SUBGROUP ON THE ECONOMIC CHALLENGES Tuesday 15 August 2006 Members in attendance for all or part of proceedings: Witness: The subgroup met at 10.10 am. (The Chairman (Mr McClarty) in the Chair.) The Chairman (Mr McClarty): Will members please switch off their mobile phones? Do not keep them on silent. Unfortunately, some of the recordings of meetings of both the Committee on the Preparation for Government (PFG) and the subgroup have been lost on a number of occasions because of interference from mobile phones. We have received a number of apologies. Roy Beggs is deputising for Esmond Birnie, and David Simpson is deputising for Peter Weir. Are there any other apologies? Mr Neeson: I will be leaving early, so Kieran McCarthy will be attending in my place. Ms Ritchie: Alasdair McDonnell will be arriving shortly. The Chairman (Mr McClarty): The next item on the agenda is the draft minutes of the meeting of 10 August 2006. Are members content that those are an accurate record of proceedings? Members indicated assent. Mr Simpson: Mr Chairman, I shall declare an interest in the meat industry and in the manufacturing sector in Northern Ireland. If you need finer details, I can certainly oblige. The Committee Clerk: Chairman, we will take advice from John Torney, Principal Clerk to the Committee on Standards and Privileges, at a later date. The Chairman (Mr McClarty): The next item deals with matters arising. The subgroup sent a memorandum to the PFG Committee to request the opportunity to take evidence from the Northern Ireland Youth Forum after the date of the deadline for its report. As requested, advice was sought from the PFG Committee on how the Northern Ireland Youth Forum’s views might be facilitated. Mr McNarry: I hope that we are pursuing that and that it can be expedited. We are grateful for the extension that I hope will be granted. I hope that that extra time can be used purposefully. The Committee Clerk: Chairman, we have received a response from the Clerk to the PFG Committee agreeing that the subgroup can meet after 25 August to take evidence from the Northern Ireland Youth Forum and submit that evidence as an addendum to the report. However, it is important that that happens before any plenary meeting takes place. Mr McNarry: Taking evidence from the Northern Ireland Youth Forum has been deemed to be the best approach. Can we ensure that it is and that it falls within the timescale? The key point is that some young people will come to talk to us. People were to ascertain whether any other bodies could be approached or any other avenues could be explored. Work on that may still be progressing. Mr Simpson: I agree with David. The Chairman (Mr McClarty): We should also consider the letter from the Secretary of State to Jim Wells. The Committee Clerk: We wrote to the Secretary of State on 20 July 2006 to ask about the prospect of Ministers and officials attending meetings. On 31 July, we wrote to him about a Minister’s being absent on leave and about not being notified about cross-cutting issues, such as the establishment of a working group on industrial rating. The Chairman (Mr McClarty): Do members have any questions? Mr McNarry: If we are allowed to use the word “pathetic”, I will use it. That is just what that is: pathetic. We can do nothing about it, but the subgroup has a duty and has been getting through its work, so far. The evidence that the officials who represent some Departments gave was not as clear as it might have been. At least one of those officials very strongly indicated that the Departments would report to the Minister. They said nothing to us when we probed them, and they seemed to be in difficulty. That is why it is unfortunate that the Minister has been unable to attend. One particular Minister has a whole month away from her three offices. That seems a remarkable period of leave to arrange in the knowledge that the subgroup and the Preparation for Government Committee were meeting, and that there were certain crises looming in at least one of her Departments. 10.15 am That was just a rant, Chairman, and I am grateful that you allowed it. We cannot compel those Ministers to come before us. I hope that, somewhere along the line, the PFG will be able to bring the Secretary of State along to answer some questions, including those on which we have been unable to get answers. The Chairman (Mr McClarty): You are welcome to the rant. I hope that it is not the precursor to a rave party. The Committee Clerk: If the subgroup would like to extend its work beyond 25 August, subject to PFG approval, it might be possible for the Minister to come along at a later stage. Mr McNarry: That is fine. Perhaps we were slightly at fault in that the dates that we identified were being worked on, and then we changed our minds. Quite correctly, we decided to hear as much evidence as possible before calling the Minister to discuss it. I am not sure whether the report would benefit, but the subgroup might gain respect if we could arrange to put our findings and concerns to the Minister. We could find out what she and her officials think, and put that evidence in an addendum to the report. The Committee Clerk: The subgroup can seek an extension beyond 25 August to do additional work, which might include taking evidence from the Economic Development Forum (EDF), the Minister and others. The only caveat is that the PFG must agree to that. Mr McNarry: There is every likelihood that the PFG will agree; it is a reasonable request. However, we should not lose sight of the fact that our report must go to the PFG, to the Business Committee, to the Secretary of State and then, I hope, for debate in the Assembly. The dates of the plenary sittings have been put back. If 108 Assembly Members are to debate these matters, it is important that they have some knowledge of the Minister’s thinking. The difficulty, however, will be in meeting the timescale. The Chairman (Mr McClarty): Thank you, David. Members should note that Barry McElduff is in attendance and is a substitute for Michelle Gildernew. Mr McElduff: Mitchel McLaughlin will be along shortly. Ms Ritchie: Notwithstanding the unavailability of Ministers during an alleged holiday period, we were expected to be here to continue the work of the subgroup. Also, the Secretary of State’s letter says in his letter that our remit is: “to look ahead, and make recommendations to a restored Executive on the economic challenges facing Northern Ireland, rather than to scrutinise current policy.” In response to that, I say that — in order to look ahead and to pinpoint a way forward on the economic challenges — we must look at current policy to see where the impediments lie, where the challenges are, and to identify the best possible fiscal arrangements. To do that, we must talk to the Minister. That is an example of sleight of hand by the Secretary of State in order to get himself off the hook, yet again. We must see the Minister on her return from leave. I hope that that could happen even after the submission of our report, because that meeting might yield important evidence. The Chairman (Mr McClarty): Are there any other comments on that matter? Mr McElduff: I share the concerns of David McNarry and Margaret Ritchie in respect of Ministers being unavailable to come before us. That is a reminder that direct-rule Ministers are less accountable and more remote and inaccessible than local Ministers would be. Mr Paisley Jnr: I agree that the Minister ought to have come before us. The Secretary of State insisted that this work be done and, indeed, compelled us to come here, under threat of redundancy. Despite that, the Minister has not made herself available. We should make the strongest representations to the PFG Committee to the effect that we want to extend our discussions to give ourselves the opportunity to call and question the Minister on all of the issues, so that we can complete our work. Without that, our work would be incomplete. It is essential, as was agreed at the first meeting of this subgroup, that the Minister appears before us. Mr Neeson: We were given a number of days’ notice to convene this subgroup. Many of us have given up a substantial amount of time during the summer recess, and we have been prevented from carrying out basic constituency work. If we can make that sacrifice, so should the Minister. Mr McNarry: May I propose, therefore, that we write to the PFG Committee to ask it to agree with us and organise the appearance of the Minister? The Chairman (Mr McClarty): Do we have a seconder? Mr McElduff: I second that. The Chairman (Mr McClarty): Do we have consensus on that matter? Members indicated assent. Mr Neeson: I was going to propose that we write to the Prime Minister, but he too is on holiday at the moment. [Laughter.] Mr McNarry: We should go and see him. Mr McElduff: Does anyone have any idea where the Taoiseach is? We could write to him as well. The Chairman (Mr McClarty): Item 4 of our agenda concerns additional information provided by witnesses. Members will find that information at tab 3 of their packs. Mr Simpson: Mr Chairman, may I go back a step to the letter from the Secretary of State concerning the new subgroup on industrial rating? As Margaret Ritchie said, we were expected to be here during the summer months to facilitate the work of this subgroup. I am sure that everyone will agree that it was difficult to ensure consistency and continuity in briefing Members. I spoke with Mr Hanson’s Department on Friday 11 August. As of that date, his Department had not even met with those concerned with rating to discuss the remit of that subgroup. No one has been nominated to sit on the rating subgroup. I am expecting a phone call before the end of this week to get some information on that matter, and to see what industries and individuals will be represented. That is a despicable situation, coming several weeks after the Secretary of State announced that measure for the industry. Thus far, that meeting has not taken place because of the summer break, but this subgroup was expected to meet. It is despicable that the rating subgroup is not even in place, and we need a letter or some form of representation to Mr Hanson’s office to find out what is happening and who will make up the subgroup’s membership. The Chairman (Mr McClarty): OK. We are on item 4 of the agenda, which concerns additional information received from witnesses. Mr McNarry: I am sorry, Mr Chairman. Mr Simpson was making a proposal, and I will second it. The Chairman (Mr McClarty): OK. Are we all agreed on that? Members indicated assent. The Chairman (Mr McClarty): Members will find several items of additional information at tab 3 of their packs. The Federation of Small Businesses submitted written evidence on the relationship between small businesses and the Strategic Investment Board (SIB). Enterprise Northern Ireland’s written evidence included projected costs for interventions and incentives to encourage family businesses. The Department of Education (DE) provided the subgroup with information on what the business sector requires of the education sector, and statistics on GCSE and A-level qualifications from 1992 to 2005. The Department for Employment and Learning (DEL) submitted a consideration paper, containing information on the available number of full-time education places, and provided us with information that David McNarry requested on population of working age by highest qualification in 2005. The Department of Finance and Personnel (DFP) provided information that the Principal Clerk requested on tax variations, and the Business Alliance provided information summarising its oral presentation. I know that time was short, but I hope that members will have had an opportunity to read those submissions. Do any members wish to comment on that matter? Ms Ritchie: In its written evidence, the Federation of Small Businesses mentions the lack of direct input to the small-business community by SIB. The federation also mentioned that matter during its oral evidence. Two days later, when SIB representatives came here to give evidence, I asked them if that was true, and they denied it. They said that, in the supply chain, small businesses in Northern Ireland have opportunities to tender for such work, and that some of them had already done so. I know that that would be disputed by the Construction Employers Federation, but the Federation of Small Businesses has probably placed too much emphasis on that. The subgroup should temper that in some way. Mr Beggs: The Department of Education has forwarded figures on GCSE and A-level comparisons with England and Wales. Further information is required on some points to make them more relevant and meaningful. First, a footnote indicates that the GCSE figures are expressed as a percentage of pupils in year 12 in Northern Ireland, but as a percentage of 15-year-olds in England and Wales. I am curious as to whether that can result in differences. For instance, someone may be aged 16 at the start of their GCSE year, and that may enhance Northern Ireland figures, as there would be an older group of children involved. Therefore, I would like further information from the Department, stating what effect it thinks the different criteria have, and why it uses a different measuring method from the rest of the United Kingdom. Secondly, a footnote states that the A-level figures are expressed as a percentage of pupils in the final year of an A-level course in Northern Ireland. It would also be useful to be told the percentage of children of that age who are successful, because one does not learn from those figures whether more or fewer children in Northern Ireland do A-Level-type courses; the figures simply measure the results of those who take the courses. Further information for clarity would be useful. Mr McElduff: The Business Alliance’s concluding remarks mention the need for a stable devolved Government. That is a reminder to elected representatives to do all within their gift to work together to reinstate the political institutions without delay. Therefore, I reiterate the strong message from the Business Alliance about the need for political stability and the restoration of the political institutions. That is evidence-based; we have heard it from many contributors over recent weeks. The Chairman (Mr McClarty): If there are no further comments, we will move to an open session and item 5 on the agenda, which is the consideration of the written evidence. First, I will ask Paul Moore, the Clerk of Business, to provide an analysis of the written submissions that we have received. 10.30 am Mr P Moore: I am pleased to have the opportunity to present my paper, which is entitled ‘Summary and Analysis of Written Evidence Provided to the Economic Challenges Sub-group’. I am conscious of the fact that it was issued by email only last night, not least because I was working on it until then, so members will probably not have had a chance to read it. I should perhaps preface what I am about to say with a health warning — I am not an economist, nor has economic development been an area to which I have been exposed professionally. However, that allows me to bring a fresh perspective to the arguments that have been presented in the submissions. I have experience in sifting through reams of Committee evidence and extracting points, which members, hopefully, will find salient to the inquiry’s terms of reference. I was happy to do that on members’ behalf. My paper is the result of a quick run through each written submission, and that is simply a consequence of the timescales to which the subgroup is subject. There are papers in the members’ packs that I have not covered, so it is probably easier to point to the submissions and extra evidence that I have covered. Those appear in the appendix to the paper. I hope that my paper will provide positive ideas, stimulate discussion and debate, and that it will assist members in reaching conclusions and making recommendations. I will briefly outline the key areas and details of what the written evidence revealed. One striking feature is that the issues emerging from the written evidence were the same as, or consistent with, all that emerged from previous oral evidence sessions. There seems to be consensus among the business community, Government and others who commentate on the economy, on the impediments to economic growth. One submission highlighted the fact that the key impediments have been correctly identified in the Department of Enterprise, Trade and Investment’s ‘Economic Vision for Northern Ireland’. That document also appears to have captured the four drivers thought necessary to overcome the economy’s structural weaknesses, and people seem to have bought into those. The subgroup must comment on whether the political parties represented here also endorse that economic vision, and, if not, where the disagreement lies. Members should also consider their views on the EDF, because its papers showed evidence of an ability to challenge the Government’s delivery of economic development policies and make rational recommendations. Therefore, members may wish to consider whether they endorse the EDF and its work, and how that fits into the system. I have tried to use headings that the subgroup discussed when considering the issues, so I will begin with ‘Public Sector delivery failure’. There is consensus that current policies will not have the desired effect of improving the economy, and doubts have been expressed in written evidence about whether Government Departments are capable of delivering effective economic development policies, particularly in their current format. While the optimum number of Departments is not a matter for the subgroup — the PFG Committee will probably examine that — there is no doubting the consensus that the present number of Departments is too high. That is particularly apparent when a comparison was made in Mivan’s submission between the involvement of seven Departments in economic development in Northern Ireland, and one agency with primacy in the Republic of Ireland. That said, while everyone agrees that the economy must be rebalanced between the private and public sectors, the written evidence also shows consensus that that should not be achieved simply by slashing the public sector. Indeed, the proposals for improvement suggest that there should be better, more focused, joined-up Government intervention, perhaps through improved implementation of better strategies. Everything must be improved, but that does not mean simply cutting off the public sector. It is clear from the written submissions that people believe that the public sector has a significant role to play in helping the economy’s transformation. With regard to infrastructure and the investment strategy for Northern Ireland, another key theme that has emerged is that that strategy has generally been welcomed. However, people can see that additional revenue is required in order to pay for the proposed £16 billion of infrastructure investment. Some believe that therein lies the opportunity for a peace dividend or for an economic package to cushion the effects of rises in water and industrial rates that have been earmarked. Members have received a further breakdown of that £16 billion figure. In my paper, I have pointed out the potential difference between the answer to a question, which was that the money is not new, and the Secretary of State’s recent announcement that that £16 billion was the peace dividend. Members may also be encouraged by the additional information on the Strategic Investment Board’s ‘Investment Delivery Framework’. That has been broken down into its various priorities. The ‘Economic Growth and Competitiveness’ heading dovetails into sub-headings that include the four economic drivers that have been identified in the Department of Enterprise Trade and Investment’s ‘Economic Vision for Northern Ireland’ document. I am aware of the linkages between the SIB and DETI, but perhaps members will think of those as attempts to grow the small, green shoots of joined-up government. The evidence also identified concerns about the capacity of local firms to play a major role in the investment strategy. From what I have heard in evidence and in members’ discussions, you are likely to see that as an important area that must be addressed by a new Executive. The Committee’s work and the written evidence have flushed out several issues with regard to planning. My paper covers further evidence of planning as an impediment. That message has been consistent. In the interest of balance, the paper considers in detail the Planning Service’s written submission in the context of the criticisms that have been levelled at it. One could argue that the views expressed in the Planning Service’s written submission are merely excuses. However, its acknowledgement of the role of planning in economic development and its declared preparedness to restructure in the face of change could be viewed positively. Evidence gathered by the Committee may have identified areas where there is potential to push the Planning Service towards further change, such as in forward planning, allocation of resources, and interaction with and policing of other Department of the Environment agencies. One might consider that the Planning Service’s reference to managing investment-strategy projects through its own procedures might smack of the public sector looking after its own. That could, however, be viewed another way — as a sign of willingness to engage at a strategic level, with the subsequent benefits that that would create at an operational level. Perhaps that could also be built upon in the private sector. The evidence that relates to the skills deficit has been of great interest. In particular, the Department’s skills strategy seems to have achieved significant buy-in from, for example, the Economic Development Forum, and contributors to that forum, such as the Northern Ireland Business Alliance. That matter has also been mentioned in the written submission. As ever, what will count in the long run is how that strategy is translated into tangible outputs and whether sufficient resources are made available to successfully implement it. That was highlighted in the evidence. The Business Alliance’s submission identified several interesting options where additional resources might make a difference, which members will, no doubt, wish to consider. It is entirely possible for consensus to be achieved on some of the issues that have been highlighted in the written and oral evidence. The evidence shows that no one claims to have all the answers or that all the answers have been articulated. It has been suggested that further work and research are necessary. That has led to one or two submissions urging care on the part of the subgroup. The Business Alliance, for example, cautioned against the subgroup drawing any hasty conclusions that may result in inappropriate actions. That said, however, some of the evidence could be interpreted as pushing the subgroup towards making hasty conclusions. Strong arguments have been made — for example, the introduction of an enhanced tax credit for R&D. One written submission calculated the potential net cost of that to the Exchequer at £10 million. Research suggests that that is a better option than direct grant aid to firms. Given the other evidence, could an Executive advocate that approach? Given that the take-up of the current R&D tax credit is 24%, could the subgroup recommend enhancing the current tax credit even further? The subgroup has heard how difficult the situation is and how people cannot be bothered to avail themselves of the R&D tax credit. Without first ensuring that those shortcomings are identified and corrected, could an Executive ignore the evaluations of earlier grant schemes, which suggest that they are effective in promoting R&D? The subgroup may wish to steer clear of some of the hasty conclusions that others may wish it to make. All the evidence, however, has drawn together many shades of opinion and will form valuable contributions for debate. Another proposal was to reduce corporation tax, which has been very strongly recommended. Many written submissions agreed that it would act as an incentive to foreign direct investment. Mivan could be considered a potential beneficiary of such an approach. However, that company sounded a note of caution in relation to reducing corporation tax. Mivan’s submission pointed to evidence that suggests that such a reduction would be of limited value in stimulating an indigenous small-firms economy, advocating more rigorous and robust independent economic research into the benefits of a reduction in corporation tax. The subgroup may well agree or may think that there is enough evidence already. It is unlikely that the subgroup will want to draw hasty conclusions, not least because they may lead to political fallout for members and their parties. However, the subgroup now has a clear evidence base to allow principles to be adopted and for travel in certain directions to be recommended to the Preparation for Government Committee and, it is hoped, eventually endorsed by the Assembly. I hope that my paper has helped in the subgroup’s deliberations. The Committee Clerk: Through the evidence that has been heard and the questions that have been answered, clear directions have been identified in uncontroversial areas such as the need to build skills that link to current and future business needs and the need to focus on innovation in R&D. The subgroup must be careful about what fiscal incentives it recommends so that all the eggs are not put in one basket. The subgroup’s report is not a recommendation to the Secretary of State, but a recommendation to the Executive, so the subgroup will have to deliver on it. 10.45 am The information infrastructure is very clear. The issue is very much the failure to deliver within reasonable time frames and the need for joined-up government and political stability. All that is clear from the evidence that has been received, and I do not think that many parties would disagree with that. There is, however, a lack of clarity thus far on the specific fiscal incentives that any package must contain, and that is where there is room for differences of opinion. It will be important for the subgroup to reach consensus, because that would reinforce the strength of the report’s recommendations. Nothing in the written evidence contradicts what the subgroup has heard in the oral presentations. The subgroup has collected a huge amount of evidence, and the job now is to make sense of it. Members will receive a draft report on Tuesday that is to be agreed formally by Thursday and issued on Friday. I hope that we can frame the draft report in a way that delivers consensus on skills, education, infrastructure, agriculture and opportunities for development in some of the biotech areas. I hope that members can sign up to that. However, the subgroup must also be clear about areas on which political parties have a view. Thus far, we have not heard parties’ views on fiscal issues. The subgroup will hear those at Thursday’s meeting. I thank Paul for identifying in his paper many of the issues. From the staff’s perspective, a great deal of consensus is emerging. The Chairman (Mr McClarty): On members’ behalf, I thank Paul for the tremendous amount of work that he has put into the paper, which I am sure we will find extremely useful. Mr McNarry: I add my thanks to Paul for his paper. It is interesting, in that it is a summary of the written evidence. I must say that the oral evidence, which we all sat through, was more interesting. We got a feel for people through their presentation, nuance and tone. What is absent from the written evidence, and I am sure that it will be addressed, was the type of evidence that we took from people such as William Wright and Eric Reid. They are employers at the coalface who were able to give some good examples of what it is like to be there, unlike some people who, quite honestly, have no experience of that whatsoever. If we could go back five or 10 years, would a group like this have been highlighting the same issues? Would it have said — as Alan Patterson and Paul Moore have said — that further work needs to be done and further analysis required? How long is a piece of string? That is where the direct rulers of Northern Ireland stand utterly condemned. They have not taken Northern Ireland forward. Instead, they have been content to write words and more words on reams and reams of paper but do nothing. I can only speak for myself, but it might make it easier if we were to scope the subgroup’s remit again. Our remit was to identify the impediments. We should draw one column and list the fiscal incentives. We should then draw another column and list what we consider an economic package to entail. We need to dissect all the evidence, and I would be grateful if somebody could do that. I did not find anybody who was citing that a solution to an impediment was something for which we needed to beg. There is an opinion in Stormont Castle that we need to beg, or that we would beg, because we want everything handed to us on a plate. An impediment coming from Stormont Castle is that politicians who have been elected to the Assembly are being blackmailed. Stormont Castle tells us that we might get this or that, provided that we form a Government. Hell, giving in to blackmail is no good for the economy, and I will not take the rap if it does not work. What is good for the economy must be good in principle and established as such. We need to single out the main impediment from all those that have been clearly identified. It will be a massive achievement if this subgroup can come close to making a decision on whether a reduction in the rate of corporation tax, some relaxation on capital gains tax or tax credits in R&D is most important. The subgroup heard from the men at the coalface that they wanted to get on with their business without restriction. Certainly, R&D was important to the witnesses from Moy Park Limited, but they were more or less doing that themselves. I do not know how other members feel, but I would be grateful if we could perhaps work from three columns, so that we can compile a report based on the three elements of our remit: to identify the impediments, consider fiscal incentives and identify what is required from an economic package. I suspect that we may succeed in our consideration of the first two, but that blackmail may come into play when we consider the final column dealing with an economic package. Those parties who want to play into the blackmail role may declare their interests, but the Ulster Unionists will certainly play no part in that. Nevertheless, the economic package is a serious and important issue that we must address. However, it must not be presented as some type of begging bowl to any Government or to any Secretary of State. Mr Neeson: I thank Paul Moore for his paper. He has clearly identified some of the major issues, and I agree with him that this subgroup should not rush into making recommendations on fiscal incentives, as there was much disagreement on the best way forward. We should examine the small-business sector and the lack of take-up of R&D therein. Paul referred to tax credits. Tax credits are based on profit, and there seems to be an impediment to firms in the small-business sector availing of tax credits. As that sector is the basis of the economy in Northern Ireland, we must give it close consideration. The subgroup has been given a short time to carry out this exercise. As the Chairman knows, when we sat on the Enterprise, Trade and Investment Committee, we devoted almost six months to ‘Strategy 2010’ — and where is it now? David McNarry’s comments on the reams and reams of strategies that have emerged over the years and how they were, or were not, implemented are quite correct. That is why we must be careful. However, there was much agreement on the development of skills, the education system, and so forth, and we will achieve a great deal of consensus on those issues. The other point that emerged clearly from many of the submissions was the current lack of joined-up government in Northern Ireland. In many ways, we, as politicians, are guilty, because 10 Departments do not provide an opportunity for joined-up government. We received submissions and evidence from DETI and DEL on the great deal of crossover in areas of responsibility between the two, and similarly between DOE and the Department for Regional Development (DRD). The subgroup must examine that problem. We are currently going through the review of public administration (RPA). In fact, I am leaving shortly for a meeting of the RPA political panel. Local government is changing very dramatically, and we must look critically at central Government too. There are many issues to consider, but on Thursday we will be able to articulate parties’ perspectives on the challenges that lie ahead. Mr Paisley Jnr: I would like to thank Paul Moore for identifying the issues in his paper and for bringing a number of complex matters together. At times, I am sure that those matters are mind-numbing. The paper helps us to move from analysis to answers, and it is important for us to reach a point at which analysis stops and answers begin. Both Paul Moore and the Committee Clerk used the word “travel” in their comments, and it is important that the Committee moves the debate on. We do not have the option of standing still and doing nothing. I am attracted by the idea that has been mooted of providing fairly straightforward columns and black-and-white terms to show the stage that we have reached. There must be a fourth column on options. Since the collapse of Stormont in 2002, because of the spy ring and everything else, the buck does not stop with us any more. The buck stops at Stormont Castle, and we must provide options to the NIO to the effect that we are not content with its standing still and doing nothing. On corporation tax or tax credits, we must state that the Government must choose one or the other. That is their call to make; they are running the place. I would far rather that we were running the place, but that is not a fact of life at the minute. We must provide the Government with the options and get them to make the call. We should state our preferred options, but tell the Government to make the call. It is important that our report properly reflects the underdeveloped private sector. It is easy to knock the public sector. I do that every day — politicians do it every day — but it is not entirely the public sector’s fault that it is so overdeveloped. We dwelt on that matter very early on and, on reading the Hansard reports, it seems to be an ongoing theme. We must ensure that opportunities exist for entrepreneurs to take. There must be no disincentives for entrepreneurs. Rather, we must provide incentives, but that will only come about through a meaningful peace dividend, rather than a rebranding of the £16 billion. That money is not a peace dividend, and we must spell that out loudly and clearly to the Government. Cutting red tape and bureaucracy is the best way of assisting businessmen and giving them shortcuts through the process. It is unfortunate that we threw away some of our ace cards when we got rid of industrial derating, and I do not believe that there is any going back on that. We must now try to make up for that by cutting red tape where possible. In placing those matters in the options column, we will be telling the Government that if we were taking the decisions, those are the options that we would be considering. We are not in Government, but we are demanding that the NIO take those decisions, because standing still is not good enough. Unfortunately, the Government have a great excuse at the moment for standing still — they are blaming us. We should make it clear that they can no longer blame us. It is up to them. 11.00 am Ms Ritchie: I would like to thank Paul Moore for his analysis of the written evidence. Suffice it to say that some of the impediments are linked to the lack of political stability. The skills deficit is related to the focus of the education system on the academic sphere, leaving those who require vocational training in second place. That is perhaps linked to some of our perceptions and the perceptions of industry. There is a need to pump-prime the private sector and to address the debate about the private sector versus the public sector, in order to tackle the infrastructure deficit. For years, direct-rule Administrations have denied the need to upgrade our infrastructure. For the Government to now suggest that they will tax the people of Northern Ireland in order to upgrade the infrastructure is quite facile. That is a further example of punitive measures, rather than addressing the situation in more imaginative terms. Although we have considered fuel duty on previous occasions over the last number of years, it nonetheless remains an issue. The Freight and Transport Association highlighted fuel duty as a potential impediment. We must undoubtedly consider the challenges to the economy. The subgroup’s draft report must make conclusions and recommendations that will show that we have an interest in preparing a report for the incoming Executive, because that is our role. It is not solely for the British Government to do that — we have a role and an aspiration. I like to think that everybody around this table wants the restoration of the Executive, the Assembly and all political institutions on, or before, the 24 November. We must ensure that the economy grows and that we are competitive. Furthermore, the North/South issues raised by Dr Driscoll must be addressed and presented as opportunities so that we see ourselves in terms of an island economy — not in the political sense, but in the pragmatic sense. For many years, communities were hindered because they were cut off from their natural hinterlands, with economic opportunities lost as a result. We must ensure that that is the not the case in the future. I take David McNarry’s point about creating a grid. That grid will assist in identifying impediments, challenges, opportunities, fiscal incentives and the economic package, and it will help us to match those up. We must also factor in parties’ perspectives to acknowledge where ideas coalesce in order to present an agreed report. We must go back to the Secretary of State to show that we have met his challenge to us and present a report that is cogent but that is also a panacea for a resumed Executive and Assembly. If we do not do that, neither the current nor future generations will deem us to have passed the test. The challenge has been laid at our door, and we have a responsibility to meet that challenge. Undoubtedly, the British Government have other responsibilities, but our most important challenge, as elected representatives, is to ensure that a resumed Executive and Assembly is capable of delivering on the report that we will publish. That is the most important thing. We must ensure the delivery of a thriving economy for future generations. Dr McDonnell: Chairman, I welcome you to the subgroup. I apologise for my late arrival, but the privilege was all the more exciting when I discovered that you were in the Chair. Mr Simpson: Quit crawling, Alasdair. Dr McDonnell: No — it is a privilege. It brings me back to the days when boys were men, girls were women, and the Chairman, Sean and myself gamely struggled with the issues before us. The Chairman (Mr McClarty): Having sat on Committees with you, Alasdair, I knew not to expect you at 10.00 am. Ms Ritchie: For fear that you might have to say it yourself, Chairman, when I said that Alasdair would be late, you said that he was rarely on time. Dr McDonnell: Lest there be any doubt about the reason for my delay, I was praying that the subgroup would be successful. Mr McNarry: Alasdair, you are a total waffler, do you know that? Dr McDonnell: I was deep in prayer that the Chairman’s tenure would be a success. Mr McElduff: Has Mr McNarry concluded his point? Dr McDonnell: Like many subjects that we tackle, we can try to eat the entire elephant at once, but that will not be possible. We were given a very short period of time in which to complete a report and, as Alan said at a previous meeting, we are trying to do nine months’ work in about six weeks. When we discuss serious issues, we sometimes begin with wishful thinking, which is not always the best starting point. We need to take an overview of the economy; we can do no more at this stage. I do not want to use the word “superficial”, but we can take only a quick scan of the lie of the land. Before we begin an in-depth examination of any of the evidence, a strategy must be devised. We tend to weigh in at the end rather than get the strategy right. I have never clearly understood DETI’s economic strategy or whatever preceded it. Mr McNarry: It is a total secret; that is the problem. Dr McDonnell: The first thing that we need is a clear strategy. If we have that, whether it is right or wrong, we can relate to it and agree or disagree with it. Of the many strategies that exist, I have never been clear, for example, on where we stood in relation to the demise of the sunset industries, in which I include agriculture, to some extent. Where do we stand on the food industry or on the shrinkage and decline of agriculture? The Ulster Farmers’ Union (UFU) and others told us that they were under pressure from milk prices and one thing or another. We may decide to follow the example of other European countries and draw a line in the sand and stabilise the agriculture industry. It may be that someone in that industry decides — Mr Paisley Jnr: Do you represent Belfast? Dr McDonnell: Yes, I can represent Belfast if Belfast city slickers can represent North Antrim — or try to represent North Antrim. The point is that, in considering labour-intensive measures, we might be well advised to plant trees. Mr McNarry: Perhaps at interfaces? Dr McDonnell: At interfaces, perhaps, or on marginal pieces of land that are treated as less-favoured areas. There are several issues involved, but we need to decide on our strategy. Are we going to wipe out the agriculture sector or let it die on its feet? Equally, we need to decide what to do about indigenous industries and how they are promoted. Local industries have long had a sense of grievance that they are not given the same priority as foreign direct investment. The third issue that I wanted to raise is R&D, which covers a multitude of sins. In fact, it covers the whole world, depending on what angle or aspect of R&D one looks considers. For small companies that are trying to improve or become more efficient, R&D is great. We need to encourage much more of that. There is a vast gold mine in the form of biotechnology. There are tremendous resources in our Health Service, our hospitals and our universities. A way must be found to set free some of the intellectual property contained therein, because much of the research is treated academically, kept in a cupboard and taken out for presentation to medical colleagues once a year, only to be put back. Much of the wealth that has been generated on the east coast of the United States over the past 10 or 15 years has been in life and health sciences and in the creation of drugs, medical appliances, etc. We have not exploited those areas. We have the resources, and we are very proud of them, but we keep them in a drawer, take them out and flash them around once a year, then put them back. As well as R&D, we must commercialise our academic and intellectual property. Tremendous strides have been made in the University of Ulster where, with no medical base or background, but from a simple biology background, a number of initiatives have been driven forward. Those in this city who should have been utilising some of their medical knowledge have, in many ways, been superseded. We must consider what strategy we can produce, and decide whether we are going to invest in becoming a life-and-health-sciences economy, or whether health sciences should be a key driver in our economy. Having done that, we must then restructure, or tidy up, that strategy’s mechanisms before getting down to such details as incentives, people and how the work will turn out. I must emphasise, in the political context, that I want to see expansion, development and progress on the cross-border issues, not because I want to poke somebody in the eye politically, but because we are a small community and we must have friends. Cross-border progress is only the first phase, as far as I am concerned, because we also must reach out to Scotland, Wales and the rest of the British Isles. We must attempt to market what we are doing here and become a player in a bigger European jigsaw. I wish that we could find a better mechanism for taking politics out of the economy. Ian Paisley Jnr mentioned the attitude of direct-rule Ministers. Their attitude is brutal, and it is intended to be so. In a crude and clumsy way, they are attempting to knock heads together — yours and mine — and effectively blame you and me for the mess that they are creating. We can squeal about that if we like. Mr Paisley Jnr: We know that we are not the problem. Dr McDonnell: That may be so, but we are going to carry the can for the problem, and the people that we represent will be penniless because of that. It appears from the direct-rule Ministers, and the broader political flow that surrounds the Secretary of State, that they intend to squeeze the daylights out of whatever money comes here. They have decided that we will pay a price and that we will be squeezed. Some of us see ourselves as British and the rest of us see ourselves as Irish, but that will be irrelevant. They will penalise us brutally to the point where we are penniless. We must get our act together around this table, in the Assembly and around other tables, and — somehow or other — create space in which to discuss our differences, and then move on to discuss our sense of common purpose in another context. It is essential that we begin to do that in order to create the backdrop for discussions on the economy. 11.15 am Members have mentioned political instability. No one said that I have to agree with the DUP, or that the DUP has to agree with me. However, there must be a balance of understanding — a balance of the equation — so that, if someone wanted to invest £1 million or £2 million here, he would know that he could trust that the relationship and understanding between the parties would not be erratic or unstable. That is where the economic equation relates to politics. There may be an opportunity to discuss that matter further at our meeting on 17 August, but we must take responsibility where we can and accept, as my colleagues across the table said, that some matters are outside our control. We must show willingness, attitude and insight so that those who are in control know that they will only get away with so much, that they cannot duck out or screw us up, and then walk away and blame the victims. Mr Paisley Jnr: Alasdair, that is why we suggested providing options to the Government: they will not have any wriggle room. If they want us to be in charge, those are the options that we will have. If they are in charge, they must choose one option, and, if they do not, they cannot blame us. It is important that we finish the grid in that way. Dr McDonnell: I accept that, but all parties’ supporters are watching, waiting and seeking a lead from us. I will not pick on individual parties; no one has any difficulty in recognising our differences. The major political differences between us have been spelt out, but there is a desire out there for us to produce something, particularly in the economic area. The challenge for us is how we do that, while still retaining our rights to discuss and disagree. We may produce only an overview, which may be more superficial than we would like. However, there is a desperate need for us to rise above our differences and state what the people want. I agree with Ian Paisley Jnr’s point. Mr McElduff: Everyone is saying that we should send a message to those in Stormont Castle that they represent an impediment. We all know that; that is not sufficient. If we simply send a message, it will look as though we are too resigned to dependence. We must be able to make decisions ourselves. The report must be evidence-based, so members should read the section in Paul Moore’s paper about political instability; they should read the submissions from the Quarry Products Association, from the Freight Transport Association and from Northbrook Technologies. The Quarry Products Association states that strong political leadership is the first necessary ingredient in helping to turn the economy around. Dr McDonnell put the case well. The subgroup should send a strong, courageous message. We must take responsibility to confirm to direct-rule Ministers that we can do a better job and that we are willing to do a better job than they do. In respect of North/South issues, which Dr McDonnell and Ms Ritchie touched on, if we only approach those from the point of view of mutual benefit, surely there is something to be said for a more competitive tax regime, directed towards a harmonised approach. It would also be instructive to take on board Dr Gilleece’s paper on the contribution of education policy to economic growth in the South. That has been successful, so we need to examine that. The Committee Clerk: I had a conversation with representatives from DETI on Friday, and they raised the issue of rating. Apparently, a £30 million pot was set aside for an energy subsidy, but the European Equality Authority got its hands on that and prevented it from being used. However, at least £20 million of that pot remains, so a suggestion was made that, perhaps on a recommendation from the subgroup, the Secretary of State might be minded to allow that money to be spent on rating relief, particularly for firms with high-energy costs. I bring that to the subgroup’s attention as a possible option. Mr McNarry: Is that a recommendation from DETI? The Committee Clerk: No, I would not put it in that way. Mr McNarry: Then why are we the messengers? Can DETI not stand up for itself, rather than bring things in by the back door? The Committee Clerk: All that I am doing is briefing the subgroup. I cannot comment on any motivation. Mr McNarry: There is nothing in writing from DETI. At times, it was the body most reluctant to put anything in writing. The Committee Clerk: The option was mentioned in a conversation that I had with DETI officials. I wanted to put that on record. Mr McNarry: It is a good point. The Committee Clerk: The pot may be small — the Secretary of State may consider £16 billion to be the total pot. However, other money is available. Some of the oral evidence suggested that big money is not required; rather, that an oiling of the wheels would suffice. We could highlight the energy rating moneys through a recommendation in the subgroup’s report. Mr McNarry: Could the Committee staff prepare a four-column presentation for Thursday’s meeting? I accept Ian Paisley Jnr’s valid point about options. I also support his reasons for that. It would be illustrative to see what is in those four columns, and what we can develop from them. By the end of this process — and I am unsure how we will get there — we must ensure that we cannot be accused of preparing to go into Government without having seen the books, without knowing what we are to inherit, and without being told anything. Departments will not tell us anything other than what they want to tell us. We have not been told how to remove the impediments or any fiscal incentives that we could suggest or introduce. I agree that the strength of the subgroup should be measured on its outcomes. I accept and respect what Alasdair McDonnell says. However, the subgroup must demonstrate that, at the end of all our preparations, we have not let matters go over our heads. Dr McDonnell: But — Mr McNarry: No buts. We have identified the issues; we want to bring them to the attention of our colleagues in the Assembly, and we want the public to be aware of the issues. For our credibility to be understood and accepted, we must show that we are seriously preparing for Government. One would not think of taking over a company unless one saw the books and was aware of its performance and sustainability. If a community group asked the Government for a grant of £3,000, the Government would ask for a business plan and enquire about sustainability plans. Without straying into another realm, many community groups fall asunder because of problems with sustainability. Last week, we discussed an interesting point about economic inactivity. I am not sure where that features in the agenda. Because of Northern Ireland’s position, economic activity must feature in the subgroup’s report. The point was made that Northern Ireland has the second-lowest unemployment rate of the United Kingdom regions, yet almost 300,000 people are categorised as economically inactive. That is 6% higher than the average UK rate. The Government must tackle that matter. I do not wish to go into the sensitivities of the issue, because Alasdair was clear and precise on them at our last meeting, and we all supported him. Not everyone who is economically inactive is a chancer, but a hell of a lot of them are. We need to tackle the damage that that does to the economy. I wonder if those in the brains trust, who sit at the head of the table, could incorporate that in a piece of work for this subgroup? The Chairman (Mr McClarty): Does everyone agree that that exercise should be carried out? Ms Ritchie: I agree. Paul’s paper also referred to the levels of economic inactivity, and some of the contributors who presented evidence to this subgroup confirmed that that is a problem. As Alasdair said, there may be good, logical, medical reasons for that level of inactivity, but the problem must be addressed. Are carers at home included in the overall equation? They are active, but only partially economically active, because they receive a paltry sum of money for their work. There are many reasons, many of which are good, for such a high level of economic inactivity and why some people go back to receiving benefits, perhaps as a means of circumventing the system. Mr P Moore: Page 7 of my paper highlights the fact that 99,000 people cite sickness and disability as the reason for their economic inactivity. Mr McNarry: The paper that DEL submitted quotes a figure of 295,000. Mr P Moore: That is the total number of economically inactive people in Northern Ireland: 99,000 come under the category of citing sickness and disability, and that represents a significantly higher percentage than in other areas. Mr McNarry: Has the proposal to have four columns been accepted? The Chairman (Mr McClarty): Are members content with that? Members indicated assent. The Chairman (Mr McClarty): Members have accepted that proposal. OK, we now move out of the open session and on to Item 6 on the agenda, which is any other business. No one has raised any further issues with me. Does any member wish to raise anything now? Mr McElduff: I want to be clear on the character of Thursday’s meeting and what we will be doing. The Chairman (Mr McClarty): The next meeting will be at 10.00 am on Thursday. Mr McNarry: Will you be here, Mr McElduff? Mr McElduff: Yes, I will see you here, David. Mr McNarry: Do not forget that the meeting will be held in Northern Ireland, in the United Kingdom. Mr McElduff: I will not comment on that at this juncture. The Chairman (Mr McClarty): The next meeting will be at 10.00 am on Thursday 17 August 2006 in this room. The purpose of the meeting will be to hear the views of members on the three terms-of-reference headings. The objectives will be to reach consensus — or a majority view, should consensus not be possible — and to ensure that the subgroup’s recommendations reflect all of the evidence. Therefore, I am setting members a bit of homework to do between now and then. I invite members to present a short summary paper of their parties’ views against the terms of reference at the next meeting on Thursday. Mr McNarry: How long is the meeting intended to last? The Committee Clerk: For as long as members want. Mr McNarry: I wonder whether we could discuss the four columns before the presentations. I would be more comfortable with that. We would probably need time to consider how the four columns end up, so that we could properly focus on a presentation. Mr Paisley Jnr: That may better focus minds, because then we will have dealt with that matter. The Chairman (Mr McClarty): The suggestion is that an item on the agenda be set for discussion of the four columns. Mr McNarry: It should be the first item on the agenda. The Chairman (Mr McClarty): OK, the first or second item. Are members content with that? Members indicated assent. Adjourned at 11.29 am. < previous / next > |