Fifty-Sixth Report - Supporting investment into the UK

Select Committee
Public Accounts Committee HC 996 9 June 2023
Report Status Response document linked Recorded deadline: 9 Aug 2023

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Conclusions & Recommendations 28 items (7 recs)
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Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Fifty-sixth report from Session 2022-23 · published 24 Sep 2023
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Recommendations & Conclusions

28 results
2 Recommendation
Review major supported investments to assess actual long-term benefits and wider economic impacts
Recommendation
The Department focuses more on securing investment deals in the short term, rather than understanding the long-term economic benefits from investment. Inward investment can support economic growth and local economies by developing new infrastructure and skills, creating jobs and by … Read more
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3 Recommendation
Review digital team capacity and priorities to assess impact on investment transformation programme
Recommendation
Insufficient digital capacity is putting the Department’s plans to increase its impact at risk. The predecessor Department for International Trade had begun implementing an investment transformation programme that aims to deliver additional economic benefits of £135 million over five years … Read more
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4 Conclusion
Develop focused investment targets with DLUHC to promote economic growth in levelling up areas
Conclusion
The Department is not yet doing enough to encourage investment into the areas of the UK where it can have the most impact on local economic growth. The Department aims to focus on high-value investments that support government’s wider objectives … Read more
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5 Conclusion
Ensure overseas posts prioritise investment support and train staff on UK-wide opportunities
Conclusion
Overseas posts have a range of roles and priorities and may not be consistent in promoting investment across the UK. Potential investors’ first contact with the Department is often with staff in overseas posts whose role is to help them … Read more
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6 Conclusion
Engage with industry to influence government action on investment barriers and review OFI lessons
Conclusion
Government is not doing enough to ensure that efforts to attract foreign investment are well-coordinated across Whitehall. Other departments and government bodies hold many of the policy levers that influence the attractiveness of the UK to investors, such as tax, … Read more
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7 Recommendation
Review government bodies supporting investment and align priorities and formalise working relationships
Recommendation
The recent machinery of government changes provide the Department with an opportunity to review its alignment with other government bodies that support investment. There are various governmental bodies that can support investment in the UK, such as the British Business … Read more
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1 Conclusion
Department for Business and Trade created by combining BEIS and DIT functions
Conclusion
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business and Trade and its Office for Investment about supporting investment into the UK.1 In February 2023, the government created the … Read more
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8 Conclusion
Department acknowledges marginal added value of its inward investment support, despite GVA calculations.
Conclusion
The Department acknowledged that most investment would still happen without its support and that its added value is marginal. It said that businesses would still decide to invest in the UK, but they would find it harder, and some investments … Read more
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9 Recommendation
Department's investor surveys are limited and fail to capture wider strategic impacts.
Recommendation
However, the Department only surveys investors who have chosen to invest in the UK. It does not seek views from investors who have decided against investing to find out why they did not. Its survey also has a low response … Read more
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10 Conclusion
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 … Read more
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11 Conclusion
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 … Read more
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12 Conclusion
Department lacks routine long-term monitoring and evaluation for inward investment project outcomes.
Conclusion
The Department does not routinely monitor what outcomes have been achieved, whether they are higher or lower than forecast, or whether investments have led to any economic disbenefits.27 We asked the Department how many of the jobs it forecasts at … Read more
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13 Conclusion
Department's investment transformation programme faces significant risks due to observed lack of digital capacity.
Conclusion
The Department aims to deliver additional economic benefits of £135 million through its ongoing investment transformation programme. As part of this programme it plans to create a more tailored service offer for different types of investor and provide new online … Read more
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14 Conclusion
Department's digital capacity issues exacerbated by high vacancy rates and challenging recruitment environment.
Conclusion
We asked the Department what it was doing to mitigate this risk. It told us that it was concerned that the formation of the new Department from its predecessor departments had placed additional pressures on its core digital team and … Read more
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15 Conclusion
Department supports levelling up by prioritising investments across the UK, mostly outside London/South East.
Conclusion
The Department aims to support the government’s levelling up objectives by prioritising investments that promote growth throughout the UK.35 It records the numbers of FDI projects it supports in each region and its forecasts of the number of new jobs … Read more
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16 Conclusion
Historical bias towards London in inward investment job forecasts now addressed by proactive promotion.
Conclusion
We asked the Department why there is such a bias towards London in the number of jobs forecast to be created, noting that for London this figure is 16,000, which is more than the combined total for Scotland, the north-east … Read more
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17 Conclusion
Department's current levelling up target definition is imprecise, encompassing all areas outside London/South East.
Conclusion
For 2022–23, the Department has introduced a new target to support investment in projects that contribute to levelling up.40 We asked the Department how it defines projects that contribute to levelling up.41 It told us that it counts everything that … Read more
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18 Conclusion
Department lacks comprehensive overview of local area strengths for investors.
Conclusion
The National Audit Office found that the Department does not have a clear overview of the relative strengths of local areas across the UK in different industry sectors to help it identify the most suitable projects for investors.43 The Department … Read more
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19 Conclusion
Overseas posts possess insufficient knowledge of UK-wide investment opportunities.
Conclusion
Potential investors’ first contact with the Department is often with staff in overseas posts. The Department’s network of more than 90 overseas posts across nine geographical 35 C&AG’s Report, para 3.9 36 C&AG’s Report, Figure 2 and Figure 14 37 … Read more
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20 Conclusion
Overseas posts exhibit varying levels of staff knowledge and expertise.
Conclusion
We are concerned that staff in overseas posts may have varying levels of knowledge and expertise. We asked the Department about the training available for overseas staff and how the Department is involved in framing the training.50 The Department said … Read more
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21 Conclusion
Investment support remains a low priority in smaller overseas posts.
Conclusion
Support for investment may not be a priority among embassies’ other responsibilities, particularly in smaller posts where there are only one or two investment deals each year. We asked the Department whether all embassies are focused on investment. The Department … Read more
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22 Recommendation
Strengthen integrated working with other government departments and devolved administrations on investment.
Recommendation
The Department needs to work in an integrated way with other government departments which hold policy responsibility for some of the sectors it aims to attract investment into, and which hold policy levers, such as tax, regulation and visa requirements … Read more
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23 Conclusion
Office for Investment established to enhance cross-government coordination on high-value investments.
Conclusion
The Department said the Office for Investment was set up to improve cross-government coordination on high-value strategically important investments, as the government recognised this was an area for improvement. It said that the Office for Investment was able to leverage … Read more
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24 Conclusion
Department has strengthened inter-departmental working, but further development is still needed.
Conclusion
The NAO report found that the Department had strengthened how it worked with other government departments to present a more coherent UK offer to investors, including through the creation of the Office for Investment, but that there were opportunities to … Read more
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25 Recommendation
Investors require greater long-term clarity and policy route maps from government.
Recommendation
We received written evidence from investors who wanted more long-term clarity on government policy. For example, the Global Infrastructure Investor Association said there should be greater focus in government on setting out route maps for investors against clear timelines, particularly … Read more
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26 Conclusion
Numerous government bodies contribute to the UK’s investment attractiveness beyond core departments.
Conclusion
In addition to the core government departments, there are other government bodies who work on maintaining and increasing the UK’s attractiveness to investors. For example, we recently reported on the creation of the UK infrastructure bank which was launched by … Read more
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27 Conclusion
UK Export Finance offers 'invest to export' products for overseas investors.
Conclusion
UK Export Finance (UKEF) is the UK’s export credit agency. Its products include an ‘invest to export’ offer for overseas investors looking to export from the UK.70 We asked the Department whether it had a good relationship with UKEF and … Read more
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28 Recommendation
Consider formalising relationships with the UK Infrastructure Bank to enhance investment support
Recommendation
We asked the Department whether it planned to formalise its relationships with the various government bodies that work to support investment through memoranda of understanding as it had done with UKEF. The Department said it did not have current plan … Read more
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