UK Industry: International Competitiveness

Baroness Nicholson of Winterbourne Excerpts

Thursday 5th July 2012 Lords Chamber

[Baroness Nicholson of Winterbourne]

My Lords, the noble Lord, Lord Liddle, in his wide-ranging remarks, commented that he wished the Government could be more active. In my support for the splendid Motion put forward by the noble Lord, Lord Jenkin of Roding, on which I warmly congratulate him, I am not seeking for the Government to be more active, because most businesses would request that government stand back. I am putting forward comments which I hope the Minister will take into full account and maybe even action some of them. I hope this will strengthen the Government’s position in supporting British industry internationally.

It is an absolute fact that, given that the House of Commons is omnipotent and omnicompetent, the international competitiveness of UK industry abroad is in some way restricted by our own democratic system. It places us at a disadvantage with our competitors, for example. Today, we must be looking at the competition while praising industry. We are trying to see who we are up against, and how we can do better than the competition. Our particular democratic political system inevitably pins the Prime Minister, the Deputy Prime Minister and other Ministers to the Benches; as does the system here, with our parliamentary Questions, constant debates and Statements. The democratic accountability of Ministers means that they must very often be here. Inevitably that can be seen to place UK businesses at a disadvantage with nations such as France, which is regularly led by prime ministerial and presidential delegations all over the globe. I know that the coalition Government are working to improve this. However, it is a simple fact that our system, in that sense, cannot provide that same spear-headed support that some other member states of the European Union and the USA can do. Therefore, I suggest that it is even more crucial that the UK Government provide a coherent and cohesive service to UK industry, particularly in-country. The steps this Government have already taken to raise British trade and investment interest abroad, which give a new and highly welcome pre-eminence to commercial diplomacy, are excellent; but there are significant concerns and gaps that still remain. I will be highlighting some of the most serious concerns, and inviting the Government rigorously to address them.

For a Government who have made significant and considerable progress with their welcome stress on value for money, results, outcomes and impact, it is noticeable that such language and structures are not readily mentioned in the Government's commercial diplomacy, such as in the FCO’s charter for business. I wonder whether that might be considered when the new edition, which I am sure is on the way, emerges.

The House of Commons business committee, for example, has previously reported that UK embassy and UKTI staff do not readily identify whether the country in which they are serving is a priority country and what the difference means. That is not helped, in my view, by the lack of transparency and accountability in the process for deciding priority countries or in how and where ministerial-led trade missions are sent. For example, the various sector and advisory groups supported by UKTI are appointed directly by Ministers without any parliamentary scrutiny. That provides a democratic deficit in what are essentially government and thus taxpayer-funded bodies influencing UK policy. It also causes potential conflicts of interest and a lack of trust in the capabilities of those bodies. Perhaps the Minister would be willing to reconsider that point.

I have previously asked a Written Question to this effect and received a somewhat summary rejection by the Government, but I believe it would be more than helpful to shine a light on the practices of the Government in supporting UK industry abroad, perhaps by introducing an independent evaluation body. That could be similar in make-up to the Independent Commission for Aid Impact, specifically for trade impact or at least to offer in some way a more formal, thorough and transparent process than the current largely questionnaire-based process. This revamped evaluation mechanism and transparency would much more effectively highlight results, provided those results have been identified and the objectives achieved; and thus our knowledge, value for money and serious impact, on which the Government, in all other sectors, are so keen, would become available. I think that would immensely heighten the Government’s capability in supporting industry.

I turn to priority countries. UKTI has a series of priority countries and UK Export Finance—the old ECGD—focuses on certain countries, not necessarily the same ones, depending on UK Export Finance’s own criteria of how effective and able it will be to receive its funding back in the long term. The FCO has its own geopolitical and strategic priorities which do not reflect consistently UKTI's priorities. Again, DfID has its own 28 priority countries and works in many more. Is it not unsurprising that with this array of different prioritisations the UK struggles—and I believe that it fails—to put forward a single face, in country and internationally?

Have the Government thought how to co-ordinate these different priority countries and even priority sectors within those countries? A possible example of how the UK does not enable itself to bring its full impact to bear in a country would be the disconnect between UKTI and DfID priority countries. As the Government are already providing significant expenditure to DfID's priority countries, as well as to the other countries in which DfID works, would it not make sense for UK Export Finance to provide preferential export credits to those countries to ensure that the UK is gaining the fullest possible impact and value for money for its investments in its stated priority countries? Are we not now aware that the long-term effectiveness for what is called development aid is, in fact, through the development of business and industry on the ground? That is surely one of the key reasons why, quite properly, this Government, as opposed to the previous Government, have placed commercial diplomacy and the strength of British business and industry at the absolute heart of their overall international policy.

With that in mind, I turn to the knotty problem of UKBA, the UK Border Agency. I declare here that I am honorary chairman of the Iraq Britain Business Council, which is working not just in Iraq but in other countries in the Middle East and North Africa region. In that role, I have the privilege to work with some of Britain’s most competitive and powerful companies in the oil and gas, construction and infrastructure, finance and professional services, education and training, telecommunications, and other sectors.

My remarks do not necessarily reflect the views of any of those companies. Nor have I put these comments in front of any of those companies to gain their agreement or otherwise. These are my own comments. Iraq is one of the great potential sources of trade and development—for international companies as well as the UK’s—which is relatively untapped, and as chairman of the Iraq-British Business Council, I foresee the difficulties that our companies face.

Given our historic legacy and our strong presence in the region of the Middle East and North Africa, UK companies and UK-based companies, or those trading through the United Kingdom—particularly those using the English language, which is now the business language of the globe—are relatively well represented in Iraq. However, there are key issues which diminish UK competitiveness towards both western and eastern countries. I have mentioned several.

The policies and priorities of UKBA for countries and for sectors of populations do not match up with any other British Government policy. It is almost impossible to get UK visas, not only for Iraqi business men and women, but for other nations with which I work in the region. It is difficult, onerous and, I would suggest, humiliating. I take the case in front of me at the moment of an outstandingly large company in the region: one of the main board directors wants to come here for business, and to bring his wife and a couple of children with him. It is Ramadan soon, and it is a good time for him to come as there is space at home and less work going on. Is it really essential for him to wait 15 days at least, maybe 20 or more, in Lebanon, for a visa? Is this a way in which British industry can be helped? Is this the way for us to make friends and influence people, or in the modern phraseology, win hearts and minds, as well as win business?

Of course, it makes the training of staff from host countries, at all levels in the UK, almost an impossible matter. Business meetings in the UK are extremely difficult to set up because of this. I would suggest that UKBA must be brought into the fold of the wider umbrella of the heartland of British policy internationally. I do not yet see that happening.

British business is repeatedly urged by the British Government to invest. In Iraq, the Iraqi Government are also urging us to invest. The Government of Basra delivered this message in a BBC Radio 4 programme. Prime Minister Maliki and President Barzani both say that the door is wide open for Britain. I believe that the British Government are inadvertently not pulling their weight in this overridingly important matter. I urge the Minister to take note of the points that I have made, and perhaps to carry them out.