Select Committee on Northern Ireland Affairs Fifth Report


91. It has recently been estimated that the working age population of Northern Ireland will grow by 67,000 over the next 10 years. Allowing also for an increase in proportion in employment to the current United Kingdom figure, 13,000 new jobs will be required annually. This factor alone would require an increase in the job creation rate in the Province, compared with the last decade, of at least 50 per cent. This is before any account is taken of reductions in employment in declining sectors.[220] Inward investment will clearly have an important part to play in creating these jobs. The chart below superimposes the contribution that total inward investment of the level achieved over the last five years would make, assuming that all jobs promoted actually materialised in that period.

92. Time and again in the course of the evidence, oral and written, the impact of the political climate has been mentioned as having a major bearing on the willingness of inward investors to consider Northern Ireland as an inward investment location, or to increase their involvement in the Province. This clearly has a crucial bearing on the prospects of meeting the major employment challenges the Province will face over the next decade.

93. Several witnesses made the point that inward investment was not a panacea; whereas some inward investors came in, prospered and expanded, others failed or left again after a period.[221] Some promised investment never materialises.[222] The risk of failure is not restricted to old technologies; the recently-announced closure of IMR Software's development centre is a case in point.[223]

94. Although Northern Ireland came out very strongly in the Chamber of Commerce survey as a location for inward investment, it must be remembered that, as Mr Ingram said, competition is, and will remain, intense for good projects, particularly knowledge-based projects.[224] By definition, all new inward investment projects are mobile as, indeed, are some 'expansion' projects. It will therefore be vitally important to get the fundamentals right, particularly in the fields of education and training, to ensure that there is an adequate pool of skilled labour to attract those projects which have the potential to make the greatest overall contribution to the long-term prosperity of the Northern Ireland economy. Nor should the availability of suitable sites be neglected, having due regard to the changing needs of industry in this respect. NIEC told us inward investors are attracted primarily by regional capabilities, in areas such as access to research and development, skills of the work force and education and training programmes.[225] If Northern Ireland is to continue to diversify its economic base, as it needs to do, it will have to ensure that it reaches world class in these areas. This may also bring advantages in enabling more highly qualified people to remain in the Province, or to return there to live having completed their studies elsewhere.

95. It is clear that some steps at least have been taken towards changing the character of inward investment into the Province and that the opportunities to enhance the linkages with indigenous industry and educational institutions are now greater than before as a result. We believe that this should be a prime area for development, possibly along the lines of the Regional Linkage Initiative proposed by NIEC.[226]

96. Although the evidence we received was mixed as to the impact of tax incentives on inward investors, and the opportunities in Northern Ireland for flexibility in this respect are much less than in the Republic of Ireland, we would encourage the Government to keep this matter under review. We are aware of one case where Northern Ireland was the preferred location for an inward investment project on all other grounds, but that tax considerations were decisive in the ultimate choice of location.

97. There have been numerous references also to 'Strategy 2010' as a blue-print for the economic development of the Province. Inward investment has an important contribution to make, but this contribution will itself be a function of the success of the Strategy. It is therefore important that this is subjected to wide public debate and rigorous scrutiny. We had considered doing so ourselves, but economic development is now a responsibility of the Assembly.

98. It is clear from the number of jobs needed in the Province over the next decade that there will continue to be a need for positive steps to be taken to seek to induce inward investors to locate in Northern Ireland. Our oral and written evidence offers a wide range of perceptions from academics, industrialists, local authorities and many others as to the key criteria for success. We hope that Sir Reg Empey's recently announced review will look at all these carefully. However, one thing is clear: long-term success in getting the fundamentals right may be expected to reduce the extent of the need for, and hence the cost of, the financial inducements offered to prospective inward investors. Lower rates of financial support for inward investment projects will be one touchstone of the success of the Northern Ireland Assembly and Executive in their inward investment policy.

220  Northern Ireland Economic Review and Prospects June 2000 (PricewaterhouseCoopers, Belfast). It is estimated that up to 55,000 jobs in traditional industries and the voluntary and public sectors may be at risk over the next five years. See also Q 242. Back

221  See, for example, Q 427. Back

222  Q 368. See also Q 47. Back

223  Q 428. Back

224  Q 365. Back

225  Q 66. Back

226  Q 89-90. Back

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