Exporting out of recession - Business and Enterprise Committee Contents

Examination of Witnesses (Questions 100-119)


23 FEBRUARY 2009

  Q100  Mr Clapham: That is an interesting point, working with the RDAs. As you say, it has become much more focused. In terms of UKTI's target markets, they identified in their strategy ten target markets. Do you feel that they need adjusting or are you satisfied that those are the markets which we should be concerned with?

  Lord Jones of Birmingham: They chose ten, did they not, but then about a year or so ago they went to 16 of the emerging markets? Do you remember?

  Q101  Mr Clapham: I am just looking at the brief. I have got my brief here.

  Lord Jones of Birmingham: They had ten, which would include America. For all the accent we put on everywhere else, America is still our biggest trading partner and still our biggest inward investor, so you ignore America at your peril. Of the ten, you are right: they were everything, but we also chose 16 emerging markets we could focus stuff on.

  Q102  Chairman: Given the list of the ten emerging markets we have got here, it would be interesting to have your view on the value of the ten—China, India, Russia, Brazil, Indonesia, Mexico, Ukraine, Saudi Arabia, Turkey, the UAE.

  Lord Jones of Birmingham: And your question is?

  Q103  Chairman: Are those the right ten?

  Lord Jones of Birmingham: If you are having ten, that is the right ten. The question should be, is ten enough? One thing I would like to see, and I am not going to second-guess Sir Andrew; he might well have done it, is that you should keep that under constant review and see where you need to be putting more or less of your money. Also, is ten enough? A very good example of this would be that Indonesia, for instance, is a market that is not really on our radar screen as a country. If you said to small businesses in Manchester, "Tell me some exporting markets you think you could go at", a country with 160 million Muslims is not somewhere where they think of and yet it is teeming with people who are getting richer every day and who would love to buy our goods and services. If you said, "How about Mexico?", they would go, "Oh, yes, we know about that. It's below America and I know where it is". You have got a big job to do to get certain markets with huge potential onto the radar screen of the British business population.

  Q104  Mr Clapham: Are we doing enough to do that, to get across to British business the kinds of markets that we ought to be having a crack at?

  Lord Jones of Birmingham: One of my jobs at HSBC is to make sure that smaller businesses in Britain get an understanding of that. I have got to get round Britain doing that and I would hope that some of my rival bankers do the same. This should be something that we should all be doing. Are we doing enough as a country? No; we should be doing more. UKTI, I would say, are doing as much as they possibly can with the resource they have got, but what I would like to see is them having more resource.

  Q105  Chairman: As a link into Lindsay's question, one other UKTI question struck us as very important: the degree of controversy around the merger of the defence export sales organisations in UKTI. Some people said that this was a marvellous opportunity to upskill our defence export operation; others said it was a symptom of embarrassment, the fact that we sold armaments at all as a nation and it was time to shut them off. What was the reason for the merger and has it worked?

  Lord Jones of Birmingham: First, it is against a background where I believe defence manufacturing is one of the great strategic and hugely important sectors of this country. We are one of those nations that has a reputation for standing up and being counted in the name of freedom. I do not want to argue about was Iraq right? What about Afghanistan? I do not mean that. I just mean that we are a nation that does stand up and get counted in many areas. To do it and do it well you need an indigenous defence manufacturing base. Secondly, if you develop it and do it well you can sell that expertise around the world. If anybody who is against us making weapons in this country thinks that this world is going to be safer by Britain not doing it, they are mad. All that will happen is that countries that you really wish were not doing it will start doing it. Therefore, if you follow the premise that we have a huge employer, a big taxpayer, a sector which supports democratic freedom and a sector which hopefully crowds out some rather nasty countries that would do it if we did not, then it follows that you need to give it government support. Our democratically-elected politicians may find it unpopular and embarrassing to say so, but the Government of the day has to get behind it and it needs an organisation to promote it. That organisation, especially in the field of arms sales, should be over-transparent. It should super-please in the areas of transparency and accountability, and it is a field where other countries are not transparent and accountable. I think we should be an exemplar in how to do that, and I am not passing judgment over whether we have in the past or not. I am merely saying that is what we should be doing. On that basis you need an organisation. It probably makes sense that you put that organisation in amongst the organisation that is there to promote the rest of your sales and promotion and marketing of what we have in goods and services rather than something that is over there, and so to bring it inside the UKTI tent I think was the right thing to do. It has peculiarities which we have to be sensitive to. One is that your best salesmen and saleswomen for that are not you and I; your best salesmen and saleswomen are the men and women in uniform. They are the best and the people who buy this stuff in other countries listen to the men and women in uniform more than they will listen to me, so you will need to be sensitive to the fact that it is slightly different in that respect. Secondly, it is probably the only sector, with the possible exclusion of higher education, where government sells to government and where the private sector are agents of government as opposed to principals. Therefore, when government sells to government you have all the issues, good and bad, that come with that. Is it different? Yes. Do I think those differences mean that you would not put it within UKTI? No. I would have it within UKTI. I think that was a right decision, but it was done too quickly, it was done without notice and it was done in a way that was not sensitive enough to the men and women in uniform and those who make the stuff upon which we depend as a nation not only for our security but also our wealth and our taxes and our schools and hospitals. However, is the end result where I would like it to be? Yes.

  Q106  Chairman: That means big problems in the process. Industry was completely unaware of the potential. It just happened out of the blue. You are saying that has caused interim difficulties but they are being overcome and the idea is basically a sound one?

  Lord Jones of Birmingham: I was amazed, given the lack of notice and the lack of consultation and the immediacy of the implementation of the decision, at how well those who were affected by it got on with it, probably not happily at the time but they got on with it, and I think the end result is probably where a lot of people would have liked it to be, but on the way through there were a fair few sensitivities trampled upon.

  Q107  Mr Hoyle: I represent a region that is very depend on defence manufacture.

  Lord Jones of Birmingham: Sure. You make the Typhoon, do you not?

  Q108  Mr Hoyle: Absolutely; we make the Typhoon, and we have got missile technology as well, but, of course, with that goes a lot of government investment of taxpayers' money. Do you think we do enough in technology transfer for the investment that we place in defence?

  Lord Jones of Birmingham: Do you mean transfer to—?

  Q109  Mr Hoyle: Into other sectors, civilian sectors.

  Lord Jones of Birmingham: Factually do we do enough? No. I think we could do a lot more. I think there is one huge impediment, which is that, of course, our biggest partner in all respects of defence manufacturing is the Americans. The problem you have got—

  Q110  Mr Hoyle: Except on Eurofighter. They are not even involved.

  Lord Jones of Birmingham: Well, quite, but—

  Q111  Mr Hoyle: And the missile technology is not American either?

  Lord Jones of Birmingham: But America is our biggest partner in defence technology and the issue you have there is that they so often have huge impediments on technology transfer of any sort. It is easy for you and I to sit in a room like this and say there ought to be more.

  Q112  Mr Hoyle: But we could do more. The big question is, which car plant is going to close in the UK?

  Lord Jones of Birmingham: You are asking me?

  Q113  Mr Hoyle: We have heard statements from the unions that a car plant is about to close.

  Lord Jones of Birmingham: You had better ask the unions then, Chairman.

  Q114  Mr Hoyle: So you have no intimation?

  Lord Jones of Birmingham: I have none. I am not hiding from you. I genuinely do not know. My fervent wish is that none does.

  Q115  Mr Hoyle: So you think it could be kite-flying?

  Lord Jones of Birmingham: I would think there is an element of it. I would not have thought it was all of it, to be fair. I do not think Tony Woodley is irresponsible in that respect. He might be playing to his audience a little bit but I think he is probably speaking his mind in his true and genuine belief, to be honest. As you may imagine, Mr Woodley does not ring me up and consult with me very often.

  Q116  Mr Hoyle: I am surprised at that.

  Lord Jones of Birmingham: In fact, delete "very often"; insert "ever".

  Q117  Mr Hoyle: I do not think he plays golf either, so you are all right.

  Lord Jones of Birmingham: We might meet on the non-golf course then.

  Q118  Mr Hoyle: In the case of the UK should we be doing more to promote its manufacturing industries, what sectors should be sustained through intervention through the recession, and how should the Government intervene without "picking winners"? That is a big question for you.

  Lord Jones of Birmingham: I am a critic of this Government not subsidising skilled people to stay in and connected with the skilled manufacturing jobs.

  Q119  Mr Hoyle: There is some of that going on. I think you are being a little bit disingenuous on that because there are cases where the Government, through the RDAs, has been investing skills in companies to help support them during that downturn.

  Lord Jones of Birmingham: I do not doubt you. What I am saying is that if that is accurate then I really would love to hear that.

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Prepared 24 June 2009