British Exports

David Mowat Excerpts

Wednesday 8th February 2012 Westminster Hall

[David Rutley]

That is a vital point. I met a friend of mine who is a Chinese speaker and has an MBA. I do not think that she really understood the power that she has at the moment in helping to foster export opportunities and to build relationships. My hon. Friend makes an excellent point. I have to say that, as I think about this issue more and more, I increasingly wonder why our children are learning French at school. [Interruption.] This is not meant to be an opportunity to bash—[Interruption.] I think that the debate should be called to order, Mr Turner.

[David Mowat (Warrington South) (Con)]

I can assure my hon. Friend that I have read his article in The Daily Telegraph, as has at least one of my constituents, so that is half a dozen of us in Cheshire. The question that interests me and that I would like to ask him is this. We talk about France and Italy. Both France and Italy export more per head worldwide and to the BRIC countries—Brazil, Russia, India and China—than we do, and they are doing that at a time when our exchange rate has depreciated by about one quarter and the Italian exchange rate has apparently been pegged to the euro and therefore is too high. Is there not an opportunity—the Minister might also wish to respond to this—for us to think as a country about what the Italians do in this regard that we do not?

[David Rutley]

It is an important point that we should learn from our international competitors and look at their success. We have been too complacent. We think that historical ties should automatically bring business to us. Well, I think that we are waking up to the fact that that is not the case any more—as we see—and we should not rely on those historical links. I think that we are too lazy. I can just about speak English and have a conversational understanding of Danish. As I was about to explain when I was so rudely interrupted by my hon. Friends, it is vital that more of our children learn Chinese at school. That has to happen.

I shall finish my speech shortly so that many of the hon. Members present can speak, because I know that they are enthusiastic to do so. We also need big businesses to want to include SMEs in their trade delegations. This is not only about what Government can do. Big businesses have to wake up and bring their supply chain in when they go on trade delegations to China or India. Helping to increase the international attitude of SMEs is vital.

--- Later in debate ---

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Turner. This debate is important, and I congratulate the hon. Member for Macclesfield (David Rutley). I have a lot of affection for Macclesfield. My big hero is Ian Curtis of the band Joy Division, who lived, died and is buried in Macclesfield. I also congratulate the Minister on his new position. I wish him well in his role. Given the turnover of Liberal Democrat Ministers, I am confident that he will be Secretary of State by Christmas.

Today’s debate has shown that there are huge opportunities for British export, but that we do not tap into our full potential. The world’s economy is expected to double in size by 2050. Much of this debate has focused on BRIC countries. There is some scope to expand our opportunities into BRIC countries, especially as China moves from an export-led production and manufacturing model towards internal domestic consumption, but I think that the second tier—the N11 or next 11 countries such as Indonesia, Turkey, South Korea, Nigeria and Vietnam—are exactly where we need to focus. I agree with the hon. Member for Penrith and The Border (Rory Stewart) that we have often missed the boat. We need to be at the forefront of trade with N11 countries.

The UK has world-class sectors. Our automotive sector, which has been mentioned, contributes about £40 billion of turnover, and 80% of its production is exported. The oil and gas sector, which is strong in my area, exports about £32 billion of goods, services and project management skills. Just this morning, I was at a breakfast meeting with ADS. The UK aerospace, defence and security sector exports about 70% of its output, or about £23 billion of products. The quality, reliability and innovation of those products are seen throughout the world, and we should be proud of them.

However, this is not just about traditional manufacturing sectors. The UK video games and interactive entertainment sector is worth £3 billion to the national economy at the moment, and global demand is expected to rise by about 10% year on year. We lead the world in that sector. “Batman: Arkham City”, produced by Rocksteady Studios in north London, sold 2 million copies in its first week of release. No CD or record—not even by Joy Division—has ever achieved that. We should be exploiting it as much as possible.

We have much to be proud of, but we cannot be complacent in this modern, competitive world. We cannot say that our exports have performed to their full potential in the post-war era. Given the intense competition of this arms race—I do not think that that is too strong a term, considering the issue’s importance and intensity—Britain needs to compete with optimum efficiency.

I agree with the CBI when it says:

“We are not alone in seeking growth through exports—other advanced economies are facing similar constraints and are looking to boost their export performance. We cannot spend another decade simply playing catch-up: we need to be bigger and bolder in our ambitions.”

The CBI concludes:

“We are not being ambitious enough with our choice of markets and our decline in goods exports is unsustainable if we want to lead an export-orientated economic recovery.”

It has been mentioned that the UK is far too dependent on traditional, slow-growing economies. Some two-thirds of all UK exports go to the US and the EU, but in the next decade, those markets will probably not grow at all. There has been much talk of balancing the economy. I hope that the House would agree that it is necessary to rebalance trade policy towards new and emerging companies.

I stress that exports and trade policy do not operate in a domestic or an international vacuum. We cannot consider exports and trade performance in isolation from the rest of Government policy. I urge the Government to implement an active, co-ordinated industrial strategy. I fear that we are a long way from that at the moment, but everything that the Government do must be considered in terms of its impact on our trade performance.

The Government’s economic policy is having an effect on business confidence and growth. The business confidence index published this week shows that confidence in negative territory. By all accounts, we are back in official recession. Turnover is depressed, there are no export growth areas and exports are not bouncing to take up the slack left by subdued domestic demand. I hope that the Government will address that.

[David Mowat]

The shadow Minister is discussing the present lack of industrial policy. In the decade between 2000 and 2010, we went from being the fifth biggest exporter in the world to being the 13th, way behind countries such as Italy. In his judgment, why did that happen?

[Mr Wright]

That is a consequence of the world growing in different ways and a symptom of the long-term decline in our export performance. As I said, we need to make a concerted effort to do something about it. Many of the invisibles kept up well during that decade and levels stayed similar. However, the thrust of my argument is that we need to raise our game.

Every Minister—not just Business Ministers—and every aspect of Whitehall should be charged with promoting British exports, but all too often, policies are not joined up. The immigration cap indicates that Britain does not want to act as a beacon for the world’s best and brightest, and there is a perception among foreign businesses that it will act as a brake on export growth.

Aviation policy was mentioned. A recent report suggests that a lack of direct flights from the UK to emerging markets might be costing our economy £1.2 billion a year in lost trade. Firms naturally trade where there are good and co-ordinated transport links. In my area of the north-east, the Emirates service between Newcastle and Dubai has tripled trade between the two areas in the four years since it started. The hon. Member for Macclesfield mentioned Chengdu. There are no direct flights from the UK to Chengdu, but there should be. British Airways does not run a service from the UK to Seoul in South Korea, although I admit that other carriers do. The Government should work closely with airlines to address that.

I turn to last week’s disappointing announcement that the Indian Government might place an order for fighter jets with French manufacturer Dassault, rather than with Eurofighter Typhoon, in which the British BAE Systems plays a huge part. The Prime Minister paid a lot of political capital with regard to that. The Opposition do not want to do anything to compromise the deal. We will support the Government in ensuring that Britain can be successful, and we think that there is still considerable scope to succeed, but I hope that lessons are being learned within the Government. Frankly, as has been touched on in this debate, the Prime Minister jetting off for a one-off PR stunt is no substitute for deep and meaningful Government-to-Government relations.

The French are particularly adept at this, and President Sarkozy’s courting over many months of Prime Minister Singh seems to have reaped rewards. Will the Minister outline the steps that are being taken to ensure that the Eurofighter stays in the game? On a wider point, what will the Government do differently to ensure more meaningful and therefore more successful contact to secure trade for Britain?

On UK Trade & Investment, I do not want to focus on cuts, but the context is important. UKTI’s budget over the next four years has been cut by 17%. In contrast, Ubifrance’s budget saw an increase of 14.2% in 2011, while that of Germany Trade & Invest increased by 10%. The Minister, fresh with his red box, will no doubt spout the lines that tough choices need to be made and that austerity is required to clean up the mess that we left behind, but does he really believe that reductions to this country’s foreign trade organisation, at a time of acute global competitiveness and when our main competitors are increasing their budgets, are sensible and will not hurt Britain’s export drive?

In the time remaining to me, I want to touch briefly on one of the key barriers to trade, particularly for small and medium-sized enterprises, namely access to finance. Will the Minister update us on progress made on the actions outlined in the plan for growth, which was published almost a year ago? How many SMEs have been helped as part of the UKTI’s passport to export initiative? How many firms have taken advantage of the export enterprise finance guarantee? The plan for growth produced three new products designed to mitigate the risks for exporters and potential exporters. How many have taken that up?

Britain has a long history of trade across the globe over many centuries. I liked what the hon. Member for Penrith and The Border (Rory Stewart) said about the need to look not to our Victorian past, but to think further back to our buccaneering in Elizabethan times. We need to address the intense competition. I would hate to see our successors in 50 years’ time lamenting the failed and missed opportunities of the first half of the 21st century in relation to the expanding global economy. The Minister is fresh in office and could make his mark by ensuring a competitive and co-ordinated policy across the Government and with business, so that we can sell British goods and services across the world, thereby creating jobs and wealth for this country.