Leaving the EU: North-East Exports

Iain Wright Excerpts

Tuesday 25th October 2016 Westminster Hall

[The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)]

Thank you, Mr Hollobone. May I start by congratulating the hon. Member for Sedgefield (Phil Wilson) on securing the debate? He has worked extraordinarily hard for his constituency. He did not mention in his speech that he was instrumental in securing the investment from Hitachi in his constituency, which we should all recognise.

It is interesting to speak in a debate such as this. I have to say that I agree with many of the points raised about the debate we had several months ago in the lead-up to the referendum. I think that everybody in this room—with the possible exception of you, Mr Hollobone—was on the same side of the debate on how we should vote in the referendum. It was 58% to leave in the north-east. In my constituency of Wyre Forest, it was 63%, so I sadly failed even more than Opposition Members to secure a remain vote.

I think we are all in agreement that the success of the north-east is entirely relevant to the success of the whole of the UK. We need to work extraordinarily hard to ensure that we get through this process over the next few years and that we are a resilient and strong economic nation afterwards. I will endeavour to address the points raised by hon. Members throughout the course of my speech, but I would like to open by saying a little about the Department for International Trade, in which I am now a Minister, and how we are trying to work with the whole of the UK.

This debate focuses on just one region, but we are representing the whole of the UK, which also involves the devolved Assemblies, so we represent Scotland, Northern Ireland and Wales as well. Irrespective of local votes, we are all Brexiteers together. Our aim is for the UK to be a beacon of open trade for the entire world, with the benefits of that trade to be felt from Bournemouth to Belfast and from Aberystwyth to Aberdeen. That means working with our dedicated regional teams, the devolved Administrations, devolution partners, regional chambers of commerce and local enterprise partnerships to ensure that together we build a strong and resilient economy from the bottom up.

It has been mentioned on a couple of occasions that the Secretary of State was an enthusiastic leaver, but it is worth bearing in mind not only that are we all leavers now, but that Ministers in the Department are balanced. The four Ministers—three in the House of Commons and one in the House of Lords—were on both sides of the debate, and all of us bring a lot of experience and views, giving a balanced view. That is important to remember.

[Mr Iain Wright (Hartlepool) (Lab)]

Given the establishment of the Department for International Trade and the importance of our region to trade performance, what additional capacity will the Minister put into the north-east to ensure that we can boost exports further?

[Mark Garnier]

I hope to be able to answer the hon. Gentleman in the course of my speech, but he can by all means intervene again if I miss his point.

The performance of the north-east is nothing short of exceptional. It is worth bearing in mind that 30 years ago last month, Margaret Thatcher persuaded Nissan that it should come along and assemble the Bluebird kits. That started off as a relatively small investment and has now turned into a phenomenal manufacturing plant. It is one of the premier auto factories not just in the UK but in the world. The region exported approximately £12 billion-worth of goods in the past year, racking up a positive goods trade balance of nearly £3 billion. That is incredibly important for our current account deficit. The region sold more than £1 billion-worth of cars between April and June alone, as well as nearly half a billion pounds of pharmaceutical and medical goods over the same period. Trade with the EU is important for the north-east—no one is questioning that. The single market is a destination for more than 61% of the region’s exports.

We have heard a lot about Nissan in particular. The Secretary of State for Business, Energy and Industrial Strategy has met Nissan and will be meeting Hitachi to try to make sure that the investment that the hon. Member for Sedgefield secured remains in the UK. We are having ongoing dialogue with those large automotive manufacturers. I have met Nissan twice, and my colleagues in BEIS have also met it. We are continuing to make sure we offer it as much assurance about the future as possible.

[Mark Garnier]

We are certainly engaging with them through the local delivery networks of the Department for International Trade, formerly known as UKTI, and through the local chambers of commerce. That is an ongoing process that will continue. The economy of the north-east is so dominated by big manufacturers that if we get that part right, that should encourage a huge number of small manufacturers.

The hon. Lady raises the right point, which is that we cannot simply look at the big manufacturers. We have a very diverse economy and there are around 5 million businesses in the UK, the vast majority of which employ fewer than 10 members of staff, so we do not forget SMEs.

[Mr Iain Wright]

The automotive industry and the train manufacturing sector are crucial to the north-east’s economy, but what other sectors has the Minister identified that really make a difference? I am thinking particularly of the steel, chemical and processing industries, but what other sectors has he identified that should be prioritised?

[Mark Garnier]

The steel industry is in a special position at the moment, as we have discussed in the House over the past few months, for obvious and tragic reasons with the closing down of plants. All sectors are important to the UK economy. We need a diverse economy manufacturing a wide range of products—not just steel but graphene and carbon fibre. Those specialist material industries are also very important.

It is important that over the past 12 months the north-east has sold £4.5 billion of goods to non-EU countries, so it is a region that takes opportunities from the rest of the world. America is behind the Netherlands as the region’s second biggest export destination, not to mention continued significant sales to China and Turkey. There are fantastic local examples of north-east companies finding success beyond the EU. Small companies such as Annie Barr International are delivering vital training courses in China and Hong Kong. Newcastle-based mobile app developers Hedgehog Lab celebrated an amazing 2015, achieving $500,000 of sales in the USA. Those are examples of small businesses that are doing very well.

Our future trading relationship with the EU has yet to be determined, as hon. Members have said, but I will be as clear as possible. When the formal process of exiting the EU has been completed, the sky will not fall on our head. We will continue to trade with the EU. It is our friend, our ally and our trading partner. That will not change. We want to build the strongest possible trading links with our partners on the mainland, which throughout history have brought prosperity to Europe and raised living standards for all Europeans. Trade has always brought us closer together as a continent, fostering a common identity that will never diminish, regardless of whether the UK is in or out of the EU. We want the EU to succeed. It is really important to our country that our nearest neighbours are a success story.

A UK outside the EU can now reset and enhance its trading ties with the rest of the world, which already recognises that products made on these shores are synonymous with heritage, quality and innovation. DIT Ministers are travelling the world, and the extraordinary demand for British brands in places like the far east and America, and across the whole world, is truly remarkable. Let us take the example of cars. Today, a car manufactured in the UK and sold to India would face tariffs of up to 100%. The tariff for selling the same car to Brazil is less at 35% and for China it is 25%. We can do deals with those markets and find opportunities for cheaper tariffs there. A UK in full control of its trading arrangements can start to address the barriers that exist. There is untapped potential in the global economy that the UK is primed to take advantage of.

One or two points were made about delivering a manifesto for leaving. The hon. Member for Sedgefield said that there had been a promise of £350 million a week. He and I remember that that was checked by the UK statistical authority and there were questions about it ever being delivered. Dare I say, Mr Hollobone—I would not want to upset your sensibilities—there was a lot of hype that might be difficult to deliver on, but the Government must deliver the right outcome.

The shadow Minister talked about tariff and non-tariff barriers. Tariffs are probably relatively easy and straightforward to negotiate, because the outcome is numerical. We must be careful about non-tariff barriers, but we are all working extraordinarily carefully in trying to get to the right answer.

We talk about what sort of model we want. One of our problems in this debate is that people try to force the argument into a pre-determined shape: will it be a Swiss model, a Norwegian model or a Turkish model? The answer is that we will try to achieve a British model, which will achieve the best possible outcome that we can imagine. We will not try to do a deal that looks like someone else’s, because we can do our own deal. That is our starting point.

When it comes to the issue of a running commentary, I take a slightly different view. We are all aware of the argument that no one lays all their cards on the table when playing poker—why would they do that? The important point is that we must be extraordinarily careful. We have heard from many people about the importance of businesses not misunderstanding what is going on. They want clarity, but I think it would be more dangerous were we to give the wrong idea about what is happening than no idea. If businesses start chasing false hares, they could head off in the wrong direction, and that would be dangerous, so we must be very careful.

I want to reassure businesses in the north-east and investors around the world that in our future trade negotiations, we will fight to ensure that the UK’s sector strengths, be they automotive, aerospace, professional or financial services, remain as competitive as possible. We will achieve the best deal for the UK. I and my colleagues will continue to speak to businesses and investors, and the Secretary of State will meet big investors in the UK on more occasions.

A thriving north-east is vital to the long-term economic health of the whole country. It is a timely reminder that Britain still makes things the world wants to buy. The British people’s decision to leave the EU does not mean that we will abandon or neglect our manufacturing prowess. We have opportunities. I was on the wrong side of the argument a few months ago, as was everyone else in the Chamber with the exception of you, Mr Hollobone, but that does not stop me being optimistic about the future for Britain. We are a great nation, and we are very enterprising and innovative. A big, economically disruptive event is happening, but I believe that with the Government’s help, when we can provide it, businesses will take advantage of the opportunities.