Government minister Liam Fox sparked derision over the weekend by saying British businesses were too lazy and fat to export. The secretary of state for international trade also suggested that the lure of golf on a Friday afternoon was preventing more deals from happening. Fox, a keen advocate of Britain’s decision to leave the EU, also questioned whether business leaders would be able to take advantage of the trade deals his department were planning.
Exporting entrepreneurs were uniformly unimpressed by Fox’s comments and many contacted the Guardian to express their outrage. Among them was Steve Magnall, CEO of St Peter’s Brewery in Suffolk, which exports to over 40 countries with 50% of its sales being made overseas. When I heard the quote from Liam Fox I was so angry. None of our export success has come from government support, it’s all been achieved through hard work and perseverance, Magnall said. Perhaps Dr Fox should spend a day with us as we cold call, chase importers, organise samples, send over presentations, Skype call and much more. I wish I had time to play golf on a Friday afternoon, but unfortunately I am too busy chasing sales.
Joy Parkinson, managing director of beauty products company Faith in Nature which exports to 38 countries, also dismissed Fox’s comments. Dr Fox’s comments are not at all helpful. To say that the UK’s entrepreneurs aren’t doing everything they can to make Brexit a success is insulting to the country’s SMEs, she said.
Perhaps Dr Fox should spend a day with us
She also pointed to the sacrifices made by her own staff in pursuit of overseas trade and says she and her team regularly spend time away from their families as a result. Two weeks ago our sales director returned from his honeymoon, dropped his cases and new wife at home and within 24 hours was on a flight to Orlando for a 30 minute meeting with one of the largest supermarket chains in the US, she said.
But Fox’s comments reflect government anxiety over a lack of international trade, which has been put under the spotlight following the vote to leave the EU. The UK’s trade deficit, the gap between the value of the country’s imports compared to our exports, is substantial – hitting a record high of £125bn in 2015. Indeed, the UK has run a trade deficit since the late 1990s although economists tend to point to factors such as increased consumer spending, a decline in manufacturing, the strength of sterling and a fall in oil and gas production, rather than the waistlines of business leaders.
The UK economy is heavily dependent on services, which are harder to export than manufactured goods. Also, the vast majority of its 5.4m businesses are SMEs and most of those are micro-businesses, which are less likely to be able export than bigger businesses. But ambitious entrepreneurs are not short of ideas on how more growth and exports could be achieved. Although being castigated by government ministers is not one of them.
Christopher Greenough, a director of Shropshire-based metal press and assembly supplier Salop Design and Engineering Ltd, says his company has successfully grown its exports across Europe and the US over the past few years and now account for 15% of turnover. He says his company has benefited from the help of the UK trade & investment department (UKTI), the government foreign trade arm, but feels its efforts could be more streamlined. The government could make it easier for SMEs to start exporting, or indeed increase exports, by making the route to information easier. There is good information within the UKTI, but this information needs to have a clear route to business leaders. Dr Fox may think that business leaders do nothing but play golf and socialise, but what we actually do is work very hard and we do not have as much time as is sometimes necessary to find information and services, he says.
Greenough also took issue with the idea that business leaders aren’t serious about business growth and driving exports. We work tirelessly, to promote UK manufacturing and engage with the next generation to show that there are great opportunities within the sector for long term careers.
There is concern that government cuts may also be undermining growth and exports. Earlier this year the government shut down the Business Growth Service, which included the much respected Manufacturing Advisory Service. UKTI has seen its funding cut and the government is keen for the private sector to run more trade missions. The government also wants Innovate UK to provide fewer grants and more loans to businesses. HMRC also has less resources to promote information about complex tax rules and changes that often hamper exporting entrepreneurs.
But some entrepreneurs say the government has failed to ensure that EU VAT rules are fair and practical. Businesses that sell digital products such as ebooks, online courses and MP3s have been hit by EU rules that mean VAT is now charged in the country where the products are bought, rather than the country where the seller is located. Clare Josa, co-founder of EU VAT Action, says that only businesses that can afford expensive software can cope with such regulations and she and 10,000 micro businesses are calling for urgent reform. We’re not fat or lazy and we were doing a brilliant job of exporting, until the EU Digital VAT changes, which were passed into law by the British parliament, Josa says.
Josa says the government refused to ask the EU for an interim threshold, which would have precluded small businesses from the changes. Josa also says reform of the law could take years and business is on hold until then. Legislation is due to be proposed by the European commission in December, to allow for a small business threshold, but it could still take four or more years to debate. And, no, Brexit doesn’t change it. These rules apply whether or not we’re in the EU, Josa says.
But there is some hope that fresh trade deals could give manufacturers and exporters a boost. Mike Cherry, chair of the Federation of Small Businesses, says that small businesses are delivering export-driven growth. Our latest data shows that UK small exporters grew in the last quarter. They are now more competitive, rising to the challenge and finding new markets. If new trade deals are formed with small business at their heart, we should at last see significant export-driven growth for the UK economy, he said.
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