UK investment policy Contents

4Investment promotion and investment facilitation

116.Among the key functions of government in respect of overseas investment are those of investment promotion and investment facilitation, both of which are typically discharged through dedicated Investment Promotion Agencies. Dr Zhan, of UNCTAD, told us that DIT was “now playing a key role” in this regard and that the UK Government and its partner organisations “still rank among the top in terms of investment promotion and facilitation”.233 The Department itself says that, since its creation, it “has cemented its reputation as one of the most respected investment promotion organisations in the world”.234

117.Dr Zhan explained to us that investment promotion involves marketing a particular location or industry in a host country in order to attract inward investment,235 with “promotion agencies trying to get investors in on the ground”;236 this can include offering material incentives to inward investors.237 He further explained that investment facilitation, by contrast, entails “a set of measures to make it easier for investors to do business”. Such measures included “trying to ensure the transparency and availability of the information for investment in host countries”, as well as “efficient procedures in business registration and also reducing the costs of registration or doing business in the country.”238

118.A series of UK Government bodies (along with partners at the devolved, regional and local levels) have discharged these functions, as well as undertaking parallel functions in respect of outward investment. Before the machinery of government changes that took place in July 2016, the Government body responsible for investment promotion and investment facilitation was UKTI, which was constituted as a non-ministerial department. When we visited South Korea in October 2018, we heard that Invest KOREA (the body for carrying out inward investment promotion work on behalf of South Korea) had been modelled on, amongst others, UKTI.

119.On the creation of DIT in July 2016, UKTI was merged into the new Department, and its functions were taken on by DIT’s International Trade and Investment (Group)239—which has now become Global Trade and Investment.240 However, as the Secretary of State confirmed to us in July 2019,241 DIT has still not published an overarching strategy in respect of investment promotion and investment facilitation (along the lines, for instance, of the Export Strategy, published in August 2018, in relation to promoting exports).242 Information on aspects of its approach to investment promotion and investment facilitation must, therefore, be gleaned from a range of official sources.

120.The Investment Minister told us that there was “ferocious competition” in investment promotion. France was now making more effort in this field and had achieved an “uplift” in its performance; and Spain and Ireland were also doing well.243 During our visit to Seoul we heard about the concerted efforts that France and Germany make in this regard. In Tokyo we were told that, while the UK is still the primary investment destination in Europe for Japanese investors, there was now increased interest in Germany, Spain, Italy and France.

Investment and the Industrial Strategy

121.DIT’s role in respect of investment promotion and facilitation sits within the overall framework of the Government’s Industrial Strategy, which was published in November 2017. The Strategy’s stated aim is to “boost productivity by backing businesses to create good jobs and increase the earning power of people throughout the UK with investment in skills, industries and infrastructure.” The strategy is led by the Department for Business, Energy & Industrial Strategy (BEIS), one of whose objectives is “Encouraging inward investment”.244 DIT, meanwhile, states that its approach to “reinforcing the UK as a leading global destination for investment” is aligned with “government priorities (such as regeneration, infrastructure and energy development projects)” and “Industrial Strategy sectors such as artificial intelligence and virtual reality technology”.245

DIT’s Core Objectives

122.A number of DIT’s Core Objectives relate to investment promotion and investment facilitation. Core Objective 1 (for which the Secretary of State and the Investment Minister are jointly responsible) is to “Support UK businesses to grow internationally in a sustainable way”. The Department states that, in order to achieve this, it will “Drive sustainable growth by encouraging and facilitating Outward Direct Investment”.

123.DIT’s Core Objective 2 (for which the Investment Minister is responsible) is to “Ensure the UK remains a leading destination for international investment and maintains its number one position for international investment stock in Europe”. To achieve this, the Department states that it will: engage with prospective investors; promote the UK as an investment destination; help and advise investors; and work across government to ensure a competitive business environment.246 The lead official in respect of Core Objective 2 is the Director General for Investment. The current postholder, Mr Slaughter (who was appointed in June 2018) is the first person to hold this role.247

124.The Department’s Core Objective 4 (which is the responsibility of the Secretary of State) is to “Use trade and investment to underpin the government’s agenda for a Global Britain and its ambitions for prosperity, stability and security worldwide”.248 We heard in evidence from the IoD that the Government’s vision of a “Global Britain” was “still some ways short of being a detailed cross-cutting strategy.” The Institute thought that “The effectiveness of DIT could be more easily measured against a defined, comprehensive Global Britain strategy.”249

DIT’s services to inward investors

125.The Department states that it provides “significant support services” to inward investors, involving “providing information, guidance and support on the UK business environment, to access finance, talent and skills, visas and migration, research and innovation, and sector experts.” This “end-to-end service for investors”, provided “both in the UK and overseas”, involves “working with colleagues across government, in London, UK regions and Devolved Administrations.”250

126.A key role in delivering these services is played by the Department’s Capital Investment Directorate.251 This “helps investors find appropriate projects, smoothing investment journeys with tailored advice, insight and introductions”, promoting “investor-ready schemes selected by our specialist teams”. Acting as “a one stop shop to align investors with a credible project pipeline”,252 the Directorate focuses on:

large-scale property and infrastructure development projects as well as opportunities to invest in high-growth UK businesses, particularly in the technology sectors, where we also offer support to encourage entrepreneurs to move to the UK.253

127.In addition, DIT runs a number of targeted programmes that are focused on inward investment. These include the Strategic Relationship Management Programme, working across Government to meet the needs of the most important inward investors,254 which was begun by UKTI. The Programme “provides a single point of contact coordinating government support for firms to engage through”, bringing “best practice in private sector relationship management into the public sector”.255 The Minister told us that through this scheme, “108 of the largest investors in the UK are managed and have a Minister allocated to them”.256 Another such strand of work that dates back to UKTI is the Global Entrepreneur Programme,257 which “helps high potential, Intellectual Property (IP) rich, overseas entrepreneurs and early stage technology businesses or start-ups looking to relocate and scale their business in the UK.”258 The projects involved form a subset of DIT-supported FDI projects.

128.DIT also provides a number of free online services for investors. In May 2018 it launched a “revamped online one stop shop for potential investors” at (branded “Invest in GREAT Britain & Northern Ireland”), to “help global investors find UK projects”.259 In October 2018, the Department launched a new online service, the Perfect Fit Prospectus, at, which creates “individualised reports for potential investors–based on their country of origin and the sector they operate in–to give them the information they need to make an informed investment decision.”260 In May 2019, DIT revamped the UK Advisory Network / Investor Support Directory, an online service listing British businesses able to help overseas investors set up or expand operations in the UK, which had also been carried over from UKTI.261 This became the UK Investment Support Directory at The Minister told us “We are trying to up our digital content […] has a lot of resource and we are trying to invest more in that.”263

129.Dr Zhan recommended that DIT should in addition set up “an online, one-stop shop for business registration”; as well as a “single [electronic] window for investment information”, a service which would enable investors to submit documentation to several government bodies by means of just one electronic submission.264

130.More generally, the IoD told us that DIT “should ensure its services are adequately promoted”, since “the awareness of them amongst firms can be quite low.” The Institute thought there was “a clear role for business organisations to help facilitate greater awareness of Government backed schemes”.265

Fostering a competitive UK business environment

131.DIT also seeks to attract inward investment by working to bring about a competitive UK business environment. As the Investment Minister mentioned to us, this is partly done through the Business Environment Advisory Team.266 This advises investors on the UK business environment; trains DIT staff to sell the UK business environment to investors; and uses feedback from investors to inform the development of Government policy in areas such as skills, migration, tax, and research and development.267

132.DIT also plays a cross-departmental role in this regard. When the post of Director General for Investment was advertised, the Department stated that the postholder’s responsibilities would include “co-ordinating government departments and working in partnership with the private sector to attract and retain high quality overseas investment.”268 The Investment Minister told us that the Director General was “leading competitiveness work across Whitehall”,269 working with the Home Office, BEIS and other departments.270 The postholder himself, Mr Slaughter, told us that, as someone who had recently come from outside the public sector, he had found the Government “actually quite remarkably joined up” across departments in this respect.271

Devolved, regional and local approaches

133.As we have noted, the Department’s role also involves working closely with official bodies, and others, in the devolved nations and at the regional and local levels in England.

Devolved nations

134.In respect of the devolved nations, in the 2011 Devolution Memorandum of Understanding, the UK Government and the DAs noted that they had “concurrent powers to promote international trade and inward investment”. The then UKTI had lead UK responsibility for “promoting the UK and all its constituent parts to foreign investors”, and for supporting and assisting outward investors, at home and overseas. The DAs were “responsible for devising and implementing additional programmes to meet the particular needs of companies in Northern Ireland, Scotland and Wales” and for promoting those countries to foreign investors. Various mechanisms were set up to enable consultation and coordination between central Government and the DAs in this respect.272 Within each of the DAs there are arm’s-length Investment Promotion Agencies, namely: Invest Northern Ireland (NI); the Welsh Development Agency; and Scottish Development International.

135.Alan Wilson, Head of International Investment at Invest NI, explained that each DA had its own “economic profile”, based on selected “contestable FDI sectors”. Invest NI focused on “financial services, legal and professional services, life and health sciences, software, ICT, advanced manufacturing, aerospace defence—those types of high-value FDI”. At the same time, though, “we are always foresighting and looking at what the top 10 trends are globally”.273

136.Mr Wilson told us that each business brought into NI had an “acceptable business plan” mapped out, which was subjected to due diligence and appraisal procedures. Eventually, a contract was signed, lasting between three and five years, with a three-year control period at the end of the contract. Any grants were paid out in arrears, to minimise risk to public funds. Client teams engaged with companies to ensure that preconditions in the contract were met, monitoring them on a regular basis. At the end of a project, a full evaluation was carried out. He stressed that “a company will normally invest initially because they come for the talent that is in a region; they do not come for the incentive that the grants give”. There was typically an employment grant in the first instance and then, “perhaps six months”, there might be support for developing skills in the workforce. Within just two years, an employment grant would yield a “10 to one return on the investment”.274

137.Regarding collaboration with DIT, Mr Wilson said:

we do have a very good relationship with DIT. I have to say that years ago it was not so close, but over the last couple of years we have definitely stepped up engagement on both sides. We have an executive forum where our chief executive meets with the directors general from DIT, and the other devolved Administrations also get together and discuss strategic matters. That is working well.275

Collaboration with DIT occurred overseas as well as in the UK. Mr Wilson told us that Invest NI had 23 offices in countries around the world which worked with prospective inward investors.276 In addition, “We have been encouraged to use the FCO platform in global posts”. Eight additional such resources, co-located with DIT representation in overseas posts, had been added in recent years, “mostly across Asia-Pac[ific] at the moment, but also going global on that model”. Co-location meant engaging with DIT’s sector teams in each country, which had “really helped the relationship” with the Department. Mr Wilson also said that the Scottish and Welsh DAs were taking a similar approach in this regard.277 (The role of DIT staff overseas is further discussed below.)

138.Another area of work with DIT was involving companies in Northern Ireland with DIT’s trade missions. One “slight criticism” Mr Wilson had was that more notice of such visits should be given: “With a bit more notice on the timeline, the sector and what it is about, I think all the DAs would have an opportunity to offer up really good representative companies that could attend those missions”.278 As an example of where “the DAs sometimes miss out”, he mentioned a cybersecurity trade mission to New York of which Invest NI had not been made aware, despite theirs being “the leading cybersecurity region in the UK”.279

139.Mr Wilson also told us that data from DIT’s overseas posts on investment leads did not come in a helpful form, as the DAs had stricter criteria for the type of project that they could support (it needed to be a “net new investment […] That brand must not have existed in Northern Ireland before”).280

140.When we asked Mr Slaughter about the relationship between DIT and the DAs, he told us that there was a “huge level of engagement”, with very strong co-ordination by means of quarterly meetings. He said there was “an excellent relationship now and we will continue to grow it over time.”281

141.The Advertising Association suggested to us that “the concept of comparative advantage could be utilised whereby Devolved Administrations take the lead on certain industries or sectors, linked to the Industrial Strategy, to avoid destructive competition.” The Association also argued that the devolution of “Control over certain taxation policies may also help to beneficially distort the market and reduce imbalances across the regions.”282


142.In England, investment promotion is approached differently. There were previously nine Regional Development Agencies, but these were abolished in 2012, with the expectation that a similar role would in future be played by Local Enterprise Partnerships (LEPs), involving local authorities and businesses, are expected to produce Growth Plans and multi-year Strategic Economic Plans. LEPs (or Mayoral Combined Authorities, where these exist) lead on Local Industrial Strategies (LISs), which are “developed locally and agreed with Government” and are intended to “build on the innovative approaches in Scotland, Wales and Northern Ireland”.283

143.In 2012, UKTI set up a National Investment Services Team to liaise with LEPs and local authorities in England; this service is now provided in partnership with EY and OCO Global. It includes building and maintaining an understanding of local assets; passing investment inquiries on to localities; and working with overseas posts and sector leads.284

144.Forty-eight Enterprise Zones exist in England, offering tax breaks and other incentives for businesses that are set up in, or relocate to, those areas.285 Some overseas investors in England have been able to access Government grants and / or loans through the Regional Growth Fund;286 and there is an Exceptional Regional Growth Fund, used at ministerial discretion.287

145.Chris Henning, Corporate Director for Development and Growth at Nottingham City Council, told us that central Government “with their network of embassies and posts overseas” provided an effective “sales front end” for the UK. Local authorities then provided the “last mile” of the process, representing “the actual places that people want to come and invest in, and the people that they need to operate in their business”. He thought it was “absolutely critical” to connect the two functions and recognise “the roles that all players have to play”.288

146.In written evidence, the IoD suggested the need for “better join-up […] between Whitehall and regional and local government so that investment can be channelled to key areas and sectoral clusters”. It envisaged a greater role for LEPs and other bodies in the English regions. The Institute also referred to the need for regional roundtables involving businesses.289 It further urged that “there should be more attention focused on inbound trade missions in particular, in order to better showcase first-hand to potential investors the potential for investment at a regional level”. And it favoured the involvement of “more regional bodies” in UK Government-led trade missions.290

The new FDI Strategy and High Potential Opportunities

147.Since 2017, DIT has published investment portfolios for Scotland, NI, Wales, the Northern Powerhouse, the Midlands Engine and South England, highlighting particular investment opportunities (along with the services to investors provided by the Capital Investment Directorate).291 This approach has been further developed through the new FDI Strategy, which the Department launched in April 2018.292

148.The FDI strategy, on which the Director General for Investment leads,293 is based on developing specific investment propositions known as High Potential (or Hi-Po) Opportunities (HPOs).294 Following the development of three “trailblazer” HPOs,295 DIT is working with LEPs, the DAs and central Government’s Territorial Offices (the Scotland Office, the Wales Office and the Northern Ireland Office) to identify FDI opportunities that have yet to achieve their full potential. DIT’s “global network of sector and specialist insight” is then be combined with partners’ local knowledge “to build a much more clearly defined and differentiated proposition” to be promoted by DIT staff in overseas posts.”296 In May 2018, there were stated to be 68 HPOs, worth more than £30 billion; and the Department says that the programme will be expanded.297

149.When the Minister appeared before us, he explained that DIT’s role was to:

identify opportunities around the country that perhaps people do not automatically understand […] and ensure that we market that effectively to foreign investors so that investment goes out to Northern Ireland and elsewhere and is not concentrated just in London and the south-east.

Mr Slaughter further explained that the HPO programme was different from other types of investment targeting, which “is more starting from the investor rather than where we want it to go”.298

The role of the university sector

150.Invest NI talks in terms of fostering “an eco-system that attracts international entrepreneurs to locate in Northern Ireland to establish and grow their business”.299 Mr Wilson explained this with reference to NI’s “fantastic A-level results”, which helped to attract “product development companies with high-value jobs”. The “really high-end skill demands” brought by these companies pushed “interaction with the universities, and the universities then turn and push interaction back into the Government and back into Invest Northern Ireland”.300

151.Mr Henning similarly referred to the way that local “economies can differentiate themselves […] through the health and vibrancy of their economic growth and innovation ecosystems.” These, he explained, were “networks of businesses, universities, business clubs and investors.”301 He further told us about the important role of the University of Nottingham’s successful campus at Ningbo in China. The relationship that had consequently developed between Nottingham and Ningbo over more than a decade was “ground breaking and may even be unique”. The Council had been “invited into that relationship” and had used it “in order to grow not only the academic-to-academic side of things, but the business-to-business and civic-to-civic side of things”, with a “sister-city” relationship developing. An “investment pipeline” from Ningbo had emerged, trade missions had been sent, and the relationship was “resulting in jobs, growth and investment in Nottingham”.302 Mr Henning concluded that the UK has:

a network of universities that are utterly international in their focus and have a set of R&D specialists. While in a sense they are competitive, they are also collaborative in terms of bringing knowledge into the UK. I would mobilise our universities to work together, and central Government can start to do that.303

152.We also heard from Mr Adams, of Global Counsel, that Higher Education was a “magnet for investment”, through “commercial partnerships with universities in pursuit of R&D”, as well as a “a series of ancillary sectors”, including the “pathway sector” (which prepared students for university) and the student housing sector. Universities had a “role in fuelling the skill level of the wider workforce” and in generating “spillover benefits and direct benefits for partnership”.304 Mr Geldart, of the IoD, told us that this effect was not just “concentrated in a few institutions” but was widespread. Universities in the regions had “particular attributes and particular focal points” for which they were known, such as the medical schools at several institutions.305

153.DIT refers to the UK’s world-class universities as a key part of the UK’s attractiveness to investors. The Minister noted that the university sector was linked to the UK being “the No.1 place for the big global tech firms to invest in Europe”.306 He told us that the UK had four of the world’s top 10 universities307 and this was:

because our universities are the most internationally collaborative in the world. We facilitate and support that and want to see that happen. A lot of future economic benefit will come from innovation and technology, which will come from having universities, business, Government and regulators all working closely together[.]308

The Government wanted to encourage the embedding of business in universities; and developments such as the science park at Cambridge University proved that universities had an “appetite” for this. The Government stood ready to support this and that was why it was putting more funding into research.309

DIT’s operations overseas

154.Activities undertaken by DIT overseas are crucial to its investment promotion and investment facilitation roles. A high-profile aspect of this is the many overseas visits undertaken by DIT ministers,310 but the Department does much else besides under the heading of its “Overseas Platform”.311

The GREAT campaign

155.The GREAT campaign—or the GREAT Britain (& Northern Ireland) campaign—”is the government’s major branding initiative to promote the UK as a destination for tourists, trade and investment and students in order to secure economic growth”, launched in 2012.312 The trade and investment aspect was relaunched by DIT in January 2017.313 According to the Department, GREAT operates in 144 countries and in 2018 it “supported over 1,400 separate events and activities in around 200 locations worldwide”.314 The campaign includes the INVEST in Great Britain & Northern Ireland campaign, which “deploys advanced digital marketing strategies to generate interest in the UK’s FDI proposition.”315 As we have noted, some of DIT’s online services to investors are being delivered under the GREAT brand.

HM Trade Commissioners

156.The Secretary of State has appointed a network of nine HM Trade Commissioners (HMTCs),316 who “cooperate closely with HM Ambassadors and High Commissioners, the wider diplomatic network, and other HM Government colleagues based in countries in their region”.317

157.The Investment Minister told us that the Trade Commissioners each “lead a regional trade strategy and have a regional trade plan”. The aim was that “rather than a one-size-fits-all analysis from London, we have regionalised well-informed, well-led insight” in each part of the world.318 The Secretary of State told us in correspondence that:

Regional Trade Plans (RTPs) [are developed] in response to economic opportunities and wider HMG strategies. The RTPs set out the priorities to be delivered across export promotion, investment and trade policy, along with DIT’s contribution to wider government objectives.319

158.Additionally, as the Minister told us, there are “sector teams and they have sector plans”; and the Department ensures “that we have co-ordination between those industry sectors and then the regional trade plans globally and try to pull all those pieces together”.320 The Department also reports that the former Prime Minister chaired Investor Roundtables, attended by industry leaders from key sectors (Technology, Life Sciences, Automotive, Agri-Tech and Creative Content).321

159.In 2017–18 DIT set up a new International Strategy Directorate to “coordinate our overseas work, and make sure that trade, investment and other prosperity-related issues receive due consideration in cross-government strategic planning”.322 Since February 2019 this role has been played by the new Global Strategy Directorate,323 which “essentially operates like a hub for all of the HMTCs”324 as part of its broader remit. The Trade Commissioners also work closely with the Director General for Investment.325

Trade Envoys and Business Ambassadors

160.In addition, the former Prime Minister appointed 30 unpaid Trade Envoys, “selected for their experience, skills and knowledge of a particular sector or market”. Their role includes promoting inward investment and their activities include “meetings with Heads of State, senior Ministers and business leaders, hosting high-level inward delegations and international events”.326 The Government also has a network of Business Ambassadors, comprising “43 senior business leaders [who] act as powerful advocates for the UK abroad”, including in relation to encouraging inward investment.327

Staffing levels in overseas posts

161.As is apparent from our account thus far, a very important part of DIT’s work on investment is undertaken by staff posted overseas, working in partnership with the FCO. Table 3 contains data on the numbers of staff deployed by DIT and its predecessor, UKTI, in UK Embassies, High Commissions and Consulates.

Table 3: UKTI / DIT staff in overseas posts (headcount)


March 2015

March 2016

March 2017

March 2018

March 2019







Outside Europe












Sources: UK Trade & Investment, Annual Report and Accounts 2014–15, HC (2015–16) 73, p 7; UK Trade & Investment, Annual Report and Accounts 2015–16, HC (2016–17) 358, p 11; Graham Stuart MP to Angus Brendan MacNeil MP, 28 June 2019

These staff constitute a significant proportion of the Department’s total complement of 3,500 (at March 2018).328 At June 2018, the Department had staff deployed in 177 overseas posts.329 During our visit to Japan and South Korea, we had the opportunity to meet DIT and FCO staff working on investment promotion and investment facilitation, and to learn about the positive relations they were building with a wide range of stakeholders.

162.When we subsequently asked the Minister of State for Trade Policy about reported budget cuts of 30% in overseas posts, he responded that there had been “some rationalisation”, albeit “not wide and deep”. The Department was “putting resource into where we think it is most needed and most used”, which was in creating export opportunities, seeking inward direct investment and negotiating trade agreements.330 The Secretary of State later told us that DIT had inherited “a baked-in reduction from what was the then UKTI budget”, with the cuts all occurring in UKTI’s final year. In response, “Rather than simply maintain all the staff where they were, we have taken the opportunity to see where we actually needed to have higher levels in the capabilities of the staff we had.”331 The inherited cuts meant that “funding for core budgets fell by c.£20m in 2018–19”. Consequent “structural changes to the overseas network to increase its effectiveness” included the establishment of the nine overseas regions under the HMTCs, with devolved budget responsibility. These changes made it “difficult to directly compare resources over time”, but it was estimated that the core staffing budget for the overseas network was £76.60 million in 2017–18. The 2018–19 budget had been reduced to £72.55 million, but the HMTCs had received an additional £5.5 million “to support this transition”. There would be further additional funding for the European Overseas Network, allowing DIT “to strengthen and upskill the workforce in the critical areas of market access and trade policy” in the context of Brexit.332

163.The Investment Minister further told us that there had been a £30 million reduction since 2015 in the budget for promoting exports and investment. DIT needed to make sure that “we have the right people, of the right seniority, right round the world, to go in and see those C-suite executives and get them to invest here”.333 The additional funding specifically for the European Overseas Network had amounted to £5 million,334 which had allowed the recruitment of 51 additional staff in Europe.335

164.It is noteworthy that the Secretary of State recently indicated to us that DIT’s particular focus on market access (see Chapter 3) has clear resource implications for overseas posts, given the amount of negotiation involved in securing such concessions.336

165.The Investment Association emphasised in evidence to us that “the network of overseas posts will need strengthening as the UK moves to its own, independent trade policy.” The posts provided industry with valuable information and a “deep understanding of the local markets on the part of the officials, gained in the promotion of exports and investment, should be a priority for the DIT’s future development”. Ensuring long-term retention of staff meant that “Questions of resourcing, local pay imbalances and skills-gaps” would have to be addressed.337

166.We further heard from Mr Adams, of Global Counsel, that DIT needed to ensure that overseas staff acquired “the skills of being able, along with business, to recognise and tackle market entry barriers and irritants.” DIT needed to convert them “into a cohort of regulatory diplomats […] or commercial diplomats”, as the US had done it with its staff. The cuts which had occurred “have had in many respects a material effect on morale and physical presence”. In addition, frequent rotation of staff between posts denied them “the chance to develop a prolonged period of exposure and experience in a jurisdiction and how it regulates and the practical challenges of navigating it”. British businesses needed “someone who can be a genuine Sherpa for them in a market they are looking to enter”.338

167.Mr Geldart, of the IoD, who had wide experience of China, said that there had been there:

a reduction in DIT’s ability to perform, because they have had to cut back on where they can place people. China is a big place […] and it is very different in different places. Shenzen, Guangdong and Chengdu are different provinces, different jurisdictions, and they operate differently. When you scale back on the availability of staff and skilled staff in particular—the great temptation is to keep the same number of people but get less cost through having new, younger people coming in […]—you do not have the age, experience and expertise to do the navigation bit. Particularly in China, you have to build the guanxi—the relationships—with local government so that you can help business to be supported on the ground in real ways.339

168.In Dr Gertz’s evidence to us on “investment diplomacy” (see Chapter 3) he emphasised the importance of adequate and appropriate representation abroad. Such diplomacy required “tact, negotiating skills, and business acumen”. Cuts were “likely to lead to less effective and less active investment diplomacy”.340

Outward investment

169.A report published by the then Trade and Industry Committee in 2007 indicated that UKTI’s work on investment was focused above all on inward investment; and the Committee was sceptical as to whether UKTI should be devoting resources to assisting UK firms in investing abroad.341

170.DIT does state that its Mission includes driving both inward and outward investment;342 and, while outward investment is not mentioned in the Department’s Core Objectives, it does feature in the Single Departmental Plan under Core Objective 1.343 The Department states that it has “established a new approach to […] Outward Direct Investment” alongside its new FDI strategy;344 and it has referred to the outward investment strategy in relation to input from the Board of Trade.345 Even so, no details of this strategy appear to have been published. In his evidence to us, the Investment Minister alluded to the scale of UK outward investment,346 and referred to outward investment in the context of investment protection347—but he gave us no specific information on work that the Department does to promote or assist UK investment overseas.

171.Dr Zhan told us that he thought the Government needed:

still to promote outward investment, because outward investment plays a key role for linking the UK to the global economy, and that is very important. So far, we know that the outward FDI stock of the UK is about US $1.7 trillion, which is equivalent to close to 70% of GDP. It is very important for the UK and, of course, it also generates investment income back home. That world link is very important.348

172.Mr Geldart, of the IoD, told us that in promoting overseas investment DIT should focus more on “the middle market, and more than 20 million businesses that want to export and go to new markets but do not quite know how to”.349 Mr Adams, of Global Counsel, reinforced this view. There was “a huge amount of activity and latent potential in the mid-cap market, but ambition and capacity in a mid-size business do not necessarily scale up in proportion”.350

173.We also received evidence about outward investment from the Advertising Association, which stressed the role of the DAs in this regard “at the start of the investment journey”, as they were “more likely to understand the needs of their local companies”. At the same time, “the resources of overseas posts should be available once those companies have reached the stage in their journey of exploring that market directly”.351

174.Regarding outward investment specifically in developing countries, we recommended in our report on Trade and the Commonwealth: developing countries that the Government should encourage investment “that supports sustainable development, particularly in the area of infrastructure. Stronger links should be developed between the UK and developing country investment promotion agencies.”352 The Government indicated in its response that DIT was pursuing these objectives in a number of ways.353 When we took evidence from Dr Fox in March 2019 he told us that it made sense to pursue outward investment “into some of those areas that would give countries—primarily in Africa—the ability to add value to their own produce”.354

Measuring DIT’s performance and targeting its efforts

175.DIT states that its key performance indicators on investment are:

176.We have already discussed, in Chapter 2, the official datasets on the value of FDI and the overall number of FDI projects. Figures in respect of successful FDI projects involving DIT (and / or one of its regional or local partners) are arrived at by the application of certain tests. In order to be counted, a project must meet DIT’s criteria for having “landed” successfully; and there must be “sufficient evidence that the DIT network has provided significant assistance to the foreign investor in the delivery of the investment project”.356 This same metric was previously used by UKTI.357 Data published by DIT in this respect are shown in Table 4.

Table 4: DIT-supported FDI projects


FDI projects

New jobs created

Safeguarded jobs

Total jobs



























Sources: Department for International Trade, DIT inward investment results: Summary of FDI projects and jobs 2017 to 2018, June 2018; Department for International Trade, Annual Report and Accounts, 2016–17, HC (2017–19) 124, p 18; Department for International Trade, DIT inward investment results: Summary of FDI projects and jobs [2018 to 2019], June 2019

Note: DIT states that the figures for 2016–17 and 2017–18 are not comparable, due to the strengthening of validation processes for key performance indicators in 2017–18.

177.Data published by DIT in respect of Capital Investment that it has supported are shown in Table 5. This includes both Venture Capital (“strategic investment into high-value start-up, growth companies and funds from Corporate and Venture Capital investors outside the UK to accelerate their technology and expansion”) and large capital investments (“overseas institutional investment into large capital projects in Real Estate, Infrastructure and Energy”). The Department states that “Whilst capital investment is all foreign investment, most does not meet the criteria of FDI.”358

Table 5 DIT-supported Capital Investment (£ million)

Investment type




Commitments to invest


Commitments to invest

Venture Capital





Large capital investments





Source: Department for International Trade, Inward Investment Results 2018–19, June 2019, p 10

178.As we discussed in Chapter 2, DIT is now looking at measuring the value of FDI in terms of GVA—and this also provides a means of targeting its efforts through the FDI Strategy.359 This approach was developed in an analysis of the economic impact of inward FDI that was published by DIT in June 2018. The Department says that this “FDI Economic Impact Tool” has been praised by multilateral bodies as a means of improving the effectiveness of investment promotion.360 Mr Slaughter explained that DIT was focusing on:

what best to do with the people we have available in the Department to try to help the economy of the UK. What we are trying to do […] is to prioritise the use of those people to support those elements of activity that add the most GVA to the economy. We do not want to turn away from helping any company that really needs assistance to make an investment and add jobs, but we do think, as we prioritise and strategise about the future economy, we need to be focusing on that GVA component of things.361

179.We heard in evidence from Dr Loewendahl, of WAVTEQ, that Ireland offered a potential model for the targeting of efforts. IDA Ireland (the equivalent of the former UKTI) and Enterprise Ireland (the Irish Government’s trade development arm) “both have targets for net investment and net job creation. They have to track how much investment they lose versus how much they win.” This contrasted with DIT’s approach of only focusing on new inward FDI projects: “They are not targeted in terms of preventing companies from closing down or downsizing, so you do not know what the net impact is at DIT.” In addition, the Irish bodies had clear targets regarding “the regional distribution of the investment they support […] They are targeted to get a certain amount of investment into deprived areas”. This “could be something interesting for the UK, given that the regional disparities are so big within the country”.362

180.A further point made by Dr Loewendahl was that DIT should do more to focus its efforts on changing the sectoral profile of UK inward investment:

Half of the job creation by greenfield FDI in the UK is retail, construction, and sales and marketing. That is not exactly strategic investment or high value-added investment, and maybe it is not investment that DIT should really be involved in and recording in its results, which it does.

The Department needed to “look at the high-quality investment as well, the high-technology manufacturing, the high-technology services”. The UK was “neck and neck” with France in competition for this; and Ireland and Germany were also strong competitors.363 (It should be noted that ONS and DIT have both produced breakdowns of UK inward FDI by industrial sector.)364

181.Dr Zhan, of UNCTAD, meanwhile, thought that the Government should be focusing its efforts on “fostering the UK’s comparative advantage in terms of hosting regional headquarters”, particularly in the post-Brexit period.365 When the Minister appeared before us he noted that the UK currently had “Some 40% of all global headquarters of the big Fortune 500 companies”.366

Investment facilitation in international agreements

182.As we noted in Chapter 3, Brazil’s model Cooperation and Facilitation Investment Agreement seeks to avoid disputes arising between inward investors and host states. Dr Lauge Poulsen told us that this model, which effectively pioneers the inclusion of investment facilitation in bilateral agreements, highlights the availability of “alternative and less contentious design choices” than the UK’s model BIT. Such alternatives could benefit British investors, especially if “pursued alongside complementary efforts that shape domestic investment reforms in partner states.” Following Brexit, the UK had “a unique opportunity to look beyond traditional investment treaty provisions and instead promote an investment facilitation agenda that provides tangible benefits to UK investors without the controversy associated with investor-state dispute settlement”.367

183.We also heard that moves are afoot to implement an Investment Facilitation Agreement at the multilateral or plurilateral level, through the WTO.368 (Such an agreement would be analogous to the existing WTO Trade Facilitation Agreement, which seeks to simplify and expedite customs procedures between WTO members).369 In 2017, fourteen developing and least-developed country members of the WTO, proposed an Informal Dialogue on Investment Facilitation for Development, focusing on: improving regulatory transparency and predictability; streamlining and speeding up administrative procedures; enhancing international cooperation and addressing the needs of developing members; and other investment facilitation-related issues (such as ombudsman arrangements).370 In January 2018, Brazil formally submitted to the WTO proposals for an Investment Facilitation Agreement.371 However, Dr Zhan advised us that “The political challenge is that, for the time being, half of the WTO membership is not on board and not supportive of the efforts to have the investment facilitation rules set at the WTO.”372

184.The Director General for Trade Policy at DIT, Mr Alty, told us that the Government “strongly support[ed]” the proposed WTO Investment Facilitation Agreement: “it is about reducing red tape and creating more transparency. That is a good example of where we want to make rapid progress.”373

185.A further point, which was made to us Dr Zhan, concerned the possibility that investment facilitation rules could be established at the multilateral level by the OECD. However, he warned that it would not be easy to involve developing countries—where better investment facilitation was most needed, since these countries suffered from excessive administrative discretion, bureaucracy, corruption and lack of transparency.374

Conclusions and recommendations

186.In conducting our inquiry, it has been very difficult to form a coherent overall picture of all the facets of the Government’s approach to investment promotion and investment facilitation. There is no single summary and we have had to piece together information from various sources. We recommend that the Department for International Trade should publish an overarching strategy (in a similar format to that of the 2018 Export Strategy), summarising the different aspects of its work in this area and explaining clearly how they fit together in a coherent and unified way. This should include outlining how the Government’s approach in respect of unilateral measures to promote and facilitate investment relates to its policy regarding investment provisions within the framework of international agreements. The Government also needs to set out clearly how exactly its investment strategy links to the cross-departmental Industrial Strategy and how in this regard the Department for International Trade relates to the Department for Business, Energy & Industrial Strategy and other relevant departments.

187.We recommend that, as part of its suite of services to inward investors, the Government must develop a one-stop shop for business registration and a “single electronic window”. Such services are desirable because they enhance transparency about the requirements that foreign investors must meet, as well as streamlining bureaucracy, so that it forms less of a barrier to investors.

188.We welcome the liaison that already goes on between the Department for International Trade and partner organisations at the devolved and local levels in respect of investment promotion and investment facilitation, but there needs to be more joined-up governance in this respect. Adequate attention must be paid to involving partner agencies at all levels in both outbound and inbound trade missions, so as to maximise their impact. The Government should show, as part of its investment strategy, that it is working closely with the university sector in attracting inward investment, given the crucial role of higher education institutions play in the investment “ecosystems” of their local areas.

189.We recommend that the Government spell out more clearly the role being played by HM Trade Commissioners, the Prime Minister’s Trade Envoys and UK Business Ambassadors in relation to investment and show how exactly their work is making a difference.

190.The Government must acknowledge fully the importance of the work done by staff on the ground in overseas posts in relation to promoting both inward and outward investment. There is clear evidence that cuts in overseas representation have had a negative impact and we recommend that the Government should ensure sufficient resources are dedicated to this area. The UK faces significant competition from some other European nations in promoting UK investment abroad and must not fall behind. The Government must study how competitor nations work in this regard with a view to learning from their approach. The Government should also review the skill-set of staff in overseas postings, to ensure that they are able to work in concert with business to recognise and tackle adequately barriers and sources of friction in relation to market entry. The Government should in addition consider whether regular rotation of staff around overseas posts might not be the most effective approach and whether more prolonged postings would be more appropriate, in so far as this could facilitate the accumulation of in-depth local knowledge.

191.Outward investment, as well as inward investment, can bring many economic and other benefits to the UK. We recommend that the promotion and facilitation of outward investment should continue to form a key part of Government’s investment strategy. This should include emphasis on pursuing other goals, such as those related to sustainable development, human rights, and climate, through outward investment.

192.We are not convinced of the adequacy of the performance metric currently employed by the Department for International Trade regarding involvement in inward investment successes, measured in project numbers. We recommend that the Government should do more to demonstrate that its efforts are directly responsible for those investment successes for which it seeks to claim credit. We heard about the work that the Department is undertaking on gauging the impact of Foreign Direct Investment in terms of Gross Value Added, as an aid to targeting its efforts. This is potentially welcome, provided that the measure of Gross Value Added that is used is sufficiently robust. The Government should also go further than developing this measure. Data are needed on the impact of the different types of Foreign Direct Investment; and the Government should, in concert with partner organisations, develop devolved-nation and regional targets for investment, as well as net targets for the capital value of investment flows and numbers of associated jobs. We recommend examining the targets used in the Republic of Ireland as a possible model. In terms of targeting its efforts, the Government should also be much more strategic about promoting inward investment, with greater emphasis in its investment strategy on attracting investment in high value-added sectors. In particular, the UK must actively seek to maintain its pre-eminent position as a location for European and global headquarters of international businesses.

193.We welcome the Government’s support for an Investment Facilitation Agreement through the World Trade Organization (along the lines of the existing Trade Facilitation Agreement)—but this must be supportive of sustainable development, human rights and climate goals. We recommend that the Government consider the potential inclusion of investment facilitation provisions in bilateral International Investment Agreements (as in the model developed by Brazil) and report back to us on this.

234 Antonia Romeo to Meg Hillier MP, 13 November 2018. See also Department for International Trade, Inward Investment Results 2015/16, September 2016, p 6: “DIT is recognised as one of the best investment promotion agencies in the world.”

239 National Audit Office, A Short Guide to the Department for International Trade, October 2017

240 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 16, 145

241 Oral evidence taken on 3 July 2019, HC (2017–19) 436, Q962

242 Department for International Trade and UK Export Finance, Export Strategy: supporting and connecting businesses to grow on the world stage, August 2018

243 Q234; see also Q235.

245 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 29

246 Department for International Trade, Single Departmental Plan, 27 June 2019

247 Department for International Trade, “Citigroup boss to oversee UK investment drive”, 7 June 2018

248 Department for International Trade, Single Departmental Plan, 27 June 2019

249 Institute of Directors (UIP0015)

250 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 29; see also Department for Business, Energy & Industrial Strategy and Department for International Trade, UK Industrial Strategy: A leading destination to invest and grow, December 2017, p 37.

251 Department for International Trade, “Capital Investment”

252 Department for International Trade, Northern Powerhouse: Investment Opportunities, March 2019, p 8

253 Department for International Trade, UK Capital Investment, October 2017, p 3

254 UK Trade & Investment, Inward Investment Report 2014/15, June 2015, p 27

255 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 22; see also p 29.

256 Q297. See also Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 34, 35.

257 UK Trade & Investment, Inward Investment Report 2014/15, June 2015, p 25

258 Department for International Trade, Inward Investment Results 2018–19, June 2019, p 10. See also Q234; Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 29; Department for International Trade, Inward Investment Results 2018–19 Technical Annex, June 2019, p 9.

259 Department for International Trade, “Dr Liam Fox launches global investment drive, bringing more than £30 billion to the UK”, 17 May 2018; see also Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, pp 29, 31.

260 Department for International Trade, “£2 billion of new investment opportunities launched across the UK”, 17 October 2018; see also Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, p 36.

261 UK Trade & Investment, UK Advisory Network (archived, 22 November 2010); Department for International Trade, UK Advisory Network (UKAN) Investor Support Directory (August 2016)

262 Department for International Trade, “Opening of business applications for the new UK Investment Support Directory”, 19 November 2018; Department for International Trade, “DIT launches new tool to drive foreign investment”, 29 May 2019

265 Institute of Directors (UIP0015)

267 Information from Department for International Trade, 14 June 2019; Department for International Trade, DIT support for the space sector, p 14; Department for International Trade, “Fostering Innovation & the Industrial Strategy, 18 June 2018

268 Department for International Trade, “DIT announces new roles to lead export and investment agendas”, 1 December 2017

271 Q269. See also Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 13, 18, 34, 35, 57.

282 Advertising Association (UIP0008)

284 Job advertisement: EY / Department for International Trade Partnership Manager (closing date: 10 August 2019); Norfolk County Council, Economic Development Sub-Committee, Inward investment update, 19 January 2017; Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 14, 35

286 Department for Business, Energy & Industrial Strategy, “Regional Growth Fund”

287 Department for Business, Energy & Industrial Strategy, “Regional Growth Fund”

289 Institute of Directors (UIP0015)

290 Institute of Directors (UIP0015)

292 HC Deb, 17 May 2018, col 408; House of Lords Written Answer HL11916, 12 December 2018

293 Department for International Trade, Director General, Investment: Mark Slaughter

294 Department for International Trade document, supplied 19 October 2018. See also Department for International Trade, “Dr Liam Fox launches global investment drive, bringing more than £30 billion to the UK”, 17 May 2018; Antonia Romeo to Meg Hillier MP, 13 November 2018. The FDI Strategy also includes: targeting Government efforts based on the actual impact of investments, measured through GVA (this is discussed further below); highly focused market research and intelligence, to support HPOs; the re-procurement of the National Investment Services contract; and strengthening DIT’s leadership position within Government in the area of FDI-related policy.

296 Department for International Trade document, supplied 19 October 2018

297 Department for International Trade, “Dr Liam Fox launches global investment drive, bringing more than £30 billion to the UK”, 17 May 2018. See also Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 30; HC Deb, 20 December 2018, cols 970–971; Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 14, 35, 36.

299 Invest Northern Ireland, Business Strategy 2017–2021, May 2017, p 20

310 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 29; Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, p 15

311 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, p 145

312 National Audit Office, Exploiting the UK brand overseas, HC (2015–16) 80, p 5

314 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, p 56; see also pp 7, 9, 15, 16, 23, 36.

315 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, p 36

316 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 7, 15, 16, 17, 52, 54, 60, 76, 81, 85, 86, 89, 95, 97, 145

317 Department for International Trade, “Final HM Trade Commissioner appointed”, 6 July 2018

319 Rt Hon Dr Liam Fox MP to Angus Brendan MacNeil MP, 14 January 2019. On RTPs, see also Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 16, 29, 52, 54, 86.

320 Q237. On sector teams, see also Qq93, 278, 297; Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 23, 29, 77. On RTPs “dock[ing] in with sector plans”, see “Brexit: DIT perm sec reveals how government got its trade plans ready”, Civil Service World, 14 May 2019.

321 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 9, 36

322 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 7

323 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 15, 16, 52, 145

325 Department for International Trade, Director General, Investment: Mark Slaughter

326 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 20, footnote 2. See also Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 7, 14, 16, 52, 53, 145.

327 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 20, footnote 3

328 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 7

330 Oral evidence taken on 28 November 2018, HC (2017–19) 1549, Q330

331 Oral evidence taken on 5 December 2018, HC (2017–19) 436, Q514

332 Rt Hon Dr Liam Fox MP to Angus Brendan MacNeil MP, 14 January 2019

335 Graham Stuart MP to Angus Brendan MacNeil MP, 28 June 2019

336 Oral evidence taken on 3 July 2019, HC (2017–19) 436, Q932

337 Investment Association (UIP0005)

340 Dr Geoffrey Gertz (UIP0014)

341 Trade and Industry Committee, Sixth Report of Session 2006–07, Marketing UK plc—UKTI’s five-year strategy, HC 557, paras 19–23

342 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 7, 13

343 Department for International Trade, Single Departmental Plan, 27 June 2019

344 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 7

345 Department for International Trade, Annual Report and Accounts 2017–18, HC (2017–19) 1111, p 22

351 Advertising Association (UIP0008)

352 International Trade Committee, Fifth Report of Session 2017–19, Trade and the Commonwealth: developing countries, HC 667, November 2018, para 138

353 International Trade Committee, Seventh Special Report of Session 2017–19, Trade and the Commonwealth: developing countries: Government Response to the Committee’s Fifth Report of Session 2017–19, HC 2151, May 2019, pp 6–7

354 Oral evidence taken on 6 March 2019, HC (2017–19) 436, Q794. See also Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 9, 15, 23, 52, 54, 100.

355 Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, p 14

356 Department for International Trade, Inward Investment Results 2018–19 Technical Annex, June 2019, p 9; see also Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, p 39.

357 National Audit Office, A Short Guide to the Department for International Trade, October 2017, p 7

358 Department for International Trade, Inward Investment Results 2018–19, June 2019, p 10. See also Department for International Trade, Inward Investment Results 2018–19 Technical Annex, June 2019, pp 6–7, 9; Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 34, 35, 38, 39.

359 Department for International Trade document, supplied 19 October 2018

360 Department for International Trade, Estimating the economic impact of FDI to support the Department for International Trade’s promotion strategy: Analytical report, June 2018; Department for International Trade, Annual Report and Accounts 2018–19, HC (2017–19) 2229, pp 9, 34, 60, 96

361 Q279. See also Q278; Graham Stuart MP to Angus Brendan MacNeil MP, 28 June 2019.

364 Office for National Statistics, ”Industrial composition of foreign direct investment”, 24 July 2018; Department for International Trade, Inward Investment Results 2018–19, June 2019, pp 8–9

367 Dr Lauge Poulsen (UIP0002)

368 Dr Lauge Poulsen (UIP0002); Qq101, 103, 109

Published: 30 July 2019