Yorkshire missing out in foreign investment competition

There were 20 foreign invesments projects in Yorkshire in 2011, just 2.9 per cent of the UK total and a fall of more than one third on the previous year.

In contrast, London and the South East saw a significant rise in foreign investment with London alone enjoying 19 per cent growth.

A report from the IPPR North think-tank suggests the North has suffered disproportionately from the shift of responsibility for attracting overseas companies from regional development agencies (RDAs), such as Yorkshire Forward, to local enterprise partnerships (LEPs) working with the Government’s UK Trade and Investment (UKTI) arm.

Restoring foreign investment to the levels seen before the abolition of RDAs would create around 12,000 jobs in the North every year.

Graeme Henderson, research fellow at IPPR North, said: “I think it is fair to say that the new arrangements haven’t worked particularly well for the North.

“Whereas RDAs would have had overseas representatives attracting inward investment for their regions there are now only representatives for the UK as a whole and that means that the investments almost by default go to London and the South-East, partly because investors know London a lot better and it is a less hard sell for UKTI.

“Quite a lot of intelligence and relationships were lost in the transition from RDAs to LEPs and that was in part due to the RDAs being closed down so quickly.

“LEPs in local inward investment terms have taken up the baton and thay are doing a good job but they need more resources.”

The report warns that local enterprise partnerships are competing with each other when it would make more sense for them to work together to present a coherent offer to potential overseas investors.

It recommends the creation of a new northern trade and investment board that can help LEPs and local authorities work together.

It also calls for reforms to the way the Government sets targets for UKTI, suggesting they should be based on the number of jobs created rather than on the number of projects attracted to the UK.

The report argues that if UKTI invested more effort in persuading existing overseas investors to expand their existing projects in the UK rather than attracting new businesses this would benefit the North.

It contrasts the North’s fortunes with Scotland where it has had the same bodies looking after inward investment for almost 40 years.

Figures show that although the UK as a whole is still out-performing the rest of Europe on inward investment it is increasingly relying on a smaller number of countries, particularly the United States.

The UK is also facing a particular problem in convincing companies from fast-growing economies such as India and China to come to this country rather than other parts of Europe.