MINUTES OF THE THIRTy-SIXTH meeting

ECONOMIC DEVELOPMENT FORUM, 25 SEPTEMBER 2008

STORMONT HOTEL

Present: See Annex 1.

Apologies: Conor Murphy MP, MLA, Jim McCusker, Stephen Kingon, Brian Ambrose, Prof Peter Gregson, Prof Richard Barnett, Will Haire, Aideen McGinley, Wilfred Mitchell

Action Points agreed at 25 September Plenary: See Annex 2.

1 WELCOME, APOLOGIES AND MINUTES OF LAST MEETING

1.1 Members were welcomed to the 36^th meeting of the EDF. The Chair advised Members that there would be a break from a single-item agenda, given the importance of discussing the economic climate and the actions being taken to help businesses.

1.2 The Chair welcomed new attendees, Michael Gould and Carolyn Brown. She also welcomed Dr Graham Gudgin for agenda item 3, Tracy Meharg for agenda item 4 and Prof Damien McDonnell, Frank Bryan and Clare Passmore for agenda item 5.

1.3 She also advised that the minutes of the plenary meeting on 12 June had been agreed by Members, by email, and posted to the EDF website.

2 MATTERS ARISING

Progress on June Action Points

2.1 The Chair referred Members to Paper 2 which outlined the progress made against action points from the plenary meeting on 12 June. The paper was noted by Members.

Skills Update

2.2 The Chair reminded members that, at the June EDF, the Secretariat agreed to provide details of additional issues/recommendations identified during the discussion on skills gaps/shortages. She directed members to paper 3. Members agreed to return to this paper under agenda item 6, when discussing the agenda for the December plenary meeting- the focus of which will be on skills.

3 COMPARATIVE ANALYSIS, FORECASTS AND MONITORING OF THE NI ECONOMY (EDF MONITORING FRAMEWORK)

3.1 The Chair suggested that, given the ongoing uncertainties in the world financial markets, it was an opportune time for EDF to discuss the current economic climate. She reminded Members that DETI closely monitors the economy and, on behalf of EDF, commissioned Oxford Economics to provide an update on the economic growth forecasts for Northern Ireland (NI). Members were informed that the draft Final Report would be shortly submitted to DETI, and that an Executive Summary was provided as part of the meeting papers.

ACTION: DETI to review the draft Final Report, once received, and finalise with Oxford Economics.

ACTION: EDF Secretariat to make the full Oxford Economics Report available to EDF Members once finalised.

3.2 The Chair invited Dr Graham Gudgin to deliver his presentation entitled ‘How hard will the credit crunch hit NI?’ The presentation outlined the macro context, the NI outlook and an update on the EDF goals and selected indicators. He suggested the media reporting was more alarming than necessary. He highlighted the slowdown in the NI economy, but noted that NI was performing better than the UK in 2008. He also pointed to the possibility of recovery for NI from 2010 onwards, but stated that the downturn may significantly impact on output growth in 2009.

3.3 In terms of the EDF goals he suggested a key challenge for DETI, Invest NI and EDF should be to improve GVA per person. The forecasts suggest limited change relative to the UK average over the next decade. He noted the potentially positive forecasts in terms of share of employment in financial and business services, manufacturing output and exports. However he suggested that further improvements in the number of employees in tradable services, private services productivity, tourism numbers, and the percentage of working age population age qualified to at least level 4, would be important to improve the NI economy.

3.4 In concluding, he advised that short term economic growth could be the lowest for over quarter of a century, but reminded Members to remain focused on the commitments set out in the Programme for Government.

3.5 The Minister thanked Dr Gudgin for his presentation agreeing that these are challenging times. She welcomed the fact that NI economy is still forecast to grow this year, and into 2009, and reminded members of the importance of retaining a balanced view on the economy.

DISCUSSION

3.6 Seamus McAleavey reminded Members that the EDF Medium Term Strategic Priorities (MTSP) sub-group had, in the past, worked with, and reviewed the work of Oxford Economics. He suggested this sub-group had been very helpful in analysing the findings of such reports.

ACTION: EDF Members to consider need for a Sub-Group focusing specifically on the EDF Monitoring Framework findings.

3.7 Seamus McAleavy asked if the public / private sector split in NI had to some extent sheltered the NI economy from the economic slowdown. Dr Gudgin suggested this was a factor, but emphasised that increasing the Private Sector should be the centre of attention.

3.8 Minister Empey made a number of observations. He remarked on the lack of balanced reporting being conducted by the media. He also commented on the need to improve productivity and tackle economic inactivity, drawing attention to DEL programmes dealing with inactivity. These programmes focus on what people can do, instead of what they cannot do. He also stressed the need for action by DE on the long term problem of poor basic literacy and numeracy skills. Dr Gudgin agreed with Minister Empey, highlighting that education will be key to improving the productivity figure for NI. The Chair enquired if NI has an advantage in terms of its cost competitiveness. Dr Gudgin agreed that NI had benefited from cost competitiveness, but suggested there were dangers with focusing on lower paid jobs e.g. call centres.

3.9 The Business Alliance representatives reinforced the point that it is not all ‘doom and gloom’, and that there are still some positive examples of businesses doing well. They urged government not to delay any public spending plans. The need for long term strategies was also emphasised. In the short term, upskilling and reskilling was recommended, with Bro McFerran suggesting there are opportunities to be capitalised upon.

3.10 Peter Bunting also made a number of points. He stressed the need to focus on high value added jobs, and not to sell NI as a low wage economy. He advocated that infrastructure projects are brought forward to assist the construction sector. The Chair noted that no one was suggesting building a low wage NI economy.

3.11 Stephen Quinn remarked that Invest NI delivers a suite of programmes to promote higher value added businesses. He also discussed the argument for reduced corporation tax. He asked Dr Gudgin if there are additional measures which NI could be focusing on given that the Government had rejected the call for a lower rate of corporation tax in NI. Dr Gudgin suggested the need for interim solutions, and stated the key to improving productivity and wages will be education. On the issues of skills shortages he advised businesses to engage with government as quickly as possible.

ACTION: Business Alliance Members to engage with DEL and Invest NI on skills shortages.

4 INVEST NI – CREDIT CRUNCH AND WORKING WTH CLIENT COMPANIES

4.1 The Minister noted that there are significant challenges ahead for the NI economy, and although these challenges were recognised in the Programme for Government, the scale and protracted nature of the downturn had become much clearer than in January 08. She invited Tracy Meharg to deliver her presentation and invited her to highlight some of the practical steps Invest NI is taking to help businesses deal with the current difficulties.

4.2 Tracy Meharg initially responded to some of the points raised in the earlier discussion. She highlighted that Invest NI always linked funding for FDI projects to innovation, exports and/or job creation. She also indicated that the new Invest NI Corporate Plan sets out the long term strategy for Invest NI and the aim to increase business productivity.

4.3 Her presentation focused on the short tem actions Invest NI are taking to help their client companies and outlined:

· new initiatives e.g. credit crunch seminars, follow on grant support, and enhanced export support:

· new product offerings e.g. profit improvement programme, capital support programme - renewable energy, and design advice;

· tailoring existing support mechanisms e.g. financial support, interim managers, non-executive director, energy/waste, carbon loan trust fund, Anaerobic Digestion (AD) projects and small firm guarantee scheme; and

· enhanced monitoring awareness and advice e.g. client risk screening, clients at risk schedule, Invest NI internal training, cash flow management advice and role of banks

She reminded Members that Invest NI is continually monitoring the environment, that other responses are being considered, and that the speed of their response will be critical.

DISCUSSION

4.4 Ian Crowe encouraged Invest NI to extend support e.g. training / mentoring to non-client companies. Tracy Meharg indicated that Invest NI do not have the resources to deal with every company in NI, but promoted the NI Business Info website. She also said some of the programmes e.g. Carbon Trust Programme, were extended to non-clients.

4.5 Patricia McKeown asked what companies have to do to avail of the grant support, and was informed that depending on the issues identified e.g. cost, marketing, supply chain, Invest NI might be able to offer assistance to companies. A call for applications will issue in October and companies will receive full advice thereafter. She also enquired about Invest NI increasing their presence in the ROI, and asked if this was duplicating the work of InterTradeIreland (ITI). Tracy Meharg assured her that the Invest NI work closely with ITI, and their work was additional to the work of ITI in the ROI.

4.6 John Gilliland commented upon the AD Projects and urged Invest NI to relate these to the food industry. He also re-emphasised the difficulties SMEs are facing in terms of their relationships with banks. Tracy Meharg advised that there had been projects from the food sector, funded through the Environment and Renewable Energy Fund.

4.7 Nigel Smyth welcomed the Invest NI initiatives, especially the focus on exports and marketing. He highlighted the opportunities in public procurement throughout the UK and also asked if the Carbon Trust needed additional money to carry forward their remit of helping local businesses cut their energy costs. Tracy Meharg reminded him of the £4.9 million funding announced in July, but agreed to check if this money had been spent.

ACTION: Invest NI to provide an update on the funding awarded to the Carbon Trust.

5 INNOVATION - MATRIX REPORT UPDATE

5.1 The Chair reminded Members that, at the June plenary, the role of science and innovation in developing the economy was discussed and that Members had agreed that Innovation, and, in particular the work of MATRIX, should be covered at the meeting. She invited Prof Damien McDonnell to make his presentation.

5.2 Prof McDonnell thanked the Forum for inviting him, and commented on the fascinating discussion which had preceded. His presentation outlined the rationale and challenges for MATRIX, suggesting NI cannot compete on low costs or wages, but must focus on a knowledge and technology based regional economy. He advised Members that MATRIX’s focus is on what is needed for NI to maximise the commercial potential of its R&D, Science and Technology capabilities. In his presentation he summarised the MATRIX work programme, and updated Members on the work of each of the 5 Horizon Panels. He highlighted the short, medium, long term and future market opportunities which have been identified. He emphasised the need for a strong inter-sectoral approach to maximise these opportunities. He also focused on how to deliver on the findings of the MATRIX work, stressing the importance of the intellectual property business infrastructure, flexible and responsive skills systems, a supportive regulatory regime, and a portfolio of finance and funding. Emerging recommendations were put to EDF Members and the focus was on ‘The Power of One’ i.e. the collective work of business, academia and government.

5.3 Frank Bryan told Members that MATRIX has identified a lot of good work already in operation, and has provided a direction for going forward. He emphasised the need for a new attitude to risk from the business sector, public sector, elected representatives and the media. The Chair agreed that this change in culture was needed in the government, but also in the media. Clare Passmore re-emphasised the ‘Power of One’ and the need for collective engagement for successful implementation.

DISCUSSION

5.4 John Gilliand welcomed the work of MATRIX and posed the question, where does it go from here? He also agreed with the need for a collective approach for implementation. Bob Barbour asked if NI universities had the breadth/depth to address the challenges. Prof McDonnell advised that the NI universities had an impressive breath and depth. He stated however that it would be foolish to rely solely on universities and emphasised the need for an industry-led approach. Bob Barbour also enquired about technology transfer and the role of Invest NI. Prof McDonnell highlighted that this was very difficult in NI because of the size of, and resources in, the SME sector, but made the point that government cannot fund all technology transfer.

5.5 Nigel Smyth enquired about any quick wins, and whether university funding should be redirected to realign with emerging opportunities. In terms of quick wins, Prof McDonnell highlighted technology transfer occurring between Horizon Panels and predicted more, especially in the SME sector. He did not advocate re-directing university funding.

5.6 Trevor Neilands emphasised the role of the colleges and the universities, and outlined a clear relationship between R&D and Skills. He stressed the need to target improving the skills base. He suggested looking towards the medium term, rather than focusing on short term needs.

6 FORWARD LOOK / DECEMBER 08 MEETING

6.1 The Chair advised that, at the June meeting, members agreed that the agenda item for the December Plenary would be skills. She directed Members to Paper 3 which highlighted a number of key areas for discussion on skills. Members were content that these issues should form the basis for the December agenda. Michael Gould suggested the need for discussions with DEL when planning the December meeting.

6.2 The chair asked the EDF Secretariat to engage with DEL, DE, Invest NI and the Business Alliance, with a view to agreeing an agenda, and who is best placed to lead on the individual agenda items.

ACTION: EDF Secretariat to engage with DEL, DE, Invest NI and the Business Alliance on agenda for the December meeting and on who will lead on the individual agenda items.

7 ANY OTHER BUSINESS

Press Release

7.1 Members agreed that given the nature and focus of the meeting, a Press Release was required and should highlight the discussions, particularly in the area of the EDF monitoring framework, and the collective responses being taking to the economic downturn.

ACTION: EDF Secretariat to draft a short press release and clear through the appropriate channels.

Date of Next Meeting

ACTION: EDF Secretariat to contact Members to confirm 4 December 08 as the date for the next meeting.

ACTION: EDF Secretariat to confirm venue for December meeting.

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ANNEX 1

EDF MEETING – 25 SEPTEMBER 2008: ATTENDEES

Arlene Foster	DETI Minister
Sir Reg Empey	DEL Minister
Joanne Stuart	IoD
Nigel Smyth	CBI
Bro McFerran	NI Chamber of Commerce
Ann McGregor	NI Chamber of Commerce
Bob Barbour	Centre for Competitiveness NI
Carolyn Brown	FSB
Ian Crowe	Londonderry Chamber of Commerce
Patricia McKeown	NIC/ICTU
Tom Gillen	NIC/ICTU
Peter Bunting	NIC/ICTU
Seamus McAleavey	NICVA
Bob Stronge	NICVA
Peter McNaney	SOLACE
Trevor Neilands	Further Education
John Gilliland	Ulster Farmers’ Union
Dr Graham Gudgin	The Centre for Business Research, University of Cambridge, and Oxford Economics
Prof Damien McDonnell	MATRIX
Frank Bryan	MATRIX
Clare Passmore	MATRIX
Tracy Meharg	Invest NI

Officials

Stephen Quinn	DETI	Robson Davison	DE
David Sterling	DETI	Mike Brennan	DFP
Graeme Hutchinson	DETI	Mike Thompson	DRD
Tony Simpson	DETI	Michael Gould	DEL
Andrew Crawford	Special Advisor to DETI Minister	Esmond Birnie	Special Advisor to DEL Minister
Yvonne Curran	DETI

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ANNEX 2

ACTION POINTS AGREED AT 25 SEPTEMBER 2008 PLENARY

ISSUE	ACTIONS ARISING	LEAD RESPONSIBILITY	TIMESCALE
EDF Monitoring Framework	DETI to review the draft Final Report, once received, and finalise with Oxford Economics.	DETI	By end of November
	EDF Secretariat to make the full Oxford Economics Report available to EDF Members once finalised.	EDF Secretariat	By end of November
	EDF Secretariat to seek members’ views on need for a Sub-Group focusing specifically on the EDF Monitoring Framework findings.	EDF Secretariat	By end of November
Skills Shortages	Business Alliance Members to engage with DEL and Invest NI on skills shortages.	Business Alliance Members	Ongoing (Update to be provided at December Plenary)
Carbon Trust Funding	Invest NI to provide an update on the funding awarded to the Carbon Trust.	Invest NI	By end of November
Skills Agenda for December Plenary	EDF Secretariat to engage with DEL, DE, Invest NI and the Business Alliance on agenda for the December meeting and on who will lead on the individual agenda items.	EDF Secretariat	By 13 November
Press Release	EDF Secretariat to draft a short press release and clear through the appropriate channels.	EDF Secretariat	By 26 September
December Plenary	EDF Secretariat to contact Members to confirm 4 December 08 as the date for the next meeting.	EDF Secretariat	By end of November
	EDF Secretariat to confirm venue for December meeting.	EDF Secretariat	By end of November