The UK risks being left behind in an intensifying battle for foreign investment unless it can improve the level of skills offered to foreign companies, according to a tough report.
A task force led by former CBI CEO John Creedland warned that it was no longer enough to base the UK’s attractiveness on cheap labor as other countries increasingly used well-trained workers as a magnet to attract companies.
The report of the Global Task Force on Global Britain says that countries that successfully attract foreign direct investment (FDI) boast a workforce with a complex range of skills to attract investors. The working group called on the Ministry of International Trade to adopt a similar approach for the United Kingdom.
Creedland said: “For big domestic investors, skills matter. If they can’t find them here, they will expand to other countries.
“In the past, the United Kingdom has performed well in attracting domestic investment, but it has been based on low labor costs rather than skills. We are now at a turning point. There is a real risk that the UK will be overtaken by other countries where the investor offer is based on skills. “
The report found that almost half (46%) of foreign companies said they would relocate if they could not acquire the necessary skills, compared to just over a fifth (22%) of local companies.
In addition, three-fifths (61%) of foreign companies said they would expand abroad if they could not acquire the necessary skills in the UK, compared to only a third (32%) of local companies. The report adds that FDI in the UK is too concentrated in the economically dominant areas of London and the south-east, so creating more skilled and better paid jobs is vital to the government’s equalization program.
In 2020, Boris Johnson announced a “radical change” in education for people over the age of 18, including a “Lifetime Skills Guarantee”, according to which every adult without A-levels will be funded to take a high-quality college course. . in demand ”.
Creedland said the government needs to assess the link between skills and attracting foreign investment. The education department is responsible for skills, but does not deal with incoming investment, he said, while the international trade department seeks to attract domestic investment but does not deal with skills.
The former CBI CEO said that when potential domestic investors were introduced to the directors of further education colleges in the UK, they were told what courses were currently being offered.
In places like Ohio, Singapore and the Republic of Ireland, domestic investors are asking, “What do you need?” They are ahead of the game.
Creeland said the link between skills and investment has not been considered before and does not appear to have been a key consideration in developing FDI policy.
“On one level, this is surprising. As CEO of the CBI, I heard week after week from companies in the UK – both owned by the UK and those with foreign parent companies – how a lack of skills is holding back their business from growing and innovating.
“But I also know that skills have long been a ‘Cinderella’ of public policy, neglected because they are complex and too few public policy makers have personal experience with skills systems in the UK.”
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