Oral evidence: Exports and the role of UKTI, HC 741Tuesday 2 February 2016

Oral evidence, 2 February 2016.

Witnesses

Tim Ambler, Senior Fellow, Adam Smith Institute, Graham Cole, Former Chairman of AgustaWestland and Chair of the Cole Commission on Exports, and Jon Coleman, Chair, British Exporters Association, gave evidence.

Chair

Good morning gentlemen. Thank you for giving evidence to our inquiry about UKTI and exports. For the purposes of the record, could you tell us who you are and where you come from?

Graham Cole

I am Graham Cole. I am former chairman of AgustaWestland. I am largely retired now, but I also chaired the Commission on Exports, which reported last year.

Jon Coleman

I am Jon Coleman. I am chairman of the British Exporters Association. We are a small organisation, but our focus is very much as the label says on the tin: we are all focused on export. It is large, medium and small sole traders, plus a lot of the international finance banks and credit insurers.

Tim Ambler

My name is Tim Ambler. I was nearly 30 years in the wine and spirit business, both importing and exporting, and then nearly 20 years at the London Business School teaching international marketing and researching it. I am now with the Adam Smith Institute and I congratulate the chairman on the continuing success of Camerons Brewery.

Chair

We should have a pint of strong ale to celebrate that. May I begin by asking you the same question I asked the first panel, which is: why has our trade performance been so awful for so long and can we change that?

Graham Cole

There are a number of reasons. When you look at a large company, in my own company, before I was chairman, I was responsible for all of the international sales. You know what your export market or potential is for the next three, five or seven years. You are tracking it yourself. You know it. You want the Government to help you get those across the line. Very rarely would Government or UKTI come to you with a new potential or possibility that you had not had your eyes on for some time. But when you come to the small businesses, you have to get them into the export market; you have to sync their exports. As part of the commission report, we went to Germany. If I can suggest, Chairman, it is a very valuable visit if you are able to make it. We visited various organisations, including the German chamber of commerce. They have 45% of their SMEs exporting; we have 18%. It is much more in their culture to export than it is here. There is a large part of that that is yet to flow through. The chambers in Germany have been there for many years, and there are things that are significantly different from our arrangement, not least of which is that belonging to a chamber over there is mandatory. We would never do that. Nonetheless, they have a culture that drives the large and smaller companies into the export market.

Chair

Can I just pick up on that? I asked the previous panel, in terms of culture and characteristics, why firms that may be making a good living through the domestic market would want the difficulty, the hassle and the risk of thinking about international markets. How do Government play a role in trying to nudge different characteristics of firms?

Graham Cole

It is very difficult, Chairman. I chaired the CBI in the South West for two years. Lots of the companies in the South West, going from Gloucester down to the Scilly Isles, are small companies. They would say to you, “Look, I make a good business in the UK with perhaps one or two small overseas contracts. I know that if I go into the export market and I am successful, I could be really big. But if I go into the export market and fail, I have not got the business that I have got now.” So, it is a risk. With a large company, you are driven towards exports because that is the business you are in. We could never sell the amount of helicopters we needed to in the UK. You had to export; you were forced to do it. On the small and medium-sized business side, that is a very different challenge. Government, or Governments, through other organisations need to help take away that fear of going into the export market and failing.

Chair

Mr Coleman, you must play a part in taking the fear away. Do firms that are already exporting come to you? How do we ensure that we can shift the needle in terms of making exporting seem an attractive, desirable proposition?

Jon Coleman

We have one or two new members who have joined because they have just done their first export. They may have not fully assessed the issues they had and come across some risks they have not assessed, so they join a trade association to get advice and experience from fellow members. We find that, certainly for the small exporter, there is the fear factor of going into an export market, as Graham has said. If you have a good domestic market, why go and export? It has been lost from the business culture in the UK over decades. In combination with that, the economy has been very much service based. Whereas the service sector has been exporting fairly successfully, the manufacturing sector has reduced, so there is less capability to export. The focus really needs to be, in our view, on the practicalities of making sure that potential exporters, particularly new ones, are aware of the risks and that they then know where to go and what the mitigants are in the market, be it the private market or from Government.

Chair

Is there a need for UKTI? Could you not do it?

Jon Coleman

We are very small, Chairman, so I do not think we could. There certainly is a need for UKTI. In our last benchmarking of UK Export Finance, which we submitted to the Committee, we identified a requirement for a more whole-government or pan-government approach. It is a good thing to refocus UKTI and put a policy requirement into individual government departments to put exports on the agenda. It can only be good to have UKTI embedded in those departments and then feed back through their advisers around regions to really link export opportunities to the UK supply chain.

Chair

Your evidence to us was excellent. You mentioned how you are pushing that whole-of-government approach. The coalition Government did that in 2011‑12, and now Lord Maude is doing it again. Did it not work last time?

Jon Coleman

It is an iterative process. If we go right back to about 2009, Lord Mandelson at the time decided that we needed to put a focus on exports. That was taken forward by the coalition Government. Steps were certainly made within UK Export Finance, which is now fit for purpose in nearly every way we believe—there are one or two tweaks they could do. However, on the UKTI side, we were always concerned there was a lack of a metric in terms of performance, linking their performance and activity to actual exports won. We are encouraged that we believe there will now be a more structured view of the value of exports that UKTI helps UK companies win. UKTI obviously cannot win an export, but they have a valuable role to play. The way to go is to put policy into individual government departments to get the export agenda on those departments’ agendas and link that into the domestic market.

Chair

Mr Ambler, you have long experience in exporting and importing. What practical recommendations do you think we should be considering in order to raise our game when it comes to exports?

Tim Ambler

Yes, I am sorry to disagree with the previous speaker, but I rather agree with the previous panel. UKTI—and I have worked with them on and off for 20 years—has not changed. It is as bad now as it was then. This may be over the top, but it is an actual blockage to exports rather than a help at the SME level—it is quite different at the bigger company level. I have been filled with tales for all of those 20 years—and you have been, too, as MPs—about trying to be a small exporter and getting some help. I tried to be a small exporter myself last week, because I knew I was coming here, to see what would happen. I am not going to take up the time of the Committee, but it is not a good story—at least not from their point of view. The Government have recognised that UKTI is not fit for purpose. The reason I know this is that they have a new model. The new model is not very precise yet; it is a bit sketchy, which makes it difficult to criticise. But to come back to your question, I am all for getting government Ministers—all the Cabinet—up one by one at the end of each year and saying, “What have you done for exports this year, my boy? How many trade missions have you led and what have you actually done about it?” That is a very good thing to do. However, to spread all the civil servants around Whitehall so that they can have more chit-chats to each other is, frankly, going to make the lack of contact between UKTI and the real world even worse.

Chair

Your evidence was excellent, too. You are very scathing about UKTI in your evidence to the Committee.

Tim Ambler

I am a little.

Chair

You say that UKTI has offloaded responsibility. What model do you want to see UKTI have?

Tim Ambler

I do not want it to have any more—let it have a great deal less. As I say, they are getting in the way, so if there was less of them, they would get in the way rather less. Government in this area should only do what only Government can do, and that is really the key to it. There are obviously many things that the private sector cannot do for itself and where it needs help: introductions to foreign Governments, high-level contracts or trade missions. There are lots of things that only the British Government and, in my view, UKTI itself can do—because it is not all bad; I do support it in some respects. However, there are an awful lot of the other things that they, frankly, fail to do, and dealing with SMEs is one of them. Dealing with the overseas posts is another, because that is a disaster area as well. They should, frankly, offload that because they cannot do it, so they should give it to somebody who can. In the case of domestic small businesses, we should follow the German pattern, which is what Michael Heseltine suggested 20 years ago. They have 45% SME exporters; we have 18%. Like the Germans did, why do we not give it to the British Chambers of Commerce, who are themselves—as you will know, Chairman—extremely keen to take that role on. Whether they should take it on overseas is a more difficult question.

Richard Fuller

There is one point in Mr Ambler’s evidence I would just like to highlight and get some views on. It is about the way in which foreign direct investment is used in statistics in that, when someone does a direct investment, the Government herald the full amount of that. If it is, say, setting up a new plant and it costs £500 million, we have £500 million and we call it a big success but, equally, that could be purchasing a British company and, essentially, it is taking over future profits that would have come to UK shareholders to give to overseas shareholders. Do you think UKTI should bear in mind Mr Ambler’s advice and be a bit more dexterous in heralding foreign direct investment statistics?

Graham Cole

If you are in the business, you are running a company and you are looking to export, it does not really matter what the statistics say or do not say. One accepts that some of those statistics that come out can be challenged. We have a target of £1 trillion. You could challenge that if you want. I do not think it changes the fundamental, which is: how do you get more people out there exporting and those who are out there exporting more? I personally do not think how you use the statistics or whatever is a major issue.

Tim Ambler

The £1 trillion target was never viable, and they knew perfectly well at the time that it was never viable. It sounded good in the media, but the real purpose of the £1 trillion target was to get the massive increase in the budget of UKTI. That is how you get bigger budgets: you have bigger targets. They manifestly achieved that. Even with the current round of cuts, they will still be a lot bigger than they were five or six years ago.

Graham Cole

I take a slightly different position to that. I worked with UKTI, or whatever it was called—it changed its name—for some time. There are areas of excellence for large companies. They can make a difference. Certainly, if you are going on a trade mission—and certainly, as I have done on several occasions, if you are going with the Prime Minister—it works extremely well and can make a difference. But you are asking one organisation to support Jaguar Land Rover, British Aerospace or AgustaWestland and also a valve manufacturer with 30 people in Newlyn. It just does not work like that. It is a different skill set; it is a different size.

Richard Fuller

To be clear, I am not asking them to do it; you are asking them to do it. I would rather we did not use that much money because I do not think it is spent particularly effectively. That is a question I put to the last panel. We are in a time of the Government still living beyond their means and trying to meet their deficit reduction targets. For taxpayers in my constituency—and each of you in your careers have been in large businesses—there is a lot of scepticism about taxpayers’ money being spent on large companies. Do you think that the Secretary of State for Business lost an opportunity here to show that he could do his bit for deficit reduction by really challenging the structure of UKTI and paring it down to where it could be truly effective, rather than, as you say, Mr Cole, trying to do too many things and perhaps not doing them very effectively?

Graham Cole

I believe, and the report we issued last year states, that with the smaller companies—the SMEs—you have to judge where the “S” starts and where the “M” starts and where a large company starts. Also if you have a supply chain that is part of a larger company, where do you cut it off? It is not quite that simple. I believe UKTI should look after the larger companies, because that is really what it does well. There should then be a different system for the smaller ones. Can I quickly make two other points related to that, Chairman? First of all, exports are today’s debate, but they must be part of an overall UK industrial strategy. On their own they do not mean anything, so you need a co-ordinated strategy. The other point I would make is about putting the civil servants around the other ministries. I believe there is an awful lot of activity that could happen within each of the other departments, particularly the spending departments. When they are making major procurements, they could look to see what the potential impact is on exports. I do not know whether you physically need to spread civil servants around or whether you can drive an export mentality into each of those departments, but you need to get the senior people in that organisation—in that department—thinking exports. That can make a change.

Richard Fuller

Many small businesses in my constituency would shudder at the prospect of the Government announcing an industrial strategy. It is a perfectly reasonable point of view; it is just how I think my constituents and small businesses will feel. They like the free market and the opportunity to meet their customers; they want the Government to get out of the way.

Graham Cole

Germany, Japan, America and France all have an industrial strategy you can identify with.

Richard Fuller

Mr Coleman, in your evidence—and I think in your response to the Chair—you were quite supportive of the distribution of UKTI into different departments. In your evidence, you make a specific point about DFID and supply chains. Am I right about your view about moving into different departments because, in the previous panel, they were saying, “Well, we are not really sure about the evidence, but the evidence we do have suggests that is not a good idea and centralising it is good.” Would you just elaborate a bit more on the supply chain in DFID, as that is one government department that is seeing significantly increased budgets?

Jon Coleman

We are certainly supportive of the idea of having UKTI more focused within government departments. In terms of DFID, we feel there should be a stronger focus on linking DFID programmes and DFID aid projects back into the UK supply chain. A very small percentage of the DFID budget is spent with UK suppliers. We think there is a big opportunity there, particularly in the context of the National Export Challenge.

Richard Fuller

Why do you think that is, compared with other countries? Is it because we are just worried about what it might look like?

Jon Coleman

There is quite a strong element of that. If you look at OECD countries, there are only four OECD countries, of which the UK is one, where there is no tied aid element. We are not asking for trade for aid, but regarding UK standards, UK quality, UK delivery of programmes, if there was a stronger link into the UK supply chain, we could deliver truly UK projects into LIDCs. That can only be of benefit to the UK. Certainly, as a taxpayer, I would feel prouder of that than some of the spend we see out of DFID.

Amanda Milling

The Chairman spoke earlier on about nudging small businesses into exporting. What are your views—I think I know some of your views—in terms of the move from the regional trade advisers to more of an online offer? What are your views in terms of that as a model?

Graham Cole

I believe that, if you are to encourage people who are not in the export market or who are on the fringes of it to do more, you have to be close to them. You have to know the business; you have to encourage them out. I do not think going online would do it. Again, going back to our report, we suggested that if you look at the German model, the chambers there operate close to the customer. They know their customer; their customers know them. They know it is a one-stop shop they can go to where they can go and talk—and it works. The difficulty is that, frankly, the excellence of the German chambers has been developed over many years. With unlimited money and support, you cannot go from 0% to 100% like Germany overnight. I would suggest that journey will have to be made at some time if you want to get the smaller companies involved. I understand the difficulties in doing it. Certainly, you could say, “The market can form. Perhaps in one area it could be this organisation; in that region it could be that.” But I just do not think that works, because you are looking for an organisation that has quality control, that is excellent, that provides and that can link to the overseas. I just do not think that you can do that if you have six, seven, eight or 10 organisations all linking with the smaller companies.

Amanda Milling

Can I just probe you on that point a bit more? Obviously, you mentioned earlier that the difference in the German market is that the chamber of commerce is mandatory. How do we address this in the UK?

Graham Cole

I accept that it can never be mandatory here. But as you build up, and the standard and the excellence of the organisation is seen, it becomes easier. It is a long-term process. One of the questions or statements I get back when we say, “You need an organisation—a one-stop shop or similar—to do this,” is, “There isn’t one; the British chambers are not ready for it.” The answer to that is “true”, but I do believe that, unless you set up at that level an organisation that can provide the knowledge, the experience and the encouragement and that knows the customer and can then link to an overseas chamber, you are not going to do it. Again, forgive me for saying, Chair, but if you see the way Germany operates, you will see how this has linked over many years and is very positive.

Tim Ambler

Can I go back to your first question regarding those people online? Having had the dubious benefit of being online with ExportSavvy, which was quite an interesting experience, some of the online information is quite helpful and some of it is plain wrong. However, it is very unsatisfactory to deal with because it asks you a lot of questions you cannot possibly know the answer to, like, “Which country do you want to export to?” How do I know? I will not spend too much time on this issue, but I will just say that what someone who is a potential exporter really needs is somebody who has been there and done that himself or herself, and can sit with you and say, “Yes, I remember being in your stage at that stage. Here is what I did and here is what other people have done,” and that kind of thing. You are not going to get that online.

Amanda Milling

Do you think the advisers you have had to date in UKTI have been able to do that? Have they had the expertise to guide potential exporters?

Tim Ambler

Quite a lot of them have been or are very good. Their problem is management. It is bad generals; there are no bad soldiers. Specifically, it is about not being directed and being given time to do the thing. At the same time, there are quite a lot of other ITAs who are in it for the money and really should not be employed. That is part of the management problem again. It is back to UKTI all the time, because they have subcontracted out quite a lot of the ITAs to other firms, but because they are not managing them properly it does not work.

Jon Coleman

Back to the original question, which was about an IT system, BExA has concerns. If you look at the Government’s record on introducing large IT systems, it is not good. The ability to go and speak to someone who can either give you the answer or point you in the right direction is far better than going online and struggling with a website, which, as Tim has said, can often give you erroneous information. I can see people spending man-years trying to sort and sift information on a website and trying to make sure it is right and appropriate. There has been a lot of talk about the SME space. What we would really like to see in the SME space coming from a combination of UKTI and UK Export Finance is some real practical support. I note that, in the Trade Minister’s announcement, he talked about vouchers for exporters. We support that. We can also look elsewhere, such as at the French example of having prospect insurance, whereby it is applicable to SMEs and they can obtain funding or a guarantee for funding to support a marketing campaign. They have to go and identify their market, come up with a business plan and they then get government support. We see that as really practical support. The Canadians have the rather nattily termed CanExport, which is a similar product. That announced, at the beginning of the year, 50 million Canadian dollars aimed at SMEs. An SME can apply for anything between 10,000 and 100,000 Canadian dollars, and that is a 50/50 share, as I understand it, so they have to come up with the equivalent amount. But that goes to support travel and subsistence—actually getting into the country. We see that as a real practical use of government funds, because you are focussing on individual exporters, you are agreeing a plan with them, you are working with them and you are following through. You have a metric you can follow.

Amanda Milling

Can I ask one last question?

Chair

You certainly can.

Amanda Milling

We have talked a lot about different things that can be done. I suppose I am sitting here and feeling quite concerned that we can do lots of things that are not going to make a difference. Do you think these different policies, initiatives and changes to UKTI are value for money?

Graham Cole

I come from a large company background and, therefore, I have got used to using UKTI. They have been very beneficial, but I am also convinced that if we really want to change things, we have to get small and medium-sized companies involved. I do not see the UKTI route as the route that is going to change that. You have to put something in place that is going to help those people. As I say, it is not a definitive grouping, because what is an “S”? What is an “M”? What is an “M” that is related to a large company? All those are difficult things to sort out but, by in large, you want to encourage people to go into the export market. The sort of initiatives that Jon has just mentioned—in Canada etc.—are valuable. When you go out into the market, you see your opposition there with quite a toolbox of things to do. But you will not get to there unless you know the suppliers; you talk to the suppliers; you get the suppliers with confidence; and you know that if he has an issue to look at with regard to export paperwork or the UK Bribery Act or whatever, there is somebody there who can help him. That is what you have to break through.

Jon Coleman

The proof will be in what happens in the next four years. Over the last five years, certainly the SME sector has not had support from UKTI. I would agree with what has been said by the members of the panel. They had a deliberate focus on medium and large companies—probably because that is where they could deliver best what they had to offer. The way forward seems to be having a refocus of UKTI on government departments and then, hopefully, a focus on linking into the supply chain, with a focus on SMEs and on getting awareness out there about the risks of exporting. It is about helping them into the market, but also then helping them through the process of understanding the risks and pointing them in the right direction, be it UK Export Finance or the private market, to cover those risks.

Tim Ambler

My expectation is rather gloomy. I do not think I am allowed to be ad hominem, but we are dealing with a Minister who was going to get rid of quangos, you may recall. My expectation is that it will not change very much and there will be another meeting 20 years from now in which the same conversation will be had. I would hope, on the other hand, that this is an opportunity for radical change. Sorry to wave my own flag around, but the supplementary evidence that I was allowed to put forward—I do not know if you had a chance to see it—is quite specific about the point I was making earlier: namely, that UKTI or the Government should only do the things that only Government can do. That cuts it right back because, in the latest thing from BIS, it says in almost every paragraph, “We are going to focus more and, by the way, here are another six initiatives.” That goes on right through their evidence—it is uncanny. They really should focus more; that is the good part of the paragraph. They should focus on what only Government can do and find a way, be it through these voucher schemes—that is a good scheme and I entirely support that—or through recentralising SMEs to BCC, with a method for controlling that, because you cannot just give the taxpayers’ money away. I am not going to take time now, but I have specified exactly how that could be done with a faint wish, not a big one, that it might be read in high places.

Chair

Can I just mention this very briefly? An emerging theme, even at this early stage, is whether UKTI should focus upon small exporters and expanding the range—those exporting to one or two markets of relatively small value—or is it the export superstars, in terms of really capturing a lot of export value? Where do you think we should be looking? Is it small businesses or is it export superstars?

Graham Cole

It is both.

Chair

Even with limited funds and different skills?

Graham Cole

Yes. You have to support large companies because they are going to bring in £1 billion, £2 billion, £3 billion, £5 billion or whatever, in one contract. You cannot afford to lose that because your competitors have greater government support than you and everything that means. That has to go on, and that is where UKTI are very good; they play a very good role. For the smaller companies, you need a different system. UKTI, with all their structure and all their need to be showing what they are doing, is the wrong organisation. Tim mentioned that Government should only do those things that only Government can do. If you do that, which I agree with, but what they stop doing is to do with the smaller companies and you allow six, eight or 10 people to go in and try to make a market of it, you will have six, eight or 10 different standards and it will not work. You need to have a standard, a quality control, for SMEs across the board.

Tim Ambler

I agree with that. I would say it should be given lock, stock and barrel to the British Chambers of Commerce, on the German model. To have six or eight people competing will not work.

Chair

Can I focus minds upon export superstars or increasing the number of small businesses with small export value? Mr Coleman, do you have a view?

Jon Coleman

If we put this, as we do at BExA, in the context of the National Export Challenge and objectives, which I agree have stretches—they are objectives; they are challenges; it is called a “Challenge”—there are two sides of the coin. To really get to the trillion, you have to be supporting the large corporates and the medium-sized ones, but there are an extra 100,000 companies exporting. They are going to be mainly SMEs. If you are going to have a joined-up government approach that has targets, you have to address how you address each side of the coin.

Chair

Do you think those two targets are contradictory then?

Jon Coleman

I do not think they are necessarily contradictory, because if you have an extra 100,000 new exporters and a lot of them are SMEs, they will be delivering a percentage increase in exports, but it is not going to be £500 billion.

Chair

Okay. Mr Ambler, do you have a view in terms of export superstars?

Tim Ambler

Yes, I do. It is the opposite of Graham’s: not both, neither. I do not think the export superstars should need government help. The superstars will go and get it. When we launched Baileys in 1972, it was a non-brand. The Irish Government wanted it for exports and we were a big enough company to lean on the Irish Government and say, “Right, we expect all your embassies around the world to give a Baileys party, just for starters.”

Chair

It does not sound like a bad idea.

Tim Ambler

We were big enough to do that. The superstars can get the help they need from various sources because they are superstars. Conversely, I do not think—as I have said several times—that UKTI is any good with SMEs. They should abandon ship.

Graham Cole

I am not sure I could see each embassy having a helicopter somehow. Chairman, I just do not agree with Tim. You need the support out there fighting in your corner because your competitors are strong.

Paul Blomfield

This is very much the same theme I want to pursue, because alongside this enquiry I have been carrying out a dialogue with local SMEs about their challenges with exporting. I have to say, contrary to Mr Ambler’s observations, there has been, from those most successful in exporting, a very positive response about UKTI and the role it has played in helping them. But I was interested in Mr Cole’s suggestion that, although clearly we are talking about different companies facing different challenges in terms of scale, you think there should be a complete split in UKTI. Isn’t there a basis of expertise that simply needs to be applied differently to SMEs?

Graham Cole

The support you need as a large company is international, political, geopolitical, long term—it is all sorts of large issues. The support you want to encourage SMEs to go into the export market is very different. You are quite right: if you talk to some SMEs, they will say very good things about UKTI. Often that is where they have been the recipient of contracts as part of a large contract. The supply chain to JLR is a good example of that. But you need to have people at a local level, close to the exporter, to help them through. I do not see that as a government function. I do not think to do that is the same ethos or the same structure as supporting large companies.

Paul Blomfield

For example, I was talking to the local hand-tool manufacturer who had broken into exporting into Russia. He is on the M side of SME, but he said that the overseas market introductory service that UKTI did was really useful. The kind of skillset that they have can be applied differently, but that knowledge base—

Graham Cole

I do not know the particular instance, but most people would say that the chambers overseas are a very effective way of introducing. The problem at the moment is you have the embassy doing some, the UKTI doing some and the chambers doing some. The whole encouragement for smaller companies is different. Now, you could certainly incorporate what your tool manufacturer is seeing going into Russia into a new system, but I would argue that the majority of people who are looking to go into the export market want a different relationship, different support, than your tool manufacturer.

Paul Blomfield

I very much accept your point that there needs to be a kind of intimacy in the relationship and mentoring and support for small businesses trying to get into exporting, but I am just curious to know what your model looks like and who is doing that differently. You mention chambers, but the truth is that chambers are pretty patchy across the country, aren’t they?

Graham Cole

This is the point I made to Ms Milling. You have to start that journey at some stage. In the report I chaired last year we recommended a one-stop-shop focused around the chambers. There is an awful lot of background to that to go through. The response quite often is, “Well, the Chambers are not able to do that; they are not ready to,” and you are right, but you have to create that. Again, I go back to the German model. That has been created, frankly, since 1945.

Paul Blomfield

Yes, we put it in place.

Graham Cole

Well, that is for historical reasons. You are not going to go from 0% to 100% overnight, but at some stage you have to do that. In my view, you have to pick your vehicle and then support it, back it and certainly iterate it, but that is the way forward.

Paul Blomfield

Thank you for that. One last question. My local tool manufacturer said that one of the problems at the moment was that where in the past, as an SME with a limited budget, they had been helped by matched funding from grants, that financial support did not seem to be available in the way that it was. It is a big problem for them. Is that your experience as well? I see Mr Coleman is nodding.

Jon Coleman

That certainly is a problem, yes. We have a rather perverse situation where support for a new exporter going into a new country and maybe going to a tradeshow is there, whereas an existing exporter who is successful in one country and is assessing another market and wants to go into that market cannot get the support in terms of funding from UKTI. You have someone who can export, knows what they are doing and just wants to go in and expand their market. The needs of the SME in terms of the real understanding of getting into a market are very different from the needs of government support for a large corporate. Large corporates have marketing departments, legal departments and export departments, so they know what they are doing. When you get down to the SME, particularly the new exporter, it is the real nuts and bolts. That is where the regional advisers—the good ones, and there are a lot of good ones and one or two who are not quite so good—can really help by either providing the advice or pointing people in the right direction to get advice from a broker, on the insurance side, a bank or a trade association, or whomever it may be. You do need that personal support.

Tim Ambler

Mr Blomfield mentioned that some chambers are patchy in this area and that is also true of overseas posts. Some are good and some are not. The proposal I have put up is that in offloading this—a bit like the Arts Council, which hands out money annually or every two years or whatever it may be—the chambers have to bid for financial support once every three years or whatever it may be. The good ones that show results get the money and the bad ones that do not show results do not get the money. One can use the competitive bidding process in order to drive standards up, both at home and indeed overseas while one is at it. I would see that as a big opportunity. That could never happen in the present structure of UKTI, but it could happen in an offloaded structure.

Chair

I am very conscious of time. BIS orals is happening in the Chamber of the House shortly and I have Kelly and Amanda wanting to come in, so if we could be brief, that would be appreciated.

Kelly Tolhurst

It is quite interesting to hear what you are saying. I have had a very good experience with UKTI as a small business trying to export into a challenging market. Because of the published focus of UKTI on large organisations, do you think small businesses or SMEs may feel they are not big enough to export and therefore do not necessarily get in touch with UKTI at crucial points?

Jon Coleman

That probably is the case. I do not have any empirical evidence for that, but if a small company is going to get into the export market, the first port of call is to go and ask someone, “How do I do it?” It is that basic. The fear factor is wondering, “Am I putting my whole company at risk by investing in an overseas market when I am happily paying the bills and I have a nice business here in the UK?” Having somewhere to go and having the help and support of UKTI, as well as other private organisations and trade bodies, is vital.

Kelly Tolhurst

Following on from that, is there any value in regional governments’ involvement in the promotion of their local areas and their particular skills? That seems to work in some other European countries, specifically Italy, that are performing much better than the UK in the developing markets.

Tim Ambler

That was the evidence from these other regional things. They all said, “Give us the money,” basically. There could well be value in that, but to have local government and the chambers competing would be trouble. They should be encouraged to work together, because you are quite right; there is a lot that could be done.

Graham Cole

It depends on what you want regional government to do. To set a culture that encourages exports is good and there may be some things they can do on a regional basis, but it does not remove the need for individual companies to have individual support to get them there and then get them through.

Jon Coleman

There is also the danger that you almost disperse the support for export if you have some things that are done regionally, some things that are done centrally, and different government departments. You run the risk of having a completely dispersed area of support, which may cost more in terms of the government purse.

Kelly Tolhurst

Can I quickly come back on that? For example, we do know that countries like Italy are more successful in getting their SMEs to export, and that is an example of one of the ways that they do it. What is stopping us?

Jon Coleman

I guess the devolution process in the UK.

Tim Ambler

Italy has a remarkable system in which each town is almost a specialist area in shoes or belts or whatever it is, so they have a huge concentration of expertise in small areas. Those small areas are the equivalent of our chambers. That is why they are successful exporters. They have a real focus, town by town.

Graham Cole

Again, my company was Anglo-Italian. Their system has been developed over many years. Whatever you put in place, you are not going to get there straight away.

Amanda Solloway

Given that UKTI cannot be everything to everyone—i.e. large businesses and small businesses—and if it has to come under one body, which is a message that has come across, and that body is called UKTI, would you suggest that it is a lack of focus on behalf of UKTI or is it a management issue, as some of you have been saying?

Jon Coleman

I would say focus.

Tim Ambler

I think the same thing. Management is obviously the focus.

Graham Cole

It is being asked to do too broad a job.

Amanda Solloway

But couldn’t it do that big a job if it had good management? I think that is my question.

Graham Cole

If you are going to provide that close support that SMEs want, you could call it UKTI but they have to be local, they have to be funded, and they have to be aware. It is exactly the same issue. Whatever you call it, it has to be quality controlled.

Tim Ambler

I have dealt with UKTI and its predecessors under the DTI for over 20 years. Many talented people have come and gone. I have admired them and they are good individuals. It is the actual culture and structure that is wrong, not the individual managers.

Chair

Gentlemen, thank you very much. That was incredibly helpful for our inquiry. Thank you for giving evidence. We appreciate your time. Thank you. Oral evidence: The Productivity Plan, HC 466-iii 3