UK Trade and Investment

Debate between Iain Wright and Nick de Bois

Thursday 15th March 2012 Westminster Hall

[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.