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Westminster Hall
Wednesday 8 February 2012
[Mr Andrew Turner in the Chair]
British Exports
Motion made, and Question proposed, That the sitting be now adjourned.—(Stephen Crabb.)
9.30 am
David Rutley (Macclesfield) (Con): Good morning, Mr Turner. It is an honour and a pleasure to serve under your chairmanship. It is also an honour to have secured today’s debate. I am grateful to Mr Speaker for selecting the subject, because I think it will provide an important opportunity for hon. Members to discuss matters that are critical to our economy and growth agenda. I take the opportunity to congratulate the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), on his recent promotion. It is good to see him here, and we look forward to hearing from him and the shadow Minister. I want to express my gratitude to colleagues and friends for turning up at the debate today. There is huge enthusiasm and energy for the subject, and I am sure there will be some stimulating contributions.
I declare an interest up front. I am a member of the all-party group on China, and I will explain why that is relevant. In December, I was fortunate to go to China for the first time on the all-party group’s visit to Beijing, Shanghai and Chengdu. It would have been difficult not to be impressed by the incredible growth in that country. I was told that 45 airports had been built in the past five years. The subway system in Shanghai, which is bigger than London’s entire tube network, was built in 15 years. In the UK, we would just about have got round to having a conversation about the possibility in that time. There has been real growth. We also went to Chengdu, which I confess I had never heard of before the trip. It is a small, second-tier town with a population of a cool 14 million and staggering growth of 63% over the past three years.
Capitalism is very much alive in China, as is growth to boot. During the week of my visit my world view changed completely, and I came back with enthusiasm for the subject of this debate. That underlines the fact that now is the time for UK plc to go east—just as China is taking forward its “go west” strategy—to try to unlock the opportunities in the vast interior as it becomes exposed to wider economic development.
In terms of context, Britain has a rich history in international trade. It has often been led by daring entrepreneurs looking for new markets, but during the last half of the 20th century, British traders somehow lost their enthusiasm, their sense of adventure and their pioneering spirit for searching out new opportunities. The irony is that that was at a time when the world economy was becoming more of a global economy. Successive Governments and businesses started to look for safe options in Europe and north America, and that must change.
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As far back as 1961, parliamentarians were expressing concern about those trends. In a debate, the Earl of Bessborough said—this may sound familiar to hon. Members:
“We live on an island, and the concept of exporting does not come easily to the people as a whole; nor does the man in the street recognise that we live or die by our international trade. To overcome this it has seemed to many of us that there must be support for a national crusade to excite the spirit, to revivify and stimulate every facet—I repeat, every facet—of the export drive.”—[Official Report, House of Lords, 22 March 1961; Vol. 229, c. 1155.]
They don’t make ’em like that any more. I love the word “revivify,” but unfortunately all that sounds a bit too familiar.
Not so long ago, we could boast a truly diverse international trade base. In 1910, our exports to India and China took up 11% of our traded goods. Today, that is 4%. Our challenge is to drive up much-needed exports, and to rediscover Britain’s trading talent.
Mike Weatherley (Hove) (Con): I am sorry to intervene so early. I speak as someone who owned a manufacturing company that won two Queen’s Awards for Export in the 1990s, and which exported to 49 countries around the world. Does my hon. Friend agree that part of the problem for small and medium-sized enterprises is the equity gap between what the banks will lend—usually up to £100,000—and what venture capitalists will lend—over £5 million? The in-between gap is the problem.
David Rutley: My hon. Friend is right. There is an equity gap, and I will talk about SMEs, which are the main thrust of my speech. From his experience, he knows more about the problem than I do, and I welcome his intervention.
There are some encouraging signs. We have seen a steady fall in our trade deficit from 4% of gross domestic product in 2007 to about 1% in early 2011, and that is beginning to help to rebalance the economy towards international trade. A recent article in The Economist reported that there are also signs of success in the motor industry. It was estimated that in 2011 the UK manufactured 1.5 million vehicles, and we exported three quarters of those. That is an important statistic, and I understand that Tata is considering expansion of its Land Rover factory at Halewood, and that Nissan will be looking to increase its production and capacity in Sunderland. It also exports to many countries around the world.
There is export success not only with motor vehicles and automobiles, but with life sciences. AstraZeneca manufactures many leading-edge pharmaceuticals, and we are seeing real success in Macclesfield where its major manufacturing plant accounts for 2.2% of the UK’s exports, which is a huge contribution. The Government’s life sciences strategy was announced in December, and sets out an approach by which we can obtain extra focus on the sector. One aim in the strategy is to create new partnerships in translational medicines and biopharmaceuticals between the UK and China so that those partnerships can enhance trade, investment, and research and development that will help us to have greater export success in that area.
Many hon. Members here can talk about, and will probably want to boast about, the export success of companies in their constituencies, but before they do,
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I want to take the opportunity to do the same. When I was preparing for this debate and when I spoke to more businesses in the Macclesfield area in north-east Cheshire, it became clear that there are some real export success stories. Plastic Card Services manufactures an innovative, biodegradable credit card, and is seeing huge success in Scandinavian markets. Its exports to foreign countries have risen from nothing to 25% in just a year. Over the past 10 years, Ukash, which is a provider of online payment services and has received the Queen’s Award for Enterprise for international trade, has increased its trade to 50 countries. It has a completely different international focus from many of the SMEs that, as a parliamentarian, I work with in Macclesfield.
Although there are success stories, it is important to come back to the challenge that has been alluded to. It is to improve our export performance across the piece, but particularly among SMEs, which is where the challenge is most marked. A short look at the statistics shows that in the UK, only one in five—25%—of SMEs export and are involved in international trade, compared with the European average, which is 25%, and in Germany it is above 30%. We must make a step change. As I said, the problem has existed for a while, but the size of the prize is huge. If we increased the penetration of exports by our SMEs up to the European average, we would wipe out the trade deficit in one fell swoop.
Chris White (Warwick and Leamington) (Con): I congratulate my hon. Friend on securing the debate. He referred to China. Does he agree that with the weakness of the eurozone market at the moment, UK Trade and Investment should try to focus more resources on emerging markets, such as south America and south-east Asia, so that our businesses, particularly manufacturers, have greater access to the fast-growing markets of the world?
David Rutley: My hon. Friend makes an important point. The good news is that UKTI has in recent months started to focus more efforts on emerging markets. I cannot speak about South America, but I know that more resource in terms of headcount is being pushed into markets in China and India, which I will mention later. It is good to see the Government responding to that good point.
David Simpson (Upper Bann) (DUP): I congratulate the hon. Gentleman on securing the debate. In a recent statement, the Secretary of State for Business, Innovation and Skills said:
“Securing…long-term economic growth is the Government’s highest priority. Helping entrepreneurs export to new markets and get access to the finance they need are critical to making this a reality.”
Considering the Asian market is estimated to be worth about $42 trillion by 2030, does the hon. Gentleman agree that it is essential that small businesses get access to finance and that confidence is recreated in those small companies?
David Rutley:
I thank the hon. Gentleman for that intervention. He raises a vital point—access to finance has come up again as a key dimension. The sad fact is, and I will mention this again later, that too many companies do not even want to export and are not
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aware of the opportunities, so there is a more fundamental problem. Hon. Members on both sides of the House have debated this problem for some time, but now is the time to get on and do something about it. We will talk about that and I am sure that the Minister will welcome further contributions from hon. Members.
How can we raise awareness and ambition, and the confidence that the hon. Member for Upper Bann (David Simpson) mentioned, to reap the rewards in eastern markets or, for that matter, South America? The Government and the business community—it is not just about the Government—can help SMEs to achieve their aims through three areas of focus: education, financing, which we have talked a bit about already, and, most importantly, access to new markets and customers.
On education, it is vital to get SMEs in touch with the best know-how on exports, and that will be one of the most important ways to help them to gain the confidence to want to export. UKTI has an important role to play, and its “passport to export” service gives a free capability assessment to businesses, which can help them to work out how they can be better prepared for the export work they want. However, I return to the point that only 20% of SMEs—one in five—are aware of the available services. It is a huge job just to make people aware that information is available.
One of the most important things that needs to happen is a lot more business-to-business mentoring to pass on experience from one company to another. I am pleased that the CBI’s pathfinder projects, which focus on mid-sized companies, are helping companies to build greater networks and opportunities. UKTI is building an export portal with Yell.com to connect first-time exporters with businesses that have experience in the area. I know, as I am sure other hon. Members do, that lots of local businesses want to pass on their experience to other businesses.
On Monday, I wrote an incredibly well-read article in The Daily Telegraph, which I am sure all Members have read several times over.
Mr Iain Wright (Hartlepool) (Lab): Absolutely.
I have had great feedback from at least one constituent, but it was a good response and it is the quality, not the quantity that counts. A gentleman from Fibrevision, which creates dynamic measurement tools for textile yarns across many countries, particularly developing countries, got in touch with me to say that he would be retiring soon and wanted to spend time passing on his experience to others in the community, and I am going to tap into that. With Lord Green’s work, there are lots of opportunities now to hold export seminars in our constituencies, and I hope that many Members here will participate in such events. It is important to welcome the energy that Lord Green has brought to the task. He is doing a fantastic job as Minister for Trade and Investment, and has given a lot of focus to his task. He has been travelling tirelessly across the country to raise the profile of this work, and he deserves our support.
Transferring knowledge and educating people will go only so far; without the finance to back it, it will be much more difficult for British business to see the success that we want them to have. Let me cite a
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different example to show what they are up against—or perhaps where we could start heading. In 2010, Germany’s export credit agency supported SMEs in the German market by facilitating €23.7 billion in exports. In the same year, only a small proportion of the £2.9 billion of business that UK Export Finance underwrote went to SMEs. Furthermore, the CBI survey shows that SMEs and other businesses are simply not aware of the available finance. To address the situation, UK Export Finance will now send trade finance experts into UKTI’s regional facilities and the regional network to bring the expertise closer to business, which is good to see. No doubt, the Minister will want to respond to the concerns raised by hon. Members about finance, but it comes back to awareness and building confidence. It is not only about money being available.
It is good to see that the Government are also building bridges to bring the east to Britain. The Chancellor of the Exchequer’s recent announcement of greater co-operation between financial centres in London and Hong Kong will help the City to become a hub for the Chinese renminbi currency market. It will also give SMEs an advantage over the competition, because they will be able to forge stronger links with the new market on their doorstep and get a step closer to customers in China.
In filling the gap in export finance, we should look not only at what is happening with the Government, but at what the banks should do, because it is clear that they, along with professional advisers, have a vital role in encouraging confidence and building momentum in exports and international trade. A poll of small manufacturing businesses found that 51%—just over half—believed that banks were not helping to support their export ambitions. We see that lack of confidence in other areas, but no doubt confidence in banks on this issue needs to be improved. As the Federation for Small Business has highlighted, banks need to promote better, more tailored products to help SMEs in their export ambitions.
I also welcome the Government’s allocation of £45 million to promote exports in other markets. As I said earlier, it is important to get front-line staff working in the new export markets, because what has to happen after education and finance, is that we must roll out the red carpet for our SMEs—make them feel welcome in such markets and to have worthwhile trade visits, particularly in their first forays into foreign markets. Although large companies are well equipped to take on this task, it is pretty clear that smaller businesses lack the know-how, contacts and network to see success in these endeavours, and we must support them.
For too long, UKTI and other Government bodies have spent too much time doing desk-based research, instead of getting out, knocking on doors, finding opportunities and bringing packaged solutions to big infrastructure problems or other projects in those markets. It is great to see the Government working in that area.
Lorely Burt (Solihull) (LD): I feel like I am in an exports master class, so I am enjoying everything that the hon. Gentleman says. I agree with him about the need for UKTI to get out from behind their desks and knock on some doors, but does he agree that the balance of UKTI’s recent work has been very much towards bringing in inward investment, perhaps at the expense of exporting and encouraging outward investment?
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David Rutley: I thank the hon. Lady for her intervention. She makes a very important point. Of course we need inward investment. We have seen success in that area and we need to continue to see success, but now, the focus needs to be on exports and driving success in that area. I know that she has made important contributions in debates on the subject.
On my visit to China, it was good to see people realising the importance of exports. We met the British consuls from Shanghai and from Chongqing. They are getting out and starting to knock on doors. There has been too much focus on research and, for that matter, paid-for research. I am much more interested—I think that others would agree with me—in knocking on doors. Any of us who have been involved with business know that it is about building relationships. People do business with people, not with pieces of paper.
Julian Smith (Skipton and Ripon) (Con): Does my hon. Friend agree that, to achieve his goal, UKTI needs an injection of private sector talent into the organisation? That would enable it to meet some of the targets that he has set.
David Rutley: I thank my hon. Friend for his intervention. That point is vital. It is true for many areas of Government interaction with businesses, but it is particularly true for the area that we are discussing today. There is a huge and staggering opportunity. I think that it has been calculated as being worth $43 trillion. Whatever the number is, it is pretty big. We have to redouble our efforts in that respect. We are certainly putting the headcount on the ground. There are 50 more people in China and 30 more in India, but my hon. Friend makes a good point about the balance of expertise there. Perhaps the Minister will also reply to that, because many of us who have had experience in the business world would suggest that it is time to get people with that experience involved.
Understanding the local cultures is also important. I have not spent a huge amount of time in China, but there are many Chinese-speaking individuals in the UK with business experience. My hon. Friend the Member for Bedford (Richard Fuller), for example, has spent a lot of time in Asia. That is the type of experience that we need to bring to bear to help us in this export drive.
Laura Sandys (South Thanet) (Con): I congratulate my hon. Friend on obtaining the debate. There is something that I do not think we understand and that certainly Government have never used to maximum effect. There are 220 languages spoken by British people in this country. We constantly talk about the language issue, but we have people who may be the first, second or third generation from certain parts of the world and we do not use them effectively as the right cultural interface, the right linguistic interface or, more importantly, as the people who are respected by business people in those countries, as opposed to the people who do not speak those languages being sent out as heads of trade missions.
David Rutley:
That is a vital point. I met a friend of mine who is a Chinese speaker and has an MBA. I do not think that she really understood the power that she has at the moment in helping to foster export opportunities and to build relationships. My hon. Friend makes an
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excellent point. I have to say that, as I think about this issue more and more, I increasingly wonder why our children are learning French at school.
[Interruption.]
This is not meant to be an opportunity to bash—
[Interruption.]
I think that the debate should be called to order, Mr Turner.
David Mowat (Warrington South) (Con): I can assure my hon. Friend that I have read his article in The Daily Telegraph, as has at least one of my constituents, so that is half a dozen of us in Cheshire. The question that interests me and that I would like to ask him is this. We talk about France and Italy. Both France and Italy export more per head worldwide and to the BRIC countries—Brazil, Russia, India and China—than we do, and they are doing that at a time when our exchange rate has depreciated by about one quarter and the Italian exchange rate has apparently been pegged to the euro and therefore is too high. Is there not an opportunity—the Minister might also wish to respond to this—for us to think as a country about what the Italians do in this regard that we do not?
David Rutley: It is an important point that we should learn from our international competitors and look at their success. We have been too complacent. We think that historical ties should automatically bring business to us. Well, I think that we are waking up to the fact that that is not the case any more—as we see—and we should not rely on those historical links. I think that we are too lazy. I can just about speak English and have a conversational understanding of Danish. As I was about to explain when I was so rudely interrupted by my hon. Friends, it is vital that more of our children learn Chinese at school. That has to happen.
I shall finish my speech shortly so that many of the hon. Members present can speak, because I know that they are enthusiastic to do so. We also need big businesses to want to include SMEs in their trade delegations. This is not only about what Government can do. Big businesses have to wake up and bring their supply chain in when they go on trade delegations to China or India. Helping to increase the international attitude of SMEs is vital.
Mr Russell Brown (Dumfries and Galloway) (Lab): Before the hon. Gentleman finishes, I want to draw his attention and that of other hon. Members to a specific issue. He has not mentioned the UK’s largest manufacturing sector—food and non-alcoholic drinks. It should be put on the record that, during the past six years, exports have grown year on year, that, in 2011, the figure for those exports hit £11 billion and that many SMEs are involved in that sector.
David Rutley: I thank the hon. Gentleman for bringing that to our attention. It is an important area. I can say with confidence that if my hon. Friend the Member for Penrith and The Border (Rory Stewart) is called to speak, he will be raising awareness of it as well, but I thank the hon. Gentleman for calling attention to it in the debate.
I know that there are huge and major trade initiatives that the Minister and Lord Green will be involved with in the year ahead and that will take up a huge amount
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of ministerial time. I am thinking of the India-EU trade summit, Russia’s World Trade Organisation accession and the Doha development agenda. All those things are very important. I trust that, in dealing with those issues, Ministers and officials will continue to focus on, and will give just as much focus to, the needs of SMEs. As today’s interventions show, that is a huge priority.
I believe that, in the end, Britain’s SMEs must go east, so that selling in Chengdu and Chennai is just as natural as selling in Cheshire. However, that cultural change will not happen overnight. The Government and the private sector must continue to build on the foundations that have been laid, so that SMEs make the full contribution that we believe they can make to our country’s growth agenda.
Mr Andrew Turner (in the Chair): As far as I can see, there will be six speakers in 43 minutes. I call Nick de Bois.
9.57 am
Nick de Bois (Enfield North) (Con): It is a pleasure to speak under your chairmanship, Mr Turner. I congratulate my hon. Friend the Member for Macclesfield (David Rutley) on securing this vital debate. I also congratulate and welcome to his post the Minister. He may be interested to know that yesterday, by coincidence, I received an e-mail out of the blue from a very old girlfriend who happens to live in his constituency. Having finally realised after 18 months that I was an MP, her first words were, “We have the lovely Norman Lamb.”
I am conscious of the time and the need for other hon. Members to speak, so I shall just highlight a few points. The recent euro debate focused on the fact—many people thought that this was a reason to tread very cautiously with Europe—that more than 40% of our trade is with the eurozone. My argument is that that trade is something to be respected, nurtured, looked after and, of course, developed if possible, but the reality is that no one would try to run a business with an over-dependence on one business partner for 40% of their trade. Therefore, it is vital that we look elsewhere.
I noted the comments of my hon. Friend the Member for Macclesfield about history. I do believe that we have relied on history, but I feel that we have failed to capitalise on a number of unique opportunities that reach far outside the eurozone and not just to the east. There are many countries that are growth economies where Britain is uniquely positioned to capitalise on its relationships, whether through historical links, the extensive diaspora that we have in this country from those countries or current strategic and political links. We need an analysis of where those factors merge with prevailing growth economies and economies that are deemed to grow in the future. We should take a snapshot of how we are doing and then realise the potential of what we can do.
Let me share one or two examples based on information from the Library. Britain is one of the few EU states arguing for active support for Turkey’s membership of the EU. However, the fact remains that the UK’s share of overall exports to Turkey is 1.2%, compared with Italy at 2.4%, France at 1.6% and Spain at 1.9%. If we
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start to analyse where we have links that go beyond just trade, we can capitalise on that for the benefit of trade. In a Commonwealth country such as India, it is surprising to note that we are being outperformed by the USA—that is perhaps not so surprising—and Argentina, with Germany and France close behind, according to House of Commons statistics.
I have more examples, but the trend I am trying to highlight is that we are now forced to look outside Europe. There is a wealth of opportunity not just in the east, but in the countries that fall within the criteria that I have mentioned. For example, on a recent trip as part of a delegation to Kuwait, I was intrigued to find out that more than 95% of the population is employed in the public sector. The country is about to embark on a large nationalisation programme—[ Interruption. ] Sorry, a privatisation programme—I stand corrected by the look on the face of the hon. Member for Hartlepool (Mr Wright), who clearly welcomed my mis-statement. However, the UK has unique experience and expertise. Kuwait is embarking on major power plant construction and massive infrastructure development, and our recent links with it should set us apart from many other countries, given that it wants to do business with us, shares a history with us and is open to our companies knocking on its door. That is a place we can look to go to.
How can we do that? The Government have a role to play, as do parliamentarians. What does business actually want from Government? Essentially, businesses faced with the prospect of exporting immediately face a number of barriers, and I experienced them myself. Those barriers will deter even many of the most hardened and determined individuals from reaching into export markets. Although I support the comments of UKTI, we need to be candid and to recognise, as the CBI said in “Winning overseas” in November 2011, that businesses see UKTI as having the Marmite effect: for some, it has been absolutely marvellous, but for many others it has not fulfilled its role or managed to match businesses’ needs with the services provided by the Government. However, that is something that we can improve and build on, and I refer Members to the CBI’s document, which I found extremely constructive and helpful.
From the Government, we are now seeing a commitment to leading trade delegations and opening doors in regions that have been ignored, and the Gulf countries are a good example. However, we cannot do these things through just one visit; we have to maintain a consistent, permanent and ongoing relationship, and I welcome Lord Green’s work, as it is a major start. With all due respect, however, there is a wealth of talent across the Lords and the Commons that should be put to use in helping consistently to develop regions at a lower level. That should be done in a way that carries with it the respect and authority not only of the individual’s heritage, but of the country that is opening its doors to them, as it sees them conscientiously rebuilding relationships.
Let us be candid: when we get to these other countries, we will need to break down the barriers to exports. We as politicians can reduce some of those barriers, such as customs and complicated legislation, in ways others cannot; we can fight our corner and support British companies. We also need to bring in contacts. I would be proud to say that I am a salesman for Britain and that I am opening doors by using the levers at our
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disposal, as that will allow us to have influence and to bring delegations along, whether from prime contractors or from SMEs riding on the back of prime contractors. We can show companies what they can achieve and give them the contacts.
However, more needs to be done. I welcome Lord Green’s initiative, and our job, in our country and in our constituencies, is to start emphasising the opportunities to export, while explaining how we can offer practical help. I do not want to be the same business man I was 20 years ago. When I first started, I wanted to export to Switzerland, although I will not bore Members with the details. I rang the embassy for advice, and the first thing I was told was, “The markets here are very good for ball bearings.” That still sticks with me as the most useless piece of information that I received, because I could have found it out during my geography O-level all those long years ago. I want to feel that the Government can put in place people who have worked in business and who can actually help businesses to reach out, break down barriers, make contacts and sell. That, crudely, is what it comes down to, and that is how we can help.
I hope the Minister will take on board the fact that the Government are setting the right direction and starting to break down doors, but let us do that consistently and permanently. Relationships are not born out of one visit, but out of a commitment to a region over a period of time. We need patience, and we need to use it to help businesses to meet the cultural and business demands of a variety of regions and to take on markets where we are being beaten, when we should actually be streets ahead.
10.6 am
Laura Sandys (South Thanet) (Con): I thank my hon. Friend the Member for Macclesfield (David Rutley) for securing this extremely important and prescient debate. In many ways, we will have a challenging time over the next 10 years generating growth domestically in the UK and across the eurozone. Our international trade and inward investment—the responsibility of UKTI—will be crucial in ensuring that we keep ahead of the game and deliver growth for the UK.
My experience is pretty varied. In many ways, I was a very small exporter. I have worked for the Peruvian Government and the Georgian Government, and I had an office in Istanbul. I also did quite a lot of work in Africa and central Asia. I have therefore seen a lot of these issues from the UK, the intrepid traveller and the travelling salesman perspective, arriving in a country and not necessarily knowing who the key players were or how to make things happen.
If we are to support the system, there are probably three big challenges that need to be met by the Government, as well as by large exporters, as my hon. Friend the Member for Enfield North (Nick de Bois) rightly said. One is getting more SMEs to think about exporting. The initiative developed by Lord Green and my hon. Friend the Member for Stourbridge (Margot James), which sees us, as constituency MPs, generating interest in exports, is crucial.
There is, however, something interesting about how we look at exporting, particularly in relation to SMEs. Everybody I speak to says they are going to do an export mission and to take people out to country X, Y
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or Z. Very few people say that the most important thing for an SME is not going abroad, but having the first sale abroad or the first inquiry from somebody who is quite interested in their product. The internet is a big platform for that. I spoke to UKTI on Monday, and I was a little concerned that it was not looking at helping SMEs to translate one or two of their webpages into two or three different languages. That is very simple; people do not need to get on a plane or to do market testing. SMEs could also put their price list into euros and include export duties for three or four different markets that might be useful for their product. We can do a lot without getting the SMEs to take that leap of faith—to jump on that plane or pay UKTI to organise an event.
The other issue with it, which people, and particularly Government, do not understand about small businesses, is that time is money. If I have to spend three or four days in a market where I do not know anybody and I do not know whether it will be successful and I have three or four customers back in the UK or in Ireland, where will I put my focus? Let us start helping these smaller companies market-test. The internet is a good way. There are brochures and there are different ways of us doing this, but let us not always think that we have to send people out for those initial stages.
Julian Sturdy (York Outer) (Con): My hon. Friend is making a powerful point, but we do have to send people out to these developing countries at certain times. If we are going to capitalise on the BRIC countries and some of the other developing markets that people have talked about, must we not improve our aviation links? If we do not, there is a danger that we will lose out to central Europe on this.
Laura Sandys: My hon. Friend has a good point. Of course one has to encourage people to go abroad. One also has to encourage them to understand how these countries work in terms of culture and not just language. Experience in these countries is crucial. My hon. Friend’s point about aviation is well made and has been made particularly in relation to China, where we do not have those links and where we have to go to Europe to access some of those growing markets.
The second point I want to make is about the cultural side. I cannot emphasise it enough: there are 220 languages already spoken in this country. People already have these links. In this country, there are small and medium-sized companies that are run by people who have cousins, relatives, uncles and aunts who have equivalent companies in the countries of their origin. We are not using that. We are trying to expend a lot of money teaching a lot of fantastically able Foreign Office officials lots of different languages, but we already have the languages in this country and we have the business communications. Having been in small business myself, I know that small businesses have a similar language around the world. I would possibly find it easier to talk to a small business in China than a scientist in England. We understand each other; we have the same rhythm. Please, let us use the assets that we have.
The third point, which in many ways has been covered by my hon. Friend the Member for Enfield North, but which is also crucial, is: are we incentivising large exporters
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to bring their supply chain with them? That is not just on trips, but as part of the overall offering. In many ways, it is a little bit of a waste of our resources when we have big trade missions and we take Rolls-Royce and BAE Systems and all these fantastic companies. They can afford the air fare. They already have operations based in these countries. If they led a trade mission that had their full supply chain and their full level of SMEs and medium-sized manufacturers, I can see why we would be doing it. We have, however, to start focusing on delivering, as the Germans do, in that middle market of entrepreneurs, giving them the confidence, ensuring that we are out there making the business contacts and securing the confidence that those SMEs need, because they are our best advert for recruiting new SMEs.
I welcome what the Government are doing. There is a new emphasis and a new impetus, but let us use the assets that we have and let us get out there and sell and know that selling is a grubby, but very important and worthy business. Sometimes Governments do not necessarily enjoy getting involved at that sharp end.
10.14 am
Mr Robert Syms (Poole) (Con): First, I welcome the Minister to his post. We look forward to what he has to say later. I congratulate my hon. Friend the Member for Macclesfield (David Rutley) on securing an important debate. We do not talk about these issues enough in this House. It is vital to the future of our country that we get out and sell both manufactured goods and the services that we produce, because that is the only way that we will remain a first-class economy.
Poole, although it is a place with sandy beaches and is pleasant to live in, has a lot of industrial estates and a lot of small companies that are successful. It has a large number of people employed in manufacturing. When I go around, all the companies that are involved in exports seem to be very busy. If the trade figures have not turned yet, I am sure that at some point they will. All the evidence that I see on the ground is that the devaluation and the rebalancing is taking place and will eventually show results.
One of my biggest companies is Sunseeker, which employs nearly 2,000 people. It exports nearly all the yachts that it produces. There are not many people in this country who can afford a £20 million, £30 million or £40 million yacht. It is a great exporter. We have companies such as Siemens, which, although it came in for some criticism recently on the rail contract, is a great British company. It may be German-owned, but it has been in this country for a century and in terms of exports and investment is important to the UK. Siemens in Poole exports to China, the United States and all the way around the world. It produces a lot of the technology for the congestion zone and a lot of signalling technology and it is cutting edge. There is a whole array of businesses.
I want to pick up on a few concerns. There is an equity gap. There are some small successful companies that want to grow and they face a dilemma: they either have to sell, or, if they do not sell and remain owned by their existing directors, they cannot raise the equity or the loans from banks to be able to expand. I have come across a number of companies in Poole that say that they could double or treble their turnover—a lot of it by export—but they cannot raise sufficient funds from
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the banks. That is the main area where they are being held back. It is not that they cannot sell the products; it is that they cannot raise the capital. That is a big issue.
Jeremy Lefroy (Stafford) (Con): I welcome this debate. Does my hon. Friend agree that the business growth fund—not the regional growth fund—set up by the banks precisely to put equity into such businesses should look at companies that are slightly smaller than the current benchmark? There are plenty of businesses employing 30 or 40 people which could double their employment and vastly increase turnover if they had access to that particular fund, where the limit is currently set a little high.
Mr Syms: My hon. Friend makes a good point. We still need to zero in on the small growing companies to see how we can help them with equity and loans.
The other thing is the supply chain. When one hears of a big export order that requires offset, that often means British suppliers down the line losing the ability to supply a big export order. What frustrates many small companies in my constituency is trying to get on the tender list of Rolls-Royce and British Aerospace. I went to see one company that was convinced it had the best product at the best price, but it could not get Rolls-Royce to buy its product. Rolls-Royce bought a German product and that same company beat the German company to supply the Germans with the same product. That was supplying the air tanker project in Germany. It was that frustration. We need a speed-dating process, so that small companies can marry up with British Aerospace and Rolls-Royce, which have been tremendously successful, to see whether we can supply some of these big companies, which are used to getting their supplies from all over the world when there are people in Poole, Macclesfield and, no doubt, Penrith who could produce the goods. There could be a degree of import substitution, simply because we marry up British skills and British companies. That needs to be considered.
The other area I want to touch on, which affects a lot of companies in Poole, where we have communications and quite a lot of military stuff, is the licensing regime for exports. I get a lot of moans from British companies when they have to go through the export licensing process. The difficulty is that it goes into Whitehall and weeks go by. It is difficult when someone is trying to promise the person they are supplying a delivery date for a product and they do not know what is going on. I think that the Government need to go back and look at this. Of course we must have proper safeguards and licences for some of the equipment that we export, but at the moment I am not sure that the system is helping those exporters.
Northey Technologies, a local company in Poole, was supplying the Chinese nuclear programme and had two export orders approved, but the third, for an identical product that they were selling, was held up for three or four months while the Government decided what assurances they needed. I repeat that the third order was identical to the first two, which were approved. Eventually, the Chinese went elsewhere.
The other day I visited AB engineering, another great local company in Poole, which produces robots for defusing bombs—one of two companies in the UK producing those. Of course, because of our experience
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in Northern Ireland we produce some good robots for doing that. That company exports all the way around the world. I said to the managing director, “You’ve asked me to visit your company. I’m impressed with what you do. Do you have a message for me to take back to the Government?” He said, “Yes, it’s the export licence regime. It’s frustrating. We find it difficult. We can’t find out what’s going on and there are occasions when sometimes we lose exports.”
My main message for the Minister is this: being new to his post, will he please go back and have a look at this area and see whether we can make it a little more efficient? Perhaps we could, at least, have a card system so that people can know when they will get a decision. The most frustrating thing is when people have an order for a good product but find that the Government are not getting on with the process of licensing it when it should be properly licensed. Anecdotally, people think that, since the Arab spring, the Foreign Office has got a lot more involved in exports, which has made things a lot worse.
We have some great British companies and some enterprising people. Going around the world, people will find some Scotsman on top of a mountain trying to sell British products. The reality is, though, that if we could do what we do well a little bit better, we could get better outcomes.
Mr Andrew Turner (in the Chair): There is six minutes for each speaker if Lorely Burt takes over.
10.22 am
Lorely Burt (Solihull) (LD): I will adhere to that, Mr Turner.
I congratulate the hon. Member for Macclesfield (David Rutley) on securing this important debate and my hon. Friend the Minister on his elevation; I am sure that he will make a brilliant Minister.
I think that the need for growth is driving every hon. Member in this Chamber. Growth is the engine that will get us out of the financial difficulties that we were left in when we came into coalition government. I attended a Federation of Small Businesses dinner last night at which our Chancellor was speaking. He talked about the importance of exports and the key role of small businesses in driving exports. Small businesses have a pivotal role to play in leading the recovery, because they are flexible and responsive to changing circumstances and to opportunities which can arise even in difficult times.
I am proud of this coalition Government’s approach to international trade. I am told that no Minister is allowed out of the country without a trade brief in his or her briefcase. It is important to recognise the value of emerging markets, not just our traditional European trading partners: in parts of Europe there are a lot of opportunities, but in other parts it is not so good. Colleagues have mentioned China, India and Brazil, which are important areas that we need to exploit.
UKTI provides a wide range of help and services to business. A number of colleagues have mentioned small business help and the need for more of it. On export credit guarantees, I would much prefer to see the help going to small companies rather than to some of our larger companies—perhaps those that are selling quite a
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number of arms at the moment. For example, why not extend the supplier credit finance facility to small businesses—the guarantee to a bank for a loan for sums larger than £25,000?
We could do more. The hon. Member for Macclesfield has already mentioned that we do not punch at our weight in respect of exports, compared with other European countries. There are things that we can do. Consider UKTI, for example. The hon. Gentleman talked about getting people out from behind their desks and knocking on the doors of local businesses. I berated the regional development agencies for being far too insular and expecting small business to come to them. The whole emphasis must change. We must be far more outward looking and inclusive.
I was particularly impressed by the hon. Member for South Thanet (Laura Sandys) talking about the internet. It is so obvious, but we do not often talk about that as a mechanism for encouraging and enabling exports, particularly for small businesses.
The hon. Member for Poole (Mr Syms) mentioned speed dating. Why not have business-to-business mentoring? I mean speed dating in the strictly business sense, of course. Perhaps I am just compounding my error. I will change the subject quickly. We can do a lot of things. Our local enterprise partnerships can help as well, as can the chambers of commerce.
Manufacturing is playing and will continue to play a key role in exports and in attracting inward investment, because we have all the tools and abilities in this country. The coalition Government are seeking to rebalance the economy. The west midlands, which is my area, is excellent at high-end, advanced manufacturing. Sadly, manufacturing shrank under the previous Labour Government from 20% to 12% of our gross domestic product. That is shameful.
We have major export opportunities. The hon. Member for Macclesfield mentioned Jaguar Land Rover. Automotive is our No. 1 manufacturing export. Jaguar Land Rover has already expanded its Solihull plant and the i54 plant and it is taking on 1,000 people. There are a great number of things that we can do. We have aerospace, chemicals, agri-food and energy, so it is up to us to have a multifaceted approach to ensure that all of us—Members of Parliament and every facet of Government, as well as employers’ bodies—work together to increase that emphasis and ensure that small businesses, particularly, get their fair share of the pie.
10.28 am
Richard Harrington (Watford) (Con): I had hoped to be called earlier, Mr Turner, by currying favour with you on the basis that I was at college with you some 35 years ago, but I was disappointed. However, I am delighted to be called now.
I congratulate my hon. Friend the Member for Macclesfield (David Rutley) on securing this interesting debate. I shall keep my comments to two points, because we are short of time.
On the export market generally, on the face of it, our performance is not as bad as it appears. For example, our exports as a percentage of GDP, if invisibles are included, are much the same as France’s and Germany’s.
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The 2010 figures, according to the Library, show us at 29% of GDP, Italy at 27% and France at 25%. However, those figures are just the surface, beneath which we have a culture in this country, developed over many years, which means that many young people do not even consider going into business, let alone the export sector. There have been other debates, both here and in other parts of the Palace of Westminster, about that culture, and I believe that part of the problem is cultural.
I am sure that if I were to go to the equivalent of a Watfordian sixth form in Germany and ask, “Who wants either to go into their family business or to start up a business?” the number of young people answering, “It’s business for me,” particularly with exports in mind, would be significantly higher than in Britain. Very few of our contemporaries at Oxford, Mr Turner, went into business, and I am sure that very few people nowadays even think about that. At university, people are pushed towards professions and careers such as ours—to which I am a recent recruit, in later life—which, good or bad, certainly do not benefit the economy or assist growth in the rest of the country in the same way as being in a business, particularly an export-led one, does. The issue is very much a cultural one.
One learns to take things as one finds them, and in my travels, both in my constituency and abroad, I have found UKTI to be of almost no help whatsoever to prospective exporters. I will give just one example, because time is limited. A few weeks ago I was asked to go to Mainz, a town in Germany that is twinned with Watford—obviously Watford in many ways is far superior to Mainz, or to anywhere else in the world, but for some reason it is twinned with it. I spoke there at an inward investment conference about investment in Hertfordshire. I was very embarrassed that the UKTI rep in Mainz—which is obviously not in the middle of Africa—did not even speak German. I found that absolutely appalling. When I questioned Lord Green, for example, at a recent Conservative China group breakfast, he could not even say what exports we make to China.
Whatever the Government say, there is no real hardcore business culture in this country as far as exports are concerned. Yes, everyone tries—politicians, the previous Government, this Government. The Foreign Secretary makes speeches saying that we are going to turn the Foreign Office into an organisation that supports business. It is nonsense. On recent visits to five African countries with the International Development Committee, I asked the ambassadors who the main importers into those countries from Britain were, and they did not know. Our ambassador to Burundi, which is a small country with a very small population, said that there was almost no British trade there, and so I had to tell him that one of my constituents, who is also a friend, exported products there. The culture exists in the minds of politicians and some other people, but the reality is very different. People do very well in business in this country without even considering exports. Exporting is not part of the culture. I accept the points that Members have made about the credit and equity gaps, and about financing. That is all well and good, but there is no burning desire to export. The view is it is very difficult, and hard to make money out of—it is just not in our psyche.
There are exceptions. My good friend and fellow Watfordian, Dr Rami Ranger, has a business called Sun Mark Ltd, which exports to 160 countries. Despite all
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the talk of our lack of efforts in the BRIC countries—Brazil, Russia, India and China—he has recently exported his Bullet energy drink to such countries as Venezuela, Honduras, Belize and Surinam. He is the Burundi man, the Rwanda man—he exports to 160 countries. He has not even heard of UKTI. He does not need to go to seminars held by Lord Green, or anything like that, because he is someone of Indian origin who thinks internationally and is used to driving for business and exports, despite the obstacles put in his way by the 50% tax, national insurance and everything else. He is loyal to this country. He could locate his company anywhere in the world but he has it in Britain, and we need a lot more of that kind of thing.
Our international development efforts are very commendable, and are supported by both sides of the House, but because of tied aid, which used to be something whereby arms were sold from countries that gave aid, there is a fear on the part of the Department for International Development of getting British companies involved in its activities, when there are perfectly benign contracts all over the world for cars, agricultural products and so on—so many worthy things. I am sure that it is against European law to show favouritism to British companies, and it would not be the right thing to do, but there is no mechanism whereby our companies are informed, encouraged and invited to tender. Why do we buy 100 Toyota Land Cruisers in Africa, without even pushing British companies to bid?
Everywhere we go with the International Development Committee—other members of the Committee are here today—we see so much money being spent. I am not saying that we should have favouritism, but there is no real feeling that this is British taxpayers’ money, and we have to try to help British companies, providing the objective is right, that money is not spent where it should not be, and that it is not more expensive. These things have to link together, and that is what I ask the Minister to consider—it is what the Government should be doing. We are proud of our international development efforts, but they should be linked to trade in the nicest possible way.
10.35 am
Rory Stewart (Penrith and The Border) (Con): I thank my hon. Friend the Member for Macclesfield (David Rutley) for securing this debate.
I want to touch briefly, in a very short time, on the ramping criticism of UKTI and the British Government. The point is, of course, that the situation of British exports is extremely complex. Germany is doing well not because the German diplomatic service is far better than the British one. In fact, the German diplomatic service is in many ways not half as well supported or prestigious within the German administrative system as the British one is. Nevertheless, there are some small things I believe we could do to improve our exports. We do not have a silver bullet. No consul-general in Istanbul will alone be able to double UK trade and investment with Turkey by 2015, but it is important to understand what we can and cannot do with this funny network of embassies.
We first must understand that the business of trade, at least regarding the embassies, is very long term. Britain’s calamitous failure in Brazil is not about a lack
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of short-term energy from individual British Governments, but about decades of lack of focus. The reason that countries even such as the Netherlands are well ahead of us in their trade with Brazil, and why Germany, France and Italy are doing better than us, goes all the way back to French investment in and support for the first universities in Brazil and German investment in its first industrial plants in the early 20th century. We have already heard about Italian success in Turkey, and that considerable success—Italy is a long way ahead of Britain in trade with Turkey—has been built up over decades, since the first Fiat investments in the 1960s, and it means that there are now 18 flights a day from Milan into Turkey, and an enormous range of small and medium-sized Italian businesses on the ground in a way that our businesses are not. If Britain is now to be serious about that kind of thing, we need to do three things. We need to look at unexpected countries, look at unexpected products, and change the culture of UKTI.
Regarding unexpected countries, a focus on BRIC countries might turn out to be a bit misguided in the long run, and in a sense we have missed the boat, I am afraid, with countries such as Brazil. However, one reason that we cannot become so centred on insulting the Foreign Office and demanding privatisation and a commercial focus is that often our diplomatic missions turn out, in the long run, to be very useful.
Take, for example, Mongolia. There was huge pressure 15 years ago to close our embassy in Mongolia, with people saying, “Why do we bother having an ambassador there? Who cares about Mongolia?” and then the country turned out to have an extraordinary range of assets—natural resources—which are about to make it the country with perhaps the largest gross domestic product per capita in that entire area of Asia. Our diplomatic network, therefore, is partly an investment in low-probability, high-impact events, exactly such as that one. The investment is, as some people have pointed out, less than our investment in the winter fuel allowance, and it pays off again and again through such unexpected opportunities. The same, if I were to be bold, could be extended to a whole series of peculiar countries. The Falkland Islands, if they continue to discover 500 million barrels of oil in the northern reaches, seem set to become a sort of Dubai with penguins.
Those are extraordinary opportunities for us, and we might take them even further. It is not just about second-tier countries such as Indonesia; we should even be looking at countries such as Pakistan. We tend to see Pakistan simply as a failed state, but it is a potential market, within the next generation, of 300 million people with an extraordinary focus on IT. Of course, we also have 1.5 million British people of Pakistani origin who can help us trade there.
Places such as Cumbria show us the astonishing range of unexpected products that we have. Innovia in Wigton, with 1,000 employees, exports 90% of its products. We have Steadmans, designing glittering gold roofs for the Bahrain air show. We have people making forges in Alston winning Queen’s export awards and people selling used photocopiers to China. We sell gluten-free food products into the Balkans.
Let me finish with sheep. The agricultural export market is massively untapped, and that is exactly where an embassy can be useful. The reason that our sheep are not in Saudi Arabia is not that New Zealand is
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outcompeting us but that we have been denied health certificates throughout the middle eastern market. It is an enormous market. The Arab appetite for sheep is almost unstoppable. Britain is just beginning to go into surplus. Our sheep industry employs 130,000 people. Agricultural exports should be a good example.
The key to all those opportunities in unexpected products and markets is the energy and culture in UKTI, in order to give people the drive and leadership to want to explore those opportunities. We in Britain should look back not at our Victorian past but at our Elizabethan past, when a buccaneering, trading, earring-wearing rogue state took its goods all the way around the world.
10.41 am
Mr Iain Wright (Hartlepool) (Lab): It is a pleasure to serve under your chairmanship, Mr Turner. This debate is important, and I congratulate the hon. Member for Macclesfield (David Rutley). I have a lot of affection for Macclesfield. My big hero is Ian Curtis of the band Joy Division, who lived, died and is buried in Macclesfield. I also congratulate the Minister on his new position. I wish him well in his role. Given the turnover of Liberal Democrat Ministers, I am confident that he will be Secretary of State by Christmas.
Today’s debate has shown that there are huge opportunities for British export, but that we do not tap into our full potential. The world’s economy is expected to double in size by 2050. Much of this debate has focused on BRIC countries. There is some scope to expand our opportunities into BRIC countries, especially as China moves from an export-led production and manufacturing model towards internal domestic consumption, but I think that the second tier—the N11 or next 11 countries such as Indonesia, Turkey, South Korea, Nigeria and Vietnam—are exactly where we need to focus. I agree with the hon. Member for Penrith and The Border (Rory Stewart) that we have often missed the boat. We need to be at the forefront of trade with N11 countries.
The UK has world-class sectors. Our automotive sector, which has been mentioned, contributes about £40 billion of turnover, and 80% of its production is exported. The oil and gas sector, which is strong in my area, exports about £32 billion of goods, services and project management skills. Just this morning, I was at a breakfast meeting with ADS. The UK aerospace, defence and security sector exports about 70% of its output, or about £23 billion of products. The quality, reliability and innovation of those products are seen throughout the world, and we should be proud of them.
However, this is not just about traditional manufacturing sectors. The UK video games and interactive entertainment sector is worth £3 billion to the national economy at the moment, and global demand is expected to rise by about 10% year on year. We lead the world in that sector. “Batman: Arkham City”, produced by Rocksteady Studios in north London, sold 2 million copies in its first week of release. No CD or record—not even by Joy Division—has ever achieved that. We should be exploiting it as much as possible.
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We have much to be proud of, but we cannot be complacent in this modern, competitive world. We cannot say that our exports have performed to their full potential in the post-war era. Given the intense competition of this arms race—I do not think that that is too strong a term, considering the issue’s importance and intensity—Britain needs to compete with optimum efficiency.
I agree with the CBI when it says:
“We are not alone in seeking growth through exports—other advanced economies are facing similar constraints and are looking to boost their export performance. We cannot spend another decade simply playing catch-up: we need to be bigger and bolder in our ambitions.”
“We are not being ambitious enough with our choice of markets and our decline in goods exports is unsustainable if we want to lead an export-orientated economic recovery.”
It has been mentioned that the UK is far too dependent on traditional, slow-growing economies. Some two-thirds of all UK exports go to the US and the EU, but in the next decade, those markets will probably not grow at all. There has been much talk of balancing the economy. I hope that the House would agree that it is necessary to rebalance trade policy towards new and emerging companies.
I stress that exports and trade policy do not operate in a domestic or an international vacuum. We cannot consider exports and trade performance in isolation from the rest of Government policy. I urge the Government to implement an active, co-ordinated industrial strategy. I fear that we are a long way from that at the moment, but everything that the Government do must be considered in terms of its impact on our trade performance.
The Government’s economic policy is having an effect on business confidence and growth. The business confidence index published this week shows that confidence in negative territory. By all accounts, we are back in official recession. Turnover is depressed, there are no export growth areas and exports are not bouncing to take up the slack left by subdued domestic demand. I hope that the Government will address that.
David Mowat: The shadow Minister is discussing the present lack of industrial policy. In the decade between 2000 and 2010, we went from being the fifth biggest exporter in the world to being the 13th, way behind countries such as Italy. In his judgment, why did that happen?
Mr Wright: That is a consequence of the world growing in different ways and a symptom of the long-term decline in our export performance. As I said, we need to make a concerted effort to do something about it. Many of the invisibles kept up well during that decade and levels stayed similar. However, the thrust of my argument is that we need to raise our game.
Every Minister—not just Business Ministers—and every aspect of Whitehall should be charged with promoting British exports, but all too often, policies are not joined up. The immigration cap indicates that Britain does not want to act as a beacon for the world’s best and brightest, and there is a perception among foreign businesses that it will act as a brake on export growth.
Aviation policy was mentioned. A recent report suggests that a lack of direct flights from the UK to emerging markets might be costing our economy £1.2 billion a
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year in lost trade. Firms naturally trade where there are good and co-ordinated transport links. In my area of the north-east, the Emirates service between Newcastle and Dubai has tripled trade between the two areas in the four years since it started. The hon. Member for Macclesfield mentioned Chengdu. There are no direct flights from the UK to Chengdu, but there should be. British Airways does not run a service from the UK to Seoul in South Korea, although I admit that other carriers do. The Government should work closely with airlines to address that.
I turn to last week’s disappointing announcement that the Indian Government might place an order for fighter jets with French manufacturer Dassault, rather than with Eurofighter Typhoon, in which the British BAE Systems plays a huge part. The Prime Minister paid a lot of political capital with regard to that. The Opposition do not want to do anything to compromise the deal. We will support the Government in ensuring that Britain can be successful, and we think that there is still considerable scope to succeed, but I hope that lessons are being learned within the Government. Frankly, as has been touched on in this debate, the Prime Minister jetting off for a one-off PR stunt is no substitute for deep and meaningful Government-to-Government relations.
The French are particularly adept at this, and President Sarkozy’s courting over many months of Prime Minister Singh seems to have reaped rewards. Will the Minister outline the steps that are being taken to ensure that the Eurofighter stays in the game? On a wider point, what will the Government do differently to ensure more meaningful and therefore more successful contact to secure trade for Britain?
On UK Trade & Investment, I do not want to focus on cuts, but the context is important. UKTI’s budget over the next four years has been cut by 17%. In contrast, Ubifrance’s budget saw an increase of 14.2% in 2011, while that of Germany Trade & Invest increased by 10%. The Minister, fresh with his red box, will no doubt spout the lines that tough choices need to be made and that austerity is required to clean up the mess that we left behind, but does he really believe that reductions to this country’s foreign trade organisation, at a time of acute global competitiveness and when our main competitors are increasing their budgets, are sensible and will not hurt Britain’s export drive?
In the time remaining to me, I want to touch briefly on one of the key barriers to trade, particularly for small and medium-sized enterprises, namely access to finance. Will the Minister update us on progress made on the actions outlined in the plan for growth, which was published almost a year ago? How many SMEs have been helped as part of the UKTI’s passport to export initiative? How many firms have taken advantage of the export enterprise finance guarantee? The plan for growth produced three new products designed to mitigate the risks for exporters and potential exporters. How many have taken that up?
Britain has a long history of trade across the globe over many centuries. I liked what the hon. Member for Penrith and The Border (Rory Stewart) said about the need to look not to our Victorian past, but to think further back to our buccaneering in Elizabethan times. We need to address the intense competition. I would hate to see our successors in 50 years’ time lamenting the failed and missed opportunities of the first half of
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the 21st century in relation to the expanding global economy. The Minister is fresh in office and could make his mark by ensuring a competitive and co-ordinated policy across the Government and with business, so that we can sell British goods and services across the world, thereby creating jobs and wealth for this country.
10.52 am
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb): I thank hon. Members for their kind good wishes, including the encouraging words from my own constituent—it was a relief to hear them—quoted by the hon. Member for Enfield North (Nick de Bois). I congratulate the hon. Member for Macclesfield (David Rutley) on securing this important debate. He made some incredibly important points and focused in particular on the role of small and medium-sized enterprises. It is critical to address how we can get more SMEs exporting, and I will return to that point in a moment.
We have heard about a large number of success stories and we need to go out and argue the case for what is already happening among many companies in our constituencies. Many Members have also highlighted barriers that need to be challenged and tackled. The hon. Member for Watford (Richard Harrington) focused on cultural barriers. We have to encourage our youngsters to think about becoming entrepreneurs and exporters. That needs to be seen as a good thing to do. The hon. Member for Penrith and The Border (Rory Stewart) is correct that long-term investments need to be made to win new markets. We have strong cultural links with many countries. As the hon. Member for South Thanet (Laura Sandys) has said, 220 languages are spoken in this country and they link people to their countries of origin. We need to exploit those links to our advantage, and I think that they are there to be taken.
This debate is timely—tomorrow is the first anniversary of the trade and investment for growth White Paper. Published early in the Government’s tenure, the White Paper made clear the importance of rebalancing our economy. Growth over the past decade was based too much on debt and consumption, and we need to refocus on export. If we are to rebuild our economy, exports are critical, and I think that there is agreement throughout the House on that. My hon. Friend the Member for Solihull (Lorely Burt) made the essential point that the need to rebalance our economy, build sustainable growth and create jobs through international trade and investment must be a priority for us all.
We are a trading nation with a rich heritage to which many hon. Members have referred. We have looked outwards, but in recent years there has been a sense of complacency about our role in the world—it is almost as though we have had a sense of entitlement. We need to challenge that, be hungry and show the buccaneering spirit that has been mentioned. We need to position ourselves to take advantage of the new opportunities for growth, particularly in respect of the non-traditional trading partners. We need to work with renewed energy to ensure that all parts of our economy are working together to get the message across that Britain is open for business. The global economy is highly dynamic and very competitive. We need to be more energetic to win new business.
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In response to the points that have been made, I want to focus on three key issues. First, how can we get more companies, especially SMEs, to export? Secondly, I want to outline some of what the Government are doing to help ease the flow of export credit to exporters. Finally, I want to say something about what the Government are doing to help more British companies into the fast-growing markets of the east and the south.
Many hon. Members have focused on the first priority. A vital part of increasing exports is to get more companies exporting. My colleague the Minister for Trade and Investment, Lord Green of Hurstpierpoint, has set out an ambitious programme for increasing the number of SMEs that export. As I think the hon. Member for Macclesfield has mentioned, only 20% to 23% currently export, compared with the European average of about 25%, and the figure is higher in Germany. We need to get an extra 100,000 SMEs exporting over the next four years to reach the European average. That is a bold, ambitious, but achievable goal, and one on which we must focus.
Achieving that increase in the number of exporters is not something that the Government, through UK Trade & Investment and UK Export Finance, can do alone. Last November, at the IMAX at Waterloo, the Prime Minister launched the national export challenge. This major partnering event brought together all those organisations and trusted advisers that can reach out to companies with messages about trade and exports.
The banks face a big challenge. They have the contacts with businesses, but a recent poll showed that many small manufacturers do not feel that they are getting the support that they need from their banks. Banks and other organisations need to reach into the business community that provides a direct route to the decision makers who really matter—the directors and managers who live day by day with decisions about how to maintain and build their competitiveness.
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Lord Green is also overseeing changes to UKTI, about which there have been many comments. The changes are bringing in private sector expertise, which has been mentioned, to strengthen UKTI’s leadership, and outsourcing services to private sector deliverers. That, coupled with an extra £45 million secured by UKTI in the autumn statement, has set it on a course to double the number of companies that it helps from 25,000 to 50,000. Lord Green has also overseen the launch of new packages of export credit finance from UK Export Finance that now meet the specific financing needs of SMEs.
Companies that start to export show increases in productivity. They are exposed to new ideas and better use of resources. Their competitiveness and business sustainability also improve. UKTI and UK Export Finance can help those companies with advice and support, but the Government recognise that other partners and intermediaries have a crucial role to play.
Following on from November’s launch of the national export challenge, UKTI and UK Export Finance have held a series of seminars around the English regions. The most recent was in Yorkshire and Humberside on Monday this week. I encourage all Members—this point has been made; there is an enormous amount of expertise in and experience of business in the House—to get involved in such events and encourage businesses in their communities to think about the export opportunities that are available.
As Lord Green has said on many occasions, to reverse the decline in the UK’s trade balance is a marathon, not a sprint. We now have in place the ground work on which to build, including the active engagement of UKTI and UK Export Finance with support networks, and the targeted support of SMEs at trade fairs and on missions overseas.
Mr Andrew Turner (in the Chair): Order. It is time for the next debate.
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Broadcasting of Court Proceedings
11 am
Mr John Whittingdale (Maldon) (Con): I am pleased to have the opportunity to hold a short debate on the subject of the broadcasting of court proceedings. I should perhaps make it clear at the start that I am not a lawyer. I have appeared in court, but only in the jury box—never as counsel and not yet in the dock.
However, during the past few months, both in my capacity as Chair of the Select Committee on Culture, Media and Sport and as Chair of the Joint Committee on Privacy and Injunctions, I have had dealings with many lawyers. In respect of the Joint Committee on Privacy and Injunctions, I read the report of the committee on super-injunctions recently prepared by the Master of the Rolls. I want to quote the opening section, in which the Master of the Rolls states:
“It has been a fundamental principle of the common law since its origins that justice is conducted, and judgments are given, in public.”
He then goes on to quote the Lord Chief Justice, who said only last year:
“Justice must be done between the parties. The public must be able to enter any court to see that justice is being done in that court, by a tribunal conscientiously doing its best to do justice according to law…In reality very few citizens can scrutinise the judicial process: that scrutiny is performed by the media, whether newspapers or television, acting on behalf of the body of citizens. Without the commitment of an independent media the operation of the principle of open justice would be irremediably diminished.”
I could almost end there, but I want to go on to say a bit about the background to the matter.
The ban on television cameras stems from a section of the Criminal Justice Act 1925, which I understand was passed to prevent the distraction caused by exploding flash bulbs of cameras in court. Of course, at that time television had not even been invented. Since then, there has been a long debate about whether our courts should be opened up to allow greater access to the media.
The debate about television cameras has been going on for more than 20 years. In 1989, Jonathan Caplan on behalf of the Bar Council produced a report that came out broadly in favour of allowing television, subject to certain very strict controls. Nothing then happened until 2004 when, after discussions between the Department for Constitutional Affairs and the broadcasters, it was agreed that a pilot scheme would be allowed to operate for a few weeks in the Lord Chief Justice’s court and then in the Master of the Rolls’s court.
That pilot scheme was never broadcast, but it demonstrated that the televising of court proceedings could be done without causing great distraction or disruption, or creating the dangers that people had spoken about. The broadcasting of proceedings could be done very discreetly and, most importantly, it could be completely controlled by the judge. During the pilot scheme, on a couple of occasions the judge pressed the button he had to shut off broadcasting. A large number of people have seen the results of that pilot and, as far as I am aware, it is generally regarded as a success. The pilot scheme did not lead to any great concerns being expressed and most people felt that it was a step forward both in allowing people to see the workings of the court and increasing understanding of the judicial procedure.
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Although the pilot scheme was generally deemed to have been successful, nothing then happened. However, there have been one or two developments outside the English and Welsh court system. For instance, the Scottish courts have allowed very controlled broadcasting, but because anybody can object, it has not been used very much. When the Supreme Court was established, it allowed some televising of its judgments. Despite the fact that those are largely fairly detailed legalistic debates, I understand that the streamed feed from the Supreme Court made available by Sky has had a lot of viewers. Indeed, there have been around 50,000 this year, with 14,000 recently watching the ruling on the Assange case.
There have been other judicial procedures during which television cameras have been allowed, such as the Chilcot inquiry, the Hutton inquiry and, of course, most recently the inquiry carried out by Lord Justice Leveson. Given the fact that I am involved in considering similar material, I have been watching the proceedings of Lord Justice Leveson’s inquiry with great attention. Those proceedings have been carried in considerable part on both the Sky News channel and the BBC News channel. There are also plenty of examples in other countries. In fact, Britain is one of very few countries left that does not allow any televising of its judicial proceedings. Most comparable countries in the developed world allow broadcasting; indeed, even China and Russia allow broadcasting of their court proceedings.
So if the arguments are so strong, why has it not happened? There have been objections. A long-standing objection is that broadcasting proceedings might lead to grandstanding and that people will play to the cameras and want to become celebrities in their own right. I was not a Member when television cameras were introduced in the House of Commons, but I was active in politics and I remember precisely the same arguments being made then about what would happen with MPs’ behaviour and that they would similarly perform to the cameras. In large part, that has not occurred. Indeed, I think most people regard the broadcasting of Parliament as having been a great success.
There have also been objections that somehow the media might distort coverage, presenting a slanted view, and that there will be a loss of objectivity. Of course, any televising of court proceedings would be subject to the same restrictions on court reporting that exist at the moment for other forms of media—for example, not revealing the identity of jurors or of potential rape victims. Those rules would apply equally to television cameras as they do to newspapers. One has to say that in general—not just in terms of the coverage of judicial proceedings—television has a better record than newspapers for impartiality and objectivity because it is governed by strict rules requiring it to be impartial and objective.
I shall illustrate a recent case where the televising of proceedings certainly had a beneficial effect for me. I had read a great many fairly lurid accounts, particularly in the tabloids, of the Amanda Knox case and the murder in Italy. Many people felt such reports were not entirely objective and, indeed, that they suggested very strongly that Amanda Knox was guilty. I happened to be away at the time of the appeal hearing in the Italian courts, which was carried in large part on Sky News, and I watched much of the proceedings, including the broadcast of Amanda Knox appearing in the witness box. At the end of the proceedings, I had considerably
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more doubt about the case. Therefore, when the court delivered its verdict that she should be released and was not guilty, it came as less of a surprise than it would have done to those people who had only read about the case in the tabloid press. That is an area where broadcasting can increase understanding and serve justice well.
It is easy to think of cases that will obviously be attractive to the broadcasters. Such cases will not only be sensational, lurid murder trials, although I have no doubt that some of those will be broadcast. I shall give three recent examples where there would have been real merit in having broadcast coverage. The first—this is a painful subject for all of us in this place—is that of the recent trials of MPs for abuse of their expenses. There was a huge public interest in people who were paid from the public purse, and it was very important that it was shown that nobody should be above the law. If those trials had been broadcast, they would have received a lot of interest and coverage.
Secondly, there were the riots, and the cases involving those who were convicted of rioting last summer. Again, there was a very big public interest. There was, perhaps, a lack of understanding about some of the sentencing policy. If people had had the opportunity to see the judge deliver a sentence and explain why he had reached that decision, that would also have increased understanding.
Thirdly and most recently, there was the Stephen Lawrence case. The fact that justice was finally done received huge coverage in the newspapers. It would have been even more powerful if the case had been broadcast and people had had the opportunity to see justice finally being done.
I was therefore extremely pleased to hear the announcement by the Lord Chancellor last September that the Government intend to move towards allowing the televising of court proceedings. Of course, there should be a step-by-step approach.
Mr Andrew Smith (Oxford East) (Lab): I congratulate the hon. Gentleman on securing this important debate. I agree with the thrust of his argument. It is important that justice is not only done, but, as he says, seen to be done.
On the step-by-step approach, does he agree with the points made by the Master of the Rolls in his speech to the Judicial Studies Board on 16 March 2011? He asked,
“from a public interest perspective might there not be an argument now for its hearings”—
“and some hearings of the Court of Appeal, being televised on some equivalent of the Parliament Channel, or via the BBC iPlayer.”
Broadcasting court proceedings could start there. We could then see how that goes, and extend it later.
Mr Whittingdale:
I agree entirely with the right hon. Gentleman. The pilot scheme started in the Court of Appeal. In their review of the pilot scheme, the broadcasters said that they would have liked it to have gone further, and that it should have been allowed to cover Crown court proceedings, and perhaps to have shown witnesses as well as the counsel and judge. That needs to be done
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in a step-by-step way. There are genuine concerns and to allay them, we need to proceed gradually. I hope that in due course we will have much greater access, but let us start, as the right hon. Gentleman and the Master of the Rolls say, with the Court of Appeal. That would be a major step forward and is, I think, what the Government hope to do.
The obstacle is the requirement for primary legislation. There is no doubt that it will take time for the rules to be worked out, and secondary legislation will probably be needed to set out in detail how this will work. However, none of that can begin to happen until there is primary legislation. The broadcasters—in a letter that was sent this week by the head of BBC news, the chief executive of ITN and the head of Sky news: a joint letter from all three of the main news broadcasters in this country—have stated that they are very keen for the process to get under way, but that primary legislation would be required in the Queen’s Speech. My request and plea to the Minister this morning is not just to confirm the Government’s intention to move gradually and carefully down this road, but to do so at the first opportunity—the Queen’s Speech.
In conclusion, this is a reform whose time has not just come, but is long overdue. I hope the Minister agrees and is able to provide us with more details this morning.
11.13 am
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly): I congratulate my hon. Friend the Member for Maldon (Mr Whittingdale), who is the Chair of the Culture, Media and Sport Committee, on securing this timely debate. In an impressive and knowledgeable speech, he presented a view that is fairly close to that of the Government.
Open justice is a long-standing and fundamental principle of our legal system. Justice must be done as much as it must be seen to be done if it is to command public confidence. As my hon. Friend set out, the Master of the Rolls said last year:
“Public scrutiny of the courts is an essential means by which we ensure that judges do justice according to law, and thereby secure public confidence”.
Very few people have direct experience of court proceedings. In principle, our courts are open to all members of the public who wish to attend, but in practice very few people have the time or opportunity to observe what happens in our courts in person. For many, the criminal justice system is still seen as opaque, remote and difficult to understand. We need to make it a reality that our courts are open and accessible to as many people as are interested in seeing them work.
Media coverage is often the prime source for public understanding of the criminal justice system, and many people base their views of the courts on their portrayal on television or film. Those dramatised accounts inevitably do not give an entirely accurate portrayal of what happens in a court case. The Government and the judiciary are committed to improving the public’s understanding of the criminal justice system through increasing transparency. The more informed people are about the justice system, the more confidence they will have in it.
Our evidence shows that a key element of confidence in the criminal justice system is how fair the public believe it is. People want information that has not been
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spun about what happens to criminals and why. The majority of respondents to the Department for Constitutional Affairs consultation on broadcasting in courts in 2004 believed that broadcasting could increase understanding of court processes and make courts more accessible. That is why the Government believe that removing the current ban on filming in courts will improve public understanding of the justice system.
The Lord Chancellor and Secretary of State for Justice announced last year that the Government plan to allow judgments and sentencing decisions in cases before the Court of Appeal, in both the criminal and civil divisions, to be broadcast. We intend to introduce legislation to give effect to those reforms as soon as parliamentary time allows, although I cannot, as I am sure my hon. Friend the Member for Maldon appreciates, pre-empt the Queen’s Speech. We are working very closely with the judiciary to take that work forward.
My hon. Friend made a case for the eventual full recording of all trials. That is not being reviewed at the moment, although I appreciate that he understands that a step-by-step approach, which was how he put it, will be required. Over a longer period, we expect to extend broadcasting of sentencing remarks to the Crown court, given a reasonable time after the introduction of broadcasting in the Court of Appeal.
All hon. Members will remember the media furore over the O. J. Simpson trial in the United States of America, and, more recently, the trial of Michael Jackson’s doctor. My hon. Friend mentioned selected excerpts from the Knox case. The Government and the judiciary will not permit our courts to become show trials for media entertainment. We therefore have no current plans to allow the broadcasting of trials from the Crown courts, other than sentencing remarks.
Currently, the Criminal Justice Act 1925 prohibits anyone taking, or attempting to take, a photograph in any court except the Supreme Court. Furthermore, the Contempt of Court Act 1981 prohibits the use of a tape recorder, or other device, to record the audio of the court proceedings. Primary legislation, as my hon. Friend made clear, will be required to amend that legislation, and any proposals the Government bring forward will be subject to proper parliamentary scrutiny and debate.
With certain limited exceptions, most courts are open to the public, and journalists are allowed to be present in court and report what they see and hear, subject to reporting restrictions. At the end of last year, the Lord Chief Justice published new guidance for journalists wishing to use live text-based communications, including Twitter from mobile phones, in courtrooms during the conduct of a court case. Journalists and legal commentators no longer need to apply to use text-based devices to communicate from a court during a case, although the presiding judge always retains full discretion to prohibit such communications in the interests of justice.
Broadcasting of court proceedings is not without precedent in this country, as my hon. Friend made clear. We already allow broadcasting of live footage of the UK Supreme Court, and many people watched Julian Assange’s appeal to the Supreme Court last week. All hearings in the Supreme Court can be viewed online from anywhere around the world through the live stream on Sky’s website. Figures from the first three months of broadcasting from last summer show that that stream was seen 139,000 times, proving there is a public appetite
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for watching court proceedings. Limited televised excerpts from inquiries—my hon. Friend mentioned the Hutton and Leveson inquiries—have been broadcast, and have engaged the public as they have progressed.
We must remember, however, that the courts deal with very serious matters that can affect the liberty, livelihood and reputation of the parties involved. It will be vital that proper safeguards are introduced to ensure that the parties are treated fairly, and that their rights are respected. Our paramount concern in opening up our courts to broadcasting must remain the proper administration of justice.
We are very clear that television must not give offenders opportunities for theatrical public display. Offenders will not be allowed to be filmed, and we are clear that the judge will have the right to stop filming in the event of any demonstration or disruption in the courtroom. We will also not allow victims, witnesses or jurors to be filmed. Victims and witnesses will be protected, and we will not introduce any measures that would make their court experience even more difficult or make them even more reluctant to give evidence. We are seeking the views of victims’ groups on our proposals, and potential safeguards to ensure that the identities and rights of victims, witnesses and jurors are protected.
Mr Whittingdale: I accept, of course, that this will be a step-by-step process, but I hope that the Minister will not close his mind completely to the suggestion that eventually witnesses should be allowed to be televised. I know that it is not the same, but I chair televised hearings, one or two of which have achieved quite large audiences. I know that appearing before a Select Committee may be intimidating, but I do not think that it makes a great deal of difference if it is broadcast. The fact that witnesses are appearing in a parliamentary forum may be intimidating, as it might be in a court, but the cameras are very discreet, and people are largely unaware of them.
Mr Djanogly: Such an inquiry may be similar to a criminal trial, but often it is not. The circumstances and sensitivities may be different, as may the outcome.
Existing reporting restrictions on cases will continue to apply to broadcasting, and in all cases the judge will have the final say on whether proceedings should be broadcast. We are considering how to ensure that any use of the footage is appropriate to the dignity of the courts as part of the legislative framework. This will not happen overnight. The 2004 pilot of filming in the Court of Appeal, which was not for broadcast, demonstrated that it is possible for cameras to be allowed into courts without disrupting the administration of justice. However, before any plans can be agreed, we must take into account the views of a wide range of interests, and we will have discussions with the judiciary and others to ensure that we have considered the complex legal, practical and technical issues.
Allowing the broadcasting of judgments and sentencing remarks is one of a number of measures intended to open up the court process to the public, including to those who do not have the occasion or opportunity to attend court in person. The Government are committed to providing the public with information on the operation of public services in their area, and the justice system is no exception. We are taking significant steps to open up
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the courts to the public, and to get as much information as possible about their performance at local level into the public domain.
On 24 November last year, we published anonymised, individual-level sentencing data by court so that the public can see what sentences are being handed down in their local courts, and can compare different courts on a wide range of measures, such as timeliness. At the beginning of this year, on 12 January, we published performance data for individual courts that enable local communities to find out how their local court is performing on a range of measures. The data include, among other measures, information on case timeliness in criminal, civil and family courts, and the proportion of cracked and ineffective trials at the Crown court. That represents a significant step forward in keeping the public informed about how the courts are operating in their area. In May, we will go a step further and provide justice outcome information on police.uk. That will enable the public to see what happens after a crime is reported—police actions followed by justice outcomes—and will reinforce the link between crimes being committed and justice being delivered.
In addition to the new data we have published on court performance, the Government have taken other steps to provide the public with information on how the criminal justice system works. For example, our release on court-level sentencing data in October 2010 was made available in a user-friendly format on the “Making sense of criminal justice” microsite, and was significantly more popular than normal statistical releases. Crucially, the data were released alongside the award-winning “You be the Judge” tool, which aims to promote public understanding of the sentencing process. The Government believe that providing adequate contextual information to increase public understanding of the criminal justice system is key to making data meaningful to the public, and we plan to provide such information with every transparency-data release.
I believe that the crime and justice sector is at the vanguard of transparency across Whitehall, and good progress has been made to date. However, we are committed to making the justice system more transparent, and I am confident that we will continue to make good progress in this area. The Government believe that television has a key role to play in increasing public confidence, and that is why we plan to introduce broadcasting from courts. However, although it is important for justice to be seen to be done, it is more important that justice is done. The administration of justice remains our primary aim, and our proposals to permit broadcasting from courts will not be allowed to affect that in any way.
11.25 am
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Rural Schools
[Mr Mike Weir in the Chair]
2.30 pm
Mr Jamie Reed (Copeland) (Lab): Today is not the first time that we in this House have discussed the future of small rural schools and I do not believe that it will be the last. I have to make it clear—this view will be shared by colleagues—that I am not interested in listening to any redundant polemic. Instead, I want to illustrate the plight of small rural schools, particularly the crisis facing Captain Shaw’s Church of England school in the village of Bootle in my constituency, and suggest some potential policy solutions for small rural schools, which I hope that the Government will be minded to support. The Minister will state that such decisions are for local education authorities and he would be right in part to identify that accountability, but I hope that pressure can and will be brought to bear by him and his Department, not only on this policy area, but on Cumbria county council with regard to its treatment thus far of Captain Shaw’s school and the community of Bootle.
My constituency of Copeland is the English constituency most remote from Westminster. Whether by plane, train or car, it is a minimum journey of six hours from Whitehaven, the constituency’s largest town, to Westminster. As the Minister knows, Copeland sits within Cumbria, the second largest county in the country, with a population just below 500,000 people, 50% of whom live in rural communities. This poses unique policy challenges in every area, from health to economic development, and many of those require unique local solutions, which a Government of any colour are required to get behind. However, none of that removes the Government’s obligations to the people of Cumbria and, in this instance, the people of Bootle.
I am delighted to hear that the Minister was in Cumbria this week. I hope it is not the last time that we see him there.
Bootle is an outstanding community. Situated within the Lake District national park, it is a truly beautiful place. The village—I use that word despite some residents telling me that it was essentially given town status by Edward III with the granting of a market charter in 1348—is an incredibly beautiful place that was described by the renowned writer and social campaigner, Doreen Wallace, in her landmark book, “English Lakeland”. She stated:
“To see Bootle is to love it.”
She was right, but Bootle has seen huge change in recent decades. Its employment base has been threatened and it has faced the same challenges faced by other rural areas throughout the country, but these have been amplified given the unique nature of Cumbria and Copeland.
Right now, Captain Shaw’s school is the centre of Bootle: it is its beating heart, its focal point and, in many ways, its pride. If Captain Shaw’s school is taken away from Bootle, the consequences will be profound. Not only will the village suffer a huge blow in terms of status and civic pride, but the message given to the pupils at that school will be one that is frankly cruel, even brutal. The message is, “We don’t back you, we
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don’t believe in you, we don’t share your aspirations, we don’t understand your ambitions; you are on your own.” I cannot accept that, the people of Bootle cannot accept that and the children should not be subjected to the psychological impact of that.
The reality is—I will touch on this issue again later—that we see the ambitions, aspirations, qualities and hopes of our communities in our schools. I have visited Captain Shaw’s on a number of occasions. It is a unique school: the smallest school in the country’s second largest county, in the furthermost English constituency from Westminster. It currently has a roll of 16 pupils from 4 to 11 years old. Every time I have visited the school I have been impressed by it. There is a genuine warmth and passion about the school and the pupils demonstrate a tremendous sense of pride and belonging. The building that they occupy is more than 180 years old, yet it is in very good repair inside and out. It has excellent ICT facilities. It is modern on the inside and has a good play area outside.
The school, as I have mentioned, mirrors the community. It is doing more than simply getting by. It is handsome, notable and unique. It is supported by an indomitable community spirit and is proud of its past and ready to take on the challenges of the modern world. I could wax lyrical about the school for a long time, but the independent Ofsted evaluation puts it even better than I ever could.
In the latest Ofsted report, Captain Shaw’s school is rated as a good school. In fact, the inspector noted that,
“this is a good school which has an excellent ethos of care, guidance and support. It is a highly valued member of its local community, with which there are excellent links benefiting pupils. On leaving Captain Shaw’s, pupils are confident, independent and self-assured young people. They possess excellent social skills which contribute to their outstanding behaviour and positive attitudes to others”.
The report is glowing in other areas too, rating the school as outstanding in the effectiveness of its care, guidance and support for pupils, but it is in lead inspector, David Byrne’s, letter to pupils and parents after his inspection that the true nature of Captain Shaw’s school and its place within the Bootle community is revealed. He wrote:
“Your school is quite special. It is very much at the heart of your village and local area and makes a vital contribution to the lives of many, not just those learning or working in the school.”
I really could not put it any better than that.
Despite the school’s small roll, it is viable. Development plans are already under way, supported by the national park, to develop Bootle sympathetically with new housing, including some affordable housing, which would make the school even more viable. In addition, the pupil-teacher ratio at the school is very good indeed, at a level that many people around the country would choose to pay for in an independent school. I do not hold independent schools in higher or worse esteem than our other schools, but it is perverse that anyone would seek to remove from a community such as Bootle the kind of provision that would be valued, privately paid for and even envied in other parts of the country. This really is the worst kind of policy-making myopia. With that in mind, it is entirely relevant to mention that the decision to close Captain Shaw’s school has been taken by a county council that is headquartered 62 miles and a one and a half hour drive away from the community in question.
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Before issuing its closure notice, Cumbria county council undertook a consultation on what it called
“proposed changes”.
I have a tremendous amount of respect for Julia Morrison, Cumbria county council’s director of children’s services, who has begun to make a real difference in Cumbria since her recent arrival, but I think I speak for everyone in Bootle when I state that nobody believed that this consultation was ever going to result in anything other than the closure of Captain Shaw’s.
I speak as a former press officer for Cumbria local education authority. There have been a number of attempts to close Captain Shaw’s over the years, none of which has ever been successful because the case for closure—I have seen this from the inside—could never be made.
My first request to the Minister is as follows. The Government have a presumption against the closure of rural schools and have stated that they want to protect them. I share that ambition. Captain Shaw’s is strong and viable and I call upon the Minister to put this policy into effect and intervene in this instance. Even in its closure consultation, Cumbria county council recognised that the number of pupils at Captain Shaw’s is likely to rise and euphemistically acknowledges that
“village life would clearly not be enhanced by its closure”.
Small rural schools can be outstanding. The outstanding St Bridget’s school in Parton, also in my constituency, is proof of that, as are many others. I pay tribute to the work done at St Bridget’s and, in fact, to everything that that school does, not just for its pupils and their parents and some pupils’ carers, but for the village of Parton as well. Once again, the case is made that schools like this are the key to the success of the communities that they are based in.
In one of its final reports, the Commission for Rural Communities published “Small school: Big Communities —Village schools and extended services”, which I commend to hon. Members, including the Minister. The report focuses upon extended provision as a key policy solution with which to help sustain rural schools. It is right to do so. It also mentions that extended services help to break the link between poverty and poor educational outcomes.
The report states that rural poverty is often hidden. I should like to dwell upon that for a moment, because despite its obvious beauty and despite some obvious individual affluence, Bootle is not a rich village. Poverty exists in parts of Bootle and is magnified by its rurality and peripherality.
I am sick and tired of redundant notions of rurality running riot across the House, in all political parties. In the mind’s eye, some in the House see rural areas as occupied by corpulent farmers chewing blades of grass and leaning on gates and, moreover, as simply a playground for those who have wealth and who have left urban areas to gentrify the countryside with large homes and Range Rovers. They never see the young farmer struggling to stay afloat and they rarely consider what it means for people who have no access to public transport and, as a result, to the schools, hospitals and other services that their taxes pay for as much as anyone else’s. They never see the struggling villages that are fighting every day to stay alive, which have never known affluence, and the pensioners, parents and children who occupy this forgotten country.
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Sir Alan Beith (Berwick-upon-Tweed) (LD): In that context, does the hon. Gentleman share my concern that some of the public debate about planning policy has suggested that people in rural areas do not want to see any building or development at all, whereas actually having some houses that local people can afford—usually to rent—so that we have children in the schools is very important to them?
Mr Reed: I share the right hon. Gentleman’s concern. All too often, people—especially those who live in or adjacent to national parks—are treated almost as living museum exhibits. That policy attitude has to change and to change fundamentally.
That viewpoint, to which the right hon. Gentleman alluded, must change. As the economic squeeze worsens, as the public sector and the state retreat further and as areas of market failure become ever more prominent, all of us need to pay urgent attention to the plight of ordinary people in that forgotten England, because they need our help and they have little or no interest in the colour of our rosettes. That is why village schools are so important. They can act as the lynchpin for extended services in a community, through the provision of other public services such as general practice, citizens advice, tourist information or even banking. By doing that, they give us the best possible chance of reaching all the people I have mentioned and more, but particularly those most at risk of social exclusion.
“Small village schools are in close contact with families and have a track record of providing good outcomes for children. Based in isolated communities, small schools may hold the key to engaging the most disadvantaged families, but their numbers are decreasing.”
Ultimately, that is the crux of the issue. The closure of small rural schools such as Captain Shaw’s is perhaps not seen as a problem for those with private transport and steady employment, but delivers another significant contradiction with regard to the statutory responsibilities of the local education authorities and others in relation to child poverty.
The Child Poverty Act 2010 creates a duty for local authorities to reduce child poverty. As the CCR report points out:
“If poverty is to be tackled effectively, it must be a priority to identify and consult with those families who don’t know about or are prevented from accessing services.”
Village schools have a critical role to play in supporting individual families in need, or as a hub for activities that will promote learning, economic well-being and social cohesion. More than that, it is clear that the choice is becoming binary. Maintain small village schools such as Captain Shaw’s in rural areas and extend their provision of services, and we can tackle the problems of poverty, aspiration and lack of economic opportunities in those areas. Close the schools, and the evidence would seem to be clear that we cannot do any of that. Closure is effectively a choice to worsen the lives and life chances of the people in any community facing the loss of its school. As the report points out, that loss is “felt to be irreparable.”
I therefore make three specific requests of the Government today. First, to intervene in the process to close Captain Shaw’s school. Allowing the smallest school in the country’s most beautiful national park to close would destroy any credibility of the Government’s
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presumption against the closure of rural schools—it could scarcely be more symbolic. Secondly, to ensure that local education authorities and other responsible bodies in the case of academies or free schools, nationwide, are acting in a manner consistent with the statutory obligation to reduce child poverty laid out in the Child Poverty Act 2010. Thirdly, to bring forward as a matter of urgency a streamlined process whereby small rural schools can provide extended services, whether public, private or both, so as to secure the viability of those schools and to reach the most excluded people in our communities.
While I have the Minister’s attention, it is only right that I raise the issue of school investment more broadly in west Cumbria. I have written to the Secretary of State, and I hope that he or the Minister will be able to meet me as a matter of urgency. Some of west Cumbria’s secondary schools, which had been allocated more than £60 million by the previous Government as part of the Building Schools for the Future programme, are reaching crisis point with regard to their physical fabric and infrastructure. That affects standards, attainment levels, teaching and the aspirations and ambitions of their pupils. We urgently need major funding for the fabric of our schools, whether from a public or private source, or the consequences for education and my community as a whole will be dire.
Mr Robin Walker (Worcester) (Con): The hon. Gentleman is making a passionate case. Does he agree that it is not only the capital funding that is important, but the ongoing revenue funding for schools? A fairer funding formula, which does not discriminate against rural areas, is vital to keeping small rural schools viable.
Mr Reed: The funding formula does need to be looked at and, given the inconsistent definition of rurality to which I alluded, we need to have a more sophisticated approach to the funding of pupil places, rather than the blanket, catch-all provision for rural areas and the blanket, catch-all provision for urban areas. The hon. Gentleman makes a very important point, which needs urgent attention. Whether it is as simple as introducing a one-size-fits-all approach for rural areas, I am not so certain—we would need to look at the evidential base.
I was about to conclude. We are an ambitious community, as I am sure the Minister is aware, with an incredibly prosperous future before us if we make the right decisions, but we require the reinstatement of the money that the Government took away. I hope that the Minister will meet me as a matter of urgency to explore how and when that can be done.
2.46 pm
Rory Stewart (Penrith and The Border) (Con): I thank the hon. Member for Copeland (Mr Reed) for securing the debate and for all his leadership on Cumbria. Central to the issue is rurality and sparse population, and if he represents the constituency in England furthest from London, I represent the constituency in England with the most sparse population. We have about 1,200 square miles and some 1.5 million sheep, but not many people.
The central issue to do with rural schools is simply an aspect of the central problem of rural communities. That problem is the relationship between population and area. Since 1997, we can see a consistent pattern
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throughout almost every area of rural life: a steady push and a clear, unstoppable trend towards the hollowing out of rural areas.
We have two hospitals in northern Cumbria serving 350,000 people. That is normally difficult for the Treasury to justify, and our Cumbrian hospitals have been in receipt of emergency funding from the Government every year for 19 years, bailing out that fundamental structural problem. Our ambulances in Cumbria find themselves drifting endlessly south, towards the population centres. In fact, every morning the ambulance sets off bravely from Brough, but because it is obliged to pick up the nearest possible case and that always tends to be further south, it is somewhere south of Blackpool by the time it has to turn around and go back up to Brough in the evening. The same extends to old people’s homes, post offices, pubs, farms and broadband—we have some of the slowest broadband in Britain—and to issues such as flood protection, which I discussed with the hon. Member for Copeland earlier.
Since 1997, therefore, we have seen a cataclysmic hollowing out of rural areas throughout the country. Nationally, there are now 2,200 fewer schools in Britain than in 1997, 550 fewer clinics and hospitals, 350 fewer police stations and, famously, almost 10,000 fewer pubs—mostly gone from rural areas. It is, therefore, something of a miracle that our rural areas survive at all, when so much of the structure in the modern world seems to be set against them. In the Pyrenees, one can walk through abandoned village after abandoned village, and the same is true in the central United States. It is a miracle that Governments have managed to fight the endless centralising power of the market that tends to drive people out.
Julian Sturdy (York Outer) (Con): My hon. Friend is making some powerful arguments. Is not part of the problem—it certainly is in my region—that small rural communities are classified as unsustainable by their local authorities and local development plans, so they cannot expand and support local schools, post offices and so on? The problem is that communities in such areas want to expand, but are not allowed to, and the unsustainable tag becomes a self-fulfilling prophecy.
Rory Stewart: My hon. Friend makes a powerful point. The slogan of sustainability is used to cover up a whole series of crimes perpetuated against rural areas by local authorities. Local authorities imagine that there is an incredibly unfair structural system whereby rural areas are continually subsidised by more densely populated areas, and they demand to know why that should be. The reality, of course, is that rural areas are often in receipt of less funding than urban areas, despite higher costs. For example, education provision in Cumbria is £4,840 per pupil, compared with a national average of £5,140, despite the structural problems that the hon. Member for Copeland mentioned, and which I shall continue to discuss. Our communities put incredible energy into trying to keep those assets open, providing volunteer time and free land, but that is swept aside by the centralising tendency.
Mr Andrew Turner (Isle of Wight) (Con): My hon. Friend seems to be talking about small schools receiving more than other schools in Cumbria, but the schools that receive much more are those in towns and cities. It is not a Cumbrian fix; it is a national fix.
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Rory Stewart: I thank my hon. Friend for his intervention. Perhaps I was not clear enough. The national average of school funding is £5,140 per pupil. Cumbria is in receipt of £4,840, so the point is exactly the one that he makes. If sparsely populated rural areas such as Cumbria are compared with urban areas, we receive less.
Neil Carmichael (Stroud) (Con): My hon. Friend is making an excellent point, and I endorse it by pointing out that we have exactly the same problem in Gloucestershire, where there is the same funding difference between rural and urban areas. Gloucestershire is launching a campaign to put that right, and rightly so.
Rory Stewart: I thank my hon. Friend. The point about Gloucestershire is key. There are many reasons why things tend to get bigger, and why small shops give way to supermarkets, small dental practices give way to bigger dental practices, and small schools give way to larger schools. That is partly because of the regulations that we impose on such institutions, and partly because of pupils expectations and the variety of teaching that they can receive. That is difficult to deliver in small schools. When I look out of my window in Cumbria, I see a school in Bampton that had run continuously since 1613, but has had to close because it was considered to be unsustainable. It is an odd world where something that was affordable 400 years ago is no longer affordable when we are spending so much more per capita on our government.
The problem is size, and we have extremes. Samuel King school in Alston has only 161 pupils, making it the smallest high school in Britain. Why should it remain open? It remains open because it is more than 20 miles from Penrith, across a pass that is closed for many days during the winter. One simply cannot get to Alston, which is the highest market town in the Pennines. A school is necessary there, because students would otherwise not be able to get to school at all. Kirkby Stephen has the smallest high school in the country. It has 406 students, but only 70 are in the high school. Its catchment area covers 400 square miles of countryside, and whatever some fantasist would like to do in the name of rationality, that school provides an essential service.
Such schools face difficulties, because the lack of affordable housing, and the limited demographics mean that it is difficult for them to increase their numbers. Kirkby Stephen school breaks even with about 410 students. It makes money with 415 students, and if the number drops below 400, it loses an enormous amount of money, but it has little control over that because its catchment area is so limited in terms of population, although its size is large.
Almost every one of our outstanding schools in Cumbria—those that I mentioned are predominantly rated as outstanding by Ofsted, and are eagerly signing up for the Government’s academy programme—have continual financial problems. They have generally had to be bailed out by the county council year after year, and are in an uncomfortable position. When they become independent as academy schools, the funding they take on is the base level that they received from the county council, and does not include the emergency bail-outs that they received year after year, so they find themselves running up increasing deficits. That is so in Alston, and in Kirkby Stephen, where the debt is approaching
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£500,000—the £140,000 a year that it used to receive from the county council was discontinued at exactly the time it embarked on its, hopefully positive, future as an academy school.
I want to make two requests of the Minister. One is that we address seriously the issue of the rural funding formula. We should not allow that to be seen as a selfish attempt by sparsely populated areas, such as Cumbria, to steal money from more deserving people. It is consistent with our general attitude towards rural areas, and our general desire that rural areas should not be seen as places that we want to be hollowed out in relation to health care, transport or education. It is a fundamental commitment of our civilisation to rural areas.
My second request, which is smaller and technical, is that I would like the Minister to provide someone from the Department for Education to work with the boards of governors, particularly at Kirkby Stephen and Alston, on their budgets. They have launched themselves to academy status, and they have great governing bodies with great head teachers, but they could do with a lot of help to understand the budget. They are in a difficult situation because they hear one thing from the county council, and another with their new academy status. They need someone to compare their per capita funding with that of other schools around the country, and to provide technical advice on what would be reasonable reductions. That would be of enormous assistance to our schools.
On those two notes, and with acknowledgement to the hon. Member for Copeland, I thank you, Mr Weir, for calling me.
2.57 pm
Dr Thérèse Coffey (Suffolk Coastal) (Con): It is a great pleasure to serve under your chairmanship, Mr Weir. I congratulate the hon. Member for Copeland (Mr Reed) on securing this debate on the future of rural schools.
I represent a constituency in Suffolk, and when I moved to the constituency, I was impressed to discover how many small rural schools were able to survive. In my patch, I have seven schools with a roll of fewer than 50, and the smallest has about 20 pupils. A further six have a roll of fewer than 100. I have been impressed by the head teachers’ leadership in doing what they can to ensure that they keep the schools going in the communities. As the hon. Gentleman said, it is not a question of the rich rural message. People in urban places are often surprised at how many of our small rural schools have upwards of 40% of pupils receiving free school meals, which reflects the fact that poverty is spread throughout the country and not concentrated in urban areas.
Suffolk has managed to survive. I believe that it was the county council’s policy to try to keep as many schools as possible open. That is different in one of our neighbouring counties, where a deliberate attempt was made to close as many schools as possible and to consolidate primary schools. An interesting way that schools have got around that is by starting to share head teachers. I point to Peasenhall and Middleton schools, which have 56 children between them and share a head teacher, and that seems to work.
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I grew up in Liverpool and went to a classic primary school, which had 30 or 60 kids a year and was all one school. When I lived in Hampshire and was a school governor in a rural area, I was introduced to the concept of mixed-age classes—combinations. I then went to schools, such as Peasenhall, where key stage 1 pupils were together and all the key stage 2 pupils were together. Trying to differentiate pupils—admittedly a small number —across a wide range of abilities and progress creates challenging teaching conditions.
I am sure that it is a great pleasure to step out of school and, instead of the hard concrete that I remember playing netball and other things on, have a view of beautiful fields and playing fields. That natural environment is impressive, and perhaps I did not share that experience where I grew up in Liverpool.
There are also financial aspects. We heard the eloquent contribution from my hon. Friend the Member for Penrith and The Border (Rory Stewart). Funnily enough, I have a village called Brampton in my constituency as well, which also has a very small primary school that suffers similar challenges to those that he mentioned. We get even less money than Cumbria does; the county of Suffolk gets £4,676.
I hope that the Minister recognises the challenges of sparse population, which include the costs of school transport. Shipping children around is expensive, and towns or cities in particular do not have those costs. I remember getting the bus to school and it was fine because there were buses every 10 minutes or so, but those of us with rural constituencies know that that just does not happen in those areas, and nor would I expect it to. I am not suggesting that someone who lives in the country should have the same public transport service as someone who lives in the middle of the city, but the additional cost pressures are a challenge for rural schools.
It would interesting to hear the Minister’s understanding of the progress on educational challenges for rural schools. People are hugely surprised to hear that somewhere such as Suffolk is pretty low down in its progress towards GCSE targets. That is not unique to my county, but is also true in other rural counties. I hope that the Minister and his officials are working on something to ensure that children across the country get the same support.
As my hon. Friend the Member for Worcester (Mr Walker) eloquently pointed out, there definitely seems to be a bias towards urban schools, which is perhaps tradition given the more conventional aspects of social deprivation and the indices. He pointed out to me that there are ongoing revenue challenges, because children with additional languages are not being identified quickly enough. More people are coming from eastern Europe with their children and settling in parts of rural and agricultural England, and that is not recognised. Some of the indicators are a few years old, so the revenue is not keeping up quickly enough.
I do not intend to detain the House for much longer. Plenty of right hon. and hon. Members want to stand up to ensure that rural schools get a fair share of the funding, but I encourage them, especially the hon. Member for Copeland, to encourage parents in their areas to find out whether a free school is possible. [
Interruption.
] Perhaps his nodding indicates that that has already happened. It has certainly happened in Suffolk. West Suffolk is going through a schools organisation review, which I fully support—I support the move towards a
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two-tier model, because it has been statistically shown that children can make more progress that way—but understandably, significant communities would have their schools removed, and we all know that when a school is lost, an element of vitality is lost as well.
As my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) said, a lot of countryside villages want more building because they want more families. They want a viable community, not to lose a school and see children transported 15 miles. A child transported to school has one minute to get on the bus, which significantly limits their opportunities for after-school activities. There is something to be said about hearing a positive message from the Minister, who I am sure, in his constituency in West Sussex, is constantly asked to ensure that the countryside is not forgotten.
3.6 pm
Sir Alan Beith (Berwick-upon-Tweed) (LD): I am glad to have the opportunity to take part in the debate that the hon. Member for Copeland (Mr Reed) so helpfully introduced. I must tell him that my constituency is even further from London than his and at least as sparsely populated as that of my hon. Friend the Member for Milton Keynes South (Iain Stewart). It is therefore an area with a lot of very small schools, and I have several with fewer than 12 pupils.
Mr Reed: I want to clarify that point. The right hon. Gentleman is, of course, geographically much further from London than I am, but I think that he can get here an awful lot quicker than I can.
Sir Alan Beith: I commend the east coast train service in that respect.
As I said, quite a number of schools in my area have fewer than 12 pupils. There is a unique school on Holy island that much of the time is combined with a school in Lowick on the mainland, but when the tide is over, the children are educated in a little village school on the island itself. That arrangement must continue or they would not be able to go to school without boarding at the age of five—of course, they board later in their educational career.
When a previous Conservative Government were in power and there was grant-maintained status, the county council threatened one school with closure. It went grant maintained and saved itself, and is still there to this day. It made a rather shrewd move. That was an exception to the pattern, and I will explain how school closures come about.
In my constituency, we have lost 10 rural schools in 10 years. Villages such as Kirknewton, Millfield, Chatton and Eglingham have lost their schools. Two schools are threatened at Cornhill and Brampton, and in both cases there are very small numbers of children at each school—just three or four. In the past, we lost schools in the Cheviot hills that served the communities of shepherds at places such as Windyhaugh and Southern Knowe.
The current policy of the county council is certainly not to bring about school closure, even though, like other authorities mentioned today, it gets much less per pupil than some urban communities, despite the high costs of educating pupils in a much larger number of schools scattered over many communities and the high costs of transport for children in rural areas, to which
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my hon. Friend the Member for Suffolk Coastal (Dr Coffey) referred. Closures in rural Northumberland have invariably happened because the governors have concluded that a school is no longer viable. That view is not always shared by the local community, which sometimes disagrees with the governors and would like to see a school retained.
In all cases, closure is to be regretted because of the impact on the community. The school is a meeting place. Some places where schools have closed have managed to retain them as community meeting places, but the loss of children from the village during the day is serious. They no longer put on the events they used to in the villages where the schools were situated—dramatic activities, re-enactments and so on, and music at church and chapel events. Many people prefer to see children in the village, morning and afternoon, going to and from school. The village becomes very quiet when there are no longer children going to and from school or voices from the playing fields at break time. That takes something out of a village.
The problem, in Northumberland at any rate, is not some bureaucratic and draconian policy of getting rid of schools, but a shortage of children and young families. Young families cannot afford to live in many of our villages; with low local wages and the price of houses, property is well beyond their reach. Houses are attractive to people coming to retire and those who want second homes and so are beyond the reach of local people.
Of course, many rural council houses have also been sold over the years. We therefore need to replace housing stock for young families in our villages. I repeat the point that I made in my earlier intervention: we must not let a sudden panic about planning policy lead people to the conclusion that no development can take place in rural areas. We need communities to have a life in the future, and that means having affordable housing for young families in villages, as well as workshops and other places where trades and activities can continue. It also means ensuring that we have other housing in villages, because we want communities to be mixed. Newcomers often bring life to a village and are often among the most active supporters of local institutions. We need to sustain our villages.
There are always a few children left—those of farmers and farm workers—but life becomes that much more difficult for them when there are no other children in the village, and the village is almost devoid of young families.
Stephen Gilbert (St Austell and Newquay) (LD): I entirely share my right hon. Friend’s analysis that we cannot allow our rural communities to become fossilised and our villages to stop moving forward in time. Does he agree that the Localism Act 2011 and the community right to build represent an avenue that some villages will enjoy exploring as they grow? The register of assets of community value is another important provision that local communities can use in safeguarding some of the services, in addition to schools, that hon. Members have talked about.