Slump in foreign investment since RDA abolition – report
MORE than 120,000 new jobs could be created in the North in a decade if foreign direct investment (FDI) returned to levels enjoyed before the abolition of the regional development agencies (RDAs).
That’s according to a report published by the think-tank IPPR North which claims foreign investment in the North has declined by 27% since 2010, but increased by 19% in London and the South East.
In 2010 the government abolished the network of nine RDAs and replaced them with local enterprise partnerships which cover smaller areas and were initially not funded.
The report, ‘UK First? Improving Northern access to Foreign Direct Investment’, claims this change is responsible for lower rates of investment in the North, and for exacerbating the North/South divide.
It says London and the South East has attracted more foreign investment than the rest of England put together since 2004. And while the UK still secures the largest proportion of foreign investment in Europe, Germany is fast closing the gap, it suggests.
IPPR North director Ed Cox said: “It is very worrying to see that a key element of the North’s economic success in recent decades has been declining in the past three years. If it continues, this can only make the imbalance in the UK economy even worse than it is already.
“It is clear that the coalition’s current approach to attracting inward investment in the North is not working. But our report shows there are steps that can be taken to improve it. It is vital that action is taken to allow the UK to maintain its place as the leading place to invest in Europe, and for the whole of the UK to contribute to that ambition.”
To help create the right circumstances to encourage greater inward investment, the report recommends a greater share of Whitehall resource be devolved to strengthen the capacity of city regions to seek foreign investment- working across Local Enterprise Partnership boundaries to identify key investment opportunities and to better project the local offer to national and international partners.
The report recommends a change in the way the government monitors investment with less focus on counting the number of new projects and more emphasis on expanding existing projects and the number of new jobs created.
It also suggests the creation of a pan-northern investment body to develop key trade and investment priorities for the North at a significant scale, improving co-ordination between local authorities, local enterprise partnerships and UKTI specialists.
