The Parliamentary Under-Secretary of State for International Trade (Graham Stuart)
I congratulate my hon. Friend on securing this important debate on how, where and with what resources the Department for International Trade is supporting exports from small and medium-sized businesses. My hon. Friend is a remarkably energetic, knowledgeable, relentless and effective MP in championing the economic interests of his constituents. No one does more than he does to promote Stoke, and the jobs and businesses on which its prosperity depends. Like my hon. Friend, I have read the Federation of Small Businesses’ paper, “Breaking New Ground”. The FSB plays an important role in encouraging more SMEs to export, and its analysis identifies the barriers that we, in conjunction with trade bodies, are seeking to help SMEs overcome.
My hon. Friend asks how we can persuade and facilitate more small businesses to export. That is a great question, but before I attempt to answer it, let me update the House on this country’s export performance. The Government believe in the benefits of business, trade and exports. Exporting builds economic resilience and provides higher-skilled, higher-paid jobs, as my hon. Friend rightly says. It raises the average profitability, productivity and tax contributions of companies that do it. Exporting is at the heart of this Government’s mission to build a more prosperous, stronger, fairer and truly global Britain. Exports underpin the UK’s economic transformation since 2010, and account for a major part of the UK’s productivity growth.
In the year to January 2019, exports grew to £636 billion—up 42% since the Labour party were sitting on the Government side of the House, although the Opposition Benches are empty tonight. The record employment statistics of the last few days show how potters in Stoke and residents everywhere have benefited from a Government who put wealth creation, not class warfare, at the heart of their policies. My Department has only existed since 2016, but it has played its part in that success story—not least, I am pleased to say, in the midlands. For instance, DIT’s global growth service is working with Stoke-based wholesaler Nemesis Now, and UK Export Finance is seeking to reinforce the success of Ceramic Drying Systems. Another example is that of Mantec Technical Ceramics, which the Department has helped on its journey to understand opportunities in Vietnam, including taking the company on a group market visit. The Department has assisted tens of thousands of companies like these to fulfil their global exporting ambitions across the country.
We do not just support exports from Stoke; we also support foreign direct investment into Stoke and the rest of the UK. This has included involvement with the majority of foreign direct investment projects, which in total created 76,000 jobs in 2017-18, amounting to nearly 1,500 new jobs per week across the country. But we need to go further. The latest figures from the Office for National Statistics show that 232,400 SMEs exported in 2017, which is an increase of 6.7% over the previous year. It is progress, but this represented just 9.8%—less than a tenth—of all SMEs. In fact, a DIT survey in 2017 found that 19% of all registered businesses—516,000—could be exporting, but are not. In other words, there are more companies that think that they could be exporting than there are that currently can and do.
The International Trade Centre has estimated that the UK has an untapped potential of £124 billion in the export of goods alone. As my hon. Friend has so rightly said, this means that we need to help businesses to export more, whatever their size—from the largest multinational to the small and medium-sized enterprises that are the backbone of our economy. It also means protecting businesses from injury caused by unfair trading practices such as the dumping of goods, and setting tariffs at a rate that balances their exposure to foreign competition with a need to access affordable supplies. I again congratulate my hon. Friend on championing the ceramics industry so effectively ahead of the announcement of what no-deal tariffs would look like.
We also need to improve our export support. Last August, we launched our export strategy. This set a national goal of raising exports from 30% of GDP to 35%, moving us towards the top of the G7 and thus realising our aim of being a trading superpower. This builds on the UK’s industrial strategy, with the ambition of making exporting the norm, not the exception, for our businesses, working with firms of every size to unlock their exporting potential.
The export strategy sets out a step change in the Government’s support offer based on four main types of barrier that are stopping businesses reach their exporting potential: first, a lack of access to financing; secondly, a lack of connections or an “in” into local markets; thirdly, a lack of information or knowledge about exporting, or the ability to easily acquire it; and fourthly, the need to encourage firms to begin their exporting journey. I will make a few remarks about each of these.
First, financing of trade, I am pleased to say, is an area where we have been a pioneer. The UK’s award-winning credit export credit agency, UK Export Finance, was the world’s first export credit agency, and it has been found, in each of the past two years, to be the best export credit agency in the world. It provides businesses of all sizes with export finance so that they can win contracts in the first place, trade finance to give them the cashflow to fulfil them, and insurance to make sure they get paid at the end. We know that 77% of the businesses it helped last year were SMEs. We have partnered with five of the UK’s biggest banks to make it easier for SMEs to access UKEF support. Since introducing its trade finance products in 2011, designed around the needs of smaller businesses, UKEF has helped to enable more than £4.1 billion-worth of UK exports. This Government have already increased UKEF’s capacity to over 100 markets and the number of currencies to more than 60. That means that companies that buy British goods in a foreign jurisdiction can buy using currency and borrow in a local currency, thanks to the sovereign guarantee provided by UKEF.
The 2018 Budget increased UKEF’s direct lending support by £2 billion over the financial years 2020-21 and 2021-22, as we leave the European Union. As my hon. Friend remarked, the spring statement, only last week, announced a new general export facility. This will enable exporters to access a UKEF-backed loan to support their cashflow for a much wider variety of uses—instead of just to fulfil a specific contract, to access the sovereign guarantee. This support will take the form of a guarantee on 80% of the value of a loan—or, as I understand it, an overdraft—from a bank, and will be available from UKEF’s partner banks and non-bank financial institutions. In addition, UKEF is holding a consultation on creating a more flexible content policy. At the moment, the content has to be at least 20% from the UK supply chain. We are looking to see whether we can make that more flexible so that we can support exports all over the world and, by doing so, show maximum flexibility and maximise the economic benefits to the UK.
Secondly, on connecting businesses into local markets, to do this we have a network of DIT staff in 108 countries across the world. They provide businesses, both large and small, with practical advice on local regulations, business practices or consumer preferences. They point those businesses towards specific opportunities, help them make local connections, and lobby directly on their behalf. Again, this is especially helpful for small businesses that are entering these markets for the first time. I am pleased to say that they are reinforced by Her Majesty’s newly appointed nine trade commissioners—senior leaders with strategic expertise who have been given the authority, autonomy and resources to drive our trade performance in key priority markets around the world, as well as being supported by more than 240 DIT ministerial visits.
Thirdly, we have taken steps to help better inform businesses about the opportunities to export. This includes a network of sector-specific and region-specific advisers. My hon. Friend referenced this, and put in a bid for a ceramics specialist based in his area. As well as having specific advisers—we will consider his bid today carefully—there are 17,000 specific opportunities listed on our great.gov.uk website from markets around the world for UK businesses to express an interest in and apply for.
Finally, we have also taken measures to encourage businesses to export. Our research told us that small businesses that are new to exporting often overestimate the difficulties. In fact, many businesses told us that once they had started exporting, they wished they had done it sooner. As I said, we estimate that there are hundreds of thousands of small businesses that could be exporting but do not. A key part of tackling that issue is not the Government urging and persuading particularly, but getting successful exporters to share their experience with others. That is why we are rolling out our successful northern powerhouse export champions scheme to the entire country, which we committed to in the export strategy. There will be a network of 1,000 exporters who can act as advisers and critical friends to SMEs that are beginning to export. Only yesterday we launched the scheme in London, and tomorrow we will launch it for the east of England region.
Those four areas are the heart of our export strategy. It is a strategy that has been designed from the ground up, with implementation in mind. That is why we developed it with business, from roundtables and meetings to workshops and user surveys, and why we have focused Government support on what Government do best, rather than duplicating our excellent private sector market in export support and financing. It is also why we agree that this support must be properly resourced. It is why we have the UK’s first ever Department of State solely dedicated to international trade. If we are to compete, particularly as we leave the European Union, we need to ensure that we are able to support and project the UK offer all around the world, as other countries and rival suppliers seek to do so.
A variety of points have been made in the debate, including on the need to ensure that certification of food exports is facilitated. We take that extremely seriously and are doing everything we can to plan ahead for it, particularly if we end up leaving without a deal. My hon. Friend suggested an MPs’ guide to export services. I pledge to take that away and look at it. It sounds like an extremely good idea and something that we should follow up. We heard praise from his neighbour, the hon. Member for Stoke-on-Trent Central (Gareth Snell), for the Staffordshire chamber of commerce. I would like to praise not only that chamber of commerce but the others around the country, which provide that close link and encourage people on the exporting journey.
My hon. Friend made a point about Stoke’s reliance on smaller businesses. We have to get our strategies right to help smaller businesses. Often we can do that by improving our digital offer. It is much improved, but we have further to go in making it better still. Focusing on exports and trade and opening up markets around the world—my Department’s brief—is fundamental to delivering the prosperity that our constituents want for their lives. It is also fundamental to generating the tax receipts that will pay for the public services on which they rely.
This Government have joined up the drive and focus on economics, linking it through to the wider social policies that we all want to see delivered. One of the great failings of the Labour party was that it neglected that. That is why we have painstakingly built a business-friendly environment, and by doing so, we have got record numbers of people in work. We have been able to put record amounts of funding into the NHS and see breakthroughs—for instance, in breast cancer this week. It is all thanks to joining up, all the way through from the smallest business in my hon. Friend’s constituency going on the exporting journey, to the tax receipts that then pay for the public services on which we all depend.
Question put and agreed to.