Reflecting on the Cole

Commission on Exports

A Banker’s Perspective

“Faster, Further, and Simpler”

Confidential Presentation

June, 2015

Gabriel Buck

- Commissioner, Cole Review

- Chairman of the BBA Export and Finance & Trade Committee

- Global Head of Export Credit Finance at Barclays PLC

GTR Conference

Birmingham

Points For Examination

Why is this report needed?

Is the UK Government’s goal of £1tn in exports by 2020 achievable?

Are all stakeholders working in the same direction?

Is the role & function of UKEF fit for purpose? What more needs to be done?

Which will have the greatest impact?

What are the key recommendations?

What should exporters be looking out for when the final report is issued?

1

An Independent & Business Led Commission

Independent – commissioned by the Labour Party, but apolitical

Balanced – driven by a recognition of the importance of exports to balance the economy

Business led – draws on the insights and understanding of businesses across the country

Expertise – led by experienced commissioners across the business community

Need to be radical – £1trn objective versus current trade deficit

2

Driven By The Passion

Graham ColeChairman of

AgustaWestland UK

“Make no mistake we are in a battle for Britain’s export future where the boundaries of the old

world no longer exist, growth is being driven by the new economies and where there is no prize

for coming second. Whilst there have been some notable successes, the system is currently

too complex, too fr\agmented and most damagingly too often an afterthought for both business

and government.“

- Graham Cole, Chairman of the Cole Commission

Supported by…

Nick Baird Director of Centrica and

Immediate Past

Head of UKTI

Nora SeniorChair, UK Regions &Ireland

Weber Shandwick and

President of British

Chambers of Commerce

Paul ClealSenior Partner PWC

Dr Angela MaxwellDirector of Acuwomen

Gabriel BuckGlobal Head of Export Credit

Agency Finance at Barclays

3

Whilst Total Trade Is Up…

Share of UK goods and services trade 1990-2012

___________________________Source: United Nations Conference on Trade and Development Statistics: Value of Trade

Total trade ($ billion)

Goods Services

800

700

600

500

400

300

200

100

0

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

4

UK historical balance of trade 1970-2012

Balance Of Trade Is Down – Especially In Goods

___________________________1. Source: Office for National Statistics (2013), The Pink Book: 2013 edition.

Trade in Services Total Trades Trades in Goods

£ Billion

80

60

40

20

0

-20

-40

-60

-80

-100

-120

1970 1976 1982 1988 1994 2000 2006 2012

5

UK market share in largest goods markets compared to Germany and USA (2012)

Competitors Have Gained Strong Ground In The Goods Markets

___________________________Source: International Trade Centre website (2013), “Trade Map”, http://www.trademap.org.Accessed November 2013

UK Germany USA

Percentage

Market Share

20

15

10

5

0

USA China Germany Japan France Netherlands Hong KongSouth Korea India Italy

6

UK market share in largest service markets compared to Germany and USA (2011)

Although The Service Market Is Gaining Ground

___________________________Source: International Trade Centre website (2013), “Trade Map”, http://www.trademap.org.Accessed November 2013

UK Germany USA

Percentage

Market Share

30

25

20

15

10

5

0

USA Germany China Japan France India Netherlands Singapore Ireland South Korea

7

Connectivity Within Government On Exports Is Fragmented

___________________________Source: Delivering the UK Export Ambition, Reform, November 2013.

System of Government Support

Where do I go?

8

There Is Still A Long Way To Go

___________________________Source: PR; OBR; House of Commons Library. Department of Business, Innovation and Skills (2015).

Outlook for UK Exports of Goods and Services (£bn)

9

UKEF Does Have The Right Mix Of Products

___________________________Source: British Exporters Association, UK Export Finance, Supporting the National Export Challenge, October 2014.

UKEF’s product range, BExA’s benchmarking 2014

Short-term

insurance

Export

credit

schemes

Fixed role

financing

(CIRR)

Foreign

exchange

risk cover

Direct

lending

Investment

insurance

Bond

support

scheme

Unfair

ceiling

insurance

Letter of

credit

guarantee

scheme

Working

capital

facility

Scoring

• UKEF – 9 / 10

• EU ECA’s Average – 7.92 / 10

• OCED ECA’s Average – 7.6 / 10

10

But It Is Not Widely Known

___________________________Source: 2014 Small Business Survey 2014: SME employers – Employers Report, BIS Research Paper November 2014, p.108; 2014 Small Business Survey

Especially by SMEs

Only 35% of SMEs are aware of UKTI

In 2014, only 2% of SMEs in England and Wales sought advise from government websites

UKTI’s current 2014-2015 target only to cover 1% of SMEs (50,000 business)

11

Faster, Further & Simpler Solutions Required

Cole Commission Established With A Timetable Of…

Cole

Commission

Launch

November 2014

Industry

Responses January 2015

Interim Report

Issued April 2015

Roundtables

with Industry April/May 2015

Final ReportEnd June 2015

12

Association of the British Pharmaceutical Industry Corner House Reform

Aerospace Defence Security (ADS)Council of British Chambers of Commerce in

EuropeRailway Industry Association (RIA)

Airbus Dojo Rolls-Royce

Australian High Commission to the United Kingdom eBay Santander

Aviva Engineering Employers’ Federation (EEF) Scotch Whisky Association

BAE Systems Electronic Systems Community (ESCO) Scottish Chambers of Commerce

Barclays Federation of Small Businesses (FSB) Society of Motor Manufacturers and Traders

British Bankers’ Association (BBA) Food and Drink Federation Sponsors Alliance

British Film Institute (BFI) GMB Standard Chartered

Bremont Watch Company Google Sullivan & Worcester

BritishAmerican Business Grant Thornton UK LLP techUK

British Chambers of Commerce Heathrow Airport The British Exporters Association (BExA)

British-American Business Council IPPR The Institute of Export (IOE)

Brompton Bicycle Jaguar Land Rover The Institution of Mechanical Engineers (IMechE)

British Screen Advisory Council (BSAC) Kingfisher The Law Society

BT London Chamber of Commerce The Institute Of Export

Business West Mabey Bridge The Independent Games Developers Association

Campaign Against Arms Trade Metail UK India Business Council

Cambridge Satchel Company Miller International UK Music

Campaign to Cut Tourism VAT Northern Ireland Chamber of Commerce & Industry Unite

Carillion NMS International Universities UK/UK Higher Ed. International Unit

Confederation of British Industry (CBI) OC&C Strategy Consultants UPS

China-Britain Business CouncilProducers Alliance for Cinema and Television

(Pact)Virgin Atlantic

Cohort Pinewood Studios Yull Shoes

Who Responded

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What We Found…

Lack of financing / liquidity

is not seen as a barrier

Support by the government

quoted as disjointed / patchy /

sometimes nonexistent

Where to go to get expert

“in country” advice was very mixed

Digitalised companies are

leading in the digital sphere. Digital is

the shop window for the world –

we must capture and drive that agenda

Many exporters outside of the City

were not aware of

what services the UK government

had to offer

Many cited that UKEF,

for example, had good

products but speed of access

was challenging

“Fear” of exporting – especially by

SMEs who feel that any failure could

have a material impact in their standing.

Guidance is needed

Service sector is critical to our export

and it needs greater support

Aid and trade are not linked –

interesting given how much

aid is provided by the UK

and how little is used to

assist UK companies

1

2

3

4

5

6

7

8

9

In essence: Lack of joined up government & slow speed of response

14

And Specifically On UKEF

Positives Development Areas

Role and function is fit for purpose – no question

High quality team that understands risk and financing

Strong Products & Services

Direct Lending

Export Refinancing Facility

20% Rule

Small Business, Enterprise, and Employment Act

Advanced Payment Product / Supply Chain Finance

o Creating a culture of “What do we need to do to win”

rather than “a level playing field”

o Quicker / clearer implementation procedures

o Communication / digital

o More flexible risk criteria for SMEs

o Greater “in country” presence

o Greater joined up Government

UKEF / UKTI – under one roof

Faster, Further & Simpler

15

Cole Commission Interim Report – Key Recommendations

True political leadership and accountability

A united front for big business with support and finance under one roof

Simple, straight-forward, clear advice and support for small, medium business

Being good at business isn’t enough, we have to become great at exports

Government leading by example

Lead in digital as the shop window for the world

Use the advantage of our unique place in the world, both global and local

16

What Should UK Exporters Look Out For? What Should They Do?

Read the final report in June

Get linked up – reach out to partners who have experience exporting

Be focused - understand your market and your USP

Look out for greater UK Government support and speedier implementation

Do not forget the City of London

Vote to stay in Europe

17

Driven By The Passion

Graham ColeChairman of

AgustaWestland UK

“This Commission is calling for a cultural revolution.

Trader can no longer play second fiddle, when the rest of the world is driving trade with a world

class orchestra.

For Britain to compete support for exports has to go further, be simpler and drive faster".

- Graham Cole, Chairman of the Cole Commission

Supported by…

Nick Baird Director of Centrica and

Immediate Past

Head of UKTI

Nora SeniorChair, UK Regions &Ireland

Weber Shandwick and

President of British

Chambers of Commerce

Paul ClealSenior Partner PWC

Dr Angela MaxwellDirector of Acuwomen

Gabriel BuckGlobal Head of Export Credit

Agency Finance at Barclays

18

Thank you!

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