Inward Investment

Oral Answers to Questions — Trade and Industry – in the House of Commons at 11:30 am on 4 November 2004.

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Photo of Colin Challen Colin Challen Labour, Morley and Rothwell 11:30, 4 November 2004

What action is being taken by UK Trade and Investment to promote inward investment in the UK.

Photo of Douglas Alexander Douglas Alexander Minister of State (Foreign and Commonwealth Office) (Trade) (also Department of Trade and Industry), Minister of State (Department of Trade and Industry) (Trade) (also Foreign and Commonwealth Office)

UK Trade and Investment has 39 inward investment teams in 19 countries striving to bring investment here to the United Kingdom. UKTI, the regional development agencies and the devolved Administrations work hard to turn those proposals into reality. The priority is to bring in knowledge-driven investments. Under the terms of the 2004 spending review, UKTI will expand its operation over the next three years in order to maintain the UK's position as the No. 1 location in Europe for attracting inward investment and to increase the quantity and quality of investment into the UK.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

I thank my hon. Friend for that answer which, combined with the recent improvements in the manufacturing sector, demonstrates that Britain is working. However, I want to add the caveat that I am very concerned about regional disparities. The overheating in the south-eastern economy means that areas such as Yorkshire and the Humber could miss out on inward investments and improvements in manufacturing. In his evidence last week to the Environmental Audit Committee, Sir John Egan gave the impression that success should be encouraged to breed success in successful areas, and that we should almost forget the rest. What are the Government doing to counterbalance that sort of approach?

Photo of Douglas Alexander Douglas Alexander Minister of State (Foreign and Commonwealth Office) (Trade) (also Department of Trade and Industry), Minister of State (Department of Trade and Industry) (Trade) (also Foreign and Commonwealth Office)

I am grateful to my hon. Friend for raising that matter. The Government are determined to ensure regionally balanced economic growth right across the UK. That is why, in my hon. Friend's area, Yorkshire Forward is progressing the agenda of bringing inward investment directly into Yorkshire and Humberside. The Government have put in place a platform of stability, and we want that to be the basis for regional devolution. In turn, that can be a real driver for the economic generation of every part of this country.

Photo of Mr Roy Beggs Mr Roy Beggs UUP, East Antrim

Thousands of jobs have been lost in Belfast, in heavy engineering, shipbuilding and the manufacture of textile machinery, and they have not been replaced. There is great disappointment in Protestant areas, and people feel that more has been lost than gained since the Belfast agreement was signed. Will the Secretary of State and the Minister use their influence to persuade potential investors in the UK that Belfast is a good place to locate? There has always been a good work ethic there, and education and training services are excellent. Will the Government encourage investors to work with the development agencies in Northern Ireland?

Photo of Douglas Alexander Douglas Alexander Minister of State (Foreign and Commonwealth Office) (Trade) (also Department of Trade and Industry), Minister of State (Department of Trade and Industry) (Trade) (also Foreign and Commonwealth Office)

The hon. Gentleman raises an important point. One of the elements of the Government's approach to Northern Ireland is that we are determined to secure the economic regeneration of areas that have suffered the de-industrialisation that he describes. I have great sympathy with that, not least because the area that I represent suffered similar de-industrialisation when jobs in the traditional manufacturing and shipbuilding sectors were lost in recent years. The latest figures available to me show that, in 2003–04, 26 inward investment successes were enjoyed by the Northern Ireland Office. I shall be happy to communicate that information to the hon. Gentleman directly. At the same time, I shall make colleagues in Government aware of the matters that he has raised in respect of the ongoing challenge in Northern Ireland.

Photo of Chris Ruane Chris Ruane PPS (Rt Hon Peter Hain, Lord Privy Seal), Leader of the House of Commons

May I take this opportunity to inform my hon. Friend of the great successes achieved in my constituency in attracting foreign inward investments? Before 1997, there were no foreign inward investors there, but now we have Merloni, an Italian company, TRB, a Japanese company, and Pachem, an Austrian company. What steps can be taken to increase the co-operation between the Department, the Welsh Development Agency and the National Assembly for Wales to ensure that further foreign inward investment takes place, in my constituency and in Wales as a whole?

Photo of Douglas Alexander Douglas Alexander Minister of State (Foreign and Commonwealth Office) (Trade) (also Department of Trade and Industry), Minister of State (Department of Trade and Industry) (Trade) (also Foreign and Commonwealth Office)

I join my hon. Friend in paying tribute to the work undertaken by the WDA, which has combined with the work done by the Government to advance the sort of inward investment that he describes. One of the challenges for UKTI is to balance the strategic overview available at the centre with the regional reach of agencies such as the WDA. We need to strike a balance between ensuring that we speak with a common voice to the inward investment community around the world—and we should emphasise Britain's competitiveness without shame or embarrassment—and ensuring that we speak up for those parts of the economy that may not, traditionally, have received as much inward investment as other areas. That is why I believe that the regional focus of directly involving the RDAs strikes exactly the right balance between strength at the centre and real regional reach.

Photo of James Arbuthnot James Arbuthnot Shadow Secretary of State (Trade and Industry)

In June, the Organisation for Economic Co-operation and Development issued a report stating that the foreign direct investment flows into the UK fell by almost half in 2003, from a level that was unimpressive by historical standards. Was the OECD wrong? Will the Minister give a slightly better reply than the Secretary of State did when she said, in the previous DTI question session, that the OECD was using the wrong statistics?

Photo of Douglas Alexander Douglas Alexander Minister of State (Foreign and Commonwealth Office) (Trade) (also Department of Trade and Industry), Minister of State (Department of Trade and Industry) (Trade) (also Foreign and Commonwealth Office)

I am grateful to the right hon. Gentleman for that characteristically gracious question. There is of course a technical distinction to be drawn between stock and flows of inward investment, and I would be happy to write to him on the technical point that underpinned the answer given by my right hon. Friend the Secretary of State. However, it ill behoves the Opposition to lecture this Government on the success of inward investment, when Ernst and Young, in a recent report, declared that the UK remains the No. 1 location in Europe for inward investment. The anti-European policies of the Conservatives would imperil that leadership position.

Photo of Brian Jenkins Brian Jenkins Labour, Tamworth

Will my hon. Friend explain who has a watching brief on the effect of inward investment? I know that we have a good success story, but I put to him the case of a marvellous investment in the purchase of a company, with promises of expansion and technological development, followed—a couple of years later—by the shift of most production overseas, with the consequent suffering by suppliers. Has that investment had a negative or positive impact?

Photo of Douglas Alexander Douglas Alexander Minister of State (Foreign and Commonwealth Office) (Trade) (also Department of Trade and Industry), Minister of State (Department of Trade and Industry) (Trade) (also Foreign and Commonwealth Office)

My hon. Friend raises an important point, which has exercised the Government for several years. We need to ensure that we get best value for money for any public support that is provided for inward investment. Our response is not to turn away inward investment, but to ensure that support is provided to our own indigenous manufacturing base and British companies. That is why we have advanced the research and development tax credit and put in place regional economic development strategies from a foundation of economic strength. We need to ensure that, as well as attracting inward investment, we ensure that we get value for money for it and that we support indigenous British companies.