Thank you to Lloyds Bank for hosting this event with UKTI, and for all of the work that they do to support British business.
I know some of you were expecting Trade Minister Lord Livingston, who is sorry that he cannot be here today. And you may be asking yourselves why I, as a Foreign Office Minister, am here to talk about business.
And once upon a time, a Foreign Office Minister in my position may have been asking himself that same question. My colleague the legendary Ken Clarke – who you’re going to be hearing from later - once told me that he’d gone to South Korea at the same time as a trade delegation. When Ken asked the British Ambassador in Seoul if he could bring the delegation to an Embassy reception, the reply was ‘certainly not!’. It would have been unspeakably vulgar to mix trade and diplomacy.
Well, today, things in the Foreign Office have changed. And if the current Ambassador made that same call, I think he’d quickly find himself on a cross-border transfer to Pyongyang.
The government’s role
So I think it is actually very appropriate that it is the Foreign Office which is here, to talk to you about what the government is doing, and what it hopes to do, to bring growth and job creation back to the UK. Because we realised that we needed a major, coordinated cross-government push to make this happen – working to support you all in the private sector – and that everyone had to pull their weight. Even the marvellously refined and rarefied diplomats in the FCO.
Our role is of course primarily to work with UKTI to increase the UK’s international trade and investment. Almost three years ago, the Chancellor set out our aspiration - to double UK exports to £1 trillion, and to increase foreign direct investment into the UK to £1.5 trillion. All by the year 2020.
How have we set about doing this? I remember myself, by the way, the traditional reaction in the private sector to the government turning up and saying “we’re here to help” – the room empties pretty quick. But we do have a plan, and it’s a plan that is working, that is making us the fastest growing economy in Western Europe.
It’s really about 3 things
It’s first of all about creating the right conditions for our companies to succeed in. These are the macroeconomic policy goals we pursue, from:
-the Chancellor’s efforts at home in the UK, with the deficit down by a half as a percentage of GDP, and one of the most competitive business environments in Europe
-to our pursuit of an EU that is more business friendly, more flexible and competitive, with less red-tape
-to our support for free trade deals around the world - whether the EU-Korea deal of 2011 which has delivered a 30% annual growth in British exports there, or the hugely important Trans-Atlantic Trade and Investment Partnership between the EU and the US – which will be the biggest ever, adding up to £10 billion to Britain’s GDP – worth up to £400 a year for every household. And incidentally, we still have more work to do to puncture some of the urban myths which have grown up around TTIP
Government must support business
Our plan is also partly about specific policy tools and institutional changes to ensure that government is providing the best possible support for business. This ranges from, for example:
-the Chancellor’s announcement in last year’s Autumn Statement of a £20 million package of support for first-time exporters
-to Lord Livingston’s announcement last year that every mid-sized business in the country would be offered an intensive programme of support to help them break into new markets – to which over 2000 companies have already signed up
-to UKTI’s e-Exporting programme helping companies to take advantage of new digital opportunities, or its new inward investment support operations in 51 more markets around the world
-to UK Export Finance’s new Direct Lending Facility, working with 20 financial institutions, including Lloyds
-or to the FCO’s own changes - increasing our network and our staff numbers in emerging economies, in recognition of where growth is now coming from, with 100 new jobs in China and India alone; radically increasing the commercial training of our staff – with many of our Ambassadors now going on private sector secondments before taking up their roles; and rebuilding our traditional diplomatic skills, for example by increasing the numbers of Mandarin and Arabic speakers so we are able to provide the best possible support to business on the ground
Finally, our plan is about leadership. As you know, the Prime Minister has spearheaded our economic drive. I was with him when he took the largest ever business delegation to leave this country’s shores to India in February 2013 – only surpassed by the delegation he took to China later that year. Ministers, too, have been travelling as never before. There were more Ministerial visits to Brazil in the first three years of this Government than there were in the previous thirteen.
And when we do travel, we relentlessly bang the drum for British companies. I, for example, have toured in tuk-tuks in Cambodia; I have visited berry fields in Guatemala; I have even shorn a Bactrian camel in the Gobi Desert. All in the name of British business.
Sending the signal
Because above all, in my view, it is vitally important that we as government collectively send the signal – and in fact that we repeat it, ad nauseam – that in an uncertain and unstable world, Britain is competent, confident, and open for business.
That is why we are so proud of our GREAT campaign. It has given us a clear and consistent narrative through which to promote the UK and its wares all over the world, and has already delivered returns to the UK of over £1 billion.
So, how are we doing? Well, the UK grew at 2.6% last year – the highest rate since 2007 – and we’ve created 1.75 million new jobs. As you know, about half of our exports go to the EU, so it’s fair to say we have faced a vigorous export headwind. But we have made real gains in some of the world’s biggest emerging markets – with exports to China almost doubled since 2010. In terms of inward investment, we are attracting record levels - an increase last year of 8% to £975 billion, maintaining the UK’s position as the premier destination for FDI in Europe. London has become home to the first Remnimbi clearing bank outside of Asia and the Secretariat of the International Forum of Sovereign Wealth Funds.
And while it’s difficult, we are trying to measure the government’s role in this in more detail than ever before, because we want to get smarter about the support we offer. In 2013, British companies told us that UKTI and the FCO together helped them secure nearly £22 billion of international business. And last year, UKTI attracted commitments worth nearly £24 billion from overseas investors, into projects to develop our infrastructure and regenerate our cities. These include the £1bn investment from China into the Royal Albert Docks in London, for example; or the £644 million investment from a Canadian pension fund into the London Array - the world’s largest offshore wind farm.
It’s a promising start. But there is always more to do. As I – and many other government Ministers – have said, our economic plan is a long-term one.
And one of the things that being a Foreign Office Minister has given me – which you will all recognise, as international businesses – is an appreciation of how important it is that in a highly competitive world, Britain remains an attractive place in which to set up and operate a business.
Last month I opened our new Consulate in Wuhan – our first new Post in China in fourteen years incidentally, part of our push to increase our network in these huge emerging markets. McKinsey think Wuhan will be the third-largest city economy in China by 2025. When I arrived, I was told that it had around 10,000 building sites currently under construction, and a new tube line due every year for the next five.
The ambition was staggering – as it has been in so many of the other places I have been across Asia and the Americas.
This is a world which is developing rapidly around us, and we must keep up. But the good news for the UK is that many of these emerging economies need exactly the high-end goods and services that the UK offers. They have been through their industrial phases and are now looking for expertise in hi-tech, in law, finance and accountancy, in the creative industries, and of course they are looking for luxury goods. All of these we do exceptionally well.
So I think we have a real opportunity in the years ahead. It is important that we as government work as closely and as effectively as possible with and for you to capitalise on this, so I look forward to hearing from you today how we might improve in that. I also look forward to hearing how this exciting partnership between UKTI and Lloyds develops in the future.
And I hope that when you next hear the phrase “I’m from government and I’m here to help”, that you see it as an opportunity and not a reason to take to the hills.