DTI to vet UK inward investment projects

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Tony Blair has authorised the President of the Board of Trade, Margaret Beckett, to take charge of the way Britain attracts prestige inward investment projects in order to stop subsidy-bidding wars between rival regions of the country.

The Prime Minister has become increasingly concerned that taxpayers are not getting value for money because different areas of the country compete for the same projects, resulting in inward investors being offered bigger financial incentives and aid packages than would otherwise be the case.

Mr Blair 's intervention was disclosed yesterday by Mrs Beckett in evidence to the Commons Trade and Industry Select Committee. She told MPs that the Prime Minister had approved a so-called concordat under which all bids for inward investment projects would be vetted by the industrial development unit of the Department of Trade and Industry.

Britain has historically been by far the most successful country in Europe at attracting inward investment. About one-third of all inward investment into the European Union has come to the UK, safeguarding or creating some 900,000 jobs since 1979. At the end of last year, Britain's stock of inward investment stood at pounds 150bn with more than pounds 100bn of that having been committed in the last 10 years.

Among the biggest projects secured by Britain are the Nissan and Toyota car plants and pounds 1bn plus investments in the north east by Siemens of Germany and the Korean electronics group Samsung.

However, the sheer degree of rivalry to win projects, particularly between the Welsh and Scottish development agencies, has led to subsidy levels being bid upwards significantly. Henceforth, all "indicative offers" of support will have to be cleared by the DTI although the vetting body will include representatives from the Welsh, Scottish and Northern Ireland departments..

In a wide-ranging session with the Committee, Mrs Beckett also indicated that the Government was unlikely to step in directly to help Britain's coal industry from further decline. The industry, led by RJB Mining, is calling on the Government to halt any further gas-fired power stations.