House of Commons Hansard Debates for 19 May 1993

Commodity Prices

11. Mr. Cohen : To ask the President of the Board of Trade what assessment he has made of the effect on businesses, consumers and trade of the recent changes in the price of commodities.

Mr. Sainsbury : The impact of movements in commodity prices varies between businesses.

Mr. Cohen : Following the exchange rate mechanism debacle eight months ago, which cost Britain about £2 billion, are not higher prices now in the pipeline? Is not that reflected by commodity price rises? Timber is up 126 per cent., sugar 46 per cent., coffee 38 per cent., beef-- [Hon. Members :-- "Reading."] Yes, reading. They are very high figures, are they not? Beef is up 35 per cent. and cotton 25 per cent. Will not that harm businesses and the standard of living of people on tight incomes and make the nation's economic recession worse? Are not the Government caught in a new web of recession of their own making?

Mr. Sainsbury : I hope that the hon. Gentleman will share the Government's view that the control of inflation is an extremely important objective and is very important to help manufacturing industry, particularly in export markets. I hope that he is also aware that food price inflation has been running at a very low level. It was only 1.5 per cent., which was lower than the general level of inflation in the year to March 1993.

The hon. Gentleman might not be aware that the chairman of one of our leading supermarket companies--indeed, I think that I can say the leading supermarket company in the country--recently forecast that true price inflation would increase from about 2 per cent. to 3 or 4 per cent. next year because of devaluation. We should like to see less, but that is not an astronomical figure.

Mr. Budgen : Will my right hon. Friend confirm that a devaluation affects only some prices, not all prices, and that inflation can be caused only by an increase in the money supply?

Mr. Sainsbury : I am happy to agree with the first part of my hon. Friend's question. As he knows, were we to embark upon a discussion of the second part of his question, it is possible that we would not find ourselves entirely in agreement and we would certainly take up much of the House's time.

Mr. Robert Ainsworth : Does the Minister recognise that the price of commodities to manufacturers is now up more than 8 per cent., that that is a direct result of what happened in September and that we are in grave danger of going around the cycle again? When will the Government bring forward a policy for the long-term development and protection of our trade and manufacturing industry? That will be the only way out of the stop-go cycle.

Mr. Sainsbury : It sounds as though the hon. Gentleman is calling for not only regulation of trade but protection, or higher tariffs, against imports into this country, which of course would be an invitation to a trade war--just the thing in 1929 to 1931 reduced world trade by 40 per cent. and, as a consequence, reduced world output of manufactured goods by 30 per cent. That seems to be a more than usually stupid policy to be proposed, even by the Opposition.

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Russian Federation

12. Mr. Fabricant : To ask the President of the Board of Trade what plans he has to meet his counterparts in the Government of the Russian Federation to discuss bilateral trade.

Mr. Heseltine : Deputy Prime Minister Shokhin, with whom I established contact at the first meeting of the British-Russian steering committee on trade and investment in Moscow last September, and I attended a second meeting of that committee this morning. We plan to continue our talks tomorrow.

Mr. Fabricant : Does my right hon. Friend agree that business with the Soviet Union, or Russia as it is today, is well worth pursuing in the long term due to its huge resources in gold and oil? Regarding of the short term, my right hon. Friend's meeting this morning with Aleksandr Nicolaivitch Shokhin, what does he think will be the short-term benefits that will accrue?

Mr. Heseltine : I must crave the indulgence of the House, Madam Speaker. I was so carried away by the full explanation of where I have been today that I missed the important part of the question.

Madam Speaker : In that case we will have a question from Dr. Howells.

Mr. Fabricant rose--

Madam Speaker : Very well, but very quickly.

Mr. Fabricant : Thank you, Madam Speaker. Does my right hon. Friend agree that it is worth pursuing long-term prospects with Russia given its huge reserves of gold and oil? Given his meeting this morning with Aleksandr Nicolaivitch Shokhin, what short-term benefits does he believe will accrue?

Mr. Heseltine : I think that my hon. Friend, who has a considerable knowledge of these matters and a facility for articulating them, is right to ask the House this question. The conclusion that I draw is that we have much to gain in both the long and the short term.

Madam Speaker : It was worth a repeat performance.

Dr. Howells : Does the President of the Board of Trade agree that one of the greatest success stories of British exports to the former Soviet Union--to Kazakhstan and Russia--is that of British Gas? British Gas is deeply concerned that if it is broken up, as some propose it should be, it will no longer be large enough to be a world player and to take British exports to those countries.

Mr. Heseltine : The hon. Gentleman will realise that these matters are currently before the Monopolies and Mergers Commission. It would therefore not be appropriate for me to comment at this stage.

Overseas Trade Services

13. Mr. Matthew Banks : To ask the President of the Board of Trade how many people the Overseas Trade Services employs ; and if he will make a statement.

Mr. Needham : At present, there are some 2,000 staff engaged in export promotion work within Overseas Trade

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Services, including those employed in the commercial sections of Foreign and Commonwealth Office posts overseas.

Mr. Matthew Banks : While Britain currently enjoys record export levels, is my hon. Friend satisfied that we are doing everything possible to ensure that there is a proper range of services to help British business men win the orders that they rightly deserve?

Mr. Needham : One can never be satisfied. My right hon. Friend the President of the Board of Trade recently announced a new structure within the DTI which I think will go a long way towards meeting the needs mentioned by my hon. Friend. We have restructured the Overseas Project Board--and are in the process of doing so with the British Overseas Trade Board--to reflect business needs more closely. We have announced the taking on of 100 export promoters, of whom 33 are in place. We are strengthening the relationship between the Foreign Office and the DTI through the joint directorate and linking export promoters with DTI regional offices and, thereafter, this country as a whole. I am sure that, in a short time, we will be giving a package of support to our exporters which will be without equal anywhere in the world.

Mr. Barry Jones : Will the Minister acknowledge the competitiveness of the British aerospace industry, which exported £5.5 billion worth of its products last year? May I tell the Minister of a great little export earner in my constituency, the 125 executive jet made at the Broughton works? May I further tell him of the concern of the work force there--not just worry at the loss of 269 jobs from the production line, but fear that that efficient unit may soon be bought, lock, stock and barrel by an American company? What can the Minister do to assuage the fears of the work force? Is he prepared to visit the factory and to meet management and labour?

Mr. Needham : My right hon. Friend has already visited the plant. Obviously it will be a commercial decision for British Aerospace. The hon. Gentleman is absolutely right to congratulate the British Aerospace company and its subsidiaries--and all other companies in aerospace--on the success of their exports, which I am sure will continue.

We can be proud of many other industries in this country, whose export performances are getting better day by day.

Mr. Jacques Arnold : Can my hon. Friend assure us that there will be adequate staffing to ensure the proper packaging of exports of British goods and services, as was carried out in the Kuwait reconstruction and the recent Proyecto Venezuela? It is a very effective way of putting across opportunities for Britain in these markets.

Mr. Needham : My right hon. Friend recently announced an additional 60 posts to deal with the 80 top markets for British exports. As I have said, we are in the process of putting in place an export promotion assistance package that no other country in the world can better.

Export Credits Guarantee Department

14. Mr. Spellar : To ask the President of the Board of Trade if he will make a statement on the staffing levels in the Export Credits Guarantee Department.

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Mr. Heseltine : ECGD's staffing levels are periodically reviewed and determined as part of the annual public expenditure survey and the Minis scrutiny.

Mr. Spellar : I think that it is unfortunate that the right hon. Gentleman could not be more forthcoming on the figures. One suspects that that gives substance to the concerns expressed by the staff of ECGD on this matter. Although an increase in the amounts available is welcome, would not it be a good idea to give an assurance to the staff that their jobs will be secure and that we will therefore have the necessary back-up to progress what will, one hopes, be an increase in exports?

Mr. Heseltine : I cannot answer that question in the way in which the hon. Gentleman wants. I have looked in great detail at the number of people employed in providing this service. I was extremely concerned at the overheads involved in providing support to the front-line services and, therefore, I have asked for some urgent reviews to take place, which it is my proper responsibility to do.

Northern Cyprus

15. Mr. O'Hara : To ask the President of the Board of Trade what was the total value of (a) imports and (b) exports between the United Kingdom and northern Cyprus in the last three years for which records are kept.

Mr. Needham : The Government do not recognise the northern Cyprus regime. Therefore, northern Cyprus is not separately identified by Customs and Excise in the United Kingdom trade statistics.

Mr. O'Hara : Is not it the case, as the recent exploits of Asil Nadir brought to public attention, that a considerable amount of trade goes on between the United Kingdom and northern Cyprus? Should not the Government now take a closer interest in the terms under which such trade is conducted? In particular, how many of the business assets through which that trade is conducted belong legally to refugees who were dispossessed in 1974? Is not it an insult to those refugees that in the last honours list an OBE was awarded to a northern Cyprus business man for his services to trade with the United Kingdom? Should not the Government now review their policy of accepting export credit certificates from a regime which the United Kingdom does not recognise and which evidently does not recognise any obligations to the United Kingdom?

Mr. Needham : The hon. Gentleman is fully aware that the trade that takes place between the island of Cyprus and the United Kingdom is regulated through the association agreement with the Community and, therefore, is a Community matter. We recognise the island of Cyprus as a whole and it would be unthinkable to the people on the rest of the island if we differentiated between one part and another.

Manufacturing Industry

16. Mr. Harry Greenway : To ask the President of the Board of Trade what assessment he has made of the parts of manufacturing industry which show the greatest potential for growth ; and if he will make a statement.

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Mr. Sainsbury : The Department's objective is to encourage and assist all sectors of the United Kingdom's manufacturing industry to become more competitive both at home and abroad.

Mr. Greenway : Can my right hon. Friend confirm that between 1 million and 1.5 million more people are in work now than were in work in 1983? That means that more than 25 million people are in jobs in the United Kingdom. Are not a substantial number of those in the manufacturing industries? Will my right hon. Friend encourage small business--while not neglecting large business--to provide jobs, because that is where a large potential for increase in manufacturing jobs lies?

Mr. Sainsbury : I very much agree that smaller businesses have a valuable role not only in manufacturing industry but in the provision of employment opportunities. Indeed, that is why the Government have a comprehensive range of services to assist small firms, including the small firms loan guarantee scheme, which was enhanced by my right hon. Friend the Chancellor in the Budget ; consultancies under the enterprise initiative ; one-stop shops, which will give a better service to small firms ; and the partnership sourcing initiative.

Mr. Campbell-Savours : Why should not regional policy be framed in such a way as to back growth sectors of the economy? On the whole question of regional policy, when will we have a statement from the Government on the redrawing of the assisted areas map? It is causing deep concern in my county of Cumbria.

Mr. Sainsbury : I can understand why the hon. Gentleman is concerned to have an announcement--we will certainly make one as soon as we can. He is aware that the proposals for the new map for assisted areas are subject to the approval of the Commission. We can never be sure how long the Commission will take to give us that approval, as I drew to the attention of the House in answer to an earlier question.

The hon. Gentleman is well aware that regional policy is directed at providing better employment opportunities in areas of the country that suffer from a lack of employment opportunities relative to other more prosperous areas.

Arab Boycott

18. Mr. John Marshall : To ask the President of the Board of Trade what representations he has received about the implications of the Arab boycott on British exports.

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Mr. Needham : I receive representations about the Arab boycott from time to time, but we cannot measure its effect on United Kingdom exports.

Mr. Marshall : Does my hon. Friend accept that such an iniquitous boycott must affect the level of United Kingdom exports? As the German and American Governments are willing to legislate against the boycott, will he explain why the British Government will not? May we have an assurance that the matter will be discussed at the forthcoming G7 conference?

Mr. Needham : I cannot give such an assurance to my hon. Friend, but I will make sure that his comments are passed on. We have not followed the line taken by the Governments of the United States or Germany because in this matter we take the views of British companies and exporters carefully into account. Those companies do not believe that the introduction of such legislation in this country would be effective, because it would be unenforceable.

Deregulation Unit

20. Sir Thomas Arnold : To ask the President of the Board of Trade if he will make a further statement about the work of the deregulation unit.

Mr. Neil Hamilton : Departments are conducting a comprehensive review of all their regulations. Seven business task forces are also undertaking a comprehensive review of all the regulations that affect those industrial sectors. We are also urging the European Community to consult business and consider the burden that its proposals might impose on it. At the local level, there are nine partnerships between local authorities and business in local areas. Local authorities and business are trying to learn from their experience of working with one another.

Sir Thomas Arnold : Will my hon. Friend encourage the civil service unions to be less defensive about the proposals and remind them that public service efficiency will be enhanced by the work of the unit?

Mr. Hamilton : I agree with my hon. Friend. There will ultimately be gains for the Government, and hence for the taxpayer, from the deregulation initiative. It can be in nobody's interest to have red tape entangling them. Nor is it in anyone's interest to have taxpayers' money wasted on unnecessary rules and regulations.

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