British Exporters Association (BExA) responds to International Trade Committee Inquiry on Covid-19 impact

BExA has submitted a response to the International Trade Committee’s Inquiry on the impact of the Covid-19 pandemic on international trade.

“The current situation is unprecedented in impact and scale. Businesses are being impacted through no fault of their own and should receive the help they need to survive this crisis and to continue creating employment and generating wealth,” says BExA.

In its six-page submission, BExA notes that the UK government’s response to the negative impact of the pandemic on UK businesses has been swift and positive in message, but has been lacking in implementation. “Access to the support schemes needs to be simplified and accelerated,” it says.

As an example, BExA explains that large organisations with split credit ratings are waiting an unacceptably long time before receiving responses on the Bank of England Covid Commercial Finance Facility (CCFF) scheme, leading to delays and uncertainty in putting in place much-needed additional liquidity facilities. Similarly, smaller businesses are struggling to access the British Business Bank’s (BBB) Coronavirus Business Interruption Loan Scheme (CBILS). The scheme is operated via accredited lenders, which receive a government-backed partial guarantee (80%) for the loan repayments in order to encourage more lending. This leaves lenders, who apply for the scheme on behalf of their clients, responsible for 20% of the loan should the borrower default. It has meant that a large number of applications are being rejected before they get to the BBB as lenders are evaluating applications based on the stricter lending criteria brought in after the 2008 financial crisis. BExA believes that lenders either need to be guided to relax these criteria or HMG needs to cover 100% of the loan. This adjustment will also assist in drawing in more lenders to the scheme.

BExA goes on to outline a number of suggested improvements that government could implement, including that HMRC’s ‘PAYE payment deferral plan’, which appears simple to access and for which HMRC takes 100% risk, could form the basis of accessibility to the BBB’s CBILS.

Elsewhere in its submission, BExA notes that it believes the government’s Export Strategy, unveiled in mid-2018, is the key piece of legislation that will mitigate the medium and long-term impacts of the pandemic. “The UK needs to look outside its borders and grow business through export. We should have a renewed focus on breaking down the barriers to export and HMG needs to increase its efforts on implementing the aims of the Export Strategy,” BExA says.

Furthermore, BExA emphasises that as well as working capital, companies will need market access support and readily available export finance support, including from UK Export Finance (UKEF). Addressing the specific steps that UKEF could take, BExA’s suggestions include that UKEF plays a more active role in covering the debtor books of UK exporters in cases where payment delays are being experienced; and that it improves its product offering to include revolving lines of credit for smaller business and reintroduces its Letter of Credit guarantee scheme.

In terms of the wider government approach, BExA urges that all forms of support be streamlined and as easy to access as possible. It further proposes an improvement of information available to exporters, many of whom are not aware of some of the schemes designed to assist them; the removal of tariffs if trading on WTO terms; and a realistic outlook of what can be achieved regarding Brexit given the time lost focusing on the pandemic, and suggests that a delay would be sensible.

BExA’s submission addresses all eight of the points raised by the ITC in its inquiry:

  • What impact will the global Covid-19 pandemic have on UK businesses trading internationally, in the short-, medium-, and long-term?
  • How effectively has the Government responded, both in the UK and in overseas posts, to the short-term negative impact of the pandemic on UK businesses trading internationally? What further steps could be taken to mitigate this impact?
  • What medium- and long-term negative impacts could arise from the pandemic for UK businesses trading internationally? What steps could the Government take to mitigate these impacts?
  • What steps can UK businesses take to mitigate the negative impacts of the pandemic on international trade?
  • How best can the UK Government facilitate trade in essential goods during the pandemic?
  • How should the Department for International Trade work with the rest of central government, as well as devolved, local and regional government, to deliver a coordinated response to the pandemic?
  • How can the UK Government engage with countries at the World Trade Organization and bilateral trading partners – including those with which the UK has a significant trading relationship or one facilitating trade in priority goods – to promote international cooperation and a coordinated global response to the pandemic?
  • How might the pandemic impact global trade patterns and international supply chains in the long-term?