Twenty-First Report - Government support for UK exporters

The Department for International Trade’s contribution to export performance is unclear because of a lack of robust metrics. It is important for any public body to be clear about and accountable for what it is trying to achieve, and the … Read more The Department for International Trade’s contribution to export performance is unclear because of a lack of robust metrics. It is important for any public body to be clear about and accountable for what it is trying to achieve, and the criteria it will use to judge whether it is being successful, including performance information that allows Parliament and the taxpayer to understand how effective they are and what impact they are having. However, the government has not set a timescale for achieving its export growth ambition to increase from 30% to 35% of GDP, and the target is dependent on multiple factors such as economic conditions and contributions from other parties including independent efforts by UK industry. The Department measures its annual exports performance through its ‘export wins’ measure but this target does not encourage it to focus on longer-term export growth. The Department was unable to provide us with details of other measures that cover the broad scope of its role in supporting exports, such as removing market access barriers. The Department says that it aims to develop better measures for understanding the impact of FTAs and to help it target specific markets. Recommendation: By the end of 2020, the Department should set out longer- term outcome measures that enable us, Parliament and the taxpayer to hold it to account for its impact on exports, and which capture the full range of its activities to support exports. Measures should include supporting exports, such as removing market access barriers, including better international comparators, the impact of free trade agreements and the number of exporters. DIT’s performance against all measures, existing and new, should be reported transparently. Show less

View Details →

The Department for International Trade is not doing enough to address the challenges that small businesses face when they export. Out of an estimated 5.9 million businesses in the UK, the Department focuses its bespoke support on around 230,000 which … Read more The Department for International Trade is not doing enough to address the challenges that small businesses face when they export. Out of an estimated 5.9 million businesses in the UK, the Department focuses its bespoke support on around 230,000 which has been almost identical for many years, with a turnover of over £500,000 and directs businesses below this threshold to digital services on its website. Levels of satisfaction with the Department’s digital services are low (under half of the Department’s clients report that services to help them identify export opportunities are good at meeting their needs) and use of these services is declining (registrations have dropped from 816 per month in 2018, to 450 per month in 2019). Small businesses with fewer staff may not be able to afford the time required to use the Department’s website to identify the right opportunities. In addition, smaller exporters are concerned about the varying quality of the Department’s International Trade Advisors, opportunities for businesses to report trade barriers, and the financial support available for attending trade shows. The FSB has welcomed the Small and Medium-sized Enterprises (SMEs) chapter in the free trade agreement with Japan. The Department intends to include such chapters in all its trade agreements, but the FSB informs us that utilisation of FTAs by smaller Government support for UK exporters 7 businesses is disproportionately low when compared to larger firms. There is scope for the Department to learn from other countries, such as Denmark, about how it could better target support at individual companies. Recommendation: DIT should take urgent action to ensure that more small businesses become exporters. Specifically, it should: • Improve the support it offers to smaller businesses. It should improve the quality of the International Trade Adviser service and explore the merits of introducing accreditation, ensure that its digital services meet the needs of smaller business Show less

View Details →

The Department for International Trade and UK Export Finance are not yet doing enough to identify and help the businesses of tomorrow to export. The Department’s level of insight into exporters in different sectors of the UK economy is variable. For example, the Department is still developing its understanding of …

View Details →

UK Export Finance directly supported only 199 customers in total in 2019–20, failing to meet its own target of 500. UKEF attributes failing to meet its customer target to a lack of awareness among smaller businesses of what UKEF offers, a potential decline in demand, a lack of appetite from …

View Details →

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 …

View Details →

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for International Trade (the Department) and UK Export Finance about support for exports.1

View Details →

UKEF is concerned that where the Department’s staff do not have the technical skills to promote export finance, UKEF may consequently have missed opportunities to use export finance to support UK exports in some markets. For example, UKEF had supported exports to 72 countries in 2018–19, but 80% of the …

View Details →

The Department’s insight into exporters in different sectors of the UK economy is variable; stronger in well-established sectors, such as aerospace, but less developed and less well-understood for some emerging sectors such as renewable energy.13 The Department told us that it has aimed to substantially increase the skills of its …

View Details →

We were concerned that the Department concentrates on identifying which overseas markets might provide contacts for the UK’s existing exporters.16 These may be larger firms in more established markets that already generate high value exports. However longer-term export growth will come from focusing on some of the smaller innovative businesses …

View Details →

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 …

View Details →

In 2018, the Government announced its export strategy and an ambition to raise exports as a proportion of GDP from 30% to 35%.24 This committee has recently highlighted how important it is for any public body to be clear about and accountable for what it is trying to achieve, and …

View Details →

The Department informed us that it has a “raft of other measures” that it could be measured against, including international comparators. It highlighted its ‘export wins’ measure, which is the value of exports that it thinks it has directly contributed to, as determined and agreed by the companies that it …

View Details →

The Department told us that it has recently introduced a value for money model to assess the impact of its different interventions, but it is still relatively new. It recognised that there is work to do to improve its overall evidence base, particularly how exports change over time, and to …

View Details →

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 …

View Details →

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 …

View Details →

The FSB also reported that the Department’s International Trade Advisors can vary in quality, that small businesses do not know about the Department’s ‘Report a trade barrier’ scheme and are not using it, and that very small firms do not have the opportunity to apply for a Tradeshow Access Programme …

View Details →

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. …

View Details →

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; …

View Details →

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 …

View Details →

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 …

View Details →

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 …

View Details →

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

View Details →

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, …

View Details →

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 …

View Details →