Report on Strategy 2010 Inquiry Volume 3
Volume 3 - MINUTES OF EVIDENCE RELATING TO THE REPORT
Ordered by The Committee for Enterprise, Trade and Investment to be printed 22 March 2001Report: 2/00R (Committee for Enterprise, Trade and Investment)
COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT: MEMBERSHIP AND POWERS
The Committee for Enterprise, Trade and Investment is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Assembly Standing Order No 46. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Enterprise, Trade and Investment and has a role in the initiation of legislation. The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.
The Committee has power:
- to consider and advise on Departmental budgets and Annual Plans in the context of the overall budget allocation;
- to approve relevant secondary legislation and take the Committee Stage of relevant primary legislation;
- to call for person and papers;
- to initiate enquiries and make reports;
- to consider and advise on matters brought to the Committee by the Minister of Enterprise, Trade and Investment.
The membership of the Committee since its establishment on 29 November 1999 has been as follows:
Mr Pat Doherty (Chairperson)
Mr Sean Neeson (Deputy Chairperson)
Mr Alex Attwood
Mr David McClarty
Mr Jim Wells*
Dr Alasdair McDonnell
Mr Wilson Clyde
Ms Jane Morrice
Mr Duncan Shipley Dalton
Dr Dara O'Hagan
Mrs Annie Courtney*
*Mr Campbell was replaced by Mr Jim Wells on 3 October 2000.
*Ms Lewsley was replaced by Mrs Annie Courtney on 29 January 2001.
TABLE OF CONTENTS
VOLUME 3
APPENDIX 4
MINUTES OF EVIDENCE
Northern Ireland Business Alliance
Sir George Quigley
Industrial Research & Technology Unit (IRTU)
Local Enterprise Development Unit (LEDU)
University of Ulster (UU)
Moyle District Council
Ulster Society of Chartered Accountants
Ards Borough Council
Equality Commission for Northern Ireland
Falls Community Council
Strabane District Council
McCormick Properties
City Partnership Board
Derry Investment Initiative
Banbridge District Council
Sinn Féin Ireland
National Association of Teachers in Further and Higher Education (NATFHE)
Sainsbury's Supermarkets Limited & Messrs Drivers Jonas
Craigavon Borough Council
Youth Council for Northern Ireland
Eurotrack Ireland
Training and Employment Agency (T&EA)
Industrial Development Board (IDB)
Department of Enterprise, Trade and Investment (DETI)
MINUTES OF EVIDENCE
TUESDAY 19 SEPTEMBER 2000
Members present:
Mr Neeson (Deputy Chairperson)
Ms Lewsley
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Dr P Haren )
Mr N Smyth ) Northern Ireland
Mr J Stringer ) Business Alliance
1832.
The Deputy Chairperson: You are very welcome. Dr Haren, do you wish to make an opening statement?
1833.
Dr Haren: We are very pleased to be here on behalf of the Business Alliance. I represent Growth Challenge in the alliance; Nigel Smyth is the Director of the CBI; and John Stringer is from the Northern Ireland Chamber of Commerce and Industry.
1834.
Dr O'Hagan: In your submission you recommend that 'Strategy 2010' be continuously updated and reviewed. What sort of review would you like to see? How comprehensive should the review be? Should it concentrate on specific problems or should it be root and branch? What policies should be in place to improve the participative process?
1835.
Dr Haren: It is extremely important for all of us to know where we are in 'Strategy 2010', to understand its vision for the economy and what emphasis it places on sectoral development. We must ask if there is coherent agreement on these diverse elements because a coherent strategy is needed to drive it forward.
1836.
There are various types of review capability. External observers will form their own views on what the strategy is and on how it is implemented. The Economic Development Forum, the Northern Ireland Economic Council, the Northern Ireland Economic Research Council will, I am sure, provide useful comments. This Committee will have a great deal of interest in how 'Strategy 2010' develops.
1837.
The document itself has attempted to define the agenda, and we need to find the principal parameters which must be monitored. There is a difficulty in describing what the monitoring parameters are. First of all, we must understand and agree on what we are trying to do. Businesses in Northern Ireland are concerned that a level of clarity has been reached in other regional economies on defining what a regional economy is about that has not been reached here.
1838.
Mr Smyth: 'Strategy 2010' sets out a series of long-term objectives to which we will certainly sign up. It would be useful to have certain short- to medium- term milestones in place to measure the impact. Our members were very keen to support the thrust of the Economic Development Forum to champion 'Strategy 2010', we are of the opinion that Northern Ireland has been weak in implementing the various reviews.
1839.
We saw a role for a forum to bring the social partners together, to champion it, to be able to monitor progress, to create a dynamic in it. One of the key success points in getting to 'Strategy 2010' was involving so many people from the private and public sectors and the universities. One should not underestimate the benefits that have flowed from that process, and companies are already acting on them.
1840.
So some form of consultation will be necessary, and we expect to see some work groups. There was a view that there are particular issues that we need to revisit. Putting that dynamic is very important. As Dr Haren said, it is very important that we first agree if this is the direction we are going, then set some short-term milestones and monitor it very carefully.
1841.
Mr Stringer: To answer your question of when, specifically, the answer is, in my view, not now. The key word is "ongoing" rather than a major orchestrated look at the situation. 'Strategy 2010' was issued in March 1999 and here we are in September 2000, still talking about it. That is not all bad. By its very nature, it was designed to inspire thought and criticism, both negative and positive, and we have got all of that. In one and a half years, both politically and economically, Northern Ireland has moved on. In the business community we feel that in political terms it is mostly positive, and in economic terms we also think positively. In so many areas of our activity Northern Ireland has made progress. We go on with the negatives and could repeat them, but the positives should not be forgotten and in the business community's view the positives outweigh the negatives.
1842.
Against that background, to come back to where we began, there should be an ongoing assessment, reassessment, looking at it in forums such as this. I support what Dr Haren and Mr Smyth have said.
1843.
Dr O'Hagan: I would like to move on to the area of Selective Financial Assistance (SFA). Do you agree with the recommendation that SFA should be less readily available and that the focus should be on softer forms of assistance? Do you see any problems with this, and what type of softer forms of assistance should the focus be on?
1844.
Mr Smyth: We will agree that we have to seek a reduction in SFA, in particular in capital assistance. In the last three to four years we are starting to see that trend emerging. Support should certainly go into supporting companies that want to be world-class, that are very growth-and export-orientated, developing human resources, and investing in research and development. That leads into the softer issues. In the softer issues we would see the importance of research and development, and innovation. Also, product process development has been very important, and we would be looking to see support in that sector. Marketing support is very important, whether it is in market research or in developing new markets. I mentioned innovation and the whole area of human resources - management development with the whole area of reskilling ongoing.
1845.
The other thing which is covered in our submission is that 98% of Government assistance goes to individual companies and 2% goes on a collective basis. These figures may be a couple of years out of date. We should be trying to move that selection to help a number of companies, whether it is in a marketing area or perhaps in a research and development project, to create this type of collaborative work. That could add more value; it is not distorting the market place. So in addition to focussing on the marketing, and research and development, we are looking to try to focus assistance on more collaborative activities. We would be very keen to see this.
1846.
Mr Stringer: Just like politicians we business folk agree with each other most of the time. That is a slight overstatement, but I certainly agree with Mr Smyth's premise there.
1847.
I would like to focus on one specific area - inward investment. In any "tweaking" - if I can use the word - or reshaping or tailoring of Selective Financial Assistance or whatever we choose to call it, we must remain competitive. I guess we will always have the situation in Northern Ireland where indigenous industry is of key importance to us and so is inward investment. You know very well that just down the road on our own doorstep in the Republic of Ireland and across in Wales and Scotland, and I now add to that the English regions, we have very active competitors for every job we would seek to bring into Northern Ireland. Whatever we do with the package, however we tailor it, it must be competitive.
1848.
The Deputy Chairperson: On a recent visit to North America the one thing that impressed us very much in the Small Business Administration was that they were giving out loans, guaranteed by the Government, to small businesses. That seemed to be very successful, and we were very impressed by the fact that there is only a 6% default in pay-back.
1849.
Mr Stringer: You may perhaps know that there is a small loans scheme operating in Northern Ireland. Your point was well made. The default rate is very low indeed. It is very encouraging.
1850.
Mr Smyth: I think that is done through the peace and reconciliation fund's low interest loan. The take-up of that has been very high. It is simple, and it is easy for companies to understand. One other area I would like to add is the whole concept of benchmarking and best practice. We see that as important in terms of developing efficiency and capabilities if companies are going to become world-class.
1851.
Mr McClarty: Do you believe that the 'Strategy 2010' report is based on sound economic analysis and research? Are there any particular areas in which it is weak? In what areas do you believe there should have been a greater focus?
1852.
Dr Haren: We would say that at the macro level there is enough sound economic analysis in it to guide us in making some of the major decisions for the future of the economy. There has been some detailed criticism of, for example, the lack of sufficient mapping from recommendations to targets. That criticism may be valid. It is very important, as we deal with this document or description of a strategy, that we should learn how to deal with it constructively. We should use the criticism to understand what the weaknesses are. We should ask the critics to tell us how to repair those weaknesses, how to draw specific conclusions from the criticism.
1853.
We should also understand in critical terms what is right about it and build upon that. Taking the purest of economic analysis, one of the lessons I would try to draw is that it did not predict the growth which has been seen in the Republic of Ireland, nor is it capable of analysing it in retrospect. We have enough analysis in the report to tell us what we face in terms of the challenges of global economic forces, forces of technology which are changing the nature of sectors, which are saying that certain sectors will be weaker in the future and certain others will be stronger. We have analysis which shows us the skills base within the economy. What needs to be done in relation to that skills base and that type of analysis is, I think, as important as some of the more refined economic analysis in telling us what we need to do.
1854.
The other thing I would try to find from the economic critics would be what are the comparators, because we are not just looking at this report and this strategy. There are other reports and strategies available to us. We should have a comparative criticism which is saying "How does this look against others? What can we learn from others? And what do we need to add to this?". We must quickly find a way of arriving constructively at conclusions and of bringing the discussion process to making decisions. There is more than enough analysis to help us do that.
1855.
Mr Smyth: I support what Dr Haren said. In terms of the weaknesses, I would have identified with one area of management development. I was conscious that the group which was tasked with the whole area of education, training and skills was rushed, and the whole process was speeded up. In my view, management development did not come out as strongly as I would have liked. A management council has now been set up and is looking into that. The activities and results in the private sector will come from our indigenous companies as much as from other investors, and the key to this is the direction from those companies, the ambition to go forward and to pick up ideas.
1856.
Mr Stringer: Just a simple message. There are some criticisms around the edges. Let us leave those criticisms aside and concentrate on the main content of this report where there is very much that is positive.
1857.
Give or take some small exceptions, there is no element of our economy, or interface with our economy, not covered or picked up in this report.
1858.
Mr McClarty: You have acknowledged the difficulty in revising the rate of corporation tax. What form of fiscal restructuring is essential to improve Northern Ireland's competitive position?
1859.
Mr Smyth: We have seen the impact of the attractive corporation tax rates in the Republic, which, by 2003, are going to be available to all companies across the spectrum, including the service sector. The impact of this has not been fully assessed yet. We have been encouraged by the Chancellor, and precedents have been set.
1860.
At present we have 100% capital allowances for small to medium-sized enterprises in Northern Ireland, for the life of the Parliament. That has been helpful to small to medium-sized companies, not expensive to the Exchequer and benefits the cash flow of companies and encourages investment. While we would like to see corporation tax lowered, you need something that could be practically delivered. Some of our colleagues in the health technology sector would see that as a major benefit. I can see a lot of difficulties with corporation tax so it may be better to focus on allowances. Extend capital allowances more broadly to medium-and larger-sized companies. Do something specifically on research and development. Introduce 200% allowances to that area to encourage more investment. Things have to be deliverable.
1861.
We recognise that it is not only the UK Treasury that we have to battle with. We have to work within an EU context. There are going to be difficulties but the message should be "Do not underestimate the impact of what is happening in the Republic".
1862.
Ms Morrice: One of my particular interests is remembering to do what we are good at. If you look at the traditional sectors - textiles, engineering, food processing - they are experiencing great difficulties at present, and we know the reasons why. What could be done to adapt these industries, to help them get higher technology and restructuring?
1863.
Dr Haren: We have some experience of working with individual sectors within Growth Challenge, and have attempted to address a broad agenda at times. Part of that agenda has been newer technology areas, but part of it is some of the more traditional industries, especially textiles. Some of the work has focussed upon the importance of design and marketing, to produce a product that is saleable. There has also been a comparative study of what is going on in other regions, such as Jutland in Denmark. The information from there is that the industry there has restructured itself to recognise that the lower value-adding component of the industry is better executed offshore, and the higher value-added component can be kept onshore, and still make for a very viable industry.
1864.
One thing that the Department of Trade and Industry competitiveness White Paper gets correct is that the knowledge-based economy is not about information and communication technology areas only. It is about knowledge in every form in the economy. The question is how to translate into practical forms and process application ways of bringing knowledge and ICT-type technology into any firm, including the more traditional ones. Actions can be taken at individual sectoral level to ensure that the whole thrust of e-commerce touches all sectors.
1865.
However, those traditional sectors have real opportunities because of their depth of skill and knowledge. It behoves us to find ways of reinforcing them and maintaining their strength as far as we can, but it is also necessary to accept that there are difficult decisions. If one has limited resources, as has always been the case for us, one must choose where those resources are placed. A large part must go into newer technology to develop those areas which are clearly identified worldwide as growth opportunities for the future. If we are not in those areas, the question of where the economy goes in the future is a real issue for us.
1866.
Mr Smyth: A fairly detailed set of reports was created as part of 'Strategy 2010'. In the textiles, clothing and agrifood sector, there was quite a strong view that people needed to work together and know the issues. Engineering is much more difficult, since it is a much more disparate sector. Some companies are doing very well, and engineering output has grown very substantially over the last few years. It is moving up the value chain. A tightening labour market is being created in the more high-tech sectors such as software, and the same is true of engineering, which will also have to respond to the problem, particularly with the impact of information technology and access to markets. What is happening in the clothing sector could well be seen in the engineering sector over the next decade.
1867.
It is a matter of developing new products, processes and capacities, and better design. For many companies, the big issue is the question of how to embrace new technology and develop links with universities. We believe that certain barriers must be addressed. There is a lack of awareness about facilities and resources in universities, who must be more responsive in order to understand companies' needs. People know this must happen, but I cannot say how long it will take to implement.
1868.
Ms Morrice: An example of that was when we visited the Northern Ireland Technology Centre at Queen's University and saw the wonderful test software on aeroplane construction. I asked if it could be applied to ships, and was told this was possible, but that it was not being done.
1869.
Mr Smyth: There is a great lack of awareness. With the Northern Ireland Technology Centre, we have in the order of 13 centres of excellence. The vast majority of small and medium-sized companies are unaware of these resources. Money is going into the university to start marketing it and developing links, and companies will have to take advantage of that. However, they must recognise that they must put something into this themselves to develop those links. It means recognising the importance of involvement in technology.
1870.
Ms Morrice: What about inward investment in this area? It could fill gaps in the manufacturing and service sectors, strengthening existing industries. What incentives would you recommend to that end?
1871.
Dr Haren: The principal point with which I should like to start is perhaps rather original. We must understand what sectors we are targeting for development, facing the fact that one must place bets. This sometimes feels uncomfortable, but one must place some bets on what one feels are the technologies and the sectors of the future. It is impossible to run an inward investment policy which is all things to all men, which is why one must start to think about which sectors are important.
1872.
One must also build up a critical mass of expertise within sectors, for part of the incentive to the outside investor is that there is such a mass of expertise in the economy for a firm to build on - for example, a network of suppliers upon which a new inward investor can depend, and skills, expertise and management knowledge appropriate to the sector, which the new firm can lean on when setting up. That can only be there if one has taken decisions and put a certain level of investment into the sector. While you are obviously strongly focused on Northern Ireland, we also argue that it is important to recognise that its economy spills across the border to the South in a very open fashion.
1873.
There are linkages to Scotland and to the remainder of the United Kingdom. We should recognise that, as we are building sectoral mass, we should know what is happening in our neighbouring economies. We can lean on them for some of the critical mass that we are searching for. If my understanding is correct, then we are back to the question of what inward investment package will make it work.
1874.
Ms Morrice: We are targeting local industry.
1875.
Dr Haren: And targeting external investment to sit in partnership beside existing industry. The equation is similar. Are there inward investors who want to invest in those sectors, and what are they are looking for? Much of the investment in those sectors has, in reality, gone to the lower cost economies and will probably remain there. We have to reinvent the existing sectors to add to their value. We can not depend on external investment to do much of that for us, but I would not be sufficiently knowledgeable about the individual sectors to say whether that applies to all of them. The first job we must do is to build up expertise so that the sector has attractions to the outside world. There needs to be something that identifies Northern Ireland as being different to the many other economies being considered.
1876.
Ms Morrice: What about Irish linen?
1877.
Dr Haren: I am not sure how good the market is, but I am sure that it is the beginning of a market.
1878.
Mr Smyth: There tends to be a lot of focus on jobs and inward investment, but the Confederation of British Industry sees the benefits of inward investment as going well beyond bringing in direct employment. It is about bringing in best practice. This is outlined in the evidence that we submitted about inward investment to the Northern Ireland Affairs Committee, which you have already had a comprehensive look at.
1879.
In terms of computer-aided design, computer- aided manufacturing and just-in-time sourcing, large multinationals are significantly much more advanced. They are in the order of double the magnitude of other companies in the market. Large multinationals are using these techniques much more than small to medium- sized enterprises. Obviously we can involve more companies, and managers may then move out to small to medium-sized companies in Northern Ireland, which will offer benefits.
1880.
Earlier we talked about the move to reduce Selective Financial Assistance. We would argue that we need to create the right skills base for investors. Everyone benefits from that. This is what IT companies are particularly looking for. Things like corporation tax may be nice, but if the skills base does not exist then we are going to be unable to attract them. Our priority must be to invest in our skills base, in education and training, and in ensuring that the transport infrastructure is right. Whether it is by use of the roads network or public transport, getting people to these jobs is important. These companies can determine where they will invest. Even though we may want to steer them into certain areas, they are the final deciders.
1881.
The important parts of the package that can attract these companies in are: direct flights into Europe and the USA; the supply base; and research and development in the universities. That is why it is important to focus on those.
1882.
Mr Stringer: Good quality inward investment in tomorrow's sectors, which are now today's, also leads, in a big way, to indigenous business growth, and it could be more. If one thinks of the larger inward- investment companies in Northern Ireland, and the jobs that are associated with them in other local industries, the figure is massive.
1883.
We should also keep our discretion in balance and when we talk of inward investment also talk about our indigenous economy, which is substantial. That brings in new words like "entrepreneur", which is a new part of the equation in Northern Ireland. In 'Strategy 2010', as in so many other documents, we read about developing the entrepreneurial culture. It is easy to use the words, but it is not so easy to deliver, and there is a raft of discussion and work to be done in that area. Inward investment is important and indigenous growth also matters.
1884.
Ms Lewsley: You referred in your submission to the lack of basic work skills in the 24 to 55 age group. Does 'Strategy 2010' deal with that deficiency? What kind of policies would best counter it? What action would be necessary to develop stronger links between industry and education and training?
1885.
Dr Haren: Bodies such as the Northern Ireland Business Education Partnership have undertaken a review of what they believe is possible and what they can bring to this issue. As individual companies, or collectively through Business in the Community or Growth Challenge, we have undertaken programmes with and without Training and Employment Agency support in the area of mentoring and of providing spare training places for outsiders on in-house courses. We have tried to find out what can be done to address the problems of basic numeracy and literacy.
1886.
However, it must extend beyond that to other basic skills; it must address the new technology which people will soon need to master in order to hold down employment. It is very difficult to name one particular policy initiative which changes this. We must, first of all, be willing to recognise the problem and to put resources into it. We must look at the existing use and targeting of resources. We need partnership between the policy makers and the private sector to solve this problem. The private sector is willing to address this issue, as it is one which deals with the proper use of resources.
1887.
The Republic of Ireland quickly found that it had not the skills and resources in its economy to meet the demands of rapid growth. We do not face that problem - yet.
1888.
We ask policy makers to listen to the ideas and programmes that are put forward and to hook on to them. A combination of resources will be necessary to find the solution. The construction of the structural funds will drive the issue of building the economy's capacity and will recognise that the economic equation also encompasses social inclusiveness. All these are parts of the problem. We need a broad range of initiatives to take the best programmes and spread them in such a way that we get the best out of them.
1889.
This is an extremely complex problem with no easy solution. That we have found difficulties in dealing with it should not surprise us; what matters is our willingness to address it.
1890.
Mr Smyth: 'Strategy 2010' emphasised the importance of linking education, training and business. Business has a key role in articulating these needs. Our focus is on "employability" - the values and attitudes compatible with work, the desire to learn and to apply that learning, to improve, to take advantage of change.
1891.
About 20% of people in employment have difficulties in those areas. Some of our larger companies are actively trying to address that and we need to learn from their processes, to share that more widely within Northern Ireland.
1892.
Key skills is a recurring theme and as we move into a more knowledge-based economy, including communication, team working, information technology, we would like to see that happening at second-level education. This has been more widely recognised in the universities. These are the skills employers are increasingly looking at. Our recent survey showed that those skills are going to become more necessary in the future, and we are trying to get that message across to the educational establishment.
1893.
One could argue that basic skills did not come out strongly in 'Strategy 2010', but it is an important area, encompassing a much broader range of issues. Dr Haren referred to NIBEP and we would be supportive of that, as well as helping the universities with graduate placements. Businesses believe that graduates do not fully understand their needs. We are keen to encourage people into work placements, and companies are keen to offer these placements.
1894.
Mr Stringer: I would like to emphasise basic skills. The situation is that factories have to train some employees how to read and write. This is a serious problem in Northern Ireland. It is a complex issue, and we could not cover all of it.
1895.
Universities have been well covered so I would like to focus on the further education sector. 'Strategy 2010' picks up well on this, and it is a key sector to be addressed for future needs and how outputs match employers' requirements. Also, how does the 11-plus fit into the system? We need to return to the beginning, to look at primary education.
1896.
Dr Haren: An educational system that produces people that do not have basic numeracy and literacy has questions around it. In the report there is a palliative post-event to correct a previous wrong. The fact that, in the report, we are dealing with 55-year-olds does not mean that we are not dealing with it at a much younger age. There are basic questions as to what the system is producing. We can try to produce palliatives, but you have to ask what the basic problem is. The report attempts to address aspects of the problem like trying to give a sense of the importance of equal rating for vocational qualifications. People need to recognise that it is not all about high academic achievement, as we sometimes define it. It is about a much broader sense of what life and achievement is about; what is actually needed to do a job in the workplace and be successful in a career. Other economies are better at doing that than the UK economy.
1897.
Dr McDonnell: I happen to believe that the education system is less to blame than the hopelessness factor that existed for many years. For a lot of children there was no achievement at the end. For the less intellectual, education was a hard struggle with no reward. The system either passed them by or they opted out.
1898.
While we may still have problems, if opportunity opens up we are now talking about an unemployment level of somewhere around an average of 6% or 7%. It is not so long ago it was probably 16% or 17% and in some places it was 60%. In that context I would be reluctant to come down heavily against the education system, until I saw where the trend was going over the next couple of years. But that is just a personal opinion.
1899.
Dr McDonnell: On the question of the single development agency which was recommended, what will be the advantages of such a body? Do you see any problems with it? I would tend to favour such a body, provided it talked to itself. The dilemma at the moment is not whether there are multiple bodies or single bodies. The multiple bodies that we have are not communicating internally, never mind externally. Ultimately my difficulty with a single development agency is that I believe that the new technology that you referred to, Dr Haren, would be neglected by it. How do we get a single development agency that accommodates the innovative stuff that you are working with?
1900.
Dr Haren: If I may I will open up our response to that and then try to develop it amongst us. I take your point about the importance of an agency's being in contact with the groups that it is trying to serve, apart from being in contact with itself internally and externally. Another dimension to that would be that it is extremely important that the agencies are in contact with what is the best practice in sectors or in particular industries so that we can understand and recognise what is needed in order to build strength.
1901.
From listening to the Minister I know that he is laying particular emphasis on the agencies making sure that they are in contact with local authorities and local development groups to ensure that the resource that is there in development terms is adequately tapped into. Clearly it is a conundrum as to why it is so difficult to communicate, but we all experience difficulties at different times in terms of covering the range of communication that is required in modern society. Firms on their side have difficulty in relating to the breadth of agency inputs that may be available to them, and actually mastering them and that is one of the drivers towards single points of contact or single agencies.
1902.
I would agree that the most important thing beyond organisation is implementation. You can change the organisation around, but not necessarily the implementation, and it is extremely important that people understand what is important in that respect. A large part of that is dialogue and listening and recognising that the people who hold the policy-making pen may not know all the answers. They need to make sure that they are listening to what the base of experience is telling them to do.
1903.
Mr Smyth: In terms of priorities coming out of 'Strategy 2010', the creation of a single development agency stood out from everything else as a big priority in our business community in terms of Confederation of British Industry members. You mentioned that they were coming from the IT industry. At the moment there are three organisations dealing with IT, the Industrial Research Technology Unit (IRTU), the Local Economic Development Unit (LEDU) and the Industrial Development Board (IDB). There is an overlap in bringing people together.
1904.
We will be quite strongly sectorally focussed within that, but we also think it is important to stress the whole culture of this organisation. We would like to see it one step removed outside the Civil Service mentality. We would much rather see a LEDU-type of organisation rather than IDB, which has some good people, but they come in, and they move out. There are a lot of issues surrounding the culture as well as the structure itself. We would prefer to see it with relevant technology and cross-functional management issues such as marketing and finance.
1905.
Mr Stringer: I would emphasise what Mr Smyth has said. If we take the different blocks which make up the Department of Enterprise, Trade and Investment family and stitch them together, we would save a little money, but I do not think we would be any further forward.
1906.
The key word is "culture". If we change the organisation's culture - and, as Mr Smyth said, it is one step back from the new one - and that will involve some degree of informed risk-taking, it will have a large positive impact on our economy in many ways. That will not just be in terms of inward investment or in the growth of indigenous companies, it will also be in terms of research and trade development, which I regard to be quite key roles for any agency.
1907.
I have had experience of IDA and Enterprise Ireland and where there is no perfect model, they provide a possible one. A degree of success has been delivered within that model. I am not saying that it is exactly the model we want, but it is probably relatively close to it. Given all those things, put together in that way, and coming up with a semi-private sector type of entrepreneurial activity, that would be of great advantage to Northern Ireland.
1908.
Dr McDonnell: I would like to come back on one point. I am quite happy to have a single body and that it be sectoralised. How do we protect innovation - for instance, growth challenge? Can that be protected and developed within any specific sector?
1909.
Dr Haren: I will relate the answer to the broader issue. We have been talking about 'Strategy 2010' - during the period in which we have been discussing the strategy we have probably had five or six reports published in the Republic in relation to economic development there.
1910.
Those reports are characterised by a commonality of thrust. It began in April 1999 with a technology foresight study indicating the priority technology sectors in which they needed to make progress. That was followed by a national development plan, which indicated the amount of money they were willing to target on individual sectors. The National Economic and Social Council said they must build upon those sectors in order to have an internationally competitive economy, which in turn will underpin the social agenda. They then moved into a Forfas enterprise 2010 document, which listed items such as sectors, technologies, higher value added, higher productivity in existing industries and more productive inward investment - which is capability focussed rather than capacity focussed. That is the term used to try and describe that it is not just investment in walls, but also what lies inside the walls that counts.
1911.
Most recently, there was an internationally traded services report which focussed on the areas of informatics, health sciences and digital media as being growth areas for the Republic.
1912.
Communication is partly about knowing what you are doing. It is about constantly repeating what you are doing and converging on the important areas. You will then begin to get the universities, industry, the private sector and the agencies working in the same direction against a common road map. That is one thing we are missing at the moment.
1913.
Dr McDonnell: 'Strategy 2010' listed 10 targets. Do you think they are achievable? There is a target that GDP should rise per head from 80% to 90% of the GB average. Should other targets have been set?
1914.
Dr Haren: GDP is a function of basic productivity within existing enterprise and the value added within existing and new enterprise. The equation of GDP per head is something which is a function of how the economy itself restructures. If we are talking about higher value-added industry, then that figure of GDP per head will move. The evidence in the Republic of Ireland is that GDP per head has moved in a way which was not forecast and which has gone faster than envisaged.
1915.
Analysis may inform us and tell us that the achievement of that target is difficult, but it does not tell us what we should be doing.
1916.
The Deputy Chairperson: Unfortunately our time is up. Dr Haren, I look forward to meeting you again in the not too distant future when you are wearing your other hat, and I hope that we will have a healthy debate on energy issues.
1917.
Dr Haren: We are grateful for the opportunity to be here today. It is very difficult to cover such a complex subject in a short time, and it is always difficult to capture the nuances of some of your questions, but we believe that we have covered the ground well today.
1918.
The Deputy Chairperson: I appreciate your contributions. They have been very helpful. We hope to conclude our public sessions in the next few weeks, and your contributions will be taken on board.
TOP
MINUTES OF EVIDENCE
TUESDAY 19 SEPTEMBER 2000
Members present:
Mr Neeson (Deputy Chairperson)
Ms Lewsley
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Sir George Quigley, Chairman Ulster Bank Group
1919.
The Deputy Chairperson: I apologise for the absence of our Chairperson, Mr Pat Doherty, who is unable to attend today. You are welcome to the Committee session and we appreciate your giving of your time this afternoon.
1920.
Sir George Quigley: I am delighted to be here and will help the Committee in any way I can.
1921.
'Strategy 2010' is an extremely comprehensive document. One of its strengths is that it was hammered out by the Departments and by the practitioners in the economic system who will have to make things happen and make it work - that is a fundamental strength. Equally, it is important that the central messages should not be obscured or lost by the width of the document. I hope that one of the major pieces of value added by your work will be that priorities will emerge more clearly.
1922.
The critical point is how one achieves the fundamental restructuring of our economic base. Much good work has been going on over the years to that end. I suggest that it has to be accelerated - the Committee might agree with me about that. If one takes that as being the spinal column of the whole matter, how does one then fix the priorities around it? That will involve the skills base, research and development and producing a society which is conducive to achieving high levels of growth based on the restructured economic base that we all want to see.
1923.
In addition, we need to achieve development to have a balanced economy, to have a balanced society and to share the benefits appropriately widely through that society.
1924.
Ms Lewsley: My question relates to technology. What steps would you like to see taken to ensure that Northern Ireland seizes all the opportunities offered by the e-commerce revolution? Also, because of technological developments, increases in competitiveness, skills and employment in areas such as logistics, information and communication technologies and customer services are necessary. What action is needed to retrain and reskill individuals to meet the demands of a changing industry and economy?
1925.
Sir George Quigley: That is a formidable question, but I will, at least, nibble at the edges of it. Ultimately, success in the economy is down to individual companies. That does not mean only a few companies in a leadership position, but the mass of companies in Northern Ireland - small, medium and large.
1926.
Three things must be achieved in individual companies. There needs to be a very sharp look at company organisation. Traditionally, companies have tended to be very compartmentalised. However, the new models - the European business excellence model, for example, or the total quality management model - are all about integrating systems and not thinking in terms of discrete functions. The thinking is of processes that permeate the whole organisation.
1927.
On your point about customers, one could argue that one wants an organisation in which everything is mobilised to meet customer need. That means very carefully researching the market to find out what the customers need and, in some cases, trying to anticipate what those needs might be. The organisation should also make use of modern technology to enable it to connect more effectively with its customers, deliver their needs and connect back to the supply chain. Increasingly, people see the structure for the future not as individual producers sitting on their own, but as a continuum of suppliers, the company and its customers. They must be linked together, and modern technology gives one the means of doing that. Your point about logistics is therefore very relevant. It is most important to consider it for the future.
1928.
One is thinking about a radical reorientation in company policy. An example is the transformation that occurred in the 1990s with what is now the Ulster Bank's parent company, The Royal Bank of Scotland. I do not want to make a commercial here, but that is a company which virtually reinvented itself in the 1990s through saying "Our mission is growth".
1929.
All our companies need to have that almost obsessive mission for growth. They need to consider how they relate to the market place, with all the delivery channels and the massive product development needed to capitalise on that attitude. In the south of the island, with which I am very familiar, the obsession with growth is almost palpable. It is in companies; it is in young, bright, upcoming managers; it is in kids coming out of school; and it is in the education system. That attitude needs, somehow, to permeate everything.
1930.
One has to have that kind of company structure. One will then find that the emphasis will essentially be on a product-orientated strategy and not on price. This is not doing the old things, and just keeping doing them more cheaply to compete with low cost producers who are also just producing standard products. We need to get away from the standard commodity product and move into the field of product development where Northern Ireland, with its skill base and its education potential, is able to out match the competition. Once you get into product development you have to gear yourself up to do it very rapidly; from the moment of conception to the moment when you deliver to the market place.
1931.
Shorts Brothers Plc has now got that speed as part of the Bombardier story. It is speed from the point where you say, we are going to have a new product because it is what the market needs and what we need to keep market leadership to the point where you bring everybody to the party: design engineers, production engineers, people who have to repair the thing and in due course maintain it, people who have to market it and sell it and the finance people who have to put the economic aspects together. They all need to be brought in from the start - with the concurrent engineering approach - to make that happen.
1932.
My third point is that you bring all these elements to the business and make sure that, before the event, you have the skills to match all of that. That takes you into a company-focused effort as well as into what the public system can do to support you from outside. I see the amalgam of all those things that I describe as "managing technology". Unless we can learn how to manage technology so that we can recognise the need for it and the need to manage it, it does not matter how much we increase our supply of research and development, it will not be effectively used. The challenge is not how to increase expenditure on research and development, although we do need more in certain areas, the challenge is to ensure that there is a demand side matching progress on the supply side.
1933.
Dr McDonnell: Just to pick up on that very quickly. I want to go back to the technology question that Ms Lewsley asked earlier. What steps do you think should be taken to increase research and development activity? What action do you think is appropriate to ensure that companies step up their research and development activity and become conscious of the need for such activity? I do not think they will step up unless the company culture realises such a need.
1934.
Sir George Quigley: I think that the demand side does mean regenerating companies. Companies need to be reoriented in the way I have suggested. They need to recognise that their only hope for the future lies in being product-centred. They are going to have to be constantly providing the market with a new product, an improved product, focusing on constant improvement, and aware of advances in technology, whether it is in materials, methods and processes, or whatever. They have to be ready for those developments. They will only be ready if they are organised in the way that I am suggesting. That means a transformation of how the company looks at itself.
1935.
On a practical point, let us look at three companies in Northern Ireland, two of which have recently announced expansion, Nortel Ltd, Shorts Brothers Plc and Ulster Carpet Mills Ltd. Those three companies have not only won Northern Ireland quality awards for the business excellence model I mentioned, but also UK quality awards, and in some cases European ones. That is the heart of it all. It is not a sexy message. It is hard work to restructure right along the line in that way. However, once you get that, people begin to ask what they need by way of research and development to reinforce that product development effort.
1936.
One has to match all of that happening and welling up from within companies, with Northern Ireland saying on the public side "What is the direction we want to take? What areas of activity do we want to be in, and what does that mean by way of skill base and research and development capability?" Are universities capable of reinforcing our effort all along the line or is there something inadequate there? You are doing it in a focused way, based on what companies themselves are saying should be done.
1937.
One European programme on technology management which was introduced about five or six years ago - and Wales was a main proponent of it - focuses on getting management technology skills and the organisation of a company embedded in a way which leads to pressure for research and development from the company itself. No one can impose it from outside. They have to recognise the need, and if they do not recognise the need until they are desperately hanging on the cliff edge with their fingers, they are in deep trouble and it is too late.
1938.
Dr McDonnell: Talking about modernisation transformation, how would you prioritise it? The dilemma is that it is good in theory, but in practice which proposals should get the priority within a company? It is great if everyone is going in the one direction, but people will invariably have different angles.
1939.
Sir George Quigley: The first thing is to make sure that the company is going in only one direction, because as we all know there has to be a corporate vision. It should not be the case of every department saying that it is going to optimise and maximise its own particular concerns. The company has to say "What is our market, where do we want to be, what is the competition, and how do we match that?" In today's world, every company, whether traditional or modern, has to say, "What do we have to do today and over the next twelve months to get in with the new economic revolution?"
1940.
Six months ago I listened to the head of Microsoft in Europe - its headquarters is based in the South of Ireland - say that there was probably a two-year window of opportunity and that if companies missed out on that, they will miss out on the game. Any company worth its salt is saying, "How do I exploit technology to connect with my market, to enable me to minimise my costs and get the logistics right throughout the whole supply chain?" The new technology puts the ball at the toe of even the smallest company. It does not need to have representatives all over the world, with agents here and there. It can get on to a website and it should be geared up to deal with the business that comes on the website - about 40% or 50% of e-mails are not answered. So the world is its oyster, and it can go wherever it likes to market produce and scoop the pool of the more established players.
1941.
Ms Morrice: I am very interested to hear about the economic revolution you referred to. What is needed is a change of culture and earlier speakers talked about the need for a more entrepreneurial culture. This "fear of failure" culture is deeply embedded in the psyche of the individual Northern Irelander. How can that culture be changed? Could it happen by osmosis?
1942.
Sir George Quigley: A key element would be the creation of local political institutions. No region, not even a country, can get very far in terms of economic ambition without political leadership. Such leadership sets goals, ambitious, stretching goals. These targets determine what the values are and set the tone of the debate on the economy. Therefore, the Executive has a major part to play, with the Assembly, to present ambitious objectives and say "We are going for growth". This will require identifying where the liabilities are. On the regional balance sheet you cannot afford liabilities. Instead, you must be constantly building upon the assets. This means focusing on education and trying to develop the culture of creativity. This has resulted in some very interesting work by the Executive in this area.
1943.
The Prime Minister's task force on creativity demonstrated how big a theme this is for education. Maintaining constant improvement is important. An American guru talks about the rhythm of constant improvement, where everything is constantly reassessed to ensure we could not do it better than at present. The best companies are doing that. They are aiming for 5% to 6% growth and are concentrating on what is needed to do that. The importance lies in getting companies growth-oriented. At present, many companies are at a loss to know what is needed to grow by, lets say, 15% a year over a period of five years. Growth is resulting in the best companies, but perhaps not with 90% of all companies. This is the problem. Growth is what has happened in the Republic of Ireland.
1944.
Ms Morrice: You talk about liabilities. Would you consider either the textiles or ship-building sectors to be liabilities, or is it important to combine traditional industry in a balanced way with modern industry because of the reputation it has established?
1945.
Sir George Quigley: One has got to take a very cool, critical look at every individual situation. One cannot generalise and claim there is no future for the clothing and textile industry. Referring to an article in 'The Economist' about three months ago, it is amazing how much of the United States manufacturing industry is made up of clothing and textiles. However, it was argued that there was no reason for large parts of that industry not having a viable future.
1946.
The situation should be examined individually to determine which areas have a viable future, and a company itself is the only one who can do this. The outside world will affect the company, and it is its reaction to that, or pre-emption of the outcome, which is important. There will be instances in which companies will have no future unless they decide to go up-market, get into the value-added area and out of the territory where they are scrabbling for business with the low-cost producers. They may have to say, quite ruthlessly "That production must be put off-shore and more concentration placed on where value can be added in Northern Ireland because, if not, then we are sunk".
1947.
Ms Morrice: Desmond's moving to Mauritius?
1948.
Sir George Quigley: These are the decisions that often have to be taken. Ultimately, if the right decisions are taken, then you have a stronger economic structure. Maybe instead of having clothing and textiles as 20% of the manufacturing base, it should be 12% to 15%. That is a solid, durable 12% to 15%, and you have diverted resources that were in that sector into growth elsewhere.
1949.
There will always be churning. It was interesting to read the statistics about the Industrial Development Authority last year. It created around 18,000 jobs - a magnificent achievement - but in its client base something like 8,000 or 9,000 jobs were lost. It is getting to the point where there is such a flow of new investment that you accept there will be constant replacement. The objective is to make sure that the replacement is at a higher value added point providing more higher order jobs than before. Unless we face that challenge positively, we will still be stuck, 10 or 15 years from now, with the wrong economic base. With that kind of economic base there is a limit to what you can do.
1950.
I said in my written evidence that the critical statistic for me is really value added per worker - the GDP per worker - and how that is moving. Not GDP per head of the population - that is the result of many positive things happening. That is how you measure whether things have fitted together, but you only get to that point if you have created that wealth engine. It really is individual companies producing that kind of performance. That means a lot of shift in the kinds of things we are doing in this higher value added area. The future of textiles and clothing takes its place in that context.
1951.
Mr McClarty: You have already answered one of my questions, Sir George. Can you explain your view on the privatisation of power stations in Northern Ireland in further detail?
1952.
Sir George Quigley: When the power stations were privatised, eight or nine years ago, the Government put the emphasis on ensuring availability of supply. That was understandable because at that stage Northern Ireland was an isolated system. The cross-border thing was not working and there was no link-up with Great Britain. As a result the nature of the contracts entered into meant that the new owners were paying more for the power stations than they would have been if they had been required to deliver the sort of future which, for example, a power station in Great Britain would have been expected to deliver. It was perfectly natural for them to say - "All right, you want us to do that. This is the price". Naturally it was a higher price.
1953.
Twenty-twenty vision, of course, is a wonderful thing, but experience shows that we need to structure it differently. We need more competition. We desperately need to get our electricity prices down, for both domestic consumers and business. Therefore, the argument that the energy working group, which I chaired in the context of 'Strategy 2010', made was that one must redo and restructure those contracts. You might say, effectively, buy them out and redo them. One point we put into our report which, to my great sadness, was not reflected in 'Strategy 2010' was this: why not use the extra money which the Government received eight or nine years ago to ease that process of restructuring? You can do a calculation of how much extra was gained eight or nine years ago, in various ways, but I think it is a fairly significant sum. I would doubt if it is less than £100 million, and maybe more than that depending on how you do the calculation. Suppose it had been a non-differentiated United Kingdom wide privatisation, what would the Government have expected to get in respect of the proportion of power generated in Northern Ireland?
1954.
The interesting thing about gains from the privatisation process was that they went directly into the Treasury. They did not go into the Northern Ireland block. My argument is that those gains could be clawed back from the Treasury without impacting at all on the Northern Ireland block.
1955.
In other words, one could have those resources and devote them to accelerating the restructuring of contracts without Northern Ireland services in the Northern Ireland block being reined back to make room for that.
1956.
The regulator is doing a tremendous job - he has made real progress and he is probably getting a lot of co-operation from generators. The restructuring will take place. It is merely a question of whether one can do it in a way which eases, beyond what might be thought possible now, the burden on consumers. Consumers deserve, having experienced high prices, these prices to come down on as sharp a gradient as possible, rather than over a longer period and a shallower gradient. I hope that is a helpful response.
1957.
Dr O'Hagan: In your written evidence you presented a pretty damning critique of the Northern Ireland economy with low productivity; a sectoral breakdown and levels of output steered towards low-valued-added industry; firms competing too heavily on price rather than quality and technical sophistication; too few large companies; too little investment in education and training; too much emphasis on conservation rather than on modernisation and transformation. Given that analysis, do you feel that 'Strategy 2010' faces up to the huge challenges presented?
1958.
Sir George Quigley: All the ingredients are there for success, but it needs to be restructured. We need to be ruthless and prioritise so that everything feeds into the accomplishment of that strategy. One thing that is in 'Strategy 2010' - and I have been advocating this since 1976 when I was involved in an economic strategy exercise for Northern Ireland - is a plan to change corporation tax radically to bring it into line with that in the rest of the island. This must be done if we want that flow of inward investment that has happened to the rest of the island over the past 20 years.
1959.
We need an arousal factor - something that immediately catches the imagination. When an American investor is told by his Department of Commerce in published documentation to come to the Republic and his return on investment will be the highest in Europe, it speaks very, very loudly. It also means that companies have every incentive to arrange their affairs to maximise profitability in Ireland and therefore get the maximum advantage from that magnificent tax concession which, even after negotiations with Europe, will still be 12·5% - a magnificently low figure. That is very important.
1960.
It is not just the arousal factor. Companies want to maximise returns and the tax concession is rewarding success, so companies have an incentive to succeed because that is when they get the big payoff. That is something which is missing in Northern Ireland's existing armoury. We have now got an attractive incentives package, but we should not forget that in the South it is not just the corporation tax, but the grant regime as well. Therefore, we have to make sure that our incentives are absolutely right. Someone may ask "What will the rest of the United Kingdom say?" My answer to that is that the United Kingdom has not been out of the investment game for 30 years. It has been on a roll, so far as inward investment is concerned and getting the biggest share of inward investment in Europe - I think it is catch-up time. To catch up, one needs to focus and get all the weaponry one can to make it happen. The ingredients are all there in 'Strategy 2010', but it needs to be prioritised in the way that I suggested.
1961.
Dr O'Hagan: You mentioned the South of Ireland in your answers. One of our concerns about 'Strategy 2010' is the lack of an all-island focus in relation to economic development. Since the early 1990's, you have been one of the principal proponents of a single island economy. How do we rectify that omission in 'Strategy 2010' and ensure harmonisation?
1962.
Sir George Quigley: We have now reached the point where it is tremendously to the advantage of both parts of the island to take such a perspective on future strategy. In the South, the economy is running at full capacity. It is very interesting that the Industrial Development Authority said earlier this year that it was not aiming to create 18,000 jobs like last year, but 12,000, and that 50% of those jobs would have to be in areas which had not previously attracted much investment - in other words the midlands, west and north-west.
1963.
It would be a tragedy if even a single bit of viable investment were lost to the island for the simple reason that there is no need for it in one half. One should co-ordinate matters and ask oneself how to ensure one gets as much into the island as a whole as possible. It may be that some investment which might have gone south will come north.
1964.
Secondly, sitting 90 miles down the road is a big chunk of the global economy, almost a mirror image - obviously in miniature - of the United States economy. It has all the major pharmaceutical and electronic companies. It is the biggest software exporter in the world, even bigger than the US. This is incredible stuff, and we ought to be going hell for leather to supply that base in every way we can. With the new economy to which we earlier referred and that new industrial revolution, the South of the island has an advantage at the moment in having a solid electronic and software base, which is a natural bed for the development of Internet support services and the whole accompanying infrastructure.
1965.
We can benefit greatly here by asking ourselves how we can ensure that we get a share of that action on an island basis. Companies might be unsure about going into the Dublin area, where labour is terribly tight at the moment. Why do they not go to Belfast, Ballymena or Derry? There is everything to be said for taking that island perspective. There are two jurisdictions, and they will have to work out how they apply their strategic vision in each part of the island. It does not erode that in any way, but it ensures we do not lose a single opportunity which can be grasped.
1966.
The Deputy Chairperson: How do you react to the proposal that Selective Financial Assistance be less readily available? What other, softer forms of assistance should be made available? Wearing your financial institutions cap, how do you see them helping us move economic growth forward in Northern Ireland, bearing in mind all the opportunities out there at the moment?
1967.
Sir George Quigley: I have a small anecdote. I was involved in placing the Harry Ferguson plaque on the frontage of Ulster Bank, the site of Harry's showroom. He was a customer of Ulster Bank, and there is a letter from its senior director to a large company in Northern Ireland dated 1932 saying Mr Ferguson was an excellent businessman with an exciting new product who wished to discuss the possibility of its manufacture in Northern Ireland.
1968.
Sadly it was not manufactured here. Maybe we lost out on the Massey Ferguson giant and everything that this would have brought to Northern Ireland as a world centre of tractor manufacture. This example goes back some years. However, it is an illustration of what a bank needs to do in order to maintain a relationship, which can then be developed into other areas. More seriously, this is an example of a missed opportunity.
1969.
On your point about reshaping incentives: it needs to be remembered that there is a market for investment worldwide. Any company will say "if I can get that measure of support in place A, or I can get 50% more in place B, other things being equal, I will go to place B". The fact that the incentive in one place is better will not overturn the decision, even if it has a bad locational record. However, this will have an influence if all other factors are equal.
1970.
On the other half of the island there are grants available and there is also a very powerful tax incentive. Therefore, the impact of diminishing the attraction for investment needs to be investigated. We also need to look critically at which areas the current grant structure supports. We should not only consider physical capital, but also the softer things. I will come to that in a minute. Dr McDonnell's point was important: for the future one has got to - and to some extent the IDB has done this - consider applications for investment assistance and look at what these are designed to do. For example, we need a change of direction in this company, towards becoming a higher value added company. We must also consider what that company can do to improve the whole growth dynamic in Northern Ireland.
1971.
If an investment does not measure up to these aims, we have to question whether we want to support that investment. We will have to consider what the investment will do for the objectives of Northern Ireland, as distinct from what that company may do for itself over the next two years. To take another example: at one stage the CBI talked about a health fitness check in relation to applications for investment. Again, in the energy group that I chaired, one of the things we suggested was that any company coming for assistance should be asked what it was doing about energy efficiency. If a company can save a quarter of a million pounds on energy efficiency and it is not doing this, why should it receive further support? In the bank, I was involved in a function that Sir Reg Empey was speaking at on health and safety at work. If a company is not looking at risk in that context, it is unlikely to be doing the other things it needs to do. In this case the investment is at risk.
1972.
These changes will require looking at the profile of the company's proposals in comparison to the regional objectives and being ruthless in which companies we support. This also answers the other part of your question. All right, it may be that it is a grant towards physical equipment; it may be a grant towards training; it may be a grant to improve management technology; it may be a grant to upgrade skill; or it may be a grant to encourage companies to benchmark against the best and bring themselves into alignment with that. However, the critical point is this: what do we want investment support to achieve in terms of regional growth?
1973.
The Deputy Chairperson: When we were in the States recently we met with the Small Business Administration. An interesting fact is that loans are provided to small businesses and guaranteed by the Government. They are not as restricted as they are here. These loans took in retail and other factors, and there is only 6% default in payback. How might that assist new small businesses here, particularly those involving women?
1974.
Sir George Quigley: I think that it has great potential. If the Government were guaranteeing loans or giving assistance towards the cost of a loan - making the rate rather softer than it otherwise might be - that would take a load off public expenditure. The costs in that case would be the subsidisation of the interest rate.
1975.
There is a precedent for that with which you will be familiar: the soft loans that were supported by the European Investment Bank and administered through local banks. I was amazed at the way in which, in the case of the Ulster Bank, the allocation went like snow off a ditch. It can be done.
1976.
You ask a pertinent question about the role of the local financial institutions. Local companies tend to go to the IDB to discuss their propositions. Afterwards, they come to the banks to tell us what they are proposing, what they have from the IDB and what they want from us. One must turn that on its head so that local companies come increasingly to the banks to discuss their proposals. That may mean local financial institutions being prepared to take rather more risks. However, that is the environment we may well be in.
1977.
The Deputy Chairperson: Thank you for coming here today - the Committee appreciates the work which you and the other members of G7 have done. We could not have foreseen reaching this stage a few years ago. We are not out of the woods yet, but your personal backing for devolution is greatly appreciated.
1978.
Sir George Quigley: Those are very generous remarks, and probably completely undeserved. Our efforts have been more than repaid by subsequent events. I spoke this afternoon to a researcher from Johns Hopkins University about the peace process, and he asked about the prospects for the future. I told him that I was very optimistic.
1979.
One of the reasons for my optimism is the way in which the new institutions have bonded, got their act together and are shaping up in very interesting ways. That is all the reward that the business community could ask for. Thank you again for your kind words.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 20 SEPTEMBER 2000
Members present:
Mr Neeson (Deputy Chairperson)
Mr Attwood
Mr Clyde
Mr Dalton
Ms Lewsley
Mr McClarty
Dr McDonnell
Witnesses:
Mr D Duncan )
Prof P McKie ) IRTU
Mr J Wolstencroft )
1980.
The Deputy Chairperson: Good morning, Gentlemen, you are very welcome to the Committee. Things are hectic in the Assembly today as there are so many Committees meeting. We are having a tough time trying to get appropriate numbers recorded. I will start off first, by making an apology on behalf of our Chairman, Pat Doherty, who has got other pressing business today.
1981.
Prof McKie: I am the chairman of the board of the Industrial Research and Technology Unit (IRTU). This is my last function as chairman of the board after eight years, as I am moving off into the sunset at the end of the month. It is nice to be here and quite appropriate for my last function. I have with me Jim Wolstencroft, our chief executive, and David Duncan, our director of innovation services. We know that time is limited, we could give you a presentation, but we suspect that that is probably not what you want. It might be better to answer any questions that you have after these opening remarks.
1982.
Just to remind you, we are the Industrial Research and Technology Unit. Our mission is concerned with enhancing the contribution of science, technology, research and development. It is aimed towards improving the competitiveness of Northern Ireland which is why we are here and why we have been working over the last eight or nine years. We are very happy to pick up any questions that you may have.
1983.
Ms Lewsley: I would like to welcome you here this morning. Over the past eight years you have energetically promoted innovation through awareness activities and investment support programmes. In your opinion, what policies would you like to see implemented to promote that innovation further?
1984.
Mr Wolstencroft: That question goes right to the heart of 'Strategy 2010', which I understand to be the central focus of this Committee's enquiry. The position of IRTU on 'Strategy 2010' is that it is a very worthy document. It has however been overtaken by a number of other very significant developments over the last 18 months. For example, a few months ago it was the United Kingdom White Paper on science and technology, a White Paper that has quite significant implications for your inquiry. There has also been the publication of the Northern Ireland Economic Council's report on public sector research and development, and the commercial focus that should be given to that. There has also been the publication of the Irish document on economic development strategy, and the Nicholson report and the Baker report on research and development.
1985.
The interesting thing about all of those documents is that they very much endorse the thrust of IRTU policy. In other words, they endorse the concentration of grant support on capability rather than on capacity. They endorse the focus on technology transfer; they endorse the focus on clustering; and they endorse the focus, not only on the development of a regional innovation strategy but - and this is an integral part of that strategy - on the development of a sub-regional innovation strategy. So far as we see, in all of these documents, and not just 'Strategy 2010', the thrust on innovation which IRTU first articulated in 1992 has been endorsed.
1986.
What has been said in these reports has strengthened, complemented and supported our mission. We do not see any reason to change the overall thrust and direction of our raft of support policies.
1987.
Prof McKie: The emphasis on regionalisation will be important. A number of things could be done just as well, and maybe even better, in a regional context rather than being centrally controlled, but that will be more in the areas of fine-tuning the programmes that we already have. I do not want to talk about the past, but we have been successful in building up centres of excellence. We have 18 now and many of them were leading centres of excellence. We have the design directorate and the incubation facilities which helped foster new industries, and maybe we can give them a lot more help in the future. Perhaps we could discuss this in subsequent questions.
1988.
Mr Wolstencroft: I would like to add one caveat to what I have said. In 1992 we published the first IRTU strategy which we rather presciently called 'Innovation 2000'. At that time we thought of 'Innovation 2000' as a tripartite function between the Government, academia and industry - we saw those as the three partners. Coming back into IRTU after spending five years on the energy desk it was clear that the innovation challenge had become more sophisticated than we realised, even in 1992.
1989.
The clear message from the documents that I referred to earlier is that to develop the full potential of Northern Ireland plc we must have a fully collaborative, fully participating and fully co-operative regional innovation strategy. This strategy must go well beyond the DETI and the Department of Education. It is a strategy that must involve a multiplicity of players - the Assembly, Assembly Committees, district councils, banks and venture capitalists - and it is a strategy that must look at sub-regional node development.
1990.
With regard to academia, the strategy goes beyond both the universities that are playing a major part in the innovation mission. One cannot speak too highly of the collaboration we are receiving from the universities and the private sector. However, the colleges of further education must be brought into the innovation family and on to the innovation team.
1991.
The Deputy Chairperson: That point was strongly emphasised yesterday at our evidence sessions, and it is one that I welcome.
1992.
Dr McDonnell: I am delighted with those last comments. I have a high regard for what you have done but I would like to raise the bar by about two feet and keep it moving. However, I am concerned, not with your relationship with industry which works quite well, but with the bottleneck between university and industry. There are many people leaving university but not going into industry. With that in mind and with reference to the research and development funding in universities, in what key areas should funding be increased to provide a better basis for future commercial exploitation? How do we move up a gear or two at university level?
1993.
I am not being critical of what has gone on before, but how can it be speeded up? In relation to that, how do you see financial assistance or other assistance being directed towards business in order to strengthen its commitment and drive towards innovation and development?
1994.
Mr Wolstencroft: There are a number of questions there and I will take them in sequence. When developing an innovation or economic development strategy, it is important to identify first of all what we cannot do. The regional Executive will have no control over the strength of sterling, whether it is strong or weak - nor indeed will the National Government in many respects. They will have very little control over the Euro, whether we are in or out of it. We will have no control over fiscal policy. Our colleagues in the Republic have control over their fiscal policy, but we do not. We will have no control, as recent developments last week illustrate, over energy prices, particularly oil prices. We will have no control over the decision making processes of large multi-national corporations. We will have no control over the pace, direction and impetus of technological change, and we will have no control over low-wage-cost competition in traditional industries. Those are the limitations that we face when developing an economic strategy.
1995.
However, there are things over which we do have control and influence. One is the capacity in Northern Ireland, given our small size, to build a truly cohesive and truly committed regional-innovation strategy. In doing that, I suggest - and this is ultimately a matter for Ministers - that we focus on the key knowledge- driven technologies. At present we are going through a third or fourth industrial revolution. Basically, a new economic geography is unfolding before our eyes, and the key industries are going to be informatics, information communication technologies, biotechnology, e-business and e-commerce, the health sciences, aerospace, digital media and nanotechnology - particularly the last one which links the physical sciences with the bio-sciences and impregnates all other scientific activity.
1996.
Now, off the top of my head, those are the areas on which I would concentrate our focus. In addition to that, building on the e-commerce, e-business and Internet revolution, we must remember the development of the so called "non-physical businesses", in other words, weightless businesses - companies selling legal services on the Internet, graphical services, architecture, artistic design and media services. All of these business opportunities are now opening up. But, to enter a caveat again into what I said, innovation is not just about high-tech business and research and development. We cannot ignore the main virtues of good business which have remained unchanged over the centuries. The Internet and e-commerce comprise just another market place. When going to any market place, you must have a good product - it has to be well designed; it has to be well marketed; it has to sell at a competitive price; and it must be followed up with good customer service. All of those are as essential as high-tech industry to meeting the innovation challenge for Northern Ireland. Therefore it is in those seven or eight areas that I see us focusing our attention.
1997.
Mr Duncan: There is another element to this which we need to invest in, and that is exploitation infrastructure. At the end of the day, we have to get the knowledge out of the universities and into the workplace. There are a couple of things which are coming along. For example, there is a new initiative called 'NICENT' (Northern Ireland Centre for Entrepreneurship), which is a joint venture between the University of Ulster and Queen's. From the beginning of this semester they will start, to the extent that you can, to teach entrepreneurship to under-graduates, post-graduates, research staff and academics in general in order to help them think about the commercial potential of their activities.
1998.
In addition, we must take proper account of the Intellectual Property Act because, according to academic tradition, work is published and therefore cannot be protected because it is in the public domain. We must apply that Act properly so universities and research bodies will invest in protecting people's work and then allow them to publish it, to the extent that it is wise to do so. We are currently operating a pilot project in the field of life and health sciences, but once we perfect the structure, the project must be rolled out into other significant research areas.
1999.
"Spin-out" and "spin-in" opportunities are also talked about. "Spin-in" opportunities give companies access to the research base and accommodate individuals with ideas so they can perfect their product or process in a supportive environment. They offer them product and process development support, as well as business development support. There is an initiative underway to achieve this. If we do not market that facility, people will only find out about it by chance.
2000.
We also need to develop equity investment services because a lot of high-tech ideas will be very mobile while they are in the developmental stage. If we invest grants in these projects, we may well lose them to elsewhere in the world. Once the stage of serious second - round financing is reached, money will sometimes dictate where a project goes. If we invest through equity, we will at least get back our money, which can be reinvested whether a project is successful or not.
2001.
In the past, we have regarded research staff as the people with the ideas, but we are starting to focus on undergraduates by trying to develop mechanisms to help them engage in start-up from graduation. There are a number of important infrastructure issues that must be worked on. They are currently evolving, but there is a lot of work to be done.
2002.
Prof McKie: That was a long but very significant answer that strikes at the hub of the issue. I apologise, if we took too long, but we might have answered a couple of other questions.
2003.
Mr McClarty: What initiatives would you recommend to encourage the development of centres of research excellence in the field of sciences and engineering?
2004.
Mr Wolstencroft: We have already developed 18 centres of excellence. It is not an easy exercise because we are acting as a catalyst or facilitator by bringing industry and the universities together. Through our Start programme to promote pre-competitive research, which has a very lengthy lead-time, we have increased the number of companies taking part in this type of research from five to 57 in the last number of years. This is extremely significant so we will certainly continue that initiative. It is not an easy scheme because it depends on people coming forward with properly constructed projects of a pre-competitive nature. There is a high degree of risk involved with private companies, in particular, being asked to risk capital on projects that may not prove successful.
2005.
We can also encourage development in either the sciences or the engineering fields by stimulating more incubation facilities in our universities. We have already two software incubation facilities in operation - in Springvale and at Magee College. Construction is about to commence on two biotech incubation facilities ¾ the Science Business Innovation Centre at Coleraine and the Bioscience and Technology Centre at the City Hospital. A further three proposals for incubation facilities are being considered by the new science park, Queen's University and the University of Ulster. It is through university "spin-out" or "spin-in" companies and incubation that businesses based on universities are developed.
2006.
Prof McKie: The last two questions share many themes and the answer to either is to locate the facilities where more of the intellectual elements discussed earlier can come home to roost. This opinion might be biased because I chair QUBIS Ltd, so I should declare an interest.
2007.
The QUBIS organisation has been around for about 20 years, and it has been very much concerned with taking intellectual property and ideas from Queen's University and putting them into the commercial arena. It has now "spun-off" more than 20 companies with 1,300 employees directly working in those, almost all of them graduates and many of them, fortunately, quite successful.
2008.
I am not suggesting that that is the only model, but it does show that some things have been happening, and we will build on them. We will have to watch the newer technology - we have already mentioned nanotechnology, and I am sure that we are going to see some innovation work in that area.
2009.
Mr Duncan: There are a couple of characteristics about the centres of excellence that need to be developed further. I now doubt whether we should call them that - perhaps "centres of research capability" would be better.
2010.
First, the centres of excellence played a fairly significant part in getting researchers to act in an inter-disciplinary way rather than a collaborative one. They tended not to know what the guy down the corridor or in the other laboratory was doing. The centres of excellence have forced them to do that and, as a product of that, they have not only greatly increased their research capabilities but also they are getting more and more research contracts in EPSRC, in Europe and so on.
2011.
It is all very well for all sorts of engineers to collaborate together and all sorts of scientists too, but we now need to start getting the engineers and the pharmacists working together and to be multidisciplinary rather than interdisciplinary.
2012.
Secondly, we have always viewed the centres of excellence as being the user-friendly interface between industrial need and research capability for local companies which are sitting here and will exploit their knowledge here, whether those local companies are inward investors or not.
2013.
There is an international dimension to this that we are only beginning to touch on. Collaboration has to be wherever the right sort of expertise is, no matter where it is in the world. For example, we have recently introduced a variation on our networking programme so that if some of our centres of excellence want to second a member of staff to America, China, or wherever for a couple of months, we will support that. Equally, if they wanted to invite an expert in from a centre elsewhere in the world to put some fizz into their research, we would support that too.
2014.
The international dimension is important, and the servicing of international companies' needs in itself could be an inward investment attraction because if those companies learn that they can get the solutions to their problems here, some of them may say "I want to be beside the solutions and not just at the end of the telephone wire."
2015.
Mr Attwood: Our time is short, and you have given us a very extensive and useful list of specific things that could be developed and are in the process of development. Mr Duncan has outlined a number of specifics, and Mr Wolstencroft has outlined seven areas for future ongoing development. Are there any other matters that you want to bring to our attention and get put on record today? In particular, is there anything of a structural nature in respect of your relationship with the Government, the universities, the funding bodies or the developmental agencies in the North that you think needs to be addressed in any way?
2016.
Prof McKie: That is quite a wide question, and I may hand it over to the others. I am slightly removed from the Civil Service. I certainly want it recorded that there is good co-operation and a lack of problems in the areas that you have mentioned. The relationships with the universities and the various Government bodies are fine, and the working environment between the various civil servants and their groups is also fine. It could be better, and we have looked at that. Your Committee is studying 'Strategy 2010' and the idea of a unified type of department, and we may want to think about that. That is an area where I would very much support the idea of streamlining our activities.
2017.
When one looks at the various groups engaged in economic development one can see duplication in some of the services, even within administration, and so there is a strong case for pulling them together, with one caveat: it may sound self-serving but research and development is different. Many groups will do their research and development in a particular way while others will do it in a different way. One needs to be careful about that, because they may come up with answers that have already been given. Perhaps research and development should be focused along the lines of the 2.10 mode, although others may have different ideas.
2018.
The Deputy Chairperson: The creation of a single development agency is one of the most important proposals in 'Strategy 2010'. What do you see as the advantages and the disadvantages, and what should this Committee look out for? I will be asking the same question of LEDU at a future meeting, and I would like you to be as blunt as possible because it is a crucial aspect of these proposals. I imagine that this is one issue that will come to the fore sooner rather than later.
2019.
Mr Wolstencroft: I do not agree that it is the most important issue.
2020.
The Deputy Chairperson: I said that it was one of the most important issues.
2021.
Mr Wolstencroft: OK. I believe that the most important issue is function, and structure must follow function. A key function in Northern Ireland's economic development policy is innovation. It does not only embrace research and development and high-technology, but a whole raft of business processes. Innovation must be central to economic development policy, and that is where the focus must be.
2022.
A range of structures, or restructuring, can be introduced to address that centrality but, from my point of view, the essence of economic development policy must be a concerted, collective focus on innovation, which involves all Northern Ireland Departments, the various development agencies, and a wider range of players and participants. If we start from there, we can begin to speculate about the best structures, but that is, ultimately, a matter for Ministers.
2023.
The functions and innovation challenge will remain regardless of what structures are introduced - in other words, the challenge will not change. It is a question of how best we meet that challenge. I would probably agree with Prof McKie that a certain amount of amalgamation and refinement would be appropriate and timely, given the new Assembly's wish to look at this area, but also because we are facing a new century with a new economic geography where technology is moving so quickly. We must not feel complacent about structures since we put the existing ones in place. This is something that we will have to revisit periodically, at shorter and shorter time intervals, in order to maintain competitiveness.
2024.
Mr Attwood's question referred to one aspect that needs to be considered. We are approaching the stage when we have something to sell internationally that we did not have ten years ago, but we still have low productivity in industry and a low gross domestic product. Those are the two main economic challenges.
2025.
Nevertheless, as a result of the collaboration in research and development between the private sector and the universities, we have now got something that we can sell at an international level. And I think we need to address how we might sell that.
2026.
The Israeli "BIRD" Programme offers a possible analogy. We might think in terms of placing a senior executive in a market, such as Silicon Valley, or its equivalent in Southern France, Sophia-Antipolis, to represent a consortium of researchers in companies interested in carrying out research and development under contract. This individual or team would try to solicit contract work for our centres of excellence or industries in Northern Ireland.
2027.
One of the most heartening developments over the last few months has been the establishment of the Northern Ireland Aerospace Consortium, a truly innovative development in which large companies and small supply-chain companies have come together in a formal consortium. They went to Farnborough and, though they did not expect to, they did business there - big business. That is an indication of the way forward for other sectors. We helped them by taking them to Brussels so that we could link them into the Framework Five Programme, and we are doing the same with a food technology delegation in a few weeks' time.
2028.
Again, to answer Mr Attwood's question, and building on what Mr Duncan has said, the international dimension of innovation, and research and development cannot be ignored. We must play in a global market. We must match the best in the global economy. We cannot do that by being a small, introverted, xenophobic region. We must be outward looking. We may have to forge collaborative linkages with other regions.
2029.
Mr Attwood: Is the process you have outlined to be found in 'Strategy 2010'?
2030.
Mr Wolstencroft: I think 'Strategy 2010' points in that direction. But as I said earlier, 'Strategy 2010' was developed about 18 months ago. The world has moved on. The world does not stand still, particularly in the research and development and high-tech fields. A number of other policy documents have been issued, endorsing the direction of 'Strategy 2010'; these, however, have gone farther forward and into a bit more detail.
2031.
Prof McKie: The idea of consortia is not specifically to be found in 'Strategy 2010' - unless I have missed it, but it is a very strong process. Think of our small enterprises. The public cannot survive too much on their own, but together, for example in aerospace, they can do well. This project is well worth supporting.
2032.
Mr Clyde: You suggested that 'Strategy 2010' does not deal sufficiently with sustainable development. What steps would you like to see taken to reverse the adverse environmental impact of many companies' production operations?
2033.
Prof McKie: This is a critical question.
2034.
Mr Wolstencroft: There are very few production processes that do not have an adverse impact on the environment, but the important thing is to limit that impact as far as possible. We have designed a range of measures to tackle sustainable development. Again, it is an issue that goes well beyond the remit of DETI or, indeed, of IRTU. Within the IRTU remit, we would like to see more companies in Northern Ireland practising energy efficiency. They will all be very focused on it, after last week's developments, because it is a sad reality that the best argument for energy efficiency is high- energy prices. That concentrates the mind wonderfully, and it makes people approach their productive processes with a much more frugal attitude than they would otherwise do.
2035.
In effect, regardless of the price of energy, companies could and should be doing more to practise energy efficiency in Northern Ireland. Linked with energy efficiency is good environmental practice. In particular, it is essential to integrate good practice at the start of your production process rather than have to come in at the "end of pipe" and clean up the mess you have created. Those are two approaches we would like to see developed much more energetically in Northern Ireland industry.
2036.
Mr Dalton: What steps do you think could be taken to ensure that Northern Ireland seizes the opportunity of the e-commerce revolution?
2037.
Mr Wolstencroft: The e-commerce revolution is a market place, and we have to encourage more Northern Ireland companies to play in it. We have set up a specially dedicated e-commerce unit in the Industrial Research and Training Unit to give companies advice and assistance on becoming much more frequently and efficiently involved. We also need to look at the regional telecommunications infrastructure, which links into the e-commerce revolution. We have undertaken a benchmarking exercise to compare our communications infrastructure with those in the Republic, the rest of the United Kingdom and certain sectors in America and Sweden because we want to establish, given its nature, whether or not we are in a position to play in the global economy. The report shows that in technical terms we have a reasonably competitive telecommunications infrastructure, but there may be certain market problems with giving small companies access to that in terms of pricing.
2038.
Prof McKie: There may be something we can do to help in that area, in pressurising some groups to try to cut the cost of access for small enterprises.
2039.
Mr Dalton: Can you identify any particular problems about small businesses being able to access that facility? Is there a problem with, say, BT's overcharging for integrated services digital network lines?
2040.
Prof McKie: A significant barrier for some companies is the cost of being on line, and there is evidence that it may be slightly more expensive in Northern Ireland. A small company may have the additional cost of investing in the hardware to make the connections. Those barriers ought to be addressed. The structure suggests that in terms of cables and gaining access to the rest of the world it is not a significant problem. Ten years ago we were world leaders. We have probably slipped a little bit, but I am sure we are adequate in that area.
2041.
Mr Dalton: Do you think that the NTL network has made a difference? Do you see that there is a facility that can be used in terms of digital television and -
2042.
Prof McKie: It brings a bit of competition into the ring. We can pressurise and encourage and do everything else, but there is nothing like getting a couple of big players competing with one another. We can give more encouragement, and that may be the best way to get these things done.
2043.
Mr Wolstencroft: That is what happened with electricity prices. They were not reduced until there was competition in the market. They have come down, but they are still not at the same level as in Great Britain. The same thing might follow in the telecommunications sector.
2044.
Prof McKie: Everything must be done to get e-commerce off the ground. Very perceptive questioning, I think.
2045.
The Deputy Chairperson: We certainly appreciate your contribution. We hope to complete our oral sessions within the next two or three weeks, and undoubtedly your contribution today will be taken very seriously indeed. On behalf of the Committee may I thank you for your attendance.
2046.
Prof McKie: Thank you for having us. It has been an honour to be here.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 20 SEPTEMBER 2000
Members present:
Mr Neeson (Deputy Chairperson)
Mr Attwood
Mr Clyde
Mr Dalton
Ms Lewsley
Mr McClarty
Dr McDonnell
Witnesses:
Mr C Buckland )
Mr E McElroy ) LEDU
2047.
The Deputy Chairperson: May I welcome you to the Committee and make apologies for our Chairperson, Mr Pat Doherty, who has other pressing duties today.
2048.
Mr McElroy: First, I wish to put on the record on behalf of the management and board of LEDU and myself how much we welcome the opportunity to be here. In the various inputs we have made over a number of years it will be on the record that we believe the existence of this Assembly and this Committee and the fact that we have a local Minister in charge of the economy is a positive thing. We welcome that and look forward to working together with the Assembly, the Committee and the Minister to deliver a better future for everyone in the Province.
2049.
Some of you will already know that I have been involved as an enthusiastic amateur in this process for many years. As such, I have been reflecting on what I might say. I was privileged to lead the first cross-party delegation that left Northern Ireland in 1982 on a trade mission to North America, bringing the disparate interests of John Hume, Dr Ian Paisley, Raymond Ferguson of the Ulster Unionists and also Mr John Cushnahan of the Alliance Party to demonstrate to the world at that time that all was not gloom and doom in Northern Ireland and that it was a viable place to do business and to live in. There were a lot of other people involved then and since. That is the context in which we come.
2050.
LEDU had a long and vigorous debate on the whole issue of 'Strategy 2010'. In addition we used some external resources to help us, as a board, to address the whole issue of where LEDU should be in the short term. We took 2005 and looked at what the role of LEDU should be and what the face of the small business might look like at that time. We considered our role in trying to determine the position at that time and improve the prospects of success. The outcome of the board debate on 'Strategy 2010' formed our input to the Committee. The output of our visioning exercise, as we call it, may not be with the Committee, but it is in the hands of the Minister.
2051.
Mr Dalton: In your submission you stated that the future success of the Northern Ireland economy would continue to be dependent on small firms. How can they compete with large multinationals?
2052.
Mr Buckland: We have provided a fair bit of information, and will continue to do so, on the significance of small business in Northern Ireland. Northern Ireland is uniquely dependent upon its small businesses. It is not an issue of their competing with large ones. The nature of the small business is such that it does things that large ones do not do. They are dependent on larger ones - about 40% of the output of small businesses go to other larger businesses. The larger business presence is important. We need a balanced economy of market leaders that are larger global businesses and an effective support infrastructure of smaller businesses with them. They work synergistically.
2053.
It is a matter of encouraging small businesses to build on their strengths, and they do have important things on their side. They can be flexible and dynamic, and that is the essential thing about them. They are innovative, and this is a notion we support. They can be innovative, quick and nimble to move and change as things happen. There are many examples of this. They can capitalise on opportunities quickly and have high growth. We publish a list of the top 100 businesses each year, and the best of our companies show remarkable growth over a small period. The interesting thing, which demonstrates my point, is that that growth cuts across many traditional sectors.
2054.
There are good examples of niche exploiters across the whole raft of sectors that are traditional in Northern Ireland and where the larger companies may not now be at the forefront. Small business takes a different track to market than large ones. There is no doubt that small business needs certain things to enable them to do that effectively and that is where we come in. They need appropriate forms of Government support, and that has been the policy here. The European Union, the United Kingdom and most Western economies continue to have policies that support small businesses. Ensuring that continues is very important.
2055.
Increasingly, they need other things to be able to ensure that growth continues. Links with universities are going to be very important with regard to ensuring that they are exploiting all the possible technologies that we have there. The need to network well is important. Networking with themselves, networking with larger businesses - all those things are important. One area where they might well be competing - and this is quite an important issue - is, increasingly, over some resources. They may well be competing for labour and skills, which is an important topic. It has certainly been policy as far as the Department of Enterprise, Trade and Investment has been concerned to encourage company training, particularly that geared to small businesses and increasingly linked to situational analysis. It is beginning to highlight human-resource issues such as attracting and retaining the most able staff. So in a sense that is probably one of the most important things, as we move forward. We have got to ensure that small businesses are equipped to compete, if I can put it like that. In the market place, I do not think they compete, I think they complement.
2056.
Mr McClarty: What do you believe is necessary to create and maintain an environment which will encourage start-up of new knowledge-based businesses?
2057.
Mr McElroy: The environment is a twofold thing. First, I believe very strongly that we need to have an environment that will attract one or two significant hitters in the high-tech area into the Province Nortel and Fujitsu are the exceptions, but we do not have Intel nor Microsoft. I say that, not because I believe they are necessary in themselves, although I would welcome them coming, I say it because of the spin-off that will come from them. All one has to do is to look at the number of very vibrant and small knowledge-based businesses that have spun off from previous executives of Nortel.
2058.
Secondly, listening to our colleagues from IRTU, there is a real issue here about the whole environment. It is about the enterprise culture, the things that we value as a society and how we create and change that. I chaired a meeting about a month ago when eight of the top venture capitalists in North America visited Belfast. Having received input from each and every one of them, to try to get some discussion going I asked the senior guy in Nortel to imagine he had been in Ireland, North and South, for the last 48 hours and was an expert in all things to do with the Irish economy, North and South. If he had to change something, what would it be? Immediately he said that this is the only country in the world that he had visited, where a person is judged to be a failure at 11 years of age. He said "In my country, unless you have failed three times, you are never going to be a success". There is a whole culture, an education issue. It is not necessarily LEDU or Department policy, but, to my mind, we must have the Department that is responsible for trade, industry and the economy joined up inextricably with education and higher education if we are to achieve something.
2059.
Mr Buckland: Just to supplement that, links with the education system at universities are very important and links with secondary education also. The enhancement of business education links has got to be important and ensuring that there is adequate venture finance available. Sometimes that is a bit of a chicken- and-egg situation, but that is going to be important as well. Initiatives like the information age one, where we clearly are making a big push to ensure that businesses are aware of and are exploiting e-commerce, is again a very important aspect of ensuring that we get our full quota of knowledge-based businesses for the future.
2060.
Northern Ireland does not have anything like enough start-ups in high-tech and business services. Although that is not the only area to deal with knowledge base, it is a crucial one, and we must look to encourage more start-ups in it.
2061.
Mr McElroy: Mr Buckland is reluctant to sing his own praises, but we have been very gratified in the uplift in e-commerce following the McMullan ad.
2062.
The Deputy Chairperson: Members of the Committee were part of an all-party delegation to North America recently. One of our most interesting meetings was with the Small Business Administration (SBA). While we are tending to move away from selective financial aid as part of 'Strategy 2010', the SBA was able to provide loans, which were guaranteed by the Government, to small businesses. Only 6% default. It does not face the same restrictions as LEDU, as it was able to deal with retail and corporate facilities. Many women also took up the opportunities.
2063.
How would LEDU view such a development in Northern Ireland?
2064.
Mr McElroy: We too met Aida Alvarez and were very impressed with her willingness to teach and to learn. In the next few months she could be a very important person in the administration there.
2065.
Mr Buckland: The SBA operates on a very much larger playing field than we do, and we have had contact with it for many years. We follow their different initiatives with great interest - their small business website is one of the best. 'Strategy 2010' is leading us away from the capital grant route into the softer areas of support. That has been a policy for some time.
2066.
That brings us round to the idea that perhaps loan support is more beneficial than grants. What they do is of great interest to us. We must bear in mind, however, that there are significant cultural differences, a point which 'Strategy 2010' also raises. We have collectively a great deal of work to do to change some of those cultural barriers. It is not for me to be critical of the banks, but Mr McElroy and I have spoken about the need for banks to take a different view of the risks associated with business.
2067.
All of these things must move together. The notion that failure is part of success is something which we have to absorb and understand as a society. We are not there yet, although we are moving in that direction.
2068.
You made another point about the number of women coming through. Our statistics clearly show that not enough women are running their own businesses. We have been carefully studying how our recent enterprise awareness campaign has been going. We have had approximately 10,000 enquiries over the last few months as a result of it. We find that one third of the people coming through are women, and that is against only 17% currently in self-employment. Things are moving in the right direction.
2069.
We have quite a long way to go to get it up to 50%. However, as one of the targets mentioned in 'Strategy 2010' is to raise business start-up rates, that will provide us with big opportunities to close the gap by ensuring that enough women come forward. We have a number of programmes and initiatives enabling us to do just that.
2070.
To summarise, we are very interested and supportive, and we believe that we are moving in the same direction as the Small Business Administration. However, we have cultural issues that have got to move in line with that.
2071.
Mr Attwood: You will have heard your colleagues from the Industrial Research and Technology Unit comment upon possible structural changes between the various agencies in the North. What is your response to the suggestion that LEDU should take over the IDB?
2072.
Mr McElroy: First, we have to look at the market place and what the customer wants. Let me give you feedback. As I have gone round the Province - and I have been part-time Chairman of LEDU for two- and-a-half years - the one thing coming across is that the customers our staff deal with are very supportive of the LEDU structure and system. I expected it to be the opposite way. I expected to hear lots of cries about the change from giving grants to offering softer types of support. Essentially, small businesses are saying very strongly that they want more professional people on the ground to give the kind of mentoring and support they need.
2073.
As regards the issue of LEDU and the IDB becoming one agency, the LEDU board took the view that regardless of what structure emerged from those who take such decisions, there would be a need for a dedicated resource to deal with the smallest start-up businesses. Their needs are radically different from those of large indigenous businesses, and they are different from the point of view of attracting foreign direct investment. Regardless of what structure emerges, we strongly advocate that there should be an entity charged with delivering support services to the small to medium-sized enterprise sector.
2074.
We are saying that that is the case from a number of perspectives. If 'Strategy 2010' is to be the way forward then the emphasis will be on enterprise and on an enterprise culture. It will be about business start-ups. The enterprise culture is not going to come from foreign direct investment - it will come from the ground up. All the evidence shows that that will need supporting.
2075.
My second point - and I would make this point strongly - is that the job of attracting foreign direct investment is radically different from providing support mechanisms to large indigenous businesses be they Harland and Wolff, Desmonds, or whatever. It is a marketing job. It is a sales job. It is not a job for analysts. It is a selling job. Without any disrespect to those who have been doing that job, those skills are not normally found within a Civil Service culture.
2076.
The board of LEDU holds the view that the support agency is a small business, and that with reference to the FDI function they would be better off in the private sector than in the public service. There is no evidence to show that there are economies to be gained by having one administration system - nobody has produced any figures to show advantages one way or the other. There is anecdotal evidence that there could be one payroll system, one public affairs department and one internal audit department, but nobody has shown me figures that actually illustrate that savings would result from this.
2077.
If savings were to be made, then it would be my argument - and, indeed, the argument of the LEDU board - that the nettle has to be grasped, because we want more people on the ground doing business and fewer people in administration.
2078.
Mr Attwood: In relation to attracting international investment, would investment money brought into the North by a private company be a more suitable model culturally than the involvement of a Civil Service Department?
2079.
Mr McElroy: The culture of the organisation that implements this must be marketing led. If you can attract marketing people into the public service, I will be very happy. The changes have to be marketing led. This is a sales job.
2080.
Mr Clyde: What are your views on the recommendation of a single development agency? Can you elaborate on your comment that partial restructuring, as suggested in the McKie Report, would be inappropriate?
2081.
Mr McElroy: I have given my personal, and indeed the board's view, in response to Mr Attwood's question. The McKie Report is dated - it is two years old. The world has moved on. Now we have a local Assembly, a Committee and a Minister. We need to implement the needs of today, not the needs of 1998.
2082.
The Deputy Chairperson: LEDU has played an important and active role in local economic development, and has worked with various partnership boards. What future do you see for this type of local economic development, in relation to the proposed rationalisation of district councils in Northern Ireland?
2083.
Mr Buckland: As mentioned, we have had a very active role over a number of years. This has become a dominating activity for many of our regional operations. There has been enormous change in this area and a large number of new entities have arrived on the scene. Often district councils have raised money and are increasingly able to provide local support. As we reported in 'Strategy 2010' - and it was quite an important feature - local communities have a tremendous willingness and a tremendous energy to get things done. The downside of this is that there has been some overlap and confusion. In the last year or so, we have carried out a number of studies and have worked in consultation both with those entities and with local enterprise agencies. These groups are increasingly aware of the current situation and are anxious that there should be more structure and co-ordination.
2084.
As we go forward, we are looking at something we shall put to the Department and the Minister in due course - how to trap all that energy and enthusiasm and the tremendous value we derive from local engagement, while ensuring it is not a confusing barrier to the principal customers, who are small businesses. For quite some time we debated a small-business development strategy, and we are now actively recommending it to the Department as a possible way forward. We point out that it would require significant co-operation between various Government Departments to be effective, but it is one way to tackle the issue to which you refer.
2085.
We now have a limited period of time, perhaps five years, when we shall still have quite significant flows of money from Europe. It is vital that everyone points in the same direction and uses that money effectively. I shall give one example we believe has been effective over the last two years. Our self-start programme has been run by local consortia, not 26, but nine, where councils and local enterprise agencies have formed groups. According to our evidence, it is proving beneficial because there is more of a local presence, allowing those consortia to modify and adapt to their specific needs.
2086.
There are tremendous benefits, but some overall sense of direction is still needed, perhaps setting targets. 'Strategy 2010' refers to the most important. Raising our start-up rates to the United Kingdom average, a target with which we agree, is no mean task. We shall have to get everyone engaged in doing that, moving in the same direction. There is a great deal of energy, and we have engaged with people. They are beginning to have the capacity to do these things. It will require - particularly since, as you say, there may be significant restructuring over a number of years - some central sense of direction. That is what we currently recommend.
2087.
The Deputy Chairperson: Are there any other major issues you wish to raise with the Committee in relation to 'Strategy 2010'?
2088.
Mr McElroy: I should like to raise the issue of whether 'Strategy 2010' goes far enough. Was it ambitious enough in its targets? We debated that issue as a board, particularly as far as the SME sector was concerned. While the targets compared very favourably with the rest of the United Kingdom, we felt we should look more to where, for many of our customers, the opposition lies - 50 miles down the road. Aiming for 3% to 3·5% growth is quite modest when one's nearest neighbour is achieving 7% to 9%.
2089.
We should try to learn the lessons and build on the work of the new body set up for trade and business development under Martin Naughton, drawing from his experience and skill. There is much more to gain from that for the sector we seek to represent, particularly as the whole economy there is becoming quite hot, to say the least. To that extent, we welcome the appointment, for the first time, by the Industrial Development Board of a dedicated member of staff in Dublin to market Northern Ireland business development.
2090.
Mr Dalton: I shall make some brief points which are perhaps linked. You mentioned that some of your successful businesses showed considerable growth and also that there has been a move away from a grant- based approach. Would it perhaps also be worthwhile adopting an approach where one took equity, allowing successful enterprises to feed back into the system?
2091.
Mr McElroy: Yes. I want this on the record. However, when we realise an investment, it must not go back to the Treasury, or central Government It must stay in the pool for reinvestment to be recycled.
2092.
Mr Buckland: It is current policy, and has been for a while, to offer equity. It is not something that gets loudly talked about, but we have always had powers to do that. Indeed, we have used those powers in appropriate circumstances. That happens at the moment.
2093.
Mr Dalton: Do you think that something could be done to improve the system of bankruptcy in Northern Ireland? Can you make any suggestions as to how the system could be reformed to enable people to wipe the slate clean and start again?
2094.
Mr McElroy: I cannot offer any suggestions off the top of my head. That it is certainly a culture issue. The idea of failure, stigmatism, personal guarantees, 'Stubbs Gazette' and all that goes with that, needs to be radically changed. However, I would not venture to say something off the top of my head.
2095.
Mr Buckland: It is an interesting statistic in Northern Ireland which we have promoted a bit. Our failure rates in Northern Ireland have been, statistically, consistently lower than most other parts of the United Kingdom. You can argue as to whether that is a good or bad thing, but that is the situation. Of course we have failures and your question is a pertinent one.
2096.
The Deputy Chairperson: On behalf of the Committee, I thank you for coming this morning. It has been a very constructive and worthwhile meeting. There is no doubt that we will be looking at the whole question of a single development agency, and we look forward to hearing you views once again on that. We will be concluding our oral sessions in the near future, and your contribution will be taken on board very seriously indeed. Thank you.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 27 SEPTEMBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Prof B Hannigan )
Prof B Norton ) University of Ulster
Prof J Hughes )
2097.
The Chairperson: Welcome everyone. I have been somewhat forward, given that we are guests. I am going to ask the members of the Committee to introduce themselves to you.
2098.
Prof Hughes: Thank you very much for the welcome.
2099.
My name is John Hughes, and I am the pro-vice- chancellor for research and development at the University of Ulster. I am responsible for setting research policy and implementing research practice throughout the university's four campuses. Prof Bernie Hannigan is the dean of the faculty of science, and Prof Brian Norton is the dean of the faculty of engineering.
2100.
We did submit a response to the 'Strategy 2010' document, and I hope that you have a copy of that. There are a couple of things that I want to emphasise, especially things that have happened since then. In the university, particularly in the last two years, there has been a very strong focus on developing an entrepreneurial culture among the staff and the students. Coupled with that, there has been a very strong emphasis on commercialising our research, and a great deal of our effort - as well as our money - has gone into doing that.
2101.
Some of the activities that are mentioned as pending in our original submission have now taken place. For example, the Northern Ireland Centre for Entrepreneurship (NICENT), a joint bid with Queen's University for funding under a national initiative, was successful. In fact, we received the maximum funding under that initiative of £900,000 from the UK Government and £300,000 from the Northern Ireland Industrial Research and Technology Unit (IRTU), so the two universities received £1·2 million and were able to establish that centre.
2102.
The centre is already very active in terms of promoting a culture of entrepreneurship among the student body. We intend that it will provide entrepreneurial training as a core part of our undergraduate and postgraduate programmes in science, engineering and informatics. The £10,000 award for new entrepreneurs is about to be announced, and, in fact, it will be announced next week. That has been extremely successful.
2103.
The Technology Entrepreneurship and Innovation (TEI) Support Programme has also been successful in securing funding under a national initiative. The University of Ulster and Queen's University are partners in that programme.
2104.
In order to demonstrate the university's commitment to its regional role, our mission statement is that we see ourselves as an outstanding regional university. Our contribution to the region is extremely important to us. We have established our regional development office with a new dean of regional development, Prof Terri Scott, who was formerly head of the school of computing and mathematics at the university's Magee campus. She took up that role in April and is actively promoting the university's regional agenda.
2105.
We have also established the role of a director of lifelong learning, a role intended to promote our e-learning initiatives - that is our distance-learning initiatives - in terms of marketing our courses not only worldwide, but also, and perhaps more importantly, from a regional dimension by marketing our courses throughout the community in Northern Ireland.
2106.
In that respect I would also like to point out the very strong interaction that we have with the further education sector in Northern Ireland. Uniquely, in the higher education sector we have 3,600 students registered on University of Ulster programmes and attending further education colleges throughout Northern Ireland. Those include colleges such as the Newry and Kilkeel Institute, the North West Institute, the North East Institute, and, increasingly, we are developing programmes with Fermanagh. So we truly are the University of Ulster, as we have spread throughout the Province.
2107.
Regarding commercialisation, we have been extremely active in terms of developing high-technology incubators and science parks throughout the Province. We were instrumental in ensuring that the science park initiative in Northern Ireland had a regional dimension to it with centres at Coleraine and Magee.
2108.
The idea that this should be solely in Belfast was dismissed on the strength of our submission, and, in fact, the development of the science parks at Coleraine and Magee has now gone ahead of what is happening in Belfast. This month we have begun building the first stage of the science park at Coleraine, and, in fact, the two initial science park buildings at the Magee campus will be finished by Christmas. So the science parks in Coleraine and Magee will be operational before there is any significant activity in Belfast.
2109.
The incubator at Magee, as you may know, is now up and running. It has worked out very well, with five very successful companies operating in it. Next Tuesday Sir Reg Empey will be formally opening and launching our Springvale incubator. It is an e-business incubator centre which has been up and running now for about two months. Based in the Springvale park, it is essentially a bridgehead for our Springvale campus development. The university is very committed to these initiatives, and I mentioned, a great deal of our effort is going into the commercialisation of our research, not only in terms of spin-out companies, but also joint ventures with local firms. Our commitment focuses on the economic regeneration of Northern Ireland. I am very glad to take your questions.
2110.
Mr Clyde: What policies would encourage small to medium enterprises (SMEs) in Northern Ireland to invest more in research and development?
2111.
Prof Hughes: Northern Ireland is, of course, very strongly SME-based, and there are a number of national and European initiatives which are encouraging small companies to get more involved in research and development. These do not always extend to Northern Ireland, but it is important that they should. However, those that are operational here have been successful. One good example is the teaching company scheme (TCS), which is funded in Northern Ireland by IRTU, and it is considered the flagship technology programme throughout the United Kingdom. The two universities in Northern Ireland, Queen's and ourselves, are consistently among the top three or four universities participating in this scheme. Most of these schemes are with small-to medium-size companies, and these kind of initiatives are crucial. Most small-to medium-size companies have serious cash-flow problems, and many of them spend most of their time simply trying to keep their heads above water. So the national support schemes such as TCS, science shop schemes and cash awards which fund joint research and development between universities and small companies are absolutely essential.
2112.
We also have a part to play in breaking down some of the barriers so that people do not perceive us as sitting in an ivory tower. We need to be much more accessible to small companies, and we will achieve that through initiatives such as our regional development office, which gives small companies a kind of one-stop shop access to the university.
2113.
Dr McDonnell: Thank you very much. I am very familiar with your work, and I am a big fan of all that you are doing, but you come at these things from a university perspective. From our perspective, the only problem with this it is that I would like to see it working better and more quickly. I would like to see it becoming more commercially successful. How do we make that happen? How do we commercialise all the wonderful things you are doing better and more quickly?
2114.
I have a specific question. How do you suggest that the university can be assisted in exploiting and protecting the intellectual properties involved? This seems to be one of the bottlenecks in making things happen.
2115.
Prof Hughes: That is a huge area for us, and we readily accept that we have not been particularly good at that in the past - in fact few universities have. We are very far behind universities in the United States, for instance, in identifying this. We have spent some time studying practice in the United States and looking at the mechanisms that have been put in place in universities there, to identify, protect and exploit intellectual property. Typically they do this through dedicated technology transfer offices. These offices are staffed by people who are business - aware, who have experience of establishing companies - often of establishing several companies. The University of Ulster is just about to advertise for just such a person who will come from the business community.
2116.
The title of the position is the director of technology transfer and research development, and it will be advertised in the newspapers in the next fortnight. We have had people in this area before, but they have been from the university sector. We really need people who have had experience of setting up companies - perhaps even failing in setting up companies - and who know the problems that small companies face. These people should also be aware of the problems associated with protecting intellectual property (IP). In this Internet age it is becoming extremely difficult and increasingly more problematic to protect one's IP, especially in such areas as electronic software. All universities are becoming more aware of this.
2117.
Dr McDonnell: How do you get the balance between the person at the coalface, or the Prof guiding that person, and their intellectual pride in the project? How do you get them to collaborate with the person you will be bringing in to run the business side - after all, he is only a "dirty" businessman.
2118.
Prof Hughes: You need a unique individual. In America the type of person in this role will, typically, have had a background in science or engineering but will have spent a considerable time in the business community and can act as a go-between. At the moment we are relying on academics coming forward with their IP. We want them to come to our technology transfer and say that there is a good idea which might be licensable, protectable, or might form the basis of a small company. We need people who will go and seek out the IP, Academics are quite often not the best people to recognise that they have something valuable. Therefore, through our regional development office and the post of director of technology transfer and research development we hope to provide that kind of service.
2119.
Dr McDonnell: How do you strike the balance of ownership between the inventor and the university?
2120.
Prof Hannigan: There are a number of issues here. First, the academic staff must be made to realise that they will not be penalised in any way in their academic career by being involved in commercial activities. We have added technology transfer activities into our list of criteria for promotion in the university. That will create an environment where there will be more openness and more approaches to the technology transfer office where such negotiations can happen.
2121.
Dr McDonnell: Will there be any reward?
2122.
Prof Hannigan: In this year's round-up of promotions from science I have put forward some people for promotion specifically on the basis of their activities in technology transfer.
2123.
Prof Norton: There are direct rewards - such as the assignment of patent rights. When the cost of patenting, met by the university, is recovered, a proportion of the royalties returns to the inventor.
2124.
To pick up on your earlier point, there is not such a conflict, because in research, one has to identify the beneficiaries to obtain the original research grant for the underlying work. There is often concern on the part of academics that the routes to technology transfer are active in order to ensure beneficiaries receive benefit. There is not a conflict between the underlying research and taking out patents.
2125.
Dr McDonnell: To follow on from that, what incentives are necessary in order to keep the high- quality research staff and high-potential students stitched into your research?
2126.
Prof Hughes: That inevitably boils down to finance - both in terms of salaries and in the research infrastructure. Good infrastructure and high salaries attract good people. The university has moved a long way towards introducing differential salary scales across the disciplines in order to attract high-calibre people in wealth-creating sectors such as information and communication technologies and the key areas of science such as bio-technology and engineering.
2127.
Over the last 20 years it has not been easy to attract high-calibre research individuals to Northern Ireland. However, things are beginning to improve. We are getting much higher - calibre applicants for many of our posts, and part of the reason for that is that we are offering realistic salaries - salaries that are competitive throughout the country.
2128.
Prof Hannigan: Student finance is also a factor. We applaud the kind of moves being made in Scotland by Prof Cubie to look at student fees.
2129.
Mr Neeson: I am delighted that both Jordanstown and Carrickfergus campuses are in my constituency. What relationships or partnerships has the university been able to build up with new IT companies in Northern Ireland? I am thinking particularly of Nortel.
2130.
Prof Hughes: We have an outstanding relationship with Nortel. Nortel has made its Monkstown plant, as you know, its European centre for software development. That has been done on the back of the high-calibre graduates that they can get in both computer science and electronic engineering, most of whom come from the Jordanstown campus. But Nortel is a very far- sighted company, and it is one of the few companies in Northern Ireland that has invested substantially in research and development collaboration with the two universities. It recently established a major project, the Jigsaw project, which is putting £2·5 million into both universities. In regard to what research the two universities will do, the brief will be left open. They are really keen on building up the research infrastructure in both universities in the whole area of telecommunications, which will obviously benefit the students coming out and the researchers who are working in these areas.
2131.
Prof Norton: We have a similar relationship with Seagate and also with smaller firms such as Getty Connections Ltd and Yelo Ltd in Carrickfergus, who are supporting student research. They are giving research contracts to the university and developing products based on outcomes of university research. It is a very strong relationship, underpinned by the flow of graduates from the university to those firms. One must not forget that they are aware of the facilities and capabilities in the university. It is not simply a transfer of knowledge. The graduates who populate these firms will go back to the university for access to particular facilities and particular expertise.
2132.
Prof Hughes: We need to be acutely aware that the two universities in Northern Ireland are producing huge numbers of high-quality high-tech graduates, particularly in areas like computer science, engineering and biotechnology. This is incredibly attractive to inward- investing companies. They are beginning to look much more strongly towards Northern Ireland, as opposed to the Republic of Ireland where there is now a serious skills shortage in many of these areas. Our problem is that, at the moment, between 30% and 40% of our high-quality graduates are leaving Northern Ireland. Many of them are now going to the Republic because of the huge investment there and the huge inward investment that we are seeing in areas like IT, but both companies and graduates are beginning to realise that there are many financial benefits to be had by staying in Northern Ireland if the quality of jobs were here.
2133.
Mr Neeson: How do you view the proposal in 'Strategy 2010' that LEDU, IDB, and now IRTU should be amalgamated into a single development agency?
2134.
Prof Hughes: We would be concerned about that, and the reason is that IRTU has, from our perspective, been the most pro-active, encouraging and supportive agency of any in Northern Ireland. They have in place extremely forward-thinking policies on research and development. They are also incredibly approachable and pragmatic, which I think is very important, particularly when you are dealing with Government agencies. We would be very concerned about losing that connection. They are not distracted by thinking about inward investment or whatever. They are focused solely on research and development in Northern Ireland, and we have found them to be an incredibly supportive agency.
2135.
As far as merging LEDU and IDB goes, we would probably support that, because I think that quite often they do tread on each other's toes. There is no longer a clear distinction between small companies and large inward-investing companies. I think that most of us would probably agree that in the past, IDB has had too much of a focus on inward investment and less on supporting indigenous industry. That has led to a situation where we have, for example, a rather weak indigenous software industry, compared with that in the Republic of Ireland. In the last five to six years, the Republic of Ireland has had 600 start-up companies, whereas Northern Ireland has had fewer than 100 indigenous start-up companies in this sector. That is a worrying statistic.
2136.
Mr Neeson: It is suggested in 'Strategy 2010' that we move away from Selective Financial Assistance towards softer forms of assistance. How do you feel about that in relation to the last points you made about the small number of start-ups?
2137.
Prof Hughes: As mentioned in my opening remarks, we need, to a certain extent, to change the culture in Northern Ireland towards thinking in commercial - which has, in the past, often been a bad word in academic spheres - terms about many of the initiatives for training students and staff in the notion of entrepreneurship. We are trying to change that culture, and the Government should be thinking less about small- scale, specific company-related projects and more about infrastructural initiatives that bring people into a more commercially focused environment.
2138.
Prof Norton: There is a need to develop business clusters and to achieve a balance between Government - funded research and development and that that companies have to fund. We need companies to see investment in research and development - a strategic view of where they are going - as important. That cultural change, particularly amongst the small-and medium-sized enterprises, is desperately needed so that they can compete in world markets, based on their technological advantages. That kind of development needs underpinning with structural help, education, a marketing of the advantages of forming clusters around underlying research centres, which might be funded by Government.
2139.
Ms Morrice: The debate has concentrated on science, technology, communication and research and development, but I want to talk about the wider perspective of Europe. What policies do you particularly recommend to foster greater co-operation within the European Union and which would enhance competitiveness as a result?
2140.
Prof Hughes: First of all, the University of Ulster should be recognised as one of the most active universities in the United Kingdom in respect of its participation in European programmes, which goes back to the early framework programmes of the mid-1980s. Last year we brought in over £21 million in research, about 35% of which came from the European Union.
2141.
In Northern Ireland there has always been a low participation rate in European programmes amongst companies, particularly in the small-and medium-sized enterprises sector - even in initiatives like CRAFT, which is deliberately focused on, and made accessible to, small companies. I do not know why that is the case and have no easy answer. Certainly the university has tried on numerous occasions to encourage small companies into many of the programmes.
2142.
Part of the problem is the expense of preparing and submitting a proposal to Europe. CRAFT, and some of the other business initiatives, tried to get round that, but the participation rate was still small. Many small companies need to see short-term advantages and often do not have the research and development infrastructure, or the cash, to think in longer terms. European programmes are not about short-termism but about longer-term investment infrastructure. There is a need to educate companies and to promote the programmes more effectively; not the big framework programmes which few small companies can get involved in, but those programmes like CRAFT which are specifically geared towards small businesses.
2143.
The other way in which small companies can get involved, and we have been active in this area, is through subcontracting - that is where we become involved in a major project and subcontract part of it to a small local company. I am engaged in at least three such framework projects at present, where part of the work has been subcontracted to small high-tech companies in Northern Ireland.
2144.
Ms Morrice: I want to move beyond framework programmes - although I got my grounding on European affairs in 1973 when studying at the University of Ulster - to talk about a much wider approach, and not only about getting money for research and development from Europe.
2145.
It is about joint venture programmes with other French, German, Portuguese and Spanish companies. It is about best practice examples. It is about increasing the culture of Europeanisation. There have been discussions about following the lead of America, but we are ignoring Europe. I am disappointed in our tendency to do that.
2146.
Prof Norton: At the risk of being repetitive, the root is to bring about a cultural change. This applies particularly to SMEs that, by standard definition, form the bulk of Northern Ireland industry. Businesses need to take a more strategic view and need to be based on a technical competitive advantage. That is the underpinning. Increased involvement in European economic interest groups and European trade associations would follow on from this. They would then have the networks on which joint ventures could be built. But the networks have to come first. Businesses need to be aware of both their competitors and their potential collaborators. They have to be involved with the various associations, and they have to attend and participate in those meetings. Opportunities will then follow. Cultural change underpins all of these developments. Businesses need to have a clear strategy for the future that is based on product advantage.
2147.
Ms Morrice: Will the fact that we are currently staying out of the single currency hinder this approach?
2148.
Prof Hughes: Definitely.
2149.
Prof Norton: Yes, that is one factor. Also, as mentioned in the 'Strategy 2010' report, a much stronger representation of Northern Ireland in Brussels is needed, across the various forums. The tradition of going through London agencies has meant that Northern Ireland has appeared peripheral to the overall picture, whereas smaller countries in the European Union have the advantage of much stronger representation per head. That is also an issue. Representation in Brussels is important not just at governmental level, but at the level of small firms. Stronger representation would give businesses the opportunity to become involved with pan-European trade associations.
2150.
Prof Hannigan: There is a very tangible example of how this can happen, and that is in the agri-foods sector. The Northern Ireland Centre for Diet and Health is based at the University of Ulster. This was funded as a technology development programme through the Industrial Research and Technology Unit (IRTU). Activities range from fundamental research and understanding of functional and GM foods, through to networks involving multinational companies, other companies, academics throughout Europe and America, and our local food companies. The local perspective stresses helping companies to understand what research and development can do for them. This includes gaining access to facilities and expertise at the universities, and to multinational companies. This will help companies to develop new product lines, which will add value to current product ranges. That is probably the leading research area in the University of Ulster. It is involved with the Food and Drink Association and with many other associations in the agri-food sector. This sector, however, needs urgent development.
2151.
Prof Norton: At a very practical level we have developed joint undergraduate programmes with European institutions in engineering and a range of other disciplines. These programmes need to develop. One disincentive to development is the system of the student finance system. Any course which is out of the ordinary, and which could delay entry into the job market, is not a financially viable option for students.
2152.
Mr Dalton: Do you think that the development of science park sites in Northern Ireland is necessary to create an environment where knowledge-based business can be nurtured, and which can attract inward investment from research-orientated investors?
2153.
Prof Hughes: Yes. As I mentioned in my opening remarks, we are absolutely committed to the science park development. We have been very pro-active in establishing science parks, particularly at Coleraine and Magee, and are contributing to developments in Belfast and Jordanstown. There are areas in the United States which - a bit like Northern Ireland - are moving away from an old-fashioned economy, based in manufacturing industry, towards a new high technology environment. These have been built around high-quality universities, in incubator units and science parks. There are examples of this in North Carolina, Pennsylvania, and Virginia. All have a striking resemblance to Northern Ireland in trying to move the economy forward.
2154.
There are already examples of science parks contributing significantly to high-tech inward investments. We are having regular visits by potential inward investors to see our incubator sites and science parks. The proximity to the graduate base and university research activities is a major attraction to such companies.
2155.
Mr Dalton: What incentives do you recommend to encourage the development of centres of research excellence in science and engineering?
2156.
Prof Hughes: One of the biggest disincentives for inward investors in Northern Ireland is corporation tax - and particularly the difference between the levels of corporation tax here and in the Republic of Ireland. Perhaps we cannot do much about that locally as it is a national initiative. We can, however, lobby about it.
2157.
One thing that can be done - it is done in other parts of the United Kingdom, and in the United States - is to give tax incentives or zero rating to companies which establish themselves in science parks. That sort of financial incentive can often be the key factor in securing inward investment.
2158.
Prof Norton: With regard to centres of excellence in universities, continuity and long-term vision are important. There has perhaps been a view that support funding should last for a couple of years but that after that the activity has to be sustainable. That view is not realistic. It takes time to establish centres and their critical mass and growth. While I am not seeking feather- bedding for certain activities - they must be competitive in the market place - long-term underpinning elements are required in the research infrastructure. It is similar to roads and lighting, which also need long-term support.
2159.
Prof Hannigan: Initiatives such as the support programme for university research (SPUR) - on which we are awaiting results - will have a major impact on ensuring that areas of research excellence, selected by the universities, will be greatly advanced in terms of achievement and international standing.
2160.
Dr O'Hagan: We have talked about the links between the universities and business. What policies would you like to see implemented by the Government to encourage further development of these links? Does 'Strategy 2010' adequately address the issue?
2161.
Prof Hughes: Quite a few initiatives are already in place. Our regional development office was recently established, and it will be supported over the next few years under the Higher Education Reach-out to Business and The Community (HEROBC) scheme. HEROBC is a national initiative, and we secured maximum funding from it for the two universities in Northern Ireland. Northern Ireland participation in such national schemes is vital - and it does not always happen. The Higher Education Funding Council for England often introduces initiatives and provides support for them, but only in the English sector. The Northern Ireland Higher Education Council does not always have the funds available to extend the schemes to here, but in the case of the HEROBC scheme it did. SPUR was also very welcome in developing the universities' research infrastructures.
2162.
Initiatives such as the Teaching Company Scheme are important. Such support mechanisms are vital, and they provide considerable Government-funded incentives for companies to get involved with the universities. In Northern Ireland, where we have a strong small-medium sized enterprise base, companies do not have the time, or the research and development environment in the company, to approach the universities.
2163.
Prof Norton: The Northern Ireland Centre for Entrepreneurship, which we have established with the Queen's University of Belfast, was supported under the national Science Enterprise Challenge. It will provide education to undergraduates and postgraduates on how to set up their own businesses. We hope that students, on graduating, will have the aspiration to set up their own firms, rather than solely to work for someone else. Part of that is a continuum between the education process, practical advice on how to set up a business and access to people with the necessary funding. There should be a causal link between our students having good ideas and being able to develop them by starting firms. Its success should develop a high-tech industrial base formed around graduates.
2164.
Prof Norton: One of our concerns with 'Strategy 2010' in this area is its focus, to some extent, on the status quo and on the current environment in Northern Ireland. It will - it is going to have to - change very rapidly. There must be a recognition that all the textile industry, for example, is not sustainable in the long term. There is also a lack of focus on areas such as health care.
2165.
Prof Hannigan: Investment in health care is seen as national investment rather than expenditure. The idea of our health care service as a potential source of further investment and of industry and output is totally ignored in 'Strategy 2010'.
2166.
A number of issues need to be addressed on understanding the role of health care providers in economic development. That must happen at all levels, including community and hospital trusts and acute hospitals. Clinical trials, for example, are a major source of revenue for health care providers in many parts of the world, not just in North America. About 75% of all the UK's clinical trials take place in the major London hospitals. We have a very good infrastructure here, but the Health Service must realise that it can be a contributor.
2167.
Dr O'Hagan: What should be the key areas in research and development funding?
2168.
Prof Hughes: It all depends on focus. The Republic of Ireland puts huge funding into research and development, focusing in particular on biotechnology and information and communication technology. We must have a similar focus. It does not have to be on those specific areas, as our universities have a stronger research and development base than in the Republic, largely because of a long-term lack of investment there.
2169.
Information and communication technology is vitally important. We also have one of the strongest research bases in biomedical sciences and biotechnology. There are tremendous benefits to be gained from investing in that sector. As Prof Hannigan said, the health care sector is becoming increasingly important.
2170.
Prof Norton: I would include new forms of energy saving and new lighter, stronger materials and thin films which are important underpinning technologies. It is important that we play to our strengths and not randomly select things from a worldwide list saying "These are the most attractive technologies". We must play to the strengths peculiar to Northern Ireland.
2171.
Prof Hughes: Our strengths do not just lie in the universities. We have strengths in all the areas which I mentioned - Nortel and Seagate, and Shorts for materials, for instance.
2172.
Dr O'Hagan: What measures do you recommend be adopted to monitor and review 'Strategy 2010'?
2173.
Prof Hughes: It is vitally important that it is kept under constant review because of the changes that are taking place. We are in a rapidly moving, worldwide technological environment, and the whole area of electronic communication and e-commerce will change things dramatically. 'Strategy 2010' does not seem to be embracing that fully. We need a process of continual monitoring and an annual review to update 'Strategy 2010' in the light of inward investment and in light of the changes in Northern Ireland's social and political climate.
2174.
Prof Hannigan: In education there is an emphasis on producing people with technical skills.
2175.
That is important, but if our main focus is always on our progress in training technicians, we shall not get far. We must be sure to set targets for graduates with higher skills at bachelor, master and PhD level. There must be policies to ensure continuous growth at those levels as well as at that of technician, which will not in itself be sufficient to move us into the future.
2176.
Prof Norton: Just as there are models of economic development one could take from other places, assessment models have been developed in various parts of Europe and elsewhere that look at the quality of jobs and sustainability of industries created - and at their international competitors. Rather than reinventing the wheel to analyse Northern Ireland's performance in this regard, we should use some of these. We should also ensure tightness in the monitoring so as not to create additional bureaucracy, incurring major costs, simply to monitor the success of the strategy.
2177.
Ms Morrice: I am very interested in what you said about the distinctive strengths of the Northern Ireland economy, our stronger research and development base compared with the South and the need for sustainability in our industry. I ask myself why we concentrate so much of our research and development investment in high-tech areas and what I call "chasing the dot-com".
2178.
You mentioned textiles. Why do we not use that investment to support those indigenous industries with worldwide reputations, linen and shipbuilding? Why are we closing the door on them, not recognising that they represent an extremely stable industrial base? We have the edge on other European countries in those areas where our worldwide reputation lies. Why do our universities not focus on trying to make those industries competitive?
2179.
Prof Hughes: We do.
2180.
Prof Norton: We could spend a long time debating the textile industry, which is a complex sector. Certain sectors are highly capital-intensive and competitive on the world stage, Northern Ireland's carpet industry being an example. In other sectors, market competitiveness is determined predominantly by labour costs. It is unlikely that those industries can remain competitive in their current form.
2181.
However, the diversification of that sector is an active, highly technical area of research in both universities. At the University of Ulster, we have a programme on engineering composites, which essentially means moving traditional textile manufacturing techniques into what are called technical textiles. In this way, techniques previously used to manufacture fabrics are used to manufacture aircraft skins. A number of Northern Ireland firms have taken up what has emerged. We are very much involved in the practical areas of researching new flameproof construction materials and energy-saving components. Indeed, we have caused firms both to invest in Northern Ireland and to develop unique markets.
2182.
The idea that there is a high-tech and a low-tech sector is erroneous. All industries which wish to be competitive internationally will do so on the basis of technical advantage achieved through research and development. All sectors must move forward in that respect. One needs to move away from the view that textiles are unique. They are a form of manufacturing, and advances in manufacturing across the board are important, as are advances underlying technology. In a flexible manufacturing system, a plant might be able to manufacture a diversity of products, one of which could be textiles. It should not be seen as a narrow sector.
2183.
Prof Hughes: That is an extremely important point. I do not believe that investment should go - or has gone - into "chasing the dot-com". It has been used to try to improve the technology infrastructure in some indigenous companies. The University of Ulster's Teaching Company Scheme (TCS) is active, for instance, at Ulster Carpet Mills, Franklin Textiles, Nu-Print Fabric Converters and Perfecseal - all very strong local companies. We help them embrace new technologies like e-commerce. It is not a matter of investing in e-commerce per se. Helping companies get involved in it is extremely important.
2184.
Prof Hannigan: The same is true of the agri-food sector, which is still, in numbers employed, Northern Ireland's major industry. We must view it as an industrial sector able to accrue benefits from higher- technology operation.
2185.
Prof Norton: The University of Ulster, in collaboration with Queen's University, the Department of Agriculture and Rural Development, and the Industrial Research and Technology Unit, operates a company called MTP (Manufacturing Technology Partnership), which specifically helps very small firms with one or two workers, often in areas of social need, to improve their manufacturing processes. This comes down to the very basics of employing new production processes, prototyping new products and brings the university's skills into that domain.
2186.
Dr McDonnell: I thank Prof Hannigan for her heavy endorsement of biotechnology and clinical trials. We will reward you later. On rewards and awards, the Investment Belfast £10k award was mentioned, which probably needs developed to be the £100k award. How would you flesh that out?
2187.
Prof Norton: I am part of the organising committee, and there are already discussions to that effect. The present sponsors, PricewaterhouseCoopers, and the venture capitalist, Crescent, are actively looking at the idea of expanding the £10k award. They want the activity to be more sectoralised, not just students but people in industry. The quality of the submissions was outstanding, and the winner will be announced next week.
2188.
Dr McDonnell: I know, as I was involved. This is a point well worth making. £10,000 is nothing. We need a larger award.
2189.
Prof Hughes: There are other support mechanisms. The universities have set up the university challenge fund. We received £2·75 million from a national scheme and are putting amounts of £100,000 to £150,000 into new business start-ups. Other schemes are available. The advantage of the £10k award was that it got a lot of publicity and raised the profile of entrepreneurship.
2190.
Dr McDonnell: How do we get the information from you about all your other schemes?
2191.
Prof Hughes: We can provide that.
2192.
Dr McDonnell: We need that because that is the cutting edge.
2193.
The Chairperson: I thank you for the way you dealt with the questions. We hope to finalise our report next month and will reflect your original submission and answers to the questions as best we can.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 27 SEPTEMBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Mr R Lewis )
Cllr D McAllister ) Moyle
Ms E Mulholland ) District Council
Cllr R McDonnell )
2194.
The Chairperson: Thank you for having us here today and for hosting not only this public session but the earlier meeting with the representatives of the University of Ulster. Welcome to this Committee meeting.
2195.
By way of background I will explain how the Committee came to hold this meeting away from Stormont. The Westminster Select Committee report, which was quite critical of the Industrial Development Board (the IDB), mentioned Moyle District Council and Strabane District Council and said that the IDB had not performed particularly well in those areas. We thought that we should acknowledge that and give some solidarity and outreach to your district council. This is one of the few meetings we have held outside Stormont.
2196.
Cllr McAllister: As Chairman of Moyle District Council I am pleased to welcome the Enterprise, Trade and Investment Committee to the council offices. We are honoured that the Committee has chosen Ballycastle for its first meeting outside Belfast and that Moyle has been given an opportunity to present evidence on 'Strategy 2010'.
2197.
Moyle District Council welcomes the initiative and the intent behind 'Strategy 2010'. It supports the vision for Northern Ireland's economy over the next 10 years expressed by the steering group. However, from a local government perspective, and especially from that of a small rural council with a high level of deprivation, the report has some shortcomings.
2198.
I assume that members have seen the council's response to the strategy and I will not go into detail on those views again. However, I will summarise some of the main issues of concern. First, there seems to be little recognition of local government's role in economic development and the potential contribution this offers to the development of the overall economy. Members will be aware that over the last four years councils have enthusiastically embraced new powers for the promotion of local economic development. These powers have been exercised in partnership with local communities, the statutory agencies and the private sector.
2199.
While much has been achieved at local level, the strategy suggests that these efforts have been increasingly fragmented and that they need co-ordination and rationalisation. Particular reference is made to the Local and Regional Development Planning Ltd (LRDP) report that referred to an overcrowded marketplace. However, the strategy fails to give any regard to any more positive observations by LRDP, for example, to the fact that it found good examples of integration at local level among local economic development partnerships, district partnerships and local action groups. LRDP also said that council-led local developments had taken on the important dynamic of helping to establish local accountability via the local democratic political process. However, the council does recognise the need for rationalisation at local and central Government level and notes that the strategy group suggests a pilot project for rationalisation between councils.
2200.
I would like to draw members' attention to the Core initiative in north-east Antrim on which eight local authorities have worked together for the last four years to produce a co-ordinated approach to economic development within the region. I have circulated information on that initiative which may interest members. This shows that the need for integration has already been recognised by local Government and that it is through such initiatives that local councils have a significant role to play in local development, a role that seems to be understated by the strategy group.
2201.
A second concern of the council is the recommendation of the strategy steering group that the cities and towns identified in 'Shaping our Future' should be the main focus for the future location of industry. The consequence of that recommendation is that investment in areas outside of the nine elite towns will be left to chance.
2202.
The group also appears to be critical of the role of councils in promoting their areas for inward investment. Where does that leave areas such as Moyle? Given the very poor transport infrastructure, this policy does nothing to tackle unemployment in one of the most deprived areas of Northern Ireland, and it is difficult to see how the strategy will provide equality of opportunity for all.
2203.
The council's third main concern is the absence of any detailed consideration of the contribution and role of the tourism sector in the Northern Ireland economy. Within this sector are many issues and areas that merit discussion. Given that tourism is recognised as a growth industry with the potential for a further 20,000 jobs, this submission is disappointing.
2204.
The council is very strongly opposed to the single recommendation regarding tourism - that the bed-and-breakfast sector should be deregulated. While the intention behind this proposal is commendable, and we assume it is to maintain farm incomes, careful thought needs to be given to the effect that this will have on Northern Ireland's reputation for high quality accommodation weighed against the benefit to the rural economy. The council feels that regulation of this important sector cannot be left to market forces and that other methods of enhancing it should be considered.
2205.
The council welcomes the recognition by the steering group of the need for alternative sources of employment and income for those working in the rural economy. The crisis in agriculture has had a significant effect in this area, and urgent steps are required to stop the decline in farm income and employment. However, while the strategy does make some specific recommendations, it falls short in that it does not appear to have any serious regard for the Department of Agriculture and Rural Development's (DARD) agriculture and rural development policies. Neither does the strategy discuss rural planning policies that have played a major contribution towards rural depopulation. The council feels strongly that closer integration is needed between all of the main players in the local rural economy.
2206.
I have tried to summarise some of the council's major areas of concern, and other issues have been referred to in the council's written submission. While there may be criticism of the strategy, there is also much to be commended in the report, and I would like to conclude by extending to the Committee the council's good wishes for its consideration of this important strategy document.
2207.
Dr O'Hagan: Many people share your concerns about the consultation process around 'Strategy 2010', and I know that you had concerns about local government not being able to play an adequate role.
2208.
What measures are necessary to ensure that elected representatives in local government are consulted adequately and play an increased role in any future economic development strategy?
2209.
Mr Lewis: The council is concerned about the lack of local government consultation in this whole process, especially given the role that local government now plays in this sector. It is not an easy question to answer. It is difficult to come up with one structure that will solve this problem. There is certainly a need to consider two-way communication in this process. Other models could be taken as an example. Under the current EU structural funds arrangements, it is possible that there will be an elected member on the monitoring committees. It could be argued that there should be elected representation on any economic development forum. The model that is being used for the structural funds is going to feed back into a communication process with regional workshops which will feed into local councils. We acknowledge that it may be difficult to establish a day-to-day communication process whereby all district councils are consulted. There are other ways. Cllr McAllister has already referred you to the Core initiative, where there is a regional grouping of councils. Consultation could come through that process.
2210.
Dr O'Hagan: You also stated in your submission to 'Strategy 2010' that it did not detail practical measures for tackling deprivation and disadvantage. It is recognised that this district council, in particular, suffers adversely in that respect. How, in your view, should 'Strategy 2010' have addressed these issues?
2211.
Mr Lewis: Maybe we were wrong in looking for practical measures. We recognise that this is an economic development strategy. Our concern is that it did not really pay due regard to the new Targeting Social Need (TSN) initiative, and a prime example of that is the suggestion that industrial development should be concentrated in nine elite cities and towns while investment in other areas is left to chance. That does not seem to take any note of TSN or areas which require assistance. It seems to suggest that they be left to their own devices, so a common theme is that this has not really been looked at, other than from an economic point of view and without regard to the social aspects which should have been considered in this process.
2212.
Mr Dalton: Considering the recommendation that nine key locations should be the main focus for future industry, in what ways do you think the IDB could seek to encourage investment in other areas, for instance Moyle, and how achievable do you think that is likely to be?
2213.
Cllr McAllister: We had a meeting with the Minister and were informed that the IDB only recommended areas outside the other urban areas, and that where an investor wanted to go was up to him. We were not aware of that. In fact, we thought that IDB had forsaken us altogether, because we have had nobody down here for ten years.
2214.
Mr Lewis: The record of the IDB, particularly in this area, has been abysmal. There have been no visits by potential investors, and no jobs have been created or safeguarded in the last five years. In formulating our economic development strategy in 1995 we did make a conscious decision to rely on the IDB, and this is now recognised as a mistake.
2215.
Returning to what I said earlier, areas other than the elite areas are going to be left alone. However, if a company is willing to invest in such an area it will receive the same package, but there is no suggestion that there should be any proactive help for such areas.
2216.
The IDB should be proactive in bringing investment to these areas. They should not be left on their own.
2217.
Mr Dalton: Does your council still agree with the document 'Looking to the Future' in which you stated that inward investment is not recommended as part of your economic development plan? That seems to contradict your submission.
2218.
Mr Lewis: That decision was taken in 1995 and welcomed by the IDB. What we could put into economic development was limited, and we thought we would leave it to IDB as the experts. The facts speak for themselves. The IDB has not provided any assistance during this period.
2219.
We now feel that our decision was a mistake and if we were carrying out the process again we would not make the same decision. We are now looking - and I refer to the Core initiative - at doing something on inward investment ourselves in conjunction with the seven other district councils.
2220.
Ms Morrice: I want to look at tourism. I have not been to Ballycastle for a long time, but the town is beautiful and you are keeping it very well. It has tremendous tourist potential, and you must be complimented on how the town looks as a tourist attraction.
2221.
You said that tourism was not properly addressed in 'Strategy 2010', and, in your presentation, you mentioned problems with the deregulation of bed-and- breakfast accommodation. What steps should be taken since those substantive issues have not been included?
2222.
Cllr McAllister: The Northern Ireland Tourist Board should produce a development strategy for tourism. Tourism should be considered as an export. We were surprised at the lack of discussion on this subject in the strategy. Given the growth potential for tourism in the Northern Ireland economy, we were surprised that the strategy did not give a lead to the Tourist Board.
2223.
Mr Lewis: Mr McAllister is correct about our concern. From a global perspective, the Northern Ireland Tourist Board should be given a lead. It is now developing its strategy for the next four years, and there should be some integration between 'Strategy 2010' and that process.
2224.
The strategy contains a lot of recommendations and only one affects tourism. That is an important sector, particularly for this council and this area.
2225.
We could come up with many practical suggestions for what could be done. For example, I would like to plug our new ferry service to Campbelltown, and I want to put on record our thanks to and appreciation of Sir Reg Empey for supporting this initiative. I hope this project will receive your support over the next five years.
2226.
Consideration should be given to other gateways such as the roads infrastructure, signing and initiatives for extending the season. District councils are major players in tourism and should have a seat on the Northern Ireland Tourist Board.
2227.
Ms Morrice: What do you mean by "extending the season?"
2228.
Mr Lewis: I mean the tourist season, which runs from June through July and August until September. There are ways of extending it into the shoulder months of February, March, April, October and November. Blackpool, for example, has done it with its illuminations. We should be looking at similar ideas.
2229.
Ms Mulholland: Deregulating bed-and-breakfast accommodation would be a backward step. The basic standards for entering the industry are not too hard to attain. Alternatively, it might be useful to have some support for those entering the industry. That has not been the practice in the past, as there have been bad experiences with it. However, with better monitoring it should be possible, and it would help increase bed space.
2230.
Cllr McDonnell: Cllr McAllister has already said that genuine tourism, not visits from friends and relatives, is export on our own ground. There is something to be said for a VAT regime that recognised that it is an export and did not charge 17.5% VAT on everything, which is a considerable burden on providers who are trying to make their operations viable.
2231.
Greater effort should be put into making destinations fairly coherent. We have, for example, a critical mass at the Giant's Causeway, and it does a great deal of good. We need a critical mass in the Glens of Antrim and other deprived areas. I do not know what exactly can be done, but we should be developing tourist zones there, and not just accommodation - accommodation is not sufficient any more. Advance hotels, as I call them, could be built in the way that advance factories are and franchised out in some way or other.
2232.
The deregulation of bed-and-breakfast accommodation has already been mentioned. This is a rather silly idea, because quality assurance is vital. My experience has been that even with the quality assurance currently offered by the Tourist Board, tourists still spend an enormous amount of time inspecting bedrooms. They can spend up to 15 minutes looking at a bedroom. Deregulating that part of the industry is not a realistic suggestion.
2233.
I also support the idea of local government representation on the Tourist Board.
2234.
Mr Neeson: You mentioned CORE and you are also part of the Causeway and Antrim Coast and Glens Regional Tourism Organisation. How do you feel about the speculation on the rationalisation of district councils? Would Moyle be advantaged or disadvantaged by such a rationalisation?
2235.
Cllr McAllister: Rationalisation, if it is to avoid duplication, is to be welcomed. Pages 195 and 196 of 'Strategy 2010' recommend that the Assembly consider a district council pilot project. CORE has already gone some way down this road. Its members have been meeting and working and are now devising a strategy. It has been four years in the making. Through the new round of structural funds, local authorities will take a leading role in the new partnerships to implement integrated strategies for the area. We would not feel disadvantaged under the CORE initiative.
2236.
Mr Lewis: We have demonstrated that local authorities can co-operate. However, on the wider question of local government reorganisation, the council has not yet formed a corporate view.
2237.
It is fair to say that in any process all public administration would be looked at. In any outcome there should be a balance between achieving local accountability and any potential cost savings.
2238.
Mr Neeson: I agree. The role of local government and local economic development has not been recognised in 'Strategy 2010.' My council, Carrickfergus Borough Council, is part of the corporate and tourism group.
2239.
One of the main proposals from 'Strategy 2010' is the possibility of creating a single development agency. Bearing in mind the role that LEDU has played in local economic development, do you feel that would put LEDU at a disadvantage with the Industrial Research and Technology Unit (IRTU)?
2240.
Mr Lewis: There is much to commend the rationalisation of the agencies. This was recognised in the LRDP report. When it talked about an "overcrowded market place" it was not referring just to the local level, it was also referring to central Government level. Through our economic development strategy we have a good working relationship with LEDU, particularly the Ballymena office. While the council would welcome integration it should not just be a case of bolting together the different agencies. Any new organisation or mergers should still have local contact. I am not sure how it can be achieved but due regard, has to be paid to that.
2241.
Cllr McDonnell: Mr Neeson referred to local government reorganisation. The last time this was proposed the council voted unanimously against any amalgamation for Moyle. It is possible to amalgamate or cluster individual functions, as we do for building control and environmental health. We are doing this for economic development. There is no benefit from amalgamating councils any further to get economy of scale, as you would lose the element of democratic representation. This can be achieved in a different way.
2242.
The size of councils is usually a concern. We are a small council and have this supposed problem. If you consider the details of the Widdicombe report, which reorganised local government in England, you find that Moyle Council is a typical size and type of council internationally. Councils in England are usually oversized and could be split up. In fact, functionally they do split up into area committees.
2243.
If the simple question is "Would it benefit us to reorganise into fewer local government areas?", the answer is clearly no.
2244.
Dr McDonnell: I need to declare a vested interest and hope I will be forgiven.
2245.
There has been an emphasis on tourism in your presentation. The compilers of 'Strategy 2010' may not have consulted widely on that aspect, and that feeling exists from Belfast to Moyle. We see this as part of the consultation process. 'Strategy 2010' is not a beginning and end in itself. It is the beginning of a whole process. I hope there will be more consultation the next time it comes around.
2246.
I am keen to focus on some of the specifics. We could talk around issues and leave fairly happily, having achieved nothing. Should we be focusing totally on Moyle and tourism? Given the terrible lack of cohesion and almost bitter rivalries existing within tourism groups, how can the industry be developed?
2247.
I send a lot of people from Canada and the United States to this region and I find a tremendous lack of confidence. People stay for a night or two and are only asked how well they have been treated when they are leaving. That is counter-productive because it seems very amateurish. We must maintain the regulation of the bed-and-breakfast sector, upgrade and create co-ordination.
2248.
Another difficulty is that when I send tourists to a guesthouse on the Causeway coast, the people there hardly know where to recommend them to stay in Cushendun, Cushendall or elsewhere. There is a lack of cohesion. Can we do anything about that? Is there any point in concentrating on tourism, or is tourism something that will continue doing its own thing?
2249.
Mr Lewis: As to whether we should just be focusing on tourism in the Moyle area, the answer is no. For us it is a starting point because at the moment we rely on tourism. Agriculture and tourism are the only real industries we have here.
2250.
As far as industrial development and investment are concerned, we are concerned that those are going to be taken away from us. I agree that the season is too short. Jobs are mainly seasonal and perhaps there is a lack of confidence in the industry given the political situation.
2251.
I agree that in the past there has been - and I am speaking from a local perspective - a lack of co-ordination. Part of the problem has been the diverse number of tourism organisations, and that has been recognised. In the past there was a Causeway Coast Tourism Association and an Antrim Coast and Glens Tourism Organisation. In partnership with all the councils involved we have come together so that there is one Causeway and Antrim Coast and Glens Regional Tourism Organisation. I hope that this will bring about more co-ordination among the providers in this sector.
2252.
Dr McDonnell: Perhaps I am being too specific in looking at these things. I will move on. In terms of development, would you like to see businesses in Ballycastle or Cushendun, or would you be prepared to settle for job opportunities in Ballymena, Ballymoney or Coleraine?
2253.
Cllr McAllister: Tourists come to see the causeway. It would be nice if we could direct them along the coast rather than have them going back down the road. However, I take your point about travelling to Ballymena, Ballymoney and Coleraine. They are not a million miles away. However, the lack of infrastructure and the problems of getting to those places by public transport have to be understood.
2254.
Cllr McDonnell: Statistics have been gathered about bus times showing that buses can bring you to your work but not bring you back. You might say that nowadays there are cars. That is true, but there is the row about the price of fuel.
2255.
If you go touring in the west of Ireland, in Connemara or Donegal, you will see factories in the strangest of places. You wonder what on earth they are doing there, but they are there and it seems possible to be able to set up high-tech factories in places like that.
2256.
I am not referring to a district marked on a map and called Moyle District Council, but it is unfair to a district, or to an area, to write it off in any sense because, apart from anything else, it results in a loss of confidence by the people there and a loss of interest. If you keep telling people "You are no good", the next thing is that they will be no good. It is unrealistic to concentrate too much on the idea that a job in Ballymena is a job in Cushendall. It is to some extent, but it is not as good. It does not do much for the character of people.
2257.
Mr Lewis: For somebody to travel to work in Coleraine, or even Ballymena, he would have to leave Ballycastle - and appreciate I am not talking about Cushendun or Cushendall or the Glens - at 6.30 in the morning and would not be back until 7 o'clock at night. There is a problem with the public transport infrastructure, and the road infrastructure is not great either, particularly in the Glens area. Then there is the lack of gritting on routes in the winter months, but I suppose that is a completely separate issue.
2258.
Dr McDonnell: What you are saying is that you would live with something in Ballymena, Ballymoney or Coleraine, but you would prefer to see it here?
2259.
Mr Lewis: Yes.
2260.
Dr McDonnell: What sort of a business would fit here? Pat Doherty and Sean Neeson here may be touring the United States shortly. They are travelling with Sir Reg Empey to promote job opportunities here. What is the pen picture of the guy or the girl that is going to put business into Ballycastle? There is no point in going along and saying that the best people in Northern Ireland are in Moyle and we have to get them jobs. Somebody in the States is going to be looking for 40 people, but he wants to be in Belfast. He wants to be in a place where he has 20 applicants, or hopes to have 20 applicants, for every job where there is good public transport. You make the point very well about the transport infrastructure. But what sort of jobs do you want? Is it high-tech? Is it low-tech? Is it textiles? There is no point in screaming "Give us a job" or "Give us 20 jobs, 30 jobs". We need to be very precise about that.
2261.
Mr Lewis: We recognise the issues to which you refer. Again, through the CORE organisation we are looking at what type of inward investment would suit particular areas, and we do recognise that Moyle is different from, say, Newtownabbey. We are a very special area, and that has been recognised by the fact that most of Moyle is covered by two different areas of outstanding natural beauty. We have Environmentally Sensitive Areas. We do have a good product, which is good for the tourism industry, and we do recognise that it probably would be inappropriate to bring heavy industry or big factories to Moyle, because of the potential environmental impact, and because we probably do not have the labour force which might be required.
2262.
Without prejudice to what is being done through CORE, I think that from an anecdotal point of view we would probably see some medium or small-sized businesses setting up, probably in one of the high-tech industries which are environmentally clean. Once this CORE research has been undertaken, we hope to have a clearer picture of what we should be looking for in particular, and perhaps how we should be focusing our marketing.
2263.
Dr McDonnell: How many people? I take your point and that is exactly the answer I wanted, but say something with 30-40 jobs arrived, how many people would be queuing up to get a job in it? How many people would have the necessary training or pre-training?
2264.
Mr Lewis: I do not suppose you could take the labour pool as the unemployed. At the last count 474 people were unemployed in Moyle, but of course that is not the available labour pool.
2265.
One of the shortcomings that we have identified and raised with the Minister is that we are not clear about what our skills base here is. We have been assured that a skills audit will be carried out. Again that will feed into what CORE is doing and give us some direction.
2266.
Cllr McDonnell: On the subject of a skills base, children do not just leave school in Cushendall; they leave school in Ballymena and other places. Presumably the same training, pre-industrial training and so on are available to them. Admittedly, if one tries to bring a high-tech factory for 40 employees to Cushendall, one is not going to get 40 trained people. But in the education system there must be the same basis of education for every child in the country, and one cannot just rule out Cushendall because it is remote or because there is only one school there. In fact, schooling has become much more general, so the potential is there.
2267.
The other thing that I will mention, which is sometimes mentioned as an anecdote, is that the planners are blamed for many things. They are blamed for driving people out of the Glens - because farmers' sons, and so on, cannot get to live in the Glens, so they leave. I am not making a planning case here for this is not the planning committee, but more sympathy is asked for by the population who want the people of the Glens to be able to continue to live there and even for the population there to grow.
2268.
Mr Clyde: Will you expand on your view that the recommendations on page 209 of the report about privatising harbours, transport companies and water and sewerage should not be considered?
2269.
Cllr McAllister: We felt that this was simply a fundraising exercise and that there are needs and a social side that must be taken into consideration. The report does not take into account whether privatisation is the best option for the harbours, and we would not support using it simply for fundraising.
2270.
Mr Lewis: The council would be particularly concerned about any proposal to privatise water and sewerage. It is recognised that there are problems with the infrastructure and a need for investment. But it is such a fundamental social service that the council cannot see how an organisation, whose prime function is to make a profit, can really focus on the main function of providing a social service.
2271.
We have particular problems in some of the rural areas such as the Glens where there are pockets of deprivation and some properties without basic facilities. We already have problems with the cost yardstick for water and sewerage. I do not see how putting that industry into the private sector is going to alleviate that.
2272.
Cllr McAllister: We have a world heritage site at the Giant's Causeway, yet three miles down the road we have houses without a sewer, which is unbelievable in this day and age, in the twenty-first century.
2273.
Cllr McDonnell: It is inherently objectionable to be selling public utilities simply for the short-term purpose of raising money for a particular project. There are certain core public services that are fundamental to life and to the quality of life, and the idea of privatising them is wrong. What is the point of having any public service at all if those services that are fundamental are not kept under the control of the public service and provided by the public service?
2274.
That also applies to harbours. No one would have come along and built a harbour if there had not already been one there. Why would anyone come along, buy an existing one and run it on some sort of a charitable basis? There are no fairy godmothers in this country. One has to pay for these things, and pay dearly for them if they are privatised - for that is why people buy them. So I consider it a silly idea.
2275.
Mr McClarty: Moyle is not an area that I am unfamiliar with. It is a beautiful part of the world, and it is a wonderful product. I support your efforts to have the Campbelltown ferry reintroduced.
2276.
May I apologise for my late arrival- there was an announcement of a £54 million investment in Coleraine this morning, and I felt that I had to be there for that.
2277.
My question is three-pronged. Does the council believe that the targets in 'Strategy 2010' are achievable? How ambitious do you want those targets to be. And do you consider that ten targets are sufficient?
2278.
Cllr McAllister: This is a question that should be addressed to economists, so I shall pass you over to the accountant among us, Mr Lewis.
2279.
Mr Lewis: I am an accountant, not an economist. I feel that we are not qualified to answer that question. I can only refer to the Northern Ireland Economic Council Report 'A Step-change in Economic Performance, a response to 'Strategy 2010', which raised some questions on how the vision was to be led to the targets and how the targets were to be related to the outcomes. This is one that we would have to leave to the experts.
2280.
The Chairperson: I thank you for the way in which you dealt with the questions. We hope next month to complete our report to reflect not only your original submission, but also your answers to the questions. It has been an onerous task to focus on improving 'Strategy 2010' so that it reflects all of the concerns expressed.
2281.
I thank you for having us here today and for your hospitality.
TOP
MINUTES OF EVIDENCE
MONDAY 2 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Ms Lewsley
Mr McClarty
Ms Morrice
Dr O'Hagan
Witnesses:
Mr P Leonard )
Mr S Prenter ) Ulster Society of
Mr F McCormack ) Chartered Accountants
2282.
The Chairperson: I apologise for the delay in starting, but unexpected traffic on the M2 meant we were one member short of a quorum.
2283.
You are very welcome. We have read your submission. I shall ask you to make a short opening statement before we put some questions to you. We shall also allocate 15 minutes at the end of this for a private session.
2284.
Mr Leonard: I should like to thank the Committee for the invitation. We welcome the opportunity to meet you and assist in your important work. We have been encouraged by the commitment to industrial development shown by the Assembly.
2285.
First, we should like to introduce ourselves and provide a little background on our society and what we do. We shall then discuss the questions you no doubt have. My name is Paul Leonard, Chairman of the Ulster Society of Chartered Accountants and head of financial services at the Bank of Ireland in Northern Ireland. Mr Prenter is a senior figure in the profession and is a senior partner at BDO Stoy Hayward Chartered Accountants. Mr McCormack is a senior partner with FPM Chartered Accountants, Newry, an area in which he is very active.
2286.
With 11,500 members, the Institute of Chartered Accountants in Ireland (ICAI) is the premier professional accountancy body on the island of Ireland. The institute is responsible for training new accountants and also for ensuring the highest standards of professional conduct amongst our membership. The Ulster Society, which we represent, is the local representative body. We are not a business lobby group in the style of the Institute of Directors (IoD) or the Confederation of British Industry (CBI), but purely a professional representative group whose interests lie in supporting the activities and interests of members.
2287.
We have 2,000 members living and working in Northern Ireland. Our annual student intake is 160 - mainly graduates - and at the moment we have approximately 500 students in training.
2288.
We are quite unique among professional bodies in that our members work in a variety of areas. We have the traditional professional practice accountant, conducting auditing and accounting and tax. We have a significant number of accountants in business, acting as financial controllers, directors, and a number of people, like myself, working in financial services, banking and so on. We also have a increasing number of people working in the public sector and in education. A number of our members hold senior positions in both the public and private sectors.
2289.
We have a very strong mix of male, female, young and old, and at the moment more than 40% of our members are under 35 years. I hope that this portrays to you a more vibrant image than the traditional representation of chartered accountants sometimes does.
2290.
We therefore believe that, with the breadth of skills and experience of our membership, we are well placed to give some assistance to you in your important work.
2291.
In relation to 'Strategy 2010', the Committee will be aware of the written submission we made when it first came out. We have also played an active part in the development of that, and six of our younger members were involved in some of the working parties in the original '2010'. We have also been asked by IDB and LEDU to do a study into the funding structures of the small-medium sized enterprise (SME) sector. I know we have set aside some time to talk about that. This involved significant research among a number of small companies in Northern Ireland. We are also doing external benchmarking. We will talk more about that later.
2292.
We are very supportive of the way '2010' has been developed and of its key recommendations. We are pleased to see progress being made in some of the initiatives, despite the sometimes uncertain political landscape.
2293.
That is the introduction, and we are now happy to take questions or queries that you have on our original submission.
2294.
Dr O'Hagan: I want to start with the Economic Development Forum. Do you think it is sufficient to bring together the social partners to oversee the development and implementation of '2010'?
2295.
Mr Leonard: We recognise that we are bringing together all the strands of people who are interested in the economy. We welcome the significant private sector involvement. However, the onus is very much on the Assembly in bringing the work forward. The forum should be used as a sounding board for advice, but the responsibility for implementation rests fairly and squarely with the Assembly. In broad terms, we are very supportive. It is a strong, vibrant and representative body.
2296.
Dr O'Hagan: You said in your submission that it is essential that '2010' is moved forward to specific actions. What immediate specific actions are most required?
2297.
Mr Prenter: We see the actions coming under three strands. We see the need to develop the knowledge- based economy of the future, the real need for specific delivery mechanisms, and the need for other supports to stimulate more growth.
2298.
Under the framework of creating actions for the knowledge-based economy, we are pleased at the developments that have taken place with the information age initiative, the Northern Ireland Science Park, the bio-institute and the forum. With regard to the specific actions, there is a real need to create a one-stop shop for economic development. We see a need to streamline the incentives required for industrial development.
2299.
Specifically we would like to see a trend whereby private investment is encouraged more so than grant. We want to see the private investment take a real stake in Northern Ireland business life. We have some specific recommendations we can come to later when we talk of stimulating the local economy and the SMEs.
2300.
We also see the need for urgent action in the linkage between fiscal policies and public sector-based incentives. We are in a competitive environment. In the Republic of Ireland corporation tax will drop to 12·5% by 2003. We need to have a level playing field and, in order to stop Northern Ireland companies moving their headquarters to the Republic, we need to see some steps being taken.
2301.
We need to see stimulation of e-commerce, which should be linked into the education system. This is a longer-term strategy. Every student should be educated and stimulated by the concept of entrepreneurship and e-business.
2302.
Mr McClarty: Could you tell the Committee what can be done to expand the role of small businesses in the economic development of Northern Ireland?
2303.
Mr Prenter: Small businesses are the core for the future. We have seen the lessons learned in other economies, such as the United States and throughout Europe, that small-medium sized enterprises create real jobs and growth, and we see jobs as being the cornerstone of the Northern Ireland economy. If we can provide quality jobs, it will help to underpin the political solution.
2304.
The specific changes that we would like to see are a change in culture away from the family legacy- type company and more towards wealth creation. There are specific mechanisms that can be done to stimulate that. There is also a need to incentivise smaller companies and create role models that they can adopt. There have been a number of successful programmes that have been created by LEDU and the Training and Employment Agency, and we are specifically looking at marketing awareness programme (MAP) and rapid advancement programme (RAP) for information technology. There are other programmes that can also be stimulated and developed to further help small businesses in the Northern Ireland scene. There is also a need for improved co-ordination between the development authorities, local borough councils and the local enterprise agencies, and the contribution to the economy of each one could be stratified to help small business to grow.
2305.
The crucial thing is we want to encourage private investment, and that is the particular change that we need to see. That will involve issues such as venture capital, sharing of shareholdings within companies and broadening the base of the equity away from only the family unit. That entails marketing and promoting role models. It means we should be looking towards non-executive directors and helping to stimulate the involvement of outside entrepreneurs in what are traditionally small family businesses. That will open up the mindset and create the culture for growth.
2306.
There is a role for more business mentoring by large companies and we would actively encourage that. We see a mechanism to take directors and senior managers out of large corporates and ally them to smaller businesses in order to use their expertise and experience to the benefit of those companies. If that can be done early in the life of the small business then it will create a real impetus for growth and help establish the structures to support this. Management development is one of the areas that needs massive improvement here. The mentoring programmes could be one way of enhancing such a vital area.
2307.
Mr Leonard: To encourage that type of behaviour some specific actions are required. In some support packages already available, Government incentives are linked to the bringing in of extra expertise to the company and assisting in the cost of that expertise.
2308.
Ms Lewsley: I apologise for being late. I want to ask a question about corporation tax. Can you elaborate on your view that a special rate of corporation tax is not achievable, and your opposition to the recommendation in 'Strategy 2010' of a tax regime available only for inward investment?
2309.
Mr McCormack: It ties into our belief that 'Strategy 2010' should not be used purely as a grant-cutting exercise. We believe that the structure of public funding is fundamental and strongly recommend that it consists of an interaction between grant and fiscal policy. That means that we look for value for money in our objectives. One area that should definitely be examined is the possibility of enterprise zones within the United Kingdom tax structure. It is fundamentally important that we encourage investment. Enterprise zones could target the whole of Northern Ireland, or areas of social need, for a minimum of five years. The concept of enterprise zones is important. They provide similar advantages to those perceived from a 10% corporation tax. It would be a further expansion of what has already been successful. Gordon Brown's 100% capital allowances scheme, valid from 12 May 1998, post the Good Friday Agreement, has been successful in generating investment, but it must go further in order to encourage private individuals to invest.
2310.
One should look at specially designated areas within the existing fiscal policy - for example, I have just come from an accountancy conference in Galway, and the amount of investment in Salthill is amazing. The reason for that is its designation as a section 48 area. Within the United Kingdom tax structure there are similar opportunities for designating areas - Laganside, for example, or even the International Fund for Ireland's urban development grants, which were quite selective in the areas assisted. Investment happened suddenly in those areas.
2311.
We need a smarter use of public funds. We are not asking for any more public funding, but to be upfront about this - and given the point Mr Prenter made about a 12·5% tax rate for all businesses within three years in the Republic - unless public funding is used intelligently, Northern Ireland, and the border counties in particular, will suffer greatly in the next three to four years. That will be the consequence of not addressing the interaction of grant and fiscal policy.
2312.
In that regard, preference shares should be used as a mechanism to replace grants in certain instances. That means that in some instances the Government put in preference shares instead of grants. Ultimately, five or six years down the line, if it is a very successful venture, the Government will benefit from the disposal of the preference shares. The key is that we want to attract profitable, sustainable businesses, not necessarily grant-attracted, capital-intensive ones. We are fooling ourselves to believe that venture capital alone will sort this out.
2313.
If the Northern Ireland economy is to compete in a financial global market, we must provide incentives.
2314.
Mr Leonard: On the specific point of why we think that a special rate of corporation tax is not achievable, to be blunt about it, we do not believe we could get it if we asked for it. From a United Kingdom point of view, it would be too upsetting for the whole corporation tax regime if we asked for it - Scotland, Wales and elsewhere would then ask for it. We are talking about the same corporation tax system, but more smartly operated at a local level.
2315.
Mr McCormack: Within the existing UK system.
2316.
Ms Morrice: I want to look at two huge areas, which very surprisingly have tended to be slightly ignored in all our public sessions. First, there is the matter of the traditional industries. You said that we must concentrate on the knowledge-based economy of the future. Does that mean that we close the door on everything that we have achieved and built our reputation on? What about textiles, agri-food, shipbuilding and the things in which we are a cut above others. People are ignoring them.
2317.
Secondly, there is the question of Europe and the euro. We seem to be blind to what is about to happen in this part of the world - nobody mentioning it, nobody coming up with an argument for or against it or a position on it. I am very surprised.
2318.
Mr Prenter: With regard to the first point, when we talk about the knowledge-based economy we mean the application of new technology to the whole spectrum of industry. We must have our students and managers, everybody, educated and confident in the e-economy. There are problems when it comes to our skill base in textiles and agri-businesses. We know of those and need to react to them. Back in June, I was involved in the management buyout of one of our long-standing traditional clothing companies about to be closed by CV. We were able to structure a successful management buyout of that. There are creative ways to look at that, and it ties into the funding issue that Mr McCormack mentioned of using preference shares and venture capital. We must encourage private investors as well as the Government to invest in risky but profit- potential enterprises.
2319.
We have to take some special initiatives to address the problems that are there in the agri-sector. There are good business skills there. We have a wonderful industry advantage on an international plane, and the experience we had in the red meat industry showed that our entrepreneurs can be creative and react when we have the right approach to it. There is a specific role for special programmes and initiatives that we must build on. Although we may lose some jobs in the short-term we must capture the expertise that is there. It is not only industry-specific skills but managerial and entrepreneurial skills, as well as customer linkages. We need to move those industries into the new era.
2320.
Mr Leonard: We are not doing those industries any favours by supporting, without being cruel about it, lame ducks. The key issue is that those industries have to change to become globally competitive. Pumping money into a business that is going to need more money year after year is not doing any good in the long term.
2321.
Mr McCormack: On the second point about the euro, currency management is key, particularly in a peripheral economy like Northern Ireland. While it would appear we are not going to enter the euro zone for some time, all our businesses must be euro-ready. There was an excellent publication produced by the Northern Ireland euro forum, in consultation with the euro preparations organisation in the South, called 'The Euro and its Implications for Cross-Border Trade', which we as an institute were actively involved with. It was practical and tried to ensure, particularly in the South where 23% of Northern Ireland's exports are going, that our businesses can be competitive by utilising accepted Treasury and management practices, and shrewd currency management - for example, buying in euro areas, and in some cases asking people within the sterling area to invoice you in euros if your customer base is also within the euro area. Whether or not the United Kingdom enters the euro zone is a political decision at present, but we have to face reality in terms of business. The euro zone is fundamental to the long term survival of the Northern Ireland economy. We must put in place policies which address the euro zone and how we can best be ready for all the opportunities and the challenges that arise from our not being in the euro currency, particularly with a land border with the South.
2322.
Ms Morrice: Do you have any recommendations with regard to our being in or out?
2323.
Mr Leonard: The point in that is we see our role as raising awareness and bringing the advantages and threats posed by the euro to the attention of business. We do not have a view on the euro as such. Ultimately it is very much politically driven, and it will be a political decision whether to go in or out of the euro. Our responsibility is purely to make sure that we are fit to trade either way, and that is the role we have taken on.
2324.
Mr Neeson: In 'Strategy 2010' there is the suggestion that softer options be created in relation to Selective Financial Assistance. In your submission you seem to suggest that it should not be used as an excuse for a grant-cutting agenda. Do you not think it is time we moved away from the grant system and tried to create the enterprise culture? If that is the case, apart from the points you have made on corporation tax, what other suggestions could you make that could replace the grant culture?
2325.
Mr Leonard: Certainly we do not want to see the amount of money supporting industry to be reduced in real terms, but we recognise that there are different ways in which it could be applied to give more encouragement to companies to become better at what they do. We accept that Government would - and should - be reducing the pure capital grants, which have historically been the way companies have been supported. We are talking about trying to encourage companies to become better at what they do, perhaps in the area of management training and enterprise, through promotion of the European quality model. The fiscal incentives we talked about were to make it more attractive for companies to invest and make profits which ultimately will create more taxable revenues and it becomes a virtual circle of more profits, more tax. That is the type of situation we want.
2326.
There are also potential breaks in funding from an income tax point of view which may encourage the private sector to invest, for example, in enterprise investment schemes and that type of thing.
2327.
Mr Prenter: Some of the other specific recommendations could be linked to forms of Government assistance, and there could be conditions attached to such assistance which would improve the prospects for success and growth. For instance, it could be tied in with a requirement that there would be a non-executive director, and that the company should be more specific about mentoring and tying into larger businesses, perhaps helping with such structures as the marketing effort and management development.
2328.
There is also the requirement perhaps that certain companies should actively participate in programmes which have proven to be successful - for example, the cost reduction programme, the market awareness programme, and other training and development programmes that are in place and established. Perhaps more of a push towards active involvement may be mandatory and attached to Government assistance.
2329.
As we see it, the primary recommendation is that where there is support from the public sector, there should be an opportunity for the public sector to gain a reward whenever that investment is successful. We saw that very successfully down South, last year.
2330.
Mr McCormack: They had £50 million in dividends and preference shares. The key point we want to get across is that we agree with your general comment on grant culture, but it is important that we appreciate that to compete in an international market we will require assistance. There is no doubt about that. It should be targeted at those companies which are operating an export market and are addressing their attention to becoming internationally competitive. However, it would be very dangerous if we concluded that financial assistance of some sort, whether it be done fiscallly or otherwise, is not required in order to act as a catalyst to put us up with the first league of nations in terms of international business. It is required.
2331.
Mr Neeson: That is a finding?
2332.
Mr McCormack: That is a fundamental issue. Unfortunately it is at times very easy for people to say "No grants". It is necessary to get behind that and to provide a leverage or encourage international investment. I am talking about our indigenous companies as well. That is key. It may be decided to reduce grants as we are suggesting, but not at the expense of public support in terms of fiscal or other mechanisms, to push the boat out and encourage people to invest here.
2333.
Mr Neeson: I know you are going to talk to us in private about small businesses. However, on our recent trip to America one of the things that impressed us was a meeting with the Small Business Administration. Loans are provided with Government guarantee - maybe we should be looking at that.
2334.
Mr McCormack: That is not miles different to preference shares. In reality that is the Government giving a loan. The difference is that if the project works the Government then gets a share in terms of preference dividends or if the company subsequently goes to the market, as happened in the South with a couple of prominent companies last year, the Government then benefits from its preference share disposal.
2335.
Mr Leonard: Certainly that is the core of the preference share. There are other mechanisms such as the small firm loan guarantee scheme. It has been in existence for a significant number of years, but it has not really been used to the extent that it could be. This is an issue that came out in a study we did: in a situation where a company is having difficulty raising finance the Government guarantees a percentage of the loan to the bank that provides it.
2336.
Mr McCormack: In Northern Ireland we have the most successful small loan scheme in Europe giving loans up to £20,000 - the Emerging Business Trust (EBT). That has been audited by Europe and has been judged. It is a very small business, but it is a tremendous success. I was involved in it myself about five years ago. The decision was taken specifically not to give grants but to give loans to try to encourage a commitment. There is an evaluation report available on that. The EBT was originally called the IFI Pilot Working Businesses.
2337.
Mr Neeson: Could the Committee get a copy of that report?
2338.
Mr McCormack: I can arrange that.
2339.
Mr Neeson: That is useful. Thank you.
2340.
Mr Clyde: Do you have any views on the recommendation in the report that there should be a single development body?
2341.
Mr Prenter: Perhaps I should relate this back to the opening question about the steps that should be taken to enhance the role of small businesses. We see a need for two agencies, one to promote inward investment and the other to look after local business. We see those as two distinct skills sets and responsibility areas, and they require separate management.
2342.
We see the need for an inward investment body that is looking at promoting Northern Ireland and attracting targeted inward investment to the Province, and a home industry body for local indigenous business. Also, there should be a restructuring on the local side. We would see the need for what is presently LEDU, the home industry side of IDB, the IRTU and the business development department of the Training and Employment Agency to come together and create a support structure for businesses.
2343.
That would be quite a significant step towards a one-stop provision of this service, both for inward investment targeted companies and home industry. There would be great efficiency in that restructuring.
2344.
The Chairperson: We are now going to have 10 or 15 minutes with you in private session.
TOP
MINUTES OF EVIDENCE
MONDAY 2 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Ms Lewsley
Dr O'Hagan
Witnesses:
Mr D McCallan ) Ards Borough Council
2345.
The Chairperson: Mr McCallan, I welcome you to the Enterprise, Trade and Investment Committee. We have read your submission, and there are a number of questions that we wish to ask you. After the members have introduced themselves, you will have an opportunity to present a short opening submission before we ask you some questions.
2346.
Mr McCallan: My introduction will take less than five minutes, and I am sure you will be glad to hear that. I have recently been appointed as director of development at Ards Borough Council, having spent 3·5 years prior to that in Lisburn. You referred to my submission, but it was actually written by my predecessor, however I shall endeavour to answer your questions as succinctly and clinically as possible.
2347.
There are about 80,000 people in the borough of Ards and, to an outsider, the area consists of: Newtownards, which is often perceived as an unglamourous town; Comber and Ballygowan, which are seen as travel-to-work areas to Belfast; and a large peninsula, which visitors drive through in order to go to Portaferry. Having been there for six weeks, and having driven the length and breadth of the area, I have found that that is not the case. It has acute socio- econamic difficulties, and I hope that 'Strategy 2010' and the process, of which this is a part, will help to improve prosperity in the various pockets that have suffered greatly from large-scale industrial decline and the lack of hospitality infrastructure in the borough.
2348.
About 7,500 homes are due to appear over the next 15 years - just beyond 2010 - and, I am sure that you are all more aware than I, that usually means two to three cars per household, 21,000 people and potentially, about 14,000 extra jobs in the region. I hope that the local economy is serviced to help as many of those people as possible and to comply with central Government directives such as the avoidance of commuting where possible.
2349.
That is a summary of my six weeks in Ards having driven, walked and looked around the place, and I hope that it is an objective summary.
2350.
Mr Clyde: You suggested that additional powers such as the purchase, development and management of land for industry purposes should be given to enhance the effectiveness of councils. Perhaps you would elaborate.
2351.
Mr McCallan: Comparisons with Britain and the Republic of Ireland highlight that, when given an opportunity, local authorities can be discerning with regard to the use of land for industrial purposes. One example of where that would be of advantage to Ards and to "NI plc" would be the zoning of land in the Comber area, which has a pitifully small amount of industrial land allocated to it, both in terms of what currently exists and the potential for same in the area plan currently being formulated.
2352.
If we were allowed to work with central Government agencies in delivering industrial units on a modest scale, we would be able to anticipate the future needs of our employers and the increase in housing and population that will affect the local economy. That is a practical illustration as to how Ards could, in a discerning way, contribute to the overall economy and, more importantly, anticipate the needs of new employment sectors and people who have been made redundant from their more traditional places of employment.
2353.
Planning is essential, but it is not something that should be done without accountability - local government is accountable in that respect. I am talking not just about land used for industrial purposes. There is also a need for land for recreational and other purposes, and we must be careful to avoid the inevitable draw of housing and high prices for good land in accessible places which are close to infrastructure.
2354.
I would like an element of planning responsibility to be introduced into a local authority's remit, if possible, if we are looking at what happens favourably in the Republic of Ireland and Britain.
2355.
Mr Clyde: Do you have any views on the report's recommendation for a single development agency?
2356.
Mr McCallan: The creation of a single development agency is more of an external perception issue. It is to do with how potential inward investors, other Governments and other jurisdictions perceive Northern Ireland in agency terms. I am conscious of a review in the Republic of Ireland that produced Enterprise Ireland and of one in Scotland which resulted in the formation of the Scottish Development Agency. It is important that we take stock of what other people have done but not necessarily replicate it. Externally, in perception terms, a single development agency is important, but internally, the machinations, the bureaucracy, the process and the displacement of responsibilities within a series of sub-agencies will still go on. It is imperative, in that regard, that the process is effected as efficiently as possible, whether there is one development agency or there are 26 - to quote the number of district councils currently prevalent in Northern Ireland. A single development agency would create the right perception outside Northern Ireland.
2357.
Mr Neeson: The council's submission stated that the role of councils was very unclear. What initiatives would you like to see that would define their role and encourage them to become more involved in local economic development?
2358.
Mr McCallan: There are 26 local authorities, so there are 26 interpretations or perceptions of local authority powers. That must change, and there is an opportunity for the Assembly and related agencies to provide a formula within which local authorities can participate. For example, local authorities are best placed to provide information in a two-way sense in that local people could go there seeking economic development advice, and central agencies could also see how their policies are being translated on the ground. Knowledge provision is important. We all have mountains of information, but if we do not turn it into knowledge, such information is absolutely useless. Local people tend to be more committed than those who are looking at a subject from a distance. If those local people are involved in real decision making, then through local authorities, we can apply that knowledge for local benefit.
2359.
In terms of fund management, in spite of all the negative and positive criticisms relating to how the 1995-99 action plans involving local authorities have gone, the one thing that all 26 councils have learned is they must be able to deliver projects in an accountable, discerning way that suits both ratepayers and the central agencies. Fund management is, therefore, very important.
2360.
Harnessing local skills is also very important, whether you have institutes linking with employers or women returners who are wondering where to go to put their enterprise into action. Local authorities could do all of these things, although it is not a scientific role for them. Basically the local authority role is one of a combination of management, delivery and knowledge on the ground for local people, potential inward investors and central agencies alike.
2361.
Mr Neeson: When we visited Moyle District Council the other day we were advised of a number of integrated schemes which they had, for example, the CORE initiative and also tourism schemes. How would you encourage greater integration in relation to economic development among district councils? Also, how would you ensure that there was no duplication between the work of the councils and the role and work of IDB and LEDU?
2362.
Mr McCallan: You have already cited the CORE group. Indeed, in the south-east region there is a synergy among councils, which has recently helped to deliver the business start programme on behalf of LEDU. There is a formula for economies of scale and value for money in which councils can work together. Occasionally it has been strategic, but more often than not it has been haphazard and primarily driven by personalities. If a formula could be applied that is based on the new area plan which links Ards and Down through Strangford Lough, that would be useful for tourism and hospitality. At the same time we do not want to get hung up on geographic collaboration for the sake of it. It is equally important that Ards looks to Belfast as a commercial pivot. Inside Northern Ireland, Ards is on the periphery of Belfast. Outside Northern Ireland it must be marketed as part of the Greater Belfast metropolitan area. You do not say that to people living down the peninsula, because they tend to look to and collaborate with their counterparts in Down district across the lough.
2363.
My point is that if there is an absence of collaboration for collaboration's sake, and an application of good collaboration based on knowledge and need, rather than the thought that it "might be a good idea," hospitality with Down and business development with Belfast would be excellent examples.
2364.
Ms Lewsley: Following on from something you mentioned about skills, what action is needed to retrain and re-skill individuals to meet the demands of the changing industry and economy?
2365.
Mr McCallan: Rather than bleat and whinge about recent job losses in the textile industry, Comber Open Learning Centre worked with the Training and Employment Agency to produce a simple training voucher system. I may be wrong about the actual amount, but I think that £600 was afforded to each redundant textile worker. The Centre saw an opportunity to provide a range of confidence-building, secretarial and computer-based learning opportunities locally. Around 100 to 110 actually availed of that opportunity. That helped the local economy, because local people got back to work. The local training provider was able to put their money where their mouth was and deliver.
2366.
In policy terms, there is an opportunity to commission skills diversification programmes. It is wrong to conclude that if you are 55 and a textile worker you simply want to travel to shopping centres or recreation facilities, particularly when you are provided with a local, personalised training portfolio that works, with assistance from central Government and delivery at local level. That is one way to retrain people who have lost jobs in local areas and, more importantly, retain them in industries that are local to the region.
2367.
Ms Lewsley: The submission stated that cross- border co-operation is missing from the report. What specific areas of co-operation should be developed, and what gains would you expect to receive?
2368.
Mr McCallan: I hesitate to correct my colleagues, but cross-border co-operation is mentioned, perhaps not cited in practical illustrations. "Practical" is the key word, provided there is an absence of "for the sake of" co-operation and there is a clear look at where the synergies are - energy, infrastructure, forestry, fisheries, the use of waterways and canals and business development. We must not forget our east-west dimension. Business in Dumfries and Galloway is just as important to me as business in County Louth. They are of equal importance.
2369.
One thing that would be useful, in practical co-operation, is assistance from agencies in developing strategic alliances in corners of the Republic of Ireland that are further afield. We do not know how many small businesses could avail of, say, a franchise and distribution agreement with a company in Cork. We are not too sure what the lie of the land is in respect of an Athlone business, perhaps not necessarily wanting to move into Northern Ireland and displace jobs but wanting to create an alliance with a complementary company. The same would also apply to Scotland and Wales. If the emphasis is on the practical, and there is not a plethora of food and furniture initiatives, which were cited in 'Strategy 2010', where the process took over the actions, that would be favourable.
2370.
Mr Dalton: My apologies, Chairman. I have two quick questions. There is increasing pressure on the textile industry with major job losses, particularly in the Ards Borough Council region. What policies could improve competitiveness in those industries and prevent closures?
2371.
Mr McCallan: I would concentrate on technology and marketing. On the technology side, if there was a relationship with organisations such as the College of Marketing and Design, the Irish Linen Guild and some of the producers, some of the higher-margin products could be produced through advancing technology, with IRTU coming forward as well. In a way, products could be branded generically as high-quality linen and textiles.
2372.
For the Japanese market, high-quality Irish linen shirts and Irish denim is sold above the true price of producing it. People are buying it because of where it comes from and how it is produced. If technology is, therefore, facilitating existing companies to diversify into niche markets, all the better.
2373.
Marketing is an extension of the response to your question. If the branding of the Irish textile industry is one which suggests quality as opposed to quantity, precision of product engineering rather than mass production, that would be all the better. There is a certain amount that you can do. There will be more job losses in the textile industry, because one cannot differentiate between textiles, cars and coal. Industry is moving that way. Therefore, my previous response to Patricia Lewsley would be linked to this, in that retraining people into industries which have a future is vital. The future of textiles is as a smaller, higher quality market place, if the technology and marketing is correct.
2374.
Mr Dalton: If people are retraining into new industries, is there sufficient emphasis in the report on tourism? What recommendation might have been made regarding tourism?
2375.
Mr McCallan: There were some references to tourism but perhaps not enough; it depends what "school" you come from. Tourism is much talked about in Northern Ireland in general terms and the Northern Ireland Tourist Board is facing up to its own readjustment. Tourism must be not just linked to economic development, but be a component of it. If someone sets up a bed and breakfast, expands it by opening a swimming pool and encourages someone to work for them, they are creating jobs. If visitors come and spend money, that is revenue creation. Many agencies in Northern Ireland have recognised that tourism is a component of economic development - it is autonomous, yet inextricably linked.
2376.
Greater reference could be made to tourism product development. There is a tendency of appraising whether a project or initiative is going to work by demanding that there is a market for it. There needs to be slightly more risk orientation towards encouraging tourism product development, whether it is self-catering chalets or the hospitality infrastructure that supports visitors. At the moment there is not sufficient hospitality infrastructure to warrant a large number of new tourists. Equally importantly, there is not sufficient product versatility to maintain our existing tourists after the curiosity factor diminishes. People may revert to the destinations that they went to before, because they provide fully three-dimensional tourism products. It is a catalyst for other self-caterers. 'Strategy 2010' is moving away from direct intervention, but just a few catalyst initiatives would be helpful in the Ards peninsula, the Sperrins, or wherever, and may allow people to have a more three-dimensional tourism experience here.
2377.
Dr O'Hagan: The submission states that the areas identified in 'Strategy 2010' where industry might be located in future were flawed. How do you think major growth areas should be chosen?
2378.
Mr McCallan: Major growth areas should be planned on the basis of demographics and on the basis of existing clusters of industry. There is a case, obviously, for places where there is not a high population, and there is low infrastructure and low industry, to look at very specific measures in terms of rural economic development, whether it is e-initiatives, telecottaging or improving the tourism product. To a degree, that would satisfy the Ards peninsula in a very mercenary sense.
2379.
You must also consider the population explosion in the Greater Belfast and the Greater Derry areas. Those are more important than local government district boundaries. People want to live in those areas, and, for the most part, they do not want to spend more than 20 minutes by car getting to their place of work. Things are obviously reaching logjam proportions here a decade after they did so in Britain and in Dublin.
2380.
Now that the nine major centres theory has been removed from the 'Shaping Our Future' concept, it is imperative that a great deal of demographic information be provided to look at where people are going to live and where their families and their children are going to be. It is important to make sure that this data is applied to where a lot of industry has grown up to date - on the main arteries, on the east coast between Belfast and Dublin, in the west, in terms of the Greater Derry area and on motorway infrastructure.
2381.
I know it is an impossible job, but as far as is possible, those types of discerning planning decisions should be taken in terms of robust industrial re-zoning in advance of where the new economy and new population are going to come.
2382.
Dr O'Hagan: On the issue of Selective Financial Assistance, 'Strategy 2010' made the recommendation that it should be made less readily available. What are your views on that, and what action would you recommend in order to improve the potential of areas in respect of inward investment?
2383.
Mr McCallan: There are two elements to that question. Regarding potential inward investment, credit should be given where it is due. The Industrial Development Board (IDB) recently developed a series of "Northern Ireland plc" marketing initiatives - multilingual and multisectoral - to go where the new business opportunities were going to be found. After the generic information about the good qualities of Northern Ireland has been marketed, councils can come in and add in some local variations on that, as and when the potential investors arrive.
2384.
The recipe of 26 local authorities, two or three central agencies and a large number of politicians heading across the world talking about Northern Ireland is flawed. One way to improve on that situation would be to encourage local authorities to take existing small businesses across the water, in association with LEDU, on targeted trade missions. There is a big difference between a trade mission and an inward investment campaign. The central agency can look after, to a certain degree, the potential inward investors who may be coming in. That is, perhaps, a personal view on the potential inward-investment side of things.
2385.
In terms of public funding, it is absolutely right that there be a more discerning approach to where the money goes. There is a genuine hope for the business angels concept, which was referred to in 'Strategy 2010' and is currently being applied in Lisburn. The private investment approach is key in bringing people who are abroad back home - people who have money and have a corporate conscience, for want of a better phrase - and in encouraging private developers to know that they may be able to site there, but there is a quid pro quo for doing so. That partnership approach is imperative.
2386.
In terms of prioritising where local, public- sector economic funding should go, there is a role there for key issues in each region to be addressed in a flexible and imaginative but, none-the-less, accountable way. Even in a country the size of Northern Ireland, it is possible to tailor programmes of local assistance and really make a difference in terms of public intervention.
2387.
The Chairperson: I would like to thank you for the way you have dealt with the questions. Given that you have been in the job for only six weeks, you have obviously read yourself into the situation. We hope to reflect your opinions and your submission when we move to conclude our report towards the end of this month.
TOP
MINUTES OF EVIDENCE
MONDAY 2 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Ms Lewsley
Dr O'Hagan
Witnesses:
Prof R Osborne )
Ms E Collins ) Equality
Ms M Bunting ) Commission
Mr P Donaghy )
2388.
The Chairperson: I would like to formally welcome you all. We have received your submission. After members have introduced themselves, I will ask you to make a short opening submission before we ask some questions.
2389.
Ms Collins: The Equality Commission welcomes the opportunity to comment to the Committee during its inquiry into 'Strategy 2010'. We are keen to engage with you on equality issues and are pleased that you are taking the opportunity to have a more detailed discussion with us. Our chief commissioner, Joan Harbinson, is sorry for not being here; she is out of the country. She would have welcomed this opportunity to meet and engage with you on equality issues.
2390.
As members of the Committee are aware, the Equality Commission has responsibility for equality issues relating to disability, gender, religion, politics and race, and ensuring the effective implementation of the statutory equality duties set out in section 75 of the Northern Ireland Act 1998. It is worth noting that if 'Strategy 2010' were being developed now, it would be subject to the requirements of the equality duties set out in section 75. Equality considerations would have been built into policy considerations from the outset and placed at the heart of the thinking.
2391.
The Equality Commission believes that the economic success of Northern Ireland will be enhanced by equality of opportunity for all and that positive steps must be taken to ensure that no section of society is excluded from access to the labour market. The economy should not be held back by any form of discrimination or inequity of treatment. Indeed, economic development and the tackling of structural disadvantages are vital to a community that is coming out of conflict and attempting to build a more inclusive and equal society.
2392.
As set out in our response to your inquiry, we welcome the recognition by the 'Strategy 2010' Steering Group that equality of opportunity and equity of treatment must be key features of the economic success of Northern Ireland and that they are more than just desirable aims in their own right. We also emphasised the importance of ensuring that the strategy is accompanied by sufficient detailed recommendations to ensure that the vision of the 'Strategy 2010' group is achieved. That is a vision of a society in which every individual has the opportunity to realise his or her full potential, participate fully in the economy and, consequently, become full stakeholders in the future development of our society.
2393.
We also recognise that levels of economic in activity are higher for people with disabilities, Catholics, women and members of minority ethnic groups, including the Traveller community. Rising levels of economic inactivity are inconsistent with the achievement of the fully participative economy that was envisaged by the steering group. It is unhelpful to economic growth to have excluded groups. We acknowledge that the steering group recognised the need for creative and flexible policies to encourage full participation, but specific measures to tackle these issues need to be fleshed out.
2394.
In light of the present pattern of labour market participation, we contend that specific measures are necessary to ensure full participation in employment. These include high-quality public transport; improved childcare and family-friendly employment policies; reasonable adjustments to facilitate the participation of disabled people; access to employment opportunities; and a focus on improving employability, especially to address the skills deficit among those excluded from the labour market. Programmes, such as targeting social need (TSN), which increase the opportunities available to those in deprived areas by targeting both the area and the people in it, assist greatly in reducing the social exclusion faced by a number of groups. Programmes such as TSN should become a cornerstone of the building of economic success and be co-ordinated with the section 75 equality duties. Indeed, they should be built into the developing programme of government that the Assembly is considering. Including equality targets in the implementation of 'Strategy 2010' is vital. Such targets will ensure that a purposeful approach is taken to the implementation of measures designed to ensure greater equality of opportunity. The targets should be both challenging and achievable, and should be accompanied by clear timetables.
2395.
Equality considerations must be incorporated into the development of public policy generally. The Assembly has a key role to play in the drive for equality of opportunity, by ensuring that it is brought into the mainstream and is a clear goal in the context of social inclusion. The economic development strategy set out in 'Strategy2010' provides a framework in which this can happen. What remains is the duty to ensure that equality is achieved in practice.
2396.
Now we will answer your questions.
2397.
Dr O'Hagan: Are you confident that 'Strategy 2010' will deliver an economy that is based on principles of equality of opportunity and social inclusion? Do you think that 'Strategy 2010' was adequate with regard to TSN?
2398.
Mr Donaghy: 'Strategy 2010' is, at least, an attempt to move in the right direction, and we welcome it, as far as it goes. What the Equality Commission and the previous commissions have been saying for a number of years is that equality will not be part of the mainstream unless it is worked at and all arms of the Government, particularly public policy, are sensitised to equality considerations. In any economic development strategy, all arms of the Government should be sensitised to equality considerations and there should be cross- cutting policy developments to ensure that we can build an inclusive society.
2399.
If the Government did some more joined-up thinking regarding equality, we would all be a lot better off. There are objectives relating to structural disadvantage such as targeting social need (TSN) and promoting social inclusion and 'Strategy 2010' has to be part of the process to bring all of that about.
2400.
Dr O'Hagan: The statutory equality scheme has been applied to the different Departments. Is it correct that the IDB - the most important development agency in terms of its potential impact on the economy - does not have to submit a separate statutory equality scheme?
2401.
Ms Bunting: The Equality Commission has already expressed its concern that, in many cases, Next Steps agencies in Government Departments have not submitted separate equality schemes. By virtue of the way that the legislation is drafted, such agencies are not public authorities under the terms of section 75 of the Northern Ireland Act 1998. Nevertheless, in our comments to Government Departments in consultation on their draft equality schemes we recommended that individual agencies - especially big agencies such as IDB and the Training and Employment Agency - should include a separate equality scheme within their departmental scheme.
2402.
The Equality Commission believes that transparency and openness are very important. People must be aware of what the agencies do and know that equality considerations are built into their work. In the DETI scheme, IDB policies are listed for equality impact assessment. For example, their policy on inward investment is down for impact assessment this year. That is important in its own right, but the Equality Commission agrees that it would be helpful if there were separate equality schemes for these important agencies, particularly with regard to job creation, skills and training.
2403.
Dr O'Hagan: Was the Equality Commission fully consulted in the formulation of 'Strategy 2010'? If so, was the consultation sufficient?
2404.
Ms Collins: When 'Strategy 2010' was being developed, the Equality Commission was several different commissions, and I can speak for a number of those that were involved in the large consultation panel and provided written evidence. There is certainly some evidence that that consultation had come through with regard to child care - that issue was pushed very strongly by the Equal Opportunities Commission. However, the type of consultation that was undertaken in the development of 'Strategy 2010' would be quite different now given the requirements on consultation and the section 75 duties. They obviously engaged in a range of different working groups and panels, but we have some concerns that it was not as inclusive as it could have been.
2405.
Mr Dalton: What specific recommendations are necessary to develop family-friendly policies in the workplace that encourage full participation in employment?
2406.
Ms Collins: We have stressed the need for family-friendly measures in order to maximise equal opportunities for women and men. Issues such as better maternity and paternity provision, and parental leave are important to those in employment and to women, whose access to the labour market is often limited by their family responsibilities.
2407.
There is a number of levels at which family- friendly policies can be developed. There is evidence in Northern Ireland that there is a very low level of awareness of gender equality on the part of employers and only limited provision in respect of family-friendly measures. The number of complaints coming to the Equality Commission in relation to issues such as pregnancy and maternity discrimination remains high. In addition to the voluntary efforts being made by employers, which should be encouraged by Government, there is also the need for better legislative protection. One of the suggestions that we would support strongly is paid parental leave. The Government have transposed a European directive which provides for parental leave, but makes no provision for it to be paid, making it more difficult for parents to take advantage of it. There is also a qualifying period of one year's continuous service before staff can avail of parental leave. That should be looked at, with a view to its removal to enable all parents, regardless of length of service, to take advantage of parental leave. There are no service requirements in five of the other Member States of the EU. That is an important issue.
2408.
Another issue is additional maternity leave. We welcomed recent changes by the Government to reduce the qualifying period for additional maternity leave from two years to one. It is right that additional maternity leave should be available to all employees from the start of their employment, which would bring it into line with access to ordinary maternity leave. Paternity leave remains an issue which does not have a legislative base, but remains voluntary on the part of employers. As a means of encouraging more fathers to take their full part in childcare, provisions should be made for paternity leave.
2409.
Mr Dalton: What is your opinion on the New Deal, part of the Welfare to Work programme. You mentioned that a recent London School of Economics (LSE) report had identified gender bias.
2410.
Ms Collins: This was not a surprise to us in the Equality Commission. We have had a number of discussions with both the Training and Employment Agency and previous Government Ministers about that issue. The eligibility criterion for the New Deal requires one to be in receipt of unemployment benefit; to be a claimant. The concern of the former Equal Opportunities Commission was that because women, although unemployed, were less likely to appear in the claimant count, they were not specifically targeted by the New Deal policy. After much discussion, there is some recognition of that by those administering the scheme. Women are not coming through to take advantage of the programme in the same numbers as men. Statistics continue to show that with the exception of the New Deal for lone parents, males are the overwhelming recipients of the New Deal opportunities. The issue thus remains one of concern for the Equality Commission. The eligibility criterion for the New Deal, while it remains claimant based, will limit the numbers of women. So, the LSE research was not a surprise to us.
2411.
Prof Osborne: The Higher and Further Education, Training and Employment Committee is working on the area of New Deal, so there may be some possibility of interaction between the two Committees.
2412.
Ms Lewsley: What recommendations would the Equality Commission make with regard to the public transport initiatives and better childcare arrangements? Your submission referred to recommendations for reasonable adjustments to facilitate the participation of those with disabilities. Would you explain those to us, please?
2413.
Prof Osborne: We have a number of specific points on public transport. The tide is turning towards an emphasis on public transport, bus and rail, rather than cars. There is an increasing recognition that emphasis on public transport has an equality dimension and is preferable to letting people loose with the private ownership of cars.
2414.
We need to focus on regular low-cost high-quality public transport from the main centres of population to peripherally located and out of town developments. It is important to connect the areas of disadvantage with the areas of employment. Service providers will often say that there is no demand; there is no demand until people can see that they can use it. If we are to open up to the areas of disadvantage when the new jobs are being located, we need to get those networks sorted out, rather than just relying on existing patterns. We need to focus on off-peak access for those working non-traditional hours, particularly older people and women with children. We need to promote accessible public transport for people with disabilities. One element that was missing from the inquiry into the rail service was the point about ensuring that more investment in railways will make them accessible to all the population and, particularly, people with disabilities, who find it so difficult to get around.
2415.
Mr Donaghy: Under the Disability Discrimination Act 1995, employers have a duty to make reasonable adjustments. There is always a discussion about what "reasonable adjustment" means. If you look at the American experience, most physical adjustments that were required of employers cost about a couple of hundred pounds. So the first barrier is to ensure that employers and service providers know that they have a duty and that the cost to them will not be insurmountable.
2416.
As we know, there are many reasons why disability has to be a priority. Disabled people are two and a half times more likely to be unemployed than those who are not disabled. We need to engage in debate with disability groups, employers and interest groups to talk through the necessities. It is in all our interests to try and do that now because in 2004 employers and service providers will have to make not just "reasonable adjustment" but will have to remove, alter or provide reasonable means of avoiding physical features that make it impossible or unreasonably difficult for a disabled person to use the service. So, the emphasis is going to change from a voluntary approach to one where the employer or the service provider must make reasonable adjustment.
2417.
Disability is, in some respects, unlike the other areas of discrimination and inequality that the Commission has to deal with. There is no point in talking about providing opportunities for work for disabled people if the infrastructure is not there to get that person out of bed from their home to their place of work. Those are the obvious considerations for making reasonable adjustment.
2418.
Ms Collins: There should be a programme of public investment in low-cost high-quality childcare provision to support working parents and to encourage and support women and men who are seeking employment. Public support for childcare is extremely low here; in comparison with other areas of the EU. Most childcare is provided by the private and voluntary sectors. That should be addressed, as should the whole question of after-school facilities. The after-school programme in Northern Ireland has been given some time-limited funding, but it compares unfavourably with the after-school programme in Great Britain, which was introduced much earlier and given a regular budget line. That is an issue for parents with school-age children.
2419.
We should encourage employers, to support the childcare needs of employees as an investment in human resources. That might include workplace nurseries and a system of childcare vouchers. There is limited support in Northern Ireland for childcare and we need to be looking at incentives for the SME sector to become involved with childcare assistance. In our early submission regarding 'Strategy 2010', we said that childcare should be an essential component of Government economic planning. There are practical things that all branches of Government involved in supporting investment could do. For example, all Government- supported investment should include childcare provision from the outset of the project. The Springvale project is one example, and other enterprise parks could be used as models to illustrate the advantages of combining Government support with local business partnerships and promoting childcare as an integral part of new developments. Government and public authorities could also develop their roles as large employers by setting an example to others of the benefits of providing childcare and family-friendly policies to assist employees with parental responsibilities.
2420.
We are becoming increasingly conscious - I am going back to an issue that you are very interested in - of issues relating to children with disabilities. We need to recognise that parents of children with disabilities may require additional facilities. There is a major shortage of provision for this group within the overall shortage in Northern Ireland.
2421.
Ms Lewsley: Are you aware that the Assembly has made provision for childcare?
2422.
Ms Collins: That is unique.
2423.
Ms Lewsley: It is unique but it is also insulting. We get £15 per week for children over five, and that was taxed, and £30 per week for children under five. If this is a new Government and if we are trying to set standards, this will only let employers get away with more than they ever did.
2424.
Mr Donaghy: My background is in the trade union movement and it is clear to me that the world of work is changing. We must be a bit more imaginative about how we can ensure that people can access the world of work. That is important, because work is the means by which we distribute wealth in our community.
2425.
Options such as job sharing, part-time work, and home tele-sales work could all be piloted. Such schemes could create opportunities. The whole shift in the world of work between male and female presents opportunities as well as difficulties. We need to pilot some imaginative ideas to see how they will work.
2426.
Mr Neeson: I wish to deal with minority ethnic groups and the travelling people. I have done a fair amount of work over the last few years with the Chinese community in Northern Ireland. One of the major problems that they have experienced is stereotyping. In other words, if you are Chinese, you must work in a Chinese restaurant or takeaway.
2427.
What active policies are required to develop and improve the skills of people such as this? In the past, they have not been able to participate fully in the labour market.
2428.
Prof Osborne: We suggest a task force to ensure a co-ordinated approach between education and training for ethnic minorities, including the Traveller community. There are the big issues of access to education and underachievement in education. Most strikingly, for the Traveller community, it is access to education. However there is also a significant pattern of educational underachievement for some ethnic minorities. In the University of Ulster, we are working with the Chinese Welfare Association to identify actions that the university can take in concert with the community to enhance the flow of pupils and students coming into the university. Our own monitoring has revealed that there are very few students coming from that community.
2429.
We need to expand occupational horizons within the community and tackle the stereotyping about what Chinese people can and cannot do. At this stage, the focus is on education and access to training, particularly in the light of Government's lifelong learning and widening access programmes. Further education colleges are supposed to be putting those in place. Such programmes aim to get adults to come in for basic training in literacy and numeracy, learn new skills and consider new horizons. That is done in the context of a changing skill mix in the economy.
2430.
Mr Neeson: Stereotyping happens inside as well as outside diverse communities, does it not?
2431.
Prof Osborne: That is why I cited the example of the University of Ulster working with the Chinese community. We should begin to think about expanding the aspirations of students from that community in terms of their occupational destinations.
2432.
Ms Bunting: It is important for Government to develop a partnership approach with those communities so that people can work together to identify the barriers to involvement. We need to address the issue of racism, and see how we can create environments in education and training institutions which support people from minority ethnic communities, especially the Traveller community, should they decide to get involved.
2433.
Recent research, with which you will be familiar, shows that there are big problems with racism in Northern Ireland; and we need to tackle those. There is no point in having good training facilities and good educational opportunities if people feel that they cannot access them and take part in them because they feel that they are being ostracised or put outside the system.
2434.
Prof Osborne: In part, stereotyping within the communities could be seen as a defence mechanism against the hostility that is encountered outside them. It is a rational response, in that sense, but we need action on both fronts.
2435.
Mr Neeson: In your opening submission, you stressed the importance of TSN. I agree with you although I am still deeply concerned about the continued use of the Robson index as a means of determining areas of deprivation. What role do you see the Equality Commission playing in encouraging the mainstreaming of equality in public policy development?
2436.
Mr Donaghy: It is absolutely central. I was involved with the Fair Employment Commission, and I was a commissioner with the Standing Advisory Commission on Human Rights (SACHR) which carried out the review into employment equality. It showed that, for those who were in work, the Fair Employment legislation was effective.
2437.
The equality changes in the Catholic and Protestant workforce need to be accelerated. The SACHR research showed very clearly that the Fair Employment legislation made virtually no impact on social and economic deprivation. SACHR quite rightly said that that was an area on which the Government had to concentrate. That gave a new impetus to targeting social need and to the promotion of social inclusion and came at the same time as the change of administration in Westminster. There is a bit more openness to ideas of social inclusion.
2438.
The Equality Commission has been trying to merge the work of the Equal Opportunities Commission, the Fair Employment Commission, the Commission for Racial Equality and the Disability Council. We have discussed how to take that forward. It is important that we continue to ensure, when dealing with areas of social exclusion for those groups, that we do not have one homogenised policy and that everyone is treated individually.
2439.
Clear in social and economic policies are required to target members of ethnic minorities, the disabled, women, Catholics and those who are excluded. The Equality Commission has a great deal of expertise and experience in these discussions and hopes to continue them with Government. The section 75 duty may help us in that, but cross-departmental policies - vertical and horizontal - are vital, so that the Government machine realises that we cannot create an inclusive society unless we target social need - wherever that social need is.
2440.
Prof Osborne: If the Equality Commission is to help mainstream equality considerations, it is vital that, over the next three years, we try to build an equality culture in Government and public authorities in Northern Ireland. The sensitisation of all people working in those bodies and in Government Departments to equality considerations in almost everything that is decided and in every change of a service is a key issue. Every new policy has to have built into it equality considerations relating to the range of groups that we have been talking about.
2441.
In order to help that happen, the relationship between the Equality Commission itself and the Equality Unit in the Office of the First Minister and the Deputy First Minister is crucial, in terms of ensuring that Government Departments act in concert to deliver equality. One example is training, which clearly spans the work of two Departments and two Committees. It is vital that the Equality Unit inside Government helps the Departments to build equality considerations into those areas, which Paul referred to, which do not just confine themselves to one Department's responsibility - they spill over. Building an equality culture, increasing sensitivity and getting the Equality Unit to act effectively in building cross-Departmental approaches to equality issues are important priorities.
2442.
Mr Neeson: Discrimination on the basis of age has not yet been addressed, although it is becoming increasingly important. It is a growing problem. Does the Equality Commission have any opinion on inequality based on age?
2443.
Ms Collins: Section 75 of the Northern Ireland Act 1998 obliges public authorities to pay due regard to the need for equality of opportunity for people on the grounds of age. That is coming through on some of the work that we are doing with public authorities, both with regard to engaging with young people and addressing some of the issues relating to our ageing population, such as caring.
2444.
Prof Osborne: The Commission has not had a discussion on this, but I am almost sure that there would be a consensus that it would support ruling out discrimination on the grounds of age. It would, I suspect, support any legislative proposals that outlawed age discrimination.
2445.
Ms Bunting: For many people, the term "older people" has taken on a new meaning. Increasingly, there is a notion that people over 50 have had their go at the world of work and that it is time for them to take up their pastimes. That is a bad approach, in the view of the Commission, because it does not necessarily follow, as many of us in this room would agree that there is something that happens at 50 that prevents a person from making a decent contribution to society or to an inclusive and participative economy. If we want to build an economy that is fully participative, it is important to recognise that, for people who may no longer be in full-time employment, for whatever reason, there are opportunities in lifelong learning. Those people can learn new skills and contribute to the economy in different ways through flexible working, and so on.
2446.
Some of the big businesses in the rest of the United Kingdom are already realising this, and are encouraging older people to work for them on a part- time basis. If we are really serious about an inclusive economy in Northern Ireland, we have got to recognise that older people have a lot to offer. We have got to tap into that potential in the same way as we need to tap into the potential of women, people with disabilities, and so on. So, it is important that the older age group is not excluded, and we would see that as a key priority for our work.
2447.
Mr Donaghy: In the context of lifelong learning, there are many opportunities to start to talk through these issues. I am aware that the research shows that one in every four adults in Northern Ireland has the reading and writing ability of a primary school child.
2448.
To have a participative economy, we need to give those people a second chance. We also need to accredit that learning in a new way. What does an O- or A-level mean to a woman who has reared a family, and is coming back into the labour market? To get a job, she needs two O-levels - something she needed to get twenty or thirty years beforehand, as far as she was concerned. That reminds me of the story of the mother who had reared a family, was looking for a job and went to an interview - generally men on the panel. She was asked, "What are you doing here looking for this job? We need somebody who has been in work this past 10 years, somebody with good teamwork skills, good conflict resolution skills, and good budgeting skills". Show me the mother who does not have conflict resolution skills. Unfortunately, that is not what we call it. There needs to be a way of accrediting the learning and experiences that adults have, whatever their age.
2449.
Mr Clyde: What is the importance of impact assessment of public policies arising from section 75 and schedule 9 of the Northern Ireland Act 1998?
2450.
Prof Osborne: Impact assessments are an integral part of the new strategy introduced by section 75. The first phase of implementation has been the preparation of guidelines by the Commission for the preparation of equality schemes. Most draft equality schemes are with the Commission and are being considered and assessed, to ensure that they cover all the areas that they are supposed to.
2451.
Public bodies have to undertake screening exercises to decide how to prioritise existing policies on which to carry out equality impact assessments. They are designed to examine the extent to which the delivery and implementation of policies have adverse impacts on the designated groups under section 75. The whole process is to be conducted in consultation with the affected groups. Equality impact assessments are at the heart of the implementation of section 75 in creating a greater equality culture in Northern Ireland.
2452.
Ms Bunting: Policies relating to inward investment and job creation, which come from the Department of Enterprise, Trade and Investment, are to be subject to impact assessment under the equality duty.
The best way of delivering those policies to promote greater equality of opportunity will be considered. That will have an important role in the work of the Department and this Committee, putting a focus on equality in how public policy is delivered.
2453.
Prof Osborne: An impact assessment may reveal an adverse impact on a particular group covered by the Act. It is incumbent on the public authority to look at alternative ways of delivering the same policy that reduce or eliminate that impact. If that is not possible, then it will have to look for actions that could ameliorate the impact - that is following it right through from a high theoretical level to "can we actually change this policy so that we do not have this adverse impact on a particular group?". We are yet to see this working through. Of course, the Commission is keen to work in partnership with the public sector and voluntary community sector to agree methodology and see how we can carry impact assessments forward.
2454.
Mr Clyde: You encourage the inclusion of equality targets in 'Strategy 2010'. What specific targets do you suggest?
2455.
Mr Donaghy: There is a range of targets that would be useful for Government to set. The differential in unemployment between Catholics and Protestants in Northern Ireland; an increase in the rate of Roman Catholic male economic activity; more rapid reduction in Roman Catholic unemployment levels; utilising the facility that now exists for employers to recruit from the unemployed; targeted programmes of education and training, so that any skills shortfalls in the labour market are more closely matched. There are a number of issues concerning Catholics and Protestants.
2456.
There are also issues concerning gender. For instance, there is the gap between the earnings of women and men, which has remained consistently stuck throughout the years of equality legislation; increasing the percentage of women who are economically active; increasing the employment of women in non-traditional occupations and breaking down segregation; increasing the number of Northern Ireland public and private sector employers who are operating more family-friendly policies and offering publicly supported childcare places.
2457.
As regards race, there are issues relating to education and training. The Assembly, the Committee, and the Department could have a real role in trying to bring about more equality for travellers and those from ethnic minorities. As regards disability, we have already talked about goods, facilities and services, but we need to see what potential there is for affirmative action to bring about more equality for groups of disabled people.
2458.
I could probably spend half a day talking about the types of targets that could be set. However, one of the main issues concerning the statutory duty set out in section 75 is how the equality duty moves out from the human resource part of the public body and is mainstreamed within the public body as a whole. I would be sensitive about having the Equality Commission always set the yardsticks and targets. The people who can best set targets are those who are actually delivering policies, practices and procedures. They know what a challenging target is, and what is achievable. It is about sensitivity. It is about building an equality culture and setting targets which are realistic, challenging and achievable.
2459.
Ms Bunting: One of the measures that came out of 'Strategy 2010' was the establishment of the Economic Development Forum, which brings together the social partners and the voluntary and community sector. That forum has a clear role to play in mainstreaming and focusing on equality issues, working with Government in devising good equality targets to monitor and review the progress that has been made in getting people into jobs and improving employability and access to work.
2460.
Dr O'Hagan: Targets, timetables and monitoring procedures need to be set down very firmly. Unfortunately, Government Departments have failed miserably with regard to those, despite the existence of targeting social need and policy and fair treatment since the early 1990s. Your organisation has a part to play in this.
2461.
As regards the long-term unemployed, do you see any incentives that public and private sector employers could use to ensure that affirmative action policies can be targeted?
2462.
Mr Donaghy: Our history of tackling equality, particularly workplace equality, shows that we made some progress. but we need to do more. It is clear that the most disadvantaged are those for whom there is no link between unemployment and employment. There is no point in our talking about economic development unless everyone in society can share in that sustainable economic development. Quite rightly, there is a focus on the unemployed to see whether affirmative action measures can be taken.
2463.
The new Fair Employment and Treatment Order encourages employers to target areas of long-term unemployment. The Equality Commission is looking at measures and we want to work in partnership with the Assembly and the Economic Development Forum to set more specific targets. Male Catholic unemployment is two and a half times that of male Protestant unemployment, but within that there is a mixture of issues. We need to look at the age and location factors influencing that, so that we can target specific age groups, locations and gender and disability factors. Half of the economically inactive people in Northern Ireland are disabled.
2464.
We need to set benchmarks. Why do we do this? As we said earlier the world of work is the means of distributing wealth and, unless we can distribute wealth and economic activity in a fairer way so that all the stakeholders benefit, we may well have a society where there is wealth, but there are major pockets of deprivation. In a community coming out of conflict, that is not the objective towards which we should be moving.
2465.
It would be useful if Government could target TSN areas for specific grants or initiatives. Government money could be provided to assist employers and others with specific training initiatives, especially with small to medium-sized employers. A more co-ordinated approach to information and advice to employers needs to be taken by Government. Government could lead by example by setting targets and taking initiatives and spending some money to achieve those ends.
2466.
The Chairperson: Thank you for your submission and for your answers to our questions. We move now to our conclusions, in which we hope to reflect your comments.
2467.
Ms Collins: We welcome that and appreciate the opportunity to deal with some of the equality issues that are at the heart of the Equality Commission's considerations. If there is anything additional arising out of today's discussions, whether in respect to indicators or specific examples, please do not hesitate to ask us for the details.
2468.
The Chairperson: Thank you.
TOP
MINUTES OF EVIDENCE
MONDAY 2 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Ms Lewsley
Ms Morrice
Dr O'Hagan
Witnesses:
Ms C Mallon )
Ms E Howell ) Falls Community Council
Ms R Taillon )
2469.
Ms Howell: Falls Community Council welcomes the opportunity to meet the Assembly's Enterprise, Trade and Investment Committee to give further expression to our written response to 'Strategy 2010'. We do not come as economic experts - rather, our submission was made from the perspective of an organisation engaged at a community level in the regeneration of one of the North's poorest and most economically and socially deprived areas.
2470.
Falls Community Council supports reconstruction and regeneration in West Belfast by promoting human rights, social justice and economic equality through community development. Our analysis of 'Strategy 2010' reflects the very real concerns in our community that, as presented, 'Strategy 2010' will fail to deliver the obligations and responsibilities promised in the Good Friday Agreement under the section entitled "Rights, Safeguards and Equality of Opportunity".
2471.
'Strategy 2010' appears to be little more than the failed economic policies of the past.
2472.
Those policies also contained the appropriate language and rhetoric of equality of opportunity, yet they created and maintained economic inequality, which manifested itself in economic discrimination, employment differentials and overall deficit in economic democracy.
2473.
'Strategy 2010' can not be allowed to proceed as envisaged. It fails to address the issue of equality in human rights agendas. It has not been constructed within the overriding policy of targeting social need, the new TSN and within statutory equality duty. There is a lack of cross-referencing with other policies and departmental duties, which are imperative to joined-up government. 'Strategy 2010' has failed to address fundamental aspects of economic inequality, such as unequal economic development - so acute in Belfast - discrimination in the location of industry, or the misuse of public expenditure in the allocation of economic subsidies.
2474.
'Strategy 2010' should develop and put substance into the North/South dimension, thereby supporting co-operation across all economic policies and activities on the island of Ireland - to ensure that the North-East enjoys the economic growth and prosperity experienced in the rest of the island. As presented, 'Strategy 2010' fails to achieve this.
2475.
Furthermore, 'Strategy 2010' gives little recognition to the impact that the social economy can have in areas of greatest economic disadvantage, where groups of people endure the consequences of economic inequality. 'Strategy 2010' must address the legacy of past failed economic policies in order to make the impact that is required. It must vigorously address economic inequality in all its manifestations. This will require pro-active policies, incorporating affirmative action, timetables, measurable outputs and outcomes to be achieved. It can be achieved if the political will is there to pursue it.
2476.
Falls Community Council understands that 'Strategy 2010' pre-dates devolution. This Department inherited the draft strategy. Like ourselves, the Committee, the Executive and the Assembly want to get it right. That opportunity exists, and no one, especially the victims of economic inequality, can afford failure.
2477.
Ms Mallon: Falls Community Council is ready to point at the important issues and to facilitate the discussion. We have made an attempt to assess the public policy agenda, social partnership, TSN, and the prevailing political climate of equality in human rights for all and situate consensus.
2478.
In the North of Ireland, there needs to be a new form of policy making, outside traditional parliamentary accountability. The exercising of power and influence must extend beyond traditional boundaries and bring together a shared community effort to identify and resolve problems. A widely based democracy, reaching all sections of the community, has a major role to play in solving community problems. The consultative process offers policy makers ways of debating and reflects the reality of the problem and the competing interests of those involved. Participation changes policy process, content, and responsibility. It draws new players into policy consideration and can achieve results that were long eluded by legislators. Above all, participation is a technique to involve the public in Government action.
2479.
Besides specific purposes, consultation also serves as a reflection of values and the desire to be open and transparent. In the policy areas covered by 'Strategy 2010', there are substantial advantages involving social partners - even if the opportunity has been missed so far. Partnership provides measures of joint decision making and involves extensive discussions. Successful innovation policy requires the collaboration of all parties involved and is not achievable by bureaucratic or administrative control. Change has to come about through a better, considerate and elaborate process, in which the voluntary and community sector plays a full role. More co-operation, openness and effective two-way communication should be established as good practice. Wider discussion is necessary in order to shape and inform future strategy and to deliver the right incentives to encourage economic growth.
2480.
Use can be made of information filtered directly from community level, with input of data, case studies and alternatives for informed opinions. These are many of the issues at hand. The community and voluntary sector is in a position to contribute considerable energy, drawing on experience and expertise to ensure quality of outcome. Community groups also have a certain moral authority that Government cannot afford to overlook in formulating policy.
2481.
Any success that 'Strategy 2010' may have in the future requires more local commissioning, openness and public involvement. The voluntary and community sector is no less concerned than Government of the need to use public money in an efficient manner to ensure that funding objectives are met and appropriately targeted. The sector experiences first-hand the limits of resources and manages with what is made available to it.
2482.
Change has to come about through a better collaborative process, with the community and voluntary sector playing an equal role. The sector is competent with extensive experience and its own sense of social partnership, but the Government has failed to appreciate its expertise and value as a social and economic force.
2483.
There are also new statutory duties resulting from the Northern Ireland Act 1998, including the commitment to human rights, the equality agenda and the stronger focus of equal opportunity and expected other corresponding responsibilities. There is a new policy duty which puts equality at the heart of public decision making to eradicate inequality. Targeting social needs must also coincide with this duty. The underlying rationale for this is the commitment to the principles of equity and equality and the eradication of community differentials.
2484.
Human rights do not have universal meaning in the North of Ireland. Nationalists are more disadvantaged than Unionists, and the argument continues that marginalisation of the Nationalist community is not being addressed adequately or quickly enough. One of the most contested equality issues is the Nationalist/ Unionist difference in areas and levels of unemployment. Despite fair employment legislation, Nationalist male unemployment rates have, since the 1970s, continued to be about 2·5 times higher than the corresponding rates for Unionists.
2485.
In 'Strategy 2010' there is an absence of the language of equality. Government remains unaffected by the new statutory obligations to promote equal opportunity. Mention is made of unemployment, including long-term, without any reference being made to affirmative action or supplementary measures to assist the long-term unemployed. Industrial projects must be located in areas of greatest need, and there must be fair employment for those who have been historically and unacceptably marginalised.
2486.
Impediments that prevent equality of opportunity should be recognised. Reversing the historical and structural discrimination requires affirmative action and an equality agenda. At the moment there is no hint, much less Government suggestion, of any special measures to promote a representative distribution and give people equal access to employment opportunities. Ostensibly, particular weighted measures in favour of one community is considered as unfair bias, rather than affirmative action. Clearly Government policy remains constrained by the idea that action taken to assist one disadvantaged group should not take place at the expense of another. 'Strategy 2010' must be situated within the framework of the equality agenda, the new human rights legislation and targeting social need.
2487.
Ms Taillon: Thank you for listening. Are there any questions?
2488.
Mr Clyde: One of the targets of 'Strategy 2010' is to raise the gross domestic product. You have stated that it is questionable that the gap between living standards here and those in the rest of the United Kingdom will be closed by half in the next 10 years. Why is this questionable, and what would be a more realistic target?
2489.
Ms Taillon: We are not economists, and obviously there are a number of factors that would need to be taken into account in order to answer that question. We know the document is flawed and that we will not be able to solve those issues without setting targets around a number of policy agendas - education, for instance, or access to infrastructure supports to get people involved in the economy. We could hardly say what a realistic target for gross domestic product would be, but there are a number of hurdles that could be set in place in terms of getting a vibrant, productive economy, given that past policies have been building a low-wage economy, possibly based on aged industries that need to be dramatically revised. That is one of the questions which we would currently find difficult to answer.
2490.
Ms Mallon: It is questionable that the North of Ireland will close the gap in living standards with the rest of the United Kingdom, not least because there seems to be a lack of sufficient public funds to implement 'Strategy 2010'.
2491.
Mr Clyde: What are your views on the recommendation in the report that there should be a single development agency?
2492.
Ms Mallon: We have many views on that, but it would take too long to give a proper qualified answer to it. 'Strategy 2010' recommends the establishment of a single new development body "covering the services currently delivered by IDB, LEDU, IRTU and the company development side of T&EA." This recommendation was made with no analysis having been done of previous working practices and of the outcomes of the named agencies. Because this was not done, the numerous examples of bad practice, particularly on the part of the IDB, will simply be transferred into another organisation. That is the shortened version.
2493.
Ms Taillon: Although there may be benefits in having a single agency, we also think that there should be a single agency for the island of Ireland, which would link up and have an integrated economic strategy for the entire island. LEDU and the IDB have both failed in the past in the departmental context of the North; the policies have failed, and the structures are secondary to that. If the policies were correct, then the structures would probably flow from that. In the case of West Belfast, one of our concerns is that there needs to be greater linkages in the economy between the small, medium-sized and the larger sectors, for productive clusters of economic development based around industries which give small local firms a chance to have a place in that economic strategy. In that case, it would make sense to have better linkages. Whether it is in the same departmental structure or not is probably secondary to that.
2494.
Ms Mallon: To overcome the institutionalised underdevelopment of West Belfast, the economic regeneration of that area demands a far-reaching and social programme that goes beyond what can be done by an investment agency like IDB.
2495.
Ms Howell: That applies equally to other areas which have been economically disadvantaged. Strategically in the North of Ireland more interest needs to be paid to the west of the Bann as well. This is not happening with the existing agencies at the moment. Whether one single agency can achieve that, would be determined by the make-up of that agency.
2496.
Mr Neeson: One of the major issues raised by 'Strategy 2010' is the suggestion to move away from Selective Financial Assistance towards softer options. On a recent delegation to the USA we met with the Small Business Administration. They have moved away from the grant culture, and they provide loans, particularly to small businesses, guaranteed by the Government. What are your views on the movement away from grants towards different options?
2497.
Ms Howell: We have a very different culture to that in the USA. In the community sector we looked at models, and they do not easily transfer due to a number of problems. Falls Community Council has no problem with using public finances to support the economy; the problem lies in how that is delivered and what the rules are that surround it.
2498.
We are concerned with how economic subsidies have been offered in the past. In the foreseeable future, there will be a need to continue with such subsidies. Whether it is private companies that need it, as opposed to developing the social economy or helping other agencies, this is a different matter.
2499.
I am not sure whether the culture exists here among the private sector to go for a softer option such as loan guarantees. Perhaps the culture is there; it may be pending. Culture on grants, for example - it is throughout our society, but it is not something that will just change overnight.
2500.
It is the way those subsidies are allocated that causes us concern. If by the end of 'Strategy 2010' we are to have equality in the economic life of this society, then the way in which those subsidies are allocated must be looked at again.
2501.
Ms Taillon: With regard to small loans, they remain inaccessible to businesses in disadvantaged areas. An entire package of support must be put in place for small business and more public money must be put towards creating possibilities for people to engage with the economy, rather than subsidising private enterprises. By investing in housing or hospitals you actually create a skilled workforce and inject money into the economy, which will then support indigenous businesses to develop. This results in an entire change of approach when looking at a multiple- faceted social and economic development that fits together, rather than taking some sort of productive investment strategy and isolating itself - isolating itself from what is happening in the wider world, and certainly on the rest of the island.
2502.
Mr Neeson: The benefit resulting from the American scheme was that more women started up their own businesses because of it. We are very keen to see that happening here in Northern Ireland as well.
2503.
Ms Taillon: There is certainly a place for these low-interest grants, but the programme they are injected into must be accessible to those people who can actually take advantage of it. The lessons learned from the peace and reconciliation loans and the European Investment Bank loans were that the businesses in need of them could not get them. If they could, they might as well go to the bank and get them. That should be looked at very carefully.
2504.
Mr Neeson: You are obviously not happy with 'Strategy 2010'. Would you like to see it redrafted, and, if so, what processes would you like to see developed if you were to make it more participative than the process that went before?
2505.
Ms Taillon: With regards to the participative process, I would prefer that rather than having an expensive document that you either get off the Internet with great difficulty or spend a lot of money on, the consultative process needs to engage the disadvantaged communities in such a way that people can access the ideas that are in it without necessarily having the sorts of skills you need to wade through the document. Resourcing could be done that would make a participatory exercise and get to the people that you want views from so that they could positively engage with it. This means identifying key individuals and organisations as well as going out and having outreach sessions to see what a representative response is and how you could act as a catalyst to make that happen. The alternative is to wait for people to, first, find out the document is there and then attempt to come to terms with it.
2506.
Ms Howell: Redrafting requires going out for consultation right across the board. However, in the west of the City, once you tag "economic" on to anything, most people walk away from it - they are afraid to touch it. The perception is that this is quite difficult for them. Obviously, different people approach it from different perspectives. Therefore, this should be fed into and added to the final document that appears.
2507.
At the moment 'Strategy 2010' fails to pull those strands together. It is very much a single-focused document that operates without the rest of policy development's being a part of it. It needs to go back out there in such a way that people can be part of the consultation exercise. I read that you had 54 submissions; that is a very low number for a document that is so important to economic development here. It is all about how you do it. Other consultation exercises have been quite good in the way they have been able to access right down to grass roots. 'Strategy 2010' has not done that. Through having been involved in various consultations, we are learning about the better practices and the ones that have not been so good.
2508.
Ms Mallon: In terms of the present prevailing political climate, equality and human rights for all and targeting social need, I believe that 'Strategy 2010' should be redrafted within that context. While 'Strategy 2010' was being drafted, targeting social need was under review, and it was drafted before the new statutory equality duties. In terms of the Government's overall policy it makes sense. The two should not be mutually exclusive -
2509.
Ms Taillon: I have one final point regarding that. We spoke earlier about the isolation or the industrial policy, and really what is needed is an overall social and economic development strategy which takes into account the different sectors. For example, there is the public sector and the role that can play in terms of the economy; the need for infrastructure, not just for roads and transport for industry, but transport to get people to jobs, or childcare to allow people to take up those jobs. All of those issues need to be taken as one coherent policy, rather than separate entities.
2510.
Ms Lewsley: Ms Howell, in your introduction you touched on the issue of co-operation on the island as a whole, and Ms Taillon also mentioned this. You stated in your submission that there was a lack of discussion on the North/South dimension, in particular, and that, for example, the IDA and IDB are competing for the same inward investment. If there were better co-operation, what benefits do you think there would be?
2511.
Ms Howell: First, there would not be the competition. There should be co-operation instead of competition. We have a great deal to learn from what has happened in the Southern economy and the way it has grown over the last number of years. That has not happened here. As long as we remain an add-on to British economic policy, we remain very much outside. Even in terms of the UK, we remain outside how their policies are meant to impact. Policies such as New Deal, and others, are not working in the North. There are opportunities to co-operate and work together as part of an all-island strategy in terms of long-term unemployment. There is already a model in the South. A model that we had been trying to push in West Belfast for a number of years before it even started in the South. We are not getting anywhere, however, because everything is framed within New Deal. We are tied and restrained by that. This is a small island, but it is one which has an entity of its own in the economic sense, and it could be quite powerful in terms of Europe. We have so much to learn from the way in which things have developed in the South, and we feel that that is where the real ties should be regarding economic development in the future.
2512.
Ms Mallon: There are obviously practicalities about co-operation between North and South. The Northern and Southern economies are small, open ones and share problems of high unemployment, long-term unemployment and a reliance on agriculture. No economy can afford to stand in isolation, and it makes sense to ensure consistency and extended local networks. In practical terms, the benefits of cross-border co-operation are obvious, not to mention the increase in opportunities for trade and investment, and there should be close co-operation with the authorities in the Twenty-Six Counties to ensure consistent local networks.
2513.
Ms Taillon: There are obviously inequalities in the Southern economy - I know that the voluntary sector there has had many complaints about how things are done - but the IDA's strategy has been to target a very different kind of industry than that which was targeted by the IDB in the past. The fruits of that are shown by the fact that they have jobs for young people. There are much higher levels of employment there and less long-term unemployment now. They have done something right, and I think we should look to that in terms of strategy, rather than what has been done in the North in the past. In areas like West Belfast and west of the Bann, almost any project that has invested there has been subsidised. As soon as the subsidy goes, the jobs and the industry are gone, and we are left with the aftermath. Whatever industrial agency is there needs to be looking at a different kind of job and a longer term strategy that does not take whatever nobody else gets, and is willing to come here but decides that it is going for a different quality of investment.
2514.
Ms Lewsley: You already mentioned that 'Strategy 2010' did not recognise or address the issues of deprivation and disadvantaged. How do you think they should have been addressed?
2515.
Ms Howell: It did not address them in the sense that it was as if deprivation and inequality did not exist. There was no reference to them at all. They were not mentioned. In layman's terms, we need a map of the North. We need to chart where industries are, and in doing that, you will find where industry is located, where it is going and where it is not going. It is not coming to places like West Belfast at the level that it should. It is not going to other deprived areas. 'Strategy 2010' should be about creating the equality that we want in the economic sphere. To do that it must address disadvantage in terms of the location of industries, where funds are targeted and all the areas that Ms Taillon mentioned earlier regarding tying together social and economic policies. We must have development in deprived areas that will bring about a skills base that will add educational value as well as the other things that make up the regeneration of any community. 'Strategy 2010' sits up in the air somewhere and does not tackle any of those issues. Reading through it I cannot see how the likes of West Belfast will benefit from it at all. It does not tie everything together.
2516.
Ms Mallon: As it currently exists, in a very narrow sense, it is contradictory to the rest of Government economic strategy, because a key element of central Government's economic strategy is the creation of a fair and more equal society. There is a theme that economic development is a wider concept than economic growth involving the reduction of impoverty and other forms of economic and social exclusion. There is an emphasis on tackling social exclusion and poverty in a wide range of associated problems, yet TSN is not properly or fully integrated into 'Strategy 2010'. The issues of economic development contained in 'Strategy 2010' fail to address deprivation. Due weight is not given -
2517.
Ms Lewsley: Would part of the solution be to get industry or inward investment to locate in a specific area of disadvantage? As was mentioned by the Equality Commission, is there a link between transport in disadvantaged areas and areas of work? We do not have a culture of travelling to work here. Many people like to wait until the work is on their doorstep, whereas in much bigger cultures, like in parts of England, people will travel on a train for over an hour in order to get to work. Do you see that as part of a strategy also?
2518.
Ms Taillon: It is obviously part of the strategy, but people do need jobs, although it depends on what those jobs are. If they were good jobs that had good wages attached, people would actually have an incentive. There needs to be investment in public transport, especially in rural areas as opposed to urban deprived areas, to make sure that people can get to the jobs.
2519.
There are a number of other areas in which there needs to be investment, for example, childcare, and it does not all necessarily have to be industrial investment. There is not going to be a factory on every street corner, but there can be public investment in infrastructural things which add to the economy. A big injection of public money into housing would make a real difference in terms of people's financial capacity to take jobs. A number of things need to be put into the package, and the first is getting away from the idea that a low-wage economy is the economy we should aspire to. That has failed, and we are not going to be able to compete with other low-wage economies. We should be investing in quality - an equality economy.
2520.
All the arguments about people not wanting to come out of their areas will change when people have a real incentive to do so, instead of being told "Get on your bike and go and take on whatever job in McDonalds is there." That has been the attitude in the past. People have blamed those who do not have jobs rather than identifying what the barriers are to their taking the jobs.
2521.
Ms Howell: We need to encourage people to move out, take jobs and travel to work. That is reliant on a number of things including their own personal safety in travelling to jobs. In West Belfast it is important that employment is located in that area in terms of the physical infrastructure. There is a terrible infrastructure on the Falls Road, and that is reminiscent of areas where there is no employment, where no money is being ploughed in. East Belfast is just coming to terms now with the problems it has regarding the shipyard, and everybody is talking about the impact those problems will have on the area. In an area like the west of the city that has never had that level of employment, that problem has always been there, so people recognise that when jobs are located in an area like that, it helps strengthen the physical infrastructure and the social well-being of that community. Travelling out of an area to where jobs are is not the only solution; there has to be investment in jobs in deprived and neglected areas as well.
2522.
Ms Lewsley: Thank you.
2523.
Mr Dalton: Have you identified what you would see as the priorities in 'Strategy 2010'?
2524.
Ms Mallon: 'Strategy 2010' is economic growth and success through information in a knowledge- driven economy. With an increase in a knowledge-driven economy, it is vitally important that the education system produces well-trained, articulate and confident individuals and a more well-run education system resulting in a positive and excellent labour market. However, there is no mention of additional funding for education in the 'Strategy 2010' document. It clearly needs further work before there is a solid basis for economic development in the North of Ireland.
2525.
'Strategy 2010' also talks about public expenditure - an extra £77 million for road investment - but it is not clear that sufficient funds actually exist to implement such spending commitments. The expenditure commitments of 'Strategy 2010', the proposals and suggestions have not been costed. Therein lies the most fundamental problems which have to be resolved before one can go any further.
2526.
Ms Taillon: All the obligations need to be fully integrated; it needs to be equality proofed, and that would need to be integrated with the education policy. Along the barriers to third-level education for people from disadvantaged areas, that needs to be taken as part of the industrial policy.
2527.
There must be linkages with other sectors, for instance, public investment in the public sector, in terms of creating the necessary infrastructure around healthcare, hospitals, housing, transport and childcare.
2528.
Mr Dalton: You indicated that you do not consider that the report was based on adequate economic analysis for research. Do you agree with the report's recommendations?
2529.
Ms Mallon: That is a very difficult question to answer because of the recommendations. I cannot say that I agree with them, for they do not contain an analysis of the evidence on which they are based. There has not been any attempt to evaluate the success or failure of current policy or to compare or contrast the relationship between DETI's economic strategies and the recommendations of 'Strategy 2010'. No attempt has been made to review the past implementation of economic development and there is no reference either to 'Competing in the 1990s and Growing Competitively'.
2530.
It has been suggested, and critics have argued, that one would have expected these documents and the evaluation of them to be the starting point for 'Strategy 2010', and the fact that past Government policy is not referred to, never mind evaluated, is an inexplicable omission.
2531.
As a researcher I have to say that 'Strategy 2010' is very ambiguous in its use of language. It is a document that has been criticised for its lack of focus on targets and priorities. It is not an outcome- orientated document, and it reflects a lack of any proper or appropriate research. More specifically, my major concern with 'Strategy 2010' is that the IDB should have been under specific scrutiny, since 'Strategy 2010' recommends the establishment of this new single economic development policy body.
2532.
Ms Taillon: It is very hard to say. "Yes, accept the recommendations," when we are saying that the entire document is flawed in terms of the equality duties, the North/South dimension and the integration of the social and economic policies. It needs to be rethought, and there should be recommendations coming from those thoughts about giving priority to such things as fairness and equity and making sure that east and west of the Bann, urban, rural and the community differentials are all taken into account.
2533.
Ms Mallon: There is also an atmosphere or sense that this has been written or worked out in a vacuum. The economic dimension of the North of Ireland cannot, however, be separated from the political dimension or the socio-economic dimension as it is in 'Strategy 2010' in terms of history matters and economies evolving. Past or present. 'Strategy 2010' has not situated itself to address properly the weakness of the local economy, so it is impossible to say that its recommendations are acceptable when the basis for those recommendations exists in such a vacuum.
2534.
Mr Dalton: In your opening statement you made an assertion regarding the Unionist and Nationalist employment rates and said that there was discrimination in favour of Unionists. Where did you get these figures, and how did you reach that conclusion?
2535.
Ms Taillon: Many years of fair employment statistics have shown that there are significant differentials between the two communities in terms of access to employment and rates of long-term employment, and the quality of jobs that different sectors of the population have come into. Many years of policies regarding areas of disadvantage and targeting social need have been focussed on certain communities. With the long history of targeting social need supposedly being at the centre of Government policy, we thought it was well accepted that there are those differentials.
2536.
Mr Dalton: I appreciate that, but I was surprised that you politicised it. You made reference to Unionist and Nationalist employment rates. I am not aware of any such data for Unionists and Nationalists. There is data on the basis of religious division but not on the political division. How did you come to that conclusion?
2537.
Ms Mallon: I am quoting directly from a secondary source, page 20 of 'Jobs are Just Promises', a publication by the West Belfast Economic Forum. It states that one of the most contested equality issues is the Nationalist/Unionist differentials in levels of unemployment. Despite fair employment legislation Nationalist male unemployment rates have continued to be about 2·5 times higher than Unionist unemployment rates since the early 1970s.
2538.
Ms Howell: The latest data coming out indicates that while there were slight improvements made in the differentials between Catholic and Protestant males in the early 1990s it has eroded again. Now it is almost three times more likely for a Catholic male to be unemployed than a Protestant male. That is worrying because the rise started again after the Good Friday Agreement, after we thought those things would start to sort themselves out. It is to do with where the new industries are being located and where the new jobs are being created.
2539.
Mr Dalton: You made many references to the need for affirmative action. How do you see that working if it is contrary to European legislation on the issue of equality- my understanding is that European legislation does not allow for affirmative action, or positive discrimination, to term it another way? Why do you feel that Northern Ireland is particularly suited to it, especially since experience of affirmative action has shown it to be a dismal failure? In fact it caused more problems for the communities that it set out to assist.
2540.
Ms Taillon: It depends upon how you interpret affirmative action and how it is implemented. Ms Howell and I went with a delegation to Strasbourg a couple of years ago as part of a European Community initiative. One interesting point was that Strasbourg City Council was implementing local labour clauses, which we were told were illegal under fair employment legislation here and under European legislation. The European Parliament was being built using local labour clauses. Therefore it can depend how European legislation is interpreted as well; there is room for a debate on that.
2541.
Legislation can always be changed if it needs to be, and yes, we want affirmative action now. Like the equality duty, it can be done as a bureaucratic exercise, which does not achieve the equity that you are trying to accomplish, or it can be done in a creative way that breaks down barriers and makes things accessible. There are many things that can be done. I know I keep harking back to this, but it is things like investing in transport and childcare facilities in an area so that people can access jobs. To me that is an affirmative- action strategy, looking at the barriers that keep people from engaging with the economy and getting jobs. It may be ensuring that people do not have to pay student loans so that they can go to third-level education. We need to examine all the different barriers. It is not just a matter of saying there is no discrimination at the point of somebody going for a job interview. Measures must be there to make things accessible to those who are being excluded from those jobs, for whatever reason.
2542.
It is not only about political discrimination, although we are still very concerned about chill factors, which keep people from getting jobs. There are many people who are excluded from the workforce for a variety of other reasons. I feel very strongly that if people are brought up from the bottom then everybody will benefit. I do not agree with an economic strategy that only goes for industrial growth and ignores those people left at the bottom.
2543.
Ms Mallon: Also, in order to breed equality, the Government need to address a legacy of discrimination. Impediments or obstacles that prevent equality of opportunity need to be recognised and addressed affirmatively to allow everybody to start from the same level. There is a history of a structural discrimination in areas, and that requires affirmative action and an equality agenda. Obviously, supplementary measures are required to assist the long-term unemployed. We need to take account of the targeting social need (TSN) agenda when locating industrial projects. There has to be fair employment, both by the location of industrial projects in areas of greatest need and by employing those sections of the community who were marginalised from the start and suffer unacceptably high rates of unemployment. It is quite clear that affirmative action will do the trick. We all need to start from the same level.
2544.
Dr O'Hagan: First, in relation to affirmative action, it is very clear that there was a policy of affirmative action for generations here which disadvantaged a particular community, but I suppose that is another debate.
2545.
Ms Howell, you mentioned earlier that the New Deal simply was not working. I recognise organisations like yours are working at the coalface where you deal with the failures of policies like New Deal and the failure to fully integrate TSN with 'Strategy 2010'. How do we build an economic development policy that deals with these problems? It is clear that current proposals fall short of the necessary requirements.
2546.
Ms Howell: We are not economic experts, but we know that 'Strategy 2010' will not cure the problems. It goes back to the problems of consultation surrounding 'Strategy 2010,' to how you bring all the players together. It is necessary to consider all the various needs in the social, community, political and economic contexts. It is not appropriate to just impose policies taken from England. The New Deal policy has been implemented across the UK, but it is only relevant to south-east England. It does not work anywhere else. It definitely does not work here. The new TSN has not been taken on board at all, and it has not worked.
2547.
Since the late 1980s, policies for targeting social need have not had any impact on communities such as West Belfast. There needs to be a pulling together of all the resources that can contribute to regeneration in communities, including employment, training, education, health, and housing. These policies need to be integrated. You can not separate the economic from the social, and you can not separate the social from the economic. They must be pulled together in tandem. This means returning to the start and examining how we can integrate these policies so that we have joined-up government.
2548.
If policies are applicable to a certain area then it is necessary to involve that community at all levels. This way the things that they are trying to implement at the local level will become mainstream Government priorities. There is a problem if Government priorities are so different from community priorities and needs that the two never meet. If this continues then the needs of local communities, particularly the most disadvantaged, will be totally ignored. 'Strategy 2010', as presented, is not going to have an impact in the most disadvantaged communities in the North of Ireland. We know this today, and if we do not get it right now we will be back in 2010 commenting on what went wrong.
2549.
Ms Mallon: Social partnership represents the most effective and obvious vehicle to TSN. Suffering communities have proved that they can best set their own agenda and deliver the reconstruction of their own area and community. National top-level programmes have in the past developed some partnership arrangements. As I mentioned earlier, use can be made of information filtered directly from the community level, including input of data, case studies and alternatives for a formed opinion on the issues at hand. The Government do not have all the answers, and they do not have access to all the answers. However, the vehicle is there in the local communities.
2550.
Ms Taillon: The concept of New Deal in relation to welfare to work is fundamentally flawed. Apart from the programme being inappropriate for Northern Ireland, it is also inappropriate as a way of addressing disadvantage. For example, New Deal is supposed to provide the means for addressing the deficit in childcare infrastructure. New Deal involves training childcare workers and allows six months training. However, at least a year is required to qualify to NVQ2 level that allows you to work in a childcare facility. There are all sorts of contradictions in the system. If contact between the voluntary sector and Government formed part of the equality proofing strategy then these contradictions and gaps would become evident. For things to be realistically equality proofed there needs to be contact with those who have experience on the ground. For instance, if the women's centres were consulted before these sorts of policies were drawn up, then something workable that actually gets people into training and employment could be developed. Then there would be real community-based childcare facilities where people could become involved.
2551.
The equality proofing and consultation process are perhaps the building blocks that it should start from. If they were being done efficiently and coherently, those things would all fit together. However, I think that somebody is saying "Well, what does productive investment have to do with the community anyway? We won't ask them, we'll just ask the CBI".
2552.
Ms Howell: The linkage with the social economy does not stand out in 'Strategy 2010' at all - in fact, it just is not there. Europe recognises the role of the social economy in areas of highest deprivation, but it needs to be properly resourced. At the moment the community sector really is completely down. There just is no money available for the community and voluntary sectors. The £2 million additional funding that was allocated a couple of weeks ago just has not hit the ground at all in any meaningful way. It is spread so thinly right across the jobs in that social economy, in childcare, in women's development, in youth development and all the rest that it is just not there. The whole collective social economy is an area that needs to be given far more attention. It could be quite a major employer in many of the deprived areas.
2553.
Dr O'Hagan: Many people across a broad spectrum of opinion share your concerns about the lack of consultation. Do you think the Economic Development Forum, which is part of 'Strategy 2010', now addresses that inadequacy? In your submission you requested more co-operation, openness and effective two-way communication. Do you think the Economic Development Forum can do that? If not, how do you think it should be changed?
2554.
Ms Mallon: I have some concerns in relation to the new Economic Development Forum. First, there is not enough information readily available or easily accessible about that body. From what little I know, the Economic Development Forum was set up in 1999, following the publication of 'Strategy 2010'. I understand that its role is to advise the Government on matters affecting the development and future competitiveness of the North of Ireland's economy, and also to oversee the implementation and monitoring of the 'Strategy 2010' recommendations. It appears that the body considers reports and key themes outlined in 'Strategy 2010' and development of knowledge based on an outward-looking economy. I would be interested to know of any further refinement of 'Strategy 2010' and progress to date. I tried to find out, but that information is not available. I am particularly interested in public accountability concerning the make-up of the review group and its success or failure with regard to taking account of the current and the previous criticisms of 'Strategy 2010'.
2555.
One obvious concern to everyone should be that the membership apparently consists of civil servants and representatives from other sectorial groups. There is a lack of representation from the voluntary and community sector. There is a visible absence of this obviously important stakeholder in the economy. The community sector is clearly not afforded equal status in terms of input to and review of 'Strategy 2010'. Specifically, there is the exclusion of marginalised communities and their community representatives. There also seems to be a lack of political input. Critics have wondered how the conflicting aspirations of economic development, as articulated by the two largest communities in the North of Ireland - "full integration into the British economic development model" and "an all-Ireland economic framework" - are addressed in terms of the macroeconomic plan. In any event, I wonder if 'Strategy 2010' is a document which continues to be framed in the minds of civil servants and the hierarchy with little input independent of Government.
2556.
There is little information there. What little information I have to go on involved a great deal of effort, time, energy and legwork, and I am coming back at you with questions. There has been further refinement of 'Strategy 2010', and I believe that there have been four meetings - although I have not seen any documents, synopses, minutes or agenda, and I have not seen anything publicly in the papers commenting on it. I would be interested in a follow-up if this Committee could point me in the right direction.
2557.
Ms Taillon: The upshot is that we have grave doubts about it because it is so untransparent and difficult to access, even to assess whether it is going to meet the needs of the job - but that is a reason to have grave doubts.
2558.
Ms Mallon: I believe that it has only met four times, which is totally inadequate in view of such an inadequate document that needs such a lot of work. Not to throw the baby out with the bathwater, but I would also hope that any future consultation process, on the basis of the maximalist attitude of consultation in this type of setting, would include more room for dialogue and that there would be improvements in consultation and interaction between that body and groups like ours and more pivotal groups who could assist.
2559.
Ms Taillon: Part of it goes back to who it is that defines who the stakeholders are, and are they representative of the different interest groups which might actually be interested as opposed to those that are presumed to be interested in the economy.
2560.
Ms Morrice: I realise that we have kept you for quite some time, but I am glad to have the opportunity to put a few questions to you. I am sorry that I missed the start of your presentation, but I have a copy of your submission.
2561.
I have three quick questions. First of all, you mention a bias towards the mature or slower growing low-technology sector such as shipbuilding and textiles. I find it fascinating that you have said that because every question that I have asked concerns why everyone is moving away from that and shutting the door on it. What do you think the role is for textiles, agri-food and shipbuilding in Northern Ireland, and do you think that they have a future?
2562.
Ms Taillon: My personal position on this matter is that subsidies are required for declining industries for transition purposes to either update them or change them. There is no point in throwing good money after bad if that is not going to happen.
2563.
There is a need for goods to be made and, however knowledge-based an economy is, we need to produce goods and to have an economy based upon that. That is the great weakness in the North. Even in regard to the great debate around public investment versus private investment that is not what the problem really is; it is how those subsidies are being used and what they are being used for.
2564.
Personally I would like to see a greater investment in social infrastructure, whether that is houses, public transport systems or public childcare systems. All of those things are equally important, create real jobs and develop real skills among people. In West Belfast one of the things that we campaigned about fruitlessly for many years to try to get link-up at a time when Springvale was the great campus that was going to transform the entire area. One of the things that we tried to get was linkages between, for instance, the hospital, the university and businesses in order that we would have an industrial health cluster of health technologies.
2565.
Those were environmentally friendly industries, new industries, that could fit within the context of not having any baggage because the whole place is a greenfield site. New industries could be brought in and people trained up and developed in such a way that local businesses could be part of the chain.
2566.
Ms Morrice: Perhaps something like Harland and Wolff making trains, for example?
2567.
Ms Taillon: Yes. Something useful like that. Again we are back to a personal view, but Shorts could be making technological products that uses its industrial skills but that are intended for something other than for the military industrial complex.
2568.
We need a whole rethink about what sort of economy we want and what sorts of jobs we expect people to have. We need to raise aspirations also and say that it is not just about computer assembly lines throwing together microchips, that it is about training people for high-quality jobs that have some real content and future.
2569.
Ms Morrice: In your subsequent point about discrimination, which Mr Dalton raised, I was surprised by your concentration on this legacy of discrimination and affirmative action. Correct me if I am wrong, but did you say that the most contested equality issue is that of political or religious discrimination? There was no mention of women, and I am very surprised at that. Do you agree that discrimination against women has been much more profound in these industries, and why have you not mentioned that in your submission?
2570.
Ms Mallon: It is certainly true. I have no disagreement or argument about that. However, I was responding specifically to 'Strategy 2010', an economic document, and the most obvious forum for me to respond in an economic sense was on the unemployment differential. It was in order to keep things in context because in our earlier discussion we agreed that 'Strategy 2010' did not take account of things you mentioned, the socio-economic analysis or any aspects with a social bent.
2571.
Ms Morrice: Are you saying that the legacy of political and religious discrimination is much more obvious than the gender discrimination?
2572.
Ms Mallon: No, it is just putting things in context.
2573.
Ms Taillon: We did say earlier that if equality proofing was done comprehensively everything would fit together, because the document does leave women out entirely.
2574.
Ms Howell: I suppose that, in our submission, we were reflecting the community from which we come. We operate in West Belfast where the predominant unemployment is among Catholic males. That is our reality. The issue of discrimination against women is not as contentious as that of discrimination on political or religious terms. It is easier to deal with. It is being dealt with, and if we are to move society forward it is the major most contentious form of discrimination that has to be tackled also. We referred to it quite a lot in our submission because it needs to be tackled if we are to move forward at all.
2575.
Ms Morrice: I will not get into a debate on the issue because we would have a difference of views. My third point concerns your comments on the lack of appreciation of the Celtic tiger, North/South co-operation and the importance of the all-Ireland bodies. I do not think that you mentioned Europe in this context. What about the importance of a much broader picture than just the island? What about co-operation within Europe, the single currency, and similar issues? Have you addressed those issues anywhere?
2576.
Ms Howell: No, we are not economists. However, we have said that the island of Ireland can move forward as a very powerful economic force within Europe. We have a lot in common with other parts of Europe. Our closest neighbour is the rest of this island and as an island we have a lot to offer in terms of the European dimension.
2577.
Ms Mallon: Unless issues are worked on and resolved on a national basis you cannot move to the super-national level. The waters are muddied, and it becomes too complicated. It is obvious that issues need to be resolved and addressed on a North and South basis before we go to a super-national level.
2578.
Ms Howell: To come back to the European context, I think that both North and South are going to lose their Objective 1 status. Therefore there will be a obvious need for greater co-operation and forward thinking on the island when that is lost.
2579.
Ms Morrice: When Ireland joins the single currency, what would you suggest? Should we adopt the single currency?
2580.
Ms Howell: I have not thought about it.
2581.
Ms Morrice: In the context of North/South -
2582.
Ms Taillon: The differential is obviously a major problem. Whether we should go in to the euro or whether we should just have some sort of arrangement, the way Denmark has got an arrangement, I am not really competent to say. Clearly there is a major problem there because it creates problems, particularly for businesses along the border. We will just say that we are not really equipped to answer that.
2583.
The Chairperson: I would like to thank you for your submission.
2584.
Ms Taillon: Thank you very much for your time.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 4 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Ms Lewsley
Mr McClarty
Dr McDonnell
Witnesses:
Cllr I Barr )
Cllr E Turner )
Cllr J O'Kane )
Cllr A Bresland ) Strabane District Council
Cllr T McBride )
Mr D McSorley )
Ms G Stafford )
2585.
The Chairperson: I wish to thank Strabane District Council for its hospitality and for hosting the four meetings. Ladies and gentlemen, I welcome you to this Committee meeting. I propose to ask the Assembly Members to introduce themselves to you, and then we will move on to questions. Before that, however, perhaps you would like to make a short opening submission.
2586.
We have become familiar with the procedure, but I will outline what normally happens. Hansard staff are present and will log what is said, there is a recording system which links us to the Assembly in Stormont. Mrs Cathie White is the Committee Clerk, and her staff look after us and run these proceedings.
2587.
Cllr Barr: I welcome the Committee to Strabane and hope you will find the business informative and useful.
2588.
Mr McSorley: On behalf of the district council I would like to go over some facts about Strabane, which might be relevant to the evidence which we will give the Committee.
2589.
The Strabane district is the fourth largest district council area in Northern Ireland. It has an area of 336 square miles and a population of about 37,000. Currently we have an unemployment level recorded at 10.2%, which equates to about 1400 people, and the district is ranked by the Robson Index as the most deprived in Northern Ireland, both in terms of degree and extent of deprivation.
2590.
There are three main towns, Strabane with a population of 11,500, Castlederg with a population of 2,600 and Newtownstewart with 1,500 inhabitants. Strabane is strategically located on the border. It is the only major town in Northern Ireland which is located on the border. It is almost equidistant between Derry, Letterkenny and Omagh. That means that it can draw on a very wide pool of labour from right across the north-west. The district has a young population: 23% are between 20 and 34, and 26% of our population are under 16. This young population is also increasingly well educated, and our schools have achieved high GCSE results.
2591.
We are also particularly fortunate in having access to further education colleges in Strabane itself, as part of the North West Institute of Further and Higher Education in Derry, Omagh and Letterkenny. Between the years 1998 and 1999, 4,000 students from Strabane were enrolled in courses of further education, and 50% of these included business and information technology modules.
2592.
Recently, a group of young unemployed people from Strabane completed a call centre training programme at Letterkenny Institute of Technology and work experience in telemarketing in Montreal as part of a wider horizons programme. Our people are getting access to these institutes. We are also within easy reach of the two universities and can benefit from the technology and software centre at Magee College. In the wider university scene, almost 700 students from the district are studying at universities in Northern Ireland.
2593.
One of the key features of our economy is the strength of our manufacturing sector. Thirty-five percent of employees work in the sector compared to an average of 18% across Northern Ireland. The downside to this statistic is that 80% of those employed in the manufacturing sector are in textiles.
2594.
The council has adopted a self-help approach. Self-help is one of the themes in 'Strategy 2010'. We have adopted a self-help approach to economic regeneration in the district, and I would like to draw your attention to a couple of points.
2595.
First, I would like to deal with inward investment. We have been working very closely with the IDB on the marketing of the district and have recently produced a marketing brochure with the close co-operation of the IDB. We also benefit from being a part of the wider north-west region. We see ourselves as being very firmly part of that region of over 300,000 people. That is very important to us.
2596.
We also consider it important to market under the banner of Ireland North-West, which is the marketing banner for the region. We welcome the recent initiative between the IDA and the IDB to look specifically at this region and to co-operate in its development and marketing. We also believe that effective use can be made of limited funding by following an integrated development approach. The council is working very closely with Strabane District Partnership to develop a community plan in consultation with the community, business and statutory sectors. That is important.
2597.
The council has taken a very strong initiative in working with the chamber of commerce and industry in Strabane to develop a project which we call 'Strabane 2000'. It is a strategic plan for the regeneration of Strabane town centre, and we hope that you will have an opportunity to see some of the practical issues and projects being taken forward in that initiative.
2598.
Central to that initiative is the development of a library and resource centre in Strabane town centre. This is an innovative partnership between the Western Education and Library Board, the council and the Strabane District Development Trust, which represents the community side. That project - costing £1·5 million - was recently announced in the Department of Culture, Arts and Leisure's funding package. Again, funding has been achieved.
2599.
We see the library as central to a learning network for the district. Indeed, the council lays particular emphasis on learning as a central part of its economic development approach. We see that network providing future opportunities for our young people, enabling them to become conversant with information technology and to participate in the new knowledge-based industries.
2600.
In conclusion, we believe that the council is playing its part through its self-help approach. We also believe that Departments and agencies need to respond generously to deliver this vision of Strabane as one of the top 10 districts in Northern Ireland. Thank you.
2601.
Mr Dalton: Good morning, I am pleased to be here along with the rest of the Committee. You said that about 35% of your workforce work in manufacturing, and of those, 80% in textiles. In the light of the rapid changes in textile clothing sectors - with job losses exceeding the projected figure of 2% to more like 5% to 6% per annum over the next 4 to 5 years - do you think that 'Strategy 2010' has adequately addressed the fears of this sector? Do you think it adequately addresses the social impact of the anticipated job losses? What immediate Government action can stem the decline in employment?
2602.
Mr Barr: I suppose the short answer is no. 'Strategy 2010' has examined the trends in the industry and has attempted to assess how the industry should go in the future. It also made recommendations that a joint Government/industry task force should be set up and that a strategic development plan should be brought forward in relation to the industry.
2603.
I feel, however, that it was weak, and I do not believe that it adequately expressed or emphasised the urgent crisis in the industry. I do not believe that the powers that be have addressed the urgent crisis, even though it is 18 months since the document was published. The only reason they appointed Kurt Salmon consultants was to carry out a review of the industry. We welcome that initiative by the Minister, Sir Reg Empey, to appoint Kurt Salmon. But if the delay in publishing the Kurt Salmon review is the same as that in publishing the 'Strategy 2010' document we may well be facing the demise of the industry. We hope the findings of Kurt Salmon will be examined and implemented as a matter of urgency.
2604.
The 'Strategy 2010' document has attempted - if not to actually write off the industry - to foresee the demise of the industry as a labour-intensive manufacturing base. Certainly the media and, probably, the Government too, appear to have written off the industry. We suspect that it may also be the Westminister Government's desire to see the end of the industry. They said they would not see its retention as a priority.
2605.
The 'Strategy 2010' document appears to see, in the future, the textile industry as being a global supplier of goods sourced from Third World countries. It will be a sad day if we reach the stage when the only way for the textile industry to survive is by sourcing all of the goods from Third World countries and becoming- either willingly or unwillingly - a party to the exploitation of child labour in those countries.
2606.
We do not believe that is the case. There is a perfect example here in Strabane. Indeed, there are a number of factories in the Strabane district. Adria Ltd in particular, is, arguably, the main employer in Strabane. It is continually proving that factories can compete and hold their share in the market place, although from a realistic point of view, they will inevitably become less labour-intensive through capital investment and research and development.
2607.
Councillors, including myself, recently had the privilege of visiting Adria Knitting Mills and of talking to the management. They are confident that they are here to stay. Although hard decisions will have to be made in relation to the overall operation, they do not see their demise, either in the near or distant future. They feel they will be able to compete, despite the market prices. I think we all know what the market prices are in very big companies like Marks and Spencer, who are now sourcing a high percentage of their products from Third World companies - although Adria does still supply some products to Marks and Spencer.
2608.
For years we have heard spokespersons from the British and Twenty-Six County Governments, the captains of industry, trade unions and influential politicians claim that there was so much international goodwill that if only there were peace here, investors would be queuing up to establish their business here.
2609.
We have had five years of relative peace, and we hope that this will remain the norm from now on. Where is all this international goodwill? Where are the potential investors?
2610.
Recently, the only impact in respect of international investment which I and others in the Strabane District Council area have been aware of was the news that the United States-based corporation, Sara Lee, had taken over Courtauld's. In preparation for that takeover, Courtauld's closed a hosiery factory in Plumbridge with a loss of 124 jobs. The directors of Courtaulds sat in this very chamber and told us that a decision had been taken that, in future, their goods would be sourced from Turkey and other countries where there were cheaper labour costs. Strabane was never inline for high labour costs. We are a low-wage economy, and wages here do not even compete with many other centres throughout the North.
2611.
Cllr McBride: Chairman, I will elaborate on the social cost impact of this, which will answer the second part of your question. It is important that this Committee be aware that in Strabane, where there is a high reliance on the textile industry, its demise will have a seriously disproportionate impact relative to the rest of Northern Ireland. 'Strategy 2010' got it wrong in its anticipated figure for job losses, when addressing the social impact issues. Instead of the predicted figure of 2% in losses, we are now running at 5% to 6%. What can we do about this?
2612.
There needs to be more of a steer in the textile industry towards replacing something that is being lost. We are realistic enough to know that there is a definite demise of the industry, and something must be done to replace that loss, which is doing so much harm. There needs to be more emphasis put on training for knowledge based industries in the Strabane area and the north- west generally.
2613.
In this area, a typical textile factory worker has a certain level of skill that is appropriate to that industry. However, his or her skill base is very narrow when taking up job opportunities in other industries.
2614.
There is an urgent need for training- training in the industry itself, whether it be done by training providers or colleges. A traditional problem with textile industry firms is that the workers have been trained internally for the company's own needs. The workforce has a narrow skill base for the job opportunities that are out there. That needs to be addressed as a matter of urgency.
2615.
The demise of the factory in Plumbridge demonstrates our first hand experience of what is meant by this. There is an impact not just on the current generation, but on future generations. Some of the workers quickly shifted into other jobs in the textile industry, which again proves that there is a future for this industry- the innovative part of it. The innovative part needs support by way of fiscal steer or whatever else is necessary.
2616.
Others simply could not take up job opportunities elsewhere, and because of the problems in the education industry, they can not now afford to educate their children to third level. This will do long-term harm in the area.
2617.
We have emphasised this morning the extent of our dependency on manufacturing, a large proportion of the total jobs in this area. There are a relatively small number of jobs here; manufacturing makes up a substantial part of that, and textiles make up a substantial part of that again. We want to make this argument very clear. In the reorganisation of public sector jobs which will occur in Northern Ireland over the next number of years, this area must not be neglected.
2618.
The arguments for the decentralisation of public sector jobs are being well made. In this district council we have never had a public sector base comparable to those in neighbouring councils, and we would like to establish such a base very firmly. Our textile industry is suffering quite severely; we need some recompense for that, possibly through more public sector jobs in this area.
2619.
Cllr O'Kane: Chairman, you asked what immediate Government action would stem the decline in employment. In my opinion LEDU and the IDB should, at an early stage, identify companies at risk. They should provide a system to assist companies with business strategy, help them to be forward-thinking and have a more structured approach to their development. This must include help with business planning, product development and marketing. Family-owned businesses need more encouragement to innovate. There is also a need for active support of our partnership with institutes of further education and universities.
2620.
We must recognise that corporation tax differs between Northern Ireland and the Republic of Ireland. Obviously, Northern Ireland is the only part of the United Kingdom with a land border with the Republic of Ireland; therefore tax incentives - such as capital allowances for upgrading equipment to make companies more competitive and to aid transition - should be recommended for Northern Ireland.
2621.
The textile and clothing sectors should be given full support in the transition they are undergoing. Some companies believe that they are being treated as second-class industries, both by banks and agencies. The construction industry is also under severe pressure in Northern Ireland due to the amount of development in Dublin and the Republic of Ireland generally.
2622.
It is imperative, then, that training in this sector be upgraded to create skilled professionals. The present system of training is inadequate. It can not ensure all-round training to the industry. We also need to re-examine planning policy, as it restricts the competitiveness of the construction industry. Chairman, I hope that I have answered that part of your question.
2623.
The Chairperson: Thank you very much for those answers.
2624.
Mr McClarty: Good morning. I am delighted to be in the offices of Strabane District Council this morning and I am very grateful for your invitation.
2625.
In your view, was sufficient consideration given to tourism in the 2010 document? What form of direct support is necessary for the development of the tourism industry in Northern Ireland?
2626.
Cllr Barr: Councillor Turner is very heavily involved in representing councils and a number of tourist bodies. He will address that.
2627.
Cllr Turner: Mr Chairman, the answer to your first question is "no". This recommendation is a quick fix, short-term action with no consideration for the sustainability of the sector. The development and sustainability of tourism requires a continued focus on quality. Many bed and breakfasts depend on repeat business, and high quality is essential to ensure this. However, improving the administration of the Northern Ireland Tourist Board's approval scheme, by decreasing waiting time and streamlining the process, would facilitate new business start-up.
2628.
In answer to your second question, it is felt that tourism is not given sufficient consideration in 'Strategy 2010' at strategic level. It is not mentioned in the key principles or recommendations. In the main 'Strategy 2010' document, many of the tourism sector working group report recommendations have been left out completely. These include, in particular, the human resource and recruitment challenges of the industry, such as conditions of employment, the industry's record as a low-wage employer and the lack of career opportunities. The tourism sector working group report rightly points out that these problems will be exacerbated by the upturn in the industry referred to in 'Strategy 2010'.
2629.
'Strategy 2010' mentions the potential for tourism to significantly increase its contribution to the GDP to 5%, as opposed to the existing level of 1·8% resulting in 20,000 jobs. Based on comparative tourism income figures, this should mean an increase of nearly 300 jobs in tourism in Strabane.
2630.
There is a need for investment in education and training to ensure that existing and new players in the tourism industry are sufficiently equipped to develop the industry to the level anticipated. Direct support should reflect the opportunity identified in developing green tourism through product development and marketing. Activity-based tourism should be developed to lengthen the tourism season, particularly with regard to green rural tourism. There should be investment for improving the skills of existing players in the industry, as well as new entrants. Account should also be taken of the need to invest in human resources to cope with the development of this sector. Quality in the industry should be maintained.
2631.
Ms Lewsley: We welcome your submission. I will look at the role that rural communities have to play in 'Strategy 2010' and I recognise the invaluable contribution they make to the whole of Northern Ireland. Do you think the strategy adequately covered these areas? Eddie talked about bed and breakfasts, and the recommendation in the strategy was about deregulation to see if that would help the matter. What other areas need to be prioritised so that rural communities are able to make a significant contribution to 'Strategy 2010'?
2632.
Cllr Bresland: Rural development must be mainstreamed to ensure its sustainability. All policies should be proofed to ensure that they take account of rural sustainability. The planning policy should allow for sustainable rural communities with a flexible approach to small-business development, not just as agri-activities, but as a mainstream business. Rural tourism development should support at a policy level, and 'Strategy 2010' highlights the potential for green tourism.
2633.
Ms Stafford: 'Strategy 2010' did not adequately cover these areas. There is no proofing of the impact of recommendations on rural development. The recommendations on the economy are significant and seem to have been left out. For example, deregulation of the bed- and-breakfast sector is mentioned as a recommendation for improving rural economy, but the action needed to develop the rural tourism sector is omitted, even though the vast potential for green tourism is mentioned.
2634.
A more strategic approach to tourism and the rural economy should have been taken, as opposed to a little isolated action. It is all the more relevant because of the projected increase in contributions to the GDP and the 1·8% to 5% increase of 20,000 jobs. Rural tourism must be developed seriously if the rural economy is to benefit from the expected 20,000 jobs.
2635.
Mr Neeson: I wish to concentrate on one of the main suggestions of 'Strategy 2010'- the amalgamation of the Industrial Development Board, the Local Enterprise Development Unit and the Industrial Research and Technology Unit into a single development agency. Bearing in mind the importance of small-to medium-sized enterprises in Northern Ireland's new economy, do you feel that LEDU or IRTU would be disadvantaged by such an amalgamation?
2636.
Cllr Barr: Perhaps our economic development officer should answer that question.
2637.
Ms Stafford: There was a recommendation in the strategy for a single development body. We believe that a single development body would create a clearer structure for the users and remove potential for confusion in the marketplace. It would simplify companies' dealings with the Department and help ensure that a coherent policy message is presented to potential investors in Northern Ireland.
2638.
The Training and Employment Agency should - and does - play a key role in the development of the workforce for both indigenous and investment companies. The past confusion of roles can be heightened only by the fact that it is now part of a different Government body. We mention that a possible one-stop shop for all Government agencies could provide a seamless service to clients, and the council might also play a role. We do not believe that IRTU and LEDU would lose focus, especially if a hands-on approach were adopted. The analogy we use is that of a GP and a consultant. They get feedback on where a patient has gone.
2639.
Dr McDonnell: My apologies for missing the initial part of your presentation. One simple question has struck me after listening to a number of presentations. The Chairperson mentioned that international investors were supposed to come here. We talked about the textile industry and tourism, so I shall take it as read that you try to make the best of what is left of the textile industry.
2640.
If an international investor stepped off a plane tomorrow morning, what could I or any member of the Committee give them as an argument for coming to Strabane? What has Strabane got to offer? What edge or advantage does it have? If someone stepped off the plane from Pittsburgh, Pennsylvania, and he wanted to set up here, creating, perhaps, 100 jobs of a technological nature- perhaps in computer systems, for example- why should he come to Strabane? That is the question I am asked every time I try to promote Belfast or Northern Ireland in general, so I am not being awkward. Other members were faced with this when we went to the United States recently.
2641.
Cllr Barr: I have no doubt that all councils, particularly town councils, have experienced that and the same must also be true of economic development officers. Our chief executive will respond to your question.
2642.
Mr McSorley: I shall give the initial part of the response, although my Colleagues may wish to come in on some of the detail. I covered some of these points in my introduction, but it is no bad thing to touch on some of them again.
2643.
We argue that Strabane has much to offer. For example, one could use the IDB marketing message of being the right people in the right place with the right connections. I know they are considering changing it, so my script will probably also have to change. One of the key points is that we do indeed have the right people.
2644.
I touched on some of the statistics earlier. We have a young population, something which will become particularly important as the population across Europe becomes older. This is a real advantage, for if someone is here for the long haul, there will be a ready supply of labour. I mentioned the central positioning of Strabane since, for a long time, we have called places like Strabane peripheral. I argue that Strabane is, in many ways, quite central, and, to turn the argument around, I see the town as being able to call on labour support from places like Omagh, Derry and Letterkenny.
2645.
We see ourselves as being very much a part of that north-west region and of the 300,000 people who live there. There is a critical mass that we see as being so important to our marketing drive for inward investors. Not only have we got the people, but, we would argue, we have got the right people; well-educated young people. One of the local schools in Strabane achieved the highest results at GCSE level in the north-west in 1998/99.
2646.
We are not behind in what we can offer. We accept that much of our labour force has left school without formal educational qualifications, but we have been taking active steps to redress that situation. Recently we suffered a disappointing decision by The Mari Group Ltd to withdraw from providing IT education in Strabane, but the council took the initiative and worked with other funding partners, which included IDB, LEDU and the District Partnership and the Training and Employment Agency. We brought that consortium together and sought a new player, and we have since appointed the North West Institute to provide that continuing education, particularly education that is focused on those who have already left the formal school system. We are being proactive in our approach.
2647.
Other benefits that we can offer include our modest wage and accommodation rates for those who might wish to come and locate here, and we currently have an advance factory that is immediately available. There is a strong case to be made for those who might want to come here.
2648.
As far as transportation goes, we are close to an airport and to a port, but our roads infrastructure is not what we want it to be. Something needs to be done, particularly in relation to the A5 and our links to Dublin and Belfast. In our response to the 'Strategy 2010' document, we made the point that it is critical, in the Regional Strategic Framework and the 'Shaping our Future' initiative, that in terms of the western corridor, we get equal prominence to the Belfast to Dublin route.
2649.
All of these things are particularly important and we feel that we have got the right people and the right place. We have some work yet to do on getting the infrastructure right - whether that be roads or telecommunications - but BT has said that if an investor were to come to Strabane, that they will ensure that the infrastructure is there to support IT or knowledge-based development, so we do not see that as presenting a problem. We are aware of the yet small sector on the IT side, but we are starting to have a cluster of small companies, and we are aware, in marketing terms, of the importance of IT companies clustering. We see a great opportunity to build a local cluster of IT knowledge-based companies which will give us the edge when it comes to investors.
2650.
Cllr Barr: In addition to what the chief executive said, there are relatively low housing costs in this area, and, in terms of the social environment, there are golf courses that would compete with those in any other area. We also have access to the richest salmon and sea trout rivers in Europe, and we consider ourselves to be the gateway to Donegal - we are less than five minutes away by car.
2651.
As our chief executive pointed out, the only thing that our complete package lacks is a good roads infrastructure - the A5 needs to be upgraded to dual-carriageway status - but perhaps the Assembly will solve that problem by providing us with good roads. We could then compete with anyone.
2652.
Cllr Turner: If we were to be honest in replying to Dr McDonnell's question, the difficulty is in getting an investor past Belfast. We have already had some difficulties with that. What can we say to investors? We can tell them that we have a proven record as an industrial base over many years. We can tell them that we have had successful factories here and that they might be well advised to speak to those employers about their labour force, imports and exports.
2653.
As an industrial base, we have brought industrialists together under various headings. They could provide the focus for inward investment if it were to come here. I support everything the chief executive has said; we have been working very hard on this. Our difficulty has been getting the opportunity to sell this area to an inward investor.
2654.
Dr McDonnell: I do not want to drag this matter out, but I would like to talk to you later about where the institute and the technical college fit in. That part is not a strong as it might be.
2655.
Mr McSorley: We welcome that, and we also do not want to delay proceedings on that point. We are working closely with the institute on a number of areas, including that concerning The Mari Group Ltd, which I mentioned earlier. We also see the work which the IDA and IDB are jointly doing in focussing on the north-west as having the potential for pilot exercises and pilot programmes which will make a real difference to the region.
2656.
The Chairperson: In relation to Councillor Barr's question, if the Assembly were to delegate the authority to this Committee, we could sort out the infrastructure problem very quickly.
2657.
Mr Clyde: Do you have any particular criticisms of 'Strategy 2010', and do you feel that there was adequate consultation with district councils?
2658.
Mr McSorley: I will come back to you on that one. We have a number of criticisms of 'Strategy 2010'. However, I would like to stress that Strabane District Council welcomes this inquiry into the strategy and the argument for developing an effective action plan which will satisfactorily address the problem issues.
2659.
We have to say that there has been no effective consultation and minimal representation by district councils on the strategy steering and cross-sector working groups. We can leave that point, because the very fact that you, as an inquiry group, have come to Strabane makes clear your concern for ensuring that councils and others in the region get the opportunity to have an input into this strategy.
2660.
We think that the strategy did not take on board the implementation of new TSN and provide for the skewing of resources to those in greatest need. We mentioned some issues in our submission, for instance, the focus of new inward investment on major service centres to the detriment of key service areas. We may have touched on that in other parts. It reflects the fact that there are places like Strabane where the importance of new TSN, in terms of the overall thrust of Government policy, has not been properly taken on board.
2661.
We have also made points about the roads infrastructure. We feel that we are not getting parity of treatment. There is almost a belief in some arms of Government that Strabane is a dormitory town. It is back to the argument of key service centres versus major service centres. It is not about providing low-cost accommodation so that people can work elsewhere. We see it as important that Strabane be built up and that we get inward investment and jobs here. We also need economic activity, which will make a difference to the retail sector in this town. That sector is facing huge difficulties because of currency differentials. It is important that we get the right injection of activity to re-generate the town.
2662.
As Cllr Barr mentioned, 'Strategy 2010' was launched in March 1999, but it is only now through the work of Kurt Salmon that we are getting some effective response in relation to the textile sector. That should have been more urgent. The problem identified was urgent and needed more attention. However, it is better late than never, but earlier action could have saved some jobs, and that is important to us.
2663.
'Strategy 2010' mentions the review of public administration, but it mentions it in relation to making savings so that they can be redistributed elsewhere. We see that as an opportunity to relocate public sector jobs to Strabane. I do not wish to get involved in detailed discussion about what size the public sector should be, but 'Strategy 2010' and the action plan associated with it should indicate that there is a need to relocate jobs in all sectors to Strabane - particularly in the retail sector. The retail sector is an important employer, and we need to make sure that something is happening there.
2664.
I also want to stress the importance of language education. It is particularly important that there is increased emphasis on education in European languages to give us the edge in attracting inward investors. This is particularly appropriate as we move forward as part of the EU.
2665.
The Chairperson: Once again I would like to thank you for the hospitality that you have shown us today. As we move towards concluding this public airing of 'Strategy 2010', we hope to reflect on your original submission and your answers to the questions today.
2666.
This is the third meeting we have held outside Stormont. When we were examining the logistics of how to deal with all of the submissions that came in, we decided that we would have three outreach meetings. One was in Queen's University, Belfast, a centre of learning excellence, and the other two were at Moyle District Council and Strabane District Council. This was because you were both mentioned in the Westminster Select Committee's report, which severely criticised the IDB for not doing enough for you We did not want to fall into that trap. This Committee wanted to show some degree of solidarity and outreach in an attempt to bring on board an inclusive review of 'Strategy 2010'.
2667.
Cllr Barr: On behalf of the council delegation, I thank you and your fellow Committee members for taking the decision to come to Strabane for the public hearing. It has given us an opportunity to relay some of our views and concerns to the Committee. I feel reasonably confident now that there will be sufficient impact made when your Committee members leave and Strabane is mentioned in the Assembly in the presence of Ministers.
2668.
I hope that you have been impressed and that you will have no difficulty in speaking well of Strabane. It has helped us in our search for meaningful and, it is to be hoped, full employment in this area. That is what we aspire to.
2669.
I know that our council chairman also welcomes you to Strabane. Thank you for coming here.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 4 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Ms Lewsley
Mr McClarty
Dr McDonnell
Witnesses:
Mr G McCormick ) McCormick Properties Plc
Mr C M Cavanagh )
2670.
The Chairperson: You are very welcome to this Committee meeting. I propose that you make a short opening submission, and we will then put some questions to you.
2671.
Mr McCormick: My name is Mr Gerry McCormick, and I am chairman of McCormick Properties. We are very pleased to address the Committee, and we wish you luck in what you are attempting to do, because it is important to us that you succeed. If McCormick Properties can help you in any way, or at any time, you are welcome to visit us. We depend on your success.
2672.
I apologise for the absence of our financial controller. He had to attend another meeting at short notice - and it was not with the bank!
2673.
I will hand over to Mr Cavanagh, our planning consultant, who will talk you through our document.
2674.
Mr Cavanagh: Good morning. I am very glad to be here. It is very significant that the Committee has come to Strabane and the north-west.
2675.
The background to why we are here is interesting because, although the company supports the 'Strategy 2010' project, it is for a reason other than to make a presentation.
2676.
McCormick's was founded as a construction company in 1969, and we began specialising in development at the end of the 1990s. We are based in the Waterside area of Derry or Londonderry. The Department for Social Development advertised in the local press, asking the public to submit ideas for regenerating the inner-Waterside area.
2677.
I asked Brian McCormick, the managing director, whether McCormick Properties wanted to respond. He said "All right. Let's sit down around a table". About half a dozen members of the team sat down. I very quickly realised that they were talking about 'Strategy 2010', although 'Strategy 2010' was never mentioned. Therefore, when we put in the submission to the Department - and you got a copy - it was called 'HOW THE INNER WATERSIDE CAN BE TRANSFORMED', and subtitled 'by Applying the Recommendations of 'STRATEGY 2010' of the Department of Enterprise, Trade and Investment'.
2678.
It is important that we reached the same conclusions, entirely focusing on a local, neighbourhood regeneration problem. We came to the same conclusions as the huge exercise in public consultation that came here, and one thing that I think is very important about 'Strategy 2010', is that the whole exercise, public partnership and involvement has been very important for 'Strategy 2010'. It was also critically important for the development of the German economy after World War II, and in more recent times, as people are aware, it has been very important in the economic development in the Republic of Ireland- which of course, I do not need to remind people is only a mile away from here, and that is a very important issue that we will come back to later.
2679.
There are three very important quotations in the document. The first one, from Charles Handy, is at the very start: "If we want to see more of the good news than the bad we will have to do it for ourselves. It is no good waiting for some unidentified 'they' to fix our world for us".
2680.
We have to do it ourselves and accept responsibility. We should not wait for London, Brussels, Washington or wherever to solve our problems for us.
2681.
But perhaps the most important quote in the document focuses on taxation - the issue that we want to talk about:
"The Steering Group believes that economic growth must be driven by a resurgent private sector in Northern Ireland, supported only as necessary by the State."
2682.
The Committee has had many submissions already, and I do not want to go over a whole lot of old ground. We regard that one sentence - found on page 207 - as the key to the whole issue.
2683.
The Government is not going to sign cheques to solve our problems. Unemployment in Northern Ireland is currently the same as in Wales. It is less than in Scotland, less than in the north east of England and it is less than in London. London has higher unemployment than we have. There is no way that Gordon Brown worries about unemployment in Northern Ireland when he goes to bed at night. We must accept that reality. Then, if you wanted to develop the private sector, as the people around the table in McCormick's talked about, they said tax incentives are the way to do it, for Government to make it easy.
2684.
The last of the three quotes is found at 9.11.6:
"Tax incentives work with the grain of an entrepreneurial approach; they encourage profitability, enhance the rewards of enterprise and leave more resources to put back into business development."
2685.
The people around the table were not interested in grants. They did not think that grants were the way to develop the Waterside. They said "Set up the tax system properly and the private sector will do it itself." The Government is not going to sign cheques. The voluntary and community sectors can do a certain amount to improve the situation in Northern Ireland, but they depend on public money anyway. If the Northern Ireland economy is not improved by the private sector, it is not going to be improved. It is not that we have a choice. We are not simply saying that we would like it to happen that way - we do not have a choice. Private business is the only way to do it.
2686.
There is a statistic that most people have never actually worked out, but it stares us in the face. The monthly statistics released by the Department for Enterprise, Trade and Investment show that some 12·5% of the population in Northern Ireland are self-employed or creating jobs for other people. Apart from public sector jobs, which I presume your Committee does not expect to increase very much in the near future in Northern Ireland, jobs will only be created by that 12·5%. If they do not create new businesses, there will not be jobs for all the other people. That figure of approximately 12·5% is not just a Northern Ireland statistic - it is international. It represents the group of people that your Committee needs to help as best you can. I think that this is a super report. We can argue about the details, but it is basically a very important report.
2687.
On taxation, we again have to go to look at the market place that we are in. A few years ago I remember talking to people and saying that in South Korea people were working 365 days a year. People in many industries work every day of the year without a holiday, and work 366 days in a leap year. That may be awful for family life, it may be bad for your health, but if that is what the competition is doing, then it is what we have to observe.
2688.
Now we look at what is happening, a mile away across the border. In five years the company tax for all companies in the Republic will be 12·5%. It used to be 10% for inward investment, and it used to be about 30% - it still is over 20% - for local companies. The European Union ruled that it was not fair to discriminate between two different kinds of company in the one jurisdiction, so the Government in the Republic said that they would agree on 12·5%. Therefore the market rate is 12·5% for taxation.
2689.
I know that you are very frustrated with Gordon Brown and his policies. They may not suit Northern Ireland, but they reflect the reality of the market place. It does not matter what Gordon Brown thinks or what we think - it is what the competition thinks that matters. That is why businesses in this part of the world are now running two bank accounts if they deal across the border. One is a Euro account, which they keep to deal with the Euro market. The taxation system here, and the difference with the Republic, is also why some companies are moving and why some companies have registered vehicles in the Republic. This is the reality, and business people want to pay the bills at the end of the week - they must make a profit. We have got to look at the nearest competition. There is a very business-friendly environment in the Republic and I quote an American investor from New York, whom I spoke to recently about how to get investment here. This individual was involved in a variety of matters, but talking about property said: "Americans look at tax. Capital in my opinion will flow to the lowest rate. I advise any Northern Ireland Assembly Member I meet to bite the bullet and set different tax rates from England, otherwise the money will not come to Northern Ireland".
2690.
In the context of urban regeneration, the Republic has recently brought in a town renewal scheme. For limited areas in 100 towns in the Republic tax concessions have been given to people for property development. Interestingly enough, this does not affect McCormick's because property development companies are excluded from it and, therefore, we are not making a case here for ourselves. Recently, the 'Sunday Business Post' featured half a page on "Tax Incentives Boost, and Town Renewal". A list of the towns was given. All those towns have parts of them where people who owe tax to the Government, they do not pay the tax but put the same amount of money into property development. In our neighbouring county, Ardara, Ballybofey - Stranorlar, Ballyshannon, Moville and Ramelton are all included in this. Strabane, Omagh, the Waterside, and Limavady are not - that is the competition.
2691.
We know that in recent property development, purchasers come from Dublin to buy apartments. That is great and is another form of inward investment. However, we could do more if the tax situation here was different. Tax levels have played a huge role in the regeneration of the Republic. About two weeks ago, the Bank of Ireland thought it worthwhile to send its officials to talk to the Department of Finance in Dublin. That was what the newspaper article was based on. The bank thought it worthwhile to publish a business guide to the town renewal scheme. It is freely available from the Bank of Ireland and covers the Republic. The fact that the bank thinks it is useful, and a newspaper thinks it is useful enough to spend half a page of its press, reflects the importance of what is happening in the Republic. I have no particular preference on the rates or the levels of assistance, but that is what is happening in the Republic and it is something that we can do. It is up to the Northern Ireland Assembly and the Treasury to work this out. Nobody else can do it, and I do not underestimate the difficulties that you face.
2692.
The principles followed are identical to those used by Department for Social Development and the Department of the Environment in helping to regenerate the Waterside. They do not just apply to the Waterside; they apply to any area in Northern Ireland - town or village, urban or rural, commercial or residential. If the tax system can be changed here then jobs will be created and prosperity will arrive.
2693.
Mr Clyde: Do you have any views on the recommendation in 'Strategy 2010' that Selected Financial Assistance should be less readily available to existing firms, and do you see any particular problem with this?
2694.
Mr Cavanagh: We had a group of business people sitting around a table saying that they did not want grants. They said they wanted to change the tax system, as that was easier. With grants there is the problem of people spending the energy that they should be spending on selling their goods in filling in forms for LEDU, the Department of the Environment, Europe or IFI. It results in them taking their eyes off the ball.
2695.
We agree that the day of the grant will soon be over. If you accept that principle then it is a question of what Selective Financial Assistance to give to an area or to a sector. You have just heard the case from the Strabane councillors about dependence in this area. Strabane, Derry and Limavady council areas have the highest unemployment in Northern Ireland. The Department's graphs show them in black and everywhere else is in varying shades of grey and white.
2696.
In a nutshell the problem is whether one supports an industry or whether one says that it is not going to develop? It has been said by members of the Committee that we should not regard the textile industry as gone. There are things that we can do and market niches that we can target.
2697.
Belfast, and all of Northern Ireland, is upset by what is happening in Harland & Wolff. It is down to something like 600 men, I understand. When the last shipyard in Derry closed down at the end of the First World War it employed four times as many people as Harland & Wolff employs now. There are all sorts of reasons for that, but basically it was market driven. It closed down where, fortunately, Harland & Wolff survived. We are in the face of market conditions that we cannot control. I do not think that anyone can control them, but we can do certain things to affect them.
2698.
The financial assistance that we give has to be based on our best guess of what can survive into the future. There is a danger, where things cannot be improved, of spending seed money to keep an old thing alive. I am not making any case for textiles or shipbuilding; I am saying that that is the general principle. What the industries of the future are is anybody's guess.
2699.
The Chairperson: I have heard your strong endorsement of Strategy 2010, but I would probe a bit further and ask you if you have criticisms of the strategy or do you consider it weak in any way?
2700.
Mr McCormick: We feel that what is there is very good and that making it happen is what counts.
2701.
Mr Cavanagh: I will go along with that.
2702.
Mr Neeson: Mr Cavanagh mentioned something about tax incentives in his opening remarks. There is one issue that has to be borne in mind and that is that the Northern Ireland Assembly does not have tax- varying or raising powers. However, you suggest that there should be tax concessions for selected sectors outside of manufacturing. In relation to urban regeneration you spoke about a favourable rating regime for small retail businesses. How do you see this being accomplished?
2703.
Mr Cavanagh: I simply put down on a page the issues that 'Strategy 2010' talked about in supporting the private sector, its work and the issues raised. I was not particularly supporting any one part of it or suggesting what might be done. On the rating regime and de-rating, enterprise zones have skewed the market, although they have been successful here and in other places. It is not my job to work out what happens if you make the changes. However, in areas needing regeneration -simply abolish rates. That can be done on a building-by-building and street-by-street basis as has been shown in the Republic. Introduce enterprise zones. In the past people were allowed five or ten years' rates-free existence if they were in the right business and in the right place. It can be done.
2704.
I was not saying that we think that this is the most important thing in the world. I remember one person in that group at McCormick saying that rates are not an important issue in the big picture - but they certainly affect business people at the end of the week when they have to pay their employees.
2705.
Ms Lewsley: What about the role of small businesses in Northern Ireland and what support do they need? Some Committee members went on a trade delegation to America recently and one of the things that struck us was the Small Business Administration there whereby the Government guarantees a loan from a bank for a small business rather than the business being grant-aided. They found that the return was much better than the amount of money which had been paid out in the first place. There was a minimal loss, and only a small percentage of businesses did not succeed.
2706.
Mr McCormick: That is very close to my heart. I have developed what was a small operation into a substantial business. We must remember that when somebody starts doing something in a small way, it is a very lonely place. I know that there are many Government bodies, such as the Local Enterprise Development Unit (LEDU), and that they all do a wonderful job, but I do not believe that enough people know that. In a small business you are so busy trying to put bread on the table that you do not have time to read the documents that come in. We have to find some way of telling people that there is help available.
2707.
There are important questions that small businesses should be asking themselves. I get many calls from small businesses asking for advice on many different things. I say this with respect, because I was one of them at one stage. Eighty-five per cent of people are sleeping. I may be wrong, it could be 95%, but certainly 85%. The reason is that one gets caught in a trap where one cannot look left or right - one must just look at the money coming in in that particular week. I tell small businesses that there is not much they can do about overheads, but they have to be very sensible about them. The instinct is to focus continually on the overheads and just to keep one eye on the profits. I changed a number of years ago - I think it was good luck rather than good guidance. I now focus on the profits and just kept one eye on the outgoings. That is very important.
2708.
There are three questions that small businesses should learn and practise. First, where are we? The number of people, perhaps even around this table, who do not know where they are is amazing. Secondly, where do I want to go? Thirdly, how do I get there? Without answers to those three questions, I do not think that it is possible to succeed in business or, indeed, in anything else. There has to be a way of holding hands with a young businessperson as well. There is continuous pressure from the banks. We are painting a very black picture of the banks, but often we ourselves are to blame because we do not give a clear picture to the banks. Sometimes we do not tell them everything. We need to produce a clear picture on the way forward for small businesses. There are plenty of bodies out there doing it, but I think there is a different way. I could waste the rest of your day talking about small businesses.
2709.
People often think that money is the most important thing. I do not believe that. Sharing ideas and knowledge and helping one another are important. Any time I have gone out to help someone else, I have come away helping myself. I will leave you with this thought. If you have a penny and I have a penny and we exchange them, then we have a penny each. However, if you have an idea and I have an idea and we exchange them, then we have two ideas each. That is why it is so important that we share knowledge and ideas. That should be strongly addressed with the help of LEDU or anyone else. Business in the Community, which I was involved in for a number of years, worked very hard at that, but I see many ways to improve it. If I can be of any help in the small business area, I will give whoever is in charge all the time they need.
2710.
Mr McClarty: What are the advantages of decentralising Civil Service jobs to aid the development of the local economy?
2711.
Mr McCormick: That is very important. I think I heard some of the councillors saying that Strabane does not have any Government jobs.
2712.
Mr Cavanagh: I received figures from a question to the Minister of Finance. I thought I was going to get figures for the whole public sector, but they were only for the Civil Service. There are about 26,000 Civil Service jobs in Northern Ireland. In the Strabane District Council area there are some 125. In Limavady there are some 140. Those are two of the areas that have the highest rates of unemployment in Northern Ireland. The Derry City Council area has about 1,200, which is still below its percentage, but when you compare it with 140 and 125, it seems very healthy.
2713.
They have begun a process in the Republic, and it is interesting for us. We share the same part of the world, the same problems about geography, and, in many ways, we share the same kind of people. What we do not share is that they have nobody to bail them out. They have got to make a success of it themselves. There were many lean years in the Republic. We have both the benefit of London and the problem of London in that we cannot make the decisions - London has a say as well.
2714.
For reasons largely to do with the recent success of Dublin, very serious attention has now been given to decentralising the Civil Service. The target is to move 50% of all public sector jobs from Dublin. This is not turning out to be a big problem because many people in the various Government Departments are quite keen to get out as house prices are cheaper and the quality of life is better. It has had huge benefits. There are frequent articles in Dublin newspapers about the great benefits to small towns in the Republic, such as Roscommon, Tralee, Letterkenny, Ballina, and Cahirciveen.
2715.
If you moved, 1000 permanent jobs into Strabane, the population would go up by several thousand. There would be more children at the schools, there would be more people - I was going to say buying petrol, but I am not sure whether they would just go another mile down the road - there would be more people buying bread, there would be more people going to the cinema, and there would be more teachers in the schools, et cetera. To Strabane, such an investment would be like somebody setting up a new Du Pont or Seagate Technology in the area, except that Civil Service jobs are more secure in many ways than business ones, which depend on the market place. They have to make a profit. There is no doubt that if Belfast wishes to avoid the problems of congestion that Dublin is now facing, the people in Strabane, Limavady, Derry, Omagh and Enniskillen would be absolutely delighted. There is no question that Belfast has more jobs in the Civil Service than are needed, and there is absolutely no question that for Strabane to have 125 jobs out of 26,000 is certainly not a fair share of the cake.
2716.
I say that because we are in Strabane. There are people in the room who regard Strabane as the centre of the universe, but just 14 miles up the road there is Limavady as well. The Civil Service does not have to be deployed in the way it is at the moment and decentralisation would be hugely beneficial for regional development in Northern Ireland, and for inclusion. People living in Strabane will not think that Stormont does not give a curse about them, and that the decisions are made up there.
2717.
Sometimes in the north-west, people suspect that the Belfast Civil Service actually get up in the morning wondering how they can do down the north-west. I know it is not as bad as that - everybody looks after themselves. Belfast has been very successful at it, and it is time for the balance to be made a bit fairer.
2718.
Mr Dalton: You made many points at the start in relation to tax, so I will ask you specifically about the recommendation that there should be a special rate of corporation tax for five years. What rate do you think there should be for inward investments in particular?
2719.
Mr Cavanagh: Ten per cent - that is the going rate. That is why people go to Donegal and not to Derry. Prumerica from New York, the back office end of Prudential Insurance Company of America, set up last month with 150 jobs in Letterkenny. That is why they came. I would remind you of the quote from the American investor: "Americans look at tax. Capital, in my opinion, will flow to the lowest tax rate. I advise any Northern Ireland Assembly Member I meet to bite the bullet and set different tax rates from England."
2720.
I know that you have not got the authority to do that at the moment. I was over in Edinburgh last week, and I visited the Scottish Parliament. I was reminded of the fact that people were less happy to give the Scottish Parliament tax-varying powers than they were to have a Scottish Parliament, but there were still about 65% in favour of it.
2721.
Unless the Assembly gets similar powers, it will have one hand tied behind its back perpetually. Anybody who has travelled to America knows that one pays a local state tax everywhere. It is easy to do - all you have to do is get the Chancellor to agree.
2722.
The Chairperson: Thank you for your submission and for your answers. Had we had more time we would have asked you a lot more questions.
2723.
Mr Cavanagh: We do not need more questions: you have got the message. The work that you are doing is very important. This Committee is the most important in the Assembly, because it will drive everybody's future. If your Committee is unsuccessful then the whole thing goes off half-cocked.
2724.
The Chairperson: You have just convinced the rest of us.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 4 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Clyde
Mr Dalton
Ms Lewsley
Mr McClarty
Dr McDonnell
Witnesses:
Mr J McDaid )
Cllr J Kerr ) City Partnership Board
Mr D O'Hare )
2725.
The Chairperson: I would like to welcome you to the Committee. Perhaps you would like to make a short opening submission, and we will ask questions afterwards.
2726.
Mr O'Hare: Thank you. I am joined by Cllr John Kerr, former Mayor of Derry and a founding member of the City Partnership Board, and Mr J McDaid, President of the Londonderry Chamber of Commerce and a member of the board. Mr McDaid runs an accountancy business in the city. Both gentlemen are known to some members of the Committee.
2727.
I am Declan O'Hare, a civil servant in the Department of Enterprise, Trade and Investment. I am giving evidence because I have been on secondment from the Department to the City Partnership Board since 1995. Before that, I worked with a Derry-based economic development organisation called Derry Boston Ventures and for four years before that I ran the east coast office of the Industrial Development Board in New York.
2728.
We will cover three areas in our introductory remarks. We want to speak about the city vision process which the City Partnership Board is involved in; we want to highlight the similarities between the 'Strategy 2010' report and our own City Vision Plan for progress; and, most importantly, we want to outline some of the concerns we have about 'Strategy 2010'.
2729.
The Partnership Board is a partnership of the public, private, community and voluntary sectors in Derry. It was set up by the Government to help formulate a long-term strategic vision for the future development of the city, based, importantly, on the views of local people.
2730.
Some members of the Committee may not be familiar with the concept of city vision. City visioning invites the citizens of a city to step into the future and imagine the type of place they would like their city to be in 20 or 25 years' time. By doing that, they can identify the barriers stand between where we are now and where we want to be in 20 years.
2731.
It is also about setting a new agenda which will guide future decisions on the city, that will affect the lives of everyone living there. It is based on the simple premise that no city can realise its full potential without ideals and targets. The rationale for this type of approach to city planning and development stems from a critical reflection on past revitalisation and regeneration processes. Despite decades of physical regeneration and development programmes, the city, like so many parts of Northern Ireland, still has chronic economic, social and community relations problems.
2732.
High unemployment levels and some of the worst areas of social disadvantage in Northern Ireland provide evidence that previous processes have not worked well enough. Changes in political leadership, changes in policy, and different funding regimes have contributed to a lack of momentum and a lack of focus on the key challenges facing the city. Therefore, there is a need to adopt a longer-term approach to identify and address such challenges.
2733.
Producing the vision plan has been an important process in itself. I know of no other study in these islands which has gone to similar lengths to ensure that every citizen in the city had the opportunity to be involved in the strategic planning process.
2734.
From the outset, the City Partnership Board agreed to invite everyone in the city to become involved by sending information leaflets and questionnaires to every home in the city. In May of 1996, when we started, we held the first city vision conference. Over 400 people from every walk of life came together to debate the key challenges facing the city over the next 20 years. In the following 18 months over 8,000 people participated in public meetings, surveys, conferences and consultation activities. We published the city vision statement, which contained all the aspirations that local people had for their city.
2735.
In February 1998 we set up five focus groups with the task of translating all the theory into practical proposals. These proposals are reflected in the 'First Plan for Progress'. A copy of that document was sent in May to every Assembly Member, so I am sure that you will be familiar with it.
2736.
It is important to acknowledge that there are many areas of agreement between 'Strategy 2010' and our City Vision Progress Report. We highlighted some of them in our submission, though it may be helpful if we go through a few of them again briefly.
2737.
The issue of inclusiveness is an important one. Our process has enabled local people to exercise real influence on the decisions taken about their city. This is very much in keeping with the view of 'Strategy 2010' that all the people of Northern Ireland should have an equal chance of sharing in increased prosperity - and that they know that they do. In fact, it refers to their becoming stakeholders.
2738.
We welcome the recommendations in 'Strategy 2010' on the knowledge-based economy, as they mirrored those in our report. 'Strategy 2010' emphasises the importance of information and communication technology in improving our companies' international competitiveness. Our report outlines practical proposals to ensure that 50% of our small and medium-sized enterprises incorporate electronic commerce strategies into their businesses within five years.
2739.
With reference to education, both strategies recognise the importance of improving links between the business and school sectors. We share the emphasis that is placed on building education and work relationships. Our plan for progress identifies the means by which these objectives can be met.
2740.
In summary, both strategies acknowledge the need to move away from an over reliance on Government finance towards targeted business support for actions that enhance competitiveness. In relation to the establishment of a venture capital fund, the 'Strategy 2010' recommendations echo the need, identified by City Vision, for increased venture capital investment in the north-west. We welcome the recommendation that Northern Ireland should have a special rate of corporation tax. I know from working for the Industrial Development Board, while it was in competition with the Industrial Development Authority, that there are disadvantages in promoting Northern Ireland as an investment location. Corporation tax has been a mainstay of industrial development policy in the Republic for a long time. It is important that a comparable tax structure be put in place in Northern Ireland.
2741.
We are concerned about some parts of 'Strategy 2010'. As a locally-produced strategic development framework - and that is what it is - our City Vision Progress Report is not a prescriptive plan, City Vision has been endorsed by Derry City Council, Londonderry Chamber of Commerce and the Department for Regional Development - the latter being responsible for managing the process. It has been endorsed as a reference against which other strategy documents can be measured. We believe that those areas of 'Strategy 2010' which are at odds with the local City Vision Progress Report need to be reconsidered. The partnership board believes that road, rail, sea and air links must be enhanced to support the changes and growing demands of the next 20 years. This concept is in keeping with the 'Strategy 2010' stress on the importance of developing strong transport infrastructure linkages with other regions, particularly with Great Britain and the Republic of Ireland. Given this view, we were particularly concerned about one section of the document which, talking about the east-west corridor, said that access to the main gateway out of the region is sufficiently developed to meet the foreseeable needs of the economy to 2010.
2742.
We also have difficulty with a supporting statement which described the port and airport facilities as being sufficient. At the time of writing, the only air links to the capital cities of Great Britain and the Republic of Ireland were from the Belfast area. On the issue of roads, the Committee will be aware of the compelling evidence that cities that suffer from road congestion will under-perform economically. The regional strategic development framework 'Shaping our Future,' emphasises the fact that the road network is the main artery for the Northern Ireland economy, with 98% of our goods being transported by road. However, road freight accessibility costs are among the highest in Western Europe. The standard and the quality of the road network varies across the region, with significant bottlenecks and alignment problems on several key routes. Some of the Committee members and staff will have experienced this today on their way to Strabane. 'Strategy 2010' acknowledges the importance of road networks to the development of cross-border trade with the Republic of Ireland. It prioritises the development of the Belfast to Dublin Road. Again we feel that this is an attempt to direct investment in and around the Belfast area. This recommendation appears to be based solely on the fact that traffic volumes are heaviest on this route. However, given the alternative to the Belfast to Dublin route for traffic from the north-west, it is hardly surprising that many drivers opt to travel via Belfast to Dublin. Applying this principle will only ensure that traffic volumes on this route will continue to increase.
2743.
The guiding principle of 'Shaping our Future' is the need to achieve a reasonable balance of development across Northern Ireland. The document also states that the rural area has experienced the fastest rate of population growth during the 1990s. Of course, this has resulted in extensive suburban growth and social and economic disadvantage.
2744.
To continue to place such emphasis, as 'Strategy 2010' does, on the prioritisation of infrastructure development in and around the Belfast region is simply to ignore the impact that this will have on the north-west area and, indeed, on rural areas across Northern Ireland. We believe that equal priority must be given to improving the Derry to Dublin road network if Derry is to function effectively as a regional hub.
2745.
Such investment will benefit not only the wider north-west cross-border region, but the Greater Belfast region through reduction in traffic volumes. City Vision's 'First Plan for Progress' stresses the importance of focusing attention on the economic needs of the wider north-west region. We should develop a common approach that is not only going to benefit Derry, but also Donegal, Strabane, Limavady and the hinterland. This sentiment is also expressed in 'Strategy 2010'.
2746.
With regard to access out of the region, the Committee will be aware of growing concern in the north-west about the railway network. Far from this being "sufficiently developed", as is suggested in 'Strategy 2010', recent reports acknowledge the under- investment that has almost crippled parts of the rail network, including the Derry to Belfast line. A train journey of over two and a half hours from Derry to Belfast cannot be described as adequate. Also, a rail network which does not allow container freight to be transported to and from the seaports, or a railway which passes through the local airport and port without stopping, cannot be described as adequate either. This lack of integration in our distribution network partially explains why road haulage costs here are among the highest in Europe.
2747.
We commend the Committee for taking evidence on 'Strategy 2010' and also commend it for leaving Belfast to take some of that evidence. It has to be hoped that this will set a trend for other Committees. 'Strategy 2010' will be one of the most important policy documents to influence, and impact on, the quality of life of everybody in Northern Ireland. We must get it right and to do that we have to get public support. Like this Committee, our City Partnership Board and the 8,000 people who worked in this process over the past five years bring a wide range of viewpoints, experience and skills to a task of this nature. The Committee should ensure that civic partnerships and consultations of this kind are allowed to influence Government policy. For that to happen some of the recommendations in 'Strategy 2010' need to be reviewed as they are at odds with our local plan.
2748.
Mr Dalton: What are your views on the development of high-tech parks in Northern Ireland?
2749.
Mr O'Hare: There is evidence, from announcements by recent foreign direct investors, that one of the major factors determining the location of inward investment in Northern Ireland is the availability of suitable accommodation - the turnkey option. We are aware that there has been a network property services initiative in Northern Ireland for the past three years. This is sponsored by the Industrial Development Board in partnership with the private sector. That has led to the private sector being encouraged, and supported, to develop four major technology parks in Belfast. We are seeing the impact of that through foreign direct investment located in and around those technology parks. Our City Vision plan proposes development of an additional 100,000 sq ft of high-quality office accommodation in the Derry area. This is a task principally for the private sector. These high-technology parks not only attract foreign direct investment but support the clustering of high-technology companies. They then feed off each other through shared experiences, particularly when those technology parks are located close to university campuses.
2750.
Ms Lewsley: The key message from 'Strategy 2010' is that we want to have a new knowledge-based economy. You mentioned in your presentation about links between business and education. How do you think those links could be strengthened or improved?
2751.
Cllr Kerr: We are focusing on the vocational and educational sector and we are looking at retraining and lifelong learning. We have a young workforce, and we lack the opportunity to become engaged in the vocational aspect - the real vocational work - because of the lack of jobs.
2752.
We need to concentrate on the vocational nature of education. For too long there has been a singular attraction to the academic side of education. We have to widen that concept. We have to look to the local university at Magee, and we have to look to the North West Institute of Further and Higher Education. We are looking for 5,000 additional places at Magee by 2010 and 3,000 places at the North West Institute of Further and Higher Education, also by 2010.
2753.
The aim is to improve the vocational education aspect, and we have developed a few local initiatives among local businesses and schools. We recently put in place the Foyle skills and education cluster, which involves the business sector and the school sector. We had 2,000 young people up at Magee the other day and, by all accounts, it went very well. Therefore we are looking at the whole notion of training for life, training and retraining skills.
2754.
Mr Neeson: One issue that seems to be recurring today - particularly in relation to Strabane - is that proximity to the border has advantages and disadvantages. This issue also affects Derry City. What steps do you think that the Government should take in relation to the current difficult trading situation caused by the strength of the pound? Also, what steps would you encourage the Government to take in the long term - and this is not a political question - in relation to the pound Euro?
2755.
Mr McDaid: I get all the hard questions. My mobile phone is turned off so I cannot even phone a friend, but I will go for 50/50. There are very peculiar economic difficulties in the border areas - travelling a few miles down the road makes one pound go an awful lot further. Filling stations in the north-west of Ireland are a thing of the past. All have converted to small shops - that was really all that was left for them. People are going across the border to fill up their cars with petrol, buy their cigarettes, and do their Lotto. That represents an enormous drain of money, and there is no easy answer.
2756.
In our document we indicate that we would be very favourably disposed towards joining Euroland. I believe - and I think that my colleagues will agree with me - that it is vital for border areas that we join the Euro in the longer term. As economies converge, interest rates will come down and, by extension, exchange rates will improve. However, I do not believe that it is economically sustainable for six of the counties in this island to trade alongside 26 other counties and having a totally different currency. It makes us economically uncompetitive in the wider European context. We would therefore opt for Euroland in the long term.
2757.
Dr McDonnell: In your submission you recommended fostering enterprise, with an objective to increase the number of people in small business and self-employment. Have you any specific suggestions on how to go about this? Part of the problem appears to be that people seek a livelihood being employed by someone rather than being self reliant.
2758.
Mr O'Hare: This is an important area. Northern Ireland has about 40.000 small or micro-sized companies, including self-employed. If each organisation were to employ one additional person, we could wipe out unemployment overnight. There is significant potential in that sector. In Derry we are establishing a process to encourage entrepreneurship, including hosting an annual award ceremony to showcase the success of local companies. This will encourage people to think more about a career in self-employment or family-owned businesses.
2759.
It is important to improve access to start-up information and business support services for potential and existing entrepreneurs. The universities have a role to play. The idea of being born global is something that is important to small start-up companies. They do not start up thinking that they are going to service a local domestic market and down the line, through an evolutionary process, become international companies. Many are now thinking internationally. It is important that the University of Ulster's plans to open an international business centre at Magee campus are linked with this whole idea of entrepreneurship.
2760.
Linked with that, it is important that agencies like LEDU introduce new programmes to promote the use of electronic commerce among small start-up companies in particular. Those are some of the practical proposals that have emerged from our City Vision Plan for Progress.
2761.
Mr Clyde: What are your views on the recommendation that Selective Financial Assistance should be less readily available and the focus put on a softer form of assistance?
2762.
Mr McDaid: We broadly agree with the recommendation. Part of our rationale would be that Selective Financial Assistance tends to be grant led. A grant, when spent, is gone forever. Budgets are tightening, and the recycling of money makes sense. Selective Financial Assistance could take the form of repayable loans. The money then gets to be used many times and our ability to finance industry increases exponentially. We take a positive view on that recommendation.
2763.
The Chairperson: Thank you for your answers to the questions. As we move to formally conclude our review of 'Strategy 2010' we have your original submission and answers. We may write to you if we require further elaboration. If you wish to leave any documents we will accept them.
2764.
Picking up on the word "partnership" in your title deeds, this Committee is a bit of a partnership. We have six parties represented and have worked well since the start. We intend to continue to do so as we focus on bringing our inquiry to a conclusion.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 4 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Dalton
Ms Lewsley
Dr McDonnell
Witnesses:
Dr B Toal ) Derry Investment
Mr R Sterling ) Initiative
2765.
The Chairperson: You are very welcome. I will ask individual members to introduce themselves, and then I will ask you to make a short opening address. Members will then have a number of questions to ask. We are constrained by time.
2766.
Dr Toal: Good afternoon. Thank you very much for inviting us along and allowing us to make our presentation. I have an opening statement, which I will try to keep to under seven minutes.
2767.
I would like to introduce Richard Sterling who, when he is not managing director of Coolkeeragh Power Ltd, is director of Derry Investment Initiative. I am Barney Toal, the chief executive of Derry Investment Initiative. Today we hope to be constructive in our approach to 'Strategy 2010'. We will outline our experiences in economic development and put forward our views on both inward investment and the information and communication technology (ICT) sector, which we think is vital to the north-west.
2768.
Derry Investment Initiative is a company limited by guarantee, established in 1988, to market and promote Derry and the region for inward investment. It also seeks to identify and facilitate the development of resources which are concomitant with the development of the ICT industry in the north-west. It is mainly a business led organisation. The board of directors is drawn from Londonderry Chamber of Commerce, Derry City Council, Business in the Community, LEDU, University of Ulster at Magee College, and representatives from both the inward investment community and the indigenous ICT sector in the city.
2769.
The latest unemployment figures we have are from September 2000. They show that the council area of Derry has 9·5% unemployment, Strabane has 10·4% and Limavady has 8·6%. The Foyle constituency has the highest number of unemployed in Northern Ireland in absolute terms, with 4,765 jobless. It is in the unenviable position of being top of the unemployed register again. A gap consistently separates the rate of unemployment in the north-west from the Northern Ireland average, which is 5·7%. The difference remains stubbornly at 60% to 70%.
2770.
'Strategy 2010' talks of equality and cohesion across Northern Ireland, but these figures indicate the uphill struggle ahead to achieve such equality and cohesion in the north-west. Derry City Council's economic development strategy has indicated that 9,000 jobs need to be created in Derry alone if the Derry City Council area is to reach the average unemployment figure for Northern Ireland. Within that figure, some 4,500 inward investment jobs need to be created over the next five years. That is the scope of the task that lies ahead for both IDB and ourselves. This figure will obviously increase if Limavady and Strabane are taken into account as part of the north-west region.
2771.
Derry Investment Initiative's main aim is to market the city and the region for inward investment so I hope that you will excuse that emphasis which we will place on today's session. However, I am sure that you will see at the end of the session that what we are saying with respect to inward investment will have a significant bearing on indigenous business development also. One phrase which we in Derry Investment Initiative have come to hear very often in the last year is "create the product". Whilst not perhaps displaying the parlance of some economic jargon, we believe that this succinctly covers both the infrastructural and resource deficit which exists in the north-west in relation to inward investment and indigenous ICT expansion.
2772.
If we accept inward investment business as just that, a "business", then mobile investors are our customers and Derry and the north-west is our product. In simple language, being a customer-led market place, if our product is not up to customer satisfaction, then we will not attract the interest of such mobile investment. After that comes the x factor, first impressions feel good, political stability, currency, and so on. You will agree there is much work to be done to ensure that that product is right.
2773.
What then are the main products which any investor seeks? We have been working with mobile investors both here and in the United States, and our experience and research has thrown up certain consistencies. Availability of a skilled labour force is always number one as is the proximity of higher and further education establishments; state-of-the-art telecommunications infrastructure; suitable business parks; good transportation links; and a secure electricity supply. These are then allied to financial incentives, tax environments and other global advantages or constraints, such as the euro.
2774.
This list provides a basis upon which the discrete economic nature of the north-west sub-region needs a separate local approach. Given the 60% difference in unemployment in the north-west and the Northern Ireland average, and the excessive reliance on the clothing sector west of the Bann, there is a strong need for a particular emphasis to be placed on creating the product in the north-west, to ensure that the information and communication technology market is catered for. IDB now estimates that over 85% of its investments are in this ICT sector and that the growth rate of the broad electronic sector in Northern Ireland, which includes information and communication technology, will be of the order of 15% per annum until 2010. If this growth is not simply to be manifested in the east of the province, where all of the products mentioned earlier already exist, steps must be taken now to ensure a share of that growth into the north-west, with Derry as a centre of that region.
2775.
Without growth in Derry, there will be no growth in the region. Derry must be seen as a cluster centre for medium and high-tech ICT. It remains to be seen how 'Strategy 2010' rises to this challenge.
2776.
We have seen recently the closures of Desmond and Sons, Coats Viyella, Ben Sherman, Milanda and difficulties at Hawkes Bay, Adria and Fruit of the Loom. If these continued job losses were scaled up to the ratio of the greater Belfast population, there would be a major outcry. The resources in the north-west are clearly underdeveloped with respect to the east. We need to see those components of the north-west product, clearly recognised, resourced and developed. These include the growth of the further education and higher education sectors through removing of the capping of occasional subjects and through capital investment; retraining for the recently unemployed and those in the declining industries; support for continued telecommunication infrastructure investment; support for business park developers, in what is a flat economy in the north-west; provision of choice and quality of power supply; and enhancement of transportation links.
2777.
The definition of the north-west needs to include Donegal since it is a resource in people and in education. 'Strategy 2010', sees the Republic of Ireland as a competitive threat. We view Donegal as an asset in selling this region through the increase in critical mass which it provides. There is additional synergy in both the economic situation in Donegal and its reliance on the clothing sector. We have been working with both IDA and IDB jointly in developing a marketing brief for the region, and we feel that this should be reflected in '2010'.
2778.
To ensure that Government commitment to the north-west is continued, we believe that the Government presence should be reinforced by the establishment of a regional development office for the north-west based in Derry and representing the various Government Departments. This is in addition to the transfer of any Government Department to the city.
2779.
In conclusion, while the focus has been on inward investment, the resource development will have distinct advantages for the indigenous ICT sector also. What we are trying to achieve in the north-west is a shift change in the economy and commodity to knowledge-based industries. We believe that the developments already highlighted will ease that transition. With such a shift change, additional service and ancillary jobs will be created to ensure a more robust economy. At this stage, I would comment that we also recognise that considerable effort needs to be put into securing the remainder of the clothing industry, but such activity is beyond the scope of Derry Investment Initiative.
2780.
I would like to thank the Committee for listening to this opening statement. I apologise for not being able to provide the Committee with an advance copy, but I have just returned from the United States and was only aware of the time of this presentation recently.
2781.
Dr McDonnell: Thank you. I agree with all of your statement. Does the group support the recommendation that there should be nine key locations? Is that a good or bad thing?
2782.
Dr Toal: It is important that there are key locations. When you are dealing with inward investors you need to start creating clusters so that they feel there is a pool of labour which they can draw upon. If you dilute the growth areas, you then end up with a situation where no area has got any particular advantage. Companies would be very keen to see a cluster develop in certain areas both for indigenous businesses and inward investors where people are required with skills and experience, which is one of the issues in the North. The information and communication technology (ICT) sector, and the knowledge-based sector in particular, is trying to attract people with three to five years experience to come back to work for companies and to project led teams within companies to upskill the graduate level.
2783.
If there are not clusters in certain areas, it is going to make it very difficult to try to attract people to come from, for example, Dublin to the likes of Derry, where there may be only one or two software companies. If it does not work out for a person in one company, then they have to hightail it back to wherever they came from or to another location. If clusters of an industry develop, then it creates more of a localised career path for individuals. I would agree with the '2010' recommendation that there are key locations around Northern Ireland. Those key locations should be designed to fit in with the various skill bases that are being developed by the educational institutions in those areas. Because of the focus on ICT at the University of Ulster, Magee, we see Derry as being a cluster for knowledge-based industries.
2784.
Dr McDonnell: Does your group have any views on the proposed single development body rather than having separate organisations such as IDB, LEDU, IRTU and various others?
2785.
Dr Toal: We have come across some issues in respect to that. Many of the companies we deal with in the United States are smaller companies in the knowledge-based industries. Being a small company is not necessarily a barrier to growth in this sector. We get the feeling that in certain circumstances, the IDB always deal with larger companies and has a predilection for blue-chip ones. The IDB do not have the same experience that LEDU may have with smaller companies and the different levels of information that those companies may have. We get the feeling that there is a certain frustration amongst other companies, so in terms of having a continuity through the small companies that are looking for investment, having the expertise of LEDU would be of assistance. I would be wary of creating a super agency which would not be reactive. That is a worry because we are getting closer and closer to the stage where speed is of the essence in terms of companies coming in.
2786.
A monolithic organisation would not necessarily have that response, but that depends on how the culture of the new organisation could be developed. In terms of information passing across between the Industrial Research and Technology Unit, Local Enterprise and Development Unit and the Industrial Development Board, it would become more transparent.
2787.
Mr Sterling: We have detected a contradiction between the 'Strategy 2010' and 'Shaping our Future' documents. It is difficult to see where 'Strategy 2010' and the regional strategic frameworks sit together. Certainly, 'Shaping our Future' came out before 'Strategy 2010', and subsequently a consultation panel on the regional framework consulted widely throughout the Province. It came to the north-west, and, as a result of that consultation, certain amendments were put into the draft, one of which was that the north-west should bring out the largely discrete social and economic nature of the sub-region. This would require a separate, local approach, including the involvement of Donegal as well.
2788.
To develop that sub-regional approach will require a regional development office situated in the north-west. The most logical location for that would be in Derry City, the hub of that region. That would ultimately become a one-stop shop for cross-cutting over all Government agencies and Departments. There may be some complications there regarding the super Northern Ireland regional approach versus the sub- regional approach.
2789.
Mr Neeson: You have referred to the concentration of textile and apparel industries in Derry. In view of the long tradition present in the city, and even here in Strabane, how do you see the future of that industry? Furthermore, do you agree with 'Strategy 2010' that there is an urgent need to concentrate more on knowledge base rather than production base, such as design and so forth? I met earlier with the management of Adria and Bergman's, and we talked about the Jutland experience- do you see something similar to that being required for this particular area?
2790.
Dr Toal: Yes. It did not take any rocket science to realise that for Northern Ireland to be involved in commodity manufacture and competing purely on a cost basis or a price basis, it could not do it. Our job is to look outwards for inward investment and, looking more at the knowledge-based sector, we did not want to see the textile or the clothing sector totally abandoned. There remains 4,000 to 5,000 people working in this area.
2791.
Looking at the most recent closure of Ben Sherman in Derry that was announced last week, roughly 80 jobs were lost. Ben Sherman in Portadown employ approximately 175 people. They do not manufacture any shirts, yet they do design work, marketing and administration. They do the higher value-added aspect of work, whilst importing their shirts mainly from the Far East.
2792.
Ben Sherman is a branded shirt. People have said that the way forward is branded clothing. It will not take long for branded clothes to be made to a high enough quality in the Far East, and we must look again at the higher value-added and the design work. If we have got the education establishments producing the designers, the garment designers and textile designers, then that is where we must focus. In terms of whether we need to shift from production to knowledge-based, my answer is yes, very much so.
2793.
Once you move into that realm you are building upon the knowledge in your people, and that is much more difficult to shift. As you accumulate understanding of a business and of its knowledge base, it is much more difficult for it to shift out. What we are trying to do in the north-west is to try to put in place the infrastructure in the broadest terms of what is required to make the area a knowledge-based economy.
2794.
If your question only related to the textile industry, I would be somewhat fearful of its commodity end production. I do not think that we will ever totally lose the textile industry. If we work more intelligently we will have some form of clothing and textiles here, but they will probably be more on the Jutland model or the Ben Sherman model in Portadown, not on the mass commodity production. We have to look at how we plan for that. I know it is very difficult to go to such firms as Adria Ltd or Desmond & Sons Ltd and say "Look we are going to have to plan for your demise", but we have to look at reskilling the people in that industry. This can have a positive effect on the industry itself by allowing it to bring in more of the knowledge-based activities.
2795.
It also provides a trained workforce who, if and when the worst does come, are people who have acquired new skills and can be made available for the newer industries which will come in and will develop. The problem we have - and we keep seeing it here with closures - is that we get a very reactionary view. We see that we have to get a taskforce, go off to the company and say "Do not leave".
2796.
That is short term. We have to look at the long term, and that is where 'Strategy 2010' has to look at reskilling, retraining and really putting in place the infrastructure required for when that change does come. And I do believe it will. We will lose our commodity- based jobs because we simply cannot compete on an hourly rate with the Far East and north Africa.
2797.
Mr Neeson: Reskilling is easier said than done, and in my experience - and I know we worked together in Carrickfergus a number of years ago - everything was reactive. How are you going to create a very proactive approach towards a situation which is almost inevitably going to happen anyway?
2798.
Dr Toal: Interestingly, we are working with the Chamber of Commerce and with the North West Institute of Further and Higher Education on developing just such a programme for the major employers in the area, whereby computer training will be given to the employees. The only input from the employers will be that they will allow the people an hour or two hours off to go to the computer class, which will be taken out to the site. Ford did this in several of its plants both in the United Kingdom and in the United States. It engenders the feeling that the company cares for the employee. It upskills the employees for the company to undertake certain tasks which may not have been thought possible before. Then, as the doomsday scenario comes, people are more able to move into a new work situation.
2799.
However, you are right - the issue is how to persuade people that that is good, how to persuade employers that that is good for them and that it does not send out the signal that they are on the way out. What employers are afraid of is that if we do this, their employees will start thinking "The worrying signals are here. Let's leave", which could enhance the downward spiral. But it is something that we are looking at as a pilot with the North West Institute. We cannot see any other alternative, for if we do not start reskilling it will come as a shock to people if all of a sudden their jobs are gone and their skills are redundant because that type of industry is no longer there.
2800.
Ms Lewsley: You mentioned knowledge-based economy which is the main message coming from 'Strategy 2010'. How is the north-west geared for that? In the previous presentation from the City Partnership Board, we heard about the Foyle skills and education cluster with regard to a linkage between business and education. How do you think the north-west is geared for that, and do you think that there is a need for more of those types of initiatives?
2801.
Mr Sterling: The north-west has recognised for some time the importance of vocational education. A number of initiatives and programmes on that have specifically been initiated in the north-west. North-west career pathways is a programme that recognises that 70% of the kids who go through college do not go on to university. It is a GNVQ-based programme, a vocational qualification that is moving towards being called something like a vocational A level. It addresses the issue within the schools that in the final years of schooling, pupils - particularly 16-to 18-year-olds - need to be vested with employability skills. The employability skills such as problem solving, communication, ICT, teamwork, application of number, and so on are the generic and key skills that employers are looking for.
2802.
We in the north-west have a view that 'Strategy 2010' may be too much focused on the higher education (HE) and further education (FE) sectors of education and not concentrating on the 70%. The north-west pathways initiative is now in its fourth year as a pilot, though there are not too many four-year pilots around. However, we have persevered with it, and this is an issue that we have taken up with the Department of Education and with the Training and Employment Agency, and they are looking into it. Since they initiated it, they now have an issue on how to deal with successful pilots.
2803.
The Foyle skills and education cluster came out of that initiative, and it is building upon the links that have been established between employers and schools whereby the economic agenda can start informing the education agenda. Some very innovative projects have developed out of that.
2804.
One particular example is of an American company that has actually been able to influence how the modules in the GNVQ IT Advance level are delivered in schools. It informed a school in Derry of a change that they required, and as a result it has recruited pupils from that school, and that is quite successful. We are feeding this into the Training and Employment Agency and the Department of Education. There are cross-cutting issues here between the Department of Enterprise, Trade and Investment and the Department of Higher and Further Education, Training and Employment.
2805.
Ms Lewsley: There was a lack of comment in 'Strategy 2010' about the North/South economic relations. What could Derry, for instance, gain from greater cross-border co-operation?
2806.
Dr Toal: That is very important. Derry, being a border city, has for many years been cut off from its natural hinterland, and both the Derry and the north-west on the northern side and Donegal on the southern side have suffered dramatically from that. The greatest unemployment and deprivation in both jurisdictions are in the north-west of the island. We would very much consider Donegal as being an asset to Derry, and vice versa, in terms of developing a critical mass for company growth and inward-investment growth.
2807.
If you look at many European models you will see growth poles between two cities on opposite sides of the border. The only area along the entire border which lends itself to that type of development is the Derry/Letterkenny corridor. We are working with IDA and IDB and feel that we have been instrumental in looking at the north-west as a single marketing issue for them. We would take that further to look at the possibility of developing cross-border business parks so that companies coming in can avail of the best of both worlds in terms of whether they are interested in corporation tax incentives or labour incentives. They can decide which side of the border they wish to locate.
2808.
From the point of view of the Derry Investment Initiative, we work on the inward investment agenda within the north-west region cross-border group, which is the four councils of Limavady, Derry, Strabane and Donegal. We have created a brand, Ireland North-West, which is seamless from the outside. We have found that companies who are looking at this area just see an island called Ireland - they do not see any difference. For us not to say that there are resources in Letterkenny, that there are people in Donegal that you can draw upon or vice versa does not make any sense to them.
2809.
From the point of view of developing cross-border economic relationships we noted in 'Strategy 2010' that it sees the South as competition and we, in the north-west, would see that as an added advantage. We can draw upon the advantages of the Celtic tiger economy and, having a skills base here at a lower wage level than in Dublin, this would be a major attraction to companies coming in.
2810.
I make no apology for the fact that we keep talking about inward investment, but, going back to an earlier point, if we can develop a cluster of high-tech knowledge-based industries here, that makes it easier for indigenous companies to start up. The University at Magee has been working with its software incubator to help start up companies spinning out from the university.
2811.
I concur entirely with what Mr Sterling said about the school leavers. I would make two points. First, we asked a recent inward investor what skills his company required, and he said that the biggest thing his company needed was aptitude. They wanted people with aptitude for work, with problem solving and communication skills. They could provide their own skills on top of that.
2812.
Secondly, if we look at the software development end, which is the area where we would like to see more investment in the region, software and high-tech companies in particular are very attracted towards universities with the graduate levels and skills base coming into research. While Magee has been growing successfully, it only has 46 BSc Honours degree graduates in computing coming out every year. We have companies such as Raytheon, which is looking for 150 software engineers. This would take the next four years' entire output from Magee, and you have to bear in mind that young graduates are attracted to the high life in Dublin and until they have to spend half a million punts on a house, do not necessarily think of coming back.
2813.
We would like to see the universities and further education colleges growing, particularly in the numbers of vocational degrees. They are all capped at the moment unless we have fee-paying people whom we are not able to attract. As an example whenever we have fee-paying students on Masters conversion courses in IT, Magee has over 220 graduates per year.
2814.
That is the third highest level in the UK, after London and Glasgow. People want to take these courses, and it is a shame that they have to go to England and Scotland, and further afield. We are adding to the brain drain, and we are loosing our biggest resource - it is the biggest resource in terms of the knowledge-based economy.
2815.
Mr Sterling: My final comment relates to cross-border developments. Growth centres have been identified in Northern Ireland, and in the national plan in the Republic a number of growth centres have similarly been identified. I have an interesting map here showing both areas, and it might be helpful to pass it round and leave it with you. You will notice that the north-west is the only area on the island that has two growth centres situated so close together. There is a critical mass there, and the darker area shows that there is potential for Letterkenny and Derry to work together. The Western Development Commission is finalising its master plan to revitalise areas in the west. It would make a lot of sense in the north-west if Letterkenny and Derry were to work closely together. This map is courtesy of 'The Irish Times'. I am not sure whether I was supposed to distribute it, but I found it fascinating.
2816.
Mr Dalton: Your submission referred to the poor transport infrastructure. Could you elaborate on this? Do you think 'Strategy 2010' has addressed these difficulties properly? What measures do you think should be taken to improve the transportation needs of Londonderry?
2817.
Dr Toal: There are certainly some major transportation issues. The road system out of Derry is not particularly good. If you drove from Derry to Strabane you would see that to travel 14 miles you are averaging 20 to 25 miles per hour. In relation to the larger routes, this is a disincentive for businesses to locate here, particularly for those that are transporting goods. You might say that this flies in the face of what we said about knowledge-based industries, that location does not necessarily matter. It does matter because when we are selling this city and this region, we have a catchment area of around 300,000 people who are within an hours' driving distance. However, to convince those people to drive an hour on the roads into Derry is very difficult.
2818.
Public transport is also very unsatisfactory. We have heard about the costs just to bring the railway system up to safety standard, without increasing its performance. However, we are certainly against the idea of the railway line stopping at Ballymena. In essence that would mean that the railway lines would become a commuter belt for Belfast, and we would be pushed further to the periphery. Both road and rail transport needs to be investigated.
2819.
We have made significant improvements in the air gateway in and out of Derry. In fact that was one of the few cross-border projects that was funded by both Governments. City of Derry Airport is now seen as the regional airport for Donegal, and it plays a vital role in getting potential investors to look at the city, or even to look at the region. The idea of a four and a half-hour drive from Dublin puts people off, if they are looking for a location for a company. We talked to companies in Dublin, who are involved in the knowledge-based sector and, despite the fact that we are living in a telecommunication age, the CEOs of those companies like to have a hands-on visit with their companies. Therefore, trying to get them to expand up into the north-west is difficult. They say that spending four and a half hours driving in each direction is not acceptable. They will look elsewhere because they are in a very competitive business and everywhere else is selling the same thing, but perhaps there are slightly better attributes to what they are selling.
2820.
With regard to the port, there has been significant growth, and we are now talking about the potential of a car ferry between Scotland and Derry. That leads on to another question which is on the list - tourism. While our focus in inward investment has been on the knowledge-based sector we do recognise that the tourism market is grossly underdeveloped in the North, particularly in the north-west. If you are trying to increase tourism you have to get tourists into the north-west, and you can only do that by having decent transportation links.
2821.
Mr Dalton: You probably pre-empted my other question there. Thank you.
2822.
The Chairperson: Thank you for your submission. We are moving, over the next few weeks, to bring forward our conclusions. Your observations will be there.
2823.
Dr Toal: I have one more comment to make. I know it is something which is, perhaps, not within the remit of the Assembly. Having just come back from America on a study tour, one of the biggest incentives to companies in the States is the tax break. They do not necessarily look at grant aid; they look at getting a tax break. What they want to do is make money, and profit is the bottom line to those companies. We have the example of one company in Boston which was threatening to move to the mid-west. The state gave that company a particular tax break and allowed it to stay. In terms of flexibility that is something that really needs to be looked at, not necessarily the reduction of corporation tax but certainly tax breaks for companies who are going to make a lot of money is vital.
2824.
The Chairperson: Thank you. Perhaps the reason we did not ask that question is that we have got that answer so many times from so many groups.
TOP
MINUTES OF EVIDENCE
MONDAY 9 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Attwood
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Cllr W Martin )
Cllr S Doyle ) Banbridge District Council
Mr L Hannaway )
2825.
The Chairperson: I welcome you here this morning. We have received your submission and would like you to make a short, introductory opening. We will then have questions to put to you.
2826.
Cllr Martin: On behalf of Banbridge District Council, we welcome the opportunity to speak to you on 'Strategy 2010'. My name is Mr W Martin, Chairman of Leisure and Development. My two colleagues are Mr L Hannaway, Director of Development and Cllr S Doyle, Vice Chairman of Leisure and Development.
2827.
We will highlight some of the points which we made in our response and go into more detail on them. This is a great opportunity to discuss those issues which affect our district.
2828.
Mr Hannaway will now give you his response as to possible ways forward.
2829.
Mr Hannaway: First, I will be highlighting a number of the key issues from our statement. The main point is that we welcome 'Strategy 2010'. For Northern Ireland to develop, it must have a strategic focus, a 10-year focus, on where it wants to go.
2830.
We need only look at the development across the border to realise the potential that exists here. We are also aware of the challenges for our local industries, particularly agriculture and textiles. We have to help those industries look to the future.
2831.
Every challenge throws up an opportunity. The Assembly will set the strategic direction, but if Northern Ireland is to develop, it is the people on the ground who must take the lead, and local government has a key role there. Since 1992, local government has been very much involved in economic development. Councils have established enterprise agencies, and that, in turn, has kicked off a great deal of new business and entrepreneurial spirit in council areas.
2832.
We have been involved in European funding, such as the European Regional Development Fund and the European Social Fund. We were instrumental in establishing Partnership Boards, and we have been involved in both LEADER+ and rural development on a number of projects. In 1992 we were permitted to raise money for economic development through rates. However, capping this by 5p in the pound is restrictive on district councils. If councils want to get more involved, all caps and legislative restrictions should be removed, and they should be allowed to get involved in investment in property for economic development.
2833.
District councils are not just borders on a map; we work in consortia. In the southern area, for example, we have been working with the craft consortia, and that involved councils from all over County Down - Down, Newtownards, Newry and Mourne, Armagh and Banbridge. We have also been active with the Rural Down Partnership, which involves three councils, and in Business Start, which involves four. We are used to working with each other in consortia and with LEDU, IDB and others.
2834.
My second point is about the location of investment. The report is specific in that it sees investment targeted at the two urban centres, that is, Belfast and Derry, with seven regional towns as identified in 'Shaping our Future'. That is essentially flawed. Research done by Dr Bradley and others shows that investment in particular locations throws up other problems. It either creates disadvantage or means that some towns are allowed to develop to the detriment of others, and that is a problem.
2835.
The concept of creating economic corridors should be considered. You could build a corridor of investment. Coming from the east of the Province, we argue that the Belfast-Dublin economic corridor is a very strong possibility for investment, but Newry, Omagh and Belfast are not the only towns where investment could take place; other towns along that corridor should be allowed to develop. Likewise, you should develop corridors of investment in the north-west and other parts of the Province to show that it is not restrictive in terms of location and boundaries.
2836.
My final point is about omissions from the report. Rural development has been very badly treated. There are only two recommendations regarding rural development, that is, the deregulation of bed-and- breakfast accommodation and the issue of IT. That is not going to help the agriculture community. Agriculture is one of the biggest industries. Any strategy that looks at how economic development can prosper here has to take a strong account of rural development, therefore that should be built into the report.
2837.
Dr McDonnell: You were very critical of the two cities and the seven other identified towns. You have elaborated a bit on that. Is your suggestion about a corridor rather than a city or town not a self-serving one? Dungannon or Omagh may not see themselves in a corridor and may very well be left out. How do you feel about that?
2838.
Mr Hannaway: You identify corridors for investment; you do not identify specific investment areas. I look at the South of Ireland as a near neighbour. Look at how development has happened in Dublin and down the Naas dual carriageway. Corridors of investment were identified, but a problem was also recognised in the west of Ireland and along the border counties, where there was no investment. In Monaghan and Louth, digital corridors for IT investment are being considered. Large geographic corridors, which are not delineated by maps, are being designated. The report is quite specific in terms of district towns: they are the towns that will be sold by the IDB, or whatever body is selling investment. We need to look at the skills bases and at the infrastructure in an area and start to invest around those. It should not be taken from 'Shaping our Future'. That is a strategic planning document which identifies key towns. You should look at corridors of investment which will enable you to look at specific skills in areas and at particular infrastructure, which will allow product in and out, and be sold more attractively than on the basis of location.
2839.
Dr McDonnell: Do you see any rural development beyond agriculture and tourism?
2840.
Mr Hannaway: Definitely. Some people insist that tourism is the panacea for rural development. It is not. Rural development needs breadth of thinking. For example, we need the removal of planning restrictions. If a farmer decides to set up a small engineering base, he will be faced with problems of redesignating his property. Many factors constrain rural development, which should be allowed the same broad scope as urban development. Farmers want to use their skills to diversify, and they should be encouraged by mentoring support, grant aid and necessary changes in legislation.
2841.
Tourism is one way of dealing with this; but there is more to tourism than bed-and-breakfast accommodation. It must take in farming, local crafts and products. 'Strategy 2010' is quite specific in its considerations. IT has potential because of its global nature and its use of the Internet. Rural Development should not, however, be restricted to those two areas.
2842.
Dr McDonnell: The Government will not be proscriptive-they will merely create the space or the opportunity. Taking the panacea - and that is an apt description - of tourism and agriculture out of the picture, what opportunities are there in Banbridge for small industry and engineering?
2843.
Cllr Doyle: Much of farming is engineering based. If planning restrictions were removed, many small businesses would spring up which would not affect the countryside. That would allow farmers to diversify. Various hare-brained schemes have been suggested, none of which would allow the farmers to make money. Small engineering works, however, would prove successful.
2844.
Mr Hannaway: We must look at different ways of working in farming. A dairy farmer working from 6am to 10am and who starts milking again at 5pm has time to work in a collective. We must educate people in the industry to look at different ways of working, and we must educate them to attract people with engineering and technical skills into the business. Most engineering businesses have difficulty in recruiting workers, and this would be a way of getting round that. There are a number of different ways of doing this- we just have to be more creative and look at the broader picture.
2845.
Dr McDonnell: Are you telling me that the progressive dairy farmers of Banbridge do not milk three times a day?
2846.
Mr Hannaway: It depends on the size of the farm.
2847.
Dr McDonnell: To change tack somewhat, what are your views on a single development agency to amalgamate LEDU and the IDB?
2848.
Mr Hannaway: I think it an extremely sensible idea. 'Strategy 2010' specifically mentions the IDB and LEDU, and we agree wholeheartedly. Working in local economic development, we know that there are trade missions which are run by LEDU and others which are run by the IDB, that there are IDB companies and LEDU companies. It is hard to differentiate between them.
2849.
Some people say that IDB companies are involved in inward investment, but Armaghdown Creameries is an IDB company, and it is locally grown. We need to pull them together and decide who is involved in creating local entrepreneurs and who is involved in inward investment and do that under one umbrella body.
2850.
The Department of Agriculture and Rural Development is now very much involved in economic development. Take for example the LEADER + programme, which targets the creation of microbusinesses with under 10 employees. The Department of Agriculture, which is involved in economic development, should be included under such an umbrella body to oversee economic development in the Province.
2851.
Dr McDonnell: Do you feel it is an issue of structure or one of communication?
2852.
Mr Hannaway: It is an issue of both. We are currently running a workshop on economic development and putting together an integrated strategy over the next month. We have to invite both LEDU and the IDB to the one meeting for the different areas. The IDB is located centrally in Belfast, and LEDU is based locally in Newry. They should be able to work better with local economic development people. The point is who decides which is an IDB company and which is a LEDU company? Who decides which company should go on an IDB trade mission as opposed to a LEDU trade mission? There is duplication there.
2853.
Dr McDonnell: There may be duplication, but a lot of people suggest to us that a wee bit of competition between them is healthy. If you create one big amorphous mass of an organisation, you will get conformity but no change.
2854.
Mr Hannaway: They are not competing against each other. At the moment there is competition with inward investment. The IDB is competing with the IDA for inward investment companies. LEDU is really seen as a support agency. There is not a competition issue; they (LEDU) are supporting local enterprise agencies and local councils to develop. I would not agree with a big amorphous organisation. What you need is an organisation to deal with both inward investment and enterprise as one body and support local enterprise structures at district council level.
2855.
Mr Attwood: Many people believe that moving more towards, if not into, a single development agency is the way to go. On the other hand, in your report you say that efforts of district councils to sell the area to potential investors can duplicate the work of the IDB and LEDU. Are you saying that that statement, which is in 'Strategy 2010', should be removed?
2856.
Mr Hannaway: Yes.
2857.
Mr Attwood: So, on the one hand we are moving towards somewhat greater co-ordination and a single development agency, but on the other hand you are saying that local councils should have the freedom to develop as they deem fit. Or what precisely is it that you are suggesting in terms of that tension between the centre and the local?
2858.
Mr Hannaway: It is the latter point. I am not saying that councils should go on trade missions or that the IDB and LEDU should go on trade missions. We need to look at a co-ordinated approach where local councils, working in conjunction with LEDU and the IDB, develop an inward investment strategy and put together a case for the district in terms of the skills, infrastructure and availability of land for that inward investment. Trade missions for inward investment should be going forward with a united front making the case from a council's point of view. Who better to make the case for local areas than local councils who have a democratic mandate and the views and knowledge of local enterprise in the area? The IDB and LEDU can complement each other in terms of providing resources and the cogent argument with industrialists. There needs to be a co-ordinated approach. I am not saying what I think the report is saying that local councils should stay out of the scene and leave it to the IDB and LEDU. I am saying that they should all be working together.
2859.
Mr Attwood: I just wanted that clarification. I am not sure if this question has been allocated already, but you recognise, as everybody does, the need for better and stronger representation in Europe. 'Strategy 2010' does not endorse the work of the Northern Ireland Centre in Europe. The Executive here suggests that a new office in Europe, representing its interests and those of the other agencies, is preferable to enhancing the role of the Northern Ireland Centre in Europe. What is your view on that and on the Northern Ireland Centre in Europe?
2860.
Mr Hannaway: The Northern Ireland Centre in Europe has served local government well. It has been developed on a cross-council basis, and there has been cross-party and cross-sector involvement. It has, therefore, had broad support.
2861.
I do not see why we should consider developing a new European body. That will only duplicate the work. We should look at the existing structure to see how we can get more out of it. The Northern Ireland Centre in Europe has established a base and enjoys the confidence of councils. It is currently providing assistance to councils and working with Partnership Boards to develop integrated plans for the area. It encourages people at local council and local partnership level to think more about Europe. This is good practice and has been replicated in other parts of Europe. We should not therefore replace the existing body; rather we should look at how it can be improved.
2862.
Ms Morrice: I am interested in a number of points that you have raised, and it would be useful to develop those. You spoke about the cap of 5p in the pound being removed, and about investment in property. That seems a relatively new idea. I would like to hear more about your intentions in that area.
2863.
Mr Hannaway: Caps, such as the 5p in the pound restriction, do not work well. They tend to be a 1980s tool for restricting councils and other authorities. It is a restrictive practice based on a conservative way of thinking. If caps are removed, some councils may not want to increase the rate, but others will, particularly in areas where there is a low creation of enterprise. Councils need that degree of flexibility.
2864.
Using Banbridge as an example, councils have been able to acquire land to develop projects in partnership with the private sector. One example is the Gilford Mill outlet project, which is currently underway. The council met with an American investor who wanted to establish an outlet centre in Northern Ireland. We owned land adjacent to the Gilford Mill and identified the area as a possibility. The council was able to come together with a private sector partnership. The council gave some land to the developer, and the developer gave some land to the council.
2865.
Councils have been instrumental in doing this for years. For example, there were problems with attracting major investment in Banbridge town by Tesco and other businesses. The council identified a piece of ground used by a hockey team, and enabled it to be sold for development by Tesco.
2866.
If the councils could acquire land that may later become available for investment - such as the hospital site in the Banbridge area - they could go into a private/public sector partnership to help create enterprise in the area. This would also create work in areas where there is extreme disadvantage.
2867.
In many rural market towns shops are lying empty. Private people can not invest in them because of issues relating to the rural economy and people flooding out to other shopping centres. Councils could get involved in developing these towns if they were allowed more freedom in enterprise development.
2868.
Ms Morrice: That is something that will be discussed in the forthcoming local government review. I was very interested in your references to textiles and agriculture, the traditional industries that people are starting to pooh-pooh in this new high-tech age. You say that there is a challenge for these industries. How do you think that they can be kept afloat in a very competitive world?
2869.
Mr Hannaway: Banbridge has a long history of textile development, and we have one of the last developers of linen, Fergusons, in the area, which needs to be expanded upon to bring it into the global market. The company could argue that it is already doing that, but the way to grow is to look at the niche markets for textiles and at better marketing. We need to focus less on what can be done in the lower-wage economies. Let us sell the specialised product that we have in the area.
2870.
In terms of agriculture my colleagues and I are not in favour of farmers leaving the land wholesale. Big problems arise if the land is not kept. Farmers are the custodians of land which has been handed down through generations. Farmers have a love of the land, how it looks and how it is kept. That is important for our green image and tourism. We want to keep farmers on the land. We need to look at new ways of working - for instance, farmers could work on a part-time basis, yet retain their farms.
2871.
Ms Morrice: The notion of flexibility for farmers in the workplace, like that for women, is an interesting one. What about organic farming?
2872.
Mr Hannaway: That is another issue. Organic farming is good for certain people involved in, for example, parts of the dairy industry. But if we were to promote organic farming as the answer, 70% of farmers might jump nto organic farming and before we knew it we would have a glut in the market place. Instead, we need advice from the Department of Agriculture and Rural Development on what type and size of farms are best for organic farming, also testing the soil. There is a long lead-in in organic farming, and we need to look at the economics involved before it is opened out wholesale. A lot of mentoring, support and scientific advice must be given to farmers before they jump into organic farming.
2873.
Ms Morrice: We have discussed representation in Europe, and you are obviously aware of the need to make use of the funds and what is available. You also talked about twinning arrangements. What steps should be taken with these initiatives to encourage the development of twinning by councils, not only in Northern Ireland but across Ireland and Europe?
2874.
Mr Hannaway: This is a point made in our submission. The report is lacking in this respect. Councils have been involved in twinning for the last ten years, and people see these initiatives as a Coronation Street notion where councillors go back and forth, yet no business is done.
2875.
For example, we are twinned with Carlow and in May representatives from six businesses went to Carlow to meet representatives of eight other businesses with similar interests. As a result, five contracts have been awarded between the several companies. Carlow businessmen are now coming North and the Carlow LEADER+ group is meeting with the Rural Down Partnership. They intend to look at a co-operation and an interaction measure under LEADER+ and to try to marry our respective action plans and develop a suitable programme. There is a meeting with the local college to make use of the technology park in Carlow. We want to link the regional technical college in Carlow, which provides distance learning courses, with the Upper Bann Institute. Carlow can offer our HND students ten-year placements in IT businesses in the Carlow area, and we can offer Carlow students placements in Banbridge, for instance, in marketing in Fergusons. We are also looking at tourism courses.
2876.
People see twinning as a social idea, yet councils have not been developing this. We are also twinned with Ruelle in France. We have an educational twinning scheme for school exchange programmes. We have also been involved with twinning in the Down craft consortium and have links with other crafts groups in Corsica and places like that. We have a long tradition of twinning, which has been productive bringing jobs and inward investment and helping to give our students a broader outlook.
2877.
Dr O'Hagan: I would like to correct an erroneous statement that was made on Monday 2 October during the public session. There was a short debate on affirmative action, and it was stated that affirmative action was illegal in the North of Ireland. It is not; under the Fair Employment and Treatment (Northern Ireland) Order 1998, affirmative action is legal here. I want to put that on the record.
2878.
You talked about economic development, the council's role and consortia. Can you develop that idea, specifically in relation to how central Government can support the role played by local authorities in promoting and encouraging economic development.
2879.
Mr Hannaway: We are a small council, and we have recognised that while we are good at some things, our neighbouring councils are good at others. Councils in the southern region came together and decided that Banbridge would lead the craft consortium as the majority of craft activity takes place there. The Business Start programme is led by Armagh City and the District Council. Newry and Mourne District Council leads the developing and mentoring of the enterprise agencies, looking at transfer product programmes. In the past, we have pooled our resources by letting one council take the lead in an area it had developed. Last week we launched the Regional Animateurs Programme, which is specifically about that.
2880.
We are urging the Government to fund actions by consortia in some instances rather than specific councils. If individual funding is given to each council area in Europe, the benefits are diluted. However, if you fund consortia, that money can be spread more widely and you get better results and value for money, given administration costs, et cetera.
2881.
Our Regional Animateurs Programme covers three specific areas. It looks at education in industry and considers how you can get universities and colleges to work with businesses to develop new entrepreneurs and be innovative. We are also involved in rural development, as I mentioned before. The third area is business enterprise, which we have been working on for the past few years. We have developed a five-year action plan on a regional strategy basis. We suggest to the Government and other decision makers that this is how funds should be allocated. Funding should be considered on a regional basis - you should fund a region rather than a specific area.
2882.
Dr O'Hagan: Many people in district councils were very concerned about the lack of input from local authorities in the creation of the 'Strategy 2010' document. What measures would you recommend to ensure that district councils and the voluntary and community sectors play an increased role in economic development and have an input in any future strategy development?
2883.
Mr Hannaway: Northern Ireland has come a long way in the last five years in terms of working in partnership. The first meeting of the Civic Forum takes place today, a prime example of community and voluntary group involvement. Partnership boards have brokered participation in district council areas, and, as I have explained, we are currently preparing our integrated plan. We hope to bring together all the main players including the district council, the partnership board and the economic sector, and an overarching steering group will manage all social, community and industrial development.
2884.
This overarching steering group partnership is the way to involve local bodies. The councils were not involved, and the report reflects this lack of consultation. Likewise, we do not know everything- we rely on the private and community sectors for information. We use focus groups and consult people to gather information. These are the many groups that we need to be consulting and involving in the development of strategies.
2885.
Dr O'Hagan: Do you have any views on the recommendation in 'Strategy 2010' that Selective Financial Assistance should be less readily available?
2886.
Mr Hannaway: We need to think long and hard about that. My initial reaction is that loans are better than direct grant aid, in most circumstances. Grant aid should be awarded for specific economic regeneration projects, either locations or innovative areas where there is a need for intensive investment, such as the IT, software and technology sectors. If, for example, someone wants to start a window cleaning business, we should consider providing low-interest loan funds as an alternative to grants.
2887.
We must have a clear strategy to stagger this approach, because if we pull away all Selective Finance Assistance, we could leave ourselves in real difficulties.
2888.
In the South there is an area allowance scheme which enables people to receive certain levels of grant funding and stay on the dole for a five-year, draw- down period. The idea of providing assistance rather than grant aid must be examined. Enterprise boards in the South also have a good system of providing loan funds. A balance of both options should be looked at. Grant aid is needed in specific sectors and rural areas. Farmers have large debts at the moment and getting a loan may frighten them. We need to look at a long-term strategy, as opposed to taking a direct decision.
2889.
The Chairperson: Do you believe the report placed sufficient emphasis on tourism?
2890.
Mr Hannaway: No. The preamble to the report, looking at the current position, deals with the GDP variation and makes comparisons between Scotland, Northern Ireland and the Republic of Ireland - Northern Ireland had 7% and 2%, and has developed. The only aspect highlighted in the report is the deregulation of the bed-and-breakfast sector. It does not address tourism.
2891.
Tourism is one of the world's growth industries. We are part of the island of Ireland, and the marketing of Ireland in America and the Far East promotes the island as a whole. We should be taking advantage of the problems of Kinsale and parts of Dublin, where there are too many tourists. Tourists are looking for something special, and we could develop on that. The report does not look at that, nor does it set out how tourism can be developed in the long term. Our problem in Northern Ireland is that we pigeonhole areas. Rural development was not included in the report. We dealt with enterprise in a blinkered fashion rather than drawing tourism, agriculture development and other areas into one report covering everything to do with enterprise and development in Northern Ireland.
2892.
The Chairperson: Thank you for the way you have dealt with the questions. Over the next few weeks we hope to form our conclusions on 'Strategy 2010'. We will be looking at your original submission and at the answers you have given.
2893.
Cllr Martin: Thank you, Mr Chairman, for having us here this morning. It has been very useful to discuss these issues, and we do appreciate the time that you have taken to listen to us.
TOP
MINUTES OF EVIDENCE
MONDAY 9 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Ms Morrice (Temporary Chairperson)
Mr Attwood
Dr McDonnell
Dr O'Hagan
Witnesses:
Mr R Smyth )
Mr A Ó Snodaigh ) Sinn Féin
2894.
The Temporary Chairperson (Ms Morrice): Good morning. Thank you for coming along. I apologise for the slight delay. The members of the Committee will introduce themselves and then you may open with your introduction.
2895.
Mr Smyth: We are very pleased to be here today to discuss 'Strategy 2010'. It is probably the first time that economic policy has been discussed in a proper forum in the Six Counties except, perhaps, for the Forum for Peace and Reconciliation in the mid-nineties. It is a very positive step that we can discuss here the issues that arise in this document and the issues that we want to raise in terms of our policy.
2896.
There is sometimes a lot of confusion about what Sinn Féin stands for in terms of economic policy. So, I will start with a brief, laying out our stall, and then move on to eking out some of the areas of the document that we want to highlight.
2897.
Sinn Féin's basic position on economic policy is that it wants to create an economic democracy. It wants to eradicate economic injustices in both regions of the island economy. The essential measurement of any process that seeks to effect change in society is the degree to which it is relevant to ordinary people's needs, and it must be shown to be meaningful and visible. That applies to economic and social development as much as it does to political life.
2898.
In terms of Ireland, meaningful socio-economic change of the scale required can not simply be legislated into existence. There has to be fundamental change in a whole range of different areas that affect people and local communities on a daily basis.
2899.
Sinn Féin believes that the needs and expectations of ordinary people and their communities must shape economic policy. The orthodox approach to economic planning and policy making over the past 30 to 40 years in both parts of Ireland has overlooked the needs of ordinary people and communities. That must be reversed, and that is one reason why we are here today.
2900.
Sinn Féin wants instead a people-centred approach; it wants to put people first.
2901.
We believe that the whole community, not just the business community, is the building block of society and that former economic policies which have failed, or which are not inclusive, do not recognise that reality. Sinn Féin wants an economy which provides sustainable and dignified livelihoods for all its citizens in Ireland. We want to develop economic resources, human and material, to their fullest to create an economic base which reflects the social and cultural values of all Irish people and fulfils their material needs and aspirations.
2902.
We believe that everyone, irrespective of background, should be able to gain meaningful, well-paid, long-term employment in jobs which provide genuine security in fair conditions. Everyone should have a meaningful role to play in the economy, particularly at a local level. These objectives can only be achieved by eliminating unemployment and poverty and by developing the industrial and economic bases of the economy, creating proper jobs with high incomes for everybody, not just one section of the economy.
2903.
In the Twenty-six Counties there is a lot of hype about the economy. A report came out in Dublin during the summer which showed that the number of children in families where one spouse was working, but they were suffering poverty, had doubled between 1994 and 1997. This was supposed to be in the middle of the "tiger" boom. People were finding work but their pay was so low that it was not pulling their families out of poverty. This is the central issue of today's economic policy making. Jobs are being created but we have to look at the wages people are earning and their future and long-term prospects. We want to see workers and their communities getting a more dynamic approach to economic decision making. We want to see the creation of a true all-Ireland economy and the transformation of the war economy in the Six Counties into a productive and fully developed peacetime economy. We also want the elimination of the economic distortions created by partition.
2904.
Sinn Féin wants to see the social and economic harmonisation of regions and social groups throughout Ireland and the introduction of genuine, deep and meaningful economic democracy. There should be a commitment to the development of indigenous regional and national manufacturing and high-tech companies, and the promotion of foreign-owned investment which must link, in a positive way, with indigenous Irish industry. It must remain accountable and have links with the host community where it is based, and it must meet the needs of the wider economy. We want to see a commitment to education and training for all people at all stages of personal development. There should be more investment in research and development, the promotion of new processes in existing industries such as food processing, textiles and the new high-technology industries.
2905.
We also want to see the full implementation of the equality agenda and an economy where people are well paid and highly skilled in sustainable employment. We need a commitment to investment and social infrastructure and the provision of full opportunities for everybody in society. There is a huge need to include an environmental agenda in the economy and the promotion of environmentally sustainable economic development is crucial in how things are planned in the long and medium term.
2906.
There are some aspects of 'Strategy 2010' which, when read in their own right, are very positive. For example, in the introduction it states -
"We need a culture which generates a common commitment to economic success based on inclusive and effective partnership".
2907.
Sinn Féin agrees with that, but we do not see that in the rest of the document. There is an issue about public accountability with regard to who drew up the document. In our mind the document is incomplete because it does not include community groups, voluntary groups and other parts of society which formulate a successful economic strategy. The document makes scant references to the equality agenda. All organisations throughout Ireland are facing huge tasks in adhering to the new equality agenda. It is a major drawback that the document does not include more detail on how the equality demands are going to be dealt with in formulating economic policy.
2908.
The Dublin Government produced a much-hyped document called the National Development Plan. It shares a common flaw with 'Strategy 2010' in that neither recognises the all-Ireland dimension of the economy. Sinn Féin believes that this dimension is vital for the long-term future of both economies. The document fails to address past strategies.
2909.
There has been a range of economic and academic research into the performance of both economies and yet '2010', which is an extensive document, has no bibliography of sources that might have been consulted. When you read it, it is difficult to understand what the people who formulated the document were thinking. What were they reading? What was influencing them?
2910.
Past strategies need to be looked at. Sinn Féin believes that, in the short term, the economy in all parts of Ireland is growing rapidly, but that does not mean that past decisions were great and led us here. That is not the case. We could have had a much more dynamic and successful economy 20 or 30 years ago if we had learned some of the lessons then that we are learning now. Some things were handled badly in the past, especially the Industrial Development Board (IDB) and, in a broader sense, the Industrial Development Agency (IDA) and economic development that ignored the east-west bias in both economies. The systematic discrimination in employment and economic policy and how it was implemented should have been recognised in 'Strategy 2010' - learning from the past as you move in to the future. It is right to draw a line under the past and move on, but it is wrong not to admit that you have learned some lessons from what went wrong.
2911.
The IDB is mentioned throughout the document. The Public Accounts Committee at Westminster announced its findings about the IDB and things that it found questionable about the way the IDB was run and the work it was doing. We think 'Strategy 2010' should recognise that the IDB needs to be fundamentally restructured not only in how it operates but in how it interfaces with the Ireland economy.
2912.
The Temporary Chairperson: Thank you. Obviously our numbers are reduced, given the nature of the submission and the inability of two Sinn Féin members to take part. Therefore, I would encourage a debate of questions and supplementary questions.
2913.
Dr McDonnell: You mentioned in both your introduction and your submission the exclusion of the voluntary and community sectors from the development process. What measures are necessary to ensure that they play an increased role in economic development and the implementation of the future strategy?
2914.
Mr Ó Snodaigh: They have to be included from the start and that is one of the major flaws of the '2010' document. It does not make sense that two of the main constituents of the economy are not included. The public representatives of the community sector and the voluntary sector should be involved. There are also very few trade union members involved in the consultative process. If you go through the list of people involved in the Economic Development Forum and its various committees, there are only one or two representing the trade union movement, and there are very few from the community sector. It is virtually the same people again and again. Any review or rethink that comes from that strategy has to involve these sectors. They have made submissions, provided a lot of documentation and their expertise and knowledge will be called on.
2915.
Dr McDonnell: What difference do you feel that will make?
2916.
Mr Ó Snodaigh: Instead of coming from the top down, this strategy stems from the ground up. The people who will benefit most from the new economy and the new situation on this island will have input from day one. This means that the strategy will reflect their views, and they will be willing to play a greater role. They will also ensure that the failures of the past will not be repeated. This is a problem with most of the strategies that have been presented. They often replicate failures that occurred not only in the last ten years but further back. Unless these problems are addressed and an attempt is made to solve them, we will be back here in another ten years looking at a new strategy, a new plan. We have the opportunity now to get it right. If we do not get it right this time we will be back here in ten years.
2917.
Mr Smyth: IDB and LEDU, as they are currently constituted, are run centrally. The implication of community and voluntary group participation is that IDB and LEDU would be regional and decentralised. The IDB would become the sum of its parts, including the community groups and business areas that it was involved in. It would no longer be a centralised Belfast- based organisation. There would be a greater emphasis upon each area producing its own strategy. These strategies would form an overall strategy, instead of the current black box approach - where somebody in the NIO or the IDB formulates an economic policy and then tells everyone what it is. This is a fundamental change because policy making would come from below rather than from above.
2918.
Dr McDonnell: What processes would you put in place to monitor and review this strategy?
2919.
Mr Ó Snodaigh: It has to be something that will involve the community, the voluntary sector and the business sector getting together and examining how we have achieved different strategies, and whether there is a timetable set out for the implementation of this strategy. There is a timetable in the document. There will have to be some powers of censure by this group if targets are not achieved. The equality agenda also needs to be considered. Somebody has to measure whether this strategy is meeting the equality agenda and Targeting Social Need. A body could be set up, or one of the existing bodies could be restructured, to take these considerations on board.
2920.
Mr Attwood: In your opening remarks you outlined at some length Sinn Féin's overall economic planning policy. To confirm, does your party still believe in a 32-county socialist Republic?
2921.
Mr Smyth: Yes.
2922.
Mr Attwood: A number of years ago Sinn Féin was hostile to the EEC and the European Union. More recently you have significantly changed that dogma. I remember something about Sinn Féin having representation in Europe. Could you indicate what your view is on the future role of NICE in representing the North?
2923.
Mr Smyth: The future role of whom?
2924.
Mr Attwood: NICE - Northern Ireland Centre in Europe.
2925.
Mr Smyth: Sinn Féin's position on Europe is quite simple. There has been tremendous debate in the party on the role of the European Union in both parts of Ireland. Sinn Féin was opposed to the EEC and the European Union in the 1970s. It has campaigned against every referendum on the simple basis that the EU that is emerging is, in some sense, the one that we predicted. It is undemocratic, it is unreformable, it is unaccountable, it is a military organisation, and it is a secretive organisation. What has changed about Sinn Féin's policy is the recognition of what both parts of Ireland have been dragged into, and the impact that the EU has on our daily working lives.
2926.
Mr Attwood: Are you proposing that the North and the South should withdraw from the European Union?
2927.
Mr Smyth: No.
2928.
Mr Attwood: What is your view on the Northern Ireland Centre in Europe and its role in Europe, in representing the North?
2929.
Mr Smyth: I honestly do not know much about that group.
2930.
Mr Attwood: You stressed the need for community involvement in local economic development, which includes local elected representatives, communities and local councils.
2931.
The previous speaker's submission on 'Strategy 2010' referred to the need for district councils - for example councils in the North and South - to come together in joint projects. What is Sinn Féin's view on those sorts of council consortia being involved in local economic development?
2932.
Mr Smyth: Throughout Ireland, councils should be involved in local economic development, but it depends on the particular councils' being able to formulate or agree a strategy. However, they should be involved. Political representatives usually get involved in economic planning in agencies which do not have power, money or resources. We propose something very different, where one would devolve the power, money and resources to an area.
2933.
Mr Attwood: Are you aware that councils have the ability to raise rates to provide money for economic development?
2934.
Mr Smyth: Indeed. Councils have the ability to raise rates for economic development, but the IDB could be spending millions of pounds in their area over which they have no say. The European Union could be doing the same. It is that money which we mean - the serious money being spent in local communities over which they have no say, for example when a bypass or industrial park is built. We want communities involved in those issues.
2935.
Mr Attwood: You said in your opening comments that people should learn lessons from what went on in the past. I certainly do not believe that your reference to the war economy reflected that sort of spirit. What steps are required to have a more open and accountable Economic Development Forum?
2936.
Mr Smyth: It could be an agency able to review the strategy, something asked in the second question. The idea of reform is not bad, but it is a question of who is represented on the forum, and what powers it has. The forum would have to be representative of the whole of society. If it is not, it is not an economic development forum, but a forum representing business or political groups. The challenge is to make it truly representative.
2937.
I understand your point about the war economy. Thousands of people have jobs linked to the so-called security services or the prisons. We hope that those jobs will no longer exist, and we want to find a way to plan new areas for those businesses and people to work in. They must be trained in new jobs, and areas which depend on security-service jobs must find something different. The situation is similar to that of the textile industry, which is in free fall in both parts of Ireland. Much lip-service has been paid for political reasons, but the industry needs much more intervention and planning to help those companies which can be helped and isolate those which cannot. We must move on to create new jobs, whether it be through education and training or through new technologies coming into an area. That is what we mean when we talk about the transformation of the war economy. We do not mean it in a negative way.
2938.
Mr Attwood: It is a negative term, so it is meant in a negative way.
2939.
The Temporary Chairperson: I should like to question you on what, for me, is the obvious topic - Europe. I was interested in your description of the European Union. Would it be wiser for us not to receive any peace and reconciliation money from the European Union?
2940.
Mr Smyth: We are not saying that we should not receive money. However, much of the structural funds money is spent on things whose long-term value one might question - for example, £2·8 billion was given in a very low-cost loan to British Nuclear Fuels Plc to develop its thermal oxide reprocessing plant (THORP). No one I know in Ireland wants to see that plant up and running, but the EU took a decision on the need for nuclear power without consulting the Irish people. Therefore, £2·8 billion was spent on something which we do not want and which is having a negative effect on us.
2941.
The Temporary Chairperson: I must admit that I am not aware of the structural funds situation south of the border.
2942.
Mr Smyth: THORP affects north of the border just as much.
2943.
The Temporary Chairperson: I meant the structural funds given to Northern Ireland by the peace and reconciliation programme. Do you believe that they are valuable?
2944.
Mr Smyth: The peace and reconciliation programme is one of the few to work well. Why is this so? It works well because it has community involvement in a way which no other programme does. It was the first programme where the EU took on the NIO and asked where the money was being spent. Was it additional? Was it being used to greater effect in communities? That fund worked. It took 20 years of people being annoyed and protesting at the way funds were being spent before an effective fund was set up.
2945.
I will use the farming fund as an example. Nobody is saying that money should not be paid to farmers on either side of the border but the result is that on both sides of the border large farmers are being pampered and small farmers are being put out of existence by EU policies. Was anybody in Ireland - North or South - ever consulted on an organised, systematic basis about what sort of farming policy they wanted? No.
2946.
The Temporary Chairperson: Staying in the European vein, one issue that is of vital importance to this island is the single European currency. Do you support our entry to the single European currency?
2947.
Mr Smyth: No.
2948.
The Temporary Chairperson: Do you support the Irish entry to the single European currency?
2949.
Mr Smyth: No.
2950.
The Temporary Chairperson: What would you advise for Ireland and the single European currency?
2951.
Mr Smyth: Once again the issue relates to recognising the reality. The South has been dragged in to a single currency and householders in the South are enduring hugely inflated interest rates on the back of a one-size-fits-all policy. The problem with the euro is that it takes economic power and decision-making away from regions and into the centre, and then the centre is depended upon to make decisions in your interest. In almost one year of the euro being in operation in the South it is clear that those decisions are not been taken in the Irish interest - North or South.
2952.
The Temporary Chairperson: So we should not be in the single currency. Should we remain members of the European Union?
2953.
Mr Smyth: It is not feasible to leave. It is obvious that a lot of people do not agree with what Sinn Féin thinks, but we are representative of a very important constituency. Sinn Féin recognises the other constituencies that exist in Northern Ireland, in the whole island, and in Europe. We want to make alliances with other groups in Europe that uphold the same views as us. Sinn Féin wants to see a better Europe, a people's Europe, where the people, not unelected, unaccountable bodies, are involved in decision making. If people do not want that type of Europe, what kind do they want?
2954.
The Temporary Chairperson: Maybe that is a debate for another day. You talk about the importance of inclusion, but I have noticed a surprising exclusion in your submission and in what you have said. You mentioned an economy for all the Irish people. What about the British on this island and those who feel that they are British? You also said that the economic development plans of the North and South of Ireland ignored the east-west bias. Are you not ignoring that in the context of these islands. You always mention the Irish Government, but you do not mention the existence of Britain. Should the economic policy not take account of trade whether it is on this island or within these islands?
2955.
Mr Smyth: Yes, Sinn Féin does recognise the relationship between Britain and Ireland. When I use the words "Irish people" I am not discriminating against anybody who lives on the island. I am talking about the people of the island. With regard to the British/Irish economy, Sinn Féin believes that the British Exchequer exercises too much influence over the Northern Ireland economy. The people that you talk about - the British people who live in Ireland - would have a much better long-term future for their economy by recognising the all-Ireland nature and all-Ireland dynamic of the economy.
2956.
In meetings with the business communities over the past six or seven years, particularly in the North, Sinn Féin has constantly been told of how beneficial it would be to have a single currency and harmonised tax laws on the island. It would also be beneficial for the island to have more control over its own economic decision making and be able to decide how to invest, rather than the British Exchequer vetoing policy in the North. This is happening on an ongoing and regular basis.
2957.
The Temporary Chairperson: Will you please define what your understanding of equality is.
2958.
Mr Smyth: Sinn Féin's basis for equality, in the economic sense, is the MacBride principles. Now, however, in terms of the Good Friday Agreement there is a much more extensive equality in human rights, a responsibility on all of us, and we recognise that. But when you read the document those requirements are not mentioned, and we think that they should be recognised. There are nine points from gender to political point of view, ethnicity, whether you are in a disadvantaged area or not, all those things.
2959.
The Temporary Chairperson: So you do think gender is an important part of this equality. What are you doing to push affirmative action in favour of gender equality?
2960.
Mr Smyth: We are in favour of affirmative action in terms of discrimination in employment, so it makes sense that we favour affirmative action for women.
2961.
The Temporary Chairperson: My last point is of particular interest to me - the textile sector and agriculture and the traditional industries, including shipbuilding. I was surprised at a press release that came out about Harland & Wolff. I would be interested to know your position on whether you think that Harland & Wolff should be supported as a shipbuilding industry.
2962.
Mr Smyth: Nobody likes to see anybody lose their job, no matter where it is. Everybody who sees people under that pressure has a certain sympathy for them. Yes, Sinn Féin has a sympathy for what is happening in Harland & Wolff. At the same time, if heaven and earth is being moved to save Harland & Wolff, should heaven and earth not be moved to create jobs in west Belfast, north Belfast or in other areas in the west of Northern Ireland that have been historically and systematically denied investment?
2963.
The Temporary Chairperson: So it is not a particular reference to the make-up of the workforce? For example, the Women's Coalition would defend Harland & Wolff, but they do not employ women, or very few. It would be quite unusual for us to stand up for "women only" factories or that sort of thing.
2964.
The important point - certainly in what Sinn Féin was saying in that press release - was that Harland & Wolff did not have a proper balanced workforce in terms of the religious make-up.
2965.
Mr Smyth: As it does not. Think about it from a Nationalist point of view. People are looking at Harland & Wolff every day. It can not be missed. And yet week after week, year after year, I do not know how many times Harland & Wolff has been saved, or Harland & Wolff has had money put into it. I am not saying that should not have happened, but some notice must be taken of what Nationalists see as a favouritism in economic policy over the years, in terms of "We must save Short Bros, we must save Harland & Wolff". Where is the investment in West Belfast? Where is the investment in western areas of Northern Ireland? Where is the equality? We are not saying that Harland & Wolff should not be saved. If it is possible on an economic basis to save people's jobs, then save them.
2966.
The people who run that company have a responsibility for the equality agenda. The IDB and other agencies have a responsibility. If they are prepared to work so hard to save Harland & Wolff, why are they not prepared to save the loads of textile companies who are in similar difficulties? Time and time again we hear "The textile industry is in terminal decline, ergo we should not help it". Sinn Féin says that if that is the case, are there individual companies that could be helped? It should be looked at on a company by company basis. Can more be done? What sort of education and training could be brought into those areas that are going to lose jobs? What sort of new industries can be attracted? How many people from the old companies are going to get jobs in the new one? They are the questions that should be asked.
2967.
From what we can see, what happens in economic policy is that one company goes, one company comes. A good example is what some people call "the Hewlett Packard situation" which happened in Dublin. One company, Packard Electric, collapsed; another company, Hewlett Packard, came. Eight hundred jobs were lost and 1000 jobs gained, but only 100 people from the old plant got jobs in the new plant. Nine hundred people spent a good bit of their life on long-term unemployment.
2968.
The Temporary Chairperson: If we decided not to support a company because of its employment practice - for example, in the area of gender - there would be serious difficulties if we stopped support because women or men were not employed, say, in the textile industry.
2969.
Mr Attwood: What is Sinn Fein's attitude at present to the MacBride principles and their continued application in assessing American investment in the North?
2970.
Mr Smyth: Sinn Fein supports the MacBride principles. That is party policy, and it has not changed.
2971.
Mr Attwood: I did not ask you that. I asked about the current situation with regard to the MacBride principles relating to American investment in the North.
2972.
Mr Smyth: You asked if Sinn Féin was a socialist republican party. Yes. Are we presiding over the implementation of socialist republican policies? No. Do we want them implemented? Yes. The same thing applies to the MacBride principles.
2973.
Mr Attwood: With regard to American investment in the North, is Sinn Féin continuing to support the MacBride principles?
2974.
Mr Smyth: It should continue to support them.
2975.
Mr Attwood: Given the section 75 duty, the formation of the Equality Commission, the various legislative bases for equality practice in the North, and given that Sinn Féin is now in Government and is, therefore, responsible for all that, are you not reassured that a sufficient equality legislative framework and policy implementation framework exists to encourage American investment to come into that legislative and legal environment?
2976.
Mr Smyth: The environment has the potential to improve tremendously because we are still in the early days of the implementation of the legislation. The legislation is a huge step forward, but it is not the be-all and end-all. You are talking about a process which every party contributed to, and every party has to concede some ground to arrive at a consensus position. Am I deviating from a consensus position that was agreed? I do not know because we agreed a consensus. In our mind, we sacrificed a lot in many areas.
2977.
Mr Attwood: Are you prepared to tell American companies, American States, American city halls, with regard to American investment in the North, whether it is manufacturing, high-tech, pension funds, that a legislative and wider framework now exists for them to commit the funds, independent of past concerns about the situation here. It gave rise to the MacBride principles and their endorsement at various levels of American civil and political society.
2978.
Mr Smyth: The Minister of Enterprise Trade and Investment and the Chair of this Committee went on a trade mission to the United States. There were no reports about any division between them. American industrialists and investors they met did not say anything about Sinn Féin promoting the MacBride principles off their own bat. We were there as part of a group, and that should be recognised. We have our own policies, but we participate as part of a consensus group. I do not see what the issue is.
2979.
The Temporary Chairperson: With regard to Targeting Social Need (TSN) what action would you like to see to encourage inward investment to TSN areas?
2980.
Mr Smyth: We would like to see targets set. It is an education problem and an infrastructure problem with regard to the physical and social infrastructure, plus a commitment that the IDB would bring businesses to this area. This is not happening at the minute. The Public Accounts Committee found that the IDB kept no figures on how many people from TSN areas were being employed in new companies. We found that astonishing.
2981.
There has to be wholesale reform of how IDB operates such as setting targets and making them go into areas. As a priority, industrialists should be shown the TSN areas first rather than other areas. On grants and the funds available, they should be targeted to encourage those areas to get much greater investment than they previously have.
2982.
The Temporary Chairperson: That rolls into my next question about the IDB and the single development agency. I assume you support the movement for a single development agency.
2983.
Mr Smyth: Yes, a single agency for Ireland, as Scotland and Wales both have a development agency.
2984.
The Temporary Chairperson: Would you agree that there should be increased co-operation with the Scottish and Welsh?
2985.
Mr Smyth: Yes, there is needless competition between these agencies. It is putting up the price of what they are paying to international companies, and that is silly.
2986.
The Temporary Chairperson: Would co-operation help that?
2987.
Mr Smyth: Yes.
2988.
The Temporary Chairperson: What about the recommendation in 'Strategy 2010' that Selective Financial Assistance (SFA) should be less readily available? What sort of assistance do you think should be given to industry?
2989.
Mr Smyth: The state should definitely be involved, and there should be some form of assistance. However, the notion that the average figure was between 25% to 30% capital investment for a start-up company is huge and hardly justified in every case. It is a huge amount of money to be turning over, and if you continue to do that, you will end up with more Hualons. You will be asking "Where is the money?" or "Where did it go?" "Why was the money ever considered to be put into this company?" In some areas where you are targeting TSN, high levels of SFA should be considered. The idea of having a blank chequebook and everybody getting the highest level seems fundamentally misplaced and is part of bidding up the price.
2990.
The Temporary Chairperson: That is talking about the level of incentive. What about other incentives, for example, tax incentives?
2991.
Mr Smyth: One of the drawbacks of the document is that it talks in one place about a tax incentive and a lower special tax rate, and then it talks about funding that through cutting health and education spending, which seems to be madness. The Twenty-six Counties has benefited hugely from having a very low tax regime and Sinn Féin's policy is that there should be tax harmonisation across the island in terms of a just tax system for both workers and businesses. A lot of investment that has been attracted by a tax package to Ireland is going into the Twenty- six Counties because it is perceived to be a lower tax. We should look at the whole area of tax on an island-wide basis to harmonise it. In linking workers wages, PAYE tax, capital gains tax and all those things should be looked at as a complete package, rather than cutting a special deal for business. That is fundamentally wrong and where bad economic policy is made. You have to look at it from an inclusive point of view.
2992.
The Temporary Chairperson: You are not advocating harmonisation of the corporate tax breaks only?
2993.
Mr Smyth: No. It has to be in terms of what workers are paying, what local taxes are being paid, and in terms of capital acquisition and capital gains tax. It is the tax regime of the island that has to be harmonised.
2994.
The Temporary Chairperson: Thank you very much for coming here today.
TOP
MINUTES OF EVIDENCE
MONDAY 9 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Attwood
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Mr J McKeown ) National Association of Teachers
Mr D Kenny ) in Further and Higher Education
2995.
The Chairperson: Good morning, gentlemen. I will ask the Committee members to introduce themselves to you. I suggest that you then make a short opening address summarising your position, after which we will ask you questions.
2996.
Mr McKeown: My name is Jim McKeown, and I am a full-time official for NATFHE (National Association of Teachers in Further and Higher Education) in Northern Ireland.
2997.
Mr Kenny: I am David Kenny from Omagh, a full-time serving lecturer in Omagh College. I am the regional secretary of NATFHE, which means that I co-ordinate all the branches in Northern Ireland.
2998.
Mr McKeown: Our organisation represents teachers in post-school education, for example, lecturers in further education (FE) colleges and the teachers in Stranmillis and St Mary's Colleges. We also have a number of members in private training organisations such as Springvale Training Ltd or Seven Towers Training Services in Ballymena.
2999.
We have about 2,000 members in this region. We are also affiliated to the Irish Congress of Trade Unions (ICTU), and I chair the ICTU's Northern Ireland committee for tertiary education and employment issues. Through that, I am nominated on behalf of ICTU to serve on the board of the Training and Employment Agency. I am also nominated to the New Deal taskforce, which extends my involvement to employment initiatives as well as training ones, and I am a member of the Further Education Consultative Committee.
3000.
I am not here in a political capacity. However, as someone who has been dealing with Ministers in respect of education and training issues for the last 20 years, I find it a pleasure, as does my colleague, to make representations to people who hold such a stake in the future of education and training in Northern Ireland. I know you are going through some political difficulties at the moment, but on behalf of our organisation, I wish you well in your work, and I hope that the Assembly continues to work for the people of Northern Ireland.
3001.
Let us now turn to 'Strategy 2010'. You have seen the fairly brief comment that we submitted by way of response to the recommendations on education and training.
3002.
I do not think there is much value in going over what we said in that document. Your Clerk very kindly provided us with a summary of questions that you felt were appropriate, and if you do not mind, perhaps the best way forward might be for us to address the issues that are flagged up in those questions.
3003.
The Chairperson: We have allocated the questions amongst the Committee members, and the reason we send you an advance summary is so that we do not, if you like, ambush you in any way. We are just trying to have a dialogue with you and get your ideas, so we can reflect them as best we can.
3004.
Mr McKeown: We are happy to respond to any question you may have.
3005.
Dr O'Hagan: I want to talk about adult literacy. What steps are necessary to tackle that problem?
3006.
Mr McKeown: You will be aware that the international adult literacy survey in 1997 showed that this is a serious problem here. Something like 25% of the adult population are only at level 4, and there could be another 25% whose literacy and numeracy skills are not that much better.
3007.
At the moment, the policy is, as far as the Government are concerned, to try to put the emphasis on schools, in that if you can raise standards in the schools, then the problem with adult literacy will eventually disappear. We are a wee bit concerned about that, I have to say, because this problem exists, perhaps, in more that one generation. Ideally, resources would have to be put in to address that particular issue.
3008.
We think that the further education colleges are ideally placed to work in that particular area, but not of themselves. In organisations such as the Educational Guidance Service For Adults, the Workers Education Association and the Ulster Peoples College there are tutors who are involved in those areas and who have a great deal of skill and expertise in bringing people forward. Where people have low levels of attainment there are real difficulties in getting those people to (a) recognise that there is a problem and (b) try and do something about it. Many support networks need to be put in place here, in which people who have skills in dealing with adult education in a community are encouraged, by way of a funding system, to do that kind of work.
3009.
Part of the rationale behind the Government's University for Industry, is to try to address the issues for those people in work who may well have adult literacy and numeracy problems. As yet, University for Industry has not really taken off, and I have read, for example, in the higher education supplement of 'The Times' that it has been referred to as a kind of educational Millennium Dome. I hope that that does not prove to be the case, because there is a job to be done there. If resources were made available, there is a role for industry to play in looking at its existing workforce and assisting them in that area.
3010.
There are already many people who work in the area of adult support, and in many cases, these people are doing so on a voluntary basis. They receive no payment for it, and they give up their own time - and give it freely. That is very laudable, but we think society has to move beyond that and take a concerted approach in respect of this issue by putting resources into addressing it.
3011.
Dr O'Hagan: In your submission you stated that you agree with the recommendation in 'Strategy 2010' that a clearer focus is needed for the further education sector. I would like you to elaborate on that.
3012.
Mr McKeown: We do. The history of further education in Northern Ireland is slightly different from that in England and Wales. Northern Ireland FE colleges grew out of the 11-plus system. It used to be the case that if young people did not pass the 11plus, they would have gone to a FE college at age 11, or even if they did pass, because the local FE college might have been nearer to their home, they would have gone there. The colleges here have a legacy of trying to get young people to take GCE courses - GCSEs as they are referred to now - A levels, and so on.
3013.
The focus of the colleges has been largely on the 16- to 18-year-old age group. That has to change. The FE sector is about widening access and increasing participation, and we have to get more adults through the doors of the colleges.
3014.
Much remains to be done in respect of colleges having a clearer focus, particularly with regard to widening access and developing the relationship between the colleges and industry, for example. Recently the Department of Higher and Further Education, Training and Employment issued a PricewaterhouseCoopers report into the links between further education colleges and the business industry. Some recommendations in that report will be of interest to the Committee.
3015.
Throughout the 1990s the further education sector has been subjected to massive changes. We have seen, for example, a drop from 27 FE colleges in 1991 to 17 today, and by the end of next year, there will be 16 when the Northern Ireland Hotel and Catering College becomes part of the University of Ulster. There have been mergers and enormous changes to the curriculum. All sorts of educational initiatives have been foisted upon the system to reduce the number of full-time teachers. In the early 1990s there were some 2,400 full-time lecturers in FE; today there are around 1,700.
3016.
In the last decade we have lost some 700 full-time teachers, almost one third of the workforce. At the same time the sector has expanded. There are more students and much change, particularly in the amount of higher education provided in the colleges. It has multiplied some 10 times over the last 10 years.
3017.
Dr O'Hagan: Why has this happened? Why has there been such a reduction in teacher numbers when the whole sector is expanding?
3018.
Mr McKeown: That is a good question. There are implications for the quality of delivery, but the main reason has been Government funding. In the 1990s resources available to the colleges have shrunk. Funding has not been put into them. Since 1998, when the Labour Government came into power and colleges were incorporated, additional funding has been put into FE. Funding has gone up by about 14%, but it has not gone into the classrooms. Funding has gone towards the army of support staff employed in the colleges since incorporation. All 17 FE colleges have an estates manager, a human resources team and a whole raft of additional support staff. Before incorporation these support networks were available under the education and library boards, and the work was carried out by education and library board staff.
3019.
Funding has gone down, and the colleges are being faced with a lack of resources. They have had to sack teachers. There are 700 fewer teachers in the system, and of that number, almost 450 have been the direct result of redundancy. This year we are starting another round of redundancy consultations. We are at present, for example, having discussions with the Belfast Institute of Further and Higher Education (BIFHE), where a further 27 lecturers are to be made redundant this year.
3020.
Dr O'Hagan: I assume that this will result in bigger class sizes.
3021.
Mr McKeown: There are two effects. One is that class sizes increase. The average class size across the system is around 18 or 19 to one teacher or lecturer. That does not sound enormous in the context of schools, however, it means, for example, that teachers in the Belfast institute are delivering HND-type courses to over 100 students. In the further education sector we are not dealing with academic high-fliers who are capable of getting three grade As at A level. We are dealing with young people for whom it has been an achievement to get five GCSEs and who come into further education to help them develop. They need more support rather than less. Bigger classes and cuts in the level of tuition support for those people is having a detrimental effect in terms of their outputs.
3022.
Mr Kenny: There is another effect, which is the vast increase in part-time lecturers. The problem with that - and it is no reflection on the part-timers - is that they come into the college, do their bit of work and then leave. However, all the co-ordination associated with that has to be dealt with by somebody else, normally a full-time lecturer, and that places an additional workload on them. The sizeable reductions that there have been over the last ten years have had quite an effect in this regard.
3023.
Mr McKeown: May I say something on the point about clearer focus? We have some concerns about the Further Education (Northern Ireland) Order 1997. The Order, which incorporated the colleges, turned each college into an individual fiefdom. Each college is responsible for the employment of its staff and the determination of its own educational destiny. As a result of that, there is no clear strategy for the sector. We want the colleges to pull in the same direction; the law must be changed.
3024.
Many plaudits have been given to the institutes of technology in the South and their contribution to the Celtic tiger. The South has been very successful in enlisting the support of educational institutions for economic development. The institutes of technology in the Republic are required by legislation to operate in a strategic manner. The legislation for Northern Ireland's further education colleges was brought in by the Tory Government at a time when market forces were the flavour of the day in relation to policies. Our colleges are competing with each other. For example, each college has to produce a development plan, but those plans are market-sensitive, and colleges keep them secret. The colleges do not know what the other colleges are doing in terms of their development plans - it is complete and utter nonsense.
3025.
We supported the idea of the colleges forming themselves into a grouping called the Association of Northern Ireland Colleges. However, that is proving to be something of a failure, because the two largest colleges - the Belfast Institute of Further and Higher Education and the North West Institute of Further and Higher Education in Derry - are not members. There is no centralised body to co-ordinate the colleges. That is wrong, and it must be changed, particularly when one considers inward investment. If the further education colleges are going to play a bigger role in that, they will have to come into the mainstream and liaise with what was the Department of Economic Development and your own Department.
3026.
We will, it is hoped, have reached that point when trade missions going to America, for example, to secure inward investment will have representatives from the further education sector involved to tell prospective investors what the further education colleges can provide. That will not be possible as long as each college can do its own thing and the college principals remain lords of their manor - not having to pull in the same direction as everybody else. We want that to change.
3027.
Mr Kenny: One other issue is the funding methodology for further education. The funding for this year is based on something which happened 18 months ago. In respect of inward investment and firms coming here, we are not able to plan ahead for the things that we should be doing such as providing training in the right areas. That needs some speculative investment in the further education colleges to allow them to research the needs of industry and respond in advance. There is no point trying to deal with matters after everything has come here. We need to be ahead of the game in that area.
3028.
Ms Morrice: I am interested in the careers guidance system. There is no doubt that this is a common complaint at every level.
3029.
There is very little innovative careers advice and experience. What can be done to enhance that?
3030.
Mr McKeown: There is considerable advice available, but there is also concern over whether that advice is independent. Advice comes from: careers teachers in schools, who do a good job; the careers service, which is part of the Training and Employment Agency and provides access to a great deal of information and skills; and careers advisers in some further education colleges - and something should be done to ensure availability in all of these colleges.
3031.
There is no co-ordination between these careers advisers, and, when one looks at the way in which schools and colleges are funded, there is a vested interest to retain people. For example, there is a problem with the interface between schools and further education colleges in the area of GNVQs. This is a qualification that was introduced to try to provide a more vocational- type focus into courses. When GNVQs were initially introduced it was planned that schools would engage in GNVQs up to intermediate level, and the further education colleges - which are like educational factories - would be involved with the delivery of advanced GNVQs.
3032.
We find that because schools and further education colleges are funded on the basis of the number of students, there are pressures on all of the institutions to try to retain students. When under that type of pressure there must be a question mark over the impartiality of careers guidance advice. We see many children being retained in the schools when we know that it would be better for them to move into a further education environment, particularly in relation to advanced GNVQs, because the further education sector can offer a more vocational type of experience, since it has more advanced links with industry and has more industry- type plant and equipment.
3033.
Similarly, in the past we have heard criticism that the Training and Employment Agency tended to direct children to the Government training centres rather than into the further education colleges.
3034.
It is important that there be an independent and coherent approach to careers guidance. IT can help - in schools there is the NINE project and the JANET project in further education colleges - which provide information about careers advice. I understand that the Training and Employment Agency has its own separate IT system. However, perhaps there is a need for co- ordination of IT systems in order that young people will be able, through the Internet, to pick up careers advice and make a more informed judgement.
3035.
We also have a job to do in educating parents regarding careers advice. Following 20 years of high unemployment, parents will have observed that it is easier to get a job if one has more qualifications. As a result, parents want their children to continue at school in order to attain academic qualifications, but some excellent schemes are now available, such as modern apprenticeship schemes, where young people can receive training and gain industrial experience for some time before moving into higher education.
3036.
We have a job to do in encouraging parents to think not only in terms of academic qualifications leading to jobs as teachers or -
3037.
Ms Morrice: Is there any parental involvement in the careers advice that is given?
3038.
Mr McKeown: No.
3039.
Ms Morrice: It is solely for the student. Would you recommend parental involvement?
3040.
Mr McKeown: Yes, absolutely, but the difficulty is how we achieve co-ordination. There may be a role for public representatives, who are also parents, but there is a need to focus on parents, because their careers advice to their children is to continue down an academic route, and that needs to change.
3041.
Ms Morrice: Organisations like the PTA, through their work in schools, could start that off. What is your view on including industry placements in teacher training?
3042.
Mr McKeown: It would be very valuable. Young people generally enter our teacher training colleges at Stranmilis and St Mary's directly from secondary or grammar school. They have very little experience of industry other than, perhaps, picking fruit on a farm as a summer job.
3043.
When teachers are teaching craft, design and technology, business studies or languages, they should have some understanding of their applied nature. These teachers will be educating the workforce of the future, and they should have some experience of what that workforce actually does. The only way in which they can get that experience is by taking part.
3044.
Ms Morrice: What about integrated teacher training colleges for the two traditions? Would such colleges be valuable?
3045.
Mr McKeown: The Chilver Report of 1980 raised that possibility. There was a terrible furore, which resulted in the whole thing disappearing. Both Stranmilis and St Mary's are colleges of Queen's University. In addition, there is a great deal of commonality between the two colleges on courses and a great deal of exchange of students.
3046.
We may not be all the way towards a single, integrated teacher training college, but we are pretty far down that route.
3047.
Ms Morrice: Is that a good direction?
3048.
Mr McKeown: We support structures which encourage integration in our society.
3049.
Mr Attwood: Can you expand on the issue of equality between academic and vocational qualifications?
3050.
Mr McKeown: We were rather critical of 'Strategy 2010' because it only looked at Dearing's recommendations in the field of higher education. Before Lord Dearing produced a higher education report - the one that addresses the question of higher education places in Northern Ireland - he carried out a major review of the arrangements for qualifications for those aged 16 to 19. 'Strategy 2010' ignored that completely.
3051.
Dearing argued that society had to break down the barrier between academic and vocational qualifications. He argued for a national framework for qualifications that would have three ladders to it. One would be the traditional academic route through GCSEs up to A level; the second would be the GNVQ route, which would be a mixture of the applied and the academic; the third would be up to NVQ level three through industry-related training with underpinning knowledge provided through educational institutions.
3052.
Society has a problem in that it values academic qualifications more highly than vocational and applied qualifications. That has implications for careers guidance. That was not always the case. Thirty years ago many families encouraged their young people to get apprenticeship training. Through that they would have gone to, say, the college of technology in Belfast to work through a HNC or HND to obtain a higher level of qualification. Those people probably make as valuable a contribution to society as those who took an academic route. We must break down the prejudice that vocational qualifications are second-rate qualifications. They are not.
3053.
We have to encourage people to think that it is no bad thing to leave school at 16, take a modern apprenticeship and develop your education and lifelong learning through that route. People who do that are just as valuable to society as those who do a degree at the University of Ulster.
3054.
Mr Attwood: You mentioned that the catering colleges have become part of the University of Ulster. Obviously there are going to be developments at Springvale, where both University and a FE College will have a common and shared interest. Do you think that the Springvale model - where FE and HE colleges will share a campus and where there will be an inter-relationship between courses, leading from FE to HE - can have a wider application?
3055.
Mr McKeown: We are not quite sure. We have not seen Springvale working, so it is too early to judge. However, a similar model already exists. Many of our FE colleges already have links with our universities. There are seven or eight colleges that are associate colleges of the University of Ulster. The first two years of HND-type courses will be taught in the FE colleges, and the course can then be converted into a degree course taught at the University of Ulster. The concept of people flowing from one educational institution to another is one we certainly support.
3056.
It is beginning to break down now, but we have a problem in Northern Ireland with an under-supply of places in higher education. It means that our universities can set very high levels of A level results before a young person can get in. Unfortunately it has been the case that the high-fliers at A level tend to have come through the grammar school system, and it has been a major achievement for the secondary level system to get some young students to achieve three C's at A level. Society then spurns those young people, because the universities will not offer them places. Those young people - and they are generally from working-class backgrounds - have to go to courses across the water. It is not the well-heeled who go there, unless they voluntarily want to troop across the water. Those who are forced to become educational emigrants are people from lower-income brackets. It has been a major achievement for them to get two Cs and a D, or three Cs, or a couple of Bs, but places are not available for them here, and they have to go across the water. That means an additional cost to them and their families. There is a social issue here to do with the way our universities make places available to local citizens.
3057.
Apart from that, we need a massive increase in the number of places. There is spare capacity. We have two University Colleges, Stranmillis and St Mary's that, historically, have been very narrow in their focuses. They are beginning to broaden now: they are beginning to do courses of a more general nature, not necessarily confined to teacher training. That could be expanded. We have quite a considerable scope here for developing more higher-level courses in the FE colleges, and they are not necessarily degree courses. If the resources were available, then the places could be provided in the FE sector.
3058.
However, there is a gross inequity in the funding of higher education places in Northern Ireland. If you were a University of Ulster student doing a HND course, you would receive something like £4,400 as a unit of resource. If you were a HND student in the Belfast institute, you would be receiving something like £2,200. Why should that be? That cannot possibly be justified. Let us fund all our students at the same level, so that they can have the same opportunities.
3059.
Dr McDonnell: What initiatives would you like to see implemented to encourage and develop better links between the further education colleges, universities and business?
3060.
Mr McKeown: There are already a number of links, but it is not perfect, and much more could be done in building the concept which is raised in the 'Strategy 2010' document of collaborative clusters involving schools and universities. It might be helpful if there were a strategic planning body for education, involving representatives of all the main players, schools, further education colleges and universities, and, indeed, the 150 private training organisations in Northern Ireland. These also provide applied vocational education, and they have to be brought in to the scene.
3061.
We were very pleased to see that the Northern Ireland Business Education Partnerships (NIBEP) has been relaunched recently and, for the first time, has a focus in further education. It is to have a network of area committees, and we would like to see our further education colleges being involved in that and having links with other interests in the field.
3062.
As a union, we argued with the Department of Education to have a scheme called Lecturers into Industry established, and over the last year, three areas - software, engineering and catering - have been involved in this. Lecturers have been released from college duties to go into industry to sample modern industrial practice and to build relationships between employers and the further education sector.
3063.
Much more has to be done, however. For example, out of the £96 million that goes to fund our further education colleges, only £0.5 million is available for staff development purposes. That is chronic. If, in the future, industry were to provide only 0·5% of its budget for staff training, you would say that that is far too low. We say that this is far too low in terms of further education. More resources have to be put in for staff development purposes and to enable colleges to build closer links with industry.
3064.
There was an attempt to do this under the regime of Brian Mawhinney, when there was a requirement for governing bodies of further education colleges to have at least 50% of their membership from the business/ industry constituency. That has not worked out very well. It is our understanding that business does not engage to the extent that it should, and we would like to see more effort being made in order to keep business and industry involved in their links with the further education colleges.
3065.
Another example is where the Government set up a further education consultative committee under Tony Worthington, and a substantial number of industry representatives are on it. I serve on that committee, but unfortunately we find that industry is not engaging to the extent that we would like it to. The Government could assist. There are 17 sector training councils in Northern Ireland, such as the Engineering Training Council, which is, perhaps, one of the more famous. Those sector training councils mainly consist of groups of employers who come together to decide on what the training needs for the industry are. We would like to see the further education institutions, and particularly the universities, involved with the sector training councils. We would also like to get away from the current situation in that the sector training councils are an ad hoc voluntary arrangement. Sector training councils should have a statutory basis, and industry sectors should be required to look at the training needs for that industry. There should be some kind of incentive to employers through a reduction in the National Insurance contribution, for example, to enable employers to play a role in the sector training council, as not all of them do get involved.
3066.
There is a big job to be done there, and we have to get industry thinking in terms of the development of its workforce. At the moment only the big employers are engaging in that. If we are serious about getting the small-to medium-size enterprises into education training, then there has to be some sort of drive or push to get them into that mode of thinking.
3067.
Dr McDonnell: You mentioned 150 training organisations. Is that an indictment of further education? Surely it ought to have been fulfilling that role rather than having it done privately.
3068.
Mr McKeown: The history to that goes back to the days of Mrs Thatcher. She abolished organisations such as the British Manpower Services Commission, the Government training centres, and so on. In effect, the development of a private training industry was encouraged alongside the further education sector.
3069.
I am not arguing that there is no role for private training there. We have represented the staff of Spingvale Training Ltd in Belfast. There are many young people who go through the doors of Springvale Training Ltd that would never get through the doors of a further education college. That is because many of them have had negative experiences and what appears to be going back to school is not something that attracts them. However, they are prepared to go to a Government training centre or a community workshop, because there is a role there. Unfortunately, private training organisations in Northern Ireland tend to be small- scale, and it is only in recent times that they have been subjected to proper scrutiny by the educational training inspectorate. This inspectorate produces reams of reports describing the genuine concerns about the level of qualifications that tutors are delivering. There are concerns about the levels of attainment and retention and about the methods of assessment, particularly for NVQs.
3070.
We do not want all that wiped out. Those training organisations make a valuable contribution, although at some stage, it must be subject to much greater regulation than at present.
3071.
Dr McDonnell: In my experience, some of those organisations are more thorough than the further education colleges in their training. I have taken on trainees and accepted placements and found that private- sector people, for the most part, would follow them up more aggressively and take more of an active interest. Some colleges just dump them out to get rid of them.
3072.
Mr McKeown: It is more of a mixed bag.
3073.
Dr McDonnell: It is a mixed bag.
3074.
Mr McKeown: I have been critical of youth training programmes in the past. Our experience was that not a great deal of value had been added to young people going through those schemes. They were being used as unpaid labour and were quite often put through many negative experiences.
3075.
We have been working towards trying to improve that, and admittedly, schemes such as Job Skills are a major step forward. However, that is not to say it is all perfect. There are problems in further education, particularly in regard to your comments on outputs. Our results were not impressive, and there is certainly work to be done by the further education sector.
3076.
The Chairperson: Thank you for answering the questions. We have your original submission, and we will use your answers to them when we are deliberating on the contents of our report.
3077.
Mr McKeown: I have one final point regarding this report produced by Pricewaterhouse Coopers. We have written comments on it, should any of you wish to read our views on this matter. Thank you for inviting us here today.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 11 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Mr C Fenner )
Mr R Joyce ) Sainsbury's Supermarkets Ltd
Mr W Pinkerton )
3078.
The Chairperson: You are very welcome.
3079.
Members will introduce themselves before you make your presentation. After the presentation we will put some questions to you. We have received your submission, and this session is to try to obtain more information before the Committee moves to complete its inquiry.
3080.
Mr Pinkerton: Thank you very much. Sainsbury's Supermarkets Ltd very much welcomes this opportunity of meeting the Committee. We are particularly grateful that you allowed us to make a written submission after the due date, and we appreciate the chance of this morning's exchanges.
3081.
We believe that 'Strategy 2010' is an important document. It has not been universally acclaimed in the Province but that does not, in our view, detract from the contribution that it can make. It is well worthy of the scrutiny it is receiving and the public debate that it is generating, including through this Committee. We are delighted to be participating in that scrutiny.
3082.
Those of you who are already familiar with Sainsbury's Supermarkets Ltd know that it sets great store, if I can use a pun, by public consultation and by seeking to explain its position on matters that affect local communities.
3083.
On a technical point, Sainsbury's Supermarkets Ltd gave evidence to the Assembly's Committee on Agriculture and Rural Development. That evidence related mostly to issues surrounding local supplies, local suppliers and pricing. I am not sure whether those issues will surface in our exchanges today, but if they do, and subject to the Assembly's protocol, Sainsbury's Supermarket's Ltd will be quite happy to provide your Committee with copies of the evidence that it gave to that Committee. On the other hand, there may be ways in the system whereby you can get that evidence directly without coming near us.
3084.
On my immediate left is Chris Fenner, who is director of property at Sainsbury's Supermarkets Ltd. Chris would be known to Mr McClarty, if not to other members. Chris was charged with implementing Sainsbury's Supermarkets Ltd's investment programme, which was announced first in June 1995.
3085.
On my far left is Rory Joyce, who is managing partner of Drivers Jonas - the planning consultants to Sainsbury's Supermarkets Ltd. Drivers Jonas has just completed some work for the Department for Social Development through the Belfast Regeneration Office.
3086.
I now invite Chris Fenner to make his opening statement.
3087.
Mr Fenner: Thank you for this opportunity; I do appreciate it. I will make a very short opening statement and leave as much time as possible to answer your questions.
3088.
I have some key points to make. Sainsbury's Supermarkets Ltd has been trading in Northern Ireland for five years. We have commitment and also a great responsibility. I would like to outline and explain this further.
3089.
Our commitment stems from the fact that we have invested over £100 million in five years in Northern Ireland. We are not here for the short term. Our commitment also manifests itself in some of the barriers that we have had to overcome - barriers that have been well publicised during the five years. The fact that we have overcome them and are now trading successfully in a number of different locations shows that we have commitment to continue and be a long-term player in Northern Ireland.
3090.
We also have a great deal of responsibility in different parts of the economy. At present we have over 2,000 employees within the business in Northern Ireland, and we are paying wages and salaries to the tune of £25 million. That is a great responsibility regarding those employees and their families.
3091.
We are a major player in the community, and we have put a lot of money into the local community in different forms. We have put much time and resources into the community too, which is equally important, with members of staff becoming involved in local organisations. In addition, we are paying about £2·5 million per year in rates to the various councils in the areas in which we are located.
3092.
We have also a major commitment to the supply industry in Northern Ireland. Prior to 1995 we were spending a lot of money with Northern Ireland suppliers - to the tune of £80 million, but with only 17 suppliers. We made a commitment back in 1995 that we would expand that business, and we are now spending over £130 million per year with Northern Ireland suppliers. We have expanded that supply base to 102 suppliers, at the latest count. We did that through a number of initiatives that we might be able to touch on later. We therefore have a great deal of responsibility across various sectors.
3093.
That manifests itself in the seven stores that we are trading in and, contrary to public expectation, we do not just trade in out-of-town locations. Some 60% of our stores in England, Scotland and Wales are in town centres. That percentage is mirrored almost exactly in Northern Ireland. Therefore we have a mix of stores.
3094.
Most importantly we have a responsibility to the 150,000 customers that come to our stores each week. That is a significant responsibility for Sainsbury's, and it is our business objective to keep each and every one of those customers happy.
3095.
Based on what I have read about 'Strategy 2010' there seems to be a lack of consultation and awareness of what the consumer wants in the retail sector of the economy. As a company that provides a service for consumers we need to make it very clear how important that is. Nowadays consumers are very mobile. They are also very promiscuous; they shop without the great loyalty to individual retailers that existed in previous years. That has a great bearing on the retail policies that the Assembly should be considering. Not only do shoppers now have a choice among Sainsbury's, Tesco, Safeway and small convenience stores, but they also have the choice of Belfast or Dublin, Belfast or London and Belfast or Manchester.
3096.
When considering retail policies you must have due regard to how attractive Belfast is against those other major centres. Before new retail policies are introduced there needs to be more work done on analysing what the consumer is looking for.
3097.
Dr O'Hagan: You stated that 'Strategy 2010' did not acknowledge what the consumer wanted and failed to adequately recognise the role of the retail sector in the economy of the North of Ireland. Will you elaborate on this and tell the Committee what action is necessary to address this issue?
3098.
Mr Joyce: The main problem is that 'Strategy 2010' does not recognise that the retail sector in Northern Ireland accounts for £1·5 billion. There was an analysis done of various sectors by working groups for 'Strategy 2010' but the retail sector was not included. However, it should have been included because it is so significant. There is an enormous amount of growth in expenditure in retailing at present. Over the last 10 years there has been an increase of 20% in real terms. We see the reason for that as being due to the interest and inward investment coming to Northern Ireland. Had there been a section in the report that looked at the retail sector, and had some basic analysis been done, this growth would have been identified.
3099.
The next step, one hopes, is that some sort of strategy will be produced to accommodate the growth. There is going to be a lot of pressure for new floor space and pressure to upgrade existing floor space. We must have a plan. We do not have the strategy because we do not have the analysis, but the analysis should have been done. Had it been done, it might have undermined some of the comments that you see in the press, which are not based upon analysis. The famous one that I still hear in Northern Ireland, but very rarely in England and Wales, concerns the study by the National Retail Planning Forum which stated that with new out-of-town superstores comes a loss of jobs. Nobody mentions the study by the same forum which followed that one; it stated that the conclusions by the first study were wrong and that mistakes had been made. Had some analysis been carried out, the second study would also have been mentioned. Therefore there is an increase in jobs.
3100.
The study by the National Retail Planning Forum is wrong for three reasons. First, the second study corrected it. Where the first study stated that there was a loss of jobs it did not count all jobs the same. There was a qualitative judgement by its authors that part-time jobs in supermarkets are predominantly done by women, carers and students. The first study treated these jobs as being of less value than "real jobs".
3101.
When they did their arithmetic they said they were going to count those jobs as one third of a real job. If there had been an opportunity to put that to a public forum, or if there had been debate about it, those facts and figures would have come out. Also it has been quoted that it is in out-of-town retailing that you have that effect. The second study looked in town but found that it is the same in town as out of town. It has nothing to do with location. If the Assembly or someone comes forward with policies for retailing based upon anecdotes as opposed to analysis, then it will be flawed. There should be a section in the document looking at the size of the sector and containing some basic analysis of retail growth.
3102.
Mr McClarty: In your opening statement you mentioned that since your establishment in the late 1990s there has been a huge increase in the sourcing of local products from local suppliers by Sainsbury's. What incentives could be given to encourage large retail stores to source local products?
3103.
Mr Fenner: This is quite simple, and it could be a bit of a quick win in many respects. To increase the supplier base we have set up a mechanism whereby potential suppliers can come and talk to us about issues which concern them. These include how small suppliers can become involved with large multiples and how their businesses can be developed in partnership with large multiples. It is not so much about money, as about an exchange of knowledge. We spoke to the other Committee about some of the things which we have set up. We have carried out some follow-up work on that, and we can present the paper to you later. It provides greater detail than we have time to do here. It is all about transfer of knowledge.
3104.
We are very keen to increase the supplier base because it is the supplier base which produces the innovation, new products and new ways of operating that will help our business. That is the key to all this. We must put some mechanism in place, either through an agency, or by relying on the private sector, to get that exchange of knowledge and to move faster than at present. We are very pleased with our supplier base. Many of those suppliers are now feeding products into the stores across the water. That is great, but the pace of that can be accelerated. There are some great products in Northern Ireland which still have not transferred across the water. We need to work on that and expand it. In 1995 we set a target to double our expenditure on the supplier base. We will have to work quite hard with local suppliers to achieve that target but we will get there.
3105.
Mr McClarty: What would you say to the accusation that large retail stores drive down prices and threaten jobs in local suppliers? For example, in my constituency of East Londonderry a bakery recently announced that it will close at Christmas because the large retailers are selling baked bread for less than it costs to manufacture it.
3106.
Mr Fenner: This issue cropped up in the report by the Competition Commission report which was published yesterday. While there was a bit of a whitewash over that report, this was one of the issues highlighted in it. We spent a lot of time making reference to this in the Agriculture and Rural Development Committee and there is much material to show how we are addressing it. It is all about dialogue across the whole supply chain. It is not a simple relationship between a producer at one end and a supermarket at the other. It is a very complex subject as many activities, processes and distribution networks get built up in between.
3107.
The Competition Commission asked the main supermarkets to produce a code of practice. We are already ahead of the game in that respect as the Minister flagged it up some months ago as a potential issue. We have a code of practice which we have been working on with suppliers and producers. I am confident that if Sainsbury's was guilty in the past, our code of practice will have changed that to everyone's benefit.
3108.
Everybody has to participate to make it a success. We realise that, and if we were guilty in the past we admit to it and apologise.
3109.
Ms Morrice: It is interesting and valuable to hear all the points that you make and to get a better understanding of your position in Northern Ireland's economy. We take on board what you say about the retail sector being more or less overlooked in 'Strategy 2010.'
3110.
I want to start with a particular interest of mine - the Euro. What will be the effects of the difference between the pound and the Euro and, speaking frankly, would we be better off in or out?
3111.
Mr Fenner: That is a big question. I am not sure that I am qualified to answer it. It is important when creating an investment climate to ensure stability so that we can plan for the future. If the Euro has the effect of removing some of the currency discrepancies, it might be good for business. However, there are wider considerations.
3112.
On an associated point, the relationship between the pound and the punt/Euro has thrown up problems that we have not experienced elsewhere. This has provided us with some interesting business challenges.
3113.
Ms Morrice: Does Sainsbury's have interests outside the United Kingdom?
3114.
Mr Fenner: We are principally a UK-based retailer, but we have a major food retailing business in the United States. Some of the problems we have with differences between currencies there are ameliorated by the fact that we buy products in dollars as well as taking dollars over the counter. The differences in currency even themselves out through that process. That is different from our experience in some of the border towns where we trade.
3115.
Ms Morrice: You have no outlets in the South of Ireland?
3116.
Mr Fenner: No, not at the moment. Homebase, the DIY business, is part of the group, and it trades in Southern Ireland. I am not quite sure what problems it faces in this area.
3117.
Ms Morrice: I want to move on to the area of social responsibility. As you said, that should be a win-win situation for all. You obviously have tremendous clout, but are you using it to influence, help and support local communities? What do you see as your social responsibility in Northern Ireland's economy? What is your contribution to the environment and how do you support local community activities outside the retail sector?
3118.
Mr Fenner: Sainsbury's in Northern Ireland, and in the rest of the UK, has some very clear environmental policies. We publish them every year, and we publish the progress we have made over the course of those 12 months against targets which have been clearly set out. It is a transparent document which sets out policy and targets and how we are performing against those targets. It sets high standards for everything from refrigeration, which has a major environmental impact, to much smaller issues. I can send you that document. It encapsulates everything that we do involving environmental issues.
3119.
Two or three years ago we embarked on a major building project, just down from the Dome at Greenwich, aimed at trying to reduce energy levels in the stores. It has some very innovative and revolutionary equipment and services, as well as some quite old-fashioned things. This has helped us to reduce our energy consumption in this particular store, monitored against a more standard model, by a significant amount. The monitoring is still ongoing, and we promise to publish the data within 12 months of opening, which will be in three months. We are using natural daylight rather than lighting. This was in vogue many years ago. It worked then, and goodness knows why we did not continue to use it. We have roof lighting, which helps to reduce our lighting levels. We have other pieces of equipment and services that are also reducing levels. It has been very successful. We have got some things right and are introducing them in other stores. Some things have not worked quite so well, and we are using research and development to try to refine these. I can let you have more information, and you can certainly have the report when we finalise the data.
3120.
On supporting local activities we try to work hard with the local community because it comprises our customers, our staff and our neighbours. We invest in a location, and we invest for the long term. It is in our interest to have the best of relationships with the local community. That can happen in many different ways. We get many requests to fund organisations - sometimes we say "yes" and sometimes we say "no". The more valuable contributions we make are when staff become involved with organisations. We find that many of our staff have skills that we did not know about. We have been able to utilise those skills and direct staff in a different direction in their career with us than perhaps we would otherwise have done. This has been beneficial and is a two-way process. We spend a fair amount of money each year on projects in local communities and on projects that have a more regional or national basis. It is difficult to give a rounded answer on that.
3121.
Ms Morrice: Are you prepared to be even more innovative - for example, recycling paper instead of plastic? You have this important position and could lead the way in recycling and green issues. I do not know all your stores, but I assume that there are not areas for children to play - what about crèche facilities? You could have a more proactive involvement in community projects, cross-community ones in particular, to try to contribute to the peace process in Northern Ireland. Would you be prepared to consider those matters?
3122.
Mr Fenner: We would consider anything - to put it bluntly. There is a lot of talk and interest in crèche facilities, and many customers ask why we do not have them. We do not provide a crèche in our stores, except for two in Scotland. We have found that the use of crèches has not been great. It is something that we have tried.
3123.
Ms Morrice: I am talking about your customers, not your staff.
3124.
Mr Fenner: I am talking about customers. For reasons that I am not sure of, crèches have been tried, tested and found not to have the level of demand that you or I might expect. I can see the provision of that sort of facility being a natural extension of customer care but it has not been taken up when we put it into stores. Either we have a bit more work to do or you have. We have tried it and it has not worked for us. Others have done it; it seems to work for Safeway. It is part of its general standard of offer to its customers. Probably we have more work to do, rather than the other way round.
3125.
Mr Pinkerton: The Minister visited the Greenwich store a couple of months ago, and he was particularly interested in it because of the energy dimensions and the windmills which generate electricity to drive the signage. Sainsbury's would be only too willing to offer the same facility to the Committee if members wanted to see the Greenwich store.
3126.
The week before last the head of Sainsbury's environmental group had a meeting with Mr Jim Lamont, the Chief Executive of the Environment and Heritage Service, about the report which has been referred to. There are close relations between Sainsbury's environment department and the Department of the Environment over here, and we are trying to develop those along the lines you are advocating in terms of waste disposal and recycling.
3127.
Mr Neeson: As Mr Pinkerton knows, we welcome the arrival of the large retail companies to Northern Ireland as it means increased choice, which was not there before, and it has also brought in some competition. I do have serious concerns about out-of-town shopping developments. I only have to look at the Abbey Centre - and I know that you hope to locate nearby shortly - and the impact that is having on my own area of Carrickfergus. Other towns are in the same situation. I am putting that down as a marker.
3128.
Going back to 'Strategy 2010', one of the big issues raised there is the development of e-commerce, and we are seeing a major revolution in retailing. What do you feel needs to be done to ensure that Northern Ireland takes full advantage of the current situation?
3129.
Mr Fenner: Can I take issue with the word 'revolution' - I do not think there is a revolution yet in our sector. I will give you some figures. Whatever shape e-commerce takes in the retailing sector, only about 0·3% of all retail goods are purchased using e-commerce. That is forecast to rise by 2005 to 5%, so it is becoming significant. There is obviously a trend, but there are some big barriers to its advancement. We have been working on e-commerce in the food retailing sector for several years, and the barriers that we are coming up against are the ones that have been well aired, such as the security of people's personal information. The biggest problem in food retailing, and I suspect that it applies to the retailing sector in general, is the delivery of the product. It is very easy to take the order and to pick whatever goods have been chosen, but delivering the goods to the delivery address is the problem. In food retailing most people order their bag of goods over the Internet and want it to be delivered between 4.00 and 7.00 pm on a Friday night. Sometimes they are at home, and sometimes they are not. That is a big issue, which is known in the business as 'the last mile' problem, because it is that last mile which is causing everyone the headache of how to get the goods to the purchaser. There is a long way to go, and I am in no doubt that these problems will be overcome and that e-commerce will play a major part in the retailing sector of the economy in years to come. However, it is not there yet.
3130.
The opportunities are immense for Northern Ireland. One aspect already in place is call-centres. The next phase of that will be tele-hotels, where the hardware is put in a building on a lease basis. That is becoming a major opportunity for investment. The biggest opportunity of all, and one that is taking off faster than anything, is business-to-business transactions. We have been using this for a lot of supplies, introducing the web site at a very early, low-level stage as a means of communicating and making information more transparent.
3131.
This is producing many savings and opportunities, so it is another area that should be focused on. A vital element of e-commerce is to make sure that the knowledge and intellect needed to exploit it is available in Northern Ireland. The intellectual base will make the best use of it. I am certainly aware from my family, and people of a younger age, that they are very conversant in the technology of e-commerce. These skills have to be harnessed, and that is where the exploitation of those opportunities will come from in future years.
3132.
Mr Neeson: There have been suggestions that there are differences in product pricing between here and England, and that products in Northern Ireland are often more expensive than across the water. Is this the case?
3133.
Mr Fenner: Do not hold me to this percentage, but we have a UK-pricing policy for around 90% of our product range. Our product range consists of approximately 24,000 different items. Our general stance is that we have a UK-wide pricing policy. It does fluctuate for petrol and where we have to buy local fresh products from the immediate market place. As far as we are concerned, Sainsbury's has a UK-wide national pricing policy.
3134.
Dr McDonnell: I live in South Belfast, not that far from Forestside. I suppose I am a customer - certainly my wife is. She spends all my money there, so perhaps I have a bias. Earlier you were a bit unkind to 'Strategy 2010'. We have many problems with it - and I believe that retailing is a very necessary part of any programme - but I thought that your critical comments were unkind because we regard 'Strategy 2010' as an engine to generate wealth. We regard retailing as a redistribution, or a recycling, of that wealth. This is perhaps where the difference lies. As I see it, 'Strategy 2010' has set itself up as a way of generating new wealth in the new economy of the twenty-first century. I welcome the increased retailing opportunities.
3135.
There is a problem that we might have with retailing, and certainly your style of retailing. It is great that you have 150,000 customers dropping in every week and that you spend much of that money locally and that a fair amount of it goes on wages. However, at the end of the week there is a big dollop of money sucked out of our economy and transferred back to base. Those are the concerns, perhaps at times unspoken, which many in the political community have about big retailers. They like the choice and the option of having these retailers there, but the worry is that at the end of the week our economy is £2 million, £3 million, or even £4 million down. I am talking narrowly about the local economy in Northern Ireland, and the local economy within three or four miles of a store. Do you have any comment on that?
3136.
Mr Joyce: I will take the wider question about the economy being down. Sainsbury's, and all other major retailers, will invest and expect a return on that, but this return does not disappear from the economy. Through dividends a percentage goes to shareholders who may be in Northern Ireland or may be anywhere in the world. This is true of any investor and any business investing here. The important issue is whether Sainsbury's is here for the long term. This is not a one-off investment like a development interest, where a company comes in, invests, takes a profit and then disappears. Sainsbury's is here, and it will be investing next year and the year after - and I do not mean in new stores, I mean in the existing stores.
3137.
It will be a long-term investment. In economic terms, it is unfair on Sainsburys or any inward investor to say that they take money out. It is true that they take a return, but they keep investing and reinvesting for the long term. That is the way the system works. It is in Sainsbury's commitment to stay here in the longer term. We will continue to see investment coming again and again, as Sainsbury's becomes part of the community.
3138.
Dr McDonnell: It is not just the return. I have no objection to people taking an honest profit. It is the capital that you are forcing elsewhere. There is a big greed, and there is a big concern out there about the amount of local sourcing. We have went through that, so I do not want to re-open that discussion. The money goes out, and it is used to source produce in France - perhaps we could not supply the same produce that you procure in France - or it goes to procure produce in Scotland or to procure produce in the south-west of England. I raise that issue in general. What policies do you feel would strengthen your type of inward investment and aid the expansion of other operations that are perhaps not quite as large as yours? What type of policies should we have - you have touched on this a few times, but I want to revisit it in a bit more detail - to pull in more national or international-type retailers? Where are the bottlenecks?
3139.
Mr Fenner: Consistency is important whether it is a business, whether it is us or whether it is some other inward investment. We need consistency in policies and in the interpretation of those policies. We do not want policies that are read one way by one organisation and read another way by another organisation. We want consistent application of those policies, but above all we want some speedy decision making. A quick 'no' is far better for us than a long term 'perhaps'. We have suffered quite badly as a result of a lack of decision making. We have some planning applications that were lodged three or four years and which are still sitting on desks for decisions.
3140.
As a result of that, we have quite a lot of capital tied up in various locations waiting the outcome of decisions. We are making it a friendly investment environment, and we want consistent policies, consistent application of those policies and speedy decision making. If you can provide that, and that sort of environment, you will have a lot of interest in inward investment.
3141.
Potential inward investors seek advice from us all the time on how we have found Northern Ireland plc. We give much positive feedback on our experiences in Northern Ireland. Any negatives usually relate to lack of decision making.
3142.
Dr McDonnell: We would like to participate in, and speed up, some of that decision making. Your presence here helps to push that along and fuel it. We have a bit to go in terms of public perception, which I touched on earlier, and on local sourcing and local relationships, but obviously you are well ahead now.
3143.
Mr Fenner: We have done a lot of work on that. We have given evidence to other Committees which we would be very welcome to share with you. That will show you that we are taking matters forward, and how we want to expand.
3144.
The Chairperson: We have no further questions. Once again I thank you, and I assure you that your submission and the answers to the questions will form part of our deliberations as we move to a conclusion, which I hope will be quite soon.
3145.
Mr Fenner: Thank you very much for your time.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 11 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Mr F Rock )
Mr T Reaney ) Craigavon Borough
Ald J McCammick ) Council
Cllr D Kelly )
3146.
The Chairperson: You are welcome here this morning. I propose to ask you to make a short opening submission and then we will have questions based on your submission to us. We have a problem this morning to do with parliamentary procedures, which means that certain members will have to leave earlier than expected. It is to do with the Business Committee and that will affect the quorum. We have decided to cut back the time for visiting delegations from three quarters of an hour to half an hour. I am sorry that we have to do that- we normally overrun.
3147.
If members of this Committee leave and our quorum falls below five, parliamentary rules dictate that we have to stop proceedings. Much of the disruption is due to pressure from the Business Committee, and I am sorry that your group has fallen victim.
3148.
Ald McCammick: Thank you, Mr Chairperson and members of the Committee. We wish to place on record our appreciation of this opportunity to make a presentation. We shall endeavour to put our points across within the allocated half an hour and, allow members to make effective use of the time available.
3149.
The council's written response recognised criticisms of the report. However, we also sought to identify the positive elements on which the council could work with the Department.
3150.
I wish to introduce my colleague, Cllr Dolores Kelly, former mayor and current chairperson of the environment committee. I am chairperson of the development committee. Also present are our chief executive, Mr Trevor Reaney, and Mr Francis Rock, our director of development.
3151.
Craigavon is one of Northern Ireland's leading borough councils. It is in an area that has been recognised as a major growth area in the strategic framework document. It is the largest manufacturing base outside Belfast, and the council is progressive and forward looking and takes the lead in development. We recognise the importance of ensuring that we have the right approach to building the economic future of Northern Ireland together with the Republic of Ireland and other islands within the European Union.
3152.
'Strategy 2010' is a regional blueprint. Your Committee has a regional remit, and we recognise this in our response. Nonetheless, there are several issues we need to raise with you that concern the council yet recognise the regional perspective. We are not here to argue selflessly on behalf of Craigavon alone- we put forward our response. Craigavon is a pilot area and a model for many of the proposals and approaches envisaged in the document. It has a diverse manufacturing base with both industries in decline as well as high technology and high value-added enterprises. Its location is ideal with excellent infrastructure linkages; it has the capacity for growth; and it has the largest IDB land bank.
3153.
In summary, the council wishes to work together with the Committee, the Minister and his Department, to make progress on those elements of 'Strategy 2010' that can be actioned at local level.
3154.
Mr Chairperson, you have provided us with a sequence of questions. I will address the first question and then involve my colleagues so that you may seek clarification on any of the points raised.
3155.
Dr McDonnell: The questions are those that we are intending to ask.
3156.
The Chairperson: We have allocated questions to various members, but because of parliamentary pressures we have had to cut back on them. However, that does not preclude us from engaging in correspondence with you.
3157.
Dr McDonnell: What measures do you suggest are necessary to ensure that the voluntary and community sector plays an increased role in economic development, and what role would the district council play?
3158.
Cllr Kelly: In our submission, we refer to the strong and well-developed voluntary and community sector in Craigavon. However, that is not to imply that we think that it should have a stronger role in economic development. We have found, through the district peace and reconciliation partnerships, that the community and voluntary sector lacks expertise in that area. In Craigavon, it was much more focused on social inclusion and unsustainable community projects.
3159.
We should also like a definition of the community and voluntary sector. We note that, in the proposed Economic Development Forum, the community and voluntary sector also includes the trade-union movement, whereas in Craigavon we very often have paid officers from the community sectors. There must be agreement on how that sector is defined.
3160.
The community and voluntary sector certainly has a role to play in the area of community business and enterprise, which was and is a very successful LEDU initiative promoting real business opportunities in the non-profit sector. However, this programme has been sidelined by both the community and voluntary sector and the Department. As I said, the community and voluntary sector prefers to seek revenue and capital funding for unsustainable, non-revenue-generating community projects. In the Greater Craigavon Partnership and the Craigavon Rural Development Ltd, we have a range of social partners, and we find that, while they certainly have a role to play, they are very weak on economic development.
3161.
Mr Neeson: I certainly recognise the role that local government can play in local economic development. You are critical of 'Strategy 2010' for not recognising the potential for local economic development. What policies do you think should be implemented to allow local government to pursue the full potential of such development?
3162.
Cllr Kelly: We believe that, as local government, we are accountable. We have finance accountability and scrutineers in place. We also feel there would be a natural link to your Committee and the Assembly with economic development. The council and the various agencies such as boards, trusts, the Planning Service, the Youth Service, health and social services, and the Housing Executive all function in isolated environments. A co-ordinated response to any situation is essential.
3163.
For example, we have great difficulties in the Brownlow sector at the moment, but there is no statutory obligation on those agencies to work with the council to pool resources in a strategic and focused manner. We ask that local councils be given statutory powers to take the lead role rather than being left to the whim of the various agencies. We stand by our local development record. We have had substantial success in taking the lead, and that should be recognised in future partnership structures and the future relationship between LEDU, or its replacement, and district councils. Too often in the past, LEDU has actively bypassed local councils to establish initiatives only to target councils' local enterprise development moneys to sustain them. We ask for a lead role and a co-ordinated response.
3164.
Mr Neeson: You mentioned LEDU or its replacement. How does the council feel about the creation of a single development agency?
3165.
Ald McCammick: As someone who has spent a number of years in management consultancy and run businesses for over 30 years in different sectors, I believe that there is a large degree of confusion in the minds of the general public, from small manufacturers employing a husband-and-wife team right up to the top. There is a need for a coming together, with one single body being charged with the whole realm. We do not want to see that based only in Belfast. LEDU has regional offices - in the West, in the South, in the North.
3166.
It is vital that a single body, charged with that responsibility, maintain those regional offices.
3167.
I want to reinforce what my colleague said about prospective developments within a given local authority area. There should be closer consultation, as in statutory application, where those responsible for roads, sewerage, water, housing and the planners have a statutory duty to consult. To be efficient and effective and to get the right sort of service for an individual who wants to start up or has an existing business, there needs to be one single, streamlined body.
3168.
Ms Morrice: I have to compliment you for your broad approach- you talked about this island, the rest of these islands, and the European Union. Far too little has been mentioned about the fact that we are in Europe. There is not enough consultation with local councils. How do you think that could be improved? What measures should be in place to involve locally elected people in the consultation process and in economic development?
3169.
Ald McCammick: Local government was granted powers to expend local economic development in 1992 by 2p in the pound, and that has subsequently increased to 5p in the pound. Since then, councils have taken up this challenge, and they have been very successful in promoting local enterprise development. They established themselves as leading players in the local development field. Many have taken on additional responsibilities, in connection with local partnerships, and arranged other initiatives.
3170.
District councils, as elected, accountable authorities, should be clearly recognised as the leading players- the hub of the wheel. Local government has too many people who have neither been elected, nor are accountable, being given responsibilities for area development. This is leading to confusion, duplication and a fragmentation of our efforts to improve in these areas. For example, the forthcoming round of structural funds, council expenditure and local enterprise development should be retained with the transitional programme, rather than thrown into the local partnerships. To date, this has been a success for councils. The district partnerships' record on economic development has been less successful. Councils should be recognised as the leading players in this, and in the formation of future local partnerships. There really is an opportunity to do that. The lack of clarity in local leadership can be easily addressed, through a formal recognition of councils as accountable leading agents.
3171.
As one who served on the Council of Europe for a number of years, I think there should be more recognition of the European Union. The more people realise that we are part of the bigger picture, the better.
3172.
Dr O'Hagan: I would like to pick up on points made by Cllr Kelly. You said that the community and voluntary sector was involved in the economic area but that it was in the business of sidelining. I would like further clarification on this. Do you see the community and voluntary sector as having any role in economic development? (Ald McCammick) when you were talking about district partnerships, were you saying that councils should take over their role? The reason a lot of that money was put into the hands of district partnerships was that there were clear problems with councils. I would like clarification on these points.
3173.
Ald McCammick: First of all, I am not saying that councils should take over. They should take the lead role. If one evaluates and monitors the progress of district partnerships one can see that they have largely not been the most cost-effective and efficient in producing economic development in local areas. That may largely be because of the people involved. Quite honestly, they feel out of their depth and have nothing to contribute to the dialogue.
3174.
From experience I have to acknowledge that in this day and age when best value is constantly sought you have to analyse constantly what your council or partnership is doing. Is there a better way; are these the most dynamic results that we are going to get from any given investment?
3175.
We have to examine what return we are getting from our money. Community members are largely geared towards capital projects. In terms of sustainability, you must ask where a project will be in three years' time when the funding is gone and what value it has added to the community.
3176.
Cllr Kelly: I have been involved in the district partnership programme since its inception and served for 18 months as the Chairperson of the Craigavon District Partnership. Like many partnerships in the first tranche of funding, we found it difficult to incorporate the peace and reconciliation aspect into productive investment. How do you introduce that aspect into economic activity?
3177.
However, in the community and voluntary sector, it is a matter of defining where people come from, whom they represent and to whom they are accountable. The community and voluntary sector challenges many views. Craigavon is unique because some of our paid representatives do not live within the borough area. We are seen to operate on a more grass-roots level. Dr O'Hagan, do you want to comment on anything?
3178.
Dr O'Hagan: Are you saying that this is specific to a problem in Craigavon and that in other areas the community and voluntary sector makes a very positive contribution?
3179.
Cllr Kelly: I cannot speak for other partnerships, but councils have been given a thrashing from the community and voluntary sector at consultations I have been to, perhaps deservedly so.
3180.
It is again a question of definition. We have found the trade union representatives to be very valuable contributors to the ethos of the district partnerships. On the other hand, they do not have the business expertise to make economic investment. While some community grass-roots projects in Craigavon led to an economic output in the town, project members were not usually represented on district partnerships. I am involved in some projects which have access to funding, but I find it very difficult to deal with economic development and expert business planning. People are left on their own, and there is a risk of volunteer burnout and a lack of sustainability. Sometimes we find that in the community and voluntary sector funding is spent on pet projects rather than on those which create jobs.
3181.
Dr O'Hagan: That is an issue for another day. I do not want to waste time, but it is an issue I would like to take up with you at another venue. In your submission, you said that if the recommendations in 'Strategy 2010' are to be put into practice, we need to deal with specific points, such as how and where action will be targeted. How do you identify and prioritise recommendations and targets?
3182.
Mr Reaney: That is a very extensive question which we do not have time to deal with in detail, but certain issues which have been highlighted in the report merit consideration as criteria. These include concentration on knowledge-based industries and new technologies.
3183.
In Craigavon the extensive traditional industry base must be replaced by technology and knowledge- based industries. This issue merits priority when targeting recommendations.
3184.
Outside the Greater Belfast conurbation there is concern that too much development is being focused on Belfast, to the detriment of the rest of Northern Ireland. This concern is felt throughout the Province. While Belfast is a natural magnet, it seems to be the only place that people are encouraged to invest in. Not enough consideration is given to the potential of other locations throughout Northern Ireland for investment. Spreading development throughout the whole Province should be a priority and a criterion for assessing and implementing strategy. We put in a bid for Craigavon under the URBAN II Programme in the new round of structural funds, only to be told that it is likely to be concentrated in north Belfast. This is another example of how the focus is on Belfast and, while the city does have needs, the rest of the Province is being neglected.
3185.
Dr O'Hagan: Thank you. I am sorry that time is short and we cannot debate more.
3186.
Ms Morrice: When you were talking about traditional industry, you suggested that "it should be replaced by new technology". That is interesting. Is there not a case for the proposal that says that traditional industry be safeguarded and new technology used to restructure and keep it going?
3187.
Mr Reaney: Yes. Allow me to bring Mr Rock in on this one.
3188.
Mr Rock: We recognise that in the traditional manufacturing sector, certainly in Craigavon, there is an inevitability about decline. Overcoming this requires a two-fold approach.
3189.
There must be an attempt to bolster what is reclaimable from the traditional manufacturing sector. We need to provide assistance to allow existing manufacturers to enter the high value end of the market, and we have some good examples of that in the borough. There is no future in mass production in Northern Ireland because our labour costs are so high in comparison with those in the Far East and parts of Africa, for example. Businesses need to aim at producing high quality, high value products which require a level of skill and literacy among our labour force against which the Far East workforce, for example, would not be able to compete. We must promote the work of local companies in conjunction with big retailers in a system similar to the one the organic food lobby has. I am not advocating parochial protectionism, but I think if people realised they were buying local products they would be willing to pay a premium. There is a willingness within the consumer body to consider that issue, but we need to highlight it.
3190.
We also need to develop new industries because of an inevitable downsizing of the big bulk manufacturers. This will cause restructuring which, in Craigavon, will no doubt result in major job losses. We want Craigavon- rather than just Belfast- to be considered for industrial investment and direct foreign projects because the area faces job losses on a grand scale.
3191.
The new industries must begin to take up the slack and employ people put out of work by downsizing. Your Women's Coalition party on the council has raised the ethical issue of far-eastern companies' use of child labour; their poor health and safety standards; and the lack of social-security systems there. The public are not aware of that either.
3192.
The Chairperson: In his absence, I shall put Mr McClarty's question to you. In your opinion, what policies will attract inward investment and help the expansion of existing small-and medium-sized businesses?
3193.
Ald McCammick: I shall bring the director of development in on that one.
3194.
Mr Rock: A number of short, sharp words, in no particular order, have been selected to attract inward investment. In Craigavon we are very aware of the difficulties of attracting such investment, and during the period covered by the last round of structural funds we had only one inward-investment project - contrary, I am sure, to popular belief.
3195.
We have the largest manufacturing base outside Belfast, despite having had only one direct foreign- investment project in that time. In Craigavon, and indeed in Northern Ireland as a whole, we need cheaper and more competitive sources of energy. In particular, we shall look for an extension of natural gas to Craigavon and south-east Northern Ireland to provide competition and cheaper energy to businesses. We have businesses in the food-processing sector, which is clearly a big energy consumer.
3196.
Most points we propose to raise have been well-rehearsed with you. The issue of corporation tax is a very difficult nut to crack, but we sit cheek by jowl with the Republic, which has a much more attractive rate. We clearly need peace and stability in the island as a whole to benefit from the significant numbers of inward-investment projects that go to the Republic. If we can neutralise corporation tax, there will be no significant disadvantage in investing in Northern Ireland as opposed to the Republic. We need a well-trained workforce, and there are substantial recommendations that address that issue in 'Strategy 2010'.
3197.
You may not ask a question on this subject, but we want to address the issue of research and technological development. In Craigavon there is a gap, both physical and mental, between many local businesses and the research and development department at Queen's University. It is a two-way process, and we must find some way of breaking down that perception. We have a very notable exception in the Galen Ltd, pharmaceutical manufacturers who have significant links with Queen's. We must try to find better ways for local companies to access the research and development facilities at the university. While I do not wish to accuse academics of living in an ivory tower, they must become more aware of the rest of Northern Ireland.
3198.
Another Committee is currently grappling with transportation. We must make better use of finance from the European Investment Bank (EIB). Local banks do not promote the EIB sufficiently and are operating what might be described as a cartel. That frustrates the attempts of local business-people to make the most out of what should be a facility spanning the European region.
3199.
The Chairperson: Thank you. I apologise again that this session has been speeded up, but we are subject to Business Committee pressures. Thank you also for the manner in which you answered the questions and for your original submission. As we move forward with our investigation into 'Strategy 2010' we will take these into consideration. Should we need to write to you we will do so, but we are working to a tight timescale to complete our report.
3200.
Ald McCammick: Thank you very much, Mr Chairman. We appreciated the opportunity to attend this session. We have left some literature with the Committee Clerk, which complements our verbal evidence. We will be happy to respond in the future to any further questions that may arise.
3201.
Mr Reaney: There were a number of points we did not have time to make during question time. Is it possible to put them in writing and include them as part of our submission ?
3202.
The Chairperson: Yes, but we finish our public sessions next Wednesday and then move into detailed internal consultations.
3203.
Mr Reaney: We will get them in quickly.
3204.
The Chairperson: Thank you.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 11 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Ms B McBrien )
Mr S Cassidy )
Ms M McDonnell ) Youth Council for
Mr C Mussen ) Northern Ireland
Ms F Mulholland )
Ms O McCabe )
3205.
The Chairperson: You are welcome. Do not be nervous, we are much more frightened of you. Normally, the Members introduce themselves to you, and ask you to make an opening submission. Then, we have questions. The Business Committee has sent a note to us, requesting that we speed up. Therefore, we can give you only 30 minutes. Unfortunately, it is out of our hands. Should we fall below a quorum of five, we will have to suspend formally. We are under massive pressure, because Members have had to leave to deal with other parliamentary business, so we will have to ask fewer questions than we had wanted.
3206.
Ms McBrien: After the 'Generation 2000' conference, the Youth Council for Northern Ireland was charged by the Secretary of State with ensuring that the young people of the Province have an effective voice in the issues that concern us. In response to this, a focus group was recruited in September 1999. Its composition is broadly representative of young people in our country, and members range in age between 17 and 22 years old.
3207.
The group was equally split between Catholic and Protestant, as well as between male and female. Furthermore, there were people from urban and rural areas, young people in employment and in education, members with disabilities, a young parent and people who were unemployed and in training schemes.
3208.
Our first task was to study the 'Strategy 2010' document. As we all plan to be active in the workforce in 10 years' time, this document stimulated a lot of discussion. We met representatives of various agencies, including education and library boards; the Careers Service; the examinations authority; the youth service and employers; as well as the Department of Education.
3209.
The report that we have produced has been widely circulated and, we understand, has been well received. Young people are often portrayed in the media as indifferent or apathetic, so we welcome the opportunity to engage in discussion with the Committee. We come here with a passion, as stakeholders in the world of work for the next decade, and with a sense of hope for the future. We have divided our topics of discussion into three areas: education in schools; work and training; and third level education.
3210.
Ms McDonnell: I am here to talk about the education system and about secondary schools in particular. Tony Blair has emphasised the importance of education in creating a just and fair society. Schools have evolved over the past decade, but further changes are necessary for that growth to continue.
3211.
I have several areas to discuss, one of which is democracy. Some schools have student councils that give students the opportunity to hold elections, arrange meetings with speakers from outside, hold debates, and organise fund-raising events. Larger scale co-operation does exist, but not in a cross-community context. We would like to see more councils in our schools and similar councils for those at work.
3212.
Partnership and further co-operation between schools and employers are needed. Like myself, many of the students here have part-time jobs. That provides us with an income for clothes, holidays and going out, but it also gives us valuable experience of meeting people, learning new skills, working as part of a team and managing our time. However, many of our teachers know little about the world of student work. We are requesting four things: first, there should be opportunities for careers teachers to get more work experience; secondly, more work experience should be made available to students of school age; thirdly, we need more vocational courses in grammar schools; and fourthly, we need more partnership between schools and the world of work, with talks from managers and more practice in interview skills incorporated into school timetables. Equipment in schools needs constant updating, given advances in ICT (Information and Communications Technology). One idea is to use sponsorship, and another is for industry to pass on their equipment to schools when they are updating machinery and technology.
3213.
Ms McBrien: Sean Cassidy will speak on our views about work and training.
3214.
Mr Cassidy: I am 21 years old and a youth leader. My aide is Chris Mussen, who is also 21 and employed by a large national company. I will say a few things about work and training. Training, work and employment are important parts of growing up and becoming adults. In our group discussions, we agreed that we hoped to gain employment in order to achieve independence and contribute to our community. Most young people have a positive outlook and want to participate at all levels of society.
3215.
First, I want to speak about equality. I have a disability, Chris has a disability and another group member is dyslexic. We all feel that we are capable of doing a good job if given a chance. Employers need to recognise this. It is important that information about grants to employers is made available, especially to smaller ones.
3216.
Secondly, I will refer to training. Several people in our group have been unemployed and have participated in training schemes. These schemes varied greatly in quality. There should be better monitoring and evaluation of such schemes by the T&EA. Some members of the group had challenging work experience with quality training for NVQ 2 and 3 qualifications. Others had poor experiences and were used as cheap labour. The person supervising one of our group members had to look after more than 70 trainees, while the agency owner drove a large car. It is unfair that profit should be made out of the unfortunate unemployed.
3217.
The world of work is constantly changing. New developments are located on greenfield sites that are not accessible by public transport and, therefore, are accessible only to one section of the community. The location of new developments needs better planning.
3218.
Very little income has been generated by tourism here, in comparison to the Republic of Ireland and other countries. Projects such as fixing up the canal system and developing golf academies, sailing schools, and historical trails need to be undertaken to generate employment and cater for tourism.
3219.
Ms McBrien: Our final topic is third level education. I plan to leave school in eight months' time. If my grades are good enough, I will go to university to further my education, because I plan to pursue a career as a geography teacher.
3220.
My first area of concern is finance. There are two issues: course fees and student loans. I have been dependent on my parents all my life. They will face paying high university fees. Many students have part-time jobs, which give them work experience, but books, computers et cetera are expensive, and many in our group have already built up debts of several thousand pounds. That creates a major debt that must be paid off in their first years of employment, when they need loans to buy a car or save for a deposit on a house or flat.
3221.
My second area of concern is the number of places available in local universities. Many of our friends have been forced to leave the country to find a university place. For most, it is a good yet expensive experience, but many of our most able young people never return.
3222.
My third concern relates to lifelong learning. The world of work is rapidly changing, and the workforce needs to keep up to date. Some of our group wish to undertake part-time courses while they are working, some want to work part-time, others want to work full-time. We are concerned at the varied level of support from their employers. Some pay course fees, the cost of any necessary books, and even give study leave before an exam. Others give nothing and may even force the worker to take a day's leave to sit an exam. The Government have stressed the importance of "education, education, education". They regard all education and training as an investment for the future.
3223.
We must note also the increase in drug abuse and gangsterism in our country, which is a legacy of the peace process. We are all involved in the youth service and recognise the benefits to young people of involvement as voluntary leaders. The youth service is seriously underfunded. We appeal for your support for this vital service.
3224.
Some questions arrived at the Youth Council on Friday. They reached us on Saturday and Monday, so we have not yet had enough time to debate them fully. Our answers will be brief.
3225.
The Chairperson: We have allocated questions to the Members. They will tell you the number. We have had to reduce them because of the time pressures on us, over which we have no control.
3226.
Dr McDonnell: My question is listed as question 1. In your opinion, what initiatives would promote greater integration in economic and education policies, and more co-operation between business and education and training? In other words, how do we create a joined-up plan for education and industry?
3227.
Ms McDonnell: The question is about how we get schools and businesses to work together, so that students are better prepared to go out and work. More teachers need to be recruited from businesses, and their pay will have to improve. More speakers are needed in schools to help students understand what they are going into.
3228.
Many of us have the idea that as soon as we go out, we will make loads of money and friends and everything will be dandy. As I found out in my work experience, that is not the way it is. Traditionally, areas such as nursing are aimed only at girls. Men tend to shy away from that area, although there are some who want to pursue a career in it.
3229.
More people with a greater knowledge of the world of work than careers teachers should be brought in to speak to the students individually or, if that is not possible, in a group. That would deal with many of the fears that people might have about going out to work. We need people to come in and speak more openly and honestly about work.
3230.
Mr Neeson: As a former careers teacher -
3231.
Dr McDonnell: Give us a break.
3232.
Mr Neeson: I can sympathise with the points that have been made. I never thought that I would finish up as a full-time politician.
3233.
Dr McDonnell: They sacked him as a careers teacher.
3234.
Mr Neeson: My question is number 2. What policies would you suggest to encourage greater collaboration between schools and the private sector, with particular reference to work placement?
3235.
Ms McDonnell: In certain schools, students can choose the area that they want to go into. At the age of sixteen, we were asked what career we wanted to pursue. Some people had an idea but others were not so sure. For example, I study geography, economics and English and I want to pursue a career in archaeology. However, my placement was with a teacher in a primary school. We need a wider variety of businesses that are willing to allow students to shadow people in work for a week, instead of just having the conventional placements in schools or hospitals. We need speakers to advise us, and firms should add a bit more excitement to the work. Girls from my school have gone on placement and spent the day addressing envelopes and making tea. A bit of excitement and encouragement would go a long way. Some sort of bonus - for example, a certificate - could be awarded on completion.
3236.
Mr Neeson: Private companies could do more to facilitate people. The choice is not wide enough.
3237.
Ms Morrice: How can schools keep up with the pace of new technology?
3238.
Ms McDonnell: Schools should set aside a special budget for IT. The equipment is expensive and goes out of date quickly. There is no point in having out-of-date software. There should be a budget for updating software during the year. Young people in schools are often more computer literate than their teachers. Teachers should be more educated in IT. Computer skills should be taught at a younger age than grammar or secondary school; it should start at primary school.
3239.
Ms Morrice: Young people do not need the training. It is the teachers who need it.
3240.
Ms McDonnell: Young people will need it for their future, but many schools do not have the money, so children are not getting the education in computers that they need.
3241.
Ms Morrice: The point was made that industries that are updating their equipment, whether it be computers or sewing machines, should pass it on to schools. One idea would be a partnership between a school and a business.
3242.
Mr McClarty: I apologise for not being present at the beginning of your presentation, but I was very impressed with what I did hear and with how you delivered it. I wondered why you were so relaxed, until Maura McDonnell said that she wanted to pursue a career in archaeology. You must feel very comfortable in the presence of us old fogies.
3243.
What policies do you recommend to address the under-representation of females in politics and industry in Northern Ireland?
3244.
Mr Cassidy: Two of our witnesses are female. School councils give girls an opportunity to come forward. The youth service promotes club committees and area youth forums, such as the Northern Ireland Youth Forum and those in Fermanagh and north Down, all of which play an important role in allowing girls to gain the right type of experience. Industry can help by providing more job-sharing opportunities, work-based crèches, after- schools clubs for five to 11-year-olds and more family- friendly working hours. However, the greatest need is to educate men to share control and not take a dominant role. They should have confidence in women. I know that that is hard to believe.
3245.
Dr O'Hagan: Many groups in our society could learn a useful lesson from your organisation when it comes to broad based representation. Is New Deal sufficient to give jobseekers the training, skills, experience and money to find work?
3246.
Mr Cassidy: Some people need more help with English, mathematics and IT. They may lack experience or skills; they may have problems with literacy through illness. Therefore, standards of training must be kept high, so that the unemployed can gain the qualifications necessary to compete for jobs. Depending on his or her circumstances, an individual may have to continue longer in New Deal to obtain those qualifications. However, jobs must be available to motivate trainees to complete their training and reduce the dropout rate.
3247.
The Chairperson: I apologise for having to reduce the time, but we will use your original submission and your answers. Perhaps you could answer in writing the questions that we did not have time to ask. We are working to a tight schedule, which means that we have another week of public hearings before completing our report. Your submission will have the same status as the other submissions. Is there anything you would like to say?
3248.
Ms McBrien: We would like to thank the Committee for listening.
3249.
The Chairperson: Thank you for coming. It was very refreshing to listen to you.
ADDENDUM TO MINUTES OF EVIDENCE
YOUTH COUNCIL FOR NORTHERN IRELAND
Q1 In your opinion, what initiatives would promote greater integration of economic and educational policies and more collaboration between business and education and training in delivering the skills needed in the economy?
1. More teachers should be recruited from business but the pay would need to be better.
2. The curriculum in schools should be reviewed by joint business and educational committees.
3. Non-traditional areas, such as engineering for girls, or care of the elderly for boys, need to be tackled.
4. Industry should inform schools of their changing needs and provide the necessary equipment for the schools to deliver the training.
5. Taster courses in FE Colleges helps students make up their mind about their career direction.
Q2 What policies would you suggest to encourage greater interaction between schools and the private sector, with particular reference to developing work placements for students?
1. Students going on placement need to understand the competitive nature of work and the need to make a profit.
2. Tasks on work experience should challenge and be organised by the employer, the school and the student in advance. The results should be checked and credit given towards NVQs.
3. Create a network of past pupils to provide information and help set up placements.
Q3 In your opinion, how can education keep apace with rapid technological developments and progress in IT?
1. Equipment for IT is expensive and goes out of date quickly. Schools need a special budget especially for this area.
2. Young people are often more computer-literate than their teachers, can use e-mail, or get on the Internet.
3. Expensive equipment should not only be available from 9.00 - 3.00.
4. There is little point in having computers if the software is out of date and there is no money for ink for the printer, or no paper.
Q4 What action would you like to see taken to ensure that there is appropriate balance between education that provides for a narrow economic agenda and education that attempts to cater for all the knowledge needs of society?
1. Skills like (a) learning to drive a car, or (b) cooking on a budget, or (c) painting and decorating
should be offered as part of a Life Skills programme.
2. Young people are good at getting information off the Internet. Information needs to be kept up to date.
Q5 In your opinion, what action is needed to retrain and reskill individuals to meet the demands of a changing economy?
1. People should have a career plan which is reviewed every year.
2. Part-time courses should be organised to meet the needs of the individual and the employer.
3. Some countries give a six-month leave from work after five years to travel or up-date your qualifications (Australia, Sweden). Study leave like this would be attractive.
Q6 Have you any ideas on how to foster enterprise with the objective of increasing the number of people who see value in a career in locally owned business and self-employment?
1. Mini enterprises are encouraged in some schools, sometimes for fund raising. Examples include: growing plants and making window boxes; cake baking; craftwork.
2. Former pupils who are self-employed should be invited back to talk to the students about how they did it.
3. The support for self-employment should be more geared towards young people who have the ideas. They could be helped by retired business people who have experience.
Q7 What policies, in your opinion, can Strategy 2010 adopt to address the current high levels of graduates leaving the region? What incentives are necessary to encourage graduates to remain in NI?
1. Ireland has always exported people. It is good to get experience in other countries but incentives are needed to encourage graduates to return.
2. The politics of the last 30 years and the current uncertain climate have a negative effect.
3. Three suggestions are:
(a) Create more third level places to encourage people to stay.
(b) Promotion is important to graduates to make best use of their abilities. A career fast-track may help.
(c) Pay higher wages. Northern Ireland lags behind the rest of the UK.
Q8 In your opinion, is the New Deal part of the Government's Welfare to Work strategy that deals with those aged 18-24 sufficient to give job seekers a real chance to develop their potential, gain skills and experience, and find work?
1. Some people need more help with English, Maths and IT because of their experiences in school, absences like truancy, illness etc.
2. Standards of training must be kept high so that qualifications can be gained to enable the unemployed to compete for jobs.
3. As everyone is an individual, it may be necessary for New Deal to go on longer for some individuals to get the necessary qualifications.
4. However, jobs have to be available to motivate the trainees to complete their training and reduce the dropout rate.
Q9 What educational policies would you recommend to foster global perspectives and a more active interest in the European Union in order to improve competitiveness in industry?
1. Geography should be core subject.
2. Language teaching should concentrate more on verbal skills. Our geographical position and the political unrest mean we have less opportunity to meet people from other countries. Languages useful for business, such as Mandarin, Russian or Japanese, could also be offered.
3. E-mail should be used to communicate with students from schools in other countries, as well as Fax and phone.
4. More exchange visits should be planned.
5. Visitors from other countries could be encouraged to visit our schools, eg Los Angeles Cricket Team Rap Group.
Q10 What policies would you recommend to currently address the under-representation of women in politics and industry in Northern Ireland?
1. As you can see, two of our witnesses are female.
2. Schools Councils give girls an opportunity to come forward.
3. The Young Service promotes club committees, are Youth For a such as the ones in Fermanagh and North Down, and the NI Youth Forum, all of which are of great value in allowing girls to gain the right kind of experience.
4. Industry needs to help by:
(a) More job sharing chances.
(b) Work-based crèches.
(c) After-school clubs for 5-11 year olds
(d) More flexible working hours.
5. However, the greatest need is to educate men
- In sharing control.
- In not seeking to dominate.
- To have confidence in females.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 11 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Mr Wells
Witnesses:
Mr B Pue )
Mr D Gabbie ) Eurotrack Ireland
3250.
The Chairperson: Welcome. I propose you to make a short opening submission, and then we have some questions to ask you. Due to pressures emanating from the Business Committee, we have had to reduce the amount of time we can devote to you today. We do not normally do this - we even run beyond our set time - but this is outside of our control, and we can give you only half an hour.
3251.
Mr Pue: You are probably familiar with the current situation in Northern Ireland Railways. I know that Mr Neeson and Dr McDonnell have been working hard on the matter.
3252.
We feel that the economic development of Northern Ireland over the coming years will be closely linked to the development or otherwise of the railways. The railways in Ireland have always been at a distinct disadvantage, as they work on a different track gauge to the rest of the UK and Europe. This difference has had no real significance until recently.
3253.
It has meant that rolling stock for Ireland cannot be acquired straight off the shelf from the United Kingdom; it has to be specially built because of the size of the track gauge, and that means additional costs. It has also meant that rolling stock has not been interchangeable.
3254.
Eurotrack Ireland has looked at the system that operates in Northern Ireland, the rest of the United Kingdom and Europe. Since the opening of the Channel tunnel, Ireland is the only major land mass in the European Community that does not have a physical overland connection with mainland Europe. Ireland is a totally isolated island.
3255.
When Eurotrack Ireland prepared its initial proposals, its intention was to reinstate the old Belfast and County Down Railway route through east Belfast to Ballynahinch, with an extension-through towards the Maze. The idea was to build the line using standard European-gauge track, which would mean that rolling stock et cetera could be interchangeable. The intention was to construct a freight depot at the Maze between the M1 motorway and the Maze prison. This location was suggested because a large volume of freight uses the cross-border road to Newry, comes to the Sprucefield roundabout, on to the M1 motorway, up the Westlink, across the A3, up the M2 and out to Larne and the Belfast Docks.
3256.
By constructing a freight depot at the Maze, our idea is to remove that freight from the roads and put it on to rail at the Maze. The system that we are proposing is called a "piggyback" operation or a "rolling-highway" operation, where actual vehicles can be put on to rail. They could then be taken through to Belfast - as was our initial intention - and on to Belfast Harbour, where the whole train could be driven on to the ferry from Belfast to Stranraer, then driven off at the other side and through to Europe.
3257.
Before the situation emerged last year, Eurotrack Ireland had been planning, if it got its initial proposal off the ground, to look at a takeover of Northern Ireland Railways. We were aware of how serious the situation was and we knew that the rolling stock was in very poor condition. Eurotrack was also aware of the state of the track, so it immediately tried to put a financial package in place to offer to the Government as a means of relieving the situation. It had become evident that funding for the upgrading that was required was not going to come from Westminster.
3258.
After looking at this, we planned to re-gauge the routes in Northern Ireland, leaving the Belfast to Dublin line, which is integrated into the Irish Republic's railway system, isolated between Dublin and Great Victoria Street on 5 feet 3 inches gauge. The rest of the system can be re-gauged to the international gauge. That means that we would be able to bring freight from the depot at the Maze up the Lisburn/Antrim line and through to Larne.
3259.
At present, road hauliers are under severe pressure due to the high fuel costs et cetera. European regulations have not helped them either; there are now restrictions on driver hours and regulations as to what breaks drivers must take. On speaking to the Road Haulage Association we learned that the majority of hauliers travelling from Northern Ireland to Europe use the Larne/Stranraer route and then drive the length of England. A lot of them will not use the Channel tunnel; they travel by ferry to France.
3260.
The drive from Northern Ireland to France takes 36 hours. If we could put a vehicle on rail at the Maze, it could be in Europe 14 hours later, and during that time, it would not have turned a wheel. Each train would, therefore, take about 40 or 50 vehicles off roads such as the M1, the Westlink, the A8, the A75 from Stranraer to Dumfries and the M6 in the UK.
3261.
It would improve the environment. We could load a vehicle, have that load delivered to Europe and the vehicle back in Northern Ireland in the same time that it currently takes to get it there. It would save wear and tear on vehicles and would reduce overheads for the operators.
3262.
We have another proposal, which we hope to discuss with Londonderry Port and Harbour Commissioners soon -they are actually discussing it at their next board meeting. It concerns the very large volume of freight that is currently coming from the United States and Canada to Rotterdam and bypassing Northern Ireland.
3263.
Vessels passing Northern Ireland take a further two days to get to Rotterdam - a day lying off Rotterdam waiting to berth, and a day unloading and re-loading. They then take another two days to get back to the same point off Northern Ireland. We are looking at the possibility of bringing those vessels into Londonderry port, offloading the containers and taking them through to Europe by rail. That would bring additional traffic to our railways.
3264.
We are also looking at upgrading passenger traffic and - because of the change in track gauge - the possibility of operating a direct rail service from Northern Ireland to London, which would link with Eurostar services to Europe. That would give people coming from Europe a direct link from their stations to Northern Ireland.
3265.
Our present position is that we have been talking to a number of financial institutions and railway operating, leasing and manufacturing companies in the UK, Europe and the United States. We need to persuade the Assembly to look at the privatisation option. If the Assembly agreed to a privatisation option we could have approximately £150 million to £200 million in place within two months, which would allow for upgrading and the provision of new rolling stock.
3266.
Over the next two to three years we plan to improve the situation by launching as a public limited company. That would give the people of Northern Ireland the option of buying shares in their own railway system and would provide another £300 million to enable us to look at reopening routes that are now closed, such as Armagh, Comber/Newtownards, Newcastle, and Londonderry/ Strabane.
3267.
Dr O'Hagan: I wish to pick up on the issue of privatisation. I am not convinced of the overall benefits of privatisation. One only has to look at the example of the privatisation of the railway system in England. I ask you to convince me. Let us talk about the pros and cons.
3268.
Mr Pue: As far as privatisation is concerned, we would advise the Assembly not to go for the option adopted on the UK mainland, which we feel is not to the benefit of the travelling public. In the UK, Railtrack maintains the track and various rail operators run the private services.
3269.
When a private operator is considering fares, he has to take into account the levy imposed by Railtrack, and it has to make sufficient money to maintain the track and pay its shareholders. The operator has to look at his own operating costs, the leasing costs for his rolling stock - because most of it will be leased - his profit, and additional profit for his shareholders. The general public in the UK is paying dividends to two sets of shareholders, and that increases fares.
3270.
We would prefer to see some kind of public/ private partnership. At the moment, all the land on which the railways operate is owned by the Northern Ireland Transport Holding Company, a sub-division of the Department for Regional Development. That land is leased free of charge to Northern Ireland Railways. We would like to see a similar type of operation where we could bring a member of the Northern Ireland Transport Holding Company onto our board and lease the land free of charge, but we would provide the funding for upgrading the track.
3271.
You say that you are not convinced about the privatisation aspect. The A D Little & Company report said that over the next ten years, Northern Ireland Railways needs £183 million to maintain its present levels of safety. That £183 million does not take into account any additional engineering expenses that may become necessary during that time. It also does not take into account the £10 million subsidy currently paid to Northern Ireland Railways for operating non-lucrative routes, nor the £1.5 million operating losses which are currently incurred. It does not allow for any expansion or development of the present system. If you consider those figures instead of £183 million over the next 10 years, the Assembly would have to find about £300 or £350 million. There are so many calls on the Northern Ireland Budget at the moment: the health service; the education services; and now there is this £3 billion which, it is said, is going to be required for upgrading water provision. If over the next 10 years the Assembly can find the money to salvage the current system, will it be able to find the additional money that is going to be required to upgrade and reinstate closed lines? We believe that the freight aspect will bring in additional revenue, which could be used to subsidise passenger services.
3272.
We have looked at a completely new fare structure; we are also looking at park-and-ride systems. We have a whole raft of proposals to be put into place that will make the railways more attractive to the travelling public. If the railways were kept in their present state and under the same control, we do not believe that the Assembly could provide the sort of funding to accomplish what we plan to do over the next few years.
3273.
Mr McClarty: I want to ask a question about the necessity of a link with mainland Europe in order to improve transportation for both passengers and freight. In I find your ideas in that regard very acceptable; they make sound economic sense.
3274.
Mr Pue: For a number of years the Government have spent a considerable amount of money trying to attract inward investment to Northern Ireland. Large international manufacturing companies who are looking for a foothold in the European market are the ideal investors for the Province. Having talked to a number of local councils we know that they have had international manufacturing companies come and have a look at Northern Ireland with a view to locating here. They know they can get the site, the staff and the technology. However, they then look at the systems and the infrastructure for getting their products into Europe and find that the only way to do so is to load them on to a lorry, take it across to the mainland on the ferry and drive it the full length of England. That is not cost- effective; it adds to the finished cost of the product. Every council has advised us that they have lost investment for that reason. With this type of system in place we would say to any company manufacturing worldwide, "locate a factory in Northern Ireland. You can load your product on to rail, and we can have it in Europe in 14 hours without intermediate handling, with less chance of damage in transit, and lower transport costs". By doing that we could attract additional inward investment to the Province.
3275.
Ms Morrice: Much of what you say is useful. I would describe you as a man ahead of your time. Perhaps that is part of our problem; that is the sort of vision we need for Northern Ireland, although money is also a problem. I want to correct you on one point. We export to England, Ireland and Europe - I keep reminding people that we are already in Europe.
3276.
In a way you have answered the question concerning the link-ups. I want to concentrate on south and east Belfast, the Westlink and the Belfast to Larne road. What problems do you envisage Belfast having to face, and how does that compare to Dublin and what it has achieved with the Dublin Area Rapid Transport (DART) system?
3277.
Mr Pue: We intend to look at a number of closed routes. Over the last few years a feasibility study was carried out by W S Atkins on the Belfast/Comber/ Newtownards corridor, resulting in the E-way scheme proposed by Translink. When we prepared our original proposals for that route we examined the idea of a light- railway transit system using vehicles known as euro-trams, manufactured by Adtrans in Derby. The euro-trams are light, electric-rail vehicles which have fast acceleration and are comfortable. They are ideal for urban transportation systems.
3278.
Initially, we planned to link our line into the Odyssey complex. The idea was to bring it in through east Belfast over the old Holywood Arches route, across the Bangor line to the Odyssey complex, over the Queen's Bridge, along May Street, around the city hall, Donegall Place, High Street and back over the Queen Elizabeth bridge to Odyssey again. We put the proposal forward in 1994 and applied to the Department for funding towards a feasibility study. The problem was that the application was rejected, and the funding was given to Translink. The final outcome was the E-way scheme.
3279.
We showed our plans to the engineer at Odyssey, who said that it was exactly what they needed. I wrote to Odyssey's chief executive requesting a meeting, but was told that that was not possible because the Department of the Environment had put a clause in the Odyssey planning conditions stating that all transport arrangements must be made through Translink. Therefore we were unable to proceed, or complete a feasibility study.
3280.
If privatisation happens we will be able to re-examine the situation. We wrote to the Department and asked for a meeting with the planners to look at the approach to Odyssey from east Belfast, but we were told that because our application for funding had been rejected, there was no point in a meeting - we were rejected again.
3281.
We intend to reconsider that, because the traffic which comes in via east Belfast originates in Newtownards, Comber, Donaghadee and the Ards Peninsula. Some of it comes from Saintfield and Ballygowan. All the traffic from Newcastle, the Newcastle road, Dundrum, Downpatrick and Saintfield congregates in south Belfast. Those are the towns we intend to serve with the reinstatement of the route to Newcastle. If we can move those passengers from cars to trains and use a park-and-ride system, they will get into Belfast quickly, and there will not be the same traffic blockages.
3282.
When there is a traffic blockage the Department of the Environment tries to solve the problem at the actual site. It does not attempt to identify what is causing it and where it stems from. That is what we want to address.
3283.
Ms Morrice: You have got a great deal of support from us on that.
3284.
The Chairperson: As a result of the pressure being put on us by the Business Committee, we have only 10 minutes left, and we have to finish on time.
3285.
Mr Neeson: In relation to the interim report from the task force, are you suggesting that the greater Belfast area should be serviced through a Light Rapid Transit (LRT) system as well, or are you talking about retaining the diesel wagons?
3286.
Mr Pue: I have not seen the task force's full interim report. We are awaiting a copy from the Department. We received the overview of the interim report and feel that the task force has not looked closely enough at the aspect of private funding. They have totally ignored it. Initially, we are looking to upgrade the route on the Larne, Londonderry and Bangor lines by using modern diesel railcars. Once that upgrading is done, there would be no reason why you could not look at an integrated LRT system. We would like to do that for the whole of Belfast.
3287.
When the London underground was built over 150 years ago, people said that it was a waste of money and not required. Where would London be now without it? Belfast needs to look forward along those lines. We have a document, prepared in 1928, about the electrification of the Belfast to Bangor line. It was prepared by Metropolitan-Vickers Ltd for the Belfast and County Down Railway. The Government at the time did not provide the subsidy that was required to introduce it. When Córas Iompair Éireann (CIE) was looking at electrification for Dublin, they borrowed that document, and that is what the DART system is based on. That could have been introduced in Belfast in 1928, but, as usual, we are way behind everybody else.
3288.
Another point I failed to mention in my original address was that plans were launched about two months ago for a rail tunnel from Holyhead to Dublin, although it will probably be 20 years before it is ready. It will be built to the British and European track gauge. Irish railways will not be able to take advantage of it. We have an opportunity now to be 20 years ahead for once - ahead of the Republic of Ireland. I am meeting tonight with some of the representatives of the Armagh City and District Council, and they are trying to arrange for me to meet Mary O'Rourke, the Minister of Public Enterprise in the Republic, to look at this problem. We have a chance to get that bit ahead, and LRT is something we will have to seriously consider.
3289.
Dr McDonnell: What general policies do you feel would enable Northern Ireland manufacturers and producers to compete on more favourable terms with their British and European counterparts? Where do you feel we, as a Committee, should be intervening in the policy-making process? Do you feel that the Dublin- Holyhead tunnel is viable?
3290.
Mr Pue: I have met with Douglas Ferguson of Queen's University, who is well versed in these matters, and he knows the company behind it and that it is a feasible proposition. If it were built, it would be the longest tunnel in Europe, and his feeling is that it will come. It may take 20 years or more, but it will come. A tunnel would be our ideal solution. With all the explosives buried between Northern Ireland and Scotland, it is not really a feasible proposition to link Northern Ireland and Scotland in that way. A ferry operation is the next best possible option. Over the next few months the Assembly will have to make decisions on the future of Northern Ireland Railways.
3291.
The development of the Province's economy will depend to a considerable degree on how the link with mainland Europe and the rest of the United Kingdom is developed over the next few years. We offer the best possible option, and unless Assembly policy makers can guarantee funding to allow that to be done, they will have to consider the privatisation option.
3292.
The Chairperson: I welcome our new member, Jim Wells, to the Committee and ask him to finish the questions.
3293.
Mr Wells: I represent South Down and know the track very well. I must ask you two crucial questions. First, a great deal of that land is being used for other purposes. Farmers have built sheds on it, and some of it has embankment missing. Will it not cost an absolute fortune to reinstate it?
3294.
Mr Pue: We have looked at that very closely. Most of the track bed between Belfast and Newcastle is intact. There have been developments in a few places, but they are mostly in open country with space for slight deviation. If a similar route were to be constructed now, bearing in mind that there is a track bed in place which simply needs replacement track, it would cost about £1 million a mile. The Newcastle route would be a little more expensive, for new stations and new bridges would need to be built in many places, and land acquisition must be taken into consideration. For the Belfast to Newcastle route, the cost of reinstatement would be about £100 million. Having said that, we must then look at what revenue will accrue over the next few years.
3295.
However, with the Belfast to London route in place linking with the Eurostar, that would mean that we could market Newcastle and South Down - in fact any part of Northern Ireland - as being easily accessible from Europe. You all know about the amount of traffic that goes into Newcastle during the summer, and we feel that this route could alleviate much of it. There is also a fairly large volume of daily commuter traffic from Newcastle to Belfast - you know how difficult it is to get on to the Ormeau Road or the Saintfield Road in Belfast.
3296.
Mr Wells: I accept all that, but how on earth would you generate sufficient passenger traffic to get a return on £100 million of investment?
3297.
Mr Pue: There is the freight aspect. Down District Council was one of those which told me that it had lost out on investment because that rail infrastructure was not there. Down district is crying out for road improvement, and it would cost less to reinstate the rail infrastructure than to upgrade the roads. It could certainly be justified.
3298.
Mr Wells: If a private entrepreneur were prepared to finance it, even looking at the present -
3299.
Mr Pue: Very little additional rolling stock would be required for the reinstatement of a closed route like that. Northern Ireland Railways operates about 25 diesel railcar sets. The majority - or at least a large number - of those railcar sets sit around York Road all day, although, admittedly, they are doubled up for peak traffic. They could be used for operating additional services during those periods. Newcastle Chamber of Commerce did a survey for us a number of years ago, and it asked summer visitors to the town how many of them would leave their car at home and travel to Newcastle by rail if there were a link. We thought a 25% positive response would be acceptable.
3300.
In fact, 98% said that they would leave their cars somewhere and travel into Newcastle by rail, because the traffic situation going is so bad. When the railway was closed, the volume of tourist traffic was phenomenal, particularly during the summer months. I believe that that closure was a mistake, and the Government has since said that it was a mistake.
3301.
The Chairperson: Thank you for your original submission and for the way in which you have answered the questions. We will reflect on all of the evidence as we move forward to complete our analysis of 'Strategy 2010'.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 18 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Attwood
Mr Dalton
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Witnesses:
Mr B McGinnis )
Mr I Walters ) Training and
Mr A Arbuthnot ) Employment Agency
Dr M Anyadike-Danes )
3302.
The Chairperson: You are welcome here this morning. I propose to ask each Member to introduce themselves. I will then ask you to make a short opening submission, after which we have a number of questions for you.
3303.
Mr McGinnis: Thank you very much for your words of welcome and kind introduction. I am Bill McGinnis, chairman of the board of the Training and Employment Agency, an executive agency of the Department of Further and Higher Education, Training and Employment.
3304.
First, the board generally welcomes 'Strategy 2010' and is fully committed to implementing those recommendations which are relevant to the agency. Before discussing 'Strategy 2010' in detail, it may be useful to provide a brief outline of what the agency does. I am the non-executive chairman, who conducts the meetings, co-ordinates business and offers advice on behalf of the board. Communication between the board and the Minister normally takes place through me, and when appropriate, I have dealt with direct rule Ministers and more recently, Dr Sean Farren. I brief board members on their duties and responsibilities when they take up office. I also ensure that the board meets regularly, and that proper minutes are kept and actioned. The agency is an executive agency of the Department, and one of the board's primary roles is to help secure strong collaboration and co-operation between the agency and the private sector, and to assist in the development of training and employment services.
3305.
As chairman, I have specific responsibility for the provision of effective strategic leadership in matters such as formulating the board's strategy to discharge its duties; ensuring that the board is provided with advance papers; taking account of wider Government policy; and ensuring high standards of propriety.
3306.
In relation to 'Strategy 2010', it gives me great pleasure to report that significant progress has been made on those recommendations concerning the enhancement of careers guidance and the establishment of collaborative clusters of schools, businesses and colleges. I confirm that the new Northern Ireland Business Education Partnership (NIBEP) was launched in September as the principle conduit of Government funding for business education initiatives. In line with 'Strategy 2010's' recommendation, the new NIBEP will bring a strategic overview and coherence to the wide range of business education activities that exist in Northern Ireland. I was also pleased to note that the themes of equality, tackling social exclusion and Targeting Social Need are central to the new NIBEP's business strategy.
3307.
In January of this year, the agency, together with the Department of Education, formed a Careers Education and Guidance Review Group. This was a direct response to the challenges laid down in 'Strategy 2010'. The group is representative of a wide range of stakeholders, including the business sector, and is chaired by Prof. Sean Fulton of Queen's University. Good progress has been made. Regular meetings take place, terms of reference have been agreed and a series of focus groups with careers officers, careers teachers, school principals and the education and training inspectorate are taking place. I want to reiterate that both Departments are providing the necessary support to careers education and guidance professionals, thus assisting young people and adults in their career planning and choice.
3308.
Skills are another key area for the agency, and I am sure that you will have read much about that recently. I am delighted to report on the work of the Northern Ireland Skills Task Force. By way of background, the Chancellor of the Exchequer's economic initiative for Northern Ireland in 1998 allocated £14 million over the following three years specifically for skills enhancement measures. This paved the way for the formation of the Northern Ireland Skills Task Force in February 1999. I chair the task force, and its membership is primarily drawn from the private sector, with support from other Government Departments and agencies, including the Department of Agriculture and Rural Development, IDB, LEDU and the Northern Ireland Tourist Board.
3309.
The task force's primary remit is to advise on the supply and demand for skills, and to provide a catalyst for skills related research. The task force has put systems in place to monitor the current situation and forecast future supply and demand for skills. This includes a skills monitoring initiative to provide comprehensive, detailed and timely data on the current skills requirements of Northern Ireland's employers. The main product of this will be a thorough annual or biannual survey of private sector employers.
3310.
The task force has commissioned the establishment of a centre of excellence for skills forecasting based at the Northern Ireland Economic Research Centre. I am pleased that Dr Michael Anyadike-Danes is present today. The new priority skills unit is engaged in a three-year programme of detailed skills forecasting for key areas where skill shortages might constrain the Northern Ireland economy. The task force has advised that the first two primary areas of examination should be information and communication technologies (ICT), and electronic engineering.
3311.
The ICT report was published in the summer and we expect the outcome of the electronic engineering study in November. Future priority skills areas to be explored include mechanical engineering, construction, and the hotel and restaurant sector. In addition to the work of the Skills Task Force the Training and Employment Agency is also continuing to carry out a complementary programme of labour market research aimed at enhancing the agency's understanding of the responsibilities of the labour market issues.
3312.
The main objective of obtaining timely and quality information is to ensure that the Government have the best possible data to aid decision-making on its programmes and services, and to ensure that training providers are aware of the potential impact of their products. The information already available has been used to begin the process of focusing programmes on certain sectors and on occupational skills. As additional information emerges, programmes and initiatives will be even more directly focused.
3313.
Dr O'Hagan: I am sure that you are aware that there are a lot of concerns and criticisms of New Deal. One criticism addressed to the Committee by a number of groups giving evidence in this enquiry is that New Deal is very restrictive and that it excludes job seekers who are not registered as unemployed. What action can be taken to address this criticism? Do you think that New Deal is sufficiently effective to give job seekers a chance to develop their potential, gain skills and eventually gain real employment.
3314.
Mr Walters: I understand the criticisms that have been levelled at New Deal, and a lot of very valid points have been made. However, to balance the argument, New Deal has achieved a lot of success. The number of people now unemployed in the two large target groups - the 18 to 24 year olds and the over 25s - has halved since New Deal was introduced in 1998. Whereas in the groups outside the scope of New Deal, unemployment remains virtually unchanged.
3315.
New Deal 25-plus applies throughout Northern Ireland and in about 15 pilot areas in Great Britain. It is particularly pertinent to note that the reduction in unemployment in those covered by New Deal 25-plus - the over 25s - in Northern Ireland and in the pilot areas in Great Britain are broadly in line. However, there is a very sharp difference between the fall in unemployment in the pilot areas in Great Britain and in the other areas, where there has been very little reduction in unemployment. That is very telling.
3316.
Having said that New Deal has achieved a lot of success, it could do a lot better. The Higher and Further Education, Training and Employment Minister, Dr Sean Farren, wrote recently to Tessa Jowell recommending changes that should be made to the design of New Deal. It is to be hoped that those changes will be introduced on 1 April next year. One of the proposals is that the intensive activity period for the over-25s should be extended from three months to six months. This is one of the concerns which the Training and Employment Agency has had about New Deal from the outset. There are some other changes proposed.
3317.
New Deal was designed for and is specifically targeted at those people who are receiving jobseeker's allowance. It was part of the Government's welfare-to- work programme which was introduced immediately after the general election in 1997. Because the programme is specifically targeted at those receiving jobseeker's allowance; therefore those who are not drawing jobseeker's allowance are not eligible to join it. That was a deliberate and very specific policy from the outset.
3318.
However, there are other programmes available in Northern Ireland which cater for those people who fall outside the scope of New Deal.
3319.
The 'Bridge to Employment' programme, for example, has been very successful in getting unemployed people into jobs. 'Worktrack', which was introduced as the successor to the 'ACE' scheme, caters in particular with women returning to work - one of the groups that fall outside the scope of 'New Deal'. Support is also available under the skills agenda, which the Chairman referred to, and that was a product of the Chancellor's initiative in 1998. People are well provided for, inside and outside 'New Deal'.
3320.
Dr O'Hagan: I will not start a debate about 'Worktrack', because there are many problems with it as well. 'Strategy 2010's' vision is to deliver
"A fast growing, competitive, innovative, knowledge-based economy".
Are you confident that 'Strategy 2010', as it stands, can achieve this? What further steps should Government Departments take to secure this?
3321.
Mr McGinnis: I am confident that 'Strategy 2010' will deliver, if everything in it can be implemented. I recognise that good progress has been made. It is a long- term agenda. Exports are holding up on the Department of Enterprise side of things, and if it is tackled energetically and progressively, it will perform well. Some aspirations will be difficult to achieve; for example, the creation of an outward-looking people. That will not happen overnight, it is a cultural problem, and people must change. However, the younger generation is increasingly looking outside Northern Ireland, and that will help deliver 'Strategy 2010'. Good progress has been made recently - the unemployment figures to be published today are 5·2%. That is still too high; it represents 40,000 unemployed people, but good inroads have been made. If we keep working towards this agenda, we can deliver it.
3322.
Dr O'Hagan: Can you elaborate on the point about an outward-looking people?
3323.
Mr McGinnis: The document calls for Northern Ireland to be more outward looking, because the economy in the island as a whole is small. We must encourage more companies and traders to go further afield to sell their products and services. I believe that is happening.
3324.
Mr McClarty: Coleraine is in my constituency, and I am very aware of the importance of the University of Ulster to the local economy. What can be done to encourage links between businesses and the universities?
3325.
Mr Walters: First, much is happening between businesses and the universities. Although the Training and Employment Agency does not have any direct responsibility within the Department for universities, it does have a close interest in them. The vice-chancellors of both universities are anxious to develop close relationships with businesses.
3326.
There are many ongoing initiatives which do not always receive publicity. For example, outreach funding of £2 million is available over three years to strengthen the capacity of universities to interact with businesses, and both universities have taken the opportunity to restructure their organisations in that respect. They are also involved in the development of the science park, and £10 million of public funding will be invested in partnership with private sector finance to develop new technologies. We have the £40 million 'National University Challenge Fund', £20 million of which is provided by Government while the rest comes from the Wellcome Trust and the Gatsby Charitable Foundation. That will provide seed venture capital funding to assist the transformation of research into business.
3327.
A further £25 million is available from the 'Science Enterprise Challenge', and 12 new centres of enterprise will be established in the UK - £1·2 million has been awarded to a joint application from the two Northern Ireland universities to form a regional centre. Foundation degrees are being introduced, and the universities are likely to lead consortia, including further education colleges and local businesses, to pilot this new qualification. A lot more goes on between universities and businesses than perhaps meets the eye.
3328.
Mr McGinnis: Businesses also have to do more; the Government cannot do it all. Businesses have to recognise the needs and try to fill those skill gaps at an earlier stage by sponsoring people through university courses. That has to happen. It cannot all be placed in the hands of the Government to solve.
3329.
Ms Morrice: You talked about the education guidance team which has been set up. In its inquiry the Committee is getting the impression that careers guidance is ineffective in schools and in further education colleges, and that young people are not being prepared properly for the world of work, or guided correctly in new directions. Could you expand on that?
3330.
Mr Arbuthnot: The careers education and guidance system is split between the Department of Education and the Training and Employment Agency. It comprises two main aspects. First, the careers teachers in the schools and, secondly, the careers officers from the Training and Employment Agency. Much depends on how these parties interact. Their efficiency and effectiveness is key to the whole development of careers education and guidance.
3331.
The review group has been meeting since the beginning of this year and will be making a report towards the end of December. We have been looking at the role of the careers teacher in the school, the position of careers in the curriculum, resources, training and the availability of this service to young people in the school. The review group has been holding focus meetings with all the constituent parts - careers teachers, young people, careers officers, business people, et cetera. One large element of the review group's work is looking at how careers education operates in the education system and at identifying possible improvements.
3332.
The other aspect relates to the Training and Employment Agency's careers officers, to the resourcing, deployment and training of careers officers and how the agency interacts through service level agreements with schools. We are also looking at the efficiency of that process and what improvements can be made. In broad terms those are the issues that are being explored.
3333.
Ms Morrice: What is the day-to-day function of the careers officers in the Training and Employment Agency?
3334.
Mr Arbuthnot: They regularly go to schools to interview young people. They help to deliver psychometric tests to help young people to decide what their aptitudes are and what sort of careers they might follow. They also help to give advice about job opportunities, and about what industries are expanding in the local and wider labour markets.
3335.
Ms Morrice: Do the careers officers supplement the work of careers teachers?
3336.
Mr Arbuthnot: Absolutely. They tend to make the linkage with employers.
3337.
Ms Morrice: How many are employed in the Training and Employment Agency?
3338.
Mr Arbuthnot: At present there are over 90 careers officers. We are currently in the process of recruiting more.
3339.
Ms Morrice: Reskilling is an area that I am very keen to look at, especially in the traditional industries such as textiles, agri-food and shipbuilding. Shipbuilding has been in the news, and I know the work that is being done there. What are you doing to reskill people to move out of the traditional industries, and what are you doing for those who wish to stay and who could add value to the traditional industries?
3340.
Mr Walters: The responsibility for training employees in declining industries lies first and foremost with their employers. But support is available from DETI through the Company Development Programme for in-house training. That form of support used to be in the T&EA's remit, but was transferred under departmental reorganisation to your Department. Support is gradually coming onstream from the University for Industry, and very shortly from Individual Learning Accounts, which are the responsibility of the T&EA and our wider Department.
3341.
The University for Industry and Individual Learning Accounts will, we believe, make a major impact in helping people in employment acquire new skills which they may need in a new job in the future. If I may give an example, Coolkeeragh Power station in the north-west faces closure because of its obsolete generating equipment. The closure has been public knowledge for quite some time, and a very structured approach is being taken there to preparing employees for the future. There is a University for Industry access centre in the company, and the company has already given its employees sums of money which they match and which are in fact the first Individual Learning Accounts in Northern Ireland. Employees will use that money to acquire the skills they may need for the future. This is an excellent example of how people in a declining industry can prepare for life beyond that particular phase of employment.
3342.
One difficulty is that if you embark on retraining programmes for employers in companies in decline, you risk causing a loss of morale. If people believe that their company might close, they might lose confidence in that company and arguably precipitate an earlier rundown or closure. One must be careful about how one tackles retraining in companies in decline - although the Coolkeeragh approach is an excellent example of how to go about it.
3343.
Much of the training or retraining which is needed can be done quite quickly, taking weeks rather than months or years, so the gap between leaving employment and entering a new job can be relatively short. We have had experience of that. For example, one of the growth sectors in Northern Ireland is call centres. It doesn't take long to retrain someone for a job in a call centre.
3344.
When it comes to giving skills to those who are unemployed, there is a wide range of available programmes. We've already touched on the Bridge to Employment Programme, and the New Deal, which provide opportunities for unemployed people to acquire new skills which enable them to get a new job.
3345.
Mr Neeson: I find it very difficult to detach T&EA from economic development. With the restructuring and separation, how can you wholly fulfil your role in economic development, bearing in mind that in many ways ETI is essentially the Department of economic development?
3346.
Mr Walters: Essentially we do that by attempting to work very closely with them. When we were all in the old Department of Economic Development we worked closely with the Department of Education, among others. Those relationships still exist; the difference is simply that we are in a somewhat different organisational position.
3347.
Our relationships with the Industrial Development Board (IDB), the Local Enterprise and Development Unit (LEDU), the Industrial Research Technology Unit (IRTU) and the Northern Ireland Tourist Board (NITB) are as strong as they ever were. We will continue to play our full part in supporting the activities of those agencies. Similarly, we have a close relationship with the Department of Education, the Department for Social Development, and the Social Security Agency (SSA). To use jargon, we are working hard at joined-up Government.
3348.
Mr Neeson: I want to deal with the problem of the under-representation of women in industry. On a recent visit to the United States I learnt that American policies encourage women to participate in business. Have you any ideas about how to increase the representation of women in industry in Northern Ireland?
3349.
Mr Walters: I agree with you. The activity rate for women in Northern Ireland is relatively low, and it is certainly low compared to the UK and Europe. Some economists say that this trend is likely to continue because our birth rate is higher than other regions and also because women are inclined to stay at home to look after children.
3350.
There is cause for optimism in some areas. The female participation rate in business at the higher skills level has improved. Fifty-eight per cent of students in higher education are women, and that is a good sign for the future. Good use is being made of European Union (EU) funding to help women acquire skills that will take them into business, through the Women's Training Network, for example. Various initiatives are in place to increase childcare provision and the quality of childcare and to train childminders by using mainstream and EU funding. As I mentioned earlier, the Worktrack Programme was developed for women returning to work. We run bridge programmes for women. The University of Ulster has provided management development programmes specifically for women. Much is happening to help women acquire skills and move into work.
3351.
Mr Neeson: Do you think that enough is being done, not only by the Training & Employment Agency (T&EA) but also by LEDU and the IDB? It is difficult to accept that a higher birth rate is a major contributory factor to fewer women participating in the workplace.
3352.
Mr Walters: I am not sure that it is a major contributory factor, but it does play a part. There is also the cultural issue. Husbands will have to take their share of family and domestic duties to help their wives get back to work. Generally, women take responsibility for looking after children, and that is why childcare provision is important.
3353.
You asked a question about the IDB and LEDU and what they can do. Some industries that have been in decline, shipbuilding, for instance, tend to employ men, whereas some of the newer industries offer good opportunities for women. A recent Cabinet Office survey reported that of the 1·7 million jobs which will be created over the next few years, some 1·2 million are likely to be taken up by women. Attractive jobs in the software and electronic industries, and in call centres, should encourage greater female participation.
3354.
Mr Attwood: Mine is a global question which is consistent with the spirit of 'Strategy 2010', as many of the themes of that document concern equality, representation and accountability. These are very welcome, I am sure you will agree. How do you view the suggestion that civil servants, in particular senior civil servants with Executive functions, should declare their membership of secret societies, from the Knights of Columbanus to the Freemasons?
3355.
Mr Walters: Do you mean that civil servants should declare their membership of such societies? That is an issue which is best dealt with by other people. Personally I would have no objection to answering, because I do not belong to any secret societies; I belong to professional institutions. It is not for me to reply but for others who have to decide on issues which may become part of the terms and conditions of employment in the Northern Ireland Civil Service.
3356.
Mr Attwood: There is a concern in management bodies in Northern Ireland that so-called secret organisations exercise undue influence.
3357.
Mr Walters: I am not aware of ever having been influenced by such organisations, nor, I believe, have any of my colleagues in the agency. We work hard to be politically neutral and unbiased in everything we do in taking forward the Government's policies on the basis of equality of opportunity for everyone, and not to be swayed by those sort of influences. I have never encountered what you are talking about.
3358.
Mr Attwood: You mentioned earlier that the agency is instituting a number of mechanisms to monitor current and future skills shortages. Does the fact that you are doing this now suggest that you were remiss in such monitoring in the past?
3359.
Mr Walters: No, it does not.
3360.
Mr Attwood: Before the introduction of the Skills Task Force, what mechanisms were used to identify future skills needs? Do you disagree with the suggestion?
3361.
Mr Walters: We relied heavily on advice from industry, particularly through sector training councils. The 17 sector training councils in Northern Ireland represent their respective sectors on a wide range of employment and training issues. We have looked to them for many years to provide us with advice on the skills that their respective sectors need. Having received their advice, we acted on it.
3362.
For example, our action in the IT sector pre-dates the Skills Task Force and the work of the Northern Ireland Economic Research Centre. A comprehensive action plan was agreed and published. This was drawn up between the Software Industry Federation and us. That dates back to 1997-98. For many years now, if I might give you another example -
3363.
Mr Attwood: If I could just stop you there. I am sure that they were very useful agencies, but the fact that you had to set up a skills task force, and the other mechanisms which were emphasised so heavily in Mr McGinnis's opening submission, suggests that the sectoral councils were not working particularly well, even though you say that they did anticipate the skills needs, and that you responded to that.
3364.
Mr Walters: Setting up the Skills Task Force was a measure to move the work that was being done in trying to forecast skill needs up a gear. Internationally, skills forecasting has proved very difficult and not many countries have got it right.
3365.
Mr Attwood: Except the Republic of Ireland.
3366.
Mr Walters: I am not going to get involved in that debate. Some say that the Republic has not got it right either. We looked at examples of skills forecasting which have been used in places such as Singapore, for example, in the Far East, and in Europe. We came to the conclusion that in-depth surveys which are used in countries like Holland and Belgium tend to produce the best results. That is why we went down the road of in-depth surveys.
3367.
However, skills forecasting was introduced when unemployment was much higher, and there was a great deal of skills among the unemployed. Dealing with skills issues then was not quite as difficult as it is now. There has been a recognition that the labour market and the skills available have changed. This is why the Skills Task Force was set up.
3368.
Mr McGinnis: I agree. When I joined the agency, unemployment was 16%, and we were largely involved in dealing with programmes for the unemployed. Jobs were not being created. Many jobs have been created in the knowledge-based economy recently, and that is an area which we have had to consider more closely. This is a worldwide problem, not just a Northern Ireland one, I heard that one of the states in the USA has 16,000 hard-to-fill vacancies in the IT sector. A readily available pool of labour would be a big advantage in attracting inward investment. That is why we have concentrated on skills to try and deal with that.
3369.
Mr Attwood: Finally, on that theme. When the East Down Institute presented evidence to the Committee at Queen's University a few weeks ago, its representatives spoke powerfully about how they had recreated their courses to suit the needs of Nortel; that institutes like them, in urban and rural areas in Northern Ireland were servicing the particular skills needs of organisations like Nortel. They were anxious about being able to find the skilled people required for those jobs. Is the Skills Task Force involved in similar schemes?
3370.
Dr Anyadike-Danes: That is a specific issue about how the policy works. We are concerned with establishing numbers, not with implementing the connections between groups of employers and training institutions. I presume that that is a role of the various mechanisms, such as the Northern Ireland Business Education Partnership, which tries to involve firms with the educational sector. The institutional arrangements for communication between the education institution and a potential employer is outside our area.
3371.
Mr Attwood: Do you not have a role in working with institutes of further education on the courses that they do, and in helping them anticipate the skills needs in the market?
3372.
Dr Anyadike-Danes: In as much as we make use of the statistics which are given to us on enrolments in institutions of further education. We put those together - we assemble a balance sheet, if you like - by type of institution, by type of course. It is fairly detailed, and I have done it all over Northern Ireland for people leaving education. We try to match it with what we are told by employers. We recognise that the levels of disaggregation in this are quite limited, because of the sort of information that is collected by an institute of further education.
3373.
For example, a number of students might be enrolled in a diploma course in computer science or in some other part of information technology (IT). That information will go into our list and be assembled with the list on similar numbers of similar courses in other higher and further education institutes in the country. That forms part of the supply side of those schools, and we try to balance that against what we are told through our sampling of employers. Industrial promotion agencies like the Industrial Development Board (IDB) inform us about the future growth in demand for different categories of skills at different levels. Then we examine the figures to see if there is a balance.
3374.
I thought that you were asking me about how a particular institute would get in touch with potential employers, and that is not our function. Our function is to find the balance between what the institutions are doing, as revealed by their enrolment figures, and what future demands for particular categories of qualification are likely to be. We are not talking about skills per se; we are talking about qualifications.
3375.
Mr Walters: We have talked a lot about skills, but skills shortages are often used as a euphemism for labour shortages and for high turnover. There are some skills shortages - there is no question of that - but very often a report about skills shortages is really about labour shortages and high staff turnover rates in companies.
3376.
There has been criticism of the relationship between further education colleges and businesses. The relationship between the two has not been good, but that is changing. There are now some excellent models of good practice in Northern Ireland, where colleges and businesses are working closely together to the benefit of those companies. For example, a number of additional places which have been allocated to higher and further education have been in the priority skills areas of information and communication technology.
3377.
Mr Attwood asked what actions we had taken. I omitted earlier to mention the Jobskills Programme that was introduced in 1995 to replace the Job Training Programme (JTP) and the Youth Training Programme (YTP). The Jobskills Programme is NVQ based and National Vocational Qualifications (NVQs) are not creatures of Government here or anywhere else, but they are features of business. NVQs are designed by businesses for their own needs and are specifically aimed at addressing the skills needs of businesses in the future. There are about 12,000 young people in Northern Ireland on a Jobskills programme at any given time.
3378.
Dr McDonnell: First, I want to put on record my personal indebtedness to the Training and Employment Agency for the efforts that it is making in South Belfast, despite other significant pressures on it from East Belfast in the recent past. I am very pleased with the progress that has been made on some of the opportunities and on trying to meet the skill shortages.
3379.
I keep making the same point - and will no doubt be making it in four years' time. It is a concern that somehow we may miss out if we mismatch the available human resources to the opportunities that arise, and that we might run out of skilled people. What creates the stresses or political pressures on people like us is when there is a labour shortage in one area and an unemployment pool in another area. Balancing those can cause considerable concern.
3380.
You recommended in your submission that 'Strategy 2010' should concentrate on the main elements that would strategically address the economic requirements in Northern Ireland. We have touched on some of these already, but could you list the main and urgent elements to focus on?
3381.
Mr McGinnis: It is very difficult to prioritise elements because this is a very large document which contains a lot of good recommendations. One very important priority is the integration of education and economic policies. This has started to happen in certain places. For example, Limavady College and Seagate Technology have worked well together to create a number of jobs. Without such a partnership-based approach, the jobs could not have been created.
3382.
Standards in education must be improved ¾ there are very well-educated people at one end of the spectrum, while people at the other end have very poor basic skills. We are trying to tackle this problem by training people in these skills through the New Deal programme. Nevertheless, if this training were given at an earlier stage in people's education, we would not have to rectify these problems.
3383.
Primary school pupils are being prepared for the world of work, but not everyone will get a professional job. There must be a culture change in the industry sector - it has to be made more attractive to people. Industry has not sold itself very well, particularly the older industries; promotion of the sector in schools is a great challenge for everyone.
3384.
The Information Age Initiative is a very positive project ¾ I am happy to see its rapid development because it is an important piece in the jigsaw puzzle.
3385.
A greater number of small companies should be encouraged to become involved in research and development ¾ the annual IRTU report reveals that very few companies have taken on this challenge.
3386.
Dr McDonnell: What action should be taken to strengthen the role of the Northern Ireland business education partnership (NIBEP)?
3387.
Mr Arbuthnot: The NIBEP produced its corporate plan last month. Its key role is to bring economic and education policies together on a practical level ¾ NIBEP can make things happen on the ground between schools and local employers. Over 20 business education partnerships have already been set up and I hope that as NIBEP develops over the coming months, it can support these partnerships and provide better resources, as well as ensuring that young people from all schools in every area can take part in the initiative. This would attract young people to the world of work and make them aware of it from primary school level. We will be working with NIBEP and the Department of Education to support and finance them in the operation of their business plan.
3388.
Dr McDonnell: You and your Chairman raised the interesting idea of targeting pupils at primary school level. It irritates me that, while the 35% to 40% of pupils at the top level of the education sector are doing very well, children who opt out of school are not targeted. How do we motivate the kids who are not making it?
3389.
Mr Arbuthnot: That is an enoromously broad question in response to which the Department of Education would be able to make a more informed comment.
3390.
Dr McDonnell: I know that it is an education issue, but will the promise of a job be a motivating factor or is something else necessary?
3391.
Mr Arbuthnot: I do not think that it is the question of the promise of a job. I have responsibility in the agency for, among other things, careers officers and the careers service, and it is important to stimulate young people. They will learn and are more likely to become engaged with the education system if they can see where it leads to, and if their imagination is stimulated by the world of work so that they can see some objective in going through the education process; if they start, even at an early age, to think about what they want to do when they grow up.
3392.
It is a matter of engaging with the young people, stimulating their imagination, increasing their awareness and taking them through the education system in that way.
3393.
Dr McDonnell: One of our biggest problems, with unemployment at 16%, was the no hope situation. A generation of young people did not pursue education because they had no hope when they came out, and so what was the point? It was not worth putting in all of that effort - or so they thought.
3394.
Mr Walters: That it is something we all have to work at. There is a role for agencies, for Government Departments, for business, for - dare I say it - politicians and for society generally. It is not easy to motivate people.
3395.
The sorts of things that are being done need to be done. There has never been a better time to help those people to get jobs, particularly in Belfast. Many people are unemployed, but in north, south, east and west Belfast new jobs are being created. If we do not succeed in getting the people that Dr McDonnell is talking about into these jobs, we will miss an opportunity and the companies that need these people will not get them, and that is equally important.
3396.
Dr McDonnell: Thank you. I know that you are doing a good job in Belfast. I do not want to speak for the Chairperson, but he is interested in Strabane.
3397.
Mr Dalton: I apologise that I was not present to hear your earlier presentation. In your submission you stated that the recommendations in 'Strategy 2010' were aspirational rather than strategic. Can you identify those that you think were aspirational, and do you have views on how the aspirational recommendations could be made more operational?
3398.
Mr McGinnis: That is a difficult question. The one thing that I found difficult to come to terms with was where people were calling for a change in corporation tax. Obviously, tax raising powers is a big issue for the Assembly and whether it can change the corporation tax system through the Chancellor. I found that to be the challenging thing that was being asked, and was very much aspirational.
3399.
We talked earlier about changing the culture of our people to be more out-ward looking. That is a long- term thing. It will take 10 to 20 years to change people's mindsets towards looking outside Northern Ireland to the bigger world. Those are the main things that I saw as being aspirational.
3400.
In fact, at that stage, I reflected the views of my board, because we had a full day session in March just after 'Strategy 2010' was published. I remember writing to Gerry Loughran saying that some of these things were aspirational. Because there is such a long list and because everyone had different views, in attempting to draw the information together, I probably used that word lightly.
3401.
Ms Morrice: I was just contemplating what Mr Arbuthnot said about a child's imagination. My son is nine and he has watched too many Harrison Ford movies. He wants to be an archaeologist, but where do I go to find careers information about that, I do not know.
3402.
You made a point about the particular skills at Harland & Wolff and said that, since the jobs that are being created are intended for women, there are fewer jobs available for men in the new jobs coming through. Given that situation, and the fact that you can get people into work quickly when they are made unemployed, what is your timescale for getting the 600 redundant workers from Harland & Wolff back into jobs? What percentage do you think you can get back in and in what timescale?
3403.
Mr Walters: In an ideal world, we would like to think that all 600 would get jobs. We do not yet know the aspirations of all these people. Major redundancies in the past have tended to suggest, from research, that the majority get jobs quite quickly. Some people decide, for personal reasons, not to re-enter employment - perhaps for caring responsibilities in the family. Others decide that retirement is the life they want.
3404.
It is difficult to put a target on it. I can assure you that we are working hard, and there is a lot going on aimed at helping those 600 people find new jobs. In the temporary job centre which was set up approximately 450 out of the 600 visited it and received advice. Incidentally, that centre has closed because the employees have left the company and it is no longer convenient to them. On the last opening day we only had 11 callers.
3405.
Ms Morrice: Can they not access this individual learning account you were talking about in Coolkeeragh?
3406.
Mr Walters: The people in Coolkeeragh are in employment. Individual learning accounts may have a role to play in all of this but resources for retraining are not an issue here. When it comes to retraining any, or all, of those 600 we will make the resources available, using the programmes we talked about. It is early days yet, but between 90 to 100 people have been referred to companies which have job vacancies. We are working closely with the Engineering Training Council and are trying to match those people who have been made redundant with companies in the engineering industry which are recruiting and have vacancies.
3407.
Castlereagh Borough Council is organising a job fair on 9 November and that will have a strong Harland & Wolff dimension to it. Arrangements are being made for engineering companies with vacancies to be present. We will be mailing all of the 600 Harland & Wolff people made redundant and encouraging them to attend. There is some anecdotal evidence that some have already found jobs without a great deal of help from us. There is a lot going on with Harland & Wolff and time does not allow me to go into it today.
3408.
Dr O'Hagan: Mr McGinnis said that when he first went into the agency the unemployment rate was about 16%. The Training & Employment Agency has been involved in a lot of these programmes for tackling unemployment over the years. What is your response to the view that it is not really about creating jobs, but more about massaging unemployment figures? Since 1979, when the Tory Government came into power, the way unemployment figures were counted and checked has been changed about 24 times, if I am not mistaken.
3409.
Mr McGinnis: I have been there for the last five years, so that is before my time. I have seen major changes and we have changed too, by trying to tackle people's problems. We have dealt more with the young and tried to run programmes to deal with the long-term unemployed, which is a stubborn figure to move. That area concerns me greatly because we have made very little inroads into it. It is something that we have to continue to tackle.
3410.
We have been trying to make the conditions right for younger people, with initiatives such as the Jobskills programme. In the 18 to 24 group in New Deal there are about 3,500 people claiming Jobseeker's Allowance who have no jobs. We are always concerned about the quality of jobs and for how long the jobs will be sustained. They are involved in and getting experience in the world of work. The number of long-term unemployed is particularly high in Northern Ireland. We have tried a number of programmes to correct that, but it is an ongoing battle.
3411.
I keep saying that it is almost a cultural change that we need. Some people have decided that they are on unemployment benefit for life, and it is very hard to change that mindset at times. We need to create more jobs, and well-paid jobs - that is the other point. There is no point creating jobs at the minimum wage rate all the time because that is not attractive for people on benefits. It is very hard to move from benefits to work if you are going to be worse off or your income will be similar. This is a big problem.
3412.
There has certainly been a major reduction in unemployment. I know that you have some criticism of the New Deal, but the New Deal has made an impact in the time we have been running it.
3413.
Dr O'Hagan: I know that your agency has been very involved in the Walsh visa programme. There were a lot of problems with it. Have any of those problems been ironed out? How is that progressing?
3414.
Mr Walters: I am pleased to say that the Walsh visa programme has stabilised. You are right that there have been some very serious problems with that programme with regard to the number of people returning. People from the South and the North are in the same programme, and it is very worrying that the percentage of people from the North coming back is about double that of those coming back from the South. We do not understand why that should be so, because they have been through the same preparation, they are in the same programme and have received the same support in the United States.
3415.
We have had many discussions with FÁS in Dublin, with which we have a very close relationship and a long history of working on joint programmes, with the State Department in Washington and with Logicon, the State Department's contractor. We have also had extensive contact and consultation with the US employers who are providing the jobs. A lot of changes to the programme will be made, particularly in the pre-departure training, but also in the arrangements in the United States. The next group which goes out there will not leave until some time early next year; we have not put a date on it yet. We are determined that no more will go out until we are sure that we will have a better success rate.
3416.
We could have done without the problems we have had with the programme, but it would be wrong, in my view, to level criticism at anyone. A lot of people approached that programme with enthusiasm and commitment and have tried to make it work, but some of the problems which have arisen have been beyond our control.
3417.
Dr McDonnell made a point earlier about motivating people. A significant percentage of people have come back in a very short space of time. A great many more have come back because they have been fired on account of their behaviour. That is bad, and we need to prepare the people who go out there better.
3418.
Dr O'Hagan: Were major factors not also the working conditions in some of the places they were going to, the rates of pay, the living conditions, and the lack of support?
3419.
Mr Walters: I would not accept that living conditions were a factor. The accommodation provided has been of a high standard. The terms and conditions of employment were known before the people went out, because they signed contracts. I know that when some people got out there, they felt dissatisfied for various reasons.
3420.
It is a question of the glass being half-full or half-empty. Of the people from the North who went out, 42% have come back, and that is appalling. However, on the other hand, 58% are still there. The figure seems to have stabilised, and they are doing very well. We were told yesterday - and this is a heart-warming story to encourage us - that one of our participants has done extremely well and is now in a job earning $40,000 a year. That is not bad.
3421.
The Chairperson: I would like to thank you for the way in which you dealt with our questions. I hope that when we move to complete our report we can take on board your views.
TOP
MINUTES OF EVIDENCE
Wednesday 18 October 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Attwood
Mr Dalton
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Mr Wells
Witnesses:
Mr B Robinson )
Mr E Miller ) Industrial Development Board
Mr E Wilson )
3422.
The Chairperson: I apologise for the delay. We were late starting and then the previous session got very intense for a period, very focused. I would like to formally welcome you to this Committee session. I shall ask the members to introduce themselves and then hand over to you for your presentation. Following that, we have questions we would like to ask.
3423.
Mr Robinson: The Department of Enterprise, Trade and Investment welcomes the work that the Committee is doing. The inquiry that you have been conducting has provided a full debate on 'Strategy 2010', and that has been very worthwhile. The Department is also delighted that the work is coming to a conclusion. It is important that the Department is kept informed of the findings from your work as the Programme for Government is finalised and so that in due course it can work through into the departmental corporate plan and those of the various businesses in the Department.
3424.
Eddie Miller is a full-time trade union official and a member of the board of the Industrial Development Board (IDB). Edward Wilson is chairman of Ulster Carpets Mills and he is also a board member of IDB. Alan Gillespie, IDB's chairman, has asked me to tender his apologies for his absence.
3425.
Mr Miller and Mr Wilson will answer the questions relating to the IDB, and I will also answer where appropriate.
3426.
I am playing a dual role at present. It is as acting permanent secretary of the Department of Enterprise, Trade and Investment that I will be dealing with your questions. I am supported by Bill Pauley from the strategic planning division of the Department.
3427.
Mr Neeson: Just for clarification, Mr Chairman, are two sessions being put into one?
3428.
Mr Robinson: Mr Chairman, we are seeking to have the questions for IDB dealt with first, and then have a slight break. Mr Miller and Mr Wilson intend to stay on for the second part of the session as part of the public hearing rather than being directly involved.
3429.
Dr McDonnell: That is acceptable because the two organisations are like a seamless cloak anyway.
3430.
The IDB submission recommended that a joined-up approach is essential in all the 'Strategy 2010' recommendations with particular emphasis on the education dimension. Have you any suggestions or opinions as to how we might achieve this in practical terms?
3431.
Mr Wilson: I hope you do not mind if I elaborate on this a little bit as I think it is one of the key issues arising out of 'Strategy 2010' - stop me if you think I am waffling on for too long, but I have some quite strong views on this particular issue.
3432.
I start from the viewpoint that 'Strategy 2010', the whole process, should have been a shared vision. It is to be hoped that it is now a vision shared not only by people who participated in creating 'Strategy 2010' but also by yourselves, who are looking at the process of evaluating it.
3433.
In relation to this particular question about the process of education and training, one of the central issues was the creation of a knowledge-based economy. The Northern Ireland Economic Council did some work on this and found that inward investors are primarily attracted by regional capability in areas such as access to research and development, skills of the workforce and educational training programmes. The two key things we, as board members, find that companies, particularly inward investors, are looking for are skills of the people and the infrastructure, but particularly the skills, of the people available.
3434.
'Strategy 2010' stated
"Economic development strategy must inform education and training policy, funding and delivery mechanisms. There should be strategic direction for skills development aimed at meeting the future needs of the economy. "
3435.
When we are talking about the future needs of the economy you will see from 'Strategy 2010' that the software industry was talking about the possibility of 20,000 new jobs, tourism of 20,000 new jobs and tradable services of up to 25,000 new jobs. There is an area of huge potential.
3436.
I just want to elaborate on where I think we are now and where we might be if we all embrace the vision of 'Strategy 2010'. What I am going to say about the present situation - and I am deliberately exaggerating so forgive me if I am overdoing it - is not a criticism of the people who are involved in the process of education and training. They are all very hard working, diligent and conscientious people.
3437.
If we look at the schools as they are now, essentially driven by the national curriculum, we have great success, with 40% of pupils going into higher education. But of this 40% how many are choosing relevant degree or higher education courses? Are the choices they are making guided or directed in a way that is going to fulfil the economic development aims of Northern Ireland?
3438.
The result is that we have a lot of frustrated graduates looking for jobs who have maybe been trained in the wrong courses and skills. When they come out of university they think the world will be their Mecca, but very often it is not.
3439.
If we look at the other side of the education picture, at the other 60% of pupils who are going through the school educational process, many of them come out of that process feeling like total failures because they are not going into higher education. It is an absolute tragedy that we are wasting all of that talent. I am told that of that group of people about 20% to 25% can be described as functionally illiterate when they leave school. It is outrageous that this should be happening.
3440.
They lose interest in school, probably from a very early age, and they feel like failures. They lose motivation and many of them, as we know, drift into the ranks of the long-term unemployed. What might that be if we all embraced 'Strategy 2010'? I apologise for being so long-winded, but I do feel very strongly about this.
3441.
If schools educational policy is driven by the vision in 'Strategy 2010' we will not lose sight of the three Rs. It will be driven by the vision that at least 40% of students will go on to higher education courses which are relevant to the current and future needs of Northern Ireland industry and commerce and other areas of activity. The 60% who are at school now and are demotivated should, as they go through the system, be prepared and inspired by the options available to them after compulsory education. The schooling process should actively prepare those people to seize the opportunities available to them.
3442.
The 65,000 new jobs that I mentioned are the areas towards which our young folk should be aspiring. 'Strategy 2010' stresses that there should be a huge emphasis on the value of vocational education. Somebody said to me recently that the main message for our young people should be that 'AQ' is better than 'IQ' - the 'A' standing for attitude, as opposed to intelligence. You can not undervalue intelligence, but for many employers attitude is more important than sheer intelligence. This is not detracting from the fact that schools should prepare children for life. More specifically, they should prepare children for the realities of twenty-first century life.
3443.
In relation to the idea of a shared vision, we as parents should say to our children "Where are the opportunities? What are you thinking about doing? Are you going into university?" - as we hope a lot of young people will do. Many parents tend to mention the safe jobs in the professions, such as the Civil Service or politics - dare I say it. A lot of this inspiration should be driven from the home. 'Strategy 2010' stresses that we should all share that vision. The vision needs to be popularised. The parents need to understand what opportunities are available for their children, and this applies to the vocational education sector even more than the higher education sector.
3444.
The universities are largely driven by providing the courses that potential undergraduates are looking for. This could change as the vision for 'Strategy 2010' has outlined the sort of opportunities that will be available in the twenty-first century. The types of courses provided should reflect these needs.
3445.
The Training and Employment Agency is currently re-preparing graduates through the rapid advancement programme. This is an attempt to reorientate people for new job opportunities. This situation should be avoided. The Training and Employment Agency should not have to provide this type of retraining. We could go on to talk about the infrastructure and the impact on IDB, LEDU and IRTU. We in IDB and people in LEDU, in IRTU and in local councils are doing their best within the constraints of the system. We need an integrated approach, which is central to the whole philosophy of 'Strategy 2010'. Much more could be achieved through the joined-up government approach. I apologise for labouring this point, but I feel strongly about it.
3446.
Dr McDonnell: What action would you wish to see to ensure that Northern Ireland does not miss out on the explosion of e-business and e-commerce? We are involved in some of it, but how do we get on top of it?
3447.
Mr Miller: The information age initiative has been set up and no doubt you have seen its document 'Leapfrog to the Information Age'. Certainly the educational aspect of training comes into that. We must equip our young people with the skills necessary in order to take on this new technology. The telecoms infrastructure is also very important in relation to broadband capacity, access and costs. We are encouraged that there are a number of companies along with British Telecom, such as Nevada, Eircom, NTL, all competing in Northern Ireland. That should help to drive down costs for businesses. There also needs to be a proper legal framework set up to do business over the Internet, and this is a matter for the UK Government. There is a Bill before Parliament currently in relation to that.
3448.
Dr McDonnell: Where do we stand with creating the culture as distinct from providing the services? One of the biggest problems we have is the poor uptake by many small businesses.
3449.
Mr Miller: The initial figures show that there was a poor uptake and, indeed, Northern Ireland was bottom of the league in relation to the UK. You may have seen recent figures which show that Northern Ireland has moved rapidly up that league. IDB has also put resources into promoting and encouraging business in this direction. Business without use of the Internet and e-mail is like trying to run a business without a telephone in this day and age.
3450.
Mr Wells: It is claimed that 'Strategy 2010' will bring about a fast growing, competitive and innovative knowledge-based economy. How confident are you that that will be delivered?
3451.
Mr Wilson: I would repeat that what is central to success in developing a fast growing innovative economy involves us all sharing and grasping the vision. There are a number of activities and recommendations laid out in 'Strategy 2010', which may now need updating, as part of it was prepared almost three years ago. I feel very confident that with people like yourselves and the Economic Development Forum we have the chance to grasp this huge opportunity in a way in which a larger community of people would not be able to do. I am confident that all the people of Northern Ireland can deliver.
3452.
Mr Wells: The figures released this morning show that there are now over 40,000 unemployed people in the Province, yet we have reached the stage where we are starting to import labour. Nursing homes are now bringing in care assistants from the Philippines and some of our factories are bringing in staff from Eastern Europe to meet shortages of labour.
3453.
Clearly there is something wrong with a strategy that is not matching supply and demand. Are you absolutely certain that by the time we implement this strategy we will not still end up with 40,000 or 50,000 people we simply cannot employ, because they have not the skills or perhaps the inclination to take up the vacancies that are there?
3454.
Mr Wilson: We absolutely agree with you, Mr Wells. My place of work is quite close to an area where there are huge unemployment figures. A lot of those are people who are long-term unemployed. Of the 40,000 we are talking about, quite a significant proportion are long-term unemployed. If you will forgive me, that does come back a little bit to what I was saying about preparing society, in general, for the process of people being trained, and preparing them in the long-term, for the sorts of jobs and opportunities that are available. We could have quite a long discussion about initiatives that can take place to draw current long-term unemployed people into the world of work, and I am happy to elaborate a little bit on that.
3455.
Mr Wells: Is there any advantage in a strategy that simply sucks in labour from outside, and drives up house prices and inflation in the Province? Is it actually targeting those hardcore long-term unemployed people?
3456.
Mr Wilson: Yes, very much so in the way that I have described. There are short-term initiatives that can be taken, but the long-term process is to avoid people drifting into the world of long-term unemployment by ensuring, in particular, that the school leavers have a focus for what they want to do and what is available to them in the world of work when they are going through the schooling process. If you look at 12-,14-,15- and 16-year-olds now, a lot of them have lost interest in the idea of getting work. They do not feel that there is any worthwhile work for them to be doing. They feel that maybe because their parents did not work, why should they work? The whole philosophy of what is trying to be achieved through 'Strategy 2010' could seriously impact on that particular problem.
3457.
Mr Miller: The number of long-term unemployed has been coming down. Indeed, the Industrial Development Board, in its conditions to projects, is putting stipulations to encourage the employment of long-term unemployed people into those particular businesses. The number has been coming down quite rapidly, and the IDB is working hard to ensure that all sections share in the rise in business.
3458.
The Chairperson: Mr Attwood has to leave early, so some of his questions might relate to the Department as well as to the IDB.
3459.
Mr Attwood: Yesterday morning on Radio Ulster a woman from the tourist industry was on, and when she was asked a question about the development of tourism on the island, she said, as many would say, that differential tax rates were prejudicial. I do not know whether that is true or not, but she in particular referred to the VAT rate, which is 12·5% in the South. So I would like to open the issue of the tax environment in the North, not relevant to the South but relevant to the work that you do. It has been a long litany of argument over the last 15 years in respect of the corporation tax rate in the North. It does seem to me, and I hope you will correct me on this, that we are now barking up the wrong tree. The prospect of getting corporation tax reduced in the Northern context seems to be unlikely because of the pressures on the Treasury in Britain. Perhaps you could comment on whether there is still potential in that regard.
3460.
Also, in your submission on 'Strategy 2010' you mention the potential use of tax breaks to encourage investment in business in the North. Will you comment on that and also comment on the tax environment in the North and its impact on your work?
3461.
Mr Robinson: Mr Miller will deal with corporation tax, and then I will deal with the wider issues of taxation in general.
3462.
Mr Miller: The corporation tax rate has given a very big advantage to the Republic. Many pharmaceutical companies have set up there because of this advantage. However, in projects where the corporation tax is not as important, such as businesses run as cost centres for example in network services, we have been very successful in attracting those businesses to Northern Ireland.
3463.
Mr Attwood: With regard to lobbying for a reduction in the corporation tax rate, is there any realistic chance of that being conceded by Europe and by the Exchequer?
3464.
Mr Robinson: It all comes down to a judgement. We are all capable of coming to that conclusion for ourselves. A previous effort was made to create a corporation tax relief grant and IDB used it in the mid-1980s. The process of achieving that grant and having that weapon available took a long time. Ultimately, it was treated just as any other state aid in the European context. The overarching regulations that Europe has for state aid in any part of the European Union came into play. Therefore any advantage to saving corporation tax was offset by reductions in capital grant or reductions in employment grant. Ultimately it funnelled into the same set of rules and regulations for it to sit in the European context. Those are the circumstances in which you have to weigh up the Treasury's approach.
3465.
There is no doubt that the Treasury has viewed incentives in that form in quite a negative light. You then open up issues like overall parity with different parts of Great Britain. In other words, it goes well beyond the narrow economic advantage of an incentive to support economic activity. It becomes a much broader issue. That is when we have to take a view on that and make a judgement on it.
3466.
Mr Attwood: What about tax breaks?
3467.
Mr Robinson: There are some tax advantages in Northern Ireland. As Mr Miller said, there are some projects where tax is not such a key driver. Under the present regulations grants for capital investment receive favourable treatment in Northern Ireland. That does not happen anywhere else in the United Kingdom. When the IDB markets Northern Ireland as a location for investment, it highlights those points and also seeks to target areas where the issues are not so tax sensitive.
3468.
That comes back to an earlier question about underpinning. Much of 'Strategy 2010' was about identifying opportunities for the Northern Ireland economy to prosper and to provide employment and wealth creation. It identified the newer technologies as the areas to go after. One real strength about that area is that it is much more people intensive as a set of requirements, rather than being heavily reliant on physical assets like coal mining, steel or iron, on one hand, and, on the other hand, hugely capital-intensive operations like major chemical plants or oil refineries.
3469.
In that sense the 'Strategy 2010' direction, pointing to this innovative and fast-growing economy above all, I think, highlighted that there were opportunities in world economies for our own natural human resources and people talents to count.
3470.
Mr Neeson: I want to ask about Selective Financial Assistance (SFA), but I want to follow on from what Mr Attwood was saying in relation to taxation. My views on the tax-raising powers of the Assembly are well known. One of the groups that submitted evidence to us in Strabane suggested that perhaps tax advantages could be created through the development of enterprise zones. I am not quite sure, and I would like to know whether that could be the answer.
3471.
Mr Robinson: The enterprise zone concept was used in the UK back in the early 1980s, and for a variety of reasons was not pursued after about a five-to seven-year period. It really distils down to the point I was making earlier that enterprise zones or corporation tax relief ultimately are fiscal measures that are designed to stimulate economic activity. Therefore the arguments for and against the enterprise zones are really not very different to the general argument. The enterprise zones had the appeal - and that may well be what was in the mind of the person who was suggesting that in Strabane - of being physically bounded and physically delineated. Here in Northern Ireland, for example, there was an enterprise zone at the airport. There was also an enterprise zone at Dargan Crescent that encouraged a lot of the development in that area of Belfast. Enterprise zone taxation allowances were involved. Those are the main differences with enterprise zones. Each is usually a small physical area.
3472.
In the past they have been much used in major regeneration projects, especially in areas of significant unemployment where the coal or steel industry had ceased to exist. It was an opportunity to do something, particularly in a specific physical area. However, I do not think the principles underlying enterprise zones are any different to the issues that I mentioned in the context of corporation tax. It is about Treasury approval in a UK context and the associated issues.
3473.
Mr Neeson: That is very helpful.
3474.
In relation to Selective Financial Assistance, one of the main suggestions in 'Strategy 2010' is that this should be less readily available. What action has been taken so far? Is this not just an excuse to cut grant aid to new investment?
3475.
Mr Wilson: The 'Strategy 2010' thinking on this came from one of the main themes, which is that we should be more self-reliant, should be able not to depend as we have done so much in the past upon the grant culture. IDB has been doing a lot already, even prior to the publication of 'Strategy 2010'. Measures were already in place for driving that process, and it is part of the IDB corporate plan to reduce the dependency culture. If I could just quote a couple of figures, for example, in SFA packages in 1995 the IDB cost per job averaged £18,500. That had reduced last year to £9,500 and the IDB percentage contribution has gone from 30% five years ago to 20% last year. That is very significant progress towards the objective of reducing the grant-dependency culture. As an industrialist I have benefited from grant aid and as the IDB looks at inward investment package offers we must remain competitive in terms of what we offer.
3476.
If people are looking for an inward investment package they are usually looking for some form of investment incentive. Increasingly IDB is steering these people to think about other issues; what is the firm going to offer to Northern Ireland in terms of innovation, research and development and added-value jobs? We are directing companies to think about exporting, marketing, strategic planning and the value of the long-term training process. A lot of work has gone into encouraging companies to go down the route of developing the business excellence programme, which is based upon the European business excellence model. This is a value-adding process, and it is very important that IDB undertake the sort of activity that constitutes a sensible alternative to putting money into subsidising jobs.
3477.
Mr Neeson: Is the question of loans being looked at by IDB? Particularly with smaller businesses this is an issue which the Committee has been addressing, but would IDB-sized companies be an issue?
3478.
Mr Wilson: It has arisen and your question is more relevant to the LEDU-type of business and to the start-up companies. There are various loan offers available from different sources, usually administered locally rather than centrally. IDB has looked at these and has offered loans to be drawn down against the provision of jobs. Another possibility is the IDB putting equity into high-risk companies. There is a precedent for this in the Republic of Ireland where the development agencies are now benefiting from the success of those high-risk start-up companies. That is another alternative strategy.
3479.
Ms Morrice: The Industrial Development Board, as its name implies, should be involved in promoting industrial development, but the impression I have always had is that more concentration has gone into attracting inward investment rather than promoting industrial development at home in indigenous industry. I am thinking particularly of the traditional sectors such as textiles, shipbuilding and food processing.
3480.
Can you give me a breakdown of the percentage of your budget which has gone to attract inward investment over the past five years, as compared to that which has gone to help local companies?
3481.
Mr Wilson: That is not a figure that I have readily to hand.
3482.
Mr Robinson: We would need to come back to the Committee with that analysis. In the context of this morning's discussion we saw this more as IDB's response to 'Strategy 2010' and the issues associated with that, rather than looking at an analysis of where it is putting its resources and the results of that.
3483.
Ms Morrice: Without giving specific figures, is it true that there is a greater concentration on inward rather than indigenous investment?
3484.
Mr Robinson: Historically, the expenditure has been approximately fifty-fifty for Selective Financial Assistance. There are then extra costs associated with maintaining an overseas office network that is primarily attracting inward investment. Mr Wilson can give the perspective of someone involved in the textile and garment industry in Northern Ireland and how that sector views its interaction with the IDB.
3485.
Ms Morrice: Could you also put it in the context of 'Strategy 2010'? How does the IDB intend to safeguard Northern Ireland industries that have built up superb world-wide reputations, such as textiles, ship building and food processing?
3486.
Mr Wilson: Before I move on to textiles, I want to respond to your question about the difference between inward investors and indigenous industry. I do not have any figures in front of me, but the important point for the IDB is that the criteria for expansion or development is the same for inward investment as indigenous industry. In other words, we are looking for companies that challenge their markets, do new things and create added-value jobs. These often tend to be inward investors as opposed to indigenous industries.
3487.
Ms Morrice: You say you are looking for it, but are you proactive in encouraging companies to copy their foreign competitors?
3488.
Mr Wilson: Yes, very much so. Part of the business excellence programme is benchmarking activity and best practice wherever it is, either in industry or other areas of activity. It is important that part of the '2010' process indicates that we should look at what other people are doing.
3489.
I was involved with the initial team looking at textiles and apparel as part of the Northern Ireland Growth Challenge (NIGC) and subsequently in partnership with IDB. When it comes to textiles and apparel, IDB is extremely proactive in encouraging innovation and added-value jobs. A lot of the industry's problems are driven by labour costs in relation to India or the Far East, but there are some tremendous success stories which IDB has been promoting through the industry association and NIGC. The Northern Ireland Textiles Association (NITA) has a design and marketing forum, set up with help from IDB, which presents successful role models in what a lot of people would regard as an old-fashioned industry. Coming from that old-fashioned industry, I strongly challenge that view. Any industry can have old fashioned bits in it but textiles, like anything else -
3490.
Ms Morrice: It is perhaps the most fashionable industry that exists.
3491.
Mr Wilson: It can be the most innovative if we want it to be. IDB, in partnership with NITA and NIGC, has been very proactive in trying to foster that process. When I was involved with the NIGC team, the IDB executive director was included on the team and made significant contributions to the team and encouraged the process as I have described it.
3492.
Ms Morrice: Is it worthwhile protecting these traditional industries and getting them into the higher value-added level?
3493.
Mr Wilson: You have probably read that Kurt Salmon Associates has been appointed to carry out a survey of the industry and to try to come up with a proactive view of an action plan for textiles and apparel. Not all companies will buy into that, but the fact that IDB is promoting that process is very important.
3494.
Ms Morrice: Can we be proactive to safeguard food processing or the shipbuilding industry?
3495.
Mr Wilson: It is difficult to comment on shipbuilding as it is such a specialised area of activity. On a visit to Korea last year I was told that they were worried about their shipbuilding industry disappearing to cheaper low-cost areas. In Belfast we have considerably higher labour costs to restructure than in Korea.
3496.
With regard to food processing the whole idea of innovation and doing things differently to the traditional method is very important. We must promote the role models, companies like Moy Park, for their tremendous work in the added-value process for what is basically a commodity. They do it in many innovative ways. The industry association was formed as part of the thought processes in 'Strategy 2010' and Growth Challenge. It was also helped and encouraged by the IDB.
3497.
Ms Morrice: Your submission stated that there were too many think-tanks and institutions with budgets for research and that you need to inject business realism into economic analysis. With the number of associations that are now being set up, is that not taking a similar approach? Is there a more business- orientated analysis in these new forums that have been set up?
3498.
Mr Miller: When the board was responding to that, comments were made on the establishment of the Economic Development Forum. The response was due to the large number of such bodies in Northern Ireland. There are various councils and there is also research in the universities, yet another body was established. This needs to be streamlined. We are a population of 1·5 million, and yet we have umpteen bodies all advising on this.
3499.
Mr Dalton: 'Strategy 2010' recommended that the nine locations referred to in the Department of the Environment 'Shaping our Future' document should be the main focus for the future location of industry. The panel reviewing the regional development strategy has since recommended that there should not be nine locations. How does this affect your policy and should there be key hotspots of economic activity?
3500.
Mr Miller: The current policy of IDB is that it is required to hold land in all 26 district councils. This is absolute nonsense and a waste of public money. There will never be enough projects to go into 26 district councils. It is more easily marketed, as suggested in 'Shaping our Future', if there are nine centres. The IDB has been moving out of Belfast into the regions to meet local councils, educationalists, et cetera. In Strabane we met people from the north-west and were encouraged by how the three councils have come together to market that area as a region. Inward investment projects are looking at areas with a population of about a quarter of a million people.
3501.
The IDB has been helping councils to draw up statistics on their population, employment levels and skill base, and to create an audit to promote the infrastructure links in their area. These important factors are taken into consideration by inward investors when they are thinking about setting up in an area. We fully support the nine centres listed in the 'Shaping Our Future' document, which will benefit everyone in Northern Ireland. Local councils are driving this programme themselves ¾ they recognise the benefit of coming together and promoting their region.
3502.
Mr Robinson: Fundamentally, there are two sides to this issue. One consideration is the concentration of the nine centres, the other is the creation of job opportunities. Regardless of how the issue is approached, the impact on both sides must be taken into account. The original 'Shaping Our Future' document designated nine centres. Public consultation on the document revealed concerns that there has been an over- concentration on these centres, and the Department for Regional Development will be responding to this. It has recognised the tension between providing a concentration of services, with finite resources deployed for maximum impact, and ensuring that job opportunities are accessible to people.
3503.
The Department of Enterprise, Trade and Investment will be applying the strategy and policy drawn up by the Department for Regional Development. On the whole, it is that Department's responsibility to decide how the physical infrastructure will be aligned with the opportunities and the finite resources available. The Department of Enterprise, Trade and Investment will operate an economic development strategy based on this.
3504.
Mr Dalton: What initiatives should be implemented to encourage the further development of links between universities and businesses?
3505.
Mr Miller: There has always been a strong link between local universities and businesses. A number of small companies are based on ideas hatched through the Queen's University's Qubis programme. The science park is an encouraging development, but we are a bit disappointed that it has taken so long to come to fruition. Inward investors are encouraged to locate close to science parks, which also support the growth of home-grown technology businesses. Relevant Government initiatives have included outreach funding of £2 million to encourage local businesses and industry to forge links with universities. The UK Government also announced the science enterprise challenge, as part of which 12 new enterprise centres are being set up to equip scientists and engineers with entrepreneurial and business skills. Northern Ireland is to have one of those centres, the two local universities having come together. We are encouraged by those initiatives.
3506.
There have also been encouraging initiatives by local companies, such as Seagate Technology, which has sponsored a chair at a university, and Nortel, which is sponsoring 40 undergraduate scholarships.
3507.
You will be aware that Nortel has recently announced 40 sponsored scholarships for undergraduates. That is all very encouraging. It does not just mean universities, but also the further education colleges. Companies such as Nortel have agreed to sponsor HND courses in the further education colleges for electronics technicians. It is important that the education sector delivers on that. I understand that they are having some difficulties in obtaining the required number of lecturers. That is a difficulty that will have to be overcome.
3508.
Links between businesses and colleges and universities are growing. In other countries multinationals are prepared to sponsor courses at further education colleges and universities in order to obtain the people with the skill levels required to meet the businesses of the future.
3509.
Dr O'Hagan: I want to go back and tease out some of the issues. What practical initiatives should be put in place to co-ordinate the work that agencies like the IDB and the Training and Employment Agency do in conjunction with district councils, so as to prevent duplication?
3510.
Mr Wilson: That brings us back to the joined- up approach I was talking about, the joined-up government where everything is integrated. We recognise that there are now lots of institutions in the process. I have no particular hang-ups about how many local councils we should have, or how many bodies, but I am concerned that we should ensure, throughout the process, that the activities and thought processes of all those organisations are fully integrated. Of course, there is a much better chance of their being integrated if there are fewer of them. That is my personal view.
3511.
What an inward investor, or indeed an organisation or company in Northern Ireland, is seeking from those organisations is help. It is not just about seeking grant aid but about seeking help from whatever sources are available. We have the Training and Employment Agency providing the training package, we have LEDU providing the small business package, we have IDB looking at the larger organisations, and we have local councils doing their own economic development thing. To a certain extent, all of that is added-value activity. How much more added value would there be if it were all directed through a shared vision to achieve the one objective? We know that that can be achieved if we all work in that direction.
3512.
As an industrialist in Northern Ireland, I personally would look for the provision of a one-stop shop for the sort of organisations that I currently interact with. That is also the view, I think, of the IDB. Despite the fact that Mr Miller and I might be out of a job, I would say that we do not necessarily need IDB, LEDU and IRTU to be separate organisations. There should be an organisation with central direction, but with functions focused on what the market actually needs, what the needs of the customer are.
3513.
As an industrialist I can clarify what companies considering investment in Northern Ireland are looking for. They need to know what infrastructure and skills are available and what bodies are involved in providing resources like these. Information should be integrated as much as possible and ideally should be provided in a one-stop shop fashion, refined to only one interface with the customer.
3514.
Dr O'Hagan: 'Strategy 2010' states that it is committed to building an economy based on the principles of equality and social inclusion. The IDB, in particular, has come under heavy criticism - criticism which is justified, in my opinion - for failing to adhere to the guidelines for Targeting Social Need (TSN). For example, as part of this enquiry into 'Strategy 2010', this Committee went deliberately to both Moyle and Strabane District Councils because those were the two council areas specifically mentioned in the Public Accounts Committee report. Areas like west Belfast, which are clearly disadvantaged areas with high unemployment, received in the region of 2·7% of IDB industry, if my figures are correct.
3515.
You referred earlier, Mr Wilson, to the problems of your own factory sited in an area of high unemployment. That is an area which I am very familiar with; it is in my constituency. I can assure you that there is a lot of frustration and concern among the population on the Garvaghy Road in Portadown because very few people from that community are employed in a factory sited right on their doorstep.
3516.
How does the IDB respond to the criticisms that it has not taken into account matters such as guidelines for equality and Targeting Social Need, and the issue of targeting and siting factories in disadvantaged areas? Another matter for concern is the criteria for disadvantaged areas, which are geographically much too wide.
3517.
Mr Miller: I totally refute the allegations that IDB is not committed to providing equality of opportunity and to social inclusion. One has only to look at our corporate plan and the very challenging target of 75% of inward investment for TSN areas. The IDB's record for attracting inward investment to TSN areas speaks for itself. In 1998-99, 84% or 2,225 of the 2,657 new inward job promotions were for TSN areas. In 1999-00 out of 2,548 new inward job promotions, 76% - 1,932 jobs - were for TSN areas. It is not just in factories that people who come from TSN areas are employed. A number of companies in non-TSN areas have done pilot research as to where their applicants came from, and they found that a very high percentage of their workforce come from TSN areas.
3518.
Also the Government have published new TSN, which will, I believe, clearly demonstrate that everyone is being afforded equality of opportunity within the TSN. You people and people from TSN areas can do a lot to help promote that area and help IDB achieve its targets in getting inward investment. You can help. It does not appeal to inward investors when they go to an area and they see flags and bunting, painted kerbstones and murals; that does not impress them. In my capacity as a trade union official, I met a gentleman from one company that had recently set up. Now he did not know that I was on the IDB, and he gave off about IDB showing this factory in this particular location. He said that when he looked at the environment in that particular location he was astounded and that he would not place a factory there. Local communities have got to help in this. I can tell you that IDB did not give up on that particular location. It was eventually successful and did get another inward investor for that particular site which was going to employ many hundreds of people.
3519.
Mr Wilson: May I just respond to one particular issue for the sake of the record. You made the point that my own company has been amiss. I just want to make the point that the imbalance in our workforce was recognised quite a number of years ago. With the full guidance and advice from what was then the Fair Employment Commission, we took active steps to ensure that that was put right. It was regarded as a kind of a model for the process that should be taking place. The balance of job applications and job appointments fully reflects the nature of religious balance in the community now.
3520.
Mr Miller: No doubt Committee members will have noted two recent announcements - the TeleTech Holding Inc announcement of 900 jobs for North Belfast and the GEM announcement of 700 jobs for TSN areas. We are fully committed to TSN, and I hope that you people can help us by speaking to the community about improving the environment in those areas.
3521.
Dr O'Hagan: I am certainly glad to hear that you are committed to TSN. The question of disadvantaged areas has been a particular cause for concern. You quote statistics showing that 75% of industry is located in, or adjacent to, disadvantaged areas, but it is the wide geographical spread of disadvantaged areas that allows you to say that.
3522.
Mr Robinson: The key point is, as Mr Miller said, that the new TSN commitments are a significant step up, as the IDB applied the policy and sought to apply the policy. The new TSN requirements mean that it is now about where the people employed in the business have come from. I think that answers your concerns on that particular point, and, as you heard clearly from Mr Miller, there is a total commitment to the new TSN agenda on the part of the IDB.
3523.
Dr O'Hagan: Is there an IDB audit or do you have any intention to carry out audits, in relation to the quality of jobs? I am talking about the wages and conditions that we attract.
3524.
Mr Robinson: The whole question of higher value-added jobs is at the core of 'Strategy 2010'. The whole policy is thrust in that direction. Some initial work has been undertaken based around likely levels of salary in projects as they are approved. The picture is proving to be quite complicated. As projects go forward, they tend to change somewhat in character.
3525.
The IDB will probably be setting out its objectives in the new corporate plan. As I said in my introduction, we see the Committee's work in relation to 'Strategy 2010' feeding directly through to the Programme for Government and into the Department. Job quality will undoubtedly be one aspect of that.
3526.
When we have worked through the Programme for Government, the IDB's role in attracting new inward investment and the associated quality of jobs will come through.
3527.
Mr Wilson: I would add a short footnote on the issue of TSN. It relates to what Mr Wells was asking about ensuring that while we still have 40,000 people employed, they should still retain opportunities. We now have an opportunity through the education and training process to encourage people to think - and I am talking about TSN areas in particular - about job opportunities.
3528.
The IDB is looking at quite a lot of companies that are developing call centres - or customer relationship management centres, as they are sometimes called. We could attract those types of companies if there was a proactive programme for training people for that type of work. It does not matter that there are no companies in the process of coming here at the moment. They will be drawn to areas because of the availability of trained people. This aspect is outside the remit of the IDB, but it comes under the heading of joined-up government.
3529.
The Chairperson: I would like to thank you for the way you have dealt with the questions. As we move to complete our report, we would hope to reflect your contribution.
TOP
MINUTES OF EVIDENCE
WEDNESDAY 18 OCTOBER 2000
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Attwood
Mr Dalton
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Mr Wells
Witnesses:
Mr B Robinson ) Department of Enterprise,
Mr B Pauley ) Trade and Investment
3530.
The Chairperson: Gentlemen, I welcome you again in your other role. I have some questions for you.
3531.
Dr O'Hagan: Mr Robinson, you said at the beginning of your other submission that you were glad to see we were coming to a close. We are glad of this as well, as it has been a marathon session. Criticisms were made of 'Strategy 2010' that it was short on economic analysis, that it did not establish a baseline as a starting point and perhaps did not take account of previous economic studies. How do you respond to that?
3532.
Mr Robinson: 'Strategy 2010' made a number of suggestions and proposals for a way forward. When the steering group undertook that work, it began by examining what had been done. In fact, at the first meeting of the steering group in April 1998 there was an extensive review of the work that had been completed. Prof. John Bradley led that work.
3533.
There was a sense that, that work having been done and absorbed, it was important that the published document be readable and have relevance and impact. Therefore, the decision was taken not to recast all that data and information, but rather to focus on the way forward.
3534.
There is no question that an extensive review took place of all the work that had been done to establish the baseline. I see 'Strategy 2010' as being rigorous in that regard but, for the reasons I gave, there was not a very significant recasting of that information.
3535.
Dr O'Hagan: There was also criticism by some economic commentators that 'Strategy 2010' failed to give more than a passing nod to the idea of an all-island economic strategy. I would be interested in your response to that criticism.
3536.
Mr Robinson: That has certainly come up as an issue. The context of 'Strategy 2010' was preparing a document for the Executive Committee, for a new Minister and for your Committee. The key issues were to look at economic performance and to focus on Northern Ireland's needs. However, in several areas it does touch upon that when it refers to being outward looking. It sets a significant amount of the work in an all-island context, particularly in areas such as energy policy.
3537.
However, I suggest that it was, above all, being delivered to the new Minister, the Executive Committee and the Northern Ireland Assembly, and that what you read follows from that.
3538.
Dr O'Hagan: It was said of 'Strategy 2010' that there were no firm targets set on equality issues. Is there any intention to address this?
3539.
Mr Robinson: We seek an economy which treats the two communities fairly, but which also offers equal opportunities for under-represented groups, including women, ethnic minorities and people with disabilities. Equality is a clear key theme.
3540.
In parallel with the work being done on 'Strategy 2010', there was an extensive body of work being undertaken around the Good Friday Agreement. All the issues on new targeting social need, statutory equality and human rights were moving along in parallel. In making that important commitment to equality issues, the steering group took the view that these other issues would be addressed as they developed. The Department has stated clearly, in publishing the new targeting social need action plan and in looking at the equality scheme, that it is very firmly behind that. The steering group took the view that it was not possible to anticipate all the elements but, in making that commitment, it saw itself as being firmly committed to equality issues.
3541.
Dr O'Hagan: I have one final question, on the status of 'Strategy 2010'. It has been stated on a number of occasions that 'Strategy 2010' was not seen as being set in stone; that it is dynamic, fluid and subject to tinkering and change. Is that still the status of 'Strategy 2010'? How many of the recommendations contained in 'Strategy 2010' have been implemented to date?
3542.
Mr Robinson: Two very important recommendations have been implemented. Let me first try to convey to you what I see as the status of 'Strategy 2010'. A number of actions have gone forward out of 'Strategy 2010'. The Information Age Initiative is up and running. There was a recommendation in 'Strategy 2010' about the importance of such an initiative: it refers to an Information Age Commission.
3543.
For a variety of reasons, when the Minister, John McFall, made the decision to move forward on this, it was carried forward as an Information Age Initiative. That is only one of the recommendations in '2010', which have been enacted. The Information Age Initiative has now come up with a strategy under the Leapfrog Initiative, and 25 recommendations are contained in that. This shows how 'Strategy 2010' has been a springboard for further important action; over 50 of the original 62 'Strategy 2010' recommendations, plus 25 from the Information Age Initiative have been or are being acted upon.
3544.
'Strategy 2010' was of its time. We all recognise that even today some of the recommendations are looking a bit tired because they are a couple of years old. In some ways the plan is well informed and a number of important measures have stemmed from it, but the strategy will emerge more from the Programme for Government than from this. As the Minister finalises that with the Committee, I expect that the Programme for Government will update the strategy, and then all of us will be able to judge how much of its course has been informed by the work of 'Strategy 2010'. There is no doubt that things have moved on.
3545.
Mr Dalton: What policies have been implemented to encourage the use of private equity finance and to reduce the over-dependency by industry on grants for finance projects?
3546.
Mr Robinson: The early part contained a narrow approach centring on Selective Financial Assistance, which is above all an IDB form of support. The objectives of grants in the past have been to stimulate economic activity. The competitive marketplace for new inward investment positions players in a particular way, vis-à-vis project finance. If, for example, a potential new investor came to Northern Ireland and was offered only loan capital to assist him, it is unlikely that he would be comfortable with that, particularly when contrasted with the support that is available in other parts of the world. He would see the IDB as a banker, and protest that he already had plenty of those. I am deliberately exaggerating to illustrate the point.
3547.
Our use of venture capital and loans is very much about stimulating continued activity because we want employment and economic activity. We must also use these incentives subtly and recognise that the other extreme is a grant-dependent culture which simply boosts the profit and loss account of the company and gains nothing else.
3548.
As the figures mentioned earlier today in the IDB evidence indicate, IDB has been reducing the level of support to these projects, with a reduction in project contribution from 30% to 20%, to encourage businesses to find the other 10% elsewhere - perhaps from the company's resources or from the capital markets or banks. The overall thrust is in that direction, but I want to convey the importance of subtlety - one cannot just apply it as a single policy irrespective of who the potential customer is.
3549.
If one were to do that, one might adversely affect a potential inward investor.
3550.
Mr Dalton: Energy costs in Northern Ireland are high compared to the rest of the United Kingdom and the rest of Europe, and this is a competitive disadvantage to industry. What policies can be implemented to address this issue?
3551.
Mr Robinson: The Committee is interested in the energy issue and has already taken evidence on the subject. The broad policy is to try to bring costs down. The Department has done a number of things that have improved costs. For example, the opening up of the electricity market allows some 400 large user customers in Northern Ireland to make savings. The average saving for these customers is estimated at 10%. Through the support fund, Government has allocated £40 million to reduce costs and this will represent a saving of around 1% to 1·5%.
3552.
The Regulator also plays an important role. The Regulator looks after consumers' interests and is also involved in attempts to bring about voluntary agreements between the generators and Northern Ireland Electricity (NIE) on price reductions.
3553.
The next stage is the question of opening up the market. Electricity should be available towards the end of 2001 through the interconnector to Scotland, and that will help facilitate the opening up of this market and reduce prices. The introduction of gas will also open the market and reduce costs.
3554.
As I mentioned earlier, the energy issue is seen as an all-island one. There are some five million consumers, and by energy standards this is quite a small market. Addressing the energy question on an all-island basis would be one way of making a saving. Work on the electricity interconnector has been undertaken in an all-island context, as have gas and gas pipelines.
3555.
Ms Morrice: Another issue close to my heart is Europe. Because inward investors use us as a foothold into Europe, do you not agree that the major block to inward investment is our remaining outside of the Euro currency zone, which would give investors access to a market of 500 million customers? Economic policy in a changing European Union seems to have been omitted or only touched on in 'Strategy 2010', and I find it astounding that we are so inward looking. Do you agree? If so, what do you intend to do about it?
3556.
Mr Robinson: I do not agree that 'Strategy 2010' is inward looking. A core principle of 'Strategy 2010' is that this is a comparatively small region with an open regional economy.
3557.
As a regional economy, several factors are given; they are not open to us to influence, even should we wish to influence them. Exchange rate policy is clearly one of those. I suggest that, by and large, fiscal policy is a given in the nature of 'Strategy 2010', although there are some proposals to change that. There are several major elements that 'Strategy 2010' says are beyond our influence, and we have to accept that. We need businesses and companies that are strong, flexible, able to compete in world markets and accept the pressures, the competition and the problems that those issues bring.
3558.
Let us take your point about being in or out of the Euro zone. There is no question that selling in Europe is more difficult at present, but many businesses in Northern Ireland are used to selling in several different currencies, so some of the barriers that would have been evident to business here 10 years ago have gone. They are selling extensively in markets in the Far East, south-east Asia and South America. Obviously, dollar-denominated markets are a big part of it. There is definitely a much greater degree of sophisticated foreign currency management.
3559.
There is also the opportunity to buy Euro- denominated raw materials and to use the strength of sterling to buy raw materials from Europe much more cheaply. That has two advantages: businesses are getting cheaper raw materials, but they are also hedging, because a certain proportion of their input costs are directly aligned to the Euro. If they are selling to France or to Germany, and they have spent 40 per cent or 50 per cent of their costs in France or Germany, they have hedged their position. Several businesses in Northern Ireland have been able to do that, because they have become much more export-oriented and expert at exporting. Several businesses have switched to sourcing in Europe and thus taken advantage of a strong currency and hedged against selling back into those markets.
3560.
Ms Morrice: It sounds as if you are making the best of a bad job. As one of the drivers of economic policy here, would you recommend that we enter the Euro zone?
3561.
Mr Robinson: I do not have a strong view on that. I come back to the point that businesses in Northern Ireland, by any standard, are largely SMEs. We estimate that 99·5 per cent of businesses in Northern Ireland are SMEs - Small-Medium sized Enterprises - by the European definition, which is the only definition worth talking about. In an SME economy, one has to recognise that one does not have the clout to compete head-on with major businesses. SMEs do not compete head-on with the Fortune 100 companies in America. Nobody does - it is the equivalent of committing suicide.
3562.
Ms Morrice: But SMEs in Northern Ireland are competing with their neighbours 100 miles down the road.
3563.
Mr Robinson: They have to find niches, be quick on their feet and exploit the opportunity to make decisions and move quickly. They may discover that suddenly the price of something that they are buying as a key raw material has gone up by 25 per cent. That may be none of their doing - the exchange rate might be to blame - but it is one of the challenges for small businesses.
3564.
Ms Morrice: What about the single market and the possibility of entering into joint ventures with continental businesses? Do you encourage that in your trade missions? Do you go to European countries and try to get link-ups that broaden experience and best practice?
3565.
Mr Robinson: Yes, a programme operates in the Department that applies equally well to companies which IDB and LEDU deal with. This programme is called the International Partnership Programme and it is funded by peace and reconciliation funds specifically for that purpose. This programme is necessary because a number of our businesses do not have the managerial strength and depth to set up independently. It is terrific to see that a number of the companies are good enough to have opened subsidiaries in continental Europe. That would not have been the case 10 years ago. However, for many of them this is not a serious option; it would be too big a stretch in management resources. Therefore they seek to find such partners through initiatives such as the International Partnership Programme.
3566.
It is important for continuing to develop a business and it is a feature of the programmes in IRTU on research and development. Like SMEs it does not have the resources necessary to devote to research and development to carry them forward. They must work in collaboration and set up collaborative projects.
3567.
Ms Morrice: Correct me if I am wrong, but in conversations that we had some years ago you said that the textile industry in Northern Ireland did not have a future. Do you now believe that you were wrong, and there might be a future for it?
3568.
Mr Robinson: There is an obvious temptation as to how to answer that question. I will answer it by trying to reposition your initial impression of my stance a number of years ago.
3569.
There has been a need for businesses to be competitive and no Government policy can change the fact that the markets are quite strong. You may disagree with me, but this underlines all changes in economic development strategy in the 1990s. John Major's Government believed that the role of Government was to create the infrastructure, while businesses created the wealth and economic development. Similar words are used in the current Competitiveness White Paper which was issued 18 months ago by the present Government. It sets forth the role of Government in promoting enterprise, innovation and states that the old models of managing the economy have gone.
3570.
The present White Paper explicitly states that the Department of Trade and Industry's role in encouraging competition is a way of producing stronger, better businesses and therefore better economic activity. The issue arises - and this is where the rubber hits the road for you - when a business such as Marks & Spencer states that it is no longer economically viable to source a significant amount of its garments in a western European economy instead of an economy in the Far East. If all other things are equal - and this is a big if - the £5 per hour paid in a developed western economy to a garment-maker is uneconomic compared to the £5 per week in Sri Lanka or Morocco.
3571.
You suggest that all other things are not equal. But the machinery available in Sri Lanka and Morocco is every bit as sophisticated as ours, because the major machinery manufacturers are in those countries now. There are economic development agencies in Sri Lanka and Morocco which support the investment in equipment -
3572.
Ms Morrice: Will you get that for call centres in Indonesia in two years' time?
3573.
Mr Robinson: That is the challenge. But it is a challenge to business competitiveness; it is not an inherent belief that we have an economic advantage in one sector and we will always have it.
3574.
Ms Morrice: We have the reputation in one sector; we do not have the reputation in call centres.
3575.
Mr McClarty: What policies will secure the long-term sustainability of the rural economy and the community that it supports?
3576.
Mr Robinson: That is a major challenge. The main thrust of 'Strategy 2010' did not deal specifically with agriculture and the issues surrounding it. It was taken as a given that the agricultural sector is under pressure. There has been a significant decline - as all know - in farm incomes. 'Strategy 2010' highlighted that the consequence of that was a need to diversify. The human resources and skills already available should be deployed in a number of different directions. Fifteen or 20 years ago it would have meant the promotion of an engineering industry, for example, agricultural machinery, forklift trucks or mobile screening equipment. That seemed to fit quite well with the strategy. The challenge today is that that is probably not sufficient any more. The opportunities are now in the knowledge- based sector.
3577.
It can be argued that the challenge for the rural economy is, in some ways, not very different to the rest of the economy. It is about skills, seizing opportunities, drawing together training and education, and a spirit of enterprise and innovation. In that sense they are not that different a set of challenges. At the same time I recognise that some of the structures required to support the change in the rural economy are different, and that is the challenge at policy level. You need to ensure that programmes run by LEDU, for example, on business start-up and developing innovation, have real relevance and coverage in the rural economy. You must also make sure that the delivery mechanisms used to improve skills and education are relevant too. That ties into issues such as further education. Although the universities have done an enormous amount to spread their campus network, the further education sector has an important complementary role to play.
3578.
That is the challenge. Perhaps it is similar to the challenge that we talked about earlier relating to equality and accessibility of opportunity. That is how 'Strategy 2010' sought to categorise the challenge.
3579.
Mr Neeson: As you are aware, there have been criticisms concerning the lack of consultation in the process. I want to look at two sectors. Approximately half the Committee members are still involved in local government, and they understand the importance of local economic development. How can that function be fulfilled in the context of 'Strategy 2010'? In addition, how can you ensure that the voluntary community sector will play a meaningful role, not only in economic development, but also in any future strategy relating to such development?
3580.
Mr Robinson: I am aware of the criticism about the extent of consultation. The report made clear the number of people involved, and you are familiar with that from other submissions. The key issue that I want to communicate to the Committee is that the involvement of those people was meaningful. The Sectoral Working Parties and cross-cutting themes were an important contribution.
3581.
I readily accept that the consultation process will not cover everybody. Perhaps the Committee will be more effective than 'Strategy 2010' - you may have covered everybody by the time you finish your report.
3582.
One thing which has not come out quite so much in the discussion is that a consultation panel was set up and it drew in the voluntary sector as well as a number of business organisations. The organisations involved are listed towards the end of annex A, and I imagine this aspect has not necessarily grabbed the attention. If you have read 300 names already, then it is not easy to continue reading. The panel was very much part of the process, and the seeds of the Economic Development Forum came from it, together with the social partners.
3583.
A number of Committee members were present at a discussion we had in December 1998. We certainly invited all Assembly Members to a presentation on the position of 'Strategy 2010' at that time. I remember that a number of Members were, quite rightly, vociferous about wanting to be part of the strategy and hoping that it would come forward to them in a form in which they could contribute. They wanted that to happen rather than its being signed, sealed and delivered to them. The steering group felt that that was very important.
3584.
If you look at where we are today as opposed to where we were two years and six months ago - before this process started - our interaction with the Economic Development Forum, the voluntary sector and the social economy has helped us make a lot of progress in our consultations.
3585.
I accept that there is always more that can be done.
3586.
Mr Neeson: What about ensuring that local government can fulfil a meaningful role in the strategy?
3587.
Mr Robinson: I did not deal with that aspect. Local government first became involved in local economic development in 1992 or 1993. Since then we have seen a real and valuable input to the whole process. I return again to the issue of finite resources. The Department has finite resources, and involving local councils, and the economic development activity therein, has been particularly valuable in that it has opened up the issue and elicited contribution from a segment of the community and from the political process.
3588.
Any feedback I have received from district council members involved in economic development activity has been to the effect that it has opened up an aspect of work that many did not appreciate had been done until that point. That was simply because they had not been directly engaged in it.
3589.
There is no question that the presentation of areas to potential investors should be very professional and very important. The Minister will be bringing issues such as restructuring back to the Committee. My view is that we will be looking for more local input. It has brought worthwhile resource, dimension and value to the process.
3590.
Mr Neeson: There are two goals that I am sure we all share: first, to create stability within society: secondly, to assist people develop self-esteem. What progress has been made in helping the long-term unemployed and those on high benefit dependency rates?
3591.
Mr Robinson: Long-term unemployment must remain a key issue. The problem is central to the work carried out by this Committee and the Assembly. The picture of Northern Ireland in the 1990s has been encouraging, as pointed out earlier in the IDB's responses. Unemployment has fallen from around 100,000 to the present level, which is significantly below 50,000, depending on which of the two methods of measurement is employed. Long-term unemployment has fallen at the same rate. At present the Training and Employment Agency research findings suggest that the labour market figure for short-term unemployment here is very similar to the UK average - that is encouraging progress.
3592.
More work must be done on the question of benefit dependency. There are concerns that high unemployment has been replaced by increased dependency on Income Support, Incapacity Benefit and Disability Living Allowance. There is not yet any real evidence to link these two factors. Instinctively, one would be inclined to assume the fall in unemployment and increase in benefit claimants are in some way connected, but we do not have a good understanding of the dynamics that are at play.
3593.
The solutions are contained in the points we have just touched upon - we need to involve specific employers in programmes such as Bridge to Employment, run by the Training and Employment Agency. We also need to work with economic development committees in local councils to inform people about job opportunities. A lot of good work has happened there - for example, in projects such as getting Halifax to come in. There has been very good work at council and ward level to highlight job opportunities. This helps the long-term unemployed get to the starting line to compete for jobs. These encouraging projects tackle the issues which are foremost in the minds of many Committee members.
3594.
This Committee's work is about joined-up government, tackling problems such as this in a meaningful way and delivering results at ground level.
3595.
We have learned a lot, and we have come a long way. However, we will have to do more, particularly against an increasingly demanding economic background. Economic demands are more knowledge-based. Therefore, we must work very hard. This is where further education plays such an important role.
3596.
Dr McDonnell: A lot of the information you presented was very interesting, and we will revisit these points. However, I have a couple of concerns. The first relates to the idea of a single agency. I have a bias in favour of a single agency, if communication takes place within that agency. At the moment there are communication gaps between the existing agencies, which we could do without.
3597.
I have a major concern with that agency. How do we protect the IRTU dimension within this single agency if the need should arise?
3598.
Mr Robinson: Chairman, you will appreciate that the structure of these agencies is a key priority for the Minister. It will be a major issue for him, and he will be discussing it with you, so we can set that aside for the moment.
3599.
The reassurance that you are looking for on this, Dr McDonnell, is in 'Strategy 2010' because in that vision, innovation is highlighted. For us to move forward we need to consider some of the points I made earlier. If these SMEs, which will provide the vast majority of the employment in this small economy, are going to be successful they can only do so through innovation. I am deliberately taking a broad definition of "innovative" - and I will come back to the narrower one that you are interested in - but whether they are being innovative in finding a niche in the market, or by being smarter about how they do things, or in manufacturing in small batches in a cost-effective way, innovation must be at the core of developments. This is a market place that is becoming increasingly globalised. That is a truism and we sometimes forget it, but we see evidence of it all the time. Coming back to the narrower point -
3600.
Dr McDonnell: You have jumped on part of the question exactly. What mechanisms do we have in place to ensure that there is constant renewal in existing industries, in terms of technology?
3601.
Mr Robinson: Is the business competitive? Is a company that employs 200 people in Northern Ireland, within a global market place, competitive?
3602.
Dr McDonnell: How do we get them into that market?
3603.
Mr Robinson: They must find ways to compete with businesses that are two or three times their size, and economies of scale must be considered. They will have to find ways to do things smarter and cheaper. It is the innovation element that runs through this entire picture.
3604.
Innovation is one of the things that we need. That is why I am emphasising an SME economy, rather than a definition based on IDB or LEDU. When we talk about innovation, maybe we could try to get away from seeing this with an IRTU label. Those labels might limit our vision and our thinking. Innovation is needed in the universities. They need to regard themselves as part of the economic assets of the community, and therefore they must also make an economic payback to the community.
3605.
Some of the points that Edward Wilson made earlier about which road to take are big philosophical issues. I am quite sure there would not be total agreement around this table as to the role of education. But 'Strategy 2010' tips the balance more in that direction - that is what it is about.
3606.
Dr McDonnell: I am concerned not with tipping the balance slightly, but with tipping it big time. I suggest that something is missing on our research and development side. I am very happy with IRTU as far as it goes, but I feel that we need to go further. The universities have to go further. We have to move away from the academic, and from seeing things in isolation, and to get that into commercialisation. I am not an expert, but we do not seem to be capitalising on the full potential of new technologies.
3607.
We need a major driving force - an engine - that will pull all this together. It seems that at the moment we are picking up the pieces or things that opportunistically come at us, or one or two people here or there have been highly motivated. How do we as a society, and as a community, get a driver behind all this new technology, and involve the universities and all aspects of research and development, IRTU or otherwise?
3608.
Mr Robinson: That is a difficult question, because it is ultimately about spreading or focusing resources. Major exercises like the Foresight Programme certainly give the raw material for that, but a key set of issues for this Committee to wrestle with would be about how you spread the resources. It comes down to saying that certain technologies are going to be winners in economic terms.
3609.
Therefore it is very important for this society, with a very limited amount of resources to put into research and development, to decide, for example, that it will have five less departments in each university because the budgets for those five departments can go instead into two other areas. You cannot escape that that summarises what you are asking for.
3610.
Dr McDonnell: I do not want to get onto one of my hobby horses, but I am particularly concerned about the work on life and health matters that is being so well done in Coleraine. I am concerned that the rest of us may not be up to speed with it, particularly the medical faculty in Queen's University, given the whole potential that is out there. We have done quite well in the past in terms of some medical devices, but there is a lot of potential in terms of drug creation, drug clinical trials, and so on. However, I will park that for another day because time is running out.
3611.
Mr Wells: One of the main criticisms of 'Strategy 2010' was that its targets were not linked to recommendations. Are you doing anything to address that problem?
3612.
Mr Robinson: The steering group had the difficult task of saying: "Here are suggested ways forward; here is what we see happening on the broader economic front; here is where we are seeing an opportunity for Northern Ireland to be a serious player; and here are some of the benefits that flow".
3613.
The only targets set are 10 very high-level targets. In the final analysis, the steering group saw that the Minister, in conjunction with the Committee, would make the important decisions on the priorities as part of the Programme for Government. It had offered the vision and stated what was important in order to achieve that vision. At the same time, the steering group did not have the resources to say: "This is where the resources should be deployed and these should be the targets".
3614.
It is an inevitable consequence of this type of report that it stopped short of saying "Here is the absolute blueprint - go and do it". 'Strategy 2010' never set out to be the blueprint; it never set out to say "This is how to do it; now go and do it". It rather said "Look, there are important decisions to be made here and opportunities to be seized, and these seem to be the issues that are associated with seizing those opportunities". The steering group never set out to make those decisions, and the points that you are referring to are a consequence of that.
3615.
Mr Wells: With hindsight, now that you have had a chance to look back on the process, do you see any other defects or shortcomings in 'Strategy 2010'? Can you pinpoint areas where you felt that it did not hit the target?
3616.
Mr Robinson: 'Strategy 2010' stands up well to scrutiny given its aims, as I have just explained. But undoubtedly things have now moved along. We are talking about a process that was initiated over two years ago, and there are aspects of it in the arena of the information age which look quite dated, given the pace of change and the opportunity.
3617.
Incidentally, I think one other thing has happened. If you look at the way the economy has moved in the past 18 months, it shows a significant growth in high-technology jobs and software as well as important advances in university linkages. 'Strategy 2010' did not set out to be a blueprint, it did not set out to be the answer to all the issues, but it certainly was in the right ballpark.
3618.
Mr Wells: Did the strategy foresee the situation of employee shortages in parts of the Northern Ireland economy which rapidly seems to be coming about? I was at the 'Strategy 2010' launch in the Slieve Donard Hotel, and no one would have dreamed that, two years on, we would be facing a labour shortage in the Ulster economy. Has the strategy dealt with that, or could it have dealt with that?
3619.
Mr Robinson: The pace of change in traditional industries during the past 18 months, both positive and negative, has been huge, absolutely huge. We were all pretty sure what the direction was going to be, but I do not think any one felt that it would work out as quickly as it has. You are absolutely right - none of us would have envisaged it at that stage. However, that is not to say that everything is done. There is still considerable restructuring necessary within traditional industry - I do not think any of us doubt that. There is also anxiety in the rural economy that these opportunities will not be available to country communities. Those remain important issues. We all know that if it becomes exclusively university driven - although none of us see it in those terms - that will create major difficulties. It has to have a broader base, broader appeal.
3620.
Dr McDonnell: Chairman, do you want me to remind them that there is no manpower shortage in Strabane?
3621.
The Chairperson: If you like.
3622.
You know this is our last day of public hearings, and you are our last submission.
3623.
Mr Robinson: Have we convinced the Chairman that it is right to stop now?
3624.
The Chairperson: Did we keep the good wine to the last? We will make those judgements as we move forward. I would like to genuinely thank you for the way you dealt with the questions in both of the sessions. We have a bit of a task in front of us over the next few weeks to bring forward our report. Thank you.
