Written evidence from the Northern Ireland
Council for Voluntary Action
NICVA (the Northern Ireland Council for Voluntary
Action) is the umbrella body for the voluntary and community sector
in Northern Ireland. It provides over 1,000 members with information,
advice, training and support services on a wide range of issues,
together with representation for the sector as a whole.
NICVA works to achieve progressive social change,
based on equality and equity, working through a community development
approach, to empower local communities to pursue their own needs
and agendas.
INTRODUCTION
NICVA recognises the need for making Northern Ireland's
economy more sustainable and independently viable; with public
expenditure accounting for some 70% of GDP there is a need for
reform to a more sustainable and balanced economic model.
Exploring the concept of Northern Ireland as an enterprise
zone is welcome and should form part of the wider debate on the
economy. NICVA notes that the general direction of economic policy
in Northern Ireland is geared towards increasing levels of Foreign
Direct Investment (FDI), higher productivity levels and more jobs
that deliver higher wages, whilst at the same time increasing
exports in similarly high productivity areas. Both approaches
have the potential for making Northern Ireland's economy more
outward looking and creating the potential for market expansion.
Whilst NICVA recognises the validity of this approach
it is concerned that unless significant consideration is given
to making higher productivity driven growth as accessible to everyone
in Northern Ireland as possible, we may produce a relatively jobless
recovery for a significant proportion of the population. This
could result in Northern Ireland failing to tackle the underlying
social and economic problems it faces. NICVA believes that Northern
Ireland will only sustainably transform its economy if underlying
social problems are tackled. In short any enterprise zone proposals
must be fully integrated into the Northern Ireland Executive's
wider social and economic objectives.
The conception of an enterprise zone for Northern
Ireland is not entirely clear; historically enterprise zones have
been concerned with creating incentives within a specific geographical
area within a given region. However, recent proposals appear to
be focused on making Northern Ireland itself an enterprise zone.
NICVA believes that any consideration of an enterprise
zone, be that for Northern Ireland as a whole or for a specific
region in Northern Ireland, should take into consideration the
lessons learned from the previous experience of enterprise zones
in the 1980s and 1990s; should form part of a long-term and sustainable
plan for Northern Ireland's economy; and should focus on ensuring
that any policy package seeks to address Northern Ireland's wider
economic and social challenges.
PREVIOUS EXPERIENCE
NICVA notes that the main policy levers of previous
enterprise zones throughout the United Kingdom consisted mainly
of relaxed planning restrictions, enhanced capital allowances
and rating relief. NICVA notes that the majority of these levers
are now devolved to the Northern Ireland Executive.
The previous approach targeted 32 specific areas
throughout the UK, two of which were in Northern Ireland.
NICVA notes the research paper Do Enterprise Zones
Work by The Work Foundation which concluded that:
"Most of the jobs created in Enterprise Zones
are displaced from other areas. Evidence from previous enterprise
zones suggest that 80% of the jobs they create are taken from
other places";
"Enterprise Zones do very little to promote
lasting economic prosperity. Most Enterprise Zones create a short-term
boom, followed by a long-term reversal back into depression; and
"Enterprise Zones are hugely expensive. Evidence
from the 1980s suggests that Enterprise Zones cost at least £23,000
per new job they create".[16]
This suggests that designated enterprise zones can
have a negative impact on the economy of those locations from
which jobs are displaced and that they do not have a sustainable
positive impact on the population within the zone in terms of
job creation and economic growth.
When the cost of £23,000 per job is considered,
the benefits of an enterprise zone based on supporting capital
investment in a specific location, has not had the desired long-term
effect required to transform Northern Ireland's economy.
EXISTING CHALLENGES
As well as the obvious challenges regarding the size
of Northern Ireland's private sector and its limited growth, there
is significant poverty in Northern Ireland with a number of wards
facing serious long-term cycles of deprivation.
Latest figures estimate that unemployment in Northern
Ireland has now reached the UK rate of 8%,[17]
whilst long-term unemployment as a percentage of total unemployment
has increased by 17% since January 2008,[18]
with long-term unemployment sitting at 48.3% of the total unemployment
figure.[19]
The Northern Ireland economic inactivity rate for
those aged 16-64 stands at 28.4%. This is significantly higher
than the UK average rate (23.3%) and is the highest of the twelve
UK regions.[20]
The number of 16 to 24 year olds in Northern Ireland
who are not in education, employment or training, (NEETs), has
increased to 49,000, 22% of the 223,000 people between 16 to 24
years old.[21]
The claimant count in NI at February 2011 was 59,100
(6.6% of the workforce), an increase of 300 over the previous
month. There was an increase of 6.3% (3,587) over the year compared
to a decrease of 8.1% across the UK. Five years ago the total
was 28,970 (3.3%).[22]
NICVA also notes that the changes due to welfare reform are likely
to have a significant negative impact on the claimant count and
unemployment figures.
NICVA believes that in order to create sustainable
economic growth, a balanced approach, which actively seeks to
tackle segregation and extreme inequalities, as well as increase
GDP, is crucial. Leading economist Richard Florida asserts that
there are three necessary factors for developing a vibrant and
creative economy-tolerance, talent and technology.[23]
NICVA strongly agrees that only by dealing with issues such as
sectarianism, racism, inequality and division, investing in the
regeneration of disadvantaged communities, providing strong protection
for our most vulnerable citizens, making the most of our arts,
creative industries, tourism and environment and ensuring that
economic reform is inclusive can Northern Ireland develop a sustainable
and world class economy.
AN ENTERPRISE
ZONE FOR
NORTHERN IRELAND
NICVA believes that any proposals for an enterprise
zone in Northern Ireland must have clear objectives which are
linked to Northern Ireland's long-term economic and social objectives.
They should be targeted incentives aimed at specific
sectors which will increase exports and FDI as these are the areas
that have the capacity for significant growth and job creation.
Areas such as the creative industries, tourism, food and drink
and ICT are crucial.
Any proposals should not be exclusively weighted
towards incentives for capital development which have historically
had limited impact on local populations, especially the most vulnerable.
Reform of the planning system in Northern Ireland should be accelerated.
Proposals should focus strongly on creating incentives
for developing the skills of Northern Ireland's population and
linking those to business needs, increasing productivity.
An Examination of the Comprehensive Spending Review's
impact on the Department for Employment and Learning's Success
Through Skills and Lifelong Learning programmes should be undertaken.
Strong consideration should be given to linking specific business
or sector incentives to greater business contributions to skills
development and training. This would increase the inclusivity
of any enterprise zone proposals whilst simultaneously increasing
workforce capacity and productivity.
NICVA notes the Department for Social Development's
Social Clauses Initiative which focuses on work placements for
the long-term unemployed linked to Department for Social Development
contracts.
NICVA believes a social clause initiative for any
incentives delivered under an enterprise zone should be examined
by the Committee. This should include the examination of linking
the development of greater childcare facilities to enterprise
zone incentives, encouraging people into work.
Social Enterprises have the capacity to tackle some
of Northern Ireland's underlying social problems. NICVA believes
that the Committee should examine the potential for a Social Enterprise
Zone/s in Northern Ireland to offer tax reliefs to lenders and
investors, as well as tax relief for those social enterprises
that re-invest their profits for the benefit of the community.
NICVA strongly believes that in order to sustainably
transform Northern Ireland's economy the benefits of economic
growth and job creation need to be as inclusive as possible. This
means whilst incentivising businesses on the one hand we need
to increase their social and corporate responsibility on the other.
This means collaboratively tackling social deprivation and educational
underachievement at an early age, with a goal of integrating people
and deprived wards into the wider economy.
This objective means that any proposals for making
Northern Ireland an enterprise zone or creating an enterprise
zone within Northern Ireland must seek to address these longer-term
objectives.
30 March 2011
16 The Work Foundation (2011), Do Enterprise Zones
work? P.3 Back
17
DETI, Labour Market Statistics, March 2011. Back
18
DETI, Labour Market Statistics, Unemployment by Duration. Back
19
DETI, Labour Market Statistics, March 2011. Back
20
DETI, March 2011, Labour Market Statistics. Back
21
DETI, Oct-Dec 2010 Labour Force Survey. Back
22
DETI, March 2011, Labour Market Statistics,. Back
23
Richard Florida, 2005, The Flight of the Creative Class, Harper
Collins Back
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