Trade and Investment

Lord Risby Excerpts

Monday 15th June 2015 Lords Chamber

[Lord Risby (Con)]

My Lords, it is a great personal pleasure for me to see my noble friend Lord Maude on the Front Bench and to congratulate him on a truly excellent speech. Perhaps my noble friend thought that when he came to your Lordships’ House he might be escaping me. The simple reason for that is that I was his deputy not once, not twice, not three times, but now four times—he is technically my boss since I am a trade envoy of the Prime Minister. I am absolutely delighted that that should be the case. I believe that my noble friend has now made three maiden parliamentary speeches, which is excellent too. I have worked with him in many roles over the years; he combines a stellar intellect with an extraordinary commitment to get things done with a clear sense of focus and direction. It is exactly for that reason that he will be enormously valuable in discussions and debates in your Lordships’ House, and in the crucial role that he now enjoys in government.

We have a brilliant service industry in this country—the best in the world, in many respects. This certainly is not the moment to discuss the whys and wherefores of the calamity that struck this country in 2008 and beyond, but it told us something—that we needed a different regulation of our financial services industry, but also a rebalancing of our economy. In common with other industrial countries, we have seen a decline in manufacturing in the United Kingdom. In our case, we have seen an overdependence on the financial services industry, much of it concentrated in London. Indeed, as many noble Lords have already indicated, our export performance has not matched that of others. One problem has been that accessibility of our banking and insurance services has been very difficult in some key markets.

Over the years all British Prime Ministers have tried to promote exports and inward investment, but by any objective standards, the time and energy that has been committed by this Prime Minister and this Chancellor of the Exchequer to that end has been widely and enormously appreciated by the business community, as I have heard so often. UKTI has been refashioned to develop new market opportunities and to encourage inward investment. However, the culture of export promotion remains a work in progress, as our home market has always been somewhat consumer oriented and, for many businesses, enough for their business purposes.

Let me deal first with inward investment. Our openness and attractiveness to external investment sources is simply unique in Europe. We remain the top European destination for foreign direct investment and second in the whole world, but until recently some 90% of FDI came from either America or Europe. Clearly this is now beginning to change, which is to be welcomed, as we see the new world economic order unfolding, with huge and recent investments by the Chinese, Gulf Arabs and others. We can recall with gratitude the huge investment made by the Japanese in this country in the 1980s, particularly in our car industry. It is estimated that the wave of FDI has created more than 200,000 jobs and safeguarded 260,000. It is crucial that we continue on this process, but we must do so by continuing to have low business taxes, a pro-business sentiment and flexible employment structures that continue to be attractive to people.

We, of course, as a country also benefit enormously from the English language, and our reputation as a very open and welcoming society. We can also be proud of a big change in business start-up culture, and the dynamism of our high-tech sector. An extraordinary statistic on the rate of start-ups in this country compared with France was published recently. We have much to learn from France as regards the co-operation between government and the private sector in assertively pushing the interests of France in export markets. That is to be admired in many respects. I read an extraordinary statistic which I hardly believe to be true, but it is part of our success story and must be encouraged—namely, apparently, 9,000 British people now live in Paris and 400,000 French people live in London, many of whom are the most enterprising and dynamic young French citizens who have been attracted here. In that context, the Chancellor of the Exchequer has removed or modified burdens on smaller businesses and has overseen the establishment of new enterprise zones and digital entrepreneur hubs. He has improved R&D tax credits and given extra support to exporters with the expansion of fast broadband, which is certainly much needed.

In March, the Government hit our target of signing up 3,000 medium-sized businesses to a support programme designed to help them break into new global markets. However, we still have work to do. Only one in six such businesses currently exports outside the European Union compared with one in four in Germany and one in three in Italy, so progress needs to be made. I am sure your Lordships will want to support this and perhaps my noble friend will comment further on it.

I was particularly interested in the very interesting and informed comments of my noble friend Lady Mobarik in respect of Pakistan and the opportunities there. Wearing my hat as the Prime Minister’s envoy to Algeria, I know that it is very interested in the start-up culture and high-tech sector which have developed in this country. Of course, in a country such as this there is an argument to be had about how you encourage this by cutting red tape and amending tax policy. However, a country such as Algeria is relatively new business territory for us and we have seen a substantial growth in business activity with it. In December last year, as part of the trade envoy programme, 1,000 potential investors wanted to attend a conference in London labelled “Algeria Open for Business”. Recently, we secured our first Rolls-Royce engine order there. We have had a remarkable success story with a Northern Ireland dairy company supplying farm products there, further energy construction and servicing deals and, very soon, we hope, a major hospital contract.

I pay tribute to my noble friend Lord Marland, who encouraged this whole process and drove this programme forward. However, the Prime Minister’s visit just over two years ago made a dramatic breakthrough. UKTI is now supporting trade and credit finance at a level unseen before. All this is very welcome. It is also particularly welcome that 89% of its customers are SMEs. Additionally, funding has been put in place to give support and advice to possible new SME entrants. Surely this is an area which offers the greatest promise.

I also express my gratitude for the change of attitude which evolved in our Foreign Office. Ambassadors now give considerable support and energy to export and inward investment promotion, as I have seen and admired in Algeria and elsewhere. There is simply no alternative to pursuing business-friendly policies if we are to secure the economic growth which gives businesses confidence that they are supported in their export ambitions. Business organisations are playing their part with UKTI, BIS and the FCO in encouraging this culture, and it is working. The latest British Chambers of Commerce international trade survey found that businesses that export reap better performance but there is more still to be done, and the BCC is there to assist. Its Overseas Business Networks programme links accredited British chambers with those abroad under the banner of Export Britain, offering advice on export readiness, planning, making connections and getting goods to market. I dwell on this because these activities supplement the work of government through UKTI and provide an international link that is hugely welcome.

As the relative importance of the European economy continues to shrink, identifying and targeting new markets remains a critical objective. I hope and believe that those of us who are privileged to be part of the Prime Minister’s trade envoy programme can in some measure contribute to this in markets that have been relatively unexploited historically. The Chancellor of the Exchequer said recently, I think with real candour:

“We have to tackle the endemic weaknesses in the British economy that no Government have been able to solve in the past: we are not productive enough and we do not export enough, save enough, train enough or build enough”.—[Official Report, Commons, 4/6/15; col. 798.]

In once again welcoming my noble friend to his role, I say in conclusion that he brings great experience of the private sector to this undertaking and I know that his contribution in driving forward our export promotion and continuing to attract inward investment will be greatly valued by this country.