SUBGROUP ON THE ECONOMIC CHALLENGES Thursday 17 August 2006 Members in attendance for all or part of proceedings: The subgroup met at 10.02 am. (The Chairperson (Mrs Long) in the Chair.) The Chairperson (Mrs Long): Apologies have been received from Esmond Birnie, for whom Leslie Cree is substituting — Leslie, you are welcome; David Ford, for whom Kieran McCarthy is substituting, and Michele Gildernew, for whom Barry McElduff is substituting. Apologies were also received from Margaret Ritchie, for whom John Dallat is substituting, and Ian Paisley Jnr, for whom David Simpson is substituting. George Dawson is here, so I assume that an apology was received from Peter Weir. The second item on the agenda is the “Draft minutes of the meeting of 15 August 2006”. Is everyone content that those are an accurate record of the proceedings? Members indicated assent. The Chairperson (Mrs Long): The minutes will be placed on the Assembly website. We now move to matters arising. First, as requested, approval was sought from the Preparation for Government (PFG) Committee on 16 August 2006 to allow an evidence session to be arranged with Maria Eagle MP on her return from leave in September. A copy of the Principal Clerk’s memo to the PFG Committee is in the members’ packs. The PFG Committee approved that on 16 August 2006 and it is anticipated that the session might be arranged for 5 September 2006. We also hope to take evidence from the Youth Forum on the same day, if it is available. The second matter arising is the communication with David Hanson MP. As agreed at the last meeting, a letter was sent to David Hanson MP requesting information on the membership, terms of reference and arrangements for the working group he is to convene on industrial derating. A copy of the letter is included in members’ packs. Finally, in relation to evidence provided by the Department of Education at the previous meeting, Roy Beggs requested further information from the Department of Education regarding statistics on GCSE and A-level comparisons with England and Wales. A copy of the Assistant Clerk’s e-mail to the Department is in members’ packs. Additional written evidence has been received since the previous meeting and is included in the packs. It includes written submissions from the Association of Northern Ireland Colleges (ANIC) and the Northern Ireland Manufacturing Focus Group (NIMFG). Additional information, as requested from witnesses at recent evidence sessions, has also been received and is in the packs. It includes information from the Department of Enterprise, Trade and Investment (DETI) in relation to economic inactivity. The Economic Research Institute for Northern Ireland has provided information on sector skill councils; the Department for Social Development (DSD) has provided data on all of the main disability benefits, broken down by gender, age, geographical area and nature of illness. As you see, it is quite a weighty tome. I suspect members will want to take it away and digest it at length. The pack also contains a table detailing the findings of the subgroup. It sets out the issues arising from the oral and written evidence received to date against the subgroup’s three terms of reference. The table has been prepared by the Principal Clerk and is for consideration at today’s meeting. It will prove useful in guiding discussions after the parties’ submissions this morning, so it might be useful if members would consider it and provide comments. Perhaps it would be better to reserve comments for a few moments until we get into the meat of the discussion. We now move to the presentations outlining party positions. First, we need to agree a format. I suggest that the most efficient way is for each party to make a presentation of 10 to 15 minutes and then open the meeting to discussion. Obviously, we should try to concentrate on where consensus can be developed, with a view to producing a report for discussion at next week’s meeting. Are members content to proceed along those lines? Members indicated assent. The Chairperson (Mrs Long): The SDLP and Sinn Féin have made written submissions and both have been tabled today. In order to prepare the report for next week’s discussion it would be helpful if other parties wishing to table written submissions after, or indeed, during today’s meeting would do so as soon as possible. Members of the PFG Committee generally make their presentations in alphabetical order. Are members content to proceed in that fashion? Members indicated assent. The Chairperson (Mrs Long): Sean Neeson will make a submission on behalf of the Alliance Party. Mr Neeson: My presentation will focus on the three headlines that were suggested last week: problems, solutions, and opportunities. The matters that I will deal with this morning are by no means exhaustive. Members have just received a short paper dealing with some of the issues that my party feels are important to the Northern Ireland economy, using the headlines agreed by the subgroup. As far as the problems are concerned I have always taken a great interest in the energy industry in Northern Ireland. There is no doubt that the high cost of energy in Northern Ireland is extremely prohibitive for industry, particularly for some large-scale industries. However, we also must realise that we are now in the age of the global economy and we face huge competition from low-cost economies such as India, China and Eastern Europe. As a country, we share a border with the Republic of Ireland, which has a very low corporation tax rate. In many ways, that gives the Republic an added advantage when trying to attract inward investment. I will deal with fiscal incentives later; they must be examined in greater detail. Many of the people who made presentations to the subgroup referred to how the infrastructure in Northern Ireland lags behind that in other parts of the UK and the Republic of Ireland. Necessary major investment in infrastructure was recently announced, but much of it will not be spent until 10 years down the line. Furthermore, bearing in mind that Northern Ireland is a peripheral part of Europe, high transport costs are also a major impediment to investment. Sadly, the political stability that many investors want to see has not yet been achieved. I hope that, through the work of the subgroup and the PFG Committee, devolution will be re-established sooner rather than later. The Planning Service has come in for a great deal of criticism. Personally, I have found that delays in making decisions on planning matters have been a major problem. A multi-national company that invested in my area was prepared to walk away because of the delays in receiving planning permission. We all agree that there is high level of dependence on the public sector. Some regard that as a problem and others, some of whom were witnesses before the subgroup, regard it as an advantage. However, the overall strength of any economy must be based on the manufacturing and service sectors. That, and the fact that the Treasury is now having such a major impact on the Northern Ireland economy and is seeking cutbacks in the public sector, must be borne in mind when developing a future strategy. When witnesses from the Department of Finance and Personnel (DFP) gave their presentation, two of the major problems that they highlighted were the high rate of economic inactivity in Northern Ireland and long-term unemployment. The Government, and hopefully the Assembly, must get to grips with that serious problem. Possible solutions include fiscal incentives and a lower rate of corporation tax, which has raised its head time and time again. When Sir George Quigley and his group from the Industrial Task Force gave their presentation, a lower rate of corporation tax was almost the only issue on which they focussed. As senior civil servants are currently carrying out a study in Northern Ireland on the benefits, or otherwise, of a lower rate of corporation tax, I suggest caution for the time being. Let us get the facts and consider what impact a low corporation tax has had in the Republic of Ireland. Mivan’s letter to the subgroup clearly stated that a low rate of corporation tax would not necessarily be an incentive towards new inward investment. I suggest that we consider all the fiscal incentives. All parties represented at this table got together with the Northern Ireland Manufacturing Focus Group (NIMFG) and discussed industrial derating, which is a matter requiring further consideration. 10.15 am Another item of interest to the subgroup was tax credits, particularly in relation to research and development (R&D). It was clear from the evidence presented to us that small companies were not taking advantage of that because the tax credit system was really based on profit. That is an issue for the subgroup; we should focus on growing the small-to-medium enterprise (SME) part of our economy. It is by far the largest base in the economy; the Federation of Small Businesses told us that small businesses were being disadvantaged by many of the incentives, simply because they were small businesses. The need to develop a skills strategy is one of the most important issues that we must address. William Wright, in his presentation, stressed the importance of apprenticeships, and I agree that there is a need to develop apprenticeship schemes throughout Northern Ireland, whether they are for small or large businesses. As I have said before, I was struck by Dr Michael Maguire’s comments on the need to develop responsive education. I remember that when Nortel was going well, the further education (FE) colleges in the greater Belfast area developed courses to try to develop the skills that would be required for that company. Sadly, the downturn in the IT business hit that on the head. That is the sort of thing that we need to look at; our education system is crucial to the development of the Northern Ireland economy. That is why it is so important to develop a skills strategy. I am not sure whether I will get consensus on developing joined-up government. There are too many Government Departments at present, and we are not getting joined-up government. Although Departments such as DETI and the Department of Employment and Learning (DEL) are trying to act in partnership, the Review of Public Administration has been carried out in isolation from central Government. If we are to develop a strong, efficient economy we have to have a strong, efficient form of government as well. The social partnership, too, has much to contribute, and the presentation from the Northern Ireland Council for Voluntary Action (NICVA) clearly showed the importance of that. Those partnerships are the way forward for the development of the economy. A further matter to address is the cost of segregation in Northern Ireland. My party has estimated that segregation costs the taxpayer somewhere in the region of £1 billion a year. If we are to develop the shared future which all of us around the table believe is the way forward — and there is no doubt about that — Mr McNarry: “All of us” is an assumption. Mr Neeson: OK. I believe, as do many people in Northern Ireland, that the way forward is on the basis of a shared future. We must deal with segregation. The return to relative peace has meant that tourism has begun to grow into a major industry in Northern Ireland, although some of the incidents that happened recently show that there are still problems. There are many opportunities out there. We have seen some improvement in the air routes into and out of Northern Ireland, but there is further scope for development. The Strategic Investment Board (SIB) has brought together many interesting projects, and there are opportunities to develop those. It is important that the operation of SIB and, as I have already mentioned, the work of Invest Northern Ireland are investigated. William Wright raised the interesting matter of licensing, which he believes will be a major contributor to the growth of his company. That option should be examined in greater detail. I said earlier that Northern Ireland shares a border with the Republic of Ireland. While some people have political difficulties with the Republic, I see a major opportunity in joint marketing with its companies. That has happened in the past. Finally, opportunities arise from exploitation of the green economy. Northern Ireland is fortunate in that it has a useful environment. On the issue of agribusiness, the Ulster Farmers’ Union presented their report to the subgroup. Let us not forget the major contribution that agriculture makes to Northern Ireland’s economy. We must examine how we can develop added value from the agriculture industry. The list I have provided is not exhaustive. However, I hope that my paper provides the basis for discussion. The Chairperson (Mrs Long): Thank you, Sean. The subgroup has done well to stick to time so far. We will proceed to the DUP’s presentation. Mr Simpson: I apologise for not having produced my paper earlier so that members would have copies. However, I will ensure that that is done as quickly as possible after the meeting, so that it can be included. I expect that many of today’s presentations will repeat one another. However, I am sure that no one will become bored. It is, perhaps, a positive thing: some sort of consensus will emerge from that. I will discuss my party’s position with regard to the economy. First, I want to consider entrepreneurial opportunity. The Government cannot create entrepreneurs. It can, however, help to cultivate a can-do culture. Absolutely everything that the Government do with regard to economic government must be rooted in the philosophy that it is public policy to support and encourage business to grow and develop; that the Government and its agencies will always approach business, its problems and its aspirations with the intention of assisting, rather than hindering, its development. Encouragement of entrepreneurism requires attention at virtually every level of Government. It pervades wide-ranging areas of Government including education, regional development and the tax system. Northern Ireland needs a serious dose of introspection in its Government Departments vis-à-vis their relationship with the business community and the promotion of a genuine partnership between the Government and business, with the Government facilitating entrepreneurial opportunity. As we share a land border with an economic competitor whose headline rate of corporation tax is 12·5%, the DUP supports the lowering of Northern Ireland’s headline rate of corporation tax to below 12·5%. If that is a step too far for the Treasury, the DUP is prepared to look seriously at a cocktail of fiscal incentives that would have the same net effect. There are alternative ways to achieve the same results. One is the proposal that approved and allowable expenditure for R&D and training and marketing — which is included in the corporation tax computation — be multiplied by a factor of three and allowed as a deduction in arriving at the taxable profits for businesses based in the Province. In addition to enhancing Northern Ireland’s attractiveness to investors, that proposal would address R&D issues, thus increasing exports and developing new skills. The DUP also supports the re-introduction of 100% capital allowances for plant and machinery and computer software and equipment for Northern Ireland companies. Such a move would incentivise companies to expand, invest and innovate. Recently, it was interesting to read in a London financial paper that the joint chairman of the Conservative Party’s Policy Group on Economic Competitiveness, John Redwood, supports considering a lower rate of corporation tax for all regions of the United Kingdom. He believed that it would be advantageous in relation to the creation of employment and investment. He made the point that young economists should examine that, and that he would strongly support a lower rate of corporation tax in Northern Ireland, as it is part of the United Kingdom. The DUP proposes a meaningful, comprehensive review of all business-related regulations, with the aim of radically reducing the time, money and energy that local businesses spend on red tape and bureaucracy. Particular emphasis should be placed on eliminating both outdated regulations that are no longer required but are still in operation, and requests for information already easily available in the Government system. In the matter of education, skills and training, the education system is not attuned to the needs of the business community. All primary, secondary and third-level schools, colleges and universities, must teach from curricula that value business and must produce students with the required skills to boost our economy. Real synergy between Government departments such as DETI, DEL and the Department of Education (DE) is required to fill the skills gaps. Our education establishments must particularly appreciate and address the skill needs of niche areas in our economy. Classes and research must be tailored to generating skills and proficiencies that are of real use in commercial ventures. Modern apprenticeships must produce real jobs. Tourism has exceptional potential for growth in the Province. Northern Ireland has a unique tourist product to sell to the world. Its full potential is not met by the present fascination with marketing Northern Ireland as an offshoot of the Republic. Some 30 million tourists enter the United Kingdom each year — far more than enter the Irish Republic. Northern Ireland should exploit the benefits that can be derived from being an integral part of the United Kingdom and a neighbour of the Republic of Ireland. 10.30 am Investment in the future development of Ulster-Scots history and culture as a tourist attraction is paramount. The potential of Ulster Scots has never been properly realised, despite the tremendous possibilities for attracting new tourists to our shores. Northern Ireland’s distinct tourist attractions, such as Titanic Quarter and the Giant’s Causeway should be at the forefront of a Northern Ireland-focused tourism campaign. Additionally, ongoing support for the air-route development scheme is essential. Companies in Northern Ireland remain unwilling to engage seriously in research and development (R&D). Just 10 companies account for 60% of our R&D output. In addition to incentivising R&D through the tax system, suggestions for improving this bleak picture include bringing together several similar or related companies in a cluster in which they can pool their resources or appoint R&D managers in an area to look after, support and encourage companies engaged in R&D. The very term “R&D” often conjures up concerns for small- to medium-sized companies who perceive it to be about inventing brand new products. R&D is also about product development. Any strategy aimed at encouraging R&D should also focus on product development and identifying product life cycles. Northern Ireland’s planning system, when it relates to business, needs a serious overhaul. A user-friendly system that fast-tracks economy-related applications and delivers coherent and consistent decisions with the minimum of delay is essential, so that our existing companies are not deterred from expanding, and new ones will not bypass Northern Ireland for a destination where it does not take forever to obtain planning permission. It is not the Government’s job to create jobs. If anything, the Government’s principal responsibility at present is to assist in ending our overdependence on the public sector for jobs. The DUP suggests that the Government devise a strategy to lower significantly the number of economically inactive people in the Province — a figure that is presently estimated to be well in excess of 100,000. Government should employ the same tactics they used to tackle unemployment in the Province. We appreciate that moving from long-term inactivity to employment will require support, and that is where the Government can assist. The Business Alliance, the Confederation of British Industry (CBI), the Institute of Directors and the Federation of Small Businesses have said we need to create 14,000 jobs a year over the next 10 years. If that figure is accurate, then embracing some of my party’s proposals will go a long way to reaching that target. The Chairperson (Mrs Long): Thank you, David. Mr McLaughlin will make Sinn Féin’s presentation. Mr McLaughlin: I reiterate that, in processing the various documents and witness statements, it is clear that there is a significant basis for agreement. The truncated timeframe of our deliberations has meant that we have not necessarily accessed all of the information that we need. Nonetheless, it has been a valuable exercise and we can draw some definitive conclusions. Clearly, differences in emphasis and in analysis will remain. Perhaps some of the differences are too significant to be resolved in the short term. However, I believe that the subgroup can reach consensus on its report to the Programme for Government Committee; indeed, it will provide parties with valuable guidance in dealing with other outstanding issues. It is a welcome change to the focus of politics in the Assembly that securing the long-term economy has taken centre stage. I believe that that would be a publicly welcomed development. Sinn Féin makes a clear statement that reflects our politics. It is not, however, a party political statement. Co-operation, collaboration and an all-island approach simply make common sense, and that has been demonstrated over and over again. I recognise that those aspirations are more appealing to Sinn Féin than they might be to some of my colleagues. However, it has been clear in discussions that there is no controversy around the assertions and examples of the benefits of that type of co-operation, which, I believe, provides a compass for the future. Sinn Féin’s paper, which I do not intend to read out line by line, maintains that North/South, as well as east-west, co-operation makes perfect sense and is logical. Its benefits are there for all to see. Sinn Féin argues that the benefits of that type of synergy will allow us to drive down the cost to business. I have given an example in our paper of how having two separate currencies is an impediment to trade, both within and without the island. It is costly to consumers and to business and serves only to advantage an already profitable and prosperous banking sector. The four banks that control finance and have the authority to issue notes in the North are also the four dominant forces in banking in the South. Sinn Féin argues that to have 10, 12 or more banks would be better than to have four banks that enjoy a monopoly. Our paper provides an example where development of proposals on the single energy market has not automatically resulted in reduction of costs because of profit-making by producers. However, through good governance, those issues can be resolved to the benefit of the consumer. The road, rail and air issues that we must deal with have been well documented. My party also believes that there are significant gaps in telecommunications provision, despite the claims of 100% coverage. Many areas in the North do not have adequate cover. That is both a disincentive and a disadvantage. We must deal with gaps in education and prepare the workforce for the type of new economic profile that — if we can achieve both a stable and sustained system of Government — must be developed, particularly with regard to the restructure of the economy in the North. We must take responsibility for the environment when we consider how to develop an energy supply on the island. Sinn Féin believes that huge savings could be made if that were properly approached. Our paper refers to the huge imbalances — in the South as well as in the North — despite the huge wealth that is available to the Government. In the west and north-west there has been neglect, underdevelopment and, indeed, discrimination. Sinn Féin argues that an Executive in the North should, from the outset, endeavour not just to set targets to tackle poverty or underdevelopment; it must take a policy-driven approach to eradicating such disparities. That will not be done overnight — the problems did not emerge overnight, but over a long period — so we must be sensible and realistic about the timescale. The determination to eradicate those inequities should be a unifying factor in any local administration. It may turn out that the parties will not agree on a tax and fiscal policy. Lobbying from a vociferous and powerful section of the business community has created the economic myth that a simple act of making tax cuts will kick start the economy. It will not; indeed, expert witnesses have produced authoritative evidence at our hearings that has challenged this emerging orthodoxy. Empirical evidence from the Twenty-six Counties, and the Irish Government’s ‘Ahead of the Curve’ report, demonstrates that a significant number of domestic firms simply pocketed tax-cut advantages without any corresponding increases in exports, output or R&D activity. All the evidence indicates that the same trend would emerge here. We must take a much more creative and flexible approach. In Sinn Féin’s view, a range of tax and fiscal measures is needed to achieve the necessary competitiveness with the Twenty-six Counties’ economy and to present, on an all-island basis, a competitive edge over emerging low-wage economies — particularly those of eastern Europe. We must challenge the one-size-fits-all tax policy that is the current orthodoxy of the London Government. We must set out incentive-driven policies that demonstrate strategic development and provide contemporary incentives that will encourage our entrepreneurs to explore new markets and promote training and development and R&D activity. We must set our faces against tax giveaways as a means of doing that, because there are long-standing structural flaws in our economy for which there are no quick fixes. However lucrative and attractive the argument for various forms of rebates might seem, we cannot expect to resolve the issues on that basis. Rebates are not necessarily the strategy answers needed to build a competitive and vibrant economy. Sinn Féin argues that an all-island tax approach to tax and fiscal measures would reduce existing anomalies. It would also deal with the vexed issue of, for example, the differentials in fuel charges, and fuel smuggling. Those issues can be dealt with by harmonising fiscal regimes and by creating common trading conditions on the island. It would mean that decisions on the location of foreign direct investment would be different, and it would remove the legacies that cause so much angst and create such negative publicity for those attempting to develop a new approach. The Irish Government have come up with a significant R&D initiative. Sinn Féin is critical about much of their economic strategy and of the deployment of the enormous resources that are available to the Dublin regime. However, my party believes that the Irish Government have developed an imaginative Government-led approach to R&D, which sends a clear message to potential investors about the island of Ireland as an investment location with opportunities. The Assembly could follow the example of that approach, and, indeed, we could join with the Irish Government in that initiative. 10.45 am Mr Neeson alluded to the failure of Invest Northern Ireland, and I state bluntly that we must deal with that failure. Invest NI’s own report shows that it has failed to reinvigorate the economy. It has failed to attract the type of investment needed, and it has failed in its duty of care to the entire community in the North. By concentrating in and around Belfast — I talk about south and east Belfast in particular, as its figures demonstrate — Invest NI has failed vast swathes of our community, which is grappling with the opportunities and challenges that having a more peaceful society brings. Our community is trying to gain the necessary confidence to have a more prosperous future. As a lead agency, Invest NI has consistently dashed people’s hopes and expectations that peace would bring the opportunity for economic development and recovery. We have to be careful about attempting to mimic the Twenty-six Counties’ approach. We are witnessing quite significant impacts on its open economy, due to international instability — rising oil prices, in particular — and, of course, consequent impacts on the American economy. We must have a more strategic relationship with the European market, and we need to pay much more care and attention to the downside of having an absolutely open economy. Emerging dangers and threats are overheating the economy in the South, and there is clear evidence of a complete dependence on the construction trade and property development market to carry the economy through this period. Finally, Sinn Féin has made a number of presentations to the NIO on the peace dividend. We have met with various Ministers over the past four or five years. We have consistently argued that there could be very significant savings in the security-budget expenditure, and in the operation of the NIO itself, if suspension is lifted and the Executive are allowed to resume their mandated responsibilities. Those savings should be re-applied in the Six Counties. Unless an essential injection of capital is at their disposal, the incoming Executive cannot be expected to implement a Programme for Government to deal with all the infrastructure deficits, the challenges of regenerating the economy, and the massive retraining costs that would be involved. We should reflect on the evidence that has, and will be, presented. Sinn Féin has presented a framework, which, we hope, in conjunction with our colleagues’ suggestions and proposals, will form the basis of a meaningful report to the Preparation for Government Committee. The Chairperson (Mrs Long): Who will be presenting for the SDLP? Dr McDonnell: I will try. The Chairperson (Mrs Long): I realise that you arrived after we had completed the preliminaries. We are allowing about 10 minutes for each initial presentation, and we shall then open up the meeting for discussion. Dr McDonnell: I will not take the 10 minutes allotted. I was delayed because the Committee Clerk and I were in dialogue by phone. I discovered that the papers I had sent by email had bounced back, so I had to reconnect. The SDLP has submitted two papers. Owing to the rush involved, we produced a general document headed ‘SDLP Economic Challenges Paper’ on 16 August 2006. It deals with several issues that have much to do with reforming Government and modernising how things are done. It has a wider scope than is relevant to the subgroup, but we felt it important to pull the paper together, crystallise some of our thinking, and put it at the disposal of the subgroup to help set the framework. Margaret Ritchie and I have attended most of the meetings. We pulled together a specific paper responding to much of what has gone on here, and I will speak to that paper now. There should be a consortium, for want of a better description, to ensure that no section of our society is isolated. Again, without drawing any political significance, much of the success in the South has come from national agreements, for some five years at a time, in which the public sector, the private sector, the unions, the voluntary sector and everyone else involved has a stake. They map out the economic way forward for a period, and broadly settle most of the issues for that period. In that context, we should be doing something similar here, but taken further. That type of exercise should be done centrally by Government to pull together all the interests, the needs and the ideas. The strategy would then be rolled out, taking us five, six, or seven years into the future. Fundamentally, a strong and growing economy is essential to produce the wealth, and the tax that flows from that, to fund the social programmes that we need to underpin a just and fair society. I mentioned the need for a coherent and transparent strategy. We feel — perhaps in less specific terms — that our current economic strategy can appear muddled and impossible to comprehend. That brings us back to Invest Northern Ireland; nobody knows where they are in our system, and that is why a consortium, or team approach, including all stakeholders, would create an open and unambiguous strategy. On 15 August I said that we need a clear strategy for managing old industries that are in decline, but in which we could retain niche markets. Those include agriculture, fishing, food production, some of the heavier industries and engineering. A few may be going offshore, but some of them could still be retained through niche markets, and, rather than shrugging our shoulders, those industries should be managed to retain whatever they have, even if that means managing them downwards. We believe very strongly that there should be a clear attitude to indigenous business and clear contracts between Government and indigenous business. We have some scepticism about the fact that grants are awarded to some and not to others. The grants system can sometimes appear willy-nilly, and it is a lottery as to who gets and who does not. The SDLP favours an open and transparent system. We are impressed by many aspects of the loan system available to small businesses in the US. When the Assembly was functioning, Sean Neeson, Reg Empey and I, among others, looked at that system. Instead of grants being selectively handed out to a few businesses, a guaranteed loan system is available — similar to our student loan system — whereby banks offer cheap, low-interest loans that borrowers can repay whenever they feel that they are able, with repayment periods sometimes stretching over 10 years. The system is open to everyone, whether they are setting up a grocery shop or a high-tech business. The operation of a similar system here would enable immigrants from eastern Europe to set up niche businesses here. The increase in immigrant numbers means that this issue will affect us more in the future than it has done in the past. If we are to aspire to becoming a first-world economy with high-wage, high-value-added industries, we must embrace new technology and ensure the availability of the education and training programmes necessary to underpin that. For years, a pool of technical labour — for want of a better description — existed, with 400 or 500 young university graduates readily available for work. However, following a couple of instances of industrial investment in the technology sector, the labour pool was suddenly wiped out. The SDLP is concerned about that and believes that a much greater training and support service is needed. The SDLP is delighted to have this opportunity to discuss the economy, and the subgroup has worked extremely well, despite some difficulties. The vast amount of evidence presented to us is a valuable resource that will stand both the subgroup and individual political parties in good stead for the next two or three years. We have been impressed with the passion and commitment of most of the witnesses. They have approached the issues with sincerity and have real hopes that the subgroup will feed back their views and that they will make a difference. I do not want to talk for too long, so I have run through several points quickly. Many issues are self-evident, and they have, or will, be raised by others. I would like to highlight some general points. Mitchel mentioned how Invest Northern Ireland had put a lot into south Belfast. I want to assure him that the investment was not because of Invest Northern Ireland, but because of enlightened political leadership. Mr McLaughlin: It is because of the good MP then. Mr Dawson: That is self-praise. Mr Simpson: It is just the fall-out from Martin Smyth, is it not? [Laughter.] Dr McDonnell: It is not self-praise — much of what has happened in south Belfast has been as a result of the development of the old cattle market and the old gasworks. All parties were involved in some shape or form. We had to compromise, pool resources and form partnerships in order to get things done, and that is how we should work right across Northern Ireland. I want to raise a few points, and, in particular, one on which I disagree with some members. Government needs to be streamlined. Our bureaucratic public service needs an awful lot of improvement and refashioning so that it can become fit for purpose. I heard it mentioned that there are too many Government Departments. The SDLP could not, and would not, agree with that because a bigger issue is involved — that of having stable government through the formation of a stable Executive. To put it bluntly, each party, and certainly the major parties — and I mean no disrespect to the smaller parties, Sean — must have a significant stake in that. The chair needs at least four legs; without those, it will not work. Mr Simpson: What about a three-legged stool? Mr Neeson: He is not talking about you, Naomi, by the way. The Chairperson (Mrs Long): I was wondering; I have only two legs. Dr McDonnell: Inefficiency in Government has very little to do with numbers of Departments. We have short memories if we do not remember the disaster that was the old DOE eight or nine years ago, when muddle and mayhem were created because one corner of it did not know what another was doing and contrary decisions were made. 11.00 am Mr Simpson: What has changed? Dr McDonnell: Whether you break up or amalgamate Departments, if there is mayhem there will be mayhem whether it is internal or external. If people are keen to reduce the number of Departments, we suggest that the mayhem be sorted before their number is decreased. We also suggest that such a reduction will not create efficiencies or competencies where there are none. Mr Simpson: Is that a management fault? Dr McDonnell: I agree that it is a fault of management and leadership. We support moves to reduce corporation tax but we caution that it will not make a lot of difference if other areas are not fixed. A lot of attention is paid to the situation that the low-level corporation tax in Southern Ireland has created; however, that has been around for 40 years but has made a difference only in the past 10 to 15 years. That is because other things, such as the education system, were fixed. It does not matter that there is a zero rate of corporation tax if other problems are insurmountable — you will not attract the investment. I worry about that. It would be useful to fix the other problems and reduce corporation tax. However, the tax is only one part of the jigsaw; the education system and the well-trained workforce are equally important parts. Many North American cities and regions have re-invented themselves in the past 20 or 25 years as old industry declined. We have learned from them and have been greatly influenced by them. Halifax in Atlantic Canada, with which Belfast has some association and partnership, re-invented itself from being a declining maritime city by moving into the twenty-first century economy and becoming involved in the hi-tech industry. We have also looked at places such as Pittsburgh, which was a coal mining and steel town that suffered when those industries suddenly collapsed 25 or 30 years ago. It reinvented itself as a hi-tech city, again by moving into biotechnology and other technologies. I make that point simply because in all cases the engine, tractor and moving force behind those reinventions was a university or universities. We strongly believe that we are not fully utilising the brainpower in our universities. Although they carry out a lot of good research, they are allergic to making money. If this subgroup were to do only one thing, it must be to find a cure for that allergy, so that universities engage with the commercial world. Universities have been the driver and have led economic recovery in the North American cities with which the SDLP and I have been involved. Some attention has been paid to the economically inactive. Although that is important, we do not believe that it is a primary issue. We have bigger things to fix, and although I would like to know a bit more about economic inactivity — and we have heard some very useful information about that in the past week — it would be foolish to put it high on the A list of issues. I would certainly put it high on the B list, but it is more important to know that people will take jobs if we have a thriving economy with high wages and high value-added production. The substantial underemployment here is perhaps a more important issue. Graduates and well-qualified people take lowly jobs. I would like to see that problem tackled as soon as possible, perhaps before economic inactivity is dealt with. It would be remiss of me not to mention the all-island economy. For the benefit of my unionist colleagues at the table, although we passionately believe in removing as many economic barriers as possible on the island of Ireland, we do not wish to do that for purely political reasons. We do not wish to offer political offence, annoyance or irritation. We have little control in our current political circumstances, but I hope that we will have some control in the future. We believe that we should take advantage of all of our relationships. We should use both our Irish and our British connections. We must take advantage of all of our connections in whatever way we can in order to maximise any opportunities, including our European links and, as I mentioned a few minutes ago, our American connections. We do not have an awful lot of natural resources and, therefore, we should use any niche or leverage that we can. I was very impressed when — after first being elected to the Assembly — we were dragged off to Brussels. Do you remember that, Barry? Mr McElduff: I do indeed. I am happy to remember that. I could stand up for Ireland, you know. Dr McDonnell: I was in a group that spent some time looking at the situation in southern Tyrol, an area of Austria that was annexed by Italy, which was handed that land as a bribe after the First World War. The Austrians who live there are ambivalent and bi-national — they play either the Italian or Austrian card as it suits, and it is one of the most prosperous regions in either Italy or Austria. I do not mention that to diminish the politics of this matter — we have our political views and each of us, in our own way, holds those views dearly. However, we should not let our economic interests or the prosperity and future of our people and our children be held to ransom to political interests. On a final note — you will be glad to hear, Chair — any proposed peace dividend will be wasted. We have seen peace moneys arrive, and we believe that the peace dividend will be wasted — just as those peace moneys have been wasted during the past eight years — if there is not restructuring, transparency, openness and honesty created in the entire public body that is handling and delivering those funds. While we certainly wish to see dividends and pump-priming, we believe that if that is handled in the way it has been during the last eight years, it may not make much difference. Mr McCarthy: Chair, may I propose that Alasdair arrange a trip to that area so that the subgroup can examine the issues? The Chairperson (Mrs Long): We will move to proposals later, Kieran. Mr McNarry: You omitted the fact that there are no terrorists there. Dr McDonnell: I want to inform Mr McNarry of the existence of a South Tyrol liberation army. [Interruption.] Mr McElduff: A South Tyrone liberation army? Dr McDonnell: I hasten to add that it is 10,000 miles away in Argentina and that it was organised by those who emigrated in 1909. [Laughter.] The Chairperson (Mrs Long): Perhaps therein lies a solution to some of our difficulties. We shall now hear from the Ulster Unionist Party Assembly Group. Mr McNarry: I am grateful to, and appreciative of, all of those who have assisted the subgroup in providing written and oral evidence. As a party for the Union, which has served and given leadership to the country for over 100 years, the UUP recognises the importance of a vibrant economy, not only for stakeholders and investors, but for those benefiting from full employment and prosperity. We also recognise the overwhelming opinion of those in the private sector who signal clearly that there must be political stability. We endorse those opinions, which are in character with our continuing demands for an equitable partnership between a devolved Assembly and civic society in Northern Ireland. For lasting stability to be attained and sustained, all parties have an obligation to state publicly their unequivocal support for the Police Service of Northern Ireland and all other Crown agencies operating with the approval of Her Majesty’s Government to uphold law and order in our country. Without that publicly stated support, parties are only making a mockery of the efforts being made here to improve our local economy. However, with that support, the Assembly can send a positive and welcome signal that elected representatives are giving sound leadership as part of their contribution to encourage and renew confidence in internal and external investment. With regard to the remit with which the subgroup has been tasked, and in particular, the major impediments to the development of the economy, the UUP shares the view expressed by Northern Ireland businesses and their representative organisations that the structural weakness of the Northern Ireland economy has been correctly identified in the four drivers indicated in DETI’s ‘Economic Vision for Northern Ireland’. In particular, we emphasise the skills gap and the low R&D spend in Northern Ireland. The nature and extent of the skills gap must be a matter of grave concern. The submissions from diverse businesses and sectors almost uniformly referred to a growing skills deficit in the labour market. Alongside that is the fact that unacceptable numbers of school leavers possess poor literacy and numeracy skills. Northern Ireland’s poor record of R&D investment in comparison with the rest of the United Kingdom is of greater significance, when it is considered that the United Kingdom level is merely average for the European Union. The low level of university/business collaboration in R&D — which is less than 50% of the United Kingdom average —contributes, in particular, to the Northern Ireland weakness in this regard. In common with some other regions of the United Kingdom, the public sector’s role as an employer and key economic player is not unusual, nor is the Treasury’s subvention in relation to Northern Ireland tax revenues an anomaly in the United Kingdom. The aim of an economic policy should be to increase the private sector, not to shrink the public sector. In considering the fiscal incentives that may promote FDI and indigenous investment, the UUP believes that a focus on purely fiscal incentives should not entirely dominate debate and discussion on the future of the Northern Ireland economy. Some commentators have stated that the Irish Republic’s corporation tax level has not been the only significant driver in its recent economic success — an education system that is rated third in the world by the World Economic forum, high levels of R&D investment and European Union infrastructure investment have all contributed substantially to that. However, it is widely recognised — and we must take note — that, in a competitive global market, the level of corporation tax does not impact on the ability to attract investment. The Treasury should examine the economic potential of a lower corporation tax rate for Northern Ireland. A competitive tax regime is essential for the united Ireland — I shall start that again. [Laughter.] Mr McLaughlin: That is OK; it will be in Hansard anyway. Mr McElduff: Very good. Dr McDonnell: It was a Freudian slip. Mr Simpson: That is a press release for us. Mr McNarry: A competitive tax regime is essential for the Northern Ireland economy. While recognising that most taxation issues are reserved, the Ulster Unionist Party believes that a devolved Administration has the potential to act on aspects of the tax burden on businesses, with existing and potential SMEs being fundamental to our regional economy. A small-business rate relief scheme, similar to that which operates successfully in Scotland, should be introduced. A Northern Ireland Administration should also commit to capping industrial rates at 25%. The Treasury should adopt a more innovative approach to the various taxes that have an impact on business in Northern Ireland with avoidance of the excise duty in fuel, potentially costing the Treasury £380 million a year. There is a very strong case for altering the level of that duty. 11.15 am The uptake of the R&D tax credit has been poor. More generous incentives, a streamlined system and better engagement by Government agencies with, in particular, SMEs on tax credits should be considered. Public procurement procedures, particularly those with reference to the Investment Strategy for Northern Ireland, should seek to maximise the opportunities for, and support the development of, indigenous enterprises. That can be dealt with locally. I shall comment on how other matters, including an economic package, could contribute to economic regeneration, and on how that might be delivered. The well-recognised infrastructure deficit — the road network and the public-transport network in Northern Ireland — has been widely recognised as a barrier to economic growth. Addressing that deficit should be the priority in any economic package. That must be additional real money, not recycled money. The energy costs that Northern Ireland businesses face continue to be a barrier to growth. The Carbon Trust has estimated the potential savings to Northern Ireland businesses of investment in energy conservation measures and technologies to be £15 million a year with a total implementation cost of £36 million. There is a strong argument on business and environmental grounds for such measures to be included in an economic package. The absence of a strategy for Northern Ireland’s manufacturing sector is in stark contrast with the strategies that have been developed in Scotland and Wales. Such a strategy would signal that a Northern Ireland Administration was committed to the manufacturing sector’s being a powerhouse of a knowledge-driven regional economy, and we would support that. The emerging skills deficit that exists for basic and specialist skills must be addressed by a partnership of Government, schools, colleges, universities, employers and trades unions. Although that is a broad agenda, some initial actions can be indicated such as focused investment in primary schools to ensure that a firm foundation is laid for basic skills, and literacy and numeracy. We recommend: a new approach to careers guidance in post-primary schools; the creation of a post in the Department of Education with a named individual to take overall responsibility for driving improvement in science education; and support for apprenticeship initiatives such as those proposed jointly by the Construction Employers Federation and the trades unions. Why not create a knowledge bank that is similar to that in Wales to provide tailored, focused and unified support mechanisms for businesses with the potential to be high growth, bringing together small innovative firms with researchers, universities, venture capitalists and other business partners? Such a knowledge bank would aid in technology, transferred inward investment and marketing. Let us also consider incentives such as enterprise zones that are different to those that we had in the past. A network facilitating the emergence of high growth industry clusters should be given time to prove that they can be engines for the growth of knowledge-based regional economies. We have already mentioned the recent events in Newry and Dungannon, and, across the border, what happened to our party colleague Lord Ballyedmond. Those are grim reminders of what our economy endured for over three decades. As then, it is today not acceptable to say that there is no support for these terrorist acts. When was it ever right to support terrorism in our country? I hope to end on a positive note. Like Dr McDonnell, I was struck with the people that we met during our deliberations and their candour, optimism, enthusiasm. Above all, I was impressed by their intention that Northern Ireland can do a lot better by improving its economy, and their will to contribute to making that difference. Their underlying message to this subgroup was that if we clear the way for stability and confidence building, and work out a partnership between a devolved Government and a dedicated business agenda, Northern Ireland can — and will — compete and punch its weight. The Ulster Unionists will support that, and we hope to contribute with all parties towards making the difference. The Chairperson (Mrs Long): I thank all members who made presentations this morning for keeping so strictly to time. It has left us a bit more time for the discussion, which is helpful. The written submissions will be included in the report, which will also reflect proposals that have been made and issues that have been raised by today’s presentations. However, the formal recommendations in the report will be based on those measures around which consensus can be achieved. Therefore, in order to prepare the report it would be helpful to focus on the areas in which we can find agreement. For reference, it may also be useful for to look at the table of evidence. It also focuses on the subgroup’s terms of reference, giving options and recommendations that would aid discussion. We will now open the meeting to discussion and see how things go. If members have any questions to ask, issues to raise or proposals to make, we are free to do that now. Mr Simpson: In Alasdair’s presentation, he mentioned the need to watch out for the pitfalls of private sector investment. Could he elaborate on that? Dr McDonnell: That is fairly simple and open. There were several times in the past when foreign direct investment was made, principally in the textile industry. Projects were sited here, worked up for a number of years and subsequently moved to Morocco or Eastern Europe. That is a very minor word of warning. The point I am making, perhaps indirectly, is that where public money is invested, the point and the purpose needs to be well tied. If a company moves away after 10 or 12 years there must be a clawback. Mr Simpson: I agree with that. I am sure that Alasdair would agree that if the conditions are right for foreign direct investment, there is no need for companies to look elsewhere. We can create the environment that will sustain them here. That is important. Mr McDonnell: That is right. Mr Neeson: I am grateful to Alasdair for reminding me about the American system of assisting small businesses. The Enterprise, Trade and Investment Committee focused strongly on that, and I recommend it to this subgroup. Coincidentally, there is an organisation in the greater Belfast area called ‘Aspire Micro Loans for Business Ltd’, which helps small businesses with loans. They are not big loans but at least they help them through difficulties. With small businesses being such a large part of the economy, we should focus on the American model. Dr McDonnell: To follow up on that, I invite members to share the following example. It was the American experience that those who had $6 million to invest in small business were able to set that up as a guarantee fund or an insurance fund for the banks. The banks in turn were able to loan $100 million on that. They found that it took $1 million to administer it — and it was administered efficiently and effectively. The banks set up a consortium to administer the scheme, and they had a standardised process for small loans, with a failure rate of only 5%. In other words, businesses that collapsed or went out of business represented only about 5% of the total. The rest was money that kept churning and working for people, and going around the system. I was tremendously inspired by that scheme because there is nothing more annoying than seeing people looking for grants or deals and failing to get them. We all, as public representatives, see that happening. It was awful when LEDU was in existence, because that body seemed to be very arbitrary about to whom it did or did not give money. Whatever plans, schemes or processes LEDU put in place, no one ever understood them and people were just confused by them. Simply put, anyone who could produce a degree of security was able to claim a loan under the US system. Quite often, that loan may have been secured only against a lease or the claimant’s investment in setting up the business. The banks used normal banking practices and the scheme was very good for businesses because the banks also provided financial discipline and management support. That meant that everyone was a bit happy, rather than having a handful of happy people and the rest angry at not getting access to finance. Mr Neeson: Another interesting thing about that scheme was that it encouraged a lot of women into business. That issue, surprisingly, has not been raised at this subgroup. From a Northern Ireland perspective, it is important to encourage women into business. That was one of the big benefits of the US scheme. Mr Dawson: This is my first opportunity to attend the subgroup, and I am pleased to be here. I have read the reports of previous meetings and have been struck by the recognition that all of the Government Departments should be focused on developing the economy and that the economy does not sit in isolation from the rest of Government. Some new and fresh thinking has been brought to the table. That should not be lost in the final report. The economy is of such importance that it requires the harnessing of all of the power and strength of all of the Departments, for the benefit of the country. There are many specific issues to consider, as has been highlighted by the presentations that have been made today and at previous meetings. We have just discussed where agreement can be reached on specific measures that could be put in place. I am sure that we could add issues concerning tourism and our desire to promote this part of either the island of Ireland or the United Kingdom. I use those words to address Dr McDonnell’s point that perhaps there is a way that that can be done for the benefit of all sides. I believe that we can reach agreement on R&D tax credits, and that modern apprenticeships must lead to real jobs. There are large numbers of issues that are highlighted in the various reports on which there will be no difference of opinion or difficulty in reaching agreement. However, all of those matters simply refocus on things that the Government have done in the past. There is no step change; it is simply doing more of the same or improving on what we have done in the past. Those measures will not lead to the step change that the Northern Ireland economy needs in order to move from where it is today to a much better future. In my view, two issues have emerged from our discussions on adding to the list of measures that will help to create that step change. 11.30 am First, the attitude of the Government, Departments and the Civil Service to the economy is exemplified in planning, bureaucracy and some of the things that the Environment and Heritage Service is involved in, and those are stymieing economic growth. The Government, through its Departments must be seen to promote, rather than stifle, economic development. Industry leaders and businesspeople consider Government policies as a blockage to economic growth. Government attitudes must change. When I joined industry as a graduate many years ago, my first managing director would never accept that I brought him just problems or concerns about the business — he always demanded that I also identified solutions. That was good training for a raw recruit into any industry, and Government Departments could learn a great deal. While they are good at identifying the blockages to investment — the rules, regulations, planning or environmental issues that will hinder it — they are not good at identifying how the blockages can be overcome. That must change. Departments often cite the European Union as the problem. They say: “It is driven by Europe, so there is nothing we can do about it.” I simply do not accept that. Those who draft or put in place legislation that comes from the European Union must do so with an eye on promoting business and economic development within the region, rather than gold-plating legislation that may create obstacles. That is one step change, which, although it might sound simple, will be hugely difficult to implement across the Northern Ireland Civil Service and the various Departments. Another step change involves corporation tax. Different opinions have been put forward on whether the level should be set at the headline rate or should combine several factors which will lead to an effective rate of corporation tax that is lower than the current rate. In many ways, it does not matter which of those we recommend. Instead, it is important that Northern Ireland can boast a rate that is more attractive and competitive than that of our nearest economic rivals. With regard to R&D, training and investment, I prefer a package of measures that would reduce the effective corporation tax rate, rather than the headline figure. Ultimately, it is important that we have a figure with which the Assembly, Invest Northern Ireland and others who promote economic development can attract investors to Northern Ireland. Objections to corporation tax variation can be met if, as I mentioned earlier, we endeavour to find solutions as opposed to problems. The potential exists for variation of tax rates in Scotland, the Channel Islands and Northern Ireland, where in the past, different packages have brought about variation in corporation tax levels. The Chancellor of the Exchequer suggests that large companies may relocate head offices to Northern Ireland, which would lose revenue to the rest of the UK. I am sure that rules can be easily introduced to prevent that happening. It has been said that the loss of revenue to the Exchequer is a red herring. The total revenue generated annually by corporation tax in Northern Ireland is around £500 million and reducing the rate of corporation tax over time would actually increase the tax take to the Exchequer. All of the objections that have been raised can, therefore, be challenged effectively. Mr Dallat: The vexed question of illiteracy and innumeracy has been a common theme in today’s presentations. A new Assembly will need to take immediate action to address the issue, which affects approximately 250,000 people between the ages of 16 and 64. It is a horrendous problem for employers, and the influx of people from other countries probably makes the issue even more important. Apart from the world of work, it is important to recognise that, under the terms of the Good Friday Agreement, equality was not simply about equality between Protestants and Catholics, but equality across the board. There can be nothing better than restoring dignity to people who were failed by the education system; and it means that the cycle of illiteracy will be broken. We accept that there have been significant improvements at primary and nursery school level upwards, but recent research shows that 1% of people leaving grammar schools have serious problems — that represents approximately 2,500 people. Sixty per cent of the prison population have serious problems. I want to recognise the outstanding work in Magilligan Prison; the ironic thing being that prisoners need to be in long enough to benefit from its courses. I am sure it is not widely know that the flags and emblems for the recent Special Olympics Ireland Games 2006 were, in fact, designed in Magilligan. It shows that there are people there, who had they been given the correct skills, could have made a very valuable contribution to society — indeed many do go on to degree courses. From the evidence obtained by different Committees during the previous Assembly it was quickly recognised that illiteracy and innumeracy amount to a very big issue. However, we lacked a co-ordinated approach to finding a resolution; sometimes one Committee was unaware that other Committees were collecting similar evidence relating to this very serious problem. The problem came to light only when the Chairpersons of the different Committees met and realised that it was affecting industry in a very serious way. Hopefully, when the new Assembly comes into being there will be a concerted effort in our schools and colleges to develop the community school concept, which focuses attention on the need for education to continue throughout a person’s working life. I recognise the contribution made by the University of Ulster in its ‘Step-Up’ programme. The programme operates in the north-west and has given people from working class backgrounds an opportunity to pursue courses in science. It will make a huge contribution to industry in future years and should be rolled out across Northern Ireland as a very good model to follow. Also, the contribution made by community groups, mostly in association with colleges of further education, needs to be examined and given the recognition it deserves. All too often, community groups were recognised only when they were in areas of conflict. When the issues in those areas have abated, the contribution of those groups, and the need to encourage partnerships, will not be recognised. In many cases, they will be left hanging without funding, depending on embarrassing overdrafts from banks, with staff working in positions of uncertainty. The general heading of “Literacy and numeracy” must appear at the top of the agenda. The Chairperson (Mrs Long): Two members still wish to speak and, at that stage, all party groupings will have had an opportunity to contribute to the discussion. It may be useful then, if members agree, to move on to more detailed consideration of the table of evidence, so that we can begin to provide guidance on the content of the report. Mr McNarry: Barry, do not be worried about that white Anglo-Saxon Protestant flying around you. I commend everyone who made presentations to the subgroup. They were useful, interesting and constructive. We may have left things out, and some of the discussions may have been rushed. However, I recommend that the subgroup reserves a paragraph in the report on the effect that criminality has had, and continues to have, on our economy. I am not au fait with the sums of money involved, but money laundering, fuel laundering, and so on, interest Mr McQuillan’s organisation, so there must be something in it. He always seems to talk in millions. While we remain hopeful that the subgroup will hear evidence from young people even after the draft report has been produced, it is important that we deal with how to prepare young people for employment. We need to give a sense of direction — one that we have worked out between us — or we need to sift through all the evidence to find out if employers have predicted the employment choices that will be open to young people over the next 10 years. Mr McElduff: I assure David that I approach this discussion in the sporting tradition of the Gael. Mr McNarry: You have completely lost me now — you had better explain. Mr McElduff: George Dawson made a good point about his first managing director insisting that problems be approached with solutions in mind. When we come to detail the impediments in the table of evidence, we should try to fill out the recommendations/options column as much as possible. For instance, Dr Gilleece’s paper goes some way to pointing to solutions relating to the skills deficit; poor correlation between current and future business needs, and educational and vocational provision. 11.45 am The paper that Dr Gilleece prepared considered how the South’s education system fits in with the success of the Celtic tiger economy. That paper should enable the subgroup to fill out at least some of the recommendation and option columns in the table. We should not be afraid to address political instability and uncertainty. We should be courageous enough at least to state formally the desirability of removing barriers that might stand in the way of the restoration of political institutions, without prejudice to individual party difficulties. Dr McDonnell: I put the following issue on the table now, lest it should slip away and be forgotten. I would like the subgroup’s report to include a recommendation that, at a later stage, a more specifically targeted investigative report will be prepared on the commercialisation of brainpower in the universities. George Dawson’s earlier comments triggered this thought. Creating or generating wealth is anathema to the Department of Health, Social Services and Public Safety (DHSSPS). Vast amounts of money are spent on health, but 15% to 20% of that could be generated internally by using existing brainpower and intellectual property. A mechanism is needed to mine that. I want to leave that issue on the table. Mr Simpson: I wish to raise a side issue, which is nonetheless very important. It is something that perhaps the schools or colleges could deal with. I have had meetings with young business people and university graduates about starting businesses, business incubation, and so on, and I have noticed that there is, in the culture of Northern Ireland, a fear of failure. America was mentioned earlier; if people in America fail in business, it is not seen as an embarrassment, but rather as a challenge and an opportunity to learn from mistakes so that they can move on. David McNarry mentioned that the subgroup may, at a later date, hear evidence from the youth councils. It would be interesting to hear their views on how that fear of failure can be overcome. Perhaps it is a mental block or perhaps it is because Northern Ireland simply has a culture of embarrassment. However, in order to encourage entrepreneurs we must get across the message that not making it in a business incubation programme or whatever does not make them failures. That fear must be overcome if young people are to be encouraged into business. Schools and colleges may help to achieve that. The Chairperson (Mrs Long): That is a valid point, and it should perhaps be listed as a cultural barrier. Business people such as Richard Branson have said that they consider failure to be a necessary step on the road to success. Dr McDonnell: That is right; people must be rewarded for trying, not punished. Mr McNarry: That is right. There is a punishment for failure, and the cost is high; it can sometimes involve a person’s home and family life. That big risk factor is very off-putting. I have talked to young people — some of whom are still at school — who have been advised not to take any risks and to join the Civil Service. Mr Simpson: God forbid that, but anyhow. Mr Dawson: I fully agree with Alasdair’s point that university research should be released into the private sector. That was achieved in the United States with the introduction of the Bayh-Dole Act in 1980, and it may be useful to consider adopting a similar approach here. The Chairperson (Mrs Long): Returning to the table of evidence, the subgroup should try to reach consensus on as much as possible. First, we should focus on where we stand on the identified impediments, recommendations and options, so that we can propose recommendations — which will obviously require consensus. Mr McNarry: Chairperson, you are leading the subgroup in the right direction. I do not know how much we will get through today, but this is a big job. I advised you earlier that I have a meeting to attend shortly, but I am willing to come back after it. I agree with Barry McElduff’s comments. We should identify not only the impediments, but the solutions, too. If we can crack that, we can make reasonable progress. I congratulate also the officials who put together this paper, which I requested. It is very useful. It is well prepared, very instructive, and I can follow it, so it is virtually idiot-proof. I suggest that, if everybody agrees — and there will be some overlapping — we should address the impediments with a view to finding solutions. That is what we need to figure out; otherwise all our work is really at a loss. Also, in the horrible event that our report does not mean anything to an Executive, because an Executive has not been formed, it is still important for the body politic that our report be presented to the Governments, so that, in the absence of a devolved Assembly, it will be held in good standing. We will have addressed the impediments, and we will be saying to the Government that as long as there is direct rule, it is up to them to address the impediments that the elected representatives of Northern Ireland have identified. The Chairperson (Mrs Long): A list of impediments has been identified from the various presentations and discussions. Although it might be a slightly negative place to start, I think that it is important, before we move on, to ascertain whether there are any additional impediments. Are there any that members feel have not been specifically identified? David, have you identified an additional impediment? Mr McNarry: Barry McElduff. [Laughter.] Mr McElduff: If we are trying to identify additional impediments that have come forward in an evidence-based way, it might be helpful to hear from the Committee Clerk at this point. The Committee Clerk: The report must be completed by next Friday, so there are time constraints. It cannot be overly weighty. The big thing is that the evidence has been taken. That, along with the written submissions, will be included, so that is 90% of the work. The issue now is to make sense of all of it. I hope that I have given a clear picture or the answer to our terms of reference. If we are content to agree that that is the list of impediments, the first of the terms of reference have been met. The report simply needs to list those along with an explanatory note. With regard to fiscal measures, I have heard from witnesses and from members, with some variations, that we need to create a fiscal environment that meets the needs of Northern Ireland. That includes an element of harmonisation, perhaps on fuel duty. The report must consider how to attract FDI in sufficient numbers to grow the economy — this “new economic trajectory” to which George Quigley referred. Where there is a lot of agreement is on the fact that the jury is still out on the best cocktail — there are different views on it. The Economic Research Institute of Northern Ireland (ERINI) is carrying out some key research, which is due to be completed in October and is fundamental to making the case to the Treasury on corporation tax. It would be foolish not to take that into account; the report would not reflect the evidence that we have heard. There have been opposing views from witnesses, who have recommended different approaches. We should be saying that we want the PFG Committee to take cognisance of that, and that any formal recommendations, either from that Committee or from the subgroup as an extension to its work, must be based on research. Mr McLaughlin: The lack of tax-varying powers should be stated as an impediment, as well as addressed in terms of fiscal measures, despite the fact that that issue is addressed in a cross-cutting way in the list of impediments. An “inappropriate and uncompetitive fiscal environment” could apply equally to central Government, but we must be quite specific that we believe that it is possible for agile and responsive Government to drive the agenda for change. If we want a step change, we should be specific about the disadvantages that we face. The Committee Clerk: I should point out that the Assembly has a degree of tax-varying powers. Rates are a local tax, and the Assembly has responsibility for that element. Mr Dawson: We would not support tax-varying powers within the United Kingdom. If taxes were to be varied here, that would have to come under a United Kingdom remit. We would not support the Assembly’s having tax-varying powers. Mr McNarry: Returning to Alan’s point about the ERINI report in October, I propose that, if we are in business, it would be appropriate to hold an evidence session with ERINI on the basis of that report. That body made a very good submission to us last week but, in the light of that report, particularly on corporation tax, an evidence session would be appropriate. The Committee Clerk: That is one of the recommendations that I have listed. The recommendations — by coincidence and luck more than anything else — include everything that members have mentioned. I have tried to present those recommendations in a politically neutral way. There is a recommendation which relates to what many members have said about usefully working beyond 25 August. We have addressed that in the addenda, but there are outstanding issues. It seems, from the evidence and from what members have said, that the two big issues are fiscal measures, and to ensure we have a secure case to put to the Treasury, which will look for quid pro quos. Everyone has mentioned the education and skills agenda. We could usefully spend some months examining those matters. Dr McDonnell: Could I ask for clarification of our agenda beyond 25 August? I would be very eager that that be put on a formal basis. If work beyond that date has not already been formally endorsed, it should be. I believe that there will be fallout and bounce-back, and we may have to continue for two or three further weeks. The Committee Clerk: The formalities are that the subgroup would need to prepare, at least, an outline work programme within the terms of reference that I have suggested. The subgroup would then seek approval from the PFG Committee. Mr McNarry: I propose that we do that. Dr McDonnell: I second that. We must do whatever is necessary to create the space for the subgroup to continue for a further period, as long as necessary. The Committee Clerk: I mentioned those two big issues because they are the two outstanding matters on which work is being done at the moment. Are members content that that would be, so to speak, their outline work? The Chairperson (Mrs Long): That is outlined on page 4 of the table of evidence, at point 13. Mr McNarry: Within that, we have the ability to take oral evidence. Dr McDonnell: I imagine that our efforts may well end up as a subject for debate in the Assembly on 11 or 12 September 2006. If we simply walk away at that stage, everything will fall into a black hole. Mr McNarry: That is a well-made point. Dr McDonnell: That would be a good academic exercise, but I believe that we should continue to try to elevate the debate, and lead, with others. If that entails our meeting until the end of September, so be it. Sean Neeson and David McClarty sat with me on the previous Committee for Enterprise, Trade and Investment, and we did some tremendous work. However, with the Assembly falling in 2002, a lot of the work that we addressed was lost. Indeed, many of those issues and themes are coming back to us now. I would like to ensure that we do whatever we can do to follow through on those matters. We must ensure that the effort that has been made over the last five to seven weeks is not immediately lost. I would be happy to endorse David’s proposal that we create space and take whatever steps are necessary to create that space. The Chairperson (Mrs Long): The terms of reference on that matter are addressed at page 4 of the table of evidence. Point 13 potentially provides the terms of reference for continuation of work beyond the date of the Assembly debate. There is no reason why that work could not continue until 23 November to ensure that we have a formal report, regardless of the outcome on 24 November. 12.00 noon Mr McLaughlin: I have no objections, in principle, to continuing the work, because it is useful to explore each other’s positions and develop as broad a consensus as possible. We need more time. However, we must make it clear in the terms of reference that we are respecting the deadline of 24 November. The task of the subgroup is to facilitate the restoration of the Executive. The Chairperson (Mrs Long): The proposal is that the subgroup recommends to the PFG Committee that new terms of reference be agreed to allow the subgroup to continue its work in the coming months. Are members content? Members indicated assent. The Committee Clerk: Are members content with the two areas that the subgroup will work on? Mr McNarry: We do not need to be content. If we want to put it to a vote, it works by a simple majority, but it is better if there is consensus. Members indicated assent. Mr Dawson: Is there flexibility for other areas to be incorporated into the terms of reference? The Chairperson (Mrs Long): It may be possible to add those following the Assembly debate. However, the important thing is to get agreement that the subgroup continues. We touched on impediments. If members are satisfied that all the impediments have been listed, we must consider whether there is consensus on the recommendations/options which flowed from the discussions. Mr McNarry: I have not had time to read the paper fully, and I am sure that is also the case for other members. I am content with the suggestions on impediments. However, rather than simply signing off the paper, can we have a bit of rope in case we wish to add to it? The Chairperson (Mrs Long): Absolutely. At this stage, we are merely agreeing the issues to be highlighted in the draft report, which will be subject to further discussion next week. No one will be restricted from changing their positions in those discussions. Mr Dawson: While I appreciate the earlier comments with regard to the word “neutral”, the word “harmonisation” in recommendation/option 2 could be substituted with “competitive variation”. The phrases would read, “competitive variation of corporation tax” and “competitive variation of fuel duty”. The term “competitive variation” achieves the same thing without using a word that is loaded. Mr McLaughlin: Competitive variation caused the problem in the first instance, and created the cost differentials. “Harmonisation” is a better word. Mr Dawson: There should be a variation that allows for a competitive environment to be established. With respect, “harmonisation” is not a neutral word. The Committee Clerk: I understand where both sides are coming from. I avoided the word “harmonisation” in other areas — no, I confess, I said it somewhere else. Mr McLaughlin: What about “fuel duty reform”? Mr Dawson: What about “corporation tax reform”? The Chairperson (Mrs Long): Is there consensus on that change of wording? Members indicated assent. Dr McDonnell: It is essential that members unanimously agree on as much as possible, otherwise the Secretary of State and others will treat us with contempt. We must prove that we can do the job in spite of difficulties and sneers from others. We do not want to belittle, or make light of, political differences or views that people hold dear, but we must try to ensure that we come out of this with a report that we can rally around and stand beside. The Chairperson (Mrs Long): With regard to the recommendations and options, there are issues around fiscal measures and the economic package. There has been some difference of opinion on the economic package, its extent and, perhaps, a lack of detail in what it should be targeted towards. It may be better to set it aside, consider the recommendations and options first, and then come back to it, if that is agreeable. Perhaps the best way is to take the table of evidence a page at a time to find out if anyone has issues. Are there any other issues on page 1 of the table of evidence, or are members happy for those to be included in the draft report for further discussion next week? I will assume that silence means consensus. Members indicated assent. Mr McLaughlin: Russian consent. The Chairperson (Mrs Long): Do members wish to comment on pages 2 and 3 of the table of evidence? The Committee Clerk: Members may not have read the paper word for word, and we would not want to cheat you — staff never do that, anyway. Mr McNarry: That would be par for the course. The Committee Clerk: The paper discusses some big issues, particularly in relation to the economic package, but no one has spoken about an exact figure. The issues have been discussed in the Preparation for Government Committee but not in the subgroup. The paper contains recommendations about using money from the reorganisation of the public sector from a streamlined Government and seeking an agreement from Government to use that money to foster and develop economic growth. Peace dividends are a separate issue. Mr McNarry: My point may be controversial, but we will have a crack at it anyway. On reflection, the Executive failed to address this question and found themselves looking for schemes and, in some cases, inventing them. It is vital, certainly for Ulster Unionists, to have a good look at the books before entering into Government. Secrecy surrounds the costs to Northern Ireland and how Departments distribute money. There are bad management practices, which may be rectified by expediencies such as reducing the number of Departments, and so forth. However, the actual sum must be negotiated, and I hope that the subgroup will make that recommendation. The sum must be additional, and it must address specific needs; it cannot be pinched from somewhere else, be recycled or be some hidden type of punishment. Members have spoken about community groups and how they are falling asunder due to lack of sustainability. Millions of pounds have gone in that direction, and it has not been productive. This is a major subject, and I appreciate the Committee Clerk for pointing it out; it should be a priority. The subgroup will report to the Preparation for Government Committee in order to advance towards an Assembly debate. It would be rather foolish of the members of the Preparation for Government Committee to prepare to go into Government if they did not have this package signed, sealed and delivered, if they did not know what they were inheriting financially and if they did not know what money they could have that was not on a merry-go-round system. They would have to be able to create budgets that made sense. They should not have to go into an Executive that are charged with bidding for budgets without having a clue about what they were doing. The Executive could make decisions and subsequently discover that money was being pinched from their allocation to give to another budget. We need to consider high-spending budgets in particular. There is no political rhyme or reason why schools are closing in the manner in which they are or why people are still waiting for hospital beds. No reasons are given for those situations. In the past, money was thrown at a problem; I hope that lessons have been learnt from that. If this subgroup does anything, it should ensure that those who are preparing to go into Government approach it in the right sense and do not chase the buck once they have entered office. Rather, they should have a precise idea of the situation in order to prioritise spending for Northern Ireland not only in the short term, but the long term as well. The Chairperson (Mrs Long): Part of the remit of the PFG Committee is to consider a draft Programme for Government at one of those stages. Members of the Committee have identified that one factor that will have to be considered is the current financial status. The subgroup may wish to reiterate that point, as the PFG Committee will consider our report. Mr McNarry: That is my point. The Chairperson (Mrs Long): It would help to restate that point. Mr Cree: The economic package must be a stand-alone sum of money and should not come from any nefarious sources. Recommendation/option 5, for example, suggests using savings from the Review of Public Administration (RPA) to fund economic initiatives. I remain to be convinced that there will be any savings from the RPA, so I would not want to depend on being able to recycle that money. We must be careful that that does not happen. The Chairperson (Mrs Long): The economic package is a separate issue. The table suggests that any savings from the RPA should be reinvested in the Northern Ireland economy rather than being allowed to drift. Mr Cree: Should we change the wording to read: “Any savings made from the RPA should be reinvested in initiatives”? Mr Dawson: There are two key issues. First, current budgets must be ring-fenced and must grow appropriately, as per inflation and whatever the Barnett formula provides. Secondly, there must be a discrete package to ensure that the managed transition of Northern Ireland from its position today to the high-performing economy of the future is sufficient. Those two key elements — the existing budgets and an additional element — will ensure that resources are available for the Executive to deliver what must be delivered. The Chairperson (Mrs Long): We are drifting to a discussion of the economic package. We should try to consider other options that are not tied to that. We can re-examine the economic package in more depth, as it will require more exploration. With regard to the recommendations/options on page two, Leslie Cree has proposed that recommendation/option 5 should read: “That any savings made from the RPA and any reduction in government departments should be used for an agreed period to fund initiatives”. Are members agreed? Members indicated assent. Dr McDonnell: I have serious misgivings about there being any savings from RPA. We have been promised savings, but I am concerned that all we will do is to pile an inefficiency in one area on top of another, resulting in double the difficulty. The Chairperson (Mrs Long): George raised an issue about recommendation/option 6, which states: “The PfG recommend the centralisation of government responsibility for economic matters within a single department or agency.” He indicated that it should become a core function of all Departments to promote economic growth. Is that something that could be added to the wording? Would there be agreement to that around the table? It would take on board some of the issues raised this morning. Dr McDonnell: There was a group, the name of which escapes me, set up in OFMDFM. Was it the Economic Policy Unit? The Committee Clerk: I think that one of the witnesses suggested that that has become moribund. 12.15 pm Mr McNarry: The SDLP Minister of Finance and Personnel did not like it, so — [Interruption.] The Committee Clerk: I could be wrong. Dr McDonnell: Of course, there will always be niggles here and there. There needs to be a co-ordinating body, but it is not necessary for that body to be in competition with the Finance Minister or DETI. It should focus on creating a real-world awareness across health, planning and other Departments. I am not disagreeing with the suggestion, but I am worried about yet another agency being piled on top of existing agencies. We should be trying to streamline and to clarify the lines of communication. Mr McLaughlin: We should remind ourselves that we are talking about a step change, and the concept of a lead agency is one such measure in that process. Departments will continue to manage budgets and to make projections regarding their own programmes. It is quite evident that there is a multiplicity of responsibilities; that there is duplication and replication; and that the system is stagnant. This may not be the complete answer, but it is, at least, an attempt to map out a different way of doing business and to have a one-stop shop for key economic and strategic decisions. We talked about tourism earlier, and some useful points were made. Seven Departments have an input into the strategic decision-making. That is a nonsense. So, the idea of a lead Department, properly staffed and resourced and with the authority to bring the other Departments along with it, is a step change that we should recommend seriously. Mr McNarry: I would subscribe to that idea, but it is a question of whether that lead Department would be embodied in OFMDFM — or, indeed, in OFM, which we might get. If we take cognisance of the evidence that we have gathered, it is clear that there is a need to ensure that there really is joined-up government. It must be co-ordinated, particularly with regard to the economy. At present, it is not; it is all over the place. On examining the evidence from the Strategic Investment Board (SIB), I was astounded at the influence that it has. I was taken aback at how much say it has in education spending, and I am not clear to whom it is accountable. If we decide that such a lead body is necessary, it must be made clear that it has to be an accountable body and the Assembly needs to know to whom it is accountable. It must also be a regulated body as regards certain amounts of money. The Chairperson (Mrs Long): There are three themes coming out of this. First, there seems to be consensus on recommendation/option 6 — perhaps this is the easiest way to move this forward — that there is a necessity for centralisation within a single agency or Department. There are two other issues. One is embedding within all Departments the obligation to create the right context for economic development. The other issue is the one that David McNarry raised about the accountability of that single agency or Department. Is there consensus on adding those two additional comments to recommendation/option 6? Dr McDonnell: I want to add emphasis to what David McNarry has said. The Strategic Investment Board (SIB) has done some good work, but I am astounded at the expansion of its role — it is almost freelancing. The SIB has grown far beyond what was intended, and it has been almost let loose as a “Rottweiler” organisation for direct rule Ministers. It has usurped on much wider powers than were intended for it. I want to see accountability, not in order to obstruct, but in order to ensure that there is management and leadership and that the right guidance is given. I made the point earlier that the worst thing that we could do would be to create another body — another bull in a china shop — that would only serve to go over old conflict and to put up more barriers. Mr Dawson: I take the point that there is an accountability issue with the SIB, but I want to emphasise that its attitude to investment and growth is one that we should seek to foster across all Departments. Mr McNarry: That is agreed. Mr Dawson: The way in which the SIB approaches projects and drives them forward should be replicated elsewhere. Although I accept the accountability issue, we should not cut down the SIB too much. Dr McDonnell: The culture is right, but the process has perhaps not been properly managed. The Chairperson (Mrs Long): We have a draft amendment to recommendation/option 6 that would take account of that. The Committee Clerk: This may be what we will need to do with the recommendations/options until we arrive at a single focus. Are members content with recommendation/option 6 as it stands, plus: “and that all Departments work to agree a common strategy and vision in support of promoting economic growth and social partnership that is accountable to an Executive.”? Members indicated assent. The Chairperson (Mrs Long): We shall move on to recommendations/options 7, 8, 9 and 10. Do members wish to make any comments? Mr McLaughlin: This may be a parochial concern, but when we talk about “economic corridors” in recommendation/option 9, people tend to think of Belfast and Dublin. Could we agree to insert the word “designated” before “economic corridors”, because that would allow us to talk about border corridors and to have an open-ended approach to identifying areas for development? The Dublin Government have developed the concept of a western Atlantic region, and that would be of particular benefit to south Tyrone and Fermanagh. The Chairperson (Mrs Long): Are members content? Mr McNarry: I just want us to be positive. Recommendation/option 9 is that research be commissioned to identify economic opportunities. We could fill a Twelfth of July bonfire with research documents, so, rather than go down the road of commissioning further research, I want to see some real, in-depth analysis of the completed research in order to determine what more needs to be done. Dr McDonnell: Three or four projects were pulled out of. Mr McNarry: I neither dispute what Mitchel has said nor am I disagreeing with him. Mr McLaughlin: David has made a valid point. Mr McNarry: We will be behaving like civil servants if we continue to ask for more research. Mr McLaughlin: It will sit on a shelf somewhere. Dr McDonnell: Mitchel is not disagreeing with that. He is saying that there should be four or five projects rather than simply the one that is likely to materialise. The Chairperson (Mrs Long): There are two suggested amendments to recommendation/option 9. The first is that instead of saying “research is commissioned”, the suggestion is that it should read: “detailed analysis of research is undertaken to identify economic opportunities”. Secondly, it is suggested that the word “designated” be inserted before “economic corridors”, so that more than one economic corridor can be considered. Mr Dawson: May I go further than that and say that we should be establishing pilot clusters and economic corridors that can be analysed? The Chairperson (Mrs Long): Is there consensus? The amendments are that we ask for in-depth analysis of research; establish clusters; and economic corridors to be — [Interruption.] Mr Dawson: Agreed clusters and economic corridors to be analysed — [Interruption.] The Chairperson (Mrs Long): To be analysed — and we are talking about designated economic corridors, as opposed to a single economic corridor. Is there general consensus — [Interruption.] Mr Dallat: I am sorry. Could I say something about recommendation/option 8 of the table of evidence? The Chairperson (Mrs Long): We will come back to that. Let us try to deal with recommendation/option 9, and tie that down. Mr McLaughlin: Sorry, John. The Chairperson (Mrs Long): We will return to recommendation/option 8. Are members reasonably content with the thrust of what we include in the draft paper? Obviously, we will have an opportunity to fine-tune that later. The Committee Clerk: I am sorry. Could I hear recommendation/option 9 again? Mr Dawson: That the focus should be on action, as opposed to research. The Chairperson (Mrs Long): We are recommending that detailed analysis be undertaken on research to identify economic opportunities. We are suggesting the establishment of agreed effective clusters and collaboration. The Committee Clerk: Do members wish to include reference to pilot clusters? The Chairperson (Mrs Long): Yes. Mr McNarry: With a view to at least 75% of them being in the Strangford constituency, around Newtownards. [Laughter.] The Chairperson (Mrs Long): I suspect that at least one other member will support that. Kieran will agree, but I am not sure that you will get consensus from everyone else. Mr Dawson: Mr Neeson has left, but I am sure that he would support East Antrim. Mr McNarry: Put it to the vote. [Laughter.] The Chairperson (Mrs Long): Are members content with the amendments to recommendation/option 9? Members indicated assent. The Chairperson (Mrs Long): John, you may raise your suggestion on recommendation/option 8. Mr Dallat: I am very nervous about suggesting something that might well end up on a Twelfth of July bonfire. They are big enough already. Recommendation/option 8 is very well worded, but would it be sensible to suggest the promotion of an enterprise culture throughout the education system, in both primary and secondary schools? We are lacking in that area, but some schools do that work extremely well through young enterprise programmes. Mr McNarry: I support John, but could I reintroduce what we said in our presentation about creating a designated post in the Department of Education, with a named individual to take responsibility for science education? Could that be added? The Chairperson (Mrs Long): There seems to be general — [Interruption.] Mr McNarry: I would nearly go as far as to say that the named individual should take over all responsibility for the entire area covered by recommendation/option 8, but I will stick to my brief. The Chairperson (Mrs Long): Two slight amendments have been proposed to recommendation/option 8. First, that a designated individual should be appointed to deal with improvement in science education. There seems to be general consensus on that matter. Secondly, we have John’s proposal that we stress the need to have a greater enterprise focus throughout the education system. There was also broad consensus on that. The Committee Clerk: I have written: “hampering future economic growth and encouraging an enterprise culture in schools”. Is that sufficient? Mr Dallat: Yes. The Chairperson (Mrs Long): You wanted to state specifically that that was to be from primary level right through the education system? Mr Dallat: Yes, I think that that is important. The Chairperson (Mrs Long): That addresses some of the issues that we discussed earlier. David Simpson raised the matter of addressing the cultural barriers. Mr McLaughlin: If we are serious about a step change, it must be policy-driven. It is not an add-on; it is a very specific statement on how we can develop a different culture. Dr McDonnell: R&D is mentioned twice in recommendation/option 8 of the table of evidence. We will be making a mistake if we regard R&D as something that sits on the margins. We are all in favour of R&D because we are all in favour of motherhood and apple pie. The reality is that we must mine down into the matter of R&D. It is not enough to simply mention R&D; we must mention applied R&D at least. There is much R&D going on in universities. The Committee Clerk: That is why I have included “enhanced knowledge transfer” in the table. Is that not sufficient? Dr McDonnell: I am not attacking or criticising. We must take a harder line because we are looking at a corner of the R&D possibilities. It can be called applied R&D, because it applies to the real world. Dozens and dozens of academics and professors in universities are conducting all types of research, but it is all irrelevant to our needs. We want relevant R&D; call it what you like — relevant, applied, commercial or economically exploitable — but that is what we want. 12.30 pm The Chairperson (Mrs Long): To be fair, that is where the term “research and development” comes from; the development suggests that it is applied. The wording could be enhanced in the draft report. It is also worth noting that research that is not immediately commercially exploitable is necessary in order to create a foundation that will enable commercially exploitable research to be undertaken. It is a matter of ensuring that turnover is continual. Dr McDonnell: I do not know whether it is appropriate, but I mentioned that a further report is needed, either from this subgroup or a similar group, to mine into the R&D issue. The entire area is murky and confused, and we will not exploit that. George Dawson made a useful point about the foundations laid by the Bayh-Dole Act in the United States. Suddenly, entire cities started to grow and have a future. We need to find some way to make that happen here. The Chairperson (Mrs Long): Dr McDonnell obviously wants the wording of recommendation 8 in the table of evidence to be strengthened. Is there consensus on that? Members indicated assent. The Chairperson (Mrs Long): It might be useful for that section of the report to include additional information on international experience, which can be considered when the draft report is being amended. Would that be helpful? Dr McDonnell: It would be useful to include the relevant paragraphs from the Bayh-Dole Act in the United States. Mr Dawson: It is available on the Internet; it is named after the two senators who tabled the Act. The Chairperson (Mrs Long): Would a summary of the Act and its impact suffice? Dr McDonnell: A few paragraphs are all that is required. Mr McElduff: I want to be assured that “curriculum’s” as it appears at recommendation 8 at point 1 in the table of evidence is the correct plural form. Are there any Latin scholars around? [Laughter.] The Committee Clerk: That is one for the spellchecker. The Chairperson (Mrs Long): Recommendation 8 reads “college curriculum’s” instead of “curricula”. Dr McDonnell: It should be “curricula”. Mr McElduff: It is crucial to introduce that point at this juncture. The Chairperson (Mrs Long): On that scholarly note, are there any other issues to be raised? Mr Dawson: As we are going in reverse order, I turn to point 7. Should we really give up money set aside for an energy subsidy by transferring it elsewhere? The Committee Clerk: I understand that it is not a question of giving up the money. Last week, I talked to a senior official from the Department of Enterprise, Trade and Investment (DETI) about what might be available so that I could bring that to the subgroup’s attention. The energy subsidy was agreed several years ago — with the Federation of Small Businesses in particular — as part of a package to offset the costs that would be incurred as a result of re-rating. Regrettably, the European Competition Authorities would not allow the money to be used for that purpose. DETI has fought against that decision for the last two years, but to no avail. The money has remained in the budget, but is being whittled away on little things. Although I am not sure that the money will be lost, redirecting it would provide an opportunity to spend it, rather than simply leaving it because of the European Competition Authorities’ decision. This proposal would allow it to be spent on a related matter. Mr Cree: I realise that I am coming late to the party, but I want to comment on option 7. Under that option, if we spend the £20 million, it is gone. It might be more sensible to use any such money to help those same companies create alternative energy schemes that use wind turbines, for example, where the benefits would be ongoing. Mr Dawson: My understanding was that the subsidy was originally £30 million. The Committee Clerk: Yes, it was. Mr Dawson: I do not know where the other £10 million has gone. Mr McNarry: It has been laundered by Peter Hain. Mr Dawson: The subgroup will refer its report to the PFG Committee, and the report will subsequently be debated in the Assembly Chamber. There would be furore on the Floor of the Assembly if the subgroup accepted a reduction in the amount of money, and agreed that it should be used for a different purpose, without further discussion with Ministers. That money should not be shifted elsewhere. The Chairperson (Mrs Long): Would it be more acceptable for the draft report to note the difficulties surrounding this amount of money and state that further discussion with Ministers is necessary? The draft report could highlight that the subgroup does not accept the European Competition Authorities’ decision, but that other options may need to be explored. Dr McDonnell: Yes. The draft report should highlight that the money is there and that it must be put to some good use. There are several potential uses for that money. I cannot not disagree with the suggestion to use the money to fund alternative energy sources, for example, as that sector is being neglected. The Chairperson (Mrs Long): Recommendation 7 could outline two options, namely alternative energy and the cushioning of industrial derating, and say that further discussion is required. Are members content for it to be re-worded in that way? Members indicated assent. The Chairperson (Mrs Long): Are there any other issues on page 3? I am conscious that recommendation 10 continues onto the next page. Mr McNarry: Is recommendation 11 the relevant place to introduce a positive suggestion to create a knowledge bank? It is important to do that because a coalition of participants from businesses, universities etc are coming together to make a difference. We do not mind what it is called, but we want such a group to be created. “Knowledge bank” sounds good. The Committee Clerk: That is probably not the right place in the draft report, but it could be included as a separate recommendation. Mr McNarry: Fair enough. The Chairperson (Mrs Long): Let us leave that suggestion until the end and add it at an appropriate place. Is that acceptable? Mr McNarry: Yes. We are near the end. The Chairperson (Mrs Long): I must leave the Chair by 2.00 pm. That leaves us with an hour and a half. Mr Simpson: I must leave by 1.00 pm. Mr McNarry: I must leave for another meeting, but, with your indulgence, Chairperson, I shall return. The Chairperson (Mrs Long): Bearing in mind that we will return to the suggestion of creating a knowledge bank, are there any other matters on page 4 of the Table of Evidence that members wish to address? Mr Cree: Yes. Recommendation 10 is not strong enough, as there is a cultural problem. I was reminded very forcibly of that last month when I visited Prince William County in Virginia. It is not named after King Billy, but the Duke of Cumberland, second son of George II, who came first at Culloden. Mr Dawson: Shame, that. Mr Cree: The Government of Prince William County has addressed many issues, including a plan for the development of the entire county. The Government’s planning department has a brief that no major plan should take longer than two weeks and building control only one week to be approved. With the greatest respect, to change our plan to a similar one would cause a major problem, but we must try to do that and be much more efficient. To pour in resources without that necessary cultural change — a can-do scenario — would be to miss a trick. Mr Dawson: Pouring in resources would be absolutely the wrong approach. The more resources and people in place, the more delays will arise. The structure of the Planning Service must be changed and a fast-track system developed. Mr McLaughlin: We must hammer in the message that change must happen in steps. Mr Dallat: The planning process must be analysed with a view to streamlining business applications. At present, the Planning Service maintains that, under equality laws and so on, it must deal with all planning applications on a strict rotation. Hence, a proposal for a 100-bed hotel in an area where applications are time limited would be pitched in a queue along with pigeon lofts. I have nothing against pigeons; such an application must be considered on a different track. That could happen almost overnight. Mr McElduff: A reference should be made that urges the Planning Service to take an enabling attitude to economic development. Leslie and George referred to a culture within the Planning Service— Mr McLaughlin: It should tell us what we can do rather than what we cannot do. Mr McElduff: Exactly. A brilliant effort was made to establish an enterprise park in Fintona, which is a targeting social need (TSN) area. Incredibly, the Planning Service blocked it, despite having sufficient flexibility and the discretion to allow it. The Planning Service must have a more enabling culture. The Chairperson (Mrs Long): Streamlining will probably depend on there being robust area plans that are timely, as opposed to what currently exists. Whether an application is fast-tracked will depend on whether it lies within a particular zone. Mr Dawson: We must also address the issue of time limits on reports from statutory consultees. The Environment and Heritage Service is particularly slow in producing reports to the Planning Service. Statutory consultations should be time limited so that the process is not disrupted. The Chairperson (Mrs Long): There seems to be consensus that the attitude in the Planning Service must change, that an enabling culture must be developed and that business applications should be streamlined on the basis of robust area plans. Deadlines and time limits must be imposed on statutory consultees so that responses are swift. Is there consensus on those issues? Members indicated assent. The Chairperson (Mrs Long): Are there any other issues that must be addressed? We have dealt with recommendation 13, which outlines the potential terms of reference for an extension of this subgroup’s remit. An additional point was raised about the creation of a knowledge bank. Is there any opposition to that, or is there consensus on including that in the draft report for further discussion? Dr McDonnell: Chair, can you remind me what the “knowledge bank” is? The Chairperson (Mrs Long): I will ask Leslie, because it was a proposal made by David McNarry before he left the meeting. Leslie, will you elaborate on that idea? Mr Cree: If I had a crystal ball, I probably could. I believe that David referred to a central register for all knowledge or information on a wide range of subjects, so that everyone can access it. It is David’s idea. The Chairperson (Mrs Long): I understood that the reference was in regard to research. Dr McDonnell: Leave it in. The Chairperson (Mrs Long): If members are content to include a reference, we can expand on it in the draft report. Mr McLaughlin: We will have to return to the amended document anyway. We will then have the benefit of the written material. The Chairperson (Mrs Long): Indeed. We will be able to drill down and find out exactly what that entails in order to make a firm decision. Is everyone content? Mr McLaughlin: With regard to presentation, does recommendation 11 on co-ordinating the delivery of economic strategies align itself more naturally with recommendation 6, which concerns a single department or agency for economic matters? Should it be relocated? It is a presentational detail; I have no issue with the content. The Committee Clerk: Those recommendations deal with slightly different matters. The Chairperson (Mrs Long): There are 13 recommendations. Issues remain around some of the impediments listed — infrastructure deficits, and so on. It might be better to deal first with any recommendations that members may have before moving on to the financial package. For example, Barry McElduff suggested earlier that under impediment 9, “Political instability and uncertainty”, some politically neutral comment should be added to show the importance of the restoration of devolution. Are there any other proposals, or are members content that all bases have been covered? 12.45 pm Mr Dawson: We cannot deal with this matter today, but it would be totally wrong to identify an impediment without also identifying a possible solution. That will probably take a bit longer, but we really need to have a solution for every impediment. Some of the solutions that have already been identified will also apply to other impediments. The Chairperson (Mrs Long): I notice that some of the recommendations and options have not been aligned with the impediment that they are to address. For example, it seems as if no solution has been proposed for impediment 10, which deals with poor planning processes, although we have just discussed potential solutions. Thus, some solutions have been identified, but they are not necessarily aligned with a problem. Nonetheless, gaps will remain. Can we agree that if members wish to propose additional suggestions, they do so by next Tuesday, by which time the draft report will, I hope, be available? Members would have an opportunity to discuss any formal proposals then. Mr Dawson: Would it be appropriate to e-mail the proposals for inclusion? The Committee Clerk: You can e-mail them to me. We had only a day between the commissioning of this table and its preparation, so it is not meant to be comprehensive. The report will also include other issues that have been raised, so please e-mail any proposals that you may have. The Chairperson (Mrs Long): That would be helpful. The first draft of the report will be circulated to other members, so highlighting the issues at this stage will make it much easier for them to be aware of different parties’ proposals. The economic package is the only issue that has not really been addressed, other than in a brief discussion earlier. It seems that consensus on that is vital if an economic package is to find favour with the Treasury. Is there scope for discussing issues around the economic package, suggested uses for the package and even, perhaps, how much it might be? At this stage, however, I suspect that the more critical issue will be what it is to be used for. Mr Dawson: I am sure that all parties could contribute to that. However, it is also true that parties would need to consult more widely with their party groups on the issue. The Committee Clerk: In trying to pull together the report, I noticed that there is a lack of coherence on this matter, because of the lack of time or energy devoted to what the package might be, how it would be funded and whether it could be done with the Treasury. The evidence that we have heard thus far from the witnesses has really been about oiling the wheels — investing in education and skills, redirecting resources, using savings, and so on. No one — including the political parties — has said that the amount needed is £5 billion, £6 billion, £10 billion or £20 billion. No one has said that just for the sake of saying it. I cannot put anything in the report other than what has emerged from the evidence. I doubt that there will be any major agreement on that in the time remaining. Mr McNarry: I wish to return to the issue of political stability. The draft report will not be complete unless there is some agreement, if not consensus, on political stability and the issues, raised in my party’s presentation, about the Police Service of Northern Ireland and the ancillary services. This matter must be finalised; if not today, then at a later date. We must finalise our opinion, if not our recommendation, particularly if we will be indexing specifics in an economic package. Certainly, in business, it would be difficult to present credentials for an economic package to a banker if you were not able to give assurances on stability. I suggest that we earmark that for reconsideration. The Chairperson (Mrs Long): The issue was addressed a few minutes ago in your absence. The Ulster Unionist Party Assembly Group’s views will be reflected in the draft report, as will the views of all parties. However, consensus is required on formal recommendations. It has also been agreed that, with regard to impediments for which no direct recommendation has been suggested, such as political instability, members can make a proposal at Tuesday’s meeting when those matters will be discussed. Indeed, members can do so in advance of the meeting via an e-mail to the Committee Clerk. Mr McNarry: I suspect that the subgroup, even in my absence, has reached consensus on all the recommendations. I am mindful of the use of the word “consensus” with regard to political stability, and of Alasdair McDonnell’s words on the importance of unanimity in our report. Therefore, I encourage anyone who has an impediment against support of the Police Service of Northern Ireland to demonstrate a change of heart so that we might have unanimity on that matter. The Chairperson (Mrs Long): I am sure that all parties will take note of that. By now, most of the report has been dealt with. Are members content to move on to the next item on the agenda, which is any other business, or are there any other any final remarks on the draft report or the table of evidence? The Committee Clerk: I am eternally grateful to members. The subgroup’s agreements and amendments will be included in the report. Dr McDonnell: I want to make an off-the-cuff suggestion. The subgroup should take a little extra time, if required. It should not waste time. However, there should be a little slippage. I do not suggest that we drift. I believe that we take the necessary time to get the report as right as possible. Mr McNarry: Has it been suggested that next week’s meeting should, at least, be allocated time until 4.00 pm? The Chairperson (Mrs Long): Members must decide how long meetings should last. Dr McDonnell: I am not available during the week after next. If possible, I would be eager to take an extra day or two to tweak and work on the draft report before it is presented. Members are aware that the recall of the Assembly has been postponed by a week. I do not know how much time the Preparation for Government Committee needs to digest the draft report. However, rather than rush it, we must strive to get it right within the time constraints. The Chairperson (Mrs Long): The report must be with the Preparation for Government Committee by 25 August 2006. No slippage is possible on that date because it is tied to the date of the plenary. A previous extension that was sought was granted. However, that does not preclude the subgroup from having additional meetings if they are required. Mr McLaughlin: Could the subgroup hold longer meetings? The Chairperson (Mrs Long): Yes. The draft report is not likely to be available until Monday evening at the earliest. A long session on Tuesday might not be particularly productive, as much of the feedback that we need is likely to come from discussions that members of the subgroup will have with their parties. It may well be that a longer session — for example, on Thursday — would be more productive, as members will have had the opportunity to discuss the issues with their parties. Members might want to give that some thought. Mr McNarry: I agree with what Alasdair said. Some members are still on holiday, and others are due to go off on breaks. Therefore, given diary commitments, if an extension is granted, can we be sure that these proposed meetings would have a quorum? In addition, it would make sense if we could agree, perhaps, that we will be available on certain days for a certain amount of time. If we do that — Hallelujah! — we might be able to finish the report more quickly. The Chairperson (Mrs Long): Perhaps parties could tell the Committee Clerk, by close of play tomorrow, whether they will be able to provide representatives on Tuesday and Thursday and for how long. Mr McNarry: George Dawson made a very valid point about the need to consult with party colleagues. It is something that the UUP members of the subgroup need to do, particularly if the report is to be finalised. Dr McDonnell: I agree with that. At this stage, there is no point in my going to speak to party colleagues. Some of them are interested, and some of them saw the deliberations on the Internet, but, by and large, I need to have a draft report to show them. I need a wee bit of time to do that. I am not trying to create obstacles or hurdles. The subgroup is moving steadily in the one direction, and parties are beginning to slot into step with each other. There is not so much as the thickness of a sheet of paper between most of the parties on economic matters. The Committee Clerk: There are to be two additional meetings, which could not have gone ahead only for the extension. Mr McNarry is right to say that it would be useful to build in time and to assume that members will continue to work after lunch on both of those occasions. That can be taken as read. Mr McNarry: Those meetings will be next Tuesday and Thursday. The Committee Clerk: I am quite happy to meet with members after the Tuesday meeting to take note of any suggestions, so that when the subgroup meets on Thursday, I will be able to reflect on those. Obviously, I will not change the report, because that must be done by consensus, but, at least, I will have a note of those. Mr McElduff: Would it possible to have an afternoon meeting on Thursday? Given that the draft report may become available on Tuesday, an afternoon meeting would give members an opportunity to consult their party colleagues if required. The Committee Clerk: It might be difficult to get the draft report cleared for the PFG Committee the next day. Mr McElduff: That is all right. The Chairperson (Mrs Long): Obviously, the timing is quite tight. I understand that, as the report will be available only at close of play on Monday, there will not be much opportunity to consult with party colleagues by Tuesday morning. I am conscious that that is a pressure. It would be useful to see the amendments that have been tabled today in the draft report. There may be other issues that we will identify on Tuesday that can be included, which would allow members to have discussions with their colleagues, so that the draft report can be finalised on Thursday. If members were happy that Tuesday and Thursday are to be longer sessions, it would be helpful if they could tell the Committee Clerk whether their party will field representatives for the entire meetings. It is important that we know that in advance. There is one item of “Other Business”, and that is to draw members’ attention to the 11th Annual Northern Ireland Economic Conference 2006, which will be held on 4 October at the Hilton Hotel in Templepatrick. It may be of interest given that its title is “Making the Step Change”, which is particularly relevant to our discussions. Do members have any further items of business that they wish to raise? The Committee Clerk: May I just reassure members about timing? The subgroup will submit a draft report to the PFG Committee. The parties will highlight certain issues, so the PFG Committee will take time — perhaps a week — to make some changes. Mr McElduff: That is a good point. The Chairperson (Mrs Long): The next meeting will be held at 10.00 am on Tuesday 22 August. At that meeting, we will consider the initial draft report. The only question that remains is whether members wish to hold next week’s meetings in closed session, which would be the norm when considering draft reports. If members opt for closed sessions, a Hansard report would not be published. Do members have any views on whether to hold closed or open sessions? Mr McNarry: Would the draft report be discussed in open session at the PFG Committee, with Hansard present? The Committee Clerk: Normal Committee practice here and anywhere else is for a draft report to be debated in closed session. A Committee would not want its findings known before publication, especially if differences of opinion exist. I assume that the PFG Committee will adopt what is a sensible convention. However, that is entirely a matter for the subgroup. 1.00 pm Dr McDonnell: I propose that we discuss the report in closed session, not for reasons of secrecy but to give the subgroup a bit of time and space, not to mention privacy, in which to thrash it out and brainstorm. It is also good practice. Mr McNarry: Are you coming on Tuesday? The Chairperson (Mrs Long): Is Dr McDonnell’s proposal agreed? Members indicated assent. Mr McLaughlin: If there has been agreement between Barry and David, the world might end. [Laughter.] The Chairperson (Mrs Long): If issues arise from today’s discussion, or from any discussions that members have with their colleagues, the sooner that those are referred to the Committee Clerk the better. That enables them to be put on the agenda at the earliest possible juncture. Adjourned at 1.01 pm. |