Commonwealth

Lord Popat Excerpts

Thursday 16th March 2017 Lords Chamber

[Lord Popat (Con)]

My Lords, I welcome the opportunity to debate the Commonwealth in your Lordships’ House. I declare my interest as the Prime Minister’s trade envoy to Uganda and Rwanda.

For those of us who have argued for many years that we have neglected the Commonwealth, leaving the European Union offers us an historic opportunity to reshape our foreign policy and rekindle relations with this amazing group of nations. I am very fond of quoting my noble friend Lord Howell, sitting just near me, who has said:

“Europe is our region, America our ally, and the Commonwealth our family”.


It is our family, and as in all families, we are all different yet united by strong foundations, none stronger than the amazing leadership of our sovereign, Her Majesty the Queen.

However, as a Member of the other House said in 2014:

“The Commonwealth has strong and deep foundations; but without constant renewal, these risk gradual decay”.


It is about such renewal that we have been talking today and we should continue to do so in future.

I want to ponder for a few moments where we have gone wrong. I think that there are four main causes. First, successive UK Governments gave little thought to how we could make the Commonwealth an effective trading body, and many of our Ministers and civil servants feared Britain playing a leading role in the organisation because of the “colonial” feel it might produce. This is both nonsense and cowardice.

Secondly, the signing of a new Commonwealth charter in 2012 was meant to give it a new direction. The members agreed to prioritise democracy and human rights. That has not worked, because we have prioritised over trade, where there is very little dispute, the areas where there is the most contention.

Thirdly, our membership of the European Union consumed a vast and disproportionate amount of diplomatic time and resources without delivering an equivalent amount of good outputs. Finally, our membership of the single market and customs union spread apathy among many of our businesses. British businesses which have created what should be world-leading products have limited themselves to our nearest trading partners, such as the European Union, and neglected emerging markets and the Commonwealth, where we really need to be.

If we are to give the Commonwealth purpose, let us focus first on trade. The Commonwealth comprises 52 largely English-speaking countries with a combined population of 2.6 billion; it covers a third of the globe; it has a combined GDP of more than $10 trillion and includes five G20 countries, with trade projected to surpass $1 trillion by 2020. Given that Britain’s trade deficit of £40 billion is the greatest economic challenge facing our country, we should keep it in mind that a recent report on the Commonwealth highlighted that it is 19% cheaper on average for a business in the Commonwealth to trade because of commonalities such as our legal system and language. By reforming the Commonwealth around a trade agenda, we solve one of our biggest problems and help to spread prosperity. Trade is of mutual benefit—for not just one but both countries concerned.

We are all children of the Commonwealth. As with my noble friend Lord Gadhia, I was born in that great continent of Africa. I now turn to our relations with the 18 Commonwealth countries there. While there are many things we can do at a Commonwealth level to build trade links with all nations, there are also many things we should be doing at a bilateral government level as well. At the moment, seven of those 18 countries have trade envoys, including the noble Lord, Lord Hollick, for Kenya and Tanzania. We should as a matter of urgency appoint trade envoys and recruit a DIT staff member for the remaining 11 countries, including Zambia, Malawi and South Africa. Are there plans to do so? The trade envoy programme offers us a unique opportunity to build bridges with these nations and to spend time on issues that Ministers simply cannot always get to. I have been in the role for just over a year and we are on course to double trade with Uganda and increase it in Rwanda by up to 20 times the 2015 level.

There are other steps we can take. Our aviation links with African Commonwealth countries are woeful. The decision taken by British Airways to suspend flights with Dar es Salaam, Entebbe and others—flights that were almost always full—was shameful. Those were our bridge to these nations and I hope other providers will continue to step in and replace them. However, a replacement is difficult because there are no slots available at either Gatwick or Heathrow. We often talk about aviation policy in this House but in a post-Brexit world we need connectivity. We are 30 years behind where we should be. We need not just a third runway at Heathrow but a second at Gatwick, and others. When I see what other countries are doing in aviation, I am ashamed of our faint-heartedness.

Similarly, the decision taken by Barclays Bank to sell its African trading arm should be seen as a national scandal. It has been in Africa for 100 years, its brand is beyond compare and yet, because of legislation passed in this very House, it is selling away one of our great connections. That harms the great brand of UK plc.

I finish with an idea that I came up with when my noble friend Lord Howell was a Minister in the Foreign Office and I took up with the current Minister for the Commonwealth, my noble friend Lady Anelay. I proposed a Commonwealth bank that could unite the Commonwealth—or, more fittingly, the “Queen Elizabeth Commonwealth Bank”. Collective institutions bind organisations together. We already have a World Bank and a European Bank so why not a Commonwealth bank? I have in mind something like the Asian Infrastructure Investment Bank, of which Britain is a founding member, which could transform economic development across the Commonwealth, supporting major infrastructure projects and possibly lending directly to businesses. Across the Commonwealth there is a huge appetite for new infrastructure investment. New roads, rail and energy projects are all essential to economic development. A Commonwealth bank would be a great way of demonstrating our commitment to our family, showing that Britain is still an outward-looking nation. It would help all its members, particularly the poorest. Will the Minister commit to exploring the idea before the Commonwealth Heads of Government Meeting next year?

The recent Commonwealth Trade Ministers Meeting —a brilliant initiative driven by the Commonwealth Business Council and my noble friend Lord Marland—is a good start. Next year’s Commonwealth Heads of Government Meeting is another excellent opportunity. Let us be bold in our approach to the Commonwealth; let us unite around increasing trade, investment and cultural links; and let Britain lead the charge for a Commonwealth bank. It will bring the Commonwealth together in shared purpose, and would also be the most fitting tribute to Her Majesty’s magnificent leadership of this wonderful family of nations.

Bilateral Trade: United Kingdom and Africa

Lord Popat Excerpts

Wednesday 11th November 2015 Lords Chamber

[Lord Popat (Con)]

My Lords, I, too, thank my noble friend Lord Sheikh for instigating this important and timely debate. We have a shared love for Africa and a passion to see Anglo-African relations given a greater standing by both the Government and the private sector. I also echo the words of the noble Lord, Lord Alton, in commending the noble Lord, Lord Oates, who made an excellent maiden speech and recalled his experiences in Ethiopia.

On Friday, the Office for National Statistics gave us some good news: our trade deficit fell from £10.8 billion in August to £9.4 billion in September. Our inability to export more than we import has become a largely unchallenged part of the economic make-up of our country. Not since 1998 have we run a trade surplus, and that was only for a short period.

Our leading politicians and business figures fret about our membership of the European Union despite its obvious economic and demographic issues, and many have realised that we have to build stronger relations with India, China and other emerging countries to balance out our continental problems. Yet the incredible rise of Africa—the obvious potential of this brilliant continent—has been ignored by far too many.

Africa is waiting for us to acknowledge that the prism of aid, conflict and corruption that we continue to see the continent through is almost entirely out of date. The recent responses in Burkina Faso and Burundi were a wonderful demonstration of how far Africa has come: two military coups that not only failed but saw organisations such as the African Union and ECOWAS play leading roles in resolving matters peacefully. We need our politicians to acknowledge the tremendous progress that Africa has made and the potential it has. We need to acknowledge that Africa is our partner, not a charity.

The former President of Nigeria correctly said that Africa is the last great frontier of emerging markets. The United States has seen the potential: President Obama held a hugely successful African summit last year. Last month, Prime Minister Modi and the Indian Government held their own African summit, with my good friend Anil Agarwal helping to bring it together. The UK has been behind the curve too many times, allowing others to build trade, economic and strategic relations first and then constantly trying to catch up. Let us not make the same mistake again.

The positive signs are all there: Africa is home to the fastest-growing middle class in the world. Six out of the world’s 10 fastest growing economies are in Africa, and economic growth is averaging around 5% across the continent. Democracy is now winning the long-standing battle in Africa. Whereas before, power was transferred with bullets, increasingly it now relies on the ballot box. In Commonwealth countries, the rule of law and constitutional set-up is largely based on the British system, and as we know, most trade in Africa relies on the English language. As the noble Lord, Lord Alton, said, we must wake up to Africa’s serious economic potential and make improving trade relations with Africa a foreign policy priority.

Perhaps most important is the continuing issue of the trade deficit, particularly in respect of goods. We need to find new markets for British goods and to encourage firms that do not currently export to do so. We need a strategic and targeted approach. If the Government encourage the FCO, UKTI, the British Chambers of Commerce and other organisations to work together, we can reintroduce and rebrand Africa for the British business community.

Trade and Investment

Lord Popat Excerpts

Monday 15th June 2015 Lords Chamber

[Lord Popat (Con)]

My Lords, it is a pleasure to welcome my noble friend to his new role. It will require a tremendous national effort to tackle Britain’s long-standing trade deficit, but doing so offers us the best possible route out of our nation’s budget deficit. I am pleased that, following his two distinguished predecessors, we have such a capable Minister leading the charge.

It is important to set our trade situation in context. There can be no argument: the past five years have been good for Britain’s economy. We have an employment rate of 73.4%, the highest since comparable records began in 1971; an unemployment rate of 5.5%, which continues to shrink every month; GDP growth of 2.8% in 2014; and average weekly earnings were up 2.2% between January and March 2015. We have also benefited from low inflation and low interest rates. Given the challenges faced in 2010, it is indeed impressive that the majority of headline figures compare favourably to any Government’s record—what a success.

However, there are two blemishes on that record. Public sector net borrowing, although down 11% on the previous year, remains high at £88 billion, or 4.8% of our GDP. Linked to that, our trade deficit is still £33.7 billion and our current account deficit £97.9 billion, some 5.5% of GDP. This has, with some minor exceptions, been a trend for four decades—a trend that successive Governments, despite good intentions, have failed to come to terms with. Put plainly, we do not have enough exports to pay for our imports; in other words, we are consuming more than we are producing.

I will turn in a moment to what actions I would like to see from the Government to help tackle our exporting issues, but it is worth drawing attention to the work of the House of Lords Select Committee on Small and Medium Sized Enterprises that I proposed in 2012. The committee was very ably chaired by my noble friend Lord Cope, and looked at how the Government support SMEs when it comes to exporting. It produced an extensive report, full of sensible ideas. Since its publication, there have been two debates in this House on the committee’s report, on 26 June 2013 and 6 May 2014. For the latter, the Government produced an update on their progress.

It is vital that we maintain, as the committee did, a clear focus on SME exporting, rather than combining all trade figures together. The challenges faced in the SME sector are very different from those in the larger corporations, but the rewards are potentially much greater. Will the Minister ensure that we continue our trend of the past couple of years and arrange for another debate—in government time—to ensure that progress is being continued?

I move on now to some of the obstacles preventing a trade balance surplus. I spoke at some length in the debate on the gracious Speech about our nation’s obsession with Europe to the great detriment of emerging markets and, in particular, Africa. I will do my best to avoid repetition, but the EU accounts for 45% of our exports and 53% of our imports. In other words, there is a difference of eight percentage points between what we import and what we export, which amounts, roughly, to a £30 billion to £40 billion trade deficit with the European Union.

Viewed through the forthcoming EU referendum, these figures prompt two different responses. Those wanting to stay in Europe see them as a clear justification of our overall relationship, an economic bonus for our membership. Those wishing to leave the EU use them to say that, even if we were not members of the EU, it would still be in Europe’s interest to trade with us as it gets a net benefit. My take on these figures is rather different. I believe they prompt a sort of paralysis among our political and business leaders. We fret over what we have, rather than envisage what we could have. As a nation we lack the courage to conquer new trading frontiers. The eurozone’s economy has barely grown in recent years and with the ongoing situation in Greece and the resulting uncertainty it is hard to see that changing. We simply must roll up our sleeves and focus our efforts on the markets of the future. The opportunities in Asia, Latin America and, in particular, Africa are numerous and lucrative. The Government’s role, through trade missions, EU free trade agreements and UKTI, must be to open these opportunities up to British firms and to navigate the private sector towards them. In turn, our business community must seize these opportunities with both hands. Can the Minister comment on his plans to expand UKTI’s presence in the emerging markets of Africa?

Our Government must also tackle our long-standing infrastructure deficit. The runway situation in London is painful; we must get on, implement the Davies commission recommendation and place our nation’s economic and trading future above the inevitable objections. Likewise we must press on with HS2 and HS3 and improving our roads. We cannot sell our goods if we cannot get them to the market in the first place.

Finally, we must also make sure that our goods and services are more affordable than those of our competitors. A lot has been made of our seven-year productivity stagnation—as the ONS said, it is unprecedented in post-war Britain. It certainly does not help our exports if workers here are producing the same amount per hour as they were in 2007 while our competitors are producing more. The Economist recently disaggregated the productivity data, finding huge differences between sectors. Our transport manufacturing industry, once again a great British export industry, has seen productivity improve by 56% from 2009. In contrast, our finance and insurance industries are producing 10% less per hour in the same period. While it is helpful to understand that our productivity slump is being skewed by certain sectors, it does not hide the fact that overall our economy is not as efficient as it should be. This trend cannot continue, or we will fall further behind our competitors. We need businesses and the Government to work together to identify and address whatever issues are holding us back.

This Government should be aiming to eradicate our trading deficit in the next five years. We have the expertise and the products; the emerging markets have the customers. Let us now see the commitment.

Queen’s Speech

Lord Popat Excerpts

Thursday 28th May 2015 Lords Chamber

[Lord Popat (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Hennessy, today. This is my first opportunity to speak as a Back-Bencher for two years, and I very much welcome the freedom to pursue my own interests. The gracious Speech states:

“My Government will renegotiate the United Kingdom’s relationship with the European Union and pursue reform of the European Union for the benefit of all member states. Alongside this, early legislation will be introduced to provide for an in/out referendum on membership of the European Union before the end of 2017”.

The EU in/out referendum, and the prior renegotiation of our terms of membership, is likely to be the defining political issue of the next couple of years. It has certainly dominated our discussions here today. But it is also a form of navel-gazing, amending what we already have, rather than looking to our future economic and foreign policy priorities.

The majority of our future economic opportunities lie not in Europe, but in the emerging economies, and in particular in the emerging continent of Africa. As your Lordships’ House will know, I am passionate about Africa’s future. Africa and Britain have a great deal in common. This morning, my noble friend Lord Howell mentioned our shared history, language, rule of law, freedom, democracy and, most importantly, the Commonwealth. The Commonwealth binds us together.

We must wake up to Africa’s potential. It is home to the fastest-growing middle class in the world and the population is expected to double by 2045. As has been well-stated, six out of the world’s 10 fastest growing economies are in Africa, with economic growth averaging more than 5% in the continent, which is three times the European growth rate. Rapid urbanisation, along with increased GDP per capita, are creating a sizeable consumer class across Africa, which is in stark contrast to the economic performance of many European countries. As a continent, Africa represents one of the last growth frontiers in the world. In the past five years, we have increased our trade everywhere in the world. We have seized the initiative, particularly in Asia. Trade with China and other emerging powers is stronger as traditional partners have fallen behind. Yet here in Britain, we continue to view Africa through a time warp. This is a failure of successive Governments, who have focused on our aid commitments and the poverty of parts of the continent rather than on identifying trade potential. Our attitude to Africa has consistently been patronising and demeaning. With the exception of the extraction industries, British businesses have more often than not kept away, perhaps still influenced by the stigmas of the past.

I have been fortunate to have visited Africa on many occasions in recent years. Every time I am in Africa, I am repeatedly given the same messages: “We like you”; “We love you”; “We are part of your colony”; “We want to trade with Britain”; “You are our partner of choice, but we don’t see you around”. Our trade with Africa is worth around $35 billion. Over the past decade, the countries that have spearheaded investment in Africa have been China and India, with Chinese-African trade at over $200 billion last year. This is our failure. We are missing out on a chance to reduce our balance of trade deficit, increase prosperity and expand our diplomatic influence.

The difference between China and the UK is that our private sector is truly private. We have to do a much better job of convincing British companies to go to Africa. It is in their interest as private companies and in the interest of this country. We must show our private sector the opportunities in Africa and work with it to enter those markets. A major part of our foreign policy must be to reintroduce and rebrand Africa to the British business community. Some of the Government’s actions since 2010 have been steps in the right direction: boosting UKTI’s presence and resources, the appointment of trade envoys, restoring our focus on the Commonwealth at the FCO and the opening of five high-level prosperity partnerships in Africa. These are all encouraging, but they are baby steps in comparison to what really needs doing.

Last year’s US/Africa summit hosted by President Obama in Washington was perhaps the most prominent recent display of interest in African opportunities. It was a clear demonstration of commitment to a great continent of opportunities and an acknowledgement that trade will always have a longer-lasting impact than aid in building a country. Yet again, a competitor is getting in ahead of us, even though we have a substantial African diaspora in Britain that we can tap into.

I urge Britain’s business leaders and the Government not to get lost in the minutiae of European negotiations, and to give some thought to a report released by Deloitte at the end of 2014, Africa: A 21st Century View. It stated that Africa’s middle class is expected to increase to more than half a billion people by 2030. All those people could be buying British goods and services. If they did, it would bring incredible wealth to our great country—considerably more than any European settlement can manage. It is time that we sensibly thought about the future and embraced modern Africa. Let us stop talking about our aid commitments and poverty, and instead seize our opportunity. If we do not do it now, we may well be too late.

Finally, I pay tribute to the Minister, my noble friend Lady Anelay, who is a friend and mentor to me. I will for ever remain grateful to her for providing the opportunity to allow an African refugee such as myself to serve in Her Majesty’s Government.