Foreign Direct Investment 2016-17

Jim Shannon Excerpts

Tuesday 12th September 2017 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Mid Dorset and North Poole (Michael Tomlinson) on delivering such an excellent and comprehensive speech. Like he, I am a glass-half-full person, who looks optimistically towards the future, and the facts, as I hope to illustrate, will indicate that things are very bright. If we try to be positive and look forward we can find solutions and see the good things. It is not always good to dwell upon the negative things; it is good to be aware of them but not to dwell on them.

Northern Ireland, as such a small country, is somewhat reliant on foreign investment and it is clear that we have the expertise and knowledge to attract investment from all over the world. I want to give a Northern Ireland perspective, because the hon. Member for Mid Dorset and North Poole referred to the United Kingdom of Great Britain and Northern Ireland. I say that often; I have said it every day since I came into this House back in 2010, to emphasise that we are very much part of the United Kingdom and that we are all together—Scotland, Wales, Northern Ireland and England.

Northern Ireland secured 33 foreign direct investment projects during 2015-16—as the Minister knows, we have some good stories—which created more than 2,000 jobs. Despite the usual Brexit warnings that scream that FDI will be affected by our leaving the EU zone, I read a piece by an economist that states:

“From a Northern Ireland perspective, the type of inward investment we have been winning has been back office functions, which may not need the access to the single market, if its function is to serve a parent company. Investor motives for investing here would back that up, with a strong majority of investors citing the skilled workforce as the main reason for investing here.”

Backing that up, figures in yesterday’s press indicate that the region of the United Kingdom with the strongest growth rate is Northern Ireland. So there is an indication that we are growing and that Northern Ireland is, for once, leading the way.

[Mr Sheerman]

Before the hon. Gentleman gets carried away with all these good feelings about the future, he would surely agree that our productivity is absolutely awful, looking carefully at UK performance. Many people who would like to invest in this country are worried about low productivity rates. Productivity is much higher in Yorkshire, which has a much bigger population than Northern Ireland and some of the places he has mentioned. We are doing very well and manufacturing is still alive and well. People would be much better off investing in manufacturing in Yorkshire than coming to Northern Ireland.

[Jim Shannon]

I am always happy to receive an intervention from the hon. Gentleman. He is definitely an optimist as he is a Huddersfield Town supporter, and that is an indication of optimism at its highest. I wish him well, although on Saturday I hope Leicester beat them. I digress slightly, but there are ways of doing better and we need to address productivity.

[Michael Tomlinson]

The hon. Gentleman is making an excellent point about Northern Ireland, but it has been shown that as foreign direct investment comes into companies, that in and of itself helps to improve productivity, which is a great benefit.

[Jim Shannon]

I will illustrate that point in some of my comments about Northern Ireland and how our economy, productivity and employment grow. In Northern Ireland, we have a skilled, dedicated workforce. Regardless of our place inside and outside of Europe, the fact remains that people are interested in investing in Northern Ireland and across the United Kingdom. The fact that we are world-renowned for our research, our cyber-technology and our skilled workforce means that we can attract the investment that we so need. We are already playing above our level in Northern Ireland. We lead the world with some of the technology we have developed, and some of that skill can be found in the constituency of my hon. Friend the Member for East Londonderry (Mr Campbell).

According to the figures, foreign direct investment projects into Northern Ireland were down 62% to just 15 in 2015, but at the time, the economic development agency Invest Northern Ireland claimed that the figures did not reflect the full picture. Invest NI said that the full picture is that there were 35 direct investment projects in that tax year, but because those projects had not started, they were not part of the figures. The original figures were wrong and gave the wrong indication. The new figures show that the investment, new jobs and new projects are significant.

No matter the predictions that come our way from economists one way or the other, our duty is to promote our abilities and industries and attract that inward investment. I seek to do that, and my colleagues and Members from all parties travel worldwide seeking to do that. Many from Northern Ireland do the same.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does my hon. Friend agree that as we reach the era of the post-Brexit vote, where there will hopefully be less uncertainty, some of the regions of the UK—particularly Northern Ireland—will need to be able to avail themselves of the advantages that access into the EU as well as access beyond the EU provide? That is particularly so with the land border with the Irish Republic.

[Jim Shannon]

My hon. Friend concisely puts the issue into perspective. We need to have cognisance of our special relationship with the Republic of Ireland, but we also have to look at the advantages we will have elsewhere across the world. We are most effective when we are attracting investment in partnership with the Department for Business, Energy and Industrial Strategy and other Departments. It is always good to see the Minister in his place, and we look forward to his response to the points we are making. Will he touch upon some of the facts with Northern Ireland as well?

It is useless to brush over the changes that Brexit will bring. There will be changes, but the changes need not be bad. Opportunities exist in the new markets emerging in Asia—opportunities that my constituents, such as Lakeland Dairies and Glastry Farm ice cream, are already making use of. Lakeland Dairies had a meeting with the Minister about those opportunities at the end of July. It is trying to secure another contract for milk products and milk powder in China. We and the Minister are working hard, and we are moving forward. Such companies are successfully casting their net to the middle east, and our local economy is reaping the dividends.

The question we must ask ourselves is whether we are doing all we can to aid companies and support them in their quest to secure jobs and enhance their businesses. On Thursday last week, Glastry Farm ice cream, which is based in my constituency—it is a small firm that started as a farming enterprise, but is now up and running —secured a new contract with Heathrow and another contract in Dubai. It is moving into the middle east, which is real progress for a wee firm from outside Ballyhalbert on the Ards peninsula, and it has been helped by Government policy in this place and by the Minister responsible back in the Northern Ireland Assembly.

We cannot go into panic mode due to the uncertainty of Brexit and the way the Europeans will treat us as they continue—I say this respectfully—in unhelpful mode. We must focus on what can be achieved. We can secure and capitalise on other forms of foreign direct investment. The parliamentary briefing outlines that for UK investment abroad, the EU accounted for 43% of the total UK FDI stock in 2015, compared to 23% for the USA and 34% for all other countries, yet net investment flows from foreign investors into the UK were £21.6 billion in 2015, up from £15 billion in 2014. That shows the trend, success and positivity, and goes back to my comment about the glass being half full. The facts back that up, and that is what we want to say. Inward FDI flows from the United States were £20.1 billion, the highest recorded value since 2011. That is another positive fact. Inward FDI flows from Europe fell, with a disinvestment of £12.1 billion in 2015, compared with a disinvestment of £8 million the year before. Again, that is positivity. Net direct investment earnings generated in the UK by overseas investors were £47.9 billion in 2015, down slightly from £48 billion in 2014. The EU accounted for £18.8 billion of that, and the USA accounted for £17.5 billion.

I am aware that while the figures illustrate the issues, they are not the whole picture. There are a lot of figures out there, and they show me that as per usual we give more to Europe than we get out of it. We need to focus on our relationship with the USA and other trade partners. We need to look towards Asia, Australia, New Zealand, Africa, the middle east and South America, which have potential and possibilities. I have said it before, and I will say it again: the sky will not fall down because we leave Europe. It will not all be darkness and gloom, but it is our job in this Chamber to ensure that we play our part in securing investment from those who wish to invest and can do so. We have the skills, expertise and workforce, and that speaks a great deal more globally than saying we are a member of the EU.

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[Hannah Bardell]

If the hon. Gentleman does not mind, I want to make some progress.

Scotland has performed well in terms of FDI, so I will indulge in talk about some of Scotland’s unique opportunities. The combination of natural resources, a highly skilled labour force and a long-standing reputation for innovation make Scotland a prime destination for foreign direct investment. The SNP Scottish Government have taken action to grow our economy and ensure that Scotland remains an attractive destination for business, boosting investment to record levels. As a result, 2016 was a record-breaking year, and, outside of London, Scotland is the best place in the UK for FDI. Places such as Aberdeen, Glasgow and Edinburgh are in the UK’s top 10 cities for attracting FDI. Our attractiveness to international investors is recognised through investments in recent years from the US, with 43 projects; France with 14 projects; and Germany with seven.

The latest annual survey on the attractiveness of locations to international business by Ernst and Young shows that Scotland now takes more than one in 50 of all investment projects based in Europe. That is a clear indication that Scotland in Europe is vital, and that Scotland is firmly established as a location of choice for global investors.

[Jim Shannon]

Does the hon. Lady accept that the strategy directed by central Government at Westminster has to take some of the credit for what is happening across all the regions? It is important to acknowledge that.

[Hannah Bardell]

I think we have to acknowledge that the Government are taking Scotland out of Europe against its will, which will be a wrecking ball not only to Scotland’s economy, but to the rest of the UK’s economy. When we have these debates and discussions in one or two years’ time, I will be interested to see where we are. It is important that Governments work together on things such as foreign direct investment. That is not to say that there has not been support from the UK Government—of course there has—but we also have to recognise the flipside of the coin. The hon. Gentleman spoke about his own constituency in Northern Ireland. He must surely recognise the challenges and issues that will come down the line for Northern Ireland as we go through the Brexit process, especially as Northern Ireland relies so heavily on foreign direct investment. Recent research suggests that people will look less favourably on the UK because of the message it has sent as a result of Brexit. That is surely a concern for him.

--- Later in debate ---

[Jim Shannon]

At a meeting with a firm this morning, I spoke to someone who attended a conference in Japan at which the UK and Japan looked at Brexit and how they could work together. For the record, he told me that there were positive contributions with respect to Brexit from firms in the United Kingdom and firms in Japan. They see possibilities and opportunities, and that should be recorded in Hansard.

[Bill Esterson]

The hon. Gentleman is absolutely right to raise that point. Japanese firms have already invested here, as have other foreign firms. They need to do everything they can to maximise their existing investments and to be in a position where it makes sense for them to build on those investments. That comes back to what the Minister has to say and what the Department has to do to enhance our position so that those investments continue to deliver and attract additional investment.