Examination of Witnesses (Questions 80-99)
LORD JONES
OF BIRMINGHAM
23 FEBRUARY 2009
Q80 Chairman: You have just written
the recommendation for our report, I think.
Lord Jones of Birmingham: But
I repeat: they are volunteers, and they are busy, busy men and
women.
Q81 Chairman: There is one other
volunteer around we have not mentioned, the Duke of York, who
does a lot of work.
Lord Jones of Birmingham: Yes.
Q82 Chairman: How did you assess
the contribution that he made?
Lord Jones of Birmingham: I should
declare an interest, which is that I am—
Q83 Mr Hoyle: His caddy.
Lord Jones of Birmingham: His
caddy! Do you know, I have never picked up a golf club.
Q84 Mr Hoyle: Well, you would not—you
carry them.
Lord Jones of Birmingham: Either
as a player or as a caddy. That is one sport I do not do. I am
continuing to be an adviser to him, unpaid, but nevertheless you
should note my reply in the light of that as being an interest
that I have. I did it before I was in government and I am doing
it again.
Q85 Chairman: Let us have the answer
to the question, please.
Lord Jones of Birmingham: The
upside of his job as special representative to UKTI is in a particular
market. He takes a brief extremely well and when he is on that
job he works incredibly hard. Regardless of what you will ever
read in a newspaper, those two facts are true. Get the right market,
with the right people for him to talk to, he makes a substantial
difference actually to particular companies' ability to sell into
that market and invest in that market. If you treat it as, "Well,
he's just a member of the Royal Family and we will send him anywhere
and really he is going to do the Royal Family stuff and not the
business accentuated stuff", do not be surprised if he does
not come back with the result. When it has been properly done
and properly directed—and one of the other things you asked
me was how I made a difference, and UKTI while I was there did
accentuate what he did and focus it and put it into the right
place—it works. If you just say, "Go and do your Royal
Family bit over there, sir", do not be surprised if it is
not business focused.
Q86 Chairman: I am quite impressed
with the work he does—very impressed, actually—but
I do sense sometimes some jealousy in the Civil Service and the
sense that they do not have the control they would like, by definition,
with a member of the Royal Family.
Lord Jones of Birmingham: You
could say that, Chairman; I could not possibly comment.
Chairman: Thank you very much.
Q87 Mr Hoyle: As you give advice
to the Duke of York, I wonder if you could advise him that the
next time he buys his daughter a car, he buys British and not
BMW.
Chairman: No, no, no.
Q88 Mr Hoyle: That was stolen.
Chairman: We are in very dangerous
territory.
Q89 Mr Hoyle: Because you know about
using British cars.
Lord Jones of Birmingham: As you
may imagine from me, Mr Hoyle, point noted.
Mr Hoyle: Thank you.
Chairman: Well done.
Mr Hoyle: What is wrong with that?
Chairman: Very good. We do not
want to criticise the Royal Family.
Q90 Mr Hoyle: It was not a criticism;
it was advice.
Lord Jones of Birmingham: By the
way BMW do have a fabulous engine plant in Birmingham.
Mr Hoyle: Yes, but this one got
stolen a bit too easily.
Q91 Mr Clapham: Looking at UKTI and
hearing what you have said about UKTI, bearing in mind that the
strategy Prosperity in a Changing World was set back in
2006, before the economic change, identifying six themes relating
to five particular sectors, given that there has been a dramatic
economic change is there a need, do you feel, for UKTI to redefine
the strategy?
Lord Jones of Birmingham: I would
not, because it has been such a success, having been bought into.
I should have no credit for this at all, this is Sir Andrew Cahn
pure and simple. He made a success of getting them to buy into
it. When I arrived, it had already been in place a year and it
was amazing to see how they bought into it. The last thing you
do if you are trying to lead something in difficult times is chop
and change. You really do lead something by keeping your head
down, keeping your troops with you, going in the direction they
have been told to go, and you go over the top first with them.
On that basis, I would not change it at all. If this Government
can find enough of your money and my money to do all the stuff
it is doing in the financial sector at the moment, I would like
to think it could find more money to beef up, to put more power
behind—in overseas markets, not at home, not here, but in
overseas markets—to put more people behind the whole drive
of the five-year strategy, so that those sectors will come out
of this better than we went in. That means trade our way out of
it. Borrowing is deferred taxation. Let no one be in any doubt
about what borrowing is. Government borrowing has to be repaid
out of your and my money. I would like to see some of that going
to putting more into UKTI at this time, not less. It is a bit
like a business: in times of recession, you put more effort into
your sales team, you put more effort into your marketing team,
because without your sales you go bust. I would like to see that,
so I would not change the strategy, I would put more into it.
They have done this joint venture, for want of a better word,
with HSBC as UKTI. It had nothing to do with me. I was told about
it the day I was going to join, so it is nothing to do with me
at all. That is about getting smaller companies around the country
educated and trained in the way of international trade, holding
seminars and teach-ins around Britain to say, "This is how
you trade internationally, these are the markets, this is what
you do, this is what you would watch for" and then helping
UKTI and the world in saying, "We will support trade missions,
we will make sure you have some qualified expert people with you,"
to get the country trading its way out of it. HSBC is doing that
with UKTI. I do not know this, but I would not be surprised if
over a period of time UKTI will do that with other things in other
sectors and get that moving. The idea of five or six sectors being
the fulcrum of how the nation goes forward, I think is a very
good idea.
Q92 Mr Clapham: Do you feel at this
point in time there is a need perhaps to refocus or certainly
to bring more investment to research and development so that,
given the change that is likely to come next year, we are going
to be in a position to exploit the export market?
Lord Jones of Birmingham: Yes,
is the short answer. I am pleased you have raised it because,
at times of less money about and more worries about business,
the two vulnerabilities are training and R&D. They are the
two that finance directors chop first. If people think training
is expensive, try ignorance. In terms of R&D, if we have restructured
our economy over the last 20 years into value-added and innovation
and away from making things which sell only on price, commodities—which
we have done—and if as a nation we are attracted to inward
investment at the value-added end of what we do, if you do not
constantly research and develop your next products you are dead,
you are finished. I think as a nation we have always put enough
into research. Blue sky research universities and businesses is
very good in this country. You will not read that in a newspaper,
because it is good news. Why would you? In terms of development,
the D bit of R&D, I do not think we are good enough as a country.
We tend to research it here and develop it in other markets, and
the sad thing is that you manufacture where you develop, you do
not manufacture where you research. If you get the trend of research-development-manufacture,
manufacture and development blends together and we are not so
good at that. So more effort, more stimulus—maybe more money,
but it is more about attitude and stimulus—at the development
end of R&D. I think this nation could invest there quite profitably.
Q93 Mr Clapham: Just looking at one
of those sectors, which is energy, we see that one of the features
that is going to remain after we come through this recession is
that we are going to have high energy prices. Cheap energy has
gone. Given the kind of situation there is now, do you feel there
is perhaps a real need for us to be investing in the green technologies,
in order to be able to reduce our dependency on those high energy
prices.
Lord Jones of Birmingham: I think
there are three reasons we should be doing it, and in no order.
One is that we are quite good at it and the world is going to
move that way, so why do we not make a win-win out of it and sell
our technology expertise around the world? I remember going to
Wuhan, quite a small city in China, only eight million people,
the size of London, in a province called Hu Bei, which has 60
million people, the size of Britain. They have big pollution issues,
and there was a wonderful company from Kidderminster, a small
business, selling some wonderful environmental engineering stuff
to help clean up their water. A huge export of success, right
in the teeth of a recession. First, it is because we are quite
good at it. Second, as a mix, if we have nuclear in the equation,
if we have sustainable in the equation, and the use of fossil
fuel continued but in a cleaner way—which of its own is
a technological advance—then you are not so reliant on some
rather, shall we say, unstable parts of the world who choose to
use energy as a power broking mechanism. On that basis, for the
nation's sovereignty, if you like, I think it is important. Third,
there is the genuinely held belief by so many people that this
is the only planet we have got and we ought to be doing something
about that too.
Q94 Mr Clapham: Given your wide experience
of dealing with British industry abroad, what would you say are
the greatest challenges faced by British industry abroad?
Lord Jones of Birmingham: Generally,
you mean, not just environmentally.
Q95 Mr Clapham: Generally.
Lord Jones of Birmingham: Every
day they come up against companies from their rival nations of
the developed world whose governments support them more, put more
money behind their promotions, whose politicians are more behind
the business equation than ours—of all parties—are.
Secondly, a challenge which the entire developed world meets every
day is that the developing world, especially the BRICS economies,
are commoditising innovation every day, so your value-added is
a win-win of being able to say, "I'm selling this on innovation
and value-added" if the price is not as important. If it
is a commodity where the price is everything, go and get it done
in Vietnam or India or whatever. Every five years or so that innovation
product has been commoditised and it is now being done over there,
so you constantly have to re-invent and re-develop value-added
products, goods and services in the developed world because everything
else is shifting that way. When you have got a billion Indians,
of whom 800 million still work on the land, you have got the population
of the European Union and America put together that is working
on the land in India and is yet to be industrialised. When you
have got something like a third of the Chinese population still
on under two dollars a day, this is going to go on for your grandchildren's
generation, and so the biggest challenge for British business
overseas is how do you constantly sell on something more than
price? If you are at the rarefied end,—Rolls-Royce aero
engines come to mind; fabulous product—fine, but you cannot
employ everybody in Britain, and so how do you do it so that you
have enough economic activity at the value-added end in your country?
If I were giving evidence as a German business person to a German
politician I would be saying exactly the same, and American and
French and Australian and Canadian.
Q96 Mr Clapham: Do they do it better?
Lord Jones of Birmingham: In terms
of promotion around the world from a structured government point
of view the best in class is probably Team Canada and it might
be Singapore. UKTI does it better than the Americans or the French
or the Germans.
Q97 Chairman: It is export promotion
generally?
Lord Jones of Birmingham: Export
promotion, yes, but, in terms of this mix of business and the
public realm together that I was talking about earlier, we do
not do it well.
Q98 Mr Clapham: So, just to clarify
on that question of support given to business abroad, our main
competitors: the Germans, the French, et cetera, do they
give better support to business products?
Lord Jones of Birmingham: Yes,
they do. I can give you two examples. One would be trade fairs,
exhibitions, where it is about small business. It is about a small
business having two things: money and confidence. The ability
to go where you have never been before is a pretty frightening
thing when you are a three-man band from Britain. This is not
a UKTI critique because UKTI has only got one pot of money and
it can only spread it so thinly so far. It is about how much is
given to UKTI in the first place. We do not put anywhere near
enough behind that. The Germans do. The second one is export credit
guarantee. One CEO of a big manufacturing exporter said to me,
"I use ECGD to market-test. If ECGD will cover me I know
it does not need insurance", whereas if you were the French
or the Germans you would be behind all your big exporters.
Q99 Chairman: I do not want to interrupt
your flow but there is just one thing you said which was quite
interesting. Canada is a federal system with very competitive
states and Germany is very much federal; the Länder are very
competitive. We quite often get anecdotal criticism here that
one of the things that undermines UKTI is the RDAs competing with
each other which sometimes confuses those markets. Do you think
that criticism is fair or not from your experience?
Lord Jones of Birmingham: I think
it has got a lot better. You asked me at the start whether I thought
I might have made a difference at the time I was there. Because
I was from somewhere north of Watford, because I had been in at
the formation of the RDAs back in 1999, I understood them, I knew
them, I had worked hard with them at the CBI. There was an element
of mutual trust between me and the RDAs and I think the relationship
got a lot better when I was there and I think it will endure,
and there was a lot less of you went to the Detroit Motor Show
and every RDA was there separately with UKTI. What a waste of
public money that was. That has now come down to just two or three.
It is far more focused. It could be better still but it is far
more focused. Similarly, I have never understood why Scottish
Enterprise always had to have a separate stand everywhere. It
was fine if it was Scottish taxpayers' money but not when it was
off my budget. That is also getting better, I think. I think there
is a bit more will to pull the boat in the same direction. The
Länder do not do it nearly half as much as the RDAs did,
and Team Canada was very much a federal drive. I always said to
UKTI, "You want to watch Team Canada and see where you can
do it like them in certain areas". Singapore was different
because Singapore came from a completely different walk of life
in so many ways.
Chairman: I am sorry to interrupt, but
that is useful; thank you.
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