[Mr Clive Betts in the Chair] — Backbench business — UK Trade & Investment

– in Westminster Hall at 12:00 am on 12th September 2013.

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Motion made, and Question proposed, That the sitting be now adjourned.—(Nicky Morgan.)

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham 1:30 pm, 12th September 2013

Thank you, Mr Betts, for calling me in this important debate on UK Trade & Investment and British exports. We spend a great deal of time in Parliament debating and having robust political exchanges about how to spend taxpayers’ money, yet we seem to spend very little time considering how to create greater wealth for this country. It is a great sadness to me that we have had only about four debates about British exports during this whole Parliament, and three out of four of them have been initiated by me. This debate will be the longest of all of them. Very few Members of Parliament have come to take part in this important debate, scrutinise UKTI and work on a cross-party basis to discuss how that body can become ever more productive in using taxpayers’ money well to ensure value for money and make Britain one of the world’s top exporters.

I have spent the past 12 months writing a report on UKTI, which I have sent electronically to all Members of Parliament. If anybody would like a hard copy, I would be grateful if they got in touch with my office. My office and I have spent the past 12 months writing the report and interviewing more than 220 British companies, which sent representatives to our office in Parliament from all over the United Kingdom to give us their analysis and feedback on UKTI, highlight their recommendations and sometimes frustrations with UKTI and advise how the service could be improved.

One of the first things that we say in the report is that the United Kingdom is the fifth largest economy in the world, yet only the 12th largest exporter. That is an important figure, and I would like the Minister and everybody to remember it in the back of their minds. This small country of ours has managed to become the fifth largest economy in the world. Sometimes we forget what an extraordinary achievement that is. However, we must ask ourselves why and how we have become the fifth largest economy in the world but only the 12th largest exporter. Why are we not the fifth largest exporter, commensurate with our international standing as a global economy?

Photo of Barry Sheerman Barry Sheerman Labour, Huddersfield

I congratulate the hon. Gentleman on this debate and his fantastic campaign. As I am co-chair of the all-party group on manufacturing, he will know of my passion and interest in the subject. Is not part of the problem that we have shrunk the manufacturing base to the point where only 9.5% of people in this country work in manufacturing? That has affected things. He is absolutely right that getting through to small and medium-sized enterprises is what UKTI finds most difficult.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

Absolutely. I have agreed to meet with the hon. Gentleman to discuss those points further. SMEs will be critical in the renaissance of exports that we hope to achieve, and a little later in my speech, I will explain how they must play their part. I will not rest in probing the Government until we have achieved the position of fifth largest exporter in the world. I do not think that that is an unrealistic target.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill

I am grateful to the hon. Gentleman, whom I thank for the work that he has done in the field and particularly for obtaining this debate. I rise because I have received a letter from a constituent who is concerned about the arms trade. To summarise her view, she wants much more transparency. Is that a point that he considered when preparing what appears to be an impressive document?

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

This debate and the report focus predominantly on the general export picture, of which our defence exports are just one aspect. However, if the right hon. Gentleman stays until the end of my speech, he will hear a reference to arms exports.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

The hon. Gentleman will have to wait and see.

The report makes three or four specific recommendations, which I will highlight to the Minister. One of the most critical is extra parliamentary scrutiny. In the process of writing this report, we went to see the Select Committee on Business, Innovation and Skills and interviewed its esteemed Chairman. The Department for Business, Innovation and Skills is a large Department, and the Committee is focused on domestic business and skills matters. During this Parliament—I may be corrected if I am wrong—I understand that the Committee has not undertaken any reports specifically scrutinising UKTI.

The Committee and the Department are so large that we need a subsection of the Committee or even, dare I say it, a separate Select Committee. The Minister and others might say that that is unrealistic, but I am putting the suggestion out for deliberation and consideration. Some form of body or mechanism is needed to perform ongoing scrutiny of the work and performance of UKTI. Let us not forget that UKTI receives hundreds of millions of pounds in taxpayers’ money. It is vital that all of us in the House play our role in scrutinising how that money is spent.

If we have additional scrutiny in the House, we can be confident in going to the Exchequer and others when things need additional funding and saying, “This is the work that the House of Commons has performed in scrutinising UKTI, and these are the deficiencies and shortfalls that UKTI faces. We need to secure additional money for it.” One mistake that the Government made at the outset, although I completely understand that budgets had to be cut across the board, was cutting the communication and advertising budgets for UKTI and others a little too much. I am certainly making representations to the Prime Minister to ensure that additional funding is given to UKTI so that it can advertise itself in providing service delivery and market itself to SMEs.

Mr Sheerman rightly referred to SMEs. About 47% of British SMEs have never heard of UKTI. They do not know anything about it; they do not understand what services it can provide. How can we expect cutting-edge SMEs, some of which have the most extraordinary innovation and ability to export, to use UKTI if they simply do not know what resources exist? I want UKTI to have product placements, even in soap operas. There could be a storyline where a local UKTI chap comes to see a company to help it export. I want advertising in national newspapers and on the radio and television, so that everybody starts to talk about export and understand that we can use our experiences in other markets to help SMEs export. We all remember the “Tell Sid” campaign, whether or not we agreed with—

Photo of Barry Sheerman Barry Sheerman Labour, Huddersfield

Some of us are trying to forget it!

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I thought the hon. Gentleman would say that, but whether or not we agreed with privatisation, we all remember the campaign. That is the sort of campaign that I want the Government to proceed with, so that everybody understands and is cognisant of UKTI, and so that no matter how small a business is, if it has the ability to export, it is given that opportunity.

The report also suggests that UKTI should be a single entity. Ideally, I would like it to be an Executive agency. At the moment, it is split between the Department for Business, Innovation and Skills and the Foreign Office, so it straddles two Departments. I fear that when a body reports to two Departments, there may be a degree of overlap or too much interference. I would like it to be a single entity and an Executive agency. What is an Executive agency? According to the definition:

“Executive agencies are part of a government department which enables executive functions within government to be carried out by a well-defined business unit with a clear focus on delivering specified outputs within a framework of accountability to ministers.”

I believe that UKTI should be a single entity, with a chief executive who is directly accountable to Parliament for the strategy, focus and organisation of that body.

At this stage, I pay tribute to Mr Nick Baird, the chief executive of UKTI. I think that when I started the report, he must have had a voodoo doll of me in his office into which he stuck pins, because I have been a real pain, but he has always interacted with me, no matter how difficult I have been with him, no matter how many probing questions I have thrown at him and no matter what barbed comments I have thrown his way. He has always been extremely civil, courteous and polite. He is doing great things at UKTI. He is appointing more business people to the organisation. However, I want him to have more autonomy and to be accountable directly to Parliament.

Following all the research that I had done, I wanted to utilise all the passion that I had for exports for my constituency of Shrewsbury, so we have moved on to the next step. Let us not forget that although UKTI is meant to help companies to export, it is also responsible for attracting direct inward investment into our constituencies. We all know that the vast majority—a massively disproportionate amount—of direct foreign inward investment into the United Kingdom goes to London. I want to ensure that UKTI on the ground in Shropshire is working in conjunction with my local council, the local enterprise partnership and the chambers of commerce directly to identify the top 10 inward investment opportunities for Shropshire. I have therefore tasked the UKTI team in the west midlands—Mr Paul Noon is the director of UKTI in the west midlands, and his staff includes Nicky Griffiths and others—with getting round the table with Shropshire council, the chambers of commerce and the LEP. I have brought them all into the same room and said, “What are the top 10 inward investment opportunities for Shropshire?” They are currently working on identifying those opportunities.

However, I suspect that the level of activity that I have described is not going on in every part of the country. I have spoken to many Members of Parliament who have told me that they are unaware of any interaction between their local UKTI teams and their local councils and LEPs, yet in Shrewsbury we have taken the bull by the horns and ensured that that work is happening. My office and I are at this moment writing a case study of exactly what we are doing, which we will share with every Member of the House, so that they can experience what we are doing in Shropshire and, we hope, try to replicate it in their own constituencies.

I pay tribute to Paul Noon and Nicky Griffiths and to Mark Pembleton from Shropshire council for their co-operation, their sterling work and their enthusiasm for getting together, with my encouragement, to start working on the top 10 inward investment programmes.

The critical point that I want to make to hon. Members is that it is no good a council or a LEP coming up with 10 opportunities that are not costed or not properly tabulated in a business format. They must be agreed with UKTI staff in such a way that those staff are happy and confident to sell them overseas, and that is precisely the work that is being carried out now. To ensure that we get extra resources for that project, I have invited Mr Nick Baird to come to Shrewsbury on 5 November. The chief executive is coming to spend a full day in Shrewsbury, so I hope—I am sure this will be the case—that everybody completes the work on those top 10 inward investment opportunities before his visit. Once they have been identified, I will play my part, as someone who is passionate about exports to the middle east and who knows the area. All other Shropshire MPs and everybody else who has a passion for Shrewsbury will also have to play their part in selling the top 10 inward investment opportunities to foreign sovereign wealth funds and countries abroad.

I would like the Minister to follow very closely what is happening in the case study in Shrewsbury and to give us every support in the run-up to Mr Nick Baird’s visit. It is very important that we can show success—that we can show how UKTI can work with the local councils and LEPs on the ground.

I want UKTI to leave no stone unturned when it comes to scrutinising every market in the world as a potential market for British exports. Of course UKTI is focused on the large emerging markets of Brazil, India, Indonesia and others, but we must never forget the very small markets. I came back yesterday evening from Gibraltar, where I had the great honour of addressing thousands of Gibraltarians. Most of Gibraltar came to the square to celebrate national Gibraltar day. I have to say that seeing 20,000 people singing “God Save The Queen” and “Rule, Britannia!” and flying the flag meant that it was a very emotional day for me. I pay tribute to the Gibraltarian spirit. However, because of my passion for exports, I started to ask a few questions about what is happening with Gibraltar. Of course it is a tiny market; of course it has a population of only 30,000 people, but my goodness me, it is more British than we are in many aspects and if we cannot sell to the Gibraltarians, who can we sell to?

I spoke to the deputy to the Governor and was told, “Oh no, it’s not my job to relay any opportunities to UKTI.” Then when I asked the question of the Governor, he looked at me with incredulity: “Oh no, of course it’s not my job.” By the time I had got through everybody, I had found that nobody was relaying business opportunities in Gibraltar to UKTI. Luckily, I have spoken to the Chief Minister, Mr Fabian Picardo, and put him directly in touch with Mr Nick Baird, and they are having a telephone conversation this afternoon to see how UKTI can interact directly with the Government of Gibraltar to ensure that the United Kingdom is aware of every opportunity, whether in construction, tourism or anything else, that exists in Gibraltar.

However, the thing that really upset me was that I found out that exports to Gibraltar are run out of offices in Madrid. I hope that I am not the only one who finds that rather ironic, given everything that Spain is doing to try to strangle Gibraltar at this time. I said to the chief executive, Mr Nick Baird, that it is completely unacceptable. The Foreign Office and UKTI seem to have these hubs. They do not have officials on the ground in certain countries, but commercial activity in smaller areas is directed from a bigger hub somewhere else. I understand that in certain cases, but it is completely unacceptable in the case of Gibraltar. The gentleman in Madrid who is dealing with Gibraltar obviously is very focused on the Spanish market, which probably accounts for 99.9% of this trade. He does not want to upset his Spanish partners. We much have direct contact with the Government of Gibraltar at the highest levels, and I will be monitoring that very closely.

Over the past year, I have created the cross-party British middle east and north Africa council, which more than 200 parliamentarians have joined. I feel passionately about the importance of the Arab world. The 22 members of the Arab League are, after all, our neighbours and of huge strategic importance to the UK from a security perspective. Hon. Members will be horrified to learn that only 5% of British exports go to the region—just 5%, to the whole of north Africa and the middle east.

What is striking when travelling around the middle east is the incredible strength of the British brand. We have good commercial links in the United Arab Emirates, but there is almost no commercial activity in countries such as Mauritania. When I visited Mauritania a few years ago, I was the first British MP to go since 1960. I asked some of my colleagues what they thought of Mauritania and they said that they thought it was a ship. They did not understand that it is an important, up-and-coming country of huge strategic importance with huge mineral resources.

When I went to Tunisia and met with the Anglo-Tunisian chamber of commerce, I was notified that only 60 British companies operate in Tunisia, compared with 1,800 French companies. Tunisia is a close, Mediterranean country on our doorstep.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

I congratulate my hon. Friend on obtaining this important debate. Does he think that a reason why countries such as France and Germany do much better in those markets is that their export guarantee schemes—what we now call UK Export Finance—are far more substantial than ours? For example, the German Hermes scheme protected or guaranteed €29.1 billion exports last year, while our equivalent in the UK gave out insurance for something like £4.3 billion. Germany provided more than five times the amount of protection through the Hermes scheme than we provided in the UK. The Hermes scheme is profit making—people pay premiums—so it is not a direct pull on the state purse.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I completely agree with my hon. Friend. The middle east and north Africa are my areas of interest. It is important that the scheme is extended to SMEs to encourage them to export to those countries, some of which have significant instability, because they will clearly be taking risks. I look forward to the Minister’s reply on that point.

Luckily, I studied French at university; I can speak French. We seem to avoid non-English speaking countries when trading. We are brilliant at exporting to countries where people speak English, but anywhere where French is a first language is a vortex for us: “No, no, no. That’s the French-speaking part of north Africa.” That is of great concern to me, because we must penetrate those traditional French markets. What unites them all—whether Tunisia, Algeria or Mauritania—is that they are fed up of the German export monopoly and of France repeatedly using them as dumping grounds for cheap exports, rather than engaging in bilateral economic co-operation and technology transfer. They are desperate to pull themselves away from their over-dependency on France and want greater economic exchange with the UK.

Photo of Andrew Griffiths Andrew Griffiths Conservative, Burton

I am enjoying my hon. Friend’s speech very much. He is making some valid points. Does he share my view that the collapse in the eurozone, the difficulties in European economies and the subsequent collapse in the potential marketplace for UK businesses have been drivers for UK companies to look at other markets? They have seen the potential in some middle eastern countries, the BRIC countries—Brazil, Russia, India and China—and the far east, and that potential is still to be tapped.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

Absolutely. I could not agree with my hon. Friend more, and I am sure that the Minister will reply to his point.

If I can achieve one thing from the debate, it will be that the Minister goes out and advertises for a top French export expert. I want the Minister to pinch him or her from the French export agency or a French export sector. I want him to find him or her, whoever is best, and pay him or her double what he or she is getting in France. Frankly, we will never get into the French markets unless we have French understanding, in both language and how French-speaking countries operate. We are not normally prone to saying wonderful things about France; but to start pinching their contracts, we need to understand how to do it. I want the Minister to take that point seriously, and if not, at least explain to me what his Department is doing to ensure increasing competence in the French language and the ability to understand how French contractual operations function in French-speaking north Africa, so that we are in a better position to attract contracts.

I pay tribute to the two Prime Minster’s trade ambassadors who are here. They do a superb job and are in a privileged position. To appoint them trade ambassadors, the Prime Minister obviously has great confidence in them, but how many people out there or in Shrewsbury know about trade ambassadors? I am sure that they know my hon. Friends Charles Hendry and for Gloucester (Richard Graham). It is important that we communicate with SMEs in Shrewsbury and elsewhere, so that if they are interested in exporting to Indonesia, for example, we can say, “There is a dedicated trade ambassador. This is his name. This is how you get in contact with him,” and do the same with Algeria and other countries. What work is the Minister’s Department doing to ensure greater understanding among SMEs of the vital resource of trade ambassadors and envoys that the Prime Minister put in place?

I have spent 20 years studying Libya. It is a country about which I am passionate. I have many friends there whom I treat as family. Before the last election, I wrote a book about Libya and the appalling human rights abuses there. My tremendous frustration with the previous Labour Government trying to curry favour with Colonel Gaddafi was such that I decided to write the book, highlighting the extraordinary abuse in Libya. I presented the Prime Minister with a copy two weeks before the 2010 election, and in 2011, I, along with others, pleaded with him to intervene in what we thought would be a bloodbath on the streets of Benghazi. Recently, I went to see him to highlight my concern about the ongoing instability in Libya.

I passionately feel that British companies should be exporting to Libya. The media circus has of course moved to Syria, but we must never forget that if we intervene in a country such as Libya, we have a duty and a responsibility to ensure that everything is done subsequently to help with security, building democracy and ensuring that residents have stability, so that they can trade with the UK.

From my friends in Tripoli, I get daily reports of kidnappings, violence and acts of terrorism; the Government still do not have control over large parts of the country. It is very important that we do everything possible to help Libya, by assisting her with security, and here I am drawn into the point made by Mr Clarke about our security industry.

There are many people who would like to criticise British security exports, but exporting the knowledge that we have accumulated in the UK over decades—on policing, border guards and training armies, navies and air forces—to a country such as Libya is a good thing. Surely, we ought, at the very least, to help Libya—with all its instability—with our expertise.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I thank the hon. Gentleman for securing the debate. His points about Libya and its instability are absolutely correct. Is he not concerned that vast amounts of the weaponry that was supplied—not just by Britain, but by France and many others—to various opposition groups under Gaddafi, or post-Gaddafi, have now found their way into Mali and many other places across north Africa? There is a genuine danger of further instability.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I certainly agree with the hon. Gentleman that a lot of equipment that the Gaddafi regime had has got across the border into Mali and other countries. We are deviating slightly from the subject of the debate, but I will say that most of that equipment is Russian. I am not sure what proportion is western-supplied arms.

I pay tribute to Mr Richard Paniguian, head of the UKTI Defence and Security Organisation, which is the military security part of UKTI. DSO is populated by people who have been in the armed services. They understand the products and are passionate about them and their work. If UKTI generally can understand how DSO operates and replicate the passion, energy, enthusiasm and calibre of the staff, we will be motoring further ahead.

I shall say a few things about British defence exports because I, for one, am not embarrassed that the United Kingdom exports security—it is extremely important for our country. Many hon. Members have in their constituencies, as do I, defence operators and contractors, firms on which many jobs and a lot of this country’s prosperity depend. The UK has some of the most rigorous export licensing procedures in the world. It considers each application on a case-by-case basis, taking into account, among other factors, the precise nature of the equipment and the identity and track record of the recipient. Her Majesty’s Government do not—and will not—issue licences if they judge that the proposed export would provoke or prolong internal conflicts, or if there is a clear risk that it might be used aggressively against another country or to facilitate internal repression. When circumstances change or new information comes to light, we can and do revoke licences if the export is no longer consistent with the criteria.

Recently, I had to defend the Prime Minister on the radio when he went to the United Arab Emirates and many people criticised him for trying to sell them some Typhoon jets. It would be the height of irresponsibility if the United Kingdom did not collaborate with our Gulf allies—sound, strategic allies such as the United Arab Emirates—to ensure that they had the capability to defend themselves against a belligerent neighbour who might attack them at any time. If countries such as the United Arab Emirates, Oman, Qatar and Saudi Arabia did not have British planes with which to try to pre-empt naked aggression against them from Iran or others, we would see increasing instability in the region.

You will be pleased to hear, Mr Betts, that I am coming towards the end of my speech, but let me just raise one or two remaining points. My hon. Friend the

Member for Romford (Andrew Rosindell), accompanied me on the delegation to Gibraltar, and I want to make a point that he wanted to make about the British Council. The United Kingdom has a global British Council network. Its work is very good, but we do not see it providing any information on UKTI. How is the Minister’s Department collaborating with the British Council, utilising its extraordinary network, to ensure that as well as sharing information about British language courses and all the other good things that it does, it communicates about UKTI and British commercial links?

I wish to talk very briefly about the European Union. The Prime Minister hopes to renegotiate various aspects of our position with the European Union, and I hope that one of those aspects will be how we go about international trading agreements with other countries. The first thing that happened to me when I was elected in 2005 was that I was sent to the World Trade Organisation talks in Hong Kong. The other two Members of Parliament with me were the hon. Gentleman who is now the Speaker and Lord Mandelson who, as trade commissioner, was representing the whole European Union. I found that very frustrating, because the United Kingdom did not have a voice. The UK was represented by Lord Mandelson, who was representing all 27 nations, but different countries mean different things to other countries—for example, Gibraltar and New Zealand are far more important to us than to Poland. I very much hope that there can be some movement on individual countries being able somehow to negotiate with countries of long standing, so that there is no one-size-fits-all criterion for the whole European Union.

Photo of Adam Afriyie Adam Afriyie Chair, Members' Expenses Committee, Chair, Parliamentary Office of Science and Technology

My hon. Friend makes a powerful case for a good review of UKTI and how it reports to Parliament and to the Government. Does he share my view that if we want to be a great global trading nation once again, rebalancing our exports further afield than the EU will mean that even some of the arguments about being too dependent on the EU will begin to evaporate? If we increase our trade with the rest of the world to 90%, leaving only 10% with the EU—not reducing the amount but the percentage—all of a sudden some of the concerns that people may have about our EU relationships will begin to ebb away.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I cannot thank my hon. Friend enough for that intervention, because it brings me to the exact point that I want to make. I was admonished by the shadow Foreign Secretary, Mr Alexander, on the Floor of the House for suggesting that at 47%—I may be wrong in that figure—the proportion of our exports that currently goes to the European Union is too high. I indicated that I wanted more of our trade to be with the outside world, particularly with the emerging countries. He took that almost as though I was somehow being disrespectful or did not understand the importance of the European Union to us, which, quite frankly, is a very outdated perspective.

The European Union will of course diminish in importance during our lifetimes—certainly during those of our children—to the extent that it will not account for half of our overseas exports, as rapidly emerging markets such as Brazil increase. The traffic is going one way. I completely agree with my hon. Friend Adam Afriyie.

I will end now with an example that relates to the Department for International Development. My last plea to the Minister is: what is his Department doing to work with DFID to ensure that more British products are sent overseas as part of the aid package? I will never forget that, when I served on it, the International Development Committee visited a village on the Ethiopian-Kenyan border and saw a water irrigation project. I met all the village elders, who told me through a translator, “Mr Kawczynski, we would like to thank you and the people of France for everything you are doing for us.” I said, “France! We’re British. What do you mean, France?” Of course, the non-governmental organisation hired by DIFD was French, all the equipment was French, Japanese or Chinese, and the people on the ground had no idea that the aid was British. Clare Short had stripped the British branding from the goods, but I am glad that there is now a British flag on our aid products.

What work is the Minister doing to ensure that, at every opportunity, DFID utilises British products—whether jeeps, water sanitation equipment or anything else? Even if the British product is 5% or 7% more expensive than its Chinese or French equivalent, let us do a cost-benefit analysis to understand the ramifications on the economy and jobs. We must ensure that, whenever we can, a Department such as DFID does everything possible to help British SMEs. I hope that hon. Members have recognised my passion for exports, and I look forward to the Minister’s reply.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North 2:11 pm, 12th September 2013

I thank Daniel Kawczynski for securing the debate and ensuring that we had the opportunity for this discussion. I will make two points that he will agree with, but he may have problems with the rest of my speech.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I thank the hon. Gentleman for that. As someone who grew up in Shropshire, I fully appreciate the beauties of Shrewsbury.

My first point is that the hon. Gentleman’s comments about language and the British approach to the rest of the world are absolutely right. It is depressing to find that the number of students entering university this year to study foreign languages has gone down, as it did last year, and that the quality and quantity of language training in many secondary schools is wholly inadequate. We need to start language teaching much earlier, in primary schools as well as in secondary schools, and to give greater emphasis to the learning of all foreign languages at university—not just the obvious European ones, such as Spanish, French, German and Italian, but the Chinese and Arabic languages, as well as Hindi, Bengali and others. We are a country that has to trade and export, and if German and French companies can send people around the world who are competent in all the local languages, we should be able to do the same. It is extraordinarily arrogant for us to turn up in a country and assume that, because we are British, everybody will want to speak to us in English, so we just have to be prepared to make those changes.

The second point on which I am sure the hon. Gentleman will agree relates to the engineering base of much of British trade with the world. It is obviously essential to have a high degree of understanding of engineering and science teaching both in schools and universities, and to recognise the status of engineering, which has done so much in this country; I am thinking of the railways, shipbuilding, motors and all the other aspects of engineering. Engineering is often seen as a dirty-hands profession, rather than a mainstream one. I can say that because I come from a family of engineers who closely followed that whole narrative. The basis of an awful lot of our past trade was the export of high-quality, high-tech engineering products.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

I entirely endorse what the hon. Gentleman said about languages. The issue is about improving not only exports overseas, but employment opportunities locally. A company in my constituency cannot recruit staff from Britain, but has to look overseas to recruit its foreign-language speaking staff. There are job opportunities right here in the UK for people who speak the foreign languages he mentioned.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I obviously completely concur with the hon. Gentleman, but I also recognise that many families in Britain who are bilingual in a variety of languages—I cannot put an exact figure on it, but I would think that about 70 different languages are spoken in my constituency—and many brilliant young bilingual people do not seem to get job opportunities in companies that are often trading with the countries that their parents came from. We should recognise that we have those resources in our society.

As I said in my intervention, I want to raise some arms trade issues, which are highly appropriate because the biennial arms fair, the Defence and Security Equipment International exhibition, is taking place in the London docklands. I think I am right in saying that more than 1,000 exhibitors—1,400, I believe—are now plying their wares.

I have many concerns, because if we compare the countries and companies involved in that arms fair in the London docklands with the Foreign Office’s report on human rights problems and abuses, we find an unfortunate coincidence between, on the one hand, the countries exhibiting at that international arms fair, countries that British companies that are exhibiting wish to sell to, or countries invited to send delegates, and, on the other hand, serious human rights concerns that the Foreign Office has drawn attention to, and countries with human rights records that it thinks we should be concerned about. Algeria, Bahrain, Iraq, Oman, the United Arab Emirates and Saudi Arabia are among the UK’s biggest customers for arms purchases, and Afghanistan, Turkmenistan, Uzbekistan and Libya, which were not on the list in 2011, have now received invitations, although human rights problems are legion in those countries.

An early-day motion was tabled two days ago, on 10 September, by Caroline Lucas, and has been signed by a number of colleagues, including me. It draws attention to the “Scrutiny of Arms Exports and Arms Controls” report, House of Commons paper 205, and states

“that the Government would do well to acknowledge that there is an inherent conflict between strongly promoting arms exports to authoritarian regimes whilst strongly criticising their lack of human rights at the same time”.

I look forward to the Minister’s response to that.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

The hon. Gentleman gave a list of countries about which concerns have been expressed, including the United Arab Emirates and Saudi Arabia, but has he visited those countries? I have taken to those countries delegations of parliamentarians, including Labour MPs. They interacted with non-governmental and human rights organisations there, and got a very different perspective on what is happening on the ground from the one reported by the British media in this country.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I have not visited Saudi Arabia or the UAE, but I have visited many countries on the list and others in those regions. Only half an hour ago, I spoke to a young man from Bahrain. He came to this country as a place of safety and security, because of how brutally he was treated in prison in Bahrain. He showed me the shot marks on his body—from birdshot—inflicted on him by the police because he was taking part in a demonstration for democracy in Bahrain. His view is that the Bahrain regime is propped up by Saudi Arabia, Britain and the United States, that it is an enormous purchaser of arms from this country and that it provides military facilities for both Britain and the USA, but it has an appalling human rights record.

Although non-governmental organisations in Saudi Arabia are doing their best, we must ask serious questions about the human rights record of Saudi Arabia; there is the use of the death penalty, the suppression of opposition groups, the denial of women’s rights and a whole lot of other issues. Even the hon. Member for Shrewsbury and Atcham could not claim to concur with the Saudi Government’s approach to human rights, or indeed support it in any way. We are the biggest arms exporter to Saudi Arabia, and the influence that Saudi Arabia has is absolutely enormous. We should think carefully on this matter, because if we export CS gas and crowd-control and anti-personnel equipment, as we do to nearly every one of the countries in the middle eastern region, they will be used against the legitimate democratic process that wishes to bring about the kind of society that we enjoy, with our freedom of speech and elected Parliament. If those people are shot by the equipment that we have supplied, are we not part of the problem? Are we not partly responsible for that oppression of human rights?

The hon. Gentleman tells us that the UKTI Defence & Security Organisation works very hard and does very well. I am not surprised that he mentions that it is heavily populated by people who were formerly in the armed services. Let me ask him this. The end-user certificate system and the monitoring of arms exports have been around for a long time, but there seems to be an incredible degree of leakage. As soon as one raises the issue, and says, “We shouldn’t be exporting arms to that country”, we are told that someone else will do it. They say that the French, Germans, Chinese or Russians will. Perhaps that is so; they probably will try, but we have to start somewhere and influence others. If we are exporting equipment that is used—it is often quite low-technology equipment—to oppress human rights protesters, we should ask ourselves some serious questions about it. Who are we to table motions complaining about the oppression of democracy in Saudi Arabia if we have supplied the equipment that oppresses the democratic wishes of people in the first place? I say that as an example; there are many others that can be used.

We can learn lessons from the Iran-Iraq war, which took place some years ago. At the time, as now, the west was fairly obsessed with supporting Iraq against Iran because of the presence of the ayatollah in Iran. I am not in any way defending the human rights record of the Iranian Government, any more than I would defend the human rights record of the Iraqi Government of that time, or indeed Iraqi Governments since. Britain quite happily provided equipment, support and political cover for Saddam Hussein in Iraq because it was opposed to Iran. The west did that, as did the US and lots of other people. In 1988, when the gas attack took place on the Kurdish people in Halabja, I raised the issue here in Parliament and was told that the situation was serious, bad and quite appalling. I then asked why we were involved in the Baghdad arms fair only eight months later. The Minister at the time told me that it was good business. We went ahead with that arms fair, and only two years later we were at war with Iraq. No doubt some of the equipment that was being fired back at British troops had been sold to Iraq by Britain. What goes around comes around.

There is a disproportion in many of the issues. Arms exports contributed, I think, 1.5% of the total exports of this country, yet they have a wholly disproportionate level of support from the Department of Trade and Industry and the Department for Business, Innovation and Skills, and there is a substantial degree of subsidy for the research done through the domestic purchase of the products. I do not wish to go on for too long, but I want to register the point that there are many people in this country who are deeply uneasy about our arms export policy, and about the export of surveillance equipment, high-tech planes and everything else that can be used to bomb and strafe people in civil wars in any part of the world, much as we deplore those civil wars and are concerned about what is happening about them.

I am always told, “If you raise all these issues, it will cost a lot of jobs in the arms industry.” I fully understand the employment issue, but I also fully understand the enormous, brilliant skills that we have that produce these weapons and the equipment that backs them up. None the less, many of the workers and I would rather the brilliance and skills were put towards exporting peaceful products, useful goods, energy-efficient goods and transport products, such as trains, planes, cars and ships, instead of getting us so deeply involved in the arms industry. Once we have supplied arms to an authoritarian regime, we cannot wash our hands of it and pretend that it will go away.

I want to know how much money has been spent on the exhibition in the docklands. Who authorised the invitation list, and who allowed many of the companies, including Russian arms exporters and others, to come to Britain, knowing full well where many of the products will end up, and the misery and suffering that is caused as a result of them? We cannot wash our hands of this or wish it away; we have to take responsibility for it.

Photo of Charles Hendry Charles Hendry Conservative, Wealden 2:25 pm, 12th September 2013

I congratulate my hon. Friend Daniel Kawczynski on securing this debate. He made a whole range of critically important points. Furthermore, he has given us the opportunity to discuss these issues and the important contribution that trade can make to our economic well-being, and I thank him for that. I also want to put on record my role as the Prime Minister’s trade envoy to Azerbaijan, Kazakhstan and Turkmenistan, and as president of the advisory board of the Russo-British chamber of commerce. Those are all unremunerated roles, but should be put on the record before my comments are made.

When I was a Minister travelling overseas, I was often asked, “Why do we not see more British companies here? Where are the British companies?” It was evident to me that right across the world there is an admiration for the skills, expertise and creativity of British companies, the brilliance of our education system, and the integrity and straightforwardness of British companies. Given the tenor of what my hon. Friend the Member for Shrewsbury and Atcham said, working with that enthusiasm in many countries to ensure a greater British presence should be absolutely at the heart of our trade and foreign policy. I am delighted by the extent to which the Government have been doing just that.

What I also saw, as a visiting Minister and subsequently, is that historically we have gone about this trade in a different way from the French, Germans and Italians. Part of that was because we did not separate out trade and politics. Too often, difficult political issues were allowed to become a real barrier to trade. My view, and that of the Germans, the French and others, is that trade is one of the best ways of creating more openness, greater transparency and a better trading relationship. The more that we can get British companies, accountants, solicitors and others in there, the better our prospects of leading those countries in the direction in which we want them to go.

There is a great deal that needs to be done. Our trade needs to be broadened to more countries. Our focus as trade envoys in the fast-growing emerging markets is an important part of that process. Through UKTI, we can help take businesses beyond the normal markets. For example, we can take them beyond Moscow and St Petersburg and get them into Tatarstan and some of the other Russian republics, which have been pretty closed to many British companies.

We need to ensure that we take the focus beyond the most expected industries. In the three countries in which I am trade envoy, the focus, inevitably, is on oil, gas and minerals. Let us look at the opportunities in design. Astana is holding Expo 2017, and we want British companies to build the infrastructure and the low-carbon transport system. Turkmenistan is spending half the budget of the London Olympics on the Asian indoor and martial arts games. Let us ensure that we capitalise on this extraordinary moment in our history when we are seen to have run one of the best games ever. I welcome such moves as part of the drive we are seeing through UKTI.

My experience of UKTI is of a lean, thinly spread organisation. I marvel at how much it is able to do, and at how every request that goes through is dealt with speedily. It is enthusiastic and shows real expertise in the countries in which we work. I link that with Scottish Development International. Clearly, UKTI does not cover Scotland in the same way that we are talking about, but around the world, the work of SDI should also be recognised.

However, those organisations can only do their work because of the way in which they work with other groups, including business groups and organisations such as the Kazakh-British Trade and Industry Council, the Turkmenistan UK Trade and Industry Council and similar groups that focus on bringing businesses together. Those groups are run by people with a detailed understanding and depth of knowledge of other countries, to try to advocate and advance the role of British companies. That must be seen as an integral part of this process, as is working with organisations such as British Expertise, which does a tremendous amount to lead trade missions and give people the chance to visit other countries for the first time. It recognises that for many people doing so, there is a nervousness, because there is a different language, culture and way of life. People going abroad do not want to do something that inadvertently offends their host, so going through an organisation such as British Expertise can be important. Of course, the chambers of commerce, such as the Russo-British chamber of commerce, can organise separate events to bring together people who are keen to do business and to take forward the bonds of co-operation between countries.

I part company with my hon. Friend the Member for Shrewsbury and Atcham on this point: I am not persuaded that such work would be best delivered by a stand-alone agency that has been taken out of Government. I want the Under-Secretary of State for Skills, who is here today, to bump into people from UKTI in the corridors of Nos. 1 to 19 Victoria street; to know that they are people who work directly for him; and to know that he does not have to go through the formalities of working with an agency and going through its chief executive or directors simply because he wants to say, “Remind me what is going on in Ukraine,” or “Tell me more about Algeria.” I want him to be able to call those people into his office at short notice and get updates, and to be able to capitalise and move quickly when an opportunity arises.

That direct reporting line to Ministers is absolutely central to the ability of UKTI to be successful. UKTI’s role is simply too important to be put at arm’s length from the core of Government; UKTI should be a part of the process of government. Also, UKTI’s dual reporting structure—it reports to both the Department for Business, Innovation and Skills and the Foreign and Commonwealth Office—is very valuable, because it engages more Ministers in its work. It ensures that more Ministers, when they are thinking of going abroad, are also thinking, “Which companies can I take with me, and how do we maximise the benefit for UK plc in the course of those visits?”

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I understand the point that my hon. Friend is making, and we will have to agree to disagree on this issue. However, only two members of

UKTI’s staff have been sacked during the last six years for non-performance; that is my understanding. Does he at least share my view that it is important that the chief executive of UKTI should be more empowered when it comes to the hiring and firing of UKTI staff?

Photo of Charles Hendry Charles Hendry Conservative, Wealden

That can be achieved within the focus of the Department, and we can certainly see if there are ways in which the chief executive of UKTI can be given the authority that my hon. Friend calls for. However, taking UKTI away from being directly under the responsibility of individual Ministers would lead to a loss of a significant part of the working relationship—a part that brings real benefits.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

Does my hon. Friend agree that the work that the Foreign and Commonwealth Office has done since 2010 to make trade, business and exports a real part of the roles of our diplomatic missions overseas has been hugely important, and that we are already seeing the results in increased exports to some countries that we perhaps had not traded significantly with before?

Photo of Charles Hendry Charles Hendry Conservative, Wealden

My hon. Friend brings me absolutely beautifully to the final part of my comments, which is on exactly that point. We are incredibly well served by our missions around the world, and by the extent to which our ambassadors and their teams are now very focused on industry and trade opportunities.

Much as I and other trade envoys would love to meet every company in Shrewsbury that wants to become involved in a country, my job is primarily to help open the doors of Government Ministers in countries where often there is not a regular flow of foreign Ministers going through, so as to push that trade process forward. However, we could not do it without the expertise and focus of others. The extraordinary growth that we are experiencing in some of those markets—there has been a doubling of trade with Russia, and a trebling of trade with some countries in the middle east—shows how that policy has been working.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

The hon. Gentleman’s point about the quality of British higher education and universities was very well made. On his travels, does he pick up, as I do, on the fact that there is great concern about the complications of applying for visas to study in Britain—the tier 4 visa system—and about the cost of higher education in Britain? From my experience of local universities in my constituency, I know that we are losing students to other places because of those complications, and the message that I get from those universities and from my travels is that we should simplify the system to continue to attract students.

Photo of Charles Hendry Charles Hendry Conservative, Wealden

The hon. Gentleman makes a valid point. In the countries that I have been going to, I have found that most of the students who come to the UK either self-pay or are on Government scholarships. Kazakhstan sends 9,000 students overseas, and 4,000 of those have come to Britain on full scholarships. We have been the country of choice because of the quality of our universities. There is a case for removing from the immigration figures the number of students who are coming here to study, because students can become an easy target when it comes to trying to bring down the immigration figures, when our ability to attract them is actually a tremendous national asset that we should be looking to capitalise on as best we can.

Nazarbayev university in Kazakhstan is partnering with Cambridge university and University college London, and I hope that in due course it will partner with Edinburgh university and other universities as well. All its students are taught in English; they are trilingual, speaking Kazakh, Russian and English. Our universities have a fantastic chance to make a contribution, and to ensure that the next generation of people coming through have a strongly pro-British approach, at least in part a British education, and a willingness to do business with this country.

The opportunities for us around the world are simply extraordinary and UKTI deserves a great deal of the credit for the progress that we are making in opening up markets.

Photo of Richard Graham Richard Graham Conservative, Gloucester 2:36 pm, 12th September 2013

Thank you, Mr Betts, for calling me to speak in this important debate.

I congratulate that towering presence among export-supporting MPs, my hon. Friend Daniel Kawczynski, on securing the debate. He is absolutely right to act as a champion for business, both in his constituency and around the country. There are a number of us here who like to be part of the ranks of export salesmen in the country, although sadly there are not so many in the Labour party as in the Conservative party.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

My hon. Friend refers to the lack of interest in this debate from the Labour Benches. I must say that we have double the number of Labour MPs for this debate that we had for my previous debate, because at least there is one.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

Well, there is only one apart from the shadow Minister. Last time, there were zero.

Photo of Richard Graham Richard Graham Conservative, Gloucester

I thank my hon. Friend for his mathematical assessment of the situation. He makes an absolutely valid point—everyone in the House should champion business and exports for UK plc.

At the heart of my hon. Friend’s argument was whether it is effective for UK Trade & Investment to straddle two Departments. That is an interesting conundrum for the Minister—the Under-Secretary of State for Skills—who, of course, straddles two Departments himself, although they are not the same two Departments that UKTI straddles. Personally, I am all in favour of activities that straddle different Departments. Cross-departmental activity is a good thing, because silos do not exist in the real world. The key to it all is having autonomy for UKTI rather than independence, which I think is what my hon. Friend Charles Hendry, who is the Prime Minister’s trade envoy to “the -stans”, was effectively advocating and supporting earlier. However, I will leave the Minister to comment on that.

What my hon. Friend the Member for Shrewsbury and Atcham was really advocating was the crucial importance of small and medium-sized enterprises, and the importance of exports to the future growth of SMEs. He knows as I do—as we all do—how vital that is to the growth of jobs, in Shrewsbury or in my constituency of Gloucester, where we have a long tradition of manufacturing and exporting. However, as I have said before in the main Chamber, in Gloucester we lost 6,000 jobs in business during the 13 years of my two Labour predecessors as Gloucester MP, although we have created 1,600 new jobs in business since 2010.

There is a great deal more to be done, which is precisely where SMEs come in, including the 500 members of the Gloucester branch of the Federation of Small Businesses and the members of many other branches all around the country. So how do we help SMEs to export? That question has been around for a long time. In fact, I wrote a paper on it as British trade commissioner for China, which, alarmingly, was 23 years ago. What has changed since then is the speed of communication and access to information through technology. We also have the new sectors and centres of UK expertise and, above all and most interestingly, the much higher standing of the brand “made in Britain”.

To bring alive that fact most immediately, at breakfast this morning I was with the CEO of the west Kowloon cultural district authority, which covers 40 acres of reclaimed land from Hong Kong’s harbour that will be transmogrified into a fantastic centrepiece for architectural design and creative arts from around the world, under a masterplan made by Foster and Partners. It will feature a huge number of UK stars from different sectors. The CEO of the cultural authority went yesterday to see some of the things achieved by Britain in time for the Olympics. He was staggered by the fact that the BBC sports hub was created in 21 weeks.

It is worth remembering that the west Kowloon cultural district authority has been in place for 16 years and has only just put a spade in the ground. The assumption that many of us had—I spent a large chunk of my life in that part of the world—that everything is done at great speed in Hong Kong and that nothing happens very fast in Britain has been turned around over the last few years by some of the achievements in this country. They help to reinforce the concept of “made in Britain” or “created in Britain” being a powerful brand, and they give our SMEs the chance to export to markets they previously might not have even thought of.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

Does my hon. Friend agree—I lived in Tanzania for 11 years, and I declare an interest as chairman of the all-party group on Tanzania—that one thing that we need to turn around is complacency? In Tanzania, we saw “made in Britain” being a huge advantage as a brand, yet the advertising for some of our products, which in those days included Land Rover, was miserable compared with their competitors, such as Toyota. There have been many improvements since then, but we need to do far more on marketing in target countries.

Photo of Richard Graham Richard Graham Conservative, Gloucester

I agree on the advertising and marketing point, but in the case of Land Rover there have been more significant changes, not least in the speed, efficiency and quality of product that Jaguar Land Rover provides.

It is a remarkable success story, as he would agree. I totally accept what he said about its presence in east Africa, which is a happy land in my experience.

To return to my point on the SME debate, in some ways it has not changed since I wrote that paper all those years ago. The debate focuses on what Government should do to best help SMEs export. For example, should they subsidise many trips abroad for SMEs so that they can get to know the countries to which they might export? Do the SMEs have the resources or the sales structure to be able to follow through, or are the trips an interesting but non-productive form of business tourism? Should we help only the larger companies, and through them indirectly boost SME exporters through the supply chains of those large companies?

Should we use Government offices for everything on export help, or can chambers of commerce be better partners for certain SME goals? In some cases, chambers of commerce can be more selective than Government can. If someone needs a lawyer in Jakarta and they ring up the British embassy, the embassy will be obliged to provide a list of every lawyer in town. What that person is really looking for is just one reputable company that can do the business. Government cannot choose a lawyer for someone, but a chamber of commerce might say, “Other companies like yours have effectively used x, y and z.” There are situations in which a chamber of commerce can be a more effective partner for SMEs.

What about where the Government should focus? Do we think that the work on strategic goals, such as EU trade agreements made successfully with, for example, Korea will add most value, or do we need an unremitting focus through UKTI on high value added opportunities in selected sectors, such as energy and resources, on which my hon. Friend the Member for Wealden is focusing successfully in the “-stans”? I am focusing more on infrastructure and aerospace in Indonesia. Do we perhaps need something like an army—I apologise to Jeremy Corbyn for using this metaphor—with a selection of weapons from which we choose the most appropriate for the opportunity and the market?

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

The hon. Gentleman should use the word “tools” instead.

Photo of Richard Graham Richard Graham Conservative, Gloucester

The hon. Gentleman is absolutely right: “tools” is a better word. Do we need a selection of tools? We need a flexible approach that can draw on the most appropriate tool in the right marketplace for the right opportunity, with an organisation led, as UKTI now is, by people with direct experience of leading businesses in their own right. I pay tribute to UKTI for recruiting an old friend of mine, Crispin Simon. He is now leading on SMEs and has led at least one FTSE 350 company in the recent past.

I agree with the Minister, Lord Green, that there is much to be said for a greater role for the chambers of commerce. That is happening and is to be welcomed. We must accept that during the process the quality of service will not necessarily always be even across the world. It will vary from country to country and from chamber of commerce to chamber of commerce.

I will make a small handful of points. First, it is important that UKTI’s GREAT campaign is publicised as widely as possibly to all Members of Parliament. It is a major marketing campaign. It is visually attractive, powerful and resonates in different countries. I launched it in Indonesia. I hope that the Minister will confirm that the regional offices of UKTI have invited every MPs to the GREAT launch in their area. I am delighted to help the launch in Gloucestershire next Tuesday. All MPs can and should play a role in encouraging their SMEs to export by joining the GREAT campaign.

Secondly, UKTI is already doing huge good work. My hon. Friend the Member for Wealden rightly paid tribute to that work, as did my hon. Friend the Member for Shrewsbury and Atcham, on the back of his powerful paper, which he spent much time and effort in producing. I am grateful to him for doing that. They are both right, because some remarkable things are going on.

Returning to the west Kowloon example I gave earlier, it is most recent in my mind from breakfast this morning that two small companies that I had never heard of before—Keepthinking and North, which are both based in Clerkenwell, in the east of this city—have won significant contracts with that project. That is a good example of how companies that may not be known to me or other hon. Members here today are winning contracts abroad with the help of UKTI. That is important, because we already know about certain familiar exports, such as the wings, engines, landing gear and coatings and so on that make up 38% of every Airbus and are made in Britain. It is important to remember that those parts are made in Britain, because the export value is always credited to France, but it is equally important that we understand that unknown companies in new sectors have real opportunities overseas.

There is an opportunity, which I hope the Minister will agree to take up, for UKTI to hold a seminar, possibly in Parliament—we know that it is difficult to move MPs out of our comfort zone, and we are required by the Whips to attend debates and vote and so on—to update MPs on some of the opportunities in new sectors and some of the new companies across the country in sectors such as creative media, medical science, nano-science and education.

I have been promoting two things in Indonesia with a degree of success. I hope that there is more to come. The first is a fantastic computer software tabling programme for universities. There are more than 100 universities in Indonesia. The software was created by a Cambridge-based company, is high-quality and could be exported to other parts of the world. The second is a quality assurance agency, which is highly rated internationally. It is based in my constituency and is doing work in many countries across the world, but it could work in others as well. Let UKTI educate MPs, who then could not possibly complain to the Minister that they did not know what UKTI was doing or what new opportunities there were.

Thirdly, in countries in which we have both a UKTI and a Department for International Development presence, I believe we can do more to act as a united UK plc. The story of the first biodiesel plant in Indonesia, made by the wonderful Gloucestershire-based manufacturer Green Fuels—I am taking the Indonesian ambassador to Green Fuels next week—is a good example of a business contract by a private business that is totally in line with our DFID objectives for Indonesia. The contract should open further opportunities for the UK in a general sense, and I believe there are other such examples elsewhere in the world. A more united, working-together spirit by DFID and UKTI could lead to exciting results.

I finish on a note as positive as those of the Members who spoke earlier. The help given to me, as one of the Prime Minister’s trade envoys, by our embassy in Jakarta, which includes both UKTI and the British Council, has been powerful. We are all working together on strategic and tactical goals that will benefit both Indonesia and the UK, which is important. A win-win solution is much more attractive than simply trying to thrust a product at some hapless overseas country.

Prudential, for example, derives significant earnings from its Indonesian operations, and in return it provides insurance and pension solutions for many millions of Indonesians. Prudential employs no less than 190,000 people in that great archipelago. That is what UK companies can achieve for themselves, starting from nothing not very long ago. That is what companies can achieve for UK plc and for their host country, which shows the value of inward investment—exported investment from the UK. Such investment offers great opportunities for British SMEs to service, in this case, Prudential either in the UK or overseas, and from that base to expand and service other financial institutions. British service companies can be very successful.

Debates such as this are a great marketing opportunity for trade envoys, so it is appropriate for me to finish by saying that if Members here today, or those who read the debate later, have specialist companies in their constituencies that believe they have something to offer Indonesia, they are of course absolutely welcome to contact me. I will do my best, with UKTI, to try to help those SMEs export a little bit more.

Photo of Adam Afriyie Adam Afriyie Chair, Members' Expenses Committee, Chair, Parliamentary Office of Science and Technology 2:52 pm, 12th September 2013

I do not intend to detain people too long, but given the passion, energy and skill that my hon. Friend Daniel Kawczynski has put into the report on UKTI and its very good recommendations, I want to say a few words in support of what he has been doing. I also want to echo some of the comments made today by the trade envoys and others.

I welcome my hon. Friend’s work and the passion with which the Conservative-led coalition Government, particularly in the Department for Business, Innovation and Skills, have been pursuing the export and economic growth agendas. We all want economic growth, which comes from two places. It comes internally by reducing taxation, improving competitiveness and removing regulation—a good stab is being made at that—but it also comes from trade, exports and inward investment from abroad. His report highlights that we perhaps require a bit more focus on UKTI’s role in bringing about the economic growth and competitiveness that we all want.

We all want Britain to be a great global trading nation, and if that is to be our position in, say, 10, 15 or 20 years’ time, we must up our game on exports. At the moment, we still have a negative balance of payments. That is improving, and the Government have done good work in that area, but the balance of payments is still negative. In a period when we have a weaker currency than previously, exports should be growing at a far faster rate.

UKTI must play its role, and it has a primary function on exports. As chairman of the all-party group on space, it is clear to me that Britain has amazing industries in our space, science and engineering sectors, particularly in robotics. We often talk about the magnificent, double-digit economic growth in China and some of the emerging economies, but our own economy has a major area in which economic growth has outpaced many of those nations. We have seen double-digit economic growth in the space sector and related industries for the past 10 years, so we do not need to look to China; we can look to our own nation to work out which elements of what we do here are exportable. The space sector and the products and services therein, of course, are eminently exportable.

[Sir Roger Gale in the Chair]

We also export our education system, our universities and academic institutions and our research. We punch above our weight on research—we have 1% of the world’s population and 12% of citations and Nobel prizes. The Open university is a great example of a British export to the rest of the world. Again, both BIS and immigration officials can play a role on both the ease with which visas are handed out and on the way in which we advertise our wares abroad. Tourism, of course, is another area that could be classed as an export—tourism imports money into our country, at least.

UKTI also has a major role on inward investment. There has been an interesting political narrative over the past decade or so. We have been a little shy and embarrassed about wealth creation. When companies make massive profits and when wealthy people come to invest in Britain, we are all a bit concerned and not quite sure whether it is a good thing or whether we should be nervous or concerned. Unless we love wealth creation and unless we love and welcome people who have the cash to invest in our businesses, we will not go very far very fast because, as we know, the banks here do not yet have money available. Despite the good work of the funding for lending scheme, there is still not sufficient cash available for UK SMEs and exporting companies to produce their wares and make their way.

We must ensure that UKTI is working to attract foreign investors to Britain. Part of what I like about the report, and about a lot of the background work on it, is that the report recognises that it might be a good idea at some point for UKTI to have some accountability. For a region, an area, a country or a district, UKTI should answer the question, “How much foreign investment have you attracted into this area over x or y period?” Several Members have asked questions along those lines to up the ante and to ensure that Ministers are aware that this would be an important way to focus the minds of those at UKTI on delivering results. They do some great work in facilitating meetings at overseas trade shows, working with DFID and the Foreign and Commonwealth Office and supporting Ministers, but the spotlight would focus sharply on the outputs for inward investment if UKTI consistently answered the question of how much direct foreign investment it has seen or facilitated within a region.

My one other general point is on the balance of trade between the EU and the rest of the world. In many ways I understand the Foreign Secretary’s response to the suggestion that we should somehow minimise our trade with the EU, if that is how he heard the question—I say that to him in a good mood. I am certain that he, the coalition Government and all of us would like to see a massive boost in trade with the rest of the world, and with the EU, too. If there were a massive boost in trade with the rest of the world—the BRIC countries and elsewhere—the proportion of our trade with the EU would naturally reduce. Why is that a good thing? Because the rest of the world is growing a lot faster than the EU at the moment and because overall trade would be increased, preferably disproportionately, to the rest of the world.

We have some great connections across the world. My father is from Ghana, although I was born and raised here. Ghana is the gateway to Africa, and it uses the English language and has a similar legal system and attitude to life. There are all sorts of opportunities in such Commonwealth countries, with which we have a natural affinity without the language barrier that many of us here have been hesitant to breach in the past. Therefore, even in our relationship with the European Union and the judgment that we shall make in the referendum, UKTI has a bearing. If it does its job well, we as a nation will feel much more confident in making bold decisions.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

My hon. Friend made a point about Ghana and his family coming from there, so he obviously has a great interest in and understanding of that country. I was born in Warsaw, Poland, and speak Polish fluently, but at no stage has UKTI asked me for any advice about Poland or to take part in any projects involving Poland. Does he agree that UKTI should better understand the interests of Members of Parliament, specifically in such countries, and utilise us more?

Photo of Adam Afriyie Adam Afriyie Chair, Members' Expenses Committee, Chair, Parliamentary Office of Science and Technology

That is absolutely right. With the trade envoys, for UKTI to focus on MPs who might have natural connections or affinities with countries with which we want to trade would be a good step forward. I therefore welcome my hon. Friend’s important work on the middle east and north Africa council, which connects nations together and makes for a more natural route to follow.

As others have pointed out, we have a wonderful brand here in Britain. I am MP for Windsor, where we have a royal presence. The British brand abroad is exceptionally strong, and sometimes it can be frustrating when one is abroad, whether on parliamentary, family or business trips, and one realises that the British brand is not being displayed that well and is not that easily accessible. There is good work to be done in raising our profile abroad, and UKTI has a role to play.

The report is excellent, and I hope that the Government will take the time to respond carefully to each recommendation. Not all of them may be successful, but the direction of travel in each is absolutely right. There might not be a separate agency, for example, but there could be autonomy within the existing structure.

Complicated matrix reporting might not continue, but it could be adjusted to make UKTI more accountable to Parliament and more directly visible to Ministers.

I welcome the report, and I hope that the Government will go through its recommendations carefully, although I appreciate that we will have a general response today. For me, inward investment is key. We do not have the cash in our British banks, so let us get it from those who have it elsewhere in the world, to boost our economy here. They will do that with good cheer and good will if we let them recognise that we value and like the fact that they have created wealth and are prepared to spend it here. If we want the UK to be back on top, UKTI must up its game and play its part. I very much welcome the report and thank my hon. Friend the Member for Shrewsbury and Atcham for securing the debate.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford 3:02 pm, 12th September 2013

It is a pleasure to serve under your chairmanship, Sir Roger, and to follow my hon. Friend Adam Afriyie. I want to dwell for a moment on the point that he made so forcefully about the importance of inward investment and to pay tribute to the work of UKTI, which has seen an advance in British exports and inward investment over the past few years. Those two things are intimately connected, as my hon. Friend says, because a lot of that inward investment results in exports for the UK.

To take my constituency and my county, Stafford and Staffordshire, our major private sector employer is a French inward investor, Alstom, which is a major exporter from the United Kingdom. Only last year, it won a large contract to supply the Swedish electricity authority with transformers. Another major employer is Perkins, which is part of the US Caterpillar group. I believe that at least 90% of its Stafford production of large generator sets is exported around the world to countries as diverse as Afghanistan, Nigeria and South Africa. Evo-Stik is a French direct investment, which is now owned by the Total group. While it is a consumer product company it, too, has exports. Broadcrown in Hixon also makes generator sets that are sold all around the world, and that company employs almost 200 people in my constituency.

Jaguar Land Rover, to which reference has already been made, is in the process of building one of the largest engine factories in the world in South Staffordshire, on the border with Wolverhampton, with excellent support from both councils. That plant will be of huge benefit not only to employment for the people of Staffordshire and Wolverhampton, but to the United Kingdom, because much of its production will go into cars that are eventually exported. JLR, under its Tata ownership, contributes a huge amount to British exports. The link between inward investment and exports is therefore important, and UKTI absolutely understands that the two things must not be seen in separate silos.

We have our own British manufacturers in my area. JCB is one of the largest and best known private British companies, employing the best part of 10,000 people in the UK. It not only exports, but manufactures overseas, so it benefits workers not only in the United Kingdom, but in those other parts of the world where it manufactures—India, China, South Africa and Brazil.

There are also the pottery companies in my area. People tend to think of ceramics as a business of the past but, when I last looked, pottery and ceramics were a net exporter for the UK—we export more than we import—because we export high-value ware that lasts much longer than other products and that is appreciated throughout the world by hotels, catering businesses and individuals.

That brings me to our own procurement in this country. Sometimes, those who procure—in the public sector in particular, but also in the private sector, such as those companies that have a big responsibility for our electrical infrastructure—tend to take a short-term view on value for money. They look at something and say, “This will wear out in 10 or 15 years, so we need to buy something that is cost-effective over 10 or 15 years.” In our country’s transport and electrical infrastructure, some transformers that were made in Britain—perhaps by English Electric, then General Electric—have been in place for 40 or 50 years. In effect, they have been working for free for the past 20 to 30 years. Customers overseas understand that buying something marked “Made in Britain” means that they will get a product that will last not five or 10 years, but 20, 30 or 40 years. They are therefore prepared to pay a premium for our products, yet our own organisations, which have a fairly short-term view when procuring for infrastructure, are not prepared to do so. I ask the Minister to consider how we can persuade British organisations, such as National Grid, to take a long-term view of the value of British products and to realise that they will last for not only 10 or 15 years, but 20, 30 or 40 years, as our overseas customers know that they will.

I also want us to concentrate on learning from the country with the best record in the world on exports: Germany. We need to learn from the Germans, because they do some things that we do not, but that we need to do. As I said, Germany’s Hermes export finance scheme covered €29.1 billion of exports last year, whereas UK Export Finance covered a little more than £4 billion.

The Germans also have a development bank, Kreditanstalt für Wiederaufbau, which was set up after the second world war and operates specifically in Germany as well as overseas. In Germany, it often enables the Mittelstand, or medium-sized companies, to access credit and equity. We do not have an equivalent here. If we are to build up our middle-ranking companies—the equivalent of the Mittelstand—which would probably be the ones to do most exporting, they need to have access to the kind of finance that their competitors in Germany can obtain through KfW and the banking system. I therefore urge the Minister to consider whether the UK business bank, which I welcome, could be developed into the kind of financial institution that KfW so ably represents in Germany.

That was all I wanted to say. In short, we should concentrate on long-term thinking in the UK. If UK organisations are not prepared to buy UK products, because they are only thinking about short-term value for money, how can we persuade our overseas customers that they should buy our very good products? Secondly, let us learn from the Germans. They are the best exporters in the world, so if we want to rival them, we have to look at why they are so successful.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills) 3:09 pm, 12th September 2013

May I begin by saying what a pleasure it is to serve under your chairmanship again, Sir Roger? I thank Daniel Kawczynski for his hard work in producing his important report. It is well researched, with significant real-life observation of the difficulties businesses have experienced in securing help to export, and it provides astute and telling recommendations.

As the debate is on trade and investment, let me also take the opportunity to thank the outgoing Minister for Trade and Investment, Lord Green. In all his dealings with me, he has been the epitome of courtesy and decency. He has been admirably non-partisan in his approach, wanting only what is best and most advantageous for Britain and its businesses. I have not heard a single business man or woman speak ill of Lord Green—quite the reverse, they are unanimous in their praise and admiration of him. Opposition Members will sorely miss him, and I hope the Minister will pass on our best wishes to Lord Green as he reacquaints himself with his grandchildren.

I mentioned the non-partisan approach being taken to this topic, and there is not much dissent from the notion that the House—indeed, the whole country—would like to see an export-led recovery. There is a huge world of opportunity for British business. The global economy is expected to double in size within a dozen years. The number of middle-class people in the world, with higher consumption and higher disposable incomes, will triple to 5 billion, and they will all be eager to buy iconic British brands and fantastic British products. As has rightly been said several times this afternoon, the British brand is strong and well respected in international markets. Every constituency has businesses that are dynamic, productive and eager to sell abroad. Given its mercantile history and current strengths, this country should be at the forefront of modern exporting nations, but it often feels as though that is not the case.

Exporting is good for business. Actually, it is beneficial not just for individual companies’ short-term bottom line, but for the prosperity of the wider economy and society in general. All the evidence shows that an exporting business tends to be a successful, sustainable and socially aware business. An exporting company tends to employ more workers and offer better wages than an equivalent non-exporting company. Companies that export have been shown to be more productive and to invest more in research and development, thinking more about the long term, and they are anxious to capture and maintain international competitiveness. I want to concentrate on that point, because there is a strong link between innovation and exporting.

Export discipline can demonstrate whether a firm or a product can move away from the often insular domestic market and navigate the harsh seas of the global marketplace; it will demonstrate how competitive a business or a product actually is. A business with a desire to export overseas has the discipline and the ambition to develop new products and services that will better serve the new export markets. It will be sensitive and responsive to customer wishes—always the hallmark of a successful business. We therefore have the possibility of a virtuous circle for exporting businesses, whereby they are exposed to new demands, fresh ideas and increased competition, which in turn makes them leaner, more productive, more outward-looking and better disposed to thinking about new product development and improved profitability. We should all encourage that as much as possible.

In that general context, there is a lot of political agreement over the current strategy on trade: we should emphasise the need for an export-led recovery; move attention away, although not entirely, from the low-growth, traditional markets of the EU and the developed world; and consider the emerging, high-growth areas, by which I do not necessarily mean the ones that are often trotted out, such as the Brazils, Russias, Indias and Chinas—we may have missed a trick on that—but the next 11 countries, such as the Nigerias, Thailands and Vietnams of this world. Those countries—in Africa, the middle east, south-east Asia and Latin America—will experience very high growth. Britain has historic links with all those regions, so we should be exceptionally well placed to take advantage of them and to seek deep, long-lasting trade relationships with the growing markets in those countries.

However, the key point, and the central charge of the hon. Gentleman’s report, is this:

“There remains a gulf between the target set, and the tangible progress made thus far”.

An export-led recovery, with a greater proportion of our trade coming from high-growth markets outside the EU, simply has not materialised. Last week, the Office for National Statistics published data showing that the UK trade deficit was £3.1 billion in July, compared with £1.3 billion the previous month. That is the largest trade deficit since October 2012. The value of non-EU exports fell last month by £2.2 billion, to £11.8 billion.

The Minister will undoubtedly say that one should not make judgments based on one month’s data, and he would be right. However, the fact is that, based on longer-term trends, we have not made the substantial progress everybody wants to see in growing our way towards sustainable recovery through trade. The value of exports to non-EU countries is more or less where it was two years ago, when the UKTI strategy was launched. We have run a substantial trade deficit for many years—some Governments have fallen as a result of adverse balance of trade announcements—and the trade gap in the past four or five years has, more or less consistently, been about £8 billion. Despite the Government’s rhetoric, which the Opposition support, they have essentially failed to change that trade position. As the ONS said of UK trade performance,

“annual growth has slowed considerably since 2010 and 2011 when growth was seen to accelerate as part of the global recovery from the financial crisis in 2008 and 2009.”

Given the recent fall in sterling’s value, we could and should, as Adam Afriyie said, have had a boost to our exports, as the pound’s fall made our products cheaper to the rest of the world. Does the Minister share the disappointment of the House and the Bank of England over Britain’s trade performance? Does he concede that Britain should be doing better on exports than it is?

In their White Paper and the UKTI strategy, the Government announced the objective of doubling British exports to £1 trillion by 2020, which is quite commendable, and we would support that. However, as the report by the hon. Member for Shrewsbury and Atcham says, the Government are expected to fall significantly short of that target—by about £150 billion. Does the Minister accept that forecast? Does the doubling of UK exports to £1 trillion remain a Government objective, and is it still achievable? Will he take this opportunity to reaffirm or revise the value of UK exports the Government are working towards for 2020?

As has rightly been said several times, the way in which UKTI interacts with companies and their products is vital to our success, or otherwise, in boosting exports. Companies in every constituency will be at different stages. Some will never even have thought of exporting, and they need to hear—often at a very basic level—of the real potential benefits for their business. Some will already appreciate the value of exporting and will be seriously and actively considering it, but they need to make that first step, so they need practical help with making contacts and mitigating risks. Others will be well versed in exporting, and they will be familiar with, and confident about, supplying overseas, but they may need help to identify potentially lucrative new markets and territories. Identifying what stage a company is at and ensuring that UKTI’s service is meaningful to it at that stage are the hallmarks of whether UKTI is successful in boosting exports.

The hon. Member for Shrewsbury and Atcham’s report rightly makes clear the need for UKTI to provide tailored services that are relevant and applicable to businesses at their particular point in the export cycle. Is the Minister therefore confident—this point is raised in the report—that UKTI is proactive enough and has the right skill set, processes and individual product lines to achieve the objectives we all share on boosting exports?

I want to think about things from the viewpoint of a company in Hartlepool or Shrewsbury with a great product that it wants to export. Charles Hendry, who was a great Energy Minister, knows that we are a centre of excellence for energy and for oil and gas companies. If a small company in Hartlepool was thinking about supplying the Kazakhstan oil business, what on earth would be the right way to help with that? What on earth should the company do to learn about exporting—especially if, given that it was a small firm, it was juggling many other things? Those running the company would worry about lack of contacts, possible language barriers, regulatory and taxation problems in a foreign land, and the fear of not being paid from halfway around the word. How would UKTI identify such a company in my constituency or any other constituency as a potential exporter? How would it get the astute understanding to know what the business was about, and provide, at the time it was needed, a bespoke service to help it navigate through the challenges of exporting?

The hon. Member for Shrewsbury and Atcham referred to skill sets in his report. I do not want to disparage the skills and expertise of UKTI staff. The hon. Member for Wealden said that they were lean and thinly spread—if only I were that lean and thinly spread. However, I want to ask the Minister a question on an important aspect of the issue, which we hear a lot about with respect to more general Government support and advice for business. What proportion of UKTI staff have practical, tangible experience of running a business and exporting? Are there staff in a position to offer tailored, relevant advice so that firms will respect their opinion, because they have been there, done it and, probably, exported the T-shirt to prove it?

Communication and dissemination of information seems to be a particular weakness. The hon. Gentleman’s report cites another report, from the Federation of Small Businesses, stating that only one fifth of small firms export, and that that rate has not changed since 2010. That statistic causes me concern, because on that basis the penetration of UKTI’s message to small firms has not materialised.

The hon. Gentleman’s report also cites the conclusion of the Institute of Chartered Accountants in England and Wales, of which I am a member, that knowledge of UKTI in the business community is “worrying”. Some 68% of small and medium-sized firms and—this astonished me—81% of large firms are not familiar with UKTI. What can be done to address that big weakness? Will the Minister take the opportunity—with what I think would be the full support of the House—to make sure that the export week coming up in early November will be strongly communicated in every constituency and media outlet? That would show that Britain is open for business and the world wants to trade with us, and it would give British-based companies the opportunity to do so.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I am grateful to the hon. Gentleman for giving way. He has hit the nail on the head. I am delighted to have heard a Labour spokesman make those comments, and I hope I was right in understanding that he agrees it would be better for UKTI staff—and would enhance their credibility—if they had direct previous experience of running companies and exporting. One of the biggest problems is that historically many people in UKTI have come from the civil service and have not had experience of running small businesses or trying to export. Does the hon. Gentleman also agree that those staff need a salary structure geared around targets, so that there is an incentive to go the extra mile for additional business?

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

I agree with a lot of what the hon. Gentleman says. The Hartlepool company wanting to export its products to the oil sector in Kazakhstan would respect UKTI if the official could say, “I’ve been there; I know exactly what you are going through. These are the problems that I had to overcome when I was running my own businesses, and you may want to consider them.” When companies feel that there is relevance, there is immediate buy-in. I shall come on to the question of how UKTI staff are remunerated. It is an important point that the hon. Gentleman covered in his report, but at this stage I would say the emphasis on quality as opposed to quantity in UKTI is vital and needs to be attended to.

I want to return to the question of how UKTI can be more meaningful and provide a more bespoke and tailored approach, as well as how the Government can adopt a more co-ordinated approach across Whitehall and central and local government. I am interested in the Minister’s thoughts on what happens when a firm must interact with the state on some formal point such as registering for VAT for the first time, filing a tax return or paying business rates. How can we make sure that the state can recognise that firm as a potential exporter and be proactive about outlining UKTI’s offer to it, understanding that the firm has reached a certain stage in its business life and growth and asking “Have you thought about overseas markets as the next step?”? Can we nudge that to happen when businesses must interact?

UKTI has a target to contact 50,000 firms annually by 2015, which seems to me at once ambitious and far too low. Given current trends, I do not think it is likely to be achieved. The Minister may correct me on the precise, up-to-date figures, but I think that we have reached about 32,000 firms, with two years to go. Is the Minister confident that he will achieve his target, and, if so, on what does he base that confidence? On the other hand, if British ambition is to increase and British firms are to export at the EU average rate of one in four, UKTI needs to make meaningful contact with about 250,000 extra firms, based on the country’s company base of about 4.8 million enterprises. I am interested in finding out from the Minister how the figure of 50,000 was arrived at, and whether UKTI should be stretched more with respect to its active involvement in seeking out firms.

I want to interrogate further what a contact is. Is it a passive, single phone call? Is it saying, “We have a website; please have a look at it”? Is it a visit to the firm, actively delving, and saying, “What are your ambitions? What do you want to achieve? How can we help you do that?”? The report, as I mentioned, says that the emphasis is on quantity over quality, and I think that is a fair point. My central question, therefore, is how UKTI provides meaningful engagement and contact with firms, and how that contact is maintained and deepened over time. Crucially, instead of contact being reactive and passive, how are leads and contacts followed up? The report is full of examples of a lead or inquiry not being followed up. I was particularly dismayed to read about a national trade association giving UKTI a list of about 300 members that were export-ready and seeking help with their first step, so that UKTI would pursue them.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

The hon. Gentleman is nodding as he recalls what he said in his report, which says that after four months, no contact had been made by UKTI with any of those companies. If that is what is going on, this country is undoubtedly missing lucrative commercial export opportunities, so what sort of meaningful engagement and follow-up is being carried out?

What work is done after trade delegations? The aftercare is the crucial bit to ensure that leads are picked up and vital relationships maintained. Jeremy Lefroy mentioned Germany. France and Germany are masters of maintaining long-term relationships overseas, for the purpose of starting and developing export markets. What are we doing to achieve the same? He also talked about financing exports. Many companies struggle to get the necessary finance to export, whether that is loans to expand production or research new markets, finance to pay for the order, or insurance against bad debts in overseas markets.

A report on finance and exports by the House of Lords Select Committee on Small and Medium Sized Enterprises said that banks were not interested in helping with export finance, and that they demanded that directors put up their home as security. The report refers to Steel Services Direct Ltd, an exporter, which stated that

“trying to expand in an overseas market whilst worrying about losing your home would put off most people”.

I agree. That is part of a wider context in which bank lending to businesses has contracted in 21 of the last 24 months. I appreciate that UK Export Finance has introduced new products with the intention of addressing the issue, but the hon. Member for Stafford is absolutely right in what he said about scale and penetration when it comes to ensuring that firms have export finance available.

Will the Minister tell the House how many small and medium-sized firms have benefited from each of the new products—the bond support scheme, the export working capital scheme and the foreign exchange credit support scheme? What was the result of the review of those products a year after their launch, and what variations are being planned? Crucially, will he outline what role the business bank will play in encouraging exports when it is finally up and running properly? What sort of time scale are we talking about, and what, if any, new products will be launched?

I keep referring to the hon. Member for Stafford, and I do not want to embarrass him by agreeing with him all the time, but he rightly mentioned the link between inward investment and exports. In my region of the north-east, over the past 20 years or so, and certainly over the last five years, there has been great work from Nissan, which has produced new developments, become ever more productive, and has a focus on exports—some 85% of Nissan cars made in the north-east are exported. Nissan is not seen as a foreign company; it is seen as a north-eastern company that is exporting to the rest of the world. The hon. Gentleman’s point about inward investment having a virtual loop into export markets is well placed.

Does the Minister share my concern that we are slipping in the rankings when it comes to competitiveness and attracting foreign direct investment? Ernst and Young’s attractiveness survey this year said:

The UK slipped behind Germany…for the first time in new projects…In another first, Germany” now outperforms

“the UK in attracting Sales and marketing investments, a traditional area of UK” strength and leadership. Those are concerns. We must always be vigilant to ensure that we maintain our competitiveness and attractiveness, and Germany is snapping at our heels. What is the Minister doing about that?

The report from Ernst and Young also states that investments in England, outside London, were 24% below their 2010 level and that it

“appears that the abolition of the RDAs may be starting to undermine not only the regions in which they operated, but also the UK’s ability to sustain its overall leading position for inward investment.”

It goes on to say that if it continues,

“The weakness of the English regions could damage the UK’s overall ability to attract FDI, in comparison to countries such as France and Germany, which have much more balanced regional portfolios.”

Is the Minister worried about that?

There has been discussion about ensuring that industrial strategy can have a co-ordinated approach to attracting foreign direct investment and exports. I do not want duplication, but is the Minister worried that with abolition of the regional development agencies there seems to be a real loss in confidence in the regions? We have been lucky in the north-east and have attracted Hitachi to help with train production, but that started with One North East. Could it happen again with the loss of the RDAs and their replacement with local enterprise partnerships?

I want to refer to points raised by my right hon. Friend Mr Clarke, and by my hon. Friend Jeremy Corbyn, who made a characteristically passionate speech. He referred to the defence and security export business, but I want to widen that to include the wider export licensing process. The Minister is obviously aware of reports that surfaced earlier this month showing that his Department, the Department for Work and Pensions, granted export licences for chemicals to Syria in 2012. Those chemicals could have been used in the manufacture of chemical weapons. Does he accept that there should be a full explanation of why the export of those chemicals was approved, especially when there were real concerns about the regime before those licences were granted?

We must make sure that we have absolute confidence in the export licensing process and can ensure that Britain is a world leader in fairness and honour when selling products around the world. Is the Minister looking again at the process to ensure that we do not sell to regimes such as Assad’s? What is being done in response to those concerns?

At a time of rapid and irreversible globalisation, there are huge opportunities for British export companies. It has already been said that much of this country’s historical wealth, whether in Elizabethan or Victorian times, was based on using this country’s skill, imagination and talent to sell our goods to the rest of the world. I passionately believe that in the 21st century, there is greater opportunity than ever before for export markets to provide scope for greater profits for British firms and higher skills and higher wages for British workers.

The role of the state is to offer a sustained, long-term, proactive, tailored and co-ordinated approach to help British-based firms to achieve their potential. We are missing an opportunity to achieve all that we could at a time when other countries—our rivals—are eagerly jumping on those same opportunities. The report of the hon. Member for Shrewsbury and Atcham is an honest, balanced and fair account of where improvements need to be made to help boost exports. We all share the sentiments and passion that he has expressed today. I hope that the Minister will act on a lot of what the report says.

Photo of Matthew Hancock Matthew Hancock The Parliamentary Under-Secretary of State for Business, Innovation and Skills, The Parliamentary Under-Secretary of State for Skills 3:36 pm, 12th September 2013

It is a pleasure to serve under your chairmanship, Sir Roger, not least because of the value of our debate and the sheer number of interesting contributions. I welcome very much the work of my hon. Friend Daniel Kawczynski and his report. I had read an electronic copy, but now I have a hard copy to take away.

I shall try to respond to all the points that were made, but I start by saying that the most significant speech this afternoon was that of Mr Wright, who demonstrated passionately the strength of feeling in favour of bipartisan openness in Great Britain. As a country, we can be proud that we have a political tradition across all major parties of openness to trade and the value of trade. The argument about the benefits of trade—not just financial, but in terms of innovation and the improvement of business practices—was powerful, and long may that cross-party openness to trade continue.

I agree strongly with the hon. Gentleman about my noble Friend Lord Green, who has worked extremely hard, travelling much of the time, not only directly to open doors along with the Prime Minister’s trade ambassadors, two of whom spoke in the debate, but to strengthen UK Trade and Industry as an institution. Its budget was increased in the 2011 and 2012 autumn statements, which was partly because of a recognition that its effectiveness and efficiency were improving. The private sector experience of many of those in UKTI who are promoting trade was raised as an important positive point by hon. Members on both sides of the Chamber. Some 75% of senior management in UKTI have private sector experience, the majority of whom arrived in the past 18 months under the leadership of Lord Green. The whole House can unite in commending his work and that of Nick Baird’s day-to-day leadership of the organisation.

I was delighted to see support in the report for the direction UKTI is taking. It also contained a recognition of some improvements, although I have noted the criticisms, which I shall try to deal with as well. Part of the question is about the need for scrutiny of, and transparency in, UKTI. I should tell hon. Members that there were reports from the Business, Innovation and Skills Committee in 2011 and 2012 and a Lords Select Committee report in 2013, while the UKTI chief executive will appear before the Public Accounts Committee on 6 November. I am sure that he will very much enjoy his trip to Shrewsbury on 5 November, perhaps spending the time ensuring that he is across all the questions that he might be asked and listening to the comments of my hon. Friend the Member for Shrewsbury and Atcham. Those reports demonstrate the intensity of the parliamentary scrutiny that has been conducted.

It is worth airing some of the evidence about UKTI’s performance. According to an independent organisation that reviews UKTI’s performance quarterly, three quarters of the 4,000 UKTI service users who were surveyed were either satisfied or very satisfied, while fewer than 10% were dissatisfied. From those who use UKTI, the results are pretty strong but, of course, 10% dissatisfied is still too many, although I hope that we can agree that it is a good baseline from which to improve.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

I thank the Minister for citing those figures, but am I right in thinking that UKTI’s annual report sets a target for satisfaction levels of 80%, yet it has consistently failed to achieve that? What active steps will the Minister take to ensure that it hits its targets on customer satisfaction?

Photo of Matthew Hancock Matthew Hancock The Parliamentary Under-Secretary of State for Business, Innovation and Skills, The Parliamentary Under-Secretary of State for Skills

It is indeed important to have a target for satisfaction, and if three quarters are satisfied or very satisfied, that shows we are heading in the right direction, but more can always be done. For instance, since 2011, a realignment of UKTI has taken place to ensure that it can better serve the needs of UK plc. The process has included: the introduction of stronger senior management with private sector experience; new private sector delivery of trade services in England, with incentivised contracts, which my hon. Friend the Member for Shrewsbury and Atcham asked for; improving performance overseas and strengthening teams in key growth areas, such as China and India; and reviewing targets to ensure that they incentivise the behaviour of individuals on the ground. The right balance is having strong direct accountability to Ministers, which is appropriate, alongside the right incentives to give individuals on the ground the autonomy to be able to promote trade.

Several hon. Members mentioned—favourably or otherwise—the fact that UKTI reports to two Departments. I am a Minister in two Departments, and it is true that it is necessary to have co-ordination between the two. It would not be right to remove accountability for UKTI from either the Foreign Office or the Department for Business, Innovation and Skills, because UKTI is precisely about the link between business and our international relations. This is about, on the one hand, strengthening links between UKTI and domestic business, for which the Business Department is responsible, and, on the other hand, strengthening links between UKTI and our diplomatic service, which has happened a great deal over the past two or three years. Both those are valuable and necessary if the service is to perform, so it is therefore right that UKTI reports to a Minister who sits in both Departments but, of course, it is accountable to one Minister—my noble Friend in the other place—so there is a clear line of sight for ministerial accountability.

Several hon. Members talked about the links between UKTI and the Department for International Development. UKTI has an aid-funded business service that works with DFID to try to ensure that opportunities for procurement through DFID, not least from SMEs, are valuable. UKTI holds seminars with businesses, including SMEs, and it will hold another seminar in November to ensure that SMEs and domestic British companies have the opportunity to make the most of procurement through DFID, which these days, of course, bears the Union Jack.

My hon. Friend Jeremy Lefroy talked about the importance of inward investment and the business bank. It is vital to ensure that finance is available for exports, and funding for lending and strengthening the domestic private banking system are important parts of that. We are also seeing the growth of challenger banks, which are increasingly providing business finance. We will, of course, have the first ever British business bank, which is being set up precisely to look at the sorts of investments that he talked about. It is right that the British business bank does not take direct instruction from Ministers for each loan because, quite properly, they have to be made on a commercial basis.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

Will my hon. Friend examine the relationship between UK Export Finance and the commercial banks? My constituents have said that some commercial banks—not all but some, but including very large ones—do not seem to be interested in promoting export finance and are unaware of the new products that are available. As Mr Wright said, they are not interested in exports at all. Will the Minister challenge the major UK banks to say what they are doing to promote exports?

Photo of Matthew Hancock Matthew Hancock The Parliamentary Under-Secretary of State for Business, Innovation and Skills, The Parliamentary Under-Secretary of State for Skills

I can go one step further because we have already been raising those challenges with UK banks to ensure that the facilities on offer are better integrated into their services. My hon. Friend will also know that the GREAT campaign to which many hon. Members referred, which brings together the promotion of UK export under one strong brand, is being piloted domestically in the north-east of England to promote export by UK companies in addition to Britain overseas, as has been the case hitherto. The promotion of the different Government schemes available for British-based businesses will be brought together under that brand in the pilot, which I hope is successful and can be rolled out further, to do exactly what he talks about.

Regarding the broad discussion about the recognition of UKTI, I strongly agree that it is important to ensure that every business, as appropriate, knows about UKTI and its services. We are doing an awful lot to try to make that happen, not least through local engagement. More than 100 constituency seminars have been put on by UKTI with local MPs, serving about 150 constituencies. A seminar in my constituency was very well attended and has led to increased contacts between UKTI and local businesses. If any Member wants UKTI to come to their constituency, we can look at that, because I think that we have been able to meet every request that has been made. Such events mean that UKTI, with the help of the local MP, can reach businesses that it has not yet reached. I am sure that the hon. Member for Hartlepool knows of many businesses in Hartlepool, so that is the sort of thing that we can put on for MPs of all types.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

To support my hon. Friend on that point, we invited Paul Noon, the regional director for UKTI from the west midlands, to come to Shrewsbury, and we had about 25 local businesses there. The follow-up from the conference has been extremely good and the event has led to exports, so I thank the Minister for that.

Photo of Matthew Hancock Matthew Hancock The Parliamentary Under-Secretary of State for Business, Innovation and Skills, The Parliamentary Under-Secretary of State for Skills

Well, there you are. It sounds as though it works in practice in Shrewsbury as well as in Haverhill, and I am sure that there are other parts of the country to which it can also reach.

There was a brief discussion about trade figures. I gently point out to the hon. Member for Hartlepool that the Opposition cannot have it both ways. They cannot blame the fact that growth has been slower than was forecast in 2010 on the Government’s domestic policies and then complain that growth in exports has not been as strong as we would have liked. In the past three years, there has been a massive crisis in the eurozone; I do not know whether he has been watching TV. One of the Government’s arguments has been that that has had a negative impact on the British economy. That argument is supported by a huge range of independent and international experts.

It is great to hear a Labour Front Bencher come to his senses and make the argument that, partly owing to the eurozone, export performance has unfortunately not been as impressive as we had hoped and that that has had a dampening impact on the UK economy. I will report back that the Labour party seems to be getting the message that that has been one of the main problems, as was set out in reports by the Office for Budget Responsibility, the OECD and other organisations. That is absolutely terrific.

Exports to India have risen 13% on the year and exports to non-EU countries rose by just over one fifth between 2010 and 2012. The move has been gradual, but for the first time in my adult life, exports to non-EU countries have become bigger than exports to non-EU countries. It shows the importance of rebalancing trade institutions such as UKTI around the world, in the EU as well as outside it.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

The Minister selectively quoted the growth in non-EU exports between 2010 and 2012, but he will recall that I mentioned the £2.2 billion drop in non-EU exports last month. Given sterling’s performance and declining value, how does he explain that and what is he going to do about it?

Photo of Matthew Hancock Matthew Hancock The Parliamentary Under-Secretary of State for Business, Innovation and Skills, The Parliamentary Under-Secretary of State for Skills

We will pursue the strategy on which we have set out, which is ensuring that the UK economy is strong at home by dealing with our debts, making it more competitive, doing everything that we can to win what we have called the global race and ensuring that UKTI plays its part, not least by delivering a UKTI budget increase over the past couple of years, so that it can reach the target of doubling exports to £1 trillion, as the hon. Gentleman mentioned.

The Government’s ambition of doubling exports to £1 trillion by 2020 also involves getting 100,000 more UK companies exporting. The hon. Gentleman asked how we are doing on that. As he said I would say, the monthly figures fluctuate, but UKTI is on track to achieve its target of supporting 32,000 businesses for the 2012-13 financial year. Some 90% of those 32,000 businesses are small and medium-sized enterprises. That support has helped generate additional sales of more than £33 billion. I would say that that is money well spent.

My hon. Friend Richard Graham, who is no longer in his place, discussed the importance of encouraging small businesses to export. He particularly mentioned chambers of commerce and other business groups. We are piloting the use of chambers of commerce; as non-governmental organisations, they can play a different role and fill a niche. There are 20 pilots, including in Brazil, India, Hong Kong, Russia and Singapore, using chambers of commerce as well as UKTI. He also mentioned one of my personal passions: Education UK—a specific unit within UKTI to help our education exports.

I will also come to the point about the link with the British Council. My hon. Friend mentioned the West Kowloon cultural district project, which has been supported by both UKTI and the British Council working together. That is an example of those two organisations working collaboratively to very good effect.

The good news on languages is that, although entries to A-level were down, entries to GCSE rose sharply. I hope that after a long period of decline, the increase in GCSE entries this year shows that people in English schools who take languages are coming through the pipeline. Let us hope that that is an early indicator of better things to come.

Jeremy Corbyn asked about defence exports. Of course, as he said, the end user certificate system has been in place for a long time—more than 20 years—and the Government have confidence in the export licensing system, which we think is thorough and robust enough to address human rights issues that might arise from individual sales to individual countries. Any application for an export licence is considered against consolidated criteria in the light of circumstances in that country.

That brings me to the point raised by the hon. Member for Hartlepool about exports to Syria specifically. He mentioned two licences issued in 2012. I can confirm that those licences were never used to export chemicals and were revoked under the new EU sanctions. I hope that that addresses his question.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

The point that I made was that the FCO’s website expresses serious human rights concerns about regimes to which a large number of British arms exports are approved by the Department for Business, Innovation and Skills. I particularly draw attention to Bahrain, but also to the whole operation of the defence and security equipment international exhibition, which is on at the moment. A Russian company there that has been supplying arms to Syria is openly parading its wares at the exhibition, which is subsidised by the British Government. We need a lot more transparency about the operation of the defence services organisation and what eventually happens to those weapons. When people are assaulted by anti-personnel weapons supplied by Britain, they do not feel very benign towards this country.

Photo of Matthew Hancock Matthew Hancock The Parliamentary Under-Secretary of State for Business, Innovation and Skills, The Parliamentary Under-Secretary of State for Skills

As I said, any application for an export licence is considered against the criteria, which have been in place for some time, in the light of circumstances in that country and depending on the products’ end use. The system has been supported by Governments of all three major parties. In the specific case of Syria, which has been raised as a concern, no chemicals were exported under that licence. I think that that addresses the point.

I am grateful for the opportunity to have this wide-ranging debate. I am looking forward to working with my hon. Friend the Member for Shrewsbury and Atcham, to ensure that we can push UKTI even further. I think that the overwhelming support for the direction of travel within UKTI and, at a higher level, the overwhelming support for UK trade openness and the ability to trade with the whole world will have been noted clearly in this debate. Thank you, Sir Roger, for your chairmanship. I hope that all those who read the report of the debate will notice that we are a country that is very much open for business.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

Mr Kawczynski, do you wish to exercise your right of reply?

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham 3:59 pm, 12th September 2013

Yes; thank you, Sir Roger. I would like to thank all hon. Members who participated in the debate and to thank Members for referring to the report that my office and I put together during the past 12 months. I place on the record my thanks to Mr Justin King, my American intern, who has assisted me during the past 12 months by arranging all the interviews with British companies and helping to put the report together.

I echo hon. Members’ best wishes to Lord Green, who is going into retirement. When he was first appointed to his position, he came to address Members of Parliament. I remember attending that first event and only five MPs turned up—five out of 650. I very much hope that when Ian Livingston, who recently became a peer in the other place, takes on the role and we welcome him to the House of Commons—I shall certainly be seeking an early meeting with him—we can encourage more than five MPs to attend.

I pay tribute to Mr Nick Baird and his team for the work that they do at UKTI. However, I will reiterate, of course, my intention to campaign on this issue as long as the United Kingdom does not match its status—its ranking—as the fifth largest economy in the world. Until we reach the same ranking for exports, more needs to be done in scrutinising UKTI.

I agree very much with the message stated by my hon. Friend Jeremy Lefroy: we can learn a great deal from Germany. We are always in awe of how that country seems to be able to export far more than any other member of the European Union. We have a great deal to learn from how the Germans do it.

We must redouble our efforts to export more. The reason why I am so passionate about exports is that they create wealth for the whole country. Only countries that are really able to export, such as Germany and Singapore, can really generate the wealth that all Members genuinely want to see, so that more money can be spent on public services.

I am grateful to the Minister for taking an interest. It is important that we scrutinise UKTI. I have referred to various mechanisms that I would like to be set up in Parliament, but I am sure that he will agree that we need to keep up the scrutiny, because by doing this job, we are playing our part in ensuring that SMEs and our constituents get to hear about UKTI and its work. Through these debates, in our own small way, we can try to encourage entrepreneurs in our constituencies to make use of this vital resource. Thank you very much, Sir Roger.

Question put and agreed to.

Sitting adjourned.