Examination of Witnesses (Questions 457-542)
Q457 Chair: Welcome,
and thank you for agreeing to appear before the Committee. I know
that for two of you this is a repeat appearance. For transcription
purposes, perhaps you would introduce yourselves with your titles
to the Committee, and then we will get into the questions. Let
us go from my left to right.
Susan Haird: I
am Susan Haird, Acting Chief Executive of UK Trade and Investment.
Lord Green: I am
Stephen Green, Minister of State for Trade and Investment.
Edward Davey: I
am Edward Davey, Minister for Employment Relations, Consumer Affairs
and Postal Affairs, but I also have some responsibility for trade
issues, particularly EU multilateral.
I am Patrick Crawford, Chief Executive of the Export Credits Guarantee
Q458 Chair: Thank
you. I would reiterate what I have said to other panellists: some
of the questions will be specific to one of you. If any of the
other panellists wish to add anything, they are welcome, but do
not feel that everybody has to contribute to a response to every
question. We have a lot of questions and we need to finish at
a reasonably civilised time. I shall start with one or two pretty
general questions, the first to Lord Green. Welcome to your appointment.
How are you going to be "messianic" in promoting UK
Lord Green: I am
not sure what the force of the word "messianic" is;
sometimes it has to do with apocalypses. First, I am nine weeks
into the job and enjoying it enormously. I think this is a huge
challenge. We all recognise that the pattern of growth in this
economy before the crisis was not sustainable; it was driven too
much by consumption fuelled by debt and by Government borrowing,
and we know that cannot continue. The economic textbooks tell
you that the only other sources of demand in any economy are the
net external position, i.e. trade, and investment, so I think
this is absolutely crucial to any meaningful understanding of
a sustainable growth path for the economy. The trade position
of this country has been weak for a long time. The last time
the current account was not in deficit was 1984, and for most
of the period since the war it has been fragile, to say the least,
and getting worse. The challenge is to turn the trade position
from being over time a net drag on growth to a net contributor
We have lost share in world markets; so have all
the other major countries except Germany, but we have lost it
faster than most. This is a significant challenge. I do not
know whether that is messianic, but I think this is a collective
challenge that is very important for the country as a whole.
I do not think there are magic wands to be waved. If there were,
they would have been waved by now. An important key to this lies
in SMEs. I am sure you will want to talk about this later on.
On investment, we have a good story. We are one
of the two or three most popular destinations for foreign direct
investment, but our challenge is to make sure we do not lose ground
there. We have specific investment needs, notably in public infrastructure,
that we need to finance over the next 10 years, so there is a
lot of work to be done in encouraging a continued flow of foreign
direct investment. That perhaps includes looking at newer sources
of foreign direct investment, particularly into the economic infrastructure
of the country.
The White Paper sets out some directions for
UKTI, which I am sure you will want to explore; some important
new products for ECGD, which I think is a significant step; a
refocused FCO commercial diplomacy effort, which is also important;
and, last but not least, the establishment of a Cabinet sub-committee
on trade and investment is a crucial development. This is something
to which the Prime Minister is committed. Indeed, when he was
talking to me about the job it was something that I thought was
a particularly important component of the Government's commitment,
because it enables us on a once-a-month basis to bring Ministers
from all the Departments relevant to this tasknot only
the Foreign Office and BIS but also the likes of the Home Office,
Treasury, Department of Energy and Climate Change, Defence, the
Department for Environment, Food and Rural Affairs and so forthround
the table with pretty detailed action plans to see through the
implications of the White Paper.
Q459 Chair: Thank
you very much. It was of course the Prime Minister who said that
the Government would be messianic. We have heard from a number
of witnesses in this inquiry that the UK has somehow lost its
mercantile spirit. It seems to me that we are talking ourselves
down. How do you think you can reverse this?
Lord Green: I do
not think anybody can reverse this single-handedly, but there
is an element of truth in it. "Mercantile" is a word
with historical baggage, of course. In particular, if you use
the version "mercantilist" it has some negative connotations.
The fact is, however, that we need to improve our competitive
strength in international markets and do a better job of net external
position, for the reasons I have stated. I think that in this
there is an issue of collective self-belief about the British.
To use an anecdote to make the point, since I knew
I would take on this job in September of last year I have tried
to ask friends and acquaintances of mine, even the occasional
journalist, how many cars they thought we made in this country.
The answer is consistently wrong by a wide margin. There is
a widespread impression that we are a de-industrialised economy
and it is nonsense. While the glass is not full, it is definitely
half-full and not half-empty.
Chair: Yesterday morning
at a breakfast meeting I corrected members of the London Chamber
of Commerce on this very point.
Lord Green: Good.
Q460 Mr Binley:
I want to pursue that, because I am not sure that Governments
of all hues have done enough to talk up Britain in this respect.
It looks like manufacturing is settling down in almost every
country except Germany at about 15%. Britain is well within that
range. Our manufacturing base is larger than that of France,
and if you look at our export base, so much of it is claimed by
Germany but is, in truth, British export, so we ought to talk
up this whole thing more. Will you do so?
Lord Green: I shall
certainly play my part in this, but needless to say this is a
part that we collectively have to play, too. No one person can
do this, but we all have to.
Q461 Chair: As
a businessman, you will be very well aware that we need some kind
of comprehensive strategy to achieve our objectives. So far,
we have not had the UKTI strategy. When will it be released,
and what would we be expecting to see in it?
Lord Green: I would
expect it to be released in April. It has been a little later
than originally intended, partly because the White Paper itself
was a little later than originally intended and partly because
I was new in the job and it seemed sensible to give us a bit of
space to get it right. I think that when it emerges it will not
be a revolution. I do not think a revolution is required in UKTI;
it is a matter of some refocusing, retargeting and refinement,
and one or two particular new initiatives. For instance, I think
we need to have a more disciplined and structured approach to
what you might call relationship management of major exporters
and inward investors, and the UKTI should establish a little unit
to support that. I am happy to talk more about that because I
think it is an important initiative. There are two ends of the
scale: on the one hand, there is what we do for big exporters,
multinational companies based here and big inward investors, and
how we tackle the SME challenge on the other.
Edward Davey: I
think the UKTI strategy needs to be seen in the context of the
Trade and Investment White Paper itself. The whole of Government
has been working on that paper and the strategies and analytical
papers that will follow it. The Trade and Investment White Paper,
which we conceived back in June/July, has taken up a huge amount
of my time, the Secretary of State's time, Lord Brittan's time,
Lord Green's time since he has been here and that of other Government
Departments. We have had extensive consultation with business,
NGOs and investors; we have had our posts across the world feed
back information about where other Governments are with respect
to trade and investment policy. All that has fed into the paper,
so in many ways this gives a very comprehensive overview of the
British Government's position on trade and investment. In the
annex you will see a proposal for 18 analytical papers to promote
the debate as well as strategies for UKTI. If you read the foreword
by the Secretary of State, he talks about the great trade investment
What we are trying to set out here, as Lord Green
says, is that the Government from the Prime Minister down believes
that improving our performance here is really important for the
whole growth story. That is why we have put so much effort into
this paper. I believe both from press cuttings and the responses
from around the world that it is having its effect, because while
we often focus on the fantastic work that I believe UKTI does
to help British business improve its export drive, it must also
think about FDI plus trying to improve the multilateral game,
whether that is within the single market of the EU, with Doha
or EU FTAs. This White Paper seeks to set out the Government's
position in all of those areas.
Q462 Nadhim Zahawi:
Lord Green, you mentioned that the current account had not been
positive since 1984. Are you confident that you can turn that
round and make it positive?
Lord Green: To
be clear, I do not think any one person can turn this round.
This is a major challenge for the economy as a whole. If may
I use what may sound like a cliché, this is definitely
a marathon and not a sprint. This is something that will take
the economy some time to turn round, in my view probably well
beyond the life of this Parliament. If we are to work this, what
we need is, first, clearly a cohesive Government approach but
also continuity and a sustained effort over quite a long period
of time. Do I think it is doable? The answer is yes. Do I think
this marathon can be run?
Q463 Nadhim Zahawi:
How long is that marathon? Let me push you a bit further on that.
Lord Green: This
is something that has been around since the war one way or another,
and in stark form since 1984, so, for the sake of argument, let's
say 10 years.
Q464 Nadhim Zahawi:
Lord Green: Yesnot
less. Do I think we can make some visible improvement earlier
than that? Yes, of course. I think there are some quite encouraging
signs now, but to be clear, a robust trade position for this country
will not come overnight.
Q465 Nadhim Zahawi:
Perhaps we can move on to the Trade and Investment White Paper.
The British Chambers of Commerce in response to the White Paper
has said that, even with the improvements the coalition Government
has made, it does not offer the same level of support to SMEs
that some of our competitors do. How do you respond to that?
In which areas do you think we are lagging behind?
Lord Green: First,
historically I think we have lagged behind in credit insurance
support. For reasons now lost in the mists of time, ECGD was
taken out of providing services that were meaningful for SMEs
back in the early 1990s, I think. It is clearly visible on any
chart of competitive products from their analogues in France,
Germany and elsewhere where the gaps were.
One of the most concrete things in the White Paper
is the filling of those gaps with products such as the short-term
credit insurance product being rolled out for non-capital goods
instead of just capital goods; working capital finance for exports,
i.e. pre-shipment and precontract; contract bond insurance
and foreign exchange cover. These are all basic products available
across the channel and are now being rolled out by ECGD this month
and next on a pilot basis. I think that is significant. Time
will tell exactly what the level of demand for it is. Indeed,
if the level of demand is very high, ECGD will have to gear up
its own HR. Its headcount has been run down and building it up
is a matter of skilled resources and that will be a challenge,
but it is something we have to do.
Edward Davey: If
we are talking about support for SMEs, it is not simply about
those sorts of products, critical though they are; it is making
sure that in key markets SMEs have access to them. If you look
at the European single market, though it has been a great success,
there is huge potential yet to be unlocked, particularly for SMEs.
That is why the White Paper talks about our welcome for President
Sarkozy's initiative of the Small Business Act back in 2008the
Think Small First approachbut says that we have to try
to make sure this is implemented.
In the Single Market Act debate that is under way,
the British Government is making absolutely clear that small businesses
need to be at the heart of that discussion and that getting rid
of obstacles to trade for SMEs across the single market is critical.
If we are talking about increasing the trade of SMEs currently
exporting and trying to get those that have not exported to do
so for the first time, clearly the single market is the obvious
place for them to start. Maybe it is more difficult for them
to go to Beijing first before going to Berlin or Brussels. Therefore,
I think the support that BIS, UKTI and the whole of the Government
can give to ensure that those markets that should be unlocked
across the European Union are unlocked is critical.
Q466 Nadhim Zahawi:
That is absolutely right. Surveys of SME organisations talk about
the proximity countries as being far more important than some
of the sexier ones.
Lord Green: As
Q467 Nadhim Zahawi:
Lord Green, you mentioned, quite rightly, identifying that gap,
and you are beginning to fill that gap. Did that come to you
proactively from ECGD or did Ministers essentially identify that
Lord Green: At
the time I got engaged in this, the process of producing the White
Paper was well under way. By the time I got engaged in it, those
product definitions were largely there. I think there was a widespread
consensus. I remember meeting with Patrick when I was still in
my previous incarnation and familiarising myself with the issues.
He was talking about the products then with a great deal of enthusiasm.
I remember meeting Leon Brittan on the same basis, and in Treasury
too there was clear support. So, this is one of those ideas whose
time clearly has come. You may say it is a little late, but it
has come anyway.
Q468 Mr Binley:
I am deeply concerned about this because Governments of both hues
have talked at length about providing working capital for SMEs.
You mentioned the import of working capital in your remarks,
yet it has not happened; the banks have not responded. I speak
as chairman of a company in that sector. The banks have made
the whole thing much more difficult; conditions have been hardened
sizeably, and we have reached the point where SMEs are now not
fearful but very apprehensive of going to banks to seek loans.
Why is that?
Lord Green: I am
just a retired banker.
Q469 Mr Binley:
I know that; that is why I ask you the question.
Lord Green: Clearly,
it has been an issue, and I have now seen it through both ends
of the telescope, because in recent weeks I, who spent a good
deal of my career travelling around the world, have said I want
to focus on travelling around this country. I have met a number
of SMEs in different parts of the country on a series of regional
visits, which I intend to continue. It is clear that there are
some issues about finance. Sometimes they are about banks and
sometimes they are about venture capital, which I think is another
subject we need to address.
As far as the banks are concerned, my sense from
the past eight weeks, not my previous incarnation, is that there
are some difficulties that we need to address. Project Merlin
committed the high street banks to a 15% increase in commitments
for SMEs specifically. That is a chunk of change. I think you
can rest assured that the Government will be breathing down their
necks to make sure that those commitments are delivered.
I get the impressionthis is anecdotal and
it is early weeks for methat the issue comes into focus
particularly when a company is trying to expand its business.
The existing relationship ticks over but, for example, when you
have a wealth of overseas orders coming in and you need to buy
a new machine, extend your plant or do something like that, i.e.
take a step function change in the scale of the business, that
is when you run into the problem of getting financial support,
and I think we need to look at that.
Q470 Mr Binley:
I am glad you talked about that because growth costs money, but
my experience with the banks now is that they do not have the
people who understand that. That is a major weakness right at
the coalface, if you like, of our banking system. What can you
do as an ex-banker to improve that understanding and make sure
that banks understand that growth needs financing, and it needs
financing early on in the process?
Lord Green: Indeed,
it needs financing early on in the process. Just to park an important
point, I think there are also some issues about venture capital
that we need to explore, because it is not always a matter of
bank finance to get things started.
Mr Binley: I understand
Lord Green: In
the case of the banks, there is no doubt that there is a trend
towards more centralised decision making and more credit scoring.
We all know that. We also understand why that is to some extent
inevitable, given the complexity of modern life. I need to speak
generally and constantly remind myself and you that I am a retired
banker; I am not going to speak for any particular institution.
I do know that there is a real commitment on the part of the
senior managements of the commercial banking arms of the companies
concerned to get this right. I have met with some; I will continue
to do so.
One specific initiative I want to get under way on
a more structured basis than has existed hitherto is some form
of structured relationship with UKTI around the country. This
exists in some places because the people on the ground have made
it exist, but I think we can institutionalise this a bit more
where there is a relationship between the local UKTI international
trade director and the ITAs and the relevant commercial banking
managers in the key centres.
Mr Binley: I am grateful
that you are where you are, because you know the business inside
out and that is a plus. If I may make one final comment, the
need is absolutely urgent if the growth agenda is to succeed.
It is absolutely vital. I heard all the fine words, and they
are fine words. I am not saying they are just that; I am not
accusing you of that, but there is a real need for a deeper understanding
in banks and Government has to use some sticks. By golly, if
it does not have the sticks now, it never will.
Q471 Rebecca Harris:
We talked on Tuesday about the implications of trade policy being
an EU competence. Our witnesses said they considered that we
had been punching below our weight under previous Administrations.
How do you think you can do more to increase our power in the
EU realistically, in particular to influence some EU members and
members of the International Trade Committee who were characterised
as globalisation sceptics?
Edward Davey: I
am really pleased that you have raised the issue because it is
absolutely critical, not least because some of the potentially
easier low-hanging fruit for boosting trade is within the EU,
particularly now that the Single Market Act programme is going
forward. In terms of the general approach, again there is a whole
Government approach to this, so all Departments are making an
effort at pushing trade globally but also within the EU. Ministers
such as myself, Lord Green and others are paying particular attention.
For my own part, I have met Commissioner De Gucht; I speak regularly
to Trade Ministers, and just this morning I talked to Dr Pfaffenbach
from Germany; there are regular meetings at the Council; and I
speak to members of the INTA Committee, so it is a key part of
the work that I do.
You are right to stress the fact that not only does
the EU have competence for trade policy but, post-Lisbon, for
investment policy; there is also the increased role for INTA.
I would encourage this Committee to do a little more work on
EU trade policy post-Lisbon and the role of the INTA Committee
in that. I do not necessarily agree with you that they are all
Q472 Rebecca Harris:
I said some were.
Edward Davey: That
may well be true, but I am pleased to say there are people who
share this Government's and, I think, this Parliament's view that
we need to have a liberal approach to free trade. I think that
members in the Parliament often reflect their Governments' overall
approachnot entirelyand we need to work very hard
to try to persuade member states for the Council of Ministers
input, and of course the Commission, and ensure that Members in
the European Parliament understand the huge benefit of trade to
this country and the EU as a whole.
Q473 Rebecca Harris:
But presumably, previous Administrations also had plenty of meetings
and tried to have some influence. Is there anything in particular?
Do we have a new approach and focus? Is there anything that
you think you can do better?
Edward Davey: As
Lord Green said about trade in general, there is no magic wand,
but I think it is a question of intensity and getting in early.
One of the reasons we were keen to do the Trade and Investment
White Paper was to get out a statement that the Government's policy
was comprehensive and dealt with issues that had been raised in
the Commission's own paper on trade policy. While we broadly
welcome the thrust of thatand Commissioner De Gucht
has a very liberal, open approach to trade, which is to be welcomedthere
are suggestions in the paper about concerns about reciprocity.
We are worried that that could be a Trojan horse for protectionist
measures, and I think we should be arguing against that particular
aspect of the Commission's paper. Obviously, the proof of the
pudding will be in the eating, but so far the work that UKREP
and the previous and present British Governments have done to
try to promote the single market agenda is important.
We shall soon be celebrating 20 years of the single
market. If you look back at the estimates of the potential impact
on growth that were made more than 20 years ago in the run-up
to the launch of the single market in 1992, some of the more optimistic
predictions have not been realised. A recent report showed that
there was huge untapped potential7% of GDP for the UKif
we could manage to unblock all the barriers and obstacles to trade
across the single market, so there is a really massive prize to
win. We have been playing our part to promote that single market
When we talk to Ministers, Commissioners and others,
we have been trying to communicate a sense of urgency about the
Single Market Act. The European economy is not exactly in the
fittest state it could be; it needs to have all engines of growth
working as hard as they can, finely tuned and fuelled. The worst
possible thing is that we should put obstacles in the way of trade
among ourselves, so we have to focus on the enforcement of existing
agreements. That is the core message that we will try to get
over in the Single Market Act. Some of the agreements made have
not been properly enforced for a long time. A much bigger push
on business-to-business services and mutual recognition of professional
qualifications is very much in British interests but also the
interests of the single market. There are new areas like low
carbon and digital, and there is obviously the emphasis on SMEs
for trade in the single market. We have been pushing this very
hard. I am slightly loth to say that the previous Government
would not have done that; I think it was doing that. I do not
want to try to make this a partisan issue, but I think we are
going about it with, I hope, some verve and passion.
Rebecca Harris: It was
our witnesses who said they thought we had been punching below
our weight previously.
Q474 Chair: You
mentioned the potential role of the BIS Select Committee in that.
We have noted that. May I also say that I think Ministers have
a part to play in advertising the role of the EU in our trade
policy as well, which is not always as well advertised as it might
Edward Davey: On
that point, I hope that the coalition Government's Trade and Investment
White Paper cannot have that criticism made against it. Europe
is very clearly placed as a key part of the potential growth prospects.
Chair: Shall we say I
am not sure it has been fully appreciated?
Q475 Nadhim Zahawi:
What you are doing in terms of the single market is all great
and good news. Perhaps I may take you beyond that in terms of
the rest of the world. Obviously, we want to negotiate through
the EU, because we then carry more clout with the rest of the
world, but how do you balance that with going up against some
of our EU partners in places like China, in terms of support for
our own businesses versus, say, German businesses?
Lord Green: I think
that is about trade promotion, which is not an EU competence;
that is up to us as a Government and the individual businesses
to promote their goods and services in China. We are in competition
with all of our EU partners as well Americans, Japanese, Koreans
and so on. It is up to us to ensure that the support we offer
in Beijing, Chongqing or wherever it might be is as good as it
That comes back to some of the things I said earlier.
This is about FCO commercial diplomacy; it is about UKTI's services
here, in terms of encouraging exporters to get into the market,
and there, in terms of helping them wade through the thickets
and undergrowth. It is very much, in the case of China, about
city coverage, and not just being in Beijing and Shanghai. I
think one way or another we cover seven cities either directly
or through CBBC.
Susan Haird: We
have staff in four; CBBC more.
Lord Green: I have
picked up no evidence to believe that we fall short of what our
obvious peers do in these kinds of markets. On the contrary,
in many ways I think we get quite a lot of plaudits for how well
we do it, which is not to say it is perfect, but the fact is that
customer satisfaction surveys produce pretty strong responses;
just shy of 80% are either satisfied or very satisfied. You could
say it ought to be 95%, and that is true; you cannot rest on 80%,
but it sounds like it is something to be enhanced rather than
a major problem to be fixed, if I can put it that way, but plainly
it is a very competitive business.
Q476 Nadhim Zahawi:
I was thinking more about balancing the role of negotiating through
the EU and then negotiating bilaterally.
Lord Green: I see
what you mean.
Edward Davey: I
think Lord Green answered the question in the correct way, in
terms of the competencies. The EU has competence on market access,
effectively, and multilateral trade, whether it is Doha or EU
FTAs with individual countries or regions, but it does not have
competence with respect to trade promotion, which is UKTI.
Lord Green: One
of the aspects of trade promotionthis falls to the Foreign
Office and commercial diplomacyis to identify key specific
market access barriers of a nonprice kind, which are often
informal access barriers, and lobby to get those removed on behalf
of specific businesses in specific areas.
Q477 Rebecca Harris:
How much influence do you think we can have on the WTO through
the EU as well? I know you have a strong aspiration that Doha
should be completed by the end of 2011. It is not in your gift
to do that. Some of our witnesses have joked that they are not
sure whether Doha is dead or in the freezer, which is rather worrying,
so the question is really about how much direct power you think
you have to achieve that aspiration.
Edward Davey: We
have certainly argued within the EU that Doha should be a top
priority. We have had very willing partners in that across the
EU. When I speak to Trade Ministers and the Commission they also
agree that Doha should be a priority. I would not say the chances
are great but they are there; there is a real window of opportunity
this year. Therefore, we and other member states and the EU are
working hard to try to bring it about. It featured very highly
in the G20 in Seoul; the activity in Geneva has increased this
We are taking note of all the different key players: the US, China,
Brazil and India. We note the different meetings that different
key players have with each other as we try to create momentum.
I can assure you that Lord Green, myself, the Secretary
of State, the Chancellor, the Prime Ministerthe whole of
Governmenthave this in our sights. You are right that
it is not in our control, but we are working with the EU, not
against it, and we think it is worth really trying because the
potential of £110 billion to the global economy is clearly
Lord Green: There
are some things we should be working for in the case of the WTO
irrespective of whether Doha is completed: the speeding up of
dispute resolution procedures for one thing; getting Russia into
the WTO for another. I think that allowing the WTO to have competence
in overseeing export controls as well as import barriers will
be a helpful new initiative.
I do not know whether Doha will get done. I agree
with what Ed has said: this is worth the effort. The chances
are not zero; they are certainly not 100%; they are probably not
50%, but they are not trivial and it is worth the effort. But
there are other things we should be doing in respect of strengthening
the WTO that we should not forget about, whatever happens to the
Doha round. We would also support the EU continuing on the parallel
track of free trade agreements.
Edward Davey: We
could talk an awful lot about the FTAs if you would like because,
as we go through the different regions and key countries of the
world in the Trade and Investment White Paper, there are a number
of opportunities in that regard.
Q478 Nadhim Zahawi:
Lord Green, you mentioned the Cabinet sub-committee that you chair.
Can you share with our Committee some of the details of what
work you have been doing with that committee and how you are encouraging
colleagues within their Departments to do the right thing and
compel them to give growth the priority it should have? You know
as well as I do that it is about human behaviour. When you are
running a big organisation everyone says great things in a meeting,
but what makes a difference is getting stuff done on the ground.
Are you feeding back to the Departments what UKTI are telling
you inward investors and businesses want in terms of exports?
What is that process so you get beyond just a talking shop?
Lord Green: It
is a very well-taken point. First, it is new. The committee
has had two meetings, the first of which was to sign off on the
White Paper. The second meeting was the week before last, when
it looked at the beginnings of some action plans, and I will come
back to that. I am chairing it; Ed is the deputy chair, and it
has all of the relevant Government Departments represented at
ministerial level on it. It is underpinned by an official cross-Departmental
committee, which is important for obvious reasons.
It meets monthly and it will have three standing
items on its agenda. One is an action plan. What I mean by that
is something with which one is familiar, certainly from my previous
incarnation. When you want to achieve some change within a complex
organisation you have to convert the policy statement into 800
action steps, assign responsibilities, timelines and so forth,
and then it is the drudgery of overseeing that and continually
refreshing it. That is the central work of the committee, supported
by the officials.
There are two other standing items. I do not say
they are currently in place in the way I want to see them; we
have been going for only two meetings. I want to see a grid of
ministerial overseas visits so we can induce an element of coordination
of that and ensure that every Minister who goes overseas, with
whatever primary purposelet's say it is the Health Minister
going to Indonesia for a health conference or somethingcarries
with him a brief with the key points we want that Minister to
raise on the trade and investment front in Indonesia in that example,
and so forth. Everybody tells me that coordinating ministerial
visits is not as easy as saying it, but it is important to do
I also see the possibilityit is still a gleam
in my eyeof being proactive about this; that is to say,
identifying a country that we deem to be important and has not
had a ministerial visit for some time and tee-ing that up. These
are early days but that is a second standing item that I intend
to be a central focus of the work of the committee. The third
standing item is of a different kind: a monthly report on the
most recent trade statistics just to remind us how we are doing,
or not doing, and why it is important. In addition, there will
be ad hoc items. The next one will be to focus on the multilateral
issues that Ed has just been talking about, and so forth. But
we have been going for two meetings so far. I have to report
that the atmosphere on them is very good. You might say that
this is still a honeymoon period as far as I am concerned, and
of course that is true. Nevertheless, I start with a very strong
sense that everybody wants to work together to get this right,
and I hope and believe it will continue that way.
Edward Davey: Clearly,
we will not be publishing all the work on the action plans in
great detail, but to give you an idea, chapter 4 of the Trade
and Investment White Paper talks about the action of the first
steps and there are 62 different actions there. That is feeding
very much into Lord Green's committee.
Chair: I welcome all the
comments you have made. The Government seems to be making all
the right noises about this. However, I continually get feedback
from the business community, saying, "Yes, we welcome it,
but why is there this policy on visas? Why is there this policy
on localism and planning? Why is there this policy on higher
education?" In effect there is a gap between those policies
and what they see other Departments doing that impacts both on
their business potential and the declared growth objectives of
Q479 Nadhim Zahawi:
Chairman, may I pick up that point and make a suggestion? Maybe
one of the items that the sub-committee looks at could be Government
Departments not doing damage, rather than just doing good, and
just flagging up by an amber or red light the damage that they
could do. Also, without wanting to add to the complexity of your
grid, many parliamentarians and all-party groups go round the
world. Some parliamentarians have expertise in particular countries,
which could help. Both Rebecca and I had a particular experience
of a very good ambassador and UKTI representative, who briefed
us for three hours before we began our meetings with officials;
we were able basically to talk the same talk, so it was joined
up in terms of the priority areas we were looking at and so on.
Those kinds of meetings are very useful for parliamentarians.
You have a much bigger group of people.
Lord Green: I am
glad you mentioned the last point. Last night I was by invitation
in one of these committee rooms with a group of Conservative and
Lib Dem MPs talking about this agenda and exactly the same point
was made. There was a chairman of an all-party parliamentary
group presentthe group on Saudi Arabia, as it happens.
We should make sure that we support parliamentarians on a systematic
basis, because I see this as a non-partisan issue. We are all
in the same boat on this, and clearly there is an opportunity
to make use of all representation that this country has overseas,
whether it is parliamentary or governmental.
If I may respond to the Chairman's point about
other issues impacting businesses, of course this is a complex
issue. It is part of the agenda of the BIS Department as a whole
to make sure that regulation does not unnecessarily get in the
way of growth in the business sector. You do not need me to tell
you that this is often a complex matter. You mentioned visas
in particular. We all know that it is a sensitive and difficult
issue. The Government has outlined its framework on work permits;
it has yet to do so on the educational side. As to the former,
I would say we have landed in a reasonable space but it has to
bed down. There are plenty of specific problems that we ought
not to allow to happen and we need to find a way to see if we
can ensure it beds down in a sensible manner and does not cause
unwanted side effects.
On the educational side, I do not think it would
be appropriate for me to anticipate what the Government says beyond
the general recognition that education is important both directly
as an earner of foreign exchangeas an exportand
also as a longer-term generator of relationships that are valuable
to this country. If I may provide just one anecdote in that respect
coming from my previous incarnation, the head of the Chinese banking
regulator was a product of the Cass Business School. He speaks
fluent English with an English accent. That kind of long-term
relationship is clearly extremely valuable to all concerned.
Q480 Chair: I
have also seen it in all sorts of areas. Obviously, I welcome
your remarks, in particular the idea of briefing Ministers from
other Departments when they are paying visits abroad. We may
well want to come back to monitor the impact at future meetings
as well. I go on to the specific area of the creative industries.
Again, if our manufacturing performance is under-recognised,
that is equally true of the enormous contribution the creative
industries make to the economy. Feargal Sharkey of UK Music was
interviewed by us. He was concerned because he did not seem to
think that there was any sort of export strategy for the music
industry. Given the enormous earner that this is for Britain
and the fact that by all assessments Britain is a world leader
in this area, what can we do to maximise the benefit from it?
When can we expect a dialogue and strategy on it?
Lord Green: First,
I recognise that the creative industries are extremely important.
I have seen it with my own eyes. I went on the Prime Minister's
trip round the Middle East a couple of weeks ago and there were
a number of representatives of not the music industry but the
design industry. I have seen it for myself also in Shanghai where
last year I visited the Expo three times. The British pavilion
was a brilliant example of the product of British creative industries
and was awarded the gold award for best foreign pavilion; 7 million
visitors, 95% of whom would have been Chinese, went through it
over a four-month period. Thus, for an extremely good cost it
enabled a large swathe of the Chinese population to see what we
mean by British creative strengths. It is apparent to me that
this is extremely important; indeed, it is part of a more general
pointthat services are a higher proportion of our exports
than of almost any of our competitors, which is a real reflection
of the underlying strength of this sector. I have to say I do
not know whether there is a specific strategy for creative industry.
Susan Haird: Yes,
there is. We have a creative industries marketing strategy, which
UKTI has developed in consultation with the sector advisory group,
led by Sir John Sorrell. Under that we seek to promote the UK
creative industries sector as a generic group, but also look at
sub-sectors beneath it. The number of companies in the creative
sector that we have helped has gone up from 350 in 2007-08 to
about 1,000 last year. We support a lot of companies exhibiting
at major trade fairs overseas. I believe there is a music fair
in Cannes that we have supported in the past; there is one called
South by Southwest in the US.
We do a lot for the music industry within the context
of marketing the creative sector generally. We have produced
a film called Love and Money, which has been given wide
acclaim. That is a multi-screen film that can be used by our
teams around the world and in the UK to promote the creative industry
Q481 Chair: I
welcome the comments you make, but they highlight a matter of
profound concern to me: notwithstanding the fact that Lord Green
has been in post for only a short time, although there is a strategy,
the Minister who is to promote that strategy is not aware of it.
That is a matter of real concern that needs to be addressed as
a matter of urgency.
Lord Green: I will
make sure that I am next time.
Q482 Chair: Lord
Green, I believe that you chair a sub-committee on trade and industry
but there is no DCMS Minister on it. Would you be prepared to
look at that, in order to look at the potential for developing
Lord Green: I do
not think that is correct; there is one.
Q483 Chair: I
understand that you chair a Cabinet sub-committee on trade and
Lord Green: That
is the one.
Susan Haird: Investment.
Lord Green: Trade
Chair: I have "trade
and industry", but whether it is trade and investment or
trade and industry
Lord Green: John
Penrose is a member of it.
Q484 Chair: John
Penrose is on it, is he?
Lord Green: Yes.
Q485 Paul Blomfield:
I want to follow up the Chairman's point about the creative industries
strategy and express a slightly different concern. It is reassuring
from the discussions we have had with the sector to know that
is in place. It is a little concerning that the representatives
from the sector to whom we spoke were not aware of it. I just
wondered what consultation or engagement there was with them in
Susan Haird: This
was done through the Marketing Strategy Board for the creative
industries, which Sir John Sorrell chairs. There is a wide range
of people on the Marketing Strategy Board drawn from different
parts of the industry. Obviously, it is difficult to consult
everybody when you are doing things, but we do work with architects,
designers and the creative sector generally: music, filma
wide range. I am not sure who was giving evidence.
Q486 Paul Blomfield:
Feargal Sharkey, head of UK Music, for example.
Susan Haird: If
I remember rightly, there are a number of different bodies that
represent different parts of the music industry. It may just
be that that individual was not part of it.
Lord Green: As
I am the chairman, I will make sure that I get myself up the learning
curve before we meet again.
Chair: Paul, do you wish
to develop this?
Q487 Paul Blomfield:
I will not, but I think it is something we ought to follow up,
if not at this stage.
Susan Haird: Would
you like me to write to you about the creative industries' marketing
strategy and how the consultation process was done?
Paul Blomfield: On the
consultation, that would be very helpful.
Q488 Simon Kirby:
If I may mention British business ambassadors, which fits in at
this point, clearly there is some design expertise and also some
fashion expertise, but if you look at film, video, video games
or music, there is a gaping hole. It might be an idea to look
carefully at that.
Lord Green: We
should look at that.
Q489 Chair: I
think the general point is that this is a major part of the British
economy that is under-recognised in the policy-making structures
that we seem to have within Government.
Edward Davey: Sometimes
it is the label that is attached to them. An awful lot of work
is done by the whole of Government in the different elements of
intellectual property, which is critical to the creative industries.
I do not want this Committee to be under any illusion. We place
massive emphasis on protecting and promoting intellectual property
rights, whether it is within the EU or through the EU competences
in our multilateral trade negotiations. I would have thought
that was a fundamental issue for the creative industries.
Q490 Chair: We
understand this. We will probably be looking at IP as a separate
issue. To finish off on the creative industries, I want to turn
to the issue of financial support. This appears to be a real problem
in this sector because, if you like, intellectual property is
much more difficult to assess in terms of asset value than other
assets. Do the creative industries qualify for the business growth
Edward Davey: I
have to say I am not absolutely sure. I do not see why they should
Q491 Chair: Anybody
Susan Haird: Is
this the fund of which Michael Heseltine is in charge?
Q492 Chair: That
is the Regional Growth Fund. This is the one the bankers are
Lord Green: Oh,
that one. I do not know the answer; I do not see why they should
Q493 Chair: May
I ask Ministers to look at this? The evidence that we received
from Feargal Sharkey in particular, but backed up by others, was
that the creative growth sector seems to find it almost impossible
to access finance from our existing financial services. Obviously,
if a business growth fund is to do what it says on the tin, it
may need to address that issue.
Lord Green: This
is the first time I have done this, but it seems to me the appropriate
thing is to look into it and write to you. I have seen nothing
to suggest that the bank fund would not support creative industries.
We should seek to get that confirmed for you. I would want to
end this part of the discussion by echoing what Ed has said: I
think this is manifestly an important part of the economy. By
its nature it is a very broad sectorwe have talked a bit
about music but actually it is about architecture, creative design,
fashionand a fairly diffuse one, too.
Q494 Chair: I
should like to move to another issue, on which you have probably
had some feedback. There are concerns in the business community
about the Bribery Act. Can you reassure us that the business
concerns about this are understood and recognised, that the guidance
to the Act will be clearer than it is at the moment, and that
it will not impact upon the ability of British companies to trade
and invest abroad?
Lord Green: I can
assure this Committee that the Government is committed to the
Bribery Act and is aware that the challenge is to produce guidance
that is helpful to businesses and is expressed in lay people's
terminology, such that businesses can make use of it. The clear
intent is to ensure that businesses can carry on their normal
business in an appropriate manner without feeling circumscribed
by the Bribery Act in ways that were not intended. The Ministry
of Justice is working on the guidelines. When they are finalised
they will be issued and there will be a three-month period during
which businesses will have the opportunity to digest their implications,
and the Act will then come into force. I do not think there is
any real voice for saying we should go back on the specific commitment
to implement the Bribery Act.
Q495 Simon Kirby:
If I may make a small observation, which will be a continuing
theme in most of what I say this morning, the Bribery Act is probably
less of a problem for big corporations and businesses, because
they will have lawyers and experts who will tell them what is
permissible and they will have a strategy in place pretty quickly.
I am just worried about small and medium-sized businesses, which
will not have that support. That is my only observation to you.
Lord Green: I quite
agree with you. I think it is likely to be a bigger challenge
for SMEs just because they do not have the administrative apparatus
to put in place the framework necessary to ensure that they are
comfortable complying with it. I am afraid it is an inevitable
challenge because you cannot get round the fact that the Bribery
Act is coming into being. I do not think there is any real constituency
for saying that Britain should go back to looking and feeling
on the international side as though it is a bit behind its peers
in terms of legislation in this regard.
Edward Davey: It
is worth saying that there are many parts of British business
that welcome the Bribery Act, and indeed championed it, because
they want the enhanced reputation from strong ethical standards
and reduced costs to ensure that we play on a level playing field
with other countries. I do not detect across Parliament or the
business community actual opposition to the fundamental principles
behind the Bribery Act, but we need to make sure that the guidance
is correct, as Lord Green says. Rushing it would be a really
bad mistake, particularly for SMEsas you said, Simon.
Q496 Paul Blomfield:
Clearly, we all share the agenda of promoting trade and investment
and growth to drive the economy. Also, UKTI is clearly a key
body in delivering that agenda. Are you not concerned that the
reduction in its budget will undermine our ability to deliver?
Lord Green: It
will provide challenges, of course. In the ideal world you would
have more money and therefore be able to support a larger effort,
but we are in the context of a spending review, the overall parameters
of which we are well aware, where it is felt clearly appropriate
that UKTI should play its part alongside essentially all other
Government activities. It is up to UKTI to ensure that it does
the job as efficiently as possible, which means looking at its
back office and protecting the front line as much as possible
within the context of resources, which are constrained.
Q497 Paul Blomfield:
We have been trying to look at the actual numbers involved. From
the conversations we have been having, it seems to us that UKTI
is taking a particularly high hit. The question is whether that
is counter-intuitive in terms of what we are trying to achieve
in delivering growth.
Lord Green: I am
not aware that it is taking a particularly high hit. I think
it is taking the kinds of reductions that many other Government
Susan Haird: It
is about 25%.
Lord Green: It
is 25% over the time frame. There are plenty of other Government
activities facing that. In the ideal world you would want a larger
budget, because the evidence is that the more you do, the greater
the payoff. That would not be true all the way up the curve,
but it looks as though we are at a point in the curve where that
would be true, but there is the real world in which UKTI operates.
I think it is true of any organisation of 2,500 people that there
are likely to be opportunities to get more efficient in the context
of straitened times.
Q498 Paul Blomfield:
Perhaps I may press you on that specifically in terms of what
those efficiencies might look like. You have said you have in
mind a number of new initiatives, which presumably will require
resources. The CBI has made the case that, for example, the Passport
to Export programme should be expanded. What is the impact of
the changed shape of UKTI to meet the 25% cutwhat programmes
are to be reduced or cutand accommodate your other new
Lord Green: First,
Passport to Export is not something that should be cut. I think
there is scope to use more internet-based assisted networking
and sharing of experience among SMEs as they get engaged in international
markets. I do not think as much of that has happened as could
do, and that is an area that is extremely cost efficient. We
will face a reduction of the country coverage through ITAs, particularly
given what is happening in the RDAs. Nevertheless, UKTI has set
itself a target for assisting more companies this year than last
year; in other words, we still believe that you can, if you will,
wring the sponge and make it more efficient.
The completely new initiatives have to do with things
that are quite low-cost in absolute terms, even if they are quite
high unit cost. Relationship management, which we talked about
a while ago, effectively involves the creation of a new unit,
but it is a small number of people. They might be quite high-cost,
but they are a small unit of people to support the relationship
management of big-ticket exporters and inward investors. I do
not think e-networking has a particularly high cost to it, but
there is no doubt that if you cut the budget like that you will
put the regional network under some stress.
Q499 Nadhim Zahawi:
Ms Haird, you told us on Tuesday that the Foreign Office funds
for UKTI were published as part of the comprehensive spending
review. Your officials have since told us otherwise. Can you
shed some light on the situation when it comes to the UKTI overseas
Susan Haird: As
I understand it, they have sent to you the overall totals for
the spending review. That was sent in yesterday evening. What
I said I would giveit was not published, nor would it be,
although I am very happy to make it available to youwas
the information post by post, about how much money UKTI would
have to deploy in China, India, Brazil and so on. That is what
I will send to you as soon as it is settled, which will be in
a few weeks' time. That is settled in consultation with the Foreign
Office, as I explained yesterday.
Q500 Nadhim Zahawi:
We were told that these were just assumptions and estimates by
UKTI but not published, contrary to what we were told on Tuesday
Susan Haird: Maybe
I did not use the word "published" in a strictly correct
manner. I meant that they were available. They will be in the
accounts and so on. The way funding works between us and the
Foreign Office is complex. We have some money allocated through
a ring-fenced budget, which pays for certain things; we have some
money allocated direct to post, which pays for other things; and
there are overheads to do with accommodation, the cost of school
fees and so on. [Interruption.]
Nadhim Zahawi: That is
probably them on the phone, telling you something else.
Susan Haird: That
is an overhead. It is complex. What I undertook to do yesterday
was disentangle the complexity and give you what I understood
you wanted, which was the amount of money available country by
country. That money will be a mix of the money allocated to pay
for staff and the money allocated, as I explained yesterday, to
pay for events that posts have agreed with us they will do to
promote particular sectors, like the creative industry sector.
Q501 Nadhim Zahawi:
Are the assumptions estimates or real figures?
Susan Haird: What
I am going to give you is getting a lot closer to real money.
It is not a completely separated out budget; we do not have separate
accounting officer responsibility for the Foreign Office money.
The chief executive is responsible for UKTI's programme money
that is allocated direct by Parliament. The BIS permanent secretary
is responsible for the BIS admin, and the Foreign Office permanent
secretary is responsible for the Foreign Office admin budget.
We are given money, and it is relatively complex on the Foreign
Q502 Nadhim Zahawi:
I can tell because you have already lost me.
Susan Haird: I
lose myself at times.
Lord Green: May
I go back quickly to a point with information hot off the press?
Creative industries do qualify for the growth fund; it is open
to all industries.
Chair: We will note that
with interest. Again, we will monitor that.
Q503 Paul Blomfield:
I want to follow on from Nadhim's point, referencing it back to
my previous point. I guess that it may not be possible to answer
thisperhaps Susan could provide us with the information
subsequentlybut how many regional trade advisers in posts
overseas will be lost through the cuts made in the Budget?
Susan Haird: Overseas
we hope not to lose headcount overseas. The decline through the
spending review is lower on the Foreign Office side than elsewhere.
There are ways in which we can save quite a bit of money overseas
without cutting headcount, including in particular continuing
the policy we have pursued for a number of years of localising
posts where possible.
I think I explained when I was here on Tuesday that
we have a mix of UK-based diplomats who are posted overseas for
a period and locally engaged staff who are recruited for the local
knowledge that they bring. Many of them have business backgrounds.
For some years now we have been localising fairly significantly,
and many of our posts overseas are now headed by locally engaged
staff, including the Baltics as a region, which is run jointly
out of Estonia and is headed by somebody locally engaged. It
is much more cost effective where you can do it. It is not possible
to localise every post in every market, nor would we ever want
to do that.
As to the English regions, where there is a loss
not only of UKTI funding as a result of the spending review but
also, as I explained on Tuesday, a loss of RDA funding because
the RDA has topped up the spending on trade in those regions,
it looks like we will lose about 50 international trade advisers.
We believe that there are efficiencies that can be achieved both
through smarter use of e-delivery, as the Minister said, and also,
for example, by trying to reduce the number of times that trade
advisers visit companies and encouraging them to visit the office.
There are ways of doing things smartly that will drive up efficiencies.
I make two comments, if I may. First, I welcome the trend to
engage staff locally, not merely on cost grounds, because I think
that as a general proposition it is probably more effective in
getting a real feeling for what is going on in a local market.
Secondly, on the English regions we will do what we can in terms
of efficiency, but I do not think we should be assuming that there
is a kind of alchemy to be performed here. The fact that we are
spending less over the timeframe of the spending review will mean
a reduction of coverage.
Q504 Paul Blomfield:
To ask a brief supplementary, 50 are being lost out of a total
headcount of how many currently?
Susan Haird: The
total number of international trade advisers at the moment is
265. That number is augmented by the regional trade directors
and their deputies, so the total number of staff employed in the
regions, as I think I said on Tuesday, is about 300. The international
trade directors and their deputies will be customer-facing. There
will then be a small support team, not all of whom will be customer-facing.
It is a 19% reduction.
Lord Green: It
is a non-trivial reduction.
Susan Haird: But
we are nevertheless aiming to keep the number of companies we
help constant, and indeed increase it, over the spending review
Q505 Simon Kirby:
Will the increase in local employment and the loss of RDA money
disproportionately affect the inward investment part of the business?
Lord Green: Susan
might want to add to this, but shifting overseas to locally engaged
staff should not affect inward investment promotion. The brief
is exactly the same whether the person is locally engaged or a
UK expatriate. As far as this country's coverage of FDI support
is concerned, with the abolition of the RDAs we are now in a transition,
as you will be well aware, from them to the local enterprise partnerships.
As you may have gathered on Tuesday, UKTI is in the process of
awarding a contractthe bids are in process at the momentto
cover FDI support for England excluding London, which will bridge
or replace the services of the RDAs domestically, but there is
no doubt that we are in a bit of a transition.
Q506 Chair: We
had some discussion on this issue on Tuesday with the acting chief
executive. This is to Susan Haird: to pick up one point arising
from Tuesday, you did say in your evidence that some of the UKTI's
work was being contracted out to Business Link. Business Link
is being closed, so what arrangements actually are being made?
Susan Haird: What
I said on Tuesday referred to the trade side of the house. We
have contracts at the moment in the English regions with the likes
of chambers of commerce, as I think I described them, Business
Link and similar bodies. The arrangements are different according
to each region. In the main, the organisations are associated
with Business Link rather than Business Link direct. "Business
Link" is a bit of an umbrella term. The contract in the
English regions will continue.
Just to amplify what was said just now, on the inward
investment side I think I explained on Tuesday that we were looking
to get efficiencies there as well. Although there is less money
because the regional development agencies will have gone, by letting
a national contract for the English regions the sector specialists
that we will use to promote inward investment and handle actual
and potential inward investors will not be bound by geography.
They can travel around the UK and put their expertise to use
in different regions.
I do not think that on Tuesday we discussed the overseas
network. The RDAs currently have quite a number of people overseas.
Again, there I think we can achieve considerable efficiencies,
because a potential Chinese inward investor, to take an example,
does not need to get very specific about regions too early on.
I think what we can have are a smaller number of specialists
who can cover a broader number of regions, and we can get considerable
efficiencies that way.
Q507 Chair: It
comes down to the core issue: exactly how will trade advice be
given to companies in the region with the demise of the RDAs and
Business Link? Could you explain how that will happen?
Susan Haird: Yes.
The RDAs were not involved in direct delivery on the trade side.
What we had was a system where the international trade directors
were co-located with the regional development agency; they agreed
jointly a regional international trade strategy. The trade strategy
was delivered by international trade advisers on the ground who
were employed by the chamber of commerce, let's say, in a particular
region. We would have placed a contract with that chamber of
commerce, or more commonly a group of chambers of commerce, and
those arrangements are unaffected by the demise of the RDAs, except
that the RDAs put in extra funding, which paid for additional
international trade advisers.
Q508 Chair: So
the structural arrangements should at least still be there, but
will have less funding than before?
Susan Haird: Exactly.
Q509 Chair: Could
it impact on the structure? The structure may in part be dependent
on that funding.
Susan Haird: It
will not impact on the structure of delivery, no. The contracts
Lord Green: It
will impact, however, on headcount.
Susan Haird: It
will impact on headcount, yes.
Q510 Chair: That
was my next question. Will there be as many trade advisers?
Susan Haird: No.
This is the 19% reduction in the number of international trade
advisers that I described a moment ago. There is no escaping
from the fact that there will be fewer people on the ground in
the English regions delivering trade services.
Q511 Chair: There
will be fewer people delivering that service to companies in the
Susan Haird: There
will, but we are planning to serve more companies over the spending
review period, and to do that by smarter methods of working, including
edelivery and the SME-to-SME networking site. We will make
greater use of outreach events. To describe what they are, they
are held in the English regions sometimes at a time when we have
people from overseas posts back home. Take, for example, Asia
taskforce events, which we have run in a number of cities around
the country. They are designed to encourage companies to export
to Asian markets. They will take the form of a plenary session
followed by clinics in small groups and then one-to-one surgeries,
almost, where the SME can meet people from our post overseas.
That can then lead them to go direct to be served overseas as
opposed necessarily, unless they so wish, to working with a regional
international trade adviser.
The regional international trade advisers work very
much with companies that are new to exports through Passport to
Export and companies that are moving on, perhaps after a couple
of years of export experience, and want to diversify. But a number
of SMEs and companies more generally will go direct to our overseas
posts either off their own bat or because they will have met us
at one of these clinics. There are a number of ways in which
we can circumvent the potential impact of the reduced number of
international trade advisers, and we shall make every effort to
ensure that our customers see no deterioration of service.
Chair: Again, that is
something the Committee will want to monitor.
Q512 Nadhim Zahawi:
We have heard throughout this inquiry that there is a real need
for people in foreign posts at UKTI to have a business background
and to be from business. With the budgetary restraints, do you
think it is realistic that you will attract those kinds of people
from business and pay the salaries that they will command?
Lord Green: As
far as the overseas representation is concerned, the shift to
locally employed means that quite a lot of the people we do locally
employ have business backgrounds, and you can do that simultaneously
at reduced cost as compared with an expatriate. I think that
is where the challenge comes. Here I have met a number of ITAs
and many have business backgrounds.
I think the real issue arises when you want levels
of senior leadership within UKTI. I believe that we need more
people from the private sector engaged in key positions in UKTI.
For example, I would like to see the unit that we have described
a couple of times that supports relationship management and big-ticket
inward investment headed by somebody we recruit from the private
sector, and there plainly you are into considerations of cost
Q513 Chair: A
representative from Mercedes, a British business ambassador, said
we needed to be more aggressive and pushy in selling ourselves.
How do you think you can get this across to your staff? There
are I suppose two levels: the governmental level and particularly
Lord Green: I think
this affects governmental, UKTI and ECGD leveland British
business ambassadors, not to mention the businesses themselves,
where part of the challenge here is to get them to take the risk
of crossing the water. The first time an SME does it there is
a risk involved and it can require some imagination and drive.
At ministerial level you can be assured that from the Prime Minister
downwards there is a real intent here. The Prime Minister barely
loses an opportunity in the public domain to ram home the importance
of trade and investment. Last weekend he was effectively saying
we should not be ashamed to be called salesmen, so this is a cultural
change led from the top.
In the case of UKTI, we are looking at the contract
that we have described as being in the process of being awarded.
A decision has not yet been made. An element of performance-based
incentive will be built into the contract. To the extent that
we are successful in recruiting some key private sector people
into UKTI, we have to look at their packages and make sure they
are competitive, and maybe those have to have some kind of performance-related
component. We have to work on the detail of that. I come from
an industry where I know how sensitive that topic can be. We
have to get it right, but clearly you have to be competitive,
and the fact is that most industry has a component of incentive
performance in people's compensation.
More broadly through UKTI, my general impression
is that there are many people in it who are energetic, marketing-oriented
folk. It is the job of the management of UKTI to ensure that
those people are brought into the key positions, with performance
appraisals and so forth focused on the degree to which they are
able to be proactive and get all the way to closing deals, or
support a company all the way to closing deals, so there is a
real sense that you are not just about policy; you are about getting
The other area that it is important to dwell on for
a moment or two is the Foreign Office in commercial diplomacy.
Something of a cultural change needs to be embedded in the Foreign
Office. Cultural change in any organisation takes a bit of time
and consistent pushing. One of the work programmes being embarked
on this year in the Foreign Office is a programme of seminars
and support for basically the bulk of the desk officers in King
Charles Street, such that they become alert to the implications
of commercial diplomacy and what it takes to be successful, both
as an individual and as an entity supporting the British trade
effort. I think there is quite a lot of work we need to do in
that general area. My overall impression of Foreign Office ambassadors
in the field is that, if you compare the position now with 10
years ago, we would all say it is much, much better.
Chair: We shall be talking
about ambassadors in a moment. We now come to the role of large
companies and Ministers in UKTI.
Q514 Simon Kirby:
The Trade White Paper talked about a change in emphasis, and Ministers
cosying up with certain big businesses. We heard on Tuesday from
academics that this had the potential to distort trade. Do you
understand that fear?
Lord Green: I think
it is important to do it right, but this is not a radical departure;
to some extent it is a systematisation of some things that tended
to happen naturally. In a way, from my perspective it is taking
a leaf out of the way in which any large services company, whether
it is a bank or another kind of services company, go about their
relationship management of key clients. Of course a large exporter
is not a key client of the Government in the same way that a large
company will be a key client of a bank, but there are some parallels.
What does a large exporter want? It will want particular
support in a particular country when it is coming up to landing
an important business deal. I do not know what academic said
this but, frankly, it is a rather purist view to say that you
do not need that support, because the absolute reality is that
the French, Germans, Americans and everybody else do this. If
we do not do it we are effectively condemning our big exporters
to have one hand tied behind their back as they do it. We absolutely
It has been going on. I certainly would not want
to imply that nothing of this kind has been happening over the
years. We all know it has been going on. I think there is a
case for a more structured approach to it without bureaucratising
it such that, for example, you would have a Minister who, on the
basis of departmental responsibility plus knowing the person,
would be the principal point of contact at ministerial level for
the chief executive or chairman of this company when he had an
issue in the export domain. It might be any kind of issue, from
the trivial to the important. He or she needs to know who to
ring up. It is almost as if he has his mobile phone number.
The Minister says, "Look, I hear you; I'll see what I can
do," and then there will also be a senior official who works
with the Minister to whom the Minister can turn and say, "How
can we sort this out for this company?" That is how I see
Q515 Simon Kirby:
To press you, should the emphasis be on big manufacturers who
create tax and employment in this country or on global businesses
that are based in this countryor is there a difference?
Lord Green: I do
not think there is much of a difference in this day and age.
First, we should start by not trying to boil the ocean; we should
start with the top 10 exporters from this country, or a modest
number to start withthey do not have to be British ownedand
inward investors, actual and potential. You are looking at inward
investors, some of whom may not already be here but who we clearly
would like to be here, and again you would have that relationship
management approach in place.
I give one named example. Recently I was in Belfast
as part of my regional visits. I called on Bombardier while I
was there. They have a major investment there and also in Derby.
They are a major company worldwide; they are a major employer
in this country; and, what's more, they are very high-tech in
the case of Belfast. I know the CEO from a long time back. I
think it would be appropriate for him to know that he can always
call me if he has any particular issues, but there ought to be
the same close relationship with the British High Commissioner
in Ottawa and on the ground with the relevant person in Invest
Northern Ireland, Belfast and the nearest point of contact for
Derbyand a senior civil servant to whom I can talk. If
he does call me up to say he has this or that problem I can say
to the appropriate official, "Let's see what we can do to
help." There is a risk of making this sound more bureaucratic
than I would intend it to be; it is actually practical help.
Q516 Simon Kirby:
I understand that entirely. Some other countries, for instance
Germanyperhaps you spoke about this on the telephone this
morningseem to have far more success than the UK in encouraging
their large companies to piggyback small- and medium-sized businesses.
If they open up in China, for instance, they take those businesses
with them. I went to China last week. We heard from BT that
that was not their intention at all and that they would involve
themselves almost entirely with local businesses. Do you not
think we could learn something from Germany?
Lord Green: We
can certainly learn something from that, because I think big companies
have a responsibility to their supply chain. We can swap stories
of course, but I think many of the companies I know take their
responsibilities to their supply chain very seriously. There
are opportunities to help SMEs that are part of the supply chain;
indeed, I would have thought it would be in the interests of a
big company to help the SMEs that are part of its supply chain.
Some of that help can take the form of helping them to get into
the foreign markets where they are investing or exporting. We
need to ensure that we do as good a job of this as we possibly
Edward Davey: The
White Paper talks about two initiatives that UKTI will be taking
forward: the peer-to-peer online mentoring proposal and the catalyst
proposal, trying to use business and academics to champion British
business and investment opportunities.
Q517 Chair: To
ask a supplementary, is the Government looking at what Germany
does in order to get this success relative to the performance
of British business? If not, will it do so?
Lord Green: I can
assure you that I personally look very carefully at the German
model. Germany happens to be a country I know well. As recently
as two days ago I attended a dinner where we had a senior consultant
from one of the best known German consultancies talking about
Mittelstand and how that has prospered and what are the conditions
within which it operates, with a view to seeing what lessons we
can learn. I think there are some lessons that it is important
We also have to recognise that we are not Germany
and will not become the kind of economic and social structure
that Germany is. For instance, as I am sure you are aware, all
German companies are required by law to be a member of their local
Handelskammer. I cannot imagine it being acceptable within British
society to mandate something like that. Therefore, it is just
a fact about the way Britain operates that we are into the kinds
of arrangements that Susan described, where you are operating
round the country with different patterns of support depending
on what works in a particular area because you do not have that
kind of uniform structure that Germany has had for decades.
I think there are some lessons to be learned about
the way they do trade delegations. It appears to be the case
that when they do trade delegations they take not only the big
companiesI think this goes to your point, Simonbut
also a group of SMEs alongside them. We have tended to do it
as one or the other, and we may be missing a trick there, which
is why I say I think we may have some lessons to learn.
Q518 Simon Kirby:
There are developing economies around the world. As these economies
mature and look to more service businesses, which we are strong
atit is our ace cardthere is complacency in thinking
that there will just be a sudden switch.
Lord Green: That
would indeed be a complacency.
Q519 Simon Kirby:
What I am saying is that even though the German example might
be heavy engineering, there is still a lesson to be learned from
Lord Green: I quite
agree with that. While I do think services are a distinctive
competence in this countryit is evident in the numbersit
is 60:40 between the two, so it is still 60 for goods exports,
and a good proportion of that is SMEs. There is plenty of scope
to do a better job. To answer the Chairman's question, first
we are on the case; secondly, I do not think that a simple-minded
replication of Germany is possible, but thirdly, there are clear
lessons to be learnt.
Edward Davey: May
I say something in addition to everything Lord Green has said?
This relates to multilateral trade deals that we need to do and
our priorities and focus within those. Quite a lot of previous
multilateral trade deals have focused on the export of goods,
much less so on the export of services. For example, in the EU-India
FTA it is very important that we get greater openness, for the
legal profession, the accountancy profession and so on. In all
those deals, not just Doha but all the EU FTAs, the importance
of service liberalisation is critical.
Q520 Chair: That
leads very nicely to my next question, but just before I move
to it perhaps I may make the point that, in terms of what Lord
Green said, I fully understand that you cannot effectively transplant
a business culture from one country to another. I seek reassurance,
however, that we are looking at those elements of a different
business culture that could be transplanted.
Lord Green: I am
happy to give you that assurance. One other obvious area of difference
between Germany and this country, which is perhaps worth tablingthis
is a tricky one that will not be a quick fixis that they
have famously a superb vocational training and apprenticeship
system. We allowed our apprenticeship schemes effectively to
collapse in the 1970s. We are now painstakingly starting to rebuild
that. That started under the previous Administration and it has
continued under this Government. We have a long way to go. If
you could turn the clock back, we would all wish we had never
allowed it to happen but we did. One of the things we have to
learn from Germany is to get back a culture of apprenticeship
and the sense that apprenticeship to the engineering industry
in particular, or manufacturing more generally, is an aspiration
to be looked for.
Q521 Chair: I
want to follow Minister Davey's point about service industries.
Just how is the Government looking to support and increase exports
of UK services?
Edward Davey: I
think the fundamental issue is to make sure our companies have
access. That starts at EU level. When we talked previously about
the Single Market Act I focused, as did our submission to the
Commission, on services, making sure that the services directive
is implemented and that the points of single contact actually
happen and are of high quality, particularly the interrelationship
between the services directive and the directive on the mutual
recognition of professional qualifications, which is a very important
part of that.
Going beyond that, we have on the table various EU
FTAs. Our argument is that in those we should focus on service
liberalisation. Obviously, of particular importance is EU-India,
but not a lot of attention has been paid to the EU-Canada FTA,
which is incredibly valuable to us, particularly with intellectual
property rights and the regulatory arrangements between the federal
and provincial Governments. That is an area where service liberalisation
is very important. But you can go round the different FTAs and
each time the element of servicesnot just legal and accountancy
but financial services more broadlyis critical. So, market
Q522 Chair: With
UKTI and ECGD working with sectoral trade associations and chambers
of commerce, basically how can you maintain a consistent message
without duplication of effort?
Edward Davey: From
the UKTI's point of view, are you talking about Government assistance
and promotion as opposed to market access?
Lord Green: I am
not quite sure I understand the thrust of the question.
Chair: We have various
trade associations to do with service industries. Basically,
how can Government, ECGD and UKTI co-ordinate their relationships
with them in order to achieve better promotion?
Lord Green: I am
with you. This is one area where I will plead that I am still
in my first nine weeks, but I have met a number of the major ones
and I am working my way through a list of meetings that I want
to arrange with individual trade associations for different sectors.
I have a large meeting with a group of them shortly, and will
continue that. I am still formulating my ideas on what opportunities
there are to improve and structure relationships and support industry
in the process.
I have already mentioned one area where I think there
is a real possibility for an improvement, which is structuring
the relationship with banks around the country, from local and
regional commercial banking manager to local investment and trade
director. There will probably be other things. I mentioned venture
capital a while back. That is another area where I think UKTI
could usefully structure a relationship with the venture capital
industry that enables us to be more helpful to SMEs who want venture
capital and find it difficult to access it.
We have not talked about this theme at all, but I
think it is quite an important one. If you will forgive me, I
would just like to elaborate on that point briefly. This country
does a better job of using venture capital than some of our continental
competitors, but a significantly worse job than America. There
are pools of venture capital sitting in America. I do not see
why we should not work to help the appropriate SMEsthis
is appropriate for only someaccess American capital in
a way they would find difficult without some guidance from UKTI.
To do that UKTI probably needs to equip itself with some specialist
resource. That is one of the initiatives that we are currently
Chair: That is very interesting.
Susan Haird: A
couple of UKTI services are contracted out and delivered for us
by British chambers of commerce. We do work with chambers of
commerce around the country on outreach events, ensuring that
we are tapping into their members. As I mentioned, the chambers
of commerce deliver the trade services in some parts of the UK
Q523 Chair: Perhaps
I may move on to a specific issue. Obviously, security sector
exports are growing fast. There has been a complaint that there
appears to be a lack of capacity in the export control department
to deal with this rising level of exports. Are you aware of this?
Is the Government doing anything about it?
Lord Green: I am
not aware of a lack of capacity but if there were we would have
to address it, because security exports are rising fast. I think
they are a very good export industry for us. It is a sad commentary
on the times that there is a big market for them, but this is
an area where very high-tech competencies in Britain are finding
very profitable business overseas, and we should definitely make
sure that we do not stand in the way of support for them.
Edward Davey: The
export control organisation reports to Mark Prisk. I am not sure
whether you have had any evidence from him in any of your inquiries.
I know that he wants to ensure that it is operating as effectively
as possible and that there is efficiency where it needs to be.
He is the Minister overseeing this.
Q524 Chair: We
will ask him in due course. I move to RDAs and LEPs. Some of
this we have already covered, and I will not repeat it. Is there
any concern that there is mission creep in the role of LEPs, particularly
with their proposed role in inward investment? We have had some
discussion on this already. Given that this was a constant complaint
about the RDAs, can you see this happening with the LEPs?
Lord Green: Obviously,
it is early days for the LEPs. I have met with three chairmen
of LEPs. That is only a subset of them of course, but I have
been very impressed by the way they are coming together. They
are chairmen who clearly know which way is up and have good business
representation. By their accounts, there is good and supportive
local authority representation. In all three of the particular
cases I have met, there is very good representation of the relevant
university engineering faculty on the LEP. It is early days but
I think that in those cases they are off to a good start.
Would mission creep mean that they would get in the
way of the contract that UKTI let on inward investment? In some
senses it would be a nice problem to have, because it would mean
everybody was becoming focused on the topic. Overseas, I think
it is rather less likely that there would be the kind of problem
that we have experienced with the RDAs in some parts of the world,
where RDAs have established overseas offices or sent out missions,
often not on a properly co-ordinated basis. I have to sayI
would have said it even before I got into this jobthat
the evidence of the external impact of the RDAs was distinctly
mixed. I am not a pessimist in this. It is my view that as the
thing beds down, LEPs are probably a genuine improvement from
the point of view of trade and investment.
Q525 Simon Kirby:
On inward investment, we heard from Susan Haird on Tuesday that
in trade and investment, there was to be no refocusing between
inward and outward investment, and you have said today that the
changes in the money available will not alter that either. That
said, why has inward investment fallen in the UK?
Lord Green: I do
not know specifically from one year to the next why it has fallen.
Overall, it continues to be the case that Britain does a reasonable
job of attracting inward investment. Some of that is clearly
with the support of UKTI. Something like 50% of inward investment
projects have some support from UKTI but not all. We need to
ensure that we continue to be an attractive destination for inward
investment. That is about a variety of things, some of which
are readily within the power of Government and some which are
broader. Clearly, corporation tax is a feature. I think the
story the Government has to tell on corporation tax is one that
is widely welcomed. The UK Patent Box announcement was extremely
helpful in regard to the overall tax profile as an attractive
destination of choice.
There are other matters like public infrastructure.
The kindest friends of this country would not say we have a world-class
public infrastructure, and there is a taskthis goes back
to something I said earlierover the next 10 years to make
sure we invest adequately in our public infrastructure: transport,
energy, water, waste and broadband. Broadband is very important
to the SME world, though not particularly relevant to FDI. One
way or another we need to make sure that we are not complacent
and continue to support inward investment.
I do not think there is any good reason to believe
that we are on a downward trend in terms of loss of share of opportunity.
It is the case that the UK brand, if I can use that phrase, is
still widely regarded and respected around the world. People
do want to invest in this country. When I was on a trip two weeks
ago to the Middle East with the Prime Minister I met, together
with the chairman of Infrastructure UK, the Qatar Investment Authority.
It is very clear that there is potential interest there.
Q526 Simon Kirby:
To play devil's advocate, does Pfizer pulling out of the UK and
businesses' concerns about airport capacity tell us something
about our inward investment strategy?
Lord Green: I do
not think Pfizer does. I think the position of Pfizer was rather
specific to that company's particular circumstances. I think
there is a wider issue about the pharmaceutical industry and the
way in which it goes about supporting primary research that affects
the whole of the pharmaceutical industry and will impact the research
base in this country that is owned by the major pharmaceutical
companies. Work is being done on that. David Willetts is the
Minister responsible for that. I do not know whether you have
taken evidence from him, but there is no point in denying that
there are significant shifts going on in the way that industry
supports primary research that have implications for the UK.
We need to attend to that. I do not think that is evidence of
a wider dissatisfaction with the UK as an investment base.
We all know the position on the third runway. The
Government has made a decision about Heathrow in particular.
I do not think that is up for re-examination. The transport infrastructure
ambitions set out in Infrastructure UK make a lot of sense to
me. We need to work at it. As I have said, I am afraid there
is no magic wand on transport. A lot of things are going on,
for example things like Crossrail. We took a long time to get
there, but the fact it is now being done helps the image of London.
Q527 Nadhim Zahawi:
I want to push you a little further on that. We talk about the
UK as being a global hub. I think there is credibility in that
claim because we have many things here that are incredibly attractive
to inward investors. Not least among them are the fact that we
own the language of international trade, and the time zone.
Lord Green: The
system of law.
Nadhim Zahawi: Quite right.
But Mr Kirby touched on one thing that I think is problematic:
transport infrastructure, particularly airports. Heathrow is
not fit for purpose. You talk to many businesses. In my previous
life in business, you would do anything to avoid going through
that hub. The competition will not come from Frankfurt or Paris;
it will come from Singapore, Dubai and elsewhere, where they are
building five-runway airports on top of what they have currently.
We seem to be treading water when it comes to our claim to be
a true global hub. I hear what you have just said in response
to Simon, but perhaps I may push you a bit further. If we are
serious about it, we ought to look at this at some point. If
not, we should stop attempting to compete with these other hubs.
Lord Green: Let
me push back a bit. I do not think Heathrow is not fit for purpose.
I have travelled through Heathrow more times than I have had
hot dinners. It is not the world's leading airport, plainly,
but to say it is not fit for purpose
Q528 Nadhim Zahawi:
How many times have you been stuck in the air circling Heathrow?
Lord Green: More
times than I have had hot dinners.
Nadhim Zahawi: There you
Lord Green: But
also over other major airports, too. It is a feature of modern
life. I happen to believe that Terminal 5 is one of the best
terminals there are. I think that by the time they finish the
redevelopment of Terminal 2, the terminal situation in Heathrow
will not be too bad at all. The issue clearly is the third runway.
The Government has made a decision on that. We will not be in
a position where we can compete with airports that have five runways,
and we have to be realistic about it.
The second comment is that you are dead right: we
are a global hub, and we trade on some very deep-seated advantages
in that; you have mentioned some alreadythere are those
that have to do with geography, the time zone, and the English
language. I think the legal system is important, as is critical
mass. The prevalence of foreign language schools for expatriates
who want to come here is important. There is a whole variety
of things that add up to a hub. We will not score top in the
class in every single parameter. Frankly, we are unlikely to
score top of the class in airports, but it is only one of the
parameters. We have to be careful not to undersell ourselves,
if I may say so. Heathrow is not that bad.
Edward Davey: A
point often missed when we are talking about trade and infrastructure
is that our ports are very important. I think we will see significant
improvements in the infrastructure round our ports and also the
services that facilitate trade at the borders, particularly the
ports. A lot of work is being done, which is covered in the White
Paper, but I think that sometimes we should put rather more emphasis
on that kind of thing than is done normally.
Q529 Simon Kirby:
Lord Green, are you awareI am sure you areof the
widespread worry amongst universities and businesses about the
change in immigration rules?
Lord Green: Yes.
Q530 Simon Kirby:
And have you hadthis is possibly the most important and
significant question of the morningsome fairly robust conversations
with your Cabinet colleagues?
Lord Green: To
be clear, I am not a member of Cabinet.
Q531 Simon Kirby:
No, but you chair a sub-committee of it.
Lord Green: Yes,
and Damian Green is a member of that committee. The process of
consultation on education has been completed. The Government
is working out what it wants to say and it will announce when
it is ready. I think there has been an extremely robust dialogue
and conversation amongst the various Government Departments involved
in this about making sure we land in a reasonable space given
the overall objective of the Government to reduce net immigration
I think we are all aware of the background to this:
the public desire for an approach that the coalition Government
now seeks to implement. On work permits, I think we have landed
in a reasonable space but we need to ensure that this beds down
in a way that does not create unnecessary or ridiculous hard cases,
and that we do not shoot ourselves in the foot. We are at an
earlier stage in that in education. I can assure you that both
I and Vince Cable are very well aware of this as an issue.
Q532 Chair: I
want to move on to a very important specialist area: trade finance,
in particular the implications of Basel III. We have had evidence
from bankers about their concerns on how trade finance will be
treated under Basel III. What representations is the UK making
to the Basel Committee to prevent a potential reduction in available
finance for business?
Lord Green: First,
it is the Treasury that represents
Chair: I recognise that,
but obviously BIS has a very strong interest.
Lord Green: Basel
III does indeed have a potential, not necessarily an actual, implication
for trade finance. Other things being equal, it would require
more capital to be held against a trade finance instrument than
would have been the case hitherto, and we may need to make sure
that does not have perverse effects. Negotiating over Basel III
has some characteristics in common with negotiating about Doha
through the European Union, i.e. you can make a case but you will
not necessarily win it. It is our job to represent the interests
of getting this right. The interests are quite complex. There
is a public interest in making sure the financial system learns
its lessons and is taken forward on a basis that is stable, profitable
and liquid, as well as serving the needs of the real economy,
and weighing up all the considerations that lie behind that apparently
simple phrase is not easy. I can assure you that the Treasury
is well aware of the issue and, in the process of discussions,
continues to make the point. Would we want to see the whole Basel
III agreement unravelling by starting to unpick it, with others
unpicking other bits of it? No, we would not, because it is in
our interests to have Basel III in and bedded down.
Q533 Chair: I
assume you are aware of the research done by BAFT-IFSA on the
default ratios of trade finance, which were much lower than any
other areas, and that these points are being made.
Lord Green: Yes.
Q534 Chair: I
turn to a subject that has been much in the news of late: British
business ambassadors. To start with perhaps the obvious one,
can you provide us with an assessment of the level of work undertaken
by Prince Andrew in his role as a British business ambassador?
Lord Green: Yes,
I can. I think Prince Andrew works very hard for the cause.
He is an energetic traveller; he has done a number of missions.
I have seen him myself; when I was in Davos he was there hosting
what I thought was a very successful reception for British business.
Q535 Chair: I
stress that my next question is in effect to cover the effectiveness
of the full team of British business ambassadors. Basically,
how do you think you can measure their success and the strategy?
Do you think you are making the most of them?
Lord Green: First,
I do not think you can easily measure the success of that kind
of role. We are kidding ourselves if we think we can use hard
metrics and say that in year x a particular ambassador achieved
y and therefore did or did not perform according to standard.
This is a much more intangible thing than that. We have refreshed
the membership of the British business ambassadors. I had a breakfast
with them yesterday, because I chair them on behalf of the Prime
Minister. They are a broad-based group. By the way, they do
cover at least some members of the creative industry, although
we may want to see whether we can add one or two.
What I can report to you from that meeting and a
previous meeting last year is that there is an immense amount
of enthusiasm and commitment to devote personal time to it. We
need to remind ourselves every now and then that they are unremunerated.
There is huge enthusiasm for the cause, if I may use that wordthe
task of making sure that Britain's trade and investment performance
is as strong as it can be. I am very energised and excited by
the contribution they appear to be willing to make.
Susan Haird: Since
they were set up in October 2008, between them they have done
120 events in more than 35 countries. There are now more business
ambassadors than there were before, so one would expect that number
to go up quite considerably. We also have the Catalyst organisation
that I described on Tuesday, which by next year will consist of
500 people who also fulfil ambassadorial roles for the UK.
Lord Green: And
a further opportunity yet to be developedan idea that came
from Ed, in factis the notion of using the diaspora in
this country of people with connections. South Asia is an obvious
part of the world but not the only one. Making use of their connections
with and enthusiasm for being in this country as part of support
for exports into their countries of origin is something we have
not tapped and we should look at.
Edward Davey: I
borrowed it from the Swedish Trade Minister.
Lord Green: We
are all busy handing out compliments to somebody else.
Q536 Chair: I
was going to raise the issue of a representative from the creative
industry, but that has previously been made by Simon Kirby and
I think it is understood. I would be pleased if you could look
at that. I think it is fair to say there were some concerns from
Airbus about Sir Roger Bone of Boeing being made a British business
ambassador. How do you justify that role when Boeing is an American
company with legal cases before the WTO against the EU that profoundly
affect Airbus UK?
Lord Green: I might
point out that we also have a representative of Mercedes as a
British business ambassador.
Q537 Chair: Yes,
but I do not think it is bringing court cases against a British
Lord Green: That's
as may be, but one should not prejudge court cases. I should
like to make three comments that I believe are quite important.
First, it is a strength of this country that, when we develop
representation like that, we are able to have it as a very international
representation. It precisely speaks to the international openness
of the hub that we talked about a few minutes ago, which is its
distinguishing characteristic. Secondly, they are all members
in their personal capacity. Thirdly, Boeing is a significant
investor in this country, and provides quite a lot of jobs here
and awards quite a lot of business to British companies, so I
would not make any apologies for having Roger Bone amongst the
Q538 Chair: That
may be a fair point, but equally it seems odd that there is no
Airbus representative there.
Lord Green: Like
I say, they act in their personal capacity. We do not have all
the car-makers represented there either. If we started saying
that, we would have a very large group of business ambassadors.
We just have to manage this sensibly.
Q539 Chair: I
think it is fair to say that there is some concern that this area
is not being managed as effectively as it might be.
Lord Green: I do
not think I would accept that, with respect.
Q540 Nadhim Zahawi:
One point that appears quite stark to us is that the number of
people employed in the UK at Airbus is 15,000, whereas Boeing
employs 800 or 900.
Lord Green: We
have to guard against what happens if Bombardier then says, "Well,
in that case we would like to be on it, too." What happens
if you say, "Since Mercedes is on it, let's have
You can see where this goes if you are not careful.
Q541 Chair: But
I think it misses the point. This is a much higher public profile
issue than the others, and it creates a perception that is perhaps
at odds with what we wish to achieve with the British business
Edward Davey: It
is important to challenge that perception when it is wrongly taken.
I emphasise what Lord Green says: these people are operating
in their personal capacity to support British business in general.
Q542 Chair: I
am giving you the opportunity to challenge that perception.
Edward Davey: Thank
Chair: I think it is incumbent
on this Committee to make it clear to you that there is some disquiet
about that. I think that concludes our questioning. I finish
by saying that if on reflection you feel that there is any further
evidence you would like to give us in response to any of the questions
we have asked, please feel free to do so. Thank you for a very
helpful and comprehensive range of responses to a very comprehensive
range of questions. I also emphasise that we will probably want
to come back to you on one or two elements to see how it is actually
working. Thank you very much.
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