Viscount Waverley
To ask Her Majesty’s Government what strategy they have adopted to increase the United Kingdom’s exports.
Baroness Buscombe (Con)
My Lords, I remind all Back-Bench speakers that they have a three-minute limit.
Viscount Waverley (CB)
My Lords, this Question encourages the Government to share their thoughts on this important subject. There will be other opportunities as we prepare for completion of the Brexit negotiations, but we need to start a process now to prepare for the time when we leave the European Union. I thank all noble Lords speaking this evening. Sensing contributions of an international nature, I will restrict my remarks more to the situation as I see it within our country.
I declare that I am the founder of SupplyFinder.com, a powerful multipurpose network of active business opportunities and information across 195 countries in 25 sectors and 11 languages. It is a comprehensive website, three years in development.
The United Kingdom is embarking on an ambitious new journey, for which we must prepare and manage carefully. Addressing the export promotion needs of our devolved regions and England will lead to employment growth and prosperity. Although a measure of uncertainty has been removed, many challenges remain. It therefore cannot be business as usual; rather, we must tackle these difficulties with clarity of vision, determination and renewed vigour.
We will succeed in increasing exports if we place increased emphasis on tolerance, respect and the well-being of all our people, all pulling together. Our country thrives in times of great adversity. We keep calm and carry on, stoically British.
Now the task is more nuanced. We must be outward-looking and positive as a nation, dispensing with negativity and adopting a can-do attitude. Not only are we called upon to be resilient, we also must be entrepreneurial, seeking and capitalising on every opportunity. Let us embrace the vital contribution of women in society and business. Let us relish our extraordinary multicultural diversity. These are the strengths that form the bedrock of our 21st century society, the pillars helping to define and unite us as a nation. “UK first, in a spirit of partnership with existing and new friends”, should be our mantra.
An early question for Government is, “What do they consider to be their best role?”. Government must share the burden and understand where their strengths lie to succeed in increasing exports. Should the Government fulfil a B2B role, or might it be better to outsource these activities and focus on B2G and, of course, G2G—Government to Government? Their core mission should be to strengthen links between private sector and public sector, creating the right environment to allow for the private sector to succeed as equal partners.
Taxpayer money can be better channelled through partnerships with the private sector. It is essential, however, that the Government support business confidence, particularly if there is any short-term economic downturn. The French and German Governments proactively support their exporters, while our UK private sector is often left to fend for itself. The primary responsibility is to create the right environment for the private sector to thrive. Would the Government consider incentives, such as tax breaks and allowances to support British exporters?
Government must enhance the business capabilities of the Civil Service and consider an urgent and transparent root-and-branch reform to meet the challenges of the future. In addition, Government must ensure that export finance is available where there is traction from our exporters to popular and even sometimes risky markets.
What are realistic levels of export values and numbers of new exporters? Indeed, how are we to measure success? Understanding this would help devise policy. The Government’s recent Green Paper, Building Our Industrial Strategy, is a good starting point, a road map to reach a destination. Questions then arise: by whom, to where, and by when? Generally, there are insufficient data on which to gauge the efficiency of business support performance. Estimates of the current number of exporters vary widely. It needs to be decided whether manufacturing will regain its prominence, and if so, which aspects. This sector requires strategic thinking and clarity to address varying needs of airport expansion, energy generation and the future of the foundation industries that underpin manufacturing. Government should move more quickly and use this network to create access into new markets, helping with market intelligence and research, increasing awareness of business opportunities and enabling ease of access for SMEs. The Overseas Business Network initiative has so far delivered. The Prime Minister’s trade envoys are excellent. Both should be recognised and supported further, particularly into new markets.
It is essential that all stakeholders are around the table and playing an active role. Business needs a simple and, ideally, a single route to advice and support. Digital routes exist, but business prefers to speak to a person. This is where multipliers, approved chambers of commerce and the trade association movement come into play. Their B2B contributions are a great strength. I think I am right in saying, however, that there is no single central list of trade associations in the UK. That needs to be resolved. Some will rightly ask, “What of funding? What of resources?”. Solutions could be found. For example, part of the fees for each company registering with Companies House could be given to a nominated chamber and association. This would generate beneficial multipliers to improve services. Competition would dictate to which nominated multiplier these funds would go. Companies would attach themselves ideally to one chamber and one association. These B2B activities should then be marshalled to ensure maximum impact on opportunity.
Government should support more mini fast-in, fast-out missions as well as the big set pieces. They should insist that all applications for public funds, whether small business support grants or major infrastructure proposals, be weighted by the contribution each makes to the nation’s exporting capability. They should develop a comprehensive package of trade missions over the next three years to introduce both new and experienced businesses to new markets and to generate new trade and project the positive GB message that we are an outward-looking nation reaping benefits from Brexit.
Sector trade also must be promoted by the creation of hubs manned principally by the private sector, centres of excellence, properly supported and funded to facilitate the needs of exporters. The UK has a comprehensive national and local network of chambers as well as an overseas network and is a trusted international brand that opens doors. These all need to be developed as vital resources. Figures suggest that in the past, one in five SMEs exported. Has that increased? Do the Government have a target level? Gone are the days when the world would come knocking. Business must get out into the field, understanding local culture and local rules.
The challenge is how to get them out there. Encouraging joint ventures or dependable partnerships would seem a useful way forward. There are plenty of initiatives in the offing, but we need to be innovative in our thinking, make things happen.
Yesterday I offered introductory remarks to the New Silk Road Forum. The Iranian ambassador gave a keynote speech. Opportunities abound for UK business interests, but we need to get a move on.
What might the UK reasonably expect to achieve in future trade agreements, and over what period of time? That is a general question which I will not develop this evening. I have focused on policy but time does not permit me to address FTAs, other than to wish the noble Baroness and the noble Lord, Lord Price, well.
I will say a very quick word about the events industry, an industry of paramount importance and one which requires support. It attracts 9 million visitors and, on average, 170 exhibitors for each show. Internationally, just 20 UK-based organisers create 1,049 events outside the UK. UK shows can be used to secure an international position for the UK. Challenges include the need to ease entry. Health and safety and data issues also require attention.
We are in a fast-moving world of differing geopolitical and geo-economic alliances. This is a call to action. We are on the starter blocks of a long journey, poised for the off. The prize: a successful global Britain, a critical link to an interconnected world, a vital hub for international commerce and increased exports. Let us make it happen.
Lord Patten (Con)
My Lords, every time that I get into our utterly dependable 1950 Series 1, Mark 1 Land Rover down in the West Country, I am reminded that its very construction and materials are the result of a post-war “Export or die” approach, for it is made of ex-aerospace-destined aluminium. Steel was reserved for only the most critical of exports, such as the Austin Atlantic for the United States. Exporting was critical then, but how much more so now when the current account deficit is the largest—at 5.4% of nominal GDP—since records began in 1948, when those very Land Rovers were being designed.
The Minister will be relieved to hear that I think that the Government are developing a correct strategy, starting with the UK being the world’s most open market to inward investment, net of what we decide are truly strategic assets in the national interest, such as defence. I hope that we will never adopt the approach, for example, of the French, who stepped in to stop foreign investment in Danone, declaring its yoghurt to be a strategic national asset. Rather, our openness is critical for exporting, as the very flood of recent welcome investment from abroad will then in its turn generate much UK-based exporting abroad.
It is clear that Dr Fox and the DIT have constructed a good template for our strategy: 50 key countries, 200 key sectors and all the rest, with which I agree, although I would like to see some specific concentration on our relationships with the Commonwealth countries, about which my noble friend Lord Marland, who knows much more about these things, may later have some thoughts. Whatever, once embedded, these aims must be stayed with, be not tinkered with and be long term. This is because persistence pays. Years back, in the windows of the then DTI down the road in Victoria Street were plastered signs saying something like, “Exporting is fun”. Well, it may be rewarding in the end and eventually enjoyable when things turn out well, but exporting is a slog, capital intensive, risky and grinding hard work, as networks are built up on the ground. To that point and to the suggestion from the noble Viscount that we need to regenerate the business views of so many in the Civil Service, I wonder whether the Minister shares my concern at the ever-accelerating roundabout of job hopping by civil servants at home and in our posts abroad. If exporting is a long-term business and it takes years to build relationships, we need to have people in post who are there for the same length of time and have the same staying power to help our people in what they try to do, rather than moving on.
The Department for International Trade says, “Let’s make 2017 the year of exporting”. It is really a decade of exporting that we need now. I ask my noble friend the Minister whether the Government have set a target for increasing the small 11% of UK businesses that export to a more realistic number by, let us say, 2025 and if so what that target is. This should be a target-driven business.
Lord Haskel (Lab)
My Lords, I agree with the noble Viscount, Lord Waverley, that, after Brexit, it will be more important than ever to get British business trading with the world. I join the British Chambers of Commerce in regretting that there was no new support for exporters in today’s Budget.
The Government’s current efforts to help exporters and deal with supply-chain problems deal largely with manufacturing, the more tangible part of our economy. But slowly and surely, it is the intangible part of our economy that has been growing and by some accounts now absorbs more investment than manufacturing. So I put it to the Minister that it is just as important to help our exports in knowledge and software, in know-how and data, in networks and branding, in aesthetic content, individually and in their many combinations—sometimes together with manufacturing—because this is the way international business is going.
The Starbucks franchise is an export as important as a tangible product, with its quality standards, systems, algorithms, branding and all the other things contained in the Starbucks franchise book.
In our economic data, these intangibles are lumped together with services. According to government data, we are a net exporter of services to the EU 27, with a surplus of €28.8 billion. But according to Eurostat, the EU 27 have a surplus of €30.1 billion on their exports of services to the UK. These figures are for 2015 from a paper published last month. Perhaps the Minister can tell us who is right, or are we just counting differently?
In their help to exporters, Ministers should recognise the growing importance of intangible exports and digital goods. If we are to help exporters in this sector, which is of growing importance for our export businesses, we really have to understand what is going on. Do not listen to just me: Sir Charles Bean made this point in his report to the Government on intangible investment. What will the Government do to help and understand this sector? As the noble Viscount said, we cannot just go on with business as usual. We have to move with the times.
Lord Popat (Con)
My Lords, I thank the noble Viscount, Lord Waverley, for securing this important and timely debate. Britain’s trade deficit is the greatest economic challenge facing our country. For almost all the past four decades, we have run a trade deficit. Last year, it was around £40 billion. Put simply, we do not have enough exports to pay for imports and we have to borrow to finance this problem. We need to be very clear that it is unsustainable; any exports strategy must identify why the situation exists and how we can address those problems.
There are many causes that I would like to highlight, but time limits me to three specific issues. The first is productivity. Britain’s productivity problem is well documented and means that we are inefficient and our exports more expensive. Business investment rates remain too low; our businesses are often not operating with the most up-to-date technology.
The second is complacency. For the past three years, I have been part of the judging panel for the Queen’s awards for exports. We review hundreds of amazing applications, from businesses which have created what should be world-leading products. But they are not, because they limit themselves to our nearest trading partners. Too few of those companies are leading the charge in emerging markets, where we really need to be. We must be more outward-looking and ambitious.
The third issue is the lack of joined-up thinking between the public and private sectors on exports, which I have often seen in my role as the Prime Minister’s trade envoy to Uganda and Rwanda. Those companies which wish to export—despite my previous comments, I know that there are many—often look to government for support. Sometimes, I think they wish they had not bothered. We have many strategies and many organisations ready to help, but there are so many gaps between those organisations and departments that it is easy for companies to fall down the middle.
In the time I have left, I want to make three small suggestions on ways in which the Government can help improve our export performance. The first is further to expand UK Export Finance, as the noble Viscount, Lord Waverley, mentioned. Secondly, we need to increase the staffing of the Department for International Trade in overseas markets. In the two countries I cover, we have one permanent staff member for DIT, yet east Africa has huge potential for growth. Winning contracts in emerging markets means more taxes paid to the Exchequer; it will pay for itself. Finally, we have to change the mindset of both our leading companies and our SMEs towards exports and emerging markets. We must be outward-looking and start to think global.
These are only a few points on part of a much bigger issue, but I want to conclude with one important point: the demand for British goods and services abroad is absolutely huge. Establishing a market for our products is not the issue; it is the supply that is the problem. We simply must change that.
Lord Marland (Con)
My Lords, I, too, thank the noble Viscount for tabling this very important debate. In doing so I declare my interests, which are in the House of Lords register, and my role as chairman of the Commonwealth Enterprise and Investment Council. The answer to the exam question starts tomorrow, because tomorrow I play host to 35 trade Ministers from the Commonwealth here in the United Kingdom. There is no greater opportunity for the UK to engage in this. The UK Government have been slow to adopt and engage with this particular opportunity. In fairness to them, they are now coming in strong and being very supportive—but it has taken a lot of nudging. That is indicative of the problems that the Government face at the moment. I ask the noble Baroness when I am going to receive a response to my letter asking for a correction to the White Paper, where the Government take credit for organising this event, which I underline is organised by the Commonwealth, not the UK Government.
The Commonwealth includes one-third of the world’s population, all speaking English, with the Queen as head of state. The Queen, through enormous efforts, with the royal family, has kept the thing alive, despite, in fairness, the UK Government—and I say this having been a Minister, the Prime Minister’s trade envoy, and setting up the Prime Minister’s trade envoy network, of which the noble Lord is a very valuable partner. Trade within the Commonwealth is projected to be £1 billion by 2020: it is proven that the Commonwealth factor means that it is 19% cheaper to do business inter-Commonwealth and this is such a great opportunity that it is actually a no-brainer for the United Kingdom to come, to work, to develop and to rebuild relationships with Commonwealth countries which it deserted when it went into the European Union.
I am very proud to be British; I have been a British businessman for most of my life and I still am. British businesses and British businesspeople are the foremost in the world. We have a great, intrepid spirit—we have always known how to export, as my noble friend Lord Patten said, and I am a great believer in it—but the fact is that we have lost our desire to export. We have been able, through a prosperous economy, to feed on our internal economy, so learning to export again will be a huge challenge. As the Minister will know, only 13% of UK companies export. That is an amazingly horrific figure for someone who thinks that we are part of an exporting nation.
Of course, it is not the Government’s responsibility. The Government are there to enable, not to do the deals, so many of the points made by noble Lords this evening are about helping the Government to recognise the best ways and routes to market for business. I pick up on my noble friend Lord Patten’s point that having someone in post for three years when trade is such a long-term endeavour is a complete waste of time. We have to tear up the scrapbook and start again. We have to get the CBI working, and to get all the other agencies that work for business helping to push this initiative further. I am confident about the future—I know we all are in this Chamber—but, as noble Lords have said, there are many pitfalls and we have to get the Government into gear to get the economy going.
Baroness Lane-Fox of Soho (CB)
I, too, thank the noble Viscount, Lord Waverley, for initiating this debate. I do not know him well but I already like him for having had the forethought to secure it on International Women’s Day—and not only that but for having secured a stellar international female Minister to reply to the debate. I would like to tell noble Lords about some data that were released today from the ScaleUp Institute, of which I am a trustee, started by the indomitable Sherry Coutu.
There are 1,000 businesses run by women in this country that are fuelling the growth of the economy. Together, they are contributing £15 billion to our economy. They range in size and scale from £1 million to more than £100 million and they are what she and we at the institute term “scale-up businesses”. I challenge the Government to pay more attention to these female-led businesses. In particular, helping them to export could be very easy, low-hanging fruit to quickly grow our markets.
Of the nearly 1,000 businesses that have been identified by the ScaleUp Institute in its work today, more than 870 have seen 30% growth year on year; 553 have seen 20% growth year on year; and 343 have seen 50% growth year on year. These are big numbers, all being driven across the country in many different sectors. Surprisingly, London is not the centre of these businesses: the Thames Valley and Buckinghamshire lead the way, followed closely by the Midlands, with London in third place. This is heartening when we hear so much about certainly my sector, the digital sector, coming from London only.
These are not just digital businesses, either. They are in leisure, hospitality, services, recruitment—even IT, I was surprised to see. So there is a huge opportunity to help these businesses grow: 84% of the CEOs said that they would like to be included on government trade missions and that exporting was one of their top three priorities. There is a huge amount that could be done if we could take the women away from their daily work, show them different markets and help them learn how to sell.
I have three quick suggestions. First, can the Government please include more women in their trade missions from this cohort which have been identified as high-growth businesses? Secondly, can we have better university courses for women to learn how to package their products and do trade deals? I mucked up many expansions at lastminute.com; it is difficult and it would very valuable if there were more rigorous university courses. Finally, could we have incentives for foreign investment into these female-led businesses, since they really are on the fast track to growth?
I feel enormously encouraged. I know there is a lot of doom and gloom, potentially, as we have this debate, but here is a set of 1,000 businesses growing at a rate of knots that want to be trading across the world. I know that the noble Lord has interests in Mongolia and across central Asia. I travelled there over six months in my gap year before university, ambling around being useless. Rather than encouraging more Marthas to go and be useless in Mongolia, let us encourage more women to do important trade deals with these important countries.
Lord Sheikh (Con)
My Lords, following our vote to leave the European Union we have a chance to redefine and build our trading relationships across the world. We must therefore be devising and implementing rigorous strategies to increase our exports to other countries. I draw attention to the UK’s growing Islamic financial services industry and the opportunities it presents. Here, I declare an interest. I serve as co-chair of the All Party Parliamentary Group on Islamic Finance. I am also a voluntary patron of the Islamic Finance Council.
The UK has the largest Islamic finance industry outside the Muslim world, with assets now exceeding $20 billion. Worldwide, the industry is now worth more than $2 trillion. Last year, growth in the Islamic banking sector continued to outpace growth in conventional banking in systems where it had been established. Moody’s Corporation also states that the sector has potential for further double-digit growth in the coming years.
Specifically in the UK, the industry has progressed significantly in recent years. In 2013, the World Islamic Economic Forum was held in London, the first time the conference had been held outside the Muslim world. The then Prime Minister, David Cameron, confirmed the issue of a sovereign sukuk for £200 million. He also announced the arrangement of student loans and start-up loans on a sharia-compliant basis. I commend the former Prime Minister for realising the potential of Islamic finance and for being proactive in pushing it forward. I hope that our current Prime Minister will do the same.
We are also the leading centre in the West for education relating to Islamic finance and training. We have universities that provide specialist courses. We have an increasing number of personnel qualified in Islamic finance, including highly-trained asset managers, insurance providers, accountants and lawyers. We should now be looking to export these services overseas. We can help establish Islamic finance in other countries that may wish to emulate our own success. We can also further develop markets in countries where Islamic finance already exists. As Islamic finance grows across the world, maintaining a powerful hand in it will offer us a gateway to many global markets and economies. We must harness our talent and expertise in Islamic finance and other industries and export it to the world.
Finally, we must consider providing sharia-compliant export finance. The expansion of export finance facilities is important, as was mentioned by the noble Viscount, Lord Waverley, and my noble friend Lord Popat.
Lord Bilimoria (CB)
My Lords, the Prime Minister said that, when it comes to Brexit,
“no deal is better than a bad deal”.
In 2015, before the European Union referendum, the UK recorded the largest current account deficit as a percentage of GDP among the G7 economies. Yet in 2015 UK exports grew faster than world exports for the first time since 2006.
When we talk about exports, we need to look at investment as well. About 45% of the UK’s investment abroad is in Europe, with around 35% of holdings in the Americas. Just over half of investment into the UK comes from Europe, while 33% comes from the Americas. The EU accounts for 45% of our exports and 53% of our imports. We have a trade deficit with the EU and a surplus with the rest of the world: 55% of our exports are non-EU. But overall, of course, we have a deficit as a country.
My own business, Cobra Beer, a joint venture with Molson Coors, exports to every European Union country, and we import from Belgium as well. More than £500 million-worth of beer was exported from the UK in 2016, making British beer the UK’s third most valuable food and drink export. But 63% of those exports go to the European Union, which is why the BBPA said:
“Continuing tariff-free access to our biggest market is essential as we leave the European Union”.
Recently, the European Union Committee produced a report titled Brexit: The Options for Trade. I thank the noble Viscount, Lord Waverley, for initiating this debate. In that report the committee said:
“While a FTA provides the greatest flexibility in securing a bespoke deal … we see no evidence that trade on terms equivalent to full membership of the Single Market … could be achieved. We do not think it will be possible to negotiate a comprehensive UK-EU FTA within two years”.
Does the Minister agree that this will be very difficult for us? The price of trading in the EU on World Trade Organization rules—the alternative to a deal on a new EU FTA—is giant: as high as £58 billion, according to the Institute for Fiscal Studies. Does the Minister agree with that?
To pursue an independent trade policy will be difficult, and yet UK trade as a share of GDP has been increasing continually since 1940. It is now 60%. The UK has always been a powerful advocate for free trade within the EU. If you look at exports of UK goods and services, the vast majority of the top 10 client countries are in the EU. We are also a very attractive inward investment destination—the third highest in the world. I ask the Minister: how is the new Department for International Trade different from UK Trade & Investment, with which I worked very closely as the founding chairman of the UK India Business Council?
We hear the rhetoric from the Secretary of State, Liam Fox, that we will lead the charge towards a world of open and fair trade, so let us rise to this challenge—a golden opportunity as never before. I have worked with the GREAT campaign. Will the Minister confirm that it is an excellent initiative? I have worked very closely with our high commissions and embassies around the world and they need to be applauded and our businesses need to use them much more than they do.
It is not about just goods and services. When it comes to trade, it is about movement of people. International students bring in £25 billion to the economy. They are important. Our immigration rules are important, hand in hand with our trade.
Finally, today we have had the Budget. To my knowledge there is not one mention of the word “exports”—but they are crucial to our economy.
The Earl of Dundee (Con)
My Lords, I join others in congratulating the noble Viscount, Lord Waverley, on securing this debate. In my remarks on UK exports and a strategy for increasing them, I will touch briefly on three aspects relating to British cities: first, their current level of success, for any future trade deal with the EU must aim to preserve and raise this standard; secondly, the actions that the Government should now take further to strengthen the commercial muscle of our cities; and, thirdly, within Europe yet irrespective of the EU, the potential of certain useful and available methods and facilities for enhancing trade and exports.
British cities export three times as much to the EU as they do to the US and 10 times as much as they do to China. In 61 out of 62 cities, the EU is the largest market. Exeter heads the list. It sends 70% of its goods and services exports across the channel. So while it is right to be ambitious about expanding trade with other countries, does my noble friend the Minister agree that as we leave the single market the absolute number one priority arising from a new trade deal with the EU is to consolidate and build upon these current results and achievements?
To strengthen commercial abilities in the first place, there are a number of actions that the Government can now take. The key issue is skills. Clearly, an insufficiency will deter foreign investment. Already across the UK there is much divergence. In Exeter just 1.5% of people have no formal qualification, yet in Birmingham as many as 16.5 % do not. Nor do UK cities fare well against their European neighbours: only six of them manage to outperform the European city average in terms of low-skilled people in their economies. To reverse these deficiencies, does my noble friend concur that several government responses are now called for, including more-targeted endeavours to improve numeracy and literacy, particularly in schools in underachieving places; policies to redress the present shortage of qualified maths and science teachers; and guidelines for new metro mayors—some of whom are elected this May—for improving adult skills in their areas?
City centres themselves, particularly in the north, often deter foreign investment as well. Does my noble friend consider that funds should be allocated accordingly, partially from the £23 billion productivity fund for city centres announced by the Chancellor last year?
Also, so that transport gets better inside cities, and following this year’s buses Bill, is she in favour of reregulating bus services? The effect of this is not as high profile as more grandiose transport projects; nor is it expensive; yet it is likely to help the performance of cities rather more.
Then on city business rates, can she give an assurance that the revaluation of commercial property, which determines how much tax is paid, will in future be done on an annual or a biannual basis?
Finally, we may take heart from the new approach adopted and evidenced in recent years by both UK and European cities. For there is now a wider perception of “trade” and a feeling that people-to-people links best lay the foundations for mutual economic growth at local, regional and city level. This welcome development is supported by the Council of Europe, in whose parliamentary assembly I have the honour to serve, and by its Intercultural Cities programme. If my noble friend considers that this programme may as yet not be sufficiently known about, will her department be able to draw it to the attention of relevant parties which can then choose to benefit from it?
In summary, there is a hopeful prospect ahead, provided that, with quite some determination, threads such as these are properly identified and pulled together. As outlined, they include: necessary government measures to promote city exports; beyond the EU, making use of various other European opportunities and interventions; then, not least, an EU trade deal which ensures that current levels of exports are preserved and raised.
Baroness Northover (LD)
My Lords, I thank noble Lords for allowing me to speak in the gap. Like the noble Lord, Lord Popat, I am delighted to serve as a trade envoy, in my case to Angola. I pay tribute to the noble Lord, Lord Marland, who devised the trade envoy network. It is needed now more than ever.
Unlike Ministers, trade envoys can focus solely on their respective countries. They can build relationships with businesses and ministries there and here. This is illustrated by the case of Angola. Angola is an oil-rich country, where BP and the Aberdeen supply chain have major interests. But as oil prices have dropped and reserves are diminishing, Angola, like so many oil-rich countries, is seeking to diversify. It has huge needs in infrastructure and services and enormous potential in hydropower, agriculture and minerals. All are areas in which British businesses have expertise.
UK Export Finance is helping to underpin UK involvement in Angola, as elsewhere. As a result of its involvement in the hydropower sector, a Scottish company which thus far has not worked outside the UK will, in conjunction with a global Spanish company, begin to work and expand in a far different market. There is also our world-class education sector. The Royal Agricultural University is helping Angola’s agribusiness potential. While in Angola, I was able to flag opportunities at the business school at Oxford. I am now about to meet the 11 Angolan students who will, as a direct result, be coming here this year.
As the United Kingdom looks to develop its long-term trade with some of the new and emerging markets, we can and must help to link British business with possibilities in these markets. The trade envoys can help.
Lord Mendelsohn (Lab)
My Lords, I thank the noble Viscount, Lord Waverley, for introducing this debate.
I also use this opportunity to pay tribute to the noble Lord, Lord Marland, who did an excellent job of bringing together and galvanising the Commonwealth’s Trade Ministers. I join him in urging the Government to clarify as quickly as possible that it was not the Government who organised this but the Commonwealth, with whose nations we have a special relationship. As the president of the Commonwealth Jewish Council, I think it is important that our best relationship with that modern, free association of nations is one where they do not believe that we still feel we have a special sense of ownership.
I would like to focus on the export side of the trade debate. Exports account for 30% of Britain’s economy, but our export performance lags behind. We have an annual value of around £500 billion, generated by 223,000 companies, and while the proportion of our companies exporting is comparable with Germany and France our performance on exporting goods lags behind.
I was very interested to read in the last edition of the Sunday Times about its excellent small and medium-sized export 100 list. There was an interesting section where it said:
“The number of companies focusing their efforts on customers in Europe has edged up to 85 companies, from 80 last year. More of the companies, 77 versus 71, are also targeting North America, with Asia seeing a decline as a main market, from 45 companies to 37”.
So our fastest-growing SMEs are focusing exporting on Europe and America, and interest in the Far East is declining. That is a very worrying sign.
A recent study also suggested that, based on past experience, around half of those exporting today might be expected to quit exporting within six years. We are looking for an additional 100,000 companies to be exporting by 2020, but I suggest that if we found ways to support those thinking of quitting exporting, we might get some easy wins.
I join the noble Lords, Lord Haskel and Lord Bilimoria, in regretting that the Budget did not have a single measure of support for exports.
I regret that the noble Viscount, Lord Waverley, had to introduce this debate as it is of such importance that it should have been introduced by a Minister. When the noble Lord, Lord Maude of Horsham, took on his post, he introduced an important debate in this House, which I thought produced a fair degree of consensus and a lot of support. It rested on four pillars, and I would like the Minister to give us some sense of where we stand now, because it was a good strategy for trying to change things.
The first of its pillars was about turbocharging the EU trade agenda by making sure that we implement swiftly the trade agreements that exist. Where do we stand on those currently?
Another was about galvanising across Government, not just UKTI and UK Export Finance. The whole of Government needed to be mobilised, not just the glacial progress that we have with the Foreign and Commonwealth Office, and all home departments should engage with business sectors to be involved in this. Where are we on this? Has the Department for International Trade, in which exports are a pillar, helped or hindered and what progress has been made?
Another tried to focus on first-time exporters and there was money applied to them. How much progress has been made there?
The noble Lord also made an interesting point about innovation. He pointed to the UK-Israel Tech Hub, which is an important example of bringing together potential partners to look at investment or the potential of exports. Israel, a very small nation, has been able to globalise its trade principally by using American companies. Will we use that as a template to create joint ventures where we can use Britain’s scale to attack other markets, using the high technology in other places?
This is an essential debate and I worry that our performance has been poor. If we do what we have always done, we will get what we have always got. Now is the time to make a significant change and I would like to see the Government coming forward with a serious change strategy.
Baroness Mobarik (Con)
My Lords, I begin by saying how much I have enjoyed today’s debate. The depth, breadth and scope of the speeches really reflects the wealth of experience in your Lordships’ House. This is exactly the kind of broad and creative thinking that the Government are encouraging to inform our strategy as we move forward. It is a pleasure to respond on behalf of the Government. I thank noble Lords for the valuable, valid and powerful points that they have made this evening. I especially thank the noble Viscount, Lord Waverley, for posing this Question for Short Debate and for his views. It is clear that noble Lords recognise the great importance of global trade, as do Her Majesty’s Government. With this in mind, I would like to set out the Government’s strategic vision and address the points raised during this debate.
The Department for International Trade provides market access, support and advice to UK business, both in the UK and abroad. We engage with key trade partners in order to build on our trade relationships and improve the policy environment for international trade and investment. Through the GREAT Britain campaign, we build a global appetite for British goods and services and encourage more people to visit, study, invest in and do business with the UK. There are two parts to the Government’s strategy to support UK exports. The first is to increase the value of the UK’s exports. We identify the markets and sectors where intervention by government and financial support are vital in helping UK firms to supply the largest projects around the world. This ensures that government resources are concentrated on high-value areas.
The second element of our strategy is to increase the number of businesses fulfilling their exporting potential. Our suite of support for potential and existing exporters is spearheaded by our award-winning Exporting is GREAT digital platform. We also provide exporters with financial support through UK Export Finance, and work is currently under way to make UKEF services even more accessible. The noble Viscount, Lord Waverley, referred to the importance of export finance. Since 2011, UK Export Finance has provided a total of £18.8 billion of support to exporters. Measures announced in the Autumn Statement 2016 included the doubling of UKEF’s total risk appetite to £5 billion.
The noble Viscount, Lord Waverley, also asked what role the Government should be playing in promoting exports. The Department for International Trade provides support that is designed to complement rather than crowd the private sector and is targeted where government can add most value. We identify the markets and sectors that present the greatest export opportunities, which allows us to focus our efforts on a number of high-value areas, known as high-value campaigns, to achieve maximum impact and success. For example, in our Kazakhstan programme, we have facilitated 51 local partnerships and helped UK companies win contracts worth more than £6 billion since 2011-12.
Our support is tailored according to where a business is at in its exporting journey. For smaller businesses that are not yet exporting, we provide trusted country guides that help them understand the market from the get-go and ensure that they enter a market in which they have the potential to succeed. We also support trade missions that give businesses a view into a chosen market before they commit to export. We use our extensive network and comprehensive in-market presence to help open the door while leveraging our HMG brand. Finally, we use our Government-to-Government relationships to help bring down structural trade barriers such as regulation.
My noble friend Lord Patten and the noble Viscount, Lord Waverley, remarked that we need to be ambitious in our targets and drive to get more businesses exporting. Our flagship digital platform—GREAT.GOV.UK—helps businesses access a range of digital tools so they can access the support that is right for them. Launched in November 2016, the website gives UK businesses access to millions of pounds-worth of potential overseas business to help them start or continue exporting. It also provides a new, searchable directory to match businesses with worldwide demand for UK goods and services. Since November, the Find a Buyer service has attracted almost 2,000 export-ready UK companies to sign up and start promoting their products to businesses across the world. Global investors can also find UK suppliers by accessing the international-facing side of GREAT.GOV.UK. The site offers practical advice to potential investors, and the pages have been translated into Chinese, German, Japanese, Spanish and Portuguese, with Arabic to launch later this month.
Finally, we have launched the selling online overseas tool, which helps match UK businesses with the right global online marketplace for their products and services. DIT is currently working with 39 of the top global e-marketplaces, such as Amazon and Alibaba, to give UK businesses access to a potential audience of 2 billion consumers. Preferential deals exclusive to clients referred by DIT have been negotiated by government with a number of these e-marketplaces, making the UK one of the easiest and best places from which to sell goods online.
Alongside our work to support British businesses to export, we will continue to be a champion of free trade. Inside the EU, the UK is one of the strongest advocates of free trade. Outside the EU, we will continue to be one of the strongest voices worldwide for free and open trade. My noble friend Lord Marland spoke of the importance of Commonwealth trading links. Later this week, DIT Ministers will meet their counterparts at the Commonwealth Trade Ministers’ meeting in London to discuss how we can best achieve continuity in our trading relationships once the UK leaves the EU, when we will have our own independent trade policy. I take this opportunity to pay tribute to noble Lords who have served as trade envoys, including my noble friend Lord Marland, for all the work that they do. In time, we will negotiate free trade agreements that will lower barriers to trade and create vital opportunities for UK businesses. We are keen to seize the opportunities that leaving the EU will present—as are many of our international partners who recognise the attractiveness of doing business with the UK.
I thank all noble Lords for their contributions over the course of this debate. In particular, I take note of its positive tone and of the phraseology of the noble Viscount, Lord Waverley: “can do”, “all pulling together” and “call to action”. That is exactly what we need as we move forward.
I will pick up a few more points. The noble Viscount, Lord Waverley, raised the importance and success of the trade envoy network. I am pleased to say that, as of March this year, trade envoys have made 44 visits to 31 markets of the kind he mentioned, including Turkmenistan and Azerbaijan. The noble Viscount was right to raise the issue of adequate data. The Department for International Trade is working with HMRC to ensure that we have the most robust data when it comes to identifying companies that are exporting and how we can target support effectively.
My noble friend Lord Patten is right that success is reliant on having the right talent in building relationships with business so that more can thrive in the global marketplace. The DIT is focused on continuing to hire, and keep, the brightest and best from Whitehall and the private sector.
As the noble Baroness, Lady Lane-Fox, pointed out, it is right on International Women’s Day that the Government are focused on ensuring that we have a trade policy and export support that allow all people to benefit. As for small businesses, last year, 92% of the companies that DIT supported were SMEs.
The noble Lord, Lord Bilimoria, made a point about the GREAT campaign. I, too, recognise the fantastic success of the project: through the Exporting is GREAT campaign, more than 20,000 responses have been registered to export opportunities published online since November 2016. The noble Lord, Lord Bilimoria, made some other valid points. The Government believe that it is in everybody’s interests to arrive at a mutually beneficial deal. We are a great global nation with much to offer Europe and the world.
My noble friend Lord Dundee mentioned the importance of skills. I am pleased to point to the measures announced in today’s Budget on investment in England’s technical education to ensure that our companies have the talent to compete on the global stage, including the new T-levels.
I am aware that perhaps I have not been able to respond to all your Lordships’ points in full. If that is the case, I will write where required. The expertise of noble Lords will be invaluable to the Government on this important issue.
Lord Marland
I am sorry to interrupt my noble friend but she has not touched on my question about when the Government are going to respond to my letter about removing the error in the White Paper. I would be very grateful, if she is going to write to me, if we could get the letter this week, because the acknowledgement has been outstanding for some time and it is quite embarrassing for the Commonwealth, as the noble Lord, Lord Mendelsohn, quite correctly enunciated.
Baroness Mobarik
I fully take that on board. As I have said, there may be outstanding questions. I absolutely accept the question put by my noble friend Lord Marland and will definitely take it back and write in due course. I am sure that your Lordships’ House will continue to play an invaluable role in informing the Government on this crucial and important subject as we go forward.