UK Trade and Investment

Debate between Geoffrey Clifton-Brown and Laura Sandys

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.

--- Later in debate ---

[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.