After studying 416 foreign-owned projects in the UK over a 14-year period, researchers from the University of Newcastle Upon Tyne Business School concluded that “companies deliberately overstated job claims to attract business support and advice”.
The study analysed statistics relating to projects in north-east England during the foreign investment boom between 1985 and 1998. The new plants promised a total of 48,825 jobs but there were only 34,164 in 1999 – a shortfall of 15,000, or more than one-third of the total promised.
The study, published in the Oxford Bulletin of Economics and Statistics, shows that firms that received help for their business plans from the main investment agency at the time, Invest UK, were less likely to achieve employment goals.
Newcastle University researcher Dr Colin Wren said: “It seems the number of jobs may have been deliberately over-estimated. Although we only looked at the north-east, we suspect that the findings apply to other regions and countries that benefited from inward investment, such as north-west England, Wales and Scotland.”
Andy Towers, a spokesperson for UK Trade & Investment, the government’s trade and investment promotion agency, told fDi: “Over 300,000 jobs should have been created or safeguarded through offers of regional selective assistance between 1994 and 2002. All offers of assistance included provisions for the clawback of grants where targets were not achieved. Since funding is released in instalments, it is likely that the full grants were not paid out in these cases. If they were, there is a provision to get it back.”