Civil service bureaucracy is acting “like a tax” on the economy and must be overhauled to close a £50bn-a-year investment gap between the UK and other rich nations, according to a major government review.
Lord Harrington, who was commissioned by Jeremy Hunt to lead a report into UK foreign direct investment (FDI), will warn on Wednesday that a revolving door of senior ministers and “willing amateur” civil servants are holding back the economy.
In a report published alongside the Autumn Statement, the Tory peer will urge the Chancellor to make attracting investment a priority in Whitehall.
It will call for a new “business investment strategy” led by a senior cabinet minister with dedicated resources to attract foreign cash and create more British jobs.
The Telegraph understands that Lord Harrington will reject assertions that a decline in inward UK investment over the past few years has been driven by Brexit.
However, the review, which was partly sparked by AstraZeneca’s criticism of the UK’s “discouraging” tax regime after it chose to build a new factory in Ireland, will also say that Rishi Sunak’s decision to hike corporation tax from 19pc to 25pc is not solely to blame.
Foreign direct investment (FDI) is crucial because it involves international companies building facilities, hiring workers and creating new products and services in the UK rather than just buying shares in British companies.
The number of FDI projects in the UK has fallen sharply over the past few years, according to the Department for Business and Trade, while investment as a share of GDP has consistently lagged behind other G7 nations.
Extracts of the 125-page report seen by the Telegraph lay bare the concerns of more than 200 businesses, banks and sovereign wealth funds which repeatedly highlight a lack of investment expertise across Whitehall.
It adds that a “risk-averse” system consistently outsources investment decisions to other bodies including the British Business Bank and UK Infrastructure Bank, creating further delays and bureaucracy.
“We have heard time and time again about government systems that are too often disorganised, risk-averse, siloed and inflexible when it comes to the needs of modern investors,” Lord Harrington, who served as a business minister under Theresa May, will say.