Exporting: Does Whitehall Know Best?

With Brexit looming, Theresa May was right to elevate international trade to Cabinet level. The government unit responsible, UKTI, accordingly transferred from BIS to the new department.  This was the opportunity to upgrade that much criticised unit to meet the new challenge.  Formed some 25 years ago from foreign minded members of the Bored of Trade and trade minded diplomats, with top management coming and going, it has not proved a success: British exports have been sluggish relative to, say, Germany and the Netherlands.  In the competitive world of governments supporting their exports, UKTI is the British Leyland.

Seasoned sales forecasters know one should provide a target or a date by which the target will be achieved, but never both together.  In 2010, UKTI accepted, along with a hike in its funding, George Osborne’s target of doubling exports to £1tn p.a. by 2020.  They had no clue, still less a plan or quantified stages, how to achieve that but the ever less likely target officially remains.

Of course some changes have been for the better; export and inward investment successes have been achieved but, taken overall, radical reformation is needed.  None of the top management seems to have any personal experience of creating exports. The organization is top heavy with too many staff in London and too few International Trade Advisers (ITAs) around the UK.  An average of 13 UKTI staff in each of the 100 overseas posts also seems excessive but quality is more important than quantity.  The structure in China is inappropriate and wasteful. There are too many centrally driven initiatives distracting junior staff from the main business of export (and inward investment) support and trade visits. 

The current UKTI CEO, Catherine Raines, is improving IT communications with a “customer” database and performance measures aligned with the Treasury target but we should not attribute all exports to UKTI; business plays a part in achieving them too. The key measure should be UKTI net added value, i.e. the value of exports, less the value of imports included and less the share of that which the exporters would have achieved without UKTI help.

Fundamentally, UKTI (and now presumably the new Department) has the wrong model for successful exporting.  The economics/digital analysis research model (what you know) favoured by UKTI is far less useful than networking personal contacts (whom you know) model supported by experience and academic research.

In general, the quality of help provided by UKTI to British business is patchy and depends on quality of ITAs and overseas posts.  It also depends on the extent of interference, initiatives and ceaseless change imposed by UKTI HQ.

Large numbers of new exporters can only come from the ranks of the SMEs yet UKTI HQ has little or no empathy with SMEs.  They are more comfortable with government relationships and large companies who should be able to look after themselves.  Advising SMEs in the UK (but not overseas) should be handed over to the British Chambers of Commerce who are umbilically connected with SMEs.  Overseas British Chambers should support, rather than compete with, UKTI and CBBC staff.

In short, the allocation of goals, responsibilities and resources within the new International Trade Department needs focus and realignment: government should only do what only government can do.