Speech

From the Northern Powerhouse to global trade

Business Secretary Sajid Javid explains how exporting can help small businesses build the Northern Powerhouse.

The Rt Hon Sajid Javid MP

It’s great to be back in Liverpool and at the International Festival of Business (IFB) for the second time in a week.

I was going to start today with a little joke about tonight’s football.

But following the tragic murder of Jo Cox last week, politics doesn’t really feel like the place for humour right now.

Jo’s murder was a heinous attack on a talented, committed young woman.

It was an attack on a wife, a mother, a daughter.

And it was also an attack on the principles on which this country is built, on the idea that we choose democracy over violence.

Hatred doesn’t begin with violence and murder.

That’s where, left unchecked, it reaches its natural conclusion

But when we know where hatred leads we can stop it in its tracks.

And all of us who believe in democracy have a duty to do just that.

Exactly 197 years ago, on the 20 June 1819, cheering crowds greeted the SS Savannah as she docked here in Liverpool.

Her arrival marked the end of the first-ever steam-powered journey across the Atlantic, and the beginning of a new era for international trade.

It was a time when the north of England was at the heart of the global economy.

Factories produced goods on an industrial scale.

And ports like Liverpool, Tyne, and Hull shipped them to markets around the world.

A century and a half later, and with considerably less fanfare, a guy named Abdul Ghani-Javid arrived at the other end of the ship canal, in Manchester.

He was my dad, fresh from Pakistan.

And, like many of his fellow immigrants, he was drawn to the north of England because it was still the powerhouse of British industry.

Still making what the world wanted, and still doing it better than anyone else.

That was back in 1961.

Business was booming, everything looked rosy.

But it wasn’t to last.

By the end of the decade exports were falling, imports were rising and the mills and factories were beginning to close.

Liverpool’s once bustling docks fell into disuse and disrepair.

Since then, of course, the individual cities of the north have bounced back.

You just need to look at this brand-new, £65 million conference centre to see how Liverpool has found a new lease of life.

Manchester has become a thriving media hub.

Newcastle and Gateshead have been reinvented as cultural capitals.

But the success of the great northern cities has happened in isolated pockets.

Individual cities and local authorities acting alone, even in competition.

A lack of co-ordination and shared infrastructure has meant that the north has been less than the sum of its parts.

And that has had a really serious impact on the region’s businesses.

Between 1981 and 2013, economic growth in most of northern England was well below that of the UK average.

Productivity is lower than the UK as a whole.

16% lower here in the north-west.

20% in Yorkshire and the Humber.

And a massive 27% in the north-east.

A lack of investment in skills left the north-east with an unemployment rate more than twice that of the south-east.

And outdated, overcrowded transport links mean northern businesses are quite literally being left behind.

That’s something this government is not prepared to tolerate.

Which is why we’re working with business and local government to create the Northern Powerhouse.

Across the whole region we’re investing in science and technology.

We’re investing in transport, in innovation, in digital.

We’re investing in culture and tourism.

And we’re devolving real power, giving the north a powerful new voice.

For example, the directly elected mayor of Liverpool has been described as holding the most powerful political post outside London.

So the Northern Powerhouse isn’t just being built with warm words.

It’s not some short-term marketing campaign.

It’s a serious vision for the future of the north.

And it’s a vision that has the potential to pay incredible dividends for the region.

If the north grew at the same rate as is forecast for the rest of the UK the economic potential is huge.

We could add £37 billion to the economy by the end of the next decade.

Here in the north-west it would mean a boost of £2,000 for every man, woman and child.

And that would be great news for businesses of all sizes.

But we’re not going to get there simply by looking inwards.

Yes, the Northern Powerhouse will make it easier for Liverpool to do business with Manchester.

For Leeds to link up with Sheffield. But the real gains are to be made by connecting northern businesses with the rest of the world.

For too long the big names, the high-street brands and the giant multinationals have monopolised the arena of international trade.

Small and medium-sized enterprises (SMEs) make up 99% of all British businesses.

They provide the vast majority of Britain’s private sector jobs.

But they only account for a small fraction of exports.

Only 1 in 5 British SMEs export at all – across the EU, the average is 1 in 4.

Things are particularly bad for the medium-sized firms.

Only 34% of British mid-sized companies export.

In Germany the figure is 68%; in Spain it’s 85%.

It’s a huge missed opportunity.

Last year, researchers found that up to 150,000 SMEs that could be exporting are not doing so.

Yet if they embraced that opportunity, if they made the most of their potential, it wouldn’t just be good news for the exporters.

The benefits of bigger sales would be felt all the way down the supply chain and right across the community.

Why are small businesses limiting their ambitions?

While the specifics vary from business to business and sector to sector, there are some key issues that I come across again and again.

First is a simple lack of awareness.

SMEs don’t have agents and networks and feelers right around the world.

For too long it has been too hard for them to even find out that an export opportunity exists, never mind make the most of it.

Second is a lack of finance.

Many SMEs lack the resources to engage with the international markets, or don’t know where to turn to access it.

Finally, there’s a lack of confidence.

Too many British SMEs don’t have a culture of exporting, it’s not something they’re used to.

And when you’re running a small firm with tight margins, it can be exceptionally hard to justify a step into the unknown.

So there are some big challenges.

But none are insurmountable.

They can be overcome.

And as Business Secretary, my views are very clear.

If a UK business wants to export to its full potential, there should be nothing to stop it from doing so.

That’s why this government is working hard to support SMEs that want to dip their toes into the international market.

That support comes in many forms.

At the top of the tree is a whole new approach to exporting.

For years, governments saw it simply as a matter for my department, the business department.

But that’s a much too narrow view.

Under this administration, boosting international trade is a responsibility shared by the whole of government.

So the Home Office looks at how the visa system can help.

The Department for Transport makes sure UK business travellers can connect with the world.

The Department for Health offers its support to med-tech firms. And so on.

All that comes together in the cross-government Exports Implementation Taskforce, which I chair.

One of the first initiatives to come out of that taskforce was Exporting is GREAT.

Launched in November, it’s a 5-year, multi-million pound campaign to boost Britain’s overseas trade.

At its heart, and particularly useful for SMEs, is a website listing current export opportunities right around the world.

Updated in real time, it tells you what’s needed where and how to go about supplying it.

I checked this morning and there are currently almost 2,000 export opportunities listed, many of them perfect for SMEs.

A government agency in Jamaica needs marine fenders and bollards.

A Peruvian construction firm has a tender out for protective workplace clothing.

There’s even a supermarket chain in Argentina that wants to stock British jam!

It’s all there on exportingisgreat.gov.uk – go take a look.

Of course, even in 2016 you can’t just build business relationships from behind a computer screen.

It still helps to get boots on ground.

That’s why I led the first ever Northern Powerhouse trade mission, taking a range of SMEs to Singapore and Malaysia last year.

We had 50 companies spending 3 days in the 2 countries.

And we built countless contacts that will help boost business for years to come.

But trade missions aren’t your only opportunity to engage overseas.

A year from now, Kazakhstan will be playing host to an international expo in its capital, Astana.

The UK will be one of 75 countries hosting pavilions, with delegates attending from many more.

The overarching theme is ‘Future Energy’, but that doesn’t mean it’s only open to the BPs and Shells of the world.

There are opportunities for SMEs working in any aspect of oil and gas, renewables, education, financial services and more.

It’s an amazing opportunity to put your business in front of 5 million visitors from familiar and emerging economies.

So if you want to be a part of that, get hold of one of the UK Trade and Investment staff here at the festival.

In fact, get in touch with UKTI if you need any help at all with exporting.

They have an expert presence in markets around the world – and it’s their job to help you succeed.

So we’re providing information about export opportunities and practical support to make the most of them.

And we’re also helping with that tricky financial side.

Through UK Export Finance, the nation’s export credit agency, we are helping small firms to minimise the financial risks of overseas trade.

Accessing working capital to fulfil export orders and making sure an overseas buyer will pay on time can be particularly daunting for SMEs, so we are increasingly focussing support on them.

And we are improving UK finance markets through the British Business Bank.

It’s currently supporting over £1.8 billion of finance to over 40,000 smaller businesses, and a further £1.4 billion of finance to small mid-cap businesses.

Together, it all adds up to a wide-ranging package of support for small northern businesses that want to export.

The opportunities are out there, and you could be too.

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Exports and growth go hand in hand.

That was true back in the days of the SS Savanah, and it’s true today.

The history of Liverpool is built on international trade, and that’s where its future lies.

The same applies right across the north, from Sheffield to Sunderland.

Exporting can really put the power into the Northern Powerhouse.

And it’s not just for the big names.

Exporting is for you, too.

Today’s customers don’t think twice about going online and finding the best product at the best price, even if that means ordering from the other side of the world.

It has never been easier for SMEs to start exporting, and the potential rewards have never been greater.

Exporting is great for your business, it’s great for your bottom line, it’s great for your employees and it’s great for the north.

So if you’re running an SME with export potential, I only have one thing to ask.

What are you waiting for?

Thank you.

Published 20 June 2016