Supporting UK Exporters Overseas
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House of Commons Committee of Public Accounts Supporting UK exporters overseas Thirty-seventh Report of Session 2013–14 Report, together with formal minutes, oral and written evidence Ordered by the House of Commons to be printed 18 December 2013 HC 709 Published on 17 January 2014 by authority of the House of Commons London: The Stationery Office Limited £11.00 Committee of Public Accounts The Committee of Public Accounts is appointed by the House of Commons to examine ‘‘the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and of such other accounts laid before Parliament as the committee may think fit’’ (Standing Order No 148). Current membership Rt Hon Margaret Hodge (Labour, Barking) (Chair) Mr Richard Bacon (Conservative, South Norfolk) Stephen Barclay (Conservative, North East Cambridgeshire) Guto Bebb (Conservative, Aberconwy) Jackie Doyle-Price (Conservative, Thurrock) Chris Heaton-Harris (Conservative, Daventry) Meg Hillier (Labour, Hackney South and Shoreditch) Mr Stewart Jackson (Conservative, Peterborough) Fiona Mactaggart (Labour, Slough) Austin Mitchell (Labour, Great Grimsby) Nicky Morgan (Conservative, Loughborough) Nick Smith (Labour, Blaenau Gwent) Ian Swales (Liberal Democrats, Redcar) Justin Tomlinson (Conservative, North Swindon) Powers Powers of the Committee of Public Accounts are set out in House of Commons Standing Orders, principally in SO No 148. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/pac. A list of Reports of the Committee in the present Parliament is at the back of this volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee is Sarah Petit (Clerk), Claire Cozens (Committee Specialist), James McQuade (Senior Committee Assistant), Ian Blair and Yvonne Platt (Committee Assistants) and Alex Paterson (Media Officer). Contacts All correspondence should be addressed to the Clerk, Committee of Public Accounts, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5708; the Committee’s email address is [email protected] 1 Contents Report Page Summary 3 Conclusions and recommendations 5 1 The scale of the challenge 9 2 How the FCO and UKTI support UK exporters overseas 12 Formal Minutes 16 Witnesses 17 List of printed written evidence 17 List of Reports from the Committee during the current Parliament 18 3 Summary We welcome the progress which UK Trade and Investment (UKTI) and the Foreign and Commonwealth Office (FCO) are making in supporting UK exporters overseas. In recent years, the departments have given greater attention to encouraging export growth and have shifted resources to focus more on emerging markets. However, we would want the UK’s export performance to improve relative to other European Union (EU) nations. Based on current forecasts, the UK is not on-track to meet the Chancellor of the Exchequer’s ambition, set out in the 2012 Budget, to double the value of its exports to £1 trillion a year by 2020. UKTI and the FCO have not always worked together effectively. For example, they developed separate strategies to increase exports, without stating how they would work together. They now need a more joined-up approach to increasing exports. It is difficult for FCO to evaluate the impact of its activities, but without proper evaluation it cannot assess which of its activities are most effective at promoting exports. 5 Conclusions and recommendations 1. In March 2011, the government published its Plan for Growth. This set out its strategy to encourage economic growth and included a focus on increasing investment and exports. In 2012, the Chancellor set a very challenging ambition of doubling UK exports to £1 trillion a year by 2020. Achieving this ambition will depend on, at least, maintaining the current market share in advanced markets and securing greater exports to new, faster-growing emerging markets. 2. In 2012-13, the UKTI and FCO spent £420 million on promoting UK economic growth through supporting UK businesses overseas. In general terms, the FCO tries to create the conditions overseas for growth, and UKTI works directly with UK businesses to help them make the most of these market conditions. The FCO estimates that 1,000 of its 14,000 staff spend at least a quarter of their time promoting economic growth, across its international network of 270 embassies, high commissions and consulates. UKTI is a non-ministerial department of both the Department for Business, Innovation & Skills (BIS) and the FCO and nearly 1,000 UKTI staff in 160 international locations work on export-related activities. 3. From 2000 to 2012, the annual value of UK exports nearly doubled. During the same period, the annual value of exports globally nearly trebled. UKTI told us that while the share of UK total exports to key emerging markets remains low (compared to the share of UK exports to advanced markets such as the United States) they are growing faster than exports from Germany, France and Italy to emerging markets. These latter three countries have a faster overall export growth rate than the UK. Recommendation: UKTI and FCO need to understand the reasons behind these stronger overall export growth rates of other countries and use this research to inform their future planning to close the gap. 4. UK export performance is currently not on-track to meet the Chancellor’s ambition to double the value of exports to £1 trillion a year by 2020. Current forecasts indicate that a 10% year-on-year growth in UK exports is needed to achieve the £1 trillion ambition. However, for the last two years the annual value of UK global exports has been flat. A significant step-up in performance is now needed to achieve a doubling of annual exports to £1 trillion. UKTI and the FCO still consider the ambition to be realistic, particularly as the UK’s standing and profile are built up in emerging markets. UKTI told us that progress in increasing UK exports to emerging markets will be crucial. Without a strong performance in increasing exports to these markets, UKTI emphasised that the total value of the UK’s annual exports will not increase to £1 trillion by 2020—no matter how successfully UK exporters perform in advanced markets, such as the United States and Europe. Recommendation: UKTI and FCO need a defined joint ‘roadmap’ to support the £1 trillion annual exports by 2020, particularly focusing on what FCO and UKTI need to do to help UK businesses maximise export opportunities to emerging markets, as well as maintaining, at least, export levels to advanced markets. 6 5. UKTI and FCO have not always worked together effectively to promote export growth. To meet the challenging £1 trillion exports ambition requires UKTI and FCO to take a planned approach to supporting UK businesses to export, based on an understanding of what works, and to collaborate with each other effectively. There are examples of UKTI and FCO working together effectively in some overseas locations, for example, in Colombia where UKTI and FCO staff worked together in sector-based teams. However, there has been limited joint-planning centrally and at other overseas locations. UK based businesses have told FCO that it needs to be more closely co-ordinated with UKTI. The two departments acknowledge that they could work together more effectively. They intend to create a joint overarching strategy that defines the contributions of UKTI, FCO and BIS. Planning at overseas posts will be more integrated with a single country business plan and set of metrics. Recommendation: The proposed joint strategy between UKTI, FCO and BIS on exports, and the new joint country plans will need to be clear on roles and responsibilities, set out how the organisations will work together, and provide a single action plan for promoting UK exports centrally and at overseas locations. 6. UKTI needs to be a more effective source of intelligence on new opportunities in order to support small and medium-sized enterprises (SMEs). UKTI told us that increasing the exports from mid-sized businesses and SMEs in the UK is critical to achieving the £1 trillion exports ambition, but UK SMEs do not perform as well as their French and German counterparts. We heard that surveys by business bodies such as the Confederation of British Industry and Federation of Small Businesses indicate that many SMEs are unaware of, or do not use, UKTI’s export services. Recommendation: UKTI needs to be a more effective source of intelligence on new opportunities in order to help make it less difficult for SMEs to export. It should actively market to SMEs the export opportunities available in different overseas markets, as well as the support it can provide to help overcome barriers to exporting. 7. The FCO would benefit from a ready means to evaluate the impact of its work to promote exports. UKTI has several metrics which help it measure the impact of its services, including the new trade growth value measure. However, the FCO does not have equivalent measures to assess the impact of its work. In particular, FCO lacks information on outcomes which it could use to judge which of its activities are most effective at promoting exports in different circumstances. This makes it difficult to demonstrate whether the FCO achieves value for money on its work to promote exports. Recommendation: The FCO should develop measures to evaluate the relative impact of its interventions, to understand their likely costs and benefits. 8. The actions of other departments, such as the Home Office to secure UK borders, can lead to tensions with the UKTI and FCO’s work to promote UK exports.