Monday 20 September 2021 7:30 pm

Government's trade export finance numbers were fudged, says panel of MPs

MPs on the Commons’ international trade committee have accused the government’s export credit agency of exaggerating the number of UK businesses it supported in the last year.

UK Export Finance (UKEF) directly helped a “significantly lower” number of companies than its “headline figure of 549 business supported” in the 2020-21 financial year, the committee found.

In the agency’s annual 2020-2021 annual report, UKEF CEO Louis Taylor said the agency had “a record year in support of our exporters, providing £12.3bn in finance and insurance and directly supporting 549 UK businesses–doubling the number from 2018–19.”

However, the select committee highlighted that of those 549, only 167 directly applied for finance and insurance, while the remaining 382 companies received secondary support, such as a referral to a private sector provider.

MPs in the committee recommended that UKEF stop counting companies that had received this indirect support, to avoid its work being “misinterpreted.”

As well as these reporting discrepancies, the committee also flagged how UKEF’s support risked jeopardising the government’s plans to be net zero by 2030, as a significant amount of UKEF’s support had gone to companies “with high greenhouse gas emissions”.

Although it only supported one fossil fuel extraction project last year, the agency had given “considerably more support to oil and gas projects than renewables in the past”, which poses a problem for the agency as it decides which projects to support in future.

 “It’s clear that UKEF is at a critical juncture and changes will be required if it is to continue to meet exporters’ needs,” said committee chair Angus Brendan MacNeil.

“UKEF should put serious thought into how it will increase support for renewables projects, or else its actions will continue to risk actively contradicting the Government’s ambitions,” he warned.

McNeil recommended that the government amends UKEF’s mandate to allow the agency to take environmental, social and human rights considerations into account – as it is currently obliged to support businesses regardless.

Its current mandate resulted in the agency supporting a £910m Total liquefied natural gas project in Mozambique associated with “serious violence”, civilian deaths and environmental harm – all risks that MPs said the agency should be more transparent about.

Of the “record” £12.3bn that UKEF committed to businesses in the last year, nearly £11bn went to just to nine exporters. Rolls Royce received the most support with over £3.3bn, followed by £1.9bn to British Airways, £1.2bn to Easyjet and £1.1bn to BAE Systems.

The agency says that up to 10,000 UK firms are supported indirectly through the supply chain from the larger exporters, the majority of which are also SMEs.

But as well as focusing support on relatively few sectors, the committee found that the agency’s information about the help available to Britain’s SMEs was “unclear and insufficient” and recommended plans to reach them better.

UKEF estimates that its financial support to UK exporters during the pandemic has safeguarded up to 107,000 jobs, and helped key industries in the UK to survive.