The Treasury has been accused of destabilising the Whitehall agency that supports exporters by constantly changing its remit and cutting its budget.
In a strongly worded report on UK Trade & Investment, the Commons trade and industry committee warns that ministers have allowed English regions to waste taxpayers’ money by opening dozens of offices abroad. Aimed at attracting inward investment, they have simply confused potential foreign investors, say the MPs.
Their report echoes complaints from business organisations such as the CBI, EEF and British Chambers of Commerce that have said the duplication undermines efforts to attract foreign investment and dilutes the “UK brand”.
The committee says it is surprised that ministers have approved the opening of each overseas office. “The decision . . . seems bizarre to us, given the level of criticism their existence has attracted from all quarters of British industry.”
The MPs’ report says UKTI has a vital role to play in boosting exports and attracting foreign investment.
But it has been forced by the Treasury to adopt three different strategies since it was created four years ago.
The report broadly supports the strategy drawn up last year, little more than 12 months after the previous shake-up. This shifted UKTI’s priorities towards boosting trade with emerging economies such as China and India and away from more developed investment and export markets.
The new strategy was designed to run for five years, but the MPs say they are concerned there will be a further damaging upheaval after the 2007 comprehensive spending review and the Whitehall reorganisation Gordon Brown is planning when he becomes premier.
“If UKTI is to have a chance of successfully implementing its current strategy,” the report says, “the government, and in particular HM Treasury, must refrain from further adjusting the priorities and structure of the organisation, and allow it to get on with doing its job.”
The duplication of effort by the English regional development agencies as each attempts to win inward investment also needs to be eliminated, the MPs argue. All but one of the RDAs have offices in the US, and seven of the nine have a presence in Japan and Australia.
The agencies say they have won 1,143 projects over the past three years that have created or secured more than 90,000 jobs.
But the report says there is insufficient evidence to judge whether the results would have been more impressive if the £15m annual budget had all been spent by the UKTI, operating as the sole inward investment agency, rather than being spread among the RDAs.
The report was welcomed by business organisations. The British Chambers of Commerce said it had been particularly concerned about the cuts in UKTI’s budget and the shift to inward investment at the expense of export support and promotion.
John Cridland, deputy director-general of the CBI employers group, said the UKTI needed to be allowed to get on with the job, free from further changes of direction.
David Wallace of the East Midlands Development Agency, who speaks for the RDAs as a whole on foreign representation, said the regional offices were part of a UK team effort.
“We sell the UK first. We can’t interest investors in a region if they are not interested in the UK.”