At today’s International Investment Summit, ministers must recognise that businesses want concrete assurances about the kind of returns they can expect, says Eliot Wilson
Today is the government’s long-anticipated International Investment Summit, which will bring together potential investors from abroad and within the United Kingdom and is intended to show, in the business and trade secretary’s words, “Britain is open for business, and we are the investment destination of choice”. This is a major event for Sir Keir Starmer’s administration, 101 days old, given the central task Labour’s manifesto advertised to “restore stability, increase investment, and reform our economy”.
Everyone should wish the summit well: increased investment in the UK economy can only be positive as the country still seeks to claw its way out of a post-pandemic slump. Rachel Reeves, the chancellor of the Exchequer, and Jonathan Reynolds, business and trade secretary, have persuaded some eye-catching figures to attend, including Ruth Porat, president and chief investment officer at Alphabet, Larry Fink, founder and CEO of BlackRock, and billionaire former Google CEO Eric Schmidt.
It is only fair to observe, though, that the summit faces a number of challenges. Perhaps the most significant is that it is taking place a fortnight before Reeves announces the details of her first Budget on 30 October. That matters because it means ministers and officials cannot with confidence say what their policies will be for the next few years – departments still do not know how much money they will have to spend until the Chancellor reveals all. (Last week the transport secretary, Louise Haigh, hinted strongly that High Speed 2 would extend to Euston, but her department then had to wheel out an official “no comment” to further questions.)
It is also unfortunate that the Prime Minister has only at the last gasp found a minister for investment. Last Thursday it was announced that Poppy Gustafsson, co-founder of cyber security group Darktrace, will take on the role, created in 2021 as a global ambassador for the United Kingdom and an interlocutor with international investors. She follows Lord Grimstone of Boscobel, former chairman of Barclays Bank, and Lord Johnson of Lainston, co-founder and CEO of Somerset Capital Management, both of whom had impressive City credentials. Starmer had seemingly struggled to find a candidate for this crucial job after it was turned down by Benjamin Wegg-Prosser, founder of international advisory firm Global Counsel.
Ministers need investors more than investors need them
Connected to this is how the Whitehall infrastructure to manage investment. It is the responsibility of the Office for Investment: last week the government announced that the unit, which is shared between HM Treasury, the Department for Business and Trade and 10 Downing Street, will be expanded and streamlined. It will offer a “bespoke service to ensure that investors receive the strongest possible government support to navigate the planning and skills landscape”, and will be supported on planning and skills by the deputy prime minister, Angela Rayner, and the education secretary, Bridget Phillipson.
This is promising, although the details and operation of the strengthened Office for Investment will be critical. The government should have a dedicated investment unit, and it has to be both hard-nosed and clear-eyed. It needs to perform two functions: it must be Whitehall’s ambassador to investors, finding out what policies the investment sector needs to make the UK the most attractive choice for its money. It also has to promote that information within government, so that departments are aware of what will help or hinder investment. The unit must be run at a senior level and carry weight in the private sector, and it needs a long-term sustainable strategic vision for the sector. The announcement of an oversight board chaired by the new investment minister is cause for cautious optimism in these regards.
Maximising returns
Starmer and his colleagues have high hopes for the investment summit. The language with which it is framed suggests that Labour sees inward investment very much as a tool to assist government policy: it is “a key milestone in the government’s growth mission” and will “support local skilled jobs and raise living standards in all our communities”. Those may be outcomes, but they are not why investors will choose the UK. Businesses want an attractive economic ecosystem which will maximise their returns.
The atmosphere must be one of optimistic realism. Labour ministers still too often seem to think they will be greeted warmly as “the grown-ups in the room”. If that was ever true, it is in the past. The impending Budget will limit ministers’ freedom of action, but they should approach today’s summit knowing that they need investors more than investors need them. This is not about a “reset” or “tough decisions” or blaming the other side for a “black hole”. As Michael Corleone said, it’s not personal – it’s strictly business.
Eliot Wilson is a writer