Select Committee on Northern Ireland Affairs Fifth Report


VIII. THE FUTURE

81. NIEC, despite some specific criticisms of current policy, commented that "there are good indications that Northern Ireland can attract investment in the new fast growing sectors to alleviate the pains of readjustment" [arising from "major and unavoidable structural upheaval"].[199] It considers that financial inducements will remain necessary given the international market for mobile investment and that the importance of "fundamentals" such as skilled labour and the local research and development infrastructure as incentives to potential inward investors are increasing, particularly for the fast-growing industries.[200]

82. There was general consensus that, in the longer term, concentration on a higher skills and higher value added basis was the only viable route for the Northern Ireland economy. As Mr Mullan, of Investment Belfast, put it:[201]

    "We cannot compete on low wage low skills and I think the decline of our traditional industries of textiles and shipbuilding is proof of that."

83. CBI was looking for a greater emphasis on sustainability than has been the case in the past. It queried whether some of the very large grants provided over the last 30 years have represented value for money.[202] In 1997, it set out a series of recommendations on future inward investment policy and acknowledges that Government policy has, in broad terms, shifted very much in the direction it recommended. It also anticipates that there may be a need to change the structure of financial incentive offered, to reflect the change in character of inward investment.[203]

84. CBI envisages a change in the overall focus of public expenditure towards investment in creating an attractive, world class location based on the fundamental needs of business, rather than on capital assistance or other forms of grant. It identifies[204] two key expectations of investors in an era of increasing globalisation of markets and the rapid spread of new technology:

  • low cost environment
  • skilled labour pool and knowledge base.

Derry Investment Initiative saw the priorities as skills, land and infrastructure, and wished to see more done to create on integrated environment.[205] CBI also suggested a review of fiscal and other incentives.[206]

85. Derry Investment Initiative also saw a need to change IDB policy on land holdings. It believed that the bulk of IDB's land bank in the north-west was not the sort of sites sought by information and communications technology companies, who "are image conscious, want visibility, security and good access, and most of all, single use business environments."[207] It wanted to see a restoration of IDB support to developers to create such business parks. It also wanted to ensure that the telecommunications infrastructure remained 'state of the art' in its area.[208]

86. Derry Investment Initiative considered that policy should place an emphasis on ensuring that local companies can benefit and grow on the back of inward investment. It cited the examples of Du Pont, where it claimed more people are now employed in private sector spin-off companies than in Du Pont itself, and of United Technologies, where skills left behind when the company relocated outside the United Kingdom were taken up by another company manufacturing a similar product.[209] Both CORE and Into the West also drew attention to the potential spin-off benefits from inward investors developing links with indigenous companies.[210]

87. Several witnesses raised the question of whether IDB should concentrate on industrial development, or on marketing. Derry Investment Initiative saw the present situation as biased towards the marketing side.[211] Mr Doherty, of Into the West, commented[212] that IDB have:

    "... suffered from being part of what is said essentially to be a British industrial investment selling machine. I think that IDB needs to proactively strategise their work as Northern Ireland, for Northern Ireland reasons, and not carry the image of a wing of the Northern Ireland Civil Service. I think that the investment agencies down south have long since shed that image. They may still very well be civil servants, I do not know, but the point is that they are not perceived as such and, therefore, have more commercial rapport at the international marketplace."

88. John Simpson considered that the IDB "has too narrow a remit and is too oriented to deliver a set of functions."[213] He sought a greater emphasis on developing skills, which would then be available to all employers.[214] He argued[215] for a more proactive role on the part of the IDB, and for a greater range of functions to be brought within its purview, in effect creating a 'one stop shop' for potential inward investors.

89. We have already mentioned[216] the suggestion that IDB is not geared up to respond to the smaller potential inward investor. Mr Doherty, of Into the West, commented:[217]

    "I can see a gap in the vertical operation of IDB, when they tend to go for the big fish and leave some inward investment opportunities that may not make the headlines in terms of job creation of 25 or 30 or 40, but they are very valuable in polarised and ostracised communities in Northern Ireland which are at rock bottom. I would like to see them focusing more at the bottom end of their market in volume terms."

90. NIEC took the view that IDB cannot bear the sole responsibility for attracting new inward investment and that its role will become increasingly confined to marketing within the context of an overall economic development strategy which focuses on upgrading regional capabilities, particularly in the area of education and training.[218] This upgrading it considers to be a multi-departmental responsibility, although NIEC envisages that IDB will have an important contribution to make both in attracting knowledge intensive industries and in maximising transfers of knowledge from them to the local economy.[219]


199  Ev. p. 31. Back

200  Ev. p. 33. Back

201  Q 154. Back

202  Ev. p. 51. See also Q 349. Back

203  Ev. p. 51. Back

204  Ev. p. 52. Back

205  Q 145. Back

206  Ev. p 52. Back

207  Q 145. Back

208  Q 145. Back

209  Q 158. Back

210  Q 257. Back

211  Q 164. Back

212  Q 259. Back

213  Q 187. Back

214  Q 195. Back

215  Q 186-188. Back

216  See paragraphs 26 and 29 to 30. Back

217  Q 259. Back

218  Ev. p. 33. Back

219  Ev. p. 34. Back


 
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