Industry and Exports (Financial Assistance) Bill
(1 day, 9 hours ago)
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The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab)
My Lords, this is a simple Bill, which I am honoured to bring to the House today. The Bill has two main provisions. It raises the statutory limits in the Industrial Development Act 1982 and the Export and Investment Guarantees Act 1991. These provisions ensure that the Government can continue to support British industry and British exporters with financial assistance.
This matters because we know that exporting firms grow faster. They are more productive. They offer better jobs and higher wages than businesses that sell only domestically. Yet we know that access to finance can be a major headache for these same businesses. It is particularly tough for those that want to export millions of pounds’ worth of goods. Getting the necessary financial guarantees can be the biggest hurdle to exporting abroad, but noble Lords will know that these exports hold the key to a company’s growth. Just a single deal could be what makes or breaks a company.
Export finance is having a tremendous impact on our economy. Some £14.5 billion of UK Export Finance support last year is supporting up to 70,000 jobs, including across key industrial sectors such as clean energy, advanced manufacturing, life sciences and the automotive sector. Through existing provisions in the Industrial Development Act, the British Business Bank’s northern powerhouse investment fund II has directly invested £115 million-worth of capital into over 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.
We want to take this further, so that we can drive more growth across even more regions. With the Bill, we will ensure that transformational levels of government support will be there for industry tomorrow. The Bill contains some technical provisions, such as changing the currency from special drawing rights to pounds sterling, and it allows the delegation of future increases to UK Export Finance to secondary legislation. I am sure that noble Lords will champion the assistance provided through the Industrial Development Act and UK Export Finance that has helped businesses to grow through trade, creating jobs and fostering economic growth. It ensures that we can go faster and further, supporting more businesses to be pioneers in the sectors that are front and centre of the UK’s economy.
In tandem with the new trade strategy, more businesses than ever before will be empowered to export with the financial firepower of the Government behind them. The Bill can mean only better prospects for those businesses, our economy and the UK, and will boost economic growth in the coming years. I am thankful to colleagues in the other place for their scrutiny of the Bill so far and look forward to the wisdom and expertise that noble Lords will bring to this debate today. With that, I commend the Bill to the House.
Lord Sharpe of Epsom (Con)
My Lords, it is pleasure to follow the Minister, and I look forward to sharing some wisdom and expertise—at least I hope so.
I am grateful to the Minister for his introduction and for the opportunity to respond on behalf of these Benches. I say at the outset that we do not oppose the Bill. Updating financial limits that have sat unchanged for decades is both sensible and necessary as a piece of housekeeping. We recognise the importance of ensuring that the Government retain the tools to support British industry and exporters, where that support is genuinely warranted—the Minister gave some very good examples of that.
However, I will use this occasion to raise some broader concerns—not about the Bill in isolation but about what it may mean for the direction of the Government’s industrial policy more widely. The question we must ask is not merely whether the Government can provide financial assistance to industry but whether the cumulative effect of doing so—repeatedly, expansively and as a matter of instinct—risks becoming a substitute for the structural reforms that our economy needs.
Subsidisation has a seductive logic; it is visible and feels like action, and the Minister just called it transformational. However, we on these Benches believe that when the state steps in to cushion risk, it does not eliminate that risk; it merely transfers it to the taxpayer, while simultaneously distorting the market signals on which businesses depend to allocate capital efficiently. The Government should recognise that the misallocation of resources that follows is not always immediately apparent, but its effects compound over time.
The most powerful industrial policy this Government could pursue is one measured not in billions of pounds of guarantees and grants but in the burdens lifted from the shoulders of British businesses. We urge the Government to focus their energies there. Energy costs—in particular, the weight of environmental levies on businesses’ electricity bills—remain a serious competitive disadvantage for British industry. Unnecessary reporting requirements consume the time and attention of managers who ought to be focused on growth. I must mention the Employment Rights Act, which the Government’s own figures suggest will impose over £1 billion in administrative costs on business—a figure that, as businesses have warned, is widely regarded as a considerable underestimate. These are the frictions that erode competitiveness quietly and relentlessly, and no amount of export finance can compensate for them. Also, as we discussed in a Question earlier this week, they impact the quantity of foreign direct investment.
I will make a more fundamental point about risk. There is a tendency in industrial policy debates to treat risk as an enemy to be neutralised, yet risk is not merely a problem but a productive signal. It is the prospect of return that draws private capital towards genuinely promising ventures. When the state steps in to underwrite commercial risk too broadly or too readily, it does not simply help good projects that the market overlooked but sustains projects that the market had rationally declined to back. We should be cautious about inadvertently engineering away the discipline that risk imposes, because that discipline is part of what makes markets work. I appreciate that this was all debated in another place, but will the Minister explain the balance that he expects to see between private capital and UK Export Finance funding and how he expects this to work in practice?
That said, we are not dogmatic. We recognise that there are strategic sectors of the economy—the Minister highlighted some—where there is a case for targeted support, and that in some cases government has an instrumental role to play in getting exports over the line. We recognise that we live in a world of intensifying geopolitical competition. The rise of China as an industrial and technological power, the fragility of supply chains that was exposed so brutally during the pandemic, and the imperative of maintaining domestic capability in defence and critical technologies create a legitimate case for a limited role for government. We do not dispute that. What we dispute is the notion that broad, expansive subsidisation should always be the appropriate or default instrument and that it can substitute for the competitive fundamentals that underpin long-term industrial strength. A strong domestic industrial base is built on competitive energy, minimal regulations, a tax system that rewards investment and a labour market that gives businesses the flexibility to grow. Financial assistance of the kind that this Bill enables should sit atop those foundations and should not be deployed in their absence.
This Bill had its Second Reading in another place on 23 February. During a debate on my honourable friend Dame Harriett Baldwin’s eminently sensible and reasonable amendment relating to reporting requirements for UK Export Finance in relation to the steel industry, the Minister there argued that it was unnecessary because the steel strategy would be published in due course—I am sure the Minister knows what is coming. The steel strategy was originally promised last year. Without reopening the entire debate, but with costs mounting daily at British Steel—up to £370 million already according to a recent letter from the Minister’s colleague, the noble Baroness, Lady Lloyd, which I think is almost certainly a dramatic understatement, by the way—I ask the Minister to be more specific. When will we see the steel strategy?
It is worth heeding the very wise words of President Reagan, who once said that the nine most terrifying words in the English language are, “I’m from the Government and I’m here to help”. We will continue to press the Government on whether their industrial strategy is truly oriented towards building competitive strength or risks drifting towards a model of managed dependency where the taxpayer bears the risk, the market loses its discipline and British businesses are, in the longer run, no stronger for it.
Lord Pitkeathley of Camden Town (Lab)
My Lords, in my experience, smaller businesses rarely wake up in the morning worrying about statutory ceilings in the Industrial Development Act. What they worry about is whether they can secure the finance and insurance needed to win the next contract.
In my day job, I spend a lot of time around smaller and growing firms, particularly in the creative, technology and service sectors. These are precisely the sorts of businesses that increasingly make up the modern export economy. What they usually lack is not ambition—there is no shortage of that. What they lack is the financial tools that allow them to take on international contracts with confidence, manage risk and secure working capital.
That is why I broadly welcome the intent behind this Bill. Much of it is, in truth, a pragmatic adjustment. It updates the statutory limits under the Industrial Development Act and expands the capacity of UK Export Finance so that it can continue supporting British exporters at scale. In that sense, it is partially a piece of inflation catch-up. The limit for financial assistance under the Industrial Development Act has not been increased since 2009. Quite a lot has happened in the economy since then, and the scale of support required to compete internationally has inevitably grown. Updating these ceilings therefore seems sensible. However, raising the ceiling is the easy part. The more interesting question for Parliament is what happens beneath it.
UK Export Finance is already operating at considerable scale. In recent years, it has supported hundreds of businesses, thousands of jobs and billions of pounds of economic activity. Those are significant numbers, but the real test is whether the system helps the right kinds of businesses to grow and export. As we expand the capacity of these schemes, it would be helpful to understand how accessible they are to smaller firms, especially those outside the traditional large project and infrastructure sectors that export finance has historically focused on. Very often, these firms are not looking for a vast intervention from government. What they need is something more practical: the ability to ensure risk, unlock working capital and give a bank the confidence to support an export contract.
The Bill also makes future increases in UK Export Finance’s statutory limit easier. It allows the Government to raise the cap in increments of up to £15 billion through secondary legislation and removes the limit on how many times the mechanism can be used. I declare an interest as a member of the Secondary Legislation Scrutiny Committee in this House. That flexibility may well be sensible, but if Parliament is effectively creating the ability to expand the programme repeatedly over time, it seems reasonable that we should also have a clearer picture of how the portfolio is evolving. For example, it would be useful for Parliament to see a regular statement covering the composition of the portfolio, the share of support reaching smaller firms, the regional spread of activity and the level of financial risk and exposure being taken on—a dashboard, if you like.
The explanatory material also emphasises that UK Export Finance operates on a sustainable basis, with the aim of delivering no net cost to the taxpayer over time. That is an important discipline and, as the scale of the commitments grows, understanding how that principle is being applied in practice becomes increasingly important. Ultimately, the success of this legislation will be measured not by the size of the ceiling we approve today but by whether more British firms are actually winning business around the world tomorrow, so while I support the direction of the Bill, I would be grateful if the Minister could address two points.
First, how do the Government intend to ensure that the expanded capacity of UK Export Finance translates into wider access for smaller and newer exporters across the country? Secondly, given that the new mechanism allows repeated increases in the statutory limit, will the Government consider providing Parliament with regular reporting on the size, composition and risk profile of the portfolio so that this House can see clearly how that expanded headroom is being used? If the Government can provide reassurance on these points, many of us will feel comfortable supporting this sensible and pragmatic measure. I look forward to the Minister’s response.
Lord Empey (UUP)
My Lords, I speak as someone who served as a Trade Minister in Northern Ireland. I was also vice-president of the Institute of Export and International Trade for many years. The first committee I served on in your Lordships’ House was in about 2012. It held an inquiry into SMEs, and I listened very carefully to what the noble Lord, Lord Pitkeathley, just said. One of the interesting things was that at that time, UK Export Finance had just begun, I think, in its current iteration, away from the old Export Credits Guarantee Department, which still exists. That had only guaranteed companies in single figures, and they all tended to be the big battalions —Rolls-Royce, British Aerospace, et cetera. It has changed, and I have no issue with the perfectly sensible raising of the limits but, as the previous speaker said, it is about what you do with the raised figures.
It is supporting, allegedly, 2,700 companies in the current year. That is a tiny fraction of SMEs in the United Kingdom, which can be measured in their hundreds of thousands, and it has become increasingly challenging to get companies to export, because of the associated risks. We have only to look at our newspapers and television screens today to see some of those risks clearly and visibly exposed.
The scale at which it is helping SMEs is insufficient because it is not simply UK Export Finance putting money in its pocket and giving it to a company; it is guaranteeing it. A bank gives the money and then goes through its processes. That is where things start to unravel because the banks take their own attitude to lending, particularly to small and medium-sized companies. With a Rolls-Royce or BAE Systems, it is happy days. They are big companies with a lot of government contracts; that is easy stuff.
If we look at the need to resolve this matter, we have only to look at our balance of trade. This country has not had a balance of trade surplus since 1983. Look at the massive gap with China. I have asked on a number of occasions whether the departments will look at having a policy of providing information to companies on import substitution. It used to happen but if we are moving towards closer integration with the EU again, I guess that will be seen by them as a challenge to their way of doing things.
I agree entirely that raising the limits is perfectly sensible, but there must be a focus on getting our smaller businesses to export. There are challenges, and if simply we leave it to how the banks are going to measure these things, we will not get the breakthrough that we need. I therefore ask the Minister to take that back to his department because getting small and medium-sized businesses to get exporting into their minds, or even be open to the possibility of it, is the only way that we will fix our balance of trade. Relying on a diminishing number of large companies, which is the reality, will not be sufficient. We need the small, often family-owned companies. We know of the system with the two BMWs in the driveway—why take the risk? Why bother? But if we do not bother, we will not see those companies create the jobs for the next generation.
We are facing AI challenges and all the other things which we do not know how to measure at the moment. Will the Minister ask his department to look again at whether some kind of direction or advice can be given, not only to UK Export Finance but to our financial institutions as a whole, because that is the source of the guaranteed funding?
Baroness Alexander of Cleveden (Lab)
My Lords, it is a pleasure to speak on a three-clause Bill. I commend the Government on their brevity. It is a welcome change this week after the 220 clauses of the Crime and Policing Bill, the 178 clauses of the Tobacco and Vapes Bill and the 1,200 amendments that we will be wrestling with again tomorrow in the assisted dying Bill.
As every noble Lord who has spoken so far has noted, the Bill does not change policy, only financial thresholds. That narrow focus accounts for the broad cross-party consensus. More fundamentally, industrial assistance and trade policy remain a rarity in modern politics. They are matters of broad common ground. Like the noble Lord, Lord Empey, I served as a Trade Minister, for Labour in Holyrood, and then as a trade envoy for a different Government—proof that trade and industry can be common ground, at least in domestic politics. Of course, updating the financial thresholds after 16 years is eminently sensible, likewise using secondary legislation to raise the limits in the future.
I want to use my time to make one substantive comment on each theme. First, on the industrial assistance aspect, my own interest here dates to 1997, when I was working on the devolution settlement in the early days of the Blair Government. I can reliably report to the House that in all those years of campaigning for a Scottish Parliament, the minutiae of industrial aid rules had not caught the attention of even the most assiduous policy wonk, so in government it proved quite tricky. How do you devolve powers over trade and industry without undermining the financial level playing field within the UK? Today, rightly, financial selective assistance and export finance remain reserved matters but in an elegant constitutional arrangement, Scottish Ministers can prepare cases for financial assistance of up to £10 million for a single project, subject to a Commons resolution.
Last night, after we finished, I took a look at the most recent Industrial Development Act annual report, laid before Parliament in July, on Section 8 spending, which is what we are discussing today. It reported that neither the Scottish Government nor the Welsh Government had any Section 8 spending, compared with £2.9 billion of live schemes in England. There are complexities about the coverage of Section 7 and Section 8 areas and I appreciate, given that I am the last speaker in the debate today—at least from the Back Benches—that the Minister will not have had time to digest material from his officials on this matter. However, I would be grateful if he could write to me about the factors that he believes are influencing the uptake of Section 7 and Section 8 spending in the devolved Governments. These complex distributional issues should not detract from the value of industrial assistance, which is supporting thousands of jobs across the UK and leveraging in billions of pounds of private capital.
I therefore turn to export finance. The Government can take pride that their export finance portfolio is larger than at any point in history. At 70% current utilisation and with a strong pipeline of commercial opportunities, it is right to provide ongoing certainty to British businesses around future export support. Here, I echo the remarks of the noble Lord, Lord Pitkeathley, and others: on export finance, the devil is in the operational detail of the specific working capital and insurance schemes, and the ease of access to them by companies. I place on record that the Minister spent his entire pre-parliamentary life in the private sector, so he is well placed to ensure that bureaucratic creep does not diminish the effectiveness of support for exports—particularly, as others have recognised, for small and medium-sized enterprises. They are, in fairness, 88% of the beneficiaries of UK export finance, but we have to watch the opportunity costs for small firms caught in long, complex, unsuccessful applications that are deemed too high risk.
I come to my final substantive point. I ask the Minister to comment on the success of UK Export Finance in delivering its underlying mandate, which is to support exports at no net extra cost to the taxpayer over time. Therefore, echoing the question from the noble Lord, Lord Sharpe, I invite the Government to comment on their attitude to risk. Are the higher thresholds that we are being asked to approve a choice to adopt a higher risk appetite with respect to the likely return, or are they simply an attempt to anticipate greater demand in the pipeline and in the future? I welcome any guidance on that point.
In conclusion, I welcome the steps announced by the Government this week to crack down on sanctions-busting. This is a point that the Opposition raised in the other place. The Minister has responded this week with a new licensing scheme where there are any high-risk exports that could be used in sanctions-busting situations. Finally, I commend the focus of UK Export Finance in helping British business to be part of supporting the reconstruction in Ukraine. On that basis, I support the Bill and look forward to the Minister’s response.
Lord Fox (LD)
My Lords, the Minister called for wisdom and expertise. It is a great pleasure to follow the noble Baroness, Lady Alexander, who displayed both of those, but I am afraid the Minister now has me.
The Minister set the scene in his admirably concise introduction, but I want to look at some of the numbers. They are big numbers—not quite as big as our trade deficit with China, but big numbers none the less. We have heard that the Bill increases the Government’s ability to provide financial support to industry and exporters by raising long-standing limits. It boosts the cap on selective industrial financial assistance under the Industrial Development Act 1982 from £12 billion to £20 billion, which is a big increase. The maximum amount by which the Secretary of State can raise this limit has been increased from £1 billion to £1.5 billion, reflecting inflation over the period since it was last adjusted in 2009.
As we have heard, the Bill also significantly expands UK Export Finance’s statutory commitment limit under the Export and Investment Guarantees Act 1991, increasing it from the current equivalent of around £84 billion to £160 billion, converting the limit from special drawing rights to sterling to create some simplicity, and allowing further rises of up to £15 billion through secondary legislation without restricting the number of times such increases can be made. It will be helpful if the Minister can confirm that those numbers are correct. He did not use them in his introduction, but it is important for the record that we have them.
These changes are intended to maintain uninterrupted support for investment, exports and jobs, ensuring that the Government can back key sectors such as advanced manufacturing, life sciences and defence, without hitting the old limits. By raising these thresholds now, the Government say that the Bill prevents constraints on viable projects at a time when businesses are making critical investment and export decisions, providing necessary headroom to offer support only where justified, while safeguarding taxpayers and sustaining the UK’s credibility. On the face of it, this is a sensible uprating, which we support. However, its passage through the Commons was not without query and I will raise some of those queries again for the Minister to perhaps recap the answers.
In the Commons, MPs from several parties highlighted that the Bill authorises very large increases in industrial assistance and export guarantees with relatively light ex ante control. There are weak safeguards, limited transparency and scrutiny over what are, or could be, very large sums, and there are potential ethical and risk concerns around how export finance could be used. Critics argued that this scale of contingent liability exposes taxpayers to significant risk, with Parliament largely limited to retrospective annual reports rather than regular, detailed scrutiny of which firms and sectors are being supported—I think that was the point the noble Lord, Lord Pitkeathley, made about updates as to where the money is going.
In the Commons, cross-party amendments sought to block support where there is reason to believe that modern slavery or human trafficking are present in the supply chains. We on these Benches believe that it is unacceptable for any taxpayer-backed finance to underwrite that sort of exploitation, so it would be useful to know from the Minister how that will be overseen. Other amendments aimed to prevent UK Export Finance supporting goods which are likely to be re-exported to sanctioned destinations. It is very important that those safeguards are strengthened and any loopholes removed.
There are also questions about how all this fits in with the industrial strategy. The Bill certainly expands financial capacity, but what is the Government’s plan for which sectors and regions should benefit, particularly concerning steel, which is an ongoing issue, and other strategically important industries? Can the Minister confirm how the applications will be managed? Are they on a first come, first served basis? Does it stop when we run out of money, or will some sort of strategic overlay be put on to applications for drawing down on these funds? If it will, who will manage this overlay, and how will it be overseen and reported back to your Lordships’ House?
While we are talking about industrial assistance, I have spent the last eight years on the replumbing of the United Kingdom post Brexit. One of the many Acts I worked on was the Subsidy Control Act 2022. We would be very interested to know how industrial assistance will be managed within the Subsidy Control Act. The noble Baroness, Lady Alexander, also brought up the UK Internal Market Act, which was also part of the replumbing, and she asked some really important questions around that. There are constraints around what can and cannot be done, not least our own constraints, which were built looking at GATT and other things in the outside world.
Additionally, I am very grateful to the noble Lord, Lord Empey, for his really knowledgeable input on SMEs. I also have an observation that historically, the bulk of export finance money goes to larger firms; it does not go to SMEs. Although the Bill is being pitched as helping SMEs, there is no real indication in the Bill as to how that will be done. Experience shows that they will not be the major recipients of this uprating, so, like the noble Lord, I await the Minister’s views on this.
There is also this issue about government finance crowding out other finance, and how the process will be managed so that it is crowding in, not crowding out. It is really important that investment that would have come in any case is not being displaced. We really need to know that public money is going to be used genuinely as additional rather than substitutional. I look forward to the Minister’s response on these issues, but notwithstanding that, we support the changes being brought forward.
In conclusion, it is important to support investment, exports and jobs in sectors such as manufacturing, life sciences and defence, and it is vital that this support is extended to SMEs. On a broader note, a huge lever for UK exports would be to be included in the EU’s Security Action for Europe—so-called SAFE—financial instrument. As the Minister knows, this would give access to up to €150 billion of finance. Can the Minister update us on where we are on attempts to find our way into that programme? Of course, the looming threat of “Made in Europe” will do the opposite of what we are seeking to do here. It will exclude our businesses, our automotive businesses in particular, from exports. Clearly, the closer the UK is to the EU, the easier this will be to resolve—but, as the Minister knows, in this case, time is of the essence. The Bill is important, but sorting out our relationship with the European Union should be the priority. That said, we support the Bill.
Lord Stockwood (Lab)
I thank noble Lords for their contributions and feedback. I am also thankful for the general support for the provisions in this small but important Bill.
As aforementioned, the Bill will ensure that the financial assistance the Government have provided through UK Export Finance and the means available in the Industrial Development Act 1982 can continue. From the £1.5 million to support a Yorkshire manufacturer, to enabling Gloucestershire’s finest truffles to be exported across the world—and, indeed, to the Stockwood household—to £20 million in support of the aviation specialists in Surrey, all the way to over £8 million in support of a Scottish manufacturing SME, UK Export Finance is supporting growth and jobs across the whole country, and the Bill will enable it to go even further.
Additionally, financial assistance under the Industrial Development Act has provided £520 million of funding to generate private sector capital investments to support the continued growth of our life sciences sector via the life sciences innovative manufacturing fund. As I discussed in my opening remarks, these provisions ensure that the Government can continue to support British industry and British exporters, putting them on the strongest possible footing to contend in today’s increasingly competitive global landscape.
I now take the opportunity to address specific points raised in the debate, starting with my noble friend Lord Pitkeathley, who asked some important questions, and I am grateful for the advanced sight of his specific interests in today’s debate. On the issue of expanded capacity of UK Export Finance translating to wider access for smaller and new exports across the country, in 2024-25, that contribution to GDP was up to £5.4 billion, supporting 496 SMEs during that year. UKEF has also recently commissioned research from Oxford Economics, which showed that there are 115,000 businesses—predominantly SMEs, by the way—in the supply chains of the businesses which UKEF supports directly. These supply chains extend to all parts and regions of the UK.
Going even further in the support of SMEs, just in January, my right honourable friend the Secretary of State for Business and Trade announced a commitment from the UK’s top high street banks for a further £11 billion package to lend more to small businesses and medium-sized enterprises supported by UKEF’s guarantee. All of this will boost UK exports and economic growth.
On the question of providing Parliament with regular reporting, to which the noble Lord, Lord Fox, also referred, UK Export Finance reports to Parliament every year through its annual reports and accounts, which are both cleared through the National Audit Office, comprising details of all the transactions supported, their impact on the UK economy, and progress against the business plan targets. This also includes statutory obligations requiring reporting on spending levels under Section 7 of the Export and Investment Guarantees Act.
In relation to the Industrial Development Act, I can assure my noble friend that nothing in this Bill will change the existing reporting requirements around the use of support under the Industrial Development Act or the regular existing reporting arrangements. Sections 11 and 15 of the IDA require the Government to provide Parliament with annual reports setting out how they have discharged these functions under the Act, and that will continue. The annual report is presented to Parliament and includes detailed reporting on the provision of funding to support businesses through numerous different schemes and funds. This covers both expenditure and commitments for a given year, as well as the total commitment to date.
The noble Lord, Lord Sharp, noted broader concerns about the burdens on business of regulations, energy costs, et cetera. Before I fully answer, I would like to say that we largely agree that the role of government is not to de-risk businesses. It is largely to create confidence in our growth prospects and set the conditions of success for the private sector. It is one of the reasons I came into government: I believe firmly in that and took my own earning potential down to zero seven months ago in order to do that. As my noble friend Lady Alexander says, it is a place where we often find much common ground and it is one of the reasons I am proud to be part of this Government, because this Government firmly believe in it.
As part of that, we have a clear industrial strategy, a trade strategy, a plan for small and medium-sized businesses, and a plan to make work pay to address long-standing barriers to growth. These are underpinned by new policy co-creation approaches, with new initiatives being developed to respond to all businesses’ top concerns. I spend much of my time on round tables, speaking to CEOs, SMEs and businesses to ensure that we get the requisite feedback to ensure we are making the right decisions.
On energy prices, last month we concluded an eight-week consultation on the British Industrial Competitive Scheme—BICS, as it is called. This scheme will reduce electricity bills for eligible manufacturing businesses by up to 25%. We are keen to ensure we go further within the macro environment for energy prices. It is absolutely critical that we remain competitive, and we are trying to do as much as we can in that area.
To the question of balance between private capital and UKEF funds and project support, UKEF exists to help UK exporters win overseas contracts, deliver them and get paid for doing them. It does this by providing competitive finance terms to prospective buyers, supporting working capital and trade finance to help exporters develop, and insuring against buyer default. UKEF does not provide grants, state aid or equity support. I reiterate: it does not provide grants, state aid or equity support. It charges a premium for its products and UKEF complements rather than competes with the commercial sector and helps crowd in private investment. It is clear to say also that UKEF remains a hugely profitable part of UK P&L.
On the question of the steel strategy and when it is coming, I recognise the importance of that question from the noble Lord. The steel strategy is imminent.
Lord Stockwood (Lab)
Thank you for your vote of confidence. The strategy is imminent. We are hoping to announce something in the coming weeks. We recognise the importance of publishing the strategy for the industry. The Government are committed to putting the industry on a sustainable, long-term footing. It is vital for our broader strategic resilience as a country over the coming years.
To the question raised by the noble Lord, Lord Empey, about whether HMG have plans to provide information to businesses on import substitution, UKEF can provide support that is conducive to exports. Its overseas support is conditional on sourcing from the UK and shifting supply chains towards UK firms. UKEF’s customers support an estimated 115,000 UK businesses in the supply chain, which shows that, when UKEF promotes UK exports, the benefits cascade throughout the UK supply chain and throughout the UK economy. The Bill is not changing policy or the mandate underpinning this reality.
My noble friend Lady Alexander asked if I could write to her about the uptake of export support by the devolved Administrations. I will be happy to follow up with her on the specific statistics following this debate. On the further question on the UK’s success in delivering on its mandate, it operates at no net cost to the taxpayer over the economic cycle and has generated more than £850 million returned to the Exchequer over the past four years. Risk is carefully managed and monitored, with regular reporting to Parliament as part of its statutory obligation and HM Treasury oversight. I firmly believe that, as part of the portfolio of assets that we have supporting UK business, UKEF is one of our strongest and most prominent capabilities.
On the question from the noble Lord, Lord Fox, on whether the numbers he referred to are correct, I can confirm that they are. I am grateful to him for his role in advertising the great work that this legislation seeks to do in supporting UK businesses. On the question about the funding applications and the sector overlay that he mentioned, UKEF operates UK-wide, supporting exporters in every nation and region. Allocation is demand-led and based on commercial viability, as noble Lords would imagine, not on geography or sector. UKEF’s business plan includes an ambition that at least 80% of the businesses it supports will continue to be based outside London. That does not mean that London is not important, but regional development and support is critical to the whole of the UK’s success. On the question about the impending pressure of the “Made in Europe” policy, I firmly agree that it is critical and we are engaged on it with alacrity and pace.
In conclusion, I hope the arguments that I have set out satisfy colleagues that the provisions in the Bill are simple and straightforward. They are necessary to improve economic growth and will provide the Government with the means to give much-needed financial support to industry and businesses up and down the country. I thank noble Lords across the House for this informed debate and for their wisdom.
Lord Baker of Dorking (Con)
Before the noble Lord sits down, can I ask him about SMEs?
Lord in Waiting/Government Whip (Lord Leong) (Lab)
I am sorry, the noble Lord should not be intervening because he is not on the speakers’ list.
Lord Stockwood (Lab)
The question was well made. I can tell the noble Lord that it is important and that there is a whole strategy with UKEF and the Government to ensure that the opportunity that the Bill creates is articulated to the SME community as well.
With that in mind, I thank noble Lords from across the House for this informed debate. It is with great pleasure that I beg to move.