UK Trade & Investment

Ian C. Lucas Excerpts

Tuesday 19th March 2013 Westminster Hall

[Chris White (Warwick and Leamington) (Con)]

I congratulate my hon. Friend the Member for Enfield North (Nick de Bois) on not only securing the debate, but his comprehensive remarks.

The UK remains the ninth largest manufacturer in the world, but over the past few years, our export performance has been poor. In 2000, our share of world goods exports was 4.4% but, unfortunately, that had fallen to 2.8% by 2009, which is quite shocking. Perhaps that is why so few Labour Members are in the Chamber.

[Ian Lucas (Wrexham) (Lab)]

Will the hon. Gentleman give way?

[Chris White]

Unfortunately, I cannot, given the time available.

There are, however, now positive signs of improvement. In contrast to financial services, exports in manufactured goods have risen since the financial crisis. Fortunately, in the period between 2008 and 2011, exports of finished manufactured goods grew by more than 16%.

Ultimately, exports depend on good products and pioneering companies, such as DCA Design International. I will not go through a list, as my hon. Friend the Member for Witham (Priti Patel) did of all the jam makers and so on in her constituency, but my constituency has similar manufacturers.

The Government have a role in supporting businesses to export, and I hope that they will use the upcoming Budget to provide additional resources to UKTI so that it can reach out to even more businesses. The Prime Minister has announced a national challenge for the UK to encourage more small and medium-sized businesses to export, which is essential. As has been mentioned, if the UK exported at the EU average of about 25%, rather than 20%, about £36 billion would be added to the UK economy.

Businesses need support if they are to export, particularly smaller businesses that do not have large teams and resources to enable them to get into such markets. Our competitors in Europe and America see potential growth in the BRIC countries, as has been mentioned, and their Governments seek to provide their companies with every single advantage. That is why collaboration between the Foreign Office and UKTI is so important. The Foreign Secretary has made it clear that he wants British embassies to roll up their sleeves and support British business. We must also ensure that officials have their ear to the ground for new trade opportunities and then feed such information back to UKTI. We need to create a dual hub-and-spoke system, with the UK’s vast diplomatic opportunities feeding back information to UKTI and trade bodies in the UK, while they in turn have their own systems to feed back local information to chambers of commerce and business networks.

The Foreign Secretary has tried to reverse the decline in trade offices in consulates throughout the world, but we need to do more than merely reverse the decline—we need to expand, particularly in the emerging markets I mentioned earlier. Information is crucial in an age in which companies can communicate in minutes and deals can be won or lost through the smallest of delays. In the longer term, we also need to encourage businesses to make personal connections with emerging markets.

As a British Chambers of Commerce survey in 2011 pointed out, contacts are often key for businesses exporting into new markets. Businesses that had employees or directors who had lived abroad were even more successful. However, the most direct way in which we can support British businesses to export is by ensuring that our export products and guarantees are as competitive as possible. The Government should therefore commission a report into the comparative competitiveness of the UK’s export guarantees and credits, and the effectiveness of our institutions such as UKTI, so that we can learn from the success of others, and accordingly improve our own standards and the way in which we work.

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[Ian Lucas (Wrexham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone.

I commend the hon. Member for Enfield North (Nick de Bois) for initiating this interesting debate and for making a valuable and interesting speech. I was particularly interested in his perception of working with the 11 developing economies, which was a positive suggestion. We are operating in a world economy that is growing in different parts of the world. Unfortunately, our own economy is not, but we are aware that there are opportunities, as we heard often in the debate, in those emerging economies. Looking ahead in the way the hon. Gentleman suggested is important, as is his emphasis—this was a thread throughout the debate—on SMEs. I will return to that theme, because it is crucial to the success of British exporters.

The right hon. Member for Belfast North (Mr Dodds) also made a valuable contribution in which he raised the important issue of devolved institutions and the relationship between UKTI and the devolved nations. More work can be done to ensure that those parties work together, both to promote investment in the UK and to sell the message about Scotland, Northern Ireland and Wales. Also, within England, a more devolved approach within UKTI would increase the links between business and UKTI, which I sense from listening to the debate that many hon. Members feel are lacking.

The contribution made by the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) was interesting, particularly his suggestion, which is certainly worthy of consideration, that there should be a Select Committee to examine these important points. The hon. Member for Witham (Priti Patel) also emphasised the crucial importance of small and medium-sized businesses. We heard about the jam that is made in her constituency, which I am sure is excellent—I would love to experience it at some stage. I was also interested in the contribution by the hon. Member for Wealden (Charles Hendry) and his reference to the Azerbaijan games.

In the debate so far, we have not touched on creative industries. Sport is obviously crucial. Last year was a wonderful year in which we projected Britain—sorry, the United Kingdom—to the world, in addition to our artistic merit. I am sure that it is true for all Members that the potential of the creative industries in our constituencies and the skills of our young people in those industries match the world’s best. When we consider exporting, we need to talk much more about the creative industries than we do now and concentrate on that sector.

I almost got upset with the hon. Member for Warwick and Leamington (Chris White) because of the misrepresentations he made about the previous Labour Government, but I will move on from that. I also learned from the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) about the daffodils that he exported, and as a representative from Wales, I commend him on his choice of flower. All Members who contributed to the debate did so positively.

We are, of course, in a difficult situation because despite the references to business expertise by Conservative Members, the reality is that this country’s economic performance has been very bad since 2010, and far worse than the Government said that it would be in 2010. The Government said that they would base their economic policy on exporting, but I am afraid that that process has not been as successful as we would have liked. We need to up our game. On the eve of the Budget, it is quite clear that we need to do more.

We do have companies that are extremely successful at exporting. I do not want to be the bringer of bad news the whole time, so I will say that only yesterday we had an excellent announcement from Airbus, which has a factory just outside my constituency, that it is selling more than 200 new aircraft to Indonesia, which is one of the economies to which the hon. Member for Enfield North referred. That is an excellent example of the Government and the industry working together. That form of business is very successful, because we are the No. 1 exporting nation in Europe and we can outperform our competitors.

The UK automotive industry is also a successful exporting industry. It is doing extremely well and, again, that is an example of the Government, industry and—dare I say it?—trade unions working extremely closely for the benefit of the economy. That means that we can succeed when we work together, ensure that we reach out to development markets and make real progress.

I turn now to Germany, to which the hon. Member for Enfield North referred, because I found some interesting statistics during my preparation for the debate. I was especially interested to learn that Germany’s export credit agency, Hermes, provided €32 billion of financial support to German exporters in 2010, which is equivalent to 3% of Germany’s exports. The UK equivalent, the Export Credits Guarantee Department, provided only £2.9 billion of support for exporters which, if my maths is correct, is less than one tenth of the support that Germany offers. It would therefore be helpful if the Minister examined that German budget and considered how a country such as Germany can fund such a seismically larger approach to investment abroad.

[Geoffrey Clifton-Brown]

The hon. Gentleman has made what is perhaps the most important point that could possibly come out of this debate. The banks are still not lending to small businesses, there is still a problem with export finance guarantees and there is still a problem with currency instruments. If we can get ECGD at least to start backing instruments to help small and medium-sized companies to export, I believe that we could have a step change.

[Ian Lucas]

The hon. Gentleman makes an interesting point. I am a proponent of a much more regional structure in banking than the one that exists in the UK at the moment. The flawed reforms in the 1980s created a very centralised and uncompetitive banking sector that has not fundamentally changed in any way since 2007. The German Sparkassen model has been successful since 2007, and the Leader of the Opposition made a speech only last week in which he talked about introducing the concept of regional banking within the UK to try to link in with those businesses that we need to see expand.

I say that because the businesses that are exporting successfully from the UK at the moment—and, frankly, the businesses that are also using export credit guarantees—are the largest businesses that we have. I do not want that to diminish in any sense, as I speak as someone who represents a constituency that is immediately adjacent to an Airbus factory, which is a vital part of our local economy. However, we also need an expansion of exports by small and medium-sized businesses.

Of course we need to work more closely with UKTI and our embassies abroad, which in my experience do an excellent job of linking in with local economies. We particularly need to look at the developing countries where we ought to be doing better. Of course, there are many examples of the benefits of soft power in the UK. Reference has already been made to the World Service and to the English language, and our universities also develop excellent links with the outside world.

We are, however, sending mixed signals to some developing countries. This issue was raised on the Prime Minister’s recent visit to India because, for example, the changes in our visa regime are sending mixed signals to India. India is an important market for us, so we need to be conscious that we require a pro-business and pro-growth strategy on such issues as visas. It is also true that the World Service is one of our greatest assets. It builds a positive picture of Britain, so we must ask why its budget has been reduced by the Government through their reforms of the BBC. We must always look to the longer term on building our economy and exports.

I am aware that one way in which the Department for Business, Innovation and Skills builds its links to businesses is through the strategic relations team, so I want to ask some questions about that—[Interruption.] I do not know why the Minister is looking at his watch, because he will have exactly the same length of time that I have had to speak in which to wind up the debate.

I want to ask the Minister specific questions about the process whereby specific Ministers are allocated to specific larger businesses. How do those Ministers, who are linked through the UKTI strategic relations team’s list of companies, link in to smaller businesses? How do they liaise with smaller businesses, which we know will drive the expansion in exports in the future? They have close relationships with the larger companies, so how is their performance with those larger companies assessed? Is there a measure of the investment that is brought in?

I would be very grateful if the Minister would consider my points. We all agree that we need to expand exports and that we need to do better. We will support initiatives that will enable that to happen, but we certainly need to up our game, because we do not have the growth that we need in our own economy.