Foreign Direct Investment to the UK

Lord Johnson of Lainston Excerpts

Tuesday 10th September 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I congratulate the noble Lord on his appointment and welcome him to his place. He is a credit to the seldom seen, pragmatic approach that Labour should take if it wants to genuinely grow this economy.

I also pay homage to my friend and mentor, the noble Lord, Lord Harrington. His review is unquestionably first class. He is a genuine leader in his field, and I was incredibly grateful to him for the enormous amount of work he did in compiling his evidence. The Government commissioned his report and we endorsed his findings, as he said. His list of actions—all of them—will help this country win more foreign investment.

We need this money. As the noble Lord, Lord Petitgas —another of the true national heroes in this area—said, without FDI we cannot achieve any of our goals for net zero, AI, advanced manufacturing, housing or infrastructure. This is not a “nice to have” but the very essence of the survival and progress of our nation. If the goal of a Government is to give their citizens a longer, happier life, improving our investment environment is the only way, frankly.

When the Conservatives were in government, the landscape looked different—optimistic and powerful. I always believed that, if you took a hot-air balloon up into the sky on a clear day, you would look down and see herds of tech unicorns galloping across our green fields, the sunlight glinting off their golden horns and hooves. Now I worry that, under Labour, we would see only a few lonely unicorns, their ribs showing through and their coats shabby. You might even text them some money, since I am afraid that Labour, for all it says, does not really understand what it takes to create an attractive environment for investment. We live in a competitive world where capital, like water, flows where it likes. You cannot force it. You cannot fake it. The opportunities have to be real and the economic framework has to be conducive to generating the right level of return, as we have heard.

The Government, I am afraid, are talking down our nation, our abilities and our people. I find it quite bizarre, and I would like to ask the Minister to comment on whether his colleagues will actually start saying nice things about this country and positive things about the economy. Under the Conservatives, in our long tenure, contrary to what you read in the papers, we achieved record amounts of FDI, putting us, as we heard, in the top three destinations for FDI in the world for overall stock, second only to the US. In greenfield ESG-related investments, I think we were first in the world. The week of the global investment summit last year, to which the noble Lord, Lord Petitgas, referred, saw pledges to invest £50 billion in just one week, and the Northern Ireland investment summit to which the noble Baroness, Lady Foster, referred was also an enormous success. I should like to hear a little more on the Government’s plans for their own summit, if I may. What are the targets for this event, in terms of pledges? How much is it costing, and when will we know who is coming?

One cornerstone feature of our economy is the flexibility of our workforce, which is now under threat from a set of proposals designed to enhance the power of the unions over business. What sort of message does that send? This is an issue and it has been raised before: many of the investors I dealt with told me how they preferred the UK to France precisely because the restrictive labour practices there made it so hard to manage a business.

This Government are also mulling significant tax rises on capital, which means, effectively, tax on investment returns. I repeat the request for the impact assessments of these changes when it comes to assessing inward investment into the country. I also want to press the case for further or better regulation to remove barriers to investment. We talked about the growth mandate in a debate yesterday, and I was not sure whether the Minister had really committed to adhering to it and trying to drive regulators to behave accordingly.

I turn to the point about financial services, which was raised successfully and succinctly just now. The FCA, CMA and PRA all think they are doing a great job, but yesterday Michel Barnier published a fabulous report that pointed out the important need to restructure some of those bodies to adapt to the modern need for huge capital pools, if we are to survive as a society.

In conclusion, can the Minister please tell us how committed his colleagues really are to garnering foreign investment? When will he commit to publicly endorsing the Harrington review with improved resourcing for the Office for Investment and a Chancellor-led Cabinet committee? When will he and his colleagues start talking up, rather than down, the amazing opportunities of this country and its regions? When, if I may ask, will he find someone brave enough, generous enough and, frankly, kind enough to stand in as their Minister for Investment?