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The impact that the recession has had, and is continuing to have, on businesses is still all too real. It is therefore essential that the Government does all it can to help to create an environment that is supportive of businesses' engagement in international trade. The question we asked in this inquiry was a simple one—what more can be done to help the country export itself out of recession?
If such an environment is to be created, all branches of government need to become more commercially aware and alert to developments that will impact on, or could provide opportunities for, British businesses. Trade promotion must not be seen as solely the responsibility of UK Trade & Industry (UKTI). There has been a very welcome change in the mindset of the Foreign and Commonwealth Office (FCO) to become much more business-orientated; other departments and agencies must take practical steps to emulate the change that the FCO has achieved.
Our examination of UKTI found that, on the whole, it is a highly adept organisation whose services are valued by businesses. We were once again impressed by the dedication and professionalism of the staff that we met. However, this does not mean that there is no room for improvement; many businesses we talked to felt that UKTI was not always successful at listening to and effectively communicating with its customers. We also heard anecdotal but credible evidence of significant variation in the quality of its work in different overseas Posts.
UKTI and its predecessors have been asked to change their priorities too often. The organisation now needs a period of stability to enable it to make incremental improvements to its efficiency. British exporters need different assistance in different markets and have different priorities, often related to their size and experience of exporting. We do not accept the criticism that UKTI has focused too much attention on the emerging markets, but equally we acknowledge that SMEs in particular benefit from the organisation's presence in traditional markets in the EU and the USA. We are therefore opposed to any significant reduction of UKTI's presence in any market. At a time of great stringency in public spending this means that where additional resources are needed, either to support work with companies in the UK, or to boost UKTI's presence in particular markets, the resources can only be found from the corporate centre.
UKTI needs to do more to alert British business to the opportunities in markets that have been regarded as too challenging, and to new opportunities in existing markets.
One policy that came in for particular criticism was the revenue targets placed on UKTI staff which they meet by selling market information through the OMIS (Overseas Market Introduction Service). Businesses—and, privately, some UKTI staff—felt that these targets were trapping staff behind their desks leaving them unable to develop their knowledge of the market on the ground.
The rationale for the charging policy itself is unclear. UKTI seems unsure whether charging should be used to discourage speculative requests, to recoup a significant part of the cost of the service, or simply to ensure that business users value the information more highly because they have paid for it. We believe that prices should be set at the level that will most benefit the UK, discouraging companies who are not serious about exporting from using the service. In the long run the extra taxable revenue that OMIS creates will more than cover the initial costs involved. Cost recovery must not be an objective in its own right and the level of costs recovered should set by UKTI's assessment of what is appropriate to enable it to meet its wider purpose and not to meet arbitrary targets imposed by the Treasury.
UKTI was one of the organisations to benefit from the Government's Strategic Investment Fund. While the sum of money allocated seems arbitrary, this decision should be seen as a welcome vote of confidence in its work. However, we are concerned that the need for rapid decision making, without appropriate consultation with business, has led to inappropriate spending decisions being made. UKTI should have focused on providing additional temporary resources for its existing successful schemes rather than hastily inventing new ones.
Regional Development Agencies (RDA) have been given an important role to play in trade promotion, ensuring that local businesses are able to benefit from national schemes. However we again heard worrying reports about unnecessary competition and wasteful duplication of services by the RDAs. While we have been told that matters are improving, there is still much to do if RDAs are to become more of a benefit than a burden to national trade promotion efforts.
The recession has also severely constrained the availability of trade credit, making it difficult for companies to get access to the funds they need to export. While other European countries have taken advantage of recent relaxations in European regulations to allow their export credit agencies to address this market failure the Export Credit Guarantee Department has, so far, decided not to supply businesses with short-term credit on the same scale. We believe that this represents a serious missed opportunity and that the Government should urgently reassess this decision.
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