The claim:
“The truth is…the amount of export support is massively up on the last election, in terms of billions of extra money that’s being spent.”
– David Cameron, Prime Minister’s Questions, 23 May 2012
The background:
David Cameron has been lauding his admnistration’s support to businesses who want to export. Gisela Stuart MP asked him a question about it, talking about small and medium sized enterprises who were struggling to do so.
At Prime Minister’s Questions, she raised the point that just five businesses had signed up to the government’s flagship Export Enterprise Guarantee Scheme (EEGS). They’ve received £2.9m since the loan guarantee scheme was set up last April to help smaller companies who want to export.
But Mr Cameron announced that the scheme had been “rolled into the export guarantee scheme more generally”.
And, he hastened to add, “the amount of export support is massively up on the last election in terms of billions of extra money that’s being spent”.
FactCheck did a bit of a double-take at that. As Ms Stuart pointed out, “hard working businesses in Birmingham…would like to export and cite a lack of export finance guarantee as a problem”.
But the government says it has overtaken the previous administration’s spending on export support by “billions”?
The analysis:
FactCheck asked the department for business, innovation and skills (BIS) how much money had been spent on supporting exports since the election. They said: “In total, £5.2bn of support has been provided to UK exporters since the election.”
They added that £2.3bn had been spent in this financial year, and £2.9bn last year.
But in the last year of the previous government, from 2009 to 2010, £2.2bn was spent.
Which means that £800m has been spent over and above what was spent in the year running up to the election. We don’t know where the “billions of extra money” is, and Mr Cameron’s department couldn’t help us. In fact, when we asked about this, his spokesman said he had been “making a point”.
FactCheck also wanted to know who got the bulk of this boost. BIS directed us towards UK Export Finance, formerly known as the Export Credits Guarantee Department, which helps exporters and investors with insurance and guarantees.
They show that last year, one company, Airbus, which makes commercial, corporate and military jets, received 61 per cent of total support given out by the department. Which equals around £1.8bn, allowing for rounding off.
Of the remaining one third of the money which wasn’t spent on Airbus – £1.1bn – the sectors to benefit included construction, oil and gas, power, healthcare, water treatment, petrochemicals, satellites and automotives.
Projects funded included: a US$367m loan to JSC Gazprom to finance an export contract which Rolls Royce won to supply and install natural gas pumping units in Russia; the supply of military tanker aircraft to the United Arab Emirates by Airbus; and credit insurance for a £310,000 contract to Securon for a contract with a military vehicle manufacturer in Turkey.
This year, BIS said they can’t yet say exactly how the £2.3bn has been spent. But FactCheck suspects that smaller companies are unlikely to get quite as much as Airbus did.
Which is how this trail began – the five small to medium-sized companies which were helped by the Export Enterprise Guarantee Scheme, which, we discover, has been subsumed into something else now. Ms Stuart asked Mr Cameron to name the five companies who got support from the smaller project. He didn’t, but FactCheck found one – Norton Motorcycles – and asked them what happened.
The Derby-based company said that through the deal, the high street bank, Santander, had lent them £625,000.
“Once the cycle gathered momentum,” the company said, “this soon reflected in the sales growth at Norton…The funding allowed new territories to be opened and very soon, motorcycles were being delivered into Italy, Germany and Belgium…Norton has confirmed a new territory in Spain.”
It’s very good news for an otherwise smallish company. But it’s worth noting that the only way they found out about the scheme was through Santander, who “first mentioned” it. No wonder the pilot project didn’t steam ahead. Now it’s become part of UK Export Finance altogether.
The verdict:
The claim that “billions of extra money” has been spent on supporting exports since the last election can’t be stood up by anything FactCheck’s been shown. We found that in two years, the coalition government has spent £800m more than the previous Labour administration did in their final year, according to BIS.
And when the prime minister was asked a question about support for small and medium sized businesses, he ended up giving an answer which directed us towards Airbus, seemingly the biggest winner, alongside a number of other defence firms.
FactCheck asked Number 10 about that, and about where the extra billions the prime minister was talking about may be. We also asked about how much of that support went to small businesses.
Mr Cameron’s spokesman said: “The Prime Minister was making a point about the focus this government has placed on export support for companies.”
By Fariha Karim
