Spending cuts ‘may harm exports’

The decision to slash the budget of a body charged with boosting trade overseas has been criticised by the Commons Business Innovation and Skills (BIS) Committee which says it contradicts Government policy.

The select committee report, published today, warns that cutting UK Trade and Investment’s (UKTI) funding by 17 per cent over four years was a “short-sighted move” which could have a long term cost to the economy.

It also says that around one in five trade advisers who work to encourage small and medium enterprises (SME) to export will be now be lost. The report criticises Government delays in appointing a Trade Minister, a full time chief executive of UKTI and announcing a strategy for the agency.

However it welcomes the Government’s ambition to make UKTI more entrepreneurial and efforts to make Whitehall more focused on supporting UK export markets.

Committee chairman Adrian Bailey MP said: “The Government has recognised the importance of UK businesses, especially SMEs, to sustaining the economic recovery. The BIS department and UKTI play a key role in supporting them as they move into overseas markets. They have delivered a good strategy, but we are not convinced that they have matched this with sufficient resources.

“We all know that departments have significant reductions to their budgets and BIS is no exception. However, we are not convinced that cutting the budget for business support is the right approach. If UKTI fails in its role as the key Government support for business then the economy as a whole will suffer. This cannot be allowed to happen and the Government will need to convince us that it can deliver with less.”