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Volume 755: debated on Monday 21 July 2014


Asked by

To ask Her Majesty’s Government what assessment they have made of the manufacturing output data for the year to April 2014; and what steps they are taking to encourage more exports by United Kingdom manufacturers.

My Lords, manufacturing output for the year to April 2014 rose by 4.4%, the fastest rise since 2011. Industrial production rose by 3% over the same period. Over the past year UKTI has assisted more than 40,000 firms to export, winning £22.6 billion of new business for manufacturers. Since 2011, UKTI has supported some £10 billion of major project wins, each in excess of £500 million. In 2013, UKTI secured £13 billion of defence and security exports.

I thank the Minister for that very encouraging reply. Would he agree with me that the manufacturing sector is probably the most important in leading Britain’s growth, and the most optimistic in terms of our growth in exports and, therefore, righting the balance of payments?

I agree with my noble friend, and we are proud of it. We are making things again in the United Kingdom. This is excellent news for the future security of skilled workers and for our economy. Manufacturing is one of the two sectors able to drive productivity growth across the economy through cross-sectoral supply chain linkages. That means potential economic benefits at every stage of the manufacture of a product, from the beginning of an idea to its development and production, through the supply chain to eventual consumer use. The Government are proud of the steps we have taken to support and advise the manufacturing sector. However, we know there is more we need to do.

My Lords, one of the greatest successes we have had is defence manufacturing exports. Is the Minister not concerned that, on an Apache order, we are going for a non-competitive purchase of something from a foreign nation, rather than competing and giving a British firm a chance to do that work?

My Lords, the department, through UKTI, is pursuing actively the sale of more defence equipment abroad but, when it comes to buying equipment for UK security, it is up to the Ministry of Defence to make those decisions. There must have been a business case to secure defence equipment from abroad.

My Lords, we are delighted with the recent visit of George Osborne, the Chancellor of the Exchequer, and the former Foreign Secretary, William Hague, to India. There are further visits planned by Nick Clegg and Vince Cable. How are we monitoring the situation relating to British exports to that country? What has been the impact of those discussions so far?

My Lords, we look at emerging markets very carefully, particularly the BRIC markets and especially India and China. In fact, both the Chancellor and the then Foreign Secretary were in India meeting the new Prime Minister, Narendra Modi, to see what we can do to export more to India. Our trade with India is to the tune of about £17 billion now in a two-way bilateral relationship. This is the area we want to increase year after year. Our target for 2015 is £25 billion.

My Lords, can the Minister confirm it is still the Government’s intention to double exports to £1 trillion by 2020? Given that, can he assess the contribution to that target that is going to be made by the £5 billion export refinancing scheme, which was launched in July 2012 and is yet to help a single company, and the £1.5 billion direct lending scheme launched seven months ago, which has received only one application?

My Lords, it is true that the Government’s target is to achieve the £1 trillion export level by 2020. That is quite a challenging and ambitious target, and we will continue to work towards it. We are developing an economic road map to the £1 trillion target and we will draw on this to inform our priorities for the future. We are also investing huge sums of money in UKTI, which is actively pursuing measures to make sure that British companies are able to export abroad. Most importantly, the recent initiative of onshoring—bringing production back from other countries to the UK—will help our export ambition.

My Lords, does the noble Lord agree that, in view of his earlier answer, we should therefore concentrate our efforts on the Commonwealth, the Anglosphere and the markets of the future, and stop wasting so much of our energy on that “Titanic” which is the European Union?

My Lords, the Commonwealth is our family, and we are very keen to see more business done in Commonwealth countries—hence the Government have appointed ambassadors to some of them to see how we can increase trade with them.

My Lords, many years ago when the Minister’s noble friend Lord Young of Graffham was standing at the Dispatch Box, I expressed my concern about our loss of manufacturing industry and was told that it did not matter because the service industries—and, in particular, the services provided by the City—would support the United Kingdom. Have the Government now changed their view?

My Lords, the noble Countess raises a very important question. We have not changed our view but we have changed our direction. Manufacturing accounts for 10% of our economy and generates 54% of our exports, so we are encouraging more manufacturing in the UK and helping manufacturers to manufacture more so that they can export more. Equally, our financial services are important, and they also generate quite a large amount of our export trade.

My Lords, is my noble friend aware that the CBI and the chambers of commerce have welcomed enormously the recent changes to export finance, which undoubtedly help us to move towards this challenging target? However, one area where still nothing seems to have changed, as I have raised before, is the promotional material behind the Queen’s award for exports. Can my noble friend have a look at that situation to see whether we can bring it up to date?

Yes, my Lords, the Government are encouraging more exports through UKTI. The promotional material for the Queen’s award for exports is an issue that we will certainly look into.

My Lords, will the Minister reflect that he gave a rather inadequate answer to the question asked by the noble Lord, Lord Pearson of Rannoch, who made a nonsensical suggestion about our relations with the European Union? Do not the Government, as the basis of their negotiation for improvement in our relationships, believe that we should not ignore nonsenses but stand up and attack them? Our future is quite irrevocably linked to developments in the European Union, and I do not think that we do ourselves any favours by ignoring the noble Lord, Lord Pearson, when he suggests otherwise.

My Lords, when it comes to business, we need Europe and Europe needs us—in fact, 45% of our exports are to the European Union. We want to continue making sure that we work with Europe well, but we need a reformed European Union and a 21st-century European Union.