Examination of Witnesses (Questions 20-39)
ANDREW CAHN,
SUSAN HAIRD,
ASIF AHMAD
AND IAN
FLETCHER
6 DECEMBER 2006
Q20 Mr Horam: Can you make these
people toe the line in some sense and not do things simultaneously
or things that contradict each other?
Mr Cahn: I think it works quite
well, but there is scope for improvement.
Q21 Mr Horam: Our sister Committee,
the Trade and Industry Committee said that the individual English
RDAs should not establish representative offices or hire locally
engaged staff in India—I do not know why it singled out
India—and that existing operations should soon be shut down.
That is pretty firm advice. It obviously thought that these organisations
were a waste of time or conflicted with what you or other people
were doing. Would you agree?
Mr Cahn: If I may, I will pass
that to Ian Fletcher, who is known as the Managing Director, International
Group, but he is also responsible for our regional network.
Mr Fletcher: Thank you very much.
There are some factors to include in the discussion, particularly
of RDA offices—devolved Administration offices fall into
a slightly separate camp. First, there is some slight evidentiary
bias, in that we tend to hear from the people who are not happy
with what they have seen. I suspect that people who have a reasonably
good service tend to get on with the business.
To answer your question directly, we are
not in a position to direct people by some form of sanction, as
we do not have that sort of controlling role with the RDAs. We
act as their international trade arm and partner.
Q22 Mr Horam: So you note what they
do rather than control them.
Mr Fletcher: We can go further.
Through evidence that the committee on overseas promotion has
put together, we have been able to demonstrate to RDAs the benefits
of co-operation, and we have started to get voluntary agreement
and practice. It is the beginning of joint branding, which will
be helpful in ending the confusion with symbols that quite a few
people have pointed out. We have started to put in place a mechanism
whereby individual inward investment prospects are properly handed
out to the English regions in a reasonably orderly way. That part
of the mechanism is quite effective, and we have been able to
link it to the funds that we provide to RDAs through the single-pot
process—a unique funding mechanism—to provide some
targets that have begun to discipline their behaviour.
Those are step-by-step and incremental
improvements. From the outside, many observers have said that
the situation looks confusing, and the truth is that we can certainly
aim at better co-ordination. Equally, some value is being gained.
The trick is to use the review in the strategy as a process of
joint learning with our RDA partners to ensure that we end up
with something that meets their legitimate objectives but that
does not lead to more confusion or duplication. We have embarked
on a kind of process.
Q23 Mr Horam: It sounds as if, in
practice, there will be less of a role for the English RDAs.
Mr Fletcher: In the long run,
the RDAs are targeted and tasked with regional economic development.
All of them have seen that one of the ways of achieving that is
by attracting investment into their regions, and they are trying
to use their resources as effectively as they can to achieve that
objective. The more we can work with them to put co-ordination
mechanisms in place that achieve their objectives while continuing
to achieve our overarching ones, the more comfortable they will
be to see the UKTI leading role in the process reaffirmed.
It is also important to say in any discussions
about the RDAs that no two are alike. A diversity of practice
is already emerging in what they do overseas generally, as well
as in specific parts of the world, and it is important not to
over-generalise.
Q24 Mr Horam: Perhaps Mr Cahn would
answer my final question. How will the cross-Government marketing
group fit into the plethora of activities? What role will it play?
Mr Cahn: That question is extremely
pertinent to your previous one, Mr Horam. The cross-Government
group on marketing is designed to co-ordinate efforts across Government.
I recruited a director of marketing, who came from the private
sector and joined us in the summer. He has been engaged in restructuring
our marketing function, which he has done extremely well, and
in developing what we call an overarching proposition, a compelling
proposition, a golden thread—we have various terms. What
we mean is a way of presenting and marketing the United Kingdom
as a place to do business, to import goods from and to invest
in. We are a long way down the road in developing that proposition.
In fact, we had our first meeting of the cross-departmental group
on marketing last week. Our preliminary presentation of ideas
was very well received, and I was encouraged by that. We had representatives
there of the RDAs and the devolved Administrations—their
marketing directors and communications directors—and we
had a real meeting of minds, so I hope that that group is going
to lead to better co-ordination.
I think your questioning has absolutely
highlighted the challenge and the opportunity. The challenge is
that there are a lot of actors in the field; there are quite a
lot of different funding streams; there are quite a lot of people
trying to do different things. The challenge is to get effective
co-ordination of that between Government Departments, with the
RDAs, devolved Administrations, trade associations and so on,
and if we achieve that co-ordination I think we really will get
a much better outcome. I am afraid it is that old chestnut joined-up
government, but that is what I am trying to achieve, and the strategy
is at least in part about that.
Q25 Mr Horam: I wish you well.
Q26 Sandra Osborne: I take your point
about extra resources adding value to a situation, but the CBI
has suggested that brand UK is being diluted by all these different
organisations. I also agree with you that Scotland most certainly
does have a strong identity of its own, which obviously has its
advantages too, but Scottish Development International is not
accountable to Parliament; it is accountable to the Scottish Executive.
I am just wondering whether when they do parallel initiatives
in various countries that is advantageous; what communication
they have with you before they do it; and whether there is evidence
that Scotland is actually benefiting from that added value.
Mr Cahn: Twice a year I meet with
the chief executives of the parallel organisations in the devolved
Administrations and we work very closely together. Most recently
we met in Cardiff, a couple of months ago, and we really do a
lot of working together and a lot of co-ordination at those meetings.
I think Scotland does benefit. As an example, a very significant
proportion—getting on for around 80%—of inward investment
in projects in Scotland does, I believe, originate in leads which
came from UK Trade & Investment. In other words we have passed
on potential leads to our Scottish colleagues, who have then been
able to turn them into real projects. So yes, I think Scotland
does get benefit from us.
Do we get benefit from them? Yes, I think
we do because we are a UK organisation; we want the benefit throughout
the UK and we are as happy for an inward investment project to
end up in Scotland as in Northern Ireland, Wales or any of the
regions of England. We benefit from working with them. Having
said all that, it is a real challenge having those different actors
in the field, and the challenge is greatest in terms of the image,
the identity, the brand of the United Kingdom. I think that is
where our marketing effort does come in. We are developing a way
of presenting the United Kingdom as a place to do business, which
I think will be for the whole of the country and I think will
benefit all parts of the country.
Q27 Mr Moss: Can I just follow up
on that excellent question? You said that Scotland had profited
from leads that you had sent on to them. Were those leads that
you identified as being proper for Scotland to deal with, or were
they leads that you passed on to all the other regions within
the United Kingdom?
Mr Cahn: It is a mixture of the
two, Mr Moss. Obviously one is client-driven, and if a potential
investor from India, say, says that they are particularly interested
in going to Scotland, we pass it on to Scotland. They may, on
the other hand, say to us, "We must have good transport links.
That is the most important thing. We must be next to a motorway
and we must be next to an airport." Well, that limits. You
then say, "Well, there are these four or five locations which
might meet those criteria"; so quite often it comes from
the client—the potential inward investor.
Sometimes they genuinely are open. The
question may be, "We want to be close to a university department
with a particular skill." A pharmaceutical company may want
to be next to a university department which has a particular strength
in the area they are interested in. Then our job is to go out
and find those university departments, of which there may be several
in the country, and, again, we tell them. But we do not start
out wanting to direct a company. We start out trying to find out
what the company wants and what it needs, and then we try to give
it good advice. The principle is always that if we give it dispassionate,
commercially sound advice that works, we are more likely to do
good, get repeat business and have a success on our hands.
Q28 Mr Moss: Just to confirm matters,
you do not target inward investment to certain regions as part
of some agenda?
Mr Cahn: No. We target inward
investment wherever it will be most profitable, successful and
soundly based.
Q29 Mr Moss: Thank you. I would like,
if I may, to turn to inward investment and UKTI's marketing strategy,
particularly your marketing of Business UK. You state in your
document "Prosperity in a Changing World" that "more
work remains to be done on the priorities for particular sectors
in particular geographical markets." Would you kindly elaborate
on what you mean by that?
Mr Cahn: One of the main themes
of the strategy is that we need to focus our efforts where they
can be most productive. We have identified a number of markets
where we wish to put a lot of effort. China and India top that,
which is one of the reasons why Asif Ahmad is here today. He is
spearheading the work on India and China. We have identified eight
other priority high-growth markets and a further eight secondary
high-growth markets, and they are the ones that we will target
particularly. We will devote staff to encouraging inward investment
from those countries and British exports to them.
We have also identified a number of high-priority
sectors. In particular, we have identified oil and gas, pharmaceuticals,
information and communications technologies, the creative industries,
the life sciences, environmental technologies and power as areas
on which we want to put particular emphasis and where we already
have, as you may know, a financial services marketing strategy
for marketing the City of London. That was announced by the Chancellor
of the Exchequer two months ago, and we are working on similar
marketing strategies for a number of other sectors. We will have
one for the creative industries, one for oil and gas, one for
life sciences and one for ICT. Those are due to begin in the first
half of next year.
Q30 Mr Moss: Are those priorities
your own, or are they discussed with other Departments? Is there
a common approach to the situation, or are you working in isolation?
Mr Cahn: In preparing the strategy,
we consulted widely and deeply—and intensively, because
it was not a very long consultation period. We consulted very
widely. We certainly consulted with other Departments. We consulted
with all our stakeholders; we had a major stakeholder conference.
I asked a former diplomat towards the end of his career to go
around meeting personally all the stakeholders we could in that
time, to hear directly from them what they wanted and what their
priorities were. We worked particularly closely, of course, with
the CBI, with the British Chambers of Commerce, with EEF—the
manufacturers' federation—and with other trade associations.
We did not work in isolation. We worked
very closely and intensively with the stakeholders. Having said
all of that, there is always an element of appreciation in this.
We had to come to our own judgments—or rather, I put advice
to Ministers and they took the view that the priorities were the
right ones.
Q31 Mr Moss: An important consideration
for overseas investors is the quality of the infrastructure in
any country in which they are thinking of investing. What efforts
are being made to ensure that the infrastructure here is attractive
to overseas investors, and what input do you have into the agenda
of providing that infrastructure?
Mr Cahn: Are you talking about
transport infrastructure?
Q32 Mr Moss: Any form of infrastructure,
taken in the widest sense.
Mr Cahn: The Eddington report—I
am parti pris; I worked for Sir Rod Eddington for six years while
he was at British Airways, and I always knew that he would produce
a good report—shows the Government's focus on seeking to
ensure that our transport infrastructure is adequate. I come back
to what I said earlier about listening to the views of inward
investors and of business. We try to do that, and one of the things
we listen to them about is whether the transport infrastructure
and other forms of infrastructure are good enough. When there
are responses, whether good, bad or indifferent, we pass them
on to the relevant Departments. We fed in to the Eddington review;
my staff fed a lot of information into that review. We fed into
the Barker review and the Leitch review. We play a significant
role in ensuring that the views of business—foreign business
men as well as British business men, and potential investors as
well as exporters—are fully taken into account in Government
policy making.
Q33 Mr Moss: How important would
you say transport infrastructure was to inward investors? What
proportion of the people you are talking to have actually said,
"We're not coming to the UK because it's just not good enough;
it doesn't meet the standards that we need"?
Mr Cahn: Infrastructure is important,
but it is important that it should be there; it needs to be a
given. Generally speaking, the level of transport infrastructure
has not been top of the list of complaints. On a purely anecdotal
basis, a number of potential investors have been fussing at me
about Heathrow—immigration queues and the time it takes
to get bags and so on—but generally transport infrastructure
is not a major cause of complaint from inward investors.
Q34 Mr Moss: A number of high-profile
businesses have relocated elsewhere. I will not mention any names,
but I think you have mentioned one country already in your submission.
Should your organisation not be devoting more time and more resources
to retaining that which we have? When I was in business, it was
always axiomatic in marketing terms that you kept the clients
that you had, so my question is: are you perhaps overlooking the
need to ensure that we keep what we have, rather than keep chasing
new business?
Mr Cahn: No, I do not agree with
that proposition at all, Mr Moss. Just as attracting inward investment
is a good, so it is also a good if economic activity can take
place in a more competitive and effective way elsewhere, because
that can lead to the growth of British companies. If globalisation
is teaching us any lesson, it is that you can grow and become
more productive and more competitive if you internationalise,
and internationalising works in both directions. Of course, it
would be a very bad thing if all that happened was that British
companies relocated out of the country, but that is not all that
happens. On the contrary, Britain is incredibly successful at
attracting inward investment. We are particularly successful in
attracting inward investment from Asia. India is now the third
largest inward investor in this country. By far the largest proportion
of Indian investment in the EU comes to the United Kingdom.
We have a mammoth amount of inward investment,
which reflects the fact that we are internationalising more quickly
than other countries and other parts of the European Union, and
we are open to internationalising. I believe that that will mean
that we become more productive and more competitive, so I see
it as a positive benefit that companies are internationalising.
It is a two-way process. You cannot have only the one-way benefits
of internationalising; it has to go in both directions.
Q35 Mr Moss: Thank you.
Q36 Chairman: Andrew Mackinlay.
Q37 Andrew Mackinlay: Listening carefully,
particularly to your replies to Mr Moss and particularly on transport
links, I was reminded that no Member of Parliament is here from
Northern Ireland, which is inextricably part and parcel of the
United Kingdom. In a surrogate way, I take an interest in those
matters, and it struck me that Northern Ireland is the one part
of the United Kingdom which has a common land border with another
state. The capital city of the Irish Republic has a very strong
financial sector, company costs are lower there and we are haemorrhaging
people. They can cross the border at Warrenpoint and reduce their
industrial costs enormously and immediately. That is by way of
background.
What are you able to do for Northern Ireland
on inward investment and stopping the haemorrhaging from that
part of the United Kingdom? Lastly, because I might as well scoop
it up together, transportation links are not just Heathrow, but
getting from Belfast to the United Kingdom and/or using the United
Kingdom as a land bridge to western Europe. So, what do you say
about Northern Ireland?
Mr Cahn: One of the things I say
about Northern Ireland—partly in answer to Mr Moss's previous
question—is that it has become something of a location for
call centres. It attracts call centres from outside our country.
Northern Ireland has its own organisation for attracting inward
investment, it is very effective, we work closely with it and
we seek to ensure that there is benefit. We work a lot with Northern
Irish companies to help them in their exporting efforts.
I am afraid that the transportation links
between Northern Ireland and other parts of the United Kingdom
are not my responsibility. I am not sure that I am comment usefully
on that.
Q38 Andrew Mackinlay: I am not trying
to be facetious, but that is why I thought you might fall into
this elephant trap.
Mr Cahn: Tumbled head first into
it.
Q39 Andrew Mackinlay: The United
Kingdom does include Northern Ireland, and the folk of Northern
Ireland are entitled to say, "We have a problem, which almighty
God has given us, but we might as well try to overcome it or minimise
it. There is a load of water between us." The links for Northern
Ireland are appalling. My dear colleague here, Sandra Osborne,
represents a constituency not a million miles from Northern Ireland;
but the links from that road on the border of Scotland and England
to Northern Ireland are parlous. From what I can make out from
parliamentary replies, there is no discussion about that between
the Department for Transport, the Scottish Executive, or the Government
of Northern Ireland, who are answerable to this place. I do not
mean this unkindly, but surely that is your business and responsibility.
You ought to be flagging it up and reaching out to that part of
the United Kingdom.
Mr Cahn: I do reach out to Northern
Ireland, to the extent that I have five independent board members
on my board, one of whom, Bill McGinnis, is from Northern Ireland.
He is a doughty and effective spokesman for the Province. All
I can usefully say is that Northern Ireland is as important a
part of the United Kingdom for us as all the other parts. We work
closely with Invest Northern Ireland to ensure that there is a
strong flow of inward investment, and we do everything we can
to help it. Northern Irish companies are given parity of treatment
in all schemes in which we are involved.
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