SMEs (Middle East and North Africa)

Michael Fallon Excerpts

Wednesday 19th June 2013 Westminster Hall

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

On behalf of us all, I welcome you to the Chair, Mr Owen. I thank my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) for giving me the opportunity to explain in more detail the breadth and depth of support provided by UK Trade & Investment for UK SMEs in the middle east and north Africa. Let me reassure him that there is a very good story to tell. This is a large and growing marketplace, in which there are tremendous opportunities. We export more to the United Arab Emirates than we do to India, more to Saudi Arabia than to Brazil and more to Qatar than to Mexico. Equally, there are challenges, particularly in markets such as those in Iraq and Libya that he mentioned, where the business environment is clearly more challenging.

My hon. Friend will be familiar with some of the services that UKTI provides. A typical example is support for trade missions, of which 20, involving 150 SMEs, have visited Saudi Arabia alone since mid-2012. Indeed, independent research undertaken on UKTI’s behalf demonstrates that, for the year to September 2012, the organisation delivered 4,500 services to businesses across the region. Some 60% of businesses surveyed reported that those services generated significant business benefit, including an average additional profit of £84,000.

In addition to supporting companies in-market, UKTI brings its specialists from the region back to the UK to speak directly to SME exporters. For example, earlier this month, in partnership with private sector sponsors and other partners, UKTI organised a UK tour for specialists from the UAE, Qatar, Saudi Arabia and Kuwait. My hon. Friend will be interested to know that they met more than 200 companies in four cities—Glasgow, Manchester, Bristol and London. Those events were organised in association with UKTI’s extensive domestic regional network, which is dedicated to supporting exporters across our country. I do want to reassure my hon. Friend, because he asked this specific question, that there are UKTI staff in every region, if not in every council area.

The work of UKTI officials to support SMEs is increasingly enhanced by the activity of the Prime Minister’s trade envoys and our British business ambassadors. As senior business leaders, they are well known internationally, and they consistently generate significant interest in overseas markets. For example, one of our business ambassadors, Malcolm Brinded, recently led a trade mission to Jordan, significantly helping the companies concerned to position themselves to secure a share of Jordanian business.

I should also highlight that SMEs in the region will benefit from another UKTI initiative—its high value opportunity campaigns. Those campaigns cover 100 of the world’s largest commercial projects, 19 of which are in the middle east and north Africa. Each will open up for our SMEs huge supply chain opportunities in projects as diverse as Qatar’s World cup stadium infrastructure, Dubai’s airport expansion and huge oil and gas projects in Iraq and Saudi Arabia. We want success in those major overseas projects to mirror the positive benefits of investment in our national infrastructure by Gulf sovereign wealth funds. Indeed, we are tendering for the provision of private sector support in the Gulf to help to grow that opportunity.

Looking forward, my hon. Friend will want to know that my colleague, Lord Green, and UKTI’s chief executive officer, Nick Baird, intend to build on the excellent services already provided to make the organisation more attuned to what its competitors offer, in line with their desire to bring more private sector expertise to bear in support of exporters. One of the key differences between us and our major competitors, especially Germany, is the range of business-to-business services available in overseas markets from organisations such as chambers of commerce. That is a difference that we need to address. Lord Green and Nick Baird also want to see a much stronger connection between domestic and overseas business networks. A strong case has been made, and British chambers and other British business groups offer a potential means to extend such services to UK SMEs. However, in most cases, that will require a substantial upgrading of those business groups’ own capacity to offer the requisite level of service, which is why the Prime Minister announced last year a transformational change to the support that business can offer to business.

UKTI has now launched a pilot campaign in 20 markets that will radically enhance the support to UK SMEs over the next three to five years. The pilot focuses on high growth and emerging markets and includes Qatar, Saudi Arabia and the UAE. Our aim is that by 2017 the support available to UK SMEs from Government and business groups will have significantly increased in range, quantity, impact and quality in at least the first 20 markets. It is then planned to roll out the programme to include all markets and connect our overseas business-to-business support to UK business networks, so that we have one global British business network that is operating on a par with our competitors.

At home, UKTI’s broader official business offering needs to adapt to the actual needs of business rather than to what we think they need. UK Export Finance understands that and continues to provide invaluable support to UK companies, many of which are SMEs, during turbulent times in the region. It was one of the first export credit agencies to resume cover for Libya, and even at the height of the Arab spring uprisings, UK Export Finance took a long-term view of the risks involved and remained on cover for the majority of countries.

I hope that my words demonstrate to my hon. Friend that UKTI intends to continue to build on its success in supporting SMEs in the middle east and north Africa, while at the same time developing new programmes of assistance. We want, for example, to be able to help more companies such as Apton Partitioning Limited of the west midlands, which designs, manufactures and distributes office partitioning systems for commercial offices.

The Apton story shows how a British business, dependent on the UK construction industry, lost 50% of its business in 2008, but emerged, with the help of UKTI, to be an international business operating in countries with major construction growth across the world. It is now exporting to Qatar, the UAE, Bahrain, Oman, Saudi Arabia and Kuwait.

My hon. Friend raised a number of specific points, which I will touch on if I may and write to him if I miss. He announced the publication of his report. We all look forward to reading that when it appears in the next few weeks. He asked about scrutiny of UKTI. I think today has been about scrutiny, but I take his point that there have not been sufficient debates on that important issue. It is of course open to the Select Committees to take up the work of UKTI.

My hon. Friend asked me specifically about Libya. We were one of the first to open an office again in Libya. Some 250 British firms have been to Libya since the end of the conflict, but I wholly accept that we need to do more than that. He mentioned Mr Mosawi in relation to Iraq, and I will certainly follow that up and reply to it. I repeat the reassurance that there are UKTI staff in every region of our country.

I hope that my hon. Friend will be reassured that UKTI takes seriously any scrutiny and comments on its activities. I hope he has had engagement with senior UKTI staff in response to any concerns that he has had. The fact that some companies occasionally feel that they are not getting the service they expect is, in my experience, the exception rather than the rule. Across the globe, countries that have used UKTI sing its praises. There may of course be exceptions to that, and if there are we need to learn why that is and to build on it. Nick Baird has made improving all levels of customer satisfaction one of the top priorities for him and his top management team. They are challenging the organisation and are seeing a response. Current indications are that, over the last calendar year, UKTI hit its target of 32,000 businesses assisted, up from just 25,000 the previous year. This year, UKTI aims to help 40,000 companies. Its target for 2015 is 50,000 businesses.

I hope that hon. Members will be reassured to hear that, of the tens of thousands of businesses that were helped and supported by UKTI in the year to September 2012, 90% of which were SMEs, more than 75% were either satisfied or very satisfied, and those companies say that UKTI has helped them generate additional sales of £49 billion. I hope that my hon. Friend and others will agree that that is an impressive performance. It is not a performance that we are complacent about, but one to which we should none the less pay tribute.

Question put and agreed to.