Examination of Witnesses (Questions 160
- 179)
TUESDAY 6 JUNE 2000
SIR DAVID
WRIGHT, MRS
BARBARA PHILLIPS,
MR DAVID
HALL AND
MR DAVID
WARREN
160. With all the clever people who are supposed
to be employed in the Foreign Office one would have imagined that
two or three in a darkened room for a weekend could sort it out.
This is a major initiative and it has been held up within the
Foreign Office for reasons best known to themselves. This is the
kind of bureaucratic obstructionism which is supposed to have
been outlawed under the doctrines of joined up government. Here
is the Cabinet Secretary suggesting something that has been agreed
by Government, and then some people in Whitehall are digging their
heels in. Am I putting words in your mouth?
(Sir David Wright) I think I would say you probably
were, Chairman, yes.
161. That does not mean to say they are not
true!
(Sir David Wright) I equally would not take issue
with you on that. I think that the process of trying to resolve
my problem with this issue we are debating has actually put the
Foreign Office up against a problem which they perhaps were not
as aware of as they might have been. As a result of trying to
find a way through this intractable issue of how you deal with
a man who is 50 per cent. commercial, 20 per cent. consular and
30 per cent. information, whose man is he; equally, how do you
account for his housing, how do you account for the education
of his children; on whose budget does all that money fall? Those
issues have caused the Foreign Office to revise its attitude to
management information and it is about to introduce a new system.
It is about to put the whole process of modernising its management
information system on a new footing. I welcome that and the sooner
it can be done the better. Within the constraints created by that
problem, we are trying very hard. I feel it strongly because,
as I say, it is the only issue within the review that remains
uncompleted.
162. That is quite important.
(Sir David Wright) It is very important.
163. How can the Foreign Office go to the Treasury
seeking greater resources when it does not know what it is spending
at the present moment?
(Sir David Wright) The Foreign Office knows what it
is spending at the moment, but it is a matter of how it expresses
it in a way in which it can transfer that sum of money.
164. And how it can increase the levels.
(Sir David Wright) It knows how many man or woman
years it employs in this area, but in regard to breaking it down
into particular commercial functions or for particular people
in particular markets, a more sophisticated system is needed.
Mr Rowlands
165. Is it not more fundamental than that? If
you are suggesting that after the agreement you may have the ability,
capacity and power to move money not just within the FCO budget,
but also between an FCO budget and a DTI budget, would not the
Foreign Secretary be rather loathe to concede that power to Sir
David Wright, or to anybody else?
(Sir David Wright) Those are the terms of the review
to which the Foreign Office subscribed. The resource allocation
passages in the review envisage that the process whereby I have
that right has to be discussed with the Foreign Office officials,
the Foreign Secretary's representatives. That is not something
that I would want to operate in an autocratic sense.
166. You would have a right to override them.
The Foreign Affairs Committee could ask the Foreign Secretary
why expenditure on commercial promotion has gone down in Latin
America and Brazil. His defence would be that Sir David Wright
transferred that to a programme in the DTI.
(Sir David Wright) It comes back to the issue referred
to by Sir John Stanley over the board. The terms of the report
state that plans for the allocation of trade development resource
to overseas posts will need to be dovetailed with plans drawn
up by FCO geographical directors for consideration by the board
and ministers for allocation of FCO resource against other objectives.
In other words, if we were to get to the point where my wishes
and my objectives did not dovetail in the way that is described
in the report, the board would then want to give a very firm view
to ministers as to what they, as commercial practitioners, thought
of my proposals and indeed thought of the reaction.
Mr Berry
167. Sir David, how on earth can the FCO know
how many person years are devoted to this activity without knowing
who is doing what and where? Is it a figure that they have plucked
out of the air? Have they just said, "We guess it is X, but
we do not have a clue how much is in France, Germany or Japan"?
(Sir David Wright) They have to deal with what I will
describe as "multi-hatted" functions. If you were to
take two groups of people who carry out commercial work—what
we will call the UK-based staff and the locally-engaged staff—the
second group is really quite straightforward because in most posts
they are 100 per cent commercial employees. Most of the locally-engaged
staff have a very clear set of responsibilities so one can quickly
establish precisely how much all that costs. The problem arises
with these "multi-hatted" people who split their work
between us and other functions. That has to be divided up and
calculated as a sum of money.
168. They are people employed in the UK?
(Sir David Wright) No, they are people employed in
posts overseas. Dividing up the costs of all those people, when
many of them may only have 50 per cent of their work on commercial
work, or 60 or 70 per cent, is a complex matter.
169. I appreciate it is complex, but I do not
understand how they can possibly know how many person years have
been spent on an activity unless they have that information. You
may want to say, "I note what you say", but I do not
see logically how they can possibly talk about figures of that
kind without knowing how the figures were arrived at in the first
place.
(Sir David Wright) I shall ask my colleague, David
Hall, who is responsible for resources to add to what I am about
to say. He has been responsible for trying to deal with this intractable
problem. They have been able to put a pretty broad estimate, which
is the £90 million to which Mr Rowlands referred, upon what
these activities cost. However, that is not sufficient for the
sort of concordat that we were talking about a moment ago. It
is not sufficient because that concordat will involve me saying,
"Out of that total sum Mr X in Kuala Lumpur costs a certain
sum of money"—that is what we know from the management
information system—"and therefore I can take the cost
of Mr X and say that I do not want him in Kuala Lumpur any more,
but I want him in Brussels". We cannot yet do that.
(Mr Hall) It is quite common for diplomatic service
staff overseas to be doing things very similar to trade promotion,
but not exactly trade promotion. Examples are inward investment—although
that would change now that that is coming within the fold—science
and technology, international financial questions, trade policy
and WTO issues. It is not easy or, from the point of view of day-to-day
management of a post, very sensible to try to divide this all
up into kind of fixed proportions. Clearly, those proportions
vary over time, according to the agenda. Those are the kind of
practical issues with which we have been wrestling. Very shortly,
the Foreign Office hope to do a further census of who does what
in this area. We hope that that will help to take this matter
forward.
Sir John Stanley
170. Sir David, you have indicated the unsatisfactory
nature of the Foreign Office's management information systems.
Therefore, can we turn to the DTI's management information systems?
If you had to fill a particular post at a particular grade overseas,
would it be materially more expensive to fill it with someone
from the Foreign Office on Foreign Office terms, compared with
someone from the DTI on DTI terms?
(Sir David Wright) The answer is not materially, no.
171. Are you sure?
(Sir David Wright) Most staff from the DTI who are
seconded to posts overseas, are eligible for Foreign Office terms.
In that respect, there would be no difference at all. If they
were to go on different terms, the overall costings of things
such as housing, allowances and children's education, if relevant,
would be broadly similar.
(Mr Hall) I am a DTI official, but ten years ago I
was seconded as the commercial counsellor in Washington and I
received exactly the same terms and conditions as my FCO colleagues
of the same grade.
172. Is that true around the world, Sir David?
You have used some qualifying words like "broadly" and
"materially". Are you just hedging your bets, or do
you actually know?
(Sir David Wright) I can certainly give you an exact
reply in a paper. My view is supported by David Hall's point,
that most DTI staff go abroad on Foreign Office terms. I am hedging
my bets, to use your phrase, because I cannot give you a categoric
assurance that there are not some DTI staff abroad on different
terms. I shall have to check that. But even if they were abroad
on non-Foreign Office terms, the monies involved would not be
material.
173. Could we have the note that you have offered?
In terms of the value for money to British taxpayers, there may
be a material advantage to taxpayers and the overall number of
personnel that we put into export promotion overseas if there
were a major substitution of existing Foreign Office personnel
on Foreign Office terms by DTI personnel on DTI terms. That is
really what I am driving at.
(Sir David Wright) I understand the question. Currently,
we are working towards a greater degree of interchange between
the two departments in that respect. That makes your question
particularly relevant. We shall enhance the number of people from
the DTI who are working in posts overseas and we shall enhance
the number of FCO people working here in the UK. Currently there
are 62 Foreign Office staff working in the UK operation and 23
DTI staff working in overseas posts. Those numbers will go up.
That is one of our objectives. The question you asked is relevant
to that, so we shall let you have that note.[3]
Mr Laxton
174. Sir David, in addressing remarks to Mr
Rowlands you have already made reference to the move in resources
away from export promotion towards electronic service delivery
and trade development. That was one of the recommendations of
the Wilson report. Are you able to give us some practical examples
of the advantages of doing that, rather than just that it was
recommended in the Wilson report?
(Sir David Wright) Yes, I can. That gives me an opportunity
to talk more about this important side of our work. At the present
time, we have an arrangement or an activity called Export Explorer.
The Export Explorer schemes are designed specifically for newcomers
to exporting. They are designed to assist them in their first
step into overseas markets. We are using the Export Explorer schemes
in particular in relation to markets that, for the sake of this
discussion, are called "less challenging". Belgium and
the Netherlands come into that category and the Nordic countries,
Canada and the United States are Export Explorer targets.[4]
That activity has continued for a year now. We are seeing that
as very much the sort of core of the trade development ethos.
We want to develop it further. It involves activities like training
in export planning, giving new companies consultation with experienced
export advisers, access to market research, help with internet
marketing, a hand-held visit to an overseas market and then a
bit about aftercare service when the company returns having carried
out some business. Provisionally, we are linking with this development
of Export Explorer, something called Passport to Export and we
are testing that on a number of possible groups at the moment.
We hope to roll out the project and the programme in September.
That is very much the style in which we shall be seeking to pursue
this trade development concept.
175. Are these companies coming to you through
the regional development agency arrangements or are they coming
to you direct? I want to come on to the electronic gateway arrangements
in a moment. Are these companies self-selecting themselves in
that they want to get into the export activity? How do they find
their way in your direction?
(Sir David Wright) I come back to the Chairman's first
question and my response about identity, visibility and recognition.
We hope that by having a more effectively branded operation the
awareness, particularly among the SMEs, of our services will be
enhanced and therefore that they will access us in the first instance,
through that website, through this new gateway to which I referred.
That gateway should provide them with the initial information
that they need about the trade development schemes, about particular
markets, about programmes of activities that are available to
them and they will then be able to move through from the gateway.
That is one access point. The second access point relates to the
regional structure. As I have explained, we have just appointed
nine international trade directors in the English RDAs. They will
run the export development counsellors who will sit in local business
links and those export development counsellors will be expected
to be both responsive and active in searching out new companies
to assist. They will have an understanding of the company and
industrial profile of their area; they will know whether businesses
in particular areas are thought to be potential exporters; and
they will be able to go out and introduce them to the schemes.
Equally, they will be there in a responsive sense so that if small
and medium-sized enterprises access the small business service
and ask questions about possible overseas trade, they will be
pointed in the direction of our staff. That is a second way in
which we shall be accessed. I believe there is a third way. That
relates to my reference to the phrase "trade partners UK",
the partnership concept. So many of our missions overseas and
our participation in trade fairs is run either through chambers
of commerce or through industrial associations or trade associations.
They contract with us to send a mission to a particular country
or to have British participation at a particular trade fair. We
would expect that when a particular company approached those organisations
saying that it wanted to take part in a mission to China, for
example, that they would say, "Have you exported already?
Have you exported to China before? If you are thinking of going
into China as your first export market perhaps that is a bit over-ambitious.
Why not speak to British Trade International and get a bit of
advice". Those are the three ways.
176. What are the advantages of your new gateway
that was launched at the end of last month—I have not as
yet had a look at it—over what was originally provided,
which was the straightforward internet access? In terms of the
internet access, what sort of level of hits did you get onto that
site?
(Sir David Wright) Perhaps I can answer your final
question at the end. Mr Hall may know the exact answer to that.
It is not in my mind at the moment. The new gateway has an advantage
over the old internet site in that it provides much fuller information.
Already we have managed to put on 3,500 pages of country sector
information, which is almost twice as much as there was on the
original site. We see this site as a central vehicle for our activities
and, therefore, we are tasking posts overseas that they should
be involved with us in filling out that gateway and providing
much more information than they have done hitherto about the particular
markets for which they are responsible. Also on the site we have
a new search engine which allows someone visiting it to acquire
more information than they would have had in the past. We have
a database of new export-related events—2000 events which
may be trade fairs, trade missions or conferences about particular
markets and that was not there previously. We are using the new
gateway to signpost businesses who visit it to other sites that
are not ours, but which will provide information that businesses
may need about particular markets. We also have a self-assessment
questionnaire on the gateway which is designed to be rather like
a Passport to Export issue, which allows a company to do a test
of its capacity and we have a whole range of frequently asked
questions to which they can find answers. All that is new and
additional. Our wish is to ensure that that gateway becomes almost
the chosen point of entry for companies rather than the telephone.
We shall have a matching telephonic response mechanism organisation
at the same time, but we want to build and advertise the gateway
so that it becomes the first port of call for exporters.
177. As I say, I have not visited it yet, but
I wrote to you a good while ago and received a response from you
about a criticism by a small company in my constituency of what
it felt was the inadequacy of the previous site.
(Sir David Wright) The previous site was very conventional
and very much a static information site. We are very keen that
this new gateway should be more interactive. In the long term
there are two prizes to be gained from that. Firstly, through
its maturity it will be such a source of information that we may
be able to make staff savings at the centre of people who hitherto
have obtained information from booklets or faxes or whatever.
Secondly, in due course, inquirers will be able to e-mail direct
to commercial officers in posts overseas as a result of having
gone through the gateway. That is not done much at the moment.
That is in the long term.
178. Have you any information on the number
of hits?
(Sir David Wright) On Brit Trade, the old gateway,
we had 250,000 hits a month.
179. Continuing with the issue of the services
that you provide to the business community, there has been, I
understand, some examination of the role of the business advisory
groups. What conclusion has been reached on that, Sir David?
(Sir David Wright) The Wilson review committed us
to review the business advisory group structure. I think the review
concluded that business advisory groups were an essential feature
of the scenery in terms of government activity in that area. It
was crucial that we should remain closely in touch with the views
and advice of British companies, but that over the years they
had grown a little topsy and become perhaps more numerous than
was needed. So the former chairman of British Overseas Trade Board,
Sir Martin Lang, was asked to do the review that the Wilson review
instructed we should do. I should start one stage further back.
The international group, which is part of my central operation,
is based on four broad geographical regions: Europe, Africa and
the Middle East, Asia and the Americas. The business advisory
group review concluded that that should be matched at a business
advisory level; that each one of those four areas should have
a matching advisory group; that the chairman of that advisory
group should have regular exchanges with the people who run the
international group; and that those four geographical groups should,
as time and situation require, be able to set up small perhaps
time-limited very market specific groups, if it was thought necessary,
for exploiting the advantages of one particular market.
3 See page 16. Back
4
Note by Witness: In these markets we operate Export USA
and Export Canada initiatives which are designed to give small
and medium sized companies the knowledge and confidence to compete
in the respective markets. Back
|
