Industry and Exports (Financial Assistance) Bill
Monday 15th December 2025
(1 day, 17 hours ago)
Commons ChamberIndustry and Exports (Financial Assistance) Bill 2024-26 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Minister of State, Department for Business and Trade (Chris Bryant)
I beg to move, That the Bill be now read a Second time.
We want businesses to grow, innovate, expand, invest, find new markets here and overseas, develop new products and new services, and bring them successfully to market. That often requires two forms of financial support from Government: grants and loans. That is why the Bill builds on two different Acts of Parliament: the Industrial Development Act 1982, which provides grants to industry in the UK, and the Export and Investment Guarantees Act 1991, which enables financial support by means of investment finance.
Of course, as Trade Minister, I am ambitious about trying to get more UK companies to export. It is a shame that only one in 10 British businesses exports, compared with three out of 10 French businesses and four out of 10 German businesses. If we could match the ambition of other countries, that would be a significant boost to the UK economy.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Will the Minister give way?
Gareth Snell
It’s nice to be loved, isn’t it, Madam Deputy Speaker? I congratulate the Minister on bringing forward the Bill. On exports, the world-leading ceramics industry in Stoke-on-Trent tells me that there used to be a fund that allowed companies to get help with the cost of going to trade expositions or being part of trade delegations, and that meant they could take their wares around the world to try to get those all-important exports. That fund no longer exists. If that fund could be brought back, I know that ceramics companies in Stoke would appreciate the opportunity to export, as this country is trying to do. Will the Minister look at that?
Chris Bryant
There are funds. Especially when there is a new free trade agreement, as in relation to India at the moment, we help lots of businesses. Businesses in the beauty industry, which I know my hon. Friend knows a lot about, have gone to a recent exhibition in India, because under the FTA, India will be taking the tariff down from, I think, 20% or so to zero. That is a big opportunity for British businesses. There are sometimes funds available.
I will look at how the ceramics industry in particular is treated. As my hon. Friend knows, I would like to establish stronger support for the ceramics industry in general, because we should be proud of it. As he also knows, I am looking at the presents that we as Government Ministers give to other Government Ministers; we could be a bit more ambitious about ensuring that they are things that people really want, and perhaps they could come from one of our creative industries, such as ceramics.
Free trade agreements can get rid of tariffs, and that is a very important way of enabling more exports, but we can also often do a great deal by getting rid of the non-tariff barriers that exist in many countries. Export ambition, even from companies that would like to export, often needs financial assistance. That is precisely what UK Export Finance is there for.
Chris Bryant
The hon. Member for Strangford (Jim Shannon) was there first, and then I will take an intervention from the hon. and learned Member for North Antrim (Jim Allister).
Jim Shannon
I welcome what the Minister has said; he has clearly underlined that all parts of the United Kingdom can benefit. As the Minister will know, we are very fortunate in Northern Ireland to have a very strong agrifood sector, which promotes itself wherever it can across Europe, across the mainland and further afield. The defence sector is also active, and the Government help to create extra procurement and extra apprenticeships is very welcome. However, there are also small and medium-sized enterprises, which are mostly involved in engineering, and this group of businesses could do more. I ask the Minister, very kindly, whether he could give us an idea of what can be done for them. We want to encourage them to be involved and to export.
Chris Bryant
The hon. Member is absolutely right that the vast majority of the companies we will be talking about are SMEs—88% of the companies that benefit from UK Export Finance are SMEs. We are bringing forward this Bill because we are getting to the limit of what is allowed under current legislation and we need to expand that. I have specifically spoken to UK Export Finance about looking at new ways to support SMEs. The retail banking sector in the UK also sometimes needs to understand better how it can support small and medium-sized enterprises to export around the world. One of the things that I have been trying in my own small way is to do a supermarket sweep when I have been abroad for trade missions: to see whether Rose’s lime marmalade, Walker’s biscuits, Marmite, Irn-Bru or Penderyn whisky—or whatever it may be—is available around the world. The more we can encourage businesses to export, the more likely they are to prosper.
One of the advantages in Northern Ireland in particular is that, because of the Windsor framework, it has an opportunity to enter into an EU market much more readily than elsewhere. One of the sadnesses of Brexit is that 16,000 fewer businesses in the UK now export, and that is largely because they have given up on Europe. That is one of the things I radically want to change.
Chris Bryant
I can see the hon. and learned Gentleman is practically pregnant with a question.
Jim Allister
It is always good to hear about a rise in the availability of financial assistance to industry. In the context of Northern Ireland, the Minister has referred to the Windsor framework. One of its drawbacks is that Northern Ireland is subject to EU state aid rules. In my constituency, I have a large bus manufacturer that sells buses to Germany. Can I seek an assurance from the Minister that that company, for example, will not be disadvantaged by the cap in state aid rules in comparison with a competitor bus manufacturer in another part of the United Kingdom where there is not a state aid limitation?
Chris Bryant
This is one of the problems with Brexit, isn’t it? It has provided a variety of different sets of rules for different parts of the United Kingdom, and that was always one of its inherent problems. Northern Ireland voted against Brexit, and we are now trying to make it work as best we can. The hon. and learned Gentleman is absolutely right. Of course there are going to be problems under state aid rules for some businesses in Northern Ireland. That is why we are trying to do two things at the same time: to ensure that the Windsor framework is adhered to, but also ensure that we have a single UK internal market.
The Bill is short—it just manages to get on to a second page—but it does some important things. First, it increases the Industrial Development Act limit on financial assistance from £12 billion to £20 billion. Secondly, it raises the amount that the Secretary of State may increase the limit by from £1 billion to £1.5 billion. That is something he can do four times under the 1982 Act. Thirdly, the Bill amends the Export and Investment Guarantees Act 1991 to increase the commitment level from roughly £84 billion to £160 billion. Fourthly, the Bill allows the limit to be increased by increments of up to £15 billion by secondary legislation. Finally—this is perhaps the single most important and most useful thing to the ordinary punter out there—it changes the 1991 Act so that the limit is expressed in pounds sterling. In other words, it will be in common parlance, rather than referring to special drawing rights, which I think has confused an awful lot of people for a long time.
I will give just a few examples of why all of this matters. Some £14.5 billion of UK Export Finance support last year was used to support 70,000 jobs, adding £5.4 billion to GDP in the UK, including across several key industrial sectors such as clean energy, advanced manufacturing, life sciences and automotive.
Rosie Wrighting (Kettering) (Lab)
I am pleased to hear the Minister explaining what the Bill will do and how it will contribute to business, but in the creative industries and particularly in fashion, young designers struggle to access international markets and export finance. What are we going to do to support creative industries such as fashion so that we do not lose them in the UK?
Chris Bryant
That is an extremely good point. The creative industries are, of course, one of the eight key industrial sectors that we are keen to promote. The music export growth scheme is specifically intended to ensure that a wide variety of acts are able to tour around the world. We need to sort out with the European Union the issue of British acts being able to tour effectively and cost-effectively around Europe, but bands from Scotland, Wales and every part of England have been able to access that finance, and it is a key part of what we do.
As for fashion, I know that you try to do your bit, Madam Deputy Speaker—as, I am sure, do all Members who want to promote British fashion—but it is important to note that the Department for Culture, Media and Sport provides support for NewGen. A fair amount of London Fashion Week is supported by either the Department for Business and Trade or the DCMS, and many NewGen designers have gone on to achieve great success in the market. We also try to ensure that we have a presence in other fashion weeks, such as those in Paris and New York, and we provide other finance as well. There is a wide variety of measures, some of which are covered by the Bill, but I can assure my hon. Friend that the creative industries are very much part of what we are considering. I was struck by, in some—oh, I am not allowed to refer to those matters until tomorrow.
Chris Bryant
I am very grateful to the right hon. Gentleman for shutting me up.
Sir Edward Leigh
Believe it or not, more than 30 years ago I was a Minister for fashion and regional policy. These things go round in a circle, and I warn the Minister —with some experience of this—that many companies were caught in a sort of Catch-22: if they were too successful, the Department of Trade and Industry would not let them be helped, and if they were not successful enough, there was always a risk that they might go bust. How is the Minister going to hit the sweet spot and make sure that we direct the money to where it is most needed?
Chris Bryant
Well, I hope that I can find the right hon. Gentleman’s sweet spot, as he is such a dedicated follower of fashion. He has made a very fair point. This is the classic problem for Governments when it comes to any industrial support, whether it is a loan or a grant: if the business is so successful, why does it need additional financial support? That is why, because of the structure that we have created through those two Acts, UK Export Finance actually makes money for the British Government. It is based on loans being made at normal rates, and sometimes it manages to lever in retail finance as well, which is a particularly important part of its work. However, when we provide a grant we have to ensure that it is intended to achieve a set series of aims. For instance, the £128 million—I think—that has been given to BioNTech is specifically designed to develop two new R&D hubs producing 400 new highly paid jobs in the life sciences sector, and also, incidentally, to tackle skin conditions and melanoma, which are among the subjects on which it is working.
The right hon. Gentleman is right to say that a difficult moment often arises, but one of the complaints I have received from quite a few sectors is that the UK can be a bit slow about deciding when we are going to support someone, and I want to be able to speed up that process as much as possible. As I said to the hon. Member for Strangford (Jim Shannon) and the hon. and learned Member for North Antrim (Jim Allister), I think the key to much of what we are trying to do involves supporting SMEs. Of course there will be massive contracts, such as the $3.5 billion expression of interest that we have allowed for the building of the new Dubai airport so that British businesses will be able to put in for some of the ensuing tenders—perhaps for hangar doors, the building of additional facilities, maintenance services or architectural designs. However, 88% of what we are talking about in respect of UK Export Finance is for SMEs.
I will make two more points, and then I will come to a close. Through existing provisions in the Industrial Development Act, the British Business Bank’s northern powerhouse investment fund II has directly invested £115 million in more than 300 small businesses. Similarly, in the midlands, the midlands engine investment fund II has launched a £400 million fund to drive sustainable economic growth by supporting innovation and creating local opportunity for new and growing businesses.
I am getting a feeling from the Chamber that everyone will be supporting the Bill. I think that, broadly speaking, it has cross-party support, and I think it important that we get it on the statute book soon enough to be able to provide that support for the businesses in the UK in the next financial year, so that we can prosper, grow the economy and protect jobs.
Dame Harriett Baldwin (West Worcestershire) (Con)
I am delighted to respond on behalf of the Conservatives, who have always championed British businesses. We believe very much in the ingenuity of our entrepreneurs, the skill of our engineers and the global reputation of our exporters. The Bill amends Acts dating from 1982 and 1991, and we believe that, time and again, our companies have shown that, with the right conditions, they can compete and win on the world stage. Updating those Acts will ensure that the Government have the tools to support our industries and exporters.
We should take pride in the extraordinary success of British exporters. The latest UK Export Finance annual report shows the scale of their achievements. Rolls-Royce and Airbus have together secured guarantees worth £165 million for supplying Ethiopian Airlines, £102 million for Avolon in Ireland and £66 million for Emirates in Dubai. That gives the House a flavour of the kind of deals supported through this finance. Defence exports remain significant too, with BAE Systems and MBDA receiving over £120 million per major contract, including support for the very important air defence systems in Poland. These figures demonstrate the global demand for British engineering, aerospace and defence expertise.
However, as the Minister pointed out in his opening remarks, beyond the headline numbers, 80% of firms supported by UK Export Finance are small and medium-sized businesses, which often supply the more global contracts. With their innovation and resilience, they are the backbone of our export economy, and they also deserve support and visibility.
The UK has a leading export and finance sector, and it can usually cover the commercial risks involved in exports, so UK export finance should be deployed only when no private sector solution is available. Generally, we are in favour of reducing subsidies, rather than increasing them, so we do not support additional taxpayer funding for the industrial strategy until the Government get the fundamentals of energy prices, tax and regulation right. Without tackling those basics, no amount of subsidy will ever deliver the competitiveness that our businesses need.
I have a few questions for the Minister. Can he assure the House that UK Export Finance will continue to be deployed only where no private sector funding can be secured? If this Bill is to meet its aims, export assistance must be spread across the regions. We saw from the autumn “Santander Trade Barometer” that three quarters of businesses that want targeted export support are beyond our capital. Optimism is high in sectors such as technology and media, but firms in Scotland and energy, construction and engineering companies are much more cautious. So there are regional disparities in economic outlook that the Government must address.
UK Export Finance is there to guarantee exports when the private sector cannot, and we would expect it to focus on countries where credit risks are higher. What new markets is the funding likely to be used for, and will some of the additional capacity be reserved for small and medium-sized businesses? Can the Minister reassure the House that none of this finance would ever be used to support exports to countries that could allow such goods to get around the sanctions on Russia, and that they are not used to export to any country that would wish us harm? Can he also reassure the House that, as the Foreign Office undergoes a restructuring, our fine network of embassies and high commissions are made aware of this so that we make the most of this export finance opportunity and have the right teams in place to support UK plc? Those are my opening questions for the Minister.
Ben Coleman (Chelsea and Fulham) (Lab)
I am most grateful to the Minister for his statement. I hugely welcome the Government’s determination to increase trade, especially in the aftermath of Brexit. That is what it is all about: expanding and clarifying the spending limit for UK Export Finance. As we have heard, UK Export Finance has a very proud history of boosting British exports, and supporting thousands of companies and tens of thousands of British jobs. The Bill means that it will be able to do even more.
I am delighted to say that I have had the privilege of seeing UK Export Finance in action at first hand in my capacity as the trade envoy to Morocco and francophone west Africa. Just last month, I had the privilege of heading the UK delegation to the francophone West and Central Africa Forum in Togo. It was attended by nearly 1,000 people from business and Government from the UK and 10 rapidly growing African countries, all of them seeking new opportunities for trade and economic partnership. UK Export Finance did an absolutely brilliant job of co-organising the event. In my opening speech to the forum, I was very proud to be able to set out a UK approach that is based on co-production rather than extraction, an approach based on mutual respect—so different from what they have perhaps learnt to expect from other countries in the past.
Ambassadors have been mentioned. I very much appreciated having UK Export Finance’s expert support alongside our ambassadors in the bilateral meetings that I was able to hold with the President of the Council of Ministers of Togo and with representatives of the Governments of Côte d’Ivoire, Senegal, Cameroon and the Republic of Congo, where we explored numerous opportunities to go further on trade, for example on electricity networks or, as the Minister mentioned, Scottish whisky—that also came up. Now, UKEF is building on what it achieved. Its hard work means that the forum will turn into investable projects, which will in turn translate into jobs, exports and impact. The theme of the forum was “success breeds success”. I am delighted that, through the Bill, we are enabling UKEF to create even more success in the future for the UK economy and our trading partners.
Closer to home, we should point out that UKEF also has an important role increasing our trade with the massive European Union market on our doorstep. The disaster—the absolute disaster—of Brexit has damaged our economy hugely. More than 16,000 SMEs have given up trading with the EU since it happened. We have lost billions in tax revenue for our NHS and schools. The idiot comment from the previous Prime Minister that the NHS would get money from Brexit turned out to be totally the opposite: we have lost billions in tax revenue for the NHS.
Alongside my determination to increase trade with Africa, I have high hopes for increasing trade with the EU, as do many, many Members on the Labour Benches; there is no single part of the House that has a monopoly on wishing, sensibly, to trade more with the European Union. The Government’s reset is very welcome. I am keen for them to be even more ambitious. We must recognise that there is no swifter route to growth than getting rid of Brexit red tape. I welcome the fact that the UK and the EU are currently negotiating an agreement to ditch much of the Brexit bureaucracy that has hit our food and drink exports and imports. I hope that will lead to lower food prices and new job opportunities for the British people. I would like to see us go even further. For example, let us boost our manufacturing industry by seeking mutual recognition with the EU of conformity assessments. Let us boost our services sector by seeking mutual recognition of professional qualifications.
Alex Brewer (North East Hampshire) (LD)
The hon. Gentleman talks effusively about the benefits of our biggest trading partner, Europe, and the disaster of Brexit. Does he agree with me that we should be forging a new customs union as soon as possible?
Ben Coleman
I am immensely surprised to hear that intervention—almost as surprised as I was to see Liberal Democrat Members put forward the customs union idea the other day! We struck a deal with the EU in May. We need to implement that deal. We need to see through the deal we are negotiating on food and drink. We need to talk about youth experience and a whole range of other things. Let us do those. Let us deliver on what we promised. Let us implement what we promised. Let us build the trust.
I sat down the other day with about a dozen ambassadors from EU countries, and let me tell the House, there is very little appetite for Britain going into a customs union until we have shown that we can be trusted and have delivered what we are already promising to deliver. Yes, that sort of comment might arouse the interest of some, but at this stage it is not the best thing for Britain to plough forward in that direction. Let us deliver on the deals we have, not throw them aside, reject them or say they are pointless. They will deliver jobs and lower prices for British people and that is what we need in the aftermath of Brexit.
As this Government seek every opportunity to enhance trade and economic growth, ensuring that UK Export Finance has the resources it needs to underpin export growth is the right way forward. The winners will be businesses in every part of our country.
Mr Joshua Reynolds (Maidenhead) (LD)
Let me be clear at the outset that the Liberal Democrats support the Bill. We do so because we recognise that British businesses need backing to compete globally, and both the industrial support package and the export finance package have vital roles to play in that. The increases proposed in the Bill represent a major expansion in Government capacity and give us the opportunity to ensure that that expansion serves our priorities as a country: supporting small businesses, driving green growth and maintaining proper democratic oversight.
Small business owners have told me that the current system simply does not work for them. UK Export Finance’s processes are designed for larger transactions, larger businesses and those that are already exporting. UK Export Finance’s criteria state clearly that in any one of the last three years at least 20%, or in each of the last three years at least 5%, of a business’s annual turnover needs to be made up from export sales, but those thresholds mean that businesses trying to break into the export market, or those growing still quite modest export activity, cannot access support. As we expand UK Export Finance’s capacity, let us make sure that the commitment made is about not just bigger deals and bigger companies, but making UK Export Finance work for smaller businesses—the backbone of British exports—with simpler application processes, lower eligibility thresholds for SMEs and dedicated support teams made up of those who really understand SMEs the best.
As the hon. Member for Chelsea and Fulham (Ben Coleman) said, we also need to understand the elephant in the room, which is that we are discussing expanding capacity of UK Export Finance at precisely the moment when British exporters face unprecedented challenges with our largest trading partner, the EU. The Chartered Institute of Export and International Trade has documented the impact, saying that among the smallest firms—those with six employees or fewer—the value of their exports to the EU fell by 30% after the trade and co-operation agreement was struck; meanwhile, firms with more than 107 employees were largely unaffected.
The Institute of Directors’ January 2025 “Policy Voice” survey found that 54.8% of businesses that previously exported and have stopped cited as a reason the UK’s trading relationship with the EU. More than half of former exporters surveyed gave up because of the barriers to trade with Europe. We are not talking about businesses that have failed to break into distant markets; we are talking about established exporters abandoning our nearest and largest market because the barriers have become insurmountable.
The priority for small manufacturers is assistance in navigating customs declarations and rules of origin to sell in Europe. These are markets they have served for decades, which is why the Liberal Democrats are calling for a fundamental reset of our relationship with Europe—a new bespoke UK-EU customs union that would cut through red tape, boost gross domestic product by an estimated 2.2% and generate roughly £25 billion in tax revenues, according to the House of Commons Library.
Gareth Snell
I hate to burst the hon. Gentleman’s bubble, but in 2019, when this House was grappling with how to take forward Brexit, there was a vote on 1 April on a proposal from the then Member for Rushcliffe, now Lord Clarke, on staying in the customs union. I voted for that, as did my party, but it failed by three votes. Five Members from his party, including the now party leader, voted against that proposal, on the basis that trying to kill any deal might keep us in the European Union. I appreciate the position he is coming from, but one of the reasons we do not have a customs union today is the actions of his party many years ago.
Mr Reynolds
In reality, we need to look at the positions that were on the table at the time. The hon. Gentleman knows as well as I do the positions that both our parties took when the votes were happening. Obviously I was not in the House at the time, but I recall watching and listening to colleagues on the Labour Benches opposing various things that we put forward. The proposal that the Liberal Democrats are putting forward today would add £25 billion a year to the revenue coming into the Treasury. That money is not to be sniffed at, and it should be supported across the whole House.
In discussing the doubling of UK Export Finance’s capacity to £160 billion, we need to ask ourselves whether that extra money is going to address the export challenges that British businesses actually face. Despite the fundamental barriers to the markets, the Government’s answer is simply to expand capacity, without addressing whether that capacity will be able to reach the businesses that need it most.
While I appreciate that, according to its 2024-25 annual report, UK Export Finance put in £14.5 billion of new finance, that only supported 667 UK businesses to grow and invest. UK Export Finance’s business plan for 2024 to 2029 clearly states its five-year milestones, including that it wants to support an extra 1,000 SMEs to export every year until 2029. That target was introduced under the previous Government, but it has not been amended under the current Government. Considering that there are 5.7 million SMEs in the UK and that facilitating export is a critical tool for economic growth, that number seems pitifully small. I would value the Minister’s thoughts on whether that target of 1,000 is his target and whether it can be improved. It is my hope that the Bill will ultimately support a more ambitious target for UK Export Finance. It would be stronger if we acknowledged the reality of supporting small businesses and removed the practical barriers that stop SMEs from exporting.
That brings me to my final point: parliamentary oversight. We are to spend £20 billion on industry assistance and guarantee up to £160 billion for export finance. This House deserves more than just retrospective annual reports. Fundamentally, these are political decisions about which sectors succeed, which regions benefit and how Britain competes globally. We need to have regular parliamentary scrutiny of spending decisions, transparent criteria for allocating support and proper impact assessments that show whether the funding is actually working. The assessments must show not just how much has been spent but whether it is reaching the businesses that need it the most and delivering the economic growth that we were promised.
We support the Bill. The Government have brought forward legislation that recognises that British businesses need backing, but British businesses need proper industry and export support that is strategically directed, environmentally responsible, democratically accountable and rooted in the challenges that they actually face. I hope that the Bill will deliver that.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I support the Bill. It is a common-sense adjustment of limits that were set in another economic age, so that powers that Parliament has long judged to be legitimate can carry on being exercised to support our industry. It is not in the interests of working people for arbitrary historical figures to determine whether the Government can act in the national interest today or in the future. No country can sensibly insist that its industries compete in the modern world and at the same time bind its own hands with ceilings fixed years ago when the scale of production, trade and finance were altogether smaller—and indeed when my hon. Friend the Minister was last on the Government Benches, though of course he has not aged a day since then.
Without this Bill, both UK Export Finance and assistance under the Industrial Development Act 1982 would simply run into statutory limits because the law has failed to keep pace with reality. In places like Teesside, we know what happens when the tools of industrial policy are allowed to rust. We have seen world-class steelmaking exposed not because the work lacked value but because the state lacked the capacity or will to act. This Government have shown, including in their response to the challenges facing British Steel, that they will not hesitate to step in when working people’s security is on the line. This Bill is another step to ensure that that ability to act is preserved.
For industries such as steel, which are foundational to our defence, energy, infrastructure and advanced manufacturing, an active state is a necessity. The Bill is not the whole answer, and the steel industry still needs a full steel strategy as well as clarity from the Government about their response to the current global trading environment. However, the Bill is a reasonable change to support the industrial strategy and ensure that assistance already sanctioned by this House in principle does not fail in practice because legal ceilings have been allowed to fossilise. I therefore support the Bill.
There is a clear difference between intervention that entrenches privilege and intervention that enables productive work when private markets alone cannot bear the risk. Anyone who has spent any time at all speaking to our steel manufacturers, who are competing against heavily-backed overseas rivals, understands that distinction.
In that sense, the Bill is simply a maintenance of our existing capacity, updating it to today’s values. It keeps faith with our strategic industries and the communities on which they rely and ensures that the instruments that Parliament has judged necessary are not rendered useless by neglect. It also supports jobs across every region of the country and in doing so preserves Britain’s ability to make, build and export. For those reasons, I support the Bill.
Alan Strickland (Newton Aycliffe and Spennymoor) (Lab)
I am pleased to speak in support of the Bill, particularly as a Member of Parliament representing a proud manufacturing seat. Our country as a whole has a proud tradition as one of the world’s leading trading nations, and exports remain a critical part of our modern economy.
Here at home, British companies continue to lead the way through innovation, research and development and high-tech manufacturing, building on our rich industrial history, but we all know that the global marketplace is changing rapidly, so it is crucial that to deliver the Government’s growth mission to spread prosperity across the country—including to constituencies like mine in the north-east—Ministers have the flexibility they need to support businesses in a changing world. That includes the provisions in the Bill to increase the funding cap for Government support to industry and increase the financial support provided by UK Export Finance to British businesses.
There are three reasons why these changes are important. First, it is crucial that we can support UK firms to compete in an increasingly complex and contested global economy, as other hon. Members have mentioned. As we see the growth of tariffs and protectionism making world markets harder to navigate, it is right that UK Export Finance should have an increased ability to provide the financial support that exporting businesses need.
I see that in my own constituency, which is home to a number of world-class companies who trade their products all over the world. Between them, they employ many thousands of local residents. They include innovative SMEs such as Filtronic, which recently secured a £47 million global order for satellite communications technologies; Kromek, which supplies radiation and biological weapon detection equipment to the US, Ukraine and our European allies; and Roman in my home town of Newton Aycliffe, whose showers and bathroom products are sold to hotel chains all over the world. Those manufacturing businesses, designing the next generation of products—each leaders in their respective fields—are exactly the enterprises that we as a Government want to encourage and support. That is why increasing the limit on UK Export Finance funding, and the Government’s wider work on these matters to support modern manufacturing, is so crucial.
Secondly, I am proud that the Government are prepared to intervene to support British business to thrive, acting confidently to crowd in investment and to step in to support the long-term future of major industries. Unfortunately, as we have seen over many years in the north-east, that stands in sharp contrast to the previous Conservative Government, who too often stood by while businesses failed, jobs were lost and regional economies were damaged when strategic intervention by the state could have made all the difference.
Of course, this is not a power that should be used lightly, but it can be an important tool when Government intervention can be the deciding factor. We have seen the value of this approach since Labour came to office in the decisive action taken at British Steel in Scunthorpe and at Jaguar Land Rover in the west midlands. I am proud that this Labour Government do not just talk about supporting modern industry but roll up their sleeves and get on with it.
The third and final reason is that while innovation, ingenuity and industrial prowess are found across our nation, for too long that has not been matched by an equitable spread of Government support across the many communities we serve. Since the election, I have been pleased to see UK Export Finance and other Government funds support businesses in a wide range of communities, and financial support for industry provided in traditional manufacturing areas that have often previously missed out. To kick-start growth and ensure that that growth benefits everyone, it is important that innovative firms are supported wherever they are found.
In conclusion, this Bill is very welcome, and as we work hard to support British firms in an increasingly complex global economy, it is vital that we give Ministers and Government bodies the flexibility they need to respond in an effective and agile way. The Minister said that this is a straightforward Bill, but as part of the wider package of measures we are taking to support industry and exports, the positive impacts that these measures could have on growing our economy and supporting UK business will be incredibly important.
Mr Calvin Bailey (Leyton and Wanstead) (Lab)
This is an important Bill, not only for the agenda of increasing trade and therefore economic growth, but for our entire foreign policy in this chaotic and insecure international environment. My work over the past year as trade envoy to southern Africa has shown me just how important joined-up trade finance is to our diplomacy and to securing UK interests around the world, particularly, as my hon. Friend the Member for Middlesbrough South and East Cleveland (Luke Myer) said, in the steel industry. In many contexts, but particularly in Africa, economic diplomacy that centres trade and investment is what our partners want from us, and this is reflected in the new UK-Africa approach that was launched earlier today. Unless we have the means to commit financially and an anchor to bring together UK businesses and investors, there will be many serious challenges that we cannot overcome.
We need to build partnerships on critical minerals that protect our economy from the weaponisation of supply chains, particularly by China, and to implement the new critical minerals strategy. We need to create deeper economic ties with fast-growing countries and regions, including many of our partners in Africa, because we have been losing out on serious growth opportunities for the lack of a focused, strategic approach over the past decade and a half. We need to show our partners that we have a modern approach to international development that recognises and works with their own strategies and ambitions and therefore puts economic transformation at its heart. This requires us to be much more joined up across Government, and to do more with the resources available.
I want to ask the Minister how the changes in the Bill will complement UK Export Finance’s update of its own strategy. How will we enable organisations with a very long-term focus, including not only UKEF but British International Investment, to be more nimble and more ambitious in working together with our diplomats? As the Minister knows, I firmly believe that what our partners want from the UK is the exercise of cohering power: not providing the whole solution to our shared challenges, but being more willing to step forward and play a leading role in building that solution. Within this, our institutions could provide a bigger economic impact and secure far more UK influence if they worked more in collaboration on larger projects such as infrastructure, trade corridors, energy grid developments and critical minerals processing. This includes working together with close partner institutions, such as those of Japan and Canada, as well as with our EU partners.
The Minister will have read my views on these matters. It is clear that the UK is viewed as a cohering partner in sub-Saharan Africa, and I hope that UKEF being front and centre of that cohering international co-operation will help to address Chinese influence in the region. How does he think we can more effectively support UKEF and others to do that, given that it may require a more nimble and flexible approach than the UK institutions are used to? Today’s Africa approach rightly highlights the UK’s support for the African continental free trade area, but promoting intra-Africa trade and the critical agenda to move up the value chain often requires us to look across borders and apply a regional lens when we assess which projects to support. Can the Minister tell us how UKEF will do this?
Finally, I note that resource constraints are inevitably a threat to the implementation of the Africa approach, the critical minerals strategy and trade growth more widely. I have seen some innovative approaches across the continent that we can learn lessons from, including greater use of chambers of commerce to ensure that country and regional expertise on UK trade and investment relationships is preserved. I want to pour praise on the ambassadors in Mozambique, Zambia, Gabon, the Democratic Republic of the Congo and Angola, who have all demonstrated exceptional approaches to trade creation and innovation. I wish to ensure that they have the Minister’s support in the retention of those posts and our diplomatic network. Will the Minister set out how UKEF and our other key public institutions will work seamlessly across all mechanisms of government to ensure that we get the greatest value for public money, even when resources are tight?
Expanded trade finance through UKEF is an essential tool for putting these strategies into practice and making our country and our partners more prosperous and secure. The Bill takes welcome steps in fixing the framework governing UKEF and making that progress possible. I thank the Minister and his Government colleagues for their engagement with me on these issues over the past months, and I look forward to playing my part in driving this shared agenda forward.
Madam Deputy Speaker (Judith Cummins)
To wind up, with the leave of the House, I call the shadow Minister.
Dame Harriett Baldwin
I would like to pick up on some of the points made in today’s interesting debate and to reiterate that, as Conservatives, we have always stood shoulder to shoulder with Britain’s businesses and great exporters. In my opening remarks, I asked some questions of the Minister, and I look forward to hearing his replies. I thank my hon. Friend the Member for Chelsea and Fulham (Ben Coleman) and the hon. Member for Leyton and Wanstead (Mr Bailey) for all the work they are doing as trade envoys to the west and south of Africa. I remember when I was Africa Minister thinking how enormous the potential is for us to do more business with these nations, so it is interesting to hear how that work is moving forward.
A number of Members highlighted the excellent export work done by small and medium-sized businesses, and we heard some excellent examples from the north-east in particular. We also heard the case made by the hon. Member for Maidenhead (Mr Reynolds) for the importance of small and medium-sized businesses. I reiterate to the Minister, so that he is aware, the importance for the House of this money not just getting swallowed up by some of the larger household names, such as Rolls-Royce, Airbus and BAE Systems, but it giving that fighting chance to some of the smaller exporters.
I want to pick up on the point that the hon. Member for Maidenhead made about the customs union. The House will recognise how much work was put in to getting landmark trade agreements with 70 countries that give UK exporters preferential access to markets worth trillions of pounds. It is work that the Minister continues energetically around the world, and he will no doubt in his closing remarks point to the India and US free trade deals, which are important pieces of work that he has been involved in. Those free trade agreements that the UK has managed to negotiate would not be possible if we were in the European Union customs union. I challenge the hon. Member to point to where the research is on this fabled £25 billion.
In conclusion, the words of Ronald Reagan keep popping into my head during debates in this Parliament. He famously said:
“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
I hope to hear from the Minister at the Dispatch Box how he will ensure that this additional money is used in the way that I said in my opening remarks, where it crowds in private sector investment and is there as a last resort to get a deal over the line, rather than crowding out private sector funding that would have been there were it not for the Government funds. Without further ado, having got my favourite Reagan quote about this Government on the record, I can assure the House that we will not be opposing the Bill.
Madam Deputy Speaker (Judith Cummins)
With the leave of the House, I call the Minister.
Chris Bryant
I thank colleagues for everything that they have had to say. I am not sure whether it was Reagan or Bush, but one of them went to France and said that the trouble with the French economy was that there was no French word for “entrepreneur”. It was repeated by a Conservative Secretary of State for Wales, who went to Wales and said that there is no word in Welsh for “entrepreneur”—that was a bit ironic.
I will try to do something extraordinary, Madam Deputy Speaker, by answering the questions that have been put to the Government. [Hon. Members: “Hear, hear!”] I don’t think it will catch on. I will start with the questions put by the shadow Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin). Her first question was about whether I can guarantee that no commercial finance will ever be used where UKEF finance is involved. The strict answer to that is no. However, UKEF’s mission is
“to ensure that no viable UK export should fail for lack of finance or insurance from the private sector.”
My hon. Friend the Member for Leyton and Wanstead (Mr Bailey) made the key point about cohering power. That is precisely what UKEF is able to provide. Sometimes, particularly under export development guarantees, UKEF funding can help to extend capacity or terms—that is an important part of what it does. It is not that there will never, ever be commercial finance and UKEF funding, but obviously we are not trying to supplant commercial funding. We are also aware, of course, that financial services are one of the key things that we do around the world. We are trying to shift our FTAs towards dealing not just with goods but with services, because that is where some of the added value is for the UK.
Several hon. Members have asked about regional disparities. Those are one of the key things we have charged UKEF with, and I know that it is keen to address them. I have a long list in my briefing notes of different parts of the country in which UKEF funding has been supportive or where there have been grants, but I will not lay them all out now.
The shadow Minister asked about new markets. That is often precisely what we are looking for: new markets for individual exporters and new markets for the UK in general. One area in which we have set aside money was specifically in relation to Ukraine, where the reconstruction will be one of the most important things for UK businesses to be involved in over future years. It will be difficult to get the insurance necessary to be able to provide that simply on the open market, which is why UKEF funding is particularly important.
The shadow Minister said that we should not export to companies that could do us harm. She is absolutely right about the side-stepping of sanctions on Russia. We have frequent discussions about that, and UKEF is particularly keen on carrying out due diligence on it. It is why we must constantly revise how we implement our sanctions regime, to ensure that it is doing damage to the Russian Federation’s economic advances.
Chris Bryant
Yes, but I am not sure that the hon. Gentleman was here for the rest of the debate. [Interruption.] Oh, he was sitting on the Front Bench—I do apologise.
David Reed
I thank the Minister. Just on a point of clarification—I am sure that this will be hammered out in Committee—we have heard about the assistance that the Government have given over the past 15 months to UK Steel, Jaguar Land Rover and others, but it is important to talk about the significant cyber element. Jaguar Land Rover was hit by a big cyber-attack, and we saw a step change when the Government stepped in and essentially made British taxpayers the insurance company. Does the Minister see any risk in the Bill, and what message does it send to adversaries such as Russia, which he just mentioned?
Chris Bryant
On cyber, financing and JLR, I might have to correct myself in writing to the hon. Gentleman if I get what I say wrong, but as far as I am aware, I am not sure that JLR has drawn down any of the finances from UKEF that we made available. We thought it was important to ensure that the guarantee was there so that the company was able to proceed. That would be of assistance not only to JLR, but to the extended supply chain, much of which needed to deliver precisely on time, because of the way the automative industry now works, and they did not have large stocks of things that they were keeping against the day when they might be called up by JLR.
We certainly do not want to be the insurer of last resort for everybody who gets into a cyber-security problem. That is why the Government have a cyber-strategy, and we are keen to ensure that businesses take that part of their responsibility seriously. We have seen the dramatic effects that it can have on the UK economy when that goes wrong; this is a serious point. I have seen no evidence that what happened at JLR was specifically related to Russia, but we must maintain vigilance on all these matters.
The shadow Minister’s final question—I am not leaving any of them out—was about how we make sure that posts know about UKEF. We have heard already from two of our trade envoys that posts are extremely well aware of the existence of UKEF, and of how completely transformative that can be when a business is seeking to expand into a particular market. I would say that the problem is that sometimes not enough businesses in the UK are aware of UKEF, which is one of the things I have been talking through with UKEF senior management.
I know that my hon. Friend the Member for Chelsea and Fulham (Ben Coleman) has been doing a magnificent job, because I have seen video footage of him on the “News at 10” in Togo, speaking in French. We are glad that we have such a linguist in our team, and he is right to raise some of the issues in relation to the EU. We want frictionless trade. That is what we were promised, and we are going to try to achieve it as far as we possibly can. Sometimes that will mean that we align as much as possible with the European Union, rather than diverge for the sake of divergence. Of course it means that we need to get more mutual recognition agreements in place. There is a series of industries where I would like to achieve that, not least architecture.
The hon. Member for Maidenhead (Mr Reynolds) gave the traditional single transferable EU speech from the Liberal Democrats. I agree with large chunks of what he was saying, but not with his final premise. As I say, within the parameters of what we have, we want to deliver frictionless trade as much as possible. Everybody in my Department laughs at me, but I often refer to floristry. There are florists in every constituency in this land, and if it costs more to bring flowers in from Europe than it did in the past, that is a problem for lots of small family businesses up and down the land. That is why sorting out sanitary and phytosanitary measures over the next few months is an important priority for the Government. He asked whether the target of 1,000 SMEs is ours or that of the previous Government—it is our target as well. We want to be ambitious about that.
The hon. Gentleman asked about spending decisions and accountability. If only he knew somebody on the Business and Trade Committee to whom he could talk about questions of UKEF. Oh no, he’s on it—I’d completely forgotten, Madam Deputy Speaker! I am sure there are plenty of means for him, but I gently say to him that in my experience, the whole system of accountability of expenditure in the House is pretty shabby. It is not my job to write how we should change that in the future, but he might come up with some suggestions and put them to others.
My hon. Friend the Member for Middlesbrough South and East Cleveland (Luke Myer) said that I had not aged a day since I was last a Minister under Queen Victoria, but I think he inadvertently misled the House; I hope at some time that he will be able to correct the record. He is absolutely right about arbitrary figures. There are arbitrary figures, and previous Acts of Parliament did not allow us to amend them to update them sufficiently in line with inflation—we need this primary legislation to do that.
My hon. Friend is also right about the steel industry. I assure him that our steel strategy will come out in the new year. It will be very clear about how important we think the steel industry is to the UK, and about having a sovereign capacity in the UK for a variety of different forms of steel manufacture. As I told the House last Thursday, I was in Brussels last Wednesday to meet Commissioner Šefčovič to talk about the EU steel safeguards, and to make sure it is understood that we are not the problem for the EU and the EU is not the problem for us, so we ought to be able to come to some agreement in that space. We know that our steel safeguard runs out at the end of June. We need to make sure that we have adequate measures in place thereafter, and we will do so.
My hon. Friend the Member for Newton Aycliffe and Spennymoor (Alan Strickland) talked about the importance of exports, in particular for businesses in his own region. To give cite just one statistic, UKEF provided a £590 million loan for SeAH Wind UK, which is building an offshore wind factory in Teesside. It will create 750 jobs by 2027 and will assist the UK steel industry, so my hon. Friend is absolutely right and I agree with him.
My hon. Friend the Member for Leyton and Wanstead, who is another of our magnificent trade envoys, asked more questions than the shadow Minister—I am not sure whether he is auditioning for some other post. He is absolutely right about the importance of our critical minerals strategy. Our relationship with Africa will be essential to deliver on that; other countries are seeking to make inroads there, and we cannot leave that be. He asked how the updated UKEF strategy fitted with what we are doing today. Well, the new strategy simply cannot exist without the extension of the financial provisions that we are introducing through the Bill.
My hon. Friend also talked about the cohering power, which is very important. He said that I could read his views—I know can, because he gave me a letter only 10 days ago, which I have read and officials in the Department are reading as well. I am enormously grateful to our trade envoys, in particular those who provide clear reports when they come back from visits about the things that we have achieved. They are achieving those things as part of the UK team. In the new year, I want to vitalise the whole House so that all Members, who often know the businesses in their communities better than anybody else—certainly better than any Government Department—bring people to us who might be thinking about exporting in the future, so that we can strengthen that opportunity.
This Bill is about enabling Scottish indie acts like corto.alto and Young Fathers, and Wales’s the Bug Club, to tour the world. It is about funding low-carbon hydrogen production. It is about helping Superior Wellness to sell hot tubs and spas around the world. It is about enabling 3TOP Aviation to expand its sustainable aircraft services into new markets. It is about helping SRT Marine Systems to sell its maritime surveillance in Indonesia and Kuwait. It is about enabling UK businesses to get contracts to help build the new Dubai airport. It is about enabling BioNTech to open two new research and development hubs. It is about helping Kindeva in Loughborough and Clitheroe to develop new respiratory inhalers. It is about enabling a new multibillion-pound car battery factory, creating 4,000 jobs. It is about Scotch whisky and salmon, and Welsh whisky; aircraft engines and wings; life sciences and advanced manufacturing. It is about jobs and our prosperity, so I hope that all right hon. and hon. Members will support the Bill tonight.
Question put and agreed to.
Bill accordingly read a Second time.
Industry and Exports (Financial Assistance) Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Industry and Exports (Financial Assistance) Bill:
Committal
(1) The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on Consideration and on Third Reading
(2) Proceedings in Committee shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement.
(3) Any proceedings on Consideration and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings in Committee of the whole House.
(4) Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee of the whole House, to any proceedings on Consideration or to proceedings on Third Reading.
Other proceedings
(5) Any other proceedings on the Bill may be programmed.—(Jake Richards.)
Question put and agreed to.
Industry and Exports (Financial Assistance) Bill (Money)
King’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Industry and Exports (Financial Assistance) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under or by virtue of the Industrial Development Act 1982 or the Export and Investment Guarantees Act 1991 out of money so provided.—(Jake Richards.)
Question put and agreed to.