§ 6. Mr. Iain Luke (Dundee, East)What further incentives the Treasury will provide to encourage inward investment into the United Kingdom. [68403]
§ The Chief Secretary to the Treasury (Mr. Paul Boateng)Announcements made in this year's Budget will further serve to consolidate improvements in the UK's performance relating to inward investment. The extension of R&D tax credits to large companies and the move to exempt corporation tax for capital gains and losses on the most substantial shareholdings in trading companies will make the UK an even more attractive location for foreign investors.
§ Mr. LukeI thank my right hon. Friend for that answer. Does he agree that the extended R&D tax credit introduced for larger companies in this year's Budget will not only help to sustain high inward investment in this country, but encourage foreign companies already located here to follow the example of NCR in my own city and locate more R&D facilities in the UK, thereby strengthening the likelihood that their corporate presence here will continue?
§ Mr. BoatengI am grateful to my hon. Friend for the interest that he takes in inward investment generally and the work that he has done in his constituency to promote it. He makes an absolutely accurate point on the impact of the R&D tax credit, but, importantly. linked to Dundee's success in inviting and securing high-tech investment in that constituency are the announcements on science made by my right hon. Friend the Chancellor in the spending review. They will further enhance the competitiveness and success of our efforts to secure inward investment into the UK.
§ Miss Anne McIntosh (Vale of York)Will the Chief Secretary tell me what the level of inward investment in this country was on 1 May 1997 and what it was on I May this year? If it has gone down, to what extent is that attributable to the £25 billion raid on pension tax credits?
§ Mr. BoatengIt has no connection whatever with the so-called £25 million raid on pensions. What the hon. Lady must understand—[Interruption.] The hon. Lady wants figures. Let me give her the figures. Direct investment flows to the United Kingdom increased threefold in the four years to the third quarter of 2001, and by 9 per cent. in the four years to the second quarter of 1997. That is the difference between our record of success in government, and the record of failure of the hon. Lady's party.
§ Mr. Bill Tynan (Hamilton, South)I welcome the measures that are being taken, but does my right hon. Friend accept that China in particular is attractive to multinational companies at present, and that investment has flowed out of this country and into China? Does he accept the need for analysis of the trading conditions that China is allowing for multinationals, to ensure that we are on a level playing field?
§ Mr. BoatengMy hon. Friend makes a fair point. China's accession to the World Trade Organisation will 413 no doubt assist that process, but it should be stressed that we in the United Kingdom offer a high skills base in terms of employment. What we offer, and what has been enhanced by the Government's decisions, is a stable economic framework and investment in education and skills. As a result, in a recent survey of developed and developing economies by UNCTAD—the United Nations conference on trade and development—the United Kingdom came second only to the United States in terms of its attractiveness to inward investment. That is a good-news story for UK plc.