Autumn Statement 2023

Lord Harrington of Watford Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord Harrington of Watford (Con)]

My Lords, I join the long line of people welcoming my noble friend to the Treasury and the Front Bench today. I have a lot of respect for her personally and she has done the jobs she has held within government extremely well. Before she was in this House, she had a very noble cause as well, which we worked on together in 2016. I hope that her current position is more successful for her than that was for us.

I am here today to speak about a document. For those who got all their papers from the Printed Paper Office, or from the Table Office in the House of Commons, there was a separate one buried deep within them called the Harrington Review of Foreign Direct Investment. I feel that I should restrict my comments to that, and I will happily test any Member of this House to see whether they have read it—I am looking at the Minister. It is only 125 pages. I do not think that it will get in the Amazon bestseller list of books, but I feel it is of some significant interest, not least as the Chancellor in his Autumn Statement fully accepted its principal recommendations. What the report has brought out will be a basis for some reorganisation of government to make it more friendly towards foreign direct investment.

The background to the review is that the Chancellor asked to see me and said that he was disappointed that we were losing some significant foreign direct investment deals. That does not mean that it is a disaster—we are good at foreign direct investment—but he wanted me to look deeply into some of the deals that we had lost, find out exactly the reasons why and come up with some recommendations to deal with them. Of course, it is very easy for some people to say that it is all because of Brexit—I would have liked to have said that—and for other people to say that it is all because of corporation tax. However, the evidence we got from interviewing more than 200 companies—sovereign wealth funds, pension funds and multinational companies, mainly—is far more complex.

This country basically has what I call a 15-love advantage, as in a tennis game: the clichés about companies liking the rule of law, the language and the fact that they can get executives who want to live and work here are absolutely true. That is where the 15-love comes in. However, there is then a story of a number of factors that seem to get in the way of investment. The grant system, the investment system that the Government have, which is comparatively generous—more generous than I first thought—is very difficult to get hold of. It takes a long time, and there is a general feeling that prospective investors are moved from one department to another. There is then a series of other obstacles, such as planning, visas, skills, the grid, et cetera. These are all well documented.

With the time available—noble Lords are very fortunate, as my last speech on this subject was 55 minutes long and I have only three more minutes to go—I note that we have a number of suggested solutions to this: restructuring the government, having a senior-level committee for investment chaired by the Chancellor and having an Investment Minister over three departments. Their responsibility would basically be to supervise all investment decision processes from the beginning of the inquiry through to their completion. Each relevant department would have a Minister and a senior member of the Civil Service, part of whose responsibility would be to push forward investment. No longer would the Home Office say that it deals with visas and the investment angle is not really its problem; nor would the DfE say that it does skills but does not take investment decisions into consideration.

In the end, I found in the evidence I received that the view of some Members of these Benches about the future of how government should organise itself—basically to do as little as possible, cut taxes and leave it to the market—is completely fallacious. In a business—as far as attracting investment, the Government are one—you must do what your competitors do. People have a small-state fantasy about countries such as Singapore and others—that we can be Singapore-on-Thames. But these countries get totally involved in investment decisions, and many of them throw money at companies to entice them to come here.

We are not market-makers but market-takers, and we must do what our competitors do. We must give companies the incentives to come here; we must provide a quick and efficient package to include the money, energy and all the things they look at for an investment decision; and, above all, we need consistency of policy. This has been shown with net zero: policy on internal combustion engines has changed three times since we published the industrial strategy in 2016. We need consistency of policy and very efficient government machinery to deliver it. I hope all noble Lords will read the report, and I look forward to discussing it in future.