Small Business Exports

Lord Mackinlay of Richborough Excerpts

Wednesday 20th March 2019 Commons Chamber

[Jack Brereton]

I thank my parliamentary neighbour for making that point. He is absolutely right about Staffordshire chamber of commerce, which offers some incredible, fantastic services for local businesses in Stoke-on-Trent and Staffordshire more widely. Many businesses would not be able to go without those services.

The strategy to which I just referred is subtitled “supporting and connecting businesses to grow on the world stage”. I am confident that that is the right ambition, and one challenge for us all in this House will be to ensure that our local businesses are connected to it. The Government promise that they will

“encourage and inspire businesses that can export but have not started or are just beginning; placing a particular focus on peer-to-peer learning…inform businesses by providing information, advice and practical assistance on exporting…connect UK businesses to overseas buyers, markets and each other, using our sector expertise and our networks in the UK and overseas”

and, finally,

“place finance at the heart of our offer”.

That is a positive statement to read, and it is in that spirit of positive engagement that I want to raise generally the remaining barriers to small-business exports.

[Craig Mackinlay (South Thanet) (Con)]

My hon. Friend talks about a spirit of working together; has he considered whether the good plan for the future that the Department for International Trade is pursuing should include the opportunity for increased exports to our close Commonwealth friends and neighbours? That trade can work both ways. Those countries are growing markets with a third of the world’s population, and they are where Britain should be looking for reciprocal trade.

[Jack Brereton]

My hon. Friend is absolutely right that we need to strengthen those links with Commonwealth countries around the world. It is important that we support those strong growing markets, in which we can trade more of the fantastic products that we make right up and down this country, especially those products made in cities like Stoke-on-Trent.

As a city we are proud of the world-class goods that we make, most famously in the ceramics industry, of course, but also in many other areas of contemporary manufacturing, from the traditional toffees of Walker’s Nonsuch in my constituency, to the cutting-edge technology of Goodwin International. They are UK export success stories. I know from Walker’s that the increase in the capital allowance to £1 million has been vital to the affordability of investment in its factory and in the latest industrial capital goods that it wants to produce.

Let me turn to the small businesses that are not engaged either in exporting or in the programmes available to encourage and help them. The Federation of Small Businesses has on its website an eye-opening article, “Breaking New Ground”, which explores what is holding back potential exporters and, crucially, what they are missing out on. It quotes a report by WorldFirst that found that the typical UK small business exporter generates more than £287,000 per year from exports. It further notes research by the Chartered Institute of Marketing and PricewaterhouseCoopers that found that of those small firms currently exporting, 70% expect to increase exports over the next three years.

Despite the evident value in exporting, less than a fifth of British small firms export anything. Why? According to the CIM and PWC study, 33% lack the confidence to approach new markets, while many see it as too great a challenge. Sixty-nine per cent. of small companies reported significant hurdles to exporting in the 2017 Hitachi Capital British business barometer. The key barriers identified in the FSB article are: insufficient resources, whether staff, time, cash or product; unfamiliar local customs, culture and language; shipping issues; handling, clearing and agency charges; exchange rate fluctuations; legislative difficulties overseas; opaque international tax rules; uncertain immigration employment laws; certificates of origin; and other red-tape issues. As Peter Sewell, regional director at Crown World Mobility, puts it:

“Understanding it all takes more than a Google search.”

It is easy to see how, for sole traders and small partnerships, exporting might be daunting even to consider. Larger companies have the capacity to employ staff in export markets, and if based in the region, they can better overcome many of the challenges I have listed. For smaller companies, though, that is often just not possible and would amount to a significant proportion of their revenues.

I wish to highlight some specific issues that were raised with me on visits to local businesses in Stoke-on-Trent. I have already mentioned Staffordshire chamber of commerce, the local exports team of which, under Rob Lawley, does a great job, and Stoke-on-Trent is one of the cities that is on the up. When it comes to exports, however, the city continues to underperform against midlands cities of comparable size, such as Coventry. That is, I think, a product of Stoke-on-Trent’s business base being far more reliant on small enterprises, and it means that the local team needs more resources to keep the momentum up and fully realise our potential.

We also have unique and specialist sectors, most importantly our ceramics industry. The British Ceramic Confederation is very keen to see a Department for International Trade ceramics expert based in Stoke-on-Trent to meet the very specific needs of the industry. Preferably, they would be based at the new ceramic research park that we hope to see developed as part of the sector deal that the ceramics industry is pursuing with the Department for Business, Energy and Industrial Strategy.

I know that the Department is well versed in the issues facing the ceramics industry after Brexit and the need to continue combating unfair trade practices from countries that do not respect the rules-based international trade system. Indeed, the Minister of State for Trade Policy was a very welcome guest to a roundtable that I hosted recently with local ceramics firms at Valentine Clays in Stoke-on-Trent South. I am also pleased to report that Heraldic Pottery, which he also visited on his trip to Stoke-on-Trent, has expanded further by buying the significant and historic Duchess China Works in Longton in a supply-chain takeover.

Ceramics is undergoing a hugely welcome renaissance in its authentic home of the Potteries, and the export success for businesses large and small will add to the mood of economic optimism in the city. The touring exports hub that joined the Minister on his visit to Valentine Clays is an important part of the engagement that business needs.

I am delighted that the Department has listened to the concerns that I and others have raised about the need to continue anti-dumping measures post Brexit. Most recently, the Secretary of State confirmed that measures to prevent unfair dumping practices that threaten our ceramics industry from artificially cheap imports would be rolled over when we leave the EU. It is also incredibly reassuring for the industry that, under a no-deal Brexit, tariffs would continue to apply to certain ceramic products.

It is essential that, as a Government, we continue to champion measures that support smaller businesses to create more job opportunities, particularly more skilled jobs, which attract a higher salary. In January, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), joined me on a visit to Park Hall Business Village. The village, which has expanded in phases, currently now houses more than 100 small businesses, employs more than 1,000 people and occupies over 250,000 square feet of commercial space. It verifies the growing economic success that has been seen and has increased the demand for additional commercial space. There we met: Deck Joint Ltd, which engineers and manufactures “leave in place” formwork for the construction industry; Eden Holistic Pet Foods, a rapidly growing business that supplies grain and gluten-free pet foods; and Fifteen Group, which provides IT services. We have many other smaller businesses that are expanding and have huge potential to export more of their products and services.

One of the issues that is raised most often with me locally is the need to widen awareness of the export finance that is available. Far too few have a good awareness of the support available to finance growing exports or enter new markets. It can sometimes come as a pleasant surprise to small businesses when they find out quite how supportive the Government are in de-risking the considerable financial outlay for first-time exporters—though, of course, more resources, more reliefs and so on will always be welcome in persuading small businesses to take that final step into being an export supplier, especially of goods and services, which are more complicated in their logistics than putting a parcel in the mail after an order on the internet.

Plenty of advice and information is available to small businesses that are looking to export. A great deal of it is free of charge or comes in premium form with membership of one of the trade groups or small business forums that do such excellent work. What I ask of the Government is that the exports strategy be fully resourced to maximise its positive effect. Global Britain’s success will be built on the success of local businesses, many of which have never exported before. Crucially, we need to have increased expert support in export markets to allow small businesses to penetrate those markets. I hope that those small businesses in particular will be the focus of the Government’s efforts to support and connect businesses to grow on the world stage.