Shadow business secretary rips into government's export schemes as service sector exports hit all-time high
Chuka Umunna, the shadow business secretary, has launched a stinging attack on the government's export schemes, claiming they have not helped a single firm. It comes amid reports from the British Chambers of Commerce (BCC) and Federation of Small Businesses (FSB) that the number of small businesses looking to export goods and services is at an all-time high.
Umunna, Labour's equivalent to Vince Cable, said the Direct Lending Scheme - launched less than a year ago - had only received 15 inquiries with a grand total of one firm applying for support. He also pointed out that the £5bn Export Refinancing Scheme, launched in July 2012, was not even operational.
"Ministers promised an export-led recovery, but the truth is that they are badly letting down British business," he said.
"Scheme after scheme which were supposed to help more firms export have failed to have any impact whatsoever - and now we learn that two programmes which were announced to great fanfare two years ago haven't helped a single firm. We desperately need to get more businesses exporting to boost middle-income jobs, grow our way out of the cost-of-living crisis and so we can ensure Britain can compete."
Last month, the government made a budget pledge to make both programmes “more accessible to small businesses”. You may remember George Osborne saying that the amount of funding available through the Direct Lending Scheme would be doubled to £3bn, with interest rates on loans cut by a third. The eligibility criteria is also being revised to make life easier for SMEs hoping to trade overseas.
Umunna’s criticism of the government’s export record is hardly out of the blue. It is no coincidence that today marks the start of Export Week, organised by UK Trade and Investment to provide British firms with advice on doing business abroad and promote their products and service, and raise awareness of the support available to SMEs.
What is interesting, however, is that Umunna's outburst comes as the FSB, courtesy of its Quarterly Business Index, reports that 24% of its members expect exports to rise over the next quarter. So, whilst the government's own efforts to bolster British exports may be falling short of the mark, there are still signs that an export-led recovery is almost in full-swing.
Nevertheless, John Longworth, director general at the BCC, believes it will take a while before we see exporting occurring on a scale envisaged by the incumbent government. This is despite figures released today by the BCC showing that service sector exports are at a new all-time high.
"Only by repairing our broken business finance system will viable, growing firms gain access to the capital that will allow them to invest in their staff and machinery, and enter new markets," said Longworth.
Meanwhile, the chancellor has announced further measures to help boost British exporters. These include a £6m cash injection to increase the number of trade advisers to medium-sized firms as well as the ability for banks that lend to exporters under the UK Export Finance scheme to take the loans to the Bank of England in order to raise additional finance.
Whilst we can't reveal our own political allegiance at EB, we're all for seeing Blighty flex its muscles on the international stage - and the more support our SMEs can get in this regard is most welcome. We're not big fans of empty promises though.