Trade, Exports, Innovation and Productivity

Debate between Geoffrey Clifton-Brown and Jeremy Quin

Wednesday 13th January 2016 Commons Chamber

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

I am delighted to be called so early in this important debate. I was particularly keen to catch your eye, Madam Deputy Speaker, because we have so few debates on exports, but I believe that if we are to grow our economy sustainably, we must increase our exports.

Given the importance of this debate, it is a great pity that our politics produces such negativity from all the Opposition parties. That is in total contrast to the Minister for Small Business, Industry and Enterprise, my right hon. Friend the Member for Broxtowe (Anna Soubry), who is positive and outward looking and produces good policies that the Government have been pursuing, both in the last Parliament and this one. I am passionate about exports. With my hon. Friend the Member for Newark (Robert Jenrick), I have the honour to chair the all-party trade and investment group dealing with exports. I want to see this country exporting more.

I just want to champion some of the Government’s achievements, which, unlike the Opposition parties, help exporters considerably. They have committed to cutting £10 billion of red tape in order to back British business and put resources into more productive use—and that is on top of the £10 billion we cut in the last Parliament. We have cut corporation tax to 20%—one of the lowest rates in the G7—and have an aspiration to cut it further. We are boosting skills and productivity by improving the quality of apprenticeships in England and increasing their number by 3 million in this Parliament, on top of the 3 million in the last Parliament. As my right hon. Friend the Minister has said, we are investing, up to 2021, £6.9 billion in UK research infrastructure and, in particular, protecting the science budget of £4.9 billion per annum. All that will help innovative companies in this country, as will building stronger links with emerging markets, especially China and India. I was therefore delighted to see the leaders of those countries—the most populous nations in the world—visit this country in the last year. And what successful visits they were.

My right hon. Friend the Business Secretary, launching the Government’s productivity plan, “Fixing the foundations: Creating a more prosperous nation”, said:

“Britain is home to some of the world’s most innovative and dynamic businesses, staffed by incredibly talented, hardworking individuals…And higher productivity means higher incomes. When productivity rises, standards of living rise too. So today I’m proud to publish ‘Fixing the foundations’. It’s our plan for productivity, and our blueprint for creating a more prosperous nation.”

Hon. Members on both sides of the House have commented on productivity, and it is true that we lag behind some of our major competitors. Many economists have puzzled over this, but I think the reason is simple. In the list of achievements I gave just now, I omitted the fact, which must be hugely welcome to all Members, that a record number of people are in work thanks to our flexible labour laws. In this country, 32 million people are in work—more than ever before—and that number is rising. I believe that, because more people are employed, some companies might not have invested as much as they might have done in labour-saving capital equipment, as has happened on the continent, where their labour laws are much more difficult and therefore they have higher unemployment. Greece, for example, has 50% youth unemployment. It is no wonder those countries have such problems, yet here, I am grateful to say, youth unemployment is dropping. It is a terrific achievement for this country.

Let us look at where trade is going around the world. In 2014, the UK’s exports of goods and services totalled £513 billion and its imports totalled £548 billion. The EU accounted for 45% of exports and 53% of imports, meaning the balance of trade with the EU is against us. In other words, we are importing more than we are exporting. There is no reason, therefore, not to look elsewhere in the world to see where we can export more. I commend that approach to the Minister. It is against a background of UKTI’s policy of increasing trade by 2020 to £1 trillion and the number of companies exporting by 100,000. There is no reason why we could not do much more.

UKTI has been transformed in the last few years. I was delighted to take one of my successful medium-sized companies to see the trade Minister, the right hon. Lord Maude, the other day to examine how we might get UKTI to do even more to encourage medium-sized businesses. The one in my constituency employs 45 people, exports to 40 countries around the world, makes it products in China and exports them directly to Australia, without their ever touching this country, and yet it remits its profits to this country and pays UK corporation tax. That is precisely the sort of medium-sized company we ought to encourage to export more.

That company told me there was too much emphasis on people in UKTI and not enough on the tradeshow access programme. Trade shows are a particularly important part of manufacturing businesses’ exporting programme. We need to encourage, via greater incentives from UKTI, such companies to go to these tradeshows, particularly where they have a record of success. At the end of my speech, I will make five or six suggestions to the Minister on how to encourage exporting, but one of them is to extend TAP from three to four years. As this company pointed out, the first year is about exploration and the second is about getting to know the customers, and only in the third year, if it is lucky, does a company begin to make a profit. It therefore needs an extension from three to four years. It is in its third year and about to be cut off just as it is becoming profitable, so it would be useful if we could give it a bit of extra help.

[Jeremy Quin]

I am delighted that my hon. Friend saw my constituency predecessor, Lord Maude, recently. We have a number of manufacturing firms in Horsham. Does my hon. Friend agree that such firms are now getting a better service from the Foreign Office and from our ambassadors abroad to help British exports? That should be put on record and welcomed.

[Geoffrey Clifton-Brown]

I am sorry to say that I only partially agree with my hon. Friend. I am not going to name the embassy in question, but a representative of the company I have been describing went to one of the nearer embassies to this country and was distinctly unimpressed by the trade representatives there. He described them as spotty youths who were just out of university. He felt that we needed people in our embassies and in UKTI who have a good track record in the private sector, and that we should incentivise such people. If they have had a good record in the private sector, it is likely that they would be successful in UKTI in helping companies to export.

There are approximately 1 million small and medium-sized companies in this country. UKTI helped 48,000 companies to export last year, but I suggest to the Minister that there is still much to be done. Far too many companies still do not understand what it means to export and do not understand the advantages of exporting. The figures are well known. Once a company has exported for the first time, its productivity goes up by 7%. So not only will its profits go up—one hopes that it will do profitable export business—but its productivity will go up as well because that activity sharpens the whole operation through dealing with an extra dimension. We could do much more, in collaboration with UKTI, with UK Export Finance and with the local enterprise partnerships. We should make them all come together much more closely.

Another suggestion I have for the Minister is that Innovation UK and UKTI could get much closer together so that some of our best seed-generated companies, including high-tech companies, could be encouraged to export right at the beginning of their existence rather than waiting until they are established. They should be encouraged to think about exporting as one of the first things they do.