Written evidence submitted by the British Marine Federation (BMF) (GSB 06)
The British Marine Federation (BMF) welcomes the opportunity to submit evidence to the inquiry of the House of Commons Business, Innovation & Skills Select Committee into Government Support for Business.
Section 1 - Introduction
1.1 The BMF is the trade association for the UK leisure, superyacht and small commercial marine industry, representing over 1,550 member companies, which account for over 70% of the total industry turnover. The UK marine industry is comprised almost entirely of small and medium sized enterprises, with over 95% of BMF members employing less than 50 people.
1.2 In total, there are approximately 4,200 companies operating in the UK’s leisure, superyacht, passenger boat and small commercial marine industry. This industry directly employs 30,635 full time equivalent (FTE) jobs and generated revenues of £2.9 billion in 2012/13[1]. Of this, international trade accounts for £1.080bn, 37.2% of the industry’s total revenue. In fact, we have members who export over 95%
1.3 In a recent report from the BMF, it was estimated that the overall economic contribution of the UK marine industry to the UK economy is £6.2 billion (2012/13). This turnover supports approximately 141,000 FTE jobs (direct and indirect) and more than £5.3 billion of GVA (gross value added) in the UK economy[2].
1.4 The UK’s leisure marine industry provides the boats, marine equipment, facilities and services that enable over 3.5 million people to enjoy boating and water sports on the coastal and inland waterways of the UK[3]. The BMF works to support the industry in encouraging activity on the UK’s waters through initiatives like On the Water and National Watersports Month, which in May 2014 saw over 400 events run nationally.
1.5 The BMF also owns and operates, on behalf of the industry, the London and Southampton Boat Shows, which run out of ExCel, London and Mayflower Park, Southampton respectively. These world renowned and world leading boat shows allow the industry to showcase their products and services to a combined 200,000+ visitors each year, while the shows play an important part in the local economies.
Section 2 – Executive Summary
2.1 One of the key roles of the BMF is to support its members in accessing the wide variety of national and regional business support schemes available. The BMF also has a dedicated International Development Team, which supports member companies’ transition from domestic to international markets, as well as supporting established exporters wishing to move into new overseas markets.
2.2 There are a number of areas of Government support which the BMF will comment on:
2.3 The Government has set a very clear and ambitious target of boosting the UK’s overseas trade to £1 trillion by 2020. The leisure, superyacht and small commercial marine industry currently generates over £1bn in international trade each year, and we support companies in contributing to this in a variety of ways, as set out further in Section 3.
2.4 For many years we have enjoyed a good relationship with UKTI and we have supported them in getting export support and advice to companies wishing to export for the first time or grow their business into new markets. However, in recent years, and most recently in October this year, this relationship has suffered significantly. Most damaging is the loss of commitments of funding from UKTI at the very last minute, without any reason given, jeopardising both existing contracts we have with international exhibitions and future plans.
2.5 International markets play a vital role to the future of our industry and it is essential that we are able to develop and deliver a strategy to support companies wishing to access those markets and grow their business. It is almost impossible to do this at the moment, when UKTI is incapable of providing clear up front commitments of support to allow us to plan appropriately (our 2015/16 allocation has not been confirmed and we are attempting to plan for a major marine show in April 2015) and to the deadlines we need to meet and when commitments of financial support are withdrawn at the drop of a hat.
2.6 Our industry has had limited involvement with the Regional Growth Fund. This is primarily due to much of our industry operating outside of assisted areas. However, we see Local Enterprise Partnerships, with their ability to draw down funding and distribute this to their regions as a key part of business support. Unfortunately, it remains the case that applications for funding are still very time consuming and resource intensive, and the money is not being distributed quickly enough.
2.7 The BMF would welcome the opportunity to provide oral evidence to the committee on the issues raised in this submission.
Section 3 – Wide array of support causing confusion for small businesses
3.1 While we welcome all forms of support for small businesses, both financial and the more practical (e.g. business mentoring), the wide array of national, regional and local support initiatives are very confusing for small businesses. These businesses do not have the time or resources available to assess all of the opportunities and decide on which one is best suited to their needs.
3.2 As an example, the Solent LEP is currently running five funding initiatives, all aimed at supporting SMEs. Add to this the new Solent Growth Hub and the advice and support this new initiative provides. And add further the work of the Manufacturing Advisory Service (MAS), GROW:Offshore Wind and Innovate UK. Who does a small business turn to first?
3.3 Small businesses need to be able to approach one body, which can advise on all of the initiatives and opportunities available, with advice on which one best suits their needs. This advice should be impartial, with no single product favoured over another. Businesses which are members of a trade association, like the BMF, can turn to them and seek advice. But with the best will in the world, we are unable to cover all of the support available, particularly at a regional and local level.
3.4 We recommend that the LEPs and their Growth Hubs provide this ‘one stop shop’ for small businesses to get tailored advice on all the initiatives available. Innovate UK and MAS can work with the LEPs to ensure appropriate information is available.
3.5 The LEPs also need to be resourced to provide advice and guidance on the application processes. It remains a simple fact that the application requirements for almost all of the funding initiatives are still too complicated, time consuming and often costly to really entice small businesses to apply. This needs to change and quickly.
3.6 Small businesses need to know that provided they can deliver on job security/creation and can deliver good value for money to the public purse that they are going to receive support quickly. Twelve to eighteen months for a full application, due diligence and receipt of final payment is too long. Especially when often the money is not made available until the project is concluded, meaning that small businesses actually have to fund the project in full, before they can receive support.
Section 4 – UK Trade & Investment and export support to leisure marine industry
4.1 The BMF provides a wide range of support and services to its membership and the wider industry, to enable companies to access international markets and grow their business through exports.
4.2 The BMF’s support includes:
4.3 All of this work is developed, funded and delivered by an important industry/government partnership. While we enjoy a very good relationship with UKTI and recently welcomed the appointment of a dedicated UKTI marine specialist to help drive support to our sector, there remain significant constraints and delays on support delivery, that make it very difficult for us to effectively plan and deliver an international strategy for the industry.
4.4 The key concerns that we currently have are across the following:
Tradeshow Access Programme (TAP) Grants
4.5 TAP grants are a vital source of support to companies looking to expand into overseas markets. Between April 2014 and March 2015, the BMF will have helped over 50 companies receive TAP grants to attend four of the leading leisure marine and superyacht shows across Europe and the United States of America (Monaco Yacht Show, Monaco; Marine Equipment Trade Show, Netherlands; Dusseldorf Boat Show, Germany; and Miami Boat Show, USA).
4.5.1 However, currently the BMF UKTI TAP grants for our nominated April 2015 - March 2016 shows are still not known, which causes difficulty not only for us as an ATO to plan our activity of support, but also for the marine businesses reliant on us for support to access these important sales platforms.
4.5.2 As an ATO, we also receive ‘enhanced funding’ as part of the TAP grant scheme. This funding enables us to offer additional services at each of the nominated shows e.g. a networking reception or private meeting space for exhibiting companies. We usually expect to receive between £20k – 40k per year to deliver these valuable, additional services.
4.5.3 On 15 October 2014, UKTI withdrew our enhanced funding for three forthcoming shows, which will take place 18-20 November 2014 (Marine Equipment Trade Show, Netherlands), January 2015 (Dusseldorf Boat Show, Germany) and February (Miami Boat Show, USA), to which we have already signed contracts for space and made additional commitments. This last minute withdrawal will only have serious, damaging repercussions on small businesses in our industry. As a not-for-profit organisation, the BMF ploughs all profits back into the services we provide for our members and the wider industry. This recent decision will mean that we will make a significant loss on all three of these shows.
4.5.4 In addition, we have not yet been given details of our forthcoming allocation of enhanced funding, which is due to be announced after the first round of TAP grant allocations is known. Without this enhanced funding, it is very likely that we will need to give very serious thought to the level of support we are able to offer at each show or even whether or not we can provide additional support to UK companies at these shows.
4.5.5 Given the Government’s published aim to boost the UK’s overseas trade to £1trillion by 2020, the uncertainty around what levels of funding support we and our industry will receive is not conducive to reaching this bold target. If you take into account all the funding we have received from UKTI, our funding has halved from the 2013-14 FY to 2014-2015 FY. However, the targets set by UKTI remain at the same levels or have increased. We understand the need for public funds to achieve good value for money, but there becomes a point where this just becomes untenable.
4.5.6 There have also been instances where funding has been allocated to us, but for reasons that are not always made clear, UKTI has changed the amount close to an event. Again, this level of uncertainty around funding does not support the Government’s aim of boosting overseas trade.
4.5.7 As a final point on TAP grants, we were very sad to see Solo TAP grants scrapped. These grants were provided direct from UKTI to applicant companies, and did not require an applicant to go through an ATO. Companies received less funding than TAP grants received through an ATO, but offered greater freedom to companies wishing to attend a show not nominated by an ATO.
Accredited Trade Organisation (ATO)
4.6 As previously indicated, the BMF has long been an ATO, enabling us to allocate TAP grants to assist marine companies to access overseas markets.
4.6.1 Currently, the BMF is waiting on the reaccreditation process as a UKTI partner via a KPMG developed online system. This is the second time all ATO’s will have been accredited within the last 18 months. This process is not without its complications (it is already behind schedule) and is time consuming. For this process to be undertaken, so soon after the last accreditation review, would appear to be a waste of time and valuable resources, for all concerned.
4.6.2 Again, we understand that checks need to be made to ensure that ATOs are providing the appropriate levels of support and value for money, but this reaccreditation process, so soon after the last does not appear to us, to be the best use of Government’s resources.
Relevant International Markets
4.7 Finally, we wish to comment on UKTI’s targets. UKTI has a very clear focus on supporting medium sized businesses to export. Our typical member company employs between 1-5 employees. UKTI needs to acknowledge and account for the fact that different industry sectors have different footprints and needs. Support suitable for small and micro businesses is essential to our industry and this needs to be addressed.
4.7.1 The leisure marine industry also has very clearly defined export markets, which are predominantly based in developed countries in Europe and North America, for the simple reason being that this is where leisure marine exists. In 2012/13 the leisure marine industry turnover from these markets was £762m (70.1% of the total export turnover).
4.7.2 The BRIC (Brazil, Russia, India and China) and South East Asian markets offer very clear attractions to a vast range of industries, and it is therefore understandable why UKTI seeks to drive exporters towards these markets. However, these markets do not have the infrastructure in place to support leisure marine to the levels that make them real growth economies for UK companies. A ‘one size fits all’ strategy cannot be leveled at all industries and the needs of established industries with more traditional markets that still offer significant levels of export growth need to be supported.
4.7.3 Unfortunately, even when we have tried to introduce companies to new markets like China, UKTI has proved under-resourced and the support they have been able to provide falls way below what is required, and ultimately we are forced to offer support from our own limited and overstretched budgets.
Section 5 – The Regional Growth Fund and Local Enterprise Partnerships
5.1 Our industry has had limited involvement with the Regional Growth Fund (RGF). This is primarily due to much of our industry operating outside of assisted areas, at least until the recent changes to the assisted area map.
5.2 There has been one notable success story, with a major UK boatbuilder in the south west securing over £4.5m to develop a new site, securing and creating hundreds of jobs both within the company and the supply chain that supports it.
5.3 However, we believe that there are still important changes that need to be made to the RGF process, to meet the expectations of the companies it was set up to support. We are aware of one instance where a company submitted an application, which was approved by the RGF board and announced publicly, only for the application to be subsequently denied owing to a boundary issue. How a company can get through the whole application process and announced as a successful bidder, only to be denied at the final hour is beyond disappointing. It still remains the case that applications of this kind require significant investment of time, skills and resources to offer the bidder any chance of success. If Government is unable to simplify and speed up the process, then we fear that this initiative will not deliver to the levels the industry and its businesses need.
5.4 We do, however, see Local Enterprise Partnerships (LEPs) as a key support structure to making RGF and other national and European funding more accessible to small businesses. But LEPs still need more resources to be truly effective.
5.5 It remains clear to us that LEPs still do not have the necessary resources to quickly and effectively provide access to this funding for small businesses. There remains a wide discrepancy in the levels of support LEPs are able to give, with some being better resourced than others. This means that applications for funding are still very time consuming and resource intensive, which means the money is not being distributed quickly enough.
5.6 Businesses are put off from applying for these funds, even if they have an excellent project for securing and creating jobs and delivering private sector investment. This has got to change and Government needs to lead that change. We understand the need for the public purse to achieve value for money, but more must be done to make these funds more accessible.
5.7 There are examples of small businesses in our industry applying up to three times to a fund, before they are successful. Ultimately, they have had to engage a professional firm to support their application, at considerable cost. RGF money should not be going to professional project managers. The support should be there for small businesses to do most of the work themselves, simply and easily.
5.8 To this end, we commend the support of universities, like the University of Portsmouth, which is providing assistance to businesses applying to the Solent LEP’s Bridging the Gap fund. The University of Southampton has also made some of its services available to small businesses. More collaboration like this needs to be seen right across the country, for small businesses to be given the opportunity to grow and secure not just their own future, but that of their industry as well.
17 October 2014
[1]BMF UK Leisure, Superyacht and Small Commerical Marine Industry Key Performance Indicators 2012/13
[2] BMF Economic Benefits of the UK Marine Industry 2012/13
[3] BMF/MCA/RNLI/RYA/BCU/MMO Watersports Participation Report 2013