UK Seeks to Spur Business Investment With Coordinated Ministerial Push

(Bloomberg) -- Ministers will be urged to remove barriers and speed up decisions to boost investment in the UK at an inaugural meeting of a cross-government panel led by Chancellor of the Exchequer Jeremy Hunt.

The new committee will meet soon and will be attended by Business Secretary Kemi Badenoch and senior figures from most other government departments, Dominic Johnson, the UK’s investment minister, said in an interview. Its formation was one of several proposals by Richard Harrington, a former business minister who published a review into foreign direct investment in November. 

The UK’s Conservative government is trying to boost business investment after investor sentiment was weighed down by concerns about Brexit, visa shortages and economic uncertainty. In November, Hunt made a tax relief on business investment permanent as part of the biggest package of tax cuts implemented since the 1980s.

Johnson said he would encourage ministers attending the committee meeting to grapple with some of the biggest obstacles to businesses investing in the UK, including lengthy planning decisions and “tear-inducing” delays for those wanting to launch new projects not being able to connect to the national grid for an energy supply.

Harrington pointed to a lack of co-ordination between government departments as a source of frustration for businesses and called for a beefed-up “concierge service” to help land large projects. Hunt said he would accept all the review’s headline findings as part of the government’s push to make the UK a hub for investment particularly in areas such as science and technology.

Harrington told Bloomberg he’s pleased with progress so far, which includes a new group made up of senior civil servants from different departments to sit alongside the ministerial one. 

“The mood of government is moving very clearly,” he said. However, he renewed a call for the government to make the investment minister a cabinet position rather than a junior posting. “The CEOS of sovereign wealth funds sit in the cabinet in their countries,” he said.

Johnson quit his role as a fund manager in the City to join the government in 2022 and his office is a room that James Bond author Ian Fleming used when he worked for the Navy.

He oversees the Office for Investment, which has a staff of 25 and was created by former prime minister Boris Johnson in 2020. The government has held two international investment summits, at Windsor Castle in 2021 and at Hampton Court in November last year, in a move that was widely seen as inspired by French President Emmanuel Macron’s “Choose France” initiative launched after Brexit. 

Johnson said his team is following up on £29.5 billion ($37.4 billion) of commitments by businesses at Hampton Court, including £15 billion from Australian investors. 

He pointed to areas of progress, including a Tata gigafactory in Somerset backed by “hundreds of millions of pounds,” of government support. Such financial packages are hard to negotiate as the government needs to see value for money while companies do not want to take all the risk, he said, adding that the deal had helped revive the British car industry. 

“We have lit the flare for other companies to have confidence to come back into the UK, including Stellantis and BMW,” Johnson said. “I think other car companies are about to come in. Now we have an EV car industry in a meaningful way.”

Nuclear energy is another area where there has been a reset after 25 years of “inconsistency,” Johnson said. “In nuclear, you can’t do stop-start.”

With government commitments to sites in Sizewell in Suffolk and Hinkley in Somerset and a competition for new small modular reactors that could be built in the UK and also exported, “we have committed billions to a future nuclear industry and we’ve made it very clear that it is at the core of our sustainable energy revolution,” Johnson said.

The minister’s role has not always been straightforward, and some lawmakers criticized his trip to Beijing and Hong Kong last year following China’s crackdown on human rights. Johnson said he supports the need for “the rule of law and freedoms” in the former British territory, but added it’s also important to have contact with China as one of Britain’s major trading partners.

Overseas investors understand that the British government does not want them to buy stakes in certain sensitive businesses but they want clarity over the policy, Johnson said, adding that the UK’s scrutiny of business transactions is working well. 

“We are faster than any other measurable country,” he said. Just “a tiny number of the thousands of transactions have been been altered, called in or blocked.”

There are still difficult areas, such as the current push from politicians in some countries including the UK’s Foreign Secretary David Cameron to seize some of Russia’s $300 billion of frozen assets to help Ukraine.

Cameron is “right to be looking at an exceptional situation in an exceptional way,” Johnson said. But any action needs to be “within the constraints of the rule of the law and property rights.”

“It is very important that international investors don’t think that the UK is being discretionary or capricious about property rights which —in my view — are completely inviolable. That’s what builds a strong economy.”

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