Enterprise, Trade and Investment (ETI) Committee Report 

2nd Report, 2010

Annual Report 2009-2010

Remit and Membership

Remit:

The Committee for Enterprise, Trade & Investment (ETI) is a Statutory Committee established in accordance with paragraphs 8 and 9 of the Belfast Agreement, Section 29 of the Northern Ireland Act 1998 and under Assembly Standing Order 48. The Committee has a scrutiny, policy development and consultation role with respect to the Department for Enterprise, Trade & Investment (DETI or the “Department”) and has a role in the initiation of legislation.

The Committee has power to:

• Consider and advise on Departmental Budgets and Annual Plans in the context of the overall budget allocation;
• Approve relevant secondary legislation and take the Committee stage of relevant primary legislation;
• Call for persons and papers;
• Initiate inquiries and make reports; and
• Consider and advise on matters brought to the Committee by the Minister for Enterprise, Trade & Investment.

Membership:

Alliance : Sean Neeson
DUP: David Simpson¹, Gregory Campbell², Paul Frew³
Independent: Gerry McHugh
SDLP: Alban Maginness (Chairperson), Alasdair McDonnell
Sinn Fein: Jennifer McCann, Paul Butler (Deputy Chairperson)⁴Daithí Mckay^5,6
UUP: Leslie Cree

With effect from 14 September 2009 Mr David Simpson replaced Mr Robin Newton.
With effect from 14 September 2009 Mr Gregory Campbell replaced Mr Jim Wells.
With effect from 28 June 2010 Mr Paul Frew replaced Mr Stephen Moutray.
With effect from the 14 September 2009 Paul Butler replaced Jennifer McCann as Deputy Chairperson
With effect from the 31 March 2010 Mr Alan McFarland stood down from membership of the committee
On 13 April 2010 Mr Daithí McKay was appointed as a Member of the Committee for Enterprise, Trade and Investment.

Annual Report 2009-2010

1. This report covers the work of the Committee during the Assembly year 2009-2010, from 1 September, 2009 to 31 August 2010.

2. During the Assembly year session the Committee met 32 times, including 10 times in partly closed session.

Primary Legislation

3. The Committee has responsibility to consider primary legislation that originate from the Department. In the 2009-2010 session, the Committee considered following two Bills:

i. The Debt Relief Bill

ii. The Unsolicited Services (Trade and Business Directories) Bill

4. The Committee stages of both bills were completed during the 2009-2010 session and Committee reports laid in the Business Office. The Committee will be involved in proceedings in the consideration stages of both Bills in the 2010-2011 session.

5. At the end of the session the Committee stages of the following two bills were underway:

i. The Energy Bill

ii. The Tourism (Amendment) Bill

6. The Committee has also taken evidence in relation to the Caravans Bill, a private members bill. Though the Committee for Social Development is taking the lead on scrutiny of the Bill, as some clauses directly affect DETI, the ETI Committee agreed to take evidence on clauses 7 and 8 of the bill. Following this, the Committee recommended amendment to Clause 7 in the Bill to extend protection to seasonal caravan owner-occupiers on protected sites.

Subordinate Legislation

7. The Committee has responsibility to consider subordinate legislation that originates from the Department. The topics of the legislation vary from business legislation (e.g. insolvency, administration, employment) to energy and electricity, tourism and health & safety. The Committee considered and supported the approval of 18 items of subordinate legislation in the aforementioned categories.

Inquiries

8. The Committee further considered the outcomes of its Credit Union inquiry of 2008-2009 and pressed for commitment from DETI and Treasury to bring forward legislation. Additionally, the Committee wrote to the Economic Secretary to the Treasury and the Financial Services Authority to urge support for the speedy implementation of credit union legislation in Northern Ireland.

9. During 2009-2010, the Committee commenced a renewable energy inquiry entitled, “Barriers to the Development of Renewable Energy Production and its Associated Contribution to the Northern Ireland Economy.” This is due to be completed in January 2011.

Budget Scrutiny

10. The Committee regularly scrutinises and advises on DETI’s budget in relation to allocation, expenditure and reductions. The Department also briefs the Committee whenever their quarterly monitoring rounds are completed. Monitoring rounds include the entire breakdown of the Department’s budget, reduced requirements in any project or section within the Department, any new monies becoming available. During the last fiscal year, the Department had to readjust the budget (reclassification, reallocations, and reduced requirements), due to reductions in public spending. The Committee closely examined these budgets and reclassifications.

Policy Scrutiny

Independent Review of Economic Policy (IREP)

11. The Review was commissioned by the Department in December 2008 and was very much welcomed by the Committee. The main aim of the review was to determine whether existing DETI and Invest NI policies, programmes and resources will contribute optimally to the delivery of the productivity goal contained in the Programme for Government. The Committee closely followed the progress of the Report and ultimately received an oral briefing in October 2009 from the Chairman of the Review Panel, Professor Richard Barnett. Since the Report has been published, the Department conducted a 6-week consultation on the findings of the Report, which the Committee considered in January 2010. In that same month, the Minister introduced to the Assembly her proposals to implement some of the recommendations of the Report; the Committee then considered the Minister’s proposals and issued a letter to the Minister outlining the Committee’s views. These included:

• Disappointment that the proposals would not be brought forward at an early date but would be at the core of the next Programme for Government.
• Suggestions that the proposed Steering Group will not operate at a high enough level within Government to drive the implementation of the proposals across all departments.
• The importance of the proposal for closer working relationships between DETI and DEL, especially in relation to ensuring that universities and further education colleges are providing opportunities to develop the skills required for business.

12. The Department submitted an implementation plan for the recommendations to the Committee in March 2010. The Committee asked to be kept informed of the meetings of the Minister’s Steering Group and the Executive Sub-Committee on the Economy. In terms of an overall timescale, the Economic Strategy must be significantly developed by the end of 2010, and in time to inform the Programme for Government, with final publication by March 2011. The Committee will scrutinise and provide input (when necessary) on information from all aspects of the foreseen process.

Strategic Energy Framework (SEF)

13. The SEF aims to set out the policy direction on energy for the energy industry and consumers, and establishes the Department’s key milestones and targets. The SEF is Northern Ireland’s main strategy for energy for the next 10 years. The Committee will also have a key role in monitoring its implementation over the coming years and advising the Department on the direction the SEF is taking. Department officials have briefed the Committee several times on the development of the SEF. Key issues explored by the Committee included pre-consultation with key stakeholders, planned public consultation on the draft SEF, sustainability and security of supply along with associated cost implications, renewable energy, the environment and the Single Electricity Market. It was the renewable energy element of the SEF that prompted the Committee to consider how Northern Ireland could further develop in this field. This led to the Committee visit to Europe and to the Committee’s inquiry into renewable energy. Both are discussed further in this Report. In January 2010, members received an oral briefing from the DETI Energy Division on the outcomes of the final SEF before it was to go to the Executive in early July 2010. The Committee will continue to monitor the progress of the SEF in the 2010-2011 session and to advise the Department as appropriate.

Northern Ireland Renewable Obligations (NIRO)

14. The NIRO is the main financial support mechanism for encouraging the development of renewable electricity generation in Northern Ireland. It places a legal requirement on electricity suppliers to obtain a proportion of their supply from renewable energy sources. It is based on a system of Renewable Obligation Certificates (ROCs) that are provided to renewable generators by Government, and then are issued to suppliers. The number of ROCs are dependent on MegaWatt Hours (MWh) produced, and vary depending on the technology that is used to produce the electricity. Members were dissatisfied at the number of ROCs assigned to energy produced by anaerobic digestion in the 2010 NIRO and urged the Department to increase this for the 2011 NIRO. The Department has recently (July 2010) released its consultation on the 2011 NIRO and an increase for ROCs under anaerobic digestion is one of its main proposals.

Draft Tourism Strategy

15. As the impact of tourism on the economy grows, the Committee sees it as increasingly important for Northern Ireland to have a tourism strategy that will meet visitor expectations and significantly contribute to the Northern Ireland economy. In February 2010, the Committee was briefed by NITB officials on a draft Tourism Strategy for NI. Members received clarification on the rationale behind the strategy, opportunities for tourism and the next steps in the process. The Committee questioned officials on the strategy’s targets, how it contributes to the Department’s PSA for Tourism and details of any cross-departmental plans. The consultation of the strategy ended on 20 May 2010 and the Committee will consider the outcomes and provide any additional input in the next session.

Social Economy Enterprise (SEE) Strategy

16. The vision for the Social Economy Enterprise (SEE) Strategy is to have an enterprise environment which encourages greater social entrepreneurial activity and is supportive of those SEEs that want to grow. The Committee noted the draft strategies in 2008-2009, after which the Committee advised the Department that the Strategy required:

• the inclusion of clear targets and well-defined key performance indicators to measure progress;
• measurement of the impact of the Strategy on the social economy sector;
• consideration, by the Department, of its lead role in ensuring that all partners identify, agree and meet their responsibilities in implementing the strategy; and
• the Department’s role in the measurement of the overall cost of delivering the Strategy.

17. In January 2010, members received an oral briefing from Departmental officials on the final SEE Strategy which included changes to the strategy based on the Committee’s advice. The Committee has agreed to endorse the strategy subject to the inclusion of financial commitments and clear targets for its implementation.

18. In June 2010, members considered the 2010/2011 SEE Operating Plan and agreed to receive updates on the implementation of each of the targets every 6 months and ask for more detailed information on the dates for the implementation targets.

Next Generation Networks (NGN)

19. The Programme for Government includes a commitment “to work with the business sector to deliver widespread access for businesses to a next generation broadband network by 2011.” The Department has been updating the Committee on the progress on the telecommunications infrastructure for NGN since early 2009 and the Committee has been supportive of the Department’s approach. In December 2009, the Department announced the Next Generation Broadband Project (NGBP); a joint venture between government and the private sector to “ensure that 85% of businesses in rural areas will have access to broadband speeds of at least 2mbps and 85% of businesses in urban areas will have access to broadband speeds of at least 10mbps.” It is envisaged that this project will have likely spill-over benefits to others, such as domestic consumers; the envisaged operational date is April/May 2011. The Committee has agreed to receive quarterly updates on the progress of the Project to ensure that the target date for operation is met.

Corporation Tax

20. In March 2010, members raised the issue of a reduced rate of corporation tax in Northern Ireland and received an oral briefing from the NI Economic Reform Group which had published a report on the issue. The Committee subsequently agreed to bring forward a take note debate in Plenary on the issue, and since it was considered to be a cross-cutting one, the Committee co-sponsored the motion with the Committee for Finance and Personnel. The Committee will continue to consider the issue in the coming session.

DETI Organisational Review

21. Towards the end of the 2009-2010 session, the Committee received notification that the Department was undertaking an organisational review. In June 2010, Members considered the project plan for DETI’s organisational review. The project’s purpose is to review the structures and activities in DETI and to ensure that resources are appropriately allocated to priority areas. Information for the project will be gathered during Summer 2010 and implementation is envisaged at the end of 2010. Members agreed to request that the project team consult with the Committee in mid-November when they consult with staff and senior management on any proposed new structure.

Engagement

22. The Committee held 2 meetings outside Parliament Buildings:

• 21 January 2010: Ulster Supported Employment Ltd (USEL), Cambrai Street, Belfast
• 15 April 201: System Operator Northern Ireland and Single Electricity Market Operator, Castlereagh House, Manse Road, Belfast

Committee members visiting the SONI building

23. The Committee visited 3 organisations:

• 5 November 2009: AVX Coleraine
• 5 November 2009: Wrightbus, Ballymena
• 21 Jan 10 - The Ashton Centre, 5 Churchill Street, Belfast

24. Committee members engaged in a video conference with pupils from Lurgan College on 18 March in Parliament Buildings. It was the first example of this type of engagement and involved a live telephone conversation combined with a live video feed with members and pupils. Lurgan College pupils asked a series of questions relating to the economy and energy, and Committee members had the opportunity to answer each question.

25. The Committee hosted a business breakfast at the Northern Ireland Balmoral Show on 12 May, in conjunction with European SME Week 2010. Invitees included SMEs in the agri-food industry and there were approximately 110 guests that attended. Guests were able to network and engage with Committee members to discuss successes and challenges of the industry.

26. The Committee hosted a Renewable Energy Workshop in the Long Gallery of Parliament Buildings on 18 May. Invitees included SMEs in the renewable sector. For the purposes of this event, the term ‘renewable sector’ was identified as organisations that are producing and/or developing renewable technologies in NI and use the renewable energy generated to sell to the electricity grid or other customers. There were approximately 60 guests that attended and a report was produced with the findings.

Committee Chairman, Alban Maginness opens the Committee’s Renewable Energy Workshop

27. The Committee undertook a visit to Europe from 24 May to 27 May, during which it met with key stakeholders in Brussels and visited the Soultz Geothermal Plant in France and the Blue Tower Project in Herten, Germany. The findings of the visit along with the findings from the Committee’s renewable energy workshop, prompted the commencement of the renewable energy inquiry.

Committee members touring the Soultz geothermal plant

Committee members in the Invest NI office in Brussels

Committee Motions

28. The Committee brought forward 2 motions for debate in Plenary. The first expressed concern about continuing delays in processing applications for project funding under the European Union INTERREG IVA Programme. The second was a take note debate on the case for a reduced rate of corporation tax in Northern Ireland. As both topics for the motions were cross-cutting issues with the Committee for Finance and Personnel, both motions were co-sponsored by the ETI Committee and Finance and Personnel Committee.

Key Priorities for 2010-2011

29. The Executive has made ‘the economy’ its key priority. Given the current economic climate and associated cuts in public expenditure, the Committee will give a high priority in the coming session to ensuring that the budget allocation to the Department is distributed across strategies and programmes that reflect the key priorities.

30. The Committee has an ambitious agenda for the session of 2010-2011. The Committee will work closely with the Department to keep a close watch on the implementation of the IREP recommendations and ensure that the new economic strategy for Northern Ireland is both ambitious and robust. The Committee is also anxious to consider the Strategic Energy Framework as it is approved by the Executive and to scrutinise the implementation of the Strategy. The Committee will work to ensure that the Department and Invest NI fulfil their commitments to bringing international investment to NI, creating and developing innovating businesses and making Northern Ireland more self-sustainable in terms of energy and the economy.

31. With those goals in mind, the top priorities on the Committee’s agenda are the economy, energy and tourism. The Committee will address its priorities through continual scrutiny of the IREP Implementation Plan, Next Generation Broadbrand Project, Social Economy Enterprise Strategy, NI Tourism Strategy and the Strategic Energy Framework. The Committee’s role is to ensure that these policies deliver significant benefits for business, consumers and the wider economy.

32. The Committee will further consider the following primary legislation during 2010-2011:

i. The Energy Bill: The purpose of the Bill is to introduce legislation regarding rights of access, guaranteed standards, gas storage, special administrator scheme, meter testing and stamping, Deemed Contracts, and gas safety management.

ii. Tourism (Amendment) Bill: The purpose of the Bill is to update the legislative arrangements in respect of the regulation (certification) of tourist accommodation in Northern Ireland; and (ii) amend the legislative requirements relating to the appointment of the Chair to the Board of NITB. In addition to changes to the Tourism Order, DETI also intends to amend associated subordinate legislation.

33. Both Bills will be in Committee Stage at the same time and the Committee will need to take evidence from stakeholders and produce a report with any necessary recommendations.

34. The Committee Inquiry into the Barriers to the Development of Renewable Energy Production and its Associated Contribution to the Northern Ireland Economy will take up a considerable amount of Committee time during the coming session. By the closing date for submissions more than 30 substantive responses were received covering a range of issues of concern to businesses, renewable energy support organisations, public sector bodies, other statutory committees of the Assembly and individuals. The Committee will take both oral and written evidence on the inquiry during the next session and will produce a report outlining key findings, conclusions and recommendations.

ANNEX A

Committee for [ Enterprise, Trade & Investment] – Expenditure for the period 1 September 2009 – 31 August 2010