Foreign Affairs Committee - Minutes of EvidenceHC 917

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

FOREIGN AFFAIRS COMMITTEE

THE UK'S RELATIONS WITH SAUDI ARABIA AND BAHRAIN

TUESDAY 12 FEBRUARY 2013

SIR DAVID WOOTTON and DAVID LLOYD OBE

USE OF THE TRANSCRIPT

1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Foreign Affairs Committee

on Tuesday 12 February 2013

Members present:

Richard Ottaway (Chair)

Mr Bob Ainsworth

Mr John Baron

Sir Menzies Campbell

Ann Clwyd

Mike Gapes

Mark Hendrick

Sir John Stanley

Rory Stewart

Examination of Witnesses

Witnesses: Sir David Wootton, former Lord Mayor of the City of London (2011-12), and David Lloyd OBE, Senior Consultant, Middle East Association, gave evidence.

Q115 Chair: I welcome members of the public to this sitting of the Foreign Affairs Committee. This is the third evidence session of the Committee’s inquiry into UK relations with Saudi Arabia and Bahrain. The Committee will hear from witnesses who have promoted bilateral trade relations, including by conducting trade delegations to Saudi Arabia and elsewhere in the Gulf.

We have Sir David Wootton, former lord mayor of the City of London, whose term of office ended last November. He is a partner in the firm of solicitors Allen and Overy, and he led a trade delegation in February last year to Kuwait, Qatar, the UAE, Saudi Arabia and Bahrain. Sir David, welcome. We are also pleased to welcome David Lloyd, who is a senior consultant with the Middle East Association, former Foreign Office diplomat and head of the British trade office in Saudi Arabia from 1980 to 1993. Mr Lloyd, welcome.

I have got a fairly general question to kick-start things, but would either of you wish to make an opening statement? My first question, Mr Lloyd, is what would you say are the UK’s main commercial interests in the Gulf as a whole, and in Saudi Arabia in particular?

David Lloyd: I would say across the board, Chairman. My particular market is Saudi Arabia, as you know. You are looking at a country that is spending huge amounts of money on infrastructure. It has the largest population of all the GCC states. That population has to be served with roads, schools, universities, power-you name it. As such, it is by far the most important and largest economy in the Middle East.

Sir David Wootton: Infrastructure, on which the UK is particularly good. Technology, advanced manufacturing, education and training, as well as financial and professional services. The UK is very good at the specialist parts of things in relation to infrastructure such as design, architecture, engineering, project management and risk management. What it sometimes lacks are the big centrepieces-the big construction companies, for example. All the specialist expertises, such as insurance, law and shipping, it has in abundance. The primary interest of the UK in the region is to pursue business opportunities for those aspects of what Saudi Arabia and the region want at which the UK is particularly good.

Q116 Chair: Is the UK a good trading partner with Saudi Arabia?

Sir David Wootton: Yes, I would say it was. My overwhelming impression, from what was said to me on my visit last February and on other visits and contacts, was that the Saudis, businesses and Government in the Gulf have a very high degree of trust in both the British people and the British commercial business product-greatly assisted, I would add, by UK Government and UKTI effort here and in the countries in question.

Q117 Chair: Mr Lloyd, do you agree with that?

David Lloyd: I would agree wholeheartedly with that. I would add that there is a visible British presence in Saudi Arabia. We lack big hitters at the top in the infrastructure sector, but we are there in banking and aerospace. Latterly, in the luxury car market, it has become a major success story for Rolls-Royce, Jaguar and Bentley. We have a growing number of engineering consultants in the mining and rail sectors, both of which are major growth sectors in the Saudi market. We have an increasing presence in the retail sector, so most of the names that you recognise over here-Marks and Spencer, Debenhams, Harvey Nichols, Arcadia-are all seen in Saudi shopping malls now, and are very, very popular.

Q118 Chair: You set out a profile there of UK involvement in these countries. How does that compare with other countries? How does our profile differ from other countries’ profiles?

David Lloyd: Difficult to say. If you read through something like MEED (Middle east Economic Digest) magazine and you are looking, for instance, at the big contracts-oil and gas contracts-being awarded, you will tend to find that the UK is not very visible sometimes, but the Koreans and the Chinese are highly visible. They really are the new big players in Saudi Arabia and in the GCC states.

Sir David Wootton: Other countries are more visible at the primary level of projects, because they have bigger construction companies-for example, America, Korea and China, as Mr Lloyd says. We will, in fact, be there more than we appear to be, because we are mainly there in the specialist roles, and therefore in the supply chain of project leaders and big companies that are not British.

Q119 Chair: The delegation that you took, was it primarily City finance-orientated, or did it have a wider-

Sir David Wootton: It was a combination of City finance and professional on the one hand and specialist infrastructure design, engineering and consultancy companies on the other. It was a combination of the two-about 50:50.

Q120 Sir Menzies Campbell: Do I deduce from that that you feel we are missing an opportunity?

Sir David Wootton: Yes, in short. UK governmental effort in Saudi Arabia and the Gulf is throwing up more opportunities than business is picking up. It will vary from sector to sector. I would say that I think the UK Government effort is very good. I think the people in post are working very hard and are very well connected, and, as I say, are throwing up more opportunities than we are taking up at the moment.

Q121 Sir Menzies Campbell: As you know, the widely held perception is that all we are really interested in is selling arms. I notice that in both your contributions neither of you mentioned defence. Do you think that we place-for various reasons and no doubt for various motives-too much emphasis on defence sales in the Middle East compared with the other activities you have described?

Sir David Wootton: Obviously the lord mayor does not get involved in defence sales at all.

Sir Menzies Campbell: There was a time, I think.

Sir David Wootton: I am sure that they are extremely important. It would not be a matter of altering the balance by reducing them.

Sir Menzies Campbell: No, I am not suggesting that.

Sir David Wootton: However, much more emphasis should be given to the other activities. As Mr Lloyd said earlier, the sheer scale of economic activity, particularly in Saudi Arabia, is huge, and there is much more that we could do.

Q122 Mr Baron: May I turn to Bahrain? Sir David, from your visit to that country last year, what impact did you think that the unrest had on bilateral trade and investment? Perhaps just as importantly, do you think that our Government-either here or in the embassy there-actually did enough to respond to that and to promote our interests?

Sir David Wootton: So far as I could tell-and this was in February last year-events in Bahrain had really brought investment from here to a stop. Businesses were continuing and I do not think that anybody had actually withdrawn, although they might have reduced activity a little bit. The policy adopted by the embassy-I played a role in delivering that, although in fact I was there for only one evening, but that evening was spent with prominent Bahraini business people, not with representatives of the Bahraini Government-was to stay in touch, to try to encourage the direction of travel and to await better days. The overall attitude on the Bahraini business side was, in a sense, resignation: disappointment at what was happening internally; disappointment yet understanding about the reaction of Bahrain’s long-standing allies and trading partners; and a strong wish that we stay in touch, against the direction of travel, with a view to producing better days.

Q123 Mr Baron: You briefly touched on the potential, as you saw it, being thrown up by the region. What more could Britain-the Government, the City or, indeed, business generally-do to benefit from that potential to the mutual benefit of all?

Sir David Wootton: Business generally would benefit by looking more positively at the opportunities that are there. There is always a reason for not doing something, and there is a general perception that it is a risky place but, on the other hand, those that are there are doing well-they are doing good business and the individuals who are there are enjoying the life there. So it is a combination of the Government, the companies that are doing well and enjoying their activities there, and indeed the City promoting involvement in the region to other British companies and trying to induce those other British companies to see things more positively.

Q124 Mark Hendrick: Thank you both for giving your time to be with us today. What kinds of trade and investment are the UK Government encouraging in the Saudi-Bahrain region at the moment?

Sir David Wootton: In the eastern province of Saudi Arabia, it is oil and gas development. I had a very good meeting with Saudi Aramco, which controls the oil and gas development on that side of Saudi Arabia. It is very keen on British companies becoming involved in its supply chain, as it is very keen on using the City of London for finance. It is also keen on our education system, as it sends lots of scholars-its staff-to train in the UK. So oil and gas is one sector.

The second sector is infrastructure, be it water, desalination, railways or airports. The Saudi airports authority controls all 25 airports in Saudi Arabia, and it is going to refurbish and redevelop them all. British companies are very good at redeveloping airports and railways, as I have said. Health care has had a large investment from the Saudi Government. Renewable energy is another sector. There is quite a wide range, but it is mainly infrastructure.

David Lloyd: I would endorse everything that Sir David has said. There is also the mining sector in Saudi Arabia, which is growing apace. The projections are that it will account for 18% of GDP by 2020, which is a significant development and a significant departure from dependency on the oil and gas sector. I am happy to say that we have some British companies that are involved in the mining sector, but it is big, and I think that it needs more attention and attraction from this end.

Q125 Mark Hendrick: How would you both characterise the receptions for the trade delegations?

Sir David Wootton: Very warm. Could I add one sector to the list before I try to answer your question? There is large housing development in Saudi Arabia. I had a meeting with the Housing Minister in Riyadh, who wanted to show us all the models of the urban housing development that they are undertaking. I was sitting, as is usual, next to him. At the end of the meeting, he stood up, ignored me, went over to the delegation and said, "I want all your business cards." They were from British specialist companies, all of which were active in housing, so housing is an important sector.

David Lloyd: Could I just add to Sir David’s comment? I obviously operate at a rather lower level, and I see Sir William Patey [in the room] over there, who on many occasions, as British Ambassador at Riyadh, has welcomed Middle East Association trade delegations to the Kingdom. Our membership is historically SME, tending from the middle level of SME to the much smaller levels-some of them may simply be single people. However, in my experience-I have been taking missions to the Kingdom since 2004-we have always been well received by the Saudis.

Missioners who are new to the Saudi market tend to have perceptions largely fed by the British press, which tends to be a little bit on the disobliging side when reporting on Saudi Arabia. However, they are always agreeably surprised when they arrive in a nice hotel and the sun is shining the next morning, and they see people going about their business, smiling and shaking hands. They suddenly realise, "Oh, this is actually quite a civilised country."

The interest sparked by visiting trade delegations from the UK is very real-there is no question. Every time we go to Saudi Arabia, we spend 10 days and go to three provinces-eastern province, Riyadh and western province. The more time we spend, the more our notoriety, for want of a better word, spreads in front of us. The welcome increases as we go along. I think that the amount of business done over the years since I have been taking delegations, however small, has been very impressive.

Sir David Wootton: I think it is very important to maintain a regularity of visits and to maintain those visits at different levels, either on the same visit or separately. The Middle East is one of many parts of the world where relationships are extremely important. If the business in hand is technical-a transport system-there will need to be relationships at the technical level, but the technicians will not be the decision makers; the decision makers will be elsewhere in the system, and the decision will only go a particular country’s way if the relationships at that level are properly handled as well-whether it is Government Ministers, members of the royal family or, dare I say it, on occasion, the lord mayor. You need the different levels all co-ordinated at the same time.

Q126 Mark Hendrick: Sir David, the notes from your visit refer to the newly launched Two Kingdoms Strategic Partnership. What did you expect from the strategic partnership and, to your knowledge, do you believe that it has delivered?

Sir David Wootton: It is a work in progress. I attended the last two most recent meetings of the Saudi-British Joint Business Council-one while I was in fact chair two years ago, and one in June 2011, before I became lord mayor. I think for reasons that are not applicable to the British side, there has not been a meeting since June 2011 of the formal structure and, I think, the partnership was begun at time of the beginning of this Government. Lots of business and visits have been going on meanwhile, but the time will, at some stage, be right for a revivification of the formal structure. It is work in progress, but meanwhile a lot of good things are going on.

Q127 Chair: How important is the Gulf to the City? You were very focused on City interests. In particular, you have been involved in promoting London as a centre for dispute resolution. Has that been successful?

Sir David Wootton: Yes.

Q128 Chair: Why do people in the Gulf want to come to London to resolve their disputes?

Sir David Wootton: Because the legal and judicial system here is perhaps more open, predictable and reliable than elsewhere. There are obviously very long historical links between the UK and the Middle East and much involvement of London lawyers. The dispute resolution mechanisms have not been as well developed there as they have been here. However, in Qatar and Dubai, there are recently-established financial centres, both of which have commercial courts-legal arms-attached, which have been led by British judges. Lord Woolf started the centre in Qatar and Lord Phillips is taking over from him, and a retired Appeal Court judge is the head judge at the legal centre in Dubai, but they are now bringing on local judges from Dubai and Qatar.

Q129 Chair: That sounds like a recipe for losing business from London.

Sir David Wootton: But the City always does better-whether it is legal, financial or anything else-when other centres do better.

Q130 Sir Menzies Campbell: You were complimentary, Sir David, a moment or two ago about the role of the Foreign and Commonwealth Office in promoting British trade and commercial interests. Will you expand on that a little more? Perhaps give us an illustration of the sort of things that the FCO is able to do?

Sir David Wootton: One example, which may appear trivial but I don’t think is, is the quality of the people who turn up at an embassy or consulate reception. Standard fare when the Lord Mayor visits is that the ambassador, the high commissioner or the consul general will give a reception at which the Lord Mayor will speak. You can tell whether the people from the city in question are high-quality people or not high-quality people. Pretty well without exception on all the visits I made, but particularly in the Middle East, the quality of local who came-I knew it was not for me; it was a result of the hard work done by UKTI and Foreign Office staff locally-was extremely high. That is one example.

Another example is the access to Ministers, in particular, that is arranged. A good example is Jeddah. I believe that the only foreign diplomatic representative of any country in Jeddah who is a Muslim is our consul general, Mohammed Shokat. The point is that he is the only diplomat who can go to Mecca and Medina, which, of course, is where a lot of business conversations take place.

Q131 Sir Menzies Campbell: On a slightly different tack, but also on how we can assist, I know what your view will be about the impact of visits of the Lord Mayor of the City of London, but what is your view about the impact of ministerial visits and even, on some occasions, state visits? Are they more than simply symbolic? Do they have real consequences?

Sir David Wootton: I think they do. I think they improve the climate. They make it easier for people in the countries visited to make decisions in our favour, because they show that Britain values the relationship. Ministerial visits-in fact, all visits-are better if there is a direct business content. It could be a delegation, or it could be the announcement of contracts, but there should be business content. A visit that is entirely ceremonial is less good than one that has direct business content. I think they are important, but particularly in improving the quality and depth of the relationship, it makes it easier for people locally to decide to buy British.

Q132 Sir Menzies Campbell: Applying the principle of who is invited to come to see the Lord Mayor by the Foreign and Commonwealth Office, does the same apply in relation to ministerial visits-the higher up the tree the Minister is, the more impact he or she will have?

Sir David Wootton: Yes.

Q133 Sir Menzies Campbell: That would keep the Foreign Secretary in constant motion for the rest of his life.

Sir David Wootton: I am piecing a number of conversations together. The value that the countries I visited place on a visit by a senior Minister-in particular the Prime Minister-is very high.

Q134 Chair: Mr Lloyd, do you want to comment on those points? Do you think ministerial visits help? Have you ever had a Minister accompany you on your SME delegations?

David Lloyd: Not to Saudi Arabia, no. Looking back on the days when I worked in Saudi Arabia, we used to have frequent ministerial visits. Yes, they served a very beneficial purpose. If the Minister’s visit was focused-if he were out on an energy mission and we called on Saudi Aramco and SABIC, the big petrochemical people-yes, it would have a big impact. Did it lead to any deals being signed? Probably not. It raised our profile, but I think the lasting effect needed further follow-up at a slightly lower level, and that did not always happen.

If I may, I would like to go back to the point that Sir Ming Campbell made about the Foreign Office and Foreign Office assistance in Post. As I said, I work at a slightly lower level than Sir David, and we have direct contact with embassies with UKTI staff in Posts. I must say that UKTI services may be outstanding or lamentable. There are any amount of reasons for that, but the single biggest one is the cuts that UKTI staff have had to take overseas, and the greater emphasis on employing locally engaged staff, many of whom are simply not up to the job.

A good example of an outstanding post-I will not name it-is one somewhere in Saudi Arabia which held a Saudi-British energy week in December 2012 and we were invited to attend. It ran for four days and the organisation was impeccable. The level of local businessmen and indeed businessmen from other parts of Saudi Arabia could not have been bettered. 50 British companies were there for the British week with access to all the big hitters-Saudi Aramco, SABIC and various petro-chemical sectors in Jubail. It was first class, and the receptions were first class.

Q135 Sir Menzies Campbell: Does facility with the language help in the establishment of the relations you described?

David Lloyd: Yes, it does. If you can speak Arabic, exchange greetings in Arabic and carry on a conversation for as long as you wish, that makes a great impression. It is not vital to pursuing business because the reality is that most Saudis we meet speak much better English than we speak Saudi. Sir William Patey is a prime example of a Foreign Office Arabist who had a superb command of the language. It was always a pleasure to listen to him speaking in public at mixed receptions with leading Saudis.

Q136 Sir Menzies Campbell: I am sure he will receive that compliment gracefully. Thank you.

Q137 Mike Gapes: May I ask about changes that have come about since the change of Government here in 2010? The new Government said they had a priority to re-energise key bilateral relationships with the Gulf states. In 2011, they said that "the Gulf Initiative is delivering clear results for the UK. We are now better placed politically and commercially than we have been for some time". Mr Lloyd, do you agree that that is the case? Are we better placed commercially than for some time?

David Lloyd: I don’t think so, no. I am not suggesting that we are re-inventing the wheel, but in my experience there has been plenty of Government involvement in Middle East markets and the GCC market, perhaps not always enough, but at the end of the day the way you do your business is to persuade more British companies to go out and do business. At this point in time, it is very difficult to recruit for missions to go to Saudi Arabia or the Gulf. We have just had to abandon one to Bahrain, which I hope we will resurrect four or five months hence, but the normal take-up of between 15 and 20 missioners to Saudi Arabia had now dropped to 10 or below.

Q138 Mike Gapes: What is the reason for that? Are they related to Saudi Arabia and Bahrain, or they UK-related?

David Lloyd: It is a bit of both. On one hand, it is the recession at home, which has knocked people sideways. Budgets here have been cut drastically, and finance managers are not prepared to say, "Yes, you can go off on a trip to Saudi Arabia provided you come back with a nice fat deal in your pocket." There is also a perception of political uncertainty and instability, and that certainly goes for Bahrain. The two together have made people more apprehensive about going to Middle East markets, which is a crying shame, because if you are suffering and cannot make money here, you should be going overseas and exporting. A country like Saudi Arabia has got everything you could wish to sell.

Q139 Mike Gapes: Is that then going to challenge the ambition that the Government have to increase trade with the Gulf? Does it mean that their ambition is not achievable, because of these factors?

David Lloyd: I don’t think so, no, because in spite of what I have said, our trade with Saudi Arabia and the other Gulf states is going up. With Saudi Arabia, in the period January to August 2012, it went up by 4%, and with Bahrain it went up by 35%, which is pretty impressive. There is a steady increase, but nothing dramatic, but I would regard that as a natural progression anyway.

Q140 Mike Gapes: What you are saying is that we could do much more and there is enormous potential that we are not grasping.

David Lloyd: Yes.

Sir David Wootton: We are better off commercially in the narrow sense. The governmental effort under Chris Innes-Hopkins in Riyadh and Dai Harris in the Eastern Province is much improved. It is much more sharply focused and directed. There are resource constraints, but all Government Departments have resource constraints. Mr Lloyd is entirely right in that the quality of Government effort has yet to be matched in the sector that it is really directed at, and I do not disagree at all with the reasons that you have given. One of the needs is to get that message across. It is not so much a matter of getting the message across, but getting movement.

Q141 Mike Gapes: You referred to cutbacks in companies, but given your experience as a former diplomat, would you comment on whether you think that the FCO has the resources to carry through the commercial aspect of this Gulf initiative, not just in terms of people but in terms of the language skills and network it would need? Is that a problem?

David Lloyd: I certainly think that language skills are not a problem. The problem as I see it, as a mission leader visiting GCC countries fairly regularly, is the diminution of staff within the UKTI staff.

Q142 Mike Gapes: UK-based staff?

David Lloyd: Partly, but also locally engaged staff and the inability to recruit and retain locally engaged staff of the right calibre to carry out those jobs.

Q143 Mike Gapes: Is that because we do not pay them enough and the good ones get recruited by commercial organisations?

David Lloyd: I would say exactly that, yes.

Q144 Mr Ainsworth: Along the same trend of trying to explore the support for exporters and businesses in the countries concerned, Mr Lloyd, you sent us a note-you have repeated some of those comments today-about the support being at one end exemplary and at the other lamentable. In your note, you appear to put that down to budget cuts and the inability to recruit and retain decent staff. How do you compare, or have you any ability to compare, the support given by UKTI with that given to exporters from other countries?

David Lloyd: That is a difficult one.

Q145 Mr Ainsworth: Do you see other exemplary practices that you wish we had?

David Lloyd: There is a fact that has not been mentioned here, and that is the charges that UKTI raises on visiting business people. Some of my missioners will say without hesitation, "This is a tax on exports. Why is it happening?" Charges have been in the system for as long as I can remember. When I was running the trade office in Khobar 25 years ago, charges were first introduced, but they were very light touch. But even then, there was quite a strong reaction against them. The instruction went round from London, saying, "If you have a British business visitor calling on you, and he is there for more than 10 minutes, the clock has to start ticking," which, frankly, we found absurd. I used to learn quite a lot from British visitors coming to see me who knew the area and who were doing business there-or at least as much as I was able to give them.

Anyway, that is an older story. Far more recently, the overseas market introduction service-affectionately known as OMIS-now imposes a charge on non-UKTI missioners if they want an official reception. Wrapped up with an official reception-that is a reception held at the embassy, on embassy premises-comes an official briefing and perhaps some minor programme arrangements with, for instance, the local chambers of commerce, or whoever it may be. The minimum charge across the world is £2,000 per post. If you are on my mission, I have to sell this to you in advance: I have to say, "Mr Ainsworth, the embassy is offering us this reception. Do you want to take it up?"

Mr Ainsworth: Do you want to put your hand in your pocket?

David Lloyd: Exactly. You say, "Well, yes, but who is going to come?" Answer: "You can’t be absolutely certain." The biggest problem here is that you are paying money up front, and there is no guarantee what the product is. Sometimes it is good, sometimes it is bad. I have had missioners who have said, "We’re going to ask for our money back. We went to this reception. We paid £300, and there was nobody there we knew." The net effect of that is that we are now starting to have to bypass UKTI services at the embassy, because missioners cannot afford to pay that price. That seems to me to be a major deterrent. Why are we charging our exporters?

Q146 Mr Ainsworth: Sir David, do you have similar complaints about the charging regime?

Sir David Wootton: No, but for a different reason. The City does not charge delegates for coming on Lord Mayor’s visits, and the Lord Mayor part of those visits is paid not out of the City corporation’s local authority funds, but out of the other side-investment funds built over the centuries-so there is no charge to council tax payers. So far as I know, the embassies and high commissions do not charge the City for events and do not charge people to come to those events; that may have escaped my attention, but I do not think so. If it is possible to deliver these things within the budgetary constraints, it is a much better model, because you keep much more control, and you get away from the issues that Mr Lloyd refers to. We have, from time to time, had suggestions that we should charge to bring us in line with the market, but we have declined the opportunity thus far.

Q147 Mr Ainsworth: Have you any knowledge of other nations doing business in a much better or more supportive way?

Sir David Wootton: Not beyond the anecdotal. Almost everywhere I went, someone would say, "Where have the British been? You are not as visible as"-and then there was mention of a number of countries. It is always the same countries.

Q148 Mr Ainsworth: Give us the list. It is France, it is America.

Sir David Wootton: What I ended up not knowing is whether, if that person is having a conversation with a visitor from France, they say exactly the same thing, but just put Britain in the array of countries, and not France. I do not know. It would be wrong to make a judgment just on anecdote.

Q149 Mr Ainsworth: Mr Lloyd, in your note you raise one of the obstacles to trade, which is the disobliging portrayal of Saudi Arabia, the big country in terms of trade figures, in the British press. You go on to say that you think that the Saudis do not help themselves, and that they could do more to explain some of the considerable reforms that have been carried out in the last few years. Would you like to expand on that? You are here, in front of a load of politicians who have been disobliged by the press repeatedly and personally. Do you really think that Saudi Arabia is missing a trick in terms of presenting some of the changes that are taking place in that country?

David Lloyd: Yes, very much so. But then they are not good at promoting themselves. They are not in the business of lobbying. Without making too much of a generalisation, Arabs on the whole are not good at promoting themselves-at putting themselves on the map and saying, "Look, there may be lots of warts here, but there are also lots of good parts as well."

The Saudis, regrettably, after all, tend to be the focus of the British press. If something goes wrong, whatever it may be-human rights, corruption-that is the negative impression that is left with the British public.

If you take the appointment of 30 Saudi women-I am straying slightly into the political arena, which I was not intending to do-to the Majlis ash-Shoura, the King’s special council recently, that was a huge step forward. I was pleased to see that it got a report, albeit a rather short one, on ITN news about three weeks ago. The Saudi woman who was interviewed as the lead anchorwoman, if you like, is well known to us-I know her personally-and is as fine an example of Saudi professional womanhood as you would find anywhere. But how many people in this country, after reading the British press, will come away with an impression which is other than poor, at best, about Saudi women, because the story that is put around is that they are repressed, largely locked up in their houses and cannot travel? There is an element of truth in that, but things have moved on.

When I was in Al Khobar, you could go into Saudi Aramco or any of the banks and there would not be a woman in sight. You go into these big organisations now and you find Saudi women who have been to university; they have good degrees, they have competed for their places against Saudi males, and they are taking up a lot of the middle management and, to an increased extent, the more senior management roles.

Q150 Mr Ainsworth: Sir David, do you think that some of the progress or reforms that there have been in Saudi Arabia are understood? If not, do you think that damages our trade relations?

Sir David Wootton: I think that there is a lot of scope for more awareness here of the experience of British businesses there, including the experience of what it is like to live and work-the experience of individuals, as well as of companies-and for more being said about the changes that are taking place. One does not want to overdo it. It is still what it is. It is Saudi Arabia and it is a particular culture, but greater understanding of what it is and what it is not would, I think, help.

Q151 Mr Ainsworth: The other issue that you and others raise, in terms of a barrier to doing business in Saudi Arabia, Mr Lloyd, is the visa regime. The Americans have managed to get a reciprocal arrangement with the Saudis; we have not. Do you think we have tried hard enough? How big a problem is the Saudi visa regime to people trying to do business in the kingdom?

David Lloyd: I would describe it as a major irritant. If you apply through the normal channels for a Saudi visa, and you ask for a 12-month multiple entry, which you are entitled to, there is a 99% chance that you will get a three-month single entry visa. If you want to go into any of the other GCC states from Saudi Arabia and you want to come back, you can’t without re-applying at a Saudi embassy in a GCC country, so that is frequently a big irritant. The fact is that you can go to any other GCC state, arrive there and pay $5 for an entry visa, no problem. You simply cannot do that with Saudi Arabia.

The Saudi Government have tried hard. There is a curious situation where you have the Ministry of Foreign Affairs in Saudi Arabia drawing up a set of rules and guidelines for the issuance of visas-to whom they should be issued, at what price, and so on and so forth-but there is an inability of embassies to carry out those instructions. So we are still stuck, basically.

Q152 Mr Ainsworth: Are you saying that there is clear guidance that we are failing to follow, or that we are failing to pass on to our own business people?

David Lloyd: Not us; the Saudis. The Saudi Ministry of Foreign Affairs issued instructions to its embassies that, largely, were not implemented. I certainly would not say that HMG has not tried hard to redress the situation, and it still is, but unless or until we have a reciprocal arrangement where we can apply for five-year multiple entry visits, just as the Saudis can to come into the UK, we still have not achieved anything. The Americans have done it, so why can’t we? Perhaps they just have more clout when it comes to that.

Q153 Mr Ainsworth: Is there anything you would like to add on visas, Sir David?

Sir David Wootton: Visas are always an irritant. That particular issue-and the Saudi issue, as a matter of fact-was not raised with me. It will not surprise you to know that British visa policy was raised with me by Saudis.

Mr Ainsworth: It was raised with me also-

Q154 Rory Stewart: Apart from the United States, which other of our major competitors has an easier deal getting visas into Saudi Arabia?

David Lloyd: As far as I know, only the Americans. I do not know about the French, the Germans or the Japanese. I suspect that they have to run through the-

Q155 Rory Stewart: Otherwise it is a relatively level playing field. We have a big problem, but so do our other competitors.

David Lloyd: Yes.

Q156 Rory Stewart: May I also clarify an earlier comment? Finally, you have told us a great deal about UKTI and British trade policy, but I want to give you a last opportunity, given all your experience, to say what ideally our trade missions should be doing in these countries, and what are they not doing. In other words, can you give a crisp, two-minute summary of what we are not doing right and what we should be doing in Saudi Arabia to get our trade better?

David Lloyd: A mission in a country is as good as the support it gets, at the end of the day, although some of our missioners are very persistent. They are very competent business people and they have a lot of patience, as you need to have in Saudi Arabia and a number of the other markets. I think missioners would like to be able to go to the embassy, or telephone the embassy, and say, "I’ve got a problem," or "Can you help me with a contact here, or a contact there?" without feeling that they will be charged for it.

I took a mission to Qatar two summers ago. The ambassador, in his briefing to us, which he did not charge us for, which was very nice, was so concerned that he said: "Look, I must tell you that we here, in this embassy and among my UKTI staff, are here for you. We will be as helpful as we can, and we won’t charge you for it, provided you don’t push your luck too far." The fact that he had to tell missioners, to give them that message, I thought said a lot, actually.

Q157 Rory Stewart: You have also said, in a recent interview, that British companies have paid far too little attention to market and lost grounds to competitors. That is presumably the other side of the story. Is there anything to be done about that? Is it true that British companies are not as hungry for these export markets as they should be, and what on earth does one do about that?

David Lloyd: There is a big project going on in Riyadh at the moment for a public transport system, buses in the first instance. I picked this up in the local press, I passed it on to a contact of mine who is a consultant in infrastructure, particularly in transport, and I said: "How about this one?" I left it with him. He went to the four leading transport management companies in this country. One of them replied, and had to be persuaded to beat a path out to Riyadh. That company has now put in a bid, so fingers crossed.

There is another huge contract coming up in Riyadh, and that is for a subway, light railway or whatever you care to call it. That will come into operation four years hence, which is pretty amazing. Are there going to be any British companies there bidding for it? I do not know. I hope so. Part of the trouble is that we do not have any big hitters in our rail industry now. We have some very, very good ones at signalling level, station design and that sort of thing, but we do not have any big manufacturers.

Q158 Rory Stewart: Sir David, is that different with the City? Are people hungrier there, more willing to get involved?

Sir David Wootton: Yes. The City has always found it easier to get on a plane and to go and establish itself. The capital investment, by and large, tends to be human capital rather than financial capital, at least initially, and in that sense the City has been better and more adventurous than the parts of British industry that we are now talking about. It has built up more experience of going abroad and setting up anew. That experience and the experience of those who have gone successfully to Saudi Arabia, other parts of the Gulf and other parts of the world, including those who have made mistakes doing it, would assist the process, if those experiences were shared with others, persuading industry as a whole to be more adventurous.

Q159 Rory Stewart: You mean, Sir David, the City itself could play a middleman role in dragging British industry-manufacturers, exporters-along with it.

Sir David Wootton: Yes, along with Government, along with spokespersons like us, associations of one kind or another, and those who have done it successfully themselves.

Q160 Rory Stewart: To what extent do you think that British companies are put off by bribery and corruption in Saudi Arabia?

Sir David Wootton: Corruption was not raised with me by anyone on my visit in Saudi Arabia, in the way it certainly was on my visits to other countries. That is not a comment on whether it is there or not. With the 2011 bribery legislation here, which business worried about, as to whether it would make life more difficult, I was surprised to find that during the entire year no business person, no UK business-in fact, no business person, full stop-raised, at least with me, the Bribery Act as having made life more difficult. Rather the reverse: it has come to be seen as part of the trust that other countries’ business communities place in the UK.

If I look back on the events at which I spoke around the world, the ones in which the room was fullest-full and standing, as we hear on the trains-were seminars about the UK Bribery Act in Brazil and Russia, where the audiences were Russian and Brazilian. I would not have expected that.

Q161 Rory Stewart: How did we get that so wrong? If businesses get so gloomy about it and think that it would be a catastrophe for us and create dysfunctions, how did we mis-predict that?

Chair: Before you answer, I see that we have a vote in a few minutes. I want two more colleagues to ask questions, so would you keep the answers relatively brief?

David Lloyd: I am not aware of any reaction on the part of British businesses to corruption in high places. Curiously enough, if you read the English-language Saudi press, there are frequently reports on corruption, but it is local corruption, so there is an awareness of corruption in the kingdom. The Jeddah municipality sacked quite a lot of its senior staff recently for corrupt practices and for failing to sort out the water management system there.

Chair: Do you want to bring up the SFO report?

Q162 Rory Stewart: Has the Serious Fraud Office investigation into al-Yamamah had any effect on any trade?

Sir David Wootton: Not that has come to mind.

David Lloyd: Not to my knowledge, no.

Q163 Ann Clwyd: Mr Lloyd, you seem to have glossed over the poor image that Saudi Arabia has in this country. It has an extremely poor human rights record, and everyone knows that. There are public beheadings, floggings and torture-the whole host of human rights violations. There have been some reforms, which of course are welcomed, but they are very slow. How can you gloss over that quite so easily?

David Lloyd: I did not gloss over it. I simply did not bring it into my notes, because I felt that it was outside my remit.

All I would say is yes, Saudi Arabia has a poor human rights record. It is starting to improve. The number of public executions is diminishing. The execution of a Sri Lankan maid three weeks ago I think horrified everybody. I suspect that a lot of Saudis wish that that hadn’t happened. I, frankly, was surprised and rather shocked to hear Prince Waleed bin Talal on television, basically saying that this girl got her just desserts. You have a large portion of the Saudi population who are still third-country nationals, as they used to be known, and still maltreated, underpaid, and sometimes not paid at all. I wouldn’t dispute that.

That constitutes a number of large warts, but I think you have to see things in some sort of perspective, and acknowledge that reforms under King Abdullah have been effective and, in relative terms, swift as well. I would go back to the role of Saudi women themselves, who are coming from behind the scenes to take up much more prominent positions.

Q164 Ann Clwyd: Sir David, you spent, I think, two weeks in the Gulf. I was looking at your report. I see that when you visited Bahrain, one of your aims was to be briefed on developments in Bahrain, particularly about the human rights situation and the implementation of the BICI report. How exactly was this done?

Sir David Wootton: It was done by the ambassador, Iain Lindsay.

Q165 Ann Clwyd: It is in your report as one of the aims. What did you learn from that briefing?

Sir David Wootton: I learned that there is some way to go, that the direction of travel at the time was hopefully the right one, and that the job of everyone in Britain, everyone who has contact with the Bahrainis, must be to encourage them in that right direction of travel.

Q166 Ann Clwyd: Did you meet any human rights activists? Did you meet any political opponents of the present regime?

Sir David Wootton: No. I confess I was only there for one evening.

Q167 Sir John Stanley: The accusation is sometimes made that British Government Ministers and officials, diplomats, are cautious or reluctant to speak out in support of those wishing to see greater human rights in both Saudi Arabia and Bahrain, on the grounds that this might jeopardise a particular trade contract or group of trade contracts. Can either of you cite any example of a statement in favour of human rights being made by the British Government that has actually resulted in the loss of a trade contract?

Sir David Wootton: No.

David Lloyd: No.

Q168 Chair: Are you aware of the reports that Abu Dhabi has dropped BP from the shortlist for the renewal of an oilfield concession that it has part-held since 1939, supposedly in response to BBC Arabic providing negative coverage of a security crackdown in the UAE in 2012?

David Lloyd: I was aware of it.

Q169 Chair: I think we are on common ground here with our views of the British press, but do you think that the attacks by the press do impact on the ease of doing business in the Gulf?

David Lloyd: I think they might do at Government level if you’re talking about a significant contract. I think three, four or five years ago we lost a naval contract with the UAE because the then UAE Foreign Minister was allegedly involved in some financial misdealings or whatever, and it was reported in the British press. At the time, it was made very clear that the award would not go to a British company, so it can happen. I am not aware of its having happened in Saudi Arabia. It certainly would not happen at the sort of level at which I operate, because you’re looking at small business companies and it would pass them by. It may create an atmosphere, which I think is relatively temporary, where the Saudis or whoever they may be are annoyed because their reputation is being put on the line, but it usually blows over.

Q170 Chair: Sir David, would you like to say anything in conclusion?

Sir David Wootton: There are always views about other countries and about what is said in other countries. I was lobbied during my time as Lord Mayor by Saudis and others on the matter of non-dom taxation, which is fairly predictable. Could I point you, Chairman, to any adverse business or political effect as a result of that? To be honest, no.

Chair: My constituents complain about it! We have a vote in one minute’s time, so may I thank you both very much indeed for this session? It has been really helpful to us and it is much appreciated.