Foreign Direct Investment to the UK

Debate between Lord Leong and Lord Leigh of Hurley

Tuesday 10th September 2024 Lords Chamber

[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.