SMEs (Middle East and North Africa)

Wednesday 19th June 2013 Westminster Hall

16:29

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

It is a pleasure to serve under your chairmanship, Mr Owen.

The United Kingdom is the sixth largest economy in the world, yet we are, I believe, only the 12th largest exporter. Many colleagues will know about my passion for British exports. Having come from an exports background, I take a strong interest not only in exports but in the region we are discussing, namely the middle east and north Africa.

I have spent the past eight months undertaking a report into UK Trade & Investment—UKTI—and into how it interacts with small and medium-sized British companies in assisting them to export to the middle east and north Africa. Of great interest to me is that we have interacted with more than 220 such companies, which have come from all over the United Kingdom into the House of Commons to give evidence in a very positive and enthusiastic way, about their experiences of UKTI. Small and medium-sized enterprises—SMEs—are keen to improve the service they get from UKTI, and I pay tribute to all their work in helping me to write my report, which will be published in seven to 10 days’ time. I will give a copy of the report to the Minister, for his consideration.

I would like to put on record my thanks to Mr Nick Baird, UKTI’s chief executive, who has been extraordinarily patient with me over the past eight months. I sometimes think he must stick pins into a voodoo doll of me in his office, because of the number of issues that I constantly raise with him. Extraordinarily, I have had to take a lot of the companies that I have interviewed to meet with him directly—and he will testify to that—because they simply have not had the traction that they expect and deserve from interacting with UKTI on the ground in their various regions. I am delighted to help them by taking them to meet Mr Baird, but that should not be for a Member of Parliament to do; they should automatically get the traction and support on the ground that they so rightly deserve.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman shows genuine zeal, and I congratulate him on his great interest in and passion for the issue. The agri-food industry in Northern Ireland is worth some £4 billion to the economy. Most of that comes from sales in Northern Ireland and the United Kingdom, and just some of it from sales overseas. Does he feel that the time has come for a UK-wide promotion of all the regions together, for the agri-food industry to market itself and get those markets in the middle east and north Africa? There is clearly the potential there to do even more for the economies back home.

[Daniel Kawczynski]

I very much concur with the hon. Gentleman. He will know that British agricultural products are among the best in the world. The British brand is extremely strong in the middle east and north Africa—they are crying out for dairy, beef and other products—and there should be a concerted approach, promoting the best of British of agricultural products in the region.

[Mr Mark Williams (Ceredigion) (LD)]

I, too, congratulate my hon. Friend on securing the debate and on his impressive work in this field. He mentioned agriculture and SMEs, but does he also think that important links need to be made between UKTI and the higher education sector, regarding the expertise in the sector and the work we are doing there? Wearing his hat as Parliamentary Private Secretary at the Wales Office, does he acknowledge that Welsh universities can offer a lot to UKTI in boosting our economy?

[Daniel Kawczynski]

I agree with my hon. Friend on that point, and I very much hope that he will engage—as I do—with the Minister in bringing directly to him, and also to Mr Nick Baird, examples of how UKTI can get involved with his constituency in Wales.

We must always be evaluating the structure of UKTI, its reporting processes and its accountability to Parliament. We must never forget that the organisation receives more than £400 million of British taxpayers’ money every year. We must also, and I will not flinch from this, be assessing, as with any other organisation, the calibre of its staff, in the United Kingdom and overseas. We must consider whether UKTI should remain in its current form, become a stand-alone entity along the lines of the Technology Strategy Board, or be brought, rather than being between the Department for Business, Innovation and Skills and the Foreign and Commonwealth Office, into a new external relations department of the Foreign Office, UKTI and the Department for International Development, focusing on our foreign relations interactions.

What there must be, however, is greater scrutiny of UKTI in the House of Commons. Since the general election, this is only the third debate—two of them initiated by me—that Parliament has had on UKTI and British exports, and I certainly will not be able to say everything I wish to say in 15 minutes. I am pleased that there is a Labour Member—the right hon. Member for Oxford East (Mr Smith)—here today. In the previous debate there were none, so I welcome the fact that a Labour MP is taking an interest. I do not know what mechanism could be used for that greater scrutiny. I do not know if an independent Select Committee just evaluating UKTI would be feasible, but we must always challenge UKTI and its Ministers and raise concerns when things do not go right.

I shall now turn to the subject of the debate—north Africa. I feel passionately about French-speaking north Africa because of its proximity to the United Kingdom and its importance strategically, for security reasons, and from an economic perspective. When I went to Mauritania two years ago, I was the first British MP to do so since 1960, when the current Father of the House, my right hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell), went there for its independence day celebrations. Regrettably, most MPs I talk to do not even know where Mauritania is, yet it is an important and rapidly growing country. It is close to Morocco, and is part of the Arab League and of north Africa. There are huge opportunities in its oil and gas sector, as well as in mining, education and construction, yet on the UKTI website no opportunities whatever are listed for the country.

I know that we have representation in Mauritania. Following my report about the country, the Foreign Secretary visited Mauritania, and we have now established a diplomatic presence on the ground in Nouakchott. As UKTI has a website for SMEs to look at and interact with, to find out what opportunities there are in a country, it is rather daunting to look up Mauritania and find nothing there. We must ensure that if we have a website it is properly populated.

Last week I took Nick Baird to have lunch with the Moroccan ambassador, Princess Lalla Joumala, and we talked about the importance of partnering with and working constructively with Morocco in joint venture operations. Morocco has tremendous relations from a banking, cultural and linguistic perspective with the other countries in the region—not just in north Africa—including Senegal, Mali and Niger. The Moroccans are keen to engage with us, so I was pleased that Mr Baird came with me to that lunch. I hope that there will be an increased focus on the Moroccans and on partnering with them to work constructively on penetrating the French-speaking north African market.

Luckily I speak French, because I studied it at university, but we are too guilty in this country of going only to places where English is spoken. If the first national language of a country is not English, we tend to gravitate away from it, and we cannot afford to do that any longer. All of the north African French-speaking countries are very keen to interact with the United Kingdom.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate the hon. Gentleman on securing the debate and on his work on the report, which I look forward to reading when it is produced. I share his enthusiasm for the effort that must go into backing up and making a success of exports by our SMEs. Does he agree that everything he says about French should also apply to Arabic, a language to which more attention needs to be given in our country?

[Daniel Kawczynski]

I absolutely agree, and I am grateful to the right hon. Gentleman. A recent media report expressed concern at the number of British diplomats operating in Arab countries who do not speak fluent Arabic. If we are to send such people overseas, they must speak either fluent Arabic or fluent French.

I have been to Tunisia, where 60 British companies operate compared with 1,700 French ones, which I emphasise because it is a staggering difference. Interestingly, by far the biggest investor there is British Gas. I want to ask the Minister what we are doing in conjunction with British Gas to ensure that its network of contacts, particularly in the petrochemical industry, is harnessed so that more of our companies are encouraged to operate in Tunisia.

[Pauline Latham (Mid Derbyshire) (Con)]

I thank my hon. Friend for securing this debate. It is important because if we are to get out of this recession well, we have to look to other markets, and UKTI is absolutely fundamental to that. I recently received a delegation from French-speaking Mali, which is desperately keen for our mining engineers and electricity people to go there to provide power and infrastructure in a country that has been in turmoil, but is now doing much better. We need to encourage such people to come and give presentations, and UKTI could play a much bigger role than it does currently.

[Daniel Kawczynski]

I completely agree. We have seen what happens in countries such as Mali. When we are not present, not trading with them and not on the ground, a vacuum is left for others to fill, and the costs involved in sorting out the mess are greatly increased.

I met the President of Niger when he came to the Foreign Office. He informed me that bilateral trade between Niger and the United Kingdom was £4 million per annum—only £4 million with an incredibly important strategic country that has a rapidly growing population.

On Libya, I met Deloitte yesterday and was informed that it is setting up offices in Tripoli. I am very pleased about that, and I want to pay tribute to Deloitte for taking that plunge. I am concerned that media coverage of instability in Benghazi is preventing more British SMEs from exporting to Libya. I have a small company in Shrewsbury that has successfully managed to win contracts to provide metal piping to various projects in Libya. I urge the Minister to ensure that UKTI does more to encourage British companies to go to Libya, which is a hugely important market for us. We have spent nearly £1 billion helping the Libyans to throw off the shackles of dictatorship, and we must not fall behind our German, Italian and French counterparts, who are banging the drum for their companies in that country.

I am frustrated that UKTI does not engage more with parliamentarians. I have been the chairman of the all-party group on Libya for the past eight years. I have led many delegations to Libya, and I have an extensive network of contacts throughout the country. Before the revolution, I even wrote a biography of Colonel Gaddafi. Yet I have not had a single exchange with UKTI about anything to do with that country or the delegations I go on. It is almost as though it is impervious to, ignorant of or has no interest in what parliamentarians are doing.

Having prime ministerial trade envoys is a very good step that I want to be expanded. There are also catalysts—they are hired by UKTI as such—who have expert knowledge of a country. I want to mention one to the Minister: Mr Ali Mosawi, who came to see me, has been selected as an Iraqi catalyst. He has expert knowledge of the country, being from one of the best-known Iraqi families and having a network of offices throughout the country. He is an official UKTI catalyst, but he came to see me because he is getting very little traction with UKTI, which is not using his services at all. He has even offered UKTI free use of his extensive network of offices throughout Iraq, but nobody has responded to his very generous offer. I want the Minister to investigate that and I want his officials to ensure that Mr Mosawi is contacted.

On inward investment to the United Kingdom, I want to know—I will ask a series of parliamentary questions to find out—where UKTI staff are based and what areas they cover. I think that the UK is still No. 1 for inward investment in the European Union, although Germany is rapidly catching us up. It seems to me that the vast bulk of inward investment from the middle east, particularly Qatar, comes into London.

With the Shropshire chamber of commerce, I recently met UKTI staff in Shrewsbury. I asked them who was responsible for ensuring inward investment into Shropshire, and I was told that there is nobody. We have huge opportunities in Shropshire, with both the council and the chamber of commerce for Shrewsbury and Shropshire. It is vital that inward investment to the United Kingdom is spread more evenly and that professional staff in UKTI cover more rural constituencies. For the record, I will not rest from badgering UKTI until at least one of its members of staff is responsible for and dedicated to working with my local companies and authorities to attract inward investment into Shropshire.

The Prime Minister has set a target of £1 trillion of exports by 2020, which is a hugely important issue. We spend so much time in this House debating between Labour, Liberal Democrats and ourselves and having huge arguments about how to cut up the cake. I respect that, but we must come together as three political parties—with those from Ulster—to talk about and work collectively on how to increase exports. That should not be a party political issue; we should come together and work together to ensure that SMEs, which are the lifeblood of our country, are given every assistance to export.

The Prime Minister’s target of £1 trillion will not be met unless we radically change the way exports are carried out. I met Lord Green over breakfast at 8 o’clock this morning, with other parliamentarians, and he told me that the £1 trillion target would be rather challenging. He seemed to give the impression that it would be good to get to 80% of it, but I think that we should aim to exceed that target. I look forward to hearing from the Minister.

16:40

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

On behalf of us all, I welcome you to the Chair, Mr Owen. I thank my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) for giving me the opportunity to explain in more detail the breadth and depth of support provided by UK Trade & Investment for UK SMEs in the middle east and north Africa. Let me reassure him that there is a very good story to tell. This is a large and growing marketplace, in which there are tremendous opportunities. We export more to the United Arab Emirates than we do to India, more to Saudi Arabia than to Brazil and more to Qatar than to Mexico. Equally, there are challenges, particularly in markets such as those in Iraq and Libya that he mentioned, where the business environment is clearly more challenging.

My hon. Friend will be familiar with some of the services that UKTI provides. A typical example is support for trade missions, of which 20, involving 150 SMEs, have visited Saudi Arabia alone since mid-2012. Indeed, independent research undertaken on UKTI’s behalf demonstrates that, for the year to September 2012, the organisation delivered 4,500 services to businesses across the region. Some 60% of businesses surveyed reported that those services generated significant business benefit, including an average additional profit of £84,000.

In addition to supporting companies in-market, UKTI brings its specialists from the region back to the UK to speak directly to SME exporters. For example, earlier this month, in partnership with private sector sponsors and other partners, UKTI organised a UK tour for specialists from the UAE, Qatar, Saudi Arabia and Kuwait. My hon. Friend will be interested to know that they met more than 200 companies in four cities—Glasgow, Manchester, Bristol and London. Those events were organised in association with UKTI’s extensive domestic regional network, which is dedicated to supporting exporters across our country. I do want to reassure my hon. Friend, because he asked this specific question, that there are UKTI staff in every region, if not in every council area.

The work of UKTI officials to support SMEs is increasingly enhanced by the activity of the Prime Minister’s trade envoys and our British business ambassadors. As senior business leaders, they are well known internationally, and they consistently generate significant interest in overseas markets. For example, one of our business ambassadors, Malcolm Brinded, recently led a trade mission to Jordan, significantly helping the companies concerned to position themselves to secure a share of Jordanian business.

I should also highlight that SMEs in the region will benefit from another UKTI initiative—its high value opportunity campaigns. Those campaigns cover 100 of the world’s largest commercial projects, 19 of which are in the middle east and north Africa. Each will open up for our SMEs huge supply chain opportunities in projects as diverse as Qatar’s World cup stadium infrastructure, Dubai’s airport expansion and huge oil and gas projects in Iraq and Saudi Arabia. We want success in those major overseas projects to mirror the positive benefits of investment in our national infrastructure by Gulf sovereign wealth funds. Indeed, we are tendering for the provision of private sector support in the Gulf to help to grow that opportunity.

Looking forward, my hon. Friend will want to know that my colleague, Lord Green, and UKTI’s chief executive officer, Nick Baird, intend to build on the excellent services already provided to make the organisation more attuned to what its competitors offer, in line with their desire to bring more private sector expertise to bear in support of exporters. One of the key differences between us and our major competitors, especially Germany, is the range of business-to-business services available in overseas markets from organisations such as chambers of commerce. That is a difference that we need to address. Lord Green and Nick Baird also want to see a much stronger connection between domestic and overseas business networks. A strong case has been made, and British chambers and other British business groups offer a potential means to extend such services to UK SMEs. However, in most cases, that will require a substantial upgrading of those business groups’ own capacity to offer the requisite level of service, which is why the Prime Minister announced last year a transformational change to the support that business can offer to business.

UKTI has now launched a pilot campaign in 20 markets that will radically enhance the support to UK SMEs over the next three to five years. The pilot focuses on high growth and emerging markets and includes Qatar, Saudi Arabia and the UAE. Our aim is that by 2017 the support available to UK SMEs from Government and business groups will have significantly increased in range, quantity, impact and quality in at least the first 20 markets. It is then planned to roll out the programme to include all markets and connect our overseas business-to-business support to UK business networks, so that we have one global British business network that is operating on a par with our competitors.

At home, UKTI’s broader official business offering needs to adapt to the actual needs of business rather than to what we think they need. UK Export Finance understands that and continues to provide invaluable support to UK companies, many of which are SMEs, during turbulent times in the region. It was one of the first export credit agencies to resume cover for Libya, and even at the height of the Arab spring uprisings, UK Export Finance took a long-term view of the risks involved and remained on cover for the majority of countries.

I hope that my words demonstrate to my hon. Friend that UKTI intends to continue to build on its success in supporting SMEs in the middle east and north Africa, while at the same time developing new programmes of assistance. We want, for example, to be able to help more companies such as Apton Partitioning Limited of the west midlands, which designs, manufactures and distributes office partitioning systems for commercial offices.

The Apton story shows how a British business, dependent on the UK construction industry, lost 50% of its business in 2008, but emerged, with the help of UKTI, to be an international business operating in countries with major construction growth across the world. It is now exporting to Qatar, the UAE, Bahrain, Oman, Saudi Arabia and Kuwait.

My hon. Friend raised a number of specific points, which I will touch on if I may and write to him if I miss. He announced the publication of his report. We all look forward to reading that when it appears in the next few weeks. He asked about scrutiny of UKTI. I think today has been about scrutiny, but I take his point that there have not been sufficient debates on that important issue. It is of course open to the Select Committees to take up the work of UKTI.

My hon. Friend asked me specifically about Libya. We were one of the first to open an office again in Libya. Some 250 British firms have been to Libya since the end of the conflict, but I wholly accept that we need to do more than that. He mentioned Mr Mosawi in relation to Iraq, and I will certainly follow that up and reply to it. I repeat the reassurance that there are UKTI staff in every region of our country.

I hope that my hon. Friend will be reassured that UKTI takes seriously any scrutiny and comments on its activities. I hope he has had engagement with senior UKTI staff in response to any concerns that he has had. The fact that some companies occasionally feel that they are not getting the service they expect is, in my experience, the exception rather than the rule. Across the globe, countries that have used UKTI sing its praises. There may of course be exceptions to that, and if there are we need to learn why that is and to build on it. Nick Baird has made improving all levels of customer satisfaction one of the top priorities for him and his top management team. They are challenging the organisation and are seeing a response. Current indications are that, over the last calendar year, UKTI hit its target of 32,000 businesses assisted, up from just 25,000 the previous year. This year, UKTI aims to help 40,000 companies. Its target for 2015 is 50,000 businesses.

I hope that hon. Members will be reassured to hear that, of the tens of thousands of businesses that were helped and supported by UKTI in the year to September 2012, 90% of which were SMEs, more than 75% were either satisfied or very satisfied, and those companies say that UKTI has helped them generate additional sales of £49 billion. I hope that my hon. Friend and others will agree that that is an impressive performance. It is not a performance that we are complacent about, but one to which we should none the less pay tribute.

Question put and agreed to.

16:58

Sitting adjourned.