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My Lords, I thank all speakers for a very interesting and informative debate. It has been very wide-ranging and has drawn on history as well as current practice. That is all thanks to the noble Baroness, Lady Wheatcroft, who tabled the debate. We are very grateful to her for that.
As other noble Lords have said, she has spoken in many economic debates in your Lordships’ House. I am sure that I am not alone in enjoying the way that she smiles as she damns with faint praise.
The title of the debate is intriguing. We are asked in this debate to “take note” of the Government’s support for British exports—not to judge it, to praise it or to revile it, just to note it. That is obviously easy to do. I noticed a few criticisms in the noble Baroness’s speech. I thought she gave the Government a bare pass mark on progress so far and particularly enjoyed her little riff on the difficulties that SMEs must have in accessing the UKTI and UKEF websites. We have heard that before from the noble Lord, Lord Leigh of Hurley, who indulged us with the attempts that he has made to try to get down to any sensible source of finance for these areas. We are aware of that. The noble Baroness picked up on it, and I hope it will also be picked up by the Minister in his response. In the last quarter of her speech she was a bit critical about some other areas of activity, including the impenetrable way that we report our trade statistics, which must make this very difficult. Handbags may not be the only issue about which we have to get further and better information before we can understand where that trade is going.
The noble Baroness was right to pick up on the fact that many Governments across the world support exports, including that of the United States of America. Why are our Government not doing more than they currently are doing? Why are they not picking up that special tax deductions and financial incentives are available in some of our competitor countries? Like many noble Lords, she also picked up on the visa problems in India, China and many other countries, and on this absurd proposal to require our overseas students to go home as soon as they graduate, which is doing so much damage across the world.
I also welcome the noble Lord, Lord Livingston, back to the House. He is a rare but very welcome visitor, but that is of course because he is doing such good work outside the House. We pay tribute to that—not only to him but to his team of trade envoys. We have heard a bit about them today, and they are also doing great work.
We on this side of the House of course accept that improving trade will be vital to growing the UK in the coming decade. Boosting exports must be a national mission and we must support the Government in their work. The world is changing faster than we can comprehend, with global economic forces moving south and east. This is creating huge opportunities in a world where, as the noble Baroness, Lady Wheatcroft, said, the global middle class is expected to treble to some 5 billion people in the next two decades, offering huge opportunities.
The 2008-09 crash exposed long-standing structural problems in our economy, which was unbalanced by sector and by region and short-termist in its corporate culture, leading to low levels of business investment and low productivity. It had a dysfunctional finance system at its heart and a stubborn and increasing trade deficit, which many noble Lords have mentioned. Although some growth has finally arrived, which is welcome, it is not the balanced and sustainable growth that we need. Prices are still rising faster than wages and the continuing cost of living crisis for many means that individuals are, on average, £1,600 a year worse off compared with 2010. A “business as usual” recovery is not good enough. To set the foundations for future success, we need to take a different approach.
We on this side have a long-term plan to earn and grow our way to higher living standards. Our goal is a high-productivity, high-skilled, innovation-led economy. To get there, we need more British-based businesses creating good jobs, investing, innovating and, of course, exporting. Our plans include radically reforming vocational education and apprenticeships by putting employers in the driving seat, creating a higher-skilled workforce with greater foreign language skills, driving up productivity and underpinning higher wages. We plan to support lending to businesses by creating a proper, independent British investment bank, and a network of regional banks with a responsibility to boost lending in their areas. We plan to support green growth by backing the 2030 decarbonisation target and giving the Green Investment Bank borrowing powers. We plan to establish a small business administration to champion small business at the heart of government. We plan to devolve powers to cities and regions to boost growth and rebalance the economy, allowing local knowledge to solve local problems, and to encourage a longer-term decision-making culture in business and government, through rules and incentives for business that reward a longer-term focus and an ambitious industrial strategy to support long-term growth. However, this debate is focused on exports. I will concentrate on that for the last part of my speech.
The noble Lord, Lord Lang, in a good speech, warned us about relying on short-term statistics, but the news is not good. The headline news from the Office for National Statistics, in its latest report, is that the value of goods exported is the lowest since October 2010, while the goods deficit—excluding oil and items such as precious stones and aircraft—has widened from £8 billion to £8.5 billion. For these statistics to improve, Britain’s small and, in particular, medium-sized businesses, which are the right focus for this activity, will need to up their game on exports. They will look to government for that support, and key to that is ensuring that they have access to the finance they need to export. That is why the performance of the Government’s two flagship export schemes—the export refinancing scheme and the direct lending scheme—are crucial.
Last month, the ONS said that UK exports have “remained largely flat” in the last four years. Last month, it downgraded the UK’s trade forecast for this year, last year and each of the next four years. Despite what the noble Baroness, Lady Wheatcroft, feared we might say about this, we support the ambition behind the Prime Minister’s suggestion that exports need to go up to perhaps £1 trillion a year—what we complain about is the lack of success in achieving that. I think she might share a little of that. Where are we on these plans? Can the Minister in his response give us a sighting shot of where he thinks the target will be? I think it will be less than £1 trillion—I may bet on that, although I am not a betting person—but it is also important to understand whether we will get the 100,000 new firms involved. I would be grateful for his comments on that. It has also been reported recently that the £5 billion export refinancing facility, launched two years ago, has still not helped a single business. Can the Minister explain where we are on that?
We have fantastic, innovative business groups in our country, and many important advantages on which we can build up our exports. We have a strong British brand; our language, our legal system, and our time zone work in our favour. As was mentioned, we should be drawing on the rich cultural tapestry of Britain, building on the links with our diaspora communities to strengthen trade links with emerging markets and exploiting our potential. To grasp these opportunities, the Government need to act and support them. Governments can help by doing what, left to their own devices, markets cannot. Markets cannot set strategic direction; government can. The automotive industries mentioned earlier are a good example of that.
Early stage, fundamental research is often too risky for businesses. It is important to recognise the role that the US Government played in financing and operating many of the innovations behind the digital economy. Silicon Valley venture capitalists took the plaudits, but they were standing on the shoulders of federal government investment and support over many years.
Taxation has a role to play. The re-emergence of the British film industry was largely due to the tax breaks which the previous Government introduced. To their credit, this Government have continued and extended them, so there is now good support for cultural and creative industries in high-end TV drama, animation and live theatre. We need more, perhaps in the craft, design and related sectors, but this has been a great start.
Government can regulate to improve things. Government can also foster clusters and other institutions that help pre-market co-ordination and support. When all this comes together, the Government can put it into a package. I hope the Minister can reassure us that the Government are on track on some of the issues that have been raised during this debate. These include the Select Committee report, Roads to Success, as mentioned by one noble Lord, and the NAO criticism about the lack of clarity and focus between BIS and HMT. There is also the potential failure of the export funding schemes and the real concern about the way in which UKTI and UK Export Finance are helping small and medium-sized businesses. Perhaps he could make particular reference to the correspondence we have exchanged about the cuts in the support for SME attendance at trade shows. We also heard worries about TTIP, and we need to think about how we are going to gather all this together in a policy. I look forward to hearing what the noble Lord has to say.