Examination of Witnesses (Question Numbers
180-199)
LORD DAVIES
OF ABERSOCH
CBE, SIR ANDREW
CAHN, MR
PATRICK CRAWFORD,
MS CLAIRE
DURKIN AND
MR GARETH
THOMAS MP
14 JULY 2009
Q180 Chairman: He is a busy man.
We are used to having a Trade Minister in the Commons. Gareth
Thomas was that man but we seem to have lost something
in this new arrangement?
Lord Davies of Abersoch: I think
we have to be careful here. I think in trade generally it is not
just trade policy and a wider issue of trade promotion; I think
it is important as Trade Minister that I am involved in trade
policy as well as trade promotion.
Q181 Chairman: Your predecessor took
a different view, of course!
Lord Davies of Abersoch: I know.
I think it is important also that we realise how complex the issues
are as regards developing markets; that is why a partnership with
Gareth is very important.
Mr Thomas: I am touched by the
sense of loss you feel of me at questions!
Q182 Chairman: It is genuine!
Mr Thomas: In a sense the area
of trade policy has gained two ministers with a long-standing
interest in trade policy questions. It is certainly true that
Digby did some of the work in terms of having conversations with
a number of key ministers where he was pushing the trade promotion
agenda as well. I am sure if needs be from time to time, if I
am in a particular country where there are UK interests to argue
then I will happily do that at that time if that is what is necessary.
UK ministers in general when they are abroad often raise a series
of issues beyond necessarily just their departmental brief.
Q183 Chairman: How are you going
to ensure effective communication across three departments? Claire
Durkin may be partly the answer to that question. I have heard
criticism made of UKTI, for example, not criticism of the organisation
but of the reporting structures it has, that it has two masters;
now trade policy has three masters—without the commonality
of the minister there used to be—Foreign Office, BIS and
DfID; and also a whole host of other government departments too
are often touched by trade policy. Are we going to get proper
joined-up government communication?
Mr Thomas: On trade policy there
continues to be a Cabinet committee that when necessary can meet
to resolve trade policy questions. I have no doubt that, as hopefully
the Doha Round gathers further momentum, there will be a need
for that trade policy and that trade committee to meet. We have
a joint Trade Policy Unit; it is partly Claire's responsibility
to ensure that coordination at official level across government.
In the end, as you will have seen from the statement on the G8
yesterday, on the biggest trade policy issue of all, the Doha
Round, the Prime Minister takes a very close personal interest;
and he will, through the Number 10 machinery, help to continue
to ensure joined-up government operations on this.
Lord Davies of Abersoch: I think
another example of coordinated effort really is in the last few
days we have got leading corporations involved in Africa coming
together, together with the Foreign Office, with Gareth, with
myself, looking at trade with Africa; and I think huge advantage
in having all of the departments involved and all ministers involved,
and a great attendance from the corporate sector, and we have
got full attendance from the ministerial groups; so I think we
have to work as a team.
Q184 Chairman: Can I ask you about
the question of the split loyalty of UKTI reporting to two departments.
Does that pose any challenges or do you think it is inevitable?
Lord Davies of Abersoch: Obviously
a lot of people have asked me—I am six months into government—as
to whether it is a plus or a minus. I think that if you are the
trade minister you work very closely with the ambassadors; you
work very closely with the Foreign Secretary, and with Peter Ricketts;
so I think it is a huge advantage because, at the end of the day,
UKTI has its own organisation but we also have the ambassadors.
We need to work as a team and I think it is a huge advantage reporting
to both.
Sir Andrew Cahn: If you go back
to 1999, Sir Richard Wilson did his report and recommended this
dual structure. I think at the time some people thought it was
a bit of a fudge but actually in practice it has worked extremely
well. What it gives us is we are plugged into the Foreign Office
network and it focuses the Foreign Office's mind on commercial
componency, on trade promotion in a way that perhaps it was not
focused before. I think it has brought the Foreign Office very
much into the field and made them committed to it. Yet we also
have for the Trade Department a full commitment, and we have the
home perspective. Actually the coordination would say, "Having
a single minister, currently Lord Davies who straddles the two
departments, means we get good coordination". I have looked
at lots of examples around the world and lots of countries do
it in different ways; I think ours stands up to scrutiny and compares
with the best.
Q185 Chairman: We should thank you
publicly for your stewardship of the Department as Acting Permanent
Secretary for a while as well; for how many months?
Sir Andrew Cahn: Two—very
short!
Q186 Miss Kirkbride: You said you
were going to be responsible for trade policy as well as trade
promotion. Bearing in mind that that is an EU competence and that
we have an EU Commissioner in charge of trade policy, I was wondering
what influence you would bring to bear on that issue?
Lord Davies of Abersoch: One of
the changes I think is happening in governments around the world,
and is certainly happening here, is that we do need on matters
of trade and business generally people with expertise who have
had international experience of trade, as I have, to be inserted
and injected into government. I think that experience of living
in Asia and working with governments across the world will be
a strength; and it enables me and Gareth to work closely together
and obviously liaise with the EU, and obviously also start pushing
even more aggressively the argument for open market and Doha.
Mr Thomas: Perhaps Miss Kirkbride
I could add, we have in terms of the EU drawn up a wish list in
terms of priorities for trade policy negotiations in terms of
free trade agreements with a number of allies in the EU, and are
obviously seeking to influence the Commission, not only the Trade
Commissioner whom both of us have had conversations with, but
also the presidency and other Member States. We do not simply
sit back and in a sense allow the EU to do trade to us; as Mervyn
has alluded to, we seek to actively go out and persuade the EU
to take the line that we take; we seek to explain British business
concerns; we seek to explain the development concerns that we
have about particular trade policy questions, and encourage the
Commission as far as we can do to pursue the UK interest.
Miss Kirkbride: How much of your time
do you think you will be giving to trade promotion, because obviously
your predecessor gave it a great amount of time?
Chairman: Not too much on that, please.
Q187 Miss Kirkbride: In your written
submission the Committee notes that one of the new support measures
for business is a series of ministerial meetings to identify policies
that might affect UK trade competition. I wonder if you could
tell us any ideas and views you have had arising from those meetings
that might boost conditions?
Lord Davies of Abersoch: I think
inevitably my role is making sure that I have got the pulse of
UK corporates, SMEs and large corporations; so I have got to travel
across the UK, which I have been doing; and working with the regional
ministers, working with the Department and making sure that I
truly understand what is going on, in the SME sector particularly.
An example of that is we have had probably about 300 small businesses
into 10 Downing Street for a discussion in the last two weeks,
entrepreneurs and exporters, understanding what their issues are
and what their concerns are. Additionally, I have done 17 overseas
visits to 14 countries since I took the job; so it is a blend
of international travel and really helping exporters and attracting
inward investors; and at the same time travelling across the UK.
Q188 Miss Kirkbride: From your meetings
with SMEs and everything else, is there anything in particular
that has arisen which you think we could be doing better? Bearing
in mind the Government's policy to try and trade our way out of
our present economic difficulties, what is it we are going to
do better and more of in the future to make matters better than
they are now?
Lord Davies of Abersoch: I think
the whole series of initiatives we put in place—and I will
not go through the list but they have been extensive—which
are about giving real help now to consumers and businesses. I
think there are still some challenges out there. The banks have
been stabilised and have got lending targets. The challenges I
think now are that we have got a global recession going on; we
have got challenges in so many different markets; on the other
hand, there are pockets of real growth in the world and we have
got to make sure we are helping businesses get that export market.
I think through a whole series of measures in UKTI, but also governmental
initiatives, we have helped business. I think there are still
some challenges out there, trade credit being one of the big ones,
seed corn capital for young business—and that is why the
Science Innovation Fund, which was launched last week, is a good
move—but basically we have still got some challenges out
there. I think what we are doing is putting a series of government
initiatives but also working very closely with the RDAs. I had
dinner with the RDAs last week, all of them in Derby, and then
Andrew spent the day with them. I think it is all about getting
closer to the businesses and making sure that the banks are helping;
and making sure that our initiatives are working.
Q189 Miss Kirkbride: There is one
issue I would like to take up with you which a constituent drew
to my attention last night. It is quite complicated so I will
not go into it now, but he has an SME and he is having real trouble
getting his goods shipped. The particular line he was upset with
was the Maersk line but he said it was a wider issue of SMEs not
getting access to containerised shipping at the times they want,
whereas the big boys of course with the bulk contracts had got
this all sorted out; but for him the lack of flexibility and some
specific issues with regard to the way we operate shipping policy,
versus the way other people do, was causing his business real
difficulties in that he could not ship his goods on time. Have
you had this raised with you at all?
Lord Davies of Abersoch: I have
not but the best thing is for them to write to me and I will take
that up.
Q190 Miss Kirkbride: I certainly
will
Lord Davies of Abersoch: I think
the most common issues for SMEs—and, as I have said, I have
met hundreds of them in the last few weeks—is around trade
credit, short-term insurance and I think it is also about confidence.
We need exporters and small businesses to have the confidence
to reach out to international markets. I think that is very much
part of the promotion we are doing in UKTI. I will take that up
if they write in.
Q191 Miss Kirkbride: I am sure those
issues are true, but if it gets down to a simple level of not
being about to book your space on the ship—
Lord Davies of Abersoch: Claire
might have a response, but with that particular one if they write
to me I will take it up.
Q192 Miss Kirkbride: I just wondered
whether Claire or Sir Andrew had come across this, and you are
aware of other people being concerned about this access?
Ms Durkin: I am very interested
in this, if I may say so, Chairman. We are preparing for the pre-Budget
Report a study on doing business with the borders, where the spirit
is that we have an action plan to make sure it is a lot easier
for us practically to do real business at our borders so we are
as competitive as anyone else in the world. We have been out to
consultation and the reason I am very interested is that we have
not had this raised, and it is obviously a very real issue. If
you could send it in I promise we will explore it at the different
ports to compare performance and see if there is something concrete
we can actually do.
Miss Kirkbride: I certainly will. You
will get it later this afternoon!
Q193 Chairman: Could I just push
you on one issue here to do with trade promotion. In UKTI's submission
dated 28 April, paragraph 6.20 talks of the meetings you are going
to have, Lord Davies, or are having with ministerial colleagues
across government "to raise the specific concerns of international
and UK-based businesses where current or proposed regulation and/or
legislation will have a potentially detrimental impact on UK competitiveness
as a place to invest in ...". I entirely agree with that
and welcome that initiative. "It is vital", the note
says, "that ministers and policymakers... understand the
potential impact of proposed policy changes on businesses' ability
to compete in global markets". The spirit of that I can only
say is absolutely right. Can you give me an example if any specific
outcomes of those meetings identified particular problems?
Lord Davies of Abersoch: I am
a member of the National Economic Council, the NEC, which is meeting
at least once a week really and it takes problems, and a good
one is visas which has been very topical recently. A lot of businesses
have raised that as an issue, so I have taken that up and had
a meeting with Phil Woolas and just pushed it with the Home Office,
so we are looking at that. I will not go into the whole list but
there are a series of matters that are raised and either I would
go and talk to the ministers involved, or I would go and raise
it at the NEC. Issues to do with export help; issues to do with
banks; there is a whole series of issues that get raised at the
NEC and individually with ministers; visas has been the most recent
one.
Q194 Chairman: We will want to return
to the visa question a little bit later on, in one specific context.
Mr Thomas: Chairman, I wonder
if I could take you back to the border trade policy issue and
give you another example to back up what Mervyn said, and that
is: increasingly the relationship between developed countries,
in terms of increasing market access, is about trying to reduce
non-tariff barriers; so trying to get agreement on the type of
regulation, the standards that British business or European business
has to adhere to, to be accepted in other markets. For example,
in the US or in Japan, say, accountancy standards that UK accountants
have to adhere to we would want accepted in the US; and that standards
that lawyers have to adhere to we would also want to have accepted
both in the US and Japan. Through the European Union's transatlantic
economic dialogue with the US—a bit of jargon for which
I apologise—we have made progress in terms of accountancy
standards; and through similar dialogues we have made progress
on access to lawyers into Japanese markets. I would not want to
overstate the level of that additional access we have secured,
but it is that type of regulatory discussion with developed countries
which we want to continue developing.
Q195 Chairman: I understand that,
but the implication of your evidence was that it was barriers
that were erected by the British Government accidentally to export
activity, like aspects of visa regime?
Lord Davies of Abersoch: We have
got to constantly be aware of any legislation we bring in that
we are not putting more and more obstacles in the way of business.
That is why I work very closely with the Better Regulation Executive;
and that is why—particularly with the burden for SMEs—we
have to make sure it is not too heavy. On the other hand, we have
got to introduce certain laws, so it is making sure that the balance
is right. I think at the moment there is a good dialogue on regulation
with the Better Regulation Executive.
Q196 Mr Bailey: This issue of trade
promotion, I am a fairly simple soul and we have had discussion
on trade policy and trade promotion. In my own innocent way I
would have assumed that trade policy was trade promotion, banging
the drum for Britain. Could you just explain how you would distinguish
between the two and how you see your role within that distinction?
Lord Davies of Abersoch: I think
at the world level, the architecture for the world, the discussions
on climate change, financial architecture and trade, we need the
world to come together and have an agreement on open markets and
the Doha Agreement. As far as I am concerned—I am also a
simple person—I think that is very, very important for continuing
to take people out of poverty and for global growth. We are in
a competitive marketplace so separately the UK needs to compete
for inward investment, and we need to help exporters. So UKTI's
role, and Andrew may want to add something, is to attract inward
investment; and clearly we are doing well on that—an 11%
increase last year and still absolutely the leader in Europe;
so FDI is continuing to grow here; but at the same time we have
had huge recession going on and we have to make sure we are helping
businesses of all shapes and sizes across all the sectors. We
have got a UKTI system of helping over 21,000 companies, and we
have got that approach which is helping businesses but, at the
same time, we need to be selling our story internationally, so
we have got international offices and we are working very closely
with the RDAs. I think trade promotion is very different from
trade policy.
Sir Andrew Cahn: I think the simplest
way of distinguishing the two is that trade policy is creating
the conditions within which trade happens. Countries negotiate,
the European Union negotiates and Britain, of course, is the most
open trading nation I know of and we press always for opening
borders and opening trade. UK trade and investment seeks to take
advantage of those open trade borders to help British companies
to export as effectively, and indeed inwards investors to export,
globalised companies to export from these shores. We very much
are a service delivery organisation helping British companies
and international companies based here; whereas Claire and her
team, working to Lord Davies and Mr Thomas, are a policy department
trying to create the conditions in which we as a service department
can take advantage.
Q197 Mr Bailey: I think that is quite
a helpful clarification. Lord Jones previously saw his role very
much, as he said himself, banging the drum for Britain, a trade
promotion element of the job description; and also pointed out
that it was really necessary to have somebody carrying out that
role relatively free from all the encumbrances of Westminster
duties. Do you see your role differently? Do you feel that if
you do that that hinders your ability to represent Britain more
effectively abroad?
Lord Davies of Abersoch: No, not
really. I think Lord Digby had his own view on this. I am six
months in and, as I said earlier, I have travelled extensively
in the UK and internationally and I already have, and so does
the Department, huge contacts around the world. We have to continue
banging the drum for Britain. I agree with Digby, I think one
of the things I have learnt in the six months is that Britain
has a hugely diverse economy, wonderful entrepreneurial activity
going on across a series of sectors; we are the sixth largest
manufacturing nation in the world; we are still a very open market
and attractive; and I think it is very important that we sell
that story internationally because the media will not; so I think
it is very important that UKTI and other government agencies do
that. I see that very much as part of my role. On the other hand,
we are in a very changing world situation and I think we have
to accept that organisations like ECGD, which I am responsible
for, have to adapt, and so does UKTI. The reality is that UKTI's
focus over the last few years has changed because the markets
have changed. My experience of UKTI in six months is that it does
a great job. It produces £16 for every £1 invested;
it is very focused and adding a great amount of value to the economy;
but—and there is a "but"—we have to make
sure we are banging the drum for the UK and that is exactly what
we are doing. I think the Business Ambassadors Network is really
beginning to kick in; they have done a huge range of visits internationally.
There is still a question as to whether we could do more on attracting
foreign direct investment into the UK. We have done very well;
we are number one in Europe, second only to the US worldwide;
but I still believe that maybe we could do more. I am having a
look at ways in which we might do that.
Q198 Mr Bailey: I want to deal with
Business Ambassadors in a moment, but if I could just pursue this
line of inquiry a little more. Obviously as a member of the Upper
Chamber you do not have, if you like, the day-to-day accountability
to electors which is incredibly time-consuming.
Lord Davies of Abersoch: I feel
that I do!
Q199 Mr Bailey: Maybe! Do you feel
that the role of trade promotion is more easily done by a member
of the Upper Chamber because there are fewer Westminster duties?
You may not agree with that last statement!
Lord Davies of Abersoch: I will
get Gareth to add to that. My experience is that we do not just
need one ex-business person doing this role; we need business
ambassadors. We also need the CBI; we need the Institute of Directors;
we need the Chambers of Commerce; the RDAs. Everybody has a part
to play in promoting Britain and British excellence. We have got
a knowledge-based economy and we have got fantastic things going
on. I was proud to talk to the SMEs at the Queen's Award Ceremony
last night with 190 companies—it made you proud to be British.
We have got to make sure that right across industry, right across
all the chambers, right across every piece of the corporate sector,
we are selling the UK. I think as the Trade Minister I see trade
promotion as a key aspect of my job and that is why I am spending
so much time travelling.
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