Part of the debate – in the House of Lords am 6:10 pm ar 10 Medi 2024.
Lord Bilimoria
Crossbench
6:10,
10 Medi 2024
My Lords, in November 2023 the Harrington Review of Foreign Direct Investment made recommendations about how the UK could attract more cross-border investment. Thankfully, the new Labour Government have set tackling barriers to investment as a priority. I thank my friend the noble Lord, Lord Harrington, for initiating this debate and for his excellent review, which made several recommendations. The City of London has said clearly:
“Overall, by far the largest FDI share comes from financial services, with £588bn attributable to that industry”.
According to it:
“The USA is the largest FDI investor followed by Holland, Belgium, Luxembourg, Germany … Japan, Switzerland, France, Spain and Canada”.
Noble Lords might have noted that most of those countries are EU countries. There is no question about it: Brexit has harmed Britain’s attractiveness as an inward investment destination. Before Brexit we were a magnet for inward investment; we were one of the highest in the world and were seen as a gateway to Europe. Can the Minister confirm that we are going to get closer and closer to the European Union? I would go so far as to say: let us join the single market as soon as possible. That will power FDI ahead.
I am a member of the GREAT campaign’s private sector council. I am delighted to hear that the Minister of State without Portfolio and Labour Party chair Ellie Reeves MP has been appointed the Minister for GREAT within the Cabinet Office. As an example of the impact of GREAT, £900 million-plus of foreign direct investment came from 32 investment projects setting up operations in the UK during 2023-24.
What better example of the power of inward investment could there be than by looking at India? Grant Thornton, the firm of accountants, has an annual India Meets Britain Tracker report. The 2024 report says that almost 1,000 Indian-owned companies are based here in the UK. For example, Tata owns Tata Steel and Jaguar Land Rover, which turn over a combined £68 billion, employ almost 120,000 people, and pay taxes of £1.17 billion.
To be attractive to inward investment, we need a flexible labour market. Britain has always had the strength of a flexible labour market, unlike France, which is hampered by not having one. Can the Minister assure us that we will not do anything to remove the flexibility that we have?
On immigration, there is no question that the previous Government portrayed a hostile approach to immigration. We have labour shortages in almost every sector. Can the Minister confirm that we will have business-friendly immigration?
What better example of foreign direct investment could there be than international students? I have just finished my 10-year tenure as Chancellor of the University of Birmingham and continue to be co-chair of the All-Party Parliamentary Group on International Students. International students bring £42 billion a year into this country, yet the previous Government—including, I am sorry to say, my friend Rishi Sunak, the former Prime Minister—had a hostile approach to international students and wanted to remove the two-year post- graduation work visa. I am delighted that Bridget Phillipson, the Secretary of State for Education, with whom I shared a platform at King’s College recently, has said that we are going to retain the two-year postgraduation work visa and that we welcome international students.
To be attractive to inward investment, we must have an attractive tax environment. Once again, I said to Rishi Sunak when he was Chancellor and I was president of the CBI, “Don’t raise taxes”. What did he do? He put up corporation tax from 19% to 25%. That is not good for foreign investment. He also put up taxes to the highest level in 70 years and now we are scared that the Labour Government in the Budget next month are going to put up capital gains tax, widen inheritance tax and affect non-doms—68,000 people who pay £9 billion in taxes in this country and spend and invest in this country. Please can the Minister remove this fear that we all have; otherwise, capital will fly from this country.
I conclude that fundamentally this country has all the ingredients for fantastic foreign direct investment. We have the best combination of hard and soft power—manufacturing, financial services, universities, creative industries, our judges, our courts—let us not hamper it. Let us encourage foreign direct investment.
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