Government Response
The Government welcomes the Business, Innovation
and Skills Committee's Report, "Exporting Out of Recession".
The Committee's Report highlights the work of UK
Trade & Investment (UKTI) to promote UK business engagement
in international trade, its successes to date and what more can
be done to ensure that it will rise to the challenges that lie
ahead. The Government welcomes, in particular, the Committee's
recognition of the dedication and professionalism of its staff
and its ongoing support for UKTI's strategy.
The Committee recognises UKTI as a highly successful
organisation, providing services that are valued by business.
This serves to confirm the strategic direction taken by UKTI
as appropriate for both its customers and the current economic
challenges faced by them.
UKTI services are pivotal to the Government's policy
to facilitate an export led recovery. The Committee's recommendation
that all parts of Government should work towards promoting the
UK as the place to do business with, and in, is welcomed and is
consistent with the current thinking. UKTI works with the joint
BIS/DfID Trade Policy Unit, the FCO and ECGD to create an environment
where trade can flourish.
The Government notes the concerns of the Committee
over UKTI charging policy, perceived duplication/competition with
the Regional Development Agencies (RDAs), allocation of Strategic
Investment Fund (SIF) resources and concerns over the effects
of the potential loss of parts of the FCO overseas estate on UKTI
trade services. Our responses to these concerns are set out in
the body of this reply.
Throughout the Report, there are references to UKTI's
front-line staff. Staff endeavour to provide an excellent service
and are to be commended for their enthusiasm and professionalism
when delivering UKTI services to their customers. The results
from the UKTI Performance and Impact Monitoring Survey (PIMS)
are testament to that. Evidence to end FY 2008/09 reported estimated
total additional financial benefit to UK businesses of around
£3.6 billion in the year covered by the survey, across all
UKTI trade services.
The case for open markets has not been undermined
by the economic downturn. The Government is therefore maintaining
its position as a strong defender of globalisation, pushing for
greater integration and liberalisation. The benefits of open
markets to the UK are clear; even in the aftermath of the financial
crisis the UK's employment rate is still one of the highest in
the world. Over the last 20 years, UK manufacturing output grew
11% in volume, real income per capita by more than 40% and real
GDP by around 60%. The Government will work to build on these
strong fundamentals.
Conclusions and Recommendations of the Committee
The Government's response to each of the Committee's
conclusions and recommenda-tions is as follows.
CREATING A CULTURE OF TRADE PROMOTION
If Britain is to have any chance of exporting
out of recession, and to flourish after it is over, then all parts
of government, not just UKTI and the FCO, must work to promote
the country as an ideal place to trade and do business with.
We urge the Government to use its reply to our Report to set out
how it intends to spread a more commercial, business-oriented
mindset throughout Whitehall. All departments must be made to
realise that they have a major role to play to help Britain trade
its way out of recession and sustain its long-term prosperity.
(Paragraph 16)
1. The Government's National Economic Council has
emphasised the importance of all ministers and government departments
engaging in supporting economic recovery, especially through exports
and encouraging inward investment. Already work is under way
to make this a reality, embedding this as an ongoing policy commitment.
Examples of this policy in action include:
· UKTI's
Sector Advisory Group for Education and Skills (SAGES) membership
is drawn from across all segments of the sector including other
Government Departments (OGDs), key industry bodies and government-backed
agencies such as BIS, the British Educational Communications and
Technology Agency (BECTA), the British Educational Suppliers Association
(BESA), the British Council and Universities UK. SAGES supports
key activities such as the recent UKTI International Delegation
to the Learning and Technology World Forum (LATWF) and the British
Education and Training Technology show (BETT) the world's largest
educational technology event.
In addition UKTI has a University Liaison Officer
within a Science & Innovation team focussed on strategic links
with Universities such as Reading, Southampton and Glasgow Caledonian.
This team and others throughout UKTI support University international
commercial engagement and collaborations. With key links to the
Technology Strategy Board, Research Councils, learned bodies and
colleagues in BIS.
Within the R&D Unit UKTI works closely with Universities
to deliver a coherent offer to overseas multinationals and encouraging
them to invest in the UK eg the Nissan Battery Factory in the
NE.
The Prime Minister announced a number of key initiatives
at LATWF on 11 January 2010 aimed at increasing educational exports.
UKTI, BIS and DCSF will play an active role in helping to deliver
these including:
· support
for the recently formed Task Force, Chair by Lord Puttnam, to
look at increasing educational technology exports and international
activity;
· increase
strategic UKTI support for universities to help them to meet the
Prime Minister's aspiration of doubling the value higher education
exports, and
· Working
with BIS to develop activities around the International Education
and Research Advisory Forum which will be a key vehicle in helping
universities internationalise.
· UKTI
and the FCO sit on a Cross-Whitehall Committee on promoting the
economic reputation of UK PLC, which met for the first time on
15 January. UKTI also sits on the International Influence Hub.
Run by the Cabinet Office, this brings together senior officials
from central government and partner organisations working to influence
audiences on an international level, to share experience and establish
best practice.
· The Cross-party
Ministerial Group on Investment Projects which convenes to remove
blockages to significant investments.
· The Prime Minister
hosted a Global Investment Conference on 22 February 2010. This
involved Ministers from across government meeting with major international
business leaders to promote the UK as an investment destination.
· On life Sciences,
UKTI and BIS work closely with the Department of Health to promote
the UK Healthcare sector. One example of this is senior-level
representation on the industry-led Life Sciences Marketing Board.
The role of the Board is to ensure the UK adopts a joined-up
approach to marketing UK strength in the sector, internationally.
This work underpins both trade and investment activity.
· UKTI's Energy
and Advanced Engineering team frequently involve other government
departments in its activities, along with stakeholders from the
private and academic sectors. Recent examples of co-operation
include UKTI and DECC providing a joint presence at the World
Future Energy Summit, in Abu Dhabi this January, and the New Industry
New Jobs (NINJ) Advanced Engineering Road shows that have been
taking place around the UK since last November. These have seen
involvement from UKTI, BIS, ECGD and the Technology Strategy Board.
UKTI's strategic advisory bodies for Energy and Advanced Engineering
also include representation from several other government departments.
· UKTI works
closely with HM Treasury on overseas promotion of the financial
and professional services sector. Examples include the Economic
and Financial Dialogues with India and China, where we work jointly
with business to ensure the programme delivers against UK objectives.
· UKTI also works
with the Ministry of Justice, the Law Society and the Bar Council
to ensure joined-up and effective promotion of the legal services
sector overseas.
· UKTI ICT Sector
team has been working with the Engineering and Physical Sciences
Research Council, the BBC and the Home Office to promote UK excellence
and innovation in overseas markets. There is regular discussion
with the Technology Strategy Board and the Knowledge Transfer
Networks. The UK's flagship trade show event, Technology World,
was run in partnership with the Knowledge Transfer Networks for
digital content and electronics.
· The joint BIS/DFID
Trade Policy Unit continues to lead work across Whitehall to push
the Doha Round to its conclusion. BIS/DFID continues to provide
new opportunities for UK business through Free Trade Agreements,
Investment Promotion and Protection Agreements and the EU's Market
Access Strategy.
· UKTI and BIS
work together as the UK's contributors to the EU Market Access
Strategy. This has the objectives of removing trade barriers
faced by UK exporters in non-EU markets. Key to this work is
the relationship with business, both through UKTI and through
BIS contacts in the UK and through the work of commercial teams
in overseas posts working with the Commission, Member States and
others in third countries in identifying issues of most concern
to business and working for effective solutions.
HIGH LEVEL MINISTERIAL VISITS
It is still difficult for relevant ministers to
spend time away from Westminster. Current arrangements constrain
the ability of ministers to engage in overseas trade missions
and damages UK competitiveness. It is necessary, and should be
possible, for both the Government and the opposition to make arrangements
to ensure that the activities of the Trade Minister are not constrained
by their presence being required at Westminster. (Paragraph 22)
2. The Ministerial Committee on Overseas Visits (set
up by UKTI under its current Strategy) coordinates the many visits
made by Ministers across Government to share messages around trade
and investment.
3. Lord Davies has made 20 overseas visits since
he joined the Government; Lord Mandelson has also been very involved
in the trade agenda, making frequent overseas visits focusing
on business issues. Ministers also undertake UK regional visits
with a business focus, working in tandem with business organisations
like the Confederation of British Industry (CBI), Federation of
Small Business and others.
BRITISH TRADE AMBASSADORS
We agree that the British Trade Ambassadors are
doing a very good job selling Britain as a place to trade with
and invest in. Having high-powered individuals singing the praises
of the country can only benefit UK plc. We ask the Government
to provide us with yearly updates on the activities of each of
the Ambassadors, and to inform us what steps it is taking to ensure
that the specialist knowledge the network possess reflects all
those industries which are of central importance to the UK's economic
future. (Paragraph 26)
4. We welcome the Committee's view that the UK Business
Ambassadors ('British Trade Ambassadors') are doing a very good
job selling Britain as a place to trade with and invest in. We
have attached at Annex A the latest progress update that was sent
to the Business Ambassadors in February 2010 and we plan a full
update for later in 2010 which, as requested, we will forward
to the Committee. At Annex B you will find the latest list of
the UK Business Ambassadors and at Annex C the current Business
Ambassadors' programme and forward look.
5. The Committee may also wish to note that the Business
Ambassadors Network has increased in numbers from 19 in September
2009 to 25 in January 2010. This addresses the Committee's wish
that the Business Ambassadors Network should reflect the specialist
industries that are of central importance to the UK's economic
future. Additions to the Network include business and academic
leaders in the Health, Energy and ICT sectors.
UKTI STRATEGY
We agree with our witnesses that there is currently
no need for UKTI to engage in a fundamental re-evaluation of its
strategy. UKTI has been forced to undergo too many changes in
recent years and it now needs time to improve incrementally.
A period of relative stability is needed to allow it to address
its remaining shortcomings. We agree that the current position
of the pound, which has made it more attractive for some companies
to export, can be accommodated within UKTI's existing framework.
That said, it would be prudent for UKTI to consult with industry,
in advance of 2011, on whether or not it will deliver on its strategy.
(Paragraph 32)
6. UKTI's 2006 Strategy, 'Prosperity in a Changing
World', mapped a course for UKTI to market the UK as never
before; focus on those markets and sectors that are key for UK
business; to use professional marketing skills and adopt a more
target-driven, entrepreneurial approach to promoting UK strengths;
and to work in partnership with others in the public and private
sector. This robust approach has stood the test of the recession
and has placed UKTI centre stage in aiding the UK's economic recovery.
7. Within the framework of the existing strategy,
we have adapted to changing circumstances. In particular the
economic crisis, to move resources to fulfil business need, for
example by moving resources to emerging/high growth markets and,
more recently, employing Fiscal Stimulus Initiative specialists
and developing a new programme of support, (Gateway to Global
Growth) aimed specifically at businesses with 2-10 years exporting
experience.
8. We have regularly consulted with business during
the current strategy as it has evolved. We have senior business
people in a non-executive role on the UKTI Board, on our Sector
Advisory Groups and working as Business Ambassadors. We also
have regular stakeholder meetings with key business multipliers
such as the Confederation of British Industry, the Institute of
Directors, the British Chambers of Commerce and Engineering Employers
Federation.
EMERGING MARKETS
We fully support the increasing emphasis that
UKTI is placing on emerging markets, including Abu Dhabi and Saudi
Arabia. Neglecting these markets would not be in the long-term
interest of British business. (Paragraph 42)
9. UKTI acknowledges the Committee's view and will
continue to keep the level of resources in this and other regions
under review.
10. Also in October 2009, the UK signed Investment
Promotion and Protection Agreements with both Kuwait and Qatar.
These agreements will give greater protection to UK investors
in Kuwait and Qatar and encourage Foreign Direct Investment into
the UK from Kuwait and Qatar.
We are grateful to the Minister for acting on
our concerns about a lack of staffing for UKTI operating in the
Middle East. We anticipate that the additional staff will assist
the office, providing a more effective service to British businesses
in a market that presents companies with a large number of opportunities,
but recommend that the situation is kept under review. (Paragraph
43)
11. UKTI acknowledges the Committee's view and will
continue to evaluate its policy approach to maintain the most
appropriate strategy and level of resource in this region.
It is obviously sensible for UKTI to direct its
resources to the locations where it can have the maximum possible
impact. However, the plethora of different priority and high
growth markets and sectors that UKTI has set itself could easily
cause confusion. UKTI needs greater clarity in explaining its
priorities to industry. Furthermore, UKTI needs to reassure business
that concentrating on these strategic priorities will not undermine
the level of service provided in established markets where the
majority of the UK's trade is conducted. (Paragraph 45)
12. As the Committee acknowledges, judging the relative
needs of established and developing markets, and different sectors,
is a delicate balancing act. We focus on the sectors where we
can add most value in both established and emerging or higher
growth markets with most potential.
13. UKTI priority emerging/higher growth markets
under the current strategy are Brazil, China (including Hong Kong),
India, Indonesia, Malaysia, Mexico, Qatar, Russia, Saudi Arabia,
Singapore, South Africa, South Korea, Taiwan, Thailand, Turkey,
United Arab Emirates, Vietnam. However, although it is important
that we develop our presence in these markets, UKTI still focuses
a large amount of resource on providing support for the established
markets that provide valuable opportunities for UK companies.
UK maintains large networks across the established markets, with
a large presence across Europe, the USA and Japan, for example.
UKTI will continue to promote opportunities and services in these
markets.
14. We have prioritised our key sectors to just seven:
financial services, creative industries, life sciences, energy,
ICT, advanced engineering and low carbon solutions, which is consistent
with the key sectors that BIS works with.
15. UKTI has simplified its service offer to customers
to three main products; "Developing Your International Trade
Potential", "Accessing International Markets" and
"Maximising Foreign Direct Investment".
16. UKTI will continue to deploy its resources to
take advantage of both existing and new opportunities, for both
trade and investment, to ensure a balanced set of criteria in
future decision making and that the offer is explained clearly
to our customers.
OVERSEAS MARKET INTRODUCTION SERVICE
The Committee welcomes the more innovative use
of OMIS highlighted in their visit to Milan and recommend that
this creative approach be disseminated across UKTI on the basis
of best practice. (Paragraph 49)
17. UKTI's evaluation system obtains feedback from
customers about their experiences of using the system. UKTI continuously
reviews OMIS quality and works to spread best practice across
its network in the UK and overseas. We issue a regular newsletter
to inform users of changes and improvements to OMIS. We hold
a regular forum that reviews randomly chosen OMIS reports in depth
and uses the results to highlight any problems and spread any
best practice. An annual discussion forum made up of UK and overseas
customer-facing staff is held to discuss any problems and test
solutions and new ideas. We have a help-line to answer questions
on OMIS business practice and support users and customers with
the on-line system. UKTI will continue with these practices as
well as looking for means to step this up.
A well written OMIS can, and often does, provide
businesses with a wealth of opportunities to take advantage of,
while a poor one is a costly waste of a company's time and money
and a disincentive for first time users to commission future reports.
While we understand that complete uniformity in the quality of
the product is not possible to achieve, the current gulf between
the best and the worst is too wide. UKTI needs to take steps
honestly to address performance in its Posts where business is
providing negative feedback on the support they are given. If
poor quality is due partly to companies commissioning vague and
unfocused reports, UKTI needs to be more willing to recommend
that businesses not use this service when it believes they would
be able to add little value to a company's operations—a
recommendation there may be disincentives to implement, given
the target set for UKTI Posts. (Paragraph 53)
18. We are constantly seeking to improve the quality
of the OMIS service and to spread best practice around UKTI's
delivery network (see paragraph 8). It is important to note that
where a company needs the support of Posts to help access international
markets, an OMIS service will often be required. Companies are
closely involved in planning OMIS reports and have to agree to
any proposal to commission Posts to do the work.
19. Since the National Audit Office (NAO) Report[1],
OMIS quality ratings have risen from 69% to 73%, and have been
maintained. The improvement in ensuring that clients are clear
about what to expect from the service has also been maintained,
rising slightly to 82%.
20. There is clear evidence that customer relationship
training for staff is improving the quality of service. We have
also developed best practice materials and hold regular teleconferences with
posts to discuss performance issues.
21. While there is an element of inconsistency that
we are working to correct, OMIS varies according to the service
level chosen. The amount of work that can be delivered for a
given service level may vary from market to market depending on
ease of doing business in the market and the business culture.
22. We discourage the commissioning of OMIS where
this is not right for the client and will continue to spread best
practice across the network.
We agree with the NAO that there is a lack of
clarity about the aim of UKTI's charging structure. However,
we do not believe that UKTI should aim for full cost recovery,
but instead that charges should be set at a level that is of the
most benefit to UK companies and the economy as a whole. This
means the charge should be as high as is required to discourage
speculative requests and no higher. In the long term, the additional
taxable revenue generated will more than cover the cost of providing
the initial service. We also believe that there is scope for
UKTI to be more creative in the way it uses the charging system.
For example, a lower price could be charged to companies that
wish to export into priority markets to encourage them to do so.
Cost recovery should be an incentive to both UKTI staff and those
who commission the report to use them effectively. They should
not be a Treasury-driven way of reducing the costs of UKTI. (Paragraph
58)
23. The Report acknowledges that charging is appropriate
to stop speculative and wasteful requests. We note the Committee's
comments. The OMIS process is still subsidised. UKTI is aware
that evidence suggests that firms of all sizes are willing to
pay more for OMIS. This means that there is scope to review the
pricing structure when the economy is in recovery, though the
impact upon demand will need to be monitored carefully. Treasury
policy is to move to full cost recovery and are working progressively
towards this goal.
We do not believe that there should be a fundamental
tension between the need for staff to meet centrally set targets
for OMIS revenue and their ability to network and make contacts
with local businesses. Indeed, without those contacts OMIS reports
would be of a much poorer quality. However, we are alert to the
pressures on UKTI staff and the fact that OMIS targets have the
potential to trap staff behind their desks and skew their priorities.
We recommend that the Department monitor this issue and where
necessary, empower UKTI management to intervene and ensure that
staff workloads do not prevent them from developing the local
and sector knowledge necessary for them to provide a vital aspect
of UKTI service. (Paragraph 65)
24. UKTI's time recording system indicates that in
the overseas network spend one day out of five on average on chargeable
work. The other four days are spent on non-chargeable work.
Both chargeable and non-chargeable work is targeted at supporting
the efforts of exporters to succeed in global markets.
PASSPORT TO EXPORT
If UKTI is committed to increasing the number
of companies exporting to its priority high growth markets it
needs to accommodate all companies who are interested in entering
those markets, regardless of whether or not they are new to exporting.
We welcome the aims behind the "Gateway to Global Growth"
programme but are concerned about reports from industry that it
is not living up to its billing as follow-on to the highly successful
Passport to Export scheme. The Government should re-examine the
support the Gateway provides to ensure it provides a properly
tailored service to the needs of business. We invite the Government
to provide more information about the operation of this scheme
in its response to our Report. (Paragraph 71)
25. Gateway to Global Growth was launched on 1 April
2009 so it is a new programme requiring time to bed down. Like
Passport to Export, it is delivered by UKTI's International Trade
Advisers in English regions. The main purpose of the programme
is to support SMEs with some international experience to tackle
new international markets in a structured and coherent way. Companies
will be on the programme for around 12 months, so the first recruits
have not yet completed the process. Gateway's quality and impact
will be assessed by UKTI's PIMS evaluation system in the coming
year. In addition, we are conducting a research study into the
experiences of companies going through the programme.
TRADESHOW ACCESS PROGRAMME
Companies clearly feel that the Tradeshow Access
Programme makes a valuable contribution to their ability to export
successfully. However, given the current constraints on public
finances it is difficult to recommend that the Programme's budget
is increased. Rather we see an opportunity to make the use of
existing resources more efficient by developing a better evaluation
mechanism for determining future grants, the need for which was
alluded to us by the Chief Executive of UKTI. We call on the
Government to protect the existing levels of funding and to explore
innovative ways of maximising the effective use of the resources
allocated to this scheme. (Paragraph 77)
26. We accept the Committee's recommendation. The
value of TAP support to SMEs has been confirmed by our own assessments,
including an independent research study carried out in 2008/09.
We will aim to increase the value of TAP support to the customer
by the following actions, to be delivered in 2010/11:
· offering,
through our delivery partners, more flexible, shared exhibition
and meeting spaces to meet the needs of smaller businesses;
· reviewing the
use of TAP funding at major trade fairs ('Key Events') to ensure
more effective promotion of the UK group and to enhance the UK's
reputation in a given sector, and
· implementing
more joined-up working between trade associations and UKTI International
Trade Advisers to help prepare SMEs to exhibit and provide relevant
support services after the event.
GAPS IN CURRENT PROGRAMME PROVISION
The Government should study VIE closely, identifying
the benefits offered by the French system, and investigate the
possibility of running a similar scheme in the UK. (Paragraph
80)
27. VIE, (Volontariat International en Enterprise
(Volunteer for Experience)), offers citizens of the European Economic
Area, who are under 29, the opportunity to gain paid professional
working experience overseas with participating companies.
28. UBIFRANCE, the French agency for international
development, both promotes and administers the scheme. There
are an estimated 100 staff members involved in identifying host
organisations, the selection of candidates, obtaining visas, monitoring
volunteers on secondment, etc.
29. While the potential benefits of VIE to the individual
and participating organisation are undoubted, the administration
of such a scheme would require consideration from central Government,
as under current UKTI resource levels it is not feasible.
30. The Committee should note that the British Council
also offers vocational education and training opportunities to
those wishing to gain experience from working abroad and for those
UK employers looking for international students to assist on short
or long-term projects.
MONITORING OF THE IMPACT OF PROGRAMMES
We believe that the effectiveness of UKTI support
to companies must be, as much as possible, measured by its "bottom
line" impact, that is the direct additional financial benefit
to companies—and to the United Kingdom—as a result
of the services that they received. Being able to demonstrate
more fully the value it adds to companies activities will help
UKTI defend its budgets during continuing pressure on public finances.
We therefore recommend that businesses who use UKTI services
should be required to keep UKTI updated about the benefit that
they receive, over the medium term as part of the agreement they
enter into when using UKTI services. This should not have to
be an onerous process, a short e-mail or phone call to their UKTI
contact after a successful business deal had been signed would
be sufficient. We also recommend that the timescale of the PIMS
system is lengthened to allow companies responding the time to
realise the full impact of the support they have received. Done
well, this process should also enhance relationships between UKTI
and the businesses using its services. (Paragraph 87)
31. The NAO made a similar recommendation about the
need for evidence of longer-term impact in its 2009 value for
money study of UKTI, and UKTI has been considering possible means
of obtaining such evidence. The NAO recognised that UKTI had
in place, in PIMS, a robust system that provides high quality
evidence about the impact of UKTI trade services on the performance
of client businesses. However, the Government notes the Committee's
concern that longer-term impacts would not be fully captured.
32. PIMS evidence is currently captured in three
ways:
· Some
4,000 trade clients are interviewed between 4-7 months after support,
when their recollection of the service is clear, and they are
well placed to give assessments of service quality and of intermediate
benefits, such as whether they gained access to useful information
or contacts not otherwise available, or whether the support had
enabled them to raise their credibility or profile in the market;
· A smaller group
of around 400 trade clients are re-contacted for PIMS follow up
interviews take place around a year after the first interview.
This allows UKTI to capture evidence on slightly longer-term
developments, and views of the expected financial benefit. Clients
are also asked whether the contacts and information they received,
and impact on their credibility or profile, had turned out to
be more or less useful than they had initially thought. The evidence
shows a consistent pattern, that clients often revise upward their
assessment of benefits from information and from effects on profile,
but not for usefulness of contacts. In addition, clients in the
follow up interviews often report qualitative innovation benefits
not reported in the first interview, such as improvements to products
or services, or to new product development strategy, and increased
R&D; and
· A small number
of clients—around 20 per year—are invited to take
part in a longer depth interview, to discuss a range of issues
relating to their international business development and the role
of UKTI support. This evidence is reported in PIMS Qualitative
Reports, and is also used to inform ongoing refinement of PIMS
methodology and analysis.
33. Tracking longer-term impact, beyond that currently
captured, is most likely to be feasible for clients who have had
relatively intensive forms of support, such as through Passport
to Export, especially where the client perceives value in a continuing
longer-term relationship with a trade adviser.
34. Evidence from PIMS shows that many other clients
derive substantial benefit from relatively short-term support
from UKTI, such as through attending a single event, or receiving
help from an overseas Post on a specific issue. While some of
these clients might welcome a well-judged phone call from someone
at UKTI to see how they are getting on, requirement for follow-up
would be burdensome.
35. To be credible, impact evidence must be strictly
robust. Collecting robust data by surveys becomes increasingly
difficult as the length of time increases after support, both
because of diminishing client recollection of the circumstances
they were experiencing at the time of the support, and because
of increasing difficulty in contacting the person who was directly
involved, due to staff changes, etc. For these reasons, academic
advisors to UKTI on PIMS issues have recommended relying more
on other robust methods to obtain evidence of longer-term impact.
For example, UKTI has commissioned academic researchers from
Oxford to evaluate the longer-term impact of Passport and Export
Marketing Research Scheme using data that clients have reported
to Companies House. These evaluation methods are highly valued
by many observers as a complement to evidence based on surveys
such as PIMS, and have the advantage that the research does not
place any burden on UKTI clients.
DELIVERY OF PROGRAMMES
Value for money and high quality services should
be the criteria used by UKTI when it awards contracts for its
UK operations. However a partner with knowledge of local businesses
and ability to promote UKTI service to the widest possible range
of companies, such as a Chamber of Commerce, will be able to add
a great deal of value to UKTI UK-based operations. These are
considerations that UKTI should bear in mind when deciding who
to partner with for local service delivery. We also believe that
the Government should seek to strengthen local Chambers as a matter
of policy. (Paragraph 90)
36. UKTI undertakes a substantial amount of partnering
with the private sector. We value these partnerships as the private
sector provides business perspective, credibility and innovation
in the way we do things.
37. In four of the nine regions in UKTI's English
regional network, Chambers of Commerce or their representative
bodies e.g. Chamberlink on behalf of the 17 North West Chambers,
are partners in the trade delivery organisations. We have other
business service organisations supporting UKTI's trade delivery
in the five other regions.
38. While UKTI considers the best value suppliers
i.e. the best quality at the most competitive price, it also seeks
delivery partners that have a capability to deliver on UKTI priorities
and that can generate synergy with other business support services.
We also take account of other value added elements such as local
business knowledge or particular sectoral or RDA focus.
39. In the case of Chambers, as well as working with
a number of them as delivery partners, in all regions UKTI's teams
will be working with their local Chambers on activities on networking,
joint events or overseas visits.
40. In addition to partnerships with local and regional
Chambers, UKTI has a longstanding and beneficial relationship
with the British Chambers of Commerce (BCC). The BCC manage two
UKTI services—the Export Marketing Research Scheme and the
Export Communications Review—where private sector specialists
are deployed to provide advice to companies on marketing research
and export communications.
41. The BCC, under cover of a memorandum of understanding
with UKTI (and its predecessor Departments), also administers
the issuing of non-preferential Certificates of Origin. Certificates
are issued by Chambers authorised by the BCC and the Chambers
have fulfilled this role for many years. Some 350,000 certificates
are issued each year, generating a good level of income for the
Chamber network.
42. Business Link is the primary access channel to
Government business support. It provides free professional advice,
support and information to help UK business to both maintain and
grow their success.
43. Business Link works with key stakeholders and
partners, including Chambers of Commerce, local councils, enterprise
agencies and other specialist bodies with knowledge of local businesses
to promote and deliver government services to a wide range of
companies. This work includes promoting the services provided
by UKTI.
44. On the strengthening of local Chambers, it is
for individual Chambers to offer the services that their members
want in order for them to expand their operations. It is not
for Government to do this as individual Chambers are focussed
on local issues and driven by the requirements of their membership.
STAFFING COSTS
In the current climate of constrained public finances
it is especially important that the maximum possible amount of
resource is directed to front-line services. However, we do not
believe that wasteful spending exists to the extent suggested
by some of our witnesses. Neither do we believe that UKTI needs
to fundamentally re-evaluate the balance it strikes between direct
cash support it provides to business and the amount it spends
on staff, the majority of whom deliver front line services to
companies. However, changes imposed on UKTI have played their
part in creating a top-heavy bureaucracy which is now being slimmed
down. This process must continue—the evidence we have heard
suggests that the real value to British business of UKTI is its
presence at the local level both in the UK and overseas. (Paragraph
96)
45. UKTI is committed to being a customer-focused
and performance-driven organisation. We have undertaken significant
work in the last few years to maximise the value of our resources
by moving them to where they are most productive for UK business.
In the past year we have realigned our inward investment resources
to ensure that they are focused on the most productive markets.
46. This has resulted in UKTI substantially increasing
the number of businesses assisted by our trade developments services
to a record 23,700 (latest Q3 2009/10 figures), whilst cutting
the average cost of assisting businesses from around £16,500
to just over £10,000 over the last three years. It is a
similar story for inward investment, where in 2008/09 UKTI directly
assisted 600 inward investment projects, a fifth consecutive year
of growth, whilst cutting the average cost of securing these projects
by over 13% over the last three years.
47. In the spending review, UKTI was also committed
to making Value for Money (VFM) efficiency savings. The target
set is £7.1 million over our three funding streams. To date,
UKTI has delivered £5.5 million (latest Q3 figure 2009/10)
and expect to deliver this target by the end of the CSR period.
All reported gains are cash releasing, sustainable and reported
net of cost.
48. In addition to these VFM savings, UKTI has driven
efficiencies and cost reductions in our accommodation costs by
utilising existing space. This delivers a year-on-year reduction
of £987,000 in accommodation costs to BIS.
49. UKTI is committed to achieving efficiencies by
reducing input costs whilst delivering improved customer services.
We maximise the value of our resources by moving them to where
they are most productive for UK business and by realigning our
inward investment resources to ensure that funding and Posts are
focused on the most productive markets.
50. UKTI has a programme of external evaluation on
the quality of its services. The PIMS Survey provides quantitative
and qualitative measures of UKTI's performance in delivering its
targets, including data on customer satisfaction with service
outputs and quality. Management information generated by PIMS
is used to inform decisions on further improving the quality of
service delivery and achieving further productivity gains, backed
up by improved staff capabilities and professionalism, and refining
Headquarter business processes. The NAO has reviewed all of UKTI
data sources and considers UKTI evaluation robust and all of our
systems "fit for purpose".
51. UKTI will continue to strive to be an exemplar
in Whitehall for innovative and cost-effective delivery. The
outcome of the Operational Efficiency Programme will help focus
our plans and facilitate further initiatives to ensure we are
delivering maximum value for money to our stakeholders and customers.
THE FCO ESTATE
In the current financial situation there will
naturally be the desire to reduce expenditure and make savings.
However, to do so by selling parts of the FCO estate, especially
those based in such prestigious surroundings, would be a short
sighted decision and in the long run could cost UK plc much more
than was saved. (Paragraph 99)
52. The FCO is considering its resource position.
It remains committed to fulfilling its historic responsibilities
and pursuing its modern priorities in deciding whether it sells
any property, FCO would take into account the potential impact
of any such decision on the delivery of UKTI services. The FCO
and UKTI will continue to work together to maximise the benefit
of the FCO network and overseas platform.
FISCAL STIMULUS INITIATIVE (FSI)
We support the aim of the Fiscal Stimulus Initiative
to help British businesses benefit from other countries' fiscal
stimulus packages. However, we believe that creating another
new programme, separately identified, contributes to the bloated
pool of existing programmes. UKTI should simply have shifted
resources on a short-term basis to markets where new opportunities
have been created. We invite the Government to provide us with
a progress report on its aim to support a thousand companies by
March 2010, given that this is now only two months away. We remind
the Government and UKTI that to the greatest possible extent the
British business community needs and requires simplicity in UKTI
programmes to engage effectively with them. (Paragraph 104)
53. UKTI is pleased to report that progress towards
the aim of supporting 1,000 companies has been excellent, with
that figure already considerably exceeded. By the end of February
2010, UKTI had helped over 1,500 companies identify business opportunities
arising from fiscal stimulus-related spending in overseas markets.
54. Attention is focused on markets that appear to
offer the most significant opportunities, particularly China,
the Gulf (mainly Saudi Arabia and UAE) and North America (USA
and Canada). Opportunity development also continues in Australia,
Brazil, India, Russia and South Africa. Resource that was targeted
on France, Germany and Spain has been mostly shifted to higher
priorities.
55. Early results from PIMS evaluation indicate that
our interventions have been viewed positively, but it will be
later in 2010 before we have evaluation covering the whole period
that the initiative has been operating. Even so, there are good
prospects for UK business in a number of areas, for example:
· Large
power plant project in South Africa identified ($1.25bn) with
interest expressed from 3 UK companies;
· UK construction
consultancy introduced to large US construction business to develop
opportunities from US Green Federal Buildings programme ($5.5bn);
· UK engineering
firm introduced to opportunity to partner with Brazilian companies
in state of Rio Grande do Sul to bid jointly for oil and gas business,
and
· Opportunity
presented to UK firm to provide protective coatings for carbon
steel pipelines in Saudi Arabia.
56. UKTI recognises the need for simplicity. UKTI
services are part of the Government's streamlined Solutions for
Business portfolio of business support products. Support from
the fiscal stimulus initiative falls under the Accessing International
Markets product. Business Specialists working for UKTI do not
market the fiscal stimulus initiative as a separate UKTI service.
Instead, they focus on highlighting the actual opportunities
identified in specific overseas markets, briefing interested UK-based
companies on how best to position themselves to take advantage
of those opportunities and signposting firms to existing UKTI
services where further help may be required.
· The
resource for the fiscal stimulus initiative was re-directed from
within UKTI's existing budget.
SECURITY SECTOR TRADESHOW
The Committee is not convinced that the funding
of this trade show represents the best use of the Strategic Investment
Fund allocation. UKTI should set out in detail the rationale
behind this decision and provide the assumptions underpinning
the assertion that his event will become self-funding within two
years. (Paragraph 111)
57. The Home Office Scientific Development Branch
exhibition is a well-established public security exhibition.
It has traditionally been a relatively small show focused almost
entirely at UK Government and law enforcement officials. For
2010, UKTI has teamed with the Home Office and the A|D|S (the
trade organisation advancing UK Aerospace, Defence, and Security
industries) to significantly enhance the show and transform it
into an international showcase for the UK Security Industry.
58. The exhibition will feature around 400 UK companies
and UKTI, together with the Home Office, has invited senior government
and law enforcement officials from some 63 countries to attend
the event. These visitors will be hosted on a government-to-government
basis and will see at first-hand the cutting-edge technology and
expertise that the UK has to offer. Both the Home Office and
the A|D|S trade association have expressed their overwhelming
support for our plans to bring overseas government buyers to this
event for the first time. They also recognise the potentially
significant impact that it will have on UK security exports in
a global market which is growing rapidly and which is currently
estimated to be worth around $140 billion annually. A|D|S has
stated that they expect to levy a small additional charge on exhibitors
in future years. This will provide the source of funding for
the exhibition after 2011, making it a self-funding annual event.
UK GLOBAL CONNECTIONS
The UK Global Connections initiative is still
in its infancy and therefore we are unable to judge its contribution
to trade promotion. That said, we are not convinced that this
scheme will address a real gap in the current programme offered
by other organisations, and are uncertain what value it will add
to the UK's trade promotion activities. Between them the British
Trade Ambassadors and existing bilateral chambers of trade should
provide precisely the networks which are needed. We see no need
to reinvent the wheel. (Paragraph 118)
59. UKTI notes the Committee's concern that the proposed
new global network, referred to in the Report as 'Global Connections',
will duplicate existing activity and will not, therefore, add
value to the UK's existing trade promotion activities.
60. The network in development differs significantly
from other networks that already operate and will complement what
they do. It will bring together business people, academics and
others who have a strong affinity for Britain and who are willing
to speak out positively and regularly about the strengths the
UK has to offer through the supply chain or as a location for
inward investment, and to provide insights and guidance to other
businesses.
61. The aim is to create a network of about 1,000
members, not necessarily UK nationals, with representatives in
all markets. Because members will be business people rather than
officials or Chamber employees they will be better placed to connect
into international business networks and what they say will be
highly credible. Where similar networks have been created, they
have been a valuable complement to other structures. For example,
the GlobalScot network between 2005 and 2007 generated more than
£30million in gross value added for Scotland's businesses.
As the network develops UKTI will monitor the costs and benefits
associated with the network, but our initial assessment is that
the network will deliver significant value for low set up and
operating costs.
MARKETING CAMPAIGN
We welcome the Department's decision to allocate
more resources to increase awareness of UKTI's services amongst
businesses, as there are clearly many businesses that are unaware
of the help that is available to them. However, we believe this
money should be used to develop a more carefully targeted communication
programme, including sending UKTI staff to meet business rather
than buying poorly targeted advertising space to spread unfocused
generalised messages. (Paragraph 123)
62. The vast majority of UKTI's awareness raising
is highly targeted with customers in mind. For 2010, there will
be a greater emphasis on strategic communications, with enhanced
collaboration across Whitehall communications departments. As
well as its own activity, including press tours by foreign journalists,
UKTI marketing and communications takes part in both the Foreign
and Commonwealth Office's Economic Reputation Committee and the
Cabinet Office's International Influence Hub. UKTI marketing
promotes the strengths of the UK economy and tackles negative
international perceptions regarding the UK as a place to do business
in and with.
63. Last year, UKTI's Marketing and Communications
Team ramped up their press activity issuing 200 press releases,
each resulting in an average 30 pieces of coverage in the national,
regional and international trade press as well as local radio
and TV items. UKTI also uses social media, using blogs, twitter,
flikr, etc. to provide detail in the lead up to regional and international
visits by the UKTI executive team, the Secretary of State for
Business and the Minister for Trade, Investment and Small Business.
This activity comes at no additional cost.
64. UKTI is also developing strategic paid media
partnerships. These include one with the Telegraph that saw the
production of a series of articles looking at the opportunities
for UK exporters, under the title 'Telegraph Trade Month'; and
the Economist Innovation Awards, celebrating the achievements
of winning individuals and companies. Both have been highly fruitful
in terms of recruiting new clients.
65. UKTI leverages strategic partnerships with British
Airways, through its in-flight magazine, and Google, through the
Google Export Advisor, to publicise the benefits of exporting.
This is done at no additional cost. Also without cost, UKTI
partnered with the Evening Standard to develop the London Export
Awards, which showcases British exporting excellence. UKTI has
also organised a series of seminars with the Institute of Directors
focused on exporting to developing markets, along with the US.
66. Additionally, working in partnership with HSBC,
we participated in a series of regional events aimed at supporting
UK business activity overseas.
67. UKTI's "Take it to the World" (TITTW)
campaign, which ran from March to October 2009, took advantage
of exceptionally low billboard rates at the height of the recession
to play an important role in raising awareness about the benefits
of exporting as a mechanism of coping with a decline in domestic
demand for goods and services. In phase one (March 2009): "Go
further. Export." our focus was to encourage businesses,
who might not otherwise consider it, to see the benefits to them
of exporting. Phase two (June 2009): "Get the Export Advantage"
made the business case for the additional benefits of exporting.
Phase three (October 2009) "Want to grow your business globally?",
highlighted the expert advice and support that UKTI offers businesses.
The campaign has been hugely successful. It was designed to
attract overall interest, and then drive traffic to a website
that clearly outlined all the benefits of exporting. Highlights
of the campaign, included:
· Over
31,000 visits to the TITTW website landing page;
· Over the period
of the campaign there was a 9.9% increase in website views compared
to the same period in 2008, and
· UKTI Enquiry
Unit also saw a 8.3% increase in enquiries (telephone and website
related emails) compared to the same period in 2008.
68. To improve further our marketing focus, UKTI
will conduct a survey of exporters' media consumption habits in
order to define a more reliable measurement of the impact of our
marketing and communications.
69. UKTI will also take part in the Central Office
of Information's standardisation of PR evaluation metrics, during
the first year of its introduction in 2010.
In addition to raising awareness of the services
business can request UKTI needs to be more proactive in alerting
companies to opportunities in their markets. We saw some promising
new activities in Milan, we recommend that the best practice exemplified
in Milan—and what we are confident is being developed in
other UKTI Posts—is disseminated across the organisation.
(Paragraph 126)
70. We agree with the Committee's recommendation.
We are seeking to improve the ways in which we identify opportunities
and alert companies to them and encourage posts to find innovative
ways to do so.
71. One initiative available to UKTI customers is
the ability to subscribe to the Business Opportunities Scheme,
an email update service that provides the delivery of timely,
free business opportunities, across all sectors in some 96 markets.
72. UKTI staff overseas, in British Embassies, High
Commissions and Consulates, are always looking for business opportunities
that UK businesses can take advantage of. Over 400 Business Opportunities
are published each month, and range from market pointers, to private
sector opportunities and multilateral aid agency tenders to public
sector leads.
UKTI'S ADMINISTRATION OF THE STRATEGIC INVESTMENT
FUND SUPPORT
We have already highlighted in this Report the
importance of UKTI listening to its customers when deciding how
to prioritise its activities and deploy its resources. But this
appears not to have happened in the case of the allocation of
funds from the Strategic Investment Fund. While we understand
the need to deploy resources quickly in some cases the haste with
which decisions were taken has resulted in poor choices being
made. This could have been avoided if UKTI had properly consulted
businesses when making these decisions. Without undertaking such
consultation it is highly unlikely that the maximum potential
benefit of an unexpected increase in funding from the SIF investment
will be realised. (Paragraph 131)
73. The £10 million of SIF funding was allocated
to UKTI to spend on events to promote sector expertise both in
the UK and abroad. The funds are to help UK businesses better
showcase their strengths to overseas customers and markets. All
events must meet the following criteria:
· High
value and visibility to UK business;
· Early
impact with strong legacy which the private sector can run with;
· Directly
related to the government's activist industrial policy New
Industry, New Jobs; and
· Leverage
multiplying effects from partners to reach the widest possible
audience.
74. This approach is in line with UKTI's focus on
reasserting the UK's worldwide business reputation and is central
to economic recovery. UKTI's strategy is to market the economic
strengths of the UK and the innovation, creativity and expertise
of Britain in high value sectors. This attracts potential investors
to the UK and helps our exporters sell themselves more effectively
as international partners of choice.
75. As the wider context at the time was the economic
downturn, UKTI took the view that it needed to move rapidly to
deploy the extra resources in the most effective way. The bulk
of the extra funding has been directed towards boosting an existing
programme of events, rather than new activities, aimed at showcasing
the strengths of the UK in key business sectors.
76. Our first and very successful event was in the
margins of London Fashion Week in September 2009. We are still
at a relatively early stage in the process in terms of being able
to give a full assessment of the benefits of our 2010/11 funding.
However, to the end of January, more than 900 UK companies have
attended events that have benefited from SIF funding.
77. Other examples include ICT and advanced engineering
sector events. Some 527 UK companies and over 150 overseas delegates
attended Technology World 2009 in November in Coventry, with about
2,500 facilitated one-to-one meetings taking place. We estimate
that at least £10m of business was generated by the event.
Overseas, an Advanced Engineering event in Sao Paulo, in the
margins of last autumn's Brazilian Grand Prix, showcased the UK
and enhanced Brazilian perceptions of the UK capability in that
sector; delegates from 38 UK companies attended and there were
106 attendees from Brazil.
78. Some of this extra money has been used for TAP-supported
events. One example is Arab Health, held earlier this year in
Dubai. SIF funding allowed us to increase our spend on enhancing
the UK's stand at the event, UK branding in the main concourse
and inside the UK pavilion, and gave us additional visibility
on the Arab Health website. This pre-show and onsite PR generated
a huge impact, with a total of 87 online and print articles featuring
the UK running in international and regional press.
79. SIF funding also enabled UKTI trade teams from
17 markets to recruit local buyers from their markets, to attend
one-to-one meetings with UK companies at this event. Our online
meeting booking system resulted in 234 meetings between UK companies
and international organisations during the event. And UKTI commercial
officers provided market briefings—for markets including
the Gulf States, China, India, Syria, Saudi Arabia and Pakistan—for
UK delegates.
80. We are starting to see real returns on our investment
and so we are confident that the funds are being deployed in an
effective way. We know from our customers that these events are
highly valued and we have built on tried and tested channels for
showcasing the strength of the UK in high value sectors rather
than inventing a wholly new programme. This demonstrates that
we do listen to our customers but there is always more we can
do. However, in this case we believe that a consultation exercise
would have caused an unnecessary delay to what has been an important
and successful part of UKTI's response to the economic downturn.
We also note a tendency of UKTI to use Strategic
Investment Fund money to embark on new initiatives. The consensus
view of industry was that it should have been used to improve
and expand existing programmes. We appreciate the Government's
desire to be seen to be engaging in exciting new activities, but
additional funding for existing mechanisms could have led to a
quicker and more direct impact on businesses. The problem stems
from the fact that the Government appears to have decided on a
welcome but essentially arbitrary increase in funding for UKTI.
We have seen no convincing rationale behind the decision to give
UKTI £10 million, rather than £5 million or £15
million. This does not seem to be a strategic use of the Strategic
Investment Fund. (Paragraph 132)
81. As noted above, the bulk of the extra funding
has been directed towards boosting an existing programme of events,
rather than new activities.
82. All expenditure was carefully planned well in
advance of the 2009 Budget, working with both HMT and wider Whitehall.
83. As part of the preparation for the 2009 Budget,
UKTI put together a detailed bid to HMT setting out options for
what it could deliver to encourage more companies to export.
All new activities funded under the temporary funding are aligned
to the NINJ agenda.
84. UKTI is continually reviewing the services it
offers to business in order to ensure it adds maximum value for
money.
REGIONAL DEVELOPMENT AGENCIES AND TRADE DEVELOPMENT
Regional Development Agencies have been given
an important role to play in trade promotion. However, we continue
to hear worrying accounts of unnecessary duplication of programmes
and competition between different agencies. If this is allowed
to continue the benefit of the RDAs' work, and that of UKTI, will
be undermined. In particular, RDAs should be required take a more
coordinated approach to trade missions both with other RDAs or
UKTI, so that the problems of duplication are avoided. (Paragraph
143)
85. UKTI has an agreement with the RDAs that UKTI
should deliver trade services in the English regions as the RDAs'
"international trade arm", under a Dual Key Framework
Agreement. Regional trade delivery services are managed by UKTI's
regionally based International Trade Directors, who are co-located
with each RDA. UKTI's regional presence is an important part
of getting closer to our customers and encouraging companies to
export. Reaching out to potential customers, which the Committee
want us to do, is an important part of that.
86. Under the terms of the Dual Key agreement the
RDAs do not run trade missions except with the full agreement
and involvement of UKTI's regional trade directors. Almost all
regional trade missions overseas are organised by UKTI's regional
teams and funded by RDAs. Businesses in the regions value the
opportunity to participate in these missions, which help them
to win business in overseas markets. In general, regional
missions are open to companies from other parts of the UK.
87. UKTI acknowledges that there is a need for greater
clarity around mission activity and it will make available a fully
searchable list of all trade missions run by UKTI and its partners
shortly after its new website is launched in April 2010.
88. The Committee should also note that there are
other regionally and locally based organisations (e.g. chambers)
running trade missions besides UKTI. Although UKTI tries to work
with such organisations to avoid duplication and to maximise the
benefits to UK companies, we ultimately have no control over what
they do.
EXPORT CREDITS GUARANTEE DEPARTMENT
The Committee welcomes ECGD's decision to examine
the possibility of extending the bond support it offers by entering
into a risk sharing agreement with banks. ECGD should provide
the Committee with an update on these negotiations in its reply
to this Report. (Paragraph 153)
89. Ministers are considering whether a contract
bond support scheme should be provided to assist exporters. Therefore,
ECGD is exploring the feasibility of this with the banks with
whom ECGD would share the risk. Further announcements will be
made in the coming months.
The European Commission waiver of the Short Term
Communication provides the Government with an opportunity to address
the failure of the market to provide business with trade credit.
Neither we, nor any of the businesses who we have spoken to,
have seen evidence that this situation is improving and therefore
the Government's decision to merely "monitor the market"
is inadequate. We strongly recommend that the Government reassess
its decision not to use the opportunity presented by the Commission's
decision to re-enter the short-term trade credit market until
the financial situation improves. (Paragraph 159)
90. The Government has no plans to introduce a short-term
trade credit insurance intervention. The shortfall in the availability
of trade credit insurance arising from the credit crunch is now
easing. The major credit insurers have assured Ministers that
they will make additional risk capacity available in the coming
year. This should enable cover to be restored for exporters.
ORGANISATIONAL STRUCTURE
We are concerned by reports that businesses feel
that ECGD is not properly reacting to customer demands. It is
especially important that during these challenging times ECGD
are properly equipped to deal with, and able to focus upon, businesses'
needs. (Paragraph 163)
91. ECGD is responding to customer demand.
It recruits staff with relevant knowledge, experience and skills
to deliver its primary duty, set out in its statute, to support
exporters. ECGD has introduced a new letter of credit guarantee
scheme and extended its fixed-rate export finance scheme. In
addition to exploring the feasibility of providing a contract
bond support scheme, the Government will shortly be announcing
its response to a Public Consultation on proposals that would
help streamline the way ECGD operates.
SUPPORT FOR AIRBUS
The UK aerospace sector is an example of UK excellence
in higher value-added manufacturing and we believe that the Airbus
proposals for simplifying export credit arrangements for customers
in the aerospace sector merit consideration. Clearly, the current
system involving three different organisations is not ideal.
However, we have not yet had time to examine this proposal in
full and we shall return to it in our Report on the motorsport
and aerospace industries. (Paragraph 164)
92. Airbus's need to deal with three Export Credit
Agencies (ECAs) is not ideal. In recognition of this, the European
ECAs have looked at possible options to create a single ECA to
deal with Airbus transactions. However, each agency has statutory,
institutional or policy impediments to take into account. ECGD's
statute, for instance, prevents it from delegating decision taking
to other parties. Forming a single ECA would be a complex task:
its structure, capitalisation/funding, the allocation of costs,
risks and losses would need to be decided, as well as how it would
account to its shareholding Governments.
93. The three ECAs have therefore focussed their
attention on streamlining the provision of their support. Processes
and procedures have been simplified; for example, there is now
common documentation and a single external legal team on each
transaction. At the beginning of 2009, the ECAs agreed to institute
a 'one-stop shop' arrangement for Airbus' customers on most cases.
Although this arrangement falls short of Airbus's aspirations
for a single ECA, the company has recognised the benefits of the
new arrangement. Airlines have also noted its advantages.
94. The Government is pleased with this progress.
However, it has not detected any interest from its European partners
in pushing the wider, and more complex, issue of looking at the
merits of creating one ECA for Airbus. As the Committee Chairman
recognised during Ian Lucas' evidence to the Committee's hearing
on the UK motorsport and aerospace industries (26 Jan), such an
arrangement would also raise the question as to why Airbus should
have a dedicated ECA: Other multinational European exporters
could argue that their export business would also benefit from
a single ECA when they source exports from across Europe.
1 UK Trade & Investment: Trade Support,
HC 297 Session 2008 - 2009. Back
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