Prime Minister Rishi Sunak should appoint a high-level investment minister and create a beefed-up “concierge service” to attract foreign cash to the UK, according to a key report to be published ahead of next week’s Autumn Statement.
Lord Richard Harrington, a Tory peer, has produced the report for chancellor Jeremy Hunt on how to improve Britain’s flagging levels of inward investment in the face of tough competition from the US and elsewhere.
It will be a key part of Hunt’s Autumn Statement on November 22, as the chancellor tries to raise Britain’s growth performance and stop its slide down global league tables for inflows of foreign direct investment.
The report will make a series of proposals to sharpen Britain’s efforts to lure inward investment, including creating a high level minister to oversee a new strategy, the Financial Times has learned.
Harrington wants the minister to have cabinet rank, but government insiders say Sunak does not want another cabinet upheaval after reshuffling his team on Monday. Instead they say the role of investment minister will be given extra clout, with accountability to the chancellor.
According to people briefed on its contents, the report will also propose the creation of a cross-government committee, chaired by the chancellor, acting as the “board” for setting a detailed investment plan.
The Office for Investment, a relatively small unit in the trade department, would be “massively” beefed up and would report to the investment minister, according to one official briefed on the plan.
Harrington’s report proposes that the OFI, created in 2020, should play a higher profile role as a “one-stop shop” providing a concierge service for investors.
Harrington declined to comment, but in an interview with the FT in July he said Britain was facing tough competition from countries including the US, France, Ireland and Singapore in developing new sectors.
“We have to change the whole culture in government,” he said, noting that the $369bn US Inflation Reduction Act — a package of tax breaks and subsidies — posed a particular threat to Britain.
Harrington said in July it was vital for the cabinet to “pick the race” it wanted to win, arguing that ministers should have a clear and detailed idea of the precise sectors they wanted to focus on.
Hunt has spoken of his desire to turn Britain into “the world’s next Silicon Valley” with a focus on five sectors: green industries, advanced manufacturing, life sciences, digital technologies and creative industries.
He has also said that his Autumn Statement will be focused on shaking Britain’s economy out of its flatlining growth pattern. The Treasury declined to comment.
There have been successive annual falls in the value of investment into the UK since a peak in 2016, with the country dropping down OECD rankings for FDI flows from 12th place in 2015 to 20th in 2022.
That trend will be examined in a FT series of articles on FDI in the coming days.
Trade and manufacturing groups have blamed the declining investment on a toxic combination of post-Brexit regulatory uncertainty, government policy flip-flops, labour shortages and high energy prices.
Evidence submitted to Harrington’s inquiry by UK industry bodies seen by the FT pointed to multiple shared frustrations with the post-Brexit investment environment.
Concerns included rising trade barriers with the EU, regulatory uncertainty caused by plans to rip up EU-era legislation and, most recently, Sunak’s decision to scrap part of the HS2 high-speed rail link and delay key targets in transitioning to a net zero economy.
Stephen Elliott, head of the Chemical Industries Association, which represents a key sector for manufacturing, said that while the total stock of FDI in the UK was still globally competitive, the decline in the “flow” year on year was worrying.
“We are falling behind competitor nations and struggling to offer a unique selling proposition,” he said.
Stephen Phipson, chief executive of Make UK, the umbrella organisation for UK manufacturers, said there appeared to be “no overall plan” to capitalise on British scientific prowess.
“What you hear constantly from inward investors is that it would be very helpful to see a clear plan that addresses areas like labour shortages and the energy price differential,” he said.
Among Make UK’s proposals are tax deductions for training and investing in capital equipment as well as regulatory policies that are “considerate of regulatory standards overseas” to give confidence to international investors.
William Bain, head of trade policy at the British Chambers of Commerce, said: “Reforming our planning system and speeding up grid connectivity will also help reassure investors that putting money into the UK will yield a swift return.”
He added: “The UK needs to up its game.”