Foreign Direct Investment to the UK

Lord Petitgas Excerpts

Tuesday 10th September 2024 Lords Chamber

[Lord Petitgas (Con)]

I will do my best.

My Lords, I commend my friend the noble Lord, Lord Harrington, for his report, and for tabling today’s debate. I know what it takes to harness FDI in the UK. During my stint at No. 10, I worked across Whitehall on several major foreign direct investments. Together with my noble friend Lord Johnson we led the 2023 Global Investment Summit, which beat every investment and attendance record.

Our country has in recent years been a magnet for both capital and talent, topping global rankings. That said, reading the press and hearing from CEOs and entrepreneurs, I fear we have a boom in gloom—investor sentiment is shifting and souring. This is a pressing topic because investor confidence and conviction underpin our national growth priority. We need more investment.

Let me share three observations. First, FDI is a competitive sport, as the noble Lord, Lord Harrington, rightly said. This country has a tremendous hand to play, but there are serious concerns and we face global competition. Investors want stability and common sense. On the former, the Government can no doubt play up their strong majority in Parliament, which is welcome. On the latter, the market is very worried that we will not stay competitive on tax and labour laws. The Government need to back up their pro-business claims with pro-business policies. Business scepticism is now rampant.

Secondly, FDI is not the only capital in town. Our domestic pensions system is woefully under-indexed in both our UK stock market and infrastructure. It needs to get into the game alongside FDI and foreigners. This will boost investment and should also help pensions returns. Moreover, given that FDI often—or always—gets a government subsidy, it will ensure that pensions, not just foreigners, benefit from government largesse.

Thirdly, FDI is about talent—people—not just capital. Let me ask noble Lords which entrepreneur, British or foreign, is going to choose the UK if rumoured levies on capital through CGT, carry and inheritance taxes become uncompetitive. We need wealth creation to pay for our welfare state. We have a mismatch, I fear, between the rhetoric about attracting investment to drive growth on the one hand and policy actions or ideology that will drive entrepreneurs and investors away. I am sorry to be alarmist.

I therefore ask the Minister three questions. First, can he provide an update on the International Investment Summit and the appointment of the Investment Minister? Secondly, can he update us on the pensions review and reform, which is tied to FDI? Thirdly, can he say whether an analysis of the impact on FDI of the likely new tax and labour laws will be made in the Budget?