Opinion
4 Nov 2015 09:36am

Are government measures effective in helping small businesses export?

Nicola Bolton, managing director of UKTI and Andrew Haldenby, director of the think tank Reform go head-to-head in this month's debate

Yes, Nicola Bolton

Government investment in direct export support for small businesses has increased over the past five years. Together with our private sector partners we have developed a comprehensive package to help small businesses make their first steps and support them once in market. These initiatives helped UKTI get more than 54,000 UK companies exporting in 2014, representing over £37bn in business wins.

We have targeted new markets for growth, building our presence and deepening our relationships in developing markets. Exports to high-growth markets since 2010 have increased by 52% to China, 37% to Brazil and 24% to India.

Success also depends upon having the right government policies and strong global conditions for trade and growth. We are pushing hard to open markets, promote free trade and counter risks to economic stability. This lies behind our G8 agenda on tax, trade and transparency, and underpins our work to deliver an ambitious EU-US trade deal that could be worth £10bn to the UK.

UKTI and wider government have long worked closely and successfully with banks and accountants to support the trade agenda. We are formalising these strategic partnerships to connect our global networks to offer a stronger range of support and advice to a greater number of exporters. We now have a strong overseas business network in 39 countries, and are looking to expand to an additional 40 markets over the next two years.

No, Andrew Haldenby

The government will miss both of its key exports targets on current trends. It will only hit its objective of £1trn in exports by 2020 if the recent rate of export growth doubles. The proportion of SMEs that export appears stuck at around 19%, according to the recently published Small Business Survey, compared to the target of 25%.

The key policy objective is to provide greater support to SMEs. Government may find its role lies in leadership and partnership rather than delivery. It will always be hard for government organisations to reach the many thousands of SMEs needed to meet the current target. The pressure on public finances will restrict resources for all government agencies for years to come.

The good news, according to the Small Business Survey, is that SMEs are finding new and powerful ways to support each other. In particular 49% of SMEs are active members of social media networks.

The twin policy conclusions may therefore be first, greater targeting of UKTI and FCO support to large and medium-sized companies, and second, to maximise the efforts of key private sector organisations to provide export advice to SMEs. Those organisations include Chambers of Commerce; professional organisations, in particular ICAEW and other accountancy bodies, and legal bodies; large companies, supporting SMEs in their supply chain; and existing SME exporters, supporting others through their own networks including social media.

 

 

Nicola Bolton

Creating the conditions for growth and providing effective support for exporters is critical to the government’s aim to drive up both export volume and value. Getting more small and medium businesses to export – and to export to more markets – is key. One of the themes from UKTI’s recent customer insights work (August 2015) was small businesses’ desire to help themselves and each other. Where commercial support is available, we will take a strong, proactive role. Where services do not exist, we need to consider new ways to stimulate the market; for example a digital platform; mentoring networks; and incubating new services with the potential to transform small businesses’ first export experience.

We’re already working with large UK-based manufacturers to draw in the UK supply chain and identify more opportunities for British companies to boost supply overseas, and we’ve signed strategic partnerships with Lloyds Bank Commercial Banking, Santander and KPMG, which increase our ability to reach new exporters and investors. We’ve also accredited 116 leading trade associations and industry bodies as Trade Challenge Partners, forming a structured relationship to support their 50,000+ members to start or continue exporting. These initiatives will enhance government’s reach to businesses, helping more achieve their export goals.

Andrew Haldenby

Government will succeed in supporting exports when it mobilises networks in the private sector, including professional advisers such as accountants. It will also succeed when its own efforts are coherent. This needs thought because policy on exports is an issue that can fall between stools in Whitehall and Westminster.

One of the most important innovations of the new government is a series of 10 “Implementation Taskforces”. These are versions of traditional Cabinet Committees designed to bring together the work of government departments (rather than simply broker decisions between them). One taskforce, chaired by business secretary Sajid Javid, is focused on exports. Also represented are the Foreign Office, Department for International Development, Defence, Cabinet Office and Treasury.Government has already sought to introduce a new “commercial diplomacy”.

 

 

Nicola Bolton

Initiatives such as the Grown in Britain and Northern Ireland business programme illustrate the trade benefits of cross-government working and cooperation with the devolved administrations. Launched at Milan Expo in May, this programme showcases the best of British capabilities, goods and services to international buyers and will deliver £1bn of economic benefit over time.

The Export and Investment Taskforce, chaired by Sajid Javid, will further strengthen cross-government efforts. So will UKTI’s trade and investment experts working with policy officials in all departments to boost the trade agenda.
There are many British businesses out there, with goods and services in demand overseas, who are not trading overseas. This month, supported by private sector partners, we will launch our most ambitious export campaign ever. Combining a multi-channel advertising campaign, a digital platform and outreach, we will present live export opportunities to businesses of all sizes, sectors and from every region of the UK. And we will provide the advice and expertise to support those businesses on that export journey.

For a year, we will travel the UK giving face-to-face assistance to first-time exporters, and we will be building the country’s largest business peer-to-peer advice network. There is a world of opportunity out there for British business.

Andrew Haldenby

These initiatives are very powerful. Government will make great progress if it can capitalise on the mutual support of businesses. The remaining question may be the role of leading ministers, and the prime minister. At present their priorities are to support individual projects and businesses via trade missions. They also make the overall case that Britain is in favour of open trade and is, in the government’s phrase, “open for business”.

These efforts are highly successful. Leading businesses praise the efforts of UKTI in providing this direct support. I wonder if ministers, including David Cameron, could do more to support the engagement of small businesses.

That does not mean personal engagement with SMES; they don’t have the time. But ministers can associate themselves with the networks of business support that will support SMEs. They can speak at the meetings of these networks, write for their literature, perhaps hold awards for their success. The government has done something similar in its support for “Silicon Roundabout” – the technology hub in east London. It would be fantastic if ministers could sprinkle their gold dust on the wider SME export networks too.

 

 

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