Recommendations & Conclusions
14 items
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
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
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
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
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