Business First Issue2 Vol5 CH2:Layout 1 23/10/2009 14:32 Page 16
Commentary
An initial response to
Independent Review of
Economic Policy
by Alastair Hamilton, chief executive, Invest NI
I
t may seem odd that the first One of the pre-requisites for the development of a small
thing I would say about the regional economy such as ours is the ability to attract and grow
IREP Report, is that Invest NI anchor tenants which can make a much wider economic
welcomes its publication. Having contribution over and above the employment and wages they
considered all of the provide directly, through economic multiplier benefits and the
recommendations that professor development of local supply chains.
Barnett makes in his report, I agree with the majority of them The fact that 10 companies received almost 30 per cent of
and can immediately see the benefit that they would deliver support needs to be viewed in the context of the wider
once implemented. However it would be equally wrong of me benefits they bring in terms of employment, which at some
not to say that I do not accept some of the criticism levelled at 14,500 people is roughly 10 per cent of total employment in
the organisation. manufacturing and tradeable services in Northern Ireland, and
Since joining Invest NI in April this year, I have been their contribution to exports and innovation.
impressed with the scope and scale of results that the team has Linked to this is our ability to support the growth ambitions
been delivering, in sometimes quite difficult and competitive of both local and international businesses.
situations.
We have supported over 80 per cent of foreign investors to
In pure headline terms, since 2002, Invest NI activity has re-invest, often bringing new skills and technologies to
encouraged over £4.5bn of investment; the creation of 21,000 Northern Ireland.
new businesses; the growth of our locally owned business base
and winning inward investment. As the Report recognised,
Indeed, since 1995, 118 inward investors have received more
Invest NI has contributed significantly to NI’s economic
than one offer of support. Aggregate initial offers resulted in
performance in terms of job creation, with almost 30,000 new
total planned investment of £1bn and the creation or
jobs promoted, a further 15,000 safeguarded, whilst every
safeguarding of 19,000 jobs. Follow-on investments resulted in
pound provided to help companies explore export markets has
a £2.4bn of investment and 36,000 jobs created or sustained.
resulted in £5 of sales in return.
And it is not only inward investors which have benefitted
However, I have a very clear view that that no organisation
from ongoing Invest NI support local businesses, such as
can stand still and we must continually focus on raising the bar
Almac, First Derivatives, FG Wilson and Norbrook, have grown
in our own performance. To that end I have been working with
from small beginnings to become global leaders.
the Board, staff and stakeholders to develop the plan that will
The changing EU environment means that our ability to offer
take us to that next stage of performance, not just as a single
Selective Financial Assistance will, over time, disappear.
step, but as a continual process.
Recognising this, we have already been shifting resources
With a very clear focus on our clients and having listened to
towards innovation related activities. However, it is important
some strong feedback, we have already started to update our
that we continue to maximise our ability to use Selective
processes and paperwork to ensure proportionality and
Financial Assistance until it is no longer a tool in our armoury.
remove unnecessary steps. We have rationalised and
With the benefit of hindsight, built on a successful outcome,
amalgamated our programmes – the grant for R&D being a
it is always easier for businesses to say that they would have
good example, but more can, and will, be done to make it
proceeded with a project regardless of the support available.
easier for businesses to identify and obtain the most
But few ever say so at the outset. On this concept of
appropriate form of support.
“additionality” the Report is clear that Northern Ireland fairs no
The main criticisms of Invest NI in the Report were that Invest
differently to other region of the UK and, indeed, it was only 10
NI has had no impact on raising productivity, that too much
per cent who stated, with hindsight, that projects would have
support has unnecessarily gone to too few companies and that
proceeded in much the same form, not the 50 per cent which
the wrong type of jobs have been targeted.
was widely reported.
Firstly, it must be recognised that productivity has only been
Although our focus is on supporting projects which have
a specific target for Invest NI since the Programme for
high levels of innovation and added value, helping companies
Government in 2008. It is clear that, where Invest NI can impact
to achieve their growth ambitions, provides employment
on productivity, it has done so.
opportunities at all levels.
Within Invest NI clients labour productivity (GVA per head) is
Our target for inward investment is to have 85% of new jobs
some 36 per cent higher than the Norhern Ireland average.
promoted pay salaries above the Northern Ireland private
Within manufacturing it is almost seven per cent higher than
sector median. Inevitably, that means that some will be below
the Northern Ireland average, and 18 per cent higher in the
the median. However, it is simply wrong to categorise all
services sector.
contact centre employment in that area. Indeed, 33 per cent of
jobs promoted in Contact Centres pay salaries above the
Productivity is also higher in large businesses, illustrating the Northern Ireland private sector median.
importance of helping more companies to grow to scale. This
need to stimulate a sectoral shift by growing high productivity
Importantly, they also give people, such as the long term
sectors to sufficient scale is already a key priority in our
unemployed or economically inactive, the chance to get
Corporate Plan.
employment within a service-based environment and to
acquire or develop transferable skills .
But, as the Report recognised, there are many other factors
which impact on the overall productivity of our economy. We
As I said at the outset, we welcome the publication of the
have the highest levels of economic inactivity in the UK, an
Report and the fact that it has opened a number of interesting
extremely large public sector, and a number of large, but low
and important debates. As the debate develops, we will
productivity sectors, such as agriculture, retails and distribution.
continue our strategy of helping to create new businesses,
As such, generating a “quantum leap” in productivity requires a
helping more of our indigenous companies to get into the
collective and focused government-wide response, which is
export markets and help to attract more new companies to
well beyond the scope of Invest NI, but could be helped by
come to Northern Ireland and bring with them high value good
some of the other recommendations in the report.
quality jobs.
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