay Round was about more than just trading goods. Great benefits will also come from the export of goods to invisible trade such as services, intellectual property and investment.

My noble friend Lord Limerick mentioned invisibles. I think that he was being unduly modest about his whole role in the export world. His experience and knowledge are highly respected in this most important field. If I may say so, he brought a valuable perspective to the debate this evening. This GAIT round will be of particular benefit to the United Kingdom, which is a leading world player in the area of invisibles. Our invisible earnings in 1993 amounted to £115 billion, which is more than £315 million, earned for Britain every day.

Perhaps I may turn briefly to a subject raised by many Peers; namely, the ECGD. The noble Viscount, Lord Waverley, particularly concentrated on that issue. We have to start off from the basis that we have exceptionally favourable economic conditions currently at home. We have low inflation, low interest rates and a competitive exchange rate which the Government are committed to maintaining. That excellent position is due to tight control over costs in both the public and the private sectors. Low wage settlements and rapid productivity growth have increased the international competitiveness of British firms. The President of the Board of Trade and my honourable friend the Minister for Trade are driving home the message about exports to both the private and the public sectors and are involving all departments. I thank my noble friend Lord Wedgwood for recognising that.

Of course the ECGD is important. During the course of the past couple of years premium rates have on average been cut by more than a quarter. In the last Budget the Government announced a further round of reductions, some as high as 20 per cent., for certain countries. The Government have also taken substantial steps to make more ECG cover available where it is needed and to accelerate the pace for resuming cover on markets emerging from previous debt problems.

The noble Lord, Lord Haskel, asked a very interesting question about comparisons. I cannot give him an answer now. But I suspect that comparisons are. very difficult. I shall try to find out and perhaps I may write to him.

It is the partnership with business that is so vital to our strategy. The Government's principal adviser on trade promotion is the BOTB under the chairmanship of Sir Derek Horny. There is also a network of more than 200 business people with experience of markets around the world. They ensure that the needs of businesses are reflected in the Overseas Trade Services operation and help formulate specific initiatives to increase trade.

On the question of secondees raised by my noble friend Lord Limerick, export promoters are now playing a key role in all these initiatives. Some 70 have joined the DTI and are actively helping business. The Government's efforts to help UK business to win major overseas projects are also being enhanced with the guidance of the Overseas Projects Board, under the chairmanship of Sir Alan Cockshaw. We have been successful in attracting senior heads of industry to work in each sector group.

As part of the overall strategy for export promotion, market plans are being drawn up by Overseas Trade Services for each of the UK's top 80 overseas markets. These will guide the future export promotion work programmes and help ensure that resources are focused to the very best effect.

The DTI and the FCO jointly provide a first class information, advice and support service for UK exporters under the banner of Overseas Trade Services. This is confirmed by our customers, 90 per cent of whom tell us that the Overseas Trade Services are of good quality and that they would use them again. Listening to what our customers tell us they need, we have recently introduced a package of new services which are being piloted right across the world.

A number of noble Lords, particularly my noble friend Lord Limerick, the noble Viscount, Lord Waverley, and indeed the noble Lord, Lord Haskel, asked about marketing services to users, persuading more people to use export services and the whole problem of obtaining the right access to services to get increased penetration across so many companies that currently do not use the services available. That problem is widely recognised. That is why the President of the Board of Trade challenged, and indeed encouraged, local organisations—chambers of commerce, training and enterprise councils, local authorities and local enterprise agencies—to come together to establish the one-stop shop concept, now called Business Links. With government support they are forming partnerships for the benefit of local businesses, delivering high quality, practical and effective business support tailored to local business needs. I am glad to tell the House that today the number of Business Links around the country has doubled to 10, and when we return from the Easter break they will have doubled yet again to 20.

I am grateful to the noble Viscount, Lord Waverley, for giving me the opportunity to assure the House of the Government's firm commitment to the long-term funding of Business Links. It is an important part of our overall strategy for helping business to win, and I believe that it will be a great success.

Of course, there are many initiatives run by the Government and the DTI. For instance, the North America Now campaign, which was launched by the President of the Board of Trade last March, aims to help British industry reinforce its trading position in the United States and Canada and increase its market share by 25 per cent. over the next three years. That means increasing our visible exports by at least £3 billion. That initiative, along with the Priority Japan and Business in Europe campaigns, will raise the profile of the trading opportunities available to British business in our major overseas markets.

I join my noble friend Lord Wedgwood in paying tribute to members of the Royal Family who work so hard to encourage exports overseas, and particularly to his Royal Highness the Prince of Wales, who works tirelessly in many areas but who has such a great interest in our projects, our performance and our ability to export.

The services that I have described during the course of this debate so far represent only part of the ways in which we promote exports. In addition, Ministers undertake a series of high level visits each year with business representatives. Last year Ministers, including the Prime Minister, made a great many overseas visits to a wide range of world markets to great success. When the Prime Minister visited India last year he was accompanied by a team of 17 captains of industry, and as a result of that initiative over 10,000 companies have been contacted with the message that India is a market on the move offering immense potential for business development.

In conclusion, I believe that we are in a most exciting period of redefining the way that UK business is helped to export. We are committed to working together with business to ensure that United Kingdom firms are best placed to achieve rapid and sustained success when they trade abroad.

House adjourned at sixteen minutes before eleven o'clock.