Examination of Witnesses (Questions 40
- 59)
TUESDAY 6 JUNE 2000
SIR DAVID
WRIGHT, MRS
BARBARA PHILLIPS,
MR DAVID
HALL AND
MR DAVID
WARREN
Mr Rowlands
40. Is it not more fundamental than that? If
you are suggesting that after the agreement you may have the ability,
capacity and power to move money not just within the FCO budget,
but also between an FCO budget and a DTI budget, would not the
Foreign Secretary be rather loathe to concede that power to Sir
David Wright, or to anybody else?
(Sir David Wright) Those are the terms of the review
to which the Foreign Office subscribed. The resource allocation
passages in the review envisage that the process whereby I have
that right has to be discussed with the Foreign Office officials,
the Foreign Secretary's representatives. That is not something
that I would want to operate in an autocratic sense.
41. You would have a right to override them.
The Foreign Affairs Committee could ask the Foreign Secretary
why expenditure on commercial promotion has gone down in Latin
America and Brazil. His defence would be that Sir David Wright
transferred that to a programme in the DTI.
(Sir David Wright) It comes back to the issue referred
to by Sir John Stanley over the board. The terms of the report
state that plans for the allocation of trade development resource
to overseas posts will need to be dovetailed with plans drawn
up by FCO geographical directors for consideration by the board
and ministers for allocation of FCO resource against other objectives.
In other words, if we were to get to the point where my wishes
and my objectives did not dovetail in the way that is described
in the report, the board would then want to give a very firm view
to ministers as to what they, as commercial practitioners, thought
of my proposals and indeed thought of the reaction.
Mr Berry
42. Sir David, how on earth can the FCO know
how many person years are devoted to this activity without knowing
who is doing what and where? Is it a figure that they have plucked
out of the air? Have they just said, "We guess it is X, but
we do not have a clue how much is in France, Germany or Japan"?
(Sir David Wright) They have to deal with what I will
describe as "multi-hatted" functions. If you were to
take two groups of people who carry out commercial work—what
we will call the UK-based staff and the locally-engaged staff—the
second group is really quite straightforward because in most posts
they are 100 per cent commercial employees. Most of the locally-engaged
staff have a very clear set of responsibilities so one can quickly
establish precisely how much all that costs. The problem arises
with these "multi-hatted" people who split their work
between us and other functions. That has to be divided up and
calculated as a sum of money.
43. They are people employed in the UK?
(Sir David Wright) No, they are people employed in
posts overseas. Dividing up the costs of all those people, when
many of them may only have 50 per cent of their work on commercial
work, or 60 or 70 per cent, is a complex matter.
44. I appreciate it is complex, but I do not
understand how they can possibly know how many person years have
been spent on an activity unless they have that information. You
may want to say, "I note what you say", but I do not
see logically how they can possibly talk about figures of that
kind without knowing how the figures were arrived at in the first
place.
(Sir David Wright) I shall ask my colleague, David
Hall, who is responsible for resources to add to what I am about
to say. He has been responsible for trying to deal with this intractable
problem. They have been able to put a pretty broad estimate, which
is the £90 million to which Mr Rowlands referred, upon what
these activities cost. However, that is not sufficient for the
sort of concordat that we were talking about a moment ago. It
is not sufficient because that concordat will involve me saying,
"Out of that total sum Mr X in Kuala Lumpur costs a certain
sum of money"—that is what we know from the management
information system—"and therefore I can take the cost
of Mr X and say that I do not want him in Kuala Lumpur any more,
but I want him in Brussels". We cannot yet do that.
(Mr Hall) It is quite common for diplomatic service
staff overseas to be doing things very similar to trade promotion,
but not exactly trade promotion. Examples are inward investment—although
that would change now that that is coming within the fold—science
and technology, international financial questions, trade policy
and WTO issues. It is not easy or, from the point of view of day-to-day
management of a post, very sensible to try to divide this all
up into kind of fixed proportions. Clearly, those proportions
vary over time, according to the agenda. Those are the kind of
practical issues with which we have been wrestling. Very shortly,
the Foreign Office hope to do a further census of who does what
in this area. We hope that that will help to take this matter
forward.
Sir John Stanley
45. Sir David, you have indicated the unsatisfactory
nature of the Foreign Office's management information systems.
Therefore, can we turn to the DTI's management information systems?
If you had to fill a particular post at a particular grade overseas,
would it be materially more expensive to fill it with someone
from the Foreign Office on Foreign Office terms, compared with
someone from the DTI on DTI terms?
(Sir David Wright) The answer is not materially, no.
46. Are you sure?
(Sir David Wright) Most staff from the DTI who are
seconded to posts overseas, are eligible for Foreign Office terms.
In that respect, there would be no difference at all. If they
were to go on different terms, the overall costings of things
such as housing, allowances and children's education, if relevant,
would be broadly similar.
(Mr Hall) I am a DTI official, but ten years ago I
was seconded as the commercial counsellor in Washington and I
received exactly the same terms and conditions as my FCO colleagues
of the same grade.
47. Is that true around the world, Sir David?
You have used some qualifying words like "broadly" and
"materially". Are you just hedging your bets, or do
you actually know?
(Sir David Wright) I can certainly give you an exact
reply in a paper. My view is supported by David Hall's point,
that most DTI staff go abroad on Foreign Office terms. I am hedging
my bets, to use your phrase, because I cannot give you a categoric
assurance that there are not some DTI staff abroad on different
terms. I shall have to check that. But even if they were abroad
on non-Foreign Office terms, the monies involved would not be
material.
48. Could we have the note that you have offered?
In terms of the value for money to British taxpayers, there may
be a material advantage to taxpayers and the overall number of
personnel that we put into export promotion overseas if there
were a major substitution of existing Foreign Office personnel
on Foreign Office terms by DTI personnel on DTI terms. That is
really what I am driving at.
(Sir David Wright) I understand the question. Currently,
we are working towards a greater degree of interchange between
the two departments in that respect. That makes your question
particularly relevant. We shall enhance the number of people from
the DTI who are working in posts overseas and we shall enhance
the number of FCO people working here in the UK. Currently there
are 62 Foreign Office staff working in the UK operation and 23
DTI staff working in overseas posts. Those numbers will go up.
That is one of our objectives. The question you asked is relevant
to that, so we shall let you have that note.[3]
Mr Laxton
49. Sir David, in addressing remarks to Mr Rowlands
you have already made reference to the move in resources away
from export promotion towards electronic service delivery and
trade development. That was one of the recommendations of the
Wilson report. Are you able to give us some practical examples
of the advantages of doing that, rather than just that it was
recommended in the Wilson report?
(Sir David Wright) Yes, I can. That gives me an opportunity
to talk more about this important side of our work. At the present
time, we have an arrangement or an activity called Export Explorer.
The Export Explorer schemes are designed specifically for newcomers
to exporting. They are designed to assist them in their first
step into overseas markets. We are using the Export Explorer schemes
in particular in relation to markets that, for the sake of this
discussion, are called "less challenging". Belgium and
the Netherlands come into that category and the Nordic countries,
Canada and the United States are Export Explorer targets.[4]
That activity has continued for a year now. We are seeing that
as very much the sort of core of the trade development ethos.
We want to develop it further. It involves activities like training
in export planning, giving new companies consultation with experienced
export advisers, access to market research, help with internet
marketing, a hand-held visit to an overseas market and then a
bit about aftercare service when the company returns having carried
out some business. Provisionally, we are linking with this development
of Export Explorer, something called Passport to Export and we
are testing that on a number of possible groups at the moment.
We hope to roll out the project and the programme in September.
That is very much the style in which we shall be seeking to pursue
this trade development concept.
50. Are these companies coming to you through
the regional development agency arrangements or are they coming
to you direct? I want to come on to the electronic gateway arrangements
in a moment. Are these companies self-selecting themselves in
that they want to get into the export activity? How do they find
their way in your direction?
(Sir David Wright) I come back to the Chairman's first
question and my response about identity, visibility and recognition.
We hope that by having a more effectively branded operation the
awareness, particularly among the SMEs, of our services will be
enhanced and therefore that they will access us in the first instance,
through that website, through this new gateway to which I referred.
That gateway should provide them with the initial information
that they need about the trade development schemes, about particular
markets, about programmes of activities that are available to
them and they will then be able to move through from the gateway.
That is one access point. The second access point relates to the
regional structure. As I have explained, we have just appointed
nine international trade directors in the English RDAs. They will
run the export development counsellors who will sit in local business
links and those export development counsellors will be expected
to be both responsive and active in searching out new companies
to assist. They will have an understanding of the company and
industrial profile of their area; they will know whether businesses
in particular areas are thought to be potential exporters; and
they will be able to go out and introduce them to the schemes.
Equally, they will be there in a responsive sense so that if small
and medium-sized enterprises access the small business service
and ask questions about possible overseas trade, they will be
pointed in the direction of our staff. That is a second way in
which we shall be accessed. I believe there is a third way. That
relates to my reference to the phrase "trade partners UK",
the partnership concept. So many of our missions overseas and
our participation in trade fairs is run either through chambers
of commerce or through industrial associations or trade associations.
They contract with us to send a mission to a particular country
or to have British participation at a particular trade fair. We
would expect that when a particular company approached those organisations
saying that it wanted to take part in a mission to China, for
example, that they would say, "Have you exported already?
Have you exported to China before? If you are thinking of going
into China as your first export market perhaps that is a bit over-ambitious.
Why not speak to British Trade International and get a bit of
advice". Those are the three ways.
51. What are the advantages of your new gateway
that was launched at the end of last month—I have not as
yet had a look at it—over what was originally provided,
which was the straightforward internet access? In terms of the
internet access, what sort of level of hits did you get onto that
site?
(Sir David Wright) Perhaps I can answer your final
question at the end. Mr Hall may know the exact answer to that.
It is not in my mind at the moment. The new gateway has an advantage
over the old internet site in that it provides much fuller information.
Already we have managed to put on 3,500 pages of country sector
information, which is almost twice as much as there was on the
original site. We see this site as a central vehicle for our activities
and, therefore, we are tasking posts overseas that they should
be involved with us in filling out that gateway and providing
much more information than they have done hitherto about the particular
markets for which they are responsible. Also on the site we have
a new search engine which allows someone visiting it to acquire
more information than they would have had in the past. We have
a database of new export-related events—2000 events which
may be trade fairs, trade missions or conferences about particular
markets and that was not there previously. We are using the new
gateway to signpost businesses who visit it to other sites that
are not ours, but which will provide information that businesses
may need about particular markets. We also have a self-assessment
questionnaire on the gateway which is designed to be rather like
a Passport to Export issue, which allows a company to do a test
of its capacity and we have a whole range of frequently asked
questions to which they can find answers. All that is new and
additional. Our wish is to ensure that that gateway becomes almost
the chosen point of entry for companies rather than the telephone.
We shall have a matching telephonic response mechanism organisation
at the same time, but we want to build and advertise the gateway
so that it becomes the first port of call for exporters.
52. As I say, I have not visited it yet, but
I wrote to you a good while ago and received a response from you
about a criticism by a small company in my constituency of what
it felt was the inadequacy of the previous site.
(Sir David Wright) The previous site was very conventional
and very much a static information site. We are very keen that
this new gateway should be more interactive. In the long term
there are two prizes to be gained from that. Firstly, through
its maturity it will be such a source of information that we may
be able to make staff savings at the centre of people who hitherto
have obtained information from booklets or faxes or whatever.
Secondly, in due course, inquirers will be able to e-mail direct
to commercial officers in posts overseas as a result of having
gone through the gateway. That is not done much at the moment.
That is in the long term.
53. Have you any information on the number of
hits?
(Sir David Wright) On Brit Trade, the old gateway,
we had 250,000 hits a month.
54. Continuing with the issue of the services
that you provide to the business community, there has been, I
understand, some examination of the role of the business advisory
groups. What conclusion has been reached on that, Sir David?
(Sir David Wright) The Wilson review committed us
to review the business advisory group structure. I think the review
concluded that business advisory groups were an essential feature
of the scenery in terms of government activity in that area. It
was crucial that we should remain closely in touch with the views
and advice of British companies, but that over the years they
had grown a little topsy and become perhaps more numerous than
was needed. So the former chairman of British Overseas Trade Board,
Sir Martin Lang, was asked to do the review that the Wilson review
instructed we should do. I should start one stage further back.
The international group, which is part of my central operation,
is based on four broad geographical regions: Europe, Africa and
the Middle East, Asia and the Americas. The business advisory
group review concluded that that should be matched at a business
advisory level; that each one of those four areas should have
a matching advisory group; that the chairman of that advisory
group should have regular exchanges with the people who run the
international group; and that those four geographical groups should,
as time and situation require, be able to set up small perhaps
time-limited very market specific groups, if it was thought necessary,
for exploiting the advantages of one particular market.
55. There was some criticism from the Latin
American advisory group that they felt that the changes that they
foresaw may mean that the private sector would have less involvement
and there would be more involvement from civil servants. They
see that as being perhaps a retrograde step. Are the decisions
that have been taken likely to calm them?
(Sir David Wright) I think and hope that they have
been calmed, Mr Laxton. You are quite right, it would have been
a retrograde step. That was not the intention of the business
advisor group review at all. The intention was to make the business
advisory groups more effective. We have reached an agreement with
those Latin American groups that they will restructure themselves
over an 18 month period, with continuation of support from British
Trade International and that in due course, after they have restructured
themselves, we would hope that they would become partners who
would deliver things for us.
56. With a continuing strong input, I assume,
from the private sector.
(Sir David Wright) Yes. All the advisory groups will
be composed of representatives of the private sector.
Mr Illsley
57. I have two separate questions. One refers
back to the question of resources. I understand that your current
budget is around £188 million which is made up of £67
million for programme expenditure, £90 million for running
costs overseas and £31 million for UK running costs. Are
you happy with that budget, or will you be looking for an increase
in the Comprehensive Spending Review?
(Sir David Wright) Yes, you are right to say that
I shall be looking for an increase. Perhaps I should say that
no, I am not happy. This year, it is proving extremely difficult
to manage the additional functions that I have to fulfil within
that budget envelope that was agreed two years ago. So, to reflect
that, I have made proposals to the two Secretaries of State for
additional funding.
58. Can you give us an idea of the order of
the increase for which you will be looking?
(Sir David Wright) The figures are still the subject
of intense negotiations between us and the Treasury, or between
the two Secretaries of State and the Treasury. I have no idea
how they will work out. I am particularly concerned that on the
capital side for the development of the gateway, that I should
receive an increase. I am asking for something of the order of
several millions of pounds for that. The overall proposal of increase
against those totals is 25 per cent. I have no idea what the Chancellor's
beneficence will produce in the end.
59. Following on Mr Laxton's question, is British
Trade International happy with information provided on export
controls? Recently I had experience of a company in my constituency
wanting to export a simple piece of equipment to Iraq and that
was very standard equipment used in mining. They came across a
whole lot of problems in trying to find out whether they needed
an export licence and problems in trying to obtain one. I think
that they have lost a $600,000 contract as a result. Do you think
that there is adequate information provided on issues where export
licences are needed?
(Sir David Wright) I am grateful for that question
because it allows me to speak a little about another aspect of
our work, which I shall develop from the reference to export controls.
As you know, we ourselves are not the authority, the agency, that
delivers authorisations for export in those sensitive areas. Over
the past year I have discovered that British Trade International,
Trade Partners UK, is very much seen by business in a different
light, or an additional light, to what was envisaged in the Wilson
review. We encapsulate that in-house in the phrase "the exporter's
friend". Increasingly, I and my colleagues have found ourselves
being asked for advice or information or action on issues that
actually are not within our responsibility or delivery. I share
the view of the Committee that I believe that this is quite an
important aspect of our work. It is important that companies should
feel that even though we are not the deliverer of a policy, if
it affects their capacity to get into foreign markets, we should
offer some assistance, or at least show that we are aware of the
problem with the relevant agency. I have found that I am dealing
with that on issues like tariffs, protection of intellectual property,
and environmental controls. Companies are raising such issues
with me and are seeking some comfort. That has happened over export
controls, although not in relation to Iraq but in relation to
another country, and I, or my staff, have intervened with the
export control people in the DTI and the Foreign Office to urge
more speed. Understandably, one of the problems that businesses
face in this area and which has been put to me rather simply,
is that in a sense it is not so much the answer that is worrying
but the time that it takes. If companies are to be told that they
do not have authorisation to export, they want to know quickly
so that they can turn their attention and resources to another
market. That is a sentiment that I understand. We are expressing
that view to the people who run such matters.
3 See page 16. Back
4
Note by Witness: In these markets we operate Export USA
and Export Canada initiatives which are designed to give small
and medium sized companies the knowledge and confidence to compete
in the respective markets. Back
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