MINUTES OF THE THIRTy-FIFTH meeting

ECONOMIC DEVELOPMENT FORUM, 12 JUNE 2008, STORMONT HOTEL

Present: See Annex 1.

Apologies: Mark Sweeney, John Gilliland, Seamus McAleavey, Bob Stronge, Jim McCusker, Tom Gillen.

Action Points agreed at 6 March Plenary: See Annex 2.

1 WELCOME, APOLOGIES AND MINUTES OF LAST MEETING

1.1 The Chair welcomed members to the 35^th meeting of the EDF at the Stormont Hotel. She outlined her commitment to working closely with members to achieve the economic goals set out in the Programme for Government and noted that the scale of the challenge was such that it required the co-ordinated efforts of all stakeholders. She informed Members she would be leaving the meeting early due to another commitment and that Stephen Quinn would assume the Chair.

1.2 Members were advised that this meeting would see the introduction of new members representing the IoD, CBI and NICCI, namely, Joanne Stuart, Brian Ambrose and Bro McFerran who are replacing Frank Bryan, Declan Billington and Mark Sweeney respectively. The Chair welcomed the new members and new attendees, Bill Montgomery, John Hood and Will Taylor.

1.3 She advised that the minutes of the plenary meeting on 6 March had been agreed by Members, by email, and posted to the EDF website.

2 MATTERS ARISING

Progress on March Action Points

2.1 The Chair referred Members to Paper 2 which outlined the progress made against action points from the plenary meeting on 6 March. The paper was noted by Members.

3. SKILLS – PUBLIC SECTOR RESPONSE TO RECOMMENDATIONS ARISING FROM SKILLS PRESENTATION (MARCH EDF)

3.1 Members were reminded that, at the March plenary meeting, Declan Billington, Chair of the Skills Sub-Group, gave a presentation outlining the business perspective on skills gaps/shortages. The presentation included a number of recommendations mainly relating to public sector activity/intervention and, in particular, to DEL, DE, DETI and Invest NI functions. The public sector response to the issues raised in the presentation was attached in Paper 3. The Chair invited Minister Empey, Will Haire, Graeme Hutchinson and John Hood to respond on behalf of their respective organisations on the issues raised.

3.2 Minister Empey outlined the policy initiatives which DEL is taking forward to address skills gaps and shortages. In particular, he mentioned that, with regard to the provision of conversion courses, there is adequate capacity at local colleges. However, he stressed that the key issue was the need for a greater all-round effort to encourage participation on such courses. He noted that this was a particular issue for ICT courses and hence the marketing of such courses is of special importance. He advised members that financial incentives may be needed to encourage uptake and that DEL is in discussion with DFP on proposals to establish such incentives (eg training allowances) to encourage individuals to avail of training opportunities. He observed that, whilst in the past employers had been willing to guarantee to interview individuals graduating from ICT courses, it had become apparent that some employers were no longer willing to provide such a guarantee. He noted that DEL had particular concerns as to the impact which this was likely to have on enrolment figures for ICT courses going forward.

3.3 He advised members that whilst DEL had focused, in particular, on addressing skills gaps/shortages in the ICT sector, the Department will continue to look closely at other sectors to ascertain where there is an imbalance between the demand and supply of skilled labour. He noted that DEL had received funding through the CSR and the Innovation Fund to fund Critical Sector Initiatives over the period 2008-2011.

3.4 However, he emphasised that, following the recent US/NI Investment Conference, it was important that DEL were kept informed of the skills needs of foreign investors whilst noting that DEL would continue to work in partnership with Invest NI to ensure such needs can be met. He referred to evidence of the effectiveness of the similar North Carolina model and advised that DEL is keen to roll-out this approach in NI. He advised that DEL had focused on meeting the needs of the ICT, Business and Financial Services sector which is aligned with the sectors upon which Invest NI has focused its FDI strategy.

3.5 Minister Empey stressed that there must also be a focus on reskilling/upskilling the existing workforce. He noted that DEL had experienced some resistance from employers to investing in staff training due to fears that staff, once trained, would take up employment elsewhere. He advised members that it was particularly important to discourage this attitude amongst employers and that there was a need to ensure that employers understood the vital importance of investing in staff training/skills given that such staff would form part of the workforce for many years.

3.6 With regard to the promotion of degree-level courses in STEM subjects, he noted that there may be a need to provide scholarships/bursaries to students to incentivise uptake. He stressed that businesses also have an important contribution to make in this regard.

3.7 The Chair thanked Minister Empey for his comments and invited Will Haire to respond on behalf of the Department of Education (DE).

3.8 Will Haire noted that a clearly identifiable career path for young people from the age of fourteen was essential to enable young people to make informed decisions on which subjects/courses they should select. He emphasised that businesses had a particular responsibility to ensure that clarification is provided to schools on career opportunities/paths and on the skills and qualifications required from job-seekers. He noted that quality engagement between employers and schools is essential to ensuring that both parties understand businesses’ skills needs and opportunities.

3.9 On behalf of DETI, Graeme Hutchinson advised that the Terms of Reference (ToR) for a research study forecasting skills requirements (to meet goals set out in the PfG) had been drafted and that Business Alliance representatives had provided helpful advice on the content and focus of the ToR. He noted that the research should be completed by Autumn 2008. The ToR are available through the EDF Secretariat.

3.10 John Hood provided an outline of Invest NI’s work with Momentum with the aim of enhancing the attractiveness of a career in the ICT sector and welcomed the marketing initiative which DEL is considering in relation to ICT courses.

He advised that Invest NI is working closely with DEL in seeking to identify employers’ skills needs.

3.11 The Chair invited Declan Billington to comment on the public sector response to the recommendations relating to addressing skills gaps and shortages.

3.12 Declan Billington reminded members that the purpose of the skills presentation (delivered at the March EDF meeting) was to stimulate discussion across the Forum on current and future skills needs. He welcomed the response from the public sector whilst noting that, if NI is to continue to attract high value-added FDI, the skills needed for the future must be identified and developed now. He noted that this would require some risk-taking but that this must be recognised and accepted by all stakeholders, including the public sector and Executive, as necessary to meet the overall aim of a highly-skilled, flexible workforce. He agreed with Minister Empey on the need for a strong partnership between key stakeholders and stressed the need for businesses to engage in dialogue with DEL and with schools now to ensure the appropriate skills are developed.

3.13 He noted that the ICT model adopted by DEL was very useful but advised that it was important for DEL to advise the Forum/Business Alliance on the sectors which were failing to engage fully with the Department. He agreed that it is important that businesses continue to invest in training/upskilling staff and advised that the Business Alliance would lobby members to ensure that businesses continue to do so.

3.14 Stephen Kingon advised that the NI talent pool was one of the key factors in attracting FDI. Bro McFerran informed members that NI had considerable talent in both managerial and technical skills. Wilfred Mitchell stressed the importance of ensuring the education system is producing appropriately skilled young people if NI is to continue to attract FDI.

3.15 Patricia McKeown noted that partnership is key to ensuring an appropriately skilled workforce. She emphasised that the public sector in particular is committed to upskilling its employees and the approach demonstrated within it provides a useful model for the private sector. However, there is a need for further evidence of other effective models. Trevor Neiland advised that different sectors required different interventions and hence there is a need to experiment, undertake pilot initiatives and learn from successes and failures.

3.16 Ian Crowe noted the work which the Workforce Development Forums (WDF) are taking forward regarding skills needs. He advised that small and medium size enterprises (SMEs) have found the last twelve month period particularly challenging, with declining margins and consequent reductions in staff numbers. However, he emphasised that this is the time when SMEs need to continue to invest in staff to ensure they are well-placed to avail of future opportunities.

3.17 Minister Empey noted that the Workforce Development Forums are based around the regional college structure and their role is to discuss and identify skills needs relevant to a particular locality. The WDFs are developing and are proving an effective structure. He advised members that an All Island Skills Conference would be held in the North West in Autumn 2008 and would focus on skills needs in the border regions. Labour market research had identified the employment needs in these areas and courses provided at local colleges must provide the skills to match such needs.

3.18 Peter Bunting agreed that a partnership approach was essential to addressing the skills issue and suggested that a tripartite model, involving trade unions, employers and government should be considered.

3.19 Minister Murphy noted that the significant investment in infrastructure now and in coming years will generate a high demand for certain skills and referred to current shortages in the supply of engineers. He recommended that efforts to identify future skills needs should take account of, and reflect, planned expenditure under the ISNI/Budget/PfG.

Stephen Quinn noted that the discussion had raised important issues in relation to skills gaps/shortages in addition to those set out in the March Skills presentation and which should be recorded by the Secretariat and circulated to members.

ACTION: EDF Secretariat to provide members with details of additional issues/recommendations arising from today’s discussion relating to skills gaps/shortages.

4. VARNEY II - UPDATE

4.1 The Chair advised Members that, since the March EDF meeting, the 2^nd Varney Review had been published and referred members to Paper 4 which contained the Executive Summary to the Review. She asked Michael Brennan (DFP) to update members on next steps following the publication of the report.

4.2 Michael Brennan reported that the Varney report outlined many issues relating to the economy with which members were already familiar. He noted that the report had concluded that the future of the NI economy lay in the hands of the Executive and had endorsed the Executive’s decision to place the economy as top priority within the PfG. He advised members of DFP concerns that the report failed to recognise a number of difficulties faced by NI including the need to meet the CSR efficiency savings targets, achieve the £1.1bn asset disposal target (over a three year period) and deal with the inherent problems within the planning process.

4.3 He advised members that there were certain recommendations which needed to be addressed including a review of planning, a review of Invest NI and noted that the Finance Minister will respond to the review, having first sought the views of his Executive colleagues. He also mentioned that there are finance issues which will be addressed to the Chief Secretary to the Treasury.

4.4 The Chair thanked Michael for the update on progress and invited comments.

4.5 Patricia McKeown informed members that, whilst the Report stated that high wages in the public sector were having a detrimental impact on the private sector, she did not believe this was an accurate reflection of public sector wages given many public sector employees are working at the minimum wage level. She noted the importance of the public sector to the NI economy in terms of employment and also in relation to procurement opportunities.

4.6 Minister Empey noted that the Varney report had focused on the high levels of economically inactive in NI relative to the UK and observed that there are major cultural differences between NI and the UK economies in this regard. He noted that DEL is working to address this issue. For example, the Department is aiming to encourage those on Incapacity Benefit to return to work. He referred to initiatives by the DWP and DIUS, shortly to be announced, wherein the terms and conditions of those on such benefits would be altered (ie a mandatory requirement for the receipt of such benefits will be that individuals must be available for on-the-job training). He noted that this is a significant change to public policy in this regard.

4.7 With regard to the Varney recommendation relating to the disposal of public sector assets, he advised that, whilst he endorsed this approach, caution was needed to ensure best value-for-money was achieved.

4.8 Frank Bryan, speaking on behalf of the IoD and the Business Alliance, advised members that the business representatives welcomed much of the analysis in the Varney II report. However, he noted that the recommendations within the Review were unlikely to bring about the step change in performance which the Business Alliance believes is necessary to guarantee NI’s future competitiveness.

4.9 Stephen Kingon observed that the conclusions of the Review appeared to have been pre-determined and noted that the Review had significantly underestimated the scale of the challenge facing NI. He also commented that the Review had failed to identify the tools necessary to address weaknesses in the economy and noted that it was incumbent on all stakeholders to rebut those recommendations which added little of benefit in efforts to address challenges to competitiveness. He stressed that it was of particular importance that all partners, including government, responded to the Review setting out their concerns with its conclusions and recommendations.

4.10 Declan Billington noted that the key message from the Review was that NI must look inward to find ways to address the challenges facing the economy. He emphasised that the key to this will be to ensure that the NI workforce has the right skills for the future and noted that this was the main market failure facing the business sector. Brian Ambrose concurred with this view and noted that there were no quick fix solutions to the issues raised.

4.11 Minister Murphy noted that the Review was a reiteration of the Treasury view of NI and the same issues had been raised now and in the past citing the example of the sale of Belfast Port, which was not on DRD’s agenda.

4.12 Michael Brennan advised members that Minister Dodds will write to the Chief Executive of the Treasury to outline outstanding concerns.

4.13 The Chair agreed that there was a need to respond to the Varney report and advised that the Executive will be providing a response to HMT in the near future.

5. US INVESTMENT CONFERENCE

5.1 The Chair invited Bill Montgomery to update members on the recent US/NI Investment Conference and referred members to Paper 5. Bill Montgomery delivered a presentation outlining the numbers in attendance/events, announcements on projects/jobs, conference costs, media coverage and Invest NI’s follow up plans to ensure that opportunities arising are fully exploited. The Chair invited members to respond to the presentation.

5.2 Patricia McKeown noted that she was concerned that NI was being marketed as a relatively low-wage destination and the image this may present of the quality of professionally skilled labour in NI.  She commented that the presentation did not include a reference to the establishment of the Emerald/Pension Fund, noting that she was impressed by the willingness of the public sector workers and unions based in New York to commit to investment in projects in NI.

5.3 Bill Montgomery advised that Invest NI do not promote Northern Ireland as a low cost location but rather as a cost competitive region within Western Europe. Bill Montgomery further advised that, whilst the establishment of the Emerald Fund was clearly of importance for NI, Invest NI had little influence over the type of projects that might be assisted by the fund. Minister Murphy, in responding, noted that it was essential that Invest NI had a clear understanding of the opportunities arising from the Emerald Fund and the actions required to ensure delivery of the same. Stephen Quinn advised that the Emerald Fund was primarily concerned with infrastructure projects which, in general, lay outside DETI/Invest NI’s remit. However, he noted that he had advised those leading on the Fund that DETI/Invest NI would be keen to provide advice/input as required.

5.4 Frank Bryan noted that it was important that the EDF put on record their congratulations to Invest NI and all concerned in arranging the Conference for its clear success.

5.5 Will Taylor recommended that the EDF should receive a follow-up report, in one year, setting out the impact of the Conference in securing projects/jobs for NI.

5.6 Declan Billington asked Bill Montgomery to advise on the actions which Invest NI required of the Executive to ensure that opportunities arising from the Conference materialised. Bill Montgomery advised that, at present, the biggest challenge is the difficult economic environment. However, he noted that it was of particular importance that NI had the skills sought by investors and informed members that those companies in attendance at the conference were particularly impressed by the flexibility of local colleges in responding to investors’ skills needs. He also drew member’s attention to the need to minimise bureaucracy in processing cases/projects. On the positive side, he advised that low commercial property costs represent a significant selling point for NI. Wilfred Mitchell queried whether the complexities of the planning process in NI presented difficulties for foreign investors. Bill Montgomery advised that this was rarely a problem and that Invest NI works closely with companies/Planning Service to ensure that issues regarding planning approval are addressed at an early stage.

5.7 Aideen McGinley stressed that it is of particular importance that DEL are kept up-to-date with the skills requirements of potential and existing investors and advised that DEL is committed to working closely with Invest NI to understand where skills gaps/shortages exist and to set in place appropriate measures to address this.

5.8 The Chair thanked Bill Montgomery for the update on the Conference and noted her congratulations to Invest NI on the success of the Conference. The Minister left the meeting and Stephen Quinn chaired the meeting from this point.

ACTION: Invest NI to provide an update to the EDF in June 2009 on the impact of the US/NI Investment Conference.

6. EDF REVIEW

6.1 The Chair reminded members that a Review of the EDF had been conducted over the last quarter. He referred members to Papers 6, 7 and 8 and suggested that today’s discussion should focus on the recommendations regarding the way forward for the EDF (as outlined in Paper 8.) He advised members that the Review had focused on four key areas, namely, the Terms of Reference, Agenda, Sub-Group Structure and Membership of the EDF.

6.2 Terms of Reference - Beginning with the revised Terms of Reference for the EDF, he invited members to provide comments - members noted that they were content to accept the revised Terms of Reference.

6.3 Future Agenda - The focus of the Agenda for the September 2008, December 2008 and March 2009 EDF meetings was discussed and the Chair directed members to Paragraph 3 of Paper 8 which set out proposals for the Agenda for these meetings.

6.4 The Chair asked Bob Barbour, who had proposed Exports as a future agenda item, to outline his views on current export activity and the challenges in encouraging businesses to engage in exporting. Bob Barbour proposed that the September 2008 EDF meeting should focus on Exports in the Tradable Services Sector as there is limited understanding/knowledge of the challenges faced by companies in this area. In responding, Stephen Kingon noted that Invest NI is currently undertaking related work on export activity which would not be complete in time for the September meeting. He recommended that a later date for an export-focused EDF meeting should be considered by members to enable the work being undertaken by Invest NI to be reflected in any future discussion at the EDF plenary meeting on this issue.

6.5 Frank Bryan proposed that a future EDF meeting (within the next 9 month period) should focus on Innovation. He drew member’s attention to the importance accorded to Innovation in the PfG and to the work of MATRIX whose report was due at the end of June 2008. He also emphasised that it was particularly important to monitor progress against the actions identified in the Action Plan to the Regional Innovation Strategy. David Sterling noted that it was unlikely that work arising through the Matrix report and the RIS Action Plan would be at a sufficiently advanced stage for discussion at the September EDF meeting.

6.6 Minister Murphy advised members that DRD have commenced a major review of the Regional Development Strategy (RDS) which would guide regional development out to 2025 and which would also consider development at the sub-regional level. He informed members that the Review is being taken forward at a number of levels with various working groups having been established to advise on the Review. He noted that the Review would have far-reaching implications across the region and, therefore, recommended that a future EDF meeting should include a focus on progress with and the emerging findings of the Review. However, he noted that it may not be necessary to place the Review as the key agenda item for the EDF. Minister Murphy advised that the Review would be completed in 2010 and that an update in 2009 to the EDF may be appropriate.

6.7 Peter Bunting noted that the Terms of Reference for the Forum refers to the establishment of a social partnership model as the basis for the EDF. He advised members that he had proposed “Social Partnership” as a future agenda item for EDF as he believes it is important to debate and reach agreement on the type of social partnership model which NI requires.

6.8 The Chair noted that whilst there were a number of proposals for forthcoming meetings it was important to reach agreement at this point. He suggested that the focus of the September 2008, December 2008 and March 2009 meetings should be on Innovation, Skills and Exports respectively. Members endorsed this proposal.

6.9 Sub-Group Structure – The Chair reminded members that it had been proposed that existing sub-groups should be stood down and should be replaced by issue specific, time-bound groups. Members agreed to this proposal.

ACTION: EDF Secretariat to liaise with Mike Thompson (DRD) on a future date for an update to the EDF on progress with the Review of the RDS.

ACTION: EDF Secretariat to consider and identify (based on proposed agenda items): where there is a need to establish a sub-group and the composition of the sub-group.

6.10 Membership – The Chair noted that the issue of the membership of EDF was an area for consideration as part of the Review and asked members to comment on the current/future membership of the Forum. Patricia McKeown suggested that it may be appropriate to extend membership to IntertradeIreland. The Chair noted that, as it was likely to take some time to reach agreement on the issue of future membership of the Forum, this should be given further consideration at a later point. Members agreed to this approach.

ACTION: Members to give further consideration to future membership of the EDF.

7. VISION SUB-GROUP UPDATE

7.1 The Chair advised members that Papers 9 and 10 provided an overview of the current work of the Skills and Innovation Sub-Groups and asked Declan Billington to provide an update on the work of the Skills Sub-Group. Declan outlined the work of the group over the previous quarter. He noted that it would be particularly helpful if DEL could identify those sectors which were not engaging with the Department and that the Business Alliance would seek to engage with these sectors. Minister Empey confirmed that the information requested will be provided to the Business Alliance members whilst the Chair welcomed Declan Billington’s offer to engage with “hard-to-reach” sectors.

ACTION: DEL to provide information to the Business Alliance on those sectors demonstrating a lack of willingness to engage with the department.

7.2