Small and Medium-Sized Enterprises

Lord Selsdon Excerpts

Wednesday 26th June 2013 Lords Chamber

[Lord Selsdon]

My Lords, forgive me, I was just trying to work out how many members of the committee were speaking today. I know that they will all be the best informed and that those like me will have relatively little information or knowledge.

I am extraordinarily impressed by the change that has taken place, probably over the past 12 months, in the attitude of the UKTI and the public sector to the promotion and development of trade. I wonder why my noble friend Lord Green has decided to leave a ship that is not sinking. I pay tribute to him because of this change of attitude.

I started my life in industry in the asbestos industry, working in new products called plastics. I suddenly thought I was in the wrong business, tried to get another job and ended up doing market research. My two greatest clients were the Government of Japan, through JETRO, and the Government of India. For several years we looked at what they could sell abroad and at the marketing and never realised that India and Japan would be two of the biggest investors in the United Kingdom. We probably never dreamed that our automotive industry would be saved by Indian investment.

I want now to look a little into the balance of trade. We suffer from a major deficit on manufacturing and always have done. I declare my interest in that my great uncle Stafford Cripps was president of the Board of Trade and drew attention to those problems. Every time I have spoken here I have drawn attention to it. Does it matter that we have a deficit on manufacturing if we have a surplus somewhere else? We have to accept that the balance of payments deficit on manufacturing is going to continue for quite a long time. Whether it will be supported by a surplus from the financial institutions, which are under quite an aggressive attack at the moment, is another matter.

We are left with the initiatives that can be taken. I was on the British Overseas Trade Board, I chaired the Middle East trade committee—I was on all these things. I used to go to the DTI practically weekly. I could not understand why suddenly at a stroke one of the previous Governments got rid of the British Overseas Trade Board and all the advisory bodies related to the promotion and development of trade. Suddenly they were replaced by a lot of new advisers, many of whom did not necessarily know the country they were going to deal with. Hundreds of them were being appointed, but the Government forgot that in the days of the BOTB the area advisory groups had, free of charge for the Government, advisers who worked on the ground in all the countries. My own responsibilities lay particularly with the Middle East and with Africa. I was told, “My dear chap, you are young enough to be alive when something important happens, but it is going to take a long time”. Now when we look at our balance of payments, we do not seem to be worried.

Occasionally I get asked to start things. I started something recently and I went into the UKTI for the first time. The biggest problem was that it could not get a room to fit enough of us in. It was busy and humming and someone had the decency to think that I looked prosperous and tried to sell me the helicopter in the entrance. A new attitude has come out of all this that I find stimulating and far from worrying.

I look back to the small and medium-sized enterprises. I do not know why we call them SMEs; I just call them people. We want people who will take the initiative. The term entrepreneur used to be used. I used to use that term until I was told—the noble Baroness, Lady Coussins, could probably help—to try to translate it back into English. If you do that it becomes “undertaker” —someone who undertakes things. Translate that back into French and it becomes croque-mort, which is a different form of undertaker. The English language makes life fun. Here we have SMEs. Why do the Government want to have initials? Have you ever tried to pronounce UKTI in different languages? It is not possible. No one can understand what you are talking about. The same is true for SMEs; it is a girl’s name in one of the countries, I have forgotten which. Why have we suddenly dropped the word “trade”?

The small entrepreneurial business, as it may be called, was always the lifeblood of the United Kingdom historically. Someone would go off abroad, find an opportunity, come back and try to demonstrate it. He might even have bought himself a new briefcase to look more important or invented a nice name. I have always enjoyed and loved the sole trader. The balance of payments deficit on manufacturing now is desperate with every country, except for what we used to call the countries of the third world, which is now known as the emerging markets. They always used to be great markets for the United Kingdom. My grandfather when he was in trade—he was on the Board of Trade at one time—would trade with Mongolia, the West Indies and Latin America, which seem to have been rediscovered. Why did we suddenly change all these names? Why can we not go back to trade?

It is quite intriguing too when we ask for money. Most of the banks these days recognise that if they finance trade projects they get a very large fee, and if you are providing export credit you have the United Kingdom state guarantee and can make a 1.5% margin virtually risk free. These are the sorts of incentives that encourage the financial sector to look for trading opportunities.

When our original empire—if that is what it may be called—started, it was based on technology, engineering, building railways, building bridges and providing connections. Now we move into the strange new electronic world, which is perhaps beyond my own pay grade. Anyone starting a business now has to realise that they do not have to leave their office to be able to communicate worldwide. They do not necessarily have to travel. I keep saying to people, “Do not travel there. First, send an invitation asking them to come and see you”. An awful lot of people from all around the world want an invitation to come to London or to the United Kingdom. You find people who are looking for clients and invite them over here. They come on holidays. The relationships get built, and while we may criticise ourselves for being a multicultural society, if that is what it is, it is what we always were in the days of the British Empire when it developed and was built.

I end with a point not just about the size of our small country but about the influence that stems from the Commonwealth and others. It is a little bit of fun being treasurer of the House of Lords Yacht Club. We do not have much money. I sat down one day to look at where our influence lay. I have raised this in the House before. I looked at economic exclusion zones. There is a 200-nautical mile limit that goes around your own country. The region around the Commonwealth and our own territories accounts for 60% of the entire EEZs of the world. The French have another 15%. If we got together with the French, we would have 75% of the 200-mile limits. The resources and all the developments are there.

We are a maritime nation. We were entrepreneurs or “undertakers” and now we are small businesses, which are the ones that will grow. I so enjoy it when a man comes into my office to see me, I say, “What are you doing?”, and he says, “I have just started my business. I am moonlighting at the moment. I hope I can make it work so that I can leave my boring job in a rather big organisation”. The enthusiasm is there. I congratulate the Government on this change of attitude within UKTI, and I hope that it continues.