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Trade and Investment for Growth White Paper

Volume 523: debated on Wednesday 9 February 2011

Today I turn to one of the main building blocks of economic recovery—achieving growth through international trade and by attracting inward investment. Britain makes up just 4% of the global economy, and without aligning ourselves to faster growth elsewhere, we cannot hope to prosper. But to do that, we have to do better than in the past. In the past few decades, we have consumed too much and exported too little. While our competitors were sending manufactures across the globe, we were building a property bubble. Now, with Germany exporting more than three times as much as the UK, it is vital to turn the situation round.

We have done better in attracting inward investment. We are one of the top three recipients of foreign investment in the world, and we are home to more European headquarters of overseas companies than all other European countries put together. Inward investors provide not just jobs but 30% of our research and development, but there is no room for complacency in an environment that is increasingly competitive.

The trade and investment for growth White Paper therefore sets out a strategy for creating opportunities, providing the conditions for the private sector growth through trade and investment that will help to rebalance our economy, and securing the benefits of trade and investment openness for the world’s poorest people.

The Government want to focus on small and medium-sized enterprises, which are much less engaged in trade than bigger companies. They have told us that they want to take advantage of the opportunities that exist especially in emerging markets but cannot always access the trade credit insurance or finance needed to take the risk. They have also told us that since the economic crisis, they feel that it has become much harder to get cover from private credit insurers at reasonable rates. The Government will therefore create several new schemes and extend one existing scheme, which will be launched in the coming months.

First, the Department for Business, Innovation and Skills will launch an export enterprise finance guarantee scheme offering export finance valued at up to £1 million for SMEs. The Export Credits Guarantee Department will launch several schemes, including: an export working capital scheme for those who are ineligible for the EEFG scheme, offering export finance of more than £1 million; a bond support scheme under which the Government will share risk with lending banks on the issue of contract bonds; and a foreign exchange credit support scheme, which will support banks offering foreign exchange hedging contracts to SMEs by sharing credit risk. The ECGD will also extend its short-term credit insurance scheme to cover a broader range of exporters, including SMEs. In addition, UK Trade & Investment will increase its focus on emerging markets and on helping SMEs, and launch a new online service offering access to sales leads around the world.

All Ministers have been asked to support our trade diplomacy. I have led, or supported the Prime Minister in, high-level delegations to Brazil, India, China and Russia with business representatives, promoting exports and seeking inward investment. We will be doing more of the same this year and beyond.

However, half our exports are to the EU, and consequently we have a strong interest in ensuring that the EU grows. That makes the completion of the European single market even more vital. Recent analysis suggests that trade between the UK and other EU member states could be as much as 45% below potential, largely because of significant non-tariff barriers. Completion of the single market could translate into 7% additional income per head per UK household. We therefore strongly support efforts to remove barriers to trade, particularly for SMEs, in fields such as e-commerce and low-carbon products, and in professional and business services, for which there are currently an estimated 3,000 regulatory requirements. We will also press for energy and agriculture liberalisation.

At the international level, completing the Doha round is one of our top objectives. Finishing those trade negotiations could deliver a £110 billion boost per year to the global economy. We have spent 10 years negotiating and now need urgent action to agree the key elements of the Doha deal this year, so I am glad that momentum towards a deal seems to be building again. Britain will do its utmost to get the World Trade Organisation past the finishing line this year. Doha is the top priority, but we will also pursue an ambitious programme of EU free trade agreements with our main trading partners, including India, Canada, Singapore and the south American Mercosur countries and, I hope, with Japan following the recent agreement with South Korea.

Finally, the UK is committed to assisting poor countries to take advantage of the opportunities presented by an open global trading system. International trade is one of the most important tools in the fight against poverty and research evidence shows that per capita incomes grow three times faster in countries without trade barriers than in other developing countries. We will therefore ensure that trade is a central theme across our bilateral aid programme, and promote regional integration, notably in Africa through our Africa free trade initiative. Helping the developing world in that way is the right thing to do on moral grounds, and it is in Britain’s economic national interest.

This White Paper sets out an ambitious direction for the UK and will guide the Government’s work on trade and investment. We will implement it vigorously and actively, and I urge British business to seize the opportunities that it will present. In that way, we will all benefit from the vision it sets out: an open trading system and a competitive British economy, driving jobs and growth.

I thank the Secretary of State for sending me a copy of the White Paper earlier today and for notice of his statement. I welcome the broad thrust of the statement so far as it goes, but may I remind him that exports alone will not deliver without a credible plan for growth across our economy? Putting new tyres on the car will not make it perform better if the engine has not been fixed.

We welcome the importance given to exports and export support, and support the increased focus on the major emerging markets such as Brazil, China and India, without neglecting our longer-established markets. We also welcome the commitment to opposing protectionism and promoting free trade. Subject to the detail, we will support the particular measures that the Secretary of State proposes to develop export support for SMEs, although I hope he can give us a timetable for their implementation. I hope the Secretary of State acknowledges that all those measures build on work done by the previous Labour Government.

Like the previous Government, this Government are committed to the completion of the Doha round of global free trade talks. Given the difficulties that those talks have had in the past, can the Secretary of State tell the House what specific new initiatives he will take in the coming year to ensure that talks are completed successfully? His predecessor and my right hon. Friend the former Prime Minister played an active and engaged role in trying to move the WTO towards agreement. What personal role has the Secretary of State played and what commitment has he gained from the Prime Minister about his personal involvement in securing an agreement this year?

Does the Secretary of State accept that the Doha round must foster development, and will he respect and build on the work of his Department and the Department for International Development under the previous Government to ensure that trade agreements support poorer, developing countries?

The White Paper recognises the potential benefits of completing European free trade agreements. What specific new initiatives will the Secretary of State take within the Council of Ministers to get things moving forward? Finally on Europe, what specific measures will he take to broaden and deepen the single market, as the White Paper puts it?

There appear to be some significant problems underlying the White Paper. Can the Secretary of State assure me that the cap of £25 million does not create a gap in export support for mid-range companies? Will he confirm that the UKTI budget will be cut by 19.5% in real terms? Given the expansion of activities in the White Paper, where and how will cuts be made without damaging support for exporters? What role will the science and innovation network play in supporting the export strategy?

Does the Secretary of State recognise that a successful export drive depends fundamentally on having goods and services to sell, and on having the companies that can provide and sell those goods and services? Does he therefore also recognise that the Government’s reckless approach to deficit reduction is damaging the prospects for growth and jobs? Can he tell the House why the strategy for growth has still not been published when he promised it in October? Does he acknowledge that the new director-general of the CBI has now joined the previous director-general in criticising the Government for having no plan for growth? Without a clear vision for the economy and a plan for growth, we will not have enough companies to export or the products to sell.

Will the Secretary of State confirm that pharmaceuticals and the life sciences are one of the knowledge-based industries by which we can hope to earn our way in the world? Last week, Pfizer announced the closure of its Sandwich plant. Is it not a chilling message that one of the world’s leading pharmaceutical companies looked at its global activities and decided that it no longer needed to be in the UK, and that it could afford to the leave the UK outside its global research strategy? How much more investment will we lose before this complacent Government produce a credible plan for growth?

The White Paper says that the Government will invest in UK infrastructure. Will the Secretary of State confirm that the introduction of universal broadband has been delayed by three years, and that there is no credible plan for fast broadband? Does he accept that those failings make the UK a less attractive place for investment by companies that support the digital economy?

Does the Secretary of State recognise that a recent report by Experian and the National Endowment for Science, Technology and the Arts concluded that there are companies with the potential to grow and export in every region of the country and in many different sectors of the economy? Does he recognise that regional development agencies often worked with UKTI to support exporters? He has abolished RDAs, but can he explain why the White Paper contains only one passing mention of regional support for exporters and support for exporters in the regions? How will he ensure that potential exporters get the right support in every part of the country?

The White Paper praises higher education as a gross export earner of £5.3 billion, so why has the Secretary of State supported changes to student visa policies that will do real harm to the country’s seventh biggest export earner and undermine our long-term trade and development interests? The White Paper speaks of investing in science, but does the Secretary of State recognise that with science investment cut in real terms and other countries increasing their science investment, we are in danger of losing world leadership in this area?

I welcome the recent performance of manufacturing exports, which have taken advantage of a competitive pound. Will the Secretary of State confirm that the strength of the manufacturing sector has been supported by the previous Government’s support for science, research and development tax credits and capital allowances, and that—in the worst of the global recession—the scrappage scheme, time to pay and flexible tax credits all helped manufacturers to retain more of their work force? Does he recognise that we now have a unique opportunity to use manufacturing exports to strengthen the supply chain companies and develop the next generation of world-beating export products? What is he doing to ensure that we take advantage of that opportunity?

There is much common sense and continuity in the White Paper and no need for artificial arguments about it, but the Secretary of State must recognise that its impact will be limited without a credible plan for growth.

First, may I respond to the right hon. Gentleman’s positive comments? He is right that, compared with, say, the United States or France, there is a significant degree of consensus about trade policy. Probably one of the best statements on the relationship between trade and globalisation was set out by Clare Short, a few years ago when she was Secretary of State. There is a lot of common ground.

The right hon. Gentleman asked about Pfizer. As it happens, I chaired the task force this morning, which—with the leader of Kent county council and the Minister for Universities and Science—is seeking actively to try to save as many jobs as we can on that site and to mobilise other pharmaceutical companies. Its work is coming along well, but these are early days.

The right hon. Gentleman asked specifically what I have been doing in relation to international trade initiatives. In each of the major BRIC—Brazil, Russia, India and China—countries that I have visited, I have engaged with the Trade Ministers, especially the key ones in India and China, which are critical to the success of the Doha round, and tried to persuade them of the importance of making good offers. We have had useful discussions about that. I have had several meetings with Mr Barnier about how we can progress the single market, and only a week ago I was in extensive discussions with my opposite number from India about the European Union free trade agreement. These are works in progress, but progress is undoubtedly being made.

The right hon. Gentleman asked about some of the concrete measures on trade promotion and resources. He appreciates that export credit guarantees are underwriting bank lending—they are not a cash contribution and there is no resource implication. He asked about timetables, and these schemes will be introduced in the next two to three months on a pilot basis. They are, in fact, imminent.

The right hon. Gentleman rightly mentioned the fact that there is some reduction in the UKTI budget, but he should recall that, under the RDA system that he extols, there was a ludicrous duplication of resources. We had British trade ambassadors from each of the RDAs posted in overseas countries, competing with each other and wasting resources. We will get more from less when it comes to trade promotion.

On the wider issue of the state of the economy, we earlier had an extraordinary display of amnesia from the shadow Chancellor, who forgot his role in the last Government. The shadow Secretary of State now tells us about the decline in manufacturing. He may have forgotten the debate last week when we had to point out to him that the decline in the manufacturing sector in the UK economy from 20% to 12% of GDP was far in excess of any other developed country, and that is the rebalancing problem that we are now trying to address. Of course, trade by itself will not solve the problem—it is 30% of GDP—but it is important, especially for some areas such as the north-east of England. Rebalancing is about manufacturing, exports and private sector investment.

Now that the Secretary of State has been in situ for some time, does he recognise—as we on the Business, Innovation and Skills Committee recognise—that UKTI is a bureaucrat’s vision, not a business man’s vision, evaluates itself on process and not on outcomes, and has a variable performance dependent on the quality of personnel in post? Does he also recognise that not one trade ambassador comes from the entertainment or music industry, which are among the major earners for Britain in the world at large? Will he have a root and branch review of UKTI, using business input, to ensure those outcomes?

The business people whom I meet—and I meet a great many—frequently make a positive assessment of the support that UKTI gives them. There are some criticisms, but not many. To answer the hon. Gentleman’s final point, he will know that Lord Green is now the Trade Minister. He has a business background and is applying precisely the disciplines that the hon. Gentleman feels—and I agree with him—are necessary.

Nothing is more important than creating jobs in the part of north Staffordshire that I represent. Because so many jobs are at risk because of public sector cuts in that area, the statement that the Secretary of State has just made is perhaps the most important statement that we will receive from this Government. Will the right hon. Gentleman work with us to ensure that that trade diplomacy that he mentioned will embrace making the case for investment at every level, including in the new environmental technologies, and the support needed for SMEs? The chamber of commerce in north Staffordshire tells me that the business initiative does not have the funding that it needs.

The hon. Lady is right to say that trade is crucial in her part of the country, and I have had discussions with her and her neighbours about the ceramics industry, which is clearly one of our success stories, and we should promote it. I also met the chairman of her local enterprise partnership, who was a good deal more sanguine about its prospects than she is.

I warmly welcome this statement, particularly the measures for SMEs. The previous Government were very good at helping with weapons and the aerospace industry, but this is one sector that really needed some help. What can my right hon. Friend do to publicise the scheme to ensure that all SMEs that are thinking of exporting can benefit fully from the measures that we are taking today?

I would not completely deprecate efforts to promote the aerospace industry—I am doing the same—but my hon. Friend is right to say that the key message of the statement is about SMEs. Compared with countries such as Germany, the number of our small businesses that export is relatively small, and we have to publicise that help through bodies such as the Federation of Small Businesses and the chambers of commerce, as well as through our website. We will be active in doing that.

As Chair of the Business, Innovation and Skills Committee, I wish to make it clear that previous reports from the Committee are slightly less critical of UKTI than may have been suggested by a Member earlier. I broadly welcome the thrust of the White Paper, especially in connection with export credit finance, which is obviously of crucial importance. It is good that that is being seen to be addressed. The White Paper and the Secretary of State both refer to the potential for further trade with the EU, and the removal of non-tariff barriers will have the potential to boost this country’s export income. Can the Secretary of State be more specific about what policies he will pursue in that area and give us assurances that those will have the support of the European Scrutiny Committee?

Can we have very short questions? There are many Members who wish to contribute, and I want to try to fit everyone in.

As far as the single market is concerned, I meet Mr Barnier regularly, and there is now a real momentum behind trying to implement the Monti report, which sets out how the single market can be deepened. There are key areas where Britain can do well—such as low-carbon products and services in general, where there are enormous obstacles to trade—and we will focus on those.

May I thank my right hon. Friend, on behalf of small and medium-sized enterprises in Stratford-on-Avon, for the White Paper? His focus on exports and tackling some of the problems with the ECGD is absolutely right. I would like to bring to his attention the fact that export finance through banks is under threat from gold-plating by the Financial Services Authority and parts of Basel III. Such finance is a safe way of financing exports for our SMEs, and indeed all our businesses. The failure rate is 0.002%, yet it is in danger of being put in the same bracket as long-term finance, which would act as a disincentive for banks to fund export finance.

As far as the ECGD is concerned, one of the things that we discovered when we investigated this matter is that Britain is far behind countries such as France—which has COFACE and other such agencies—in providing trade finance. That is the gap—the market failure—that we are trying to fill. I hear my hon. Friend’s point about banks in general—a point that the Chancellor dealt with a few moments ago. There is clearly an issue about the extent to which the FSA has overreacted in its interpretation of international rules.

I am sure that the whole House will welcome measures to help small and medium-sized businesses to export more, but how are small businesses helped to export by the abolition of the grants for business investment scheme? The figures from the Secretary of State’s own Department show that this money produced £10 of private sector investment for every £1 of public money spent. The money was directed overwhelmingly at small and medium-sized businesses, and overwhelmingly at manufacturing companies, and it was available only in the assisted areas that the Government say they want to help. Does not the abolition of the scheme show that there is now a widening gulf between the rhetoric about rebalancing the economy and the reality of the policies that the Government are pursuing?

We want to help small businesses, but we intend to do so in a more cost-effective way, and in a more effective way overall. The support for trade finance that I have described is specifically directed at small enterprises. As for the other schemes, such as mentoring, which the right hon. Gentleman will know about through my colleague the Minister of State, Lord Green, we are putting in place a whole series of measures that are focused specifically on the SME community.

I congratulate the Secretary of State on extending the remit of the Export Credits Guarantee Department into small business support, but will he review the department’s performance and structure further? I refer in particular to the fact that 90% of the support that it provides goes to the aerospace industry. That shows a real imbalance, and there are other problems with the functioning of that department too.

I accept the general argument. We accept that the ECGD is an agency of Government that needs reform. It has been heavily constrained in recent years by judicial reviews of some of its export activities. Of course we have to respect the courts, but the ECGD clearly needs to do more and perform a wider range of functions. What we are announcing today for small-scale enterprises is a key step forward.

The latest figures from Her Majesty’s Revenue and Customs indicate that Welsh exports fell by 6.3% in the previous four quarters. Considering that UKTI has no presence in Wales, what is the Secretary of State doing to ensure that my country, traditionally an exporting nation, is at the heart of this strategy?

I did not totally follow the hon. Gentleman’s point about the statistics. Just to go over what the most recent statistics from a couple of days ago tell us, exports actually grew by 6% in the last quarter of last year, compared with the previous quarter. We should not read too much into that, because we are in abnormal conditions, but exports, along with business investment and manufacturing, are now growing. Wales, as a manufacturing and export centre, as he says, should be benefiting from that, and I hope that it will.

The Secretary of State’s statement was strong on specific measures for encouraging trade and exports. However, it was less detailed when it came to inward investment, which is equally important when it comes to creating jobs and growth in the UK. What specific measures is he proposing to boost inward investment into the UK?

It is right to say that inward investment is enormously important. We start from a position of strength, as a major host country for inward investment. One of the specific actions that we are taking is giving the Trade Minister, Lord Green, personal responsibility for developing close relations with our major inward investors, in order to build up the flow of capital into this country.

One way to make our businesses, both large and small, more internationally competitive is to ensure that we have the skilled work force that we need for growth. Does the right hon. Gentleman agree that a vital tool in that is using public procurement, at both local authority and Government level, to increase the number of apprenticeships available? That tool was widely used by the Labour Government, and is successfully used by our European counterparts. Given that my Bill—the Apprenticeships and Skills (Public Procurement Contracts) Bill, which is due to receive its Second Reading this Friday—is supported by the Federation of Small Businesses and the British Chambers of Commerce, will the Secretary of State now lend his support to it?

As it happens, I launched apprenticeship week on Monday, and visited several parts of the country to promote apprenticeships and raise their status. Indeed, Government support has increased, as the hon. Lady knows, with 75,000 new apprenticeships this year. There are good elements in her Bill, and I know that she is talking to the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), who is sitting beside me now, about how we can take those positive elements forward.

I commend the Secretary of State for today’s statement on the White Paper. Last week I visited a company called Davin Optronics in Watford, which employs about 50 people. The company is really keen to expand into exports, yet it does not have the resources to fund a major campaign abroad. Can he assure me, first, that the measures in the White Paper for small businesses will assist them through UKTI, and secondly, that he, one of his colleagues or an official from UKTI will visit the company, help it, and get the publicity that this drive deserves?

I hear many stories of that kind; indeed, I have small businesses in my constituency that are in exactly the same position. If I can meet the company, I shall be happy to do so, and certainly one of my colleagues will. With the additional support that we have given, along with our additional competitiveness through the exchange rate, for example, my hon. Friend will find that large numbers of SMEs will move forward over the next year, and he has identified one such company.

Is the Secretary of State aware that SMEs and exports are the lifeblood of the Northern Ireland economy? Can he tell us whether he has had any discussions with the devolved Governments and the regions? Will there be easy access for companies? We have had a particular difficulty in the past with exports from the food and meat industries. There is also a need to deal with cross-border trade with the Irish Republic, which could be boosted considerably. Will he pay special attention to those issues?

My colleague the Trade Minister, Lord Green, was in Northern Ireland only a few days ago, meeting Bombardier and other key investors. The hon. Gentleman is quite right to stress the importance of trade with the Irish Republic; somebody pointed out to me recently that our trade with Ireland is worth more than our trade with the BRIC countries put together. Clearly we must not forget that.

There are many SMEs, particularly manufacturers, in my constituency that are capable of taking on the export opportunities that my right hon. Friend mentions. Often they do not readily receive the relevant information on how to take up those opportunities. How will the information about those opportunities be disseminated to grass-roots SMEs in constituencies such as mine?

My colleague the Minister of State, Lord Green, is developing a support package for SMEs that involves a much more accessible website that I hope will give the information that such companies require. I totally accept the basic point that, because of a lack of information, there is often a gap between what is available and what is accessed.

Does the Secretary of State share my concern—and, I am sure, that of the right hon. Member for Sheffield, Hallam (Mr Clegg)—at the letter that I received this week from the vice-chancellors of Sheffield university and Sheffield Hallam university that said that the cut in permits for foreign students will cost Sheffield £25 million in the next year? The Secretary of State has been involved in international education; he is an internationalist; he is intellectual. We are putting up the shutters to foreign students in Britain, which is slowing us down and will cost South Yorkshire a lot of money. Can he talk to the monoculturalists in the Tory party and get some more sense on this issue?

I am certainly talking to my colleagues in the Home Office and making exactly the case that the right hon. Gentleman has just made. [Hon. Members: “Oh!”] This is a major export industry—worth over £5 billion, quite apart from the other benefits that we derive from having overseas students—and in the universities there is almost no problem. As he knows, there is an issue with some English language schools, but those schools are also a feeder for students going to university here. It is important that we remain as open as possible, while dealing with the undoubted abuses that occur in some cases.

In this transition year between regional development agencies and local enterprise partnerships, will the Secretary of State ensure that the regions, especially Yorkshire, fully benefit from this excellent White Paper?

Yes; my hon. Friend has raised the wider point about ensuring that the LEPs are as effective as possible. As he will know, the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) has announced that most of Britain, including all our major conurbations, is now covered. I now expect them to get to work, and to address the kind of problems that my hon. Friend has brought to our attention.

Before the statement, I attended an event here in the Commons organised by Heriot-Watt university to highlight the university’s very successful international strategy. The principal pointed out in his speech, however, that the biggest obstacle was the proposed changes in student visas and work permits, which will affect Edinburgh university as well. Those universities, and others, hope that the Secretary of State will be successful in the battle that he is apparently having with the Home Office. This is not just a question of the effect that the changes will have on universities here and now; it is also about the image that this country will have if it sends out an unwelcoming message, as well as the possibility of undermining our export potential. I hope that the Secretary of State will take all these points to the Home Secretary when he has his discussions with her in Cabinet.

The hon. Gentleman makes the same point as his colleague the right hon. Member for Rotherham (Mr MacShane), and I do not think that I need to reply again at length. I totally accept the importance of having a liberal system for the admission of students—subject to the need to deal with abuses.

Food and farming is now the UK’s largest manufacturing sector, and enterprising companies such as Heygates flour in Downham Market are exporting their products to the middle east. I am concerned about the level of regulation, and about whether BIS sees food and farming as a mainstream industry. The industry is often caught up in regulations both from Europe and from the Department for Environment, Food and Rural Affairs. I have worked in international business, selling overseas, and I received a lot of support at that time from embassies and high commissions, under the auspices of the Foreign Office. What is BIS doing to link up with those people who can provide valuable assistance on the ground to people wanting to sell into those markets?

My colleague is right to emphasise the importance of that industry. Food and drink represents more than 10% of the manufacturing sector. On the various trade missions that I have been on, companies in the sector are often at the top of the list in pushing for better access. In the European Union there are many obstacles to trade, both within the Union and across borders. It has a very illiberal and unsatisfactory system for dealing with agriculture, and we want to open it up.

Will the Secretary of State confirm press reports earlier this week that his flagship policy of a national insurance holiday for new start-up businesses outside the south-east is failing? According to the figures only 1,500 businesses have come forward, yet the Government expect 400,000 to do so over the next three years. Does he not consider that a flop?

I do not recognise the hon. Gentleman’s numbers. I get a great deal of feedback, particularly from small companies outside London, telling me that they are benefiting from taking advantage of the national insurance contribution relief. The Chancellor will announce the progress of the scheme in the Budget, and tell the House how he is going to develop it.

May I add my welcome for the focus on SMEs? The Secretary of State is making absolutely the right judgment on this, because they will be the engine of growth and jobs in the economy. Last Friday I visited Moog, a first-class company in my constituency that is involved in advanced manufacturing and a strong exporter of components. As the Secretary of State knows, that is a very important sector. What more can he do to support advanced manufacturing and companies like that?

My diary would be seriously oversubscribed if I offered to visit all the companies that have been mentioned this afternoon, but I am happy to talk to my hon. Friend about the specifics. Indeed, a key element of the growth strategy that the Government are working through relates specifically to the development of advanced manufacturing, and key support for that will be provided by the technology centres, for which we have obtained additional funding, and which will be rolled out over this year.

On a day when the Office for National Statistics has revealed that the UK’s trade deficit widened in December to its highest level since August 2005, and the chief economist of the British Chambers of Commerce has said that

“Britain’s trading position is not improving”,

will the Secretary of State concede that it was a big mistake to slash investment in capital allowances, which help manufacturing exporters?

I do not think that the hon. Gentleman has studied the figures carefully. If he does, he will see that the trade deficit narrowed slightly in the last quarter of last year, as against that quarter in previous years. The figures are not good, and they have not been good for many years. We have had very poor trade performance; that is what I said at the start of my statement. We have a massive legacy of underperformance in exports, and particularly in manufactures, that we have to overcome, and the White Paper represents a clear step in the direction of remedying that problem.

I welcome the Secretary of State’s statement. Does he agree that it is important for UKTI to develop co-ordinated relationships with the new local enterprise partnerships, especially in the black country, in order to ensure that local businesses have proper access to export markets?

Yes, indeed, and that is the case. UKTI will continue to delegate people to work in the regional areas. In the past there has been an enormous amount of duplication and waste, and those people will continue to work in exactly the way that my hon. Friend describes, but more effectively than in the past.

We have just heard that the Secretary of State supports efforts to remove barriers to trade, particularly for commodities such as low-carbon products. Will he therefore update us on when his Department plans to release details of the green investment bank, and how much money will be made available for it?

I gave evidence to the Environmental Audit Committee about 10 days ago on the timing of the green investment bank. As I explained then, the business plan will be available in May. We assume that staff will be hired by the end of this year, and that loans will be made next year. I set out the programme and the road map when I was interrogated by the hon. Lady’s colleagues.

I certainly welcome this statement, but I would like to probe the Secretary of State on the question of the European single market in connection with the ability of small businesses to form alliances and joint ventures with other small businesses in Europe. In addition, I would simply observe that SMEs in my constituency have a more than passing interest in capital allowances.

I continue to hear strong representations about the value of capital allowances from, among others, the Engineering Employers Federation. That is clearly one of the things that the Chancellor will be mulling over before the Budget.

In Stoke-on-Trent we welcome the emphasis on small and medium-sized enterprises and manufacturing exporters, but as my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, there seems to be a dissonance between the rhetoric and the reality. Business Link has announced that it is no longer funding two enterprise agencies in north Staffordshire, Business Initiative and Stafford Enterprise. The local chamber of commerce is very worried about the effect that that will have on local start-ups and their ability to export. There does not seem to be very much joined-up thinking here.

As many people on this side of the House who have run small businesses will know, the problem with Business Link was that it was a very ineffective system of business support. It has now been replaced, and in future small businesses will have access, through mentoring, to other business people, rather than to those who serviced Business Link, which was not a successful scheme.