UK Trade and Investment

Iain Wright Excerpts

Thursday 15th March 2012 Westminster Hall

[Laura Sandys]

Some examples are a bit difficult to repeat in public. On a serious note, the French have always had a very clear focus. Since the second world war, both their diplomats and their whole political structure have been focused on understanding economic diplomacy.

[Mr Iain Wright (Hartlepool) (Lab)]

It’s just a certain je ne sais quoi.

[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.

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[Mr Iain Wright (Hartlepool) (Lab)]

Mr Amess, what a pleasure it is to serve under your chairmanship today, and may I also wish you a very happy 60th birthday in 11 days’ time?

[Neil Carmichael]

That is impossible.

[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.

[Julian Smith]

I had a micro-enterprise that traded here and had a subsidiary in Singapore. We delivered within two years hundreds of thousands of pounds of tax revenue back to the UK. Please do not underestimate the power of the 4.5 million micro-enterprises to deliver tax revenue as part of the export drive that the Government are undertaking.

[Mr Wright]

I certainly bow to the hon. Gentleman’s superior experience, but my point is that, with finite and reducing resources, it is absolutely essential—I will come on to this—that today’s debate is about the effectiveness of UKTI. Where do we get the biggest bang for the taxpayers’ buck? Is it from small enterprises or more medium-sized enterprises that have got opportunities for export and growth? Where will we get the best return for the British taxpayer and hence future prosperity and growth?

[Laura Sandys]

In a strange way, what we need are different strategies for different size companies. That is what it boils down to. It is not an either/or. We might be focusing too much on a certain sort of service to very small companies that is more suitable to a medium-sized company. That is why I proposed looking at translating websites or aggregating certain sectors and being able to present them, which does not cost that small business either time or money.

[Mr Wright]

That is an important point. I am interested in looking at where we can gain knowledge and experience from other successful exporting nations. I look to Germany, although we cannot replicate Germany in the UK. It would be wrong to suggest that we can. However, a successful ingredient of the German economy, with its emphasis on manufacturing and engineering, on the long term, on worker and management co-operation and on good regional financial opportunities, is the Mittelstand, the medium-sized companies often seen as Germany’s economic backbone. It is interesting to see what they have. They have a relentless focus on export markets, often in global niche markets, allied to close relationships with their supply chains, as the hon. Member for Gloucester (Richard Graham) mentioned, and distribution networks. Will the Minister tell us what steps UKTI has taken to embrace mid-sized companies? How often have mid-sized companies been taken on trade delegations?

[Mr Adrian Bailey]

One of the points made in the CBI report was that more needed to be done for medium-sized businesses that are exporting at the moment to find a wider range of export opportunities. I hope that the Minister will respond to that as well.

[Mr Wright]

The Chair of the Select Committee is right.

UKTI is suggesting new products: the “passport to export” for new-to-export companies, and the “gateway to global growth”, aimed at helping established exporters tap into new markets. This seems to be a good approach that has the support of the wider business community, but I want to press the Minister on the benchmarks for success. What are they? What progress has been made and how many companies have benefited from those two new products?

That leads me to the strategic document that UKTI published a year or so ago, “Britain Open for Business”. The strategic approach that it suggests—expanding exports by securing new businesses overseas, especially through increasing exports to high growth and emerging markets—seems appropriate, given what hon. Members have said today. We also welcome the sectors that the strategy identifies in which Britain has a competitive advantage and from which we could derive greater growth in exports in the next few years.

There can be a greater link-up between industrial and trade strategy. “Britain Open for Business” hints tantalisingly at that, but more can be done. The document is light on detail, which in many respects is understandable, given that it is a high-level strategic document. However, it does not set out very clearly what actions UKTI will take and how success based upon outcomes will be measured.

On that basis, may I ask the Minister a few questions about some of the tasks and actions that “Britain Open for Business” pledges? UKTI states that it will bring more private sector expertise into the strategic relationship management of major exporters and inward investors. That important point has been mentioned a number of times by hon. Members. Will the Minister update hon. Members on how that is progressing? Will he specifically outline how private sector expertise with that commercial know-how is being brought into the business?

Similarly, UKTI strategy has stated that a new private sector delivery partner operating in England outside London will be tasked with bringing in high-quality inward investment projects. Will the Minister say what the latest is on that and what progress has been made? UKTI has also pledged to develop new partnerships with key businesses that support SMEs, trying to tap into their networks to raise awareness of the benefits of exports. Time and again today we have heard about the huge importance of the chambers of commerce and about the excellence that sector-led trade associations can provide in batting for British companies outside the UK. What is being done to exploit that great expertise more? How will that be evaluated, and what progress is being made?

UKTI has pledged to create a new online self-help community for UK SME exporters to provide business-to-business support, advice and mentoring. Again, will the Minister update hon. Members on that? With regards to the document, will the Minister tell us about the high value opportunities programme? How successful has that been and can he identify specific export opportunities that have been realised as a direct result of that initiative?

Let me turn to the cuts, which have been mentioned a number of times, not least by the Chair of the Select Committee. UKTI faces a cut of around 17% over the next few years. In contrast, its French equivalent has had an increase in its budget of 14.2% in 2011 to €105 million. Germany Trade and Invest had a budget increase of 10%.

[Nick de Bois]

I suppose it is inevitable that we must go down that route a bit, but does the hon. Gentleman agree that, considering the funding that was in place before the previous election and the rather dismal figures we have been reviewing during the debate, money is not the answer to everything? It is how that money is used and how effectively one works with other businesses that is important.

[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.

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[Mr Wright]

I agree. A lot of the work will be done by civil servants, but politicians and leaders of Government are very important. The CBI report states that improvements have been made with regards to political lobbying, but that we have seen the cancellation of trade delegations at very short notice. In contrast, it mentions France, where around 200 high-level trade missions that are focused on 20 primarily high-growth countries are co-ordinated annually with senior politicians. They are well publicised in advance. As a result, in November 2010, a visit to China led by President Sarkozy secured €15 billion in new deals for France.

I think the Prime Minister is still in America. I have noticed that a lot of the talk has been about Afghanistan, Iraq, extradition and basketball—quite rightly, given the circumstances of the past few days. Trade should also have been an important topic. I had a look at the No. 10 website this morning, where the Prime Minister said:

“Barack and I have agreed to prioritise work ahead of the G8 on liberalising transatlantic trade and investment flows.”

However, did the Prime Minister take our business leaders to the White House in his visit to America? Have we won any new deals in the world’s largest economy as a result of what the Prime Minister has done this week? I certainly think he should have done. If he has not, I would respectfully suggest that he has missed a trick, and it shows the culture that needs to be altered in Whitehall.

[David Rutley (Macclesfield) (Con)]

The hon. Gentleman may have missed press reports last night that said that there was a banquet at the White House in which Sir Richard Branson and other British business leaders were in attendance. That dimension has, to a large extent, been covered.

[Mr Wright]

I certainly saw reports about Sir Richard Branson being at the event along with George Clooney. My point is this: when the Prime Minister, the leader of our Government, goes out on state visits, what is he doing to win trade for Britain? What is he going to come back with? It is important that he takes a delegation of business leaders and wins awards and contracts for Britain.

[Julian Smith]

This Prime Minister has done more on UK trade trips than any other Prime Minister in recent history. He has been to Brazil, China and India, and the Foreign Secretary has been on a trade mission to Australia. This Government’s track record on the matter is exemplary.

[Mr Wright]

I understand the hon. Gentleman’s point. I know that there was a high-level and high-profile delegation to India just after the Prime Minister assumed office, but one-offs and PR stunts are not going to win business for Britain. The effort needs be sustained, co-ordinated and done at the highest possible level over a long time.

I am excited about the opportunities that British companies—dynamic, innovative and competitive as they are—have in the competitive, 21st-century global economy. We will miss a trick if we do not have a sense of urgency and determination in ensuring that we grow our businesses in the export markets. I hope the Minister will have a greater sense of urgency and determination to ensure that British goods and services are sold around the world, thereby providing us with greater wealth and prosperity.

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[Mr Prisk]

Absolutely. One of the key elements of the Automotive Council road map we developed is demonstrating the depth, but also the gaps, in the supply chain, and our ability to recruit substantial prime investment. We are all familiar with the good news across the automotive sector. Part of the issue is then about how to strengthen tier 2, tier 3 and so on. That is why, when I go to the Paris motor show or the Berlin air show—as jolly and entertaining as it may sound to those who do not go, it is a very carefully worked programme—I talk to the key tier 2s and tier 3s, making it clear to them that not only do we have good indigenous businesses but we have growing markets for the components they generate, in which they may wish to invest. That supply chain thinking is very important.

[Mr Iain Wright]

Will the Minister answer the question that I asked him during Business, Innovation and Skills questions this morning? Five months after the launch of the advanced manufacturing supply chain initiative, no firms have been helped because it is not yet fully formed. I talked about a sense of urgency and that is a good example. Can the Minister get a wriggle on, and make sure that firms benefit as quickly as possible?

[Mr Prisk]

I am not quite sure about the manoeuvre the hon. Gentleman described, or how graceful it would be. What I can say is that there was a discussion on whether Birmingham city council should lead in this field, as part of the LEP. That delayed it by six or eight weeks. We wanted to ensure that we did not just do something from Whitehall and ignore that local expertise. It has now agreed to take on a core of the initiative and will be able to mount something very shortly. There has been a little delay, which I think is rightly because the idea of the supply chain, particularly in the automotive industry, came from Birmingham. I did not want—I suspect that the Chair of the Select Committee, the hon. Member for West Bromwich West (Mr Bailey) would haul me over the coals if I did—to sweep past a really good west midlands proposal just to ensure that we delivered on a set time frame. We are about six to eight weeks behind where I would like us to be, but we will be in a position to develop it shortly. It is part of a bigger picture, which is a broader figure of approximately £125 million. The delivery of the automotive supply chain package is imminent, but the hon. Member for Hartlepool is right to make sure that we keep to a sensible time frame.

I am aware of time, and I must give my hon. Friend the Member for South Thanet time to respond before the debate ends. I will turn to how we measure effectiveness and then go on to some of the specific points that have been raised by right hon. and hon. Members.

It is fair to have balance, and, rightly, criticisms have been raised. That is fine—I take those criticisms as a constructive process. UKTI is a successful and often well regarded agency when compared with its competitors abroad. I use the word “competitors”, because that has to be the mindset of Ministers and Departments. In 2010, UKTI won the prize for the best trade promotion organisation in the developed world. However, as several hon. Members have pointed out, UKTI can only succeed when it works in a leadership role and works with others. That is a really important point that has come out of the debate.

My hon. Friend the Member for The Cotswolds mentioned chambers, which he has rightly championed for a long time. Chambers are a part of a number of private sector consortia that are delivering foreign direct investment. To confirm where and how at this point, they deliver for UKTI in the north-west, the west midlands, the south-west and, soon, in the north-east. The delivery partner that UKTI operates in the east midlands is in fact owned by the local chambers, which I think is good.

My hon. Friend has been a keen supporter of the Council of British Chambers of Commerce in Europe and has seen its work. A memorandum of understanding was signed just last month which will enable it to be part of the service delivery overseas. That is a very good way to move ahead. The idea that somehow the Government are all-seeing and all-powerful, and that any one agency has all the networks that we need to tap into, is mistaken—getting that breadth is important.

On how we measure the fitness or capability of the agency, the danger is that we will get into which survey says what and when it was cast. The hon. Member for Brent North flagged up the National Audit Office report. My understanding was that those were the 2009-10 survey figures. Clearly, we need to move ahead from them, but I understand the point he is making and I do not dismiss it. UKTI has tried to get an independent assessment of the people who use the service. What is their independent view of the quality of that service? Without going into great detail about how the survey is undertaken, the key point is to receive feedback on the satisfaction, or otherwise, of the service. What difference—this is important—has UKTI made to the company? In particular, what added value has it generated?

The figures up to 2011, if I can update the House, from the most recent study—clearly, the 2012 survey is in hand now—demonstrate that 70% of companies report significant business benefits. Some 75% of companies were satisfied or very satisfied with their overall experience with UKTI. I am not putting those figures on the record to say that we do not need to worry about the situation, even though a much smaller proportion, I think 7%, were dissatisfied or very dissatisfied with UKTI. In my book, that is useful and helpful, but we also need to listen to the experiences of real businesses, and today’s contributions have been very helpful. For example, my hon. Friend the Member for Stroud (Neil Carmichael) mentioned a couple of businesses—Tudor Rose was one, if I wrote that down correctly. Those are good stories, but we need to hear from hon. Members when there are weak stories. I am keen to find out where the weaknesses are. Sometimes the business itself might get the wrong end of the stick, but other times we need to make sure that we have that channel. I therefore encourage hon. Members to make sure that that is fed through to UKTI, because it is important.

On what we can do to change the strategy, structure, calibre and so on—good points raised by a number of hon. Members—Lord Green has set out an ambitious programme for increasing the number of small and medium-size enterprises that export. We want to get up to the European average of 25%. The proportion is below the European average, a point raised by several hon. Members. In practice, that means getting an extra 100,000 SMEs exporting by 2020—that is the benchmark. Lord Green and the new chief executive, Nick Baird, who came into office in September, have set about making important changes that respond to some of the specific points raised by a number of hon. Members.

My hon. Friend the Member for South Thanet is absolutely right about SMEs, particularly with regard to her micro argument. In an age when a start-up business on a laptop in a back bedroom has the capability of being a global business from day one—which was certainly not the case when I started my business, like my hon. Friend the Member for Enfield North, in 1989—we need to think about where Government intervention needs to sit in terms of quality, and, frankly, there are a lot of very good commercial services that the Government do not need to duplicate. That thinking is important and that is a good point, which I will flag up with Lord Green myself.

I have said that UKTI is making changes. What are they in practice? First, it is bringing in private sector expertise—this alludes particularly to the point made by my hon. Friend the Member for Skipton and Ripon (Julian Smith)—into the senior leadership of UKTI. As we have already heard, it has already outsourced the inward investment services, creating, through PA Consulting, a coherent investment service right across the English regions outside of London. Those teams have incentives built in to their contracts to bring new projects to our shores. In other words, it is moving towards being outcome based—if not as ideally as we would always have in the private sector, then much closer to that—rather than, necessarily, what I would describe as the conventional salaried model.

I would like to pick up on a couple of points that have been raised on the regional development agencies, UKTI and LEPs. One of my problems with the RDAs was that, when I went to Shanghai, I discovered that UKTI had its own operations running very positively, but there were eight separate independent trade organisations—all fully funded, all competing with each other, and all in Shanghai—from the eight RDAs outside London. To my mind, that was bonkers. There needs to be a clear, co-ordinated UK presence, while making sure that, within the UK, communication is strong. Removing the RDA layer—for many other reasons beyond this one—helps us to co-ordinate or focus the effort on UKTI—a single, clear UK message. Then what is needed is to ensure that there are proper links to the grass roots. That means working with the devolved Administrations and having a proper understanding with the LEPs in England. That is where we are. We have memorandums of understanding in place, which are crucial because they allow a strong UK voice. If Kent or Essex wish to do their own thing, that is fine, but let us co-ordinate and work together. That is an important shift.