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Small and Medium-Sized Enterprises

Private Members’ Business – in the Northern Ireland Assembly at 10:30 am on 24th February 2009.

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Photo of William Hay William Hay Speaker 10:30 am, 24th February 2009

The Business Committee has agreed to allow up to one hour 30 minutes for the debate. The proposer of the motion will have 10 minutes to propose and 10 minutes to make a winding-up speech. All other Members who are called to speak will have five minutes.

Photo of Leslie Cree Leslie Cree UUP 10:45 am, 24th February 2009

I beg to move

That this Assembly notes with concern the growing negative impact of the current economic downturn on small and medium sized enterprises; recognises that global economic circumstances have significantly restricted the flow of Foreign Direct Investment; and calls on the Minister of Enterprise, Trade and Investment to refocus her Department’s policies and resources on support for small and medium sized enterprises.

The foreign direct investment (FDI) boom categorically ended in 2008. All major economies are in recession. Multilaterals are consolidating their positions, and they have retreated from many locations around the world to, effectively, lick their wounds and shore up their balance sheets.

Invest Northern Ireland’s January update stated that FDI leads have been hit particularly hard. In the Republic of Ireland, for the past 15 years, FDI has formed the backbone of the Celtic tiger economy. However, we are all watching with apprehension as the Republic’s economy continues to contract sharply, while the Government there face serious budgetary problems and potential intervention from the International Monetary Fund. Commentators describe the Republic as the fifty-first state, but there is no more room in a “buy American” White House.

What that boils down to is that some opportunities have seriously diminished. Many FDI doors are now closed to the Minister of Enterprise, Trade and Investment, and they will remain closed for at least the entirety of 2009, and most probably 2010. The Minister and the Executive are, however, still tied to a Programme for Government target that seeks to secure inward investment commitments promising 6,500 new jobs by 2011, of which 5,500 will provide salaries above the Northern Ireland private-sector median.

The Ulster Unionist Party is not against foreign direct investment; it welcomes it and believes that we should be working towards securing it wherever possible. However, we are also realists who believe that Governments and Ministers should be able to adapt their policies and targets to accommodate emerging circumstances. The business world must adapt to such circumstances, so it is crucial that the Minister of Enterprise, Trade and Investment and the Executive are able to do likewise.

Small and medium-sized enterprises (SMEs) are the backbone of Northern Ireland’s economy, accounting for 81% of private-sector employment and 79% of private-sector turnover. Moreover, 99% of private-sector enterprises are small businesses that employ fewer than 50 people. In the current recession, those businesses are suffering.

In the media, we rightly hear much when larger companies lay off significant numbers of people. However, there is little coverage of the constant flow of businesses that are laying workers off one, two or five at a time. Projections suggest that up to 15,000 jobs are under threat and that unemployment could rise to 50,000 by 2010.

I recognise that the Department of Enterprise, Trade and Investment (DETI) and Invest Northern Ireland have made some improvements. However, contrary to what the Minister announced last week, the Executive are not doing all that they can to help the economy. In the current circumstances, to consider that one can ever do enough smacks of arrogance.

Although the Minister is tied to delivering the notional FDI targets in the Programme for Government, resources will be wasted and time will be lost to help indigenous businesses survive the recession, so that they might emerge on the other side in a more competitive and healthy position. As the example of the Republic shows, indigenous businesses are more durable and sustainable.

FDI should be the icing on the cake of a strong, outward-looking local economy, and that opinion is shared by many business groups in Northern Ireland. Northern Ireland Manufacturing’s excellent paper, ‘Manufacturing Counts’, states:

“too much attention has been directed by Invest NI towards IT and call centre employment and not enough towards broader industry. It has been too quick to dismiss much of manufacturing as ‘sunset industries’ not worthy of support”.

It continues:

“There is good, sustainable high value added niches to be exploited in all of our manufacturing industries, and this is where Invest NI should be active, helping local firms to be world beaters”.

We must get away from the idea that only FDI can deliver high-value-added jobs.

What else can the Minister and the Executive do? Invest Northern Ireland must become more original in order to help Northern Ireland businesses become more innovative.

A less bureaucratic and more targeted service is needed for small local businesses, and we must stop chasing unachievable targets. Furthermore, the support that is available to Northern Ireland companies by Invest Northern Ireland and other organisations needs to be promoted more vigorously and widely. Northern Ireland companies need greater help to promote themselves on the international market.

The Ulster Unionist Party fully recognises EU state aid laws. It is of paramount importance that we do all that we can as facilitators for business. Any further help that we can provide to reduce companies’ overheads will help to retain employment and boost productivity.

In the past year, the work of the Carbon Trust has saved businesses in Northern Ireland £18·3 million. That is not an insignificant amount, but more can be achieved. Glyn Roberts from the Northern Ireland Retail Trade Association believes that Northern Ireland needs:

“further investment in energy efficiency measures to help businesses save money, particularly investment in worthwhile organisations like the Carbon Trust who have a proven record of delivering for business whilst being clearly under-funded.”

I recognise that the Minister invested a further £4·9 million in the summer, but that is not enough, and it represents an opportunity lost. I urge the Minister to make a bid in the next monitoring round for further investment in the Carbon Trust, and I urge the Minister of Finance and Personnel to listen with sympathetic ears.

Northern Ireland companies are still paying too much for their electricity and energy. In the past year, retailers have seen increases in electricity bills of 60%, and they are paying 20% more than their counterparts in other parts of the United Kingdom. That is why the forthcoming review of our energy market is so crucial and why greater energy diversification and security is a must.

I am pleased with the Minister’s commitment to that process, but, in the short term, we need to see results, especially in the investment and delivery of renewable energy. The Confederation of British Industry (CBI) believes that low-carbon technologies offer the UK an opportunity to enter and lead new markets that are estimated at $1 trillion. It is imperative that we move more quickly and show more ambition and vision to ensure that we do not lose out to other regions and countries.

There must be investment in alternative energy. America and other economies will be seeking innovation, and we must be at the forefront of that wave of opportunity. When one considers the opportunities that energy efficiency and green technology present, the out-of-date attitude of our Minister of the Environment — who champions himself as a friend of business — moves from the embarrassing to the harmful.

Outside of DETI, we need to accelerate the reform of the planning system, which is clogging the arteries of our economy. The Minister of the Environment must publish planning policy statement (PPS) 5 as quickly as possible so that our town centres will become vibrant and sustainable. Furthermore, the net loss of jobs that out-of-town developments can bring must be halted, and the Minister of Finance and Personnel and all Departments must deliver on commitments to pay businesses on time.

The Executive have made some positive improve­ments in recent months. The freezing of non-domestic rates is welcome, as will be the Minister’s awaited announcement on small business rate relief. However, I want to see the proposals’ details, not least on how the Minister intends to fund such a scheme in these finan­cially constrained times. However, I remain optimistic.

Unfortunately, an attitude prevails among some parties that we are doing all that we can or that we are doing enough. As individuals lose their jobs and as companies go under, I fear that those people will view the Minister’s attitude as being cocooned in a different world.

The Programme for Government must be re-prioritised, and the Minister of Enterprise, Trade and Investment must step up a gear in her approach.

Recently, I spoke about the severe lack of monitoring and evaluation of the Programme for Government targets. That is mirrored in how the Minister of Enterprise, Trade and Investment approaches her economic policies. During this economic crisis, the quarterly review provided by Oxford Economics is not enough. The Minister should provide a more frequent breakdown of the performance of each sector in the economy, details of how that compares with other regions in the United Kingdom and what impact her Department’s actions have had. Only proper monitoring and evaluation will inform us of the best way forward. I commend the motion to the House.

Photo of Mark Durkan Mark Durkan Leader of the Social Democratic & Labour Party

The motion refers to the restricted flow of foreign direct investment, which is an issue that the Committee for Enterprise, Trade and Investment has heard voiced by Invest Northern Ireland and the Department. There has been a reduced resource requirement by Invest Northern Ireland of £14 million in 2009-2010 and £10 million in 2010-11 in response to that very restriction.

(Mr Deputy Speaker [Mr Molloy] in the Chair)

The Committee has been concerned to ask the officials and the various private-sector interests that have recently appeared, and will appear, in front of the Committee about what else can, and should, be done to support, in particular, our small and medium-sized enterprises during this difficult period.

No one is saying that FDI has gone for good, should not be sought and should not be supported; people recognise its importance, including its importance to our own small and medium-sized enterprises, which can often benefit from supplying the firms that come here with FDI. However, we all have a sense that small and medium-sized enterprises here are facing acute pressures as a result of market issues.

Market factors have meant that people are seeing customer orders reduce and consumer demand drying up in many instances; however, in other cases, some firms are doing very well. The Committee has been at pains to make sure that, in expressing concern about the downturn, we do not fail to champion the many firms that are navigating their way through these challenging times in quite a positive and interesting way. The Minister of Enterprise, Trade and Investment and her officials have been at pains to show close support and strong regard for such firms also — not just because they are doing good in themselves with their customers and for their employees, but because they are setting a very good example at a very difficult time.

The Committee has raised issues in the Assembly in the past — for instance; concerns about the decision taken last year to remove the grant involved in the Start a Business programme. We asked the basic question that, if our aim is to support people going into private enterprise, surely we should be supporting them at the starting point. The removal last year of the, albeit small, grant sent out the wrong message and is taking its toll on the uptake of the Start a Business programme.

I know that the Minister has that matter under review in some way. We need to look at more than simply restoring the grant; we should be looking at a number of the other grants that were weeded out over the past number of years. Those grants were withdrawn because it was felt that we did not need them, there was a different climate and there was a different system of market incentives. We need to see whether more intelligent grant support can be applied at this time.

We have a situation in which businesses face a crunch in circumstances where credit is denied, tax is demanded, and grants that existed previously are gone. Although we have a limited role in relation to ensuring that credit is available and in limiting the tax demand, the one area in which we do have a role is in making grants available. Before money that is surrendered by Invest NI and DETI, because of the drying up of FDI, is sent to the centre to go to other good causes and good means of expenditure that can support the economy — which none of us should naysay — the fact is that we need to consider whether that money could be spent in supporting firms and enterprises as well. That is a very important point that we all need to look at.

I mentioned the issue of the banks. That matter is not under our direct control, but Ministers are working on it.

Photo of Francie Molloy Francie Molloy Sinn Féin 11:00 am, 24th February 2009

Will the Member please draw his remarks to a close?

Photo of Mark Durkan Mark Durkan Leader of the Social Democratic & Labour Party

The Committee looks forward to the Treasury Select Committee being in Northern Ireland next week, and the Business and Enterprise Select Committee is also coming here. I hope that that will bring positive attention on the performance of the banks in supporting business here.

Photo of Simon Hamilton Simon Hamilton DUP

I welcome any debate on the economy. However, it is a pity that it is taking place in such gloomy circumstances — as outlined by both Members who spoke previously. I support the motion, although its phraseology might have been better if it had referred to redoubling existing focuses on small and medium-sized enterprises. I am happy to support the motion in the context of the ongoing independent review of Invest Northern Ireland and economic development policy within Northern Ireland, bearing in mind the fact that Northern Ireland’s is a small and medium-sized enterprise economy. That fact has been acknowledged already, and that focus is already there through the Department and Invest Northern Ireland.

Before I make some other points, I will touch on a couple of criticisms that I noticed in the proposer’s opening comments. I have heard his colleague, and my colleague, on the Committee for Enterprise, Trade and Investment be a bit more strident in his criticism of Invest Northern Ireland, and perhaps the criticism is that it is not focused enough on some of our smaller businesses. Hopefully, that criticism will be teased out during the ongoing review. However, if there is a criticism of how that organisation is structured and focused, I look forward to seeing the Member and his colleagues take up that criticism with their party leader, who was responsible for the creation of Invest Northern Ireland.

Once again today, there have been criticisms of the Programme for Government and the focus of the Budget, and a call for its rewriting. It is worth bearing in mind some of the positive steps that are being taken to try to — not overcome the current difficulties, because we see big sovereign Governments having difficulty overcoming the problems we face —

Photo of Basil McCrea Basil McCrea UUP

Will the Member give way?

Photo of Simon Hamilton Simon Hamilton DUP

Hold on; let me make my point, and then I will certainly give way.

Steps are being taken to give some comfort and ease, such as the small-business rates-relief scheme, which is due to come in next year; the freeze on non-domestic regional rates; the capping of industrial rates at 30%, which we were all united in calling for and which I am glad to see has happened; and the investment of £1·4 billion this year in our infrastructure, which is offering some assistance and employment to people out there. If those matters were not being implemented by the Executive, or if we were in a direct rule situation, how much worse might the situation be?

Photo of Basil McCrea Basil McCrea UUP

For once, I may have a slight advantage over the Member, in that I remember the time when Invest Northern Ireland was set up as a one-stop shop. It was supposed to encompass all areas — small, medium and large enterprises. The problem was that it then became an organisation focused only on the larger organisations and foreign direct investment. Therefore, there is some question about it. Will the Member consider that the regeneration, or the reinvigoration, of an organisation such as LEDU would be a positive step?

Photo of Simon Hamilton Simon Hamilton DUP

Those issues could be drawn out in the ongoing review. I do not think that anything is off the table in respect of the review. However, the Member’s call for the examination of the creation of an organisation such as LEDU again would run contrary to the position advocated by his own party leader in the early part of this decade with the creation of a one-stop shop, and I would love to be a fly on the wall for that conversation. Equally, I would love to be a fly on the wall during the conversation, presumably between the proposer and his colleague the Minister of Health, Social Services and Public Safety, calling for the reprioritisation of the Budget to focus even more on the economy, and looking to take some resources away from his budget to spend on economic development.

I would not entirely take the criticism that Invest Northern Ireland is not focused on small and medium-sized enterprises, although I am no advocate for it. I accept, as other Members do, that, in some respects, there are problems with the organisation. The Start a Business programme has helped close to 20,000 individuals get into the business community, and that is a positive outcome. We cannot ignore small and medium-sized enterprises. We cannot have an economic development agency, such as Invest Northern Ireland, and not be focused on small and medium-sized enterprises. Some of the job creations recently have been provided by small and medium-sized enterprises because the companies providing them employ fewer than 250 people.

Last week, I had the privilege of attending the Innovation and Export Awards 2009, at which we were able to celebrate the success of Invest Northern Ireland client companies — Randox Laboratories, Almac, Singularity and Mash Direct, which is in my constituency. Those small companies are doing very well in a global context, with assistance from Invest Northern Ireland.

When discussing support for small and medium-sized enterprises, we should not take our focus entirely away from, or retreat from discussing, foreign direct investment, too. Foreign direct investment is a hallmark in good economic times. We could now view foreign direct investment through the spectrum of bad economic times and say that it is a bad thing that we should not pursue. However, if we are thinking about how we can reach a strong position in the good economic times, we must recognise that FDI is good. Local companies who supply FDI companies enjoy spin-off benefits from such investment.

As a country, we must position ourselves for the good times and the benefits coming out of an economic upturn in the future. Northern Ireland must continue to sell itself during these difficult times, so that, when times change, we can sell our positive points, as a country and as a small economy, to potential investors. We should not be that fussy about the source of investment in these difficult times, so long as investment is coming our way.

Photo of Francie Molloy Francie Molloy Sinn Féin

I ask the Member to draw his remarks to a close.

Photo of Simon Hamilton Simon Hamilton DUP

We should focus on the positives and on all potential investors, whether they be small indigenous companies or big foreign direct investors.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. Like other Members, I welcome the opportunity to speak on the motion, which I support. The economy is now in recession, and, according to all the forecasts from the various Committee witnesses and others, the economic situation will get worse as the year progresses. It is clear that new and innovative ways of thinking are needed if we are to sustain the businesses and jobs that already exist, and offset any further job losses. That also includes creating new investment opportunities and ensuring that people are trained in the necessary skills so that, when the economic climate changes, they will be able to access jobs as they become available.

The economic downturn has had an impact on the anticipated level of foreign direct investment. Therefore, in the current adverse conditions, it is even more important that small and medium-sized businesses and social economy enterprises — because we must not forget about the contribution of social economy enterprises — are given the resources that they need to sustain themselves in the short term, and develop and grow in the longer term.

It is essential that planned funding be made available for the delivery of major infrastructure projects in roads, housing, education and health, and we have heard those matters debated in the Chamber over the past few months. Governments, both in the North and South of Ireland, have an opportunity to maximise the social and employment opportunities for everyone through the public procurement process. That is another essential part of introducing new and innovative ideas. It is also an essential part of the investment strategy. It is crucial that the opportunity be grasped now to secure current jobs and create new employment opportunities.

The Executive have earmarked something like £20 billion for the public procurement of works, services and goods over the next 10 years. Looking at the matter in an all-island context, almost €16 billion is spent on public procurement each year, most of which goes to companies overseas. As has already been pointed out, SMEs account for a significant proportion of businesses in the North. However, almost three quarters of those SMEs, including those from the social economy sector, do not even apply for public procurement contracts because they feel that the tendering process is stacked against them. There is an excellent opportunity, through working closely with organisations such as InterTradeIreland, Invest NI, IDA Ireland and the enterprise councils, to encourage and develop local SMEs on this island and to enable them to secure contracts for public procurement.

Photo of Mark Durkan Mark Durkan Leader of the Social Democratic & Labour Party

On the issue of public procurement, does the Member agree that the whole approach to frameworks very much militates against SMEs being able to compete for, and be involved in, significant contracts? Is she concerned that Northern Ireland Water seems to be following exactly that approach under the name of the “alliance approach”, as they call it? That will mean that only the big firms, generally from outside of here, will be on the list for work from Northern Ireland Water.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

I thank the Member for his intervention, and I agree that the tendering process is stacked against some small and medium-sized businesses. There is an opportunity to deliver on the important issues of fairness, inclusion and equality of opportunity, by actively challenging the existing patterns that perpetuate the issue that the Member talked about.

There are a number of opportunities for social-economy enterprises to enter into business with the public sector and the private sector, and we need to look at innovative ways to take that forward. Banks have already been mentioned; they also have a corporate responsibility to ensure that lending and borrowing facilities are kept open to SMEs and social- economy enterprises.

People are very concerned, as we should be, that the recent injection of public money to steady the banks has not had the desired outcome for businesses across this island. In this period of economic uncertainty, it is important that local businesses have access to the new financial guarantee schemes that have been introduced by the British and Irish Governments as part of the bailout for banks. We need to look at that again, because public money cannot constantly be put into a black hole where it is going nowhere. We need to look at creating a state bank of some description, whereby public money can be given and redirected into borrowing facilities for businesses. There are also options for organisations such as Invest NI to create an investment fund, so that they too can lend money to businesses and create lending and borrowing facilities for businesses. That approach might bring some sort of result.

In conclusion, I support the motion and ask that the Department and Invest NI refocus to ensure that organisations such as Invest NI redirect those resources and that support to small and medium-sized enterprises. When we are talking about small and medium-sized enterprises, it is important that we do not forget the contribution that social-economy enterprises have made to the economy as a whole and to the local community in challenging disadvantage and need. Go raibh maith agat.

Photo of Séan Neeson Séan Neeson Alliance

We all recognise the importance of SMEs to Northern Ireland’s economy. Indeed, it is important to remember that most SMEs are largely indigenous. In fact, they are really the backbone of Northern Ireland’s economy at the moment.

I welcome the ongoing review of Invest Northern Ireland. Since the demise of LEDU, many people have been questioning whether SMEs are getting the support that they need. The Enterprise, Trade and Investment Committee has been looking at that issue and questioning officials about it. The classic example that has concerned the Committee — the Chairman has already referred to it — relates to the changes that are taking place to the Start a Business programme. I should declare an interest, as a member of the board of Carrickfergus Enterprise and also as a member of Carrickfergus Borough Council. That major scheme was working very successfully indeed, and a number of new businesses were established in Northern Ireland and built from the ground up. Therefore, the Committee has questioned why there is a need for change.

I am led to believe that there has been some form of resolution in relation to the awarding of contracts which were due to be awarded in January, and I would like the Minister to respond to that, because Start a Business provides major scope for the establishment of new businesses in Northern Ireland. Furthermore, I hope that any change that takes place reflects the review of public administration.

Many of us believe that the changes came about too early because of the review of public adminstration (RPA). The other important thing in relation to SMEs is that they develop at the regional level. For that reason, it is important that the regional offices of Invest Northern Ireland are retained to reflect the changes brought about by RPA.

A few years ago, Dr McDonnell and I had the pleasure of meeting the United States’ investment secretary. In the States, there is a scheme to provide loans, guaranteed by banks, for the establishment of SMEs. It has been very successful and, most importantly, as a result of the scheme many women became involved in business. That is something we must encourage in Northern Ireland. Indeed, there used to be a guide called ‘Women into Business’, which I warmly welcomed. There is an opportunity to expand the Northern Ireland economy, and I encourage DETI and its Minister to consider the scheme that has been established in the United States and decide whether a similar scheme would provide opportunities here.

Last week in the Assembly, I spoke about the importance of the green economy. Great opportunities exist in that sector for both large and small companies.

We all know that the banks have largely created our present problems, and they have a responsibility to get us out of our present situation. I recognise that the Ulster Bank has announced recently that it will set aside finance to assist SMEs and I wholeheartedly encourage other banks to follow that lead.

Photo of Robin Newton Robin Newton DUP 11:15 am, 24th February 2009

This is an important matter. In these difficult economic times, it is right that that the economy is being debated in the Chamber. However, it is a serious matter, and is not one to be toyed with. It should not be placed on the agenda either as a party-political strategy or as something that will become a political football. I am sorry that the proposer of the motion described Minister Foster’s actions as “arrogant”. That is to be regretted.

No single Minister has responsibility for the whole economy. Other Departments have parts to play in the economic well-being of trade and industry and in improving prospects of both. During discussions with owners of SMEs, I have heard them give the clear message to me and to all politicians: give us the tools and we will do the job.

I have already said that the motion is important, but it is not possible to address the difficulties of the owners of small businesses by restricting the debate to the actions of Minister Foster: in that respect, the motion is weak. It is not too difficult to understand how Minister Empey’s Department has a major impact on the economy and SMEs. The need to address the skills shortfalls; the upgrading of employees’ skills; finding solutions to the further education lecturers’ dispute; the problems of apprentices in the construction industry or the sector’s refusal to take part in the Minister’s fostering programme for apprentices who have been made redundant are important issues. Each of those major problems, which are the responsibility of Minister Empey, has an impact on the business performance of the SMEs.

It is obvious that as Minister Empey addresses those problems — which are crucial to the future of employees and individual businesses — it will be difficult to improve the economy if they are not tackled effectively and efficiently.

SMEs expect us to have in place best-practice training programmes that can deliver the skills that the economy demands.

In a wider context, SMEs want the banks to play a positive role through their lending policies. Minister Foster and her Executive colleagues have been addressing that issue right up at Downing Street levels. In addition, SMEs want an effective and fit-for-purpose road network, and we have debated in the Chamber on previous occasions that they want us to tackle the burden of red tape and bureaucracy.

Right across the spectrum, all Departments have a role to play, and I urge that we work collectively, as an Assembly, and through all the Committees, to address the additional problems and burdens that businesses have at this time in Northern Ireland.

I stress that there is a trap in mistaking activity for action. Whatever we decide, and any Committees’ activities, must be transformed into action right down at the coalface of SME service delivery.

Businesses perform best when they are given the freedom to trade. In the past, we have debated the issue of red tape and bureaucracy, and, increasingly, the small-business sector demands that that be addressed. I am never quite sure how we can do that in the European and Westminster contexts; however, where possible, we should be contextualising red tape so that businesses in Northern Ireland are not overly burdened by any further strategies. In fact, SMEs recoil at the mention of Government strategies. They require practical, targeted and measurable assistance that will bring results to the economy.

Finally, I want to see a balance in how that is done; we must not address FDI exclusively, and we must not forget that successful SMEs underpin the economy.

Photo of Paul Butler Paul Butler Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. Cuirim fáilte roimh an tairiscint seo. Tá mé sásta labhairt i bhfabhar an rúin seo. I welcome the motion and I speak in favour of it. I know that there are some concerns about party politics, and that there has been some criticism of Ministers. Nevertheless, the message that we should send out is that we are concerned about small and medium-sized enterprises.

I accept that there has been an Executive response. Simon Hamilton talked about the £1·4 billion in capital investment; the capping of industrial rates at 30%; the freeze on rates; and a rate relief scheme for small businesses that will come into effect, albeit next year.

Small to medium-sized enterprises help the economy, and they do as well as their counterparts in attracting foreign direct investment. There are concerns among small and medium-sized enterprises about the availability of working capital and credit. The Minister of Enterprise, Trade and Investment has come up with an enterprise finance scheme, and Invest NI, through its accelerated support fund, has tried to deal with those issues.

I hope that the Minister goes away today with some ideas. Tonight, Lisburn council will give its response to her economic policy, and there has been criticism of the roles that Invest NI and local councils have played in local economic development.

It is not all criticism. On a positive note, DETI has helped to secure funding from Europe. However, there is also a sense that the priorities of Invest NI are not on small and medium-sized enterprises and that local businesses, for example, see local councils as being more accessible because of the skills and knowledge that councils have about local economic development. Local businesses see the councils as a better avenue than Invest NI, and they see Invest NI’s priority as being on foreign direct investment. I hope that that is one of the points that will come out of the review of economic policy and that the Minister takes that on board.

Organisations such as Enterprise NI work closely with councils and have developed economic policies to try to help small and medium-sized enterprises. Such organisations criticise the response to the economic downturn; they see the banks and the car industry being bailed out, so why not local businesses? They have criticised the fact that the terms of reference for the small business support programme were drawn up before the present economic downturn. That is something that could be looked at to try to help small businesses.

Those organisations have also made a relevant point about what they call the “entrepreneurial deficit” in the North. They look to the South, where city and county councils have a statutory responsibility to develop the economy and local businesses. Councils have a budget to support businesses in a proactive way.

Hopefully, the Minister will take on board the role of local authorities. I know that she has referred to the work of Craigavon Borough Council, and I hope that she will take on board the work of Lisburn City Council, Belfast City Council and other councils. Bodies such as Enterprise NI have concerns about the RPA, to which Sean Neeson referred. They have concerns about the 11 new councils taking on the role of economic development and about where DETI will sit with that. Mar a dúirt mé ar dtús, tá mé ag labhairt i bhfabhar an rúin seo.

I support the motion.

Photo of Jim Shannon Jim Shannon DUP

There can be no question that small businesses are under pressure at this time. In my constituency of Strangford and in every other constit­uency, barely a week goes by when I do not hear of a business that is suffering or is finding it hard to come to terms with the economic climate.

I am aware of the issues, but the Minister of Enterprise, Trade and Investment is even more aware of them, and she is working on the solutions. We must be positive about what the Minister is doing and be aware that other Departments also have to have responsibility. My colleague Robin Newton made that point earlier. One need only take the time to look at the DETI website and read about the daily battles that are being won and the solutions that are being found for small and medium-sized enterprises to know that DETI is already focused on doing its best to bring businesses to the Province and to encourage existing businesses.

DFP haes maed proamishaes tae bring aboot, en fer tae pit in plaes iver £1·4 billyin tae kinstruckshin projects this financial yeer, kumpaered wi’ £676 millyin jist iver five yeer aga. This is aw gaun tae help oot schuills, roads, hoaspitals en tha laek in mony perts o’ tha kintrie. Iver tha nixt 10 yeer DFP wull bring aboot en pit in tae capital projects £20 billyin throo investment, wrouchtin alangside wee en medyum-sized enterprises.Tha delivern o’ thees projects wullnae oanly help oot tha kinstruction industrie bit aw tha feeder suppliers en transport firms etc. This is a’ must if we er tae git an bring oorsels oot o’ this dip that we er in.

The Department of Finance and Personnel (DFP) has pledged to deliver £1·4 billion of construction projects this year, compared with £676 million five years ago. That is helping schools, roads, hospitals and many other areas. In the next 10 years, DFP will deliver £20 billion of capital projects through the investment strategy, working closely with small and medium-sized enterprises. That delivery of projects will help construction and all supplementary businesses, such as suppliers and haulage firms. That is a must if we are to bring ourselves out of the dip that we are in.

Banks are part of the key to progress and success. The latest news is that the Ulster Bank has set up a £250 million regional fund to support small and medium-sized enterprises by providing additional debt finance and access to other options to help businesses to manage their capital and cash flow in the current downturn.

The Minister, who has been aware of that and who is very much working in the background, has rightly commended the Ulster Bank for taking that big encouraging step. That flexible scheme will not only give businesses greater scope for day-to-day expenses, but can be taken, I believe, as a sign that banks can see light at the end of the economic tunnel and are helping businesses to see that light as well.

This, along with offers from other banks and the UK Government’s recently announced enterprise fund guarantee scheme, will provide local businesses with a wider range of funding options and will help to boost their confidence and, indeed, that of the community. That is Government in action — working with the wider sector in order to make practical differences to people’s lives and businesses in the Province.

The fact that exports are diminishing cannot be denied. The Department is already at work. Its most recent success has been Moore Concrete Products, which is not in my constituency — as Members will be surprised to hear — but in Ballymena. There are photogenic pictures in today’s papers. The Minister happens to promote industry in the papers at least two or three times every week.

Moore Concrete Products, which supplies pre-cast concrete products to the agriculture, civil engineering and building industries, used Invest Northern Ireland’s trade mission to carry out market research and to gain rights to manufacture pre-cast concrete products. The Netherlands, which is the fourth-most-important European market for Northern Ireland manufacturers, is an attractive market for companies such as Moore Concrete Products. There is much past success to build upon. Customers in the Netherlands purchased goods worth £145 million in 2007-08 — 10% of Northern Ireland’s total exports to markets in continental Europe. Again, that is a success story.

As the Minister stated recently, businesses must and will place even greater focus on increasing the value added to their products and services and developing innovative sales and marketing techniques.

The proposer of the motion referred to planning, as did other Members. It is important that planning reform is in place. That is not just Minister Foster’s responsibility, but that of other Departments and, in particular, Minister Wilson. A method is in place to fast-track important projects and get things moving. Business is worried, but the Minister will prove that she is up to the challenge. My grandmother had a saying:

“the proof of the pudding is in the eating.”

The Minister will prove that, and it will be an acceptable meal.

Photo of Alasdair McDonnell Alasdair McDonnell Shadow SDLP Spokesperson (Health), Shadow Minister (Europe), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Northern Ireland) 11:30 am, 24th February 2009

I reassure my friend Mr Newton that I have taken note of his sensitivities. I will speak carefully because I do not want to offend his soft and sensitive feelings. I was touched — and I hope that the Minister was, too — that he jumped to her defence.

On a more serious note, I thank my colleagues Mr Cree and Mr McFarland for bringing this timely motion before the House. Indeed, after the shock of — I was going to say “the collapse”; it is well nigh a collapse — the downward spiral that Northern Ireland has experienced during the past nine or 10 months, much more time must be focused on and support given to people who try to rebuild the economy. The Assembly must take all the constructive action that it can and do as little as possible to talk the economy down further.

We live in challenging times. Many of Northern Ireland’s key domestic and international markets are struggling. Consumer and business confidence is in relative free fall. Unemployment is rising. In particular, the current climate is acutely severe and threatening for local small and medium-sized enterprises. My office has been inundated by local businesspeople who are deeply concerned that their hard-built enterprises are on the verge of collapse.

The issues that they face are not new and are no surprise to anybody. We have all heard the stories of cash flow difficulties; limited access to credit; decrease in demand for goods and services; severely reduced profit margins; and, unfortunately, increasing incidence of compulsory staff redundancies.

We cannot underestimate the importance of local SMEs to our economy. The figures that I have been given indicate that 65% or 66% of our private-sector workforce is employed in very small companies that employ fewer than 10 people. I note and welcome the Minister’s repeated pledges to do everything possible to support our local SMEs. That is essential if we are to mitigate and offset the worst effects of the recession. However, as the motion rightly points out, global economic circumstances have severely restricted the flow of foreign direct investment.

The Department of Enterprise, Trade and Investment and, indeed, all of us can always do a little more. I urge Invest Northern Ireland, in particular, to nurture and support existing and new local small and medium-sized enterprises in every way that it can, rather than chasing a crock of gold at the end of a rainbow for foreign direct investment that is not there. Invest Northern Ireland is engaged in a number of worthwhile initiatives to help small businesses, such as credit-crunch seminars. However, it could do more, and it could be more flexible and responsive.

A series of specific measures could be undertaken to deliver targeted, efficient and effective support and assistance to small businesses and to people who wish to start up a small business. Those measures include reinstating the £5,000 business start-up grant, which should be administered by some of the capable local enterprise companies. Those companies are best placed to provide pre-start enterprise and expansion training.

I also urge the Minister to introduce a capital expansion grant for small companies that employ between two and 10 employees and that want, or need, to grow but do not have the resources. That grant would not only help to offset and mitigate the worst effects of the current situation but could assist in long-term strategic development and changing the tone of Northern Ireland’s economy.

Mr Neeson referred to the United States Small Business Administration, and that is a wonderful example of action being taken to bring about economic recovery. Efforts have been made here to get a loan-guarantee scheme for small firms up and running, and I appreciate that it does not seem to work very well. However, we must do whatever we can to ensure that the banks operate that scheme.

The US Government were able to persuade the banks to run a scheme that resulted in £100 million in loans instead of £5 million in grants; the £5 million is an insurance to support those who defaulted. The Executive must apply pressure on the banks to make them more understanding and flexible and to open up the flow of capital.

Photo of Mitchel McLaughlin Mitchel McLaughlin Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. Obviously, the economic downturn has exercised all parties. I welcome the motion, and my party supports it. The Assembly has repeatedly returned to the issue, and that reflects the concerns in the wider community and constituencies.

The consequences of the economic downturn are obvious. The withdrawal or recasting of credit facilities has had dire consequences for companies, some of them long-standing. There have been daily announcements of redundancies, falling property values and a virtual shutdown of private-sector construction and development. That has consequences for long-standing companies that provide freight and haulage services, which, in many ways, were the spine of our SME sector. There has also been pressure on front line services and increases in energy costs; the list goes on and on.

We have a limited ability to respond in an autonomous fashion, and, indeed, Governments that do have that ability have experienced difficulties. Nevertheless, we have strengths in the very considerable resources that we can apply to capital investment projects. Beyond our traditional resource, which is very strong and obvious, another resource is the strength and vibrancy of our SMEs, which have a proven ability to withstand the most difficult circumstances.

We can, and should, deploy those strengths and pursue every opportunity for FDI. I have not heard any convincing arguments as to why we should abandon that approach. However, the Programme for Government has other dimensions and provides a real opportunity for the Assembly and the Executive to support indigenous enterprises.

I am pleased that the Chairperson of the Committee for Enterprise, Trade and Investment addressed the issue of the frameworks; I, too, have addressed it on a number of occasions. The Minister of Enterprise, Trade and Investment and her ministerial colleagues should review not only the role and function of Invest NI, but general procurement policy and approach. We should talk about unpacking major capital projects to ensure that local enterprises have an opportunity to compete for, and win, contracts. If the bubble had continued, and the economy had continued to grow, we should have been discussing and considering this issue anyway. However, it is now imperative that we do so in order to ensure that local enterprises, skills bases and companies respond to that opportunity. The benefits of such an approach are obvious.

We can continue to address the aims of the Programme for Government and the strategic investment goals. However, when local companies are able to deliver — and not just be restricted to being sub-contractors, through which significant sums, to all intents and purposes, are exported out of our economy — money will be re-circulated to the maximum extent in the regional economy. We will have retention of skills and work squads, opportunities for training and appren­ticeships, and support and security for indigenous SMEs.

The motion should be supported on the basis that the targets in the Programme for Government remain robust and attainable. I am certain that the Minister is alive to the urgent need to provide maximum oppor­tunities for SMEs to participate. It is on that basis that we should deploy our strengths and opportunities. There is little point, purpose or benefit in lamenting for what we do not have. Let us apply the resources at our disposal and our own creativity and imagination in order to ensure maximum involvement in the delivery of the capital projects to which we have already agreed. We have the resources to do so.

Photo of Dominic Bradley Dominic Bradley Social Democratic and Labour Party

Go raibh míle maith agat, a LeasCheann Comhairle. Tá an-áthas orm a bheith páirteach sa díospóireacht thábhachtach seo inniu, agus gabhaim buíochas leis na Comhaltaí eile a ghlac páirt sa díospóireacht sa Tionól inniu.

I am pleased to take part in the debate, and I thank the Members who proposed the motion.

The likelihood of attracting foreign direct investment is greatly reduced during periods of economic downturn such as we are experiencing at the moment, not only locally but on a global scale. American companies, from which we traditionally draw high levels of FDI, are being encouraged to keep investments at home in order to help their own economy to recover. We should continue to seek FDI — but with realistic expectations.

However, we should seriously consider redirecting resources towards developing local businesses and industries. Although global recession poses a threat, it also provides opportunities. If it does not force us to fall back on our own resources, it certainly encourages us to concentrate more on growing and developing our own indigenous businesses. Even if local plants are profitable, international companies can, during recession, close them overnight if the international headquarters seeks rationalisation. In recent times, that has happened too often, and we have seen the pain and anguish that it leaves behind. However, it is a fact of the modern global economy.

Although inward investment and support to high-value-added, technology-based business is important and achieving inward investment in technology-based business targets is challenging, they do not provide the total solution for the Northern Ireland economy, especially for those businesses based in peripheral areas and disadvantaged communities, which FDI often does not reach.

We need to develop a mixed economy that values, and applies resources to, the establishment and development of entrepreneurs who are starting locally focused businesses, including family enterprises.

Entrepreneurship is an important driver for economic growth, competitiveness and job creation, and support should be available at a local level for all businesses. Figures from 2007 showed a gap in provision between around 7,000 new businesses registered for VAT, and the support available from Invest Northern Ireland. Locally focused businesses contribute to the Northern Ireland economy by providing employment, income and opportunities in towns, villages and rural areas. They provide the only opportunities for employment and income growth where inward investment is not an option.

Unfortunately, at present, no one has statutory responsibility for supporting locally focused businesses, and whatever support is available is of a stop-start nature. Only a small amount of Invest Northern Ireland’s budget goes to locally focused businesses, and the Start a Business programme is now coming to an end.

There is no Northern Ireland-wide programme to support local businesses to develop, grow, innovate and export. Local enterprise agencies do not have core funding, and have often to spend their energies on attempting to stay afloat, rather than doing the important work that needs to be done in continuing to support and develop local business.

Addressing the entrepreneurial deficit in Northern Ireland requires a system similar to that in the South, where city and county enterprise boards have a statutory responsibility. That requires local development plans and budgets for supporting small businesses, and a proactive approach that includes integrated support for entrepreneurship, which is cross-departmental and co-ordinated by the Minister’s Department.

Barriers to entry need to be reduced through the provision of start-up support through a network of business advice centres, with incentives for research, development and innovation. There is a need for a strategy rooted in a statutory basis, with a clear policy framework, accountable to the Assembly, and a consistent long-term approach based on best practice, wherever it is found. Out of that should come regional action plans supported by longer funding cycles and managed by local education authorities, further education colleges and the local councils. Go raibh míle maith agat.

Photo of Jim Wells Jim Wells DUP 11:45 am, 24th February 2009

I support the motion. The difficulty with speaking last in a debate is that there is little that has not already been said. However, for the benefit of next week’s ‘Mourne Observer’, I will say it anyway. [Laughter.]

I am grateful to the Federation of Small Businesses, which has provided me with some interesting statistics on the importance of SMEs to the Northern Ireland economy. Their role is pivotal — they account for 81% of all private-sector employment in the Province; they employ 500,000 people; and 41% of the entire employment in Northern Ireland is in the SME sector, compared with 32% in the rest of the United Kingdom. We are dealing with the engine of our economy. If we allow the SME sector to stagnate or decline dramatically, the impact on the entire Northern Ireland economy would be very severe.

I will deal with one issue that I am sure other honourable Members have been faced with: the difficulty in obtaining funding. I have been approached by companies in my constituency that have very strong credit ratings; have had a long history of borrowing from one of the big four established banks in Northern Ireland; have had no default on their credit; and have paid their monthly instalments to the bank with no difficulties whatsoever. That has enabled them to grow as SMEs, and to increase employment.

Since the onset of the credit crunch, however, those perfectly reputable and solid institutions are finding it more and more difficult to obtain not new credit, but simply an extension to the credit that they enjoyed for decades.

I was approached by a company in my constituency that employs 120 people and that has run into a brick wall in trying to obtain further credit that would allow it to continue to employ and to invest. Indeed, the FSB has indicated that one third of SMEs in Northern Ireland have experienced difficulties in obtaining adequate funding for future expansion.

We all welcome the Ulster Bank’s decision to make £250 million available for small companies to invest. However, would that have happened had it not been for the link between the Ulster Bank and the Royal Bank of Scotland? The Government now own some 70% of that bank’s shares, which has forced its subsidiaries to start lending to small business. Where are the Bank of Ireland, Allied Irish Bank and the Northern Bank — the other three major banks in Northern Ireland — when it comes to providing much-needed finance for companies? The problem for customers of those three banks is that it can be very difficult to transfer to the Ulster Bank for all sorts of technical reasons. Therefore, the new funding is available only to new companies that are starting up or to existing Ulster Bank customers. That sector is experiencing major difficulties.

Furthermore, there seem to be real problems with the enterprise finance guarantee scheme, which is itself an excellent proposal. However, so far in Northern Ireland, only 3% of SMEs have been able to avail themselves of that scheme. We require a dramatic increase in the liquidity and availability of funding; but not rash funding, because we all realise why we are in this mess. It is because banks, particularly in America, were prepared to lend money to companies and individuals who had no prospect of being able to repay their loans — the toxic-debt syndrome. The problem is that we have swung in the opposite direction. We are now in a situation in which perfectly reputable and solid companies cannot go any further. Without funding, it is curtains for some of those companies.

I urge the Minister to use her good influences to try to ensure an easing of that particular logjam. I realise that the Minister and the Department have a limited role, because we are dealing with large, multinational banking companies. As much as I would like the Minister to be able to walk into the headquarters of any of those large banks, crack a whip and tell them what to do, that could be difficult. However, I would like to think that the Executive and the Minister can use their influence to tell the banks to start lending again to solid companies in Northern Ireland in order to get people back into employment. If that does not happen in the next six or seven months, I will be deeply concerned about the future of SMEs in Northern Ireland.

Photo of Arlene Foster Arlene Foster DUP

I thank the Members who tabled the motion, as it allows me to reaffirm my Department’s commitment to supporting our SMEs, which are, effectively, the backbone of the Northern Ireland economy. Despite the pejorative remarks that were made at the beginning of the debate, it also enables me to clarify the policies, programmes and resources that are in place and that seek to have a positive impact on the local SME sector.

I wholeheartedly reject the allegation that I am cocooned or that I am arrogant with regard to our small and medium-sized enterprises. Why would I have asked for a review of Invest Northern Ireland and departmental policies if I were arrogant or cocooned? Why, if that were the case, would I have asked a subgroup of the Economic Development Forum to bring forward actions for the short term? Why would I have listened to the concerns that were raised with me about the Start a Business programme, particularly on the removal of the grant system? Why would I have asked for a review of that programme and for evidence of the impact that the removal of the grant system has had on it?

In common with other UK regions and countries across the globe, Northern Ireland is now facing significant economic pressures. The private sector has been reporting substantial job losses, and of all the confirmed redundancies in the past year, about half were from our SMEs. That is a worrying indication of just how difficult current trading conditions are. In January 2009, for example, Invest NI clients reported a total of almost 600 redundancies, compared with a previous monthly average total of 226 redundancies.

Based on its current levels of work in progress, Invest NI has also seen evidence of a reduction in business development activity across the sectors. That suggests a mood of caution, with clients deciding either to defer or, indeed, to slow down investment plans. That situation extends beyond the indigenous business base, with the early-stage pipeline of new FDI prospects also reduced significantly in comparison with those that existed at the same point last year.

However, given that we have a regional economy and a large public sector, historically, we have been somewhat insulated from the most marked swings in the economic cycle. Obviously, our proximity to the Republic of Ireland and the current exchange rate also work to our advantage, particularly the impact on the retail sector and the opportunities for export. Those factors, to some extent, should help to cushion our economy from the full — and I mean, “the full” — impact of the downturn.

Indeed, independent economic forecasters — and not just Oxford Economics — indicate that, as regards output and employment, Northern Ireland will not be more adversely affected than the other UK regions during the downturn. I get a range of forecasts, not just those from Oxford Economics. However, I have told Members time and time again that economic forecasting is not an exact science, and, at present, those forecasts can range in difference.

We have a regional economy, but we also have a SME economy. In 2007, there were an estimated 132,000 business in Northern Ireland, 99% of which were small and medium-sized enterprises — businesses employing fewer than 250 people. Small and medium-sized businesses account for 81% of the private-sector employment in Northern Ireland, compared with 59% in the UK as a whole. Therefore, SMEs really are what Northern Ireland is all about.

Government support for businesses in Northern Ireland is therefore largely directed towards assisting the SME sector. The SME business base is core to the success of the Northern Ireland economy, and Invest Northern Ireland contributes towards its development by providing support to new start-ups and the expansion of existing business.

Invest Northern Ireland also continues to develop new schemes of support focused on encouraging business starts and accelerating the growth of its SME clients. One such example is the growth accelerator programme, which is specifically tailored to meet the needs of small businesses by providing a short assessment and assistance of up to £130,000 to help SMEs to enter new markets or to bring new essential skills to their businesses.

I reject the allegation that we do not help the manufacturing industries and that we identify those as sunset industries. I accept that the area of manufacturing has been the subject of some of the worst news. However, some indigenous manufacturing companies have also been the subject of our best news, especially those in the areas that Invest Northern Ireland identified as growth areas such as pharmaceutical companies, including Randox Laboratories and Almac Sciences.

Some 28% of the assistance offered goes to contact centres in ICT, and the remaining 72% goes to all other sectors, which includes manufacturing in its widest sense.

We held 10 seminars — attended by representatives from 560 clients companies — across Northern Ireland to help deal with the credit crunch. Participants at the events had the opportunity to discuss their individual business needs in detail and to identify key projects to improve their performance and the possibility of taking advantage of the £5 million accelerated support fund.

The EU has introduced a temporary relaxation of some state-aid measures in response to the current economic conditions, because viable businesses are under pressure — a point that was well made by my friend Mr Wells — and in difficulty, through a squeeze on credit and a weakness in demand.

The UK Government, through the Department for Business, Enterprise and Regulatory Reform, have notified a framework for small amounts of compatible aid under this temporary relaxation, and my officials are urgently considering how those flexibilities can be used to help Northern Ireland businesses to weather the economic storm.

Meanwhile, Invest Northern Ireland continues to work hard with its clients to identify and exploit new export markets, particularly given the advantages presented by the current exchange rate. During a trade mission to the Netherlands, I saw at first hand the determination of our local companies to establish and cultivate trade links with our European neighbours. Mr Shannon made that point.

In relation to Mr Butler’s point about working more closely with councils and local enterprise agencies, he will be pleased to know that I was in Lisburn at 7.45 am today to attend a credit-crunch seminar hosted by his own council. We have run a series of such seminars, and have recognised that the client base of Invest NI is limited. We wanted to work with companies that are not clients of Invest NI. Therefore, we have worked in partnership with Enterprise Northern Ireland, the district councils and the Northern Ireland Chamber of Commerce and Industry, and we have developed a programme that provides the wider local business community with the opportunity to avail itself of specific advice and guidance regarding the current economic climate and its impact.

Mr Cree mentioned energy prices in Northern Ireland, which are a worry to a lot of firms. Indeed, all Northern Ireland businesses can access the Carbon Trust’s interest-free loan scheme that is doing a tremendous job to achieve its aim, which is to maximise energy efficiency. I understand that around 940 companies have benefited from energy-efficiency advice and that a couple of hundred more companies will benefit from that advice this year.

Mr Cree commented on the need for more money, as expressed by Mr Roberts of NIRTA. Members know that I have repeatedly said — in the Chamber and outside — that I will be very sympathetic towards any application for further funding from the Carbon Trust in relation to energy efficiency. However, to date, I have not had any approaches in respect of that issue. Therefore, it is not a case of my not sending the right messages to people. If that approach is made, I will be very sympathetic.

Many Members, among them the Chairperson and Mr Neeson, spoke about the Start a Business programme, which has operated for around nine months without a grant. I said at the beginning of my speech that concerns about that issue have been relayed to me, and that I was keen to continuously monitor the impact of grant withdrawal, particularly given the rapidly changing economic conditions. I have asked Invest NI to commission an independent review of the evidence to date, and to seek the views of clients who have dropped out of the scheme. I hope to have that before the end of the week. Once the independent review is completed, I will share the report’s findings with the Enterprise, Trade and Investment Committee and with Members in general. The current programme will close at the end of March 2009. The new enterprise development programme, which Mr Neeson referred to, will commence in April.

Members mentioned our local banks during the debate. Members know that I have met representatives of the banks in order to discuss concerns that have been raised. I also raised concerns about the conditions that apply to new national schemes that have been introduced. Mr Wells spoke about the enterprise finance guarantee scheme, and assured me that the new scheme is designed to be easier to administer than the old — small firms loan guarantee — scheme. My Department is working with local banks to try to get the information out there so that we can have a better take-up than the small firms loan guarantee scheme, to which Dr McDonnell referred. For some reason, Northern Ireland had a very poor take-up of that scheme, compared with the rest of the UK.

Meanwhile, Invest NI’s offer activity at the end of January 2009 totalled almost £130 million; twice as much as was offered at the same point last year. Innovation and capability development also showed significant increases of 28% in offers and 79% in assistance.

Inward investment projects approved, to date, in 2008-09 intend to promote 2,981 new jobs and safeguard a further 993 existing jobs. That corresponds to increases of 140% and 180% respectively, compared to the position this time last year.

Although those provisional results indicate a successful year for Invest NI, it is likely, and we must be cognisant of the fact, that many investors may bank those offers of assistance in preparation for a medium-term upturn. In other words, they may not take advantage of the offers that have been made to them, which, in turn, will mean that the drawdown of those commitments will be delayed — something that we must bear in mind.

Closer examination of Invest NI’s work-in-progress statistics also shows a significant decline in the number of potential projects that are scheduled to come to fruition in the medium to long term.

The number of long-term larger projects in the pipeline has decreased by 55% compared with the same period in 2007-08. In the current global climate, it is to be expected that some prospective investors will want to defer projects for implementation in the medium term. However, it is important to realise that we are talking about deferment, and not the closing of the door that has been mentioned by some Members today. I agree with Mr McLaughlin’s comment that it would be foolish not to pursue further FDI. We can build our small and medium-sized enterprises in Northern Ireland while looking for the inward invest that is needed in the region — the two actions are not mutually exclusive.

Ms J McCann and Mr McLaughlin made comments about public procurement: I heard what Mr McLaughlin said on the issue and will examine it. Ms J McCann will know that InterTradeIreland is doing some very good work on public procurement and is holding seminars across the island of Ireland to try to help smaller contractors get Government contracts. I received an update on that work recently.

As we move through the economic downturn, continuing to pursue value-added inward investment is central to the success of my Department and the long-term goals of the entire Executive. Northern Ireland continues to display the strong attributes that make the region attractive to investors, such as a highly educated workforce, strong infrastructure, competitive costs, proximity to Europe and a pro-business focus. All of those attributes are very strong selling points for Northern Ireland.

My departmental policies and resources cannot be looked at in isolation, which was a point made by my friend the Member for East Belfast Robin Newton and the Member for Strangford Mr Shannon. As chairperson of the Economic Development Forum, I established a private-sector led subgroup to consider additional measures to help businesses through the economic downturn. The initial recommendations of that subgroup point to a range of cross-departmental actions, which cover my Department, DRD, DOE, DEL and DFP. Those recommendations include: assisting the construction sector; identifying financing issues that affect SMEs; suggesting financing solutions and identifying medium-term actions to prepare for the future upturn. I hope that we will be able to discuss that report at the Executive in the very near future.

We cannot change the world, but we can offer support to businesses at this difficult time. We will continue to work alongside our local businesses to help them reduce the impact of the downturn, enable them to sustain their businesses, and help them to prepare for the future so that when confidence in the financial markets returns, they will have the skills and tools to take early advantage of the improvements. I am glad that I had the opportunity to clarify some of the points that were raised in the debate.

Photo of Basil McCrea Basil McCrea UUP 12:00 pm, 24th February 2009

Perhaps it is in the nature of politics that people are inclined to think that their particular view of the world is correct. They try to lecture other people, telling them to listen carefully because they might learn something. I also suspect that while people are doing that, they are also tempted to make party political points in order to explain why their side knows better and that the other side is missing the point. In the current circumstances, that is not the right way forward.

I declare an interest as a former chief executive of Northern Ireland Manufacturing, and I will refer to some of the issues that I learnt during that period. For the record, I am also a director of Atlas Communications. The issue that one learns when talking to a body such as Northern Ireland Manufacturing is that one has to win a battle to convince people that there is a right way forward. I put it to Members, gently, that not everyone was always fully supportive of a cap on industrial derating, and a look through the Hansard reports of debates over a number of years is quite illuminating. I mention that only because some of what I say may be of some help.

The Minister started her speech by asking why she was being accused of being arrogant, out of touch, insular, etc. What I want to do is to find a way to work collaboratively and collectively with everyone.

Certain points were made that merit attention. Of particular concern is the issue of construction. Some Members talked about the very important steps that the Ulster Bank has taken, and mention was made of an economic survey that I suspect that everybody has read. Northern Ireland went into recession before the global economic downturn because of an unsustainable housing boom. Our Celtic tiger economy was built without Celtic tiger industry.

In case anybody has difficulties with the language, I shall cite a particular Ulster Bank document, which states that Northern Ireland house prices were two thirds of the UK average in April 2005, and all regions, bar Scotland, had prices above Northern Ireland. That document also states that Northern Ireland had overtaken the UK and ROI averages by February 2007, and prices were increasing by 56% each year.

In addition, the document highlights that Northern Ireland had the third-highest house prices of any UK region by August 2007, but Northern Ireland has the lowest average wages in the UK and the highest rates of economic inactivity, as we all know. Furthermore, the paper states that Northern Ireland is expected to fall back down the regional house price table, and its position will reflect its economic fundamentals.

I want to hear from the Minister, her Department and her Executive colleagues what exactly their ambition is for Northern Ireland. What is the Minister’s vision for the economic future of this place? How will Northern Ireland make its way in the world? I very much suspect that it will not be on the basis of a return to a construction boom that is based on housing. We must find some way of adding value that can be invested in our other services.

I want the Minister to be a business champion. I am quite sure that she will take on that challenge. When all sectors of industry evaluate the question of who understands their challenges and can resolve their issues, the answer should be the Minister of Enterprise, Trade and Investment.

I now come to some of the comments that were made by colleagues around the Chamber. Leslie Cree posed a question about what more could be done. I suspect that we will hear more bad news sooner rather than later. The public will quite rightly ask those of us who make our living up here what we are going to do about the situation. There is no room for complacency. If we are to maintain the confidence of the public, we must be seen to be doing something.

Mark Durkan made quite a prescient comment when he asked what else can be done. My answer is that we must examine risk. A number of Members said that all businesses are contracting and becoming averse to risk. The trouble is that that leads to illiquidity, which perpetuates the global downturn. Government must take the lead in removing — and encouraging people to take — risks. That is not something that government, particularly civil servants, traditionally do.

Simon Hamilton mentioned Invest NI and the creation of jobs, but we all know that all we have really had is churn. Over the past five years, many jobs have been lost from the highly paid and high GVA manufacturing sector. Those have been replaced with short-term part-time jobs in the service industries.

Photo of Arlene Foster Arlene Foster DUP

The Member obviously missed the jobs announcement by First Derivatives plc, the average annual wage of which is £40,000. Does he accept that that is a good investment?

Photo of Basil McCrea Basil McCrea UUP

I am not sure why the Minister feels the need to highlight that point. The big challenge for Northern Ireland is productivity. In previous statements, her colleague the First Minister said that Northern Ireland must address productivity. We must generate more earnings from the existing workforce.

Jennifer McCann quite rightly highlighted procurement issues. Procurement frameworks are detrimental to SMEs. Rather than just talking about that, I would like to see some forward movement.

I listened to what Robin Newton had to say. I apologise for agreeing with him on three or four points, because that will probably not go down terribly well.

However, he was right to say that we must work collectively, and he was correct in saying that the upgrading of skills is key if the economy is to emerge from the crisis. He used a good turn of phrase when he said that we must not mistake “activity for action”. I agree with Mr Newton that there must be a balanced approach to dealing with FDI, as well as SMEs.

Photo of Robin Newton Robin Newton DUP

Will the Member give way?

Photo of Basil McCrea Basil McCrea UUP

I will only give way for a quick point, because I wish to finish.

Photo of Robin Newton Robin Newton DUP 12:15 pm, 24th February 2009

I also described the motion that was proposed by Mr Cree and Mr McFarland as weak, because it does not call for collective action.

Photo of Basil McCrea Basil McCrea UUP

I realise that Mr Newton and I do not agree on every point; perhaps that will get him off the hook.

I am about to finish the political career of another Member now. Speaking towards the end of the debate, Jim Wells derided his own lack of anything to add. However, he hit the nail on the head and made what was by far the most pressing contribution to the debate. He acknowledged that what the Ulster Bank is doing is great, but he asked what action is being taken by the other big three banks — and I think that I am right in taking that to mean the Bank of Ireland, the Allied Irish Bank (AIB) and the Northern Bank? The problem is that two of those banks are headquartered in the Republic of Ireland.

Perhaps the Minister of Enterprise, Trade and Investment will raise my next question with her Executive colleague Nigel Dodds: why has he not gone to speak to speak to Brian Lenihan, and why did he not attend the meeting of the North/South Ministerial Council at which the banks were discussed? The one question that I want answered is why the Bank of Ireland and AIB are not following the suit of the Ulster Bank by enabling businesses to access funds. Pressure must be brought to bear from the highest level on those banks.

Alasdair McDonnell talked about capital grants, and he has a point; a way must be found to encourage expenditure by the private sector. I want to find out what the Minister might do in that regard.

Photo of Arlene Foster Arlene Foster DUP

Will the Member give way?

Photo of Basil McCrea Basil McCrea UUP

I would give way to the Minister, but I have only enough time to conclude.

I want a different attitude to be taken to risk, and that should be led by the Government, perhaps in agreement with the Assembly and the Public Accounts Committee. I also want a new approach to procurement, particularly to the frameworks that do not help the SMEs. In light of the Ulster Bank’s initiative, I want action to be taken on the banks whose headquarters are in the ROI. Most importantly, I want the Minister to outline her vision for the future of Northern Ireland after it emerges from the current economic mess.

Question put and agreed to.


“That this Assembly notes with concern the growing negative impact of the current economic downturn on small and medium sized enterprises; recognises that global economic circumstances have significantly restricted the flow of Foreign Direct Investment; and calls on the Minister of Enterprise, Trade and Investment to refocus her Department’s policies and resources on support for small and medium sized enterprises.”