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The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
It is a pleasure to serve under your chairmanship, Sir Roger, not least because of the value of our debate and the sheer number of interesting contributions. I welcome very much the work of my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and his report. I had read an electronic copy, but now I have a hard copy to take away.
I shall try to respond to all the points that were made, but I start by saying that the most significant speech this afternoon was that of the hon. Member for Hartlepool (Mr Wright), who demonstrated passionately the strength of feeling in favour of bipartisan openness in Great Britain. As a country, we can be proud that we have a political tradition across all major parties of openness to trade and the value of trade. The argument about the benefits of trade—not just financial, but in terms of innovation and the improvement of business practices—was powerful, and long may that cross-party openness to trade continue.
I agree strongly with the hon. Gentleman about my noble Friend Lord Green, who has worked extremely hard, travelling much of the time, not only directly to open doors along with the Prime Minister’s trade ambassadors, two of whom spoke in the debate, but to strengthen UK Trade & Investment as an institution. Its budget was increased in the 2011 and 2012 autumn statements, which was partly because of a recognition that its effectiveness and efficiency were improving. The private sector experience of many of those in UKTI who are promoting trade was raised as an important positive point by hon. Members on both sides of the Chamber. Some 75% of senior management in UKTI have private sector experience, the majority of whom arrived in the past 18 months under the leadership of Lord Green. The whole House can unite in commending his work and Nick Baird’s day-to-day leadership of the organisation.
I was delighted to see support in the report for the direction UKTI is taking. It also contained a recognition of some improvements, although I have noted the criticisms, which I shall try to deal with as well. Part of the question is about the need for scrutiny of, and transparency in, UKTI. I should tell hon. Members that there were reports from the Business, Innovation and Skills Committee in 2011 and 2012 and a Lords Select Committee report in 2013, while the UKTI chief executive will appear before the Public Accounts Committee on 6 November. I am sure that he will very much enjoy his trip to Shrewsbury on 5 November, perhaps spending the time ensuring that he is across all the questions that he might be asked and listening to the comments of my hon. Friend the Member for Shrewsbury and Atcham. Those reports demonstrate the intensity of the parliamentary scrutiny that has been conducted.
It is worth airing some of the evidence about UKTI’s performance. According to an independent organisation that reviews UKTI’s performance quarterly, three quarters of the 4,000 UKTI service users who were surveyed were either satisfied or very satisfied, while fewer than 10% were dissatisfied. From those who use UKTI, the results are pretty strong but, of course, 10% dissatisfaction is still too high, although I hope that we can agree that it is a good baseline from which to improve.
Mr Iain Wright
I thank the Minister for citing those figures, but am I right in thinking that UKTI’s annual report sets a target for satisfaction levels of 80%, yet it has consistently failed to achieve that? What active steps will the Minister take to ensure that it hits its targets on customer satisfaction?
Matthew Hancock
It is indeed important to have a target for satisfaction, and if three quarters are satisfied or very satisfied, that shows we are heading in the right direction, but more can always be done. For instance, since 2011, a realignment of UKTI has taken place to ensure that it can better serve the needs of UK plc. The process has included: the introduction of stronger senior management with private sector experience; new private sector delivery of trade services in England, with incentivised contracts, which my hon. Friend the Member for Shrewsbury and Atcham asked for; improving performance overseas and strengthening teams in key growth areas, such as China and India; and reviewing targets to ensure that they incentivise the behaviour of individuals on the ground. The right balance is having strong direct accountability to Ministers, which is appropriate, alongside the right incentives to give individuals on the ground the autonomy to be able to promote trade.
Several hon. Members mentioned—favourably or otherwise—the fact that UKTI reports to two Departments. I am a Minister in two Departments, and it is true that it is necessary to have co-ordination between the two. It would not be right to remove accountability for UKTI from either the Foreign Office or the Department for Business, Innovation and Skills, because UKTI is precisely about the link between business and our international relations. This is about, on the one hand, strengthening links between UKTI and domestic business, for which the Business Department is responsible, and, on the other hand, strengthening links between UKTI and our diplomatic service, which has happened a great deal over the past two or three years. Both those are valuable and necessary if the service is to perform, so it is therefore right that UKTI reports to a Minister who sits in both Departments but, of course, it is accountable to one Minister—my noble Friend in the other place—so there is a clear line of sight for ministerial accountability.
Several hon. Members talked about the links between UKTI and the Department for International Development. UKTI has an aid-funded business service that works with DFID to try to ensure that opportunities for procurement through DFID, not least from SMEs, are valuable. UKTI holds seminars with businesses, including SMEs, and it will hold another seminar in November to ensure that SMEs and domestic British companies have the opportunity to make the most of procurement through DFID, which these days, of course, bears the Union Jack.
My hon. Friend the Member for Stafford (Jeremy Lefroy) talked about the importance of inward investment and the business bank. It is vital to ensure that finance is available for exports, and funding for lending and strengthening the domestic private banking system are important parts of that. We are also seeing the growth of challenger banks, which are increasingly providing business finance. We will, of course, have the first ever British business bank, which is being set up precisely to look at the sorts of investments that he talked about. It is right that the British business bank does not take direct instruction from Ministers for each loan because, quite properly, they have to be made on a commercial basis.
Jeremy Lefroy
Will my hon. Friend examine the relationship between UK Export Finance and the commercial banks? My constituents have said that some commercial banks—not all but some, including very large ones—do not seem to be interested in promoting export finance and are unaware of the new products that are available. As the hon. Member for Hartlepool (Mr Wright) said, they are not interested in exports at all. Will the Minister challenge the major UK banks to say what they are doing to promote exports?
Matthew Hancock
I can go one step further because we have already been raising those challenges with UK banks to ensure that the facilities on offer are better integrated into their services. My hon. Friend will also know that the GREAT campaign to which many hon. Members referred, which brings together the promotion of UK export under one strong brand, is being piloted domestically in the north-east of England to promote export by UK companies in addition to Britain overseas, as has been the case hitherto. The promotion of the different Government schemes available for British-based businesses will be brought together under that brand in the pilot, which I hope is successful and can be rolled out further, to do exactly what he talks about.
Regarding the broad discussion about the recognition of UKTI, I strongly agree that it is important to ensure that every business, as appropriate, knows about UKTI and its services. We are doing an awful lot to try to make that happen, not least through local engagement. More than 100 constituency seminars have been put on by UKTI with local MPs, serving about 150 constituencies. A seminar in my constituency was very well attended and has led to increased contacts between UKTI and local businesses. If any Member wants UKTI to come to their constituency, we can look at that, because I think that we have been able to meet every request that has been made. Such events mean that UKTI, with the help of the local MP, can reach businesses that it has not yet reached. I am sure that the hon. Member for Hartlepool knows of many businesses in Hartlepool, so that is the sort of thing that we can put on for MPs of all types.
Daniel Kawczynski
To support my hon. Friend on that point, we invited Paul Noon, the regional director for UKTI from the west midlands, to come to Shrewsbury, and we had about 25 local businesses there. The follow-up from the conference has been extremely good and the event has led to exports, so I thank the Minister for that.
Matthew Hancock
Well, there you are. It sounds as though it works in practice in Shrewsbury as well as in Haverhill, and I am sure that there are other parts of the country to which it can also reach.
There was a brief discussion about trade figures. I gently point out to the hon. Member for Hartlepool that the Opposition cannot have it both ways. They cannot blame the fact that growth has been slower than was forecast in 2010 on the Government’s domestic policies and then complain that growth in exports has not been as strong as we would have liked. In the past three years, there has been a massive crisis in the eurozone; I do not know whether he has been watching TV. One of the Government’s arguments has been that that has had a negative impact on the British economy. That argument is supported by a huge range of independent and international experts.
It is great to hear a Labour Front Bencher come to his senses and make the argument that, partly owing to the eurozone, export performance has unfortunately not been as impressive as we had hoped and that that has had a dampening impact on the UK economy. I will report back that the Labour party seems to be getting the message that that has been one of the main problems, as was set out in reports by the Office for Budget Responsibility, the OECD and other organisations. That is absolutely terrific.
Exports to India have risen 13% on the year and exports to non-EU countries rose by just over one fifth between 2010 and 2012. The move has been gradual, but for the first time in my adult life, exports to non-EU countries have become bigger than exports to EU countries. It shows the importance of rebalancing trade institutions such as UKTI around the world, in the EU as well as outside it.
Mr Iain Wright
The Minister selectively quoted the growth in non-EU exports between 2010 and 2012, but he will recall that I mentioned the £2.2 billion drop in non-EU exports last month. Given sterling’s performance and declining value, how does he explain that and what is he going to do about it?
Matthew Hancock
We will pursue the strategy on which we have set out, which is ensuring that the UK economy is strong at home by dealing with our debts, making it more competitive, doing everything that we can to win what we have called the global race and ensuring that UKTI plays its part, not least by delivering a UKTI budget increase over the past couple of years, so that it can reach the target of doubling exports to £1 trillion, as the hon. Gentleman mentioned.
The Government’s ambition of doubling exports to £1 trillion by 2020 also involves getting 100,000 more UK companies exporting. The hon. Gentleman asked how we are doing on that. As he said I would say, the monthly figures fluctuate, but UKTI is on track to achieve its target of supporting 32,000 businesses for the 2012-13 financial year. Some 90% of those 32,000 businesses are small and medium-sized enterprises. That support has helped generate additional sales of more than £33 billion. I would say that that is money well spent.
My hon. Friend the Member for Gloucester (Richard Graham), who is no longer in his place, discussed the importance of encouraging small businesses to export. He particularly mentioned chambers of commerce and other business groups. We are piloting the use of chambers of commerce; as non-governmental organisations, they can play a different role and fill a niche. There are 20 pilots, including in Brazil, India, Hong Kong, Russia and Singapore, using chambers of commerce as well as UKTI. He also mentioned one of my personal passions: Education UK—a specific unit within UKTI to help our education exports.
I will also come to the point about the link with the British Council. My hon. Friend mentioned the West Kowloon cultural district project, which has been supported by both UKTI and the British Council working together. That is an example of those two organisations working collaboratively to very good effect.
The good news on languages is that, although entries to A-level were down, entries to GCSE rose sharply. I hope that after a long period of decline, the increase in GCSE entries this year shows that people in English schools who take languages are coming through the pipeline. Let us hope that that is an early indicator of better things to come.
The hon. Member for Islington North (Jeremy Corbyn) asked about defence exports. Of course, as he said, the end user certificate system has been in place for a long time—more than 20 years—and the Government have confidence in the export licensing system, which we think is thorough and robust enough to address human rights issues that might arise from individual sales to individual countries. Any application for an export licence is considered against consolidated criteria in the light of circumstances in that country.
That brings me to the point raised by the hon. Member for Hartlepool about exports to Syria specifically. He mentioned two licences issued in 2012. I can confirm that those licences were never used to export chemicals and were revoked under the new EU sanctions. I hope that that addresses his question.
Jeremy Corbyn
The point that I made was that the FCO’s website expresses serious human rights concerns about regimes to which a large number of British arms exports are approved by the Department for Business, Innovation and Skills. I particularly draw attention to Bahrain, but also to the whole operation of the defence and security equipment international exhibition, which is on at the moment. A Russian company there that has been supplying arms to Syria is openly parading its wares at the exhibition, which is subsidised by the British Government. We need a lot more transparency about the operation of the defence services organisation and what eventually happens to those weapons. When people are assaulted by anti-personnel weapons supplied by Britain, they do not feel very benign towards this country.
Matthew Hancock
As I said, any application for an export licence is considered against the criteria, which have been in place for some time, in the light of circumstances in that country and depending on the products’ end use. The system has been supported by Governments of all three major parties. In the specific case of Syria, which has been raised as a concern, no chemicals were exported under that licence. I think that that addresses the point.
I am grateful for the opportunity to have this wide-ranging debate. I am looking forward to working with my hon. Friend the Member for Shrewsbury and Atcham, to ensure that we can push UKTI even further. I think that the overwhelming support for the direction of travel within UKTI and, at a higher level, the overwhelming support for UK trade openness and the ability to trade with the whole world will have been noted clearly in this debate. Thank you, Sir Roger, for your chairmanship. I hope that all those who read the report of the debate will notice that we are a country that is very much open for business.
Sir Roger Gale (in the Chair)
Mr Kawczynski, do you wish to exercise your right of reply?