Foreign Direct Investment to the UK

Baroness Wheeler Excerpts

Tuesday 10th September 2024 Lords Chamber

[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.