Margot James is PPS to Lord Livingston, Minister for Trade and Investment, and MP for Stourbridge.
The recent report from the Adam Smith Institute about UK Trade and Investment (UKTI) was flawed in several respects. Press coverage last week pointed out that although the report might have been right to criticise bureaucratic waste in the agency, UKTI needs help rather than a hammering if we are to have any hope of rebalancing our economy towards exports.
As chair of the All Party Parliamentary Group on Trade & Investment, I have had many conversations with SMEs who have used and benefitted from UKTI services. I led trade missions last year to Singapore, Indonesia and Brazil, and the businesses who came on these visits found excellent support on the ground, with local UKTI staff providing invaluable introductions and advice.
The ASI report claims that UKTI funding has increased by 70 per cent since this Government came to office. The facts are otherwise. In 2010, the UKTI budget was £350.4m. Despite dealing with the deficit, the government has found more money for UKTI, and the budget for the current year stands at £378m. The increase, however, is just 7.6 per cent, so it is to UKTI’s credit that the number of companies they have helped has roughly doubled over the same period.
This progress has been achieved by reducing overheads and the cost of administration as well as by the modest increase in funding mentioned above. These efficiencies have enabled significantly more money to be spent on customer facing activity, such as the well regarded “Trade Access Programme,” in which SMEs access financial support for promoting their products at trade exhibitions around the world.
There have been several other significant developments worthy of note. The majority of the UKTI leadership team has been recruited from the private sector. There is a closer relationship with the FCO, especially in markets abroad; it now far more aware of their commercial responsibilities to promote trade than it was in 2010.
I have had the privilege of working as PPS to two outstanding trade ministers. First, Lord Green put in train a re-structuring of UKTI, bringing in more executives from the private sector; he also established greater co-operation abroad between UKTI offices and business organisations, such as chambers of commerce, and laid a greater emphasis on SME exporters. SMEs with a turnover of less than £10m per annum now account for 70 per cent of companies supported by UKTI.
Now Lord Livingston is maintaining this overall direction; importantly, he has also put in place a much-needed strategy to target UKTI resources more effectively at medium-sized companies with more potential to export in greater quantities.
Currently, medium-sized companies with a turnover of between £25m and £500m, account for just seven per cent of UKTI support. There are an estimated nine thousand fast-growing medium-sized companies. Lord Livingston is leading the UKTI drive to make contact with every one of these companies by the end of the summer, to offer each one a bespoke trade support service.
No organisation, whether in the private or the public sector, is perfect. The new CEO of UKTI, Dominic Jeremy, who takes up his post in a couple of weeks time, will face significant challenges – not least to raise awareness among potential exporters of UKTI support. Most business surveys find awareness levels of between 40 and 50 per cent, and it is accepted that these levels of awareness need to be raised.
PIMS undertakes the UKTI Performance & Impact Monitoring Survey, an independent survey in which over four thousand companies, a random sample of companies who have used UKTI services during the previous twelve months and are interviewed in confidence.
The PIMS report published in March 2014 found that UKTI supported 34,820 companies in the year to September 2013, and that 77 per cent of these firms were either satisfied or very satisfied with the support they had received. 70 per cent of supported firms also reported significant benefit to overseas sales and their business overall.
Last year, our trade deficit declined from £33bn from £27bn and net trade contributed to our GDP growth. This is an achievement, considering that an economy that is growing faster than its main trading partners will inevitably import more as a result, adding to its deficit.
However, there is still a long way to go before we realise our full export ambitions. Britain has been running a trade deficit since the early 1990s. Although we are the second biggest service exporter in the world, our trade in goods has suffered in association with Britain’s long term decline in manufacturing – a decline which is being reversed at last.
Overall, taking trade in both goods and services into account, Britain is number six in terms of global export rankings. This is a solid base from which the UK, with our recovering manufacturing sector and vibrant service sector, can take advantage of the additional support provided to exporters and seize the opportunities available around the world. The UK has a great opportunity to make our exports of goods and services a key source of future growth and prosperity.