Daniel Kawczynski MP: UK Trade and Investment is not doing enough to spur on the export-led recovery Britain needs

Daniel Kawczynski is the Member of Parliament for Shrewsbury and Atcham and Chairman of the British MENA Council.

Last year, the Government set itself the goal of doubling the number of Small and Medium Sized Enterprises exporting to 50,000 by 2015. Achieving this will only be through a concerted effort from UK Trade and Investment to encourage those export-ready SMEs to do so. While much has been made of the newly appointed UKTI trade envoys and the recent UKTI events around the country during its November "Export Week", I am deeply concerned UKTI is not doing enough to spur on the export-driven recovery which both the Prime Minister and the Chancellor seek. I sincerely believe UKTI requires urgent attention to ensure it is encouraging and assisting more export-ready SMEs to do so. Failure to act will only stifle any steps made towards reaching the Government’s 2015 export targets.  

Some SMEs are more than capable of finding the necessary resources to export, but the vast majority require support. Many do not have the time or the funds to conduct market research or risk assessments, complete licensing applications, get export finance guarantees, or understand the regulatory environments of their chosen market. UKTI provides many of these services for the ambitious export-ready SME.

Given the current number of approximately 25,000 exporting SMEs, reaching the 50,000 mark by 2015 will certainly be an uphill battle. If UKTI were fully responsible for this undertaking, it would need to assist 10,000 new SMEs to export per year, or 833 per month. While it would be unrealistic to expect UKTI to meet these numbers every month, recently released numbers paint a bleak picture of UKTIs contribution to the national effort, of which it should be a large part of.

• Last year, there were only 530 instances of companies using a chargeable UKTI service – using a chargeable service does not necessarily require one to export. A business leader previously interested in exporting may easily decide to put off exporting for a number of reasons. This reality means the instances of developed trade could actually be much lower than the recorded chargeable services. This is deeply concerning. The costs associated with these services may be prohibitive to some SMEs looking to export, but it is difficult to imagine only 530 businesses in the UK could afford them. If UKTI is to be at the forefront of our export-led recovery, it will need to increase dramatically the number of businesses using its services. Information and administrative services however, are not enough: SMEs need to secure financing guarantees to export with the help of commercial lenders. This is unfortunately impeded by the fact that...
• In 18 months, just 18 businesses used export financing guarantee products launched by UKTI and UK Export Finance aimed specifically at SMEs – export credit insurance plays a crucial role in providing confidence to banks lending to SMEs seeking export financing. Without those guarantees, there would be no appetite among banks to do so, especially during the current credit crunch. I am therefore delighted by the new products launched by UKTI and UKEF last year, but I am equally dismayed by the failure of a programme with so much promise. 18 transactions over 18 months means there are many export-ready businesses which are not receiving the benefit of the export financing guarantee products. This represents a massive shortcoming in UKTIs capabilities which is further supported by statistics indicating...
• Only 30% of SMEs are aware of UKTI’s activities, while only 20% are aware of UKEF – A recent survey conducted by the Institute of Chartered Accountants in England and Wales found that knowledge of UKTI and UKEF is embarrassingly low. These numbers clearly show that UKTI and UKEF are facing a crisis of marketing. If SMEs do not know there are governmental departments able to help, how can the Government expect UKTI to be the vanguard of an export-led recovery?

At the crux of issues such as the use of services, uptake of products and awareness is how proactive UKTI is as a government department. Awareness – which is the main contributor to the deficiencies in the other two areas – is something which UKTI can very much be in control of; how well UKTI markets itself is entirely up to those who work there. To give the export led recovery a real chance, UKTI needs to rethink its strategy for approaching and encouraging SMEs to export. Some can make it alone, but others cannot. Those who cannot need to know about the support UKTI can provide. The Prime Minister often says UKTI is going to “bang the drum for British business” abroad; they first need to focus on banging their own drum at home.