Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Acknowledged
Department's inward investment job forecasts impacted by early dropouts and exclude wider economic impacts.
Conclusion
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
Government Response 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.
Government Response
Acknowledged
HM Government
Acknowledged
2.1 The government agrees with the Committee’s recommendation. Target implementation date: June 2024 2.2 The department’s investment operations are based on new and existing relationships with multi-national companies. Recognising that it is the companies themselves that make the decisions rather than the department directly, the department’s main focus is on landing, retaining and expanding their UK presence. 2.3 The Gross Value Add (GVA) methodology is applied to estimate the economic benefits of the department assisted Foreign Direct Investment. Pipeline data – the data reflecting the investment projects in progress – is used to estimate outcome of the department’s investment work. However, specific details relating to the data employed to estimate economic impact is often missing early on, making it harder to accurately create performance expectations, and later performance evaluation, with a high degree of precision. However, the department welcomes the challenge to improve data quality and will seek to improve the department’s ways of working in this area.