Trade Promotion – another area for our new MPs to attend to

Margaret and Jim Cuthbert on the lack of transparency in our trade and investment programmes.

The general election has been held, and it is now time for MPs representing Scottish constituencies to do just that. Much attention will rightly be focused on the Smith Commission proposals: and it is to be hoped that the minefield proposed by the old UK government in answer to Smith will be cleaned up. However, some other smaller issues could also be taken up robustly by our new MPs.

Here is just one of them – a particularly important issue as, if we are to grow our economy in Scotland, we need to improve our trade performance.

Promotion of trade and inward investment is a reserved matter: that is, money to cover services in trade and investment is allocated to a UK department, (UK Trade and Investment), for it to spend on behalf of all parts of the UK: trade and investment is not devolved to Scotland. This means that, when the Treasury funds the Scottish Parliament through the Block Grant (the Barnett formula), there are no Barnett consequentials of UK spending decisions on trade and inward investment. Any money which is spent by Scottish Enterprise on trade and inward investment comes out of the Scottish Block Grant, and involves a conscious decision by successive Scottish governments to improve Scottish trade, by diverting money from devolved services: money to provide a service over and above the service we should already be getting from the UK Trade and Investment department, UKTI.

So what is Scotland credited as accessing through UKTI? The estimates provided by UKTI in their annual report and accounts show that in 2013/14 it had a budget of £160 million, of which it spent just over half on trade and £40 million on inward investment. Marketing accounted for a further £20 million. All of these are small sums relative to spending on, say, health, but they are important as their purpose is to showcase us overseas, and help firms export.

UKTI estimate that, in 2013/14, they spent a total of £16.77m for the benefit of Scotland out of a UK spend of £205 million.(source Country and Regional accounts, Public Expenditure Statistical Analysis). This suggest that 8.2% of their total spend was on behalf of Scotland.

Now, unhelpfully, in their annual report, UKTI do not give a country/regional breakdown of how their different programmes and services are spread across the UK. We only have their own totals, quoted above, which they supply to the Treasury. But we actually have little idea about whether the apportionment of spend cited by UKTI is accurate.

So what sort of service does Scotland get from UKTI? It is very difficult to find out. But the information which can be gleaned from the UKTI website is not reassuring: and indeed it would be funny if it were not so important.

In their annual accounts UKTI state “UKTI works with the Devolved Administrations in Scotland, Northern Ireland and Wales to promote international trade and inward investment. UKTI and the Devolved Administrations consult each other regularly on policy developments and activities to avoid duplication of effort, double funding of projects and contradictory actions.” This is the only mention of Scotland in the report and accounts. Similarly there is no mention other than “we work closely ..” in its UK Export Finance strategy and business plan.

On upcoming events in Scotland, the UKTI website in April 2015 had only one event noted on its Scotland page: a November 2013 Commonwealth Games Business Conference. This has now been pulled after we complained. The events website for Scotland now reads “Your search for “Scotland” found 0 events. Ooops, sorry, there are no results that match your search criteria. In the search box above, please try different terms or filters.” By contrast, searching on other areas reveals, for example, a free export week event in Northampton: a half day free event for the construction industry in London: a half day free event in Cheshire on financial markets: a day course in London on making exports pay: and a week long event on web optimisation in London.

Spending by Scottish government agencies on trade and investment, (which, as we have noted, the Scottish government funds out of its own resources – without any help from Barnett), is, if anything, even more opaque.

According to Scottish Enterprise, it “plays a leading role in the management of programme areas operating across all of Scotland (including the Highlands and Islands Enterprise area)”. And this includes “Inward investment and overseas market development via Scottish Development International (operating as a joint venture with Scottish Government and Highlands and Islands Enterprise); this includes management of the network of overseas offices and field staff”.

And that is the only mention of Scottish Development International in the Scottish Enterprise annual report and accounts.
Further, the amounts spent by the Scottish government on trade and inward investment services cannot be determined from published sources.

And with regard to Scottish Development International, their website says “We’re here to help foreign companies invest and thrive in Scotland, and local enterprises make the most of international trade and global markets.” It then invites the reader to “contact us” – but in the long drop-down list where the person has to indicate their country, this agency representing Scotland allows one to put in, for example, “Occupied Palestinian Territory”, or “Democratic Peoples’ Republic of Korea”, or “Falkland Islands Malvinas” but not Scotland. If you are in Scotland you must use UK.

Unless we have more detail about what Scottish Enterprise and UKTI are spending their money on, we can have little idea as to how well spend matches aspirations, and how much value we are getting for money spent or expenditure attributed to Scotland. At present, we have little idea from the information available about overlaps and inefficiencies. When responsibilities are split, as they are now, clear and accurate information is even more important.

What comes out from all of this is that in a vital area where government aims to help the economy, we have no idea how much money is spent, what it is spent on, and whether we are getting value for money.

It is also quite clear that although both organisations say they work closely together, the UK organisation comes close to treating Scotland with contempt on its website, and the Scottish agency did not even notice. There is a job to be done which we hope the new MPs will take up.