Examination of Witnesses (Question Numbers
220-239)
LORD DAVIES
OF ABERSOCH
CBE, SIR ANDREW
CAHN, MR
PATRICK CRAWFORD,
MS CLAIRE
DURKIN AND
MR GARETH
THOMAS MP
14 JULY 2009
Q220 Mr Wright: Where would you consider
the priority markets that we should be concentrating on?
Lord Davies of Abersoch: Inevitably
places like China—where I am off to in about 10 days, and
we have done a huge amount on getting access and really understanding
how the Chinese are spending money; the US; markets like Saudi.
There are a few of them we have prioritised and are working with
those companies.
Q221 Chairman: I get confused—I
really do—about UKTI's country priorities. You just named
the US which in the submission to the Committee was not on the
list; China was, of course, together with 16 others; and now we
have France, Spain and places added to the list as the Fiscal
Compass Programme. I get really confused. There seem to be all
kinds of different priorities which emerge from time to time,
and actually when you pin it down I am not sure whether it shifts
the whole amount of resource around the world anyhow, where you
define the resource and those priorities.
Lord Davies of Abersoch: I think
we categorise 17 high growth markets. The criteria for those was
market size, potential for growth, political and economic importance
and the strength of their scientific and research base. We match
the profiles against our UK capabilities. We have those 17 markets;
and then separately we also have a sector approach in UKTI, because
you need industry experience; but one should never forget that
the UK trades with the US in a huge way. When you look at foreign
direct investment into the UK about 35% of all the projects are
still coming from the US. The danger is that we put all out eggs
into some high growth markets but forget the euro and the US.
I think we have got a clear strategy to focus and develop business
and trade with the high growth markets; but at the same time we
need to make sure that we are not losing touch and contact with
the US.
Q222 Chairman: It is an impossible
task. You have got to keep everyone happy. That is the trouble.
Everyone wants a different priority from you so they have got
priority for us?
Lord Davies of Abersoch: No, I
think we are very clear: we have got 17 high growth markets, but
at the same time we have got to make sure we do not ignore the
big markets that are giving us a huge amount of trade and foreign
direct investment today.
Sir Andrew Cahn: We have staff
in 98 markets around the world, and many of them are very small
but they provide an essential service to British companies. We
decided on the 17 high growth markets back in 2006 because, as
Lord Davies said, we did a pretty solid piece of modelling and
decided those were the key growth markets for the future; and
we transferred staff from other markets round the world to there.
They are priority in the sense that we put new resource in there.
America remains, as Lord Davies says, absolutely key to us and
it will continue to be the main source for foreign direct investment.
It continues to be, after Europe, the main attractive market for
our exporters. It is a huge priority but we are not shifting new
resource into America. The key issue for us is how much resource
do we put into Europe? We currently have, for historical reasons,
a very large amount of resource in Europe. Many of our exporters
want us to keep that resource there; but if we are to help our
exporters explore new markets and get into the growth markets
of the future we have got to look to those markets and not just
to Europe. It is, of course, trading things off, but we do have
a clear set of priorities as to where we shift our new resource
to.
Q223 Chairman: We are going to go
to France and Italy to see the operations there quite soon to
assess whether we think that is making an appropriate contribution.
You do have 2,400 staff at HQ and 1,300 overseas, is that right?
Not at HQ but in the UK?
Sir Andrew Cahn: No, we have 2,400
staff altogether. We have 1,400 staff overseas, and we have about
700 staff in headquarters; we have about 400 in the regions. The
staff in headquarters, quite a lot of them are frontline staff.
As you know, we now are responsible for defence and security,
and the large majority of the defence and security staff are based
in London but travel a great deal and are overseas a lot. Indeed,
quite a lot of my other headquarters staff do that.
Q224 Chairman: We are not going to
ask you about defence and security because that seems to be going
very well. So we are not going to ask you questions about that
but we should touch wood indeed, Lord Davies! We were very grateful
to the response to our letter about Saudi Arabia. We came back
very, very impressed by the UKTI operation in Saudi Arabia. I
had constituency experience of it, doing fantastic work for a
constituency company, and yet we saw a hopelessly overworked group
there and we were grateful for the letter you sent us. When we
do go around the place, I am concerned quite often that I see
UKTI staff having to meet Treasury requirements to recoup income
and spending all their time doing OMIS reports which are deskbound
jobs which anyone could do; it does not have to be the added value
that a government employee can bring to the post. They are losing
opportunities to go out and network and really build value. Are
you really getting the best out of overseas staff?
Lord Davies of Abersoch: It is
interesting and we are chuckling because I asked the very same
question yesterday with the execs. What has charging done; is
it adding enough? The reality is that the response has been very
robust from everybody within UKTI. It has helped make it more
of a performance culture; it has helped people realise the cost
of what they are producing. We had a very robust debate yesterday,
and I think that the team believe that this is not the time to
increase charges and put a burden on corporates; but we are producing,
what, £3 million or £4 million of revenue and I know
it is a small amount but it has had a profound impact on the culture
and made people realise the value of their services. The team
is very keen to maintain it.
Q225 Chairman: I think you are being
told what they think you want to hear. I do not think you are
being told the truth.
Lord Davies of Abersoch: No, it
is the other way round.
Q226 Chairman: We have talked to
UKTI staff on the ground and they complain time and time again
about the deskbound nature of their jobs because of the OMIS report
system and they wish they did not have to do it. They said it
could be subcontracted to people elsewhere in the market who could
do the job just as well, and they are not providing the added
value for UK exporters they think they could if they were freed
from these ridiculous shackles. They may tell you something different
but they tell something else behind your back.
Lord Davies of Abersoch: Look,
I think in any business, any walk of life, you have got to have
accountability; you have got to have clear reporting. What I have
found in six months in UKTI is that there are very clear performance
guidelines, very clear reporting. Yes, we can always improve the
paperwork around the reporting; but I think UKTI is producing
great value—£16 for every £1 invested; I think
the staff do a great job.
Q227 Chairman: Agreed.
Lord Davies of Abersoch: So I
think the charging has improved the performance culture.
Q228 Chairman: I think this is something
I want to challenge you on quite firmly; because I am quite clear
your staff privately do not think that. The OMIS reports in particular
are an extraordinary burden on them,
Sir Andrew Cahn: The OMIS reports
are highly valued by our customers. They add great value to British
exporting. I heard you say that it could be done by the private
sector. In many posts overseas there is nobody else to do this
work. What the OMIS report is built upon is exactly the networking
and the knowledge of the local markets that our local staff have.
Q229 Chairman: We heard that OMIS
reports were locking people at their desks and stopping them develop
the local knowledge and networking so essential to inform them.
Sir Andrew Cahn: I would argue
that is overstated. However, I was trying to offer you one crumb
of comfort, which is that we do have one different model which
we are using in China, where we use the China-Britain Business
Council as a contractor; they do much of this work and the idea
is indeed to leave our own staff free to do more government to
government work, networking and so on. That is an interesting
experiment; it has proved quite successful; and we will see how
far we can move. I think in most markets it really is not possible
to set up an organisation like the CBBC to do it; and there are
not private sector contractors on the ground.
Lord Davies of Abersoch: Hopefully,
every time you visit somewhere and you get that sort of feedback
you will give it to me and I will have a look at it.
Chairman: Sometimes they tell us things
they do not want attributed, of course, that is the trouble!
Q230 Mr Oaten: I do want to talk
about the RDAs which you have mentioned quite a few times this
morning as having a key role in the whole process. You also keep
talking about banging the drum for the UK and the importance of
selling the UK. Is there not, bluntly, a contradiction in those
two statements? In that every time you use and have an RDA they
are not banging the drum for the UK, they are banging the drum
for the West Midlands, Scotland, Wales, wherever their own vested
interest is? Are we not losing a great opportunity here in that
this incredible UK brand that we should be out there fighting
for is being diluted by the RDAs all doing their own separate
thing?
Lord Davies of Abersoch: I think
on international promotion that is UKTI's job. Trade promotion
that is what we do. I think a while ago there was a danger that
the RDAs might have duplicated what we had and started opening
offices everywhere. I think the Arthur D. Little report was very
clear that that was not happening; that they were coordinated.
So I think our role in trade promotion is very clear. When I had
just arrived into the job one of the first questions I had is:
is the competition between the RDAs somehow devaluing the proposition
for inward investors? I do not think it is. I think they have
to be careful—a bit of competition between the regions I
think is healthy, providing they overall come together and are
coordinated, and I think that is happening more and more. I think
inevitably there is a bit of competition but, as I said, I think
that is healthy.
Q231 Mr Oaten: Do you really want
that competition played out in public in a conference in the middle
of Asia somewhere, because that is what has been happening?
Lord Davies of Abersoch: No. I
will give you a good example of how we are addressing that. On
China I wanted, together with the team, to make sure that we really
brought everyone together and so I called a meeting of the CBI,
the Institute of Directors, trade associations, the RDAs, got
them all in a room and agreed a clear strategy for China and how
we are going to tackle that market. I think in certain key markets
we do need to bring the RDAs together; but it is not just the
RDAs; it is the Chambers of Commerce; it is the CBI; because the
danger is that everybody does something slightly different. In
that regard I think one of my challenges, one of the Department's
challenges, is to really bring together information about the
depth and diversity of the British economy, so that every ambassador,
every MP and every business person has got that level of data.
We are putting that together as we speak. I think we are getting
better on co-ordination and on the key markets we are bringing
everyone together.
Q232 Mark Oaten: Would there come
a point where you would intervene and say to two or three RDAs,
"Listen, you are not welcome. We do not want three of you
there. You have to decide that maybe this is a country where the
West Midlands, for example, has the expertise and the lead and
you should be there and it is not a place for one of the other
RDAs"?
Lord Davies of Abersoch: On international
activity I think they tend to work it out and have a good working
relationship between each other. I do not think there is huge
argy-bargy between them.
Q233 Mark Oaten: Are you concerned
about the overseas offices issue or do you think that is being
tackled?
Lord Davies of Abersoch: No, I
think that is being tackled. If that expansion of international
offices had carried on in a huge way, duplicating costs, I think
that would have been a problem, yes. There is no evidence that
that is happening and in fact, when you look at the co-ordination
internationally, it is very good.
Q234 Mark Oaten: You mentioned that
you have got 1,000 or so staff working in 98 countries, is it,
that you are in?
Sir Andrew Cahn: We are in 98
countries, 1,300 staff.
Q235 Mark Oaten: Does that include
in that figure those that are also there from the RDAs or is that
on top?
Sir Andrew Cahn: No, it does not.
The RDA offices, and these are very small offices; it is usually
one person or two, and indeed with one person very often a locally
engaged person who is doing other things, are, of course, focusing
on inward investment. They are not focusing on trade promotion.
We do the trade promotion; our staff do that. The overseas offices
of the RDAs are there to attract inward investment to their particular
region, but in fact the RDAs are looking at these offices now
quite critically and I think we will find, very much as Lord Davies
said, that it is not that they are expanding; indeed, they are
even beginning to contract. The other thing I would say is that,
following the Arthur D Little report, we have worked very closely
with the RDAs to improve co-ordination because what Little said
was that it is not that all the critics are wrong. It is not bad;
there is not significant duplication, but they did propose a whole
series of changes we could make to improve co-ordination and ensure
that there was not duplication in the future. We have done that,
we have had some pilot projects with the RDAs. They are completed.
We are now doing that elsewhere. I am reasonably confident that
we work very closely with the RDAs and we get efficient use of
public money.
Lord Davies of Abersoch: And that
includes the devolved administrations.
Q236 Mark Oaten: I was just about
to ask. Is there a separate case to be made in Scotland?
Lord Davies of Abersoch: They
do a bit of trade promotion. At the dinner the other night we
talked about how do we make sure that we are all together as one
and we had a great discussion. What we need to do more of with
the RDAs, and I do bang the drum—I am going to sound like
Digby now—on this issue, is that we really do need to showcase
British success, whether it is life sciences, whether it is healthcare,
whether it is pharmaceuticals, creative industries, you name it.
We had a great discussion with the RDAs last week about how we
bring these success stories together and sell them. I think that
is quite a challenge.
Q237 Chairman: I will bring Mark
in again in a second on education but before we do that can I
just ask one other question on the RDAs? I have heard criticism
in the past of regional export trade promotion visits organised
by RDAs on a cross-sectoral basis. What I hear from the industry
bodies is that the outward missions that work are the ones based
on sectors, not regions, which are focused on a particular industry.
I think you are making progress again in co-ordinating this but
it does seem to me that that is a very strong message that I have
heard across a wide range of industry sectors, "Please don't
let the RDAs do regional export trade promotion visits".
Do you agree with that analysis and, if you do, is the situation
getting better?
Lord Davies of Abersoch: I do;
I am a big believer in sectoral experience and speciality, and
we have got that in UKTI. We have sector boards, advisory boards.
I meet with them regularly now with the sector chairmen and in
fact all the chairmen together. I think you need that industry
focus and I am taking an ICT, a technology group, to China in
two weeks' time. I think that is very important for promoting
business, so I agree with you.
Q238 Chairman: But are the RDAs doing
the regional promotion now?
Lord Davies of Abersoch: They
are doing it more and more as a sectoral approach with us.
Chairman: Just as I have encouraged what
you said about the attempt to co-ordinate their overseas activity
more generally in answers to Mark Oaten, I am very encouraged
by what you have just told me about that too and I think it is
very important to keep that process going.
Q239 Mr Wright: You mentioned, Lord
Davies, that you are going to China and are taking an ICT group.
How do you pick that group? How do you pick the business or the
individuals that you take?
Lord Davies of Abersoch: I am
not sure exactly the names of the people coming with me but I
looked at the programme yesterday. UKTI offices will have spoken
to the regional offices about who has got an interest in which
business; they would know from their own database. UKTI obviously
has a huge database of exporters, and we have talked to the CBI.
We would work with those sorts of organisations to make sure that
we do it together. It is the other way round as well. The Chinese
technology and mobile industry came over; the minister of technology
was over and brought half a dozen companies two weeks ago. In
conjunction with other ministers and industry groups I hosted
a get-together and then they toured various parts of the UK, eight
companies, looking at British excellence in mobile and ICT.
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