UK at skills tipping point in quest to attract FDI – WordSkills - OCO Connect

UK at skills tipping point in quest to attract FDI – WordSkills

We’ve just supported The Skills Taskforce for Global Britain in developing a report that argues the UK is missing opportunities to secure FDI (Foreign Direct Investment) due to undervaluing the importance of skills for investment attraction.

The report found that the UK needs to supercharge its skills offer now if it wants to attract high value FDI to all regions of the UK, as the landscape turns more competitive and dynamic than we’re traditionally used to.

During the course of our research, we investigated how other leading Investment Promotion Agencies (IPAs) promoted technical skills to win foreign investment and developed a range of case studies on Ireland, Costa Rica, France, Singapore, Ohio, and Victoria (Australia), where we’ve seen a significant ‘gear-change’ in relation to skills, over the last number of years.

That change in focus can be seen with the UK’s closest neighbour – Ireland – and Singapore, two countries that have showcased how skills can be used effectively in attracting FDI.

Historically, the UK’s skills offer has focused on cost competitiveness, but the report has found that competing countries are improving their skills and offering well-trained workers to attract FDI.  Ultimately, the report puts into sharp focus that the UK’s sales pitch of ‘cheap labour’, is no longer good enough incentive to attract inward investment.

In fact, the report found that nearly half of foreign firms were prepared to move their operations abroad if they couldn’t get the skills they needed. Additionally, six out of ten foreign firms said they would expand overseas if they couldn’t get the skills they needed in the UK.  A warning that the UK needs to improve the skills on offer to potential FDI firms or risk losing out to another country.

Overall, findings highlighted three common trends among those IPAs with a successful approach to skill promotion for FDI:

  1. Institutional Integration – the institutions that control skills policy and FDI work closely together
  2. Targeting of investors – deliberately targeting – and sometimes incentivising – investors that will bring new skills in nascent industries
  3. Encouraging skills transfers – once foreign investors arrive, maximising skills transfers to the local workforce through apprenticeships or other vocational training


Additionally, our research highlighted an opportunity for the UK – to leverage its success in attracting FDI to build its skills base and deliver prosperity to all regions of the UK

Dr Neil Bentley-Gockmann, OBE and CEO of WordSkills UK, says other countries that successfully attracted FDI had workforces with ‘a sophisticated skills offer to attract investors’.

“Competition is becoming fiercer, with a greater number of markets entering the race to attract investors and established markets becoming more strategic and less laissez faire in their approach to FDI,” he explains.

“At the same time, investors’ needs and priorities are changing, with an increasing focus on talent and on the technical skills which may have been overlooked in the past but which are critical for thriving sectors such as tech, advanced manufacturing and life sciences.”

He adds, “Whether you’re interested in attracting more investment to the UK or developing world-class skills, the message is clear – skills and inward investment need to be part of the same conversation.”

Echoing these sentiments, former CBI director-general John Cridland warns, “In the past, the UK has had a good record in attracting inward investment, but it has been based on low labour costs rather than on skills.

“We are now at a tipping point.”

In summary, the UK risks being surpassed by other countries where the skills offer is quality, not low-cost.  Skills matters.

The full report – ‘Wanted: skills for inward investors’ – is available to read here.


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