UK Trade and Investment

Geoffrey Clifton-Brown Excerpts

Thursday 15th March 2012 Westminster Hall

[Laura Sandys]

Absolutely. Even us half-French Members of Parliament try to grab a little of that je ne sais quoi. The French have a philosophy that goes from the top to the bottom of government—whether that is nationally or, interestingly, at a local government level, where inward investment and trade relations are considered a lot more important that we necessarily consider them to be in the UK.

As I say, we are talking about an aggressive environment, so it is worth questioning UKTI. Do we have the right strategy? Do we have the right people in the right places? Sometimes I am concerned about whether we are marketing ourselves effectively enough. In other instances, I have come across bureaucracy. If we are in a fast-selling and aggressive competitive environment, is that bureaucracy holding us back?

I shall start by considering strategy. Much of UKTI’s strategy is great. There is a lot of sectoral focus. Account management has been introduced, so that large investors here have people who are direct relationship managers there. There are client relationships across the board. In many ways, the organisation is like an excellent consultancy, such as the one I used to run. However, what is this well-oiled consultancy really trying to achieve?

My limited exposure to UKTI’s strategy for inward investment did somewhat confuse me. Hon. Members might think that that is only my experience. However, when I spoke to some UKTI officials, they were confused about the relationship between themselves, PA Consulting Group, which has won a tender to work with UKTI, and the local enterprise partnerships. Frankly, there is a lot of confusion about what that relationship looks like, who is in control and how we—constituency Members of Parliament, with assets that have an inward profile and the opportunity to gain inward investment—can gain access to that supply chain of sales leads.

I am not sure that the right structure is in place—one that is understandable and will operate the most effectively to make the inward investment propositions to the important and big companies and sovereign funds that we need to secure to achieve economic revival. Quite a lot of money is being spent through the clearing house that is PA Consulting. Will the Minister look at the money going into the so-called bureaucracy and operational side of the inward investment structure to see whether more of it can go to the localities and organisations that deliver inward investment pitches, in order to improve the inward investment opportunities of such localities?

I am concerned that we have a convoluted sales environment in inward investment, but I might be proved wrong, and I look forward to the Minister illuminating me or giving me a pathway that I and many of my colleagues in Kent would be interested to understand.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I congratulate my hon. Friend on securing this important debate. I do not think we had a single debate on exports in the whole of the previous Parliament, so this debate is timely and welcome.

We, this coalition Government, quite rightly got rid of the regional development agencies that used to be responsible for co-ordinating inward investment and introduced the LEPs. However, the LEPs do not yet seem to be working well. Are they working in my hon. Friend’s area?

[Laura Sandys]

I welcome my hon. Friend’s intervention. As yet I am not too sure what an LEP is. I think that they are evolving and creating their own personalities. An interesting thing is that they do not fall into the same category as the RDAs, which were similar in every different region. My area is part of a large LEP, comprising Essex, Kent and east Sussex. In many ways, that creates a different sort of LEP than smaller ones. LEPs are evolving.

I am not concerned about the future of how LEPs operate. We have 18 months to two years of interregnum, in which we need to get our inward investment pitch out. We must put forward the best that we have to offer. The rest of the world is crawling all over business opportunities while we are waiting for structures. I do not have time for structures, particularly in my area, where, as I have said, Pfizer has decided to downsize quite dramatically. Life science jobs based in Sandwich are walking away every day, because the marketplace is an international one. The jobs are not fixed in Sandwich; they are leaving and going to Shanghai, and they are being recruited for around the world. Waiting for structures to be in place is not going to be good enough for some areas where we need to move fast and be nimble and commercial.

Are we sure that we have the right sort of people working in the area? The people are extremely bright, and I have met some of the most intelligent and committed people working at UKTI. However, we need to think about whether they are commercial people. I know that including PA Consulting is an extremely important part of involving the private sector. I put my hands up to say that I used to run a consultancy, and I worry that sometimes consultancies are not the private sector; they become an extension of a client, although it is still important to have that input. We need to be clear who has international experience working at the sharp end.

Perhaps my greatest surprise came when I was talking to someone about the issue in one of our Departments. They said, “We are spending a lot of money on languages. It is fantastic, Laura. We are going out there and ensuring that all our diplomats speak all these wonderful languages in all these emerging economies.” I looked a bit aghast, and they were a little disheartened that I was not excited about that. I said, “Do you know that 220 languages are already spoken in this country? Do you know that we have the opportunity to recruit people whose cousin, uncle, aunt or existing business partner already works and lives in these countries?” With absolutely no disrespect to anyone with a classics degree from Oxford or Cambridge, someone whose grandfather comes from Punjab is possibly a better person to build our relationships and business contacts with those particular countries, in those communities, than someone who is learning Punjabi for the first time.

One of the exciting things about this country is that we are the Commonwealth in minutiae—we are a reflection of our past, which gives us a huge asset for our future. We need to look again at the sort of people whom we are presenting as the face of Britain, and also at who can be effective. I throw a challenge to UKTI: if it recruits a selection of such people to be our face in the emerging markets and says, “Take 100 small businesses with each of you, try to nurture them and help them to have trade relations in particular areas, support them in the first year, ensure that they are not entering into contracts with someone who is a little sharp in the area or who will not deliver, and nurture them through the first year of export or joint partnership”, we will get a much bigger increase in exports and enter into global relationships with small and medium-sized businesses. We have a unique asset, but I am just not sure that we are using it.

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[Barry Gardiner]

The hon. Gentleman makes an absolutely perfect point. I am very happy to acknowledge it and support exactly what he says. UKTI should not simply be looking at the present, and it should not simply be looking at the short to medium term. It should have a strategic overview of where the UK’s trade and investment interests lie into the foreseeable future—that is absolutely right.

[Geoffrey Clifton-Brown]

Does the hon. Gentleman agree that if we get one thing out of this debate, it is that UKTI needs to be encouraged to benchmark itself against the very best similar organisations in the world? With great respect to my hon. Friend the Member for South Thanet (Laura Sandys), let us not benchmark against the French—we will get into the same problems that they have—but go to Asia and look at Singapore and Hong Kong to see what they are doing for their countries.

[Barry Gardiner]

I think that I should just take interventions and not make my speech, because every one of them is excellent. The hon. Member for The Cotswolds is right. I disagreed with him on his earlier points about RDAs, but on this point I agree: benchmarking and international comparators are essential if we are to see what we are doing. Also, there must be much closer scrutiny, performance management and benchmarking within UKTI to ensure that we are delivering what we promised. I will mention accountability in that sense later.

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[Barry Gardiner]

The hon. Gentleman is right. Indeed, for precisely those reasons, I set up the all-party parliamentary group on UK-India trade and investment a number of years ago, to take advantage of the constituency links that he and the hon. Member for South Thanet have mentioned. We must capitalise on these things. They are the stuff of which business is made. Business is made not simply by good products and good marketing, but by people and contacts and by people who are able to go out and get business and do the deal. Someone might have the best product in the world, but if they do not have such a relationship, things will not happen. That is the hallmark of successful business.

In my constituency, more than 130 languages are spoken in our schools, and in one school, in a class of 29 children, 21 different first languages are spoken. Coming from such a constituency, I echo the sentiments expressed by the hon. Member for Enfield North (Nick de Bois). It is upon the experience, contacts and family connections of my constituents and, I presume, his that we must build a much stronger trade relationship.

This question must be asked of UKTI: why are emerging markets not at the forefront of British investment now? It should be UKTI’s role to facilitate investment abroad. The statistics reflect UK companies investing where it is easy, not where they can maximise return and not with an eye to future market share. That has a knock-on impact for British trade generally. The UK’s share of global exports has fallen from 5.3% in 2000 to 4.1% in 2010—a long-term trend of decline, I agree, since the 1950s. In the same decade, however, German exports grew from 8.9% to 9.3%. Meanwhile, our goods exports have grown by only 1% per annum, compared with 3% in the US and 5% in Germany.

A report conducted by Ernst and Young for the CBI noted:

“UK outflows are concentrated on the EU and the US, with negligible investment going to high-growth economies.”

The failure properly to engage with emerging markets is, however, not limited to the BRICs. There are no stated bilateral trade targets for Egypt or South Korea, despite both countries being designated as high-growth markets in UKTI’s current five-year strategy. There are also no stated bilateral trade targets for Bangladesh, Indonesia or the Philippines.

Although it is, of course, unfair to blame all those things on UKTI, they serve to underline the organisation’s inefficiencies. UKTI has masked its weaknesses through a lack of accountability. The figures provided in its own reports show little consistency, and there is a great deal of obfuscation regarding the allocation of resources and staff. There is also little or no clear delineation of duties or responsibilities between UKTI, the Foreign Office, the Department for Business, Innovation and Skills and the Treasury. The result is an overlap in what the various Departments do and, I assume, a duplication of effort. That lack of organisational clarity gives way to inefficiencies and a failure properly to undertake functions.

The evidence from business—I stress that it comes from business—is that UKTI is not an unuseful organisation, but it could do much more. In a survey conducted by the National Audit Office, 30% of respondents mentioned receiving some benefit from UKTI, but 40% indicated they had received no benefit at all. In a survey of exporters conducted by the CBI, only 12.8% of respondents described UKTI as excellent, while the verdict of 15.4% of respondents was that it was unsuitable or poor, and many organisations, of course, did not respond at all.

UKTI claims that for every pound invested in it, £22 is returned to the British economy—I am not indulging in flights of fantasy—but in UKTI’s own survey of British exporters working through UKTI, 46% of respondents indicated they would have achieved the same outcome without using UKTI. Let us not come out with silly statistics showing that for every pound that goes into UKTI, £22 comes back to the British economy, when UKTI’s own survey tells us that most people think they would have achieved exactly the same result without using UKTI. We have to be honest with ourselves if we are to make a proper analysis of the organisation and put those defects rights.

There is a dearth of credible financial and structural information available on UKTI. The National Audit Office stated that UKTI cannot measure its effectiveness or account for its expenditures because of a lack of accurate information. Our own National Audit office is saying that. The Government allocated an additional £45 million to UKTI in 2011, and it is most concerning that we are pouring money into a body that, according to the National Audit Office, has no oversight or accountability.

Evidence from within British industries has highlighted the failure of UKTI’s approach. Eight of UKTI’s 10 board members have no background in business, thus undermining the organisation’s ability effectively to identify investment opportunities and support inward and outward investors. Again, I refer to Ernst and Young’s CBI report, which states:

“more could be done to link UKTI and embassy staff to the plethora of trade associations operating in local markets.”

[Geoffrey Clifton-Brown]

The hon. Gentleman has hit on a vital point. Will he consider the scheme originated by Lord Heseltine to encourage more members of UKTI to go on secondments in industry, and vice versa? In fact, we should do more of that throughout the civil service, so that it has the ethos of trade within it.

[Barry Gardiner]

I am always happy to listen to a freeman of the city of Liverpool, as I understand the noble Lord now is. Of course secondments and exchanges, such as those that the hon. Gentleman mentions, are sensible and important, but it would be better for people to have real commercial experience in the first place. That goes back to the remark the hon. Member for South Thanet made in opening the debate: however intelligent someone is, a first in classics from Oxbridge does not qualify them to do business or run UKTI. We have some brilliant civil servants, but if they do not have hands-on experience of running a business, filling in VAT forms, hiring and firing people or doing all the things that the Minister, the hon. Lady and I have done, they will find it difficult to get down to enabling others to do them.

The testimony of ADS, which represents the UK aerospace, defence, security and space industries, is particularly telling. Despite UKTI’s defence and security sector being larger than all its other sectors combined, ADS has observed that there needs to be a reorientation towards the BRIC countries and an increase in the number of sector specialists. The City of London corporation raised similar concerns over its UKTI sector. It identified a

“reduced...capacity limiting ability to support the delivery of overseas initiatives”

and commented:

“reduced resources for UKTI are having a detrimental impact on the effectiveness of UKTI in encouraging inward investment”.

Such comments provide valuable feedback from service users; this is not about Her Majesty’s Opposition or Back Benchers quibbling and cavilling. We are simply highlighting what service users are saying, not because we wish to embarrass UKTI, talk down British industry or undermine the Government and the Minister, but because we share the concern that Britain is not punching at the weight that it should be—or, far less, above it.

All institutions, but particularly Government institutions, should be accountable, and the debate has given us a valuable opportunity to highlight UKTI’s role, so I pay tribute to the hon. Member for South Thanet for her inspiration in initiating it. Our intention has been to provide constructive criticism and to create wider awareness in Parliament of UKTI’s role in promoting UK trade and investment. Evidence from industry and recent experience are instructive. It is clear that we must redouble our efforts to attract investment and ensure that UKTI is properly funded, fully accountable and working effectively.

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[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am delighted to serve under your chairmanship, Mr Amess. I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing the debate. The fact that we have had a debate on trade with India and today’s debate on UKTI—two debates in two years—shows the interest of the coalition Government, and particularly of Conservative Members, in trade.

I also congratulate my hon. Friend the Minister on being here. He and I had Front-Bench roles in opposition, and I regret to say that I am going to shine a light in a few dark places he might not wish me to, but here goes. High levels of exports and foreign direct investment have always been an indicator of the health of an economy. It is vital to promote exports and foreign direct investment. We know from the very recent past that we cannot rely on consumption fuelled by debt, or on Government spending funded by debt, to drive growth. As I said in one of my first speeches after the general election, it is only through exports and FDI that effective growth will come into the country. That is how important they are to the economy. As a result of our history, we boast strong economic and cultural links across the globe. We should capitalise more on the fact that English is the universal language of business.

The effectiveness of the work of UKTI is vital to our economic recovery. A company in my constituency called Renishaw plc, chaired by the excellent David McMurtry, is doing incredibly well. Its revenues for the past six months, ending 31 December 2011, were up by a record 11% —that is £1.47 million—and as a result it is now employing 16,050 staff, with 130 vacancies, including 25 apprenticeships and 30 graduate positions. That is the real importance of exports: the growth of the economy, but also employment prospects—graduate and work placement prospects, which are so vital for youngsters leaving education.

Exports are also important for the companies themselves. It is estimated that between 1996 and 2004—the Minister will know this, because I have used these figures many times—the productivity of firms that export went up by 34%, but that of firms that did not export went down 7% to 8%. Exporting firms tend to have higher productivity. It is estimated that less than a quarter of the 10,000 medium-sized firms in the UK export, and most of them receive help from UKTI. However, the Government have recognised the fact that we must help more companies, and, as my hon. Friend the Member for South Thanet said, in his autumn statement the Chancellor granted UKTI an extra £45 million, to meet the target for the number of small firms exporting, and bring it to more than 50,000. We will need to work hard to achieve that target.

I pay tribute to the Gloucestershire chamber of commerce. I was contacted on Tuesday, by Suzanne Hall-Gibbins, the chief executive, who asked me to pass on in the debate how important she felt the role of chambers of commerce could be, in exporting. I hope that the Minister will say a little more about chambers of trade and of commerce. Along with the local enterprise partnerships, they have a supremely important role, because they can identify a lot of opportunities.

[Julian Smith]

Does my hon. Friend agree that one opportunity for British Chambers of Commerce would be for them to produce some of the market reports currently produced by UKTI? I think that the BCC believe they can do them quite a lot more cheaply.

[Geoffrey Clifton-Brown]

My hon. Friend is right, and, as my hon. Friend the Minister will know, we had that debate often in opposition. We could make more of the knowledge, on the ground, of chambers of trade and of commerce, as well as organisations throughout Europe. We could use them more—that is what they are there for.

I want to take up the point made by the hon. Member for Brent North (Barry Gardiner), who is unfortunately not in his place at the moment. In 2010 50% of our exports went to EU member states, and a further 16% went to the USA. The problem with that is that it is estimated that those markets will decline by 30%. On the other hand, by 2030 the BRIC—Brazil, Russia, India and China—countries will have increased by 41% their share of global GDP. In other words we are exporting to the wrong people. We are exporting to the countries it is easy to export to; but we are not encouraging our companies to export to the real high-growth markets. If we carry on as we are, we shall sink further downhill.

The markets in question are not always necessarily difficult to export to. The Minister may know that I recently visited Morocco, as did our trade ambassador Lord Marland. There is huge opportunity there, not only for trade with Morocco itself, but to use it as a hub for exporting into west Africa. We have all been looking east, towards Asia, but some west African countries’ growth is higher than that of Asian countries. Mr Tarab, the excellent CEO of the main phosphate company, which has 60% of the world’s reserves, is an Anglophile and joint chairman of the joint chamber of trade. He said to me that we should use Morocco as a hub to get into west Africa. In particular, our banks should use the opportunities that they have through shareholdings in Morocco to get into some banks in west Africa. West African countries such as Ivory Coast, Senegal, Nigeria, Angola and Ghana have had huge growth rates in the past few years, as a result of their oil and gas reserves and discoveries. We are missing a trick. They are friends, ancient trading partners, and many are members of the Commonwealth. We need to consider that market closely.

The previous Government’s policies on exports and attracting inward investment were incoherent, which prevented UKTI from implementing a rational strategy. One simple reason for that incoherence was a revolving door for trade Ministers, and another one for trade priorities for UKTI. I suggest gently to the Minister that he should set some priorities for UKTI, stick with them and ensure that we achieve them.

UK businesses that export reap significant benefits, but many are reluctant to start exporting, because they do not know where to begin, or they are unaware of the benefits. That is where UKTI comes in, but because it lacks a coherent strategy, as I have mentioned, it has not reached out to small companies well enough. I still think there is a mismatch between what UKTI does around the world, or in London, and what happens on the ground. Ninety per cent. of the companies in this country are small ones, and 4.5 million companies employ fewer than four people; if 1 million of them took on an extra person it would almost solve youth unemployment overnight, so that is a very important area. UKTI, through our embassy network around the world, could be more proactive in identifying the opportunities in those countries and relaying them back to London. Then, through our databases on our websites, we could relay the opportunities to the businesses.

Things tend to happen the other way around. What UKTI does is reactive. It tends to rely on a company approaching it and asking whether there is a market in Nigeria for the valve that it makes, which supports the oil industry. That opportunity should be identified by UKTI long before that happens, and passed back to the relevant companies. That is a change of thinking, and UKTI needs to think about it.

We need to think what incentives we can give to small companies to export. However small a company is, exports should be discussed at every board meeting. It might not want to do anything about them, but they should be on the agenda. We could encourage small firms more with corporation tax breaks. Perhaps we should even skew the national loan guarantee scheme towards companies that export. The Government need to do more to encourage small businesses.

We have not talked enough in the debate about inward investment. Too often we are delighted when big firms come to this country. Then we leave them to fend for themselves. An example is the £1.5 billion development by DP World at the London Gateway port, with investors from the United Arab Emirates. There have been huge planning problems. We should be monitoring and nursing those big investments, with someone senior from UKTI saying, “You have got a planning problem; this is who you need to go and talk to.” We need to get a reputation in this country for really caring, not just about firms bringing their investment to the country but about looking after them afterwards. That brings me on to infrastructure and the prospect of allowing it to fall behind.

Critics of High Speed 2 and Crossrail are wrong: we need the best infrastructure in the world. People need to be able to get about; we need to be up there on a world scale—certainly as good as any of our European competitors.

We need to deploy our UKTI people in the right places. Returning to my visit to Morocco, I found that we had four based in Casablanca, which is fine because that is where most trade is done, but we did not have a single UKTI representative in Rabat, although it is the centre of Government in Morocco, where all the Ministers are. The hon. Member for Brent North (Barry Gardiner) is right, business happens by networking, and we should be asking our UKTI people to network around the world. If they are to seek out the opportunities that I mentioned earlier, they need to network with the right people.

[Laura Sandys]

rose—

[Nick de Bois]

rose—

[Geoffrey Clifton-Brown]

I am spoilt for riches—I give way first to the proposer of the debate.

[Laura Sandys]

Does my hon. Friend remember the concept of people who lived in a community for years and years but happened to be British becoming so-called honorary consuls? They were in a country permanently, or might be there for 30 years, unlike ambassadors or UKTI people who come and go. We have lost that tradition; they need not replace anyone, and we should be nurturing such people—Brits who live in Morocco, for example.

[Geoffrey Clifton-Brown]

My hon. Friend makes an extremely interesting point. I have come across one or two honorary consuls, such as a former one in Mexico who is involved in a huge development in that country and knows the whole business community backwards. Other than a few expenses, honorary consuls come for free to the UK Government, so we should appoint more. My hon. Friend is exactly right.

[Mr David Amess (in the Chair)]

Sir Nick de Bois.

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[Nick de Bois]

I want a copy of Hansard now.

My hon. Friend is right to talk about the need for UKTI to network, but may I be cruder and suggest that we do what the French and Germans do? UKTI should bring contacts from within the countries, put them in front of visiting delegations and make them mix. We need such contacts to sell and they can open doors to help people to sell.

[Geoffrey Clifton-Brown]

I was coming to that, so I shall do so now. We need to encourage everyone from the top downwards, from the royal family, the Prime Minister or my noble Friend Lord Green, to take trade delegations out to such countries; we have been good at that in the first two years of the Government, but we have not been so good at following it up. The noble Lord Prescott, for all his faults, and he had many, was liked by the Chinese, because he kept going to China—he went three or four times a year. Such hierarchical communities respect people, and friendships must be made in depth. Our business people need to know that as well, because even big business and the FTSE company chairmen make that mistake—they think that they can fly into Beijing or Shanghai, do the deal and get out. What they should do is be in there long before they make the deal, do the deal and then revisit their contacts. The other thing on big companies is that we should use them as ambassadors for smaller companies. The FTSE chairmen that I have talked to about that idea are keen to help, and UKTI should have a role.

I have nearly taken up my allotted time, Mr Amess, so you might call me to order, but I have one or two other bees in my bonnet and then I shall conclude, please.

We must do much more to encourage all Departments to export—every single Department should have a designated Minister not only for procurement but as a trade Minister. With the possible exception of social security, there is no portfolio in the Government that could not have a role in trade. In fact, anyone at any time who goes abroad at the taxpayers’ expense, whether a civil servant, a Member of Parliament or a Minister, should be an ambassador for trade—such people should have an eye out for trade opportunities and, when they return to this country, they should write a note. What did I do? The first thing that I did on my return from Morocco was to write a note to my noble Friend Lord Marland on the opportunities for trade in Morocco. I also had a visiting delegation of parliamentarians from South Korea in my office the other day; I discovered a sniff of a highly important lead on an inward investment in South Korea and I sent an e-mail straight away, that day, to the noble Lord Green, alerting him to such a significant opportunity. That is what we should be doing more.

My hon. Friend the Member for South Thanet is right that every single Member of Parliament should become a trade ambassador, on two counts. First, we visit a lot of companies in our constituencies, and we know what they do as businesses, and their export potential. Secondly, we also know our own constituency, even if it has not got an enterprise zone—which I do not, although I wish I did, as my hon. Friend does. I still know, however, what the opportunities are in my patch, as does my neighbour, my hon. Friend the Member for Stroud (Neil Carmichael), and we link a lot of businesses together. We should all become trade ambassadors.

The Prime Minister was right to veto the European fiscal compact or tax agreement, because we now see Prudential, with a market value of £18.4 billion, considering whether—perhaps threatening, I do not know—to go to Hong Kong or wherever. If that business goes, a significant number of jobs will be lost in the City of London. If we over-regulate the City or business as a whole, we will simply drive that trade elsewhere in the world. We need to say to our European partners—as I said to the German Finance Minister, and got absolutely nowhere—that if we over-regulate in Europe not only will we lose financial services jobs in this country but the whole of Europe will become uncompetitive against faster growing economies in the world. We need to be really careful about that, so the Prime Minister was absolutely right, and the demands to protect the City of London were reasonable. There are three important financial centres in the world, the USA, London and Hong Kong—with Hong Kong very deregulatory and aware of the need to reduce taxes—and, if we are not careful, Hong Kong will overtake London in time to come. That is a real danger.

I return to the point that I made to the hon. Member for Brent North. Everyone has been critical of UKTI today, and it is easy to be so, but it has a difficult job to do and I think that it does a good job—on the whole and in spite of all the criticisms that I have made. That said, it could do the job a lot better. UKTI needs to benchmark itself against the very best globally, to learn lessons from our rivals in Hong Kong, Singapore, India and all around the world. We in the coalition have been slow to insist that UKTI does that, and I suggest to the hon. Member for West Bromwich West (Mr Bailey), the Chairman of the Select Committee on Business, Innovation and Skills, that if UKTI does not do that itself, perhaps the National Audit Office should do a proper value-for-money report. That is not necessarily a criticism—none of us has 100% wisdom, and every single one of us could improve performance. There is some distance to go with UKTI, because the only way we will grow the economy and create jobs is to export more and to encourage more inward investment. After all, we were the leading country in the industrial revolution, and that is what made this country great—the “great” in Great Britain—so for goodness’ sake let us strive to get back there again.

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[Mr Wright]

It is impossible that Mr Amess is 60.

I must however add a sour note, Mr Amess, that is directed at your good self. I attended business questions in the main Chamber today and I heard you say to the Leader of the House that Southend is the best seaside resort in the country, if not the world. I have to correct you and say that Hartlepool and Seaton Carew is actually the best seaside resort anywhere in the country.

This has been a great debate, and an important and interesting one. I congratulate the hon. Member for South Thanet (Laura Sandys) and my hon. Friend the Member for Brent North (Barry Gardiner) on securing such a significant and timely debate.

In many respects, I am very optimistic about Britain’s prospects in the next half-century. We have innovative, dynamic, competitive companies in sectors from which the world wants to buy goods and services, and in which we are world class. We have a tradition of open, fair and global trading, which we need to exploit a lot more, and the world economy will double by the year 2050. The rate of growth throughout the world in the next decade will be about 4% to 5%––much higher than in the last 30 years. We need to exploit that to Britain’s competitive advantage as much as possible.

I mentioned this point in a previous debate, but it is worth repeating; indeed, the hon. Member for South Thanet referred to it earlier: there is a ferociously competitive global economy out there. British firms must be as nimble as possible, but my additional point is that there is a premium for coming first in the 21st-century economy, and we need to ensure that Britain and British companies go first into the new and emerging markets.

Let me quote from the CBI’s excellent report, “Winning overseas”, which says:

“We are not alone in seeking growth through exports – other advanced economies are facing similar constraints and are looking to boost their export performance. We cannot spend another decade simply playing catch-up: we need to be bigger and bolder in our ambitions.”

The report concludes by stating, very starkly:

“We are not being ambitious enough with our choice of markets and our decline in goods exports is unsustainable if we want to lead an export-orientated economic recovery.”

Exporting is incredibly important to the British economy, and not just in the simplistic and obvious sense that it generates revenue for our country, allowing us to pay our way in the world. All the evidence suggests that firms that export and that attract inward investment stimulate better research and development, productivity, innovation and hence competitiveness. The efficiency of our wider economy improves through exposure to new ideas and different ways of doing business. A paper from the Department for Business, Innovation and Skills itself, entitled “International Trade and Investment - the Economic Rationale for Government Support”, states:

“export support is a highly cost effective means of generating additional business R&D, enabling firms to increase internal resources available for such investment, as a by-product of successfully helping them to gain access to new markets.”

It is clear that public money invested in export expansion and support reaps huge dividends for the businesses of this country, and it also improves the ongoing competitiveness and prosperity of our country. The CBI—I quote it again—states quite directly the challenge to us in this House as policy makers:

“Be clear about what the UK is trying to achieve and where its strengths lie in order to help UK business in the global marketplace. The UK must develop a strong brand that our exporters can leverage to their own advantage.”

I think that we would all agree with regard to that.

I am optimistic about the growing alignment between areas of UK competitive advantage and demand from emerging markets in the next decade or so. We have the rise of the global middle class, with about 1.8 billion middle-class people in the world. In the next few years, that is estimated to grow by 5 billion, so we are going to have a huge increase in people with more disposable income wanting to buy British goods and services. That will provide enormous opportunities for the UK in some of our real strengths: premium brand automotives, financial services, IT, pharmaceuticals, chemicals, creative industries and higher education.

I am optimistic, but we face challenges. It has been mentioned that we often have cultural and structural barriers to companies expanding their exports, or even starting to export in the first place. In terms of our cultural barriers, too many of our firms simply do not export. The key task of UKTI is to break down those cultural barriers as much as possible and identify the companies that could make a real success in exporting.

We export to a limited field of slow or no-growth countries. That point has been made by the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) and others. Some 65% to 70% of our exports go to the United States and the European Union. We need to ensure that the strategic focus of UKTI switches to high growth and emerging economies. The hon. Member for Enfield North (Nick de Bois) was firm about making sure that we were at the forefront of N11 economies—the next 11 high growth economies.

There is a cultural barrier. How on earth does a firm in Hartlepool or elsewhere, with no culture or experience in exporting whatever, get into the business of exploiting foreign opportunities? As the CBI states, getting a swimmer to attempt a different stroke is much easier than getting them into the pool in the first place. Firms happen to chance upon exporting opportunities, rather than making a determined effort. We heard about the micro-brewery that the hon. Member for South Thanet mentioned. It is right that the Government have an objective to double trade by 2015 with Brazil, China, Colombia, Egypt, India, Indonesia, Malaysia, Mexico, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan, Thailand, Turkey, the UAE and Vietnam. As the CBI says:

“It is clear that the UK needs to re-orientate its trade towards high-growth markets in order to boost its performance.”

Those countries are where the high growth, emerging opportunities will arise.

[Geoffrey Clifton-Brown]

I am sorry to labour the point, but the list that the hon. Gentleman has just read out did not include a single west African country. Some of the west African countries that I cited will have much higher growth rates than some of the countries that he mentioned. We must not neglect the countries of west Africa. Many of them are members of the Commonwealth. They are friends.

[Mr Wright]

The hon. Gentleman makes a fair point. UKTI needs to look closely at where those high growth opportunities will be and ensure that, because of possible historical links, we exploit those opportunities first. I tabled a written question about how we are to double trade and what targets are in place. As my hon. Friend the Member for Brent North said—perhaps the Minister will comment on this—there are no stated bilateral trade targets for Egypt, South Korea, Bangladesh, Indonesia or the Philippines. The Minister said that UKTI provides a degree of service for UK companies seeking to do business, but that is not good enough. We need to be much more focused and determined to ensure that British firms can sell their goods and services in the areas that are going to grow the global economy in the next half century. We need a framework in place to allow that to happen.

I became interested in the course of the debate about where UKTI, with finite resources, should be concentrating those resources. The hon. Member for South Thanet and others mentioned the need to focus on small firms and make sure that we get in at the beginning to ensure that we can benefit and help to shape and mould their ambitions for exporting opportunities as they grow. I keep mentioning the CBI, because its report is excellent. The CBI states that UKTI could perhaps be more effective if it focused on mid-sized companies with real potential for high growth. They may already be exporting, but they require assistance to break into new markets.

I am interested in what the Minister has to say about what we need to do to identify, embrace and nurture medium-sized enterprises—those companies with a turnover of about £10 million to £100 million, with up to 500 employees, and, as I said, real potential for high growth.

--- Later in debate ---

[Mr Wright]

Effectiveness is at the heart of the debate. I made that point in response to the hon. Member for Skipton and Ripon (Julian Smith). I want to see as big a bang for the UK taxpayers’ buck as possible. How we go about doing that is important.

I was coming on to the figures regarding what rate of return we get for taxpayers’ investment. I think that my hon. Friend the Member for Brent North disputes these figures, but they are a good starting point. For every pound that UKTI spends on export promotion, the British economy and firms generate an additional £22 profit. That is an astonishing figure and a huge ratio. It is difficult to think of a comparable direct example in which Government investment and active involvement could produce such a return. When we factor in the law of diminishing returns and state that—plucking something from the air—every pound that UKTI spends will provide half that current return, on my rough calculation and even according to a conservative estimate, based on the UKTI’s current £333 million budget, this country’s businesses stand to lose well over half a billion pounds in additional profit. With the economy flatlining and unemployment rising, is that appropriate? Should we not be trying to invest more in UKTI?

As I tried to say in response to the hon. Member for Enfield North, every pound spent needs to be focused diligently on proactively seeking out firms with great potential for export capability in high-growth areas. As many hon. Members have said, that means being proactive and having a UKTI presence alongside Foreign Office staff in those emerging markets to advise companies of the ways in which to do business in that particular nation.

That does not necessarily solely mean advertising that the UKTI posts on Twitter and Facebook, and that companies have access to online materials. Certainly, the use of online materials—the internet and social media—is important. However, to use them at the expense of the face-to-face establishment of relationships, will not be an effective use of public money. To some extent, I saw that when I was a shadow Education Minister and the Government ended face-to-face careers guidance for young people. Web-based initiatives—the notion that someone says, “There’s a computer there with the internet on it. Just have a look and see what jobs you might be interested in”—are not an effective use of public money. Web-based media may be part of a complementary blend of materials, but they cannot be the full answer. I worry that, in tightening financial circumstances, people will rely on Twitter and Facebook too much.

People have mentioned the scrapping of the RDAs. That abolition of regional government architecture has not helped matters. LEPs are still in their infancy. We hope that they are a success, but we are missing valuable time. The world is moving on and it will not wait for us. We need to ensure that we are at the vanguard of this competitive environment. If structures are altered domestically, we will be penalised internationally.

I want to finish by making a number of points, one of which is about access to finance. Will the Minister update hon. Members on the progress made with the actions outlined in “The Plan for Growth” published almost a year ago? I put that question to the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), in the debate on British exports and trade a week or so ago, but he did not have time to answer it. How many SMEs have been helped as part of UKTI’s passport to export initiative? In “The Plan for Growth” the Government launched the export enterprise finance guarantee, which provides guarantees for lenders to facilitate the provision of short-term finance lines for export. How many firms have taken advantage of that?

The plan produced three new products designed to mitigate the risks for exporters and potential exporters. I understand that the bond support product was operational from April, so we have had almost a year of it. Will the Minister state how successful he thinks that has been in freeing up exporters’ working capital and how many firms have taken advantage of it?

I want to finish on the point about us having a sustained approach to trade investment and political lobbying. “Britain Open for Business” states:

“Government Ministers will also systematically lobby for UK commercial interests on all overseas visits and in meetings with their counterparts in other governments.”

That is welcome, but the point has been made time and again that every single Minister with a red box should be charged with selling Britain overseas. They should be making sure that they are trade ambassadors. To widen that point, we are missing the trick that hon. Members have huge influence in their constituencies. As mentioned, we are missing brokering opportunities overseas.

[Geoffrey Clifton-Brown]

By far the largest number of people who travel abroad at the taxpayer’s expense are civil servants and local government officials. A diktat should go down to every single one of them that they should be trade ambassadors for this country when they go abroad at the taxpayer’s expense.