UK Trade and Investment Strategy — [Philip Davies in the Chair]

– in Westminster Hall at 9:30 am on 23rd July 2019.

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Photo of Philip Davies Philip Davies Conservative, Shipley 9:30 am, 23rd July 2019

Before I call Julia Lopez to move the motion, the eagle-eyed among you may have noticed that I have decided that jackets may be removed for this debate.

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

I beg to move,

That this House
has considered UK trade and investment strategy.

It is a pleasure to serve under your chairmanship, Mr Davies, and to see some colleagues here; I must admit that, with all the anticipation of the morning, I was expecting to see tumbleweed rather than MPs in the Chamber.

By the time the morning is out, we will know who has the honour of being our next Prime Minister. The challenges ahead of that person will be profound, but so will the opportunities to reshape this great nation. Precisely 100 days will lie ahead of them until 31 October, when the extension to our EU membership expires. Each of those days will have to be used to prepare the UK’s people and businesses for any eventuality and to move forward with confidence, intent and gritty resolve into our next chapter. In so doing, we must articulate a clear vision of our place in the world, at the heart of which must be both a coherent global trading strategy and a package of measures that demonstrate to international investors our determination to be one of the most dynamic, stable, open and innovative democracies in the world.

I intend to use the debate to press the Minister on what he sees as the Department for International Trade’s role in those 100 days; to present some thoughts about our trade and investment strategy from the two years I have served on the International Trade Committee; and to raise the profile of DIT as it prepares to take on a more central role after three years in the back room, showing how the right trade and investment strategy can deliver prosperity to the people we represent.

Formed straight after the referendum as one of the new Brexit Departments, DIT has faced the ongoing challenge of being excluded from the Brexit process, which has been driven by the Department for Exiting the European Union, the Cabinet Office and No. 10, leaving it vulnerable to the decisions and delays of others. That has stifled proper debate about the extent to which any terms agreed with the EU will limit our ability to devise an independent global trading strategy. Accounting for the threat of the backstop and the long-term view to mirror the EU’s rules via a so-called common rulebook, the Department has had to plan for everything from protracted EU negotiations that limit our room to manoeuvre to the complete freedom and vulnerability of a no-deal situation.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I am grateful to the hon. Lady for giving way so early. I may have misheard her, but I think she referred to the need to counter the threat of a backstop. The backstop is there to guarantee the Northern Ireland peace process. Unless I misheard her, can she explain why she sees that as a threat?

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

No party wants the backstop to come into place, because we hope there will be a free trade agreement in its place, but the hon. Gentleman will be well aware that there is much concern that the backstop will tie us into rules and regulations that hamper our ability to achieve the aims that the Brexit process was intended to achieve.

Inevitably, the dilemma I outlined has constrained DIT’s ability to determine what might be offered to non-EU trading partners in any roll-over agreements or future negotiations. Perhaps all that is understandable and to some extent inevitable, given the complexity of extracting ourselves from a 40-year relationship. However, in the absence of a strong DIT voice in the Brexit process, there has been a failure to understand the potential trade-offs in the withdrawal agreement and how rapidly the rest of the world is moving on. There has also been a vacuum of informed parliamentary debate on our global trading future, leaving MPs to veer wildly from visions of chlorinated chicken and the bargain basement sale of the NHS to naïve declarations about the speed, value and impact of new free trade agreements.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

I congratulate the hon. Lady on securing this timely debate. She mentioned that Parliament in particular has not really debated these issues. Actually, we have. I put it to her that the Government have not been clear about what sort of trade deals, and how many, they have agreed around the world. Perhaps she can give us an answer.

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

I am not entirely sure I understand the hon. Gentleman’s point. Does he want to know why the Government have not been clear about how many trade agreements they have secured?

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

Well, at the moment the Government are not able to enter into negotiations on FTAs, but they are able to try to agree roll-overs of those deals. As I set out, the problem for the Department has been that it does not quite know what scope it has to negotiate those roll-overs, so partners have been waiting to see what is eventually negotiated with the EU to know what negotiating leverage they have over us. That leaves the Department in a rather difficult position, and that has had an impact on our ability to roll over trade agreements.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

If the hon. Lady has looked at the news this morning, she will know that Canada and India, for a start, are not at this stage prepared to enter into a trade deal with the British Government.

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

I am not entirely sure I heard that—I do apologise.

The state of unreality we have got into in our trade debate must end now, not least because it undermines our credibility as a negotiating partner. It is time to decide our desired trading destiny, work out how we get there and then determine how to maximise our leverage along the way. If we are honest, we all want trade with the EU to remain virtually untouched at the same time as we open up new market opportunities. We want to acquire the right to regulate and tax as we please, and we would like to stop club membership rules such as freedom of movement. That is what the EU would term a “cake and eat it” strategy.

Boiling down the last three years, they have largely been about what price tag the EU wants to place on that goal and whether such a prospect is even for sale. In effect, the EU’s answer has been that no such deal is on offer and that we must instead pay to leave, tie ourselves into the EU’s regulatory sphere without a place at the table and wait to see whether we are granted any freedom to diverge. Unless we can find a middle ground between those positions, we will be walking away from the counter, which will introduce trade frictions and potentially tariffs into our relationship. It is important that we deal rapidly with the consequences of doing that, and DIT will have to be put front and centre of that task.

Earlier this month, when the International Trade Secretary appeared before the Select Committee, I was staggered to learn that DIT had apparently played so small a role in advance of the 29 March and 12 April deadlines for our leaving the EU. Overnight, we could plausibly have been left with no formal trading arrangements with the EU to allow for the continuation of tariff-free exchange. Indeed, that remains a very real prospect. Yet when I asked whether DIT had had any discussions within Government about drafting a simple framework for a future FTA to offer the EU at that juncture, the Secretary of State advised that the responsibility was DExEU’s, and that there would be little point in tabling an offer because the EU would simply reject it.

I do not want to open a debate about the contentious World Trade Organisation article 24 process and the likelihood of the EU agreeing to such a mechanism to maintain tariff-free trade. However, surely we can at least agree, because both the EU and the UK have said so, that at some point in the future—either immediately or after some time—the two parties will want to strike a free trade agreement. Why, therefore, have the Government not yet drafted an outline of how they would like such an agreement to look, and why is DIT being squeezed out of this important conversation? I have also heard surprising reports about how little the Government have utilised our expensive chief trade negotiator in our Brexit negotiations. The under-utilisation of DIT’s resource has been a strategic mistake.

In the next 100 days, we must prioritise the close working, if not the merger, of DIT and DExEU, such that our future relationship with the EU is seen in the wider context of what we are trying to achieve in trade. EU-UK trade, of course, will be a vital strand of our future prosperity, but it will not be the only strand. The past three years have been defined by aggressive lobbying by companies and organisations that would benefit most from everything staying the same. That is understandable, but we are not giving equal airtime to the costs of ongoing alignment.

To give a couple of examples, the Select Committee has heard from experts that the EU regulation concerning the registration, evaluation, authorisation and restriction of chemicals is so onerous and expensive that all the fastest-growing developing markets are looking at adopting the non-EU model of chemicals regulation. Other experts advise that the EU’s hazard-based approach to farming standards excludes important technological advancement that could reduce the environmental impact of farming.

We must seek immediately to draft a generous framework document for an EU-UK FTA alongside a series of explicitly temporary stop-gap continuity agreements with third countries that would allow diagonal cumulation of rules of origin with pan-Euro-Mediterranean countries. At the same time, we need to return to DIT’s proposed no-deal tariff schedule and think carefully about how it can best provide leverage in any negotiation with the EU.

The Secretary of State assured our Committee that his Department would have adequate resource on 1 November to begin simultaneous negotiations on FTAs with Australia, New Zealand and the US. There is no doubt that that could introduce useful pressure and urgency to maintain a good relationship with the EU. However, we must be careful not to fetishise FTAs or to oversell what they can achieve and how quickly.

I was particularly pleased last week to see my right hon. Friend Boris Johnson manage expectations about a US deal. The US are notoriously tough trade negotiators, with in effect two negotiating partners in the Administration and in Congress, and there is a limit to what can be achieved given the breadth of matters decided at sub-federal level. None the less, as the Minister for Trade Policy, my hon. Friend George Hollingbery, advised our Committee last week, given the breadth and depth of our trading links with the US, even a relatively shallow agreement could reap substantial rewards.

Our North American trade commissioner, Antony Phillipson, set out to the Department this month his strategy for US-UK trade. I would be grateful if the Minister gave us an overview of what was said, particularly on how we intend to build a strong relationship at state level and whether we have the right resources to do so. The parliamentary mandate for opening formal US-UK trade talks and ongoing parliamentary scrutiny of negotiations will be critical if such a deal is not to fall at the final hurdle or to be brought down by misinformation campaigns.

The Secretary of State is proud that the public consultation on the deal was one of the largest such exercises ever undertaken. However, I noted that of the158,000 responses on a US-UK FTA, 152,000 were individual campaign emails and only 234 responses came from businesses. I fear that that may be indicative of a 38 Degrees-style effort to cause alarm about the future of the NHS or reduced animal welfare standards: two matters on which Ministers have already offered countless assurances.

We can do plenty beyond the US-UK FTA that will be less contentious and arguably reap benefits more quickly. Amid the important debate about the future of our fishing industry and sheep farmers, we overlook the fact that our economy is most heavily dependent on our world-beating financial and professional services. The FPS sector remains key to our ongoing prosperity, with its exports more than double those of any other sector. Our strength in this area far exceeds that of any other European financial centre. Meanwhile, over 30% of the trade value added in the UK’s manufacturing sector comes from services.

There are no guarantees in the withdrawal agreement of preferential access to the EU market for our critical service industries, and many in the City are now questioning whether we really want an enhanced equivalence deal that would leave us subject to the whims of EU regulators. The EU should have understood some time ago that growth in financial services is beyond Europe, with London business as likely to be lost to Singapore and New York as to Frankfurt, Paris or Dublin if it tries to diminish the City’s competitiveness. Nonetheless, it seems likely to impose tougher recognition requirements on us. Instead of responding with mercantilist reciprocity, we must seek quickly to demonstrate that markets can trade with one another without needing to regulate each other.

The best way of testing such a model could be an ambitious global financial partnership with Switzerland, which is having plenty of its own difficulties with the EU following the expiration of its equivalence regime. A dynamic Swiss-UK agreement including right of market access, mutual recognition and regulatory co-operation could set a gold standard in future services agreements that could in time be rolled out to other important financial hubs. That will require a more involved regulator, the active co-operation of the Treasury and the engagement of professional bodies to allow for recognition of qualifications.

That is where DIT’s role as convenor will become so important. The Department has established a network of new trade diplomats who sit within embassies to identify market access issues, build commercial relationships and triage problems among relevant Departments. I recommend that in key services markets we add to their number representatives from our own financial regulators, copying the example of the Monetary Authority of Singapore, which has offices around the globe, in recognition of the fact that services deals are as much about regulator-to-regulator as Government-to-Government co-operation.

A gold standard financial services agreement could be complemented by gold standard FTAs with New Zealand and Australia. I have said many times that these are not the biggest markets, but in both we have willing partners who can help advance our wider global trading agenda. They have experience in big and growing Asian markets. There is complementarity of language, culture and legal systems and an appetite to co-operate on quality food production, retail, healthcare, FinTech, defence and education. Meanwhile, at the WTO we can work together to embed important work on e-commerce and reinforce the multilateral rules-based system.

Plenty of diplomatic work can be done to enhance other trading relationships without needing an immediate FTA, though FTAs can be incredibly useful in providing momentum and focus. The Minister for Trade Policy talked at the Select Committee about the staggering size of the Chinese cosmetics market, which we find hard to access due to Chinese rules that require animal testing. If work could be done to demonstrate the quality and provenance of UK goods, such additional market access could be worth in the region of $10 billion. That would overshadow the benefits of most FTAs with smaller countries.

The Institute of Directors talked of similar barriers to trade for UK engineers, architects and planners over Chinese design licences. Seemingly intractable market barriers in China can sometimes be lifted quickly in response to citizens’ concerns, particularly in areas such as food and healthcare, where a demand for high-quality international products followed a series of consumer scandals.

DIT can not only flag such barriers and work with diplomats to remove them but highlight to our domestic businesses what kinds of opportunities are out there. The Secretary of State spoke last week about how DIT has helped a Cumbrian milk producer attend a trade fair in China that opened business to him worth hundreds of thousands of pounds.

It is important that we spot legislative developments, too. To give one example, Indonesia is to demand sharia compliance of financial products by 2025. With London one of the few financial centres with expertise in the field, our insurers and financiers could steal a march in this huge market. At the latest belt and road summit in April, the Chinese state pledged to put no more capital into belt and road initiative projects, capping the level at which Chinese banks can fund each project. That change of approach could open new opportunities to UK legal advisers, financiers and construction firms.

We need to empower the Department to do even more of that work. That will require skilled personnel. I was delighted to see the launch of DIT’s new training scheme last week for trade negotiators and diplomats. We need to leave them in post long enough to develop the long-term relationships and market knowledge that reap dividends. There is currently too much churn, which is particularly problematic in markets such as China, where guanxi—relationship building with provincial governments—is key.

In advance of this debate, I was sent a briefing by the Open World Research Initiative, a collaboration between 15 UK universities, which is calling for a chief Government linguist to embed language policy across Government. That is a great idea. Technology is moving on at pace in this area, but to understand a language and its nuances is to gain deeper cultural understanding and stronger relationships in future markets of importance.

I would also like us to soup up the work of our international chambers of commerce as well as long-term, party-to-party political relationship building. I have spoken before about how good Germany is at that through its Stiftung model, which operates almost as a political diplomatic service, and its very activist chambers of commerce have presence not just in capitals but in important regional centres. We must bear in mind that some of these big Asian cities are prominent economic actors in their own right, often larger than small European countries.

Going forward, I want to see DIT work much more closely with the Foreign and Commonwealth Office and the Department for International Development to merge our international output into a coherent strategy. As my right hon. Friend Greg Hands highlights frequently, the strength of our voice on trade is fundamental to our relevance as a respected actor on the international stage.

I was pleased to see yesterday the announcement that DIT will be able to access the overseas aid budget to link our trade and aid work much more closely. In that vein, the Government should work with and challenge the City of London to become the sustainable development finance hub of choice, cementing its position as the go-to financial centre for Africa and south Asia’s gateway to global capital markets.

DIT also has a big role to play domestically. One of the problems facing UK business is not a lack of demand for their products but a reticence in bidding for international contracts and a real nervousness about exporting. DIT has been addressing that with energy and creativity, but such work is not given the prominence it deserves. The export toolkit launched last week is an attempt by the Department to give MPs responsibility for identifying businesses and projects in their constituencies that could benefit from export and inward investment opportunities.

DIT is uniquely placed to know how to make our domestic market attractive to the kind of inward investment that creates jobs, adds value and increases tax take here in the UK. Its end-to-end service for international investors is important, but we must also look at a single window for business registration and investment information. Similarly, it is vital that we keep an eye on the competition, because the trade promotion bodies of France, Germany and Spain are stepping up their game.

There is already a business environment advisory team that flags barriers on skills, migration, tax and development, and I would like to see its work given more prominence so that we can make the UK one of the most attractive, tax-competitive markets in the world. It should also look at how we give our financial regulators an explicit competition mandate to embed our dominance in financial services. Work must be done with the Home Office to break the link between long-term labour migration and mode 4, so that our desire to control immigration numbers does not hamper the ability of companies to move key personnel.

We must be equally alert to investment that is against our national interest. There is a big difference between greenfield foreign direct investment that creates jobs, embeds skills and generates long-term tax revenue in the UK and speculative investment—the use of these shores to park dodgy money or the strategic purchase of critical assets accelerated by the cheap pound.

I was horrified to see the exposé in The Sunday Times of the tier 1 investor visa, and I am similarly concerned about the security implications of allowing critical infrastructure to be foreign-owned. Our Committee is likely to recommend improved modes of data collection on FDI, so that we can better sort the wheat from the chaff and get a more accurate sense of investment trends.

We have perhaps suffered from the naivety in recent years that all inward investment is good investment, fearful that if we clamp down on flows into the UK, people will think we are closing in on ourselves. Australia and Singapore take a much more robust approach to property and infrastructure investment—particularly that affecting national security—and that does not seem to detract from their reputations as open economies. I ask that we look at the Australian model of a foreign investment review board, which rarely sees sales blocked but can add conditions to any investment, and which applies caution over foreign influence. I am pleased that the Government are already reviewing our approach via the BEIS White Paper on investment that was launched in July 2018, and I would be grateful if the Minister updated us on that work.

As I said in my introduction, the next 100 days will be critical in addressing some of the strategic errors made in the Brexit process over past three years, and the Department for International Trade must play a full role in that work. It is frustrating that so little progress has been made in determining the future EU-UK trading relationship, but DIT has now had three years to establish opportunities, expand networks, and increase trade expertise, so that it is ready to go. Now is the time for the Department to be unleashed so that we can draw up a trading strategy that will grow our economy, entrench our values on the world stage, and deliver exciting exporting and value-adding investment opportunities to each and every corner of our United Kingdom.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 9:51 am, 23rd July 2019

I thank Julia Lopez for introducing this debate with so much detail, commitment and interest. Even as all eyes are on the race to become leader of the Conservative party and Prime Minister, our focus must remain where it should be: on formulating and implementing a trade and investment strategy. Whatever one’s take on Brexit, people agree that it creates numerous exciting trading opportunities. I am excited by the idea of Brexit—as I know you and other hon. Members are, Mr Davies—and by the opportunities it will bring. We will gain access to a pool of countries, with which we will decide our own trade deals.

The food and agriculture sector plays a major role in my constituency. I have been consistent and vocal about the worldwide opportunities on offer, but work, effort, commitment and interest must be put in to secure them. Our farmers will be free from the chains of the EU, and able to decide their own future. The fear-mongering associated with the future of farming, post Brexit, has been another attempt by the political élite to avoid implementing the result of the 2016 referendum. The time for that has passed. It is now time to work together and prove that we can, and will, move forward. I am excited for my constituency and its opportunities. It was a great day in our country’s history when our citizens decided that they wanted to remove the EU’s shackles, and displayed their faith in their own abilities, their country’s abilities and free-market economics.

As the hon. Lady said, a free trade agreement with the USA, China or India—all major importers—is an exciting prospect. We are not currently allowed to negotiate such trade deals while we are, unfortunately, still in the EU, but we can look to the future with optimism as we open so many new doors.

Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

Does my hon. Friend agree that it would be to the advantage of the United Kingdom and the EU to reach a mutually advantageous and agreeable free-trade process? The new Prime Minister and his Cabinet must have that as the centrepiece of their strategy for a trade and investment approach once our membership of the EU has ended.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I absolutely believe that. It is time to support the new Prime Minister and that strategy, to look to the future with optimism, commitment and focus, and to ensure that we deliver what is important.

My constituency contains agri-food industries, such as Lakeland Dairies, which has a factory in Newtownards—indeed, it has two factories in Northern Ireland and two in the Republic of Ireland, and it is knocking on eastern doors. The International Trade Secretary was instrumental in securing a substantial contract worth £250 million over five years for milk products. I was also involved with that deal, but the Secretary of State pulled it over the line. We must knock on all doors with our reasonably priced and superior-quality produce. The chief executive officer of Lakeland Dairies, Michael Hanley, is clear that although he, I and others want a deal with the European Union, whatever happens—deal or no deal—Lakeland Dairies will still trade in Northern Ireland, the Republic of Ireland and across the world. In reality, things go on. Life does not stop; the sun does not stop shining. The roof will not fall in, and many things will continue as always.

Strangford is a large rural community with towns in the middle, and together with many dairy farmers I look to the future with both optimism and, in some cases, scepticism. Although I am ecstatic and very happy that farmers will have access to a greater market, we must solve the Republic of Ireland problem, stop the grandstanding of Varadkar and others, and get down to the business of a mutually beneficial deal. As my hon. Friend Mr Campbell said, it is in all our interests to work towards that goal, and the quicker a bit of reality creeps in, the better.

The backstop must be removed. I am happy and pleased that both potential leaders of the Conservative party—the future Prime Minister—are committed to the removal of the backstop, which the Democrat Unionist party welcomes. The Good Friday agreement is never in danger—people throw that cherry into the mix all the time, but the agreement is never under pressure. There is no need for a hard border. Interestingly, Varadkar has said there is no need for a hard border, as has the EU and the United Kingdom of Great Britain and Northern Ireland. We are all agreed that there is no need for a hard border, so why bother having one? There are technological ways to solve the problems if there is the willingness to do so. It is now time to get behind the new Prime Minister and leader of the Conservative party, and support the process to get that deal. Perhaps the cold reality that comes with new leadership, new commitment and new fervour will take us over the line.

With a US-UK trade deal in the mix for when we eventually leave the EU, farmers in Northern Ireland and the United Kingdom should look ahead with optimism because such a deal may include dairy imports. Agri-food businesses in my area already export to USA, and that can be expanded if the right links are created, as the Minister is doing. A trade deal with China—the largest food importer in the world—will place our farmers in a position of optimism and opportunity. China has a population of 1.4 billion and its food imports have increased from approximately $6 million in 2005 to $300 million in 2015. Such levels of food imports are likely to continue as the country’s economy grows, and that is a potential market for us to build on. Such links offer our farmers an exciting opportunity to export their high-quality products to China if a trade agreement is reached. Again, we need optimism and to look forward in the correct way.

It is important that Northern Ireland’s interests are protected in any future free trade negotiations, and we must reach a compromise on the future of trade on the island of Ireland between Northern Ireland and the Republic of Ireland, and between the United Kingdom and the Republic of Ireland. We must ensure that the Union is not weakened—that must never be allowed to happen—and that our economy has access to the pool of opportunities that Brexit creates, rather than being cut off from the rest of the UK and trapped in the customs union. The Irish backstop must go, for the sake of both Northern Ireland and the Republic of Ireland, as that will suit both countries.

Trade must continue as normal between Northern Ireland and the Republic of Ireland—I believe anything other than that is suicide for the Republic of Ireland, which relies on the UK through Northern Ireland as a solid trading partner. None of that should be new to anyone in the Chamber, as such issues have been debated clearly for the past two and a half years. I seek to renew focus and remind people of where we should be headed, rather than become distracted by all that swirls around us.

In conclusion, if we are as focused and hardworking as businesses throughout the United Kingdom of Great Britain and Northern Ireland can be, we cannot help but succeed. If we continue to be distracted, the blame will lie not at the feet of those who voted leave—the majority of people in the United Kingdom of Great Britain and Northern Ireland—but with those in this place who refused to honour that referendum result and work towards the best leave deal possible. I thank again the hon. Member for Hornchurch and Upminster for securing this debate, and I look forward to hearing contributions from other hon. Members and the Minister’s response.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union) 10:00 am, 23rd July 2019

I confess to being a bit surprised at being called so soon, but I am grateful for the opportunity to sum up. I commend Julia Lopez on securing the debate and on the measured and well-researched way that she presented the case.

A number of the hon. Lady’s comments—this may be a misinterpretation on my part—seemed to be about the place of the Department for International Trade in the Government and its relationship with other Departments. I do not care which Department sorts out this mess; I just wish that one Department, somewhere in Government, would understand that we are in a mess. It is, despite the protestations of Jim Shannon, a mess of our own making. It was not created by bad people in the Republic of Ireland, France, Germany or anywhere, but by a Government who presented people with the opportunity to make the wrong decision and who proceeded to make that wrong decision as wrong as it could be.

Everybody who campaigned for leave before June 2016 promised that we would leave with a deal. Most of those who bankrolled the leave campaign are now actively and aggressively pursuing a no deal—contrary to what they promised would happen if people supported the no campaign—but we are where we are.

Photo of Eddie Hughes Eddie Hughes Conservative, Walsall North

The Prime Minister negotiated a deal, which the hon. Gentleman had the opportunity to vote for. He is suggesting that the campaign was based on the offer of a deal, but one was offered and he chose not to vote for it. Surely, he is trying to thwart the outcome of the referendum, whether he accepts the result or not.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I have been absolutely consistent, before, during and after the referendum, that I will continue to campaign for the best trade deal that we will ever have, which is membership of the most successful trading partnership the world has ever seen. As I have said before, but perhaps the hon. Gentleman was not there—

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I will deal with one interruption before I take another.

I accept the verdict of the people of my nation and of this nation. I demand—I do not ask, beg or plead—that the sovereign will of the people of my nation to remain in the European Union be respected. In return for that, I will undertake to respect the sovereign will of the people of this nation who voted to leave.

Photo of Luke Graham Luke Graham Conservative, Ochil and South Perthshire

The hon. Gentleman talks about the sovereign will of our nation, but we sit in the United Kingdom Parliament. Our country is the United Kingdom and the people of our nation voted to stay part of the United Kingdom. Why does he not respect the will of the people in Scotland from 2014, but suddenly respects it from 2016? He talks about the best and most successful trading partnership in history, but of course, that is the United Kingdom, of which I hope we will always be proud to sit as part.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I am puzzled as to how refusing to respect a referendum that said that Scotland should continue to elect Members of Parliament to sit in this place could be consistent with the fact that I am in this place carrying out my responsibilities as an elected Member of the United Kingdom Parliament for a Scottish constituency.

The hon. Gentleman has forgotten to mention, again, that the single biggest argument of the no campaign in the 2014 independence referendum—I am ready to have a further full discussion about independence whenever he wants—was that if we leave the United Kingdom, we are out of the European Union, so if we stay in the United Kingdom, we guarantee Scotland’s membership of the European Union. That promise has been shown to be utterly worthless.

We have a democratically elected Parliament and Government in Scotland with a mandate to give the people of Scotland a choice to decide on our future. It would be a democratic outrage for anybody to attempt to usurp that, especially considering that this Parliament, not long ago, unanimously and without a Division agreed that sovereignty over the nation of Scotland resides with the people of Scotland. Anybody who did not like that view had the chance to oppose it when it was put to the House; nobody did.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I want to get back to the topic that the hon. Member for Hornchurch and Upminster diligently set out. As I said, when the starting gun is fired, I will be ready to debate why Scotland’s future is not as a part of the United Kingdom, but that is not why we are here. We are here to debate how the United Kingdom, with or without some of its constituent parts, can find a new place in the world of international trade, having taken a mistaken decision to cut itself off from the biggest and most successful trading partnership the world has ever seen.

Three or four months after we should have been implementing our future trade strategy, we do not know what the aims and ground rules will be; what importance will be given to other trading partners’ respect for inter- national environmental standards; or what requirements will be set in respect of workers’ rights in the countries that produce the goods that we are going to start trading in. Some of our trading partners do not have a good track record on looking after workers in their factories. Nor do we know what weight if any will be attached to the human rights records of the countries that we are chasing for international trade deals.

Since the 2016 European Union referendum, one area of British exports that has done well is weapons sales, because the number of arms licences to sell British weapons to countries that are on the Foreign and Commonwealth Office human rights watch list has doubled. In the last 10 years, the United Kingdom has agreed to the sale of weapons to every single country that the Foreign and Commonwealth Office regards as having a bad track record on human rights, with the exception—I wonder for how long—of North Korea.

Is the purpose of our world trade strategy of global Britain not so much that Britain is great, but that weapons are great? Do we intend to continue to expand the policy of selling weapons with little or no regard to their real purpose? Will we start importing goods without any concern as to the conditions that were imposed on the workers who manufactured them? That would be consistent with an independent trade strategy, but I think it would be unacceptable. I hope that the Minister will confirm that it would be unacceptable and that the trade deals that the United Kingdom will enter into to replace the 40 trade deals that we enjoy through the European Union will insist that standards of environmental protection, product safety and workers’ conditions and rights are at least as high in our trading partner countries as they are under those existing trade deals.

In 2017, the Secretary of State for International Trade promised that the Government would

“replicate the 40 EU free trade agreements that exist before we leave the European Union, so we’ve got no disruption of trade.”

Will the Minister take a second or two of his summing up to list exactly which of those 40 trade deals we have replicated? I suspect that it will not take him long. Again, a promise that was made before and after the referendum—that all those trade deals would be replaced before we left the European Union—has been shown to be utterly worthless. Of course, that promise was not painted on a bus by somebody who claimed that they were not acting as a Minister, but by a serving Minister of the Crown.

The hon. Member for Hornchurch and Upminster mentioned the concern that the price of a trade deal might be to open up parts of our services to privatisation and outsourcing where domestic Governments would not have permitted that.

The Government have been very careful to say, “We’re not going to allow the NHS to be privatised.” That is good, but in this part of the United Kingdom, far too much of the NHS is already privatised for my liking. A lot more of the NHS is privatised in this country than would ever be permitted in my country. That is fair enough—if the people of England want to vote for Governments who choose to outsource more and more of their NHS and NHS support services, good luck to them. That is their right. However, the people of Scotland have voted for a Government who have explicitly said, “There will be no privatisation anywhere in our NHS.” As a statement from a national Government, that is something that must be respected.

Photo of Luke Graham Luke Graham Conservative, Ochil and South Perthshire

As the hon. Gentleman is talking about privatisation within the NHS, perhaps he can inform the Chamber now of the percentage increase in privatisation in the Scottish NHS and the increase in expenditure for temporary, locum and non-NHS workers used within our devolved NHS back in Scotland?

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

The hon. Gentleman knows perfectly well that the NHS in Scotland, like the NHS throughout the United Kingdom, has a serious shortage of expert, professional specialist staff. Part of the reason for that is that his Government are making the United Kingdom a less attractive place for people to come and work. They have created a hostile environment. The hon. Gentleman can snigger up his sleeve behind me, but I have cases in my constituency where a healthcare provider had to terminate the contracts of two professionally qualified healthcare specialists because they did not meet the United Kingdom Government’s salary level requirements to be allowed to stay.

If those specialists had worked in London, where everything—prices, rents, wages—is higher, they would have met the threshold. The same provider is allowed to provide services to people in London, but the people providing services to my constituents had their contracts terminated and had to leave the United Kingdom. That is not the fault of the Scottish Government or the European Union; it is the fault of an immigration service that is based on numbers, not on human beings or the need to continue to attract the best talent and the best people we can into our NHS. It is a simple fact that there are aspects of the NHS in some parts of the United Kingdom that are run for profit that, under the policy of the Scottish Government, will not be allowed to run for profit. They will be owned directly and provided for by the public sector.

We can all have different opinions about the best way to run a health service, but it would be utterly unacceptable for a United Kingdom Government or a Scottish Government to impose a way of doing things on health authorities in England that they believed was not in the best interests of their people. It would be equally unacceptable for any Government of the United Kingdom to enter into a trade deal, without the consent of the Government of one of the devolved nations, that would undermine the devolved authority that those nations have. I have not yet heard a categorical, cast-iron guarantee, so I will give the Minister another chance to give an absolute guarantee in his summing-up that there will be nothing outsourced in Scotland’s NHS without the explicit consent of the Government and Parliament of Scotland.

One of the arguments used for our leaving the European Union—I am pleased that the hon. Member for Hornchurch and Upminster did not use it today, because it is completely ridiculous—was the claim that, as the United Kingdom has a trade deficit with the European Union and a trade surplus with the rest of the world, the answer was to leave the European Union and only trade with the bits of the rest of the world that we have a trade surplus with. If we only trade with people who we have a trade surplus with, the only people who are going to trade with us are those who have a trade surplus with us, so nobody can trade and it does not get us any further forward.

That argument also completely fails to recognise why it is that, particularly in manufactured goods, the United Kingdom has struggled to trade as an equal competitor with the rest of the European Union. It is because other parts of the European Union take the profits of their industry and put them back into the industry, to make it more efficient, cost-effective and competitive. For too long in the United Kingdom, the profits of industry have disappeared to a tax haven somewhere in the Caribbean or Mediterranean. Because of the way that United Kingdom businesses have run their businesses, they have not kept up.

If we look at the productivity of businesses in the United Kingdom compared with their equivalent direct competitors in parts of the United Kingdom, there is nothing in European legislation that means that Europeans sell more stuff and more profitably than the equivalent companies in the United Kingdom. That happens because they can often do it more efficiently and reliably, sometimes even in industries where the UK previously had a record as one of the best in the world.

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South

In fact, we have seen significant manufacturing growth in this country in the past few years under Conservative rule. We saw rapid decline of manufacturing industries under the Blair and Brown Governments, but under the Conservatives we have seen significant growth in the manufacturing industries in this country.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

The fact remains that industry in the United Kingdom is not nearly competitive enough compared with industry in some of the countries that we should regard ourselves as seeking to match. I will not get into an argument about whether the previous Labour Government or the current Conservative Government are more disastrous for the people of Scotland, because frankly neither have delivered any of the things they promised to Scotland. I am aware that the hon. Member for Strangford wanted to intervene; I apologise for forgetting and I am happy to give way to him now.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

We obviously have a difference of opinion, but I had an opportunity last week to go to one of the Department for International Trade’s breakfast presentations. It was clear to me from that presentation that, while the promotion says, “Great Britain is great” or “The United Kingdom is great”, it does not mean just that England is great. It means that Scotland is great, that Wales is great and that Northern Ireland is great. Therefore, together we are all doing well. I gently suggest that if the hon. Gentleman has an opportunity, he should contact the Department for International Trade and he will see just where we feature. We are third in the world when it comes to promotion, and some of the things we are doing in this United Kingdom of Great Britain and Northern Ireland are beneficial for everyone.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I do not doubt what the hon. Gentleman says, but that leads on to something else I was going to mention. If anything is seen to be quintessentially British, I do not have a problem with our sticking a Union flag and a picture of Big Ben—the Elizabeth tower, as it is now—on it and selling it to the world on the basis of its Britishness. I do not have an issue with that. We sell according to the strong point.

But who in their right mind is going to market British whisky with a Union flag on it? Who on earth thinks that that is a strong brand? Who is going to talk about selling British haggis? Haggis is not British; haggis is Scottish. If we stick a saltire on it, it sells better and more quickly. Who came up with these ideas? In the same way, to sell Cornish pasties we put “Cornish” on them; we do not call them “British pasties”. We might put a wee British flag on it, just to remind people the Cornwall is still part of the United Kingdom.

There are a lot of national and regional identities, particularly associated with food and drink, in the United Kingdom, and the producers rightly are intensely proud of the reputation that Welsh lamb or Irish dairy products have, for example. Why on earth would anybody want to stop marketing Irish butter and Irish cheese as Irish and start trying to invent a different brand for it as British? Why would people choose to sell quintessentially English products as not being English?

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

One of the most wonderful receptions I went to when we were on a trade trip to the WTO in Geneva was the British ambassador’s reception, where they promoted and showcased all the wonderful produce of Scotland—particularly whisky, but also other things. What positive strategy can the hon. Gentleman set out for how the Scottish National party’s devolved Administration and the SNP representation here in Westminster will try to participate in the trade promotion of their own products?

Photo of Philip Davies Philip Davies Conservative, Shipley

Order. Before the hon. Gentleman replies, let me say that Front Benchers traditionally have 10 minutes in these debates. Because of the time allowed, I have given quite a bit of latitude, but he is now up to double that time. Can I urge him to wind himself down so that we can move on to the other Front-Bench speeches?

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I apologise, Mr Davies.

I say briefly to the hon. Member for Hornchurch and Upminster that the Scottish Government and previous Scottish Executives run by other parties have done that. One of the biggest obstacles is that every time the Scottish Government try to promote Scotland abroad or the Welsh Government try to promote Wales abroad, the UK Foreign Office says, “Hold on a minute. That’s our job.” Look at the snide comments every time a Minister of the Crown from the Scottish Government goes overseas to promote Scotland.

The negative, patronising, sneering attitude—not from the hon. Lady—that the national Governments of the United Kingdom all too often experience from the UK Government must finish. The United Kingdom Government have a job to do in selling the United Kingdom abroad, and the national Governments have a job to do in selling their respective nations abroad. That does not mean that they have to get in each other’s way or fight with each other about it. It is disappointing when attempts by the devolved nations to market themselves abroad are undermined by the UK Government, simply because, as a matter of democratic reality, the Scottish Government and the Welsh Governments have different views and a different political life from the UK Government. That is what devolution is for.

I realise that I have taken more interventions than I would normally in such a short speech—

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

Before I let the Minister intervene, I ask him to confirm that the United Kingdom Government recognise that although the United Kingdom has a trade deficit with the European Union, Scotland has a trade surplus with it. Anything that damages or even temporarily interrupts Scotland’s successful trading relationship with the European Union will be deeply damaging to the Scottish economy and therefore to the United Kingdom economy.

Photo of Graham Stuart Graham Stuart Parliamentary Under-Secretary (Department for International Trade)

I am disturbed to hear about this pattern of behaviour whereby the UK Government are allegedly inhibiting the Scottish Government’s promoting Scotland. We perhaps do not have time to discuss that right now, but I would be delighted if the hon. Gentleman wrote to me setting out instances of that. I promise to investigate them fully. I have never heard such allegations before, and I would be interested to hear about them and investigate them, if he can provide them.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

There was a recent case in which the Foreign and Commonwealth Office refused to support visits abroad by the First Minister of Scotland. That refusal was welcomed by the Scottish Conservative party.

Photo of Philip Davies Philip Davies Conservative, Shipley

I am afraid this will not be a point of order.

Photo of Luke Graham Luke Graham Conservative, Ochil and South Perthshire

I seek your guidance, Mr Davies. An incident has been mentioned regarding the First Minister of Scotland, but there are no facts to back that up. She was supported on the trip to New York to speak to the UN, which I believe the hon. Gentleman was referring to. The Foreign and Commonwealth Office facilitated that. There was a lot of discussion afterwards, but we should stick to the facts. I seek your guidance on that matter, Mr Davies.

Photo of Philip Davies Philip Davies Conservative, Shipley

As I anticipated, that was not a point of order but a point of debate, and not a matter for the Chair.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

I want Scotland to continue to be a successful trading nation. I want the United Kingdom to go back to being a successful trading nation, as it once was, but on completely different terms. Some may think that we are going back to the days of empire, when everybody else worked for nothing in hellish conditions to keep a handful of people in the United Kingdom wealthy, but that is not going to happen. The individual nations of the United Kingdom have the talent and ingenuity to succeed and compete successfully against almost any other nation in the world, but the first thing that the United Kingdom must do to achieve that is to recognise that it is no more than an equal with the rest of the world. Nobody owes it a living or is beholden to it anymore.

The hon. Member for Strangford mentioned the Republic of Ireland, which used to do 90% of its trade with the United Kingdom; today, it is about 10%. I wonder what the Irish have got right. Perhaps it is something that the United Kingdom could learn from.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade) 10:23 am, 23rd July 2019

It is always a pleasure to serve under your chairmanship, Mr Davies. I congratulate Julia Lopez on her thorough speech. In her stout advocacy for Boris Johnson, whom she mentioned more than once in the course of her remarks—

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Was it only once? It felt like so much more—I cannot think why.

The hon. Lady called for the merger of the Department for International Trade and DExEU. I wonder where the Minister might fit in the brave new world of the new combined Department—whether, indeed, he has a place in it. I wondered also whether the hon. Lady’s challenges to him were part of his job application for one of the roles among the new Ministers. Perhaps how well he does in that job application will depend on his responses to her questions.

I agree with the hon. Lady about the need for a coherent and global world trade strategy that is attractive to investors. We probably diverge a bit after that point, but we agree about the importance of a strong trade and investment strategy.

The folly of the Government’s strategy—or lack of one—was shown in the comments of their Canada trade envoy, who set out the stupidity of publishing zero tariff schedules. It is now pointless for the Government of Canada to spend time negotiating an agreement with us, as it will not be better than the deal that we have already unilaterally given away. Zero tariffs means opening up to importers with no guarantee of anything in return. An effective strategy would, of course, ensure the best market access to our main trading partners and build confidence among investors.

We are about to have a new Prime Minister—I am assuming it will be the right hon. Member for Uxbridge and South Ruislip—who advocates a no-deal Brexit and is keen on the idea of undermining our economic relationship with our nearest neighbours and a trading bloc that accounts for well over half of our trade, either directly or through agreements with 70 countries to which we are party through our membership of that critical trading bloc. It is madness to be considering no deal. It is the opposite of the robust, considered and credible strategy that is needed. It is an act of economic self-destruction, and Parliament must do all in its power to prevent such an outcome.

Investors want us to have the best access to the EU, and so does the Labour party. Businesses need frictionless trade and regulatory alignment, and so do workers. The prospect of no deal is causing enormous damage, as businesses and investors wait or decide to move elsewhere while we delay. No deal must be ruled out. It is in our strategic interest to do so, and it is what business organisations and trade unions are calling for.

The fall in inward investment shows what is happening as a result of the lack of certainty. There has been a massive fall in investment projects and new job creation, while the number of jobs saved through investment has fallen by nearly 80%. The number of foreign direct investment projects has also dropped sharply. On the point about uncertainty, Kent County Council said in its evidence to the International Trade Committee that there is no doubt that the UK’s reputation has been significantly damaged by Brexit-related uncertainty.

The British Chambers of Commerce says that we lack consistency in provision of trade support for both imports and exports, and ADS draws attention to the poor funding of the British presence at trade shows; other countries have much larger pavilions and a more coherent national offer to prospective customers. They also give a strong signal that the Government back their domestic sector. The Society of Maritime Industries made the same point in its evidence to the International Trade Committee. It submitted a photograph of the German pavilion, which was much larger than the neighbouring British pavilion. It asked: which country’s message is more effective—the simple “Made in Germany” in large letters or “Innovation is GREAT” in much smaller letters? It also asked which pavilion made the companies more attractive to visit. It was in no doubt it that its German competitors had better support. Our reputation has been damaged through Brexit incompetence. There is a lack of support for exporters, and no sign anywhere of a strategy for trade and investment.

To succeed in international trade, we must align our domestic and international strategies. That means delivering on the Government’s stated aim of moving to a zero-carbon economy. Labour recognises the benefits to be had in jobs and prosperity from investing in the $26 trillion global opportunity of moving to a zero-carbon world. That figure comes from the Intergovernmental Panel on Climate Change.

The Government say that they are committed to net zero by 2050. However, that does not stack up when we remember that we are funding fossil fuel development overseas; 99.4% of UK Export Finance provision in the energy sector went on fossil fuel development in places such as oil refineries in Bahrain. Just £1 million was spent on renewables, but £4.8 billion went on oil and gas. Raiding the international development budget—something announced yesterday by the Secretary of State—is not the answer. We should use aid to help developing nations, not to give further support to the fossil fuel industry.

UK Export Finance should be helping with the development of renewables; otherwise, we are just exporting our emissions to the developing world and elsewhere, as of course is the case when we do not include emissions from shipping and air freight in our carbon reduction targets. The emissions do not go away as if by magic just because we pretend they are not part of our carbon footprint. Christian Aid rightly says that the support for fossil fuels is incoherent. We have world-leading marine technology in tidal energy. Where is the focus on renewable energy at the heart of an exciting and financially rewarding export strategy?

Under article 2(c) of the Paris agreement, the Government’s policy priority should be:

“Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

The figure of 99.4% going to fossil fuels from UK Export Finance is the exact opposite of the stated policy of our Government. As Global Witness told the Select Committee, UK Export Finance should measure the greenhouse gas impact of the projects it funds. The US Overseas Private Investment Corporation adopted a greenhouse gas cap for its projects in 2007, and it is no surprise that it has shifted towards clean energy investments. If the private sector in the United States can do that, why cannot we? Labour believe we can.

Global Witness says that, for trade and domestic policies to match, UKEF should no longer invest in fossil fuel projects. Ministers like to remind us that UKEF is an award winner—but why should it not win awards for its low-carbon policy? The Canadian and French export credit agencies have more stringent controls on fossil fuel support. One of the two Swedish agencies did not lend to any fossil fuel projects in 2015 or 2016. If they can do that, why cannot we? Global Witness also says that the Department for International Trade should realign export support to renewable energy. There is an export opportunity for us, if we want to grasp it, in what it describes as floating offshore wind. Why not? UKEF has stopped investing in businesses that rely on child labour. Why not take the same approach to global warming?

The Government have woefully underprepared the UK for operating an independent trade policy. Trade remedies legislation is still not ready. There is no sign of the Trade Bill passing through Parliament. Existing trade deals are vulnerable to lapsing without replacement, not least because of the incompetence of the International Trade Secretary in announcing zero tariffs, as Andrew Percy reminded us in his resignation statement as the Canada trade envoy. He described it, let us remember, as “cack-handed” planning and felt patronised by the Secretary of State when he warned of the dangers of a no-deal tariff schedule and its impact on the prospects for the roll-over of trade agreements. As the hon. Gentleman has asked, why would those who are already getting 95% of what they want rush to sign up to what the UK want in the event of no deal? It does not bode well when a Back Bencher has a better grasp of international trade policy than the Secretary of State.

Labour will align our trade and industrial strategies to promote sustainable low-carbon export growth. We will introduce a transparent and consultative framework for the development of trade agreements, and be a strong and supportive partner of our small and medium-sized enterprise exporters. We will use trade policy as a tool to elevate rights and standards domestically and with our international partners, to ensure that the benefits of global trade are shared through society—whether that is in moving to a zero-carbon world or in enhancing the achievement of the sustainable development goals.

Trade must not be used to lock future Governments into a deregulatory agenda or to erode the capacity of Governments to legislate in the public interest. Neither can trade strategy be a series of controversial arms sales. In stark contrast to the present Government and their new Prime Minister, it is only Labour that is committed to delivering the robust trade strategy that our country needs. We will play a leading role in demonstrating that trade can be the force for good that it should be.

Photo of Graham Stuart Graham Stuart Parliamentary Under-Secretary (Department for International Trade) 10:35 am, 23rd July 2019

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend Julia Lopez on securing the debate and on her excellent opening to it. The subject, as we heard in many excellent and some peculiar contributions, is an interesting one. Our success in trade and investment will be crucial to delivering a more prosperous, stable and secure future for the country as we leave the EU.

There has been a massive change in the importance of trade and investment in the global economy and in the UK economy. That is one of the things to be grasped. In 1990, exports constituted a little more than 20% of GDP, but now they are more than 30%. We have the aspiration of reaching 35%, making us one of the greatest exporting nations in the G7. If we look at foreign direct investment, the stock value of that represented as a percentage of GDP was a little over 20% in 1990. Now it is more than 66%. As we have just heard from the Opposition spokesman, it is worth noting that, as we neared the end of the last Labour Government, France came up nearly to meet the level of foreign direct investment stock held in this United Kingdom; whereas, I am pleased to say, on last year’s figures from the United Nations Conference on Trade and Development, the UK’s stock of foreign direct investment—with the hundreds of thousands of jobs that result from it in the United Kingdom—is now greater than that of France and Germany combined. That may be one element in explaining how we have gone from a youth unemployment rate that was 45% up by the time the Labour Government left office to one that is now at the lowest level since records began.

While we talk about trade and investment we must remember what it is all about, which is the quality of life—the living standards, prosperity and security—of this nation. That is why this Government and Conservative Prime Ministers since 2010 have had such priorities. The numbers are there. People can give all the speeches they like, but if we follow the numbers, we will see the transformation that has been brought about. That is reflected in outcomes—the reduction in unemployment and increases in employment.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

I am glad that the Minister mentioned numbers and outcomes. Let us look at some. Jobs saved through investment fell, from 2016 when they were 28,000, to just 6,000 in 2019. That is an 80% fall. Those are numbers. They are not exactly encouraging, are they? They are not exactly a sign of the Government’s success. Meanwhile, 13% of Asian investors have reduced their investment and 14% have put activity on hold, and there are similar figures for north America—slightly lower for western Europe. How is that a record of success on the numbers?

Photo of Graham Stuart Graham Stuart Parliamentary Under-Secretary (Department for International Trade)

I am grateful to the shadow Minister for that intervention. The danger is in selectively seeking those things. On every possible measure, we see the UK—[Interruption.] I hope the hon. Gentleman will stop barracking; he knows what is coming. Even though he pretends not to, he must have seen the UNCTAD numbers—the official UN numbers—for 2018. What did they show? They showed that in 2018, according to the UN, the global stock of foreign direct investment—the yearly amount of total flows—fell.

Photo of Graham Stuart Graham Stuart Parliamentary Under-Secretary (Department for International Trade)

The overall stock fell. The hon. Gentleman is talking about flows; he should try and get to grips with this. Maybe this will be a useful seminar for him to do so.

If the hon. Gentleman looks at the stock line for Europe, which is the accumulated level—not at the flow line, as flows go up and down year by year and are essentially volatile; they always have been and I project they always will be—he will find that it fell in Europe too. The net amount fell; there was net disinvestment in Europe and in the world. What happened in the UK? It went up again, but not quite as quickly as it did before. It is the global context. By every possible measure—flow, stock, greenfield, mergers and acquisitions—we lead Europe.

We have strengthened our position in Europe. Why has that happened? It is because of the business-friendly policies that we have put in place. As the shadow Minister is feeling so aggressive, I put it to him: in what possible parallel universe in which there is increasing competition for mobile global investment, with the massive number of jobs and the prosperity that brings, how would jacking up corporation tax rates lead to more jobs, more opportunities and more prosperity for people in this country? That is the trade and investment strategy of Labour.

We do not need to think just about what Labour’s current policies will do; we can look back at every previous Labour Government. By the end of the 2000s, France was just about overtaking the UK; now we have more than twice as much as France. Just think of the hundreds and hundreds of thousands of jobs—I am most interested in that number. While the hon. Gentleman and his party play politics, we deliver the investments that lead to prosperity and jobs. If he is interested in going further into the subject, he should look at Ernst & Young and the pattern over the last few years. What have we seen? We have seen an increase in investments outside London and the south-east, and an increase in the share of the FDI going into manufacturing, which has been maintained and strengthened in this country.

That is the exact opposite of the picture that the hon. Gentleman tried to lay out. It is there in every figure—from the OECD, UNCTAD, the Economist Intelligence Unit, Deloitte and fDi Markets. That is a fascinating one. Some people say, “If you include mergers and acquisitions, and you include intra-company transfers, that is not real FDI. We should look at greenfield and new start-ups, not someone buying a factory. What difference does that make? What about creating a new one? Let’s look at that.” Who looks at that? That would be fDi Markets. What did it show last year? From memory, it showed that the UK got 1,268 projects, that France temporarily overtook Germany, with 580 projects—well done President Macron, who has put a lot of work into that—and that Germany had 560 projects. In other words, despite Brexit uncertainty, in 2018 the UK had more greenfield investment projects than Germany and France combined. On what basis would anyone other than the most devout and misguided socialist try to suggest that those figures are not good?

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South

Does my hon. Friend agree that the manufacturing figures referred to demonstrate exactly the picture of this Government and show the investment in exports that is going on? In the Blair and Brown years we saw a dramatic decline, with factories in manufacturing industries closing up and down the country. Under the Conservatives, we have seen a massive growth in manufacturing industries, clearly in part because of the exporting success and the support for exporting in this country.

Photo of Graham Stuart Graham Stuart Parliamentary Under-Secretary (Department for International Trade)

My hon. Friend is a particular champion of industries in his area, not least ceramics in Stoke. I thank him for speaking in my constituency last Friday and talking about the success that has come from the effort put into that local economy to help to turn it around and strengthen it.

Since 2010, we have been working to turn around the toxic economy legacy bequeathed by the last Labour Government and to support the pioneering, innovative, entrepreneurial brilliance of British business once again. Success has come from policies designed to promote the dynamism, openness and flexibility of our economy. A further important step was taken by the Prime Minister when she established a dedicated trade Department for the first time in British political history. The Department for International Trade has just celebrated its third birthday and is crucial to the delivery of trade and investment success.

Given that this could be a valedictory performance by me, as we get a new Prime Minister later, I pay tribute to the Secretary of State for International Trade and President of the Board of Trade, my right hon. Friend Dr Fox, for the brilliant work he has done leading and establishing this Department of State. Its work will become even more vital after we leave the European Union. We must build a global, outward-looking Britain that is a dynamic and independent champion of free, fair, rules-based international trade.

Our trade and investment strategy seeks three basic things: higher exports, greater foreign and outward investment, and reduced trade barriers. Contrary to what we have heard, exports are booming. Total UK exports now stand at a record high of £647 billion, bearing out exactly what my hon. Friend Jack Brereton just said. They are up in real terms—[Interruption.] Maybe the shadow Minister only looks at numbers that suit his narrative? They are up 25% in real terms.

In 2017-18 alone, the Department for International Trade helped UK businesses to export goods and services worth around £30.5 billion, which is a year-on-year increase of 4%. We are proud of our work in encouraging more companies to export, as my hon. Friend the Member for Hornchurch and Upminster said in her excellent opening speech. A lot of the difficulty is in overcoming the timidity and the concerns that companies have in exporting. Nearly 111,000 firms exported goods in the first quarter of 2019, which is 5,000 more than in the same period last year.

I have talked about the foreign direct investment numbers, but the latest figures from UNCTAD show that UK hit a record high of almost £1.5 trillion in FDI stock by the end of last year, which is more than Germany and France combined, creating 76,000 new jobs and safeguarding 15,000 more. That was in one year and in marked contrast to 2010, when France was close to overtaking us.

To put the FDI numbers into further context, UNCTAD’s figures show that FDI flows—flows not stocks; I hope Bill Esterson knows the difference—fell by 19% globally in 2018. [Interruption.] I am now talking about flows as opposed to stocks, so it is repetition, but about a different aspect of something that I hope the hon. Gentleman would take an interest in. FDI flows fell by 19% globally and by 73% in continental Europe. What happened to FDI into the UK? The flows increased by 20%. So much for the negative effects of Brexit uncertainty.[This section has been corrected on 3 September 2019, column 2MC — read correction]

The pace of change in the global economy is increasing but, for the agile, opportunities abound. The Department for International Trade provides the platform to give the UK a unique trade advantage, by locating export promotion, trade finance, trade remedies, export licensing and international negotiations all in a single Government Department.

I want to respond to some points made by my hon. Friend the Member for Hornchurch and Upminster. She asked about the 100 days. We will continue to prepare for no deal to be the outcome, which is not the avowed intent of either of the leadership contenders for the Conservative party. We prepared and were in a good position ahead of 29 March, and we are working with the Department for Business, Energy and Industrial Strategy to be able to meet questions coming in from businesses. We are ready to meet any surge in demand at that level.

My hon. Friend asked about state-level engagement with the US. The Secretary of State and I met with Senators from Florida and Texas the other day. As we expand and strengthen the Department’s reach, we recognise that it is not all about working at the national and federal level, whether in the US or elsewhere, such as in Brazil. I was pleased to meet the Governor of São Paulo, which itself has more than 30% of the GDP of Brazil. There is a lot more to be done at that more granular level in order to identify barriers and overcome them.

My hon. Friend made an interesting point about language. Given our national weaknesses on foreign languages, I hope that officials may be able to follow up on that point. She also touched on the DIT working more closely with the FCO and DFID. We are absolutely trying to do that. I am delighted that we are becoming an official development assistance Department. We have to bring trade and development together. That is how people get out of poverty. This involves so many countries. There is now the Ghana Beyond Aid initiative; I visited Ghana’s investment conference in London last year. These countries do not want to be seen primarily as aid recipients. They want to be seen as countries with great entrepreneurs, great technology and great capability. That is why, after the Prime Minister’s speech last year in Cape Town, I am helping to organise the Africa investment summit on 20 January 2020. It is precisely to ensure that, cross-Government, we are able to support increased investment in Africa and take advantage of the opportunities there.

My hon. Friend touched on the subject of regulators. Whether further changes are required in their missions as defined by Government is something that I will leave for others to wrestle with, but I can say that our regulators really are stepping up to the mark. The Financial Conduct Authority, with whose representatives I have met, is making a major difference. People can look at our FinTech bridges. We lead the world on FinTech—financial technology. It is enormously valuable, and we are creating FinTech bridges with a number of other countries. For instance, we are deepening our engagement with Hong Kong and Australia. In both cases, the FCA has been a fundamental part of the team as we try to ensure that start-ups there can more easily come to the UK, and vice versa. It is precisely that kind of opening up of markets that is so important.

I am not sure that I have ever given a speech from my iPad before. When the screen goes blank—

Photo of Graham Stuart Graham Stuart Parliamentary Under-Secretary (Department for International Trade)

It is better to have your screen go blank than your mind go blank, as may have happened to the hon. Gentleman when he started to talk about FDI, on which we are doing so well.

Last year we launched a new export strategy to encourage, inform, connect and finance businesses of all sizes, with the goal of increasing our exports from 30% to 35% of GDP, which would move us to the top of the G7. We are committed to working with the devolved Administrations in doing that. I will follow up on any suggestions. I hope that, if there are problems, we can immediately sort them out. It is certainly not this Government’s policy in any way to inhibit the effectiveness of the devolved Administrations in trying to promote business in their areas. We work together hand in glove. I remember that at MIPIM, the world’s largest property conference, last year, I launched the Scottish capital investment portfolio. We worked closely together on doing so, and we can do so again. That is very important, particularly in the Scottish context, because, if my numbers are still correct, exports as a percentage of GDP in Scotland are only around 20%, whereas for the United Kingdom as a whole the figure is 30%. That shows the importance of helping the Scottish Government to do a better job in promoting Scottish exports, because there is huge capacity there.

I am proud of what we have done with UK Export Finance. We have doubled its appetite since 2010 and we have revolutionised its performance as a world-leading export credit agency. It now has a capacity of £50 billion and its offer has been extended; it is now available in 62 international currencies, so when support is provided, that can be done in the local currency, thereby reducing risk. That has helped too. We have run it at no cost to the taxpayer, lowered its cost ratio since 2010 and ensured that no UK export fails for lack of finance or insurance. Earlier this year we went further. Now, companies that are not exporters themselves but are part of the supply chain of companies that do export can access UKEF finance too.

We have convened the Board of Trade for the first time in 150 years to promote a culture of exporting and investing, spreading the benefits and prosperity of international trade to every corner of our United Kingdom. Whether I have been in Stirling or Belfast with the Board of Trade, I have been delighted to see the local response and people’s enthusiasm for what we are doing at the DIT to promote trade from those areas.

Time has passed, and you would probably like me to bring my remarks to a close, Mr Davies. If I may, I shall continue just briefly. We have created an overseas network of Her Majesty’s trade commissioners, the most recent one being for Australasia. There are 10 of them and they have been selected for their expertise in particular markets. They are building our regional export plans and working to secure market access across the globe.

Whether it is on promoting exports with our export strategy or promoting foreign direct investment—for which we remain the No. 1 destination in Europe, well ahead of our competitors; in fact, we are third in the world, behind only the United States and China/Hong Kong—we are determined to go further. And of course in the area of trade policy, there is not only the issue of free trade agreements; my hon. Friend the Member for Hornchurch and Upminster was right to say that we should not fetishise them. As our second permanent secretary and chief negotiator has noted, for every one person working on FTAs, we want three or four working on market access.

Therefore, whether it involves opening up Taiwan’s pork market, cosmetics in China or lowering duties on Scotch whisky going into Latin American countries, we are, across the piece, upping our game. Having a dedicated trade Department—this might be my last speech while a member of it—was a significant and important step forward, particularly given the growing importance of trade and investment to the prosperity of this country and the world. The Department—with or without me—will continue to be an advocate for an open, rules-based, liberal trading system. It will continue to work to reverse the negative impacts on manufacturing and so much of our other trade and investment performance that happened inevitably—it happened in almost all cases—under the last Labour Government. We must ensure that Labour never comes into government again, and that this Government can go out there and continue to strengthen the DIT and strengthen our prosperity in the world. I thank my hon. Friend the Member for Hornchurch and Upminster very much for securing the debate today.

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster 10:56 am, 23rd July 2019

I thank all hon. Members and the Minister for engaging in this very important debate.

Jim Shannon talked of the vital agricultural interests in his constituency and the freedom that they might have in the opening up of new markets in India, the US and China—a market that is growing particularly rapidly. He says that the sun will not stop shining if we leave the EU, and he is quite right.

Peter Grant has a notoriously upbeat and sunny disposition. I do not want to be impish by saying that I was very interested to learn of his intense respect for the will of the people, given the simultaneous passion that he expressed for overturning the results of both recent referendums. It is a curious world in which we live.

Scotland will play an even more important role in the future in attracting regional investment and boosting exports of in-demand products such as whisky to growing markets such as China. It would have been helpful to have had a better understanding of how the devolved SNP Government wish fully to participate in what is a very exciting project.

I appreciate that Bill Esterson finds himself within a party that perhaps now welcomes only newspeak from its comrades, but I am fairly certain that my right hon. Friend Boris Johnson is not advocating no deal as his primary objective. I would like to reassure the hon. Gentleman that his dystopian imaginings about the DIT’s work and the trade figures are rather wide of the mark. He expressed concern about an absence of green objectives in our trade work. He might be reassured by some of the exciting things that we are doing on green finance initiatives with the likes of Singapore, and might be interested to know about some of the work that we saw with the Select Committee in South Korea—in particular, on renewable energy and how that is helping it to reach its targets.

The Minister reminded us of what trade and investment is all about, which is the delivery of prosperity and prospects to the people whom we represent. On every single investment measure, we lead Europe. We are spreading wealth not just to London and the south-east, but to every region of the UK. My hon. Friend unashamedly peddles optimism, and my goodness this country is ready for it. My constituents and local businesses have so much to offer, and they expect the Government to facilitate their hopes and ambitions—for themselves, yes, but also for our great nation. Let us learn from some of the errors of the past few years, but be grateful for the strong foundation that the DIT has laid and that will allow us to go forward into this new chapter with confidence and energy and find global trade opportunities that deliver for those whom we represent.

Question put and agreed to.

Resolved,

That this House
has considered UK trade and investment strategy.