Westminster Hall
(12 years, 9 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Backbench Business
(12 years, 9 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
UK Trade and Investment
(12 years, 9 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Laura Sandys (South Thanet) (Con)
I am extremely honoured to be speaking under your chairmanship, Mr Amess. From one seaside town Member to another, I should say that we ought to be on the beach rather than in here. However, some things are far more important for us and our constituents. I thank the Backbench Business Committee for giving us—myself and my friend the hon. Member for Brent North (Barry Gardiner)—the opportunity for this debate.
Although this place has paid little attention to UK Trade and Investment, the Government have put significant focus on the organisation. They announced an extra £45 million of funding in the autumn statement and they have recruited one of the most influential businessmen to be Minister for Trade and Investment. We have a Cabinet Committee that is focused on growth and that has a key input from UKTI. Even this week, we can point to results in which UKTI has been instrumental: Lockheed Martin, Nissan and Jaguar Land Rover investments and reinvestments in the UK. We can point to some very positive things that have materialised from the attention and focus that UKTI has put on our inward investment and trade initiatives.
UKTI has also created a key platform for some additional areas such as the global green growth initiative. I am very excited and keen that we promote that further. UKTI has forged and developed unilateral free trade agreements and last year launched the charter for business. There has also been a focus on high-value opportunities. The three areas of investment announced this week are part of that range of high-value opportunities that we need to secure for our long-term future.
I also hear from large businesses about how welcome Lord Green’s leadership is and about his commitment to the role. However, I am concerned to see the speculation that he might get pinched by the Bank of England. I hope that our Ministers in the Department for Business, Innovation and Skills are securing him—locking him in the office and pinning him down on his chair.
Although things are going well for UKTI, we cannot forget that we are not operating in normal times. As every clichéd politician has said, “We’re all in this together.” However, certain departments are more involved in the job of getting us out of this mess than others. There is probably no more important department involved in that than UKTI. I am therefore very pleased we are having this debate today.
For certain personal and constituency reasons, I am particularly interested in UKTI, not least because, a year ago, Pfizer—one of my largest employers—decided to withdraw many of its staff. It is therefore absolutely crucial for me and my constituency to understand more about how UKTI functions, and what it does to develop and attract inward investment.
On a personal level, I have worked for what was called the Department of Trade and Industry in its inward investment unit. I have also worked in many countries, from countries in the Caucasus to Peru and Argentina. I have seen for myself how people engage when it comes to inward investment and how trade missions work—or, as has frequently been the case, do not work. It is important that we in the House have an opportunity to debate something that has such an impact on our constituencies. Many of us have had experiences of inward investment and trade in our lives before we came into Parliament.
So if everything is going so well, why do we need this debate? Success is not enough if it is only expressed in our own terms. Unlike other departments, UKTI is operating in an aggressive, competitive environment and, in many ways, is not trading in isolation from others. A key national priority for any country—whether it is democratic or not—is domestic prosperity. That means that trade and inward investment for every country, particularly emerging countries, is becoming a very big priority.
If we really believe that, we must believe that, for example, a job from Samsung that goes to Hamburg is a job that has potentially been lost from the UK. If I have to declare this, I will: I happen to be half French—[Interruption.] It is something that I have to bear. I have therefore seen how the French operate globally in both the trade and the inward investment sector. All I can say is that our competitors certainly know how to finish the race sometimes before us.
Julian Smith
Will my hon. Friend give some specific examples of how the French have managed to seal the deal?
Laura Sandys
Some examples are a bit difficult to repeat in public. On a serious note, the French have always had a very clear focus. Since the second world war, both their diplomats and their whole political structure have been focused on understanding economic diplomacy.
Laura Sandys
Absolutely. Even us half-French Members of Parliament try to grab a little of that je ne sais quoi. The French have a philosophy that goes from the top to the bottom of government—whether that is nationally or, interestingly, at a local government level, where inward investment and trade relations are considered a lot more important that we necessarily consider them to be in the UK.
As I say, we are talking about an aggressive environment, so it is worth questioning UKTI. Do we have the right strategy? Do we have the right people in the right places? Sometimes I am concerned about whether we are marketing ourselves effectively enough. In other instances, I have come across bureaucracy. If we are in a fast-selling and aggressive competitive environment, is that bureaucracy holding us back?
I shall start by considering strategy. Much of UKTI’s strategy is great. There is a lot of sectoral focus. Account management has been introduced, so that large investors here have people who are direct relationship managers there. There are client relationships across the board. In many ways, the organisation is like an excellent consultancy, such as the one I used to run. However, what is this well-oiled consultancy really trying to achieve?
My limited exposure to UKTI’s strategy for inward investment did somewhat confuse me. Hon. Members might think that that is only my experience. However, when I spoke to some UKTI officials, they were confused about the relationship between themselves, PA Consulting Group, which has won a tender to work with UKTI, and the local enterprise partnerships. Frankly, there is a lot of confusion about what that relationship looks like, who is in control and how we—constituency Members of Parliament, with assets that have an inward profile and the opportunity to gain inward investment—can gain access to that supply chain of sales leads.
I am not sure that the right structure is in place—one that is understandable and will operate the most effectively to make the inward investment propositions to the important and big companies and sovereign funds that we need to secure to achieve economic revival. Quite a lot of money is being spent through the clearing house that is PA Consulting. Will the Minister look at the money going into the so-called bureaucracy and operational side of the inward investment structure to see whether more of it can go to the localities and organisations that deliver inward investment pitches, in order to improve the inward investment opportunities of such localities?
I am concerned that we have a convoluted sales environment in inward investment, but I might be proved wrong, and I look forward to the Minister illuminating me or giving me a pathway that I and many of my colleagues in Kent would be interested to understand.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
I congratulate my hon. Friend on securing this important debate. I do not think we had a single debate on exports in the whole of the previous Parliament, so this debate is timely and welcome.
We, this coalition Government, quite rightly got rid of the regional development agencies that used to be responsible for co-ordinating inward investment and introduced the LEPs. However, the LEPs do not yet seem to be working well. Are they working in my hon. Friend’s area?
Laura Sandys
I welcome my hon. Friend’s intervention. As yet I am not too sure what an LEP is. I think that they are evolving and creating their own personalities. An interesting thing is that they do not fall into the same category as the RDAs, which were similar in every different region. My area is part of a large LEP, comprising Essex, Kent and east Sussex. In many ways, that creates a different sort of LEP than smaller ones. LEPs are evolving.
I am not concerned about the future of how LEPs operate. We have 18 months to two years of interregnum, in which we need to get our inward investment pitch out. We must put forward the best that we have to offer. The rest of the world is crawling all over business opportunities while we are waiting for structures. I do not have time for structures, particularly in my area, where, as I have said, Pfizer has decided to downsize quite dramatically. Life science jobs based in Sandwich are walking away every day, because the marketplace is an international one. The jobs are not fixed in Sandwich; they are leaving and going to Shanghai, and they are being recruited for around the world. Waiting for structures to be in place is not going to be good enough for some areas where we need to move fast and be nimble and commercial.
Are we sure that we have the right sort of people working in the area? The people are extremely bright, and I have met some of the most intelligent and committed people working at UKTI. However, we need to think about whether they are commercial people. I know that including PA Consulting is an extremely important part of involving the private sector. I put my hands up to say that I used to run a consultancy, and I worry that sometimes consultancies are not the private sector; they become an extension of a client, although it is still important to have that input. We need to be clear who has international experience working at the sharp end.
Perhaps my greatest surprise came when I was talking to someone about the issue in one of our Departments. They said, “We are spending a lot of money on languages. It is fantastic, Laura. We are going out there and ensuring that all our diplomats speak all these wonderful languages in all these emerging economies.” I looked a bit aghast, and they were a little disheartened that I was not excited about that. I said, “Do you know that 220 languages are already spoken in this country? Do you know that we have the opportunity to recruit people whose cousin, uncle, aunt or existing business partner already works and lives in these countries?” With absolutely no disrespect to anyone with a classics degree from Oxford or Cambridge, someone whose grandfather comes from Punjab is possibly a better person to build our relationships and business contacts with those particular countries, in those communities, than someone who is learning Punjabi for the first time.
One of the exciting things about this country is that we are the Commonwealth in minutiae—we are a reflection of our past, which gives us a huge asset for our future. We need to look again at the sort of people whom we are presenting as the face of Britain, and also at who can be effective. I throw a challenge to UKTI: if it recruits a selection of such people to be our face in the emerging markets and says, “Take 100 small businesses with each of you, try to nurture them and help them to have trade relations in particular areas, support them in the first year, ensure that they are not entering into contracts with someone who is a little sharp in the area or who will not deliver, and nurture them through the first year of export or joint partnership”, we will get a much bigger increase in exports and enter into global relationships with small and medium-sized businesses. We have a unique asset, but I am just not sure that we are using it.
Julian Smith
Does my hon. Friend agree that as well as the international face of UKTI, we potentially need to look at the skills that we are presenting to the domestic customer base of UKTI? What types of skill and commercial experience does she feel are required to seek out export-hungry companies throughout Britain?
Laura Sandys
I welcome my hon. Friend’s intervention. I have started two small businesses, both in the middle of recessions. We do not have enough people who have a business focus.
I was quite surprised that 1,000 people work in UKTI in different regions of the United Kingdom, and there may be great value in that. I would like to see a lot more of them in our constituencies, perhaps using the opportunities that Members of Parliament can offer, so that they can understand a particular constituency.
We need a much stronger commercial focus. Small businesses have one language; in a strange way, it is almost a universal language. It can travel even if people do not speak the same language. It is more important to have that business language when people talk to someone else than it is necessarily to have location or certain areas of expertise. We need more commercial people.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The hon. Lady made an extremely important and valid point about using our multicultural and multinational economy and contacts to attract business to this country. Under the previous Government, the strategic investment fund seized upon that idea. To be fair, the current Government, through UKTI, are trying to do that through an organisation known as Catalyst. However, I am unclear as to how much progress we have made. I thank the hon. Lady for raising the subject, because it is important. Perhaps the Minister, given that advance notice, will be able to give us some information.
Laura Sandys
I reiterate that question to the Minister. Hopefully we will understand more about the issue.
Another point, which arises from the comments of my hon. Friend the Member for Skipton and Ripon (Julian Smith), is about how we help and assist small businesses—I am talking about very small businesses. For example, some of the ways UKTI is approaching trade are positive, but they are for medium-sized companies. There is a strong internet and web-based opportunity, which I have mentioned before in the House. Why are we not translating one or two web pages about small businesses that we know might be of interest to x, y and z markets? That would offer them an opportunity to market online from their office, rather than having to go on expensive trade missions.
The Minister has had his own small business and knows well that it is not actually money that affects small businesses, but time. The idea of spending three or four days speculatively is not really feasible for many businesses, but we could start to amalgamate websites to push certain sectors. For example, in my constituency there is a little brewery called Gadds’. It has five employees and has just made its first sale to Japan on the basis of somebody picking up a quote from a website about microbreweries—I understand that Japan is very excited by microbreweries. Why do we not have a web page in Japanese on our UKTI site that talks about 20 lovely, exciting and interesting microbreweries? Let us try to use what we tell everybody else to use—internet platforms that can save money and time. It is very speculative, but it does not cost anybody anything either.
In conclusion, I would like to ask the Minister some favours. Can we please try to put enterprise zones and areas that have received regional growth fund moneys on the UKTI website? I have been asking for that to happen for months. It is really important as an inward investment platform, but there is no reference to those important coalition initiatives.
Brandon Lewis (Great Yarmouth) (Con)
My hon. Friend mentioned enterprise zones. The New Anglia enterprise zone, which covers my constituency, is predicting 2,000 extra jobs in the next couple of years, going up to 15,000. That is being replicated across the country. Does she agree that it is hugely important to promote enterprise zones and to make sure that people overseas—many zones are trying to attract them—understand fully their opportunities and expectations?
Laura Sandys
Yes. I very much welcome my hon. Friend’s point. We have both been working very closely on enterprise zones, and my hon. Friend chairs the all-party parliamentary group on local growth, local enterprise partnerships and enterprise zones. Promoting them is absolutely crucial and I understand that there are two reasons why it has not happened. One reason is bureaucracy. The other reason—I was told by somebody from UKTI—is that UKTI does not have enough resources to put it on the website. Well, if they ran the website under IPSA regulations, they would find out exactly how much they have to get their hands dirty themselves. We need those front-end promotions.
UKTI should talk much more to Members of Parliament. I welcome the fact that my hon. Friend the Member for Stourbridge (Margot James) is doing a lot of work with MPs and UKTI, but we should not underestimate how much we know about the texture of our constituencies. That is certainly not about trying to sing our praises. The bizarre information and knowledge we receive as MPs is extraordinary and might stimulate some exciting ideas. As well as going through LEPs, which are big and have not really quite formed yet, and talking to chambers of commerce, who see things through one particular prism, I urge the Department to talk to MPs about their constituencies. That will give a little more flavour.
I am very happy to do what I call a speed-dating pitch at the next meeting of international UKTI executives when they come from all parts of the world to the UK. I am very happy to do a pitch on my enterprise zone and my regional growth fund money, and I am sure that there would be a lot of interest from other MPs who would be happy to do the same. We are here to sell. We are also here to look after potential inward investors. I assure them that MPs are not all as unruly as I am; they behave and they stay on message—if they are told what the message is. There are a lot of opportunities for us to be part of UKTI’s sales pitch, and to welcome people in the way that, when I have been abroad, other countries’ MPs have welcomed inward investors. I still feel that this place is kept apart from an important sales job for the UK. We can be a part of it. We can contribute to it. Hopefully, some of our ideas might even be adopted.
Barry Gardiner (Brent North) (Lab)
The hon. Member for The Cotswolds (Geoffrey Clifton-Brown) is absolutely right; there has been no debate on UKTI—not only in this Parliament but in the entire previous Parliament. It is indicative that the hon. Member for South Thanet (Laura Sandys) and I, who have both run businesses, have initiated this debate.
Julian Smith
Can the hon. Gentleman explain to me, as a new MP, why, in the whole period of the previous Parliament, trade and export seemed to get so little coverage and interest from Ministers or Government Back Benchers?
Barry Gardiner
I could, but I would rather refer the hon. Gentleman to the pamphlet that I wrote on the matter following the general election. I fear that if I were to begin on the point now, it might take up more time than we have available.
If the UK is to emerge from its current economic stagnation, it must do so by trade. The opportunities from trade and investment lie not only in our own abilities but in the accurate assessment of the economic opportunities in, and performance of, other countries. We have seen a definite shift in economic power. With the rise of India, China and Brazil, there is a new global dynamic, so there are now new global opportunities. We have seen the eurozone’s problems, as it struggles to pull itself out of recession. In the past 15 years, the United States has adjusted to refocusing its attention more towards the Pacific than the Atlantic. In those circumstances, we have seen the benefits of Indian companies, such as Tata Global, investing in British companies such as Tetley. We have seen the benefits of British companies, such as BAE, expanding overseas and, in doing so, boosting our economy.
It is imperative that we have the skills and institutions that can facilitate such investments. We need an organisation that can identify opportunity overseas and channel UK companies in a co-ordinated supply chain to meet it; one that can source overseas investors and persuade them that UK companies are the perfect fit for their investment to yield above-sector returns for them and for new jobs and growth in the UK. That organisation should be UKTI. The redoubtable hon. Member for South Thanet has illustrated that UKTI is, in its current state, not yet that organisation. It lags behind other countries’ organisations in promoting investment abroad and at home.
Nick de Bois (Enfield North) (Con)
Before the hon. Gentleman advances his idea of what UKTI can do—I agree with everything that he has said so far—should a critical part be not just about where the opportunities are now and in the short-term future? The UKTI must be able to play a strategic role, with the Government, for the so-called N11 countries. We must seize the opportunity to be the first to the field with infrastructure, airline routes and so on.
Barry Gardiner
The hon. Gentleman makes an absolutely perfect point. I am very happy to acknowledge it and support exactly what he says. UKTI should not simply be looking at the present, and it should not simply be looking at the short to medium term. It should have a strategic overview of where the UK’s trade and investment interests lie into the foreseeable future—that is absolutely right.
Geoffrey Clifton-Brown
Does the hon. Gentleman agree that if we get one thing out of this debate, it is that UKTI needs to be encouraged to benchmark itself against the very best similar organisations in the world? With great respect to my hon. Friend the Member for South Thanet (Laura Sandys), let us not benchmark against the French—we will get into the same problems that they have—but go to Asia and look at Singapore and Hong Kong to see what they are doing for their countries.
Barry Gardiner
I think that I should just take interventions and not make my speech, because every one of them is excellent. The hon. Member for The Cotswolds is right. I disagreed with him on his earlier points about RDAs, but on this point I agree: benchmarking and international comparators are essential if we are to see what we are doing. Also, there must be much closer scrutiny, performance management and benchmarking within UKTI to ensure that we are delivering what we promised. I will mention accountability in that sense later.
Mr Bailey
I am just giving my hon. Friend another opportunity.
A relevant point made in my Select Committee’s report last year was that a problem with UKTI is that it has been focused on measuring processes, rather than outcomes. Doing the latter is far more difficult. Does my hon. Friend agree that to assess its effectiveness, we have to find some mechanism by which we can measure UKTI’s impact?
Barry Gardiner
I would that every debate I participated in shed as much light on the subject as this one appears to be doing, without my saying a word. My hon. Friend, who chairs the Business, Innovation and Skills Committee, speaks with great knowledge on the subject and has pinpointed one of the key problems. It is a problem not simply for UKTI but for government as a whole. Government is keen to measure outputs, but reticent about measuring outcomes. That process transformation is required, as my hon. Friend’s Select Committee has pointed out.
While Germany and France bolster their economies with effective trading bodies, UKTI presents itself to those who use it as slack, unfocused, inefficient and even, in some cases, a deterrent to investors. Consider what Dr Wu Kegang, chief China adviser to the British Chambers of Commerce, told the BBC last year. He said that Chinese investors
“have no idea how to enter the British market. They don’t know how to build business channels inside the UK to promote their innovative brands and products”.
Global economic power is shifting from west to east and UKTI is failing to adjust adequately to the new reality. The UK is falling behind in investment in BRIC countries; inward foreign direct investment is dropping; and our global share of trade has slumped. Recently, the news has been dominated by the difficulties that British companies are facing in securing contracts over their foreign competitors. Just last month, BAE lost out to the French company, Dassault Aviation, for a contract with the Indian air force worth £7 billion to the UK economy. We cannot afford to lose, and we should not be losing, such a contract.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I am concerned and want to ensure that we get the facts correct. The preferred bidder has been identified. We have not given up the fight. There is a lot more to do. We need to get that clear. I understand what the hon. Gentleman is saying, but I want to make sure that it is known that we are not yet out of this fight.
Barry Gardiner
I am delighted that I was able to provoke the Minister’s intervention, because that is exactly the fighting talk that I wanted to hear. The hon. Member for South Thanet started by talking about your both being on the beaches, Mr Amess, and clearly the Minister is still fighting on them, so that is good.
This is a time when the UK should be taking every advantage afforded it to it. The difficulties created by recession and the crisis in the eurozone are considerable. That is why we need to expand our horizons, seeking new and innovative ways to attract investment and finding opportunities abroad. UKTI and British industry, generally, possess some remarkable advantages, many of which have been mentioned by the hon. Lady in her opening remarks. We enjoy significant cultural, historic and economic ties with many countries currently experiencing economic growth. London is the world’s financial capital, and we have a long and proud history of manufacturing.
With the right attitude, focus and know-how, UKTI can provide a firm footing for Britain to re-establish economic growth. As it stands, however, it is failing. The UK has lost market share in trade and investment. According to the Office for National Statistics, foreign companies invested £32 billion in the UK in 2010—a decrease of £16 billion from 2009. More significantly, because some people may challenge that on the basis of the recession, that was the lowest value since 2004. In 2010, outward foreign direct investment by UK companies decreased to £23 billion—the lowest FDI outflow in 16 years.
One might claim that recent events in the eurozone and the United States have impacted on such figures, but the statistics for the so-called BRICs are just as unimpressive. The United States remains the biggest recipient of outward UK investment. India, whose economic growth has topped 7% almost annually for the past 10 years, is down in 18th place, while China, the world’s largest economy, is 24th. Between now and 2030, GDP in the BRIC countries as a proportion of world GDP will increase by 40%, yet more than 65% of UK trade is done in north America and Europe. Indeed, British involvement with emerging economies has been waning. The UK dropped from seventh to fourth in the list of India’s largest export markets, but went down to 22nd place for imports from number three and now accounts for just 1% of all imports into India. We are the sixth largest manufacturing economy in the world, yet we represent just 1% of India’s imports. If that is not cause for shame and alarm, it should be.
Nick de Bois
There is a lesson in this and a stark warning. As with many other countries, there is a large diaspora from India in this country. We have a history unique to that part of the world and we share many common languages and traditions, yet we seem—perhaps there is a role for parliamentarians from all parties, as well as Ministers—to be failing to build long-term relationships. Does the hon. Gentleman agree that, in that way, we may be able to play a small part?
Barry Gardiner
The hon. Gentleman is right. Indeed, for precisely those reasons, I set up the all-party parliamentary group on UK-India trade and investment a number of years ago, to take advantage of the constituency links that he and the hon. Member for South Thanet have mentioned. We must capitalise on these things. They are the stuff of which business is made. Business is made not simply by good products and good marketing, but by people and contacts and by people who are able to go out and get business and do the deal. Someone might have the best product in the world, but if they do not have such a relationship, things will not happen. That is the hallmark of successful business.
In my constituency, more than 130 languages are spoken in our schools, and in one school, in a class of 29 children, 21 different first languages are spoken. Coming from such a constituency, I echo the sentiments expressed by the hon. Member for Enfield North (Nick de Bois). It is upon the experience, contacts and family connections of my constituents and, I presume, his that we must build a much stronger trade relationship.
This question must be asked of UKTI: why are emerging markets not at the forefront of British investment now? It should be UKTI’s role to facilitate investment abroad. The statistics reflect UK companies investing where it is easy, not where they can maximise return and not with an eye to future market share. That has a knock-on impact for British trade generally. The UK’s share of global exports has fallen from 5.3% in 2000 to 4.1% in 2010—a long-term trend of decline, I agree, since the 1950s. In the same decade, however, German exports grew from 8.9% to 9.3%. Meanwhile, our goods exports have grown by only 1% per annum, compared with 3% in the US and 5% in Germany.
A report conducted by Ernst and Young for the CBI noted:
“UK outflows are concentrated on the EU and the US, with negligible investment going to high-growth economies.”
The failure properly to engage with emerging markets is, however, not limited to the BRICs. There are no stated bilateral trade targets for Egypt or South Korea, despite both countries being designated as high-growth markets in UKTI’s current five-year strategy. There are also no stated bilateral trade targets for Bangladesh, Indonesia or the Philippines.
Although it is, of course, unfair to blame all those things on UKTI, they serve to underline the organisation’s inefficiencies. UKTI has masked its weaknesses through a lack of accountability. The figures provided in its own reports show little consistency, and there is a great deal of obfuscation regarding the allocation of resources and staff. There is also little or no clear delineation of duties or responsibilities between UKTI, the Foreign Office, the Department for Business, Innovation and Skills and the Treasury. The result is an overlap in what the various Departments do and, I assume, a duplication of effort. That lack of organisational clarity gives way to inefficiencies and a failure properly to undertake functions.
The evidence from business—I stress that it comes from business—is that UKTI is not an unuseful organisation, but it could do much more. In a survey conducted by the National Audit Office, 30% of respondents mentioned receiving some benefit from UKTI, but 40% indicated they had received no benefit at all. In a survey of exporters conducted by the CBI, only 12.8% of respondents described UKTI as excellent, while the verdict of 15.4% of respondents was that it was unsuitable or poor, and many organisations, of course, did not respond at all.
UKTI claims that for every pound invested in it, £22 is returned to the British economy—I am not indulging in flights of fantasy—but in UKTI’s own survey of British exporters working through UKTI, 46% of respondents indicated they would have achieved the same outcome without using UKTI. Let us not come out with silly statistics showing that for every pound that goes into UKTI, £22 comes back to the British economy, when UKTI’s own survey tells us that most people think they would have achieved exactly the same result without using UKTI. We have to be honest with ourselves if we are to make a proper analysis of the organisation and put those defects rights.
There is a dearth of credible financial and structural information available on UKTI. The National Audit Office stated that UKTI cannot measure its effectiveness or account for its expenditures because of a lack of accurate information. Our own National Audit office is saying that. The Government allocated an additional £45 million to UKTI in 2011, and it is most concerning that we are pouring money into a body that, according to the National Audit Office, has no oversight or accountability.
Evidence from within British industries has highlighted the failure of UKTI’s approach. Eight of UKTI’s 10 board members have no background in business, thus undermining the organisation’s ability effectively to identify investment opportunities and support inward and outward investors. Again, I refer to Ernst and Young’s CBI report, which states:
“more could be done to link UKTI and embassy staff to the plethora of trade associations operating in local markets.”
Geoffrey Clifton-Brown
The hon. Gentleman has hit on a vital point. Will he consider the scheme originated by Lord Heseltine to encourage more members of UKTI to go on secondments in industry, and vice versa? In fact, we should do more of that throughout the civil service, so that it has the ethos of trade within it.
Barry Gardiner
I am always happy to listen to a freeman of the city of Liverpool, as I understand the noble Lord now is. Of course secondments and exchanges, such as those that the hon. Gentleman mentions, are sensible and important, but it would be better for people to have real commercial experience in the first place. That goes back to the remark the hon. Member for South Thanet made in opening the debate: however intelligent someone is, a first in classics from Oxbridge does not qualify them to do business or run UKTI. We have some brilliant civil servants, but if they do not have hands-on experience of running a business, filling in VAT forms, hiring and firing people or doing all the things that the Minister, the hon. Lady and I have done, they will find it difficult to get down to enabling others to do them.
The testimony of ADS, which represents the UK aerospace, defence, security and space industries, is particularly telling. Despite UKTI’s defence and security sector being larger than all its other sectors combined, ADS has observed that there needs to be a reorientation towards the BRIC countries and an increase in the number of sector specialists. The City of London corporation raised similar concerns over its UKTI sector. It identified a
“reduced...capacity limiting ability to support the delivery of overseas initiatives”
and commented:
“reduced resources for UKTI are having a detrimental impact on the effectiveness of UKTI in encouraging inward investment”.
Such comments provide valuable feedback from service users; this is not about Her Majesty’s Opposition or Back Benchers quibbling and cavilling. We are simply highlighting what service users are saying, not because we wish to embarrass UKTI, talk down British industry or undermine the Government and the Minister, but because we share the concern that Britain is not punching at the weight that it should be—or, far less, above it.
All institutions, but particularly Government institutions, should be accountable, and the debate has given us a valuable opportunity to highlight UKTI’s role, so I pay tribute to the hon. Member for South Thanet for her inspiration in initiating it. Our intention has been to provide constructive criticism and to create wider awareness in Parliament of UKTI’s role in promoting UK trade and investment. Evidence from industry and recent experience are instructive. It is clear that we must redouble our efforts to attract investment and ensure that UKTI is properly funded, fully accountable and working effectively.
Mr David Amess (in the Chair)
Order. The winding-up speeches will begin at 4.55 pm. Seven or eight colleagues wish to speak, so I hope that everyone will share the time available. If hon. Members speak for 10 or 15 minutes, that will be fair.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am delighted to serve under your chairmanship, Mr Amess. I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing the debate. The fact that we have had a debate on trade with India and today’s debate on UKTI—two debates in two years—shows the interest of the coalition Government, and particularly of Conservative Members, in trade.
I also congratulate my hon. Friend the Minister on being here. He and I had Front-Bench roles in opposition, and I regret to say that I am going to shine a light in a few dark places he might not wish me to, but here goes. High levels of exports and foreign direct investment have always been an indicator of the health of an economy. It is vital to promote exports and foreign direct investment. We know from the very recent past that we cannot rely on consumption fuelled by debt, or on Government spending funded by debt, to drive growth. As I said in one of my first speeches after the general election, it is only through exports and FDI that effective growth will come into the country. That is how important they are to the economy. As a result of our history, we boast strong economic and cultural links across the globe. We should capitalise more on the fact that English is the universal language of business.
The effectiveness of the work of UKTI is vital to our economic recovery. A company in my constituency called Renishaw plc, chaired by the excellent David McMurtry, is doing incredibly well. Its revenues for the past six months, ending 31 December 2011, were up by a record 11% —that is £1.47 million—and as a result it is now employing 16,050 staff, with 130 vacancies, including 25 apprenticeships and 30 graduate positions. That is the real importance of exports: the growth of the economy, but also employment prospects—graduate and work placement prospects, which are so vital for youngsters leaving education.
Exports are also important for the companies themselves. It is estimated that between 1996 and 2004—the Minister will know this, because I have used these figures many times—the productivity of firms that export went up by 34%, but that of firms that did not export went down 7% to 8%. Exporting firms tend to have higher productivity. It is estimated that less than a quarter of the 10,000 medium-sized firms in the UK export, and most of them receive help from UKTI. However, the Government have recognised the fact that we must help more companies, and, as my hon. Friend the Member for South Thanet said, in his autumn statement the Chancellor granted UKTI an extra £45 million, to meet the target for the number of small firms exporting, and bring it to more than 50,000. We will need to work hard to achieve that target.
I pay tribute to the Gloucestershire chamber of commerce. I was contacted on Tuesday, by Suzanne Hall-Gibbins, the chief executive, who asked me to pass on in the debate how important she felt the role of chambers of commerce could be, in exporting. I hope that the Minister will say a little more about chambers of trade and of commerce. Along with the local enterprise partnerships, they have a supremely important role, because they can identify a lot of opportunities.
Julian Smith
Does my hon. Friend agree that one opportunity for British Chambers of Commerce would be for them to produce some of the market reports currently produced by UKTI? I think that the BCC believe they can do them quite a lot more cheaply.
Geoffrey Clifton-Brown
My hon. Friend is right, and, as my hon. Friend the Minister will know, we had that debate often in opposition. We could make more of the knowledge, on the ground, of chambers of trade and of commerce, as well as organisations throughout Europe. We could use them more—that is what they are there for.
I want to take up the point made by the hon. Member for Brent North (Barry Gardiner), who is unfortunately not in his place at the moment. In 2010 50% of our exports went to EU member states, and a further 16% went to the USA. The problem with that is that it is estimated that those markets will decline by 30%. On the other hand, by 2030 the BRIC—Brazil, Russia, India and China—countries will have increased by 41% their share of global GDP. In other words we are exporting to the wrong people. We are exporting to the countries it is easy to export to; but we are not encouraging our companies to export to the real high-growth markets. If we carry on as we are, we shall sink further downhill.
The markets in question are not always necessarily difficult to export to. The Minister may know that I recently visited Morocco, as did our trade ambassador Lord Marland. There is huge opportunity there, not only for trade with Morocco itself, but to use it as a hub for exporting into west Africa. We have all been looking east, towards Asia, but some west African countries’ growth is higher than that of Asian countries. Mr Tarab, the excellent CEO of the main phosphate company, which has 60% of the world’s reserves, is an Anglophile and joint chairman of the joint chamber of trade. He said to me that we should use Morocco as a hub to get into west Africa. In particular, our banks should use the opportunities that they have through shareholdings in Morocco to get into some banks in west Africa. West African countries such as Ivory Coast, Senegal, Nigeria, Angola and Ghana have had huge growth rates in the past few years, as a result of their oil and gas reserves and discoveries. We are missing a trick. They are friends, ancient trading partners, and many are members of the Commonwealth. We need to consider that market closely.
The previous Government’s policies on exports and attracting inward investment were incoherent, which prevented UKTI from implementing a rational strategy. One simple reason for that incoherence was a revolving door for trade Ministers, and another one for trade priorities for UKTI. I suggest gently to the Minister that he should set some priorities for UKTI, stick with them and ensure that we achieve them.
UK businesses that export reap significant benefits, but many are reluctant to start exporting, because they do not know where to begin, or they are unaware of the benefits. That is where UKTI comes in, but because it lacks a coherent strategy, as I have mentioned, it has not reached out to small companies well enough. I still think there is a mismatch between what UKTI does around the world, or in London, and what happens on the ground. Ninety per cent. of the companies in this country are small ones, and 4.5 million companies employ fewer than four people; if 1 million of them took on an extra person it would almost solve youth unemployment overnight, so that is a very important area. UKTI, through our embassy network around the world, could be more proactive in identifying the opportunities in those countries and relaying them back to London. Then, through our databases on our websites, we could relay the opportunities to the businesses.
Things tend to happen the other way around. What UKTI does is reactive. It tends to rely on a company approaching it and asking whether there is a market in Nigeria for the valve that it makes, which supports the oil industry. That opportunity should be identified by UKTI long before that happens, and passed back to the relevant companies. That is a change of thinking, and UKTI needs to think about it.
We need to think what incentives we can give to small companies to export. However small a company is, exports should be discussed at every board meeting. It might not want to do anything about them, but they should be on the agenda. We could encourage small firms more with corporation tax breaks. Perhaps we should even skew the national loan guarantee scheme towards companies that export. The Government need to do more to encourage small businesses.
We have not talked enough in the debate about inward investment. Too often we are delighted when big firms come to this country. Then we leave them to fend for themselves. An example is the £1.5 billion development by DP World at the London Gateway port, with investors from the United Arab Emirates. There have been huge planning problems. We should be monitoring and nursing those big investments, with someone senior from UKTI saying, “You have got a planning problem; this is who you need to go and talk to.” We need to get a reputation in this country for really caring, not just about firms bringing their investment to the country but about looking after them afterwards. That brings me on to infrastructure and the prospect of allowing it to fall behind.
Critics of High Speed 2 and Crossrail are wrong: we need the best infrastructure in the world. People need to be able to get about; we need to be up there on a world scale—certainly as good as any of our European competitors.
We need to deploy our UKTI people in the right places. Returning to my visit to Morocco, I found that we had four based in Casablanca, which is fine because that is where most trade is done, but we did not have a single UKTI representative in Rabat, although it is the centre of Government in Morocco, where all the Ministers are. The hon. Member for Brent North (Barry Gardiner) is right, business happens by networking, and we should be asking our UKTI people to network around the world. If they are to seek out the opportunities that I mentioned earlier, they need to network with the right people.
Geoffrey Clifton-Brown
I am spoilt for riches—I give way first to the proposer of the debate.
Laura Sandys
Does my hon. Friend remember the concept of people who lived in a community for years and years but happened to be British becoming so-called honorary consuls? They were in a country permanently, or might be there for 30 years, unlike ambassadors or UKTI people who come and go. We have lost that tradition; they need not replace anyone, and we should be nurturing such people—Brits who live in Morocco, for example.
Geoffrey Clifton-Brown
My hon. Friend makes an extremely interesting point. I have come across one or two honorary consuls, such as a former one in Mexico who is involved in a huge development in that country and knows the whole business community backwards. Other than a few expenses, honorary consuls come for free to the UK Government, so we should appoint more. My hon. Friend is exactly right.
Nick de Bois
I want a copy of Hansard now.
My hon. Friend is right to talk about the need for UKTI to network, but may I be cruder and suggest that we do what the French and Germans do? UKTI should bring contacts from within the countries, put them in front of visiting delegations and make them mix. We need such contacts to sell and they can open doors to help people to sell.
Geoffrey Clifton-Brown
I was coming to that, so I shall do so now. We need to encourage everyone from the top downwards, from the royal family, the Prime Minister or my noble Friend Lord Green, to take trade delegations out to such countries; we have been good at that in the first two years of the Government, but we have not been so good at following it up. The noble Lord Prescott, for all his faults, and he had many, was liked by the Chinese, because he kept going to China—he went three or four times a year. Such hierarchical communities respect people, and friendships must be made in depth. Our business people need to know that as well, because even big business and the FTSE company chairmen make that mistake—they think that they can fly into Beijing or Shanghai, do the deal and get out. What they should do is be in there long before they make the deal, do the deal and then revisit their contacts. The other thing on big companies is that we should use them as ambassadors for smaller companies. The FTSE chairmen that I have talked to about that idea are keen to help, and UKTI should have a role.
I have nearly taken up my allotted time, Mr Amess, so you might call me to order, but I have one or two other bees in my bonnet and then I shall conclude, please.
We must do much more to encourage all Departments to export—every single Department should have a designated Minister not only for procurement but as a trade Minister. With the possible exception of social security, there is no portfolio in the Government that could not have a role in trade. In fact, anyone at any time who goes abroad at the taxpayers’ expense, whether a civil servant, a Member of Parliament or a Minister, should be an ambassador for trade—such people should have an eye out for trade opportunities and, when they return to this country, they should write a note. What did I do? The first thing that I did on my return from Morocco was to write a note to my noble Friend Lord Marland on the opportunities for trade in Morocco. I also had a visiting delegation of parliamentarians from South Korea in my office the other day; I discovered a sniff of a highly important lead on an inward investment in South Korea and I sent an e-mail straight away, that day, to the noble Lord Green, alerting him to such a significant opportunity. That is what we should be doing more.
My hon. Friend the Member for South Thanet is right that every single Member of Parliament should become a trade ambassador, on two counts. First, we visit a lot of companies in our constituencies, and we know what they do as businesses, and their export potential. Secondly, we also know our own constituency, even if it has not got an enterprise zone—which I do not, although I wish I did, as my hon. Friend does. I still know, however, what the opportunities are in my patch, as does my neighbour, my hon. Friend the Member for Stroud (Neil Carmichael), and we link a lot of businesses together. We should all become trade ambassadors.
The Prime Minister was right to veto the European fiscal compact or tax agreement, because we now see Prudential, with a market value of £18.4 billion, considering whether—perhaps threatening, I do not know—to go to Hong Kong or wherever. If that business goes, a significant number of jobs will be lost in the City of London. If we over-regulate the City or business as a whole, we will simply drive that trade elsewhere in the world. We need to say to our European partners—as I said to the German Finance Minister, and got absolutely nowhere—that if we over-regulate in Europe not only will we lose financial services jobs in this country but the whole of Europe will become uncompetitive against faster growing economies in the world. We need to be really careful about that, so the Prime Minister was absolutely right, and the demands to protect the City of London were reasonable. There are three important financial centres in the world, the USA, London and Hong Kong—with Hong Kong very deregulatory and aware of the need to reduce taxes—and, if we are not careful, Hong Kong will overtake London in time to come. That is a real danger.
I return to the point that I made to the hon. Member for Brent North. Everyone has been critical of UKTI today, and it is easy to be so, but it has a difficult job to do and I think that it does a good job—on the whole and in spite of all the criticisms that I have made. That said, it could do the job a lot better. UKTI needs to benchmark itself against the very best globally, to learn lessons from our rivals in Hong Kong, Singapore, India and all around the world. We in the coalition have been slow to insist that UKTI does that, and I suggest to the hon. Member for West Bromwich West (Mr Bailey), the Chairman of the Select Committee on Business, Innovation and Skills, that if UKTI does not do that itself, perhaps the National Audit Office should do a proper value-for-money report. That is not necessarily a criticism—none of us has 100% wisdom, and every single one of us could improve performance. There is some distance to go with UKTI, because the only way we will grow the economy and create jobs is to export more and to encourage more inward investment. After all, we were the leading country in the industrial revolution, and that is what made this country great—the “great” in Great Britain—so for goodness’ sake let us strive to get back there again.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
It is a pleasure, once again, to serve under your chairmanship, Mr Amess. I thank the hon. Member for South Thanet (Laura Sandys) and my hon. Friend the Member for Brent North (Barry Gardiner) for securing the debate, and I congratulate them.
I have served on two Business, Innovation and Skills Committee inquiries covering UKTI, one as a lay member under my Conservative predecessor as Chair, the hon. Member for Mid Worcestershire (Peter Luff), and the other as Chair myself when we took up the issue of foreign trade and investment last year. We are in a rapidly moving world and Select Committees can take part in the process; it is most important that we do not just produce reports, make recommendations, get replies and then put them on the shelf, but that we examine how policies have evolved over time. My Committee will certainly be looking again, in the near future, at the issues raised today.
I have heard a lot of criticism of UKTI today, as well as what might be called faint praise, some of which reflects fairly perceptions of UKTI. Certainly the figures quoted by my hon. Friend the Member for Brent North from the CBI survey by Ernst and Young genuinely reflect the mixed perception of the sort of services that UKTI provides. However, in defence of UKTI, the service has had some problems. The report of the Select Committee on Business, Innovation and Skills states:
“All departments must be made to realise that they have a major role to play to help Britain trade its way out of recession and sustain its long term prosperity.”
That echoes the words of the hon. Member for The Cotswolds (Geoffrey Clifton-Brown), and as a fellow Cotswoldian, I could not agree more. The report continued:
“The Committee found that UKTI is, overall, a successful agency but that it has been subject to too much interference from other parts of government. Its priorities have been changed too often, leading to a lack of clarity. Treasury imposed revenue targets have also forced UKTI to offer businesses services it is able to charge for, rather than providing the services which will most benefit individual companies and the country.”
Those were the conclusions of my predecessor Committee about the previous Government’s policy. The problem is that it has not changed much under the present Government. We should measure UKTI in terms of national policy and in the context of national priorities.
When the Government came to power, they talked about rebalancing the economy, and highlighting the crucial role of export growth within it. I expected UKTI, as the most strategic service capable of delivering that overall policy objective, to be strengthened and to be given greater influence not only over the policy of the Department for Business, Innovation and Skills, but over other departmental policy. Regrettably, a series of delays, confusion and muddle has blunted its effectiveness.
First, there was delay in the appointment of the new head when the previous one left—a four-month delay in a service that is vital to our ability to grow out of recession. Then there was delay in appointing Lord Green as Minister for Trade and Investment. He was appointed in January 2011, about seven months after the Government came to power. Given the point that has been made so many times about the importance of our top ministerial representatives banging the drum for Britain in foreign countries, that delay hampered UKTI’s ability to maximise its role and potential.
There were funding cuts of 17%, leading to a 19% cut in trade advisers. When the Minister appeared before the Select Committee, he conceded that, in the short term at least, the number of companies that could be advised would be reduced. That was remarkable at a time when all public announcements were about the huge importance of exporting our way out of the recession, and the level of commitment needed to do so.
The hon. Member for South Thanet made some important points about the abolition of the regional development agencies, and the appointment of a body to carry out that inward investment process. There were huge delays, and a period of confusion. We all have our opinions about the regional development agencies, but they carried out that function with various degrees of ability.
Laura Sandys
It is interesting that we have a very effective organisation, Locate in Kent, which is very Kent-based. From our perspective, regional development agencies did not understand us, so they were never going to have a function. We need speed and flexibility of action, instead of having to wait for bureaucracy. Whatever the organisation and whatever the structure, we need to act fast, and to be nimble and flexible, instead of institutional.
Mr Bailey
I accept the hon. Lady’s comments. There were different experiences of the RDAs’ work, and they generally seemed to be more highly regarded the further north they were. However, there was undoubtedly a body of expertise embedded in them, which suddenly found itself unwanted. The introduction of local enterprise partnerships may or may not be able to fulfil part of that function, but for a long time there was no clear source of advice, information or propaganda that could be used to make the necessary local connections by any company contemplating inward investment. That may be changing in one or two places, but we have lost a year at least, and the consequences in some areas are serious.
Overall, the problem has been that because of the delays—there was also a five-month delay in publication of the UKTI strategy—the impression has been that, despite all the public pronouncements, the service is not a serious priority. Not only have we lost some of the services that were previously carried out, there has been a lack of direction and focus for a considerable time as a result. I accept that the perception of UKTI has been mixed, but the Government have failed to make it the sort of priority service that it should be—I totally agree with the comments made by the hon. Member for The Cotswolds—and that has not helped it to perform its function.
I welcome a number of recent developments, which may change that situation, and the Select Committee will consider them, including the extra investment of £45 million. The recently signed agreement between UKTI and the European Chamber of Commerce, which has been anxious for that agreement for a long time, could be a model for the integration of our foreign trading practitioners, with UKTI, the Foreign Office and civil servants pledged to make those connections. There is probably huge scope for reproducing that sort of model in other parts of the world.
UKTI has had its efforts blunted by other problems arising from other departmental priorities. The visa regime has certainly not helped its efforts in China and India. That has been a constant source of grievance in those countries, and it has not created the right sort of climate, or the feeling that Britain is open for business, which should underpin UKTI’s efforts there on our behalf .
The Export Credits Guarantee Department was roundly criticised by the British Exporters Association before the Select Committee. To be fair to the Government, they have tried to act on that in a way that the previous Government did not, but the jury is out on how successful their actions will be. The overall problem for small businesses is access to finance to allow them to invest and to take the available opportunities in foreign markets. I know from personal experience in my constituency of a number of companies with export opportunities that have not been able to realise them because they could not lay their hands on the finance required to invest to meet the necessary production targets.
I return to the point about departmental priorities, and the importance of getting the top people in our ministerial hierarchy to go out and beat the drum for Britain. The hon. Member for The Cotswolds made the valid point that going out to sign a trade agreement is only one thing, and I have heard feedback from companies expressing their concerns that while they do the work to get trade agreements ready, the Ministers just go along to sign them and take part in the photo shoot.
In Germany, for example, political leaders are constantly on the phone to work with and promote industry, but we in Britain do not do that in the same way. That is not a criticism of the current Government; it was the same under the previous Government. One problem is our governmental structure. Why does the Prime Minister return to the House every Wednesday to answer questions when he could be out working to get contracts signed that will help British people get British jobs and strengthen our economy? The Government should consider changing some of our constitutional structures and parliamentary procedures to free up our leaders to carry out that ambassadorial role more effectively than they are able to do at the moment. I do not blame individuals because the nature of their job militates against such involvement. However, if we are serious about trying to refocus the whole Government on such a priority, we must look at government in the round.
A number of other Departments have pursued policies that run contrary to our objectives. The abolition of regional development agencies before there was an effective replacement mechanism is one example, as is the Home Office and its visa regime. Such things work against our trade objectives, because our departmental structure does not consider overall priorities that will help us grow our economy. The hon. Member for The Cotswolds made that point, although perhaps in a slightly less critical way.
The fact remains, however, that the structure within our Government does not focus on growth as it should. If UKTI is to be effective, we must give it more investment, monitor the outcomes of its work, and ensure that other departmental priorities work to maximise its potential. If we do that, UKTI may genuinely be able to lead this country towards export-led growth and the position that we were in many years ago, developing our exports and our role in the world economy.
Priti Patel (Witham) (Con)
It is a pleasure to serve under your chairmanship, Mr Amess, and I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing the debate. It is always a privilege to attend debates of this nature and to discuss trade, exports, inward investment and UK plc. Conservative Members feel passionately about those issues and are constantly coming up with ideas. I hope that we will be able to give the Minister some constructive and helpful suggestions about how we can work together to further that agenda.
It is always interesting to follow the Chair of the Business, Innovation and Skills Committee, and although I was taken aback by some of his earlier comments, I agreed with his concluding remarks. I find somewhat ironic and superficial the synthetic lament about UKTI and the fact that there is now a lack of trade advisers. During the good times, a lot of money was spent by central Government, and we must question how it was used and why exports did not increase, given that all those resources were going in.
I agree with many of the points raised during the debate so far, and I will not go over ground that has already been touched on or repeat facts and statistics. I wish to talk about the United Kingdom in relation not only to business, trade and the global economy but to the Commonwealth countries. Statistics demonstrate that we are not doing enough to enhance or strengthen our long-established, traditional, historic and cultural ties with those countries and to do more business with them.
We all know about the economic outlook and the crisis in the eurozone. I feel that the United Kingdom should capitalise on its natural relationship with Commonwealth countries and become an even greater player on the economic stage. We must strive to work better with our friends of old and our friends of new to improve our economy and show that Britain is open for business and to enhance cultural ties and commonalities.
My hon. Friend the Member for Enfield North (Nick de Bois) spoke about the diaspora and the Indian community. I am of Indian origin and I know a little about the Indian community in this country. Central to what one hopes will be UKTI’s enhanced role following today’s debate, perhaps the Government will consider how engagement with other communities—not only in London and the south-east, but across the United Kingdom—can be strengthened. The Commonwealth network provides us with many natural trading partners, but we need to do more to enhance that network. If the UKTI is able to take a more strategic role, I hope that that would be embedded in its sense of direction.
I should like to take up some of the points that have been made and particularly the contribution made by my hon. Friend the Member for South Thanet. Local enterprise partnerships were mentioned. She and I share the largest LEP in the country—your constituency is also part of that, Mr Amess. I have been asking some interesting questions and it has been quite an education; I decided to throw myself into the world of LEPs and rationalise from that local grass-roots position how we can be more outward facing in terms of exports, enhance business relationships in the constituency and make connections overseas.
I feel strongly about the issue because 80% of my constituents are employed by small and medium-sized businesses—a figure that is higher than the national average. Small businesses are key to the local economy, not only in my constituency but in the eastern region and Essex. Every week when I meet local business representatives, whether I am meeting someone for the first time or someone whom I have met frequently over the past four to five years, I always ask about the international dimension. They have never engaged with UKTI—a point worth reflecting on—and partly because of current economic circumstances and constraints, they have not really considered where their business will be in five years’ time in terms of exports or the international footprint.
Through the LEPs network, I decided to engage with the Essex chambers of commerce—you will be familiar with that, Mr Amess—to consider the situation. Interestingly, in two weeks’ time, we will hold a trade event in my constituency. We have successfully invited the Indian Economic Minister and the UK India Business Council, as well as all the relevant businesses that need to engage externally and look east, to facilitate dialogue, connection and engagement. My conclusion, particularly after working with the chambers of commerce and speaking to many local businesses, is that all Members of Parliament have a symbolic and significant role to play. I see myself almost as a broker and someone who is able to facilitate people coming together in the same room.
I am in talks with the Essex chambers of commerce about taking a delegation of Essex businesses to India, probably in the summer around June. I will organise that with the chamber of commerce. With no disrespect to UKTI or central Government, I do not see it as central Government’s role to get involved. We know our businesses and economies best, and we are undoubtedly all ambassadors for our communities and businesses and for UK plc. It is incumbent on all of us to play a stronger role in doing so and in facilitating. Although UKTI has a role to play and will, we hope, take on board many of the comments and representations made here today, I feel that we can do much more on that basis.
I also feel that the Government have a role to play, particularly working alongside MPs, where we have contacts and business links. I have had the tremendous privilege to work in the corporate sector and across a range of sectors. I have worked in the east and the middle east, particularly in Asian countries. I have also had the privilege to work for gulf Governments, helping them attract foreign direct investment. What we learn from such experiences is valuable to the Government, as are our insights into how to do business and attract inward investment and our personal contacts and networks.
Just this week, I have had some interesting offline conversations, to use a business term, with people in the Indian Government about the Government tenders coming out of India. I am an advocate for our great country—I want British businesses to have a tremendous footprint in India—so I am picking up the phone to a company, which will remain nameless for now, that makes great products that have missed out on other international deals, to see where I can facilitate connections.
Off the back of today, we have a tremendous opportunity to sit down with Ministers and their teams to help carve out a strategic route map with certain countries to download our networks and insights, marry them up to British companies and see how we can facilitate greater dialogue, engagement and connections with other Governments, where those connections have not been particularly strong in the past and where central Government might not have a good footprint, a strong blueprint or a personal connection. There are quite a few examples.
I see this debate as a great opportunity to move forward strongly. The previous Government missed many opportunities. The economic backdrop was different then; it is tougher now. We are in a competitive marketplace. I speak of India a lot in debates on this subject. Germany and France are making great inroads there. I want us to be highly competitive and beat them, because we have a natural relationship with India that they do not. I welcome the Minister’s comments later, but I want to give him the message that I should like to sit down with his team and many other colleagues to work out what that strategic route map will be.
Neil Carmichael (Stroud) (Con)
It is an honour and a pleasure to speak in a debate chaired by you, Mr Amess. It is also fantastic to speak in a debate secured by my hon. Friend the Member for South Thanet (Laura Sandys). The subject is critical, as every hon. Member has said and as we will all underline in our speeches.
My hon. Friend the Member for Enfield North (Nick de Bois) is half French. For the record, my family is heading in that direction, as my wife is French, which makes my children half French. I know that the French are incredibly determined, persistent and thorough, which probably accounts for their successes in trade. His experience and mine are obviously useful in such matters. Having said that, I will move on to the key points.
I worked with UKTI in my former life, before being elected as the Member of Parliament for Stroud. I was interested in Poland, which at that point was growing well. I knew that there were great opportunities, because I had taken the time to study economic data and seen that there were areas of growth. That was more than 10 years ago. When I enlisted UKTI to help me, I found the organisation extraordinarily helpful in many ways, including in making contacts and links with firms already in Poland, decision makers and politicians—even members of the Law and Justice party, which was quite an experience. My experience with UKTI was encouraging, but it could have been better, and I will explain one or two reasons why.
I learned two important things during my time looking at Poland. The first was that, despite the fact that Britain went to the rescue of the Poles in 1939 and had good relationships with the Poles culturally and historically, we were not first in terms of investment in Poland. We were not second, third or fourth; we were fifth. Germany had the No. 1 slot, for obvious reasons; France had the No. 2 slot; Italy had the No. 3 slot; the United States had the No. 4 slot. We rolled in at No. 5.
We must do a lot better. We should think not just about the countries with which we have been friendly in the past; it is tomorrow that matters. Although I am fully in favour of developing links with countries in the Commonwealth and beyond, we cannot just make assumptions about the behaviours of those countries; we must be sophisticated, robust and determined in developing the right kinds of opportunity.
The second thing that I noticed in Poland was that the first four countries had identified sectors and did them extraordinarily well. The French identified the hotel sector. One cannot go to a hotel in any part of Poland that is not owned or run by the French. They identified the sector and developed it thoroughly. The Germans did likewise in the automotive sector, the Italians in pharmaceuticals and the Americans in computers.
Laura Sandys
One reason why France and particularly Germany have a strong sectoral focus is that their trade associations have a different function and are a lot more proactive than ours. In many ways, they form a sales and marketing operation for the sector and are front runners, helping medium-sized companies that might not be able to spend the time or effort to go to those countries by representing them, almost like agents. It is a potentially interesting model.
Neil Carmichael
My hon. Friend is exactly right. Not only do they identify and develop sectors, they have a structure to develop relationships that are thorough and long-lasting. That is the first point that I make to the Minister.
We have all celebrated Lord Green, so let us have another go. I think that he is an excellent Minister of Trade. I welcomed his appointment, and I have heard him speak on several occasions. I last heard him speak on China. He delivered a powerful analysis of where China was going, where the markets were and the development of sectors and so forth. That is the attitude that we want within and throughout UKTI. We must understand properly the countries that we are considering in terms of the economic data, the analysis and the prospects that lie therein. The approach exemplified by Lord Green when I heard him speak on China—I have heard him speak on other subjects, but China is a good example—is the kind that we want to see much more of in UKTI.
That leads me to another point, which I made in a different context in this very room last week. It involves the importance of supply chains, which we sometimes underestimate. A lot of the products that we make in Britain are parts of products that are then developed somewhere else and sold on. In my constituency, for example, we make fuel injectors for large diesel engines. We do not make the engines; they are made in Germany, and they become parts of vehicles that are made elsewhere. That is a lengthy supply chain and a valuable one. That is what we must understand in the context of developing trade links. We must be much more interested in developing links, not just between Britain and another country, but within Britain. I am referring to the firms that should be developing the right links elsewhere. That requires more knowledge. It requires a better understanding of the landscape of opportunities. UKTI needs to get a grip on the question of supply chains, and I urge it to do exactly that.
My hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) mentioned Renishaw, and he was absolutely right. Renishaw is also in my constituency. It is a great firm. It is eager to develop markets and has recently done so successfully, because of the quality of its product, its knowledge of the market that it is going into and its sheer determination to get the engineering right. That is another thing that the Germans tend to do. We need to ensure that all our companies have that determination to achieve excellence, and that excellence needs to be promoted. Again, it seems to me that UKTI needs to develop the right kind of relationships for that to happen. It needs to do so in the right place and through the right channels.
In Gloucestershire and in my constituency in particular, we have had some striking successes with UKTI, so I do not want to be over-critical. For example, Green Fuels— a company that I visited before the general election—has developed businesses in Nevada and Mexico. Both those developments took place with the assistance of UKTI, which is great news.
Another firm from my constituency, Tudor Rose International, has obviously been using UKTI successfully. It has stated:
“As an Export Market Management Company we are delighted with the help and assistance UKTI are giving us in developing new and emerging markets.”
It goes on to develop that theme. The interesting point about that quote is that it refers to “new and emerging markets”. We must be ready to look at the new opportunities, define exactly what they are and stick to them.
Brazil is a very good example. Anyone with an understanding of agriculture would have known that, sooner or later, that country would really start growing in that sector. Some companies—for example, Fiat and New Holland; agricultural machinery firms—observed what was happening and now dominate the manufacture of large agricultural equipment there. That is good, but it is something that perhaps we should have been thinking about ourselves.
My constituency, oddly enough, has many firms that are exporting to the oil and gas industry in an emerging market in an emerging country—Brazil. They are doing surprisingly well. I shall just underline the fact. ARC, for example, is producing products that are desperately needed and of a high quality. It understands the market well and has appreciated that it is a market that will develop. In my view, UKTI needs to produce some analysis that can be easily seen—it must not be hidden behind a locked door until someone comes along with a key to prise it open—to give firms a feel of where the opportunities are and where expansion and development can take place.
I shall conclude by ramming home the point that we need more analysis of the opportunities, and it needs to be much more sophisticated and alert to new and emerging markets. That is the first point. Secondly, UKTI needs to be more transparent, a bit more open and a bit more user-friendly. That was my experience when I was looking at things in Poland, and I still detect it from time to time when I am talking to firms that are using UKTI today. Last but not least is a powerful point that my hon. Friend the Member for Witham (Priti Patel) made about developing links. However, UKTI must be thorough. One trip with a bit of glitz will not do. We need something bigger and more sustained. It must be broader and deeper—more meaningful. That is how our competitors have stolen a march on us. It is what we must start doing, and now is a good time to start.
Julian Smith (Skipton and Ripon) (Con)
I am not sure that I have a speech; this will just be a bit of verbal. I would like to add to some of the comments that colleagues have made. I start by paying tribute to my hon. Friend the Minister of State. Many Government Members wish that he was more than a Minister of State. He has a wide portfolio, of which UKTI is just a part. I want to put it on the record that his energy and effort in this area, as well as on deregulation and in other parts of the business agenda, are noted and appreciated.
From last year’s trade White Paper to the work that UKTI has been doing and my right hon. Friend the Prime Minister’s trip to America, as well as his trips to India, Brazil and China, a great deal of work has been done. I disagree totally with the head of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey). The current Government have put trade on the front foot and are investing heavily in it from the highest level. One of the biggest indicators, and perhaps the Minister will confirm that my understanding is correct, is that every Minister who goes abroad now has a ledger on how much trade is being done between Britain and the overseas country. That is a great improvement and allows a focus on trade during every ministerial visit. However, the comments that I make today will focus on UKTI.
I represent a north Yorkshire seat, where the UKTI offer has been very good. There is a very good gentleman sitting in Leeds called Mark Robson. I pay tribute to him and his team. The tie-ups that that part of UKTI has with industry groups in health care and other areas seem to be extremely good. That combination of utilising outside bodies with UKTI employees works well.
However, when I was reading the corporate plan for UKTI, I was shocked to see no mention of people and a people strategy—a human resources strategy. I have been a Member of Parliament for two years, having come from an international business, and I believe that there is a crisis in Whitehall because of the lack of commercial experience. We will see that increasingly across a number of areas, but UKTI is at the forefront of the crisis.
My first question to the Minister is this. Will he give the House his views on UKTI’s HR strategy? What can he do to impress on people the need for an HR strategy? In the short term, where will the 100 or 120 trade advisers who are being recruited come from? What are their backgrounds? How is that recruitment taking place? How much are we paying them? Are we paying them enough? We need to pay a good market rate to get private sector expertise. How do we bring in private sector talent?
That leads me to the question of culture, which hon. Members have discussed. Having read the strategy document and spoken to delegations from UKTI senior management when they visited the House, my biggest concern is the lack of a sales culture in UKTI. We have talked about how we could monitor UKTI better, with better metrics, the National Audit Office and so on, but I am not sure whether things need to be that sophisticated. The things I am interested in that were not in the annual report are simple. How many trade visits were made in, for example, China by UKTI executives? How many corporate plans in Brazilian states and provinces are being tracked? How many hits has the UKTI website had? It is simple stuff, but we need to look at the data in UKTI literature and put some pressure on. There is no net assessment of how many new inward investment projects, businesses and employment opportunities there are versus what goes out. All the talk is about what comes in, with no assessment of what the net numbers are, so my second question is this. How do we improve the sales culture of UKTI?
The issue of sales leads me to communication. The initiative of using Ministers seems to be working really well. It got a bit of stick in the press last year, but I understand that most FTSE 100 companies now have a senior Minister as a relationship manager. However, I am not sure whether the complaints from the retail and financial service sectors have been addressed, because they were missed out of the pilot exercise. I am keen to hear whether those two vital sectors have now been included.
Let us consider how we can expand the pilot scheme to include more companies. The focus on mid-sector companies that was announced last December by Mr Baird looks positive, and I am sure that it will bear a great deal of fruit. As co-chair of the all-party parliamentary group on micro businesses, I believe that we need to communicate better with the smallest companies in our economy. I agree that there is a role for MPs, but it worries me that that should be the only route into such companies. We have another route that we do not use and that is through the Treasury and HMRC. All the bits of paper that companies get from the Government about tax, pay-as-you-earn and other such matters could be used. Advertisements could be printed on the back, sign-posting people to the work of UKTI. I will continue to ask the Chancellor to open up HMRC.
Finally, we need some honesty from UKTI about what it is doing and where the gaps are. A number of my hon. Friends had a meeting with the Chinese ambassador recently, and he said that when he was running a province in China, he was surprised that he never saw a representative from Britain at the local trade fair; there was always one from Germany and sometimes one from France. In China, there are more than 30 provinces. As I understand it, we cover only a fraction of them, and it would be helpful if we, as parliamentarians, could understand where the gaps are so that we could raise questions with Government, such as, “Do we need further investment? How can we get private sector involvement to fund more work?” The annual report did not go into that, so I encourage UKTI to be brutally honest with us.
I urge the excellent Minister of State to press on UKTI my concerns relating to communication, people, culture and brutal honesty.
Nick de Bois (Enfield North) (Con)
It is a delight to serve under your chairmanship, Mr Amess. Although I had not planned to speak, I have been inspired to make a few comments on a subject that is dear to me. I first came into contact with UKTI, or whatever it was called then, in my first six months of starting a business in 1988 or 1989—it was so long ago, I can barely remember. I approached it with some enthusiasm because I wanted to export and I did not know where to go. I am afraid that UKTI is in part responsible for me ending up in politics. [Interruption.] The hon. Member for Hartlepool (Mr Wright) is allowed to groan, but they should not be doing it on the Government Benches.
It was with immense frustration that I realised that what was on offer was inadequate and ill-informed. Despite the attractive rhetoric at the time, the Government—I fully confess it was a Conservative Government—did not have much of a handle on how to help businesses grow and export. I resolved that one day I would be in a position to do something about that. Although I am not in that position, I hope that I can influence thinking.
I am not here to join the list of people who are criticising UKTI; actually the concept of it is sound but the implementation could be better. The CBI report in 2011, which looked back over the previous decade—I will try to resist making any political points—rightly acknowledged that the UKTI had what can only be called the Marmite effect on many businesses. It was a love or hate situation. Some experiences were absolutely marvellous and terrific and others were not. I am sure that organisation and administration had something to do with it, but in the end, as everyone says, it comes down to people and how motivated and how good they are at their jobs.
There are two issues: the short term and the strategic. In a couple of interventions, I touched on the strategic. I am afraid that we have missed the boat on the BRIC nations. Yes, there are short-term opportunities, but we should have been building relationships a long time ago. We could have done that at Government and at business level. I am not sure whether Members are aware that we still do not have a direct route from London to Brasilia. That is not how we should behave if we want to establish ourselves with future growing economies. I hope that a strategy in that area will evolve and that UKTI, along with the Government, will play a leading role in helping us to engage with the N11 countries.
The report “Britain open for business”, which I commend to Members, talks about some of the future target countries. It lists only six of the N11 countries. I am a little bemused by that. There may be good reasons, but why did it pick only those six as future target countries?
For the next 10 years, average growth in the eurozone will be pretty awful. The average growth for Germany is forecast at 1.4%, which does not make it a good place to invest money or to solicit sales. It is natural and right to look elsewhere. We have touched on many of the relationships that we have through diaspora or for historical and strategic reasons. I will be blunt; they love us in Kuwait. We came to its aid 20 years ago when we helped to liberate it from Iraq.
There are reasons why countries have an affection for us and wish to work with us, and they go right back to before the Commonwealth. However, it is not just a question of saying, “Oh, let’s go and work with those countries.” We must look for where the growth is. We have already heard about India’s phenomenal growth and the shocking fact that we have such a small slice of it. Closer to home, we are one of the few countries that is supporting Turkey’s membership of the EU. Turkey’s growth currently stands at 8.9%. The UK is behind Italy and France. As Members will understand, with my name, I am utterly qualified to comment on the French without any fear of kickback. France’s growth stands at 1.6%, Spain’s at 1.9% and Britain’s at 1.2%. It is a ludicrous situation. Government cannot do everything, but they can act as a facilitator.
If we look at areas outside the eurozone, and match them with our historical links, the links that I have raised and where there is growth, we start to see the basis of a strategy through which we could reach out and seek future growth. Indeed, many of the countries that I am talking about are in the Commonwealth. I am not ashamed to admit that. In fact, I can think of no greater legacy in this diamond jubilee year than for the Prime Minister to make a formal, public, demonstrable commitment to boosting trade with the Commonwealth. What greater legacy could Her Majesty the Queen ask for? Let me remind hon. Members that we are talking about a common wealth, which was the foundation of the Commonwealth. There is no reason why we should overlook it now. Forgive me, if that sounds a little traditionalist, but it is probably also practical and something that we should seriously consider as an acknowledged strategy.
Looking well outside the Commonwealth, UKTI could quite reasonably look at the Gulf countries, for example. There was a time, when “Cool Britannia” was all the rage, that we overlooked many of the former colonies, for fear of not being very “Cool Britannia”, but I regret that decision. I was on a trade delegation to Kuwait and Members will be surprised—I do not know for certain, but perhaps Opposition Members will be quite delighted—that 90% of Kuwait’s economy is in state ownership. That is an unsustainable position for Kuwait. There is growth in Kuwait, mainly because of the very high price of oil at the moment, but Kuwaitis know that a programme of privatisation is absolutely essential to their future. Who better than this country, which led the way in turning the heavy hand of state corporations into successful and profitable private organisations, to help Kuwait with that programme? We now have to work hard to rebuild that relationship and position ourselves to be ready to do business with Kuwait, which will help our exports.
Once it has evolved its strategy, UKTI can play a significant role in that process. Let me try to explain why from the point of view of a potential exporter; I was a potential exporter and I am sure that many others in the House were too. Exporting is a journey fraught with difficulties. It makes the Cheltenham Gold Cup hurdle look remarkably easy—if horses go over hurdles at Cheltenham. I am not a horse racer, so I do not know, but it seems a reasonably good analogy. Measuring risk against return in exporting, there is high risk for potentially satisfactory or good return. Patience is a prerequisite, but there are so many hurdles to exporting that many people who start with the right intentions find it all too easy to pull out or fail before they have made any substantive progress. UKTI’s work could be a very effective way of holding the hand of some of those early exporters as they go through the trials and tribulations of exporting. I know, because I failed at exporting. I have no problem admitting it, because that failure eventually led me to learn from those lessons and to succeed, both in north American markets and in some of the markets that we have discussed today; but it was a very difficult journey.
Where UKTI could help to fill the gap is both on a practical level and an advice level, but we need to do more. We have already acknowledged the need to build—on a regular basis—our relationships with Governments, agencies, finance houses and companies themselves. UKTI can help to do that, but it needs to do it with a little more power and oomph to its elbow, taking the companies with it. There is a role for UKTI in that process.
My next point is that we need to ensure that we can work with trade bodies here in the UK, by proactively going to them rather than waiting for them to come to us. First, we must have matched British industries with markets in the growth countries and then put the case to them why they should export to those countries. There is practical help that we can offer British companies via UKTI, and we must persuade them about—indeed, sell them on—the merits of exports.
We must also offer companies practical ways to break down the barriers to exports. Many of those barriers are financial. For example, how does a company even open a bank account in some countries? We can help with that and other things, through to delivering companies the contacts in the first place that will allow them to go on and build a sustainable relationship. The job is as much about selling in Britain as it is about opening doors overseas. It is not rocket science to say that that is what we need to do.
I echo the call of my hon. Friend the Member for Witham (Priti Patel): parliamentarians—I choose that word carefully—can play an active role in that process. Parliamentarians from both Houses can do that; there are skill sets everywhere. Let me for a moment shower praise on Baroness Morris of Bolton, who I joined on a trip to Kuwait. In that part of the Gulf region, a baroness or a baronet—I am afraid that I do not know all the proper titles—is one of the most respected positions. I was walking behind Baroness Morris, having got out of the second car that had picked us up from the airport; the hotel manager and the director met us at the hotel door and I followed them in. I hasten to add at this point that I was carrying my own bags. When I got to the lifts, I was promptly shown into a different lift from the one that Baroness Morris was being escorted into. I had no problem with that, but it taught me a lesson. In different parts of the world, our parliamentarians are respected and valued; sad to say, they may be more respected and valued than they are in parts of this country. We should use their talents, whereby they are consistently able to build relationships, and consistently use—frankly, let us say what it is—the power of office and patronage to help practically in opening the doors and driving our business.Above all else, if we match not only the titles but the talent, skill and expertise of our parliamentarians with the abilities of UKTI, we can make a practical demonstration of effective support from Government to meet the real needs of business.
Mr Iain Wright (Hartlepool) (Lab)
Mr Amess, what a pleasure it is to serve under your chairmanship today, and may I also wish you a very happy 60th birthday in 11 days’ time?
Mr Wright
It is impossible that Mr Amess is 60.
I must however add a sour note, Mr Amess, that is directed at your good self. I attended business questions in the main Chamber today and I heard you say to the Leader of the House that Southend is the best seaside resort in the country, if not the world. I have to correct you and say that Hartlepool and Seaton Carew is actually the best seaside resort anywhere in the country.
This has been a great debate, and an important and interesting one. I congratulate the hon. Member for South Thanet (Laura Sandys) and my hon. Friend the Member for Brent North (Barry Gardiner) on securing such a significant and timely debate.
In many respects, I am very optimistic about Britain’s prospects in the next half-century. We have innovative, dynamic, competitive companies in sectors from which the world wants to buy goods and services, and in which we are world class. We have a tradition of open, fair and global trading, which we need to exploit a lot more, and the world economy will double by the year 2050. The rate of growth throughout the world in the next decade will be about 4% to 5%––much higher than in the last 30 years. We need to exploit that to Britain’s competitive advantage as much as possible.
I mentioned this point in a previous debate, but it is worth repeating; indeed, the hon. Member for South Thanet referred to it earlier: there is a ferociously competitive global economy out there. British firms must be as nimble as possible, but my additional point is that there is a premium for coming first in the 21st-century economy, and we need to ensure that Britain and British companies go first into the new and emerging markets.
Let me quote from the CBI’s excellent report, “Winning overseas”, which says:
“We are not alone in seeking growth through exports – other advanced economies are facing similar constraints and are looking to boost their export performance. We cannot spend another decade simply playing catch-up: we need to be bigger and bolder in our ambitions.”
The report concludes by stating, very starkly:
“We are not being ambitious enough with our choice of markets and our decline in goods exports is unsustainable if we want to lead an export-orientated economic recovery.”
Exporting is incredibly important to the British economy, and not just in the simplistic and obvious sense that it generates revenue for our country, allowing us to pay our way in the world. All the evidence suggests that firms that export and that attract inward investment stimulate better research and development, productivity, innovation and hence competitiveness. The efficiency of our wider economy improves through exposure to new ideas and different ways of doing business. A paper from the Department for Business, Innovation and Skills itself, entitled “International Trade and Investment - the Economic Rationale for Government Support”, states:
“export support is a highly cost effective means of generating additional business R&D, enabling firms to increase internal resources available for such investment, as a by-product of successfully helping them to gain access to new markets.”
It is clear that public money invested in export expansion and support reaps huge dividends for the businesses of this country, and it also improves the ongoing competitiveness and prosperity of our country. The CBI—I quote it again—states quite directly the challenge to us in this House as policy makers:
“Be clear about what the UK is trying to achieve and where its strengths lie in order to help UK business in the global marketplace. The UK must develop a strong brand that our exporters can leverage to their own advantage.”
I think that we would all agree with regard to that.
I am optimistic about the growing alignment between areas of UK competitive advantage and demand from emerging markets in the next decade or so. We have the rise of the global middle class, with about 1.8 billion middle-class people in the world. In the next few years, that is estimated to grow by 5 billion, so we are going to have a huge increase in people with more disposable income wanting to buy British goods and services. That will provide enormous opportunities for the UK in some of our real strengths: premium brand automotives, financial services, IT, pharmaceuticals, chemicals, creative industries and higher education.
I am optimistic, but we face challenges. It has been mentioned that we often have cultural and structural barriers to companies expanding their exports, or even starting to export in the first place. In terms of our cultural barriers, too many of our firms simply do not export. The key task of UKTI is to break down those cultural barriers as much as possible and identify the companies that could make a real success in exporting.
We export to a limited field of slow or no-growth countries. That point has been made by the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) and others. Some 65% to 70% of our exports go to the United States and the European Union. We need to ensure that the strategic focus of UKTI switches to high growth and emerging economies. The hon. Member for Enfield North (Nick de Bois) was firm about making sure that we were at the forefront of N11 economies—the next 11 high growth economies.
There is a cultural barrier. How on earth does a firm in Hartlepool or elsewhere, with no culture or experience in exporting whatever, get into the business of exploiting foreign opportunities? As the CBI states, getting a swimmer to attempt a different stroke is much easier than getting them into the pool in the first place. Firms happen to chance upon exporting opportunities, rather than making a determined effort. We heard about the micro-brewery that the hon. Member for South Thanet mentioned. It is right that the Government have an objective to double trade by 2015 with Brazil, China, Colombia, Egypt, India, Indonesia, Malaysia, Mexico, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan, Thailand, Turkey, the UAE and Vietnam. As the CBI says:
“It is clear that the UK needs to re-orientate its trade towards high-growth markets in order to boost its performance.”
Those countries are where the high growth, emerging opportunities will arise.
Geoffrey Clifton-Brown
I am sorry to labour the point, but the list that the hon. Gentleman has just read out did not include a single west African country. Some of the west African countries that I cited will have much higher growth rates than some of the countries that he mentioned. We must not neglect the countries of west Africa. Many of them are members of the Commonwealth. They are friends.
Mr Wright
The hon. Gentleman makes a fair point. UKTI needs to look closely at where those high growth opportunities will be and ensure that, because of possible historical links, we exploit those opportunities first. I tabled a written question about how we are to double trade and what targets are in place. As my hon. Friend the Member for Brent North said—perhaps the Minister will comment on this—there are no stated bilateral trade targets for Egypt, South Korea, Bangladesh, Indonesia or the Philippines. The Minister said that UKTI provides a degree of service for UK companies seeking to do business, but that is not good enough. We need to be much more focused and determined to ensure that British firms can sell their goods and services in the areas that are going to grow the global economy in the next half century. We need a framework in place to allow that to happen.
I became interested in the course of the debate about where UKTI, with finite resources, should be concentrating those resources. The hon. Member for South Thanet and others mentioned the need to focus on small firms and make sure that we get in at the beginning to ensure that we can benefit and help to shape and mould their ambitions for exporting opportunities as they grow. I keep mentioning the CBI, because its report is excellent. The CBI states that UKTI could perhaps be more effective if it focused on mid-sized companies with real potential for high growth. They may already be exporting, but they require assistance to break into new markets.
I am interested in what the Minister has to say about what we need to do to identify, embrace and nurture medium-sized enterprises—those companies with a turnover of about £10 million to £100 million, with up to 500 employees, and, as I said, real potential for high growth.
Julian Smith
I had a micro-enterprise that traded here and had a subsidiary in Singapore. We delivered within two years hundreds of thousands of pounds of tax revenue back to the UK. Please do not underestimate the power of the 4.5 million micro-enterprises to deliver tax revenue as part of the export drive that the Government are undertaking.
Mr Wright
I certainly bow to the hon. Gentleman’s superior experience, but my point is that, with finite and reducing resources, it is absolutely essential—I will come on to this—that today’s debate is about the effectiveness of UKTI. Where do we get the biggest bang for the taxpayers’ buck? Is it from small enterprises or more medium-sized enterprises that have got opportunities for export and growth? Where will we get the best return for the British taxpayer and hence future prosperity and growth?
Laura Sandys
In a strange way, what we need are different strategies for different size companies. That is what it boils down to. It is not an either/or. We might be focusing too much on a certain sort of service to very small companies that is more suitable to a medium-sized company. That is why I proposed looking at translating websites or aggregating certain sectors and being able to present them, which does not cost that small business either time or money.
Mr Wright
That is an important point. I am interested in looking at where we can gain knowledge and experience from other successful exporting nations. I look to Germany, although we cannot replicate Germany in the UK. It would be wrong to suggest that we can. However, a successful ingredient of the German economy, with its emphasis on manufacturing and engineering, on the long term, on worker and management co-operation and on good regional financial opportunities, is the Mittelstand, the medium-sized companies often seen as Germany’s economic backbone. It is interesting to see what they have. They have a relentless focus on export markets, often in global niche markets, allied to close relationships with their supply chains, as the hon. Member for Gloucester (Richard Graham) mentioned, and distribution networks. Will the Minister tell us what steps UKTI has taken to embrace mid-sized companies? How often have mid-sized companies been taken on trade delegations?
Mr Adrian Bailey
One of the points made in the CBI report was that more needed to be done for medium-sized businesses that are exporting at the moment to find a wider range of export opportunities. I hope that the Minister will respond to that as well.
Mr Wright
The Chair of the Select Committee is right.
UKTI is suggesting new products: the “passport to export” for new-to-export companies, and the “gateway to global growth”, aimed at helping established exporters tap into new markets. This seems to be a good approach that has the support of the wider business community, but I want to press the Minister on the benchmarks for success. What are they? What progress has been made and how many companies have benefited from those two new products?
That leads me to the strategic document that UKTI published a year or so ago, “Britain Open for Business”. The strategic approach that it suggests—expanding exports by securing new businesses overseas, especially through increasing exports to high growth and emerging markets—seems appropriate, given what hon. Members have said today. We also welcome the sectors that the strategy identifies in which Britain has a competitive advantage and from which we could derive greater growth in exports in the next few years.
There can be a greater link-up between industrial and trade strategy. “Britain Open for Business” hints tantalisingly at that, but more can be done. The document is light on detail, which in many respects is understandable, given that it is a high-level strategic document. However, it does not set out very clearly what actions UKTI will take and how success based upon outcomes will be measured.
On that basis, may I ask the Minister a few questions about some of the tasks and actions that “Britain Open for Business” pledges? UKTI states that it will bring more private sector expertise into the strategic relationship management of major exporters and inward investors. That important point has been mentioned a number of times by hon. Members. Will the Minister update hon. Members on how that is progressing? Will he specifically outline how private sector expertise with that commercial know-how is being brought into the business?
Similarly, UKTI strategy has stated that a new private sector delivery partner operating in England outside London will be tasked with bringing in high-quality inward investment projects. Will the Minister say what the latest is on that and what progress has been made? UKTI has also pledged to develop new partnerships with key businesses that support SMEs, trying to tap into their networks to raise awareness of the benefits of exports. Time and again today we have heard about the huge importance of the chambers of commerce and about the excellence that sector-led trade associations can provide in batting for British companies outside the UK. What is being done to exploit that great expertise more? How will that be evaluated, and what progress is being made?
UKTI has pledged to create a new online self-help community for UK SME exporters to provide business-to-business support, advice and mentoring. Again, will the Minister update hon. Members on that? With regards to the document, will the Minister tell us about the high value opportunities programme? How successful has that been and can he identify specific export opportunities that have been realised as a direct result of that initiative?
Let me turn to the cuts, which have been mentioned a number of times, not least by the Chair of the Select Committee. UKTI faces a cut of around 17% over the next few years. In contrast, its French equivalent has had an increase in its budget of 14.2% in 2011 to €105 million. Germany Trade and Invest had a budget increase of 10%.
Nick de Bois
I suppose it is inevitable that we must go down that route a bit, but does the hon. Gentleman agree that, considering the funding that was in place before the previous election and the rather dismal figures we have been reviewing during the debate, money is not the answer to everything? It is how that money is used and how effectively one works with other businesses that is important.
Mr Wright
Effectiveness is at the heart of the debate. I made that point in response to the hon. Member for Skipton and Ripon (Julian Smith). I want to see as big a bang for the UK taxpayers’ buck as possible. How we go about doing that is important.
I was coming on to the figures regarding what rate of return we get for taxpayers’ investment. I think that my hon. Friend the Member for Brent North disputes these figures, but they are a good starting point. For every pound that UKTI spends on export promotion, the British economy and firms generate an additional £22 profit. That is an astonishing figure and a huge ratio. It is difficult to think of a comparable direct example in which Government investment and active involvement could produce such a return. When we factor in the law of diminishing returns and state that—plucking something from the air—every pound that UKTI spends will provide half that current return, on my rough calculation and even according to a conservative estimate, based on the UKTI’s current £333 million budget, this country’s businesses stand to lose well over half a billion pounds in additional profit. With the economy flatlining and unemployment rising, is that appropriate? Should we not be trying to invest more in UKTI?
As I tried to say in response to the hon. Member for Enfield North, every pound spent needs to be focused diligently on proactively seeking out firms with great potential for export capability in high-growth areas. As many hon. Members have said, that means being proactive and having a UKTI presence alongside Foreign Office staff in those emerging markets to advise companies of the ways in which to do business in that particular nation.
That does not necessarily solely mean advertising that the UKTI posts on Twitter and Facebook, and that companies have access to online materials. Certainly, the use of online materials—the internet and social media—is important. However, to use them at the expense of the face-to-face establishment of relationships, will not be an effective use of public money. To some extent, I saw that when I was a shadow Education Minister and the Government ended face-to-face careers guidance for young people. Web-based initiatives—the notion that someone says, “There’s a computer there with the internet on it. Just have a look and see what jobs you might be interested in”—are not an effective use of public money. Web-based media may be part of a complementary blend of materials, but they cannot be the full answer. I worry that, in tightening financial circumstances, people will rely on Twitter and Facebook too much.
People have mentioned the scrapping of the RDAs. That abolition of regional government architecture has not helped matters. LEPs are still in their infancy. We hope that they are a success, but we are missing valuable time. The world is moving on and it will not wait for us. We need to ensure that we are at the vanguard of this competitive environment. If structures are altered domestically, we will be penalised internationally.
I want to finish by making a number of points, one of which is about access to finance. Will the Minister update hon. Members on the progress made with the actions outlined in “The Plan for Growth” published almost a year ago? I put that question to the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), in the debate on British exports and trade a week or so ago, but he did not have time to answer it. How many SMEs have been helped as part of UKTI’s passport to export initiative? In “The Plan for Growth” the Government launched the export enterprise finance guarantee, which provides guarantees for lenders to facilitate the provision of short-term finance lines for export. How many firms have taken advantage of that?
The plan produced three new products designed to mitigate the risks for exporters and potential exporters. I understand that the bond support product was operational from April, so we have had almost a year of it. Will the Minister state how successful he thinks that has been in freeing up exporters’ working capital and how many firms have taken advantage of it?
I want to finish on the point about us having a sustained approach to trade investment and political lobbying. “Britain Open for Business” states:
“Government Ministers will also systematically lobby for UK commercial interests on all overseas visits and in meetings with their counterparts in other governments.”
That is welcome, but the point has been made time and again that every single Minister with a red box should be charged with selling Britain overseas. They should be making sure that they are trade ambassadors. To widen that point, we are missing the trick that hon. Members have huge influence in their constituencies. As mentioned, we are missing brokering opportunities overseas.
Geoffrey Clifton-Brown
By far the largest number of people who travel abroad at the taxpayer’s expense are civil servants and local government officials. A diktat should go down to every single one of them that they should be trade ambassadors for this country when they go abroad at the taxpayer’s expense.
Mr Wright
I agree. A lot of the work will be done by civil servants, but politicians and leaders of Government are very important. The CBI report states that improvements have been made with regards to political lobbying, but that we have seen the cancellation of trade delegations at very short notice. In contrast, it mentions France, where around 200 high-level trade missions that are focused on 20 primarily high-growth countries are co-ordinated annually with senior politicians. They are well publicised in advance. As a result, in November 2010, a visit to China led by President Sarkozy secured €15 billion in new deals for France.
I think the Prime Minister is still in America. I have noticed that a lot of the talk has been about Afghanistan, Iraq, extradition and basketball—quite rightly, given the circumstances of the past few days. Trade should also have been an important topic. I had a look at the No. 10 website this morning, where the Prime Minister said:
“Barack and I have agreed to prioritise work ahead of the G8 on liberalising transatlantic trade and investment flows.”
However, did the Prime Minister take our business leaders to the White House in his visit to America? Have we won any new deals in the world’s largest economy as a result of what the Prime Minister has done this week? I certainly think he should have done. If he has not, I would respectfully suggest that he has missed a trick, and it shows the culture that needs to be altered in Whitehall.
David Rutley (Macclesfield) (Con)
The hon. Gentleman may have missed press reports last night that said that there was a banquet at the White House in which Sir Richard Branson and other British business leaders were in attendance. That dimension has, to a large extent, been covered.
Mr Wright
I certainly saw reports about Sir Richard Branson being at the event along with George Clooney. My point is this: when the Prime Minister, the leader of our Government, goes out on state visits, what is he doing to win trade for Britain? What is he going to come back with? It is important that he takes a delegation of business leaders and wins awards and contracts for Britain.
Julian Smith
This Prime Minister has done more on UK trade trips than any other Prime Minister in recent history. He has been to Brazil, China and India, and the Foreign Secretary has been on a trade mission to Australia. This Government’s track record on the matter is exemplary.
Mr Wright
I understand the hon. Gentleman’s point. I know that there was a high-level and high-profile delegation to India just after the Prime Minister assumed office, but one-offs and PR stunts are not going to win business for Britain. The effort needs be sustained, co-ordinated and done at the highest possible level over a long time.
I am excited about the opportunities that British companies—dynamic, innovative and competitive as they are—have in the competitive, 21st-century global economy. We will miss a trick if we do not have a sense of urgency and determination in ensuring that we grow our businesses in the export markets. I hope the Minister will have a greater sense of urgency and determination to ensure that British goods and services are sold around the world, thereby providing us with greater wealth and prosperity.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
Mr Amess, you are managing to overcome a difficult health condition, and we appreciate that. We are delighted to be under your guidance.
This debate has been informed and cosmopolitan. I take it on the basis of constructive criticism; that is how things should be. There has been an element of entente cordiale, certainly between one or two hon. Members present. It is refreshing to have had people who have been in business and who have been part of chambers. My hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) and I worked on the issue in opposition, and he brings his own business experience to the area. My hon. Friend the Member for South Thanet (Laura Sandys), whom I congratulate on securing this debate, also has her own expertise in the field, which was notable in her remarks. I will come on to some of them in a second. A number of other colleagues, to whom I will refer as I try to respond to the points raised, have shown both interest in and knowledge about the subject.
It is rather peculiar, as was highlighted by several hon. Members, that there was no debate at all in the previous Parliament. That is to be regretted. While my diary secretary will perhaps not want me to encourage too many such debates on a regular basis on behalf of the trade Minister, it has been demonstrated that this House has an important and positive contribution to make to an important part of our economy.
I am not the Minister responsible for trade, but I want to respond to a number of key points that have been raised, and I will personally ensure that the chief executive of UKTI will pick up on the specific points raised, and I will have a conversation with the noble Lord Green. I know that he takes such matters seriously, and I want to ensure that, while he is unable to be present, he can pick up the flavour and character of the comments, particularly those regarding the involvement of MPs, which several people have talked about. They are absolutely right, and I will address those points under the heading of the national export challenge. My hon. Friend the Member for Witham (Priti Patel) highlighted the need for MPs to engage positively, to be close to the business community in their area, district and chamber, and to be a good conduit. That is an important point. It alludes, in many ways, to the point that I will come on to about the broader role of chambers, which I know is of special interest to my noble Friend—sorry, my hon. Friend—the Member for The Cotswolds. [Laughter.] It has been a long afternoon. I anticipate such matters. Perhaps I should say “senator” in due course.
The Government have made it clear ever since the election that we have to rebalance the economy. Members have rightly pointed out that we cannot have an effective trade and investment organisation if we do not have the right balance in the economy. We have seen an improvement—20% year on year now—in car production in previous months, which demonstrates that if we get the overall investment and balance of the economy right, it will start to feed through into good trade figures. That is an important aspect. If we are to have sustainable growth, we need to rebalance the economy; it needs to be broader and more resilient. That will draw through on international trade and investment.
As Members have rightly said, we are a nation with a proud heritage of looking outwards to different markets and opportunities. It is vital that we rebuild our export capability and ensure that by improving the business environment here at home, whether through reforming the tax system, getting a skilled work force in, strengthening the role of innovation or cutting red tape, we not only enable our businesses to export but make Britain a far more attractive location for those who are looking for a place to invest. It is a virtuous circle in that regard, and an important one that we need to reflect on.
Hon. Members are right to say that there are good parts in the current situation and there are challenges. Companies in this country have to win new business—I will come on to markets in a moment—and to ensure that we get more businesses engaged in that process. It is worrying how small, compared with the German Mittelstand and other countries, is the proportion of small businesses that engage in export markets. As a number of hon. Members, particularly the hon. Member for Brent North (Barry Gardiner) and my hon. Friend the Member for The Cotswolds, said, we need to start to change the culture. It is not just about going to the traditional markets that we have always gone to in the past 10 or 20 years. We have to go to the fast-growing markets, not just in the east but in the south of the global economy—I can say that from our point on the globe. We have tended to overlook Africa. The Chinese have not been so short-sighted; they have always had a canny process about it. It is therefore important that we think beyond traditional trading partners.
In a sense, that returns me to the point about the use of the diaspora in this country, which was excellently made by the hon. Member for Brent North and my hon. Friend the Member for Enfield North (Nick de Bois). Those communities are here, and it is right to raise the question about how Whitehall, not just UKTI, engages those communities to strengthen our cultural and economic ties abroad, so that we make the best use of all the talent in our country. There is a big issue regarding what Whitehall does and how that works. Certainly, to someone who is a relative newcomer to Whitehall, that is important.
Barry Gardiner
I am grateful to the Minister for the way in which he is taking on board and synthesising the constructive criticisms that have been made.
Does the Minister agree that in taking groups of people out from this country, it is important that we take a complete supply chain to the prospective client country? Instead of simply taking out individual companies, we should look to put together supply chains that can meet the infrastructural, other developmental and business needs of that country, and show that within the UK, we can manage an entire supply chain for it.
Mr Prisk
Absolutely. One of the key elements of the Automotive Council road map we developed is demonstrating the depth, but also the gaps, in the supply chain, and our ability to recruit substantial prime investment. We are all familiar with the good news across the automotive sector. Part of the issue is then about how to strengthen tier 2, tier 3 and so on. That is why, when I go to the Paris motor show or the Berlin air show—as jolly and entertaining as it may sound to those who do not go, it is a very carefully worked programme—I talk to the key tier 2s and tier 3s, making it clear to them that not only do we have good indigenous businesses but we have growing markets for the components they generate, in which they may wish to invest. That supply chain thinking is very important.
Mr Iain Wright
Will the Minister answer the question that I asked him during Business, Innovation and Skills questions this morning? Five months after the launch of the advanced manufacturing supply chain initiative, no firms have been helped because it is not yet fully formed. I talked about a sense of urgency and that is a good example. Can the Minister get a wriggle on, and make sure that firms benefit as quickly as possible?
Mr Prisk
I am not quite sure about the manoeuvre the hon. Gentleman described, or how graceful it would be. What I can say is that there was a discussion on whether Birmingham city council should lead in this field, as part of the LEP. That delayed it by six or eight weeks. We wanted to ensure that we did not just do something from Whitehall and ignore that local expertise. It has now agreed to take on a core of the initiative and will be able to mount something very shortly. There has been a little delay, which I think is rightly because the idea of the supply chain, particularly in the automotive industry, came from Birmingham. I did not want—I suspect that the Chair of the Select Committee, the hon. Member for West Bromwich West (Mr Bailey) would haul me over the coals if I did—to sweep past a really good west midlands proposal just to ensure that we delivered on a set time frame. We are about six to eight weeks behind where I would like us to be, but we will be in a position to develop it shortly. It is part of a bigger picture, which is a broader figure of approximately £125 million. The delivery of the automotive supply chain package is imminent, but the hon. Member for Hartlepool is right to make sure that we keep to a sensible time frame.
I am aware of time, and I must give my hon. Friend the Member for South Thanet time to respond before the debate ends. I will turn to how we measure effectiveness and then go on to some of the specific points that have been raised by right hon. and hon. Members.
It is fair to have balance, and, rightly, criticisms have been raised. That is fine—I take those criticisms as a constructive process. UKTI is a successful and often well regarded agency when compared with its competitors abroad. I use the word “competitors”, because that has to be the mindset of Ministers and Departments. In 2010, UKTI won the prize for the best trade promotion organisation in the developed world. However, as several hon. Members have pointed out, UKTI can only succeed when it works in a leadership role and works with others. That is a really important point that has come out of the debate.
My hon. Friend the Member for The Cotswolds mentioned chambers, which he has rightly championed for a long time. Chambers are a part of a number of private sector consortia that are delivering foreign direct investment. To confirm where and how at this point, they deliver for UKTI in the north-west, the west midlands, the south-west and, soon, in the north-east. The delivery partner that UKTI operates in the east midlands is in fact owned by the local chambers, which I think is good.
My hon. Friend has been a keen supporter of the Council of British Chambers of Commerce in Europe and has seen its work. A memorandum of understanding was signed just last month which will enable it to be part of the service delivery overseas. That is a very good way to move ahead. The idea that somehow the Government are all-seeing and all-powerful, and that any one agency has all the networks that we need to tap into, is mistaken—getting that breadth is important.
On how we measure the fitness or capability of the agency, the danger is that we will get into which survey says what and when it was cast. The hon. Member for Brent North flagged up the National Audit Office report. My understanding was that those were the 2009-10 survey figures. Clearly, we need to move ahead from them, but I understand the point he is making and I do not dismiss it. UKTI has tried to get an independent assessment of the people who use the service. What is their independent view of the quality of that service? Without going into great detail about how the survey is undertaken, the key point is to receive feedback on the satisfaction, or otherwise, of the service. What difference—this is important—has UKTI made to the company? In particular, what added value has it generated?
The figures up to 2011, if I can update the House, from the most recent study—clearly, the 2012 survey is in hand now—demonstrate that 70% of companies report significant business benefits. Some 75% of companies were satisfied or very satisfied with their overall experience with UKTI. I am not putting those figures on the record to say that we do not need to worry about the situation, even though a much smaller proportion, I think 7%, were dissatisfied or very dissatisfied with UKTI. In my book, that is useful and helpful, but we also need to listen to the experiences of real businesses, and today’s contributions have been very helpful. For example, my hon. Friend the Member for Stroud (Neil Carmichael) mentioned a couple of businesses—Tudor Rose was one, if I wrote that down correctly. Those are good stories, but we need to hear from hon. Members when there are weak stories. I am keen to find out where the weaknesses are. Sometimes the business itself might get the wrong end of the stick, but other times we need to make sure that we have that channel. I therefore encourage hon. Members to make sure that that is fed through to UKTI, because it is important.
On what we can do to change the strategy, structure, calibre and so on—good points raised by a number of hon. Members—Lord Green has set out an ambitious programme for increasing the number of small and medium-size enterprises that export. We want to get up to the European average of 25%. The proportion is below the European average, a point raised by several hon. Members. In practice, that means getting an extra 100,000 SMEs exporting by 2020—that is the benchmark. Lord Green and the new chief executive, Nick Baird, who came into office in September, have set about making important changes that respond to some of the specific points raised by a number of hon. Members.
My hon. Friend the Member for South Thanet is absolutely right about SMEs, particularly with regard to her micro argument. In an age when a start-up business on a laptop in a back bedroom has the capability of being a global business from day one—which was certainly not the case when I started my business, like my hon. Friend the Member for Enfield North, in 1989—we need to think about where Government intervention needs to sit in terms of quality, and, frankly, there are a lot of very good commercial services that the Government do not need to duplicate. That thinking is important and that is a good point, which I will flag up with Lord Green myself.
I have said that UKTI is making changes. What are they in practice? First, it is bringing in private sector expertise—this alludes particularly to the point made by my hon. Friend the Member for Skipton and Ripon (Julian Smith)—into the senior leadership of UKTI. As we have already heard, it has already outsourced the inward investment services, creating, through PA Consulting, a coherent investment service right across the English regions outside of London. Those teams have incentives built in to their contracts to bring new projects to our shores. In other words, it is moving towards being outcome based—if not as ideally as we would always have in the private sector, then much closer to that—rather than, necessarily, what I would describe as the conventional salaried model.
I would like to pick up on a couple of points that have been raised on the regional development agencies, UKTI and LEPs. One of my problems with the RDAs was that, when I went to Shanghai, I discovered that UKTI had its own operations running very positively, but there were eight separate independent trade organisations—all fully funded, all competing with each other, and all in Shanghai—from the eight RDAs outside London. To my mind, that was bonkers. There needs to be a clear, co-ordinated UK presence, while making sure that, within the UK, communication is strong. Removing the RDA layer—for many other reasons beyond this one—helps us to co-ordinate or focus the effort on UKTI—a single, clear UK message. Then what is needed is to ensure that there are proper links to the grass roots. That means working with the devolved Administrations and having a proper understanding with the LEPs in England. That is where we are. We have memorandums of understanding in place, which are crucial because they allow a strong UK voice. If Kent or Essex wish to do their own thing, that is fine, but let us co-ordinate and work together. That is an important shift.
Mr Prisk
We have wound them down, although they still operate in technical terms, as the hon. Gentleman knows, until 1 April. We have tried to wind the RDAs down while building the LEPs up. The key point is that, in trade terms, we have made sure that UKTI is in the saddle, rather than having nine horses running consecutively, if I can say that during Cheltenham week. That was the important point, because there was a danger.
A German business in Shanghai told me, “Look, I’m confused. Two agencies have come to me. One says they do wonderful things in Coventry, the other says they do wonderful things in Leicester. Frankly, I can’t spot the difference between the two. Why am I being sold competing bids?” That is a good point. Co-ordination is crucial.
The second change that Mr Baird and the noble Lord Green have made is that, from April, there will be incentivised contracts for the private sector to deliver trade support in the English regions. On the sales culture, which several hon. Members mentioned, those two things—getting private sector into the business and moving towards incentivised contracts —will make a significant difference.
Hon. Members raised a couple of broader issues about how we deal with trade as a Government. That is a good point. Right from the start, the Prime Minister made it clear that there would be a trade Minister, and we have an excellent trade Minister in Stephen Green. All of us must regard our role as part of the trade and investment portfolio. That is why more than 400 separate ministerial engagements have been undertaken by Ministers from all Departments—I have a feeling that that even extends to the Department for Work and Pensions—because it is important that, when we go abroad, we are part of a trade mission. That is my background and, I am happy to say, that of most of my ministerial colleagues.
That is why today, for example, the Prime Minister is in New York, having had his business dinner at the White House yesterday with UK and American businesses, building on those contacts—if that answers the hon. Gentleman’s question. That is why the Foreign Secretary said, right at the beginning of this Government, that we want to put commerce right at the heart of what the Foreign and Commonwealth Office does, in collaboration with BIS and others, including UKTI, because we need to change the culture that says that the diplomatic role does not sully its hands with the process of commerce. That is fundamental. We are, as I said at the beginning, a trading nation. It is in our blood. Therefore, getting that change is important.
On the calibre, selection and recruitment of individuals—I am married to a classicist, so I need to be careful about what I say next—we need to ensure that there is the broadest recruitment possible, which is why the private sector infusion is important. I am a great believer in a greater interplay between private and public, which is why, when I started in my role, I said to the team dealing with small businesses, for example, “Let us spend a working week in a small business.” Obviously, I had done it before professionally, but it was crucial for the civil servants to understand what it was to be in a commercial environment, especially in a small business, which does not only have to get the business, but has to do the business and fill in the VAT form on a Sunday afternoon, as I recall.
Hon. Members mentioned being more French. I put it that way because, as hon. Members have correctly put it, it is about moving away from Ministers only attending events to cut ribbons once the deal is done. If we do that, it is too late. I tried to get the point across during my few months covering this role at the beginning of the Government, before Stephen Green was able to join us—it was worth the wait to get the right calibre of individual—that it is no good Ministers rolling up when the deal is done; we have to be there building the relationship. That is what Business Buddies is all about. Part of my role is ensuring that I have an ongoing strong relationship with many major automotive businesses. That is fundamental. Such relationships are crucial because, as the French have learned and known for many years, the deal comes at the end of building such a relationship, not at the beginning. That is why the process, of which UKTI is a fundamental part, reaches across the whole of Government, ensuring that Ministers, from the Prime Minister downwards, are involved.
Let me wrap up, because the hon. Member for South Thanet needs to respond to the debate; that is the courtesy of this House. The noble Lord Green rightly said at the start—he is wise and right about this—that changing the way our trade balance operates is not a sprint but a marathon. That means, not that we want to ensure that we are going at a good pace but that, if we are to change the industrial strategy and the way we deliver inward investment and the operation and communication of exports, and so on, we must ensure that we get this right. It is true that, although there are strengths in the current system, we have inherited a number of weaknesses and we are trying to iron those out. Personally—this is also the view of my ministerial colleagues—I welcome constructive criticism and ideas and want to ensure that those will be fed through, both to the organisation and to the Minister responsible in the next few days.
Laura Sandys
I thank the Minister for a comprehensive response to many of the points that were made.
Along with my friend the hon. Member for Brent North, I feel that this has been a positive debate, contributing ideas and experience and setting the tone, hopefully, for a closer relationship between Members of Parliament and UKTI into the future. Hon. Members have made many varied points. A big issue mentioned by a lot of Conservative Members is the sales and marketing culture and engaging with UKTI and MPs, with our support. We must also be clear that UKTI cannot deliver economic growth itself: it is a facilitator. It is incumbent on all hon. Members to go back to our constituencies and talk about the opportunities, ensuring that we are making those connections work.
I should like to throw a couple of opportunities—not challenges—to the Minister and to UKTI. Can we make this the start of a dialogue and debate? It would be useful to have a round table that was a little bit more informal, talking about ideas and experiences and, perhaps, identifying certain key people who have had a previous history in certain markets. For me, it would be central Asia and the Caucasus, which does not appear on any list. It might be useful to have an all-party group considering such issues, advancing ideas and doing some comparison with Malaysia, Singapore, France, Germany and others, pulling together data and interrogating where other people are making successes—and celebrating our successes, too.
I hope that hon. Members feel that they have had the opportunity to put ideas on engaging with UKTI to the Minister. We must ensure that this is not the end but merely the start of building a longer-term relationship between this place and our external marketing and trade and inward investment.
Question put and agreed to.