Skip to main content

Government not doing enough to support foreign inward investment outside London

9 June 2023

  • Investment projects created more new London jobs than in Scotland, NE & NW England, Yorkshire and the Humber combined in 2021/22
  • Department for Business & Trade focused more on securing short-term deals than understanding long-term economic benefits of investment

The Government is not yet doing enough to encourage investment into areas of the UK outside of London and the South East, where the most impact can be had on local economic growth. In a report today the Commons Public Accounts Committee says that, while the Department for Business & Trade (DBT) aims for high-value foreign investment into the UK to support levelling up and growth, the number of new jobs created through investment projects supported by Government varies depending where you are in the UK.

In 2021/22, 39% of projects supported by DBT were in London and the South East (excluding projects with multiple UK sites). 16,000 of the jobs forecast to be created were in London – more than across Scotland, Yorkshire and the Humber and NE & NW England combined. The Committee recommends that focused targets be developed to support investment across the UK.

The Committee says DBT and the Office for Investment are not doing enough to understand the impact of their work to support inward investment into the UK. While DBT estimates between 4% and 8% of UK investment projects would not happen without its support this is based on limited evidence, with DBT admitting that its impact on investment levels is marginal. More work is needed for the impact of Government support to be understood. 

According to DBT analysis, every £1 spent on supporting investment leads to £5-£6 of additional UK GDP. However, the Committee found that more focus is placed on securing short-term investment deals rather than understanding their long-term benefits, with no routine follow-up on whether projects delivered what was initially promised.  The Committee calls for DBT to review major investments it has supported over the past five years.

Deputy Chair's comments

Sir Geoffrey Clifton-Brown, Deputy Chair of PAC 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.”

Further information

Image: Unsplash