Attracting international investors: Harrington Review boosts role of Office for Investment
Writing a guest post for GIIA, Gavin Winbanks proposes how the UK government should offer a more coordinated, visible and focused welcome to foreign direct investment
For the global infrastructure investor community, a standout element of the UK Chancellor's Autumn Statement was the acceptance of the Harrington Review recommendations, including the announcement of an enhanced role for the Office for Investment (OfI) to support the landing of strategic projects in the UK. My suggestions on how HM Government (HMG) can make a success of the expanded remit for the OfI, as one part of the overall puzzle are as follows;
The OfI was established in November 2020, a joint unit between the Department for Business and Trade (DBT) and No.10 Downing Street. For those unfamiliar, OfI’s purpose is to work across Whitehall to land strategic projects in areas of priority to the Government, where other parts of Government are unable to deliver a key project in isolation.
I was one of the first two officials on the team and we built the function from scratch, a hugely exciting enterprise. By the time I left, we had supported commitments to invest in excess of £14 billion – a demonstration that this kind of initiative can work and deliver results.
The Government’s decision now to expand the OfI is a timely intervention as the UK looks to rekindle the attractiveness of the UK as an investment destination. To be clear, the OfI will not solve everything, but it points to a government keen to place investment at the heart of policy, given the important role it plays in encouraging growth.
Below are my suggestions for the way in which the enhanced responsibilities of the OfI have the greatest chance of being successful and becoming an essential part of the investment landscape in the UK;
The Sovereign Investment Partnership between the OfI and Abu Dhabi’s Mubadala Investment Company was the largest announcement led by OfI in its first year. To unlock the UAE’s commitment to invest £10bn in the UK, I brought together more than 50 officials across Government – central and local – and across DBT to ensure that we were able to identify opportunities relevant to Mubadala. That single front door was absolutely essential and made communicating a strategic single story to Government so much easier. Having the machinery of Whitehall coalesce around this negotiation was absolutely vital, and commendable for the support it offered. Maintaining this support, in the face of other challenges and the potential for fiefdoms, is critical.
Over the past few years, policy changes have been rapid and significant, and often contradictory from the investor perspective. For investors with the most significant projects, knowing where to engage, how to engage and having the confidence that the officials with whom you are dealing are able to make a difference is absolutely essential. The OfI has strong Whitehall and commercial expertise, and being able to build on that and support investors to understand how they can engage with OfI is going to become even more important. For investors, it is also vital to be clear on when something is NOT for the OfI. It is tempting to see this team as the panacea to all the UK investment challenges, but it is but one part of an entire process.
Most people assume that Government does (or should) talk with one voice. Unfortunately, it does not and different policy approaches between departments (particularly as it relates to changes in Ministers), makes it hard for officials to talk with one voice to an investor. It makes it even harder for investors trying to seek clarity on how to land important projects. Addressing many of the systemic challenges facing the UK is not the sole responsibility of OfI but there are some many key learnings which reside in the experience of the team. HMG needs to address these issues of integration and the OfI should be a central repository of this knowledge, unafraid of tackling tricky issues.
Alongside the promise by Government to review by next spring the various investment facilities for investors, work needs to be done to give investors comfort on the roles being played by different departments and how everything fits together. Investors regularly highlight (and do not understand or have the bandwidth to engage with) the variety of other departments which have the power allocate funding to unlock projects. For large investors operating across asset classes, there might be additional touchpoints with the UK Infrastructure Bank and the Infrastructure and Projects Authority, Homes England and beyond. The harder HMG makes an investor work to land an investment, the easier it is for an investor to choose another jurisdiction. Having a single chaperone has to be a positive.
So, while I am really positive about the impact of an enhanced OfI, we also need to look beyond. Outside of the OfI, the decision to set up a Ministerial Investment Group to drive the government’s strategic approach to its five priority growth sectors – as Harrington recommends - is hugely positive as well (and a return to form which used to give investors comfort). Positive too is the Government meeting investors during this week’s Global Investment Summit.
Government having the courage to commit to these strategies over the longer term and - without being too cheeky - keeping Ministers in place for long enough for them to be committed to the delivery of the strategy, will also make the life of the OfI much easier.
A globally competitive OfI is just one of six headline recommendations in the Harrington Review that the Chancellor accepted. I welcome it; now Government must also ease the other large and systemic challenges that investors face.
Article written by Gavin Winbanks, who is founder of capital investment consultancy White Hawk Green and was co-founder of the Office for Investment. Prior to that he spent more than a decade at Macquarie, working with governments internationally.
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