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 …
Government response. 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.
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 …
Government response. 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 …
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. …
Government response. 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 …
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 …
Government response. 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.
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 …
Government response. 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 …
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 …
Government response. 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 …
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 …
Government response. 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 …
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 …
Government response. 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 …
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 …
Government response. 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 …
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 …
Government response. 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.
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 …
Government response. 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.
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 …
Government response. 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.
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 …
Government response. 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 …
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 …
Government response. 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 …
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% …
Government response. 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 …
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 …
Government response. 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.
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 …
Government response. 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.
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 …
Government response. 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.
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 …
Government response. 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.
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 …
Government response. 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.
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 …
Government response. 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.
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 …
Government response. 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 …
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 …
Government response. 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 …
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 …
Government response. 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 …
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 …
Government response. 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 …
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 …
Government response. 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 …
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. …
Government response. 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 …
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 …
Government response. 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 …
HM Treasury