MINUTES OF THE FORTY FIRST MEETING

ECONOMIC DEVELOPMENT FORUM, 12 NOVEMBER 2009

STORMONT HOTEL

Present: See Annex 1.

Apologies: Conor Murphy, Sir Reg Empey, Will Haire, Bob Barbour, Patricia McKeown, Seamus McAleavey, Prof Peter Gregson, Peter McNaney, Bill McGinnis

1 WELCOME, APOLOGIES AND MINUTES OF LAST MEETING

1.1 Members were welcomed to the 41st meeting of the EDF and were reminded that the special plenary meeting had been arranged to enable the Forum to collectively debate the Report on the Independent Review of Economic Policy (IREP).

1.2 Members noted that minutes of the plenary meeting on 17 September had been agreed by email, and had been posted to the EDF website.

1.3 The Chair noted that, following his appointment as DETI Permanent Secretary, David Sterling was now the deputy Chair of EDF.

2 MATTERS ARISING

Progress on September Action Points

2.1 The Chair referred Members to Paper 2, which outlined the progress against action points from the previous plenary meeting.

2.2 In relation to carbon footprinting in the food sector, John Gilliland clarified that positive engagement had been ongoing with Invest NI, and he welcomed this. He expressed concern that the environment agenda only merits 5% ranking in the Invest NI Resource Allocation Model. Stephen Kingon agreed to follow-up on this issue.

ACTION: Invest NI to engage in discussions with John Gilliliand re. the 5% ranking for the environment agenda in the Resource Allocation Model.

2.3 In relation to the European Globalisation Adjustment Workers Fund, Peter Bunting enquired if DEL or DETI had made any further attempts to access these funds. He was advised that the funds had been considered in relation to Visteon and Seagate, but that the criteria had not been met. He reminded members that the criteria had been reviewed on 18 June 2009, and suggested NI should be pursuing this fund. Catherine Bell advised that the Department of Work and Pensions were in the lead on this. Given the complexities of the issue, she agreed to provide EDF with a note outlining the Northern Ireland position.

ACTION: DEL to provide a short paper, for circulation to EDF, in relation to the Northern Ireland position on the Global Adjustment Workers Fund.

3 INDEPENDENT REVIEW OF ECONOMIC POLICY REPORT

3.1 The Chair reminded members that she commissioned a Review of Economic Policy in December 2008, and the Report was published on 29 September 2009. She thanked Professor Barnett and his Review Panel for the time and effort they had put in to produce their detailed and wide-ranging Report. She reiterated her disappointment with the sensationalist nature of some of the press coverage that followed in the immediate aftermath of the Report’s launch.

3.2 She briefly summarised the recommendations, including the recommendation the EDF should be stood down, and replaced with a small advisory body, comprising expertise on regional economic development to provide independent advice on the economy.

3.3 The Chair reminded Members that a 6 week consultation exercise was ongoing, and advised that she wanted to give careful consideration to all the Panel’s recommendations, including the future of EDF, which in her view had played a very important role in informing economic policy.

3.4 Professor Richard Barnett provided a short presentation on the IREP Report. He too expressed disappointment with the media coverage in the aftermath of the Report’s launch, but suggested an informed debate was ongoing among economic commentators. His presentation focused on two issues, (a) the need for change identified by the IREP Panel, and (b) their recommendations for change.

3.5  In relation to the need for change he discussed the need for productivity to remain the primary policy goal, the current fiscal environment and the imminent changes to the state aid regime.

3.6 He provided a short summary of the key recommendations in the Report under four themes, as follows:

• Invest NI’s support to stimulate Innovation and Research and Development (R&D);
• Invest NI’s support for small businesses;
• Independent advice for the Executive and the ETI Minister on the economy; and
• Delivery of economic policy.

3.7 In concluding he emphasised the Panel’s conclusion that putting more appropriate government structures in place would would significantly improve the implementation and effectiveness of economic policy in Northern Ireland.

3.8 The Chair thanked Professor Richard Barnett for his presentation. She invited Stephen Kingon, on behalf of the Invest NI Board, to make any comments he may have on the Report.

3.9 Stephen Kingon remarked on the adverse media coverage, highlighting that the damage caused will take some time to remedy. He advised that the Invest NI Board had welcomed the Report and had agreed, in principle, with 80% of the recommendations. He indicated that the Board was concerned with those recommendations which they believe will hamper Invest NI’s position vis-à-vis their competitors by taking tools out of their armoury. In addition he suggested that the Review Panel had misunderstood the Northern Ireland market in relation to the Venture Capital recommendations.

3.10 A short discussion followed with Members expressing their initial comments. Members focused on the repercussions of the withdrawal of support for business expansion, and Bro McFerran urged all Members to comment on this in their response to the consultation exercise. Peter Bunting advocated discussions at an all island level in relation to moving jobs from ROI to NI and vice versa. He suggested this was a ‘no win’ game and proposed the need for a truce.

At this point, Members were split into three workshops (see Annex 2) to discuss the findings of the IREP Report. The Chair left the meeting and returned for the workshops' feedback to the plenary.

4 WORKSHOPS REPORT TO PLENARY

Response of the financial institutions in Northern Ireland to the economic downturn

4.1 The Chair welcomed Members back to the Plenary and invited the workshop chairs to summarise their discussions.

4.2  Brian Ambrose indicated that his workshop had been broadly supportive of the recommendations of the Report. He outlined the key points raised in their discussions as follows.

• Members agreed that the recommendation for a focus on Innovation and R&D was sound. It was also agreed that short-term pragmatism was required, and that there were other opportunities to explore, for example in relation to Green New Deal.
• Members noted that Invest NI currently had a number of tools at its disposal, including SFA, Company Training Support and Business Expansion. While it was recognised that there was a need to ensure additionality, it was important for Invest NI to have these tools available if it is to remain competitive with other regions.
• It was accepted that there was a need to retain as much flexibility as possible, but it was recognised that some forms of regional aid will be phased out. The group also discussed whether there would be a focussed campaign to retain regional aid, as has been done in a number of other UK regions.
• The group endorsed the recommendation to amalgamate DETI and DEL as these two Departments naturally fit together.
• Regarding the recommendation to stand down EDF, while they were not opposed to EDF being stood down, it was noted that the effectiveness of EDF had improved, particularly in recent years and the benefit of interaction and exchange of views between stakeholders was also noted.
• Members noted that there was a need to drive down further the number of programmes delivered by Invest NI. Regarding the issue of the client concept, it was noted that there would be a need to manage expectations if Invest NI support was to be opened up to everyone.
• Members felt that the issue of balanced regional development could have been strengthened in the report and that the third Investment Strategy for Northern Ireland (ISNI3) should have a greater focus on economic development.

4.3 Jim McCusker outlined the key points raised in his workshop as follows.

• Members agreed that the problem in NI is not the policies in place, rather it is the delivery of these and the support the economy has from politicians. They noted that it is right that the economy is centre of the PfG but concerned that, in practice, it is not receiving top priority in terms of budgets etc.
• Members suggested it would not be realistic for Invest NI to ignore business expansions. If existing firms are creating high wage and high skilled jobs, then there should be no distinction from same jobs created in new FDI firms.
• Members agreed that productivity remains the right medium / long term goal for the Executive, but acknowledged that employment is a key issue.
• Members suggested that Northern Ireland should not simply accept that SFA is going to disappear post-2013 but should make the case for retention alongside other regions. However, it was accepted that there was a need to be realistic and to acknowledge that this looks unlikely given that the UK national Government has typically called for removing state aid.
• Members recognised the important role skills will play in the long term success of the economy and suggested education needs to work to address issues around risk aversion in NI and promote entrepreneurship. Members also highlighted the need to acknowledge the importance of other factors that FDI firms take into account such as telecoms, infrastructure and planning.
• Members noted that local firms accept that they need to do R&D and innovation to compete in export markets and welcome the proposed shift in focus. They stressed the need to ensure wide definitions of R&D and innovation. Concern was raised that the UK Government will reject these wider definitions. To address tension with employment, Members suggested that R&D and innovation should not be considered narrowly, but rather consideration should be given to the benefits and jobs created through supply chains.
• In relation to the small business unit recommendation, Members noted a lot of uncertainty about what this proposed unit would do. They outlined the need for more clarity on what the respective roles of it and the local authorities will be. Members suggested that post-RPA, there needs to be a lot of co-ordination between Invest NI and local authorities to optimise the contribution of local authorities and to ensure there is no duplication of support. In addition Members suggested the need to ensure that local authorities have a consistent offering of support across NI rather than competing with one another and providing different assistance.
• Spatial issues such as East / West divide in NI were discussed. The need to look at NI as a region, rather than sub-regions competing with each other, was also suggested, if there is to be a balance between East and West in NI.
• Members agreed that EDF has not worked in its current form and supported the recommendation of Review to wind up. Bilateral talks are useful but probably not sufficient by itself. Any future advice body needed to be much more streamlined.
• It was acknowledged that it was very difficult to get independent advice in NI due to its size and as such there will always be potential for a conflict of interest.
• Members supported the proposed merger of DETI and DEL and agreed the new department should be responsible for developing economic strategy.
• Members agreed Invest NI should be more flexible and business like. They suggested there are good people in Invest NI but the problem is structure they work within. In terms of attitude to risk, Members recognised there was a need to be accountable but suggested the focus should be more on the future rather on past failures, and on overall outcomes, rather than individual decisions and spending.

4.4 Bob Stronge outlined the key points raised in his workshop as follows.

• Members stressed the need for a joined-up approach in all areas of government. A change in culture is required across all departments to ensure the economy really is the key priority for the Executive. This has not yet filtered through all Departments / Agencies. Furthermore, Members suggested that the Executive needs to follow through on the PfG commitments.
• Attitudes to risk need to change – politicians, officials, wider public, PAC Committee and Audit Office.
• Members supported the creation of a ‘Department of the Economy’, within the context of a wider review of government structures, and stressed the need for political leadership.
• Members welcomed increased autonomy for Invest NI, within the context of a clear coherent strategy.
• Members stressed the need for a broad definition of Innovation and R&D and for consistency of definition across all funding providers. Members also noted that there had been confusion in relation to business expansion on the basis of R&D and Innovation.
• Members recognised the tensions between state aids and support for Innovation/ R&D and suggested Northern Ireland should also be pushing for an extension from the EU regarding state aids.
• In relation to the small business unit in Invest NI, Members enquired if this is this just another LEDU. Members suggested the need for clarification in terms of leadership and structures, and for relationships between supply and demand side to be clarified. Members also stressed the need to engage DoE in the process, specifically regarding RPA issues.
• In relation to EDF, Members agreed that in recent times EDF sub-groups have worked well. Members valued EDF Plenary as a useful two way information exchange and welcomed interaction with three Ministers at EDF. Members identified the need for more information on the alternative, especially in terms of representation.
• In relation to Venture Capital, Members suggested that this is a big policy issue, wider than the remit of Invest NI, and suggested DETI had a key role to play, especially given market failure / banking crisis in Northern Ireland.

4.5 Discussion followed on the future of EDF and Members stressed the importance of effective engagement with the ETI Minister.

ACTION: Based on the workshop chairs’ summaries and the ensuing discussion, EDF Secretariat to draft collective EDF response to IREP Report, to be circulated to Members w/c 16 November for agreement.

5 ANY OTHER BUSINESS

Press release

5.1 Members discussed issuing a press release highlighting that a cross section of civil society had come together to debate the findings of the IREP Report. The Secretariat agreed to consider this further.

Date of next meeting

5.2 The Chair advised members that the Secretariat has not yet scheduled any dates for 2010 EDF meetings, pending a decision on the future of EDF in light of the IREP recommendation. She advised that the Secretariat will contact Members in due course to confirm future arrangements.

LIST OF ATTENDEES ANNEX 1

Arlene Foster	DETI Minister
Joanne Stuart	IOD
Brian Ambrose	CBI
Bro McFerran	NI Chamber of Commerce
Ann McGregor	NI Chamber of Commerce
Jim Sammon	Londonderry Chamber of Commerce
Wilfred Mitchell	FSB
Tom Gillen	NIC/ICTU
Jim McCusker	NIC/ICTU
Peter Bunting	NIC/ICTU
Bob Stronge	NICVA
John Gilliland	Ulster Farmers’ Union
Stephen Kingon	Invest NI
Shirley McCay	SOLACE
Prof Richard Barnett	Higher Education UU
Trevor Neilands	Further Education

Officials

David Sterling	DETI
Graeme Hutchinson	DETI
Fiona McCausland	DETI
Andrew Crawford	Special Advisor to DETI Minister
Catherine Bell	DEL
Maura McCusker	DE
Mike Thompson	DRD
Mike Brennan	DFP
Yvonne Curran	DETI (EDF Secretariat)
Thomas Byrne	DETI

MEMBERSHIP OF WORKSHOPS ANNEX 2

Group 1
Chair:	Brian Ambrose
Location	Boardroom
Scribe:	Fiona McCausland
Members:	Stephen Kingon Jim Sammon David Sterling Mike Thompson Peter Bunting

Group 2
Chair:	Bob Stronge
Location	Confex 7
Scribe:	Yvonne Curran
Members:	John Gilliland Trevor Neilands Joanne Stuart Ann McGregor Graeme Hutchinson Catherine Bell Tom Gillen

Group 3
Chair:	Jim McCusker
Location	Confex 8
Scribe:	Thomas Byrne
Members:	Bro McFerran Prof Richard Barnett Wilfred Mitchell Mike Brennan Maura McCusker Shirley McCay

ACTION POINTS AGREED AT 12 NOVEMBER 2009 PLENARY ANNEX 3

ISSUE	ACTIONS ARISING	LEAD RESPONSIBILITY	TIMESCALE
Carbon Footprints - Resource Allocation Model.	Invest NI to engage in discussions with John Gilliliand re. the 5% ranking for the environment agenda in the Resource Allocation Model.	Invest NI	By mid December
European Globalisation Adjustment Workers Fund	DEL to provide a short paper, for circulation to EDF, in relation to the Northern Ireland position on the Global Adjustment Workers Fund.	DEL	By mid December.
EDF response to IREP Report	Based on the workshop chairs’ summaries and the ensuing discussion, EDF Secretariat to draft collective EDF response to IREP Report, to be circulated to Members w/c 16 November for agreement.	EDF Secretariat	Week commencing 16 November.