Attracting foreign direct investment: UK government success
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Addressing the Forum of business leaders, Matthew Hancock spoke about action the UK government is taking to foreign direct investment to the UK.
Four years ago, if I had stood here and said that Britain could become the best place in the world to start and grow a business, many of you here wouldn’t have believed me, and the pledge would not have been credible.
Yet today, standing here, it is credible to say that. We are by no means there. But we are determined for Britain to be just that.
And to deliver that ambition, we must build on our long history of being a leading player in the international business world.
It is within that context that foreign direct investment (FDI) is one of the pillars of this government’s growth agenda.
Today I want to make 3 points:
There is clear evidence that our policies are starting to work.
We need to build on our strong open history, our location on the doorstep of Europe, our rule of law and our language. But we cannot rest on those things and have to remain vigorous in improving Britain as a place to do business.
On Monday the widely respected Global Infrastructure Investment Index, published by Arcadis showed the UK is now the 10th most attractive economy for infrastructure investment in the world.
The UK Guarantees Scheme, which offers up to £40 billion in government-underwritten guarantees to infrastructure projects, is being rolled out.
We have strengthened UK Trade & Investment (UKTI) so that since 2010, UKTI has recorded 6,172 inward investment projects which are estimated to have created more than 220,000 jobs - almost 2000 of them in the last year alone.
These results placed the UK at number one in Europe for foreign direct investment – again. We also attracted almost £24 billion of commitments to invest in infrastructure last year.
This government has reduced corporation tax to 21%, one of the lowest in the EU’s big five economies and will reduce it again next year to 20%, making it the lowest in the G7 and the joint lowest in the G20.
The World Bank rates our tax system as more business-friendly than any other major world economy. We have tax reliefs for research and development (R&D) and exploiting patents.
It’s fast and simple to set up a company and we have top level professional services to underpin a company’s plans – 4 of the top 10 law firms, 6 of the top 10 accountancy firms and the world’s largest advertising company.
We have the world’s leading financial centre in the City and no other European centre comes close to the size and expertise of our financial services sector.
We’re a global talent hub – the number one rated major economy for attracting, growing and retaining talent. We have 4 of the top 6 universities in the world and our visa system is set up to encourage skilled people from overseas – attracting internationally mobile talent.
We’re a nation of entrepreneurs – over half a million business were started in the UK in 2013. We have the fewest barriers to entrepreneurship in the world and last year our Global Entrepreneurs Programme supported 45 entrepreneurs in moving their global headquarters to the UK, and supported the expansion of 20 further businesses previously attracted to the UK.
I could go on.
That’s why in 2012 there were 3 times the number of new investors bringing their European headquarters to the UK, compared to our nearest competitor. But this government isn’t just helping overseas companies. The business environment we have built helps British businesses, large and small. For example:
- we’re world leaders in R&D – a partnership with industry which creates a thriving ecosystem for turning ideas into success
- we’ve removed unnecessary burdens from business - around £1.5 billion per year has been saved by businesses as a result of our deregulation work
- we’ve unlocked £10 billion of financing for smaller business over the next 5 years by our British Business Bank and we’ve guaranteed over £1.6 billion of lending to over 16,500 small and medium sized businesses since May 2010, through our Enterprise Finance Guarantee scheme
- we help businesses to export. Over 40,000 UK businesses have been helped by UKTI support which helped generate additional sales of over £60 billion and created or safeguarded over 180,000 jobs
We are winning the argument but these individual actions are not alone enough
We need to show that international business coming to the UK benefits everyone who lives here, bringing jobs, prosperity and opportunity for all.
People may not know or care whether their job has been created through inward investment – but they would certainly care if that investment didn’t happen, and that job didn’t exist.
We help the people of this country by doing as much as we can to encourage investors to come here. We need to constantly remake that argument - at its heart an argument for an open economy and for free trade.
Finally, we must remember that there is still more to do
We need to keep corporation tax down, continue making it simpler to invest, reach further for UKTI and create a more joined up approach from domestic authorities.
In conclusion, I’d like to tell you a story.
Wolf Minerals is an Australian-headquartered company specialising in metal exploration and development.
In March 2014 work was started on the re-opening of Hemerdon Tungsten mine near Plymouth – a £123 million investment which is estimated to create 200 jobs.
UK Trade & Investment worked to provide strategy advice and help the company find solutions.
They worked with the Local Enterprise Partnership, and with strong support from Devon County Council.
They contacted and liaised with all the different agencies and regulators and worked in partnership with Wolf. The mine will be one of the largest tungsten mines in the world, and is expected to generate £1 billion in exports over its lifetime.
This kind of joined up partnership we want to see more of.
I leave you with this. Here we are in London. One of the finest cities in the world. One of the most open and dynamic. Reinvented for the modern age.
We sit in a country united and determined to support jobs and prosperity.
But we can’t do it on our own: so our offer to you is not selfless. Join with us in building a free and prosperous nation that works for you too - and in doing that we will support you every step of the way.