UK Industry: International Competitiveness — Motion to Take Note

Part of the debate – in the House of Lords at 1:45 pm on 5th July 2012.

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Photo of Lord Selsdon Lord Selsdon Conservative 1:45 pm, 5th July 2012

My Lords, I am grateful to my noble friend Lord Jenkin of Roding, who has an ability to set the scene; it makes it very difficult for those who follow. What I have just heard from my noble friend is almost a layout of what the immigrants should learn if they are to come to the United Kingdom.

I shall take as a theme, "We have been there before. It has already happened, so why are we repeating ourselves?". When I have nothing better to do, I write White Papers about things that I think should happen. The noble Lord, Lord Stevenson of Balmacara, a fellow Scot, will remember what we were taught in early days: if a man had no estate, there were only three things that he could do. First, he could help other people to do it, in which case he joined the professions. Now, though, for all the professions-accountancy, law-there is doom and gloom, because they find reasons why you should not do something. Or he could take the credit for those who did it, in which case he went into politics. However, if you were a real man, you went out and did it. The noble Lord was sitting as a lone ranger on his Benches. I am not saying that there is no interest on his side-I used the past tense.

I will go back and say, "We've been there before". I take as my theme today, "Yesterday's story". If we go back into the past, this was the sort of phrase that was given as an instruction to government-in this case, a guide for the Board of Trade, saying that it should,

"take into their consideration, the true causes of the decay of trade and scarcity of coyne ... and to consult the means for the removing of these inconveniences".

That was in 1621. I can give you one for every year; there is a wonderful book on the history of the Board of Trade. It has gone out of print and I have just rewritten it. I hope that I can give you others.

What successive Governments did was to forget the past. They went and got rid of the Board of Trade and put in place something called BIS-the sort of thing that dogs do before breakfast. No one understood, and the word "business" was divisive. I chaired various trade bodies and went on trade missions, always to places where no one else wanted to go. That was usually at the instigation of two great Leaders of this House, Lord Jellicoe and Lord Shackleton.

Lord Jellicoe said one day, "My dear chap, you ought to do a bit more to help the House. I'm going to put you on Sub-Committee B on the European Union". I said, "What's that?" He said, "Liven it up a bit-it's meant to do something about trade". There were only three members of that committee: Lord Dennis, myself, and I have forgotten the other one. We went to a series of meetings and we were not sure what we were talking about. We really thought that it ought to be about trade. Then one day we had a visit from the Chancellor of the Exchequer, the noble Lord, Lord Lawson. He sat with these distinguished people; the committee was called the Aldington Committee. We asked him a few questions, although I personally was never able to ask a question because I did not like to intervene among my elders and betters. When we were having discussions about money supply, which seemed to be more important than trade, Lord Amery asked for an explanation. The Chancellor at that time said, "I'm not quite sure if I can get up to your level". He made an explanation that led to the famous remark from Lord Amery, "I am very grateful, Chancellor, for your explanation. I am most confused but very happy to be more confused at a much higher level".

Today we are talking about the same sorts of problems: money or trading finance. We have forgotten some of the basic principles. You see, we have a trade deficit in visibles, or in manufactures, of £100 billion, rising at 10% per annum. I always take everything back to when my great-uncle Stafford Cripps devalued the pound in 1948; I have a schedule that runs through that. We have a deficit, and we finance it in part with what I call "invisibles". Your Lordships may remember that Sir Cyril Kleinwort created the Committee on Invisible Exports that used to wander down from the City to try to lobby their Lordships and others in order to get us to do something to support trade. That soon disappeared, but the invisible surplus is not enough to offset the deficit, and it is getting worse.

We then went into the EU, your Lordships may remember. I was treasurer of the Conservative Europe Group because no one else would take the job, and together with the noble Lord, Lord MacGregor, we had to raise money because the Labour Party did not want to go into Europe at all; they were totally against it. We had a vote in favour here in your Lordships' House-very nearly a greater vote than for the abolition of hanging-and we went into Europe, as though that would be the be-all and end-all.

I do not believe in exports and imports; I just call it trade. You have a good trade or a bad one, but you trade with anyone who is willing or able to pay, provided that you like them. As soon as you would use the word "business", the Foreign Office runs away and says that it cannot be seen with a businessman, a box-wallah. The same went for Ministers at home because it seemed wrong to be looking at trade in this sort of way.

When we look around the world today, we find that our biggest single deficit is with the EU. The phrase that we adopted in those early days was, "Britain in Europe: it's our business to be there". It was not about a political wish or the controls that would come later, it was simply about business and trade. So we have a thumping great deficit with all the EU countries except Ireland, where we have a surplus. However, some of that surplus comes from containers that arrive in England and then are shipped across to Ireland where the added value goes, because the Irish would not have the money to pay for the amount of trade that we do with them.

That is all just to set a bit of background. I feel that we should go back into the past and look at what the Board of Trade was established for, along with some of the roles played by your Lordships, a subject that has been raised away already. One of the key elements of trade-good trade rather than bad-is relationships. This has often been a difficult problem for those who go on all-party group visits, missions and so on, when you wish to discuss the concept of business. Your Lordships' House, with its 800 Members, has a relationship with every single quarter of the world, and we are still respected. My noble friend Lord Green knows that well. For some time I was president of the British Exporters Association, although that now consists almost entirely of financial institutions-there are hardly any manufacturers left.

If we are looking at where we end up in future-we have raised both the Commonwealth and new markets-the financing of trade has always been one of our skills and it was one of my own responsibilities. At one time it was not necessary to get government guarantees for anything if you had reciprocal trade. We would often go out and sign individual reciprocal trade agreements with any country where you could buy something and then finance it by selling. I will use the simple example of Cuba. We did not have a good relationship with Cuba, but Lord Walston did. He was a Labour Peer and a very good friend of mine; he was not allowed to go to Cuba officially but was allowed by the Foreign Office to visit it on his way to his plantations in another part of the Caribbean. He knew Castro well and we had a few discussions. We said, "What can you sell?". Naturally, we were all thinking of cigars or rum, and had forgotten that Bacardi was originally a Cuban product. They said, "We do very good grapefruits". I sighed, "Oh God". Anyway, I was lucky enough to know someone at Marks and Spencer, so I picked up the phone to them and said, "The Cubans do a rather funny sort of pink grapefruit. Will you buy some?". They said, "Yes, why not? Tell them to send a shipload". I turned to the Minister and said, "Could we send a shipload of pink grapefruit?". That all started with a simple trade.

In those days it was quite difficult when we did not have good diplomatic relations. I found this when I chaired the Middle East trade committee. I could go to Iran, Iraq or any one of the Arab or Middle Eastern countries totally free and unencumbered, because I would be invited. You did not need security; indeed, often it was dangerous if you got together with your own embassy. You would be told, "No, diplomatic relations are not good enough at the moment to be able to prosecute trade". I never understood that word "prosecution"; it has something to do with following on, but it always seemed a rather negative phrase.

What I am saying quietly here is that we within your Lordships' House should give consideration again to all those bodies-the British Overseas Trade Board, which was chaired by Lord Jellicoe, the East European Trade Council, which was chaired by Lord Shackleton, and all the others-where individuals and their friends had relationships, often historic, with all these countries, and that could run across the Francophone territories and all the Commonwealth. As my noble friend Lord Sheikh has said, the Commonwealth is a great opportunity.

I have no fears. I just feel that we have subsumed ourselves in the most complex bureaucracy around. Ministers are not really allowed to do business or to sell, although they can come and promote and talk. If your Lordships' House can identify those people who might be willing to help, then I feel that we have a great sales force.