The biggest single investment by a foreign company should create 6,000 jobs, helped along with £200m of taxpayers' money. Philip Johnson, Home Affairs Editor, documents the drama
THE demeanour of two men seated around the Cabinet table this morning will tell a story of multi-million pound intrigue that would not be out of place in a City boardroom.
On the youthful features of William Hague, secretary of state for Wales, will be etched the tell-tale signs of jetlag and a barely suppressed smile of self-satisfaction. A few places away, the face of Michael Forsyth, Scottish secretary, will be wreathed in disappointment.
The two men are on friendly terms and have much in common but their departmental responsibilities have pitched them into an unseemly battle for foreign investment.
Yesterday's announcement that the Korean electronics giant Lucky Goldstar is to locate a £1.7 billion complex in South Wales, bringing 6,100 jobs to the region, was an exceptional coup for Mr Hague after less than a year as Welsh Secretary, and a blow to Mr Forsyth.
The story of what is Europe's biggest inward investment deal began last September, when Mr Hague visited Seoul in support of a bid for Newport in Gwent to be the site of the LG semi-conductor factory.
His sales pitch was familiar. Wales has an excellent rail and road network, with links to the South East, the Channel tunnel and Europe. Mr Hague was also offering a generous subsidy, which the Welsh Office would still not disclose last night but which has been rumoured to be at least £150m. If this is correct, the cost of £25,000 a job would be one of the higher subsidies ever offered to an inward investor.
Both Scotland and Wales, together with some English regions, can offer generous grants under the Regional Selective Assistance programmes to entice foreign firms.
However, questions are now being asked about whether the whole system is not now in need of overhaul.
Last month, Wiliam Waldegrave, Treasury chief secretary, wrote to both Mr Hague and Mr Forsyth proposing that inward investment should in future be controlled from London by the Department of Trade and Industry's Invest in Britain Bureau.
The idea went down like a lead balloon in the offices of the two protagonists and has apparently been blocked. But Mr Waldegrave's arguments remain valid and have apparently been driven home by the prime minister.
They fear independent competing investment agencies are wasting taxpayers' money by engaging in a Dutch auction for jobs that allow multinationals to play one against the other for the best deal.
Treasury officials would rather see a UK-wide co-ordination of the efforts to attract investment, not least to ensure that the English regions get a slice of the action. Figures published by the DTI this week show that in the year to March 1995, Wales and Scotland won 52pc of all grants to investors in assisted areas, though they account for only 14pc of the population.
There is a fear, however, that Scotland and Wales are becoming saturated with electronics plants and that future investment should be directed elsewhere.
It would also make greater political sense for the government to channel more inward investment into the English regions. There are, after all, only 10 Conservative MPs in Scotland and six in Wales.
Treasury officials and their ministers suspect that the Scots and the Welsh are bending the rules, providing extra incentives to companies to locate in their areas, something flatly denied by both departments.
"The LG deal was within European and Treasury limits," said one Welsh Office source. "There was nothing improper."
