1 Introduction
1. The Government has placed trade and investment
at the heart of its strategy to rebalance the economy and generate
growth. In a keynote speech to the CASS Business School on the
Government's approach to the UK economy the Secretary of State
for Business, Innovation and Skills, Vince Cable MP, made this
clear:
Growth will have to come from the business sector.
It will need to come from trade.[1]
2. The approach was also articulated by the Prime
Minister when he appointed the Government's new Minister for Trade:
As we come out of recession it is crucial that
we demonstrate that the British economy is open for trade, open
for investment and open for business.[2]
3. The importance of putting trade and investment
at the heart of UK economic policy can be demonstrated by the
fact that the UK is the world's sixth largest exporter and third
largest investor in foreign markets and is second only to the
USA in attracting R&D investment from abroad.[3]
4. However, these figures should not be seen as any
reason for complacency. According to the Government, in 2009,
UK manufacturing exports decreased by 8% and service exports by
4%. In the same year, Foreign Direct Investment global inflows
fell by 37%.[4] The UK
share of manufacturing exports fell from 4.4% in 2000 to 2.8%
in 2009.[5] The UK has
also slipped from second to fifth in the world for inward investment
flows, behind the US, China, France and Hong Kong, according to
the UN Conference on Trade and Development.
5. The data released by the Office for National Statistics
in February confirmed the decline in performance with the gap
between imports and exports widening from £8.5bn in November
to £9.2bn in December,[6]
which was described in the press by one commentator as "pretty
horrendous".[7] The
latest figures released on 11 May show that the deficit on trade
goods and services was £3 billion in March compared to £2.7
billion in February.[8]
6. Commenting on this decline the Secretary of State
believed that there was "a general lack of focus on the kinds
of things that would make our exports more successful".[9]
We decided in this inquiry to test whether or not the Government
was putting in place the necessary structures to provide support
to UK companies which wished to develop or expand into foreign
markets. There are many strands to Government policy in this area
but two government organisations, UK Trade & Investment (UKTI)
and the Export Credit Guarantee Department (ECGD), play a central
role.
Terms of reference
7. We announced our inquiry on 24 November 2010.
Witnesses were invited to submit evidence on the following points:
- The role of BIS in providing
support for exports and investment;
- How the Government measures success in its support
for trade and investment;
- The Government Trade White Paper;
- The role of UKTI with regard to identifying opportunities
in:
—established markets
—emerging markets
—key sectors
and working with businesses both large and small
to take advantage of these opportunities;
- The effectiveness of the Export Credit Guarantee
Department and the flow of trade credit;
- How other countries, similar to the UK, export
to emerging markets and what our Government could learn, if anything
from them; and
- The role of the British Business Ambassadors.
8. The late publication of key Government policy
papers in these areas did not allow us the time to scrutinise
them with our witnesses. However, the evidence we received greatly
informed our deliberations and set an informed benchmark against
which we assessed Government policy.
9. We would like to thank all those who contributed
written evidence to the inquiry as well as those that came to
Westminster to give oral evidence including: British Exporters
Association (BExA), British Chambers of Commerce (BCC), Society
of Motor Manufacturers and Traders (SMMT), Food and Drink Federation
(FDF), Engineering and Machinery Alliance (EAMA), CBI, Federation
of Small Business (FSB), Forum of Private Business (FPB), Institute
of Directors (IOD), A|D|S, BAE Systems plc, Airbus, PACT, UK Music,
The Publishers Association Ltd, China Britain Business Council,
Dr Kerry Brown, Professor Peter Nolan, Simon Carter, Joan Turley,
Surrey Satellite Technology Ltd, Dr Razeen Sally, Professor Jim
Rollo, Vanessa Rossi, Susan Haird, Acting CEO, UKTI, Patrick Crawford,
CEO, ECGD, David Frost CMG, Director for Europe, Trade and International
Affairs, BIS, Ed Davey MP, Minister with Trade Portfolio and Lord
Stephen Green, Minister of State for Trade & Investment.
10. We would also like to thank the British Business
Ambassadors who came to tell us about their roles: Nick Fry, Chief
Executive, Mercedes GP; Sir Roger Bone, President, Boeing UK Ltd;
Lord Charles Powell; and Paul Skinner, Chair of Infrastructure
UK.
11. UKTI, along with its delivery partners, plays
a vital role overseas supporting UK companies. It was therefore
important for us to see their work at first hand. We therefore
undertook a visit to China—a market identified by the Government
as a priority—to gain a better understanding of how UKTI
supports British companies looking to export their goods. The
visit enabled us to meet with Embassy and UTTI officials as well
as UK and Chinese businesses to discuss UK trade and investment
opportunities and the role that Government should play in facilitating
business opportunities. We would like to thank everyone who helped
to make our visit a success. We will also be publishing a report
shortly focusing specifically on what we learnt whilst in China.
1 Speech to Cass Business School: www.bis.gov.uk/news/speeches/vince-cable-cass-business-school Back
2
"Lord Brittan announced as trade adviser to the Prime Minister",
Number 10 press release, 19 August 2010 Back
3
Department for Business, Innovation and Skills, Trade and Investment
for Growth, Cm 8015, February 2011, para 1.20 Back
4
Department for Business, Innovation and Skills, Trade and Investment
for Growth, Cm 8015, February 2011, para 1.26 Back
5
HM Treasury and Department for Business, Innovation and Skills,
Plan for Growth, March 2011, Foreword Back
6
Office for National Statistics, Statistical Bulletin: UK Trade,
January 2011 Back
7
Daily Mail, Andrew Goodwin, senior adviser at Ernst and
Young, 10 February 2011 Back
8
Office for National Statistics, Statistical Bulletin: UK Trade,
March 2011 Back
9
Minutes of Evidence taken before the Business, Innovation and
Skills Committee on 17 April 2011, Q 57 Back
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