Exports: Government Support

Debate between Lord Hunt of Chesterton and Lord Leigh of Hurley

Thursday 29th January 2015 Lords Chamber

[Lord Leigh of Hurley (Con)]

My Lords, I thank my noble friend Lady Wheatcroft for instigating this debate. She is of course a well known commentator for the Wall Street Journal, an excellent publication, and business editor of the Times. I refer noble Lords to my various interests as declared in the register of interests.

Since new year’s eve 1600, when the East India Company received its Royal Charter from Queen Elizabeth I, Britain has been a nation of exporters. At our zenith, Britain was responsible for half of all the world’s trade. Since then, of course, we have had globalisation and the entry of a few competitors, so I would not see a return to those dizzy heights as a viable target. However, we can still aspire to see Britain’s goods and services exported the world over. We are, after all, an island nation, necessarily open and outward-looking.

It is not just for soft power and prestige that exports matter, though; they are of course vital for economic growth. With government spending rightly curtailed by the nightmarish inheritance that was the state of our public finances in 2010, and uncertain consumers paying down debt or increasing savings, exports have been and remain a key driver of growth in our successful economy. It is worth noting that in 2014 the UK had the fastest rate of growth of any major economy, thanks to the sterling work of the Government and the long-term economic plan.

I am pleased that the Government have recognised the importance of exports, with strong leadership matched by concrete measures to support business. As my noble friend Lady Wheatcroft has said, the Government have set very bold targets of doubling UK exports to £1 trillion a year and getting 100,000 more UK companies exporting in that time. To achieve this, the Government must support businesses looking to access markets abroad by offering guidance, with networking opportunities at trade shows and other events, and of course with direct financial support. I join my noble friends Lord Risby and Lord Lang of Monkton in recognising the work done by the Foreign Office to make overseas trade a specific part of its mandate. As well as our ambassadorial consular services, businesses operating abroad will find unprecedented support awaiting them from our embassies and UKTI offices.

Unlike previous Administrations, this Government are proud of the exploits of our business leaders, which are so important. This Government are willing to put them front and centre of our soft-power diplomacy. I have therefore been very pleased to see many British leaders accompany the Prime Minister on his trips abroad, which have been mentioned by both my noble friend Lord Cope and the noble Lord, Lord Hunt of Chesterton. In fact I was on that delegation to China, if that is the one that was being referred to—we did not go to Hong Kong—and I believe that the noble Lord, Lord Hunt, is correct that it was not an Airbus but a Boeing. I inquired as to the choice of transport, particularly the carrier, which was not British Airways, and was told that a tender had been put out and the most cost-effective plane had been selected in order to minimise the cost to UK taxpayers.

[Lord Hunt of Chesterton]

Is this a defence or an attack?

[Lord Leigh of Hurley]

I confess that one of the benefits of the delegation, as the noble Lord, Lord Cope, said, was that nearly all the delegates there were SMEs. Fortunately, it was not an Airbus, because a Boeing has the advantage, particularly on the carrier we were travelling with, of a bar in the centre of the plane. It was a memorable trip, as my noble friend Lord Livingston will recall, if only because virtually all the SMEs on the plane that had signed contracts while we were out there pushed themselves towards the bar in the middle of the flight, to the point where the pilot put on the seatbelt sign, even though there was no turbulence whatever, to get them all back again.

These delegations have a number of important missions, including helping medium-sized businesses that lack the brand value and network of their larger cousins but have growth potential if they can globalise their operations. The Prime Minister’s personal commitment, as my noble friend Lord Risby has said, must be welcomed. It is worth commenting that he has visited 19 out of 20 of the G20 countries—Argentina, understandably, is on hold—and we have seen significant increases in the budget of UKTI, even at a time when many UK government departments have understandably had to cut back. Indeed, the recent spending review at the department for business for 2015-16 established a baseline increase of £70 million a year, with a view to assisting 500 new medium-sized businesses annually. These measures show the priority status that exporters have been afforded under this Government. Whereas the previous Prime Minister led the world in accumulating the biggest budget deficit of any leading economy and discouraging business activity with higher rates of corporation tax, this Government have made the UK a leader in attracting global investment.

I see this in my personal and professional life, acting for SMEs in the UK. There has been a huge pick-up of interest from overseas, particularly from China. This approach is paying dividends in extending the reach of UK companies from domestic or European to truly global. For example, it is relatively easy and straightforward to export to Ireland: it is close and we speak the same language. The real challenge—but also the gain—is in trying to export to the BRIC countries and other emerging economies. In 2008, at £19 billion, the UK exported more than twice as much to Ireland as it did to China. Pleasingly, in the last quarter of 2013, for the first time ever, exports to China finally overtook those to Ireland. The Prime Minister said that he wanted more exports to the BRIC countries and UK business has responded.

This does not mean that the EU is not a very important market: of course it is. For example, it remains very important in my field of activity, financial services. Many international finance companies, from banks to funds to traders, set up in London to access the EU, but it is not perfect. Our success in truly globalising our export market should encourage us to demand some reform in Europe. This means completing the single market in all services. I commend our own commissioner, my noble friend Lord Hill, in his endeavours to deliver a capital markets union. This will help further with the export of UK financial services throughout Europe and bolster our competitive position in this field.

Despite the many advantages referred to of our membership of the EU, we must ensure that British exporters to the EU are not disadvantaged by EU regulation. I am thinking of the vote by the European Parliament Committee on the Internal Market and Consumer Protection to recognise further “EU safety tested” markings. These are yet another burden for manufacturing, particularly European manufacturing. Parochially, I know of one manufacturer who manufactured his product in full compliance with the relevant European standards—which in his case was EN1888—only to discover, when he tried to export his product to France, that the French unilaterally sought to apply their own particular safety standard, which was called an LNE. In the face of that protectionism in the French market, it was essentially impossible for him to export his product to France, despite complying with the EU regulation.

We need London to act as the trading capital of the BRICs and increase our exports to these fast-growing nations still further. With the help of the world’s leading financial services industry, I am confident that we can do so. Closer to home, we need the UK to continue to lead Europe out of its comparative economic malaise and into competitiveness through increased trade. Initiatives such as TTIP—the much hoped for trade agreement between the EU and the US—will be vital in achieving this. I believe that the UK will continue to act as a broker between the US and the EU in facilitating that. I therefore commend my noble friend Lady Wheatcroft for staging this debate today to highlight the importance of exports to the UK economy.