Industrial Development (Northern Ireland)

Orders of the Day — Elected Authorities (Northern Ireland) Bill – in the House of Commons at 12:16 am on 26th January 1989.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Maclean.]

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes 12:34 am, 26th January 1989

We have had a long debate on matters relating to Northern Ireland and it is appropriate that my Adjournment debate, which I am delighted to have the opportunity of initiating, should also be about Northern Ireland. I wish to talk about a better position—the economy and the work of the Northern Ireland Industrial Development Board and the Local Enterprise Development Unit. Those two organisations have done a great deal to benefit the economy.

The public image, to some extent reinforced in the earlier debate, is that there is much strife and division in Northern Ireland, overshadowed by the phenomenon of terrorism. But there is another Northern Ireland which I have had the opportunity of getting to know over the years in my capacity first as secretary of the Conservative parliamentary Northern Ireland committee and subsequently as vice-chairman of that committee. That Northern Ireland is shown in the work of the employers' organisations and of industry which do such a great job of keeping the economy going in the face of the difficulties of strife, division and terrorism. There is a good news story to tell. Hon. Members who represent Northern Ireland constituencies will appreciate that there is another side to Northern Ireland to which I should like to draw attention.

The report and accounts of the Industrial Development Board for the year 1987–88 show the tremendous effort put in by that organisation and by the Northern Ireland Office to regenerate the economy. In his statement in the report the chairman says that in the last year three major milestones were passed in the work of the board since it was established in 1982. In the year to 31 March last the number of new jobs promoted rose to more than 20,000, the total leveraged investment of the board in industry surpassed £1 billion, and the number of factories sold to the private sector exceeded 200.

These achievements have provided genuine satisfaction to the Industrial Development Board, but the real congratulations deservedly go to Northern Ireland industry as a whole. The graph of jobs promotion has continued upward for the third year running, with about 5,300 jobs having been promoted. It was the best ever job promotion total, with £302 million worth of investment secured in 115 projects. In creating dynamism in the economy for this expansion in investment confidence has been vital.

That confidence has showed itself in two recent announcements by my right hon. Friend the Secretary of State for Northern Ireland. The first was the announcement by my right hon. Friend and Daewoo, an electronics company which is part of a £15 billion group. It is to set up a video cassette recorder factory which will create more than 500 jobs in two years. That announcement was made about two and a half months ago. It is expected that a 100,000 sq ft purpose-built factory will be erected on a 12-acre site at the Rathenraw industrial estate at Antrim as part of an £18 million investment by Daewoo over the next three years.

It is, I understand, the first Korean investment in Northern Ireland and the third plant that Daewoo Electronics has located outside Korea. Northern Ireland industry, the people of Northern Ireland, the Northern Ireland Office and the Industrial Development Board in particular should be congratulated on the work that they have done to secure this excellent project which will bring considerable employment opportunities to the Province. Production will start in the middle of this year when the new factory has been completed. It will have the capacity to produce 500,000 video recorders a year, which will be sold mostly in the European market.

We have also had the good news about the French company, Montupet. The Secretary of State announced just before Christmas that about 1,000 manufacturing jobs will be created by that company within five years at Dunmurry, near Belfast. My right hon. Friend was delighted to welcome the investment by Montupet, which is a world leader in the production of aluminium components for the car industry. This £90 million investment is the biggest project ever to be secured by the Industrial Development Board and the largest initial investment made by any overseas company in Northern Ireland. This was more good news for jobs in Northern Ireland at the end of 1988, which saw a substantial fall in unemployment. It has been a good year generally for investment by many of Northern Ireland's companies, reinforced by Daewoo and now by Montupet.

I shall be very happy for the hon. Member for Londonderry, East (Mr. Ross) to catch your eye in this brief debate, Mr. Deputy Speaker, but first—this will be relevant for the hon. Gentleman—I want to turn the House's attention briefly to the work of the Local Enterprise Development Unit during the past year.

I have had an opportunity, in my capacity as vice chairman of the Conservative parliamentary Northern Ireland committee, to meet the officers and those in charge of LEDU, over several years, as I have the industrial development board. LEDU had a new chairman last year in Mr. Hadden, who presented his first report recently. There is good news with regard to LEDU, which is responsible principally for the smaller businesses. IDB is responsible for securing the large projects and investments from companies such as those 1 have outlined.

LEDU does very important work in assisting very small businesses, with perhaps six or 12 employees, to get off the ground. It gets to the small business man. Alongside the great skill and enterprise in Northern Ireland and the initiative that is characteristic of the Province, LEDU's work is very important.

The principal means of assessing the agency's performance is to consider the number of jobs promoted and renewed. The total for 1987–88, the last year for which figures are available, was 4,570, which was an increase from 4,543 in the previous year and well ahead of the expectations of LEDU and the Northern Ireland Office.

It is gratifying to note that each of the past seven years has been a record promotion year against the previous year, and as a result LEDU has more than doubled the annual rate of job promotions and renewals in the period 1981–82 to 1987–88, from 2,060 to 4,570. But there are other aspects of the agency's activities which cannot be measured just in terms of present-day job promotions, but which are helping to boost the job potential for future years by improving the environment in which small businesses can flourish and in encouraging companies to improve their overall efficiency, productivity and profitability.

I know that this is outside the terms of the debate, but I had the opportunity of meeting the chairman of Short Brothers earlier today. Here again is another good news story—they are everywhere we look in Northern Ireland. Those of us who represent constituencies on the mainland sometimes have the ability only to look for the bad news and to look at the security problems, but there is another Northern Ireland where there is initiative, enterprise, expansion and industry and a massive fall in unemployment. Two massive investment opportunities were announced by my right hon. Friend the Secretary of State just before Christmas. So that there is another side to Northern Ireland which I hope the House will take on board.

Photo of Mr William Ross Mr William Ross , East Londonderry 12:44 am, 26th January 1989

I am grateful to the hon. Member for Brigg and Cleethorpes (Mr. Brown) for allowing me a moment to intervene to raise a matter which comes about because of a development by a young man in my constituency.

The House will be aware that the facsimile machine was a British invention. If, however, one tries to buy a facsimile machine made in the United Kingdom today one will run into certain difficulties: even the ones that the Post Office produce have all their bits and pieces made in Japan. It is a story, which is far too often told, of a British invention which is not brought to fruition and benefit for the people of this country because the development money has been unavailable.

My constituent is grateful for the support that he has already received from the Local Enterprise Development Unit, but he has now run into another snag. For commercial reasons, I do not wish to give any indication of the type of invention that he has come up with, but this man discovered something that I think has great potential. He also discovered that he had to pay quite a lot of money to protect his patent rights. He could not go on developing the thing in secret because one simply cannot keep these things secret; at some point they will become public knowledge and one must protect oneself against that.

Unfortunately, the amount of development that must still be done before the invention can go to market is considerable, and he still needs protection for his patents during that time. Worldwide patents are costly.

The Minister should have a letter in his office from me on this matter, asking him to look at it. I believe that there is a problem that needs to be addressed. It is the need for support for an inventor in patent protection until the thing has developed to the stage, not necessarily of production but of marketability. It is a costly business.

I appreciate all the difficulties. The whole question has more prickles than a cactus. But I ask the Minister most seriously to look at this difficulty which could mean something going overseas when it could otherwise be kept at home, with great benefit to our economy and to the workpeople of Northern Ireland and of the United Kingdom generally.

Photo of Peter Viggers Peter Viggers , Gosport 12:47 am, 26th January 1989

I thank my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) for raising the subject of the Northern Ireland Industrial Development Board and the Local Enterprise Development Unit in this short Adjournment debate. My hon. Friend is vice-chairman of the Conservative Back-Bench committee on Northern Ireland and his keen interest is greatly appreciated at all times.

As to the point made by the hon. Member for Londonderry, East (Mr. Ross), he says that he has written to my Department. I shall make a point of pursuing the matter personally and discussing it with the chairman of the Local Enterprise Development Unit, and I will come back to the hon. Gentleman in writing and, if necessary, by way of a meeting.

As my hon. Friend said, few people outside Northern Ireland hear of the industrial success of the Province because, unfortunately, the achievements of business and the steady fall in unemployment are not the stuff of headlines. Understandably, it is violence and the image of violence that impinge on the public perception. The reality of Northern Ireland is quite different. The vast majority of people there live perfectly normal lives. They shop in modern shopping precincts in Belfast and in the towns of the province. They send their children to the first-class schools and, in their leisure time they can enjoy the beautiful countyside and excellent sports facilities.

But the subject of our debate is the work of the industrial development agencies, and here, particularly, there is a real success story to tell.

The Industrial Development Board was established under the Industrial Development (NI) Order 1982 which came into effect on 1 September 1982. The order set up an IDB board of not more than 12 members chosen for their individual experience and expertise. Since the IDB is fully part of a Government Department and therefore accountable to Ministers, the constitutional position of the board is somewhat unusual. The board is described in the 1982 Order as having the role of advising the Department and its Minister and overseeing the work of the 1DB staff —"the Executive". Ministers have, however, made it clear that the board has effective decision-making powers across a broad spectrum of its work and these arrangements have been incorporated in guidelines issued by the Department of Economic Development. The IDB has established a reputation for being separate from the mainstream of Government activity and commands, the respect of the business and commercial community. Its independence is important. The chief executive and the board have full executive responsibility for the implementation of the industrial development drive and well-established delegated authority. On a formal basis, the chairman and chief executive of the IDB have direct access to me as the Minister for industrial matters; informally we meet frequently and work closely together.

The IDB is staffed partly by civil servants with experience of industrial development, but it also receives a constant flow of industrial, commercial and financial expertise through secondment or engagements on short-term contract, of those with relevant experience from the private sector.

The IDB's role is not merely one of a provider of financial assistance. Instead, it aims to work with companies to help plan and aid their development. The IDB cannot tell companies how to survive and develop. Companies are much better placed to do that, with their in-depth knowledge of the business environment. The IDB can provide the framework for companies to research the changes, plan for them and to act quickly to take advantage of them. It does that through the various types of assistance and advice packages that it can provide.

Photo of Mr Roy Beggs Mr Roy Beggs , East Antrim

We appreciate the compliments that have been paid to Northern Ireland industry and we congratulate the IDB and LEDU on their achievements. Can the Minister assure us that the financial packages that he can help IDB and LEDU to make available in Northern Ireland will continue to be at a level that will attract overseas investment? Can he assure us that Northern Ireland, with its high unemployment, will not discover that it is being disadvantaged by better packages of assistance being offered on the mainland

Photo of Peter Viggers Peter Viggers , Gosport

I can give the hon. Gentleman that assurance without fear. The proud boast of the IDB is that no worthwhile project fails for lack of financial assistance. As the hon. Gentleman knows, with his keen interest in such matters, the IDB has been outstandingly successful in winning inward investment and promoting indigenous investment.

The IDB has been successful in marketing its operations and hon. Members will know of the 40–60 scheme which is aimed at encouraging companies to develop comprehensive marketing plans for their future development. That scheme provides 40 per cent. of costs up to a maximum of £60,000 per year to each eligible company. That scheme is exclusive to Northern Ireland, In 1987–88 the IDB offered over £2 million to companies to assist them with planning or opening up overseas markets.

To ensure that its marketing development services are and remain relevant, the IDB has established a marketing advisory group with representatives from the private sector.

Great Britain remains a major focus for Northern Ireland companies and the IDB has organised a series of major purchasing seminars to introduce Northern Ireland companies to major purchasing organisations in Britain and elsewhere.

Trade missions and fairs help to develop Northern Ireland industry. They help companies to sell in export markets, assess market potential, gauge competitor activity, develop or renew export contacts and offer customer reassurance. The 10 missions and seven fairs organised in 1987 resulted in prospective orders worth up to £44 million.

As more Northern Ireland companies move into the challenging international export world there is even greater need to be competitive. To this end, industry is increasingly recognising the need for technology and to forge closer links between higher education institutions in Northern Ireland and local companies.

In 1987–88 the IDB offered companies research and development assistance amounting to £8 million. This involved total company investment of over £22 million, and since 1983 some 187 companies have received assistance for the development of new products and processes.

However successful the IDB may be in securing new jobs through the development and expansion of companies already operating in Northern Ireland, it is necessary that this effort be supplemented by the winning of further inward investment to provide the employment opportunities which Northern Ireland so desperately needs. Inward investment is an important source of new viable jobs.

Inward investment offers more than just new jobs. It offers new management styles, new technology, new skills, new products and new markets for goods manufactured in Northern Ireland. But, as I said earlier, we have a major image problem, and this becomes particularly obvious and acute in seeking to win further inward investment. It is therefore to the IDB's considerable credit that it succeeds in overcoming initial concerns and persuades businessmen to look beyond the image to the industrial reality. And success IDB certainly does have.

One hundred and fifty-four million pounds, or 51 per cent., of the total investment and 2,486 of the new jobs promoted in 1987–88 arose from foreign-owned companies. That is a welcome indication of the confidence that foreign investors have in Northern Ireland as a sound business location. Confidence breeds confidence and I believe that the fact that 12 first-time inward investment projects came to Northern Ireland in the year ended 31 March 1988 is an indicator that the level of confidence in Northern Ireland as an industrial location is increasing. In the last three months alone, as my hon. Friend said, Daewoo, from Korea, and Montupet, the French car components manufacturer, have established plants in Northern Ireland. Between them those companies will require about 1,600 workers.

Since the IDB was established, in 1982, it has promoted over 20,000 jobs, and the total investment leveraged by IDB assistance has exceeded £1,000 million. Job promotions are up for the third year running. In 1987–88, the best year so far, some 5,300 jobs were promoted, and I am confident that that record will be beaten this year.

I have mentioned the investment of some £18 million through Daewoo and some £90 million through Montupet. More recently we have seen Ford invest a further £50 million in its Northern Ireland plant. Other investments, by du Pont at its Maydown plant near Londonderry have taken that company's total investment in Northern Ireland well above £500 million. These are major investments which are very significant, not only to the Province but nationally.

I turn now from the Industrial Development Board to the second of our development agencies, the Local Enterprise Development Unit. Operationally, LEDU is independent of Government and only in very rare cases does it have to refer decisions to the Department for approval. Its activities are currently overseen by a board of eight part-time directors all drawn from the business community, and hence, like the IDB, its operations benefit from the direct input of those with real industrial and commercial experience.

It is essential for an agency dealing with small businesses to be readily accessible to their clients. LEDU achieves this by operating out of four area offices spread across Northern Ireland. Again, to achieve the commercial input, the work of each area office is overseen by an area panel made up of local business men.

LEDU's field of responsibility covers small firms in the manufacturing, craft and service sectors. Like the IDB, it offers selective financial assistance, but here also considerable emphasis is placed on working with companies to develop their marketing, research and development and competitiveness. LEDU is seen by the local business community as a valuable source of advice, support and, when appropriate, financial assistance.

In 1983. LEDU launched a major initiative designed to encourage local communities to play a more active and positive role in developing small businesses in their areas. Under the initiative known as the local enterprise programme, LEDU provides help towards the setting up of enterprise centres. Each centre offers low-cost small workshop accommodation in addition to providing common support and advisory services.

The provision of basic support services, such as typing and photocopying, is of considerable assistance to small companies starting operations and becoming established. Thirty such centres are planned of which at least one will be in each of the 26 district council areas. To date 20 centres are operational, and between them they provide 1,530 jobs in 430 businesses. These figures are projected to rise to 2.100 jobs and 520 businesses by next year. I am greatly encouraged by the fact that over 300 local business people serve on the boards of these centres on an entirely voluntary basis.

The LEDU has consistently met its job promotion targets. Since its formation in 1971 it has promoted over 35,000 jobs, of which 20,000 were in the last five years. In the last financial year, 1987–88, a total of 4,047 new jobs were promoted, of which about 500 were associated with enterprise grants towards new, very small, often one-man, businesses. Those figures demonstrate the importance of the small firms sector and LEDU's role in promoting it.

I take it as evidence of the high esteem in which the work on developing enterprise in Northern Ireland is held that the European Community small firms task force chose Northern Ireland for its first European enterprise conference. The conference, which was held last autumn in Belfast, gave us the opportunity to share our experience of enterprise in action with more than 400 delegates from all over Europe and beyond. The event undoubtedly enhanced Northern Ireland's reputation as a leader in enterprise development and enabled us to learn from the experience of others. I am sure that all who attended found it a most rewarding and stimulating experience.

The Government are totally committed to the development of the economy of Northern Ireland and have demonstrated that in their funding of the IDB and LEDU. The IDB's funding over six years has exceeded £390 million and £127 million of support is planned for next year alone. That answers the funding point raised in the debate. LEDU's funding over 10 years is £125 million, and £32 million is projected for next year. The important factor is not money but the industrial activity, the profits and, above all, the jobs that flow from this support. I take this opportunity to thank all those at the IDB and LEDU who have worked so hard to promote prosperity and employment. Their success is reflected in the growing confidence of industry in Northern Ireland.

Question put and agreed to

Adjourned accordingly at two minutes past One o'clock.