A pounds 300m welcome: The UK is luring foreign business
Sunday 05 June 1994
Britain spends approximately pounds 300m a year on grants for so-called inward investment. This figure is inflated by the time spent by government departments and British embassies on encouraging and vetting applications.
Once they have established themselves in this country, foreign corporations may also be able to take advantage of the annual pounds 1.5bn or so of other forms of industrial aid, ranging from regional enterprise grants to loyal employment assistance.
The UK is the most attractive location in the European Union for non-European companies, taking 40 per cent of total inward investment. But the Government points to a payback: overseas companies provide 16 per cent of all UK manufacturing jobs, 22 per cent of net output and 27 per cent of net capital expenditure.
Northern Ireland's high unemployment means that it is under more pressure than other parts of the UK to attract industry. The region's grant system, which operates independently from the mainland, has been regarded sceptically since the collapse of the De Lorean car company in 1982 cost taxpayers dollars 86m ( pounds 57m) amidst a welter of financial irregularities.
Despite attempts by Department of Trade and Industry officials in London to distance the mainland's industrial grants system from those of Northern Ireland, they are very similar.
The Northern Irish Industrial Development Board is replicated in Wales, Scotland and five English regions. Proposals are vetted by officials to see if they will generate jobs and contribute to the local community. But the critical test is to ensure that they are viable. 'This is more of an art than a science,' a DTI spokesman admitted.
Each region has an industrial development advisory board of industrialists and trade unionists. Promising schemes are put to them, and those requiring grants of more than pounds 1m go to a national IDAB.
Payments are staged throughout the life of the project, and the regional units monitor their investments to ensure that investment, job and sales targets are met before the next instalment is handed over.
The DTI's Invest in Britain Bureau says that in the year to 31 March 1993, the last for which figures are available, it was aware of 303 foreign projects that generated 56,271 jobs.
Sir Ronald Halstead, the former Beecham chairman who has recently stepped down as chairman of the national IDAB, said: 'The people doing the assessing are highly motivated. They are seconded from industry and the financial community for two or three years before going back to their firms.'
He pointed to the success that the Japanese manufacturers, Nissan and Fujitsu, have had in the north-east of England.
But James Grierson, an economic development officer with Dumfries and Galloway Regional Council in Scotland, argued that the full costs incurred in attracting inward investment were 'rarely, if ever, accurately computed'.
He claimed: 'Apart from promotional expenditure and the consultancy fees that are a prerequisite in the evaluation of the more esoteric type of enterprise, the participation of a number of funding partners obscures the true cost.
'Even a relatively simple tourist development could involve the Scottish Office, Scottish Enterprise, the local enterprise company, the regional council (economic development) and the EU in providing a package of loan and grant support. In addition, ScottishPower could be called upon to supplement the power supply.'
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