NORTHERN IRELAND:Following on from the McCarthy report in the Republic, the publication of an independent review into economic development in Northern Ireland proposes radical reforms: is there the will to see it through?
IS CURRENT economic policy delivering a better life for people in the North? That's the key question which the North's minister for enterprise wanted answered when she commissioned an independent review of economic development policy a year ago.
Arlene Foster made it clear from the outset that she was not expecting the review panel to come up with any brilliant solutions to the North's immediate and pressing economic dilemmas.
Instead the five strong panel, headed up by distinguished economist and academic, Prof Richard Barnett, who is also the vice-chancellor of the University of Ulster, should concentrate on medium to longer-term priorities.
She wanted the panel to deliver "evidence-based recommendations" that would help secure a strong, prosperous economy.
Central to the review was the minister's instruction to the panel to examine whether current economic policies and programmes were able to deliver on the productivity goal that is a cornerstone of the current Programme for Government.
This productivity goal was set more than two years ago by the current Northern Ireland Executive when it boldly proclaimed the North was "entering a more optimistic and promising era".
One year on, after months of collecting evidence and months of deliberations, has the IREP actually delivered on what it set out to achieve - a roadmap for the North's economy in the medium to long term?
If the IREP panel's of 58 separate recommendations are any indication then the North's economy minister is currently in possession of at least a set of directions.
These recommendations were arrived at following discussions and sometimes heated debate with a wide range of people from major stakeholders such as Bombardier Aerospace to business bodies and independent local business people, such as Eileen Walsh.
Walsh owns a shop, in which sells Irish craft products. She told the IREP panel that although her business, which is entering its 46th year, is thriving it has never received help from government economic agencies.
"Practical help for a business like ours would be invaluable, particularly with regard to web design and development," she said.
Richard Ramsey, Ulster Bank's chief economist in Northern Ireland also told Barnett and his team that although the Executive had made the economy a priority there was no structure in place to deliver its objectives.
"While the sheet music has been agreed - the Programme for Government - the performance is being hampered as different sections of economic development (enterprise, employment, urban regeneration, planning, investment strategy and overall economic strategy) all fall under separate departments," Ramsey said. Many of the submissions to the IREP were highly critical of current economic policy and the panel appears to have been sensitive to the view from the coalface of business.
But the key question that needs an answer now is did they actually get a real feel for how current policies have shaped the economy or the outlook for prosperity in the medium to long term? Did they arrive at conclusions which can help Northern Ireland build a strong economic future or is this yet another talking shop exercise which the North excels at?
According to Barnett, the IREP panel set out with no pre-conceived ideas about the economy but he firmly believes it did arrive at conclusions which he is confident could make an "effective contribution to the future direction of the Northern Ireland economy".
He believes the recommendations put forward by the IREP team with regard to both policy development and changes to governance structures in the North will, if adopted, help to effect a "step change" in its economic fortunes.
One of the key recommendations made in the IREP report is that all core economic functions in Northern Ireland would be brought under a single Department of the Economy.
The IREP panel has also suggested that the first and deputy first minister should establish a permanent body, chaired by the enterprise minister, but involving other ministers from relevant departments to prioritise action on the economy.
The IERP panel believes this body should oversee the development and implementation of an economic strategy.
It is a radical proposal and one that not might be welcomed with open arms from various political parties keen to keep a minister at the Stormont power broking table.
According to Barnett and the other members of the independent panel, this Executive sub-body "should agree an economic strategy, building on the findings of the IREP, as a matter of urgency".
Their message could not be clearer to the Executive: they are saying 'what you are doing now is not working - change it or suffer the consequences'.
Because of the nature of the review the regional economic development agency InvestNI was an area of key area of focus in the IERP and this is reflected in the sweeping recommendations the panel makes regarding its work and future role.
The IERP panel has advocated giving InvestNI more freedom to operate and greater autonomy and flexibility in managing its budgets.
But at the same time it also warns that a study should be undertaken to determine how Northern Ireland could more rapidly shift the pattern of inward investment towards higher value sectors. Barnett and his colleagues have suggested that InvestNI be developed "into a more responsive and less compliance-driven business development agency".
In considering InvestNI's current role the IERP also recommends an overhaul of how the agency delivers financial assistance to companies in the North and how it trains and recruits its own staff.
The panel raised serious questions about the composition and role of InvestNI's board. But the key issue raised and explored by the IERP panel refers to InvestNI's track record since its inception.
Barnett said the chief concern of the panel was that, "despite the high level of InvestNI support historically, the current portfolio of policies delivered by InvestNI had not made significant progress towards achieving the goal of improving productivity".
He said the panel was of the opinion that "there should have been a much greater emphasis on supporting value added investment during a period when the local economy was much stronger than it is currently".
The review panel also expressed concerns in relation to InvestNI on two crucial fronts; the level of financial assistance offered in support of investment projects by local and international companies and job quality.
The IERP panel found that although InvestNI had spent in the region of £1 billion since it was established it had not succeeded in raising productivity levels in the North.
Barnett is keen to stress that while the review examines current economic policies that could be improved upon, it also suggests new opportunities that might not previously have been considered as important in shaping the North's economic potential.
In the IERP report the panel looks closely at global best practice in economic development and recommends that Northern Ireland would be well served by adopting "best practice lessons" to its advantage .
Barnett and the review panel found that countries thatwhich had been successful in attracting foreign direct investment, such as Singapore and the Republic, had developed a "pro-business and high-performing investment agency".
They also found that low corporation tax rates played a beneficiary role "in attracting value added inward investment" but admitted that this was something which Northern Ireland was currently unable to replicate.
Barnett and the review panel took an exhaustive approach to investigating every aspect of economic policy in the North and the panel have been both praised and cricitised in equal measure for its conclusions and recommendations.
Many, for example, in the venture capital community have rejected the IREP panel's analysis of how it currently operates in Northern Ireland and InvestNI's relationship with it.
The Business Alliance, which represents key business organisations in the North; including the Confederation of British Industry, the Centre for Competitiveness, the Institute of Directors and the Northern Ireland Chamber of Commerce, said there was much it agreed with in the IREP report.
But there are a number of ideas it did not warm to, including proposals by the IERP panel that a new institution for commercially-orientated research should be established.
The Business Alliance was also critical of the recommendation made by Barnett and the review panel that InvestNI should reduce its support for company training and that all grants to businesses, which did not relate to research and development and innovation, should be phased out by 2013.
"We need to ensure Northern Ireland can offer an attractive financial support package within European Union limitations to both retain and attract international investment, particularly as we emerge slowly from recession," the Business Alliance organisations stated.
The phasing out of grants to businesses which do not related to R&D was also a contentious issue raised by Derry's Chamber of Commerce in its response to the IERP report.
The northwest business body was disappointed that the panel did not place more emphasis on "infrastructure as being a key component of economic success" and the politics of regional economies within the North.
In general most organisations appear to have considerable respect for the work carried out by Barnett and the panel. Brian Ambrose, CBI Northern Ireland chairman, said his members will discuss the report but he hopes that the enterprise minister and executive will "commit to action before the end of the year".
According to Joanne Stuart, Institute of Directors chairman, the report contains "bold and decisive recommendations" and looks beyond the current economic turmoil.
The president of the Northern Ireland Chamber of Commerce, Bro McFerran also believes businesses will welcome the proposals to create a more entrepreneurial InvestNI with greater autonomy and flexibility.
"Northern Ireland's future depends on our agility and responsiveness to opportunities. I particularly welcome the recognition of the need to professionalise and enhance support for exporting," said McFerran.
Alan Patterson, board member of the Centre for Competitiveness, also supports this stance. He believes that politicians should give InvestNI greater freedom and encourage "more risk taking."
Perhaps the greatest endorsement of Barnett and the panel's work came from trade union leader Peter Bunting.
The Assistant General Secretary of the Irish Congress of Trade Unions welcomed the IERP report as the "official confirmation of criticisms made for many years by the trade union movement about the direction of economic policy in Northern Ireland".
"The report on economic policy by Prof Richard Barnett and his colleagues highlights the major failings of the path pursued by InvestNI and the Department of Enterprise, Trade and Investment.
"The trade union movement welcomes the reviews major recommendation of prioritising the economy resulting in more highly skilled jobs and higher wages, thus enhancing the quality of life for workers and working families," Bunting added.
Is current economic policy delivering a better life for people in Northern Ireland?
The consensus at this time would appear to be no. Perhaps the next question Arlene Foster needs to ask is what are she and the Northern Ireland Executive going to do about this?
IERP report - The Key Recommendations
Core economic functions in Northern Ireland should be brought under a single 'Department of the Economy'
The Executive should establish a permanent sub-committee, chaired by the Enterprise Minister, to prioritise action on the economy. The committee should oversee the development and implementation of an economic strategy
More emphasis needs to be placed on developing policies to promote Innovation and R&D
InvestNI should have a more focused, dedicated and professional approach to strengthening export performance in manufacturing and tradable services
InvestNI should be allowed more freedom to operate, enabling the organisation to be more responsive to business needs
A small business unit to be created within InvestNI, and the approach of working only with 'clients' should cease
Aside from funds designed to support seed stage projects, InvestNI should disengage its direct involvement with venture capital (VC) funds and should act as a facilitator between companies and VCs
A study of industrial land provision should be commissioned to determine why there is a perceived need for InvestNI to purchase large amounts of land
InvestNI should consider an internal reorganisation that reflects the differing skill sets required to support FDI, exports, Innovation / R&D and small business support
Grants for business expansion should be phased out towards 2013. The resources should be redirected to provide greater levels of support to Innovation and R&D in indigenous and foreign owned companies
A new institution for commercially-orientated research should be exploredInvestNI should establish a more dedicated and professional approach to supporting and stimulating exports
In terms of supporting value added business expansions not involving Innovation and R&D, InvestNI should provide co-financing in the form of equity and / or debt to those companies that have been successful in securing funding from the private sector
InvestNI should further reduce its support for company training, and concentrate support mainly to small firms and to projects with a high Innovative content, where retraining is necessary to realise a substantial rise in productivity
The local education system should prepare now to meet the anticipated increased demand for higher level skills in Stem and other Innovation relevant subjects, arising from the increased prioritisation of Innovation and R&D
Additional research in universities and public sector bodies should be aligned closely with the needs of industry in NI and potential inward investors to NI. Furthermore, the development of specific new research capabilities should be used as an incentive to attract potential investors
Industry-led Innovation communities should be developed as a pilot to bring together business, academia and Government and exploit available market opportunities
The Planning Service should have processing time targets which are competitive
