Foreign Direct Investment to the UK

Lord Wigley Excerpts

Tuesday 10th September 2024 Lords Chamber

[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.