Welsh Conservatives Debate on Inward Investment
Janet Finch-Saunders
I’m pleased to actually contribute once again to a Welsh Conservative debate on inward investment, because it’s something that we take very seriously. We know that foreign investment by multinational companies, you know, certainly provides a platform for new ideas and technologies in Wales, and we need those highly skilled jobs coming here. In the 1970s and 1980s, Wales offered a package of incentives to companies looking to locate here: grants, low labour costs and cheap land for development, to name but a few. During the 1990s, Wales’s share of all inward investment projects to the UK was around 15 per cent. Now, as eastern Europe has developed, Wales has struggled to compete and, since then, has seen a steady decline. Despite the Welsh Government spending almost £2.5 million in one year alone on 14 overseas offices, Wales’s share of foreign direct investment has remained stagnant at between 3.4 per cent and 4.7 per cent since 2006.

So, it does really beg the question whether some of the priorities of the Welsh Government actually are the best value for building our business base here in Wales. The Ernst & Young attractiveness survey of 2014 found that only 2 per cent of existing and potential investors thought Wales was an attractive location to establish operations. This is a clear demonstration of the Welsh Labour Government’s lack of strategic vision for attracting inward investment.
Despite the decline of Wales as a choice destination for FDI, the UK remains the most favoured location in Europe for inward investment. I wonder why that is. In 2013-14, it saw the best level of FDI ever recorded, securing 1,773 projects, helping to create 66,390 jobs and safeguarding a further 45,000. The UK Government’s initiatives to cut corporation tax have had a significant impact on improving the attractiveness of the UK for foreign direct investment. Central to the Conservative-led coalition’s economic strategy was its bold decision to reduce the burden of corporation tax by the largest percentage in our nation’s history: a cut from 28 per cent to 20 per cent. Those are the tools, those are the measures that build investment and confidence in an economy and inward investment.
The UK offers the most competitive corporation tax in the G20. Twenty-five per cent of international investors interviewed by Ernst & Young stated that reducing corporation tax would improve the UK’s attractiveness. So, we are on the right track; you’re not. The UK is doing well—

Alun Davies
You’ve spent a lot of time on corporation tax—probably a bit too long, to be fair—but if you’re going to do that and you believe that corporation tax is the prime determinant of economic success, will you support the devolution of corporation tax to enable the success of the Welsh economy?

Janet Finch-Saunders
There are other initiatives that the UK Conservative Government is bringing forward, and I can assure you that we will, actually, look to reduce a lot of bureaucracy and red tape that are strangling the businesses already here.

According to Chris Sutton, chair of CBI Wales:
‘At a UK level, we have a very attractive corporate tax environment and a flexible labour market.... We have a strong backbone of multi-nationals and we need a structured programme of engagement to ensure that we retain what we have, to work with them to re-invest at the end of their life cycle and to bring the next project to Wales.’
With discussions to devolve corporation tax, the Welsh Government could be issued the perfect tool to incentivise business growth here in Wales. More must be done, however, to ensure that the benefits of FDI are maximised. Dr John Ball argues that future investment must be based on modern skills, modern processes and products. Past FDI hailed the culture of call centres, centring on employees not entrepreneurs—I said that wrong. We need highly skilled and diverse investment that will bring with it positive long-term economic prosperity.
The Welsh Conservatives have a strong strategy to do just that. The establishment of a private sector investment council to work with the Welsh Government trade investment team would attract and develop inward investment. We would work with the private sector, and that is critical to ensuring the aftercare of FDI, business networking support, training support and assistance in policy and expansion. This will ensure that once companies are here, they will be here to stay. We will encourage, we will nurture, and we will incentivise those businesses.
According to Chris Sutton, the secret to FDI success here is creating a stable and consistent policy background, and a business environment that is attractive to investors at both a macro UK level and devolved policy from the Welsh Government. The UK Government are upholding their end of this, but I think it’s fair to say that the Welsh Government is out of its depth.

I urge the Welsh Government to work with the new UK Government and ensure that Wales remains an attractive place for foreign investors to come and do business.