Examination of Witnesses (Question Numbers
200-219)
LORD DAVIES
OF ABERSOCH
CBE, SIR ANDREW
CAHN, MR
PATRICK CRAWFORD,
MS CLAIRE
DURKIN AND
MR GARETH
THOMAS MP
14 JULY 2009
Q200 Mr Bailey: I believe, like this
Committee, you made a recent trip to the UAE?
Lord Davies of Abersoch: Yes.
Q201 Mr Bailey: Could you give us
some sort of feedback on how you felt you were successful in promoting
trade there? Did you have any problems by virtue of the fact that
you had an anchor in Westminster?
Lord Davies of Abersoch: I think
exports to the Gulf increased 25% last year. There is no doubt
with the Gulf generally—I have spent many years going to
the Middle East—there are huge opportunities for the UK.
I was in Abu Dhabi last week—I think we agreed a series
of measures on how we can improve cross-border trade with Abu
Dhabi. We are implementing those measures—Edward Oakden,
the Ambassador and myself—in the coming weeks; but it is
right across the Middle East. Trade has grown significantly; they
feature amongst our high growth, high potential markets in the
UKTI list; and I think we have got to make sure we take advantage
of the outstanding relationships that we have right across the
region. Yes, good progress on my visit; Lord Mandelson has also
been visiting the region; but we need to make sure we continue
the focus on the Middle East and UAE in particular. I saw the
Saudis two weeks ago so, yes.
Q202 Mr Wright: On the UAE you describe
it as one of the exciting markets that there is, but there is
a lack of awareness out there. How are you going to respond to
the lack of awareness that there is with businesses about the
opportunities in the UAE?
Lord Davies of Abersoch: You say
there is "a lack of awareness", I think it is growing.
I think what we need to do is—Abu Dhabi is a good example—we
are going to have an Abu Dhabi week in October; we are going to
bring the seniors from business over; we are going to work with
the CBI et cetera to make sure that small businesses understand
the potential. We are going to do that in a series of road shows
across the Middle East. I think we do have to raise awareness.
What you find is that small businesses are gradually realising
the opportunities in the Middle East. What we are doing in UKTI
is showcasing success stories. I am a big believer that you have
to showcase companies, big and small, that have done well in the
region.
Sir Andrew Cahn: Perhaps I may
simply add that we have added significant numbers of staff in
UAE, in Qatar and in Saudi. Two years ago we decided those were
high priority markets and we shifted staff there, so there is
increased resource gone in. Also we have got a regional hub in
Dubai. For three years now we have had a very successful regional
event for the whole of the Gulf region based in Dubai, and we
have particularly brought SMEs there. While I agree with you that
there is still more opportunity there; it is still a growth region;
it is growing and there are a lot of opportunities; the trick
is to introduce new British companies to the region and persuade
them to stay the course, because in the Gulf short-termism does
not work. You have to go there and you have to make long-term
partnerships and then trade flows. I think our greatest challenge
is, first of all, to persuade new exporters that it is worth the
trouble, and then to help them and guide them through those early
years when the returns are not as good as they might be in the
later years when the returns can be excellent.
Lord Davies of Abersoch: I think
there are about a thousand British companies that are doing business
very successfully in the Gulf. I think my other focus, and the
focus of UKTI, and the Business Ambassadors, has got to be continuing
the relationship so we attract foreign direct investment into
the UK—a big opportunity for us.
Q203 Mr Bailey: Before I go on to
Business Ambassadors, on the trip that the select committee made
it was put to us, and fairly strongly I think, that there was
perhaps a feeling that in the past the British Government had
not really cultivated its relations with the Middle East as it
might have done; and that the one thing that you could do which
was of huge benefit in making both the UAE and Saudi Arabia feel
important and engaged with the country was for a prime ministerial
visit, or at least the most senior minister. No disrespect to
yourself, whom I reckon has unparalleled experience at this, how
do you see your role in encouraging the Prime Minister and Lord
Mandelson to carry out this role? What is your assessment of the
added value it would give to the work that you are doing?
Lord Davies of Abersoch: I think
it is a great point. There is no doubt that the prime ministerial
visits are very important, and obviously the Prime Minister has
visited the region in the last few months and Lord Mandelson has
visited. We need a continuous stream of ministerial visits and
the more senior the better. I am working with Number 10 on a series
of things to do with the Middle East; and I am working very closely
obviously with Lord Mandelson. Funnily enough, I had a discussion
in it this morning as to how we are going to organise this next
visit. As part of the ministerial coordination of visits, which
I am very involved in, the Middle East does need continuity, it
does need senior calling, and we also need to make sure, which
we are doing, that when the leaders are over in the UK, as they
are very often, that we are seeing them, which we are doing.
Mr Thomas: Mr Bailey, one of the
other things we can do in terms of encouraging British business
to have confidence to invest in the Middle East is through the
negotiation of investment, promotion and protection agreements,
which help to give confidence to British investors that their
capital investment in other countries will have a higher level
of protection than if the agreement is not there. The Middle East
is one of the key areas which the Trade Policy Unit is targeting
for agreement.
Q204 Chairman: Before we move on,
could I just come in on that point briefly. This is one of the
old chestnuts—the Committee travels around different countries
and we talk to ambassadors and high commissioners and representatives
of the British business community and they say, "A British
Prime Minister", not just this one but the generic
British Prime Minister, "cannot make as many visits to markets
as the French President or the German Chancellor, because they
are tied up in the day-to-day business of the Commons; and we
have a huge competitive disadvantage", they say, "because
the effective head of state", the head of government in our
case, "cannot commit the time to trade promotion that other
countries, our competitors can". Do you feel that is the
scale of disadvantage that the British business community, and
the Foreign Office, seems to believe it is?
Lord Davies of Abersoch: I am
not going to recommend a constitutional reform! The Prime Minister
is visiting extensively.
Q205 Chairman: He is very constrained.
He went to India for two days and one of them was a Sunday, which
was limited.
Lord Davies of Abersoch: I think
he is travelling extensively. I think everybody needs to do it.
I think the Duke of York's role is understated. I think he does
fantastic things for business. I know he has got his critics in
the media, but if you saw the letters that I get from businesses
on the work that he does, he does a great job for British business.
I think it is not just the Prime Minister; I think it is a collection
of individuals, including the Foreign Secretary; but I would also
say with the ambassadors themselves their role has changed over
the last few years, and they have become hugely important for
us as ambassadors, not just on foreign policy but on business.
Q206 Chairman: What we have also
heard is that it is very important that people who are seen to
have the ear of the Prime Minister travel. In the Gulf we had
a lot of praise for you, Lord Davies, personally because you have
a high reputation in the Gulf, you are known historically in that
region and they felt you were the next best thing—even better
probably! In India Lord Mandelson enjoys a similar status, to
be fair. He is perceived to be a very high profile character who
is known to like India, take an interest in India and he gets
a high profile in the Indian media here in the UK. We do have
a disadvantage against Sarkozy and French presidents which we
can counter in different ways.
Lord Davies of Abersoch: Yes,
we need leaders in every industry, as we said earlier on, to help
us.
Q207 Chairman: Competitors do that
too.
Lord Davies of Abersoch: I think
it is not just the Duke of York, the Prime Minister, the Foreign
Secretary or other ministers; you have seen Ed Miliband doing
a series of visits on renewables and pushing the whole agenda,
very much business-related.
Q208 Chairman: The CII, the Confederation
of Indian Industry, were here recently and they made their usual
complaint that senior leaders of British business were not prepared
to make the time to meet them; they met at a junior level of the
organisation not a senior level, and there is a lack of engagement
in the British business sector in doing this high level stuff.
Lord Davies of Abersoch: We received
them; I saw the FICC; I am off to India in September; I was there
three weeks ago. There is no doubt that with a market of the potential
that India has for us and the historical links there is so much
more that we can do with India.
Q209 Chairman: I want to talk about
the principle, the level of engagement. You are saying British
business must do its bit?
Lord Davies of Abersoch: We need
British business to be more engaged on cross-border trade with
India. I am pushing it very hard with the CBI. I spoke to the
CBI international group about it. I am speaking to business leaders
and we need more engagement.
Q210 Mr Oaten: The point about the
Duke of York and the Royal Family is very well made—incredible
assets which many other of our competitors do not have. I wondered
to what extent you work with them, you brief them, and to what
extent you actually demand of the Royal Family to get involved?
How close is the coordination you have with them on this? Are
there a set of individuals out there that you would like to get
involved in helping to go and sell the UK; and do you practically
go out and seek them and try and get them on board for this?
Lord Davies of Abersoch: Basically,
on India I met with Patricia Hewitt, the new chairperson of the
India-Britain Business Council, 10 days ago and the whole conversation
was about how do we raise the level of engagement? So we have
got a plan and we are working on that. I do work and meet regularly
with the Duke of York and we have a travel schedule. I had him
meet 10 high performers out of UKTI about 10 days ago; it was
a really good meeting where he wanted to know what else he could
be doing to help business; he has subsequently written to us and
asked for ideas from each of the 10. They also had great feedback
from him on what else we should be doing. It is constant dialogue
and I think that is very important, because if there was not that
would be bad—but there is.
Sir Andrew Cahn: We agree before
the year starts a budget with the Duke's household. We discuss
with him in great detail what trips he should make; we agree them.
I am a member of the Royal Visits Committee which agrees the programme
of visits overseas for the Duke of York; and we are now in discussions
with the Duke of York's office about how to evaluate what he does.
Q211 Mr Oaten: This is part-funded
then?
Sir Andrew Cahn: We fund it. We
do not fund his air travel; we fund the other parts of the visit.
The Duke of York also does some visits on behalf of the Foreign
Office which we do not fund; those are non-trade related. His
trade promotion visits we fund; we task; we evaluate. We work
very closely with the Duke's office.
Chairman: I would also pay my own tribute
to the Duke's work as well.
Q212 Mr Bailey: You have several
times mentioned in a complimentary vein the British Ambassador's
Network launched in October last year. Could you briefly summarise
just the initiatives it has taken so far, where it has been to
and what it has done?
Lord Davies of Abersoch: Inevitably
these are busy individuals who have their own careers and jobs
et cetera—18 of them. I think generally we have got
a couple of people who work on helping them in UKTI. We were having
a discussion about it with the executive team of UKTI yesterday.
We are talking to business and academic individuals who have got
a wide range of experience, and what we try and get them to do,
and there are great examples, is give talks and promote business.
I think that individuals like Paul Skinner, Malcolm Grant and
Terence Conran have done a great job in selling the story. As
always, as with all things, we are learning as we go along. It
has been going some time; they have done over 40 engagements in
15 countries, but I need more from them: and if that is reported
and that becomes the headline out of this that is great; because
we need them to do more to help us; because the more the merrier
really. It is working well and we are learning many lessons as
we go along.
Q213 Mr Bailey: I am interested in
looking at the individuals involved. Obviously business and education
are highly represented there. When we were in the UAE we were
told there were huge opportunities in education, which is obviously
served through this network, but also health. I would not pretend
to know the individual competences of all the members there, but
it would seem to me on looking at them that we are light in terms
of the health service and, if you like, the health sector in general.
Given the potential for developing health services throughout
the world, do you not feel that is an issue that might be addressed?
Lord Davies of Abersoch: I absolutely
agree. I think with health, the NHS, we have got outstanding excellence
and innovation that Paul Drayson and Lord Darzi were talking about
at a launch yesterday. I think there is more that we can do to
work with the NHS. I was one of the keynote speakers with Lord
Darzi at the NHS Forum that was held recently, which had about
5,000 attendees; so I think we need to export that excellence
and I think there is more that we can do. I think the same is
true on education. I think we are doing a good job. I met with
David Greenaway, the new Vice-Chancellor of Nottingham University,
about 10 days ago to look at creative ways that we can do more
on education. The reality is, however, it is already a big export
for us.
Q214 Chairman: I want to return to
that in more detail later on.
Lord Davies of Abersoch: There
is more that we can do but there are two sectors and they are
important; we are giving them priority in UKTI; and I think we
have got marketing strategies for various aspects; so we have
a life sciences, marketing strategy; and I think we really do
need to sell our NHS capability more.
Q215 Mr Bailey: I would just finish
by emphasising that point, because I do feel that in education
the Ambassadors Network does reflect the importance of this and
the progress that we are making on it. I am not sure that it reflects
the potential that there is within the Health Service and the
providers' industry that we have here.
Lord Davies of Abersoch: I agree;
I think we should look at it. I chair a university in North Wales,
Bangor. It is not just the foreign students coming into the universities;
we have excellence in the sector and we need to make sure that
we are marketing it.
Chairman: I do emphasise Adrian's point.
There is no-one in the Business Ambassadors Network who does life
sciences, which is surprising given the importance of life sciences
to the UK economy and the potential as well.
Q216 Mr Wright: On UKTI, when we
had Lord Jones before us he made a very good case for more resources
that were needed for UKTI. The 2009 Budget announced that there
was £10 million of the £750 million strategic Investment
Fund particularly earmarked for UKTI to spend on promoting UK
sector expertise both in the UK and abroad. How much is this in
comparison to what is currently spent?
Lord Davies of Abersoch: It is
always a bonus on discovering you are getting more money. It does
not happen very often, I am told, so I took that as a welcome
sign that everybody realised the strategic importance of UKTI.
Let me reassure you that the £10 million will be very, very
carefully spent. Andrew can give you a bit more detail. Clearly
for some high value events we have allocated already some money
towards those high value events and Andrew can talk about those
in more detail. I think that is one aspect. I think what we do
not want to do is spend the money on extra staff. I think it is
much more important that we go for high value events and initiatives.
Sir Andrew Cahn: We were given
£10 million and that certainly was extremely welcome, and
we took it as a sign of confidence in UKTI, but it is only for
two years: it is £5 million this financial year and £5
million for next financial year. The first thing we wanted to
ensure was that we did not set up a scheme which would fall off
a cliff in two years' time. We tried to find activities which
will have a real impact on British exporters and inward investors
during the recession and as we come out of it, but which we can
stop in two years' time. That is why we are promoting particular
events. One example is we believe one of the sectors where Britain
is particularly strong—in fact globally leading—is
the security sector: it is growing; it is growing rapidly; there
is still a huge demand; and we thought we could do better for
the sector. We are going to try and create a sort of Farnborough
event—Farnborough is for the aerospace and we want the equivalent
for the security sector; and we are going to try and create that
in two years so that by the third year it is self-funding and
self-sustaining. That is a good example of what we are trying
to do. We are going to try and set up a Global Britons Network;
that is tapping in to the thousands of people around the world—business
people and people doing other things—who are Britons living
overseas but are friendly and want to help Britain; and also to
those who are foreigners who are alumni of our universities or
our schools and who are friendly to us. Again, we think we should
be able to set that network up and make it largely self-sustaining
in two years. Lastly, I am going to be doing some marketing to
try and encourage British companies who are not exporting to export—those
SMEs in particular who are finding the recession really challenging
and who could benefit from markets overseas which are still growing.
We are having a marketing campaign to try and help them and target
them.
Q217 Mr Wright: I am pleased with
that last question because just recently I had the pleasure to
open an extension of a local business which is exporting across
the world at which the eastern region and UKTI representatives
were there. One of the things that came out of that was the fact
that your representatives were saying those businesses did not
understand UKTI and did not know that they existed. From that
particular point of view, I am hosting a business breakfast later
this year with the assistance of UKTI about exporting our way
out of recession so local businesses, SMEs, understand it. That
is a problem in itself. Whilst I understand that this money is
going out to promote so people can visit trade shows et cetera
and so forth as they have done in the past, is not the job as
well of UKTI to actually get out there into those localities to
explain to the small businesses, who are not aware of the opportunities
abroad, to actually go forward? I understand, Lord Davies, you
cannot visit every corner of the UK. Perhaps sometimes when you
are talking about a region like the eastern region, it is a massive
region in terms of area but there are niche markets in certain
places which really have not been impacted by UKTI?
Lord Davies of Abersoch: I do
not think we should be defensive about this at all; it is a hugely
difficult task to cover over four million SMEs, whether you are
an RDA or UKTI. I think there is closer and closer partnership,
which was evidenced at the dinner the other night in Derby, with
UKTI and the RDAs. We had to spread the message through our regional
offices and through the RDAs that small businesses can export
and can do it without having to travel the world searching for
markets. I think one of the challenges for small businesses is
that we have to bring these markets, as far afield as places like
Algeria and others I have been to, to the companies. We need to
find better ways continuously of bringing opportunities to small
companies, and that is exactly what we are doing. I think it is
a good opportunity to mention Alan Sugar, whom I saw for the first
time in a ministerial capacity yesterday. I think that is one
thing that Sir Alan can do, which is to basically go round and
do workshops with Business Link and with small businesses selling
the virtues of exporting. I think that is exactly how we are going
to use him.
Q218 Mr Wright: Do you then consider
that the RDAs should be the vehicle to give more promotion? In
terms of how the UKTI's ability can go there, whose responsibility
would that be?
Lord Davies of Abersoch: UKTI
has to bring the international markets to the corporate sector.
At the end of the day we also have to work in partnership with
the RDAs.
Q219 Mr Wright: Can you just explain
to us what the Fiscal Compass Programme is and what it has accomplished
since it was launched?
Lord Davies of Abersoch: It is
basically an attempt to give corporates access to the spending
programmes. Governments across the world are spending huge amounts
in the fiscal stimulus. I think we have had over 200 enquiries
from companies that want advice and access to some of the fiscal
stimulus programmes around the world. Launched in March; early
days; but so far so good. I think the target is to get about a
thousand companies by March of next year so, so far, encouraging.
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