Members of the Commons International Trade Committee accused the government export credit agency of exaggerating the number of British companies it backed last year.
UK Export Finance (UKEF) directly assisted a “significantly lower” number of companies than its “overall figure of 549 supported companies” in fiscal year 2020-21, the committee found.
In the agency’s 2020-2021 annual report, UKEF CEO Louis Taylor said the agency had “a record year to support our exporters, providing £ 12.3 billion in financing and insurance. and directly supporting 549 UK companies, double the number of 2018-19. ”
However, the select committee pointed out that of those 549, only 167 directly requested financing and insurance, while the remaining 382 companies received secondary support, such as referral to a private sector supplier.
Members of the committee recommended that UKEF stop counting companies that had received this indirect support, in order to prevent its work from being “misinterpreted”.
In addition to these discrepancies in the reports, the committee also noted how UKEF support risked undermining the government’s plans to be net zero by 2030, as a significant portion of UKEF support had gone companies “with high greenhouse gas emissions”.
Although it only supported one fossil fuel extraction project last year, the agency had given “much more support to oil and gas projects than to renewables in the past.” which poses a problem for the agency because it decides which projects to support in the future.
“It is clear that UKEF is at a critical juncture and changes will be needed if it is to continue to meet the needs of exporters,” said committee chair Angus Brendan MacNeil.
“UKEF should seriously consider how it will increase its support for renewable energy projects, otherwise its actions will continue to risk actively contradicting the government’s ambitions,” he warned.
McNeil recommended that the government change the UKEF’s mandate to allow the agency to take into account environmental, social and human rights considerations – as it is currently obligated to support companies regardless.
Its current tenure has led the agency to back a Total £ 910million liquefied natural gas project in Mozambique associated with “serious violence”, civilian deaths and environmental damage – all risks MPs have been facing. said the agency should be more transparent.
Of the ‘record’ of £ 12.3 billion that UKEF has promised companies over the past year, nearly £ 11 billion has gone to just nine exporters. Rolls Royce received the most support with over £ 3.3bn, followed by £ 1.9bn at British Airways, £ 1.2bn at Easyjet and £ 1.1bn at BAE Systems.
The agency says up to 10,000 UK companies are supported indirectly through the supply chain of the largest exporters, the majority of which are also SMEs.
But in addition to focusing support on relatively few sectors, the committee found the agency’s information on support available to UK SMEs to be “unclear and insufficient” and recommended plans to better achieve them.
UKEF estimates that its financial support to UK exporters during the pandemic has saved up to 107,000 jobs and helped key UK industries survive.