Member Article

Let’s work together to attract cash

THE good news is that the UK has dominated Europe in attracting Foreign Direct Investment (aka FDI and commonly called inward investment), according to the recent European Investment Monitor report by Ernst& Young.

The bad news is that FDI has fallen back in the English regions and the future looks anything but bright.

According to the well-respected management accountants and business advisors: “Investments in England outside of London were 24% below their level in 2010 – a decline that has coincided with the closure of the Regional Development Agencies (RDAs) and the switch to Local Enterprise Partnerships (LEPs).”

In contrast, Scotland, Wales and Northern Ireland, in the first year of their devolved administrations, recorded large rises.

If it continues, the weakness of the English regions could damage the UK’s overall ability to attract FDI in comparison to countries such as France and Germany, which have much more balanced regional portfolios.

This resonates with forecasts from this column about managing change better. Clearly no region has done so, but the LEPs are not a substitute for the RDAs.

The main difference is that the LEP – a partnership between the pubic and private sectors – has to achieve economic growth and jobs without being fully in control of the marketing of the region. This is a challenge since inward investment must be attracted to create growth.

The E&Y report is a good signal that more needs to be done to attract inward investment to the regions.

Many in the private sector have raised concerns that we need to get our collective act together and market the North East as a region. I appreciate that the seven councils involved in the North East LEP are committed to form a Combined Authority to take regional responsibility for job creation, infrastructure and economic development. But this will take legislation and therefore time. That is a luxury we do not have and I believe that a Shadow Board should be set up to start the marketing of the region.

While the E&Y report will allow defenders of the old RDAs to say “I told you so”, it only looks at one albeit important issue and in general I believe that the NE LEP is making good progress in many areas.

For instance, successful early development of the Sunderland Enterprise Zone around Nissan has resulted in another 40 hectares of land being allocated Enterprise Zone status.

Investment is essential to fund development of the economy, but we also need to make sure that everyone around the world knows we are open for business and have a great deal to offer.

With private sector interest harnessed into partnership with councils, we would surely recover the lost ground on FDI.

This was posted in Bdaily's Members' News section by Kevan Carrick .