Recommendations & Conclusions
12 items
6
Recommendation
Twenty-First Report - Government suppor…
Accepted
It is more difficult for businesses who are not customers of five of the largest commercial banks to access export finance. Smaller businesses would benefit from shorter turnaround times and simpler requirements when they apply for export finance. UKEF has introduced greater delegated authority to five of the largest commercial …
Read more
It is more difficult for businesses who are not customers of five of the largest commercial banks to access export finance. Smaller businesses would benefit from shorter turnaround times and simpler requirements when they apply for export finance. UKEF has introduced greater delegated authority to five of the largest commercial banks who can apply for some of UKEF’s products using an online portal and obtain immediate cover. In 2019–20, 389 applications were made through this portal. However, we heard that businesses who are not customers of these five banks cannot access the portal. Instead, they need to use a manual process that takes much longer. UKEF said that it intends to expand the number of other banks that can apply for its products using an online portal ‘shortly’. First, it wants to establish the system with the big five and create a single set of standard documentation. Recommendation: To make it simpler for smaller businesses to apply for export finance, UKEF should accelerate its expansion of the number of banks that can apply for UKEF’s products using the quicker online process. In its Treasury Minute response, we expect UKEF to confirm by when it expects to achieve this. Government support for UK exporters 9 1 Promoting export growth
Show less
Government response AI summary
The government agrees to accelerate the expansion of banks operating under the delegated approach for UKEF products, aiming for September 2021. It will sign up new institutions for the General Export Facility and engage with other funders, including FinTechs, to adapt products to simplify access …
Read full response →
HM Treasury
10
Conclusion
Twenty-First Report - Government suppor…
Accepted
Although sector teams within the Department for Business, Energy & Industry Strategy and the Department for International Trade work together, officials at both departments consider there is scope for a better joint understanding of how to exploit emerging opportunities in overseas markets.21 The Department noted that there is a high …
Read more
Although sector teams within the Department for Business, Energy & Industry Strategy and the Department for International Trade work together, officials at both departments consider there is scope for a better joint understanding of how to exploit emerging opportunities in overseas markets.21 The Department noted that there is a high correlation between innovating, high productivity and exporting, and that it does work with UK Research and Innovation (UKRI). However, the Federation of Small Businesses (FSB) considers that there needs to be better links between innovation funding and export finance.22 The Department acknowledged that not everybody in UKRI is fully aware of what support a company needs to export and that its own staff may not consider what innovation funding is available when working with businesses.23 Lack of robust metrics
Show less
Government response AI summary
The government describes an integrated approach developed with BEIS, applying a new framework to critical net zero technologies to link innovation and export potential from early policy stages. While there are no immediate plans to partner on UKRI studies, DIT and UKEF will continue to …
Read full response →
HM Treasury
14
Conclusion
Twenty-First Report - Government suppor…
Accepted
The Department intends to focus its bespoke support on around 230,000 businesses that have greatest potential to generate high-value exports, specifically those with a viable service or product to export and a turnover above £500,000. We were concerned that this is a small fraction of a total of 5.9 million …
Read more
The Department intends to focus its bespoke support on around 230,000 businesses that have greatest potential to generate high-value exports, specifically those with a viable service or product to export and a turnover above £500,000. We were concerned that this is a small fraction of a total of 5.9 million businesses in the UK.32
Show less
Government response AI summary
The government agrees and commits to continuing support for SMEs through a new £38 million Internationalisation Fund, exploring accreditation for International Trade Advisers, enhancing digital services, and promoting the 'report a trade barrier' service. These actions aim to broaden support beyond the largest businesses by …
Read full response →
HM Treasury
15
Conclusion
Twenty-First Report - Government suppor…
Accepted
The Department will provide support to all other potential exporters mainly through its website services.33 However, the National Audit Office reported that businesses have low satisfaction with the Department’s digital services (under half of the Department’s clients reported that services to help them identify export opportunities were good at meeting …
Read more
The Department will provide support to all other potential exporters mainly through its website services.33 However, the National Audit Office reported that businesses have low satisfaction with the Department’s digital services (under half of the Department’s clients reported that services to help them identify export opportunities were good at meeting their needs). In addition, use of these services is declining (registrations have dropped from 816 per month in 2018, to 450 per month in 2019, although the Department noted that businesses can use its services without registering).34 Small businesses with fewer staff may not be able to afford the time they need to use the Department’s website to identify the right opportunities, and that smaller exporters often receive little follow-up once they have registered with the website.35
Show less
Government response AI summary
The government agrees and commits to enhancing its digital offer for exporters by iterating services to increase quality and provide relevant content, data, and digital services. This aims to address concerns about low satisfaction and declining use of existing digital support for small businesses, with …
Read full response →
HM Treasury
17
Conclusion
Twenty-First Report - Government suppor…
Accepted
The FSB informed us that the utilisation of Free Trade Agreements by smaller businesses is disproportionately low when compared to larger firms. It has welcomed the inclusion of a small business chapter in the published objectives for each of the FTA 32 Q 70 33 C&AG’s Report, paras 12, 1.13. …
Read more
The FSB informed us that the utilisation of Free Trade Agreements by smaller businesses is disproportionately low when compared to larger firms. It has welcomed the inclusion of a small business chapter in the published objectives for each of the FTA 32 Q 70 33 C&AG’s Report, paras 12, 1.13. 34 Q 34; C&AG’s Report, para 2.20 35 Q 35 36 Federation of Small Businesses written evidence to the Public Accounts Committee inquiry into Government support for UK exporters, 11 September 2020, para 6; and Qs 35–39. 37 Pact written evidence to the Public Accounts Committee inquiry into Government support for UK exporters, September 2020, para 2.1. 38 Department for International Trade written evidence dated 25 September 2020 39 Q 18 14 Government support for UK exporters negotiations with the United States, Australia, New Zealand, and Japan, respectively.40 The Department confirmed that it aims to have a chapter that is supportive of small businesses in all trade agreements.41 Failure to meet customer targets
Show less
Government response AI summary
The government agrees to continue helping SMEs export via the £38 million Internationalisation Fund and by including SME chapters in all Free Trade Agreements. It will also explore accreditation for trade advisers, build its digital offer, and promote the 'report a trade barrier' service, with …
Read full response →
HM Treasury
18
Conclusion
Twenty-First Report - Government suppor…
Accepted
In 2019–20 UKEF directly supported 199 customers, falling short of its target to support 500. A further 140 customers benefited as suppliers to UKEF-supported projects. UKEF attributes lower than expected growth in the number of customers it supports to a lack of awareness among small businesses of what UKEF offers; …
Read more
In 2019–20 UKEF directly supported 199 customers, falling short of its target to support 500. A further 140 customers benefited as suppliers to UKEF-supported projects. UKEF attributes lower than expected growth in the number of customers it supports to a lack of awareness among small businesses of what UKEF offers; a lack of appetite from banks to support smaller exporters; declining demand from exporters; and issues with the application process for UKEF products.42 Pact has informed us that UKEF products and services are not used by the creative businesses it represents because they are not tailored to their needs.43
Show less
Government response AI summary
The government agreed with the (implicit) recommendation, launching the General Export Facility, refreshing its marketing campaign, streamlining bank agreements for trade finance, and setting up a new team to improve buyer finance products for smaller transactions.
Read full response →
HM Treasury
19
Conclusion
Twenty-First Report - Government suppor…
Accepted
UKEF said that its biggest problem is raising awareness with businesses and among the relationship managers of the banks it works with to provide export finance. UKEF encourages banks to lend by offering to guarantee up to 80% of their risk exposure, so if a bank is prepared to lend …
Read more
UKEF said that its biggest problem is raising awareness with businesses and among the relationship managers of the banks it works with to provide export finance. UKEF encourages banks to lend by offering to guarantee up to 80% of their risk exposure, so if a bank is prepared to lend £100,000 to a company, then with the UKEF guarantee it could lend up to £500,000 to the company.44 UKEF has a marketing budget and has developed an awareness-raising campaign called Exporters’ Edge. UKEF informed us that, since the start of the campaign, awareness among small and medium-size enterprises (SMEs) has risen from 20% to 31%.45 We asked whether UKEF undertakes a customer survey. UKEF informed us that, because it has so few customers, it does not survey them directly and instead it regularly talks to trade associations.46
Show less
Government response AI summary
The government agrees and launched the General Export Facility (GEF) in December 2020, which is expected to increase SME support. UKEF has also refreshed its "Exporters Edge" marketing campaign to promote GEF and other SME-focused products, working with banks and industry partners.
Read full response →
HM Treasury
20
Conclusion
Twenty-First Report - Government suppor…
Accepted
UKEF said that from next month (October 2020), it will introduce a general working capital facility, which will be more usable for smaller exporters. It will enable them to go to their bank and get UKEF support for their total export working capital requirements rather than linking this support to …
Read more
UKEF said that from next month (October 2020), it will introduce a general working capital facility, which will be more usable for smaller exporters. It will enable them to go to their bank and get UKEF support for their total export working capital requirements rather than linking this support to a specific export contract. UKEF hopes that this more flexible product will be a real driver of the number of small businesses that benefit from its support.47
Show less
Government response AI summary
The government agrees and confirms that UKEF launched the General Export Facility (GEF) in December 2020, which is designed to be more usable for smaller exporters and drive an increase in SME support. UKEF has also refreshed its marketing campaign to promote GEF and other …
Read full response →
HM Treasury
21
Conclusion
Twenty-First Report - Government suppor…
Accepted
In response to the COVID-19 pandemic it has also expanded the scope of its Export Insurance Policy to a wider number of markets, with the aim of protecting UK exporters from the risk of non-payment should UK exporters’ customers become insolvent or their government actions make fulfilling the contract impossible.48 …
Read more
In response to the COVID-19 pandemic it has also expanded the scope of its Export Insurance Policy to a wider number of markets, with the aim of protecting UK exporters from the risk of non-payment should UK exporters’ customers become insolvent or their government actions make fulfilling the contract impossible.48 It also told us that it is being proactive in engaging with the renewable energy sector and has recently financed projects in Taiwan, Ghana and Spain. However, UKEF told us that its work is largely reactive and sector-agnostic, responding to demand in the market. Consequently, the lack 40 Federation of Small Businesses, 11 September 2020, paras 17, 18 41 Q 17 42 C&AG’s Report, paras 21, 3.9, 43 Pact, written evidence, September 2020, overview 44 Q 73 45 Q 75 46 Q 59 47 Qq 58, 72 48 Q 72 Government support for UK exporters 15 of a domestic supply chain in the UK in these sectors was identified as a constraint.49 The Environmental Audit Committee also noted that UKEF has been criticised for the ‘proportion of its support for the energy sector which goes to fossil fuel projects’.50 Accessing export finance outside of the five largest banks
Show less
Government response AI summary
The government agrees to expand UKEF's 'clean and green' Export Finance Managers network, increase targeted marketing for the clean growth sector, and allocate an additional £2 billion to UKEF's direct lending facility specifically for clean growth projects, with a target implementation date of September 2021.
Read full response →
HM Treasury
22
Conclusion
Twenty-First Report - Government suppor…
Accepted
The National Audit Office reported that UKEF application processes can be slow and smaller businesses would benefit from simpler requirements.51 The FSB told us that it also wanted to encourage UKEF to simplify and shorten the application process for any future export finance product.52
Read more
The National Audit Office reported that UKEF application processes can be slow and smaller businesses would benefit from simpler requirements.51 The FSB told us that it also wanted to encourage UKEF to simplify and shorten the application process for any future export finance product.52
Show less
Government response AI summary
The government agrees and is expanding the number of banks using the delegated approach and signing up new institutions for the General Export Facility. It is also engaging with other funders, including FinTechs, to adapt UKEF products, with an aim to implement by September 2021.
Read full response →
HM Treasury
23
Conclusion
Twenty-First Report - Government suppor…
Accepted
To speed up application processes, UKEF delegated greater authority to five of the largest commercial banks who can apply for some of UKEF’s products through an online portal and can get immediate cover, and UKEF streamlined its eligibility criteria for applicants. In 2019–20, 389 applications were made through the portal, …
Read more
To speed up application processes, UKEF delegated greater authority to five of the largest commercial banks who can apply for some of UKEF’s products through an online portal and can get immediate cover, and UKEF streamlined its eligibility criteria for applicants. In 2019–20, 389 applications were made through the portal, of which 62% were eligible for immediate cover using the online process. The digital process is quicker, but when applications do not meet the eligibility criteria UKEF reverts to a manual process, which takes on average 49 days.53
Show less
Government response AI summary
The government agrees to expand the number of banks operating under the delegated approach and to sign up new institutions for the General Export Facility as quickly as possible, with a target implementation date of September 2021. UKEF is also engaging with other funders like …
Read full response →
HM Treasury
24
Conclusion
Twenty-First Report - Government suppor…
Accepted
As it currently stands, UKEF confirmed to us that businesses who use banks other than the five with UKEF delegated authority, cannot benefit from this streamlined process. UKEF told us that it planned to expand the number of other banks that can apply for its products using an online portal …
Read more
As it currently stands, UKEF confirmed to us that businesses who use banks other than the five with UKEF delegated authority, cannot benefit from this streamlined process. UKEF told us that it planned to expand the number of other banks that can apply for its products using an online portal ‘shortly’. First, they wish to establish the system with the existing five banks and create a single set of standard documentation.54 49 Q 68 50 Environmental Audit Committee, Nineteenth Report of Session 2017–19, UK Export Finance, para 6. 51 C&AG’s report, para 2.41 52 Federation of Small Businesses, 11 September 2020, para 10. 53 C&AG’s Report, paras 20, 2.41. 54 Qq 78, 79 16 Government support for UK exporters
Show less
Government response AI summary
The government agrees to expand the number of banks operating under the delegated approach and to sign up new institutions for the General Export Facility as quickly as possible. UKEF is also engaging with other funders like FinTechs to adapt its products, with the first …
Read full response →
HM Treasury