Examination of Witnesses (Questions 1-19)
UKTI, DTI AND FCO
24 FEBRUARY 2004
Q1 Chairman: Good morning. Mr Holmes,
perhaps you could introduce your colleagues and then we will get
started.
Mr Holmes: On my right is Dr Elaine
Drage from the Europe and World Trade Division of DTI which is
the trade policy part; on my left is Peter Mumford from the Foreign
and Commonwealth Office, Economic Cooperation Department; and
I am from the UKTI.
Q2 Chairman: Thank you very much for
coming in this morning. You say you are a new organisation but,
chameleon-like, you change with the passions of the Government
machine, I suppose. Perhaps you can tell us how you have changed,
now that you have shed your previous skin as an organisation.
What does this mean?
Mr Holmes: I suppose there are
two principal changes. I come from the bit that used to be known
as Trade Partners UK and we have joined up Trade Partners UK—the
trade development and promotion arm—with Invest UK—the
inward investment promotion arm—to make a more coordinated
and more joined-up organisation, because obviously there are a
lot of synergies to be found between the work that we do. At the
same time, we have moved our focus from market promotion (that
is, particularly encouraging people towards a particular market)
towards a more customer-led, sector-based approach, by which I
mean essentially that we consult British industry about where
they think the opportunities are for them as opposed to saying,
"The opportunities are in country X, you should go there."
That is very much at the behest of British industry itself, which
sees this as a more constructive and helpful way of giving them
assistance. Similarly, at the same time we are putting more effort
into the English regions, which is part of our wider responsibility
through our international trade development teams in the regions,
and each of the nine English regions has a UKTI implant, if you
like, office in the regions, which is now effectively operating
as the international trade arm of the regional development agencies.
That is quite a new development and one which I think we will
find over time will be a real advantage to both sides there.
Q3 Chairman: How do you relate to the
trade arms in Northern Ireland, Wales and Scotland?
Mr Holmes: As you know, of course,
they have their own system and their own operations. Effectively,
they are represented on the UKTI board of management. We consult
regularly with them on issues of common interest, principally
how we manage our customer relationships with the businesses we
service, but as the UK national organisation we provide certain
services like subventions for trade missions and so on and it
is open to the devolved administrations to use those services.
Q4 Chairman: Just one last point. It
is a bit strange that you are going to sectors while the DTI is
moving away from them. Do you find that a difficulty, given the
weakness of the sectoral approach that the DTI must now have for
it? Because it has diminished the significance of what they might
regard not so much as sectors but as silos—the old hermetically
sealed units that never spoke to each other—in favour of
some holistic or thematic approach. Maybe I am oversimplifying
it, but do you see this as being a difficulty in dealing with
at least one of your sponsoring departments?
Mr Holmes: So far, I do not think
so, would be the answer I would give, because it is a relatively
new development for us. My impression so far—and my team
do not actually work in the sectoral field, we are the international
and regional part of the operation—is that this is not an
issue. Indeed, our sectoral teams are not just DTI-related, of
course: there are DEFRA, DoH and other government departments
which have a residual export promotion function with whom we also
interrelate. So far, so good. We are taking on a different part
of the work, as it were.
Q5 Richard Burden: Who defines your sectors,
given the fact that you are working across the Department as well?
One of the problems with the previous DTI approach on sectors
is that it seemed a bit arbitrary as to what was in each sector.
If you are then spreading across departments and looking globally
as well as domestically, how do you define what a sector is?
Mr Holmes: The UKTI has defined
a number of sectors with which it will work. You are quite right,
the definitions are arbitrary. To give you one example: we have
a creative industries sector group. That covers an enormous range
of different industrial sectors, from films, music, design and
so on. So, yes, you are quite right, it is almost by necessity
an arbitrary decision but it is one which I think has a coherence
and is generally recognised by all the people involved.
Q6 Mr Evans: Let's imagine I make widgets
in Clitheroe. What are you going to do practically to help me?
Mr Holmes: That depends on whether
you are an existing exporter, somebody who wishes to export or
somebody who wishes to export to new markets.
Q7 Mr Evans: Let's say I am none of those.
Let's say I just make widgets and there is a demand out there
for what I make but I am not aware of it. You are not going to
come to me. That is what you said earlier on, is it not?
Mr Holmes: We will still provide
information on countries where there are opportunities for widget
manufacturers and we will do that through our website.
Q8 Mr Evans: I would have to register
with you, would I? I would have to be proactive.
Mr Holmes: The first step would
be either to go to your local business link and talk to an international
trade adviser there, or to ring up UKTI, having looked at the
website, and say, "Ah, I need more information." We
do not go out and proselytise, as it were, for markets at the
moment. Our underlying approach is really about trade development
and getting UK companies out, improving their competitiveness
through giving them export skills if they do not have them or
helping expand those skills and their approach through moving
into new markets. So, yes, you are right.
Q9 Mr Evans: So there is a number of
things you could possibly do for me, let's say I am proactive
and I want to export. You are going to give me advice, what, on
a one-to-one basis? Or are you going to send somebody over? Or
do I come down to you?
Mr Holmes: If you go through the
Business Link process, there are international trade advisers
in the Business Links who will be able to give you advice on .
. . Say you are a completely novice exporter, we have a scheme
called "Passport to Export" which is essentially about
taking an inexperienced company through a series of stages which
will make them ready to export. It is a developmental process.
At that stage, the international trade adviser will also give
advice on perhaps which markets might be best suited for your
widgets. At that stage he will either recommend taking up one
of the UKTI services through our post overseas. In the case, say,
of Singapore, if we decide that your company has a good chance
of doing business in Singapore, we would then suggest you get
in touch with the High Commission in Singapore, perhaps commission
a piece of initial market research, and perhaps get you on to
a trade mission to enable you to go out and have your first look
at the market itself. I have to say we probably would not necessarily
think that an Asian market would be the best place to start. Experience
would show that the markets nearer home, markets like the Netherlands,
the Nordic countries, the United States and so on, might be better.
But you never know. It is not unknown that we send people on their
first mission to some very strange places.
Q10 Mr Evans: Some of this sounds very
expensive. What is the best thing I can get for free and what
has to be charged for? If you could give us a global figure perhaps.
Mr Holmes: Free you get a lot
of advice. A lot of the basic advice is free. The sort of thing
we charge for is what we used to call—and are in the process
of changing, I am sorry to say—a Tailored Market Information
Report (TMIR, in the jargon) and that is a basic piece of research
on the market, the possibilities in the market. The cost of that?
I guess an indicative figure would be about £300. So we are
not charging big bucks for this sort of information. On top of
that there are subventions on trade missions. We have schemes
to allow people to go out to overseas trade fairs, for example.
The cost of subvention for those varies according to the market,
the distance and the travel costs, but, if you took the figure
for the subvention for the trade mission to, say, Australia, one
the most distant markets, it would be £800. That is the sort
of thing. I should say that we are in the process of revising
the services that we do have on offer. We started off with something
like 50 different services. Frankly, most of them were not taken
up, so we are in the process of narrowing this down, so far, to
20, and we are about to reduce it still further to a broad band
of about four streams of service which we can then tailor to the
individual customer.
Q11 Mr Evans: Did you get feedback from
your customers on whether they think they are getting value for
money? How do you think you compare to similar services offered
by, let's say, the French, the Germans and other countries?
Mr Holmes: Yes, we do get feedback.
In fact, we actively seek feedback. We do commission independent
research to help us get feedback. The problem is, of course, particularly
with SMEs, which are our prime focus, that getting feedback is
not always very easy unless you ask somebody, as it were, while
you are delivering the service. Follow up is not always welcomed,
particularly by the smaller companies, because they have other
things to do. We try to get our feedback on a selective basis
rather than to go for everybody.
Q12 Mr Evans: Do you think you are competitive
compared to, let's say, the French or Germans or Italians?
Mr Holmes: We believe we are,
yes. I have to say that I am not aware that we have done any recent
comparative research on that. We certainly believe that we are
effective, although I am not sure it is fair to say that we would
be comparing like with like—because I think we start, as
I said earlier, from a trade development basis. That is what the
Treasury give us the money for. Whereas I think our French and
German colleagues are much more export promotion oriented, we
are not.
Q13 Sir Robert Smith: How do you measure
the return on the taxpayer's investment? If you were not there,
what would be the baseline of trade development?
Mr Holmes: It is a very good question.
I am not sure I can give you an accurate answer. The only thing
I can say is that we are looking all the time to see how we can
pin down our performance measures in a way that gives you the
direct answer to the question. If we spend £500 on a company,
you then ask them whether, as a result of the £500, they
got X amount of business. That gives you some sort of measure.
But I think part of the problem at the moment is that with a lot
of the things one does—the warming up, if you like, of contacts,
the research—you cannot get an immediate view of what the
value for money is. We can only get an imperfect view but, generally
speaking, we feel that our services provide net value. We would
like obviously to get more value for money out of it and we are
looking all the time at new ways of measuring and new ways of
delivering services, very much with customer wishes as our guiding
light, as it were.
Q14 Mr Berry: Good morning. How do you
decide whether Nigel's widgets are in a sector that offers the
best opportunity for UK business?
Mr Holmes: That is a judgment
that we leave to UK business, to the extent that we have sector
advisory teams who are made up of businessmen, members of trade
associations, regional experts. They tell us where they think
the opportunities should be in the sector. That does not mean,
however, that if Mr Evans comes to us with his widgets and we
have said that this is not a priority sector, that we will say,
"Go away and do it yourself." No, not at all. We are
there for people who want to do business outside the priority
sectors. The sector focus is about getting UK industry to tell
us where they think the best opportunities are for them and enabling
us to support them.
Q15 Mr Berry: Every single industry that
comes before this Committee and every single trade association
and every single company claim that they are the top priority
for government support.
Mr Holmes: Yes.
Q16 Mr Berry: Every one of them.
Mr Holmes: Yes. I would not disagree.
Q17 Mr Berry: It is not a particularly
analytical approach simply to respond to what a business happens
to say on a wet Tuesday afternoon.
Mr Holmes: It is a bit more analytical
than that, I think. It is based on information that we get. They
do not just come to us and say, "We are your number one priority.
Give us the money and we will deliver a certain amount."
We have to look with our posts overseas, so we look at what opportunities
are actually out there. We bring these to the attention and there
has to be informed and rational debate about this. It is early
days. In a sense, in a year's time, after it has had a goodish
run, you might get a better answer out of us.
Q18 Mr Berry: In fairness, in your reports
in relation to priority sectors in Singapore, Malaysia and Thailand,
you do always use the phrase "on the advice of industry".
Mr Holmes: Yes.
Q19 Mr Berry: So the picture I get is
that industry (whoever they are) come along and advise you and
then you are saying, "But we do not accept uncritically what
they are saying."
Mr Holmes: Yes.
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