Major acts to stop regional squabbles over investment

John Major has intervened to prevent regional development agencies in different parts of the country bidding against one another for prestige inward investment projects.

The move is understood to have been prompted by Downing Street's anxiety to avoid unseemly squabbles between rival agencies and Government departments in the run-up to the general election, particularly on projects where large numbers of new jobs are at stake.

The Prime Minister is believed to have called in ministers from the Welsh, Scottish and Northern Ireland offices together with representatives from their regional development agencies to emphasis the need for a co-ordinated approach.

There was uproar in Scotland two months ago when it was reported that the Korean electronics giant Lucky Goldstar had decided to locate a pounds 1bn plant in Wales. William Hague, the Secretary of State for Wales, is thought to have offered a subsidy of up to pounds 150m to win the project, which could create 4,000 jobs.

The Koreans pointedly refused to confirm they had chosen Wales, although it now appears that the plant will be sited in Newport, Gwent and that an announcement is imminent.

Scotland had been bidding to have the factory built in Lanarkshire while Ireland was also a contender.

News of Mr Major's intervention came as the Invest in Britain Bureau announced its most successful year yet with a record 477 inward investment projects in 1995/96 worth pounds 7bn-pounds 8bn, creating 48,000 jobs and safeguarding a further 97,000.

In the past three years Britain has attracted 1,350 projects from overseas, creating or safeguarding 285,000 jobs.

The biggest single investment was a pounds 1.1bn project by Siemens to build a semiconductor plant in the North-east - one of 58 inward investments from Germany.

The President of the Board of Trade, Ian Lang, rejected suggestions that Britain was nearing saturation point after accounting for 40 per cent of all US and Japanese investment into the European Union.

But he indicated that the number of new investors was likely to fall, meaning that the IBB would concentrate more and more effort on overseas companies which already had operations in Britain. Expansion by existing investors accounted for 57 per cent of the 477 projects clinched last year, compared with 55 per cent in 1994/95 and less than half at the start of the decade.

Mr Lang also denied that the Euro-sceptic wing of the Conservative party was deterring overseas companies from investing in Britain for fear of it becoming increasingly semi-detached from the rest of Europe.

"I see no indication of any anxiety because the Government remains committed to Europe and the single market."

Mr Lang said that the policies of Labour would put inward investors off in droves. But IBB sources said their soundings, particularly in the Pacific Rim, suggested that companies would not be influenced by a change of government.

Their overwhelming view also was that Britain was committed to Europe and likely to end up taking part in a single currency.

Of the total investments last year 46 per cent were by North American companies while 35 per cent were from Europe and 17 per cent from Asia- Pacific.