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Independent Review of Economic Development Policy in Northern Ireland (DETI/Invest NI)

Ministerial Statement – in the Northern Ireland Assembly on 5th October 2009.

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Photo of David McClarty David McClarty UUP

I have received notice from the Minister of Enterprise, Trade and Investment that she wishes to make a statement regarding the independent review of economic development policy in Northern Ireland.

Photo of Arlene Foster Arlene Foster DUP

I wish to make a statement on my intention to launch a short period of consultation on the report of the independent review of economic development policy, which was published last week.

Members will be aware that I invited Professor Barnett, the vice chancellor of the University of Ulster, to chair the review into whether the existing Department of Enterprise, Trade and Investment (DETI) and Invest NI policies, programmes and resources are contributing optimally to the delivery of the productivity goal in the Programme for Government. I thank Professor Barnett and his review panel for the time and effort that they put into producing their detailed and wide-ranging report.

The panel made a total of 58 recommendations. In summary, it recommends that there is a need to promote a much greater emphasis on supporting innovation as well as research and development; a need to provide greater autonomy for Invest Northern Ireland in order for that organisation to be more responsive and flexible in supporting companies; a need to improve the way that economic policy is developed and co-ordinated in the public sector; and a need to re-examine the way that we assess performance, in particular the tendency to examine each individual decision rather than adopting a broader portfolio-based approach.

The report outlines a number of recommendations in other areas of government that help to deliver on the Programme for Government productivity goal. Those include important areas such as skills, infrastructure and planning.

It is clear that the panel put a huge effort into addressing those highly significant and complex issues. Its conclusions and recommendations will require the most careful consideration, which is why I will not be jumping to a conclusion on the report’s analysis and recommendations. I was exceptionally disappointed, but perhaps not surprised, by some of the sensationalist coverage that followed the immediate aftermath of the launch of the report last week. Much of that was at odds with the balanced tone of the report, and, I believe, misrepresented the findings and conclusions of the report.

That coverage was in marked contrast to the mature and balanced discussion that took place during Question Time in the Chamber last week. Following that lead, I urge everyone to give the report the mature reflection that it needs and deserves.

The panel’s analysis and recommendations will prove a valuable stimulus for a thoughtful and wide-ranging consideration of what needs to be done to grow the economy. However, there is also an urgent need for action, which is why I am announcing today that there will be a short, six-week period of public consultation on the report, ending on Monday 16 November. Responses should be sent to the strategic planning division in my Department, and further details can be found in the covering letter that accompanies the commencement of the public consultation exercise.

My objective is to balance the need to draw in views with the need to reach timely conclusions and to initiate purposeful actions on the report and its recommendations. I commend the statement to the Assembly.

Photo of Alban Maginness Alban Maginness Social Democratic and Labour Party

I thank the Minister for her statement and echo some of the comments that she made on the sensationalist approach to the report by some members of the press, though not all.

The report is a substantial and complex piece of work, and the implementation of its recommendations will require all of government to work together. As the Minister rightly said, the report will require most careful consideration and mature reflection. However, she also referred to the urgent need for action. With that in mind, what consideration have the Minister and her Department given to the involvement of other Depart­ments and agencies in the development of proposals for action on the findings of the report and to the estimated timescale for bringing those proposals to the House for implementation?

Photo of Arlene Foster Arlene Foster DUP

I thank the Chairman of the Committee for his comments and his question.

The report has been shared with my ministerial colleagues — it was sent to them on the same day that I received it. It is important to take the views of colleagues at high level, initially and later on, on how the report could impact on their Departments. Although the review’s terms of reference only covered the policies of DETI and Invest Northern Ireland on the economy, the point is well made in the report that there are many other Departments that contribute to the success or otherwise of the Northern Ireland economy. The main thrust of the report is about raising the productivity of the Northern Ireland economy, and Barnett points to a wide range of areas that do not fall under the remit of DETI. Therefore, there will need to be engagement between me and my Executive colleagues.

I wanted the consultation to last six weeks, and no longer, because there is a need to gather the views of representatives from the business community and other stakeholders before I hold my discussions with ministerial colleagues. This piece of work will engage all my colleagues, which is why I intend to take it to the Executive shortly after the consultation finishes.

Photo of Simon Hamilton Simon Hamilton DUP

I welcome the proposal in the report to merge the Minister’s Department with the Department for Employment and Learning (DEL), or at least elements of that Department that are economically focused and facing. That proposal will be widely welcomed by the business sector and the community at large. If the proposal finds favour in the Executive, how can it be taken forward so that we receive the benefits of it that are underscored in the report?

Photo of Arlene Foster Arlene Foster DUP

It will come as no surprise that I welcome the proposal to merge DETI and DEL so that there is a single Department of the economy. That proposal was welcomed by the business community, which is reflected in the evidence that its representatives gave to the review. However, that is not just a matter for my Department; as the Member knows, it will have to go to the Executive. Although I can take a view on the matter, the Executive will have to come to a view on it and take it forward. The Assembly and Executive Review Committee, which the Member sits on, will probably also have a role.

However, it is something that I welcome and that I am sure will come up for discussion after the consultation.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. I, too, thank the Minister for her statement. Given some of the criticisms in the review of the performance of Invest NI — to which the Minister referred in her statement — does Invest NI not need to be made more accountable rather than given more autonomy?

Photo of Arlene Foster Arlene Foster DUP

I do not accept that at all, and that is certainly not the finding of the Barnett review, which clearly says that Invest Northern Ireland should be given more autonomy to allow it to be more flexible and responsive to the needs of the business community and those seeking to invest in Northern Ireland. The Member’s assertion is not borne out by the evidence and is not in the review.

The review is balanced in many ways, not least in its assessment of the work of Invest Northern Ireland. It highlights areas of good performance, and, yes, it does contain criticism. However, there is not much point in me asking such a panel to carry out a review if it gives me only good news. I wanted constructive criticism, which is very much in the review, and I welcome that. I hope that we can have a mature debate on how we deal with that criticism and move the discussion forward.

Photo of Leslie Cree Leslie Cree UUP

I thank the Minister for her statement. It is good to have that review; there is a lot in it. At this early stage, a lot more thought is needed before we come up with broad questions on the way forward. However, one thing did catch my eye: 55% of total programme costs for selective financial assistance was spent on expanding businesses rather than growing new ones. Is the Minister happy with that emphasis?

Photo of Arlene Foster Arlene Foster DUP

There is a good deal about selective financial assistance in the review, particularly in relation to “dead weight”, which involves giving money to a company that later says that it was going to expand anyway. However, that is not known when dealing with a company up front, and therein lies the difficulty. When you are dealing with someone across the table who says that unless you give me assistance, I will take these jobs elsewhere or not expand, do you take the risk and decide not to help the company with those jobs, or do you step back and give it the money?

That is an issue that will come up again and again, and the Member is right to point it out. However, selective financial assistance is on a timeline, and that also gives us difficulties from a European perspective. I am pleased to see that the review provides suggestions about how we can argue with Europe to keep some of that selective financial assistance, because we still need that help in Northern Ireland.

Productivity versus jobs, and lower-paid jobs, is an issue with which the Assembly will have to come to grips. I said it last week, and I will say it again: should we continue to bring low-value jobs to a constituency, even though I know that Members very much welcome those jobs in their constituencies? The review clearly says that we should emphasise innovation and research and development and that low-paid jobs should be able to find their own way. That is a big decision for the Assembly and for Invest Northern Ireland and is for Members to look to in respect of their constituencies.

Photo of Séan Neeson Séan Neeson Alliance

I thank the Minister for her statement. I welcome the publication of the review, particularly in relation to small and medium-sized enterprises (SMEs). One recommendation is that SMEs should be integrated into the supply chains of large companies. How does the Minister react to that? Secondly, Professor Barnett and his team will appear before the Committee for Enterprise, Trade and Investment this week. Is six weeks long enough for the consultation?

Photo of Arlene Foster Arlene Foster DUP

I will answer the second question first. Yes, a six-week period is long enough I do not want to be accused of paralysis, apart from anything else. Government are always accused of taking in reports and allowing them to sit and not acting on them.

I was determined that that would not happen with this report, because it contains many good points. Some recommendations will take longer to implement, but we can act on others now. In fact, Invest Northern Ireland is already carrying out actions that have much synergy with the report’s recommendations.

I was pleased to see a section on small businesses in the panel’s report, because part of the criticism that I continually hear about Invest Northern Ireland is that it has a client base that it does not go beyond. The report talks about doing away with the emphasis on client companies, and I welcome that as it will allow Invest Northern Ireland to engage with companies that it otherwise would not have dealt with, particularly small businesses.

I am pleased with how Invest Northern Ireland has been working on some bigger contracts to bring in smaller companies and allow them access, which goes back to the public procurement issue. For instance, Invest Northern Ireland is working with the team in the south west hospital to bring in small contractors and allow them access to the work. Moreover, it allowed small contractors to bid for work in Bombardier recently. We can do a lot for small businesses that has not been done to date. I welcome that.

Photo of Mervyn Storey Mervyn Storey DUP 12:15 pm, 5th October 2009

I welcome the fact that the Minister has launched the consultation. She mentioned small and medium-sized enterprises, which are the core of constituencies such as mine, especially in places such as Ballymoney and Ballycastle. What will be the implications of the report beyond the confines of Belfast and Londonderry? There is much concentration on issues around those two cities, but spreading the benefits of the economy is surely an essential component in all parts of Northern Ireland, especially rural areas such as those in the Minister’s constituency.

Photo of Arlene Foster Arlene Foster DUP

It will not surprise the Member to learn that I want Invest Northern Ireland to operate in places other than Belfast and Londonderry. It is important that coverage spans Northern Ireland. When I took up my ministerial post last year, I visited each Invest Northern Ireland office in Northern Ireland to encourage them to, as the Member says, engage locally with councils, Chambers of Commerce and small businesses. The report has validated that notion and encourages us to look beyond the client company base.

As the Member knows, more than 80% of companies in Northern Ireland are SMEs, and, therefore, a huge number of people are employed in such businesses. As the Member said, they are the backbone of the economy in Northern Ireland. I welcome that part of the report and look forward to taking it on.

Photo of Alasdair McDonnell Alasdair McDonnell Shadow SDLP Spokesperson (Business, Innoviation and Skills), Shadow SDLP Spokesperson (Health), Shadow Minister (Europe), Shadow Spokesperson (Northern Ireland)

I thank the Minister for her statement. Does she share my view that Invest Northern Ireland has been strangled in many ways since its birth by petty bureaucratic accountability rather than enjoying the meaningful accountability that it needs? Is the Minister aware that, at the outset, Invest Northern Ireland was intended to be fairly autonomous but that somewhere along the way, it became strangled by the Department? How does she intend to reverse that position and give Invest Northern Ireland the space, freedom and autonomy to do the job that is required of it?

Photo of Arlene Foster Arlene Foster DUP

The Member is right: a large section of the report mentions governance. Governance issues between DETI and Invest Northern Ireland are very good in so far as there are a lot them. There needs to be greater clarity about their respective roles and responsibilities on economic policy. In other words, DETI sets the economic policy, and Invest Northern Ireland has a role that is flexible and responsive, but realising that it spends public money and must be accountable for that expenditure. That is absolutely right and should continue to be the case.

The Member might recall that in my first meeting with the Committee for Enterprise, Trade and Investment, I raised the issue of risk and the fact that Invest Northern Ireland should be allowed flexibility. Instead of focusing on one investment announcement, we should consider investments in a portfolio manner and consider several investments together. Then, if one investment fails and nine are successful, it would be a good story.

I must emphasise that that approach is not, as some commentators have suggested, a way of allowing Invest Northern Ireland to waste government money — not at all. It allows it to be more flexible, as a regional development agency, and to get those high-productivity jobs that we so desperately need in Northern Ireland. I welcome that; I hope that it encourages Members to debate the issue in the Committee for Enterprise, Trade and Investment and in the House to try to strike a balance between good governance and the need to be flexible.

Photo of Stephen Farry Stephen Farry Alliance

I welcome the Minister’s statement. Will the Minister confirm that, in determining a way forward, governance structural issues are secondary and that the primary challenge is to increase productivity in Northern Ireland? Will she expand on that and talk about the challenge of moving from an economy that competes on the basis of low costs to one that is based on skills and quality? Selective financial assistance, which is based on attracting people in with grants, is not sustainable in the longer term.

Photo of Arlene Foster Arlene Foster DUP

It is interesting that the Member should make that point. It is the same point that I made to a potential Indian investor when I was in India. That investor asked about tax breaks and corporate tax rules in Northern Ireland. I answered by saying that investors need to look at Northern Ireland in a holistic sense, taking account of our skills and our standard of living. We must acknowledge that real estate here is a lot better value for money than that in competing areas, such as London, Edinburgh, Dublin or Cardiff. From that perspective, investment in Northern Ireland is attractive, but we must encourage investors to look at it as a whole.

The Member is right when he says that governance issues are longer-term considerations than programme and policy issues, which we can deal with quickly. That is why I wanted a short consultation that would allow us to get on with things. Invest Northern Ireland is already dealing with some of those issues, particularly in the area of innovation and research and development. The Member may know about a new research and development programme that was launched last December. That has been welcomed by the business community in Northern Ireland. We need to intensify those programmes, after which we can make progress on the discussion about governance.

Photo of Declan O'Loan Declan O'Loan Social Democratic and Labour Party

I congratulate the Minister for commissioning the report, and I welcome its contents. I agree with her comments about the media response, some of which was hysterical and did not do justice to the good work that Invest Northern Ireland has done, as well as noting the improvements that need to be made.

The report made a recommendation on improving the way in which economic policy is developed and co-ordinated in the public sector. Does the Minister agree that, instead of the three economic policy units that we have — one in her Department, one in the Office of the First Minister and deputy First Minister (OFMDFM) and one in the Department of Finance and Personnel (DFP) — it would be desirable to have a single unit, which would be concentrated in her Department? We could readily achieve that; it would be much easier than uniting two whole Departments.

Photo of David McClarty David McClarty UUP

Before I ask the Minister to respond, I remind Members to check that their mobile phones are off. Not only do they disturb every other Member, they affect the recording equipment in the Chamber.

Photo of Arlene Foster Arlene Foster DUP

The Member has made that point in the Chamber on a number of occasions. It will come as no surprise to him that the section of the report that deals with core economic functions is in line with his thinking on this issue. That is why it makes a point about a single Department of the economy and a single, permanent subcommittee, which I, as the Minister, would chair. It also mentions the running-down of the Economic Development Forum (EDF), and that has not been discussed much. That, in itself, is a significant suggestion, but it has remained largely under the radar; I am not sure why that has been the case.

There is a need to consider having a focused policy for the economy. The economy is the centre of our Programme for Government and is our number one priority. Therefore, all policies that flow from the Programme for Government should be focused on that goal. We must streamline our approach in that regard; that is one of the governance issues that Mr Farry mentioned that will take a little longer to put into practice. However, I am keen to follow up on it.

Photo of Alex Attwood Alex Attwood Social Democratic and Labour Party

I welcome the report and the accelerated consultation period of six weeks, which I feel to be appropriate. I look forward to the day when Invest NI is much more than a Belfast-based agency. In fact, I look forward to the day when it is not just a south- and east-Belfast-based agency, and extends not just across the North but into north and west Belfast.

I return to the point made by my colleague Mr O’Loan. Is it not the case that, on the Government side of economic policy, too many cooks spoil the broth? The head of the Civil Service told the SDLP earlier this year that the responsibilities of the economic policy unit in OFMDFM are recession, economic response and co-ordination of economic policy under the Programme for Government. Does the Minister agree that that is duplication of effort, and that those economic policy responsibilities and economic policy units should only be part of her office?

Photo of Arlene Foster Arlene Foster DUP

That was a good try by the Member to get me to confirm that. The economy is a priority across government, as I said in response to his colleague the Chairperson of the Committee for Enterprise, Trade and Investment. It does not only affect my Department. I accept that there is a lot in the report that highlights the need to have a focus.

I will bring the results of the consultation to the Executive for a full discussion on that focus, as well as other issues. The Member can look forward to what I will have to say after I have had that discussion. He is right in saying that there is a need for a focus in economic policy, and we will see how that comes out after the consultation.

Photo of Alan McFarland Alan McFarland UUP

I thank the Minister for her statement, and welcome the report. Invest NI was set up as an amalgamation of IDB and LEDU, with a view to getting away from the idea of LEDU being a poor relation. In October 2002, IDB and LEDU were dissolved, and Invest NI unfortunately ended up going towards the old IDB system.

Does the Minister recognise that this is an opportunity to refocus Invest NI into an organisation seen by small businesses as being fair to them? Will the Minister examine the way in which the Belfast Harbour Commissioners were dealt with? In a previous mandate, there was a similar argument about whether they should be given economic independence and allowed to float. As she will see, they have done extremely well out of that freedom.

Photo of Arlene Foster Arlene Foster DUP

I am happy to consider other examples of how organisations have been dealt with by the Government, and I will take on board the Member’s comments about the Belfast Harbour Commissioners.

In the early days of Invest NI, there was more of an emphasis in getting foreign direct investment (FDI). That was done to try to raise productivity, but it cannot be done in isolation from the indigenous firms in Northern Ireland. I realise that, and judging from my conversations with its representatives, so does Invest NI. I hope that smaller companies will feel a lot more comfortable dealing with Invest NI. Invest NI has been doing more in that space over the past two to three years, particularly in some of its programmes. Earlier this year, I launched the ‘Go for It’ programme, a growth accelerator programme. Work in that field is ongoing. I accept that there probably should be more work in that field, and I will talk to the chief executive of Invest NI about that in the very near future.

Photo of Martina Anderson Martina Anderson Sinn Féin

Go raibh míle maith agat. I apologise to the Minister for not being here at the beginning of her statement. I was signing a petition outside.

I thank the Minister for her statement, and acknowledge that she set up the review into Invest NI. My opinion is that the Minister got more than just constructive criticism from its findings. As the report shows, almost £1 billion of public money was wasted. Almost one third of assistance went to only 10 companies.

The Minister is exceptionally disappointed at the media coverage, and that is something that Declan O’Loan and the SDLP seem to share with her. Does the Minister not realise that, if ever there was an issue of public confidence for the business community, this is it?

The review was a damning indictment of Invest NI. Invest NI rents out empty buildings in my constituency of Foyle, which makes a contribution to the north-west. Will the Minister take a more robust view of the findings of the report rather than simply leaving it to the consultation? That consultation is appreciated, but people want to hear that the Minister will deal with the recommendations in a robust way. They want Invest NI to have a better working relationship with small and medium-sized enterprises and the entire business community, rather than for it to deal with only a small number of companies.

Photo of Arlene Foster Arlene Foster DUP 12:30 pm, 5th October 2009

I will deal with the recommendations, but I will certainly not deal with the nonsense that the Member has just talked about £1 billion being wasted. Some £4·5 billion of investment came on the back of that £1 billion, so it was not wasted. Is the Member going to turn that investment away? Is she going to turn away the 28,000 jobs that came from Invest Northern Ireland? Is she going to turn away the 15,000 jobs that were sustained, particularly in manufacturing companies? I am disappointed with the Member’s comments, because I thought that we would have a mature debate about the report. It is a balanced report, and I urge the Member to read it if she has not already had the opportunity to do so. The report highlights areas of good performance and calls for improvements in other areas. The panel recognises many areas in which Invest NI has performed well and pointed out areas in which there is a need for change. I do not know what sort of message —

Photo of David McClarty David McClarty UUP

Order. The Member has rightly asked the question, but the Member must allow the Minister to answer that question.

Photo of Arlene Foster Arlene Foster DUP

The Member spoke about Invest NI’s concentration on the 10 largest companies, but those companies employ 14,500 people. Is the Member saying that we should ignore those companies, or is she saying that we should help them to increase Northern Ireland’s productivity? That is what I want to do with those companies and, indeed, with all companies. I already said that there is a need to deal more proactively with smaller companies in the communities in Northern Ireland. I will do that, but I will not take what I have had from the Member today, which is simply not true.

The Member knows how hard Invest Northern Ireland works on issues in her constituency, particularly the jobs at Stream. I am disappointed with the Member’s comments about Invest Northern Ireland, given that it is doing everything that it can to bring work to that company in Londonderry. I will deal with the recommendations based on what is in the report and not on what others would like me to think is in the report.

Photo of Jimmy Spratt Jimmy Spratt DUP

I apologise for not being here for the start of the Minister’s statement. The report contains some radical recommendations. Did the panel fully consider the views of the business community during its deliberations?

Photo of Arlene Foster Arlene Foster DUP

The board had a good ongoing consultation relationship with the business community. The panel comprised some experienced businessmen, something which the press seems to have overlooked. The panel also frequently bounced ideas about the recommendations off a practitioners’ panel. I am pleased to say that the panel has spoken to and engaged with the business community and that it will continue to do that during the consultation period.

Photo of Mitchel McLaughlin Mitchel McLaughlin Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. I thank the Minister for her statement, and I welcome the approach to the consultation. Consultation and, indeed, consultation within a short time span is important. We must send the message that Executive Ministers can address such issues.

I wish to express my disappointment about one matter. The report is supported by extensive research and consultation, so would this consultation not have benefited from the Minister’s commentary on the report’s recommendations? That would have shortened the consultation process. The report will have to be brought back to the Executive and the Assembly, and it seems that, at this stage, we are over-consulting on a printed document. The Minister’s comments would have added substantially to the value of the public consultation. The Minister may wish to comment on that.

Photo of Arlene Foster Arlene Foster DUP

I imagine that anyone listening to the debate will hear my comments and know my feelings on a wide range of issues. However, I am not going to be prescriptive; I want to hear what others have to say about the report. As I said, the report contains a lot of information, and, if Members wish to speak to me about any aspect of it before the close of the consultation period, I will make myself available. However, it is important to have a short consultation period to take on board views from the business community and other stakeholders.

Photo of David McClarty David McClarty UUP

That concludes questions to the Minister of Enterprise, Trade and Investment on her statement.