Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of Witnesses (Questions 327 - 339)



Mr Robinson

  327. Good morning, gentlemen, welcome to the Select Committee. While you are settling in, I should explain I am not Peter Brooke! Our Chairman's flight has been delayed, we are not quite sure exactly when he will join us but we felt, as we have a fairly tight schedule today and we are pretty sure you have as well, that we would not delay our meeting any longer. What I would propose to do is give you an opportunity if there are any preparatory or introductory remarks you want to make, and then I know members of the Committee have a number of questions they would like to put to you.

  (Mr Gillen) Thank you very much on behalf of the Irish Congress of Trade Unions Northern Ireland Committee. We are pleased to be here today and have the opportunity to meet with the Committee. I will keep my introduction brief because I would prefer to try and deal with questions. I know you will have received our response to Strategy 2010 and also our document on Vision Into Practice: The First New TSN, which we think are relevant to the work you are looking at now. We have said, and we know the Economic Council share generally these views, that the Northern Ireland economy is coming from a very worrying manufacturing base with low technology and low value-added industries. These difficulties have obviously been exacerbated by the changes in oil prices and by the perception the troubles have on us. Our industrial structure is one of low pay, long-term unemployment and one which needs to be rearranged to give account of the inequalities which exist in our society. I mean that in the sense of education, proper housing, a decent education service, all the things which have impacted on the health and welfare of our population. We were involved in the production of 2010—very marginally, I have to say, with one representative. We have tried to get involved in the next round of Structural Funds which are also important to the work you are doing. This morning the EDF is meeting and they are looking at the package of grant aid which goes to industry at the moment, and one of the proposals is that they are going to try to restructure that within the cash limits which are available under the budget. We believe that if we are going to succeed there are issues which face us, not least the European Union issues concerning EMU. If we are not to diverge from the European economy then we are going to have to position ourselves to get into the EMU as soon as we possibly can, and as the only part of the United Kingdom which has a land border with a country which is in euro-land, we can see the haemorrhaging which is taking place near the border. I believe—I do not know whether it is true or not—that some of our public authorities are sending their vehicles across the border to fuel-up because of the price differentials which are there. We have the problem of smuggling. People say there is no entrepreneurship in Northern Ireland, but there is plenty of it around the border from what we can see and hear. So we need to look at that issue. If we are to attract new industry, then we do not want end-of-the-line product industries, we want the new technologies which are not particularly capital intensive and will not be looking for a massive hand-out of grants but will be looking for an available workforce which is highly skilled. We would say it is only then that they might look to grants, but that type of industry should be able to provide its own capital and our public money should be being used to provide that pool of labour which is highly skilled to assist them in their work. Mr Robinson, I would like to leave it there and then Tom and I can respond to questions. I do not know if Tom wants to add anything.
  (Mr McKee) Can I briefly add to the contribution which the education system can make to the growth of the Northern Ireland economy? The education system is becoming increasingly accountable. We have quality assurance well embedded in the FE sector and teachers are moving into the field of assessment performance in terms of salary, so in that sense there is a degree of accountability coming. What is particularly worrying is the decline in the key courses in the further education sector. If the Northern Ireland economy is to develop particularly its manufacturing base, then you have to look at what is being provided in further education colleges, and the ETI report last year provides very worrying conclusions. It shows that there is a very sharp decline in the number of courses run in further education colleges particularly in the areas of manufacturing, engineering and IT. Each year, further education colleges are being forced to shed the key staff that they would need to train students in those expertises which will be needed for any growth in the manufacturing base. If anything, our view is that the further education colleges are being attracted too much towards their role as higher education institutes, because all of them now, almost without exception, are further and higher education institutes, and this is being done at the expense of genuine further education provision particularly in those areas which would be related to any growth in the economy over the next four or five years. In short, it does not make sense that further education colleges have to manage their staffing resources on an annual cull each year when really that kind of college should be encouraged to plan on, say, a five year basis, trying to anticipate what the economy will need in five years' time rather than what industry needs now. I would remind the Committee that the ETI have produced these figures which are very, very worrying indeed, pointing to the very low provision in the very areas that any improvement in the manufacturing base would need.

  328. I took it from one of the comments Mr Gillen made that it was perhaps felt by the ICTU that your expertise had not been fully used in terms of the preparation of 2010. Does the IDB use the ICTU in terms of inward investment, either to go out with delegations or to meet delegations when they come to Northern Ireland?
  (Mr Gillen) We have an annual meeting with the IDB to discuss their performance in the previous year and to look towards the future. We were invited to nominate two people to sit on the Advisors Board of the IDB, we do not sit there as of right, we have two people who are notionally trade union members who are there at the moment. As you know, the IDB is an advisory body only. We do not believe that they have performed particularly well, we think that they have let the community down in relation to targeting the areas of social need and we have been hammering at them—I think that is the word to use—for a number of years now. Their plans say they would locate in a TSN area or in an area adjacent to a TSN area but they have said to us that it is not their responsibility to deal with inequalities. We take a counter view to that because it is public money, it is taxpayers' money which they are giving out and therefore there is a responsibility on them. I think that the introduction of the Northern Ireland Act and section 75 means that the onus is on them now to produce an equality scheme and they are going to have to look at that afresh. To the other direct question you asked me, Mr Robinson, no, not in my knowledge in 20 years has the trade union movement been invited to go out on a delegation to any other country although we have through government departments met with industrialists and with foreign journalists and diplomats to talk about the situation in Northern Ireland, though we have always been expected to come along and say how good industrial relations are and that we are all doing the best we can. We would like to be more involved in planning for the future and elements of 2010 would seem to give us the opportunity and we are pleased that we have four seats on the Economic Development Forum and we are going to make full use of those and we hope that Forum and, hopefully, the re-establishment of the Executive very soon on an overall agreed basis will give us the opportunity to look at these issues afresh.

  329. What do you think the objectives of inward investment policy should be? Should it be simply to bring some jobs to Northern Ireland or as a catalyst to develop indigenous industries?
  (Mr Gillen) There is no doubt that if you can attract a new technology industry such an industry should be able to bring in new products—cash cow products—that there should be some kind of a spin-off and there should be a formal linkage mechanism set up between foreign investment companies and our local indigenous companies. We think that is not as well developed as it could or should be and we would be very keen to be involved in encouraging linkages between companies and sourcing structures. We know from the literature that such an organisation exists in Wales, we know there is one in the Republic, and they have been very successful in ensuring that local companies link with investment companies and create skills, and this improves right through the infrastructure the skills of the workforce and the managerial skills and there is a very beneficial spin-off there. That is one of the things we would be keen to see from inward investment.

  330. Have you been asked to, or do you play, any role in terms of encouraging inward investors to develop in terms of their economic links in the community, sourcing components, transferring know-how and so forth?
  (Mr Gillen) Certainly we have not been given such a specific invitation as that. What I have tried to indicate in my earlier response to you is that we would be very keen to do that. We want to develop those links because we think we have a role to play there. We are aware that in the next round of Structural Funds there might well be a new delivery mechanism which would also be working with inward investing companies, and we are involved in those delivery mechanisms at that level. I think we would be very willing to work with any company and local companies do that but we have not been given that opportunity as such, certainly not through any government department approaching us and saying, "Do you think you could do something about this?" But this discussion may well go on in other forums and we shall pursue that issue given the questions you have put to me.

Mr Beggs

  331. Good morning, gentlemen. First of all, can I welcome you to our Committee and put on record the fact that the people of Northern Ireland appreciate very much the responsible way in which trade unions have operated in Northern Ireland throughout a very difficult period. My question to you follows on from the Chairman's. What is the Irish Congress of Trade Unions' assessment of the underlying fundamentals of the attractiveness and competitiveness of Northern Ireland as a place from which to export?
  (Mr Gillen) Can I thank you first of all for your very kind comments on behalf of the movement. I think there is a strong view that our local employers are not as geared up for export as they should be. We know that to be competitive they have to identify a market. There is a feeling that we are working on really 5 per cent of average wages of the UK and that should be a competitive advantage; not one that I welcome frankly but one that I want to build up on. We are part of the European Union and that should attract an inward investor to get into that overall market but what goes against that, Mr Beggs, is something I said earlier on, the fact that we are out of the European Monetary Union, and this is going to be something which is going to keep inward investment out of Northern Ireland. Unless the UK Government can do something, I think these pressures in the longer term will start to apply in Great Britain as well as in Northern Ireland.

  332. From where does Northern Ireland face real competition? First of all, with regard to projects mobile within the United Kingdom and, secondly, for internationally mobile projects?
  (Mr Gillen) Within the United Kingdom obviously every region within the United Kingdom is a competitor. Government has made it clear that it is not the role of Government to support regions or create employment in regions, it is up to the social partners—now that we are allowed to use that expression a wee bit more liberally than we were before—to come up with their own regional strategies. We have lost Objective 1 so therefore we are one step down the ladder, so our competitors are going to be first of all the Objective 1 regions within the GB. The fact we are a further offshore island of an offshore island is a difficult issue for us. The fact that our energy costs are higher, our transport costs are higher, means we are competing at an unfair advantage with every other region of the UK. We then go to what is now called the global market and there we are competing with everyone. We have failed to get the inward investment that the Republic have acquired, and one of the reasons for that is something that Tom said earlier on in relation to our education, we have failed to recognise the importance of technician level in education. We are beginning to recognise it now but it is a wee bit too late because although it is never too late we are well behind our closest neighbour. Then we have this over-dependence on the textile and garment industries and they have suffered dramatically because they could just not be competitive. We have seen our local UK based companies going to Morocco, to the Far East to source their materials and their clothing. That has led to massive closures of industry here and I do not know that we are ever going to be able to get that type of market back because, frankly, I do not think we can compete. We can certainly compete on quality of product but not on the cost that it is being produced for. This is unfortunate. We had a delegation from the ILO in Belfast this past couple of days from what were Eastern European countries and from Africa and Malaysia. This is part of why we think development education is so important. People should realise that it is not the fault of the employees over there who are getting what some people would claim over here to be "our jobs". I think we are trying to educate people out of that and increase the realisation that with some of these products which are coming in perhaps it might be useful to ask where they are being made and what conditions they are being made under, and whether or not there is a duty on some of our local suppliers and retailers to ensure they are not buying in goods which are being made in bad conditions. Those are all the pressures we are under. We are going to have to look for new markets, we are going to have to be competitive and deal with those structural defects which are still with us.

  333. Bearing in mind the importance to the future prosperity of Northern Ireland of exports and finding new markets, are your members being given sufficient training, and is there expertise in the elements associated with export being developed?
  (Mr Gillen) I would probably have to say to you that I would be unaware of any direct programme that would be working within the trade union movement on its own which would be equipping trade unionists as trade unionists to deal with an issue like that. I am not sure that, beyond working closely in partnership with the employer, there is much we could do as a trade union organisation in an area like that. It is not one which has been brought to us again and unless we can get industry into the place I do not see there is much of a day-to-day role we can play in that, other than working very closely with the employer, develop a strategy of partnership at that level, and produce good quality goods, and I think it is then up to the professionals in that area. I am not saying we do not have expertise but there are people who are employed to do that; if there is something they feel we could do to assist, we would always be willing to do that.
  (Mr McKee) There is, of course, one unfortunate dimension of export, to use that term, and that is the export of human resources in Northern Ireland. I think it is a tragedy that so many skilled people at all levels are leaving Northern Ireland at the moment. Obviously the individuals who are exported gain, if you like, but we are not getting the counterbalances of free trade in that respect.

Mr McCabe

  334. Good morning, Mr Gillen, Mr McKee. In your written material you make quite a number of comments and observations about TSN areas and it is really on the relationship between inward investment and TSN I would like to ask a few questions this morning. The first one I wanted to ask is, as I understand it, the current strategy or emphasis is on attracting inward investment into TSN areas, and I wondered in purely economic terms what your view was. Is that a policy which makes economic sense?
  (Mr Gillen) One of the main planks of the current European strategy in the next round of Structural Funds is to increase the equality of opportunity and to provide those people who are disadvantaged at the moment with the opportunity to obtain skills. It could be argued that there is no point putting a plant into a TSN area if you cannot service it, and we would not say that would make a lot of sense. What we would say is that a lot of resources should be going into TSN areas to train and skill those people who live in them, so they will meet the demands of any investor who wants to locate. Part of the problem we have had where a factory has located, either in a TSN area or adjacent to a TSN area, is that it has not necessarily benefited the people who live in them because people who have skills transfer into that area and they bus their way in and they bus their way out, or they drive their way in because the bus service is not that good—but that is an issue we can come on to later. It is important that there is a strategy to deal with those issues. Yes, we feel it is very important. It is referred to in Strategy 2010, it is acknowledged I think in the document, there is a genuflection towards it, which is certainly not enough as far as we are concerned. There is an acknowledgement in there but it is essential there are resources put into those areas to train people.
  (Mr McKee) Yes, it might be tempting to see TSN solely in the context of social restructuring but, whilst it is that, it is much more than that. In the long-term, if there is sensible investment in TSN then the community as a whole becomes a much more stable entity and in the long-run it is more likely to continue to attract inward investment. If you do not cope with TSN, you will end up with social unrest, the community as a whole can become quite unstable and, in the long-run, can become less attractive. So there is a return on it, it is not just a philanthropic concept by any means.

  335. Thank you. I think you have probably anticipated one of my questions because you did say in your earlier answer that although a business may be located in a TSN area, there is no guarantee at all that the local people will directly benefit, in fact people may be bused in or come in by car. Is it possible for the ICTU to make a judgment or an assessment at all of the extent to which workers in TSN areas have benefited from inward investment programmes?
  (Mr Gillen) We have asked the agencies to give us this information and they do not seem to have it at the moment. It is something they have not thought about. Obviously we do not have access to the direct information. I think probably if you were to push me to the wall, I would say that the percentages have been pretty low, but we have asked IDB and the T&EA, who put substantial resources into training and into employment, to tell us directly. Obviously their monitoring of this is very important, the whole question of monitoring public funds and what is coming out of that is very important. Yes, it is something we are aware of, Mr McCabe. It is something we have highlighted both to the IDB, the T&EA and LEDU, and something which we pushed firmly with the old DED and with the new department. We are not in a position to make a formal assessment but our judgment would be it has not benefited. If we look at our long-term unemployment, if we look at our unemployment rates, there is enough evidence to say that it has not happened.

  336. Thank you. I understand what you said earlier about the importance of social cohesion and the attractiveness of an area and the danger of further decline, but would it be fair to say at the moment there is no substantial evidence to show that workers in TSN areas directly benefit from a business being located there? In fact, there does not seem to be any information available which would show just what the levels of benefits are; people do not seem to be keeping those figures. Your impression is that it is low but we do not have those figures. Just in terms of a policy, would it make more sense if firms were allowed to locate wherever they wanted in terms of inward investment, and we put the emphasis on providing suitable training and transport so that people from more deprived areas were able to travel and acquire the skills in that employment, but the actual decision about where they locate was left to the business itself?
  (Mr Gillen) I think that is a fair comment to make and it is one which we are very conscious of, and certainly it is a view which is shared by the Northern Ireland Economic Council. I think they hinted at that in earlier comments. There is no compulsion on a firm, nobody can tell a firm where to go, but there is a duty on the funding agencies to be aware that there are TSN areas, that there is suffering, that there is a lack of opportunity, that there could be either a direct or indirect form of discrimination going on, and that needs to be tackled. There was a proposal to build a factory called Wilong—which was changed locally to How Long—but it never actually came about. It was going to be built outside Corrs Corner, miles outside of Belfast. It would have been essentially an industry for women, it would not have been a particularly well paid business, there were no buses going to it, and infrastructure was part of the problem. If you are going to ask people to leave where they live, then you are going to have to provide them with the means of transport, and that does not exist. People are going to have to be mobile if they want to work but there are not enough bikes to go round and nobody wants to travel to work on a bike, although I know some environmentally friendly people do. The issue is that they are going to have to be skilled up but then these people do not have cars—part-time women workers do not have cars, the long-term unemployed do not have cars—so there has to be that cohesive integrated strategy. In principle, there should be no reason why people should not be able to travel to work but they need either a highly skilled job with good pay or they need some kind of an infrastructure to take them there, so it might be that the better answer is to have it in a TSN area.

  Mr McCabe: Thank you very much.

Mr Clarke

  337. Can I add my welcome to those already given and say that, in the best traditions of trade union negotiation, you seem very able to answer the question which is coming up, in that you seem to be pre-empting our questions. I wanted to delve a little bit deeper into the comments you were just making on infrastructure and ask for a general opinion in terms of the current grants structure. Would it be better if those grants were available for either infrastructural improvements, to answer the problem you have already identified of being an island off an island, or, as Mr McKee said in his opening remarks, towards education and training? In other words, is the grant aid which is available at the moment spent in the best way or should it be spent on either of those two alternatives—infrastructure or education and training?
  (Mr McKee) I think the more urgent of the two would certainly be education, and training in particular, because if you do not have a well-trained workforce and a flexible workforce, that is certainly going to deter investment in the long-term. I would certainly see that as the primary priority or the greater priority of the two. The road system can be sorted out afterwards and I understand that is well underway in Northern Ireland anyway, and there is a great need certainly in the east of the Province to look at the full transport situation, not just roads but public transport, flexible public transport as well. I would certainly have no hesitation at all in saying that if we are to attract employers then the greater priority of the two would certainly be in the whole field of education relevant to developing career skills, in developing a workforce that is adaptable and has the necessary training. Of course the real challenge there is not to anticipate what the system now needs but what the system needs in at least five years' time.

  338. Just breaking up the question in relation to infrastructure, do you think it is more important to grant-aid infrastructure which will enable business to move goods around or to invest in infrastructure which will make it easier for people to move around to jobs? So public transport or commercial infrastructure?
  (Mr Gillen) People will move around, particularly in the context of getting to employment because if they are not working they do not tend to move around an awful lot; it is difficult to get out of your own area because you do not have any money to spend. Yes, we do need to encourage business to be able to get its goods to and from work to the point of sale. The big disincentives there we referred to a bit earlier on—the price of fuel, for example, is horrendous, there is a great haemorrhaging of resources out of Northern Ireland because of that as well, where people are locating their businesses in the Republic not only because of the price of fuel but because of the other costs of putting imports on the road. Those are issues which need to be dealt with. They will not be within the gift of the Executive, because it is fiscal policy here we are talking about, and that does not fall to us, that is Mr Brown's area of responsibility, and the Treasury are going to have to be aware of the difficulties which are surrounding employers and the transport and haulage industry in that area. The roads infrastructure is improving dramatically. There were some very rapid and good decisions taken in the early days of the Executive—and anybody who travels through town will be appreciative of one of those, and the Newry by-pass obviously will benefit as well. There are some concerns—and I diverge a wee bit here—in relation to how that is funded because, as you know, we are into the next round of Structural Funds and there is a lot of pressure being put on to use what is called the Peace 2 money to support infrastructure projects. Certainly we want those infrastructural projects to be supported and we want them to happen, but they are important to the economy and therefore they should come out of public expenditure cover or, if not that cover, at least transitional Objective 1 but preferably public expenditure cover because it is not legitimate to use Peace 2 money for infrastructure projects. The gas pipeline is another example to the north west which we fully support. We do not support the proposal for that to come out of peace money. I had a meeting yesterday with representatives of Premier Line, who are talking about extending the gas pipeline that is coming in from Scotland down through the border—Craigavon, Newry and across the border—and that obviously would create job opportunities here as well, but we have to be careful that we have anchor tenants for a gas industry in Northern Ireland as well, we do not want to be a conduit to create industry in the Republic. If the gas is going to go through Northern Ireland, we need to attract industry which can benefit from that as well. So those are all parts of the infrastructure which we are talking about. There are proposals for at least a public-private partnership for the rail network which is needing tens of millions of pounds spent on it. They have not surfaced again recently but we would be concerned that the cream of the railroads would be siphoned off and other areas would be left to find their own way, and the north west would suffer again in relation to a rail line. Those are things which we need to be careful about also.
  (Mr McKee) There is a further dimension which should not be forgotten and that is the need in developing transport infrastructure to look very closely at what is happening in the planning of housing development. What has happened in recent years in Northern Ireland is that planning and housing development has gone ahead in isolation from plans for traffic infrastructure, the transport infrastructure, and you end up with a gridlock in areas where you have high density population. Probably the worst area in Northern Ireland in that respect now would be in the south eastern approaches to Belfast and the infamous Saintfield Road. Yet, at this present time, there are huge plans in that area to go ahead with housing development, well in advance of any development of a transport policy serving the whole area. If there is a lesson to be learned it is that the pieces have to be slotted into the jigsaw very carefully and that too, in the long-term, would be a crucial factor in attracting inward investment. If it is easier for people to travel to where the work is going to be, then it will make it easier for everyone. If workers have to travel very long journeys and are stuck in gridlock, it does not make sense.

  339. Once more you have pre-empted my next question in your answer. I wanted to go on and talk about the relationship with the Republic and ask how much you feel Northern Ireland loses out in terms of inward investment because of what is happened within the Republic?
  (Mr Gillen) Substantially. The Republic of Ireland around the mid-60s, early-70s, put an awful lot of effort into identifying what skills were going to be needed to meet the challenges of the future, and they identified IT skills, they looked at what was going to be the growth in the pharmaceutical market and they now have a very high percentage of pharmaceutical industries based in Europe based in the Republic of Ireland. They have had a very robust outward, outreach system, bringing companies in. They have, I think, taken a much more flexible approach to attracting industry. But, as Tom has said and I have said earlier on, the first thing that an inward investor looks for is an available workforce that is skilled, flexible, adaptable and is there to meet their needs, and they will come if they get that. So I think the answer would be substantial on that, and they have got all of those industries which we should have been in the market for. The spin-off from that, which again Tom mentioned earlier on in relation to Mr Begg's question on exports, is that we are exporting, we are running across the border, all our young graduates who have IT skills. The wage rates in the Republic at the moment are very high. They are sending people to Newfoundland to attract graduates; they are actually going out of the Republic now looking for workers to come in, which is a massive change and it is an indication of how successful they have been. Their growth rate is 8 to 12 per cent when we are talking about 2, 2.5, so we have suffered dramatically. I referred also to the loss of money around the border areas. It is now very, very profitable for people to drive considerable distances to fill up their tank of petrol, and that is money leaving this economy, so there is a haemorrhage there as well, which is another thing which is causing job losses and family businesses to close around the border, and problems are attached to that.

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