When the UK government commissioned Lord Harrington to review FDI into the UK, he set out to prove or challenge the idea that the country’s somewhat flagging FDI performance could be traced back to Brexit or high corporate tax rates. His 124-page final review — the result of interviews with about 200 direct and financial investors — articulated that there is more to the story than that. Many companies “have found ways around Brexit”, he tells fDi Intelligence in an interview. Rather, it is issues like policy volatility that have been weighing on the minds of investors and holding back investment decisions. 

Q: What is the main issue with the way the UK deals with FDI? 

A: Many of the companies and investors we interviewed said that one of our problems was the lack of consistency of policy. There are other European countries with political instability, but their policies towards business remain consistent. That has not been the case in the UK. One clear example is the net-zero strategy for the automotive sector. The government first committed to phase out internal combustion vehicles by 2050; then banned their sale from 2030; then moved the ban to 2035. Whatever one thinks of the actual merit of those policies, if you are an investor, that is now changing. And that’s happening within one political party. There’s not enough emphasis given by government on how investors are going to perceive these changes. 

There are other European countries with political instability, but their policies towards business remain consistent. That has not been the case in the UK.

Q: What does it mean in terms of articulating a national FDI strategy? 

A: There are people in the Conservative party who say that the government should keep out of business. This is not an option for us. Our competitors are very actively involved in attracting business to their world. And some of the fantasies preached by some people in my party about the fact that we can be a ‘Singapore on Thames’, which is an argument that Brexiteers used for low government involvement [in the economy] are nonsensical. Singapore is very interventionist in the business sector. It is attracting businesses with financial incentives. We have to do the same. We can’t say: “It’s nothing to do with us, the market will decide.” 

We can’t say: “It’s nothing to do with us, the market will decide.” 

Q: Are you suggesting that the UK follows in the footsteps of the US or the EU and make available large incentives to investment in strategic industries? 

A: The US is a different matter. It is throwing trillions of dollars at companies with a combination of fear that they will not be allowed to supply America, and incentives of financial and tax nature to do it. In our part of the world, it’s often not the quantum of the money, it’s the ease of access to it. One company told us it had a prospective investment of nearly £1bn and wanted the government to provide about £70m. After more than a year, no one in the UK government could provide a final answer. Particularly for smaller new investors into this country, it’s so complicated [to access incentives] that it really puts a lot of them off. Whereas if someone [in the public sector] committed to providing prospective investors with a comprehensive offer with some element of money, as well as a site with suitable planning permission, a deal with energy supply, a number of visas available to be approved within a certain period, a nice package all wrapped up in a red ribbon, this is what it is about really.  It’s not to say we just need to have billions and billions more money because we just don’t have it. 

Particularly for smaller new investors into this country, it’s so complicated [to access incentives] that it really puts a lot of them off. 

Q: Is there anything that stood out in your conversation with the investors for the review? 

A: I was actually quite surprised that people also have such a positive predisposition towards this country. The clichés of the language, the rule of law, the fact that people like to work here. It gives us a start. But we have to really make the government organise itself in a way that allows us to capitalise on that stock we have. Overall, I didn’t want to make it appear like it’s a disaster. It’s not a disaster, we’ve done OK. But we are trying to compete with the best in the world.