North East voice critical to attracting overseas investment to UK, regional director says

The North East must have a seat at the table of a newly proposed Government Investment Committee that could drive UK inward investment efforts, a leading official has said.

Jen Harley, director of Invest Newcastle, says the Northern cities such as Newcastle have demonstrated their “enormous” investment potential and must play a key role in a new setup proposed to bring increased investment from overseas. The recently launched Harrington Review of Foreign Direct Investment recommends a committee chaired by the Chancellor and comprising ministers and Number 10 officials to steer a strategic approach to attracting job-creating schemes across the country.

Its publication comes after criticism^[1] from a cross-party group of MPs this summer, who said Government’s current approach had a “baked in” economic bias towards London. Lord Richard Harrington’s report^[2], commissioned in March and published last month, not only highlights the intensifying competition posed by subsidy-rich schemes introduced by the US and EU but also the imbalance of foreign direct investment (FDI) flow between London and the South East and the rest of the country.

Most recent data shows the gap is widening with London and the South East’s share of FDI projects rising from 52% to 62% between 2015 and 2021, while other regions’ share fell from 45% to 33% in the same period.

In the face of that imbalance, the review points to successes including the positive role of Metro Mayors in attracting investment to the regions but also references shortcomings including “suboptimal connection” between local authorities and central government; a need to collaboration between regions rather than inter-region competition; and a lack of investment-ready sites.

In response to the review, Ms Hartley said: “First and foremost, the solution to the UK’s FDI performance has to be set in the context of the whole of the country and not just London. While the capital recorded its lowest number of new projects for 10 years in 2022, down 24% year-on-year, all of the Northern regions saw project numbers rise by at least 10%.

“This is not to say we shouldn’t be concerned about the decline of FDI into London, but rather to recognise that Northern cities have enormous investment potential if properly leveraged. As the Harrington Review explains, it’s not about competition between areas, it’s about creating a level playing field for investment promotion and targeting support to where it’s needed most.

“In Newcastle, we know that we have strong and distinctive investment propositions that appeal to international investors, and we would welcome any additional support in promoting more place-based opportunities.”

She went on to welcome the review’s calls for differentiation between cities and regions based on sector-specific strengths and closer collaboration with other cities. She added: “Plans to convene a Government Investment Committee to oversee delivery of a Business Investment Strategy make complete sense but they absolutely must have regional representation.

“Otherwise, how can we be serious about place-based propositions that are complementary to local industrial strategies and that target support where regions have specific competitive advantages? The improved performance of Northern cities in terms of FDI can in some part be attributed to English devolution and the emergence of Metro Mayors that are empowered to develop distinct economic identities for their areas. The same teams credited with this success must therefore have a seat at the table when it comes to policymaking for the future.”

An HM Treasury spokesperson said: “The UK is one of the prime destinations for foreign direct investment in Europe and we are determined to attract even more as we grow the economy. Following the Autumn Statement^[5], we are establishing a Ministerial Investment Group and will announce details, including aspects of its make-up, in due course.”

Newcastle has had a number of inward investment successes over the last two years, with hundreds of jobs being created by the likes of Leonardo, Arctic Wolf and Monstarlab.

References

1. ^{^} criticism (www.business-live.co.uk)
2. ^{^} report (assets.publishing.service.gov.uk)
3. ^{^} Heather Mills announces VBites Food to enter administration after 30 years in business (www.business-live.co.uk)
4. ^{^} Software giant Sage making major impact on improving North East skills, new report shows (www.business-live.co.uk)
5. ^{^} Autumn Statement (www.business-live.co.uk)