Written evidence from ExportAction Ltd
1. INTRODUCTION
1.1 This submission of evidence concerns itself
exclusively with UKTI and is offered by ExportAction Ltd, a UK
SME assisting other UK SMEs establish and develop exports to the
world's largest single country market, the USA.
1.2 If the statistics used are inaccurate, that
has as much to do with the UKTI's communications skills as ExportAction's
inability to comprehend. ExportAction would welcome more transparency
is the reporting of UKTI costs and accomplishments without need
to resort to time-consuming freedom of information requests.
2. EXECUTIVE
SUMMARY
2.1 UKTI needs to operate in a more business-like
manner, be more innovative in the ways in which it assists UK
SMEs and needs to focus more on enabling the skills of its staff.
2.2 The estimated cost of £250 million to
operate an organisation dispensing £100 million in financial
support would not be sustainable in the business world.
2.3 The services provided by UKTI are lacking
in innovation and need review and revision to meet the
current needs of UK SMEs to "help them help themselves."
2.4 The ability to make the skills of UKTI staff
available to would-be exporters is hampered by lack of focus,
bureaucracy and administration as well as, at the highest level,
inconsistent leadership.
3. BUSINESS
3.1 UK Trade and Investment (UKTI) calculate
it increased the return on investment it generates to 19:1 for
every pound spent. This is an incredible achievement in a period
when according to the Office for National Statistics, exports
rose by 2.2 %. Why do we spend so little (£70 million per
annum) in export trade support and at what point would additional
investment cease to produce a positive return on investment?
3.2 How is the 19:1 return calculated? Does it
include recent laudable orders by Rolls Royce (£1.9 billion
from Chinese airlines) and Qinetiq (£1.2 billion from the
US's NASA), which distort the performance of SMEs.
3.3 If UKTI costs £250 million a year to
run and it invests £70 million in trade support the 25,000
UK companies assisted in the past twelve months benefited from
an average of £2,800 per company. More funding is needed
to "make a difference" to those companies.
3.4 Serving two masters (BIS and FCO) makes it
difficult for UKTI staff to focus and confuses potential UK exporters
and prospective inward investors. There should be more focus on
overseas markets in which UKTI can "make a difference"
for UK SMEs. Without existing relationships, a UK SME it is statistically
unlikely to export to the 96 markets from Algeria to Yemen in
which UKTI has trade presence. If UKTI has 2,400 staff and costs
£250 million a year to run, the average cost per head is
£104,167. This appears high especially as 1,100 are UK based
and those overseas are not all based in high-cost of-living locations.
3.5 More stability and continuity in leadership
is necessary. Under the previous administration, UK trade, or
business, Ministers included Douglas Alexander, Margaret Beckett,
Stephen Byers, Richard Caborn, Alistair Darling, Lord Clinton
Davies, Lord Davies, Patrician Hewitt, John Hutton, Alan Johnson,
Lord Jones, Ian McCartney, Lord Mandelson (twice), Mike O'Brien,
Ian Pearson, Baroness Symons, Gareth Thomas and Brian Wilson,
not to mention Lord Sugar. What would you say of a corporation
that had so many people at the helm?
4. INNOVATION
4.1 The portfolio of assistance UKTI offers to
would-be exporters is "stale" and lacks relevance to
today's SME business management. It fails to address current "real-life"
conditions in UK SMEs. Currently UKTI offers Access to Major Buyers,
Alerts, Fiscal Stimulus Initiative, Overseas Market Introduction
Service (OMIS), Press Release Service, Sector-based Trade Missions
and Seminars, and Tradeshow Access Programme (TAP). Most of theses
activities are labour-intensive and do not represent a good return
on invest from UKTI's perspective. Companies need more help to
help themselves.
4.2 SMEs need help with translation, intellectual
property issues, tax relief, and information. Assuming UK plc
does not want to invest in companies unlikely to survive, thrive
and pay tax, end "match funding" and explore ways to
provide interest-free, unsecured loans (or tax credits), for translation,
successful filing of international patents and designs, and overseas
investment in sales operations.
4.3 Technology is not of itself innovative. Do
not invest in Going Global, "a peer to peer self service
community that will enable the sharing and tagging of information
on internationalization services..." as described by Mr Mark
Prisk, MP, Minister of State for Business and Enterprise. It might
be this gobbledygook has been employed to get around the pledge
of Mr Francis Maude, Minister for the Cabinet Office that "No
new websites will be permitted except for those that pass through
a stringent exceptions process for special cases..." Going
Global was described in the Minutes of a UKTI Executive Board
Meeting of 25 January 2010 as a service that could "exist
on the web" and in an IBM paper of 14 April 2010 as "a
proposed web service."
4.4 Assuming Going Global will not be a replacement
for the UKTI web site, it might be reasonable to suppose it will
require a promotional budget similar to the £837,000 spent
by UKTI on print, outdoor and electronic advertising in the twelve
months to 31 August 2010. Given the track record of information
services delivered electronically by UKTI at Uniform Resource
Locators to be viewed with browser application software (or web
sites) this surely cannot be a special case. If only for the sake
of the reputations of those involved, please bring a halt to this
project, which, as at 31 August 2010 had already incurred £36,906
in development costs. Viewed from a commercial perspective, these
costs are not business-like.
5. SKILLS
5.1 Many UKTI staff are over-loaded with administration
and bureaucracy to the extent that no matter how experienced,
well meaning and hard-working they may be, there is insufficient
time and motivation to perform to their potential. In 2009, 2,400
UKTI staff assisted 23,700 companies and 600 inward investment
projects: ten projects per person per annum.
5.2 UKTI has a "field sales force"
of some 300 International Trade Advisors (ITAs) with a "trade
services target" of £4.4 million. This equates to a
"sales quota" of £14,667 per capita per annum.
If UKTI is to compete with the private sector, it should surely
be done on an economically viable basis and increase the sales
skills of the ITAs, or free them from administrative processes
that detract from their "assistance" (unpaid consulting
and service selling) time. Further, 300 ITAs assisting 23,700
companies averages 79 per person per annum: one and a half companies
per week. This would not be found acceptable in a commercial environment.
UKTI should manage these ITA's rather than, as one example, South
East Trade & Investment Limited, a wholly owned company of
Great London Enterprise Ltd, which suggests unnecessary levels
of administration and bureaucracy.
5.3 The dedication and talents of UKTI staff
is beyond question. That so many errors are made in communications,
both printed and electronic, hints at pressures due to requirements
of activity rather than productivity. One example is, "More
than 75% of British small and medium-size businesses are planning
to export more goods and services in the coming year to more markets,
according to recent research in the United Kingdom." Given
the time to review and reflect, this statement on the UKTI web
site would surely not have been made. Other examples are available
upon request.
January 2011
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