Business, Energy and lndustria I Strategy Committee House of Commons, London SWl H 9NB

Tel 020 7219 5777 Email beiscom@parliament.uk Website www.parliament.uk/beis

Angus Brendan MacNeil MP Chair lnternational Trade Committee

Do* *gu, Á)'t zrd November2o16

Exports and the role of UKTI

Last autumn my Committee launched an inquiry into Exports and the role of UKTI

However, the decision to leave the EU and subsequent establishment of your

Committee, means that we do not feel it appropriate to continue this work.

ln light of this, we are drawing our work on this inquiry to a close. However, I wanted

to write to you to share our emerging findings (attached), many of which we believe

will be relevant for the ongoing work of the new Department and which your own

Committee may wish to consider further. We have restricted our observations to the

current range of products and services that Government provides to exporters, as we

did not have the opportunity to take evidence on the challenges and opportunities arising from leaving the EU - which will clearly be significant - prior to your

Committee's establ ishment.

We are gratefulto all those who contributed to our inquiry. This has included nearly

100 written submissions, around six hours of oral evidence, and the time generously given by around 45 SME participants at a workshop in Derby and members of the

Italian Government who shared their own insights into export support.

Yt ee. J--/A

lain Wright MP

Chair of the Business, Energy and lndustrial Strategy Select Committee

Emerqino findinqs from inquirv Exoorts and the role of UKTI

a The Committee heard evidence of significant flaws in UKTI's previous operating model. While recognising the commitment of UKTI's staff and the predominantly positive feedback from businesses that have used UKTI

services, we agree with the previous Trade Minister, the Rt Hon Lord Maude,

that "in order to be fully fit for purpose UKTI requires transformational change." While weak global grovrrth may explain some element of the UK's persistent trade deficit, it does not explain why UK export growth has been the

slowest in the G7 since 2008. Clearly, the ishment of a new Department

for lnternational Trade offers a major opportunity to achieve this, and continue

the journey which was previously started under Lord Maude.

o There appears to be an inherent tension between the value & volume export targets. We understand why the Chief Executive of UKTI telling us

that "there is value in the volume and volume in the value." However, we have

also heard evidence that the vast majority of export value comes from a

smaller number of export 'superstars'.

a UKTI needs to incubate new export superstars by better supporting established exporters to move in to new markets and expand their sales. Historically UKTI appears to have spent disproportionate resource

encouraging new businesses to export, and providing high-levels of support to

the largest companies. Smaller, established exporters with the potential to grow must not fall in to a policy blind-spot. We recognise that refocussing

resource towards mid-sized businesses could have implications for the level

of support that Government can offer to new exporters.

a Many companies place high value in face-to-face advice and are concerned that online support is often too generic and high-level. Some

evidence has argued that if Government is genuinely committed to increasing

the number of exporters then UKTI must continue to ensure that companies continue to have timely access to a human adviser who can provide practical

and bespoke advice and support to help its customers on their export journeys. However, we also recognise that resources are finite and the new

department will need to find the right balance. lt will be important that the new

department makes clear its offering to businesses of all sides and explains the rationale underpinning any changes in the level of support.

o We have heard strong endorsements from business for UKTI in-market support, and particularly access to trade shows and trade missions. However, the Committee has also heard some concerns that UKTI staff in-

market are identifying exporting opportunities that UK companies are then not

filling. This could potentÍal mean that effort is being wasted in market because

UK businesses are not able to exploit opportunities identified, or that UK businesses are unaware of opportunities identified in market.

o We have heard concerns about the quality of the OMIS service. While we recognise that the quality of an OMIS report will depend on how specific a company can be about its needs, we are concerned that customer experience continues to be mixed given that this Committee previously outlined issues with OMIS in 2010. The new department may need to do more to manage business-expeetatio ns-and-ensure-that-theireustomers-only-eom missio OMIS reports (or any successor to that scheme) where appropriate.

a The Government has high social capital abroad which can open doors for business that may remain closed to third-parties. A number of witnesses to our inquiry expressed concern that contracting out in-market support could have negative consequences because third-party providers would not be held in the same esteem as Government.

Many witnesses to our inquiry found the export support landscape confusing. The Committee heard that UKTI operates around 15 different websites and offers multiple services. We also heard evidence that national and local government, and trade bodies too often act in competition rather than collaboration, providing a poorer overall service for businesses. The Committee also heard mixed evidence on the shift to a new'whole-of­government' approach to exporting; while we heard very positive feedback on Defra's work in this regard, other departments did not seem as likely to prioritise export support. The new Department could usefully produce a clear map that sets out in one place the different types of export support available and clearly articulates the different roles and responsibilities of national and local government, trade associations and other external partners.

a A number of businesses highlighted specific concerns around interpreting export control requirements and international export regulations. The evidence we heard suggests that businesses would benefit from a route to get clear advice on export requirements. Some businesses felt that UK procedures are more onerous than those enforced elsewhere and this could risk placing UK companies at a disadvantage.

The Gommittee has heard evidence of mixed performance by lnternational Trade Advisers (lTAs). The planned review of lTAs performance targets offers an opportunity to address this and ensure a

consistent high quality of support for businesses. Likewise any further outsourcing of export support needs to be balanced by strong contract

management, as the Committee heard mixed reviews about third party providers of export support.

o The UK does not appear to have a strong brand as an exporter. ln ltaly,

the Committee heard that the UK was associated with tradition and financial services. The evidence the Committee heard suggested that the UK had a

strong message on attracting inward investment, but was less clear on its

brand proposition as an exporter.

O The level of export finance support provided by UKEF appears low relative to counterparts in other countries, and awareness of UKEF also low. We recognise that UKEF has accepted that it needs to take steps to address its level of service to SMEs, and agree that this is important to helping reduce the financial risks of exporting. The Committee also heard a

number of other suggestions to improve financial incentives for exporting, such as tax reliefs for exporters, which may merit further consideration.