Select committee inquiry
Supporting investments in the UK
Closed
What the inquiry looked at
“The Department for International Trade (DIT) is responsible for supporting investment into the UK from overseas. Working with the Office for Investment and a range of other government departments and bodies, DIT aims to achieve economic growth in all the nations and regions of the UK. Based on the NAO investigation into supporting investment in the UK the Committee will question senior officials at DIT on: the strategy for supporting investment into the UK how the Department delivers its inward investment strategy whether those activities are having an impact If you have evidence on these issues please submit it here by 6pm on Sunday 26 February. Please have a look at the requirements for written evidence submissions and note the Committee cannot accept material as evidence that has been published elsewhere.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
In the committee's words, from the summary of Fifty-Sixth Report - Supporting investment into the UK ↗
Inward investment can drive economic growth across the UK by creating and sustaining new jobs, developing new infrastructure, and boosting productivity. The Department for Business and Trade (formed in February 2023 from the Department for International Trade and business-focused functions of the former Department for Business, Energy and Industry Strategy) supports inward investment by identifying opportunities and removing barriers. In 2021–22 it supported 1,174 investment projects, which it estimated would lead to economic benefits worth £7 billion. However, it is difficult to understand how much value the Department is adding and how much of this investment would have come to the UK without government support. The Department acknowledges that its impact is marginal. There are various factors that make the UK an attractive place to invest, and investors will only invest if they consider it makes commercial sense to do so.
The Department has a clear focus on securing investment deals, but it also needs to understand the real world impact of this – whether the economic benefits it has forecast, including new jobs created, are actually achieved, and whether there are wider long-term economic benefits for the UK.
The number of expected new jobs varies across the UK. In 2021–22 39% of projects supported in the UK were in London and the South East (excluding projects with multiple UK sites). More jobs were created in London, than in total for Scotland, north-east England, north-west England, and Yorkshire and the Humber combined. The Department is not yet doing enough to support new investment in the regions and nations where investment can make the most difference.
To raise its game in the face of heightened competition for investment from other countries, the Department needs to monitor what is going on globally, get a better understanding of what works and make the most of opportunities arising from the new department, which brings together responsibility for international and domestic business. It also needs to do more to influence other government departments so that they consider opportunities to attract investment when taking policy decisions, and ensure that attracting investment into the UK is a priority for the government’s overseas posts. The Department should also ensure that it has the capacity and digital skills to increase its impact through its transformation programme.
What the government said
The government responded on 24 September 2023. The deadline was 9 August 2023.
Summary written by Accountability Index from the government's response.
The government agrees with the Committee's recommendations on impact evaluation, long-term benefits, digital capacity, regional targeting, Whitehall coordination and alignment of investment bodies, and disagrees with both recommendations on overseas posts and training.
- On understanding impact, the government "agrees with the Committee's recommendation" (target: June 2024). The department "will explore the feasibility" of expanding investor surveys to include investors that abandoned plans to invest in the UK.
- On regional targeting, the government agrees (target: Autumn 2023) and says it has "several areas of work in progress" with the Department for Levelling Up, Housing and Communities to better target support at areas where investment is most needed.
- On overseas posts, the government disagrees with both recommendations (5a and 5b). It points to the annual investment business planning process and the Investment Academy training offer, and says the department "takes a proportionate approach to ensure value for money".
- On Whitehall coordination, the government agrees (target: April 2024). Following the Harrington Review, the department "will look to implement any relevant recommendations" and will update the Committee in the next Treasury Minute progress report.
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 20 January 2023 to its close on 24 September 2023. The dashed mark is the deadline Parliament records for the government's response.
- Oral evidence 6 Mar 2023
- Report 9 Jun 2023
- Government response 24 Sep 2023
- Correspondence 25 May 2023
What it recommended 7 recommendations · 21 conclusions
2Review major supported investments to assess actual long-term benefits and wider economic impacts
Recommended (the committee's words)
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
3Review digital team capacity and priorities to assess impact on investment transformation programme
Recommended (the committee's words)
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.
4Develop focused investment targets with DLUHC to promote economic growth in levelling up areas
Concluded (the committee's words)
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.
5Ensure overseas posts prioritise investment support and train staff on UK-wide opportunities
Concluded (the committee's words)
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.
6Engage with industry to influence government action on investment barriers and review OFI lessons
Concluded (the committee's words)
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.
7Review government bodies supporting investment and align priorities and formalise working relationships
Recommended (the committee's words)
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
1Department for Business and Trade created by combining BEIS and DIT functions
Concluded (the committee's words)
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
8Department acknowledges marginal added value of its inward investment support, despite GVA calculations.
Concluded (the committee's words)
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
9Department's investor surveys are limited and fail to capture wider strategic impacts.
Recommended (the committee's words)
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
10Department's inward investment job forecasts impacted by early dropouts and exclude wider economic impacts.
Concluded (the committee's words)
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
11Risk of diminished long-term inward investment benefits if companies move operations or listings abroad.
Concluded (the committee's words)
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
12Department lacks routine long-term monitoring and evaluation for inward investment project outcomes.
Concluded (the committee's words)
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
13Department's investment transformation programme faces significant risks due to observed lack of digital capacity.
Concluded (the committee's words)
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
14Department's digital capacity issues exacerbated by high vacancy rates and challenging recruitment environment.
Concluded (the committee's words)
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
15Department supports levelling up by prioritising investments across the UK, mostly outside London/South East.
Concluded (the committee's words)
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
16Historical bias towards London in inward investment job forecasts now addressed by proactive promotion.
Concluded (the committee's words)
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
17Department's current levelling up target definition is imprecise, encompassing all areas outside London/South East.
Concluded (the committee's words)
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
18Department lacks comprehensive overview of local area strengths for investors.
Concluded (the committee's words)
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
19Overseas posts possess insufficient knowledge of UK-wide investment opportunities.
Concluded (the committee's words)
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
20Overseas posts exhibit varying levels of staff knowledge and expertise.
Concluded (the committee's words)
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
21Investment support remains a low priority in smaller overseas posts.
Concluded (the committee's words)
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
22Strengthen integrated working with other government departments and devolved administrations on investment.
Recommended (the committee's words)
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
23Office for Investment established to enhance cross-government coordination on high-value investments.
Concluded (the committee's words)
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
24Department has strengthened inter-departmental working, but further development is still needed.
Concluded (the committee's words)
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
25Investors require greater long-term clarity and policy route maps from government.
Recommended (the committee's words)
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
26Numerous government bodies contribute to the UK’s investment attractiveness beyond core departments.
Concluded (the committee's words)
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
27UK Export Finance offers 'invest to export' products for overseas investors.
Concluded (the committee's words)
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
28Consider formalising relationships with the UK Infrastructure Bank to enhance investment support
Recommended (the committee's words)
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
Evidence
Oral evidence sessions 1
- 6 Mar 2023Supporting investments in the UK4 witnesses, listed belowparliament.uk ↗
Who gave evidence 4 witnesses
- Amanda Brooks CBEDirector General, Trade Policy, Implementation and Negotiations, Department for Business and Trade
- Ceri SmithDirector General in Strategy and Investment, Department for International Trade
- Daniel GieveChief Executive Officer, Office for Investment
- Gareth Davies CBPermanent Secretary, Department for Business and Trade