The Government must do more to entice foreign investors into the North amid “baked in” economic bias towards London, a new report says.
The report launched today by the Commons Public Accounts Committee criticises work by the Department for Business & Trade to attract high value foreign investments, saying its focus is too weighted towards the capital. The cross party group of MPs say that in 2021/22, 39% of projects supported by DBT were in London and the South East and 16,000 of the jobs forecast to be created by those projects were in London – more than across the North East, North West, Scotland, Yorkshire and Humber combined.
The Government has been accused of “flying blind” as the committee said there is a lack of understanding about its impact on investment levels and too much focus on short-term deals without follow-up to see whether projects developed what was initially promised. And the report also said a new Department target that emphasises supporting investments that lead to more than 35,000 new jobs outside of London and the South East does not differentiate between UK nations and regions.
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In response, seven recommendations are set out which include closer working with the Department for Levelling Up to target areas that could most benefit from investment; encouraging civil servants overseas to better promote the whole UK and reviewing deals supported in the last five years to learn more about impacts.
Sir Geoffrey Clifton-Brown, deputy chair of the Public Accounts Committee, said: “Our report is more confirmation that economic bias towards London and the South East remains baked into the system. DBT cannot continue to fly blind on how its work impacts and supports investment. Such projects have the potential to transform entire communities with much-needed jobs and growth.
“Government must learn lessons at pace on how it is best placed to help make the UK an attractive destination for inward investment in a competitive field. It is welcome news that Government targets are to be set to support investment outside London and the South East. But greater precision and leadership are needed from Government to guide projects into areas of the UK as a whole, where there is potential for them to have the most impact.”
In the North East, there have recently been sector-specific calls for other levers to attract inward investment. In the automotive supply chain, one of the region’s most significant centres of employment, the Government has been urged to “level the playing field” with international competition. It comes in the wake of the US Government’s massive $360bn Inflation Reduction Act which offers attractive subsidies and tax incentives to firms in the electric vehicle manufacturing space and other energy transition-linked industries. The EU’s Green Deal Industrial Plan, has also tried to entice clean tech companies by relaxing state aid rules.
Newcastle in particular has been successful in attracting foreign investors over the past couple of years. Firms such as Italian defence tech specialist Leonardo, Japanese digital consultancy Monstarlab and US cyber security firm Arctic Wolf have all chosen the city to host bases. Elsewhere Israeli defence giant Rafael’s acquisition of Pearson Engineering and US contractor Raytheon buying Alnwick’s NORSS point to the region’s attractiveness.
The Department for Business and Trade has been contacted for comment.
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