Select Committee on Business and Enterprise Minutes of Evidence


Examination of Witnesses (Questions 20-39)

LORD JONES OF BIRMINGHAM AND MR GARETH THOMAS MP

8 JANUARY 2008

  Q20  Mr Binley: Digby, I can think of few better men.

  Lord Jones of Birmingham: You are very kind.

  Q21  Mr Binley: Having said that, I would hate to think you were illegal.

  Lord Jones of Birmingham: I am sorry?

  Q22  Mr Binley: I would hate to think you were illegal, because you talked about values and legality is an important matter. The Observer did suggest that you had failed to comply with regulations which required you to declare outside earnings. I think that was in December. Have you now complied?

  Lord Jones of Birmingham: Yes.

  Q23  Mr Binley: You are now legal, are you?

  Lord Jones of Birmingham: Not only that, but actually I gave up absolutely everything I do money-earning-wise (not some of my charity stuff but money-earning-wise) on the day I became minister. I filled in the form to the House of Lords, which is that to which you refer, a week later; so I was a tad surprised in early December when I got a letter saying: "Why have we not had your form?" Of course, I take responsibility for it personally, it is my signature on the bottom of it, but I did do it.

  Q24  Mr Binley: So you are legal.

  Lord Jones of Birmingham: I was legal from July. It is just that somebody somewhere did not file it, but I will take responsibility for that because that is what ministers do.

  Q25  Mr Binley: That is really good news. Can I stay with the newspapers; they are part of the light world we live in, and you found that out in an even bigger way that perhaps you might have thought. In September The Financial Times suggested that you were still struggling to persuade some departmental officials to adopt new ways of thinking. In other words, you were as frustrated about the slowness of government, as most businessmen who come into this place are, quite frankly, and I identify with that. Can I ask what sort of new ways of thinking you had in mind and can I supplement that by saying: what changes do you think you have made in that respect?

  Lord Jones of Birmingham: The Prime Minister made a decision in late June, upon his appointment, (a) to split our jobs and (b) to say, for the first time, let us do trade and investment to the exclusion of other responsibilities. The easy bit is for him to say it and for me to say I would love to do it. The second easy bit is for me to get going. For instance, I am the first minister in charge of UKTI physically to go and sit with them every day in their office; I am the first one to try and brand UKTI as a minister, not in with the whole of the Foreign Office and everything else, because it is being done differently. The easy bit is to say sit here and say that. The difficult bit is to then, not in UKTI—they not only buy it, they are fabulous and they support it all the way down the line—but in other parts of government it is new, it is different, it is change. It means that if there is a choice between cancel a delegation to Russia or do something else that a previous minister in this job would have done, I will go to Russia because Russia is a huge investor in Britain, because British companies trading with Russia is important. It offends them when you cancel at the last minute, although for very valid reasons if you are an MP or if you have other responsibilities. For the organ of government, the engine of Whitehall and Westminster to get used to that change is (a) difficult, (b) frustrating for both sides and we are learning from each other, and (c) yes, it is difficult when I am used to, "When do you want it"? Yesterday", finding that things take a little longer sometimes. Have I learnt that over six months? Yes. Are they learning to do it a little more perhaps with a sense of urgency? Yes. Somewhere in the middle it is getting on quite fine. In fact, I have to say I am thoroughly enjoying it.

  Q26  Mr Binley: I am delighted. As a salesman all my life, I understand what you mean about offending because the last thing you want to do is offend a potential customer. I am not sure government fully understands that and I am at one with you. Can I finally go on to talk about your travels? You have told us of your travels. Give us some idea of where you have been and how you have raised those policy matters, how they have related to the actual job of promoting Britain around the world, and, finally, can I ask in that respect, it would be helpful to keep us informed if we had a bulletin perhaps, I do not know, every four months or something of that kind, just to give us a handle on what I think is very important work.

  Lord Jones of Birmingham: The latter point first. I would love to do that. If every quarter I dropped the Chairman a line and I copied it out to the members and I basically said, "This is where I have been"—long-haul, short-haul, regional—"these are the companies I saw, this is what I was doing, these were the issues I have raised", that is a relevant point. I would love to do that actually; so the answer to that is, yes. The first point, one of the things that is very important is to not get carried away with one of the fashions of the time, or one of the important markets at the time, to the exclusion of others. An example would be: was it important I went to India and to China in my first six months? You bet it was. But, for instance, when Bo Xilai was trade minister in China (and I knew him in my CBI days) he congratulated me on this appointment and he said, "Do yourself a favour. Of course, come to Beijing and Shanghai but please do not concentrate on that. Loads of people from all over the world, ministers, come to Beijing and Shanghai. Go to the cities that do not often see people. That is where Britain can maximise its time." It was excellent advice. Not only did we please the Trade Minister of China, an enormous partner in the twenty-first century, but we can get more bang for the buck from the taxpayer of my time. For instance, on my visit to China I went to Wuhan, a small city, only eight million people, and Hubei Province, 60 million people, the size of the UK. You have got British companies, environmental engineering companies, cleaning up the lake, dealing with pollution, stuff that is added value and quality innovation, Britain is doing its best now. To get there was a good use of my time. Loads of ministers, rightly, will go to your Beijings and your Shanghais. Secondly, it is important to understand that last year roughly 1,500 different items of inward investment into Britain, second in the world, after America, number one in Europe by a mile. Of those 1,500, about 600 came from one country: America. If we, therefore, ignore America on the basis that everyone is going east (and, by the way, lots of important things are going east), we are very foolish. So I have been to Arizona on one visit and I went to New York and Philadelphia on another visit to basically say thank you. I went to Johnson & Johnson in Philadelphia, a huge pharmaceutical company.

  Q27  Chairman: I do not want to cut you off, but we have a full itinerary.

  Lord Jones of Birmingham: For instance, on a short-haul we actually export more to Germany than we export to India, China, Russia and Japan put together. So if we ignore Germany, if we take it for granted—it is in the European Union, we understand them, do we not—then I think we are being very foolish, we are being very complacent and we are very wrong. If you were a minister who had lots of other things on and a constituency here and other obligations there, you would ignore Germany because you have not got time. I have the time, so I went to Düsseldorf, met some inward investors and said, "Thanks very much for coming and risking your dosh in Britain."

  Q28  Mr Binley: A very quick question. The last time you were here the Chairman asked if you would consider doing the same job, bearing in mind you are not involved with policy, with a future Conservative Government. Has six months in government changed your mind: because you intimated you might not?

  Lord Jones of Birmingham: I actually did not say yes or no. The words I replied, if you look at the record, were "no comment". Six months on, I hope I am doing my bit for my country. I am certainly, I hope, adding some value. The answer to you is: no comment.

  Mr Thomas: Mr Binley, if it helps, I certainly would not do my job.

  Q29  Mr Binley: Gareth, I was never in any doubt about that particular point!

  Mr Thomas: I do not think there is an early prospect of that.

  Chairman: The partisan note that has been introduced into these proceedings unnerves me slightly. I will let Julie Kirkbride in briefly before bringing in Tony Wright.

  Q30  Miss Kirkbride: We will part with the question of whether or not you would do the same job under a Conservative Government, the question is whether you could afford to continue doing the job under any government?

  Lord Jones of Birmingham: I do think it is very, very important that ministers (and, may I say, it is not my bag but members of Parliament) do set an example if we are saying to policemen—

  Q31  Chairman: No, we will end that there. We are getting off the subject.

  Lord Jones of Birmingham: We can afford to do it. The answer is it is not about whether you earn the money, it is about whether you want to make a difference to your country, but what you have got to do when you are looking at the money (and I have learnt this in six months) is stop bleating about it, because, frankly, an extra 2% or 3% is not the issue. The issue is you are either doing it for your country or you are not.

  Chairman: I think you have deliberately misread Julie's question.

  Miss Kirkbride: It is not my question.

  Chairman: It is not your question, you know that, but we will move on to Tony Wright.

  Q32  Mr Wright: Another question of value for money. In a written answer recently there was an evaluation of UKTI trade services which found £65 million expenditure generated £1.13 billion benefits or £17 benefit for each £1 of spend. With those huge returns that we see, why do you think that the UKTI's budget has been kept level under the 2007 Comprehensive Spending Review?

  Lord Jones of Birmingham: Every department had to, and rightly, make cuts, and we have to, all of us in every department in government, try and maximise the money we get from the taxpayer. I think the CSR settlement for UKTI was fair, I am pleased actually to see that it was a settlement that does enable me to do the job differently. I got involved in it personally to make sure we could get some resource behind it and if we can deliver those figures, which I am proud of (and nothing down to me, down to the fabulous people who work in my department), if we can do that with the money, I do not think we need a bigger settlement to deliver more. As with most departments, I hope, it is not the amount you get, it is how you use it, and if we can be efficient and productive in how we do it—prioritise, choose, maximise—then I think we can not only deliver that again but deliver better. Could I do with more money? We all could, could we not, but it is not on the table. The nation's finances are not going to say to departments: have loads more. My job is to make sure that Andrew Cahn and his people actually deliver even better things than that with the dosh we have got.

  Q33  Mr Wright: Surely if we were getting that return, £17 for every £1 of investment, although it is not a cut per se, it would be pure folly to look at it on that basis. Surely we would be investing more to get more value for the investment. Sixty-five million pounds is not really an awful lot of money for the size of the department that we run in UKTI.

  Lord Jones of Birmingham: It is not an awful lot of money for what we do, and one of the jobs, I hope, is that UKTI will be seen in government, seen by the media, seen by people as important to this nation as Treasury, or Foreign Office, DFID, MoD and everywhere else, and it is time it came out from under its bush and really did get up in the headlines for the fabulous contribution it makes to the coffers of the nation. If we were given more would we deliver more? You get we would. Do I work in the realms of reality and do I understand that that is not on? Of course I do, and therefore the job is to deliver more with what we have got by better application of resource, although you are right, if we did have more, of course we would deliver more.

  Q34  Mr Wright: So are you confident then, even with the CSR settlement, that you are going to be able to deliver more through UKTI in the coming 12 months?

  Lord Jones of Birmingham: Yes.

  Q35  Mr Wright: One of the other aspects of this is the question of the UK embassies abroad. There is going to be a cut in those areas, and there has been some suggestion that perhaps we could share some friendly embassies in that situation. How do you consider that is going to affect the trade support?

  Lord Jones of Birmingham: The final decision in any event is (a) not there yet and (b) is not for me. I can have an influence, I can make an input, and I have, but it is not my decision; so I will not actually second-guess the Foreign Secretary. What I would say is that the British business community, one of the first ports of call, especially in emerging markets, one of the friends at court you have is UKTI, especially if you are a small business in emerging industries, emerging sectors, such as creative industries or environmental engineering where a lot of fabulous ideas come out of small business. UKTI on the ground linked into an embassy that has the infrastructure and the heritage (and, let us get proud about this, the Union Jack, we are Brits and we should be proud of it), that presence round the world is key. Also key is the way that presence is emblematically transmitted into that community: a quality-looking embassy, a residence in which you are proud to entertain to make sure that on the ground you are seen as having influence. Sadly, perception is reality in a lot of this and, therefore, to ensure that do we need embassies round the world? Yes. Do we need them virtually everywhere? Yes. We are Britain. We are the fifth biggest economy on earth with a fabulous set of values.

  Mr Thomas: If I may, there is one other thing I would add to Tony's question. Digby has quite rightly talked about UKTI and the role of embassies. In a sense the trade policy which focuses on the long-term policy questions is also engaged (and I apologise for confusing the House in the first discussion) in the long-term promotion of opportunities for British business by trying to open up markets through the Doha Round and discussions through regional trade agreements, through all sorts of other discussions that take place around competition policy within the European Union. So there are approximately 70 staff who work on trade policy issues who are, in a sense, seeking to open up opportunities for British business which UKTI and the FCO posts can then exploit at a later date.

  Lord Jones of Birmingham: Let me just add, if you take an example, Graham Fry in Tokyo, or William Irvine in Beijing, you will find they are spending and their staff are spending, not UKTI, at ambassador level up to 40% of their time regularly, a third of their time, on what David Miliband would call commercial diplomacy, on the whole presence of Britain from a commercial point of view. Is that essential? That is so essential to this nation it is not true. Do we need that presence around the world? Yes, I personally want to see it everywhere.

  Q36  Mr Wright: You did mention briefly that you had been putting your view forward in terms of the various embassies that are coming forward for possible closure. Is that taken on board generally by the Secretary of State?

  Lord Jones of Birmingham: Well, I can miss sixpeneth, and I do, very much in private, and I can put forward, and so would my people, on a case by case basis the merits and the not merits, but I do sympathise with the decisions or, rather, the judgments that have to be made. For instance, as we apply our resource there are some countries in the world which, although they are important, are not as important as others, and so you have to make some judgments. By the way, it is not a British issue; the French have to do this and the Germans and the Americans.

  Chairman: I think we need to move on from this subject.

  Q37  Mr Wright: Very briefly, I think you did mention your new responsibilities for DESO. Gareth, in terms of the changes that have been effected with the transfer of DESO to UKTI, is that going to make any difference to your particular role?

  Mr Thomas: I do not think it is going to make a direct and immediate difference. I think it will impact on Digby, as he alluded to in an earlier answer.

  Lord Jones of Birmingham: I just see it as a fabulous opportunity. Defence manufacturing is so important. We are good at it, hundreds of thousands of jobs depend on it, huge amounts of corporation tax, and if this nation does not get behind its defence manufacturing sector, we will rue the day. If I have got the chance to champion that by DESO or some DESO coming into UKTI, I relish the opportunity.

  Chairman: I think the general view in the defence world is it was not broken; it did not require fixing, though it is something we might look at again in the future because it has caused a lot of concern to defence contractors, the changes they did not ask for, and happened out of the blue, but never mind. Let us move to more questions that Gareth Thomas will want to address with Mike Weir.

  Q38  Mr Weir: It seems the end of this year is now the informal target date for concluding Doha. That is some four years behind schedule. Is there any reason to believe it will happen this time?

  Mr Thomas: I was in Geneva just before Christmas at the end of November and it was clear that there has been some movement in the agriculture negotiations which are absolutely key to getting some momentum into the Doha process. We are expecting to see revised texts that form the basis for negotiations from the agriculture group and from the NAMA group in either late January or early February. If those texts are accepted as a basis for continuing negotiation by all the key players, then there is no reason why there could not then be a ministerial meeting at Hong Kong or Cancun to try to close down agreement on the headlines of a Doha deal. So, whilst the delays and the length of time it has taken are frustrating, there does appear to be movement. The chair of the negotiating group is very clear on that, as were a number of other key players, and I think we have to allow those and support those discussions continuing. You may be aware, Mr Weir, that our own Prime Minister has been heavily involved in talking to key players, both within the US and within Brazil and India and other players within the European Union to try to encourage the flexibility that is needed to close down a deal. We are not that far away. The difference in the positions of key players is not huge, but it is going to require people on all sides to show that additional bit of flexibility.

  Q39  Mr Weir: You mentioned the United States, but, as I understand it a US presidential trade promotion authority is needed to avoid Congress unpicking a final deal. There has been a lot of concern about this portion of it. In fact, Brazil and India have called for a "road map" towards TPA. Do you think greater clarity on this is needed before any deal can be finalised and is the current election process in America likely to delay the others?

  Mr Thomas: Trade promotion authority is not stopping the Americans continuing to take part in discussions, and TPA can be renewed or extended at any point by Congress. I suppose my own sense is that the American presidential elections, as, I suppose, any elections do, do not provide the most conducive backdrop for negotiations to take place, but, as I say, the Americans are continuing to take part in those discussions. They are very active participants in Geneva and we will have to see how things pan out. There are a number of different scenarios in which TPA could be achieved and a number of different scenarios in which the negotiations could be included, albeit, perhaps, that a new president may have to take the deal through Congress. I do not think TPA as such is a critical issue; it is going to be flexibility from the different countries' capitals which are going to be key.


 
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