Member News
By Peter Luff - 5th February 2010
We all know – at least I hope we do – the importance of boosting exports. We have to do this both to help lift the UK out of recession, and also to rebalance the economy away from an over dependence on debt-fuelled consumer spending.
The UK may be emerging slowly from a long and deep recession, but government support for exporters is more important than ever. As a recent report from my committee highlights, it is essential that the government does more to help to create an environment that supports businesses’ engagement in international trade.
If that environment is not created, UK plc will not make the most of an opportunity to create a new era of prosperity. That new era must and can be built on the foundations of strong export-led growth, rather than a return to the vicious cycle of consumer-led booms that too often turn to bust.
There are some signs of increasing exports as companies take advantage of the low pound. Indeed, there are many firms producing and exporting cutting-edge goods and services. Our concern, though, is that too often government doesn’t do enough to provide those companies with a really supportive environment which would enable them to take full advantage of export opportunities.
Other governments are competing fiercely on behalf of their exporters and using all the weapons in their armoury. For example, senior political figures in France, Germany and the US, unconstrained by the demands of Parliament, can and do spend much more time on export promotion than British ones can ever manage. With this hand tied behind the UK’s back, we have to be smarter in other areas to compensate.
Worryingly, government departments – apart from BIS – too often see trade promotion as solely the responsibility of the trade promotion agency, UK Trade & Investment (UKTI). There has been a very welcome change in the mindset of the Foreign and Commonwealth Office (FCO) to become much more business-orientated. Now, and urgently, that success needs to be replicated around Whitehall. That is why our report urges other departments and agencies to take practical steps to emulate the change that the FCO has achieved.
UKTI is, overall, a successful agency but it has been subject to too much interference. Its priorities have been changed too often, leading to a lack of clarity and direction. Treasury-imposed revenue targets have also forced the organisation to offer businesses services it is able to charge for, rather than providing the services that will most benefit individual companies and the country.
During the course of our inquiry, my committee was also disturbed to hear of the pressure being put on the FCO by the Treasury to sell embassies and high commissions in high profile locations. Selling these buildings would not only represent a downgrading of the UK’s presence overseas but would sacrifice an important weapon in UKTI’s arsenal. The ability of UKTI to offer companies the opportunity to host meetings and events in such impressive locations can make a real difference to their ability to win new business.
Of course the current financial situation means we have to reduce public expenditure. But to do so by selling strategic parts of the FCO estate would be a short-sighted decision and in the long run would cost UK plc much more than was saved.
If we are going to succeed in fostering an export-led recovery, we need to see a culture-shift across Whitehall. The country can’t afford a Whitehall machine that appears uninterested in promoting UK plc in the global economy.
In that ugly but popular phrase, does the rest of government get it? We’re not sure it does – and it needs to. Ministers can’t just delegate their responsibility to UKTI.
Dods Parliamentary Communications Ltd