Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Acknowledged
Risk of diminished long-term inward investment benefits if companies move operations or listings abroad.
Conclusion
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
Government Response 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.
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.