Supplementary written evidence from the
Department for Business, Innovation and Skills Committee
1. At the oral session for the BIS Committee
on Tuesday 8 March, and again on Thursday 10 March, I agreed to
write to you following up on a number of specific issues raised
in our discussion. These are set out below.
TO PROVIDE
INFORMATION ON
HOW UKTI ARRIVES
AT THE
£19: £1 BENEFIT TO
COST RATIO
2. UKTI's Performance and Impact Monitoring Survey
(PIMS) covers some 1,000 customers each quarter (4,000 each year)
who have received services from UKTI in the previous four to seven
months. They are asked about their experience of the quality of
and satisfaction with these services, and the outcome they expect
for their business.
3. The PIMS interview is designed to ensure that
clients think very carefully about the concrete ways in which
the specific UKTI support they received has helped their business.
Following questions on the qualitative benefits of the support
- such as whether it gave them access to useful contacts or information
not otherwise available, and whether it enabled them to improve
their approach to an overseas market - they are asked specifically
whether the help resulted in financial benefit. If it had, they
are asked to quantify this benefit. After they have provided a
quantified estimate, they are asked what proportion of this profit
they believe they would have achieved without the help provided
by UKTI. This proportion is discounted in the final estimated
benefits.
4. The estimate, therefore, reflects customers'
own judgements about the value of additional exports and additional
profit they expect to achieve as a direct result of UKTI support.
5. Following various robustness checks, a mean
benefit was calculated which, when multiplied by the total number
of businesses who said they had been significantly assisted by
UKTI, gave a figure of £5.2 billion additional profit. This
represents an estimated £35 billion of total additional exports
resulting from UKTI's support. These calculations are made by
the independent research company which conducts the PIMS surveys,
and the number of businesses is carefully de-duplicated, so that
no business is counted twice, irrespective of the number of markets
in which they received UKTI help.
6. The £19:£1 ratio was then calculated
by dividing the £5.2bn additional profit by the total cost
of UKTI's trade service support in 2009-10.
7. In April 2009, the National Audit Office completed
their value-for-money report on UKTI's Trade Support. They found
that "UK Trade & Investment is making good progress against
its targets and has in place a robust system (PIMS) of assessing
delivery". They also noted that "UK Trade & Investment
has put in place extensive arrangements to obtain regular and
systematic feedback on the quality of its services".
8. In addition, as part of their annual work
on reviewing the appropriateness of Departmental performance measurement
systems, the National Audit Office concluded that the UKTI performance
measurement system (PIMS) merited their highest assessment, which
is "fit for purpose".
EXPLAIN WHAT
SUPPORT IS
AVAILABLE TO
BUSINESSES IN
THE UK TO
PROVIDE MARKET
INFORMATION AND
READY THEM
FOR EXPORTING
9. There are two programmes run by UKTI that
provide intensive, tailored help for companies wanting to develop,
or improve on, their exporting capabilities. Both programmes are
delivered locally by International Trade Advisers, most of who
have private sector backgrounds and have been exporters themselves,
and understand the practical problems firms face.
10. For new to export SMEs, Passport to
Export provides flexible help designed to meet individual
companies' needs. Typically, a company will receive an assessment
of their ability to export, help with an action plan to get them
started, training to help develop their capability, and help to
put their plans into action, including support to find the right
market and to make their first visit. Since Passport was introduced
in 2001, some 14,000 companies have benefitted.
11. A good illustration of the type of help provided
is the mandatory two-day developmental workshop delivered to Passport
companies in the East of England region, as a first step in their
12 month programme.
12. The workshop tackles SMEs' lack of focus
and planning for doing business internationally at the early stage
of exporting. It gives them intensive, focused, structured management
time in which to analyse their business, identify key issues,
learn about approaches and solutions, begin to make decisions
and commit to an export strategy. Full use is made of delegates'
own experience and knowledge and clients are challenged to focus
on and address key strategic decisions such as:
- Is export right for our business? (And is now
the right time?)
- Where should our priority geographical focus
be?
- What is/are the most appropriate route(s) to
market for us?
- What type of partner(s) do we need and how many?
- What will our proposition to the market be?
- What resources do we need to put in place to
make it happen?
13. This requires research and delegates need
to document their thinking throughout, identify issues they face
and decide what actions they need to take.
14. As well as strategy, discussion and learning
often include issues such as raising funding, getting paid, Intellectual
Property issues, cultural issues and logistics, depending on the
needs of the group. All these topics are covered in the workshop
materials.
15. Gateway to Global Growth was
launched on 1 April 2009. It is aimed at helping SMEs, with exporting
experience, to raise their game, including entering more challenging
markets overseas. The offer differs from Passport by focusing
on capabilities for widening and diversifying overseas business,
and placing greater emphasis on referrals to other services, including
charged-for help from private sector providers. Nearly 3,000 companies
had been signed on to this programme by the end of February 2011.
16. UKTI also has a number of specific services
which are often accessed as part of the above programmes but which
can also stand alone. These include free advice from professional
market researchers on how to conduct market research, as well
as the option of a grant towards approved market research projects
and a subsidised review from a communications expert on how to
overcome cultural barriers to exporting. This includes advice
on labelling and website design.
17. In addition, UKTI's Tradeshow Access Programme
helps new to export and new to market companies to participate
in trade fairs. Applicants are referred to an International Trade
Adviser who can help them prepare and make the most of their participation.
18. UKTI is also able to provide detailed, bespoke
subsidised help from UKTI staff, many of them locally engaged
with local knowledge, in our Embassies, High Commissions and Consulates
overseas. Help includes tailored information, contacts and on
the spot assistance, as well as help to launch a product or host
events for potential customers.
19. UKTI has made considerable efforts to raise
awareness of services through its web site and through appropriate
marketing activities, and through organisations such as Chambers
of Commerce and Trade Associations, links with banks and through
press articles.
20. UKTI also runs a variety of outreach events
based on regions, markets and sectors. These are both helpful
in themselves and enable companies to meet UKTI staff based in
the UK and overseas, who can provide them with more detailed help.
TO PROVIDE
UKTI BUDGET INFORMATION
ALONG WITH
DETAILS OF
THE INDIVIDUAL
ALLOCATION TO
COUNTRIES
21. Further information on budget allocations
will be available over the course of the next month, and I will
write to the Committee again when this information is available.
In the meantime, I thought the Committee might find it useful
if I explained: how UKTI is funded; how it funds the services
it provides; and what further information will be available in
the coming weeks.
How UKTI is funded
22. UKTI has three main funding streams:
- Its own directly funded UKTI Programme vote for
which the UKTI Chief Executive is the Accounting Officer and has
overall financial authority; and
- Funding contained within the Department for Business,
Innovation and Skills (BIS) and the Foreign & Commonwealth
Office (FCO), for which the UKTI Chief Executive has a level of
delegated budgetary control cascaded from the BIS and FCO Accounting
Officers as appropriate.
23. The funding in UKTI's Programme
vote pays for front line trade and foreign direct investment activity
including grants and business support services, for example Passport
and the Trade Show Access Programme (TAP).
24. UKTI's BIS administration funding
is ring-fenced within BIS, and pays for staff based in the UK,
and their associated costs.
25. UKTI's FCO funding is contained
within the FCO vote, and the UKTI element pays for front line
staff based overseas.
26. UKTI's budget profile for 2010-11 through
to 2014-15 is set out below.
UKTI Budget Baseline Profile for 2010-11
and SR10 (2011-12 to 2014-15) on a cash basis
(NB: not including inflationary impacts)
| 2010-11 | 2011-12
| 2012-13 | 2013-14
| 2014-15 | difference £m's
| difference % |
| UKTI programme | |
| | | |
| |
| Gross | 94 | 91
| 88 | 86 | 85 |
-9 | -10% |
| Income | 5 | 7
| 8 | 9 | 11 |
6 | 120% |
| Net | 89 | 84
| 80 | 77 | 74 |
-15 | -17% |
| | |
| | | |
|
| FCO total resource* | 204 |
| | |
| | |
| | |
| | | |
|
| BIS ring fenced admin | 40 |
39 | 38 | 36 | 33
| -7 | -18% |
| | |
| | | |
|
| Total resources | 333
| 327 | 322 |
317 | 277 | -56
| -17% |
*No further figures are currently available for FCO resource.
How UKTI funds its services
27. The UKTI programme vote funds our full range
of Trade and Investment activity, which includes: Support for
China Britain Business Council, UK India Business Council, Tradeshow
Access Programme, High Value Opportunities, Sector Events, Trade
Missions, Export Market Research Scheme, Export Communication
Review, Passport, and Gateway to Global Growth. Management of
these funds is via the UKTI HQ groups or through the regional
network of International Trade Advisors.
28. UKTI business planning enables the business-led Sector
Advisory Groups to provide a steer for the key trade activities
for the year ahead and enables UKTI to agree funding for activity
in market which best reflects sector priorities.
What further information will be available in the coming weeks?
29. We will shortly complete our planning process for 2011-12,
at which time we will be able to provide some specific information
by country. This will include: Numbers of staff (both UK based
and locally employed); funding for sector events in country; funding
for business development visits (visits by staff in post to meet
UK businesses in the UK); ring-fenced budgets to meet some elements
of local expenditure; and targets.
TO PROVIDE
INFORMATION ON
THE CREATIVE
INDUSTRIES STRATEGY,
RESPONDING TO
A PERCEIVED
LACK OF
FOCUS AND
SUPPORT
30. The Creative Industries International Marketing Strategy,
launched in September 2007 under the Chairmanship of Sir John
Sorrell, was developed as a partnership between the public and
private sectors.
31. Organisations and practitioners across the sector were
involved in its early development; this included conducting 66
in-depth interviews with key stakeholders plus a wider email consultation.
This consultation flagged a need for UKTI to develop closer relationships
with the sector, and establish an overarching senior level Board
representing the wider creative sector. Both BPI (Geoff Taylor)
and Simon Bell (Publishers Association) were involved in early
workshops on the approach and each organisation has continued
to sit on the Board. Music is also represented on the Board by
Doug D'Arcy (from Music Exports Group and Songlines). (NB: Feargal
Sharkey, UK Music, attended the meeting of the Board on 31 January.)
32. The aim of the Creative Industries marketing strategy
is to enhance the international competitive position of the UK's
creative industries, by raising awareness and improving perceptions
of the UK's creative offer; working with partner organisations
in the sector to develop the messages and activities; and to market
the creative industries as a whole as well as at cluster or sub-sector
level.
33. Successes of the strategy include:
- Sector-led marketing messages on UK creative strengths backed
by evidence, case studies and imagery, delivered via a web-based
toolkit, as a resource for UK business and government;
- A multi-screen film exhibition "Love & Money - 50
Years of Creative Britain" which has been used extensively
internationally (currently being updated);
- High impact events including a series of business focused
workshops around the Shanghai Expo covering advertising, architecture,
branding and corporate communications;
- Introducing a wider number of creative sectors and customers
to UKTI and the development of international strategies eg advertising,
architecture, designer fashion, and
- Delivery of UKTI support to 1000+ creative companies per year
(up from approx 350 in 2007-08).
34. There is a commitment from Board members
to publicise the messages and activities developed under the strategy
to their members and sectors, but no specific requirement to publicise
the strategy itself. The Board has acted as a critical friend
to UKTI in helping to enhance activities under the strategy.
35. The strategy is time limited and due to end
with showcasing activities at the Olympics in August 2012. It
has laid a foundation for the sector to take forward any further
strategic marketing work. Sir John Sorrell and the Board are currently
considering options for post-2012 activities.
TO CONSIDER
REPRESENTATION OF
THE CREATIVE
INDUSTRIES ACROSS
OUR BUSINESS
AMBASSADORS
36. We are considering the question of further
Creative Industries representation in the Business Ambassadors
Network and I will write to the Committee on this in due course.
18 March 2011
| 
