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House of Commons

Friday 22 June 1990

The House met at half-past Nine o'clock

PRAYERS

[Mr. Speaker-- in the Chair ]

PETITION

Major Peter Thompson

9.34 am

Mr. Barry Field (Isle of Wight) : I beg to ask leave to present a petition on behalf of my constituent, Major Peter Thompson, Royal Marines, retired, who should have retired from active service on his 48th birthday in 1976. The Royal Marines asked him to extend his service, which, as the loyal officer he was, he agreed to do, and his service was extended by 14 months. Unfortunately, because of the then Labour Government's pay restraint policies, when Major Thompson retired, his pension was effectively reduced, through no fault of his own. Major Thompson believes that, by agreeing to extend his service, the Ministry of Defence in effect promised to protect his pension entitlement. The petition states :

Wherefore your Petitioner prays that your Honourable House at least resolves to have his date of retirement from the Royal Marines amended to that which it should have been, under Service Regulations then pertaining, from his actual date of retirement some fourteen months later, after loyally agreeing to this extension of service which so adversely affects his retired pay now and contrary to what was promised by the Authorities at the time of his acceding to their request.

And your Petitioner, as in duty bound, will ever pray etc. To lie upon the Table.

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Export Trade

9.36 am

Mr. Lewis Stevens (Nuneaton) : I beg to move,

That this House considers that the United Kingdom export trade is a vital factor in the development of the British economy ; notes that Britain exports a wider range of commodities than any other country and welcomes the contribution made by the continued growth of the volume of exports over the last ten years ; supports the Government's efforts to remove barriers to international trade to free the movement of goods and money ; and believes that the promotion of British overseas trade should be a high priority for business and government and that the opportunities arising for increasing exports require a high level of competitiveness from business and trading conditions such that they are not disadvantaged compared to other countries.

I have chosen a broad motion because our export business is a wide subject, involving not only industrial manufacturing but financial services and overseas and inward investment.

By tradition, this country is a trading nation. Since the industrial revolution, we have traded products that were manufactured in this country. Before it, we traded on a merchant basis throughout the world. For a long time, we have not been self-sufficient. Despite moves over the years to make ourselves self-sufficient in various products, we have noted the need to involve ourselves in international trade to make up for our product deficiencies. It is interesting that, in the past few years, the growth in exports has managed to compensate, to some extent, for the large increase in imports. Mr. Peter Morgan, the director-general of the Institute of Directors, made an interesting comment in an article in "European Freedom Review". He said :

"We are all soldiers in a global economic war. There is a convention which defines the conduct of the war--it is called GATT--but there is no arms limitation treaty. A nation is allowed to put into the economic battlefield any number of its citizens that it chooses--there are no restrictions. Nor are there any restrictions on the training or technology which can be given to our economic warriors.

Some competitors are disturbingly professional about these issues. The West Germans in business behave uncomfortably like the East Germans in sport-- they pick their players while they are still at school and then coach them meticulously until they are old enough to compete. They concentrate on developing technical skills. Not surprisingly the West Germans win as many enterprise gold medals as the East Germans win Olympic golds. And there is the suggestion that for the 1992 games, East and West Germany will enter a single team." That comment is a particular tribute to Germany, and it shows clearly that we are involved in a trade war.

Last week in the Daily Mail there was a report of a survey that had been carried out by some Swiss groups. The report had the unfortunate heading : "Unions mean Britain trails in trade war' ". I may return later to the topic of industrial relations. The report placed us 12th out of 23 nations in competitive trade. That is not an especially good position for us. However, the survey made some interesting points. It said, for example, that Britain exports the widest range of commodities to the second largest number of countries. It also said that Britain scores well for having free markets that allow the free movement of cash, that we invest more of our wealth overseas than any other country and that we receive the most foreign investment. After Belgium, we erect the fewest barriers to

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imports and we are the third best for easing restrictions on foreign firms wanting to set up in Britain. The survey also commented on some of our less good achievements.

Mr. Derek Conway (Shrewsbury and Atcham) : My hon. Friend may be about to tell us some of the bad news. Can he inform the House whether that survey covers the effect on British competitiveness of corporation tax? Does he conclude that Britain's ability to compete with the very powerful nations that he has mentioned this morning would be considerably harmed if the British people were ever foolish enough to return a Labour Government committed to increasing the burden of business taxation on British exporters?

Mr. Stevens : I am grateful to my hon. Friend for that intervention. The survey does not mention corporation tax specifically, but the business community accepts that much of our success must depend on investment in our businesses. One of the key factors to the success and growth of businesses, particularly the small and medium businesses, must be the corporation tax or the tax levied on those companies. Should any Government move to increase the taxes on those businesses, it would be a serious threat to the exports and development of those companies. It would also be a serious threat to the standard of living of the British people. The survey does not mention that.

Mr. A. J. Beith (Berwick-upon-Tweed) : While the hon. Gentleman is thinking about that, he should talk to some of the business men in Bath and elsewhere who have contributed a great deal to our tourist earnings, but who find that the new business rate is working extremely to their detriment.

Mr. Stevens : The business rate is a far smaller element in the costs of most businesses, especially those involved in exports, than corporation tax. In some areas, the business rate has created extra charges for some businesses, but in many other areas, including my own, the new uniform business rate has reduced the burden on many businesses. It has especially reduced the rates for manufacturing businesses which are the key to much of our export trade. I will concentrate more on manufacturing industry than the motion may suggest, mainly because I know that industry best and I worked in it for many years.

The United Kingdom volume in manufacturing is now 55 per cent. higher than it was in 1981. That is a substantial increase in the volume of exports in manufactures. If oil and erratics are excluded, in the three months to April, exports were 11 per cent. higher than in the same period last year. That again is a substantial amount. One does not jump to that degree without considerable effort and success for the businesses involved.

Our impact on world trade, in manufacturing and most other industrial sectors, has declined over many years. Since 1983, the United Kingdom world share of trade in manufactures has been constant following those years of decline. That is possibly one of the most significant events since the Government took office in 1979. What had become almost accepted as an inevitable decline was halted and we started to come back--or at least to hold constant--in a world where trade is growing all the time. That in itself was an achievement and it was reflected in the way in which our gross domestic product grew at an

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average of 3.2 per cent. between 1981 and 1989 when the figure for West Germany was 3.2 per cent. and for France, 2.1 per cent. That had an automatic reflection on the standard of living of the British people.

In 1948, Rostas published a paper on the fact that our productivity, which is a key to our competitiveness and our exports, was far less than that in the United States. Towards the end of the 1950s, it was suggested that France and Italy--and Germany a little later--would soon be well ahead of the United Kingdom as well. What happened during that time? Little happened, because we continued the decline. Our productivity fractionally improved, but not at the rate of our competitors' productivity.

By the end of the 1970s, we found ourselves in a weak position. That has substantially improved in the past 10 years, but it does not alter the fact that we still need continually to improve. Our volume of exports and our ability to compete in the world market are more important now than they have ever been. We know what 1992 means in terms of our general EEC commitments. However, the recent changes in eastern Europe and in other parts of the world will set a new target, a new area of investment and a new area of competition.

The economy of the United Kingdom needs to grow in the 1990s. Whereas, in the 1980s, there was a rise in oil production, which obviously benefited exports and imports, the concentration must now move towards the industrial sectors. In general terms, it is difficult to define precisely how competitiveness has become better or worse. In general terms, our productivity has increased, which has maintained us on a level base compared to many of our main competitors.

The difficulty is that, while our overseas trade from exports has increased, it has been over-balanced by the large amount of imports. That means that we must increase our exports and that import substitution is involved. That means in turn that new capacity must be established either by United Kingdom companies and/or by inward investment from companies overseas.

Increasingly in recent years, companies from countries such as Japan have invested in the United Kingdom, which is relatively attractive to overseas companies. The United Kingdom's ability to attract such activity will depend heavily on our cost-competitiveness and also on the ability of our firms to provide them with materials and components. If we cannot provide components, we shall become less attractive.

German and Japanese industries have adopted very different strategies. Our attraction lies essentially in the fact that we are becoming more competitive and that our industries have low cost structures. That has meant that we can compete better in simpler products than the Germans and the Japanese, who have responded to the strengthening of their currencies by concentrating on products and services in which technology and other experience can support a high price, so that producers remain competitive despite high domestic costs. That is a desirable practice, should it prove practicable. One criticism of the United Kingdom is that our work force lack skills, and that restricts our ability to increase our export growth. But we have been successful in many high-technology sectors. The aerospace sector, in particular, has done well. I have in my constituency one of the Rolls-Royce companies. Both before and since its return to the private sector, Rolls-Royce has been able to compete throughout the world with its advanced high

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technology products, and strong competition from the United States has not stopped the company's continued development in exports and trade. Rolls-Royce has also diversified its activities, taking over Northern Engineering Industries, for example, which produces Synchrolift platforms for use in dry docks--a high-technology product involving large-scale engineering. That is an example of the way in which we can compete successfully in some areas of high technology, although not all.

No country will have a monopoly on high technology. As international trade increases, even Japan, with its tremendously large high technology range, will gradually be forced to limit the scope of its products because other countries will become more highly specialised. In those aspects of high technology in which we are successful, we can certainly compete.

Exports are most important to our economy. In 1989, for example, our exports were worth £92 billion, which, given the size of our economy, makes them a major factor by any standards. Unless the trend of improvement continues, our living standards will be reduced. This Government, throughout their lifetime, like previous Conservative Governments, have strongly supported the removal of trade barriers, considering that to be one of the most important factors in encouraging international trade. It is not easy simply to open the door to trade from anybody, anywhere, at any time. At times, one has to consider the interests of our industries and-- possibly even more important--ensure that we are playing on a level playing field and all playing to the same rules. But this country has led the struggle to remove barriers, and no doubt we shall continue to pursue the matter well into the future.

GATT is a key to that, although, as with most international agreements, difficulties may arise in enforcing the rules that are laid down. In particular, we may have difficulty in persuading all the countries that should be involved in GATT to accept not only the technicalities but the spirit of the agreement and not to try to invent other barriers.

Despite our free trade approach, there is still concern among those in the textile and knitwear industries in the midlands and elsewhere about the future of the multi-fibre arrangement, which has been in force for many years and has been extremely helpful to companies in those areas. The future of the arrangement is now the subject of talks and it is likely that, in due course, the industry will move away from the MFA into the normal GATT arrangements.

What happens in the transitional period will be most important for many companies, and that is what worries the industry. It is to be hoped that a satisfactory arrangement for a transitional period lasting a few years-- there have been many arguments about how many years it will be--will be found during the Uruguay round. That will be an important confidence- booster to the industry. Until the industry is satisfied that it is not threatened with the sudden disappearance of the protection afforded by the MFA, its attitudes to investment and the way in which it views itself will be affected. I realise, however, that not all the competition suffered by the British textile industry comes from the countries that are partly the reason for the MFA being there in the first place.

The United Kingdom's competitiveness largely depends on improvements in productivity. For the past 10 years, productivity improvements in the manufacturing

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industries have been running at about 4.3 per cent. a year. That is a substantial improvement, given that, between 1974 and 1979, productivity increased by only 1.2 per cent. a year. Productivity is the key that will make the difference between whether we succeed and improve our position or whether we fall behind our competitors. Our competitiveness also depends upon our ability to invest in the development of industries and to draw in the technologies that we need. Over the years, many of our companies have tended to reduce their size and increase their productivity, which to some extent has weakened our base on which to expand and create extra goods for export. It is true that many of our industries have a far more productive and competitive base and a better technology base ; it is simply smaller than the base that we had years ago. We must increase that base, to make ourselves even more competitive.

Our small base forces us into specialisation which can be successful. For example, the British machine tool industry almost disappeared some years ago. However, earlier this year I visited the national exhibition centre, as did the hon. Member for Wallsend (Mr. Garrett), where the change that has gradually taken place in that industry over the past few years was apparent. Once again, we have a machine tool industry. Within its limited range, that industry has been successful thanks to high technology and to being

forward-looking and assessing the needs of the industry worldwide instead of simply concentrating on the home and immediate European markets.

As we move towards 1992, the EEC barriers to trade will be removed. However, although some aspects of 1992 are good, there are other aspects about which we should have reservations. Within the Commission there is a desire not to have barriers, to allow free trade. At the same time, there is a danger that with the centralisation of the Community, bureaucracy might create new barriers.

The definition of product standards offers opportunities. The harmonisation of standards of products such as engineering goods will have a considerable effect on the goods and also on safety, environmental needs and consumer protection. At the moment, we often have national testing of products that have already been tested in other countries. That can provide a barrier to trade, because it is easy to insist on a standard different from that in another country. The Commission is keen to have a mutual recognition of standards within the Community. It would be a great advantage if countries within the Community and outside it could accept the same testing standards.

The political changes in Russia and eastern Europe offer challenges to trade. The Department of Trade and Industry has encouraged people and actually taken groups of businessmen to those countries in an attempt to promote interest in eastern Europe. Of course, it is not that easy. We cannot simply say, "Look, there's a country, get in there." However, there are opportunities to open up new markets on a much wider and more interesting basis, but that will take time. The Government have a role to play as companies move into new areas. The British Overseas Trade Board, the Foreign Office, the DTI, which is a prime mover, the Department of Energy, the Ministry of Agriculture, Fisheries and Food and the Welsh Office all have parts to play.

Mr. David Evennett (Erith and Crayford) : My hon. Friend has raised an interesting point. With the opening

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up of new markets, there is an opportunity for a partnership between the Government and industry. The Government should encourage and give advice ; they should not take a definite lead.

Mr. Stevens : That is a very important aspect.

With regard to eastern Europe, there are staff in embassies and at consulates who can assist our business interests overseas. However, as we seek to expand our effort overseas, we must remember that it is not simply a matter of manipulating effort from one area to another. Additional resources will also be required perhaps in terms of people. Today local knowledge rather than diplomatic effort is more important when businesses go abroad. Shifting staff from one area to another--for example, from South America to eastern Europe--might not necessarily be in the interests of trade. We still need governmental organisations in the countries in which our businessmen see markets.

Mr. Ian Gow (Eastbourne) : My hon. Friend was paying tribute to the Foreign Office. I have often wondered whether it is possible to conceive of a world without the Foreign Office and that thought just occurred to me again. If we have what Mr. Delors wants--not what I want--which is economic and monetary union, will there then be a need for a British embassy in the Grand Duchy of Luxembourg, in the Kingdom of Spain, in the temporary republic of Greece or in the Kingdom of Belgium?

Mr. Stevens : That is a most interesting concept. I am not sure whether that idea would be welcomed. If we follow my hon. Friend's argument a little further, would our trade with France and Belgium actually constitute exports? That might raise many difficulties, and it might affect the figures that I have quoted today.

Mr. Gow : One must never be led astray even by one's hon. Friends, but my hon. Friend puts me in mind of a greater man even than he-- General de Gaulle. The general had the marvellous concept of a Europe from the Atlantic to the Urals. Mark how far ahead of his time the general was. We now see in prospect that widening of the European family and the opportunities for trade to which my hon. Friend was rightly referring.

Mr. Stevens : I cannot follow that important aspect.

We are trying to encourage more small and medium sized companies to export to Europe and elsewhere. However, there is a problem with the information and facilities on offer to them. Our embassies and consulates now charge small companies for information and I believe that that is reasonable. The information with which companies are to be provided must be useful and tailored, and it must also be a worthwhile investment.

The trouble with many companies going overseas is that we do not necessarily co-ordinate very well as a country. That is a commercial aspect. When companies get together to make trade bids in a competing country, it is not uncommon for syndicates to get together in no particularly natural grouping. From time to time we find our companies going abroad in competition with each other and bidding for bits of contracts rather than for whole contracts. There is a need for commercial interests to combine ideas and to bid for some of the large projects that are available.

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There is great enthusiasm for eastern Europe for all sorts of reasons. We are enthusiastic because it is near, and, because of its low economic position, its potential is even more attractive. However, we have been doing a lot in Africa, the Caribbean and south American countries that also need our help in economic development. Our activities in eastern Europe will be in addition to our already developing trade with other countries.

It is well known that companies within the EC and elsewhere get help in one form or another to boost exports. That boost is very welcome--everybody welcomes Government assistance. It is important that our businesses get the same encouragement and help ; otherwise, we will not stand a chance of competing fairly. Matters are improving through Government and other pressure. There is no question that things are getting easier in Japan because barriers are being removed. After some changes in tax on whisky exports to Japan, our Japanese exports have boomed by 72 per cent. That is an important market for whisky, and for many other products.

It is important that the Government respond to frequent complaints about people finding ways around the rules. The same applies to some of our EC partners, GATT countries and so on. We want to make people play by the rules and ensure that, if somebody is not prepared to meet a deadline, we do not put our people at a disadvantage. There is much more that I should like to say, but I have little voice left.

The importance of our exports cannot be overstated. We have a history of trade. In agriculture, industry and finance we have achieved a great deal in a few years by developing and extending our trade to the benefit of the people of this country. It will be to the detriment of our country if we do not push harder the importance of exports developed by our businesses abroad. We have done well over the past 10 years. The future lies in our ability to export and compete.

10.14 am

Mr. Ted Garrett (Wallsend) : I am sure that hon. Members sympathise with the disability of the hon. Member for Nuneaton (Mr. Stevens). It is an occupational disease of our profession. A rest this weekend will do the hon. Gentleman's voice much good.

The hon. Member for Eastbourne (Mr. Gow) referred to General de Gaulle, whose concept of Europe does not coincide with mine. General de Gaulle's concept of Europe was from the Atlantic to the Urals--a Napoleonic concept, with France in the lead, not the EC, as we seem to think that it should be today.

It is amazing that, when this debate started, the Opposition side of the House was populated by four hon. Members from the north-east and one who was originally from the north-east, who had the temerity to intervene and then to disappear. I should like to think that that is not his normal custom. He should follow the rules of the House. If an hon. Member intervenes in a debate, he or she is expected to see the debate through. I have always followed that custom, and I hope that other hon. Members will continue to do so.

Two of our major problems are a lack of knowledge about exports and a lack of communication. People involved in export and marketing have an incestuous way of life. They talk to each other in jargon, and the rest of the nation does not seem to be involved. That is a matter of

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regret. Among the many criticisms of our educational system, one that stands out is that many polytechnics do not teach the skills that one requires to be an expert on exports and the skills that many manufacturing and exporting companies require. I inquired into the matter and I found that, in the United Kingdom, there are only about three places at which a graduate or non-graduate who wishes to pursue a career in that profession would have great difficulty in finding a place. We should be very proud of that.

I have an engineering background. In my young days, we never saw the marketing people or those who helped to sell the goods that we manufactured. When I was about 18, the management of the company introduced we apprentices to the export manager. It was like listening to someone from another planet. We kept straight lines of demarcation.

Members of the Institute of Export, a most worthy body, cannot get a hearing. They cannot even communicate with the British public. How can we persuade our sons and daughters to follow that worthy profession? It is a skilled profession that requires courage, expertise and damned hard work. If one succeeds, the results are good.

At this stage I should declare that I advise the British machine tool industry, which is a large exporting sector of our manufacturing base, and British American Tobacco plc, which has enormous export and finance facilities and, of course, indirect exports because of its other activities. As chairman of the all-party group for the chemical industry, I am proud to say that a small but influential group of Members of Parliament are conscious of the vast role that industry plays in our exporting capabilities.

There are some anxieties among exporters. The machine tool industry, for example, is worried about the cut in support for inward missions. Inward missions mean that 15 or 20 prospective purchasers from America or any other country that has an industrial base or that wants to buy British machine tools are brought here for 10 days. The industry pays half the cost and the other half is paid with the support of the British Overseas Trade Board, for which we are all grateful.

However, some people still seem sceptical about whether inward missions are a success. The other night, I participated in a public debate on the motion : "That this Government have eroded the nation's export base." I listened to a young lady who was the epitome of a female yuppie, who said, "Inward missions are a complete waste of time." She was immediately challenged by an equally positive example of a male yuppie, who said straight away

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood) : Was it me

Mr. Garrett : No, it was not the Minister--he is now past that age. That young man said that that was nonsense. He had been to Mexico, where he had used his export knowledge to sell British goods to Mexican and Latin American companies. He said that it was nonsense furthermore, because some Mexican machine tool importers had then come to the United Kingdom, interested in purchasing machine tools. The inward mission had also succeeded in selling the products of a British company that produces

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safety equipment for the mining industry. It took over a market that had been held for 20 years by a French company.

That is a side effect of an inward mission. If there were no inward missions, the British machine tool industry would not be able to sell 40 per cent. of its production in the United States. The Americans prefer British machine tools to Japanese machine tools. They are developing a healthy dislike for the Japanese machine tool industry, and we must capitalise on it.

We have mixed fortunes with outward missions, which is when we go to other countries. Those mixed fortunes are due partly to the lack of back-up that is in our embassies for the commercial people we employ. There has always been a grouse at commercial and diplomatic level--and with some substance-- that the British are not well-manned or fully geared up compared with our competitors.

I should like to hark back to 1966--I hope that hon. Members will not mind me reminiscing again--when the Labour Government formed the first Select Committees. I was asked to serve on the first Select Committee on Agriculture. We began by inquiring into how British agriculture would interest itself in what was happening in Europe. We thought that we would go to Brussels and Paris. That was an exciting venture in those days, when hon. Members did not travel abroad as much as they do now--at least, not officially. We discovered that we had no agricultural attache in either Brussels or Paris. When we reported that fact on our return, the Minister-- the late George Brown--did not appear to like our interference in foreign affairs, with the result that Mr. Crossman, who became Leader of the House, abolished not only the Select Committee on Agriculture, but also the committees covering technology and education. Those three Select Committees were aborted and it was some time before a Government--the present Government--thought that it was a good idea to return to a Select Committee system, which is what we have today. I hope that you, Mr. Deputy Speaker, will forgive that slight digression into history.

I well recall visiting Taiwan, with which, then as now, we did not have diplomatic relations. I was much struck by the fact that, although Germany did not have diplomatic relations either, it had 80 people in Taiwan to promote its commercial affairs. In addition, the Americans, who did not have diplomatic relations, had nearly 300 people there. The Minister should note that the British had only one man, on part-time secondment, who was not even supposed to be there officially, and two secretaries to look after the interests of British exporters and manufacturers. When we reported that back to the Minister, he said, "Yes, we honour our diplomatic agreements. When we do not have a diplomatic agreement, we do not have one." Britain struggled along like that. Although things have improved, it is useful to remember that example.

Those who, like me, visit international trade exhibitions are appalled to realise that our exporters have to struggle damn hard to find a place in the market place of the huge international exhibitions. Only last year, in one of our biggest markets, the local people who represented British commercial interests in Chicago and Detroit found that their employment was to be terminated. Although they were Americans, those people did a damned good job for Britain and British interests.

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When the Kemp report, commissioned by the Secretary of State for Trade and Industry, appeared last December, it contained a few positive things, but also some anxieties and worries. British exporters are worried about the financial services that are provided by the Export Credits Guarantee Department. It is not good enough for the House quietly to accept the report without making some form of strong and legitimate protest.

In the past, our major exporting industries have believed that some of the Department's policies were good for their companies. I have to say that : I cannot stand here and be completely negative. Furthermore, the policies have been good for the sub-contractors that supply the main companies. We from the north-east know that that has also been good for the employment prospects of our region. Finally--this is stating the obvious--the policies have been good for our balance of payments.

While the balance of payments is at its present level--I shall not enter a debate on that this morning, because we shall probably hear enough about it next week--it is worth stating some of the things that are causing concern. The Kemp report refers to the insurance services group of the ECGD. The House knows that that provides comprehensive cover for those exporting goods, but not services. Some manufacturers think that the monopoly at present enjoyed by the insurance services group is not in the best interests of the exporters. They feel that the interest charged is too high, and in many ways they are grateful that alternative private agreements can be reached to meet the cost of providing the financial security that the exporters are expected to have.

Exporters also feel, and I agree with them, that, if they are to be successful in exporting and industry, they should be supported at a level equal to that given to our foreign competitors. This support should apply also to the provision of facilities at the cost at which such facilities are available. In other words, it is no good the Government saying that the facilities are available if the exporter is being charged too much for them. We must see whether we can find an easier financial solution to their legitimate complaints. Some of the premium rates charged by the ECGD are already higher than those provided by other export credit agencies. The new system of calculating premiums will put British industry at a disadvantage. I also understand that the global sum available for cover has to be carefully calculated for each country, that there will be a strict limit on the sums available and that the amount for each country will be calculated. In other words, there is a lack of flexibility, which means that British exporters, who have been successful in China, the USSR, Hong Kong, South Africa, India and Indonesia, will be restricted : in some years, more will be required to offset what is provided to another country or area of export. I hope that we will increase our exports, but if, when we do so, there is not enough cover for the new business, exporters will be somewhat disturbed. I welcome this debate, about which I could say a lot more. I am disappointed by the attendance today, but it is symptomatic of this nation that we have not got across to the public, the Government or even the Labour party the importance of this subject. When one mentions exports here, people yawn, but if one mentions them in Germany

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or France, one can see the vigour and alertness with which they respond. The young people in Germany going through their education system are involved with, for example, the vast chemical companies operating there. They gear their educational system to fit into the needs of their companies, both professional and labour. We have to mix our problems on export with a new system of re-education, because, whatever people may say, we are still a strong and substantial manufacturing country. I want that to continue.

10.33 am

Mr. David Evennett (Erith and Crayford) : I am glad to have the opportunity to participate in this important debate. I am always delighted to follow the hon. Member for Wallsend (Mr. Garrett). I know of his sincere interest and experience in industry and exporting. I agree with a number of his comments, although not with his analysis. I shall later highlight where I disagree with him. I congratulate my hon. Friend the Member for Nuneaton (Mr. Stevens) on raising this important issue in the House today. His excellent speech highlighted the real achievements of our industry, particularly our exporting industry, and we have a good story to tell, as he said. My hon. Friend knows, not least from the many occasions when we have served together on various committees dealing with these subjects, that I share his interest in industry, training and employment.

I shall concentrate on three areas. The first is the general importance of exports. Secondly, I shall highlight some of the exporting industries in my constituency and the success stories that are to be told there. Thirdly, I shall raise the issue that I believe to be paramount, although it has not yet been addressed--the need for changes in our attitude towards wealth creation and exporting in our educational establishments. The relevance and importance of industry and commerce are too often ignored by the House, and we do not have enough debates on these vital subjects. As the hon. Member for Wallsend said, it is disappointing that more of our colleagues are not here today.

We have endless debates about matters affecting the public sector, yet we give so little time and attention to the private sector, which creates the wealth that we need to finance public sector services. Without the wealth, we cannot provide from the public purse the funds for the services such as education, transport, and the national health service, that we all want and need. It is important that we consider matters affecting industry and commerce, so that we are aware of the difficulties that people in these sectors face and so that we can ensure that the Government, who, unlike so many previous Administrations, are in tune with businesses, will take every step to help business and business men to be successful.

Britain has a long history as a trading nation, and our industry and commerce have formed vital parts of our economy. Our record of trade, and in particular export trade, goes back many centuries, as we have already heard this morning. We have a long history of seeking out and then meeting the demands of new markets around the world. Over the years, there have been many changes as a result both of competition from other developed nations, notably the United States, West Germany and Japan, and of rapid technological advances in the past decade or two.

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In his informative speech, my hon. Friend the Member for Nuneaton gave us some figures that told an interesting story.

At one time, the products of our heavy industries--shipbuilding, heavy engineering, foundry works and so on--were sold throughout the world, but low-technology goods are now produced domestically even in less developed countries. Therefore, the market for such goods from this country is limited. Where we can and do compete successfully is at the high-tech end of the spectrum, in both manufacturing and service industries.

Ms. Joyce Quin (Gateshead, East) : There is not a neat distinction between high tech and low tech. For example, in shipbuilding, modern vessels have high-technology equipment. Therefore, the old and new industries can often work together.

Mr. Evennett : I accept that one cannot have hard and distinct divisions in industry or in any other aspect of life, but there are different skills and opportunities. If we took industry as a whole, we would lose and not maximise our export opportunities in our areas of expertise.

Mr. Garrett : The hon. Gentleman pursues the right arguments, but he must also remember that, as my hon. Friend the Member for Gateshead, East (Ms. Quin) said, we are blending high and low technology. That applies to the coal mining industry and what is left of the steel industry. We export the technology for those industries. British companies make the high- technology equipment used in them. There is a follow-through. It is true that we still have some low technology left, and that element will always remain. It is not advisable to decry it too much.

Mr. Evennett : I am grateful for the hon. Gentleman's comments, and I agree with him. One must have balance in everything. Balance is the important aspect that I wish to put across this morning.

Of course manufacturing industry in Britain is important for employment and for exports, but we must not concentrate too much attention on it and overlook the importance of the service industries, for example, which have an equal part to play. With modern machinery, simple manufacturing processes can often be carried out in many countries. Therefore, there is intense competition in that sector. By contrast, the service industries in Britain have a high volume of export business and sell quality services which are available in few other countries. We have a good record of providing high-quality professional services in all forms of engineering design, technology, architecture, and, as my hon. Friend the Member for Nuneaton said, financial services.

It is essential to overcome the old idea that manufacturing is more important than other industries, or that it is the only important element. Manufacturing is perhaps of equal importance, but both manufacturing and services must be discussed in any debate on exporting. Regrettably, in certain areas there has been a decline in our manufacturing industry. Everyone in the House must take responsibility for the all too frequent record of decline and disappointment in certain manufacturing industries. We know the reason for that decline. Over the years, many restrictive working practices and economic policies have resulted in so many firms going to the wall and so much export trade being lost. Everyone in the House regrets that, even though we understand that there must be

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developments and changes within the economy, which regrettably, results in lack of competition in some sectors and jobs and manufacturing industries going overseas.

There has been a tremendous expansion in the service industries. The export market for service industries is not new but it is often decried and it is not debated with enthusiasm in the House. The invisible exports from the City of London, which are so vital to our economy and our nation--such as shipbroking and marine insurance--have played an important part in our economy recently and ever since London developed as a financial centre centuries ago.

The City continues to play an important role in international trade, and constantly develops new products and services to meet world demand, ensuring that the City of London remains a major international centre for insurance, finance, commodities and banking. We must not forget the finance provided by the City for our industries across the country. It enables them to export and create wealth for the whole nation.

My second area of interest is dear to my heart. It is the industry in my constituency of Erith and Crayford. It is historically an industrial area where the heavier end of manufacturing has had a base and exports have been of great importance. Traditionally my constituency was dominated by the engineering industry. The area had strong links with the manufacture of armaments, and a large part of Crayford was developed by the Vickers company to provide housing for its work force. We are grateful for the development that took place last century and in the early part of this century. However, today the large, labour-intensive operations have been replaced by smaller manufacturing and service operations. In general these new companies are leaner and more efficient. They are highly competitive and entrepreneurial and make the best use of a skilled work force to produce goods and services which are sold both at home and abroad. Many of the companies in my constituency have already developed significant export markets and are working to expand those markets and to identify and develop others. The companies involved in that export business represent a wide range in terms of size and product from large companies, such as BICC in Belvedere, which supplies supertension cables for major power supply projects throughout the world, and Dussek Campbell in Crayford, which recently won a Queen's award for export achievement for the sale of its waxes and oils, to small companies such as Gillies Smoked Salmon located in Crayford, which has developed a new export market selling smoked salmon to overseas airlines.

As one who regularly visits such firms in my constituency, I am delighted with their approach, enthusiasm and success in production and export. I could mention many other local companies, but the important point to recognise is that, regardless of size, product or market, all those successful companies have a common philosophy. They have a good work force, effective management and above all an entrepreneurial approach which enables them to promote themselves and their products and to take full advantage of the opportunities that result.

Businesses in Crayford which have developed an export potential are well placed to take full advantage of the area's geographical location. It is near the channel ports and the EEC. Both my hon. Friend the Member for Nuneaton and the hon. Member for Wallsend mentioned the EEC but in my area we take a new and greater interest

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in opportunities beyond the EEC. That is an important point that we must put across to everyone in Britain. As we look to 1992 and the EEC, we must not neglect the American, far-eastern and other markets in the third world, which are vital to industry and exports in Britain.

I regret the fact that we too often look towards Europe because of 1992 and the success of the Department of Trade and Industry in pursuing the 1992 initiatives and the development of trade within Europe and the opportunities therein. However, we must never overlook the fact that Europe is one market in the world and that there are so many others. In my constituency, the export industries are looking beyond Europe. Their management teams and directors travel the world promoting their firms and the services that they provide. As we have already heard this morning, the development of the European Community as a single market will present a host of new opportunities for business in Britain and for exports. The key will be a shift in attitude so that Europe is not seen as an export market. As my hon. Friend the Member for Eastbourne said in his excellent intervention, Europe may be part of a much bigger domestic market. We look with interest to the 1990s and the developments that they will bring.

It is important to note that 1992 has been widely publicised, albeit somewhat later than in other European countries, and although the concept was misunderstood in the early days, the campaign has had great success. Everyone in the industrial and manufacturing sector is looking towards 1992.

In Britain we need to realise that business is changing. Business remains what entrepreneurs in this country have always felt it was : exciting, challenging and rewarding as an occupation. Business presents great opportunities, apart from generating the wealth of a country. Business is demanding and stimulating, and requires dynamic, talented, intelligent and trained people.

The present Government are the first in my lifetime who believe in business and have helped and encouraged it in a way that would not have been dreamt of 10 or 20 years ago. They have encouraged and supported entrepreneurs with general policy and with specific initiatives, such as the small firms service, enterprise allowances for those starting out in business, the enterprise initiative--which enables companies to obtain a vast range of expert advice on development--and, of course, the insurance provided for businesses by export credit guarantees. All those initiatives and enthusiasm from the Government have had a major impact on business in this country. As has been said, manufacturing output and investment have increased and profitability--which is something that we do not talk about enough in the House--is at its highest for 20 years. Sometimes hon. Members have criticised those but they are real achievements, which lay the foundations for a more successful business sector in the future.

The third area of concern is that, despite the positive approach which the Government have adopted and have encouraged others to adopt, and despite the support for the enterprise culture, which has been somewhat slow to develop but is now gathering pace, there is still a shortfall. Enthusiasm and belief in profit and business have been slow to develop and are still in their infancy in some of our

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