Northern Ireland Assembly
Monday 26 June 2000 (continued)
Industrial Development Board:
Report of House of Commons Public Accounts Committee
Dr O'Hagan:
I beg to move
That this Assembly welcomes the House of Commons Public Accounts Committee report on the Industrial Development Board (HC 66) and directs that the Northern Ireland Assembly Public Accounts Committee give continuing attention to the issues raised in the report.
Go raibh maith agat, a Chathaoirligh. I welcome the opportunity which the publication of the Westminster Public Accounts Committee (PAC) report has afforded the Assembly to debate an important issue. Since putting this motion down I have been contacted by various Government officials and advised that such a motion may be premature as the Department of Enterprise, Trade and Investment and the Industrial Development Board (IDB) in particular cannot formally reply to the Public Accounts Committee at Westminster until 20 July. I have also been informed that it will then be up to that Committee to decide if the response is acceptable and that the Comptroller and Auditor General will monitor undertakings given in the response, reporting back on any concerns.
All of this, however, should not and does not preclude this debate's taking place, especially since we are heading towards the summer recess. This is too important an issue, and there are too many concerns about the activities and performance of the IDB, to put this debate off until September. Nor does it preclude the Assembly's PAC from keeping a watching brief on the IDB as recommended by its Westminster counterpart.
Over the years, a number of official and academic studies have analysed the work of the IDB. These include reports by the Northern Ireland Economic Council and the Controller and Auditor General, community research undertaken by the West Belfast Economic Forum and hearings and reports by the Westminster PAC itself. Each of these investigations and reports contains remarkably similar findings. These are: that the IDB claims to create far more jobs than it actually does; that it violates its own criteria for providing grants; that its internal performance appraisals are inadequate; that its monitoring of grant recipients' performance is disastrously insufficient; and that there is evidence of an unjustified waste of public money.
Further criticisms are also common to several reports. These are: that the IDB has failed to locate sufficient jobs in areas most in need of employment (namely, targeting social need (TSN) areas) in spite of the fact that TSN has been a thread in Government policy since 1990; that even those jobs located in TSN areas are not held in sufficient proportion by residents of the area, especially target groups such as the long-term unemployed; and that the IDB has shown an arrogant disregard for the public and for Government officials by providing misleading evidence and statements and, most significantly, by steadfastly refusing to change its bad practices.
The report by the Westminster Public Accounts Committee expressed surprise that the IDB had to carry out special data collection exercises to answer basic questions that it should be monitoring as a matter of course. The Committee found that the IDB provided evidence that was contradictory, confusing and misleading. It concluded, in view of the IDB's failure to respond to previous criticisms or to come under any kind of public control, that should devolved Government be re-established, that IDB activity is a subject which we should be commended to the Northern Ireland Assembly Public Accounts Committee for continuing attention.
I want to turn to some specific concerns surrounding the IDB. First, job creation. Studies have consistently shown that IDB claims regarding job creation are totally unrealistic. The IDB uses a basic indicator called job promotions which is a notional figure of the number of jobs that could be created in a grant-aided project over a number of years. I quote an IDB representative:
"a job promoted is a result of negotiating with the company on a promise that the company will make on the basis of its business plan presented to the IDB."
Studies of actual jobs created have shown that the number is much less than quoted, and that the duration of IDB assisted jobs is quite short. For example, the Comptroller and Auditor General found that in the North of Ireland as a whole only 51% of the jobs promised by IDB assisted inward investors between 1988 and 1994 were actually created. Moreover, only 36% were still in place by March 1997.
There is also a disingenuous method in place for costs-per-job figures. This is calculated by adding together jobs promoted and jobs safeguarded, which are existing jobs that were safeguarded by IDB grants. This year's end-of-year statement from the IDB, for example, indicates 7,145 jobs promoted and 1,796 jobs safeguarded. These total 8,941. That figure is used to calculate the cost-per-job figure, which comes out at £9,507. However, when pressed, IDB representatives stated that the actual number of jobs created in 1999-2000 was 1,609. There is clearly a vast difference in these two figures, and that difference greatly affects the cost-per-job figures. The cost-per-job figure also does not take into account the cost of running overseas offices.
The IDB also uses various forms of double counting in its yearly in statements and annual reports, claiming the same jobs promoted over more than one year. The IDB has been criticised for using these unrealistic figures and counting methods since the 1983 Northern Ireland Economic Council Report, yet it has resolutely refused to change this practice. Therefore when actual jobs are considered, the IDB's performance in terms of job creation has been to say the least woefully inadequate.
In relation to equality issues it appears that the IDB has never taken equality seriously by actively promoting the siting of projects in economically marginalised TSN areas. In response to public pressure, the IDB promised to site 75% of jobs in TSN areas. Yet in the period 1988-97 just 30% of projects and 41% of jobs promoted went to TSN areas. When one looks closely at the figures the lack of adherence to TSN becomes even more appalling, with only 2·3% of IDB-assisted projects situated in west Belfast and none in the Moyle and Strabane District Council areas.
Instead of actively overturning this record and seriously tackling economic marginalisation and disadvantage, the criteria were simply broadened to include areas adjacent to TSN areas. This is such a wide category that the IDB can now claim to have successfully carried out their equality obligations when in fact there has been little operational change.
Up until this year the IDB made no effort to ensure that firms that have located in disadvantaged areas hired people from those areas. The IDB viewed the hiring practices of sponsored companies as the business of those companies. There is no monitoring of the equality effects of grant-aided companies hiring practices on groups such as Catholics, women or the long-term unemployed.
The Westminster Committee stated
"it is not enough to record only the location of projects the acid test is to measure the extent to which jobs are going to people who actually come from disadvantaged areas."
The IDB is now beginning to carry out monitoring on this basis. This to be welcomed as a step in the right direction and should be monitored by the Public Accounts Committee here.
12.00
Given the IDB's failure to carry out its equality obligations thus far, it is therefore cause for concern that it was not obliged to publish a draft equality scheme. Instead, the Department's equality scheme will also cover the IDB. The IDB is the largest recipient of public funding within the Department. Other agencies under the control of the Department are obliged to publish equality schemes. Therefore it is simply not good enough that the IDB should be exempt. Basic data on the religious and gender composition of workforces in IDB-sponsored companies must be maintained and published.
Statistics that measure actual job creation should be compiled. The IDB claims it must use the measure of job promotion because that is widely used by other agencies and allows it to measure its success against its competitors. This is a disingenuous argument. First, one method does not preclude it from using other methods for measuring performance. Secondly, the IDA in the South of Ireland publishes annual statistics of actual jobs in IDA-assisted companies by economic sector and location. It has carried out an annual survey of employment in all industry since 1973. That survey gathers data on employment in each company, including by gender. As the existing regulations require companies to report on the religious composition of their workforces, there is no excuse for the IDB's avoiding the collection and publication of a similar survey of IDB-sponsored companies.
Another issue brought up by the Westminster Committee, and also the subject of other studies, has been the internal performance of the IDB - in particular, its failure to adequately assess the performance of its units, and especially its foreign offices. The Select Committee found that the IDB does not yet have a performance-measurement system that clearly demonstrates the relative and individual cost-effectiveness of its overseas offices, despite the high levels of costs involved in running these offices. Such internal accounting must be implemented. Not only is it necessary for assessing the efficiency of specific units, but it also has an additional impact on other statistics. As I mentioned earlier, cost-per-job figures are understated not only because of the use of inflated jobs promoted figures but further because they do not include the institutional costs of attracting companies.
The IDB also fails to collect data on the economic performance of grant-aided companies. The Select Committee found it unacceptable that it took the IDB five years to begin even basic monitoring of the economic efficiency of the firms it sponsored, even though it had been told to do so in a previous report in 1992-93. Having failed to adhere to Westminster recommendations, the IDB must be monitored in this regard. Moreover, it is crucial that the IDB extend its data collection and monitoring to other areas. It should be conducting annual surveys of each company's performance. It should be looking at costs, whether the materials or services are purchased locally or imported, its profit rate, where it obtains its technology and at what costs, and so on. Citing a company confidentiality clause is not enough. The IDA has conducted a complete survey of components of sales, including scrutiny of costs and profits since the early 1980s. All companies are required to provide this by law. As the recent performance of the "Celtic tiger" demonstrates, such requirements have not affected in the least the IDA's ability to attract companies.
There is also need for a review of IDB operations in promoting local economic development projects and jobs in indigenous companies. The IDB admits that it has failed badly in this respect. We must all recognise, whatever our concerns, that foreign companies and multinationals will play a role in the future development of our island economy. However, this should not be to the detriment of indigenous Irish industry. Overdependence on transnational corporations does not make for a healthy economy. Experience has shown that multinationals whose decisions are based on global success rather than local concerns are more likely to move away from a host locality if global market conditions dictate. The IDB would be better placed promoting local industry, which is rooted in local economies and is more likely to reinvest its profits in the local economy.
No one denies that the IDB has difficult job. Its activities have been severely hampered by several factors, including the political conflict and the inability to use policies like low taxation rates, which the much more successful IDA in the South has been able to do.
However, the IDB's job is not made any easier by massaging figures to reflect better performance or by making grossly inflated claims. Keeping accurate records, carrying out rational accounting and putting in place adequate monitoring practices all represent good housekeeping.
The IDB has received massive sums of public money. It has the largest budget within the Department of Enterprise, Trade and Investment. People are entitled to know what is being done with this money, how efficiently and successfully it is being used, and what improvements are going to be brought about within the IDB.
The resistance within the IDB over the years despite repeated studies and recommendations, be publicly accountable, to make positive changes, to institute rational accounting and monitoring methods is unacceptable. Furthermore, it leads one to wonder whether if the true cost of their activities were known, it would bring forth such public criticism as would convince those who hold the purse strings that some money which has gone to the IDB would be better spent elsewhere.
I ask the Assembly to vote in favour of this motion because one of the problems over the years has been the lack of accountability shown by the IDB.
Go raibh maith agat.
The Chairman of the Public Accounts Committee (Mr B Bell): I am grateful for the opportunity to speak as Chairman of the Public Accounts Committee.
First, it gives me the opportunity to pay tribute to the valuable work carried out by the Public Accounts Committee at Westminster over recent years. That work has been based on reports prepared by the Comptroller and Auditor General for Northern Ireland and by Mr John Dowdall and his staff in the Northern Ireland Audit Office. It has been their job to seek to ensure that Government Departments and their agencies fulfil their responsibilities to the taxpayer and that money voted by Parliament has been spent wisely and in a proper manner.
I know that Mr Dowdall and his staff have drawn the attention of Parliament to a number of instances where Departments have fallen short of this requirement. He will now carry out this important function for the Northern Ireland Assembly.
The independence of the Comptroller and Auditor General in exercising his functions is an essential element in the process of holding Northern Ireland Departments accountable to the taxpayer through elected representatives. Section 65 of the Northern Ireland Act 1998 provides that he shall not be subject to the direction or control of any Minister, Northern Ireland Department, or the Northern Ireland Assembly. Taking that into account, I wonder how wise it was, or what the Business Committee were thinking about, to even propose that this motion be debated here today.
Section 60(3) of the Northern Ireland Act 1998 provides for Standing Orders to establish the Assembly's Public Accounts Committee. The main statutory function of that Committee is to consider accounts and reports of the Comptroller and Auditor General laid before the Northern Ireland Assembly.
The remit of the Assembly's Public Accounts Committee is strictly limited to the consideration of reports prepared by the Comptroller and Auditor General. Since the legislation makes it clear that he cannot be directed by the Assembly in exercising his functions, it follows that the Assembly cannot direct the Public Accounts Committee as the motion seeks to do.
We all have a number of concerns in relation to the report on the IDB's performance. However, there is a clear procedure already. As the report was submitted by the Committee on Public Accounts, the next stage in the process would be for the Department of Finance and Personnel to respond by producing a memorandum of reply. That procedure is based on the principle that, in replying to reports of the Committee, the Government should provide considered responses to the recommendations, which must first be given to Parliament.
This is a long-established procedure, and it will apply to any future reports to this Assembly by my Committee. Sir Reg Empey will undoubtedly want to carefully consider the issues raised in the report, and provide a measured response through the memorandum of reply. That reply is due to be completed next month. In those circumstances, Members should be aware that the Minister will not be able to respond at this stage to detailed issues in the report.
Although my Committee awaits publication of the Department of Finance and Personnel memorandum with interest, it will be a response to the Committee of Public Accounts, and it will be for that Committee to decide if the response is acceptable. The Comptroller and Auditor General will of course monitor any undertakings given in that response and report to my Committee any concerns about their implementation.
The recommendation of the Chairman of the Committee of Public Accounts that my Committee should keep a watching brief on this issue has already been drawn to the attention of Committee Members. The Assembly's Public Accounts Committee, however, can only take this matter forward in the context of any future Northern Ireland Audit Office reports on the work of the IDB. My contention is that we cannot be directed by this motion.
Mr Dallat:
I would like to pick up on what Mr Bell has said. If we are not directed, I hope that at least we will be influenced. That is what is important. As Chairperson of the Audit Committee and a member of the Public Accounts Committee, I welcome the report referred to in the motion. The under-performance of the IDB is an issue which the Public Accounts Committee will, in time, have to take on board as part of a programme of work which is already under review. I have before me the business for next Wednesday, which deals with road safety in a very comprehensive way - one of the major issues concerning Northern Ireland at the moment.
The Public Audit Office's function is to ensure that the Assembly gets value for money. That is achieved by providing the Assembly with independent information and advice about how economically, efficiently and effectively Departments and agencies and other bodies use their resources.
The public auditor also gives help to audited bodies on how to improve their performance to achieve value for money. Clearly the Assembly's Public Accounts Committee must be concerned that the IDB achieved its annual targets for job promotion in only four of the nine years under review. There will be concern too about the number of jobs that remained in place. The absence of a set of performance measures to demonstrate the relative and individual cost-effectiveness of the IDB's overseas offices is perhaps one of the most alarming disclosures in the report. Clearly, a Government agency charged with inward investment and having no formal records of their performance is mind-boggling, to say the least.
On a positive note, we welcome the IDB's assurance that in future it will monitor the cost-effectiveness of its overseas offices and sector campaigns. However, it is essential that the weaknesses exposed in the IDB be taken on board by our Public Accounts Committee.
12.15 pm
Now, for the first time, we have a responsibility to ensure that the IDB delivers. The admission that it failed, over the nine-year period reviewed, to attract any inward investment to seven disadvantaged areas, including two areas of social need, is alarming. The further disclosure that the IDB has only begun to monitor the impact of inward investment on disadvantaged areas is also a cause for concern. Without pre-empting the findings of the Public Accounts Committee, I have no doubt that the IDB will be asked to ensure that what it promises is delivered.
Now that the Public Accounts Committee is up and running, I, as Chairman of the Audit Committee, hope that there will be opportunities to scrutinise the work of all Government Departments with a view to improving performance. That includes value for money. As Chairman of the Audit Committee, I can report that there have been several formal and informal meetings with the Comptroller and Auditor General, at which my Vice-Chairman, Mr Billy Hutchinson, has also been present. A meeting of the Audit Committee was held last week, and another is scheduled for Tuesday. The Public Accounts Committee meets on Wednesday.
Finally, I take this opportunity to assure the House that the Comptroller and Auditor General is not only able but willing to deal with this and with any other issue that Members feel is of concern. It is a developing process. Resources are obviously limited, but I am impressed by the high standards to which the Northern Ireland Audit Office operates. The draft programme of work already agreed by the Public Accounts Committee is impressive and will make a significant impact on how the Assembly delivers on its responsibilities for efficiency, value for money and fairness. As time goes by, new and fresh ideas will emerge from the scrutiny responsibilities of the Northern Ireland Audit Office that will result in joined-up government, bringing many benefits to the people of Northern Ireland. I do not accept that the Assembly has no role to play. The Public Accounts Committee has a critical and evolving role to play on this issue and on many others that will emerge in time.
Mr Paisley Jnr:
The House of Commons Committee's report on the IDB is an indictment of the failure of the IDB, over the medium term, to make a significant and lasting impact on job creation, employment and investment in the Province. The report is littered with serious criticisms of the board's practices in attracting investment and its inability to cope with market demands and provide accurate information about its own activities. Without saying so openly, the report practically calls the IDB a failure. It is heavily peppered with criticisms such as
"A substantial proportion of jobs promised were not, in fact, created",
"taxpayers' money is put at risk",
"we are most dissatisfied with the provision by IDB of misleading information."
It also says that the IDB's overseas offices secured no new projects, despite spending £80 million.
This is a catalogue of shame and long-term disaster. We are indebted to the House of Commons for pulling no punches. They have given us a wake-up call. If the IDB does not buck itself up, the situation will get worse. It is now for the Minister, Sir Reg Empey, to respond to the detailed and serious recommendations in this report and say what his Department is going to do to repair the damage and ensure that the future of the IDB is a success.
It would be easy to come to the House, give the IDB a good kicking, shout "Hurray" and walk away, but if the House is really serious about improving investment, opportunity and employment in Northern Ireland, it will take a different approach. Pious hand-washing and condemning while doing nothing is of no use.
It is in all of our interests for the IDB to become a success story as a result of this report rather than wallow in its failures. Because of the way in which the motion was brought forward, we will not be supporting it. Nor do we believe that it can be supported. The motion has been pre-empted by the recommendations of the report itself. If the Member who moved the motion had read the report, she would have seen that the House of Commons commended it to the Public Accounts Committee of the Northern Ireland Assembly for continuing attention. That has already happened, and it is being considered by the PAC in Northern Ireland.
Sinn Féin/IRA has shot itself in the foot by bringing this motion forward. It is loathsome in the extreme that IRA/Sinn Féin has the audacity to criticise the Industrial Development Board. Yes, the IDB's record is poor and the IDB must improve itself. But at least the IDB, misguided though it has been, had the best interests of Northern Ireland at heart.
That can certainly not be said of IRA/Sinn Fein. Not only has it detracted from investment by its long-term bombing campaign, but it has shot industrialists, extorted money from building and investment programmes, done untold damage to Northern Ireland's public-relations schemes, and killed workers. It boasted to the world that its ambition was to destroy Northern Ireland, and now it comes here and criticises the IDB for doing a terrible job. Despite IRA/Sinn Fein the IDB tried to make a good job of things. If the situation were not so serious, the inverted evil of Sinn Fein would be a joke, as I think most Members on this side of the House would agree.
This report by the House of Commons says that the disadvantaged areas of Northern Ireland must now become priority investment areas. It singles out two specific areas - one in Mid Ulster and the other in my constituency of North Antrim. The report urges the IDB to attract investment to North Antrim - to Moyle in particular. I hope that the Minister will respond to this positively. In the report an amazing excuse is given by the IDB to the House of Commons. It claimed that it was unable to attract investment to the Moyle area because the location was bad. Only the IDB would dare to say that the Causeway coast, which has a major research university on its doorstep and a young well-educated workforce, is not a suitable area for investment. This is especially the case since the IDB owns sites less then 10 miles from Moyle in the Ballymoney area, and we could indeed have major investments there. The IDB refused to invest in the Moyle area despite the fact that there are excellent opportunities there and 10·6% unemployment.
I hope that, as a result of this report, the Minister will prompt the IDB to develop a strategy for investment in that area - a strategy that will encourage inward investment and also encourage indigenous employers to develop and act positively for the whole area. If we are to attract disadvantaged people into employment such a strategy must be created. However, we are not going to pre-empt the Minister who, we hope, will be able to respond positively on these issues.
The reality is that the IDB dropped its ambitions because of the problems it faced as a result of terrorism. As a House we must encourage the IDB to lift its eyes again to get a vision and to create a strategy for investment which is both ambitious and achievable. We all understand the terrible blight that terrorism has inflicted on Northern Ireland, but the IDB cannot keep using that as an excuse. Rather, it will be judged on its ability to overcome the additional problems associated with Northern Ireland.
I do not believe that the Belfast Agreement has made things much better in terms of public relations. I have spoken to industrialists, and I am sure that many of them look cautiously at investment in Northern Ireland when they consider that one of the Ministers of the Crown is also a godfather of IRA/Sinn Féin.
Mr Deputy Speaker:
I ask the Member to restrict his comments to the report.
Mr Paisley Jnr:
I am speaking about the report and the ramifications for Northern Ireland. The reality is that investors and industrialists have spoken to me about their concerns. They have made statements in the press that they will look cautiously at Northern Ireland, given that one of the Ministers of the Crown is also a godfather of Provisional IRA/Sinn Féin. That is a fact. It is something that people might not like to be said in the House, but it has to be said if we are going to be honest about achieving investment in Northern Ireland. At the weekend I was reading a book written by Eamonn Mallie and Patrick Bishop. I was refreshing my memory - it stated, with specific regard to the long-term investment problems in Northern Ireland, that in 1976 the IRA army council gave its approval to the new Northern command. One of its leaders was, of course, Mr McGuinness, our Minister of Education. Mallie goes on to say that the first action of Northern command was
"across the whole of Northern Ireland . a wave of incendiary attacks on hotels".
Today Sinn Féin has the audacity to criticise the IDB when its leading members organised the campaign that made the work of the IDB doubly difficult for all those years. The proposer of this motion should hang her head in shame.
Mr McElduff:
Will the Member give way?
Mr Paisley Jnr:
Get away.
The IDB headquarters in Belfast was bombed by this crowd over here - IRA/Sinn Féin - in the early days of the troubles, in some of the first actions of Northern command. Now it has the audacity to condemn the IDB. The IDB has been sweeping up the results of bomb attacks on its own offices, so it is little wonder that it has had difficulty attracting investment into the Province. Yes, the IDB could have done better, and it did back the wrong horses at times. Some of the examples in this report about Hualon and other companies clearly indicate that, but the reality is that the IDB's job was made doubly difficult by this crowd over here - Sinn Féin.
This report indicates that the IDB spends, in real terms, almost £40,000 per job. That is an astounding figure, given that less than 50% of the investment proposals are successful. I hope that the IDB and LEDU can, together, come up with a strategy that will allow more money to be spent on LEDU projects - instead of vast sums going to create short-term jobs, some of which last less than 10 years. LEDU projects give indigenous companies the opportunity to pay and increase their workforce and to develop indigenous employment. Indigenous employers stay here longer because they have a long-term commitment to the Province.
I hope that the Minister will take up the recommendations and ensure that the very detailed criticisms made of the IDB in this report are responded to thoroughly. We look forward to the House of Commons continuing to monitor the IDB. A number of recommendations have come to my attention. I have skited over some of them briefly already. Recommendation 8 urges the IDB to attract investment to
"disadvantaged areas . and those locations which have enjoyed little or no such investment in the past".
We know where those locations are, and I hope that they will attract successful investments in the future. Projects should be matched to areas of unemployment. In my constituency, Moyle has 10·6% unemployment. Moyle and Ballymoney should attract an investment programme. In the last 10 years there has not been one successful investment in the Ballymoney area. That is alarming, given the fact that the IDB holds great swaths of land in that part of the Province.
12.30 pm
It is essential that indigenous companies be given the opportunity to develop. If the IDB cannot attract industrialists and inward investment, then let it encourage local companies to invest in the Province and make a success of things. Yes, the IDB has had a difficult job. Yes, this report indicts it for some startling failures, but the reality is that Sinn Feín/IRA bears a great deal of the responsibility for the major problems faced by investors in this Province. On that basis, we will certainly not be associated with a Sinn Féin motion on this issue.
Mr Neeson:
I am somewhat surprised that this motion is before the House today, for it is out of order, and the Business Committee must bear some responsibility for that. It is important to bear in mind though that the report is very alarming and should be taken seriously indeed.
A number of issues need to be addressed by the IDB, but I regret that we have not yet heard its response to the report. Convention at Westminster allows a period to respond, and that period is not up. As Deputy Chairman of the Enterprise, Trade and Investment Committee, I was looking forward to having the IDB before the Committee to answer the criticisms made in the report and to answer my questions and those of my Colleagues.
Clearly, there are issues which need to be addressed, but we have to also accept that we are living in a time of change. This report was drawn up for the years 1988-97. The ceasefires had not been declared, and there was a very unstable environment in Northern Ireland. I hope that the announcement made this morning about the arms dumps will give us the confidence that will enable us to create a stable environment with increased opportunities for attracting inward investment and creating more indigenous jobs. Those are the opportunities that need to be grasped.
We are currently looking at the document 'Strategy 2010'. One of the issues that it raises which is very pertinent to the report is that of tax incentives. My party has consistently argued that the Assembly should have tax-varying and tax-raising powers. Until that happens, we will be running behind our nearest neighbours in the Irish Republic, particularly on corporation tax.
Mr Paisley Jnr:
I tend to agree with the Member on corporation tax. However, the tax-varying issue has been part of the Member's party's policy since 1997, yet it has failed to deliver. Why was there no successful House of Commons or House of Lords amendment to the 1998 Bill that would have given this House tax-varying powers like those of the Scottish Parliament?
Mr Neeson:
I regret that our point has not yet been accepted, but I hope that it will be seriously considered by all parties concerned when we come to review the agreement.
We must also bear in mind the positive side of the IDB: 86,000 people are currently employed in Northern Ireland because of IDB ventures. These issues must be taken on board as well.
I wish to make two final points.
The Chairman of the Committee and I had a meeting with the Minister recently, and he raised the point about reductions in the ETI budget - what was then the DED budget - over the years. I fully concur with him that there are opportunities for inward investment there as a result of the new environment, and I think it is vitally important that the budget should not be reduced, regardless of the pressures that come from elsewhere.
Finally - and this is no criticism of Mr Billy Bell - I wish to reiterate the point that the Chairperson of the Public Accounts Committee at Westminster comes from the Opposition, and I still believe that it is morally wrong that the Chairman of the Public Accounts Committee of this Assembly should come from a party that is included in the Executive.
Dr Birnie:
I too welcome the recent publication of the PAC report. It is obviously going to be of great interest to many of our constituents. However, now is not the time for a full-scale debate. Such a debate can properly be held after a formal response to the report following the due procedures as outlined by the Chairman of our Public Accounts Committee, as said in Parliament.
To borrow - rather, adapt - one of Shakespeare's phrases, I am speaking neither to praise the IDB nor to bury it.
What we can do is highlight a number of issues which this House can subsequently carefully evaluate. We can start by looking at several things which can be said in defence of the IDB's record. The first point has already been put quite well by the Member from North Antrim. Obviously the actuality of violence and the threat of violence over the last 30 or so years has been a very big factor in explaining why Northern Ireland's record, and latterly the record of the IDB in terms of job creation, has not reached that of its counterpart in the Republic of Ireland or, indeed, those of the comparable agencies in Wales and Scotland.
All parties in this House must recognise that point. The second thing which can be said in defence of the IDB's position is that it is very easy for ourselves as elected representatives to demand that jobs and factories be put in certain places. I could, for example, note the finding in the PAC report that the Greater Belfast's share of inward investment has been only roughly half of its share of unemployment. It is easy for all of us to do that and demand that jobs come to certain localities. However, we need to recognise that we work in the context of a market economy and there are distinct limits on the extent to which the state can order companies to go to this village or that village, or that county or locality. We are not dealing with some of sort of Stalinist system of central planning, nor indeed are we attempting to go back to the heyday of so-called indicative planning, which was tried in Northern Ireland during the 1960s and to some extent failed.
In subsequent Assembly consideration of the PAC report we will obviously need to take on board the various areas of concern which it raises, the first being the very large discrepancy between the promotion of jobs and the actual creation of jobs on the ground. This is nothing new. As the mover of the motion noted, a variety of reports, including those done by the Northern Ireland Economic Council, have been pointing this out over the years. Secondly, we obviously need to look at the cost per job, and that must include all of the costs of promotion as the PAC report has outlined.
Thirdly, there is the whole issue of targeting social need. To what extent have jobs actually gone to TSN areas?
With regard to jobs in TSN areas, how far do the people who took those jobs live from the TSN areas? Linked to this, and to a point that I made earlier, there is inevitably a trade-off, a difficult balance, that has to be struck. We can attempt to skew the location of jobs, but if we do so, efficiency suffers and the costs to the Exchequer rise. And that is public money which could be used more profitably in other ways to combat poverty. We need to look at that balance.
(Mr Speaker in the Chair)
Finally, when the House comes to consider this report and the long-term performance of the IDB formally we will need to do so in context - and it is a worrying context. I think it was Mr Neeson who made reference to 'Strategy 2010'. It is of great concern that in 'Strategy 2010' there was no critical evaluation, in any real sense, of the work of the IDB. Some commentators would say that that was not an accident. The way in which the former Department of Economic Development structured 'Strategy 2010' and the composition of its steering committee were quite deliberately designed to shield the IDB from the type of critical evaluation that, over the years, has been given to the work of the IDA in Dublin or similar agencies in, for example, Edinburgh and Cardiff.
I support the spirit of the motion, yet, because of the qualifications relating to procedure, which were properly raised by my Colleague Mr Bell, I cannot vote for it.
Mr Speaker:
The Member has just made comment about procedural issues that were raised by the Chairman of the Assembly's Public Accounts Committee and a number of other Members. I need to make a ruling in this regard.
First, in producing its report the Public Accounts Committee at Westminster requires the IDB to respond within a period. That is clearly laid down, and it may well be that the Minister's response will be limited by the IDB's having to make some necessary enquiries before responding to the PAC at Westminster.
That is wholly different from the assumption that the Assembly is not entitled to consider this matter and respond under the terms of the motion. Some people across the water do not yet understand the impact of devolution and what this Assembly, and the Scottish Parliament and the Welsh Assembly, can and cannot do. It seems that that is also the case even in this Chamber.
The Public Accounts Committee's report on the IDB is a public document, and anyone can comment on it. However, the IDB has a particular responsibility to do so and will respond within the necessary time. That is a ministerial responsibility, but the Assembly is entitled to debate a public document and to express its view, and that is what it is properly doing.
That that view might be taken into account by the IDB and the Public Accounts Committee at Westminster is not unreasonable, but it is proper for the Assembly to debate this matter, and I rule that the motion is competent.
In general recommendation xix of the PAC report it is recognised that the Public Accounts Committee of the Northern Ireland Assembly should attend to the matters raised and give its continuing attention to them post-devolution. We are in a transitional period, and there may be questions about whether the Public Accounts Committee at Westminster will retain a right to address cases of substantial expenditure.
There may also be questions about procedures for this Assembly's Public Accounts Committee and what matters it may or may not deal with, but those are entirely separate issues. Members should not hold back from expressing their views on this publicly available document. Subsequently there will have to be some understanding between the devolved Assemblies and Westminster, on a convention basis, I suspect, as to how deeply things are considered, but this Chamber has the right to continue to debate this motion. It is a competent motion.
I have already made it my practice when the Assembly adopts motions which relate to business elsewhere - the recent motion on the Postal Services Bill is an example - to forward the matter to the relevant Minister, with the Official Report, so that due consideration can be given to the views of the Assembly. That is proper practice, and I intend to do the same with regard to this matter. I felt that it was important to make this ruling. Without clarification, much of the debate might end up nugatory.
12.45 pm
Mr C Murphy:
On a point of order, A Cheann Comhairle. Does your ruling and advice mean that those Members who agreed with the spirit of the motion but were somewhat concerned about its procedural correctness can now support it entirely?
Mr Speaker:
I can only clarify procedural questions. If that has laid some Members' concerns to rest, so be it, but it would certainly be quite wrong for me to give even the slightest smidgen of advice as to how Members may vote. All I can do is clarify the procedural matters.
Mr Paisley Jnr:
Further to your ruling, Mr Speaker. If this House decides to follow the Committee on Public Accounts recommendation (xix), which you read, will we have established the convention that when the House of Commons commends a report to this House, we consider it on the basis that it has been commended to us? If that is the case, we are today establishing convention, and that should not be knocked out of place either.
Mr Speaker:
The Assembly, through its Business Committee, has agreed to consider this report on foot of a motion brought forward by Dr O'Hagan. That is an entirely proper thing to do. My clarification is that procedurally it is entirely correct to do so within the boundaries set out in our Standing Orders, in the motion itself and in relationships that are already established.
It may be that this will quickly become a convention in the same fashion as routes rather quickly become traditional routes. This process might quickly become a conventional process. I cannot say whether that is a good or a bad thing in either circumstance, but it is there, it is proper, and if the Assembly takes the view that it should debate such matters, I see no reason why it should not do so.
Mr Weir:
Mr Speaker, do you agree that, while it is perfectly appropriate for you to rule that it is competent for the House to debate a subject, there is a difference between the competence of the Assembly and whether Members feel that now is the appropriate time to debate the issue, or that this is the appropriate manner? That is a different issue, though it does not impinge on whether the House is able to deal with this matter.
Mr Speaker:
That is, of course, true. Members might have other views. What must be understood - and it may go some way towards the point mentioned by Mr Paisley Jnr - is that, given that one cannot have recurring debates on the same question, Members cannot assume that an opportunity for further debate will arise. That is an entirely different matter.
Mr Close:
Further to that point of order, Mr Speaker. I recognise, appreciate and accept your ruling with regard to the competence of the House to debate the issue before us. Does your ruling also extend to the directive that is involved in the motion - namely, that the Assembly is going on to direct the Northern Ireland Assembly Public Accounts Committee?
Mr Speaker:
It is entirely proper for the Assembly to direct that a Committee give attention to a matter. That is what this motion suggest - that the Northern Ireland Assembly Public Accounts Committee give continuing attention to the issues raised in the report. It is entirely proper that the Committee should do that. How it chooses to give that attention, and whether it might attend positively or negatively to all those matters, is a wholly different question.
The terms of the motion make it clear that it is not something that can simply be ignored. The Assembly's Public Accounts Committee may make its own judgements about precisely how it attends to the matter. It may agree or disagree with all of it. The motion is simply directing that the Committee pay attention to it. That seems to be a competent thing to do.
There may well be a procedural question - a question of Standing Orders - as to whether the Northern Ireland Assembly Public Accounts Committee may have wider or lesser powers extended to it within the requirements of the Act. That is another matter. However, this is a competent motion.
Mr B Hutchinson:
Mr Speaker, I appreciate your outlining the position of the Business Committee. As a member of that Committee I think we were coming under flak from parties whose Whips sat in the same room and did not complain. The point was that the Committee took a decision that the motion was competent and brought it forward to the Floor of the House.
(Mr Deputy Speaker [Mr McClelland] in the Chair)
Mr Neeson said that during the period covered by the report - 1988-97 - there was still a lot of violence and that this affected the level of inward investment. I am sure that, on reading the report and noting the issues that must have raised for the Public Accounts Committee, everybody in this House, including the Minister responsible, would be concerned. We can talk about violence affecting jobs here for the last 30 years. However, if we look at the record of inward investment we see that there were foreign companies here well before the ceasefires were in place. They did not seem to have much of a problem.
We need to look at the reasons the IDB cannot respond or has not done so. The hon Member for North Antrim said that the IDB had backed a few wrong horses. If I had backed as many wrong horses as the IDB I would be looking to find out the number of Gamblers Anonymous. It makes mistake after mistake after mistake.
With regard to the levels of violence in the past and job creation, a number of places - for instance, Antrim - have done very well for inward investment. It is not that far from north Belfast or from other places where there has been conflict, but we still could not attract jobs to those areas. I do not necessarily believe that that argument holds.
My argument is about the way taxpayers' money was spent. In some cases great risks were taken with that money, and it did not deliver jobs. The records of the IDB and LEDU indicate that the lifespans of the jobs they create are about 3.8 years and 4.2 years. This is about the length of time the grants last. People continually talk about a benefit culture. We have got into a grants culture and a benefit culture for inward investment. We need to look at better ways of doing this.
A number of Members have pointed out that we have not done so well for indigenous companies. I would like to see us taking the same risk for indigenous companies as we have taken for the IDB. One thing is for sure: the indigenous companies are going nowhere; they are from here, and they are based here. Most of them started out as family businesses and have grown. We should be making sure they grow even bigger.
That is not to say that we do not want to see inward investment. Of course we do. It would be madness for this House to suggest that we do not. We want to create an IDB that performs much better. Take its performance overseas. Any of us who have been on trips abroad and have talked to people in foreign cities will know that the IDB could perform a lot better. Everybody knows that.
We have met industrialists who say that if they wanted to come here, the last people they would even talk to are those in the IDB. That has nothing to do with the people who work there; rather it has to do with the way it operates and the rules and regulations that restrict it. Those are the things that we need to change. I am convinced that the people who work there can perform at a better level. We need to ensure that the Minister is given support from the Committees and from the Floor of this House in finding the best way forward.
We need to focus on how we give them the tools to bring the jobs here. We will not solve the problem by talking continually about IRA bombs and murders by loyalist paramilitaries, and so on. We must live in the real world and look at how to get jobs into the areas that most need them. The best thing to do is focus on this report, see what the problems are and try to correct them.
This is not about kicking the IDB or anyone else. It is about having a debate, because a number of our constituents are concerned. People out there looking for jobs cannot get them, and they are asking questions about people here. Let us look at the number of jobs the IDB announces. It will tell us tomorrow that 1,500 jobs are going to appear on a particular site. Do we ever see 1,500 jobs? No. Those are the sorts of things we need to get to grips with. Why do we continually raise expectations? All this reflects badly on the IDB. If we were to look at the number of jobs it said it was bringing and then at the number of jobs it actually brought, it would be a very bad picture indeed.
Mr Paisley Jnr:
Does the Member accept that one of this report's criticisms of the IDB is that it does not yet have performance-measurement systems in place, the recommendation being that such systems should be introduced? The House of Commons commends the report to the House, and if we accept that position, those measurement systems will be in place so that in future the problems the Member has rightly identified will be dealt with.
Mr B Hutchinson:
I thank the hon Member for his comments, with which I agree. As a member of the Business Committee, I wanted to see this motion come before the House so that we could discuss these very matters. Having met sufficient of the industrialists who deal with these matters, the hon Member knows as well as I that we need to put such things in place. If we do not have them we shall not be able to perform at the necessary level to give confidence to taxpayers and Members of this Assembly representing those people.
We need to make sure that we support Dr Dara O'Hagan's motion and move things on. If we do not do so, that will send an extremely bad message to our constituents regarding job creation. I want to ensure we can bring jobs to this Province, irrespective of where. However, I should like to make sure we get them in TSN areas. Those jobs would be extremely valuable to the people there, as well as to this Assembly and to the peace process as a whole.
Mr Deputy Speaker:
It might be helpful for me to tell Members about some of the timing arrangements. I hope to suspend this debate at 1.30 pm and resume it at 5.00 pm. The sitting will be suspended at 1.30 pm, resuming at 2.30 pm for ministerial questions.
Dr McDonnell:
I welcome the report and the debate on the issues it raises. It is not appropriate to go backwards. We could use this occasion to hurl abuse and poke each other in the eye. However, if we did that we would undermine the very basis of confidence our economy requires. I should like to think anything we do in this House gives support to the Minister and the IDB in their considerable efforts to ensure we get the economy we desire, for it is the engine that will provide for all our social spending. If we do not have a healthy, strong economy, we shall not in the long term have the funds for the Health Service and the top-class education system to which we aspire.
I am equally concerned that some of my Colleagues' comments highlighted the risks involved. We must be clear that part of the problem with our economy has been that we have been averse to risk. Perhaps the IDB has been taking the wrong risks, or taking the right risks in the wrong places. I am not sure, and it will take some time to tease out the detail. However, I wish to make it quite clear that it is essential that we be prepared to take risks in the long term, for otherwise we shall not succeed.
1.00 pm
That is the big difference between our economy and the American economy. Those who succeed in America are those who take risks. In the United States people go bankrupt one, two, three, four times, yet on the fifth they may come up with an outstanding success. The cutting edge of technological developments, whether it be in information and communication technology, multi-media or biotechnology, requires risk. Venture capital is also important. If venture capitalists achieve one winner out of 10, they feel all right; if they achieve two out of 10, they feel successful. We do not need to run like lemmings over a cliff on this. Certainly, there are issues involved, but we have to know the difference between taking responsible risks and taking irresponsible, reckless risks.
There are glaring mistakes and omissions in the report, as well as a lack of accountability. This must be corrected. That is different from taking risks. We must refocus, re-energise and ensure that all our efforts go towards developing our economy to the maximum. We should not talk down the examples of success and the good work done at times by the IDB in difficult circumstances, but the underperformance and misinformation mentioned in this report will not do anyone any favours if we are to create a healthy economic environment, one in which entrepreneurship and economic prosperity flourish.
A great deal of work still needs to be done on 'Strategy 2010'. It was hailed initially as being the be-all and end-all, but gradually we have come to realise that 'Strategy 2010' was only the beginning of a process. We must now ensure that we are all singing from the same hymn sheet, that we are all marching together in the same direction, and that we are all broadly agreed - maybe not in every detail - on what we are doing, and where we are trying to go.
I am concerned about false figures and headlines that provide jobs that are not delivered. These serious inaccuracies lead to cynicism of, and disinterest in, any publicity or announcements that the IDB makes. Many of the jobs it has announced in the past were temporary and short-lived.
There are also the issues of cost-effectiveness, the measurement of the function of the overseas offices and project appraisal. Having gone through the various recommendations that emerged, I believe that immediate and urgent pressure must be brought to bear on our own Public Accounts Committee, the Department, and the Minister, to ensure that when jobs have been promised, there is a reasonable chance that they will be created, and that if they are short-term or part-time jobs, that is made clear.
I am seriously concerned about the creative accountancy that is involved, suggestions regarding some of the costs that were attributed to jobs but not included, and the cost of some of the overseas offices. The report mentions using the Internet. Could a strong case not be made for scaling down some of the overseas offices, utilising an Internet system and mobile support unit, based at home but which could respond when and where it was needed? There must be ways and means of ensuring that our job promotion operation is cost-effective and efficient. These are the issues highlighted by the proposer of the motion today. The motion is down because we need to take account of it. I welcome the ruling from Mr Speaker that set the parameters. It is entirely appropriate for the House to discuss this and, indeed, for the Business Committee to put it on the agenda.
I would welcome a more comprehensive opportunity later for a debate on many of the issues raised. Nevertheless, the point I want to emphasise is that there is a desperate need - if we are to go forward with a healthy and expanding economy, particularly in the field of new technology - for honesty, openness and transparency, balanced with the need not to talk ourselves into a corner or into a loss of confidence. We must learn from the serious mistakes highlighted in the Public Accounts Committee's report. We need to put those right and go forward steadily, gaining the broad support and confidence of the community. If the IDB and Department of Enterprise, Trade and Investment do not have public support at home, they are unlikely to be able to sell themselves and Northern Ireland abroad.
Finally, I want to raise one of my hobby horses, which may not be appropriate to the Public Accounts Committee or the issue at stake. My concern is that the IDB has not managed - I will not put it any stronger - to come to terms fully with the whole swath of new technology. While we do have some involvement in communication technology, perhaps it is at the lower end of the market. I would welcome much closer attention to information and communication technology; movement and effort on biotechnology, particularly in the fields of life and health sciences, and closer attention to the emerging multimedia opportunities where growth is currently at 37% per annum. Perhaps we have been a little shy and reserved about grappling with some of the opportunities that lie therein.
I am broadly in support of the motion. It is only right that we should debate the issues raised, as they are pertinent to all of us. In doing so, we should not throw the baby out with the bathwater. We should be constructive in our criticism to ensure that we retain the credibility and strength to go along. It would be disastrous if we were to do ourselves damage in discussion.