Exports: Government Support

Earl of Shrewsbury Excerpts

Thursday 29th January 2015 Lords Chamber

[The Earl of Shrewsbury (Con)]

My Lords, I congratulate my noble friend Lady Wheatcroft on securing this important debate today. I declare an interest, which is non-remunerative—sadly.

My noble friend Lord Bamford is currently overseas and is very disappointed that he is unable to participate in this debate on a subject that is, naturally, very close to his heart. He is out there promoting exports. He has asked me to represent his views as well as my own to your Lordships today and to make the case that, while much has been done by the Government to support UK exports, more still needs to be done.

As noble Lords will be aware, my noble friend’s family business, JCB, is one of Britain’s leading exporters. In fact, around 75% of the company’s UK production is exported to more than 150 different countries every year. To give this some context, more than 26,000 JCB diggers left our shores through the ports of Southampton, Felixstowe or Bristol last year. As a result, the group secured export revenues of well in excess of £1 billion, making a very healthy and positive contribution to the nation’s trade balance. So congratulations to JCB and to other UK-based manufacturers like it. For example, in the UK car industry, of the 1.5 million cars manufactured here last year, nearly 1.2 million were exported. In terms of value to the British economy, the wholesale value of car exports was £26 billion last year. That is an astonishing performance from our automotive industry, which has been well supported by this Government.

Construction equipment and cars are just two examples of British export successes; there are many more—in industries as diverse as fashion, pharmaceuticals and, close to where I live near Stoke-on-Trent, the ceramics industry, with major exporters and famous names such as Steelite, Churchill, Dudson, Wedgwood and Portmeirion. Even closer to where I live are some top-class SMEs, such as JBMI Group Ltd, which recycles aluminium, much of it from the automotive industry, and other waste products from the smelting industry. Instead of sending such waste materials to landfill, it follows the encouragement from Brussels directives to produce worthwhile products from waste, and they export. Yet Her Majesty’s Government could help more companies such as this one by the reduction of red tape and a quicker, more positive action and decision-making process by the Environment Agency.

Your Lordships may be aware that UK television exports were worth nearly £1.3 billion in 2013. It seems that “Downton Abbey” and “Top Gear” are as highly regarded in overseas markets as JCBs and Jaguars. My noble friend Lord Bamford is justifiably proud of his company’s export successes. JCB has been exporting for several decades, and in many ways, as a leading player in its sector, exporting comes easily to this giant in manufacturing.

However, as a leading and innovative businessman, my noble friend is acutely aware that, for many smaller companies, making that first step into export markets can be extremely daunting, and that, having made that first step, achieving growing export sales can be most challenging. From the safe haven of British soil, the intrepid businessman or businesswoman has to navigate the labyrinth of different languages, different cultures, payment terms, credit lines and complex distribution channels. This Government have done much to assist SMEs, for whom the export challenge is probably the greatest. Both my noble friend and I pay particular tribute to our noble friend Lord Livingston, who, just 12 months ago, started out in his role as Minister for Trade and Investment on a promising path to help our small and medium-sized companies.

In his report on UK manufacturing, published in 2012, my noble friend Lord Bamford recommended that UK Export Finance expand its activities to assist exporters, and he is pleased with the wider range of products that it now has to offer. My noble friend has been most keen for our embassies and consulates to support British businesses in overseas markets. Recent experience shows that they have become much more commercially focused, which is a positive step forward. However, my noble friend would be the first to admit that more needs to be done to promote exports in an increasingly difficult trading environment, with BRIC economies having slowed and ongoing troubles in the eurozone.

In my noble friend’s opinion, much of the effort needs to take place here in the UK to convince and reassure businesses that developing and growing export sales is a worthwhile task and not to give up at the first hurdle. This Government have established an excellent framework, with UKTI offering the support of trade advisers and UK Export Finance providing help through its wide network of export finance advisers. But there needs to be a step change in how we market these services to UK-based companies, particularly to those in smaller companies for whom the perceived risks of exporting will be considerably higher. I know that my noble friend the Minister understands the need to do more.

When I asked my noble friend Lord Bamford what advice he had to offer any company contemplating exporting to overseas markets for the first time, his reply was, quite simply, “Don’t necessarily start in Europe. Think also of the Commonwealth”. This view mirrors the UK’s trade situation, in that the value of exports from trade outside the EU is greater than it is from trade with EU countries. The latest available statistics from the ONS for the year to November 2014 state that the value of non-EU exports was £149 billion compared with EU exports worth £136 billion. My noble friend’s point was this: although France is closer geographically, it may be easier and more worth while to sell to India, Canada or South Africa, where language is not an issue and where we share the bonds of history. The EU is an important market for JCB and many other manufacturers, but the bulk of that company’s revenue comes from India, the Americas, Russia—though not at the moment—and the Middle East. Our country’s sights need to be set further east and more to the west.

The Minister will recall that when he attended the “Meet the Mittelstand” conference held in JCB’s Staffordshire headquarters just over a year ago, he announced that UKTI,

“will be contacting every mid-sized business in the country … to find out if they want to start exporting … Or, if they are a current exporter … whether they are looking to expand into new markets”.

My noble friend’s stated aim was that,

“there should not be a mid size firm who does not export to their potential, due to a lack of awareness of the support government can provide”.

Might my noble friend the Minister update your Lordships on the progress made in contacting those 8,900 mid-sized businesses, and on the extent to which they have taken up the government support being made available through UKTI and UK Export Finance?

My family motto is “Ready to accomplish”. My noble friend Lord Bamford’s family motto is “Jamais content”—“Never content”. Perhaps UKTI should adopt these mottos for itself.