COMMITTEE FOR FINANCE AND PERSONNEL
OFFICIAL REPORT
(Hansard)
Regional Economic Strategy
10 December 2008
Members present for all or part of the proceedings:
Mr Mitchel McLaughlin (Chairperson)
Dr Stephen Farry
Mr Fra McCann
Ms Jennifer McCann
Mr David McNarry
Mr Declan O’Loan
Mr Ian Paisley Jnr
Ms Dawn Purvis
Mr Peter Weir
Witnesses:
Mr Michael Brennan ) Department of Finance and Personnel
Mr Peter Jakobsen )
The Chairperson (Mr McLaughlin):
We are joined by Michael Brennan, head of the strategic policy division, and Peter Jakobsen, principal economist. I refer members to the briefing paper and the secretariat paper.
Is Mr Jakobsen attending today?
Mr Michael Brennan (Department of Finance and Personnel):
He is in the car park; he should be here shortly.
The Chairperson:
We will begin without him. Do you want to make any opening comments?
Mr Brennan:
Members will be aware that the Department of Finance and Personnel has established an interdepartmental working group that has been examining the draft regional economic strategy in recent months. However, the global and local economic climate has changed dramatically in the past six months. Therefore, the Department has conducted a stocktake to determine the current position of the regional economic strategy process. We have decided that now is a good time to marry an economic strategy for Northern Ireland with an assessment of the Executive’s progress on meeting the commitments on economic growth outlined in the Programme for Government.
That will allow us to engage interactively with the strategic reviews of major economic policy areas that are being conducted by the Department of Enterprise, Trade and Investment (DETI) and the Department for Employment and Learning (DEL). Last week, the Minister of Enterprise, Trade and Investment announced the strategic review of Invest Northern Ireland to the Assembly. That review is critical for the development of macroeconomic policy and an economic strategy for Northern Ireland.
Furthermore, in order to develop the economic strategy, we will interlink with other key issues such as the Department for Regional Development’s review of the regional development strategy, which will have an important interchange with economic policy. We propose to link those key issues on the stocktake for economic policy with the annual assessment of the Programme for Government.
The Chairperson:
Peter has arrived; do you have anything to add?
Mr Peter Jakobsen (Department of Finance and Personnel):
I apologise for being late; I was caught in a fire drill.
Mr O’Loan:
The Executive were established 18 months ago, and they declared the economy to be their number-one priority. Since then, Varney I has been completed, and Varney II — which was about a regional economic strategy — was released in April. Then, last week, the Minister of Enterprise, Trade and Investment announced her review, which Mr Brennan described as a “strategic review of Invest Northern Ireland”. Did the Minister not call it a strategic review of economic policy?
You and the Minister both referred to the review as action-orientated. As I said during another debate, I welcome that approach. Despite all the talk of action, we seem to be producing more exercises to achieve action. How exactly does Arlene Foster’s review tie in with your proposals? How quickly will the Department establish its overall umbrella programme? Moreover — and perhaps most importantly — what major steps will the Department take to change the economic environment, not just during the current downturn, but in the longer term?
Mr Brennan:
The DETI review extends beyond the remit of Invest NI, because DETI has responsibility for two of the key productivity drivers — innovation and enterprise. The Department of Finance and Personnel will be actively involved in Professor Barnett’s review over the coming months. That review will run in parallel with our wider review of economic development issues across the entire Executive area.
For example, there is the regional development strategy, which I mentioned, the sustainable development strategy in the Office of the First Minister and deputy First Minister (OFMDFM) and DEL’s forecasting skills. Therefore, the DETI review will run in parallel with our work on the macroeconomic strategy. You are right that the DETI review is broader than just Invest NI, but Invest NI will be a key element of that.
The Programme for Government, which was announced in January 2008, set out a wide range of targets in the first five public service agreement (PSAs). Therefore, now is the appropriate time to begin the annual review of how Departments are delivering against those targets and establish how realistic they are in the current economic environment, because things have changed so dramatically since January.
Mr O’Loan:
In the absence of a regional economic strategy, what proportion of PSA targets are in danger of not being achieved?
Mr Brennan:
I cannot say at this time. We need to conduct the annual review of those targets to establish where Departments are with regard to the delivery of them. The key DETI target in relation to Invest NI was to achieve 6,500 foreign direct investment jobs. However, when that target was set in January 2008, no one could have foreseen the current position of the global economy and the effect on the potential to attract foreign direct jobs into Northern Ireland. The situation has changed dramatically, and that is an example of how the change in the environment has changed the way in which delivery of targets is assessed. That is the critical work that we are engaged in now.
Mr O’Loan:
You also state that a modern and efficient infrastructure is vital for growth and enhanced competitiveness. What is your assessment of progress to date on infrastructure?
Mr Brennan:
I do not know the specifics of how each Department is rolling out its components of the investment strategy. However, I do know that, some £1·4 billion has been allocated to capital projects this year. Therefore, the December monitoring position should highlight the extent, if any, of underspend.
Mr O’Loan:
What is your view of the fact that 42% of all capital spend is targeted for the last three months of the year?
Mr Brennan:
That could be due to the nature of the contract delivery — I am not aware of the specifics of that.
Mr O’Loan:
Did the Treasury request that NI put in place a regional economic strategy? What is the equivalent situation in Scotland, England and Wales?
Mr Brennan:
The initial regional economic strategy for Northern Ireland was a commitment made during direct rule, in which the Chancellor asked the regional authorities, including the devolved Administrations, to produce an economic strategy. The English regional development agencies all submit development strategies to the Treasury. The devolved Administrations in Scotland and Wales have produced their own independent economic strategies —A Winning Wales is the name of the Welsh strategy, and I cannot remember the name of the Scottish one.
Mr O’Loan:
I referred earlier to delays and a desire to see action. Although you told the Committee that a draft strategy would be consulted on in October 2008, we are approaching 2009 and only have indications that the draft strategy will be delivered at some stage. What are the reasons for that delay?
Mr Brennan:
During our first series of meetings with the various Departments on our working group, it became clear that certain ones, such as DETI, DEL and DRD, would engage in major reviews. We have only become aware of DETI’s position in regard to appointing its panel in recent months. The various review strands have started to crystallise: we know DRD’s position in relation to the review of the regional development strategy; the Minister of Enterprise, Trade and Investment published her strategic review under Professor Barnett; and we know the Minister for Employment and Learning’s position in relation to the review of skills forecasting. Over recent months, the various initiatives in Departments have crystallised and are now up and running.
Mr O’Loan:
A lot of joined-up work is required. Has the strategy been approved by the Executive? In the Assembly on Monday, the Minister of Enterprise, Trade and Investment said that work on a new strategy is progressing and will embrace key reviews of policy delivery. Do all the Ministers know the direction of the strategy?
Mr Brennan:
As I understand it, yes. The Minister of Enterprise, Trade and Investment circulated the draft terms of reference to all of her Executive colleagues and invited comments on them.
Mr F McCann:
To account for the DETI review of economic policy, the paper has been delayed until spring 2009. Does that DETI review include a review of Invest NI? What input does the Department of Finance and Personnel’s strategic policy division have in that review? When will the new Programme for Government that is mentioned be in place?
Mr Brennan:
DFP will be an active participant in the DETI review by sitting on the various working groups that will take that forward. As I mentioned earlier, Invest NI will be subject to the terms of reference for the DETI review, and it will be a key element of the review that Professor Barnett will undertake.
The work on assessing the current Programme for Government and its success against targets is already under way. Over the coming months, we will be pressing Departments on how they have progressed against the targets that were set out last January.
Ms Purvis:
On the back of that, your paper states that the timing of the DETI review will:
“assist in preparations for the next National Spending Review and new PfG.”.
When do you expect the new Programme for Government to be in place?
Mr Brennan:
The timescale for the new Programme for Government is for the Executive to determine. A key element of the current Programme for Government will be a report on its delivery. That is a commitment on OFMDFM, so the work that we are doing will be critical to the assessment of the current Programme for Government. The national spending review will be set by the UK Government, but a considerable lead-in time for preparation is needed so that the devolved Administration will be ready to engage with the Treasury about its future priorities.
Ms Purvis:
Do you not have any indication of when either will be ready?
Mr Brennan:
The report on the assessment of the progress of the current Programme for Government will be available by spring 2009.
Mr Weir:
The Department of Finance and Personnel previously indicated that the critical part of taking forward the strategy would be when discussions commenced about moving resources into economic development. As the focus of the Programme for Government was very much about the economy becoming centre stage, what progress has there been to ensure that those resources are in place for the 2008-2011 period?
Mr Brennan:
The key issue is to assess the extent to which Departments have delivered against what they promised for the economy. A range of Departments had greater or lesser roles in delivering the first five PSAs, which related to the economy. Departments were given resources to deliver those, so we must assess whether they have delivered — that is the key issue. If Departments have not delivered, they must make a defence to justify why they should retain those resources in the coming years.
In the context of in-year allocations, the key issue is the extent to which the resources will deliver long-term and durable economic returns for the local economy.
Mr Weir:
In your paper, you make reference to the intention to engage with relevant external stakeholders. Can you be more specific regarding identifying who those relevant external stakeholders are; what the timescale will be for that level of consultation; and how you will take on board the comments that they will make?
Mr Brennan:
Several key external stakeholders regard themselves as having a role to play in shaping economic policy, such as the Business Alliance and its constituents — the Confederation of British Industry (CBI), the Northern Ireland Chamber of Commerce and Industry, the small firms federation and the trade union movements. In paragraph —
Mr Weir:
When you said the small-firms federation, did you mean the Federation of Small Businesses (FSB)?
Mr Brennan:
Yes. There is a range of interests — many of which are reflected in the umbrella of the Economic Development Forum (EDF), which meets on a quarterly basis. The Department of Finance and Personnel has a seat on the EDF, so we will attend and, as a regular agenda item, we will update the forum on how the work is progressing. Those organisations are the key players as regards external stakeholders.
Mr Weir:
What is the timescale for such discussions, or will you just wait until the next EDF meeting?
Mr Brennan:
The strategic policy division regularly engages with the Institute of Directors and the CBI, both of which submit papers to us for comment. Therefore, rather than engagement being date led, it is an ongoing process with those bodies.
Ms Purvis:
The Department of Finance and Personnel’s business plan for 2008-09 states that the strategic policy division will develop a deeper evidence base on long-term trends and wider strategic issues and will ensure that that will be available to influence the 2008 Budget. What long-term trends and wider strategic issues have you identified, and how have they influenced your decisions to date?
Mr Brennan:
The strategic policy division provides the Minister with papers that highlight where we believe the Northern Ireland economy is positioned, where it is going and where policy should be focused. Economic-inactivity ratios and the long-term skills mismatch in Northern Ireland are particular long-term trends that concern us, but our overriding economic concern is the gross lack of productivity. The productivity gap between the economy here and the one nationally is considerable, and, over the past 20 years, it has not converged to any meaningful degree. Therefore, we have been considering particular areas on which we should focus policy that has the potential to increase productivity.
Ms Purvis:
Does the strategic policy division have a business plan?
Mr Brennan:
Yes, we do.
Ms Purvis:
Will you forward a copy of it to the Committee?
Mr Brennan:
Yes.
Dr Farry:
I am concerned about what is being proposed, which strikes me as a downgrading of our ambitions. It is as though you are arguing that we should adopt short-term actions because of the national and global economic situations. I would suggest, however, that those situations make the argument for having a regional economic strategy even stronger. Will all the work on developing a regional economic strategy now be shelved? What stage are you at in developing a detailed strategy, and at what point was the decision taken to produce a shorter paper?
Mr Brennan:
To date, our work has concentrated on the principles for economic growth and on the drivers of productivity, so the point that I made about productivity being the fundamental economic concern still stands — the work has not become redundant. However, the sectors at which we had targeted policies for productivity growth have changed. For example, a year ago, financial services appeared to be a key area into which Northern Ireland had to go, but the world is dramatically different now, and that has affected our ability to grow that sector. Therefore, although the specifics have changed, the framework for economic policy, and the work that we have done to date, still stands.
Dr Farry:
How detailed will the document be? I accept that the Programme for Government is in place and that the economy is its underlying priority; however, in essence, it is a loose framework that includes a number of targets — it is not a detailed economic strategy for Northern Ireland. Therefore, how detailed will the regional economic strategy be?
Mr Brennan:
In order that progress can be assessed at specific levels, we would like to cross-link the strategy with the various public service agreements and the Programme for Government’s actions. However, given that we are able to cross-link to documents such as the regional development strategy, the sustainable development strategy and, particularly, the Programme for Government, in conjunction with OFMDFM’s assessment of the progress towards those targets, we need not produce a massive tome of several hundred pages; we can produce a slimline, short and focused document on the key policy agenda for the Assembly and the Executive. In addition, we can cross-link to other documents, such as DRD’s work on regional development and OFMDFM’s work on sustainable development. We need not regurgitate everything that is happening in the wider environment.
Dr Farry:
I often appreciate the advantages of something that is intended for wider consumption being short and concise, but the flip side of that is that it can reflect a lack of detail on policy focus. The Varney II report was a detailed peer review by Treasury officials of our economic policy that ran to over 100 pages and included a whole series of recommendations. To what extent will Varney II be picked up by the regional economic strategy, which was effectively billed as the vehicle for taking those recommendations forward initially?
Mr Brennan:
We took Varney II as the starting point in considering how to move forward, because many of the recommendations that are included in that report are quite sensible. For example, Varney called for an assessment of the functions of Invest NI and, based on its call for an assessment of competitiveness, the report put forward the idea of a competitiveness advisory board. We are already taking a range of Varney-specific recommendations as a starting point, and it is sensible to do so.
Dr Farry:
You will be aware of the comments that a number of businesses and economic organisations in Northern Ireland made to the Committee. They were quite disappointed with Varney II, and a common theme was the frustration that we are locked into the model of four or five drivers, which the Treasury has been propagating for the past 10 years, or longer. There does not seem to be any imagination to think outside of the box in which we have placed ourselves.
Mr Brennan:
I understand where those comments are coming from. However, it is not simply a Treasury request to produce a model that is based on the four productivity drivers; it goes much wider than that. For example, the European Commission’s Lisbon agenda seeks to promote economic growth and development in a similar way. Everyone is pursuing the same agenda of innovation, enterprise, and research and development. It is not just a Treasury-inspired model; it is an international pursuit, and everyone has identified the same areas for competitiveness, with similar key drivers. Delivery on those drivers determines whether one wins or loses.
Dr Farry:
Prior to the restoration of devolution, I was conscious that there was much talk among senior civil servants about the notion of picking sectors that would be taken forward as unique selling points for Northern Ireland. I appreciate that international best practice is the framework of the Lisbon agenda, but can we explore the possibility of identifying a sector in which we can specialise?
Mr Brennan:
I am always wary of the concept of picking winners. Historically, it has been difficult to do that permanently and correctly. We are focusing increasingly on the competitive position of Northern Ireland, with particular reference to its geographical position. That is why we have come up with the hub-and-spoke approach, through which Northern Ireland can offer significant advantages over London and Dublin in labour costs and property rental costs.
The hub-and–spoke model offers a range of cost advantages, which must be exploited. For example, the situation for financial services will be incredibly difficult over the coming months, particularly in London and Dublin. One argument that can be advanced is that now is quite a good time for Northern Ireland to present itself as a location for financial services so that we can offer significant paper-cost benefits over those other regions. Northern Ireland offers significant high-quality graduate output, and that hub-and-spoke model is being increasingly developed.
Dr Farry:
I have two concerns with what you have just said. First, the hub-and-spoke model sounds like an acceptance of a dependency situation, in which the primary hubs are in London and Dublin. Under that model, the issue is not so much about how the fundamental balance between the greater south-east and Northern Ireland can be challenged, but how Northern Ireland, Scotland, Wales and the north-east are doing relative to the economic powerhouse.
My second concern is to do with the notion that Northern Ireland competes on the basis of lower costs. I am not sure how viable that will be as a long-term strategy. It almost implies that the race is at the bottom, and that there might be someone out there who can undercut us. Surely the logic of what we have been talking about is that we should focus on skills; our advantage lies in the potential of having a highly skilled, English-speaking workforce that is plugged into the global economy, as opposed to one in which we compete on lower costs. I do not see how lower costs can help our productivity gap.
Mr Brennan:
The hub-and-spoke model does not preclude enhancing the skills agenda, for example. One of the key elements of economic policy development is the focus on our local universities, and the links between the universities and the wider academic world that have been established in order to enhance research and development capacity. That is directly relevant to the skills agenda; it is about enhancing the wealth-generating capacity of Northern Ireland. Developing Northern Ireland as a link to London and Dublin in order to promote cost advantages does not mean that we should stop trying to develop excellence in Northern Ireland in specific areas.
Dr Farry:
What are your underlying assumptions about the gross value added (GVA) gap? I thought that the Executive made a mistake when they shifted the goalposts and said that they would now compare Northern Ireland with the UK average, minus the greater south-east region. Most independent observers do not expect any meaningful convergence; Varney did not expect there to be any convergence. People were frustrated with the old Northern Ireland Office version of the GVA gap, which was unambitious when it came to moving from 80% to 80·5% or 81%. What are our current expectations?
Mr Brennan:
Focusing on GVA convergence can be quite misleading, because it does not give a true insight into how things are improving in Northern Ireland. The current GVA target is to halve the gap with the UK minus the greater south-east region in the private sector. I suspect that things have gone so badly in private services in the UK that Northern Ireland is converging quite rapidly.
Dr Farry:
It is a false positive result.
Mr Brennan:
Exactly. I do not have the statistics to back up that assertion at present, but I suspect that that is what we will find. Northern Ireland has tended to converge over the past two or three decades. For example, Northern Ireland’s most rapid period of convergence with the UK national economy was in the early 1990s. That was not because of a positive reason, but because the UK economy went into recession.
Mr Jakobsen:
In fact, the recession here might cause convergence. If we lose low-paid jobs, our GVA per worker will increase.
Ms J McCann:
I am sorry that I missed your presentation; I might be repeating a question that has already been asked. Earlier this year we heard that an interdepartmental steering group would take the regional economic strategy forward. I know that the Committee submitted a paper that called for a cross-cutting implementation plan to rebalance the economy and close the productivity and income gaps between here and Britain. Has that steering group made any significant progress on that plan, and what degree of co-ordination is in place? There are many economic reviews taking place; DETI has initiated one. Who is collating and co-ordinating that information?
Mr Brennan:
The formal interdepartmental group includes representatives from all Departments. The work that is being done by DETI and DEL is co-ordinated by a smaller group, which engages on a weekly and sometimes daily basis with those Departments. We also sit on each other’s working groups — for example, I am involved with the work that DETI is doing with Professor Barnett. There are links between the various strands of work across Departments in order to ensure that there are no communication breakdowns or information gaps between them. I am confident that the level of engagement between officials of various Departments is comprehensive and ensures that breakdowns do not occur.
Ms J McCann:
Planning is another factor. The Committee heard recently that there are almost 70 planning applications in the system that could create employment opportunities and help to sustain the economy. Do you have a cross-departmental remit to tie all those factors together and examine those issues?
Mr Brennan:
Yes; for example, I attend meetings of a DRD working group that is reviewing the regional development strategy, and a representative of DRD would attend meetings of my Department. The same applies in relation to planning issues; DFP economists sit in performance and efficiency delivery unit (PEDU) meetings with the Department of the Environment (DOE) and Planning Service at which attempts are made to overcome difficulties involved in major planning applications. There is a lot of overlap at official level.
Mr Paisley Jnr:
A year ago, the debate was public sector versus private sector, and the cry was that the entire economy must be recalibrated and aligned with the private sector. However, the current cycle means that the calibration of our economy will probably provide a secure cushion for many people. Getting the balance right must be reflected somewhere.
No one wants an over-dependency on the public sector, but the fact is that in the current climate those certainties are quite good for many households in Northern Ireland. It is probably good that there was no ramstamming ahead with some of the things that were suggested over the past year.
Will your report look at some of the impacts on retail, for example? I understand that current figures show that retailing has not declined to the extent that was expected; that the growth of the euro and the steady pound has increased border trade and created opportunities.
Mr Brennan:
Yes, the point about the present influence of the public sector is well made. The public sector influences somewhere in the order of 60% of regional GVA and provides significant economic buoyancy, or a safety net, in the current economic climate. I suspect that is why forecasts for the coming year for Northern Ireland are more upbeat than for the national economy.
For example, Oxford Economics forecast that the Northern Ireland economy will decline next year by about 0·8%; whereas, the Chancellor’s pre-Budget report forecast for the national economy has it somewhere between 0·75% and 1·25%. I suspect that that is the influence of the public sector in Northern Ireland.
The key issue is that people always say that the public sector is too big. The Department’s response to that is that the Northern Ireland public sector is not too big, because, as a proportion of the total population, per capita and in terms of the UK average, it is the same as in Wales or Scotland. There must be the same proportionate level of teachers and nurses in society.
The problem is that the private sector in Northern Ireland is too small. In the work on economic policy that we are carrying out with other Departments, we must focus on how to grow the private sector. In recent years, a key growth driver for the economy was the retailing and distribution sectors. They were focused areas in terms of delivering growth.
Fortunately — if it can be put that way — the retailing sector is being sustained at present because of the currency differential with the euro, which is promoting significant cross-border retail activity. That is a timely and beneficial economic stimulus, which is a positive when married with the influence and extent of the public sector.
Therefore, the strategy must look at key drivers for the private sector. At the minute, retailing is a positive, but it does not deliver enduring, wealth-creating jobs. Retailing is not sustainable. If something significant goes wrong in the public sector, or there is a collapse in confidence, retailing will dry up — it is not a long-term bet.
Mr Paisley Jnr:
However, the hub-and-spoke approach that you described earlier could make money grow, because that involves bringing in new jobs, developing new skills and attracting new investment. I was struck by Stephen’s point that we should not be dependent on the public sector; everywhere is dependent on something.
Mr Brennan:
Yes, to a greater or lesser extent.
Mr Paisley Jnr:
Mainland China is commercially dependent on Hong Kong’s financial sector. Will your planned focus on the hub-and-spoke approach be emphasised to ensure that it has real potential?
Mr Brennan:
That will be a key element of the approach. The previous direct rule draft of the RES neglected that element. It is only in the past three years that it has come increasingly to our attention how critical it is to develop relationships as part of that hub-and-spoke approach.
Mr Paisley Jnr:
Jennifer made a point about planning. Figures were put to me this week that, in Belfast alone, there are planning applications worth in excess of £2 billion. I know that pressure is being applied to speed up those applications. Will you consider those planning issues, and will they form part of the analysis when it finally comes before the Committee?
Mr Brennan:
We will obviously consider planning as a constraint on, or facilitator of, economic growth. Planning policy is a key policy instrument for economic growth, so we will consider it on a general level. However, we will not get involved in the specifics of scheme A against scheme B or region A against region B in Northern Ireland.
Mr Paisley Jnr:
The Programme for Government and the investment strategy identified a series of milestones, many of which were thematic milestones, while some were specific to particular Departments. At this point, how close are Departments to reaching those milestones, both general and specific?
Mr Brennan:
My feeling is that some PFG targets and milestones that relate to external events are under stress. Take, for example, the ability of Invest NI to attract 6,500 FDI jobs — that is an incredibly challenging target in the current climate. I understand that DETI is undertaking a risk assessment of each of its targets and milestones, and that other Departments are doing likewise.
A key high-level milestone for the investment strategy concerns capital spend and the rolling out of capital. For example, under ISNI, we have around £1·4 billion to spend on capital investments this year. We have heard nothing to suggest that that will not be delivered. The in-year monitoring rounds do not show a significant failure — people are not surrendering the money. It is up to Departments to deliver their elements of the overall milestone, as it were. I worry about whether some specific milestones can be reached because of the external factors involved. It will be interesting to see the risk assessments that Departments have carried out on their targets.
Mr Paisley Jnr:
Many capital projects are being brought forward, so milestones could be reached ahead of schedule and projected target dates. Is that what you are suggesting?
Mr Brennan:
A concerted effort is being made to reprioritise the investment strategy to develop projects that can be started very quickly and be of specific benefit to the construction industry, which is under pressure. A reordering is under way to try to bring that about.
Mr Paisley Jnr:
As you know, the Department for Social Development has a target to build 5,000 new social homes over the next three years. My assessment is that, at present, about 50 have probably been built. It seems unlikely that the Department will reach that target, give the current state of the market.
Mr Brennan:
I am not aware of the specifics of that target, and I do not know what progress DSD has made towards delivering on it.
Mr Paisley Jnr:
That will be one of the key factors for the construction industry.
Mr Brennan:
Yes.
Mr Paisley Jnr:
This is a Barack Obama-type question: is there a silver bullet? Can some measure be taken that will kick-start the economy and ensure that it is seen as the number-one priority, or is it a case of more of the same, keep the shoulder to the wheel and make a steady attempt to achieve growth?
Mr Brennan:
To hark back to the Varney engagements, many people thought that a fiscal derogation — for example, corporation tax — was the silver bullet. I did not think that it was, nor do I think that there is a silver bullet as far as policy intervention is concerned. The single critical issue in creating economic stability revolves around creating economic confidence. There seems to be great instability and unawareness at the moment, and when such instability is injected into a regional economy such as Northern Ireland’s, it undermines economic activity. People become more conservative in their investments and their spending. Until the banking sector becomes more stable in its expectations, we face a difficult time.