International Trade

Baroness Wheatcroft Excerpts

Thursday 23rd January 2014 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, I congratulate the noble Lord, Lord Harrison, on securing this debate on such an important subject. I reassure the House that I will not be quoting George Monbiot.

I believe that there is scope for taking a much more upbeat look at the situation than that of the noble Lord, Lord Harrison. The news from the UK on employment is of job creation. Even among younger people who are very hard to employ, the numbers are going in the right direction. Contrast that with what is being said at Davos at the moment, where some people, including the French president of Total, are saying that Europe should be regarded as an emerging market. That is not the situation in this country.

In the motor industry, for instance, to which my noble friend Lord Sharkey just referred, exports of vehicles from this country in November were up by 10.7% on a year ago. That is a remarkable climb in a market that has been very difficult. UK car production over the last year hit a six-year high. Huge investment has made a difference. Nissan in Sunderland is responsible for halving the unemployment rate in that town. It now exports a remarkable 80% of production from that plant. Huge investment in that plant has managed to produce something that is a world-beater.

However, not every sector is as buoyant as the automotive sector. I was struck by the following information from the most recent trade statistics. Reporting our imports from non-EU countries, it was said that in November last year:

“The top five commodities are similar to the previous month although HS2 88”—

their arcane description for—

“Aircraft, spacecraft, and parts thereof … has risen from fifth to fourth place forcing HS2 61 … into fifth place”,

in our imports. HS2 61 is:

“Articles of apparel and clothing accessories, knitted or crocheted”.

I try to keep abreast of trends but I am unaware of an avalanche of crochet coming into the country. Perhaps we would get a better grasp of what is going on in our imports and exports if we were to revisit the basis on which the trade figures are comprised.

The statistics, however, still show some good news. Exports to China have doubled since 2009. That is not enough—it is still only 1% of the market—but is certainly a creditable achievement. As we saw in the recent trade mission, a great deal is being done to build further alliances with China. The digital alliance, for instance, between UKTI and China is aimed at providing up to £2 billion in extra business for our creative industries. That trade mission did not just accomplish big deals for UK businesses but brought investment from China into this country. Chang’an Motors, for instance, is now making a £60 million investment in a West Midlands R&D centre, which will create 300 jobs. It would be really useful if a discipline adopted by the Government was to refer later to what has actually been achieved by these trade missions in the longer term. To hear what the follow-up has been would produce some interesting information for us, but would also probably put a deal of pressure on those businesses that go on trade missions to continue to work hard to capitalise on the extraordinary boost that they have been given.

However, one of the main problems for us is that companies are not investing. I talked about Sunderland, where Nissan’s huge investment has generated a vast number of jobs, made a big difference and made a hugely productive plant that can export. However, in this country and all around the world very few companies are investing and prefer to sit on their cash piles, which is why the employment figures are going up but, I am afraid, the productivity figures look very disappointing. Investment in modern plant and technology creates improved productivity. One thing that I am desperate to see, and to which I have referred in this House previously, is some incentive for big companies to invest at least a bit of that cash pile in smaller companies, thus generating more jobs and helping us to grow businesses.

More can be done. Next week, a report from the 2020 commission, entitled Sweating our Assets, will be launched in the other place and has been led by Laura Sandys MP. I have been delighted to have a small part in the work that it has done, which has been very much in collaboration with the Engineering Employers’ Federation. Some of the ideas that it has come up with will, I hope, help this country to improve productivity. There is a long way to go on that.

The Government are determined to boost trade. As my noble friend Lord Marland said, and put into practice when he was Trade Minister, many initiatives are under way. Last year, in October, the Government launched Grow Online, Expand Worldwide—a scheme aimed at helping small and medium-sized British companies to expand their e-commerce operations. We are already one of the leaders in that field. According to the Business Secretary Vince Cable:

“Britain’s 220,000 online retailers export more than the rest of Europe’s e-retailers combined”.

The Government have been energetic in providing support for exporters, with the aim of doubling exports by 2020. That is a brave aim and one that demands support. It is, however, a very big ask: it requires exports to grow by 8% a year. We are not getting anywhere near that at the moment. In part, to reach that target, there have been dramatic changes in the way in which the support network overseas works. There is increased reliance on British chambers of commerce abroad. This has created a degree of concern among some companies and other business organisations. Some chambers of commerce abroad are effective, strong organisations but vary in quality. Can the Minister assure us that the quality of those chambers is being monitored and that we are confident that this is the best method?

Our chambers of commerce differ from the German chambers, where membership is mandatory. There are some concerns that we may be moving in that direction, as smaller businesses of course want nothing which will involve them having to pay subscriptions to organisations to which they do not particularly want to belong. I understand the logic in taking responsibility for small and medium-sized exporters away from our embassies. I believe that the theory is that the embassies can then concentrate on helping the really big deals go through. I am a great admirer of the skills of our embassies overseas, which do great work. I would like reassurance that we are making the best landscape for encouraging our exporters. I have been particularly impressed, for instance, by the high commission in Delhi and its work building exports in India. The people in those embassies really know their markets.

I return to the undoubtedly good news. Noble Lords will have seen today’s announcement by James Dyson that he will triple the number of engineers working in Malmesbury on creating his brilliant designs. Products will not be manufactured in this country; that is just not competitive. We have to accept that our skills are really on the inventive side. James Dyson says that:

“Competitive advantage rests on knowledge and developing patentable ideas that can be exported—and our intellectual property is owned in the UK”.

We are an inventive race. Over the years we have created some of the most important things in the world today. I do not need to mention Tim Berners-Lee. On a smaller scale, look at Fever-Tree. I would hazard a guess that most noble Lords have come across Fever-Tree, which creates some of the best mixer drinks in the market. Who would have thought, just 10 years ago, that there was a market for a new creator of fizzy drinks to mix with gin? Fever-Tree spotted the gap in the market and now, just a few years later, exports 75% of its turnover. There are a hundred and one stories such as that about inventive British companies, which we need to support.

In conclusion, I take comfort from the fact that, thanks to the determination of our Government to tackle the deficit, no one in Davos this week is saying that the UK should be regarded as an emerging market.