MINUTES OF THE THIRTIETH meeting

ECONOMIC DEVELOPMENT FORUM, 5 DECEMBER 2006, NI SCIENCE PARK

 

Present:            See attached list (Annex 1)

 

Apologies:         David Cairns, Ann-Marie Slavin, Anne O’Reilly, John Gilliland, Raymond Mullan, Mark Sweeney, Brian Turtle, Will Haire, Bruce Robinson, Wilfie Hamilton

 

1.                  WELCOME AND APOLOGIES / MINUTES OF LAST MEETING / MATTERS ARISING

 

1.1               The Chair welcomed members to the 30th meeting of the Forum.  She also welcomed the new higher education representatives, Peter Gregson, QUB, and Richard Barnett, UU, and Bro McFerran, the new deputy member from NICCI, to their first meeting.

 

1.2               The Chair noted that the minutes of the September 2006 meeting had been agreed by members via email and posted to the EDF website.

 

Matters Arising

Planning Figures

1.3               Members were reminded that, at the September meeting, they had requested further information on major planning applications and were advised that meeting paper 2 provides an overview of Planning Service’s Special Projects Unit.  The Chair asked members to note the paper and, if they had any comments, to forward them to the EDF Secretariat.

 

North-South Collaboration Report

1.1               Members enquired if the North-South Collaboration Report mentioned at the September meeting was available.  They were informed that the study on the All Island Economy had been published in October and can be accessed online (www.nics.gov.uk/press/ofmdfm/final271006.pdf).

 

Careers Strategy

1.2               The Chair advised that DEL and DE had recommended that the Careers Strategy, proposed as an item for the agenda at the September meeting, be discussed at a future EDF plenary when the Strategy had been developed further.

 

ACTION:           EDF Sub-Group Chairs to consider the Careers Strategy being produced by DEL and DE as an agenda item for the next meeting.

 

1.                  NI ASSEMBLY - ECONOMIC PACKAGE

 

2.1               The Chair reminded members that the Economic Sub-Group, set up by the Assembly to consider the economic challenges facing NI had now published three reports and noted that the Executive Summaries and Recommendations from these reports had been circulated to members.

 

2.2       The Business Alliance welcomed the opportunity to address the economic challenges facing NI and commended the cross-party efforts of the elected representatives in their work on the Assembly Economic Sub-Group.  The main themes identified in their 3 Executive Summaries were: —

 

·             Radical change is required to move away from dependence on the public sector and to address the need to create a fiscal environment which would attract FDI and encourage local businesses to grow;

·             The need for an economic package to tackle skills shortage, poor levels of literacy and numeracy, fiscal incentives for FDI, and to encourage early adaptors of new technology;

·             The need for a more competitive corporation tax for NI to achieve a higher growth trajectory to close the wealth gap with the rest of the UK and RoI;

·             The challenges facing the NI economy are complex and there is no silver bullet.  A radical approach is required to rebalance the economy.

 

2.3       Members of the Business Alliance highlighted the inherent weakness in the NI economy, particularly in regard to over-dependence on the public sector, lower than average productivity and wages, as well as significant increases in the cost of living and doing business here.

 

2.4       It was noted that the Secretary of State has declared the NI economy ‘unsustainable’, and, by the same measures as outlined in the current RES, the NI economy will remain unsustainable for the next 10 years.  Members agreed that a radical step change in the nature of our economy is essential to deliver real private sector growth, more secure / high value jobs and a sustainable / balanced economy to underpin political stability in a new dispensation under the auspices of a NI Assembly.

 

2.5       The Business Alliance then gave a presentation on the conclusions of ERINI’s report, ‘The Case for a Differential Rate of Corporation Tax in Northern Ireland’.  The report argues that the only way to achieve a change in the current trajectory for the NI economy is to enhance fiscal incentives.  It suggests that low corporation tax has been a key element in the success story of RoI.  The presentation proposed that a reduction in corporation tax in NI would enable growth to potentially double, perhaps eliminating the productivity differential with the UK in a decade.  Initial tax losses could be turned around in 6 years and cumulative tax loses made up in a decade.

           

2.6       Members generally agreed that the prognosis for the NI economy was not entirely positive, but highlighted points of debate over how improvement might be achieved.  Some judged that a corporation tax reduction for NI alone was not likely to be achieved and argued that other factors had led to success in RoI, including an investment in education and skills.

 

2.7       It was pointed out that a reduction in tax in NI would impact on other UK regions and that under EU rules the NI budget would need to bear the cost of any variation in tax.

 

2.8       Members also pointed out that, although fiscal incentives are important for attracting FDI, local business should not be forgotten.  The need to strengthen the skills base and provide incentives for training were also highlighted as key factors.

 

2.9       In response to queries on officials attending the Economic Sub-Group,   members were advised that they had provided (and would continue to provide) factual information but it was not appropriate for officials to defend policy or to assist in the formulation of proposals to be put to Ministers.

 

2.10      In moving forward, it was recognised that a radial step change was required to set the NI economy on a new trajectory.  It was agreed that the Business Alliance should engage in further discussion with their partners in EDF and further ideas could be usefully discussed at future meetings of the Forum.

 

ACTION:           Business Alliance to engage with other stakeholders on this issue and bring forward further options to a future plenary meeting.

 

3.         COMPREHENSIVE SPENDING REVIEW (CSR)

 

3.1               The Chair reminded members that HM Treasury is currently developing the 2nd Comprehensive Spending Review that will identify what further investments and reforms are needed to equip the UK for the global challenges of the decade ahead.  The Chair advised that in NI this CSR work is being led by DFP.

 

3.2               Members received a DFP presentation that provided background information on the CSR and indicated that this review related to the period between 2008/09 and 2010/11.

 

3.3               Members were informed that all savings made would be retained in NI and would be reallocated to priority front-line services.  They were also advised that the Secretary of State has provisionally indicated that, building on the priorities used in the 2005 Budget process, Departments should seek to align spending with the priorities of Children and Young People, Anti-Poverty and Social Inclusion, Sustainable Development and a Shared Future.  A devolved Executive could, of course, set its own objectives and priorities for public expenditure over the CSR planning period.

 

3.4               Members raised concerns about methods of ensuring that these savings would be efficiency savings rather than cuts.  Members were informed that there would be a focus on outcomes achieved through PSA targets.  Savings will be monitored through these targets and through High Level Impact Assessments.  Members suggested that the achievements of the previous spend should be measured and the intended outcomes of the current spend should be highlighted.  It was noted that a report on performance against targets was published last month reporting 75% on target.

 

3.5               Members questioned who was involved in the review exercise and expressed concern that stakeholders had not yet been consulted.  They were advised that, at the moment, this was an internal exercise but it was emphasised that this was only the first stage in the process.

 

3.6               Members asked how the economy factored into the outlined priorities.  It was explained that economic objectives and allocations will be reviewed as part of the wider CSR work.

 

3.7               Members also queried the drivers for integrated service provision and they were informed that new Shared Service Centres aim to centralise service provision, and to maximize opportunities for efficiency gains.

 

3.8               It was also noted that NI has been listed as an area that needs action in relation to UN targets on discrimination against women and that this must be factored into the CSR.

 

4.         REGIONAL ECONOMIC STRATEGY TARGETS

 

4.1               Members were provided with some benchmark targets for the NI economy.  Limitations of these targets were indicated and the importance of benchmarking NI against itself (over time) and against other regions in the rest of the UK was noted.

 

4.2               The MTSPs Sub-Group reported that DFP had attended the Sub-Group’s meeting in November for a discussion on RES targets.  Non-government attendees at that meeting had expressed concern over how the RES fits with the Economic Vision.  It was noted that the trajectory for NI indicates no significant improvement and that more challenging targets should be set.  Members agreed that more discussion was needed on what was being measured.  There was a general consensus that high level comparisons with overall performance of the UK economy are misleading.  However, it was agreed that these should not be abandoned but instead a range of comparisons should be provided, such as a comparison with the UK excluding London, the South East and East of England, comparisons with other EU regions, and NI’s progress over time.  Members were also advised that, given UK regions had access to broadly similar policy instruments, the UK and/or subsets of UK regions remain the most relevant benchmarks.

 

4.3               Members also raised concerns about the terminology used in the update paper and pointed to the varying use of the terms ‘indicators’, ‘targets’, ‘predictions’ and ‘forecasts’.  Some members stated that they could not endorse the strategy in light of the alternative outcomes available to the economy on the back of the ERINI report on lower corporation tax.

 

4.4               In conclusion, members agreed that further work was needed in setting RES targets and on the terminology used in relation to this.  It was agreed that DFP should take this forward with the MTSPs Sub-Group and report back to the plenary Forum.

 

ACTION:           DFP to work with DETI and the MTSPs Sub-Group on setting targets for the RES and to report back to the plenary Forum.

 

5          NI SUSTAINABLE DEVELOPMENT IMPLEMENTATION PLAN

 

5.1               The Chair informed members that, since the publication of the Sustainable Development Strategy in May 2006, OFMDFM have developed an Implementation Plan and this was published on Monday 27 November.  OFMDFM gave a presentation on the Implementation Plan.  The DETI Permanent Secretary assumed the role of Chair following the Minister’s departure.

 

5.2               The presentation highlighted the key issue of striking the balance between the three pillars of Sustainable Development (social, environment, economy) and emphasised the relevance of Sustainable Development to business and the economy.  It outlined the guiding principles of Sustainable Development and the key delivery areas, highlighting the need to mainstream Sustainable Development across all sectors.  It was observed that this requires a significant contribution from sectors outside government.

 

5.3               The presentation noted that economic growth has historically been strongly correlated with increased emissions, but also illustrated that some progress has been made in addressing this.  Members suggested that this correlation might be misleading and that other factors, such as the decline in the manufacturing sector, may have impacted on this relationship.  It was stressed that Sustainable Development is not an obstacle to economic growth.

 

5.4               The presentation also highlighted the findings of the Stern review and its proposed essential elements of a policy response, including the creation of a carbon tax, promoting technological advances, incentives for behavioural change and multilateral action.

 

5.5               Members raised a number of issues relating to this item, including:

 

·             The effect of Sustainable Development on business and the need to provide incentives to encourage participation;

·             The reallocation of efficiencies if NI became an energy efficient economy;

·             The benefits of Carbon Trading; and,

·             The contribution of the agriculture sector.

 

5.6               Discussion also focused on the involvement of stakeholders in moving forward for NI.  It was noted that a stakeholder group has been in existence for 18 months and that key stakeholders had also been invited to the ‘Sustainability Makes Sense’ event on 14th December.  It was emphasised that NI has an opportunity to lead on this issue.

 

5.7               Members requested access to the recently published Implementation Plan.

 

ACTION:         EDF Secretariat to circulate the weblink to the Sustainable Development Implementation Plan.

 

6.         SUB-GROUP REPORTS

 

Innovation Sub-Group

6.1               The Chair of the Innovation Sub-Group reported on the HE/FE Collaboration Fund.  He noted that a final proposal for this important initiative had been received by DEL and that, following some minor amendments, this would be forwarded to DFP for approval, with the intention that funded activities would begin in April 2007.  He also updated members on the Universities’ paper on their economic impact, highlighting that this paper calls for an additional investment of £44 million per annum into NI’s HE sector.  It was recommended that this important piece of work be included as an agenda item at a future plenary meeting.  It was noted that the Universities were undertaking further work to develop this paper and that industry-led hubs and the wider skills agenda would be important contexts for this.  Members expressed broad support for future work and agreed that this work should be considered at a plenary meeting at an appropriate stage in its development.

 

6.2               Updates on the progress of the Regional Innovation Strategy, the NI Science and Industry Panel and the Global Tracking of Innovation were also given by the Innovation Sub-Group and future work on identifying world-class Centres of Excellence was highlighted.

 

ACTION:           EDF Innovation Sub-Group to consider the Universities’ work as an agenda item for a future meeting.

 

Enterprise Sub-Group

6.3               A representative of the Enterprise Sub-Group reported that it had received a presentation by NITB at their November meeting, which highlighted the need to develop a long term sustainable tourism industry.  It was noted that the Sub-Group had agreed to consider DETI’s research on the Economic Impact of Tourism at a future meeting.  Members agreed that it was important to develop the marketing of tourism and advised that the Sub-Group might consider the points made by the Tourism Forum in relation to this.  Members also noted that the district councils should be given the opportunity to provide input to current work by the Sub-Group on the role of Tourism Ireland, NITB and the councils in promoting NI as a tourist destination.

 

6.4               Members also discussed the Sub-Group’s progress report on the Review of the NI Better Regulation Strategy and research into Entrepreneurial Culture and Attitudes to Risk.  Members requested more detail on the latter.

 

ACTION:           DETI to circulate Terms of Reference for the research project on Entrepreneurial Culture to Londonderry Chamber of Commerce.

 

Skills Sub-Group

6.5               The Chair of the Skills Sub-Group reported that a number of meetings had been held with various organisations to identify key issues to be taken forward by the Sub-Group.  Issues identified include the quality of Employment and the impact of factors such as gender bias on 14 year olds making decisions on future careers and foundational Degrees.  The Sub-Group also intends to engage with the universities to identify further issues.

 

6.6               Members suggested that DEL’s work on Professional Technical Skills scheduled for next year should also be considered by the Sub-Group and the plenary forum.

 

ACTION:           EDF Sub-Group Chairs to consider DEL’s work on Professional Technical Skills as an agenda item for a future meeting.

 

Infrastructure Sub-Group

6.7               The Chair of the Infrastructure Sub-Group updated members on the Sub-Group’s progress on the Investment Strategy for NI.  It was argued that the potential maximum return to NI might not be achieved and that the Strategy needs to be reprofiled.  It was recommended that EDF should consider how it might contribute to the reprofiling of the Investment Strategy.  Members requested more information on the consultation process.

 

ACTION:           EDF Secretariat to speak with SIB on arrangements for consultation on the Investment Strategy and circulate as appropriate.

 

ACTION:           Infrastructure Sub-Group to engage with SIB and report back to the Forum.

 

MTSPs Sub-Group

6.8               Members were asked to note the report from the MTSPs Sub-Group and consider whether the Regional Forecasts Ltd report should be used as the basis for EDF’s review statement.  Members agreed that the publication of the Regional Forecasts report to the DETI website was sufficient and that the Sub-Group’s future work should focus on working with DFP to finalise targets for the RES.

 

7                    ANY OTHER BUSINESS

 

Future Agenda Items

7.1               It was agreed that items proposed during the meeting should be considered as agenda items for future meetings.

 

Dates for Plenary Meetings in 2007

ACTION:           EDF Secretariat to circulate dates for plenary meetings in 2007 to members.

 

Press Release

7.2               Members agreed that a press release was not necessary.

 

Any Other Business

7.3               The Chair proposed that future papers should be finalised and forwarded to all members at least 1 working week in advance of plenary meetings.  He also suggested that EDF agenda papers should clearly outline what action (note/agree/action) was being sought from EDF plenary.

ANNEX 1

EDF MEETING – 5 DECEMBER:  ATTENDEES

 

Maria Eagle

Chair

Stephen Quinn

Deputy Chair
   

Attendee

Organisation

Declan Billington

CBI

Frank Bryan

IOD

Seamus McAleavey

NICVA

Jim McCusker

NIC/ICTU

Wilfred Mitchell

FSB

Patricia McKeown

NIC/ICTU

Peter Bunting

NIC/ICTU

Bob Barbour

CforC

Peter McNaney

SOLACE

Janice Tracy

Londonderry Chamber of Commerce

Bro McFerran

NICCI

Clarke Black

Ulster Farmers’ Union

Stephen Kingon

Invest NI

Peter Gregson

QUB

Richard Barnett

UU

Aideen McGinley

DEL

Leo O’Reilly

DFP

Peter Jakobsen

DFP

Richard Pengelly

DFP

Shane Murphy

OFMDFM

Rob Lynas

OFMDFM

Doreen Brown

DRD

Graeme Hutchinson

DETI

Edel Lamb

DETI (EDF Secretariat)