Geoffrey Clifton-Brown calls for more focus on exports
15th March 2012
Geoffrey Clifton-Brown calls for much more focus on promoting exports and foreign direct investment at every level of government and for UKTI to have a coherent strategy to encourage UK companies to export.
Geoffrey Clifton-Brown (The Cotswolds) (Con): I am delighted to serve under your chairmanship, Mr Amess. I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing the debate. The fact that we have had a debate on trade with India and today’s debate on UKTI—two debates in two years—shows the interest of the coalition Government, and particularly of Conservative Members, in trade.
I also congratulate my hon. Friend the Minister on being here. He and I had Front-Bench roles in opposition, and I regret to say that I am going to shine a light in a few dark places he might not wish me to, but here goes. High levels of exports and foreign direct investment have always been an indicator of the health of an economy. It is vital to promote exports and foreign direct investment. We know from the very recent past that we cannot rely on consumption fuelled by debt, or on Government spending funded by debt, to drive growth. As I said in one of my first speeches after the general election, it is only through exports and FDI that effective growth will come into the country. That is how important they are to the economy. As a result of our history, we boast strong economic and cultural links across the globe. We should capitalise more on the fact that English is the universal language of business.
The effectiveness of the work of UKTI is vital to our economic recovery. A company in my constituency called Renishaw plc, chaired by the excellent David McMurtry, is doing incredibly well. Its revenues for the past six months, ending 31 December 2011, were up by a record 11% —that is £1.47 million—and as a result it is now employing 16,050 staff, with 130 vacancies, including 25 apprenticeships and 30 graduate positions. That is the real importance of exports: the growth of the economy, but also employment prospects—graduate and work placement prospects, which are so vital for youngsters leaving education.
Exports are also important for the companies themselves. It is estimated that between 1996 and 2004—the Minister will know this, because I have used these figures many times—the productivity of firms that export went up by 34%, but that of firms that did not export went down 7% to 8%. Exporting firms tend to have higher productivity. It is estimated that less than a quarter of the 10,000 medium-sized firms in the UK export, and most of them receive help from UKTI. However, the Government have recognised the fact that we must help more companies, and, as my hon. Friend the Member for South Thanet said, in his autumn statement the Chancellor granted UKTI an extra £45 million, to meet the target for the number of small firms exporting, and bring it to more than 50,000. We will need to work hard to achieve that target.
I pay tribute to the Gloucestershire chamber of commerce. I was contacted on Tuesday, by Suzanne Hall-Gibbins, the chief executive, who asked me to pass on in the debate how important she felt the role of chambers of commerce could be, in exporting. I hope that the Minister will say a little more about chambers of trade and of commerce. Along with the local enterprise partnerships, they have a supremely important role, because they can identify a lot of opportunities.
Julian Smith: Does my hon. Friend agree that one opportunity for British Chambers of Commerce would be for them to produce some of the market reports currently produced by UKTI? I think that the BCC believe they can do them quite a lot more cheaply.
Geoffrey Clifton-Brown: My hon. Friend is right, and, as my hon. Friend the Minister will know, we had that debate often in opposition. We could make more of the knowledge, on the ground, of chambers of trade and of commerce, as well as organisations throughout Europe. We could use them more—that is what they are there for.
I want to take up the point made by the hon. Member for Brent North (Barry Gardiner), who is unfortunately not in his place at the moment. In 2010 50% of our exports went to EU member states, and a further 16% went to the USA. The problem with that is that it is estimated that those markets will decline by 30%. On the other hand, by 2030 the BRIC—Brazil, Russia, India and China—countries will have increased by 41% their share of global GDP. In other words we are exporting to the wrong people. We are exporting to the countries it is easy to export to; but we are not encouraging our companies to export to the real high-growth markets. If we carry on as we are, we shall sink further downhill.
The markets in question are not always necessarily difficult to export to. The Minister may know that I recently visited Morocco, as did our trade ambassador Lord Marland. There is huge opportunity there, not only for trade with Morocco itself, but to use it as a hub for exporting into west Africa. We have all been looking east, towards Asia, but some west African countries’ growth is higher than that of Asian countries. Mr Tarab, the excellent CEO of the main phosphate company, which has 60% of the world’s reserves, is an Anglophile and joint chairman of the joint chamber of trade. He said to me that we should use Morocco as a hub to get into west Africa. In particular, our banks should use the opportunities that they have through shareholdings in Morocco to get into some banks in west Africa. West African countries such as Ivory Coast, Senegal, Nigeria, Angola and Ghana have had huge growth rates in the past few years, as a result of their oil and gas reserves and discoveries. We are missing a trick. They are friends, ancient trading partners, and many are members of the Commonwealth. We need to consider that market closely.
The previous Government’s policies on exports and attracting inward investment were incoherent, which prevented UKTI from implementing a rational strategy. One simple reason for that incoherence was a revolving door for trade Ministers, and another one for trade priorities for UKTI. I suggest gently to the Minister that he should set some priorities for UKTI, stick with them and ensure that we achieve them.
UK businesses that export reap significant benefits, but many are reluctant to start exporting, because they do not know where to begin, or they are unaware of the benefits. That is where UKTI comes in, but because it lacks a coherent strategy, as I have mentioned, it has not reached out to small companies well enough. I still think there is a mismatch between what UKTI does around the world, or in London, and what happens on the ground. Ninety per cent. of the companies in this country are small ones, and 4.5 million companies employ fewer than four people; if 1 million of them took on an extra person it would almost solve youth unemployment overnight, so that is a very important area. UKTI, through our embassy network around the world, could be more proactive in identifying the opportunities in those countries and relaying them back to London. Then, through our databases on our websites, we could relay the opportunities to the businesses.
Things tend to happen the other way around. What UKTI does is reactive. It tends to rely on a company approaching it and asking whether there is a market in Nigeria for the valve that it makes, which supports the oil industry. That opportunity should be identified by UKTI long before that happens, and passed back to the relevant companies. That is a change of thinking, and UKTI needs to think about it.
We need to think what incentives we can give to small companies to export. However small a company is, exports should be discussed at every board meeting. It might not want to do anything about them, but they should be on the agenda. We could encourage small firms more with corporation tax breaks. Perhaps we should even skew the national loan guarantee scheme towards companies that export. The Government need to do more to encourage small businesses.
We have not talked enough in the debate about inward investment. Too often we are delighted when big firms come to this country. Then we leave them to fend for themselves. An example is the £1.5 billion development by DP World at the London Gateway port, with investors from the United Arab Emirates. There have been huge planning problems. We should be monitoring and nursing those big investments, with someone senior from UKTI saying, “You have got a planning problem; this is who you need to go and talk to.” We need to get a reputation in this country for really caring, not just about firms bringing their investment to the country but about looking after them afterwards. That brings me on to infrastructure and the prospect of allowing it to fall behind.
Critics of High Speed 2 and Crossrail are wrong: we need the best infrastructure in the world. People need to be able to get about; we need to be up there on a world scale—certainly as good as any of our European competitors.
We need to deploy our UKTI people in the right places. Returning to my visit to Morocco, I found that we had four based in Casablanca, which is fine because that is where most trade is done, but we did not have a single UKTI representative in Rabat, although it is the centre of Government in Morocco, where all the Ministers are. The hon. Member for Brent North (Barry Gardiner) is right, business happens by networking, and we should be asking our UKTI people to network around the world. If they are to seek out the opportunities that I mentioned earlier, they need to network with the right people.
Laura Sandys rose—
Nick de Bois rose —
Geoffrey Clifton-Brown: I am spoilt for riches—I give way first to the proposer of the debate.
Laura Sandys: Does my hon. Friend remember the concept of people who lived in a community for years and years but happened to be British becoming so-called honorary consuls? They were in a country permanently, or might be there for 30 years, unlike ambassadors or UKTI people who come and go. We have lost that tradition; they need not replace anyone, and we should be nurturing such people—Brits who live in Morocco, for example.
Geoffrey Clifton-Brown: My hon. Friend makes an extremely interesting point. I have come across one or two honorary consuls, such as a former one in Mexico who is involved in a huge development in that country and knows the whole business community backwards. Other than a few expenses, honorary consuls come for free to the UK Government, so we should appoint more. My hon. Friend is exactly right.
Nick de Bois:...
My hon. Friend is right to talk about the need for UKTI to network, but may I be cruder and suggest that we do what the French and Germans do? UKTI should bring contacts from within the countries, put them in front of visiting delegations and make them mix. We need such contacts to sell and they can open doors to help people to sell.
Geoffrey Clifton-Brown: I was coming to that, so I shall do so now. We need to encourage everyone from the top downwards, from the royal family, the Prime Minister or my noble Friend Lord Green, to take trade delegations out to such countries; we have been good at that in the first two years of the Government, but we have not been so good at following it up. The noble Lord Prescott, for all his faults, and he had many, was liked by the Chinese, because he kept going to China—he went three or four times a year. Such hierarchical communities respect people, and friendships must be made in depth. Our business people need to know that as well, because even big business and the FTSE company chairmen make that mistake—they think that they can fly into Beijing or Shanghai, do the deal and get out. What they should do is be in there long before they make the deal, do the deal and then revisit their contacts. The other thing on big companies is that we should use them as ambassadors for smaller companies. The FTSE chairmen that I have talked to about that idea are keen to help, and UKTI should have a role.
I have nearly taken up my allotted time, Mr Amess, so you might call me to order, but I have one or two other bees in my bonnet and then I shall conclude, please.
We must do much more to encourage all Departments to export—every single Department should have a designated Minister not only for procurement but as a trade Minister. With the possible exception of social security, there is no portfolio in the Government that could not have a role in trade. In fact, anyone at any time who goes abroad at the taxpayers’ expense, whether a civil servant, a Member of Parliament or a Minister, should be an ambassador for trade—such people should have an eye out for trade opportunities and, when they return to this country, they should write a note. What did I do? The first thing that I did on my return from Morocco was to write a note to my noble Friend Lord Marland on the opportunities for trade in Morocco. I also had a visiting delegation of parliamentarians from South Korea in my office the other day; I discovered a sniff of a highly important lead on an inward investment in South Korea and I sent an e-mail straight away, that day, to the noble Lord Green, alerting him to such a significant opportunity. That is what we should be doing more.
My hon. Friend the Member for South Thanet is right that every single Member of Parliament should become a trade ambassador, on two counts. First, we visit a lot of companies in our constituencies, and we know what they do as businesses, and their export potential. Secondly, we also know our own constituency, even if it has not got an enterprise zone—which I do not, although I wish I did, as my hon. Friend does. I still know, however, what the opportunities are in my patch, as does my neighbour, my hon. Friend the Member for Stroud (Neil Carmichael), and we link a lot of businesses together. We should all become trade ambassadors.
The Prime Minister was right to veto the European fiscal compact or tax agreement, because we now see Prudential, with a market value of £18.4 billion, considering whether—perhaps threatening, I do not know—to go to Hong Kong or wherever. If that business goes, a significant number of jobs will be lost in the City of London. If we over-regulate the City or business as a whole, we will simply drive that trade elsewhere in the world. We need to say to our European partners—as I said to the German Finance Minister, and got absolutely nowhere—that if we over-regulate in Europe not only will we lose financial services jobs in this country but the whole of Europe will become uncompetitive against faster growing economies in the world. We need to be really careful about that, so the Prime Minister was absolutely right, and the demands to protect the City of London were reasonable. There are three important financial centres in the world, the USA, London and Hong Kong—with Hong Kong very deregulatory and aware of the need to reduce taxes—and, if we are not careful, Hong Kong will overtake London in time to come. That is a real danger.
I return to the point that I made to the hon. Member for Brent North. Everyone has been critical of UKTI today, and it is easy to be so, but it has a difficult job to do and I think that it does a good job—on the whole and in spite of all the criticisms that I have made. That said, it could do the job a lot better. UKTI needs to benchmark itself against the very best globally, to learn lessons from our rivals in Hong Kong, Singapore, India and all around the world. We in the coalition have been slow to insist that UKTI does that, and I suggest to the hon. Member for West Bromwich West (Mr Bailey), the Chairman of the Select Committee on Business, Innovation and Skills, that if UKTI does not do that itself, perhaps the National Audit Office should do a proper value-for-money report. That is not necessarily a criticism—none of us has 100% wisdom, and every single one of us could improve performance. There is some distance to go with UKTI, because the only way we will grow the economy and create jobs is to export more and to encourage more inward investment. After all, we were the leading country in the industrial revolution, and that is what made this country great—the “great” in Great Britain—so for goodness’ sake let us strive to get back there again.