Foreign Direct Investment to the UK
Lord Harrington of Watford
To ask His Majesty’s Government what measures they intend to implement to attract more foreign direct investment to the United Kingdom.
Lord Harrington of Watford (Non-Afl)
My Lords, I requested this debate on a subject on which I spent most of last year and produced what is somewhat modestly called the Harrington Review of Foreign Direct Investment—it is probably the only volume that will ever bear my name, so it means a lot to me.
I was asked to do this review by the former Chancellor of the Exchequer, Jeremy Hunt, but it certainly became very much a cross-party matter. I made sure, as it was my job to do, that the then Opposition, now the Government, were plugged in to it during the course of the review, because I did not want it to become a political matter. I am pleased to say that in the Autumn Statement last year, the Chancellor accepted the recommendations. The then shadow Business Secretary, now the Business Secretary, at a separate event at PwC, also accepted it. I really did not want this debate to become a list of criticisms of the last Government for not implementing it, or criticisms of the current Government for the same, because I have had a lot of good will from both.
However, I feel that this House should really know a little about what the recommendations were, because we still have a fundamental problem with foreign direct investment. On the surface of it, the numbers are reasonably good. We do better in terms of volume than many other comparable countries. But when the numbers are analysed deeply, as I do in the report, the situation is not as rosy as it seems. This is shown when we strip out renewables—noble though they are, it is just that the taxpayer is subsidising foreign manufacturers to come in and supply energy, which, while all very good, is not investment in the other way—and if we strip out what I call share swaps, which are basically US private equity and others legitimately taking stakes in companies, which does not really mean new investment.
The cause célèbre that led to me being asked to do this was the AstraZeneca deal, when AstraZeneca took the decision, after 14 months, to move not to Macclesfield, Cheshire, but to Dublin, Ireland. It is easy for people with my personal political views to say it is because of Brexit, and it is easy for other noble Lords who maybe think a little differently on the political spectrum to say it is because of corporation tax. Actually, when we took evidence from about 200 companies, sovereign wealth funds, pension funds and others, the situation was far more complex than that.
AstraZeneca lent us its management team and we went through the whole process in great detail. We found that patterns emerged across the spectrum, which I will briefly outline. I have only 10 minutes so I cannot do it too deeply, although copies of the review are available if anyone would like to read it. It showed that signals we send to investors, particularly about consistent changes of policy, were a big one, and I quote several examples in the review. For example, the big ones are HS2 and the road to net zero. Originally it was 2050 for no further production of internal combustion engines, then it was changed to 2030, then to 2035. There are lots of such examples across the whole spectrum of government which investors look at and get worried, because they do not know where the next policy is going to come from.
The second was the availability of money. This is not just a question of the Government not having enough money to help investors. There is quite a bit of money, but it is in so many different pots, challenges, funds and departments that it is so complicated to access, and this puts a lot of companies off. That is before we get to the main hurdles to business investment: the clichéd—but true—planning and getting sites through planning permission; connection to the grid, which can take up to 20 years; skills provision; visas; and a whole list of obstacles to investment. I am sure all noble Lords will know of these.
We have to compare our performance with that of other countries, and other countries have changed and got very well-organised investment operations. For example, AstraZeneca—and many others—go to other countries and are given a written offer by those Governments, in the same way a bank would. The offers say, “Here’s the deal, here’s the money, here’s the site with planning permission, here’s how you get your visas, here are the skills that we are planning to provide”. It is then much easier to decide whether to make the investment, subject obviously to a lot of due diligence.
We really do mess such companies about. We have government departments with policy objectives which are often not compatible with other ones. This leads to people who do a very good job at their own job—which might be reducing the number of visas, because that is their policy—going directly against what another department wants, because it is trying to encourage investment.
Lots of recommendations came out to try to deal with this, some of which I will very briefly mention before I ask the Minister about them. He has been most helpful. We had a cup of tea yesterday to discuss this matter, and I hope he will be able to answer the questions that I gave him. I recommended that a government investment committee be set up to lay out a business strategy for prospective investors, like a bank or financial institution would. It would not say that we can do everything, because we do not have the money nor the resources, but it would identify which areas we are going to use to attract more people. These could be missions, to use the current Government’s statement, or the five areas identified by Jeremy Hunt in the Conservative Government equivalent.
I will give a brief example—I will just pick one out of the hat. In this country, we are very good at aircraft wing manufacturing. The question then is: how do we attract more aircraft wing manufacturers, and, above all, how do we make it possible for them to have their suppliers in the supply chain cluster around them? There is a government investment strategy—if you like, that is the equivalent of the board of a financial institution—which lays out the strategy. Beneath that, we have someone who—again, if it were a financial institution—is akin to a chief executive: a Cabinet-level Investment Minister. We had an extremely competent and capable Investment Minister in the previous Government, who, as it happens, is sitting on the Opposition Front Bench now. I felt that he definitely should have been promoted and made the Cabinet-level Investment Minister. I do not think that the current Government have filled the post, but I can think of someone who is very competent to do that.
The position itself is important. Why should that person attend Cabinet? First, if you look at all the big sovereign wealth funds and others, their bosses attend Cabinet, and have the regular ear of the Prime Minister, President or whomever it might be—that is very important. Secondly, in our own Government, that person has to have overriding powers over other departments. That is very important, because when a prospective investment is signed off, real clout is needed over other departments to get all these things done.
Beneath that, my recommendation was to use the existing Office for Investment and to make it significantly greater. It is very good, but it has 25 people, which, in Civil Service terms, is like a corner shop compared with a whole country. It needs to expand dramatically and to be proactive by hunting out the kinds of companies that the strategy from the board above has given it and finding out what it will take to entice them to this country. It is very important.
Finally—I say “finally”, but there are 150 pages of recommendations—beneath that there needs to be a one-stop shop for prospective investors. They get tired of trooping from department to department and being told the Civil Service vernacular that this policy is “owned” by this or that department. The sort of organisation that other countries have for a one-stop shop is very important.
In the little time I have left, I note that there was progress in the previous Government, inasmuch as the Civil Service seems very tuned into this report. I received a very kind message from our trade commissioner in Singapore, whom I met only once at the beginning of the review. I then went to Singapore, where he said, “You should know that lots of your recommendations are being implemented outside the country, in the posts”.
The ministerial top-level investment committee was due to meet, I think, on the day that the election was called, but it has still not met. I ask the Minister—who is a very accomplished businessman in his own right, so I hope he has some sympathy with what I am asking—what progress has there been in implementing the report? Will the government investment committee with all the Secretaries of State sit? Will a Cabinet-level Investment Minister be appointed? Does the Office for Investment have the additional resources that I asked for? What progress has there been for a one-stop shop for prospective investors?
Baroness O’Grady of Upper Holloway (Lab)
My Lords, I congratulate the noble Lord, Lord Harrington, on his review. As a former TUC leader, I hope to add a workforce perspective to the debate.
In my view, the key objective of driving up investment, from whatever source, is simple: the Government’s goal must be to create more prosperity and to ensure that that prosperity is shared fairly, not least in the form of better-quality jobs in the parts of the country that need them most. There is a bigger picture on UK investment, of which the current concern about falling FDI is just one part. Britain languishes near the bottom of the OECD business investment league. Productivity is sluggish and well below the US, France and Germany, with too little invested in innovation, new kit and equipment.
For many years, the TUC has argued that the root cause of low investment is the British disease of short-termism and that this is facilitated by an outdated corporate governance regime which glorifies shareholder primacy while actively excluding workers’ experience and expertise from the boardroom. The former Prime Minister, Theresa May, once agreed with us. It would be interesting to hear whether the noble Minister agrees too.
More positively, I welcome the identification by the noble Lord, Lord Harrington, of the UK’s key growth industries. This is not about picking winners; it is about accelerating success. I support his view that not all wisdom resides in Whitehall. The devolved authorities —and local unions and businesses—have a vital role to play in attracting place-based investment.
But a word of warning: we must guard against the UK’s nations, regions and cities wasting time and public money competing against each other for FDI rather than co-operating for the common good. Also, we must be clear that we cannot and will not seek to attract foreign investment on the grounds that the UK offers cheaper labour and weaker workers’ rights. Those days are over.
Instead, our prospectus must be built on a determination to transform the UK’s offer on skills and talent. That means not only cherishing our universities but practical action to address the Cinderella status of further education institutions and that of their learners and staff. Investors, both foreign and domestic, will be encouraged by our Government’s commitment to planning reform and to public investment in national infrastructure, including through the launch of Great British Energy, which will help to contain energy costs, and a national wealth fund. A proper industrial strategy will boost confidence too. Crucially, we must invest more in people. Improving the health, skills and creativity of the workforce will help to make the UK a more attractive destination for foreign investment and ultimately pay dividends for us all.
Lord Leigh of Hurley (Con)
My Lords, I am delighted to take part in this debate and congratulate my noble friend Lord Harrington on his excellent review. I draw your Lordships’ attention to my register of interests, which discloses that I am a senior partner of Cavendish Corporate Finance. As such, I have had a 35-year career in attracting investors into UK businesses, mainly from overseas buyers, and thus have some experience in this area. I have very little experience on the greenfield side of FDI, as we typically act for mature businesses. I note that this report is, quite rightly, very heavily focused on greenfield.
It is worth noting that academic research suggests that just 4% of local business units in the UK are foreign-owned but that they account for nearly 40% of UK turnover. Some research by Jonathan Haskel, the son of the noble Lord, Lord Haskel, shows that foreign-owned companies which invest in the UK are about 50% more productive than domestically owned ones, not least due to the knowledge spillover, so this really is important.
Despite all the talking down by some, FDI has remained very strong in the UK post-Brexit. No less a person than Warren Buffett told the FT in 2019 that he was
“ready to buy something in the UK tomorrow”—
a marvellous endorsement. We take 17.3% of Europe’s FDI investments into the UK and are only second in Europe at so doing. To my surprise, the official figures record only 985 FDIs in the UK in 2023, which is very low. It amounts to £83 billion into our current stock of £2 trillion. Only 985 implies that not all the figures are properly recorded. It also misses a huge swathe of inward investment, which is private equity.
We should not forget that, according to a recent BVCA report, private equity and venture capital investment by UK firms in 2023 for global investment raised some £60 billion, of which £20 billion went into the UK alone. Of that £20 billion, over 80% comes from outside the UK; so that is overseas investors—largely American but not exclusively—coming in through private equity straight to UK businesses. This is, if you like, foreign indirect investment, but, none the less, it makes a massive difference to the UK economy.
The review has some excellent ideas on how we can do better. I will focus on recommendation 4.6, on a long-term approach to tax. The Government have been exceptionally helpful to UK businesses through the tax system, with R&D credits of some £6 billion a year and the expensing of capital allowances, but it would be very helpful if the Minister could pass the message to the Treasury that we need certainty on the availability of both capital expensing and R&D credits for overseas investors.
If the new Government are serious about growth, pushing the wealth creators out of the UK is not the way to do it. The lead item in Saturday’s Times shows that they are leaving in droves, frightened by the proposals on non-dom tax; the previous Chancellor’s proposals were quite modest in comparison. There is also the disastrous proposed rise in capital gains tax. Why would anyone who is footloose want to stay in the UK? These actions completely contradict the stated objective of growth. If businesspeople do not want to live in the UK, or will not live in the UK, how on earth do we expect them to invest in the UK? It would be tragic if these excellent ideas from the noble Lord, Lord Harrington, are wasted because people such as non-doms and investors are encouraged almost to leave the country by these tax proposals.
I know that the noble Baroness, Lady O’Grady, will not agree with me, but I must add that overseas investors and, in particular, US investors, who are typically the most significant, are aghast at the proposed employment changes. They have invested in the UK way ahead of European countries because they see the current flexibility in employment legislation that facilitates employing people. Can the Minister please confirm that an impact statement will be prepared, showing the likely impact of any proposed employment laws on FDI and PE investment in the UK?
Lord Londesborough (CB)
My Lords, I will, first, thank the noble Lord, Lord Harrington of Watford, both for securing this debate and for producing such a thorough and insightful review on FDI—I read all 120 pages at pace. As the report quite rightly underlines, FDI is all the more critical to the UK because of our continuing low levels of investment in both private and public sectors, which is the major factor behind our lost growth and productivity. We start from a much lower investment base than other G7 countries, however well we are ranked in terms of FDI attractiveness.
I appreciate that the big-ticket foreign investments of £100 million or more grab the headlines and drive much of our promotion and policy, as these projects typically account for about 70% of FDI inflows. But I would like to see much more focus on FDI in the £1million to £5 million and £50 million to £100 million brackets, on which there is curiously little data. That is a comment I often hear from investors themselves, and where, incidentally, the UK underperforms. On this subject, I ask the Minister, first, what data we have on FDI in SMEs, and is it broken down by size of investment and sector? Secondly, how, and to whom, is this data distributed?
I ask because, from my anecdotal experience, the impact of FDI on, particularly, medium-sized businesses, is proportionately far greater than for many of the large projects in terms of growth rates, jobs created, innovation and, indeed, return on investment. Some 52% of our private sector output comes from SMEs; and, more importantly, scale-ups, defined as enterprises growing at 20% on average per year, account for over a fifth of that turnover—that is almost £500 billion per annum—despite representing just 1% of all SME businesses. In terms of generating GDP growth, these scale-ups play a vital role both locally and nationally.
I should perhaps declare an interest, in that I founded and ran one of these scale-ups for 20 years, before we landed what is called an accidental investment from a US investor group, which made an eight-figure commitment and took a strategic stake. With foreign backing and advice, we managed to innovate, expand our overseas markets and double the size of our workforce in four years, and we saw a huge impact on productivity and growth rates. The point of this anecdote is less about the economic impact and more about the accidental aspect: the investors found us via Google. I am now an investor and adviser to start-ups and scale-ups, and continue to see the sporadic, accidental aspect of foreign investment. We need to be far more systematic.
This brings me back to the issue of data. In the sub-£100 million investment market, and especially the sub-£25 million investment market, we need to ramp up our data and research, and make this more accessible to foreign investors, if we are serious about gaining a bigger share of FDI.
Finally, we should also take heed of the FDI-SME multiyear project, which is conducted by the OECD in collaboration with the EU. It focuses on how to develop linkages between FDI and local enterprises, and on how to create more opportunities of productivity and innovation spillovers for local economic development. It would be good to have a UK equivalent.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, I very much welcome the opportunity to speak in this debate on an issue that is so vitally important to the well-being of the United Kingdom. I congratulate the noble Lord, Lord Harrington, not only on securing this debate but on the completion of his review. There is no doubt that the UK as a whole remains a leading investment destination, but there is no room for complacency, and there is certainly space for improvement and innovation.
In my seven years as the Northern Ireland Minister for Enterprise, Trade and Investment, I was always incredibly proud of the amount of foreign investment we attracted to my talented and skilled part of the United Kingdom. We had our challenges, not least that our nearest neighbour, the Republic of Ireland, had a corporation tax rate of 12.5%—which, to be fair to it, it has relentlessly promoted to gain the eyes and ears of potential investors, especially those from the United States, looking for a base in or close to Europe for their “follow the sun” model of operation. The noble Lord, Lord Harrington, talked about consistency of policy: it has had that tax rate for 25 years.
I have long believed that lowering the CT rate across the UK, but especially in Northern Ireland, would have brought huge dividends. As an Executive in Northern Ireland, we argued the case with the Brown and Cameron Governments. We were successful with the latter, and the Corporation Tax (Northern Ireland) Act 2015 granted to the Executive the power to set a lower rate of corporation tax through the Northern Ireland Assembly. However, the rate has not been lowered, as the European Union state aid rules mean that the cost of lowering the rate would have to be taken out of the block grant to Northern Ireland from Westminster. Post-Brexit, as state aid rules from Europe still apply to Northern Ireland, this effectively means that the Northern Ireland Executive will be unable to lower the rate of corporation tax. The whole idea of lowering corporation tax was to make Northern Ireland more competitive with our nearest neighbour, but I am sad to say that European overreach has killed this idea.
I still believe that having a lower rate for the whole of the UK would benefit all parts of the country. It is a great door-opener to foreign investors, and then the different parts of the UK can add their own special parts to the pitch.
In Northern Ireland, we have a very strong education system, and our bright young people are always our starting point. Northern Ireland still has a grammar school system, and I have always had such a positive reaction to our school system from international investors. We have the best maths results in Europe and are rated sixth in the world. It is a great story for employers interested in the skills of our young people.
Vocationally too, because of our size, we can quickly adapt to the needs of the global economy and particular employers. I used to say that Northern Ireland was big enough to do the business but small and flexible enough to care about the individual companies that were coming. In conjunction with our partners in higher and further education, we were able to set up skills academies, specifically to deal with gaps identified by incoming employers. This was a win-win scenario, for the company and for our young people seeking a career.
The triangular working of government, academia and industry was a tangible success for Northern Ireland and its inward investment offering. I welcome the comments from the noble Lord, Lord Harrington, about aircraft wings production. I have no doubt that he was thinking of Belfast—Bombardier and now Spirit AeroSystems.
I want to finish with a best practice example for the Minister. I note the comments of the noble Baroness, Lady O’Grady, about devolved Administrations and metro mayors not being in competition with the Westminster Government, and I think that is right. When I was Enterprise Minister in the devolved Administration, the now noble Lord, Lord Swire, was Minister of State in the Northern Ireland Office and I had the privilege of working with him on a number of initiatives. One was a joint trade mission that he and I made to the Middle East, where we worked together to present Northern Ireland’s offering from a UK Government point of view and a devolved Administration point of view. It worked well and is a model that should be looked at. I ask the Minister to look at it from the point of view of the devolved Administration and that of metro mayors.
Baroness Wheeler (Lab)
My Lords, I remind noble Lords that speeches are limited to four minutes.
Lord Petitgas (Con)
I will do my best.
My Lords, I commend my friend the noble Lord, Lord Harrington, for his report, and for tabling today’s debate. I know what it takes to harness FDI in the UK. During my stint at No. 10, I worked across Whitehall on several major foreign direct investments. Together with my noble friend Lord Johnson we led the 2023 Global Investment Summit, which beat every investment and attendance record.
Our country has in recent years been a magnet for both capital and talent, topping global rankings. That said, reading the press and hearing from CEOs and entrepreneurs, I fear we have a boom in gloom—investor sentiment is shifting and souring. This is a pressing topic because investor confidence and conviction underpin our national growth priority. We need more investment.
Let me share three observations. First, FDI is a competitive sport, as the noble Lord, Lord Harrington, rightly said. This country has a tremendous hand to play, but there are serious concerns and we face global competition. Investors want stability and common sense. On the former, the Government can no doubt play up their strong majority in Parliament, which is welcome. On the latter, the market is very worried that we will not stay competitive on tax and labour laws. The Government need to back up their pro-business claims with pro-business policies. Business scepticism is now rampant.
Secondly, FDI is not the only capital in town. Our domestic pensions system is woefully under-indexed in both our UK stock market and infrastructure. It needs to get into the game alongside FDI and foreigners. This will boost investment and should also help pensions returns. Moreover, given that FDI often—or always—gets a government subsidy, it will ensure that pensions, not just foreigners, benefit from government largesse.
Thirdly, FDI is about talent—people—not just capital. Let me ask noble Lords which entrepreneur, British or foreign, is going to choose the UK if rumoured levies on capital through CGT, carry and inheritance taxes become uncompetitive. We need wealth creation to pay for our welfare state. We have a mismatch, I fear, between the rhetoric about attracting investment to drive growth on the one hand and policy actions or ideology that will drive entrepreneurs and investors away. I am sorry to be alarmist.
I therefore ask the Minister three questions. First, can he provide an update on the International Investment Summit and the appointment of the Investment Minister? Secondly, can he update us on the pensions review and reform, which is tied to FDI? Thirdly, can he say whether an analysis of the impact on FDI of the likely new tax and labour laws will be made in the Budget?
Baroness Hamwee (LD)
My Lords, the introduction to the debate from the noble Lord, Lord Harrington, was very compelling. I am speaking personally—not that I think my Liberal Democrat colleagues would intervene on and disagree with me, but many of them have expertise in these issues, as, of course, do others in today’s debate, which I do not.
When I saw the title of the debate, I thought: what makes a country attractive? It must include a focus on people. Some of this is soft—similar to soft power. Does the UK give the impression of being welcoming and send out a message of welcoming individuals? Is it open-minded about who would contribute to our society, demonstrating that it is itself interested in and imaginative about contributing energetically and effectively to global society?
The language is important, the Government’s language especially, as it reflects attitudes. So is being warm and welcoming in practical terms. Almost my first thought was immigration policy, including the visa regime. Do we indicate that we are a country which characterises short-term labour needs—shortage occupations—as more important than people’s inherent value and, indeed, their values? Do we say, “Your family members can come with you, provided they are not dependants”?
I give as another example adult dependant relatives. I have heard so many examples of difficult decisions and the distress of high-flyers who have been working here for many years and are very anxious about elderly parents in their country of origin. They have the means to support them in the UK but, crudely, no visa is available unless the parent is so unfit that they are, in fact, not fit enough to travel. I have heard many examples of high-flyers leaving the UK so that they can care for their parents.
In the interregnum between the GLC and the GLA—so 30 years ago, but I do not think that people’s nature change—I chaired the London Planning Advisory Committee, and I did come to realise that planning cannot solve everything and that it can cause problems. We undertook a major piece of work on London as a world city, involving academics and, crucially, the business community. It considered London’s strengths and weaknesses alongside cities such as New York, Paris and Tokyo.
A major conclusion was the importance of London being attractive and liveable if it is to attract foreign investment. When companies consider where to locate, they consider what is important to their staff: good transport, accommodation, air quality, culture—obvious qualities when attracting and retaining staff. If you are bringing your children you need to be assured that it is a good place to bring up children, so it is about living conditions as well as working conditions—not that you can separate them entirely. When I opened the conference to launch the report, the slides—it was that long ago—stuck. They got going when I was talking about the attractions of London’s ceremonial events, and showed a refuse cart; actually, that is important too.
In summary, I am advocating a life in the UK test —not the one for citizenship, which gives too many applicants the feeling they are not wanted, but one for policymakers across the board.
Lord Birt (CB)
My Lords, investment is the lifeblood of an economy. What will attract investment into ours?
First and foremost, we need to recognise that the investor community, amassing funds of trillions, is truly global, has untrammelled freedom of choice, can invest anywhere, and will place its funds only where it is convinced that it will make good returns—and reliably—in a predictable and non-volatile political, fiscal and financial environment. In other words, a necessary if not sufficient condition for attracting investment is stability, as the noble Lords, Lord Harrington and Lord Petitgas, eloquently underlined.
Where we score highly on stability is our widely admired and trusted legal and regulatory systems, and in the City we possess a world-class financial centre, but, in the past 10 years or so we have failed badly to offer the political stability the investor community looks for. We have exposed investors to the chronic uncertainty of Brexit, religious wars in the ruling party, five Prime Ministers, and the Liz Truss moment of madness, with the Bank of England forced to ride to the rescue of the UK’s pension funds.
A new Government should strain every sinew to restore political calm, to foster a stable currency and to ensure internationally comparable interest rates. Beyond stability, we have to offer investors high returns, so a new Government must also work to remedy the enduring weaknesses that contribute to the UK’s low productivity: underinvested road and rail infrastructure, a planning system that moves at a snail’s pace, skills shortages at every level and too few people in productive work.
I neither have, nor have I ever had, a stake in a private equity fund, but I have chaired companies invested in by PE, and I have been much exposed to global investors. The UK has the greatest private equity firepower in Europe but a high proportion of those working in the sector are not UK citizens and they, and the funds they manage, are highly mobile. Personally, PE professionals can benefit handsomely if they produce high returns for their investors, but if they fail, which happens, they receive nothing, and the risk of that is recognised globally in establishing tax regimes for when they do succeed.
The UK is not an outlier but somewhere in the middle of the pack in the tax regimes applied to PE by the US and leading EU countries—less generous than some, more generous than others. But I hope the Government will be truly wary of the very real flight risk of both funds and professionals, and the consequent dangers for the economy, if our rates are materially increased, as the noble Lord, Lord Leigh, himself underlined.
It is vital that the new Government celebrate and incentivise the spirit of enterprise—a critical route to growth, to increasing individual prosperity, to expanding the tax take, and to beginning the process of re-investing in our mightily challenged, underfunded public sector.
Lord Wigley (PC)
My Lords, I am grateful to the noble Lord, Lord Harrington, for the significant work he undertook in his review of foreign direct investment. We in Wales are still in the process of moving away from an economy based on heavy industry to one in which we have to pay our way in the world by the export of sophisticated goods and services.
My industrial career was with three American-owned manufacturing corporations: Ford at Dagenham, Mars at Slough, and Hoover Ltd—where I was financial controller of its washing machine factory—employing 5,000 people at Merthyr Tydfil and which, three decades later, was tragically closed down. With all three, I worked on inward investment projects, with ultimate decisions being taken in America.
I later chaired a small company manufacturing in the biomedical sector, which we set up near Caernarfon. It was a business we started from scratch and that grew to employ 50 people, before being taken over by the Diagnostic Products Corporation of Los Angeles, whereby it grew to employ more than 200 people in a new factory, built by the Welsh Development Agency, at Llanberis. It is now part of the Siemens Healthineers division, employing 500 people there, producing test kits for medical conditions, largely for export. Recently, 100 well-paid research and development jobs were transferred from America, to be filled by people largely recruited locally.
There are three types of inward investment that I would like to highlight. The one I have mentioned bought into an existing business and, by dint of investment, access to research, worldwide networks and additional markets, improved the prospects for its own operation. The second type is those that set up in Britain from scratch, gaining market access to the UK, or—as was—to the European home market. In this regard, Wales benefited hugely from the Welsh Development Agency. I pay tribute to the excellent work of our late colleague, Lord Rowe-Beddoe. The WDA persuaded 50 Japanese companies to base their European operations in Wales; sadly, some of them have now moved on. It is a tragedy that the WDA was abolished. We need such agencies.
The other huge FDI contributor to Wales has been the United States. In 1974, the year I entered Parliament, the report Overseas Investment in Wales noted that Wales had 90 wholly owned American companies employing some 44,000 people. At its peak, it is estimated that there were over 200 American companies and operations in Wales.
The third category is of one investing in and possibly taking over a business that already exists in the UK—perhaps helping it to expand, as was our experience. However, there is always a danger of a takeover in its original country of origin, leading to jobs being moved away from these islands, as happened with Hoover, and at worst leading to asset stripping and a loss of control of intellectual property.
Overseas investment in Britain, properly harnessed to work in partnership, still has a huge role to play in our economic recovery. However, we need agencies such as the WDA to make sure that the right things are happening in the right places on the ground. I hope that the new Government will find ways to eliminate artificial tariff or technical barriers between ourselves and our continent, create economic stability at home and bring a new approach to foreign direct investment. I hope they will co-operate with the devolved Governments to harness our resources, work in harmony and give our universities and our young people the chance to play their part in these matters.
I hope this report presents a starting point from which we can move forward.
Lord Bilimoria (CB)
My Lords, in November 2023 the Harrington Review of Foreign Direct Investment made recommendations about how the UK could attract more cross-border investment. Thankfully, the new Labour Government have set tackling barriers to investment as a priority. I thank my friend the noble Lord, Lord Harrington, for initiating this debate and for his excellent review, which made several recommendations. The City of London has said clearly:
“Overall, by far the largest FDI share comes from financial services, with £588bn attributable to that industry”.
According to it:
“The USA is the largest FDI investor followed by Holland, Belgium, Luxembourg, Germany … Japan, Switzerland, France, Spain and Canada”.
Noble Lords might have noted that most of those countries are EU countries. There is no question about it: Brexit has harmed Britain’s attractiveness as an inward investment destination. Before Brexit we were a magnet for inward investment; we were one of the highest in the world and were seen as a gateway to Europe. Can the Minister confirm that we are going to get closer and closer to the European Union? I would go so far as to say: let us join the single market as soon as possible. That will power FDI ahead.
I am a member of the GREAT campaign’s private sector council. I am delighted to hear that the Minister of State without Portfolio and Labour Party chair Ellie Reeves MP has been appointed the Minister for GREAT within the Cabinet Office. As an example of the impact of GREAT, £900 million-plus of foreign direct investment came from 32 investment projects setting up operations in the UK during 2023-24.
What better example of the power of inward investment could there be than by looking at India? Grant Thornton, the firm of accountants, has an annual India Meets Britain Tracker report. The 2024 report says that almost 1,000 Indian-owned companies are based here in the UK. For example, Tata owns Tata Steel and Jaguar Land Rover, which turn over a combined £68 billion, employ almost 120,000 people, and pay taxes of £1.17 billion.
To be attractive to inward investment, we need a flexible labour market. Britain has always had the strength of a flexible labour market, unlike France, which is hampered by not having one. Can the Minister assure us that we will not do anything to remove the flexibility that we have?
On immigration, there is no question that the previous Government portrayed a hostile approach to immigration. We have labour shortages in almost every sector. Can the Minister confirm that we will have business-friendly immigration?
What better example of foreign direct investment could there be than international students? I have just finished my 10-year tenure as chancellor of the University of Birmingham and continue to be co-chair of the All-Party Parliamentary Group on International Students. International students bring £42 billion a year into this country, yet the previous Government—including, I am sorry to say, my friend Rishi Sunak, the former Prime Minister—had a hostile approach to international students and wanted to remove the two-year post- graduation work visa. I am delighted that Bridget Phillipson, the Secretary of State for Education, with whom I shared a platform at King’s College recently, has said that we are going to retain the two-year postgraduation work visa and that we welcome international students.
To be attractive to inward investment, we must have an attractive tax environment. Once again, I said to Rishi Sunak when he was Chancellor and I was president of the CBI, “Don’t raise taxes”. What did he do? He put up corporation tax from 19% to 25%. That is not good for foreign investment. He also put up taxes to the highest level in 70 years and now we are scared that the Labour Government in the Budget next month are going to put up capital gains tax, widen inheritance tax and affect non-doms—68,000 people who pay £9 billion in taxes in this country and spend and invest in this country. Please can the Minister remove this fear that we all have; otherwise, capital will fly from this country.
I conclude that fundamentally this country has all the ingredients for fantastic foreign direct investment. We have the best combination of hard and soft power—manufacturing, financial services, universities, creative industries, our judges, our courts—let us not hamper it. Let us encourage foreign direct investment.
Lord Jones (Lab)
My Lords, I too thank the noble Lord, Lord Harrington, and it is always instructive to hear the noble Lord, Lord Bilimoria. I want to see more foreign direct investment and see it invested in Wales’s remaining steel industry. I want to see the global company, Tata, invest ever more urgently and very considerably in what remains of Britain’s steel industry, specifically in Wales, particularly at Shotton, which is a small gem in Tata’s steel crown, and now especially—strategically, substantially and very urgently —in the still-mighty Port Talbot works, which is still just perhaps a fully integrated steel plant. I welcome the green steel fund and the Government’s timely emergency funding. However, I am a long-standing parliamentary witness to the contracting and dying agonies of the steel plants in Wales—Ebbw Vale, Cardiff’s East Moors, Newport’s Llanwern, north-east Wales’s Shotton, Brymbo in Wrexham, and Trostre and Velindre in the south. As a youthful Minister and shadow Secretary, I visited most of them.
I declare an interest as I once was a common labourer on the furnace stage of No. 2 blast furnace when the fully integrated Shotton works was in its heyday with a workforce of 14,000. My tools were a crowbar, a pickaxe, a shovel, a six-foot ladle for sampling the blinding-orange, hot running metal, and a wheelbarrow for my hundredweight of moulding sand. I operated from the roaring mouth of the furnace across the stage, along the runner to the drop to the receptacle that received the metal below. There was no Health and Safety at Work etc. Act—Michael Foot’s historic legislation was a generation away—but I had a helmet and salt tablets.
I took my breaks in an echoing, greasy, cramped cabin and my workmates were men of no fixed abode, probationers, ex-prisoners and no-hopers. We were all equals and the furnace keeper was a hugely experienced, brave, careful man. He wore clogs and had his sweat towel at his brass-buckled belt. I say that the steelworker always works in a challenging environment, seeking to avoid injuries and deafness. I would like to see the Welsh steel industry, especially in beleaguered Port Talbot, have its generous, urgent direct foreign investment from Tata Steel.
I note that that clock says I have spoken for two minutes 24 seconds, but I think it had a breakdown and I must honour the four-minute limit.
Lord Gadhia (Non-Afl)
My Lords, I commend the noble Lord, Lord Harrington, on securing this short debate. It is especially timely ahead of the International Investment Summit and the Budget scheduled for next month. The Harrington review was a thorough and comprehensive report grounded in evidence from a wide range of stakeholders. Its six headline recommendations provide a thoughtful and practical road map for improving the UK’s attractiveness as an investment destination. Indeed, I referenced the review during the King’s Speech debate, describing its proposals as necessary hygiene measures to revive investment, alongside the reinstatement of the Industrial Strategy Council.
Although the previous Government commissioned the report and made warm noises about its conclusions, they ultimately ran out of time to make meaningful progress. I hope the new Government will fully embrace this agenda. Global investors do not care much for domestic political tribalism. In fact, if anything, they are looking for the opposite: predictability, certainty and consistency—the three most coveted words for investor confidence. So, if the new Administration are serious about sending a positive signal to prospective investors, which I believe they are, then they would do well to show some continuity in this area.
However, we do have to face up to three broader issues regarding FDI. First, we are no longer the gateway into the EU, which was a previous tail-wind underpinning inward investment flows. The data speaks for itself: since 2016-17, we have seen a 30% drop in the number of FDI projects. The picture would be much worse if it were not for greenfield investments in renewables, notably offshore wind.
Secondly, taxation matters—not just corporate taxes but those levied on investors themselves. Even though headline corporation tax rates have increased, full expensing of capital expenditure, now permanent, should produce positive results over time. In contrast, on personal taxation, I believe we have miscalculated the impact of the latest changes to the so-called non-dom tax regime, which is often intertwined with FDI decisions made by high net worth individuals. The Treasury modelling will have made assumptions about the number of people expected to leave the UK. There is now substantial evidence that the assumed leaver rate has been far exceeded. We will, therefore, face the double whammy of losing Exchequer revenue and adversely impacting FDI. I ask the noble Lord, Lord Leong, whether the Treasury is monitoring this situation and whether the Treasury and the OBR are still confident that the measures announced in the March 2024 Budget will still raise £2.7 billion a year by 2028-29. I also fear that we are about to make matters worse through changes to the capital gains tax regime in the forthcoming Budget. The politics of envy is seductive but economically destructive. I hope that rationality will prevail. This is certainly the reputation of the current Chancellor, and the October Budget will be a big test of her judgment and instincts.
This leads neatly to the third factor influencing FDI: namely, general investor sentiment towards the UK. This is the ultimate intangible and not easy to pin down but arguably one of the most important ingredients determining the flow of FDI. Sentiment can be influenced by the smallest of issues, which is why the noble Lord, Lord Harrington, was right to call for the streamlining of cumbersome processes, removing obstacles such as planning delays and grid connections. Another issue that frequently comes up from inward investors is their poor experience at Heathrow Airport. It is literally the UK’s shop window, and we should be far more imaginative in making passport control a pleasant experience for incoming visitors, especially those bringing their cheque-books.
In conclusion, I am convinced that the UK can lead the world in attracting capital, but to do so we must regain our self-belief, natural pragmatism and fall in love again with wealth creation.
Lord Mountevans (CB)
My Lords, I add my congratulations to the noble Lord, Lord Harrington, on his splendid review. Noble Lords may know the City is close to my heart. I spent my career in global shipping markets. But my ship really came in, as it were, when I was elected as Lord Mayor. In that role, I represented UK plc around the world, promoting UK exports, particularly financial and professional services, and highlighted the attractiveness of the UK as a place for international investment. It is with that background that I turn to the subject at hand.
Following the views of the then Chancellor, the review focused on five key growth sectors in the UK: green industries; advanced manufacturing; life sciences; digital technology; and creative industries. The list does not include financial and professional services, arguably Britain’s most important and successful sector. I urge the new Government not to overlook it. I wonder if sometimes Governments have felt that FPS can look after itself. It must be high among Government’s promotional priorities; a dynamic FPS is fundamental to successful business.
At the forefront of our minds must be the UK’s competitors, from Ireland to Singapore and those in the Middle East—each with powerful investment agencies focused on attracting FPS. By contrast, here in the UK, there are a wide range of organisations promoting FPS and other FDI. A change in targeting support could give these organisations far stronger impact. We know that improving FDI helps growth. For example, in 2023 the UK attracted FDI in 222 FPS sector initiatives involving 177 foreign companies valued at £1.1 billion. FDI in 2022 alone created nearly 15,000 jobs. Over half of the jobs created in 2021—the last year for which I could find figures—were outside London.
City of London Corporation research indicates that improving support for financial and professional services within FDI could significantly increase growth, adding an additional £0.7 billion to the economy by 2030. The UK has a great potential in FPS. We have our skills and expertise; we are a great place to connect to global talent and markets; we have strength in sustainable investment and green finance; and we have our pioneering fintech sector. This means that the UK has a strong offer across the FPS piece.
I offer four ideas for how we can expand and strengthen the position. First, there is the FCA’s innovation of a sandbox, where companies can experiment with new ways of doing business while under close, agreed regulatory oversight. The UK has led the way in creating new opportunities for services firms to innovate. This helps to attract growing and vibrant business to the UK. The UK can be a world leader again by establishing multijurisdictional sandboxes, which would help develop regulatory approaches across jurisdictions in response to emerging technologies. This would act as a catalyst for increased foreign investment in the UK.
Secondly, we should be embracing emerging parts of the services industry, such as carbon markets. These markets have the potential to position the UK as a global centre for carbon market activities. With this comes the opportunity to attract foreign investment in UK professional services, capital markets and trading activities. The City of London Corporation’s UK carbon markets forum seeks to highlight the importance of this sector.
Thirdly—perhaps the Minister will be attracted by this proposition—we should create as a pilot an FPS investment hub as the first step to creating a stand-alone cross-sector national investment agency. This should be established as a joint venture or public-private collaboration. It should be arm’s length from the Government. This would create focus for foreign investors wanting to direct investment to the UK.
Fourthly, the much-applauded review of FDI from the noble Lord, Lord Harrington, shines a light on how the UK might strengthen and deepen its attractiveness to FDI, but perhaps we could go further. The establishment of a financial and professional services strategy would help UK and overseas businesses to see a road map of how the Government may offer help and support. By having a single codified strategy, foreign investors might be galvanised into directing their investments to the UK.
Lord Livingston of Parkhead (Non-Afl)
My Lords, I share my thanks to my noble friend Lord Harrington for his outstanding report; it is an excellent read.
I will give a view on the UK’s position in respect of FDI. I speak not just as someone who was previously Minister for Trade and Investment, but also as either a CEO or director of companies that have invested around the world. The UK’s position is not bad. We have suffered because of Brexit, which has had an impact. We have also suffered from instability. Businesses cannot put a number on instability. It increases risk and they do less investment when it exists. They want to see long- term stability if they are making long-term investments.
We have so much in the UK that we can build upon, as mentioned in the report: English, GMT zero, the rule of law, financial centres, et cetera. If I could add to the report, I would add universities. We have four of the best universities in the world within 100 miles of here. They are important, not just for skills and research, but also many future business investors will have gone to university in the UK and have become pro-UK. Investment in universities and foreign students is a win-win, and we really need to encourage it.
People also want to live here. Encouraging employees to come and work and live here is an important part of the investment decision, as is labour flexibility. We are talking here about good companies which train well, invest well, recruit people and promote them. They want to see labour flexibility. I know that there are a number of countries in the EU that people will not invest in because it is so difficult to change their position after they have done it.
The noble Lord, Lord Harrington, raised a number of issues; I will pick up on just a few of them. I find one of them deeply depressing because it was an issue when I was a Minister, so obviously I did not solve it: opening bank accounts. It is remarkable that it still has not been solved. It seems to be easier to open a bank account if you are a fraudster than if you want to come to the UK and give out jobs or if you are a Peer. It is a Catch-22 situation: you cannot open a bank account because you are not here, and you cannot be here because you cannot open a bank account. Although the noble Lord, Lord Harrington, made some points on this, I challenge the Minister to go further. Why do the Bank of England, the Treasury or the PRA not give some cover to the banks—do a bit of research and say, “Okay, you can give open accounts for the next 12 months while you do the work”—and try to clear people up front? Banks will be risk averse because of the nature of the regulations.
On visas, we are usually going to grant visas to people who want to create lots of jobs. Let us make it easy, do it up front and be proactive. As an example, when I was a Minister a car plant was opened here; one of the key reasons was that we presented a visa from the Home Secretary saying, “We want you to be here, and here’s a number for your top people to contact when you want to come and visit the factories”. The important part is that people want to feel wanted.
One of the other important things is consistency. We have had so many changes. Everyone in government, including the Treasury, has to understand that these things do not turn around in a year. You cannot keep on changing funding for support mechanisms or programmes; these things are built up over many years. The people we are speaking about today may be making investments in five or 10 years, not five or 10 months.
Finally, although this report is about FDI, it makes so many great suggestions that also apply to domestic investment. FDI is not instead of domestic investment but as well as it. We should apply the same rigour to making great investment decisions, whether from abroad or from companies in the UK.
Lord Johnson of Lainston (Con)
I congratulate the noble Lord on his appointment and welcome him to his place. He is a credit to the seldom seen, pragmatic approach that Labour should take if it wants to genuinely grow this economy.
I also pay homage to my friend and mentor, the noble Lord, Lord Harrington. His review is unquestionably first class. He is a genuine leader in his field, and I was incredibly grateful to him for the enormous amount of work he did in compiling his evidence. The Government commissioned his report and we endorsed his findings, as he said. His list of actions—all of them—will help this country win more foreign investment.
We need this money. As the noble Lord, Lord Petitgas —another of the true national heroes in this area—said, without FDI we cannot achieve any of our goals for net zero, AI, advanced manufacturing, housing or infrastructure. This is not a “nice to have” but the very essence of the survival and progress of our nation. If the goal of a Government is to give their citizens a longer, happier life, improving our investment environment is the only way, frankly.
When the Conservatives were in government, the landscape looked different—optimistic and powerful. I always believed that, if you took a hot-air balloon up into the sky on a clear day, you would look down and see herds of tech unicorns galloping across our green fields, the sunlight glinting off their golden horns and hooves. Now I worry that, under Labour, we would see only a few lonely unicorns, their ribs showing through and their coats shabby. You might even text them some money, since I am afraid that Labour, for all it says, does not really understand what it takes to create an attractive environment for investment. We live in a competitive world where capital, like water, flows where it likes. You cannot force it. You cannot fake it. The opportunities have to be real and the economic framework has to be conducive to generating the right level of return, as we have heard.
The Government, I am afraid, are talking down our nation, our abilities and our people. I find it quite bizarre, and I would like to ask the Minister to comment on whether his colleagues will actually start saying nice things about this country and positive things about the economy. Under the Conservatives, in our long tenure, contrary to what you read in the papers, we achieved record amounts of FDI, putting us, as we heard, in the top three destinations for FDI in the world for overall stock, second only to the US. In greenfield ESG-related investments, I think we were first in the world. The week of the global investment summit last year, to which the noble Lord, Lord Petitgas, referred, saw pledges to invest £50 billion in just one week, and the Northern Ireland investment summit to which the noble Baroness, Lady Foster, referred was also an enormous success. I should like to hear a little more on the Government’s plans for their own summit, if I may. What are the targets for this event, in terms of pledges? How much is it costing, and when will we know who is coming?
One cornerstone feature of our economy is the flexibility of our workforce, which is now under threat from a set of proposals designed to enhance the power of the unions over business. What sort of message does that send? This is an issue and it has been raised before: many of the investors I dealt with told me how they preferred the UK to France precisely because the restrictive labour practices there made it so hard to manage a business.
This Government are also mulling significant tax rises on capital, which means, effectively, tax on investment returns. I repeat the request for the impact assessments of these changes when it comes to assessing inward investment into the country. I also want to press the case for further or better regulation to remove barriers to investment. We talked about the growth mandate in a debate yesterday, and I was not sure whether the Minister had really committed to adhering to it and trying to drive regulators to behave accordingly.
I turn to the point about financial services, which was raised successfully and succinctly just now. The FCA, CMA and PRA all think they are doing a great job, but yesterday Michel Barnier published a fabulous report that pointed out the important need to restructure some of those bodies to adapt to the modern need for huge capital pools, if we are to survive as a society.
In conclusion, can the Minister please tell us how committed his colleagues really are to garnering foreign investment? When will he commit to publicly endorsing the Harrington review with improved resourcing for the Office for Investment and a Chancellor-led Cabinet committee? When will he and his colleagues start talking up, rather than down, the amazing opportunities of this country and its regions? When, if I may ask, will he find someone brave enough, generous enough and, frankly, kind enough to stand in as their Minister for Investment?
Lord Leong (Lab)
My Lords, I am pleased to respond to this Question for short debate on behalf of the Government. I take this opportunity to thank all noble Lords who have spoken, and I start by paying tribute to the noble Lord, Lord Harrington. He has done valuable work in this space to help make the UK more attractive for inward investment, and I thank him for his kind words. Before coming to this House, I had always been an entrepreneur; I have set up businesses and been on beauty parades to seek investments. Since then, I have sold my businesses and become an investor, so I am well versed on what is required to bring in investment, and on the situation we have to portray to attract inward investment.
The noble Lord’s recent review has generated much discussion about how we can facilitate more investment through more channels, both here in Whitehall and in the private sector; indeed, some of his recommendations have since been implemented. I also pay tribute to the noble Lord, Lord Johnson, for his recent tenure as Minister for Investment. He was an energetic and vocal champion for UK PLC, and I have no doubt that his personal efforts helped to facilitate more inward investment into the United Kingdom.
Several noble Lords asked when we are going to have a Minister for Investment. All I can say is that the Government will make that announcement in due course. We want to find the right individual, who can drive our investment agenda right across government—that is the individual we are looking for. I shall endeavour to answer as many of the questions asked as possible within the time limit of 12 minutes, and if I do not answer them all, I shall go through Hansard and write to noble Lords.
The Prime Minister, the Chancellor and the Business Secretary have all emphasised the importance of inward investment to this new Government: it is a key driver of productivity growth, which enables innovation and efficiency in the wider economy. This in turn creates jobs, opens up opportunities for communities and spurs economic growth. Investment drives growth, productivity, employment and a higher standard of living. We know that investment is one of the principal drivers of growth, as the noble Baroness, Lady O’Grady, mentioned, yet for quite some time the UK has suffered the lowest investment share as a percentage of GDP in the G7. We ranked 27th out of 30 in the OECD league table last year. With five Prime Ministers, seven growth strategies and 10 Business Secretaries under the previous Government, stability was sorely lacking. Businesses have not had the confidence to invest, as mentioned by various noble Lords, to adopt new technology, to upskill their employees or to plough money into research and development. We are determined to change that.
One of our principal ambitions is to boost those sectors in which the UK is a world leader and which therefore have the greatest potential for generating the growth that we need. They include our green industries, advanced manufacturing, life sciences, digital technology and, let us not forget, our world-beating creative industries, our financial and professional services and aviation, as mentioned by various noble Lords and the noble Baronesses, Lady Foster and Lady O’Grady. While these sectors have been attracting much investment, they are at risk of stagnating because of the policies and action, or lack thereof, of the last Government. If we do not work hard to attract this investment and capital, we know that our European partners in France, in Germany and even in our nearest neighbour, Dublin, will attract them. As for Singapore, Bahrain and the UAE, we have to compete with them. Attracting foreign direct investment is a global, competitive business. We have to be out there, seeking out those companies and sovereign funds to make the UK the investment destination—we have to bring them here.
To hit the ground running, the Prime Minister has already announced plans for a new international investment summit in October, as mentioned by some noble Lords, to bring together businesses and big-hitting investors. We want to drive home the benefits of our plans for a new industrial strategy and, of course, our national wealth fund, both of which we will lay out in more detail over the coming months. Launched shortly after we took office, the national wealth fund will explore the possibility of aligning key financing institutions, such as the UK Infrastructure Bank and the British Business Bank, to offer a compelling proposition for investors, including to scale up or invest in SMEs. It will mobilise billions more in private investment and generate a significant return for taxpayers. Over £7 billion has already been allocated in additional funding so that investments can start being made immediately, focusing on further priority sectors and catalysing private investment at a greater scale.
As part of our bold plan for growth in the places where it is needed most, our industrial strategy will drive investment into crucial sectors across all parts of the United Kingdom, including working with the devolved Administrations and combined authority mayors. It will build a resilient economy that can stand on its own two feet, increase opportunities for all and make Britain a clean energy superpower.
It will also be through planning reform. I hear this time and again from investors: we need to unshackle the things that prevent planning and building factories. To get Britain building again we need planning reform and to end the ban on offshore wind, prioritise brownfield land for development and renew green-belt boundaries. This will attract more much-needed investment into construction, engineering and clean tech.
These increased investment opportunities will be vital for putting capital into skills and education, as has been mentioned by many noble Lords. Indeed, our new body, Skills England, was launched in July, alongside our commitment to transform further education into technical excellence colleges. Working with local businesses, this will accelerate the upskilling of the workforce and act as a vital skills bridge between industry, small businesses, trade unions, schools, training providers and our universities.
We will bring in the expert voices needed to form a fully independent Industrial Strategy Council, placing it on a statutory footing to send a clear message to businesses and international investors that we are a pro-growth Government of certainty, consistency and stability.
The Business Secretary has already spoken to hundreds of businesses and he has assured private sector leaders of our commitment to accessibility and a pro-enterprise approach. Both the Department for Business and Trade and the Treasury are working closely to provide cross-Whitehall governance on investment. This is taking shape through our growth mission boards—the first of which met in July—the Industrial Strategy Council and the national wealth fund, ensuring joint accountability in securing new investment and removing structural barriers to priority areas. I know this was a recommendation from the noble Lord, Lord Harrington, in his review last year, so no doubt he is pleased to see it taking shape.
We also know how critical the pensions industry is to investment, as mentioned by several noble Lords. They are intrinsically linked, but we know that there is much more that we can harness. That is why we are undertaking a pensions investment review, with the ambition of unlocking the potential of the £360 billion in local government pensions schemes.
We will continue to utilise the expertise of the Office for Investment, as mentioned by several noble Lords, and its dedicated concierge services provided to the world’s most strategically important investors, complementing the wider work of the Department for Business and Trade. The OfI has a strong track record of securing highly transformative investments into key sectors in the UK, and we will continue to leverage its knowledge and relationships to land-critical investments.
I mentioned earlier that FDI is a global competitive business. We have got to compete with the likes of Singapore, with its Economic Development Board, and likewise with Bahrain and the USA. We will seek investment from Africa to Australia, and from the USA to the UAE. We have to be at the beauty parade to promote the UK as the destination for investment. For higher-value investments, we offer bespoke assistance, including project and account management, and guidance to help navigate the UK landscape and develop innovative solutions to help overcome barriers such as planning and access to the grid.
My time is up, so I am going to conclude, but I will write to noble Lords after I have read Hansard.
Lord Leigh of Hurley (Con)
My Lords, will the Minister confirm that he will write to noble Lords, four or five of whom have specifically asked for impact assessments on employment laws and on potential changes to taxation? Will he confirm that he will specifically address those issues?
Lord Leong (Lab)
I assure the noble Lord that I will definitely write. For those issues relating to the Treasury, it is a bit above my pay grade but I will definitely speak to my colleagues to get some information to noble Lords.
To conclude, we need to see more of such investments in the United Kingdom, and we need to really turn this stalling performance into sustained growth—growth that translates into more jobs, better pay, a happier workforce and more innovation. It is only through investment from this new Government, British businesses and international investors that we can make those things possible and make the UK one of the best places in the world to live, work and innovate.