Recommendations & Conclusions
28 items
2
Recommendation
Fifty-Sixth Report - Supporting investm…
Acknowledged
The Department focuses more on securing investment deals in the short term, rather than understanding the long-term economic benefits from investment. Inward investment can support economic growth and local economies by developing new infrastructure and skills, creating jobs and by developing robust supply chains, and the Department’s analysis suggests that …
Read more
The Department focuses more on securing investment deals in the short term, rather than understanding the long-term economic benefits from investment. Inward investment can support economic growth and local economies by developing new infrastructure and skills, creating jobs and by developing robust supply chains, and the Department’s analysis suggests that every £1 spent on supporting investment leads to £5-£6 of additional GDP. However, investments are long-term projects, and while some may start well, investors may choose to move their operations elsewhere if the environment changes or if things go wrong. The Department reports on the number of investments it has supported and estimates how many jobs those investments may lead to. It says that these statistics do not capture secondary impacts in other parts of the UK if the investments help build stronger supply chains. However, the Department does not routinely follow up projects to establish how many projected jobs were actually created, whether they still exist, or whether there were other economic benefits. The Department agrees that there would be value in evaluating projects after five to ten years, albeit that it needs to balance that with the costs involved in following up prior-year projects. Recommendation 2: The Department should review major investments it has supported over the last five years to check the current position on forecast benefits and wider economic impacts and use this to inform future work. It should also implement a structured approach to monitoring and evaluating progress with achieving benefits, for high-value investments in particular. 6 Supporting investment into the UK
Show less
Government response AI summary
The government agrees with the recommendation and acknowledges challenges in accurately estimating economic impact and evaluating performance due to missing data. It states it will seek to improve data quality and ways of working in this area.
Read full response →
HM Treasury
3
Recommendation
Fifty-Sixth Report - Supporting investm…
Accepted
Insufficient digital capacity is putting the Department’s plans to increase its impact at risk. The predecessor Department for International Trade had begun implementing an investment transformation programme that aims to deliver additional economic benefits of £135 million over five years and to help the UK compete with other countries for …
Read more
Insufficient digital capacity is putting the Department’s plans to increase its impact at risk. The predecessor Department for International Trade had begun implementing an investment transformation programme that aims to deliver additional economic benefits of £135 million over five years and to help the UK compete with other countries for investment. The NAO report highlighted that the department’s lack of digital capacity was a risk to the delivery of the programme. The new Department says that the risk has increased because following its creation, because there are additional pressures on digital teams. It is considering whether to contract in additional support, which it expects to be challenging due to the time it takes to get security clearances for staff, and whether to postpone programme milestones. We have recently seen and reported on similar issues with digital capacity in other government departments. Recommendation 3: The Department should review the portfolio, priorities, and capacity of its digital teams following the creation of the new department. Based on this review, DBT should assess the impact on the delivery of its investment transformation programme.
Show less
Government response AI summary
The government agrees with the recommendation, detailing steps taken to address digital capacity challenges such as a blended staffing mix, a specialist DDaT pay framework, and recruitment of over 100 civil servants. It assesses the impact on the Investment Transformation Programme as minimal, with a …
Read full response →
HM Treasury
4
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
The Department is not yet doing enough to encourage investment into the areas of the UK where it can have the most impact on local economic growth. The Department aims to focus on high-value investments that support government’s wider objectives including on levelling up and promoting growth across the UK. …
Read more
The Department is not yet doing enough to encourage investment into the areas of the UK where it can have the most impact on local economic growth. The Department aims to focus on high-value investments that support government’s wider objectives including on levelling up and promoting growth across the UK. However, there is variation across the UK in the number of new jobs that the Department estimates will be created through investment projects supported in 2021–22. We note that more jobs were created in London, than in total in Scotland, north-east England, north-west England, and Yorkshire and the Humber. The Department has added a new target to its internal performance framework on supporting investments that lead to over 35,000 new jobs outside London and the South East in 2022–23. However, this target does not differentiate between UK nations and regions so investment will not necessarily go to where it can make the most difference. The Department accepts that the target is a blunt instrument and is working with the Department of Levelling Up, Houses and Communities to develop a more granular focus. The Department also agrees that it needs a deeper understanding of the relative strengths and competitive advantages of different parts of the UK and has further work to do on this. Recommendation 4: The Department should work with the Department for Levelling Up, Housing and Communities to develop a more focused target for supporting investment across the UK, which reflects that Department’s levelling up objectives and is directed at the geographical areas where investment is most needed. For example, the Department for Business and Trade could consider a target for supporting investment 10–15 miles outside of a city centre.
Show less
Government response AI summary
The government agrees and is actively working with the Department for Levelling Up, Housing and Communities on several initiatives to better target investment across the UK. These include developing a deeper understanding of regional strengths, supporting UK Freeports and Investment Zones, delivering a Key Account …
Read full response →
HM Treasury
5
Conclusion
Fifty-Sixth Report - Supporting investm…
Rejected
Overseas posts have a range of roles and priorities and may not be consistent in promoting investment across the UK. Potential investors’ first contact with the Department is often with staff in overseas posts whose role is to help them identify and access investment opportunities in the UK. But there …
Read more
Overseas posts have a range of roles and priorities and may not be consistent in promoting investment across the UK. Potential investors’ first contact with the Department is often with staff in overseas posts whose role is to help them identify and access investment opportunities in the UK. But there is scope for teams in overseas posts to develop their knowledge of investment opportunities across the UK and ensure they are presented clearly to investors. We are concerned that these staff may have varying levels of knowledge and expertise, and support for inward investment Supporting investment into the UK 7 may not be a priority among their other responsibilities, particularly in countries where there are only one or two investment deals each year. The Department says that it has taken steps, such as organising conferences, to ensure that staff overseas have up-to-date knowledge, and training on investment is available to all embassy staff. HM trade commissioners are the senior officials with responsibility overseas for trade and investment and, in addition, each overseas post produces a country plan which reflects trade and investment plan objectives. Recommendation 5: The Department should work with the Foreign, Commonwealth and Development Office to ensure that supporting investment is part of the overall priorities of overseas posts and, where required, staff receive any training they need to build knowledge on strengths and opportunities for investment throughout the UK. More training could be offered to staff of both departments when they are in the UK up to and including Ambassadors between different country postings.
Show less
Government response AI summary
The government rejected the recommendation, stating it already provides comprehensive investment training through its Investment Academy for staff globally and delivers pre-posting training for senior officials, arguing these existing provisions address the committee's concerns.
Read full response →
HM Treasury
6
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
Government is not doing enough to ensure that efforts to attract foreign investment are well-coordinated across Whitehall. Other departments and government bodies hold many of the policy levers that influence the attractiveness of the UK to investors, such as tax, regulation, and visa requirements. The Department works with other departments …
Read more
Government is not doing enough to ensure that efforts to attract foreign investment are well-coordinated across Whitehall. Other departments and government bodies hold many of the policy levers that influence the attractiveness of the UK to investors, such as tax, regulation, and visa requirements. The Department works with other departments to support investment into specific sectors and shares investors’ views about barriers to investment to help ensure that departments consider investor perspectives in their policy making. OFI’s convening powers, supported by its association with the Prime Minister’s Office in Downing Street, has helped improve cross-government working. The Department also told us it has good relationships with counterparts in HM Treasury, although it would like to do more to influence the Treasury on, for example, providing tax incentives that encourage inward investment. However, some other departments are not receptive when the trade department approaches them. The Department is also looking at how it can improve its processes for working with devolved administrations who have a role in supporting investment into their nations. Some investor and industry representatives believe government could do more to engage with industry and provide greater policy certainty and a consistent approach across government, particularly on nascent technologies. Recommendation 6: The Department should engage with industry and investors to understand what they need from government and consider how it can influence other government departments more effectively to help tackle barriers to investment. It should also review lessons learned to date from the work of the OFI.
Show less
Government response AI summary
The government agreed, highlighting existing engagement mechanisms like the Investment Council and annual surveys, and committed to implementing relevant recommendations from the upcoming Harrington Review in September 2023. It will also provide an update on its OfI workshops in the next Treasury Minute.
Read full response →
HM Treasury
7
Recommendation
Fifty-Sixth Report - Supporting investm…
Accepted
The recent machinery of government changes provide the Department with an opportunity to review its alignment with other government bodies that support investment. There are various governmental bodies that can support investment in the UK, such as the British Business Bank and the UK Infrastructure Bank. While UK Export Finance …
Read more
The recent machinery of government changes provide the Department with an opportunity to review its alignment with other government bodies that support investment. There are various governmental bodies that can support investment in the UK, such as the British Business Bank and the UK Infrastructure Bank. While UK Export Finance (UKEF) is focused primarily on supporting UK exports, it also supports investment through its ‘invest to export’ offer for overseas investors looking to export from the UK. In response to a previous recommendation we made, the Department formalised its relationship with UKEF by introducing a Memorandum of Understanding and by ensuring UKEF is represented on the Department’s governance structures. The Department says it does not plan to have similar MOUs 8 Supporting investment into the UK with all government bodies working on investment, as it will have formal roles with some of them (e.g. the Department is now sponsor of British Business Bank which was previously owned by the Department for Business, Energy & Industrial Strategy), and others, such as UK Infrastructure Bank, are owned by HM Treasury. It is important that the Department develop a strong working relationship with the UK Infrastructure Bank as green inward investments will become increasingly important if we are to meet our net zero targets. However, the Department agrees that it is a priority to ensure that it is aligned with partner organisations that support inward investment. Recommendation 7: The Department should review which government bodies have a role in supporting investment in the UK and consider how it could formalise working relationships, and align priorities and activities in supporting investment. Supporting investment into the UK 9 1 Making an impact
Show less
Government response AI summary
The government agreed, noting ongoing work to integrate the new department and existing formalised relationships with devolved governments and local authorities. It committed to undertaking an internal assessment to review engagement with other bodies and recommend additional guidance, while also highlighting the role of the …
Read full response →
HM Treasury
1
Conclusion
Fifty-Sixth Report - Supporting investm…
Acknowledged
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business and Trade and its Office for Investment about supporting investment into the UK.1 In February 2023, the government created the Department for Business and Trade (the Department), bringing together the …
Read more
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business and Trade and its Office for Investment about supporting investment into the UK.1 In February 2023, the government created the Department for Business and Trade (the Department), bringing together the business functions in the Department for Business, Energy & Industrial Strategy and the Department for International Trade.2
Show less
Government response AI summary
The government agreed, outlining its strategic ambitions and existing use of official statistics for measuring investment outcomes. It committed to exploring the feasibility of expanding investor surveys, including those who abandoned plans, and will define a timeframe for this within 12 months, as it continues …
Read full response →
HM Treasury
8
Conclusion
Fifty-Sixth Report - Supporting investm…
Not Addressed
The Department acknowledged that most investment would still happen without its support and that its added value is marginal. It said that businesses would still decide to invest in the UK, but they would find it harder, and some investments would not happen.13 The Department told us that it has …
Read more
The Department acknowledged that most investment would still happen without its support and that its added value is marginal. It said that businesses would still decide to invest in the UK, but they would find it harder, and some investments would not happen.13 The Department told us that it has calculated the Gross Value Added (the economic impact) of the investment it has supported, and estimates that for every £1 it spends on inward investment, there is an impact of at least between £5 or £6 on GDP.14 The Department also estimates that between 4% and 8% of UK FDI projects would not happen with its support, although it considers this to be a low estimate.15
Show less
Government response AI summary
The government's response discusses plans to explore expanding investor surveying to include those who abandoned investment plans, and evaluating data from other agencies. It does not directly address the committee's observations regarding the department's existing estimates of its added value and economic impact.
Read full response →
HM Treasury
9
Recommendation
Fifty-Sixth Report - Supporting investm…
Accepted
However, the Department only surveys investors who have chosen to invest in the UK. It does not seek views from investors who have decided against investing to find out why they did not. Its survey also has a low response rate.16 The Department’s methodology does not capture its impact on …
Read more
However, the Department only surveys investors who have chosen to invest in the UK. It does not seek views from investors who have decided against investing to find out why they did not. Its survey also has a low response rate.16 The Department’s methodology does not capture its impact on wider strategic objectives such as levelling up, achieving net zero and the UK becoming a science superpower.17 We asked the Office for Investment how it tracks its performance. It told us that it has only worked on around 50 projects so far, so it does not survey investors. It said that its understanding of its impact is mostly based on qualitative feedback and lessons learned exercises conducted after projects are won or lost, on which it also elaborated in written evidence provided after our evidence session.18 We also asked the Department what it is doing to understand how other countries support 7 Foreign Direct Investment is defined as an investment reflecting a lasting interest from a foreign investor or enterprise in a UK enterprise where the overseas investor owns 10% or more of the enterprise and aims to have an ‘effective voice’ in its management. 8 C&AG’s Report, para 3.12 9 Q 25 10 C&AG’s Report, para 12 11 Qq 21, 25, 59–60 12 Q 39 13 Q 61 14 Q 22 15 C&AG’s Report, para 3.16 16 Q 22; C&AG’s Report footnote 10 17 Q 22 18 Qq 47–52; Letter to the Chair of the Public Accounts Committee from Gareth Davies, DBT Permanent Secretary, 20 March 2023 Supporting investment into the UK 11 inward investment.19 It said that it looked at approaches by other countries in 2019, and uses its contacts with investors, multilateral fora and overseas posts to understand how investment promotion agencies in other countries operate.20 Securing long-term economic benefits
Show less
Government response AI summary
The government agrees and aims to deliver by June 2024. It will explore the feasibility of expanding its investor surveying to include those who decided against investing in the UK and will work to define a timeframe for this within 12 months.
Read full response →
HM Treasury
10
Conclusion
Fifty-Sixth Report - Supporting investm…
Acknowledged
The Department records potential long-term benefits of inward investment such as the salary level of the jobs expected to be created and export potential, and reports its forecasts of the number of new and safeguarded jobs that are expected to be created or retained over the following three years as …
Read more
The Department records potential long-term benefits of inward investment such as the salary level of the jobs expected to be created and export potential, and reports its forecasts of the number of new and safeguarded jobs that are expected to be created or retained over the following three years as a result of investment from FDI projects.21 After our evidence session, the Department wrote to tell us that an estimated 1–1.5% of supported investments drop out in the first 12 months of concluding and that this will have an impact on the Department’s estimates of jobs created or retained over the three year period.22 In addition to jobs directly resulting from investments, the Department told us that there will also be second-order impacts across the UK from building supply chains. But it explained that these impacts are not captured in its statistics because they are very difficult to measure.23
Show less
Government response AI summary
The government agrees with the observation and acknowledges difficulties with data quality in estimating economic benefits and second-order impacts. It commits to seeking improvements in its ways of working to improve data quality in this area.
Read full response →
HM Treasury
11
Conclusion
Fifty-Sixth Report - Supporting investm…
Acknowledged
In some cases, there may be fewer long-term benefits from inward investment than originally forecast if, for example, foreign investors choose to move parts of their operations, jobs and skilled UK staff overseas.24 We heard about the cases of Japanese-owned chip designer Arm, and Irish buildings materials group CRH, who …
Read more
In some cases, there may be fewer long-term benefits from inward investment than originally forecast if, for example, foreign investors choose to move parts of their operations, jobs and skilled UK staff overseas.24 We heard about the cases of Japanese-owned chip designer Arm, and Irish buildings materials group CRH, who both announced, in March 2023, plans to move their stock market listings from London to New York. The Department noted that if a company’s listing moves, its headquarters would not necessarily follow, but agreed that there is a risk of this happening.25 The Department subsequently wrote to tell us that the British Business Bank and its subsidiary, British Patient Capital, play a role in ensuring that innovating companies can access the growth capital they need to scale and stay in the UK.26
Show less
Government response AI summary
The government agrees with the observation that long-term benefits may be fewer than forecast. It states its focus is on landing, retaining, and expanding UK presence, and commits to seeking improvements in data quality for estimating economic impact.
Read full response →
HM Treasury
12
Conclusion
Fifty-Sixth Report - Supporting investm…
Acknowledged
The Department does not routinely monitor what outcomes have been achieved, whether they are higher or lower than forecast, or whether investments have led to any economic disbenefits.27 We asked the Department how many of the jobs it forecasts at the outset are still there five years later. The Department …
Read more
The Department does not routinely monitor what outcomes have been achieved, whether they are higher or lower than forecast, or whether investments have led to any economic disbenefits.27 We asked the Department how many of the jobs it forecasts at the outset are still there five years later. The Department told us that it does not have a long-term evaluation of individual projects in place. It said that it needed to balance the costs involved in following up prior-year projects. However, it agreed that the question of evaluating its long-term impact over five to ten years was a good one which it should look into.28 19 Qq 58–61 20 Q 61 21 C&AG’s Report, para 3.14, Figure 1 22 Letter to the Chair of the Public Accounts Committee from Gareth Davies, DBT Permanent Secretary, 20 March 2023 23 Q 27 24 Q 34; C&AG’s Report, para 3.14 25 Qq 16–17, 34 26 Letter to the Chair of the Public Accounts Committee from Gareth Davies, DBT Permanent Secretary, 20 March 2023 27 C&AG’s Report, para 12 28 Qq 23–25 12 Supporting investment into the UK Digital capacity
Show less
Government response AI summary
The government agrees with the observation that long-term outcomes are not routinely monitored. It acknowledges issues with data quality in estimating economic benefits and commits to seeking improvements in its ways of working in this area.
Read full response →
HM Treasury
13
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
The Department aims to deliver additional economic benefits of £135 million through its ongoing investment transformation programme. As part of this programme it plans to create a more tailored service offer for different types of investor and provide new online services for managing lower-value investments and simple investor queries.29 It …
Read more
The Department aims to deliver additional economic benefits of £135 million through its ongoing investment transformation programme. As part of this programme it plans to create a more tailored service offer for different types of investor and provide new online services for managing lower-value investments and simple investor queries.29 It told us that its strategy for the transformation programme was informed by comparisons with investment services offered by competitor countries and best practice from OECD and the World Bank.30 Risks to delivery of the transformation programme include a lack of digital capacity. This is a risk we have often observed and reported on in other government departments.31
Show less
Government response AI summary
The government agrees with the observation regarding the risk of a lack of digital capacity. It details existing mitigation strategies, including a blended staffing mix and a specialist DDaT pay framework, stating that capacity challenges have not constrained the Investment Transformation Programme.
Read full response →
HM Treasury
14
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
We asked the Department what it was doing to mitigate this risk. It told us that it was concerned that the formation of the new Department from its predecessor departments had placed additional pressures on its core digital team and that the digital team was reviewing its priorities. The Department …
Read more
We asked the Department what it was doing to mitigate this risk. It told us that it was concerned that the formation of the new Department from its predecessor departments had placed additional pressures on its core digital team and that the digital team was reviewing its priorities. The Department plans to assess whether it needs to contract in additional digital support for the transformation programme and whether it will need to delay the programme.32 It said that contracting in digital support was challenging as there was a ‘small pool’ of candidates to hire from and candidates needed security clearance.33 The Department subsequently wrote to us about the level of vacancies in the former Department for International Trade’s digital team. As of 13 March 2023, 105 out of 371 roles (28%) were unfilled.34 29 C&AG’s Report, paras 2.16–2.17 30 Qq 60–61 31 Qq 86, 89; (for example) Committee of Public Accounts, The Defence digital strategy, Thirty-Sixth Report of Session 2022–23. HC 727, 3 February 2023 32 Q 86 33 Q 88 34 Letter to the Chair of the Public Accounts Committee from Gareth Davies, DBT Permanent Secretary, 20 March 2023 Supporting investment into the UK 13 2 Promoting investment across the UK Driving local growth
Show less
Government response AI summary
The government agrees with the observation regarding the risk of a lack of digital capacity. It details existing mitigation strategies, including a blended staffing mix and a specialist DDaT pay framework, stating that capacity challenges have not constrained the Investment Transformation Programme.
Read full response →
HM Treasury
15
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
The Department aims to support the government’s levelling up objectives by prioritising investments that promote growth throughout the UK.35 It records the numbers of FDI projects it supports in each region and its forecasts of the number of new jobs each investment is expected to lead to.36 In 2021–22, 57% …
Read more
The Department aims to support the government’s levelling up objectives by prioritising investments that promote growth throughout the UK.35 It records the numbers of FDI projects it supports in each region and its forecasts of the number of new jobs each investment is expected to lead to.36 In 2021–22, 57% of projects supported by the Department were based outside London and the South East, 39% of projects were based in London or the South East, and 4% of projects had multiple UK sites.37
Show less
Government response AI summary
The government agrees and states that Levelling Up is a key priority. It details several ongoing workstreams to better target support for investment in areas outside London and the South East, including developing regional understanding, working with Freeports and Investment Zones, and promoting High Potential …
Read full response →
HM Treasury
16
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
We asked the Department why there is such a bias towards London in the number of jobs forecast to be created, noting that for London this figure is 16,000, which is more than the combined total for Scotland, the north-east of England, north-west England and Yorkshire and the Humber.38 The …
Read more
We asked the Department why there is such a bias towards London in the number of jobs forecast to be created, noting that for London this figure is 16,000, which is more than the combined total for Scotland, the north-east of England, north-west England and Yorkshire and the Humber.38 The Department said that in the past, the support it offered was reactive to where businesses wanted to invest. This was often in London and the South East because these were the areas overseas investors knew most about, but now the Department identifies and promotes opportunities across the country.39
Show less
Government response AI summary
The government agrees that Levelling Up is a key priority and describes several initiatives to better target investment support and promote opportunities across the UK, thereby addressing the historic bias towards London and the South East.
Read full response →
HM Treasury
17
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
For 2022–23, the Department has introduced a new target to support investment in projects that contribute to levelling up.40 We asked the Department how it defines projects that contribute to levelling up.41 It told us that it counts everything that is not in London or the South East, which we …
Read more
For 2022–23, the Department has introduced a new target to support investment in projects that contribute to levelling up.40 We asked the Department how it defines projects that contribute to levelling up.41 It told us that it counts everything that is not in London or the South East, which we considered to be a very imprecise model as not every part of the UK outside London and the south-east is in equal need. The Department agreed that its measure is a blunt instrument and said it was working with the Department for Levelling Up, Housing and Communities to develop a more granular focus.42
Show less
Government response AI summary
The government agrees and confirms that Levelling Up is a key priority, detailing several ongoing workstreams to develop a deeper understanding of regional strengths and competitive advantages to better target investment support in areas most needed.
Read full response →
HM Treasury
18
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
The National Audit Office found that the Department does not have a clear overview of the relative strengths of local areas across the UK in different industry sectors to help it identify the most suitable projects for investors.43 The Department said that it is fair to ask whether it has …
Read more
The National Audit Office found that the Department does not have a clear overview of the relative strengths of local areas across the UK in different industry sectors to help it identify the most suitable projects for investors.43 The Department said that it is fair to ask whether it has a deep enough understanding of the comparative advantages and the real strengths of different areas.44 It addresses this as best it can by trying to ensure that investors are aware of opportunities across the country, including through the ‘investment atlas’ (the Department’s website listing FDI and capital investment opportunities across the UK) but agreed that developing this understanding is a work in progress.45 The role of overseas posts
Show less
Government response AI summary
The government agrees and is undertaking several workstreams to develop a deeper understanding of the relative strengths and competitive advantages of different parts of the UK, which will inform targeting of promotion efforts and policy development.
Read full response →
HM Treasury
19
Conclusion
Fifty-Sixth Report - Supporting investm…
Rejected
Potential investors’ first contact with the Department is often with staff in overseas posts. The Department’s network of more than 90 overseas posts across nine geographical 35 C&AG’s Report, para 3.9 36 C&AG’s Report, Figure 2 and Figure 14 37 C&AG’s Report, Figure 13 38 Qq 26–27 39 Q 27 …
Read more
Potential investors’ first contact with the Department is often with staff in overseas posts. The Department’s network of more than 90 overseas posts across nine geographical 35 C&AG’s Report, para 3.9 36 C&AG’s Report, Figure 2 and Figure 14 37 C&AG’s Report, Figure 13 38 Qq 26–27 39 Q 27 40 C&AG’s Report, para 3.4 41 Q 73–74, 91 42 Qq 91–92 43 C&AG’s Report, para 10 44 Qq 26, 76 45 Q 26, 76; C&AG’s Report, para 2.7 14 Supporting investment into the UK regions led by HM Trade Commissioners develop and manage relationships with investors and promote the UK as an investment destination through events, marketing and other channels.46 The Department told us that potential investors may initially only be aware of London as an investment destination, so staff in overseas posts play a role in explaining that there are opportunities across the UK.47 However, the NAO found that teams in overseas posts could develop their knowledge of investment opportunities across the UK and ensure they are presented clearly to investors.48 The Department said that at some posts there are people representing the Scottish Government, the Welsh Government, the Northern Powerhouse and the Midlands who try to educate staff at posts about opportunities outside London.49
Show less
Government response AI summary
The government disagrees with the Committee's concern, stating that senior FCDO leaders already play an important role and describing existing training programmes like the Investment Academy, pre-posting training, and access to Trade Faculty learning.
Read full response →
HM Treasury
20
Conclusion
Fifty-Sixth Report - Supporting investm…
Rejected
We are concerned that staff in overseas posts may have varying levels of knowledge and expertise. We asked the Department about the training available for overseas staff and how the Department is involved in framing the training.50 The Department said that it has developed training programmes to increase learning, skills …
Read more
We are concerned that staff in overseas posts may have varying levels of knowledge and expertise. We asked the Department about the training available for overseas staff and how the Department is involved in framing the training.50 The Department said that it has developed training programmes to increase learning, skills and knowledge in trade policy areas. This training provision is available through taught programmes and online learning to both Foreign, Commonwealth and Development Office and DBT staff.51 The Department said it has also taken steps, such as organising conferences, to ensure that staff at posts have up-to-date knowledge about opportunities across the UK.52
Show less
Government response AI summary
The government disagrees with the Committee's concern, stating that senior FCDO leaders already play an important role and describing existing training programmes like the Investment Academy, pre-posting training, and access to Trade Faculty learning.
Read full response →
HM Treasury
21
Conclusion
Fifty-Sixth Report - Supporting investm…
Rejected
Support for investment may not be a priority among embassies’ other responsibilities, particularly in smaller posts where there are only one or two investment deals each year. We asked the Department whether all embassies are focused on investment. The Department told us that each overseas post produces a country plan …
Read more
Support for investment may not be a priority among embassies’ other responsibilities, particularly in smaller posts where there are only one or two investment deals each year. We asked the Department whether all embassies are focused on investment. The Department told us that each overseas post produces a country plan which needs to reflect the trade and investment objectives that the post must deliver.53 The HM Trade Commissioners are the senior officials overseas with responsibility for trade and investment objectives.54 46 C&AG’s Report, para 2.8, Figure 6 47 Q 26 48 C&AG’s Report, para 2.8 49 Q 26 50 Qq 81–83 51 Q 84 52 Q 81 53 Qq 84–85 54 Q 83 Supporting investment into the UK 15 3 Working across government Improving coordination
Show less
Government response AI summary
The government disagrees with the conclusion that support for investment may not be a priority for embassies. It explains that investment priorities are aligned and targets agreed annually with HM Trade Commissioners, supported by comprehensive training for overseas staff.
Read full response →
HM Treasury
22
Recommendation
Fifty-Sixth Report - Supporting investm…
Deferred
The Department needs to work in an integrated way with other government departments which hold policy responsibility for some of the sectors it aims to attract investment into, and which hold policy levers, such as tax, regulation and visa requirements that can help reduce barriers to investment. The Department also …
Read more
The Department needs to work in an integrated way with other government departments which hold policy responsibility for some of the sectors it aims to attract investment into, and which hold policy levers, such as tax, regulation and visa requirements that can help reduce barriers to investment. The Department also needs to work with local government bodies and the devolved administrations which can also support investment into their areas.55 It told us it had a good relationship with the Welsh Government, but that it planned to review the effectiveness of its process for passing investment leads to the Welsh Government.56
Show less
Government response AI summary
The government agrees with the recommendation but states that further steps are necessary to coordinate investment promotion across Whitehall. It largely defers specific action, indicating that the Harrington Review will examine cross-government working, and the department will implement relevant recommendations upon its conclusion.
Read full response →
HM Treasury
23
Conclusion
Fifty-Sixth Report - Supporting investm…
Acknowledged
The Department said the Office for Investment was set up to improve cross-government coordination on high-value strategically important investments, as the government recognised this was an area for improvement. It said that the Office for Investment was able to leverage the brand and authority of Downing Street through its links …
Read more
The Department said the Office for Investment was set up to improve cross-government coordination on high-value strategically important investments, as the government recognised this was an area for improvement. It said that the Office for Investment was able to leverage the brand and authority of Downing Street through its links with the Number 10 Business Unit, both for bringing together other departments to support investment projects, and to demonstrate to investors that the government values them.57 It gave the example of BioNTech, which had recently signed an agreement with the government to do clinical trials in the UK over the next ten years, and is expected to invest several hundreds of millions. The Department explained that the Office for Investment had helped support the investment by arranging a meeting between the BioNTech founders and relevant senior stakeholders from across the health service, relevant government departments and regulators. The Department told us that it had received very positive feedback from BioNTech though it recognised the meeting likely had a marginal impact in terms of influencing BioNTech to choose the UK for its investment.58
Show less
Government response AI summary
The government agrees with the observation, stating it actively engages with investors through existing fora like the Investment Council and annual surveys. It acknowledges the need for further steps to coordinate investment promotion and will implement relevant recommendations following the Harrington Review.
Read full response →
HM Treasury
24
Conclusion
Fifty-Sixth Report - Supporting investm…
Acknowledged
The NAO report found that the Department had strengthened how it worked with other government departments to present a more coherent UK offer to investors, including through the creation of the Office for Investment, but that there were opportunities to develop this further. The Department told us that it tried …
Read more
The NAO report found that the Department had strengthened how it worked with other government departments to present a more coherent UK offer to investors, including through the creation of the Office for Investment, but that there were opportunities to develop this further. The Department told us that it tried to make sure other departments were aware of how their proposed policies may impact investment and that it highlights potential barriers to investment to other departments.59 The Department said there were some inevitable policy tensions which limited what it could do to reduce barriers to investment. For example, investors have said opening a UK bank account is challenging but this is due to anti-money laundering regulations which are in place for good reasons.60 However, it said that in some cases it was hard to influence other departments to change or adopt policies to support investment where other departments were focused on their own agendas, such as on business visas where the Department would like the Home Office to make it easier for businesses to come to the UK.61 55 C&AG’s Report, Figure 6 56 Q 77 57 Qq 1, 10, 12 58 Q 10–12 59 Q 31 60 Q 35 61 Qq 64–66 16 Supporting investment into the UK
Show less
Government response AI summary
The government agrees with the observation, highlighting existing engagement mechanisms like the Investment Council and annual investor surveys. It acknowledges that further steps are necessary to improve cross-government coordination on investment promotion and will implement relevant recommendations following the Harrington Review.
Read full response →
HM Treasury
25
Recommendation
Fifty-Sixth Report - Supporting investm…
Acknowledged
We received written evidence from investors who wanted more long-term clarity on government policy. For example, the Global Infrastructure Investor Association said there should be greater focus in government on setting out route maps for investors against clear timelines, particularly for new technologies.62 We asked the Department about its relationship …
Read more
We received written evidence from investors who wanted more long-term clarity on government policy. For example, the Global Infrastructure Investor Association said there should be greater focus in government on setting out route maps for investors against clear timelines, particularly for new technologies.62 We asked the Department about its relationship with the Treasury, given the need from investors for stability and consistency from government.63 The Department told us it had good relationships with the Treasury and that it worked closely with the Treasury on economic policy in relation to businesses. However, it said it would like more influence with the Treasury than it currently has, though it acknowledged that the Treasury was open to listen to well-evidenced proposals for new policies to support investment into the UK.64 We received written evidence from industry and investor representatives who wanted the government to engage more with industry and investors to identify measures to make the UK more attractive to investors.65 For example, BP suggested that the government should set up a forum with foreign investors in the UK to discuss how to make the UK more attractive to other global investors.66 Supporting the UK’s attractiveness to investors
Show less
Government response AI summary
The government agrees with the recommendation and states it actively engages with investors through existing fora like the Investment Council and annual surveys. However, further steps to coordinate investment promotion and set out route maps will be determined and implemented following the conclusion of the …
Read full response →
HM Treasury
26
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
In addition to the core government departments, there are other government bodies who work on maintaining and increasing the UK’s attractiveness to investors. For example, we recently reported on the creation of the UK infrastructure bank which was launched by the Treasury to encourage private finance alongside public investment, and …
Read more
In addition to the core government departments, there are other government bodies who work on maintaining and increasing the UK’s attractiveness to investors. For example, we recently reported on the creation of the UK infrastructure bank which was launched by the Treasury to encourage private finance alongside public investment, and to achieve two strategic objectives – helping to tackle climate change, and supporting regional and local economic growth.67 Following the recent machinery of government changes, the new Department will have different relationships with some of these bodies.68 For example, the British Business Bank and Companies House are now arms-length bodies of the Department, whereas prior to the changes they were within the Department for Business, Energy & Industrial Strategy’s remit.69
Show less
Government response AI summary
The government agrees with the committee's point regarding the department's role in aligning government bodies that support inward investment. It commits to an internal assessment by February 2024 to review existing engagement and recommend additional guidance, alongside ongoing integration efforts and the Harrington Review.
Read full response →
HM Treasury
27
Conclusion
Fifty-Sixth Report - Supporting investm…
Accepted
UK Export Finance (UKEF) is the UK’s export credit agency. Its products include an ‘invest to export’ offer for overseas investors looking to export from the UK.70 We asked the Department whether it had a good relationship with UKEF and whether UKEF’s products were incentivising new investment into the UK. …
Read more
UK Export Finance (UKEF) is the UK’s export credit agency. Its products include an ‘invest to export’ offer for overseas investors looking to export from the UK.70 We asked the Department whether it had a good relationship with UKEF and whether UKEF’s products were incentivising new investment into the UK. It told us that it had a well- defined relationship with UKEF structured through a Memorandum of Understanding, a previous recommendation of this committee.71 The Department said that it ensures that the two organisations’ agendas are aligned through integrating senior levels, for example the chair of UKEF sits on the Department’s board.72 The Department also told us that it included UKEF’s guaranteed loans when reviewing what incentives the UK could offer to investors, particularly given the limited grants available to investors.73 62 Q 28; SIU0001, SIU0003, SIU0004 63 Qq 28–29 64 Q 29 65 SIU0003, SIU0004 66 Qq 69–70; SIU0004 67 Committee of Public Accounts, Creation of the UK Infrastructure Bank, Thirty-Fourth Report of Session 2022–23. HC 45, 25 January 2023 68 Qq 17, 20 69 Q 89 70 C&AG’s Report, Figure 6 71 Qq 89, 98 72 Q 89 73 Q 90 Supporting investment into the UK 17
Show less
Government response AI summary
The government agrees with the committee's point on ensuring alignment among government bodies supporting inward investment. It commits to undertaking an internal assessment by February 2024 to review existing engagement and recommend any additional guidance required, with work already underway and the Harrington Review investigating …
Read full response →
HM Treasury
28
Recommendation
Fifty-Sixth Report - Supporting investm…
Accepted
We asked the Department whether it planned to formalise its relationships with the various government bodies that work to support investment through memoranda of understanding as it had done with UKEF. The Department said it did not have current plan to do this, as in some cases it has existing …
Read more
We asked the Department whether it planned to formalise its relationships with the various government bodies that work to support investment through memoranda of understanding as it had done with UKEF. The Department said it did not have current plan to do this, as in some cases it has existing formal relationships with these bodies. However, it does plan to make sure its work to support the UK as a competitive business environment is aligned with its arms-length bodies.74 We encouraged it to also consider its alignment with the UK Infrastructure Bank which it said it had regular interactions with.75 74 Q 98 75 Q 90 18 Supporting investment into the UK
Show less
Government response AI summary
The government agrees and will undertake an internal assessment to review its engagement with other bodies supporting inward investment, aiming to recommend any additional guidance needed to support these relationships. It also notes existing close working relationships and the ongoing Harrington Review to improve linkages.
Read full response →
HM Treasury