Foreign Direct Investment to the UK

Lord Livingston of Parkhead Excerpts

Tuesday 10th September 2024 Lords Chamber

[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.