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 BRIC 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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