My Lords, the UK has cemented its strong position for attracting foreign direct investment in Europe, being ranked by the OECD as the number one destination in 2014. The OECD’s estimates show that the UK received $72 billion of foreign direct investment flows.
I thank the Minister for that reply. This illustrates that under the existing EU rules—and I could say the same about other matters under the existing rules—Germany and France have 25% higher productivity than we do. German exports are three times greater than ours. It is therefore not the so-called EU red tape that stops them doing that. That leads to two questions. First, is it not clear that our economic redemption in this country lies in our own hands even under, broadly, the existing EU rules, which we played a major part in writing?
Secondly, in order that the debate on the referendum on us staying in or getting out is evidence-based rather than just claim and counterclaim, not least on the impact of international investment, do Her Majesty’s Government agree that our electorate are entitled to hear objective assessments from a body such as the Office for Budget Responsibility rather than simply leaving them at the mercy of the objectivity of the Daily Mail?
My Lords, improving productivity is indeed one of the key economic challenges for this Parliament. By the Budget, we will have published our productivity plan. Evidence is always useful and important in public policy, but the EU needs to change and become more competitive and the Prime Minister is determined to deliver that through the referendum that we promised to the British people.
My Lords, this House will be aware that many small and medium-sized British companies depend on being the supply chain to foreign-owned companies located in the UK because of our membership of the EU. Is the Minister able to give me an assessment of their contribution to our GDP and how much would be at risk if we were to leave the EU?
My Lords, would the Minister be very kind and answer the final part of the question from the noble Lord, Lord Lea, which was what intention the Government have of providing objective information to the electorate on a whole range of issues relating to the forthcoming referendum, of which this is an important one? What are they actually going to do about it, given that there is no legal base for providing that information in the referendum Bill?
As noble Lords will have seen, the Prime Minister has already started to discuss his plans for reform and renegotiation with his EU colleagues and associated analysis. We expect to set out some further details at the European Council meeting at the end of June.
Does the Minister agree with me that the UK’s long-term performance under successive Governments in attracting foreign direct investment has been vital? Given that the increase in FDI in the last five years has grown faster than the UK economy and GDP per head, does she agree that this recent performance raises questions about the potential contribution of foreign direct investment to UK economic performance? Could she explain why we appear to see very little impact on productivity from rising levels of foreign direct investment and what changes are required to the inward investment strategy?
The noble Lord is right to congratulate the country on the improvements in foreign direct investment. One should pay tribute to companies such as Nissan, Tata and a whole load of smaller companies for coming to the UK, taking advantage of our flexibilities and low tax rates to do so.
The issue of productivity is a bit of a dilemma, which is why my right honourable friend the Chancellor has said that he will publish a productivity plan to make Britain work better, building on the good start made in education and skills, deregulation and so on that we discussed in the previous Parliament.
My Lords, will the Minister confirm that over the years neither the department of trade nor the “invest in Britain” agency has given membership of the European Union as one of the 14 reasons to invest in this country? The reasons given are more likely to be language, time zone, educated workforce et cetera. Is it not true that foreign investors and indeed clients know that if we left the EU our trade with it would continue, if only because we are its largest client?
I note with interest what the noble Lord says, and I agree that all the things he has listed are vital reasons as to why people want to invest in Britain. We have unique labour flexibility, it is easy to set up business here compared with other countries—as I know from having been a business person for 17 years—and we have a good, welcoming tax regime and very good education.
My Lords, does my noble friend not accept that it would be a good idea to provide objective information so that we can have a sensible debate in the forthcoming referendum? Should we not be conscious that the scaremongering tactics that were used in the Scottish referendum proved deeply counterproductive, and that those who wish to remain in the European Union would be wise not to spread the myth that Britain cannot survive alone, using its relationships with the Commonwealth and elsewhere to maintain our prosperity and employment?
My Lords, not everything in the garden is as rosy as the Minister has pronounced. Tata Steel, which she mentioned earlier, is withdrawing pensions from its employees, which did not come in for blue-collar workers until 1973, so there will be a call for strike action for the first time in many years in that vital industry. Not everything is perfect at the moment.
I agree with the noble Lord that the car industry is vital, and I have been very much encouraged by how it has been changed and revived due to foreign investment but also to the brilliance and innovation of our country. There are always issues as industries change, and he rightly highlights one of them.