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Manufactured Goods

Volume 165: debated on Wednesday 17 January 1990

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7.

To ask the Secretary of State for Trade and Industry what was the increase in import penetration of manufactured goods from 1979 until the most recent date for which figures are available.

Import penetration in manufacturing industry rose from 27 per cent. in 1979 to 36 per cent. in the year ending March 1989.

Is it not a disgraceful record for the Government of the world's first industrial power to turn the manufacturing trade surplus of £1 billion achieved under the previous Labour Government into a £20 billion deficit this year? Although the service sector is important, the Government must understand that we cannot rely on it alone. We should follow the example set by the Germans and Japanese, who plan for, support and invest in their manufacturing industries. Why have the Government failed so abysmally?

The hon. Gentleman does not appreciate that although our commitment to the European Economic Community means rising import penetration, it means also an increasing proportion of exports. Both have risen because of increasing European and worldwide trading. Six Community countries have a higher import penetration than the United Kingdom, but that does not mean that those countries or Britain have weak economies. It means instead that we are benefiting from a more open and competitive market, that our customers have greater choice, and that British businesses have more discretion in whether to produce for the home or export markets. The important point is that unemployment has fallen dramatically and is well below the EC average—it is particularly low in the hon. Gentleman's constituency. Living standards have reached new records, and consumers have unprecedented choice.

Will my hon. Friend remind the Opposition that manufacturing exports have increased by 40 per cent. since 1986, whereas manufacturing output fell under the previous Labour Government, as did our share of exports? Does my hon. Friend agree that protectionism is no way to make British industry more efficient and competitive? Will he commit himself to dismantling the pernicious gentlemen's agreement that limits car imports, and so put timely pressure on the unions at Ford?

My hon. Friend is right to say that the open trading system offers more prosperity than restrictions—as the events unfolding daily in eastern Europe show. Car imports are a matter for EC deliberation and not specifically for the British Government, and they will be debated within the Community's Councils.

The Minister will be aware that one way of overcoming high import penetration is to assist British regional development in areas where unemployment is high and incomes are low—such as my own. Will he study the example of the Bretons, who tackled the problem very successfully? They enjoy a thriving export business, but only on the basis of a regional development fund and agency.

Our policies have been much more successful in reducing unemployment than those of many other European countries. It is well below the EC average as a consequence of our open market and competitive policies. As the hon. Gentleman knows, we already have a regional policy. The main contributors to improved prosperity are an open trading system and sound economic policies that allow rapid growth of the sort seen in this country in recent years.

Will my hon. Friend give more help to smaller companies, many of which could win exports if given greater encouragement through the British Overseas Trade Board and the commercial departments of British embassies? Will he also examine the potential of eastern Europe, and ascertain whether our commercial departments there could be expanded to help British exporters, as it is difficult to export to the East at present?

I am grateful to my hon. Friend for raising this important subject. There are a number of initiatives to encourage exports. The DTI has an export initiative for smaller companies, which should get in touch with regional offices if they would like help.

I and my right hon. and hon. Friends are active in taking companies and industrialists to see the opportunities in eastern Europe. Extensive briefing is available from our embassies and from the DTI in London and the regional offices. There are enormous opportunities in eastern Europe for British business, and we would welcome companies taking up our offer of advice and help here and in the embassies abroad.