Britain risks being left behind in the escalating battle for foreign investment unless it can improve the level of skills available to foreign firms, according to a hard-hitting report.
A task force led by former CBI chief executive John Cridland has warned that basing the UK’s attractiveness on cheap labor is no longer enough, as other countries increasingly use well-educated workers as a magnet to attract business.
The report, from the Skills Task Force for Global Britain, says countries that have been successful in attracting foreign direct investment (FDI) have a workforce with a sophisticated range of skills to attract investors. The task force called on the Department for International Trade to take a similar approach for the UK.
Cridland said: “For big foreign investors, skills are important. If they cannot find them here, they will develop in other countries.
“The UK has been successful in attracting foreign investment in the past, but it relied on low labor costs rather than skills. We are now at a tipping point. There is a real risk that the UK will be overtaken by other countries where the offer to investors is skill-based.
The report found that nearly half (46%) of foreign businesses said they would move their operations overseas if they couldn’t acquire the skills they needed, compared to just over a fifth ( 22%) of national companies.
In addition, three-fifths (61%) of foreign businesses said they would expand overseas if they could not acquire the skills they needed in the UK, compared to only a third (32%) of national companies. The report added that UK FDI was too concentrated in the economically dominant areas of London and the South East, so creating more skilled and better paid jobs was key to the government’s leveling program.
In 2020 Boris Johnson announced a ‘radical overhaul’ of education for the over-18s, including a ‘lifetime skills guarantee’, under which every adult without an A level would be funded to take a university course to “skills in high demand”.
Cridland said the government needs to appreciate the link between skills and attracting foreign investment. The education department was responsible for skills but was not interested in foreign investment, he said, while the international trade department was looking to attract foreign investment but was not interested in skills.
The former CBI chief executive said that when potential overseas investors were introduced to heads of higher education institutions in the UK, they were made aware of the courses currently on offer.
“In places like Ohio, Singapore and the Republic of Ireland, foreign investors are asked: ‘What do you need?’ They’re getting ahead of the game.”
Cridland said the link between skills and foreign investment had not been examined before and did not appear to be a major consideration when developing FDI policy.
“On one level, it’s surprising. As Chief Executive of the CBI, I heard week after week from businesses across the UK – both British and those with overseas parent companies – how a lack of skills was preventing their business from growing and growing. innovate.
“But I also know that skills have long been the ‘Cinderella’ of public policy, overlooked because they are complex and too few people who make public policy have personal experience of skills systems in the UK. “