UK Trade and Investment

Lord Bilimoria Excerpts

Tuesday 9th October 2012 Grand Committee

[Lord Bilimoria]

My Lords, when I accompanied Prime Minister Tony Blair on his visit to China and India in 2005, we christened the British Airways plane that we travelled in “Blair Force One”. In his excellent speech in India, Mr Blair said that he was wearing two hats: one as Prime Minister of the United Kingdom and the other due to Britain’s presidency of the European Union at that time.

I, too, am speaking in this debate wearing more than one hat. The first is as the founder and chairman of Cobra Beer, which I founded with my business partner, just the two of us. It grew from a micro-business to a small business to a medium business—the full spectrum of an SME. The second is now as the chairman of a larger business with a global joint venture with one of the world’s largest brewers, Molson Coors, headquartered here in the UK, and a joint venture with Molson Coors in India. I am also wearing the hat of the founding chairman of the UK India Business Council, where I have had the privilege of working closely with UK Trade and Investment, which has funded and supported the UK India Business Council. In fact, the UKIBC would not exist without UKTI’s support.

Ronald Reagan is famous for saying that the nine most terrifying words he had ever heard were, “I’m from the Government and I’m here to help”. I think that that is very unfair, as government can genuinely assist business, not only in creating the right environment for business to flourish but in the way that UKTI helps British businesses go global. Yet it saddens me that when I make speeches around the country and ask an audience of, say, 200 businesspeople, “How many of you do business with India?”, just a few hands go up.

I thank the noble Baroness, Lady Liddell, for initiating this debate. The reality is that only 20% of British companies export—that goes for SMEs as well. If that could be increased to 25%, that would add another £36 billion to the UK economy. SMEs are the engine of our economy. According to the Secretary of State for Business, more than half the monetary value of the UK’s exports comes from SMEs. SMEs employ more than 60% of the private sector workforce and there are 4.4 million SMEs in the UK. In the past 12 months, UK Trade and Investment has helped more than 25,000 businesses, of which more than 90% were SMEs.

It baffles me why businesses do not make more use of the help that UKTI can offer. From my own recent experience, in 2009 we signed our global joint venture for the whole world, excluding India, with Molson Coors. Three years ago, Molson Coors was not interested in India and said, “You keep India”. A year later, as the global joint venture was progressing well, they expressed an interest in looking at the Indian opportunity. When I accompanied the Molson Coors team to India, we met with Barry Lowen, the head of UK Trade and Investment in India, who was able personally to reassure my colleagues from Molson Coors of the Indian opportunity. This helped greatly and a year later, in 2011, we signed a joint venture for India, called Molson Coors Cobra India, and bought, upgraded and expanded the only brewer in the state of Bihar.

A year later, in June 2012, the global board of Molson Coors, its enterprise leadership team, for the first time in its more than 200-year history, held a board meeting outside the United States, Canada and the UK—in India. During that visit, UKTI and the British high commission organised a high-profile event in Delhi for the board to meet key individuals who provided a variety of feedback, which gave the board the confidence not only to continue to support the Indian joint venture but, all being well, to sanction further expansion in India in the years to come. The role played by UKTI and the British high commission was absolutely instrumental.

As the noble Lords, Lord Cope and Lord Cotter, said, what more can the Government do to get this message out to British business, particularly SMEs, to take advantage of this help that is available to all British businesses? UKTI is on the ground in 96 countries. It is present around the world and can do much for British business and SMEs: it can carry out market-entry research, OMIS reports, at very reasonable rates; it can make introductions; it can help to host events; it can provide networking opportunities, host and organise trade delegations—I could go on. Why do businesses not know about this and make more use of it?

The Government have rightly woken up to the fact that Britain does not have a balanced economy. We have let things slip. In 1978, manufacturing was 26% of GDP; today it is barely 12%. In 1970, services accounted for 54% of GVA and manufacturing 40%; by 2009 it was 78% and 17% respectively. We need to encourage manufacturing. What we have not lost is the ability to be the best of the best in manufacturing in the world. In terms of advanced engineering, just look at Rolls-Royce, whether cars or aero engines. Look at Jaguar Land Rover—at our whole automobile industry in fact. At Cobra I am very proud that, first and foremost, I am a manufacturer.

What are the Government doing to encourage innovation? The noble Lord, Lord Hunt, alluded to this. It is a shocking fact that the UK Government’s investment in R and D is well below that of other advanced economies. Sweden’s investment is 3.5% of GDP; in Finland and Japan it is 3.4%; in Germany 2.5%; in the US 2.7%. In the UK it is only 1.8%. Skills development is crucial. According to the World Economic Forum, the UK workforce is 18th in the world, far behind those of Japan, Germany, Sweden and the Netherlands, for example.

The good work that UKTI does cannot operate in a vacuum. Government has to create the environment to help the capacity and capability of British businesses to excel and to be able to export and compete around the world. It needs to create the environment with a competitive tax regime and low red tape and regulation, which will attract inward investment and so help SMEs. Our taxes are too high, although I am happy to see that a survey published today says that, where red tape is concerned, we are actually far better than many other countries. Thankfully we are not in the euro, but our exports are still too dependent on the euro. UKTI must continue to encourage British businesses to look more globally, particularly to countries such as India. We are a trading nation, we are outward-looking, we are an open country and we can only succeed and compete by encouraging our businesses to go global. Otherwise the world will leave us behind.