UK needs investment strategy with skills at its heart or will miss out on foreign investment

If the UK fails to recognise the importance of technical and vocational skills it will be left behind as other countries reap the rewards of lucrative foreign direct investment (FDI), warns a report released today(Monday 25 April 2022).

The report, from the Skills Taskforce for Global Britain, says the UK has been overtaken by France as Europe’s top destination for foreign investment. It argues that the UK needs a better integrated strategy on skills and inward investment to attract international firms to more parts of the UK.

The UK currently does not have an investment strategy and the taskforce believes the Department for International Trade needs to develop one with skills and regional opportunities at its heart. 

Polling work carried out for the taskforce highlighted how important skills are for investors, with foreign firms more likely to look elsewhere if they can’t get the skills they need. Almost half (46%) of foreign firms said they would move their operations abroad if they couldn’t get the skills they needed, compared to just over a fifth (22%) of domestic firms. 

When asked about expanding their operations 61% of foreign firms said they would:

The report says the UK’s FDI is too concentrated in the already economically dominant areas of London and the South East. It argues that delivering FDI to more parts of the UK is vital in creating the higher-skilled and better-paid jobs needed to drive the government’s levelling up agenda.

Last year the International Trade select committee raised similar concerns about the bias in London and the South East and called on the Government to show it had a plan to maximise the benefits of FDI for all parts of the UK.

Skills Taskforce for Global Britain Chair John Cridland CBE says: “The countries successfully bringing in foreign investment have a sophisticated skills offer to attract investors. Put bluntly, if you want to attract investment you need high-quality skills, and if you want high-quality skills you need inward investment.

“We need the Department for International Trade to develop a coherent investment strategy that will deliver FDI throughout the UK and not just in London and the South East. Competition is becoming fiercer and the UK simply cannot afford to miss the opportunity to add skills to its international calling card.

“If the Government’s levelling up agenda is to be realised, the UK has to develop and promote the skills that will deliver a high-skill, high-wage economy and attract foreign investors.”

The taskforce says that a post-Brexit vision of Global Britain needs to showcase the UK’s excellence in skills. It says WorldSkills UK should use its unique knowledge of world-class skills to work with more parts of the UK’s technical education sector to improve skills levels right across the UK.

“This timely report sets out why skills are so important in attracting foreign investment. As the international arm of the UK skills systems, WorldSkills UK is uniquely placed to use our knowledge of global best practice to help deliver and promote the skills we need now and for the future.”

Commissioned by WorldSkills UK, chaired by former Director General of the CBI John Cridland CBE with professional services firm EY as a founding member, the taskforce was set up in May 2021 to develop plans to deploy world class skills to attract inward investment.

Josie Cluer, EY’s Lead Partner for Learning and Skills in the UK, is a founding member of the taskforce says, “Skills investment is crucial if the UK is to maintain its track record in attracting foreign investment and it could play a key role in helping the UK return to top spot in the European rankings for FDI projects.

“Placing skills and regional opportunities at the heart of the UK’s investment strategy will help attract foreign investment to all parts of the UK, creating jobs, opportunity and prosperity everywhere, not just London and the South East – levelling-up both opportunities and output.”