Examination of Witnesses (Questions 60-72)
ANDREW CAHN,
SUSAN HAIRD,
ASIF AHMAD
AND IAN
FLETCHER
6 DECEMBER 2006
Q60 Mr Purchase: I am well aware
that I was conflating two issues—inward investment and trade—but
in the end, the resources are there to be used in one way or the
other. I was just making the point that, working at one end, it
is difficult to spread the resources to work at the other. I personally
believe that Britain needs to do a great deal about that very
long tail of poorly performing companies.
I shall move on. You have a taskforce in
Asia. How is the level of service in Asia, and how has the new
Asian markets programme been received across the exporting world?
Mr Cahn: I will ask Mr Ahmad to
answer that, if I may, because he has been closely involved.
Mr Ahmad: If I have understood
your question correctly, you were referring to the Asia taskforce
announced by the Chancellor some two years ago. The purpose of
that was to answer the question that you posed much earlier, which
was, with the UK's stake in global trade under threat, what more
did we need to do to protect and enhance our position? The taskforce
acts as a sounding board whereby members of leading British companies,
academic interests and organisations such as the CBI gather as
a collective to ask, "What is happening in these marketplaces?
Is the UK well positioned?" Some of the issues that they
have come up with are wider Whitehall issues, such as our policy
on work permits and visas and how intellectual property rights
are protected in world markets so that when a UK investor invests
abroad, we do not sell the Crown jewels in the process.
It will have an outreach team, which we
will roll out from the beginning of the new year, whereby companies
that have already succeeded in Asian markets will go out to the
regions of the UK and say, "This is how we have encountered
the challenge of globalisation. These are the opportunities."
Supplementing all that, we are conducting
research to try to identify areas of proven UK competence in which
we can match structural changes in demand with the capability
of UK companies. In essence, the Asia taskforce has given us a
wider remit in what we do.
Q61 Mr Purchase: Can I just get you
to elaborate on that a little? Our colleagues in the Select Committee
on Trade and Industry highlighted in their report on India the
impact of the reduction in posts. How does that fit in with what
you have just been saying to me? Perhaps it does not.
Mr Ahmad: We have had two waves
of changes in the structure of UKTI. Two years ago, when the previous
spending review was put in place, covering the period 2004 to
2007, there was a requirement to shift resources back to the Foreign
Office from UKTI's front line—a cut of some £20 million.
We achieved that, largely by prioritising our efforts, keeping
our key staff resources in the markets that mattered most and
making cuts in less important marketplaces. As director for Asia,
I would say that the impact on Asia was minimal. Some of it made
sense but, conversely, what we are now doing as part of the new
strategy is reinforcing many of the markets in which demand is
greatest, China and India being two key ones.
Q62 Mr Purchase: So are you satisfied
that business has proper access to the posts that are now available?
I believe that one of your aims is to give business increased
access to the insight captured by our overseas posts. Are all
these things coming together okay?
Mr Cahn: I think they are. One
of the other things that we are trying to do picks up on giving
British business insight into the expertise and intelligence of
our posts overseas. We have a pilot project to make available
on a subscription basis economic intelligence from our posts overseas.
We will have a pilot based in South Africa that will be running
next year to see whether it is commercially viable and whether
companies want it. I very much hope that they will and that it
will work and be successful.
On the more general question whether I
am satisfied that our companies have access to adequate services
in the high-growth markets such as China and India, yes, I am.
We have particularly good teams and a very good staff, which we
are augmenting in both China and India and in the other key high-growth
markets such as Russia—we have augmented staff there—Turkey,
Mexico, Brazil and Indonesia. I believe that we are offering a
good service overseas.
Q63 Mr Purchase: Thank you.
Q64 Chairman: We have five minutes
more. Fabian Hamilton.
Q65 Mr Hamilton: Mr Cahn, can I come
back to some of the things that you said about the organisation
and its culture? I understand that the CBI said in written evidence
that "UKTI does not really have a common culture throughout
the organisation." It suggested that you need effective culture
change and that that is one of your biggest challenges. It seems
that you agree. You said that "To accomplish our ambitions
requires a major change in the culture of UKTI." How are
you getting on with that culture change? Is it happening?
Mr Cahn: It is absolutely true
that we are an organisation made up of several cultures. I asked
Susan Haird, my deputy, to lead on culture change. Perhaps she
could address that question.
Ms Haird: We are working very
closely with some consultants at the moment who are doing work
for us to identify the current culture, the desired culture—we
have a good idea of what we want—and how to close the gap.
We are also undertaking a skills audit to identify where the staff
that we have at the moment have skills and where they do not,
and what we need to do to close the gap—recruitment, training
or, most probably, a mix of both.
You are talking about culture change. It
is actually quite a difficult thing to achieve, especially in
a disparate organisation such as our own, but there are a number
of levers that you can use. Traditional human resource levers
such as the objectives that you set people, the way that you appraise
them and the way that you reward them. Also, crucially, there
are the strategy talks about becoming a target-driven organisation.
We are going to set very clear targets for staff right through
the organisation, which we believe will help drive the more marketing-led,
entrepreneurial behaviour that we want to see.
Q66 Mr Hamilton: How has that gone
down with the staff?
Ms Haird: I think that the staff
are very enthusiastic about the strategy. They see that we are
now an organisation well placed with our stakeholders and much
respected by them and by Ministers. They feel excited about the
direction of travel. Staff like targets. They like having clear
things to achieve. On the inward investment side for some years
now, we have had clear targets for the number of successes that
we want to see. What we are trying to do now is to spread that
target-driven approach throughout the organisation, and the staff
are excited by that.
Q67 Mr Hamilton: Will the culture
change ensure uniform delivery across all posts and the countries
where UKTI is represented? Sometimes it can be patchy, can it
not?
Ms Haird: I think that setting
clear targets, including for customer satisfaction, will help
drive a consistent approach across the organisation.
Q68 Chairman: Thank you. Sandra Osborne.
Q69 Sandra Osborne: Quite understandably,
you have a particular focus on emerging economies as a key element
of the UK's response to globalisation, but globalisation involves
more than two countries, and you have a specific focus on India
and China. You have also mentioned other high-growth economies,
but is there a danger that the concentration on China and India
could mean missed opportunities in other emerging economies?
Mr Cahn: I rather regret now that
we used the term "emerging economy". We used it, so
it is our fault, but I am not sure that it is particularly respectful
or accurate to call India or China emerging economies. They are
growing rapidly, that's for sure. I rather wish that we had used
the phrase "high-growth". I merely say that, but that
is certainly our fault.
You are absolutely right that we cannot just
focus on India and China. They are key—they are the two
key countries in which we must be well represented if we are to
prosper in the coming decade—but other high-growth economies
are very important. We selected 10 initially, and a further eight
are coming up behind. Ian Fletcher and his team used a reasonably
sophisticated methodology to get to them. The fact that we ended
up with the usual suspects—the countries that you would
expect to find—does not invalidate that; it merely shows
that the methodology worked. As I say, we have 18 high-growth
countries that we are particularly targeting, 10 of them with
particular priority.
Q70 Chairman: Can I ask you a final
question about the way in which your statistics are compiled?
Are you confident that you know the final destination of exports?
If you are not, does not that mean that all the statistics about
where we are in the global marketplace are meaningless?
Mr Cahn: They are not meaningless,
but they do need interpretation. You are absolutely right to say
that trade statistics are notoriously difficult to place complete
reliance on. That is, perhaps, even more the case in respect of
inward investment, which you can define as financial flows or
stock, or by project numbers. There are different measures: those
announced by United Nations Conference on Trade and Development
and by Ernst & Young, and the ones that we announce. There
are others, too. None of those are accurate, in the sense that
none give a complete picture. Each of those measures has its problems.
For example, if you look at financial flows, Luxembourg turns
out to be one of the major inward investors in the world. If you
consider stock, you find that Mauritius is perhaps the major investor
into India.
There are real difficulties in interpreting
the statistics. I have no simple answer. There is no magic wand.
On inward investment, we try to look at all the different measures
and then try to interpret them. For ourselves, we tend to use
the number of projects as the most reliable way of measuring inward
investment, although of course that is, in itself, distorted because
a tiddler and a ginormous project each count as one. Nevertheless,
that is a reasonable measure. On exports, equally, it is quite
difficult sometimes to know the end destination. A good example
is that France appears to have massive exports to China—the
Airbus aircraft—but although the wings and engines are British,
they count as British exports to France. What is accurate? It
is difficult to get to the truth.
Q71 Chairman: Is there time for an
international convention on this, or will it take us centuries
to get there?
Mr Cahn: I came into this job
in order to achieve something pretty rapidly and not to sit in
committees. There may be room for an international convention,
but I think that somebody else can negotiate it.
Q72 Chairman: We will return to that
in future. I thank all four of you for coming today; it has been
a valuable sitting and I am sure that we will, at some point,
revisit these matters with you, but I cannot say when. This has
been important for the Committee's continuing scrutiny of your
work, as well as for our sister Committee. Thank you very much.
Mr Cahn: Thank you, Chairman.
If I may be permitted to say so, I hope that you will return to
the charge at some point. It is valuable that your Committee chose
to look at UKTI and I have enjoyed being here.
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