Official Report: Minutes of Evidence

The Chairperson (Mr McGlone): Before us are Mr Alastair Hamilton, the chief executive of Invest NI, and Mr Mark Ennis, its chairperson. You are very welcome. Thanks very much for your papers. We have had the chance to peruse them. Do you want to give us an overview of where you are coming from and some insights? We have read the papers. If there are key elements you want to highlight, that is grand, but we will get into the main substance of what you are presenting to us through the question and answer session.

Mr Mark Ennis (Invest NI): Thank you very much, Mr Chairman. Good morning, everyone. This is my third time before you as Chairman, and I am glad to say that it is the third year in the row that we have been the best ever. Long may it continue, although there are some challenges ahead.

On the day I took over three years ago, the target for jobs promoted increased from 21,000 to 25,000. That was an interesting challenge on my first day in office. I am pleased to say that, with these results, we have not only exceeded our targets for jobs but have bettered our targets for investment and research and development. Not only have we succeeded in those areas but we have secured some new names that we are delighted about. You will have heard the recent announcements. It has been like a roll call, and it has been a fantastic performance.

We have some challenges. Manufacturing performance is flat. That concerns us and we are working on it. However, as chairman of the organisation, I am delighted to see the strong growth in our account-managed customers, and I am pleased to inform the Committee that Invest NI has received it Investors in People gold award, which is probably a first for an organisation of our size and scale. I am delighted with that.

We also have some challenges ahead with the Budget, and the Committee may want to touch on those. We also have opportunities ahead with corporation tax. I will now ask Alastair to run through the highlights of the report.

Mr Alastair Hamilton (Invest NI): Good morning, everybody. It is good to be back before you.

It is a bit of a strange situation. Normally, at the half-year point, we are a little bit behind and we tell you what we will do for the rest of the year to hit our numbers. This year is the reverse and, as a result of circumstances with the changes to regional aid at the end of June and the growing economy, we have two year-ends back to back. We had a year-end up to the end of March and another from March through to the end of June.

Mark has covered the performance. Some 10,800 jobs have been promoted in six months, which is our highest ever position. To give you the breakdown of that, 5,170 of them are foreign direct investment jobs, and 5,634 are local company jobs. Those jobs are a tremendous contribution to the economy.

Some £40 million has been invested in R&D. I make no excuse for that, and I know that there are members of the Committee who are very supportive of the R&D and innovation drive. There have been some notable projects, particularly the recent announcement of a project by Seagate in Londonderry, which is the second largest R&D project announcement in the 10 years of the organisation's existence.

I know that the Committee is particularly interested in SME R&D investment. From your papers, you will see that SMEs have contributed 22% of that £40 million. We have a target of 20% R&D investment from SMEs over the four-year Programme for Government period, and we are running at 27%.

There was a particular focus in the Committee on that point, so I assure you that that is performing well.

At the bottom of the slide, there is a statistic that is easy to glance over, but I want to emphasise it: there has been a return on investment of one in nine. Our return on investment in the previous Programme for Government period — 2008 to 2011 — was one in five, so every £1 invested returned £5. In this six months, particularly because of the peak in investment we have seen, the value that we have been able to achieve has returned the result of £9 for every £1 invested.

There are three slides that I normally show you. One is on the volume of offers. I re-emphasise that 92% of all offers are made to locally-owned businesses. We have always managed to maintain the figure at around 90% to 95%.

Slide 4 shows the value of assistance, and you can see that we are in a substantial position. There has been £126 million of assistance offered. I will make a point now, but I will come back to this. We need to pay for every offer that we make. Some people think that as soon as we stand up and make an announcement about a £5 million investment on jobs that that £5 million has been spent, but it has not. As you know, we assure public funds by only paying when jobs are created. So, a bow-wave of commitment has been generated on that slide. If you were to look at 2012-13, 2013-14 and 2014-15, there are about £250 million worth of forward commitments that will need to be paid for, probably over the next five years. Keep that number in your mind. That is £50 million a year for what we have secured. Even if we write nothing more, that will need to be paid for as these jobs get created

Perhaps we will talk about skills and skill challenges, particularly as I am very sympathetic to the position that the Department for Employment and Learning find itself in with the current Budget position. Strategically, with the knowledge that selective financial assistance (SFA) will disappear — it has already started to go and will go further under the changes in the European Union regulations — we moved our support into skills. If you look at some of the projects we secured last year, 50% of the funding was by way of skills, either from ourselves for post-employment or from DEL for pre-employment. You can see the numbers: a 232% increase in skills support. That is a challenge as we think about budgets going into the future.

Slide 5 gives you the planned investment. If you compare slides 3 and 5, you will see why return on investment is £9 for every £1. There has been a substantial — £1·1 billion — level of investment leveraged on the back of the £126 million of support that we have offered to those companies. That is an all-time high for a six-month period. I also reflect on the narrative at the bottom of slide 5: this is the first time that half a billion pounds worth of investment has been leveraged by local businesses in Northern Ireland. I need to keep repeating this message, because people often think that the majority of our funding goes to internationally owned firms, but the opposite is the case: the majority of the jobs, the majority of the investment, the majority of the assistance that we have given over the past period of time has gone to local firms, and they have been by far the greater part of delivering economic growth in Northern Ireland.

Slide 6 gives you an illustration of the jobs-promoted position: there have been 10,800 jobs promoted in the last six months, which is 270% up on the same period last year. However, when we do a six-month comparison, we are almost comparing apples with oranges because of the year-end that we have had in the first quarter. Nevertheless, that figure has come as a result of the sales drive.

Mark mentioned some of the names that are brand new to Northern Ireland, and slide 7 details them. Baker & McKenzie is one that we are particularly proud of. As I have often said in the last few weeks, and I will repeat it here, who would have thought, seven, eight or 10 years ago, that we would have been able to attract the first legal services centre for a firm like Baker & McKenzie, which is the world's leading law firm by turnover? Who would have thought that the first overseas legal services centre for that firm would be in Northern Ireland? We are absolutely delighted, as you can tell from my comments, to have landed that firm in Northern Ireland.

I will make two points as you look down that list of companies. As you know, we had a very specific strategy to try to diversify and move a little bit away from IT dependence because of the challenges on the skills side. Those challenges are still there, so, as you can see, there is a good spread of different sectors that we have been able to support.

We have also been very focused on developing clusters. We obviously have the financial services one, the IT one and the business services one, which have been active for the past five or six years. The two that have got to a critical mass stage are the legal services one, with Baker & McKenzie adding to that family, and the professional services one, with announcements from the likes of PwC, which is creating 800 jobs, EY and Deloitte inside the last nine months about building professional services teams in Northern Ireland.

Moving on to slide 8, members will remember that there was a point made in the Barnett review about getting a very clear focus on brand new, net-new projects to Northern Ireland. You know that we often say that 75% of our investment comes as a result of reinvestment in existing firms, but we need to be building for the future and bringing in brand new names. The people who have done their sums very quickly will see that there are only six names on slide 8: four are yet to be announced, and hopefully that will happen inside the next few weeks.

There are a couple of strategic points to make to the Committee. One is that this is a different play. Leaving Baker & McKenzie out, these are high-growth and early-stage firms that are mainly from the US. The upside is that you should get more growth out of them, and the downside is that they are a riskier proposition than bringing blue chips like Baker & McKenzie or Citi into the operation. We are aware of that and will manage it, and it is very much part of our strategy to drive brand new names.

Slide 9 is a new slide that you will not have seen before. This Committee is very focused on output-related measures, and there has been a big drive, as you know, to get a really clear dashboard of performance measures in our organisation. The purchasing manager's index (PMI) is another piece that we have added to that dashboard. People who listen to the external commentators will know that the Ulster Bank does a purchasing managers' index report every month. We have gone to the company that does that and asked it to run the exact same questionnaire for a subset of companies. That subset is companies that are account-managed within Invest Northern Ireland. I cannot claim that it was our bright idea: it is something that Enterprise Ireland does. We tracked it with them, and it makes a big difference to what they do within their account-managed base. So, unashamedly, we copied it.

The Chairperson (Mr McGlone): What are you comparing the data with? Are you comparing it with that of all other companies or selected companies? For example, if you are comparing it with data from the likes of the construction industry or the legal profession, where cutbacks are happening, the opinion could be skewed.

Mr A Hamilton: The PMI that we compare with, which is the green bar on the slide, is the PMI that is done across all sectors in Northern Ireland, so it will include the sectors you mentioned. Let us remember that there are legal firms and construction firms in our account-managed base. There are growth opportunities in our base: we do not just strip out of our base those that are in decline.

The Chairperson (Mr McGlone): I was just trying to establish what those were and what they included.

Mr A Hamilton: The PMI is a survey, and not everyone is surveyed. It is a representative survey across the entire Northern Ireland business population. The NI bar on this is the 1,070 companies that have been selectively analysed, so you have a direct like-for-like comparison between the PMI that the Ulster Bank will publish and what we intend to publish on a quarterly basis as the NI comparison.

Slide 10 details the key performance indicators, which I first presented to the Committee at the halfway point of last year. We said we would, at the year-end position, publish information about our jobs promoted and publish information about our jobs created, which is a measure of every job that was created in that time. At a half-year point, we said we would do the KPI analysis. This is our survey of a constant base; in this case, that is 770 of the 1,070 account-managed customers, whom we have records for across the period that we analysed.

Only some jobs there will attract Invest NI support. This is just an overview of job creation, supported and unsupported, in those companies, and it shows a gain of 11,523, a loss of 2,983 and a net change of 8,540 jobs. Members, I should have included a slide making a comparison with last year, but I omitted that, so I will give you the figures. The net change at this point last year was 2,108 and is now 8,540, which is a net change of about 300%. You can see that, by lots of measures, such as the PMI and the number of jobs promoted, actual delivery and future intentions are in a very healthy position.

There is no slide on the jobs created position because I got the data only two days ago, but I can give you that information now. Just to recap, the number of jobs created for 2013-14 was 6,158, and, to date this year, that number is 3,255. That, too, is a very healthy position — the trend continues. That is slightly over half the number created by the end of last year. I expect that we will be ahead of last year, because there will be a hockey stick on the jobs created position at the year end. The number is counted when people put claims in and we pay them, and, historically, we get more claims at the end of the financial year than at the start. So, with 3,225 jobs created, we are well on track.

Slide 12 gives the export position, which Mark has mentioned. The headlines are that Europe and Russia are up 1% on the quarter; America is up 18%; Asia-Pac is down 6%; and India, the Middle East and Africa (IMEA) is up 2%. If you net that all out on the quarter, you find that we are up 3·4%, but let us remember that the previous quarter was down, so that is why the chairman has already said that, on a year basis, we are flat at present. I am happy to go into a little of the narrative on that. We are seeing the impact of the Russia situation, and the eurozone is not growing as everybody expected. However, we are seeing growth in the North America situation.

I will spend a moment on the final slide, if you allow me, Chairman, to give an overview. On the target review, we have 10,800 jobs to date, which is for six months, and forecast that we would deliver in the region of 13,000 jobs across the year, so the tail of that work is in progress and working through to the year end. I think that it is worthwhile adding two numbers. We promoted 11,000 jobs last year, so, if we get to 13,000 this year, the total over two years will be 24,000, against a Programme for Government target, which was set at the very start, of 25,000. I would love to have got to 25,000 jobs, but I do not think that we will. Nevertheless, it has been an outstanding performance for Northern Ireland businesses and internationally owned businesses to have signed contracts to promote what will be 24,000 jobs across that period.

On the R&D side, we have delivered £40 million, and our target is £80 million. We will push that target — as a matter of fact, we have done it and the board has signed off on it — to £109 million for this full year. I am giving you a lot of numbers, but here is another notable number to keep in mind: if we deliver that £109 million over the Programme for Government period, we will have delivered £510 million — £0·5 billion worth of investment in research and development — against the target of £300 million. That would be an outstanding result for Northern Ireland companies.

I think it timely, chairman and members, that we reflect a little on the budgetary challenges. We still need some time with the Department and the Minister to work through where we are with our budget. However, when people look at the wider Budget position, they see that DETI is getting an additional 5%. I welcome what that means for us, but please do not be under any illusion that that is sufficient to deliver what we need to, if we continue to deliver as we are as an organisation.

Let me give you two numbers. We put a very strong case and were very much supported by the Executive and Assembly. At the outset, I mentioned the figure of £50 million. If you allow that our old commitments are dropping off at the rate of about £17 million to £20 million a year and subtract that from the £50 million, we have a £30 million challenge, for the next five years, to pay for the jobs that we signed up. We bid for £30 million and got £30 million in the draft Budget settlement. However, the bit that is unseen is that we have been asked to take a £17·5 million cut at the same time. The challenge is that I cannot take the £17·5 million out of my commitments because that defeats the purpose of getting the £30 million. I need to take it out of everything else. That will represent a substantial challenge for the organisation.

As we sit on the draft Budget settlement, 93% of my budget for next year is committed. It is signed up and contracts are agreed, and unless something changes with those contracts, 93% is committed. That leaves me 7%, which is about £6 million to £7 million of my budget. That is not only to write new business but to do other things that are not committed, such as the most important piece, which is to run our export and trade operation. Some members experienced just one of the 60 overseas exhibitions and trade missions that we run every year. They are uncommitted because there is no contract; we sign them up year-on-year. I fear that there is a substantial challenge that may not have been seen by looking at the headline numbers in the tables at the back of the draft Budget.

My plea to the Committee, the Assembly and the Executive is to keep funding the growth, because we are seeing substantial growth, and companies are really coming forward. I, more than anybody, appreciate the funding available to our organisation over the last four years when it was needed in the midst of an economic downturn to help companies in trouble. I hope that the Committee feels that we spent that money wisely and supported companies. Nevertheless, we need to fuel the growth, because the overriding ambition is to rebalance our economy, and we now have a growth opportunity.

The Chairperson (Mr McGlone): Alastair, we are tight time-wise. Will you maybe take us through, please?

Mr A Hamilton: There are some important points on our budget that I want to get across. I do not want to miss the opportunity to —

The Chairperson (Mr McGlone): You will be asked about them.

Mr A Hamilton: OK. I will put my opening position. I made the point about skills, and I want to give you a couple of numbers. Over the last five years, DEL has moved into the space of funding part of our sales proposition through Assured Skills. It has committed £10 million over the last five years, £4·6 million of that in the last year alone. I am concerned that, if we lose the Assured Skills proposition, we will seriously weaken our international FDI proposition.

I have two more points, the first of which is a quick headline on local government reform. The councils have asked us to run the Go For It, or Regional Start, initiative for a further six months. We are doing that for them and will run it through to October because they are not ready to take it on at the transition point in April. We have also agreed with all the councils, although it will be a budgetary challenge, that we will continue to fund the local economic development programmes. Ninety-nine programmes have been rolled out over the last two and a half years, and we will fund those to the tune of 20%. That is the plan on the table at the minute.

Finally, on the Programme for Government, I will give you the big picture, looking across the four years. We are now 38% ahead of the jobs target, 29% ahead of the local jobs target, 52% ahead of the FDI jobs target and 47% ahead of the R&D target. I hope that what I have presented to you this morning, not only the quarterly update but our position three and a half years into a four-year Programme for Government, is a very healthy position of delivery for Invest Northern Ireland.

The Chairperson (Mr McGlone): Thanks very much indeed for that very positive update. It is good to hear that such progress is being made.

I know that I met you two recently in Cookstown, but your staff are the ones out there delivering and doing the spadework on the ground, and it is good to see that. I also heard particularly good comments about your staff from Committee members who were on the US trade mission. So, will you reflect that back to them? A number of us will meet them when they come over for your annual powwow, and that will be good.

Mark, when we were in Cookstown, I raised the issue of corporation tax. You referred to the challenges, which I am sure are there. We have to get agreement on it and so on. If a decision on corporation tax-varying powers is agreed — we hope that that will come without disadvantaging any other part of the overall Budget — how well, in the context of infrastructure and otherwise, are we prepared for it?

Mr Ennis: Chairman, budget permitting, which is a big caveat, it is back to a point that Alastair made. Look south of the border, where success was based not only on its rate of corporation tax but on the pool of skills that supported that. If we take away our pool of skills, that will have a big impact on our ability to attract business and take advantage of a lower rate. It comes back to budget. I am pushing Alastair to go out and advertise our success, particularly to American corporations. It is difficult to do that. We should be marketing the corporation tax move now. We should be out there starting to generate interest. However, it is a difficult environment in which to do that, so we have not, as yet, done so. That is another issue. Those are the key issues I have with our readiness.

I also make the point that, when negotiating, we should be aware that UK corporation tax has come down from 28% to 20%. We have not yet decided what level of corporation tax to shoot for, but we can assume that it will be 12·5%. Therefore, the cost to us should be much lower than when we were negotiating three years ago.

The Chairperson (Mr McGlone): That is a fair point.

Mr Ennis: We all need to be aware that we need to sharpen our pencils when people are trying to take money from us for the privilege of having corporation tax powers.

The Chairperson (Mr McGlone): Alastair, when we were in Cookstown, I mentioned the elusive report on grade A office accommodation. Can you clarify whether that report is for the whole of Northern Ireland?

Mr A Hamilton: Yes, it is.

The Chairperson (Mr McGlone): Have you an indication of when it will be ready? It is becoming dated.

Mr A Hamilton: Progress on that has slowed because there have been recent changes in the property market that we have asked —

The Chairperson (Mr McGlone): If you use that as a reason, it will never appear.

Mr A Hamilton: There was a substantial change that required us to go back to the people to update it. Quite a big change over the last three or four months in that space required it to be updated. The report will go to our board at its November meeting.

The Chairperson (Mr McGlone): Good.

Mr A Hamilton: It will go to the Minister shortly after that. I expect that, very quickly after that, you will be involved.

The Chairperson (Mr McGlone): Obviously, the availability of that type of accommodation is integral should there be a decision on corporation tax, and even if there is not, because I am aware of some issues at the moment. I see that your reply on the issue was prepared by William McCulla, whose letter states that the current position includes 68,000 square feet at City Quays One. From what I am told, a large part of that is already under offer to an international law firm, and the rest will be let within the first quarter, so that is out of the frame.

Mr A Hamilton: I am not in a position to confirm or deny whether anybody is making offers on property. What I will say is that it has now become clear, from the people who built the facility, that they are moving forward to City Quays Two. They said that they would do that when they had sufficient comfort that they had pre-let or partially pre-let an element of the building. I take it that they got to that position.

The Chairperson (Mr McGlone): I presume that you are aware of the situation, but I am just conscious that it is included in this reply almost as available property, when, in fact, within the next three or four months, hopefully, it will all be taken.

Mr A Hamilton: At any given point, Chairman, you will be in that position, as people pick up on these things. However, I understand your point.

The Chairperson (Mr McGlone): This is dated 4 November. The other issue is that City Quays Two will not be completed until 2016, so we are playing catch-up all the time, a situation that is affecting firms. I am aware of a major software name that, just last week, was trying to get space of between 50,000 and 70,000 square feet. It scoured Belfast and could not get any, so it is a major problem. That is the current situation, before we even have — hopefully, after budgets and that are sorted out — a decision on corporation tax.

I see that as a difficulty. Hopefully, the report will appear and give us some indication of what the market is like. I know that some of your people have been ringing round to establish that as well. However, if we get the success that we anticipate, have we the necessary facilities and infrastructure, including office space?

Mr Ennis: One of the challenges, and it is exactly the same scenario as in Dublin, is that commercial rents have not caught up with demand, which has moved much more quickly than people anticipated. Therefore, if you want developers to build in Belfast, they need to be hitting rents of around £18 a square foot. In Dublin, it is significantly higher, but the issue is exactly the same. My personal view is that there is a lag between rentals in place and the current demand, which is very active at the minute, and I am sure that that is the feedback that you are getting. It takes time to build, and, therefore, there is a lag. Demand will drive up rent to the appropriate point, and we are starting to see developers taking a much more bullish position and moving forward. Given where developers have been for the last six or seven years, they are not particularly confident, and, therefore, that is taking a while. Our financial institutions are starting to move, and we have heard of some deals starting to be supported but, again, it is lagging. The reality of the situation is that there is a lag.

The Chairperson (Mr McGlone): According to what I hear, it is £17 a square foot at the moment.

Mr Ennis: It is getting there, but you have to be careful. Developers will give you the latest figure, which could be from yesterday or the day before, and tomorrow it might be £19, but that is one offer for one particular space. You have to look at the whole movement.

The Chairperson (Mr McGlone): No, it was not.

You appreciate the challenges. What needs to be done? You are the guys who will be asked these questions from potential investors, from those considering FDI, if we get the branding of a reduction in corporation tax.

Mr A Hamilton: I can say nothing more, Chairman, other than that there are suggestions and recommendations in the report. As soon as they go to the board and the Minister, we will be open for a discussion on them.

The Chairperson (Mr McGlone): That is grand. Thank you for that.

Mr Flanagan: Mark and Alastair, thank you for your presentation. I suppose that Gordon will be disappointed with the presentation because, due to the success of Invest NI, your graph is full of green. Gordon would have liked to have seen the blue and red that were there before.

Mr Dunne: We have moved on.

Mr Flanagan: The performance of Invest NI is obvious to see. In particular areas and sectors, Invest NI is hugely successful, and we commend you for that. Regional imbalance is still there and still an issue of contention in many areas. I had wanted to know when we could expect to get accurate figures on the number of jobs created, but you pre-empted the question, so I will not bother with that discussion. It is good to have those figures, and I have already tweeted that they are out. For too long, we were all debating what a job promoted actually was, so getting the figure for jobs created is a good thing.

Can you give us the rationale for the 5% decrease in the total offers to local businesses, despite the 64% increase in offers to external businesses, and a 10% decrease in the value of assistance to local businesses? Is a lot of that to do with the change to the national incentives before June? Do you think that this is a one-off or is it more of a long-term trend that we can expect to see from Invest NI?

Mr A Hamilton: There are two different questions there. First, the 5% decrease is because, unashamedly, there was an absolute focus in the organisation to maximise out on the offers that went on to deliver these results before that opportunity closed at the end of June. A lot of those projects involved externally owned firms because we were running out of opportunity. All of our effort in the organisation was to close that pipeline of opportunity. The 5% decrease is not purposeful; it is a consequence of all that focus on closing opportunities that mainly involved internationally owned firms before we lost the opportunity.

What do we expect to happen in future? I expect the balance between the two to normalise again. We were in an exceptional situation for the first three months. You would expect these volumes to reduce as we go forward for three reasons. One is that our work-in-progress pipeline is down because we cleared it out in delivering those projects. The second is that our budget position has yet to be resolved; we do not yet know whether we have a level of funding to write in-year business. The third is that changes to regional aid and other changes that have come in will start to take effect. I have been signalling to the Committee for the last 18 months that we will hit a peak. I did not think that we would get a second peak in this quarter, but we did. We will hit a peak and then come back to a more normal rate.

Mr Flanagan: Is there any indication from the likes of your internal PMI report that local organisations are not feeling the growth in the economy in the way that external investors are? The recent Consumer Council study on consumer confidence shows that the benefits of that growth are not really being felt by householders. Are small local firms not feeling the growth in the economy that we can all see?

Mr A Hamilton: The PMI is not broken down that way, so I cannot answer your question specifically. However, as we look across the range of supports that we have given out over the last 18 months, there has been a very healthy balance between local firms, with SMEs a sub-sector, and internationally owned firms. Since the beginning of April this year, 63 announcements have been made on projects that we have supported. That is not all — that is only a scale value — but 63 have been announced. Your key question was on regional imbalance, and, of those, 35 were outside Belfast. If you look at manufacturing versus services over the six-month period, you will see that 44% of our support investment has gone into the manufacturing sector. I am quite pleased with the split between local SMEs and internationally owned, and the sectoral splits within them.

Mr Flanagan: Finally, the last time you were before the Committee, I raised the issue of figures on a living wage. You said that you were more interested in the targets set in the Programme for Government and so were looking at the minimum wage and the targets for the private sector median wage. Have you given any further consideration to reworking the bandings that you request from employers to find out what proportion of jobs created pay above the living wage?

Mr A Hamilton: You said that I was not interested; I am interested. However, our responsibility, as an organisation, is to deliver against the goals and targets set. I may not repeat exactly what I said the last time, but I will paraphrase because our position remains the same. We have been set very clear targets. The national minimum wage is a given: it is a legal requirement for firms, and we do not get involved in that. Our other quality measure, as set in the Programme for Government, is against the private sector median. We have the national minimum wage, the private sector median and 25% ahead of the private sector median. I have no issue if, from a policy point of view, the Department, the Minister and the House decide that they want to look at other measures, such as the living wage, and include those in a Programme for Government. You will need to consider the impact. I know that others have given you representations of the potential impact on businesses and industry. At present, we are not charged to manage or deliver against the living wage.

Mr Flanagan: I appreciate what you are saying, and I know that it is not a target that you have been set. All I ask is that when you go to those creating the jobs to find out whether they are paying above or below the private sector median wage, you include a third band of whether they pay above the living wage. I am not asking you for a complete change in policy because I appreciate that that is a matter for the Executive and the Assembly. You already find out from employers what they do through Invest NI funds, so it is merely a matter of also asking them whether they pay above the living wage.

Mr A Hamilton: We can ask the Minister whether she wants us to analyse, measure and report on that. I am happy to take that back to her.

Mr Flanagan: Is that a decision that the Minister has to make, or is it a decision that the board should make?

Mr A Hamilton: I have often said here that our reporting matrix is quite extensive. We gather over 35 different levels of numbers: jobs, the split of those jobs, R&D, financial transactions and so on. Adding another one will, from a business point of view, add another level of bureaucracy to our reporting. Therefore, the Minister will need to consider it.

The Chairperson (Mr McGlone): At this point, the Deputy Chair is going to take over because I have to attend an urgent meeting of the Justice Committee, which has been called to discuss the Desertcreat project. I have to attend that and try to get that green bar on the PMI matrix that you have here pumped up a bit. Thank you very much for your time, and it is good to see you again.

Mr Agnew: Thank you, gentlemen. You have given us a very positive news story, and I was nodding my head. Then we got talking about the Budget cuts and corporation tax, and my hackles were raised somewhat. Mr Ennis, you said that money will be taken from us for the privilege of having corporation tax powers. The fact is that there is a European requirement on state aid that we will have to pay whatever cost there is to corporation tax.

You have made a compelling case for why Invest NI will find it difficult to meet a £17·5 million cut, given that, effectively, your non-committed expenditure is £6 million to £7 million. Any accountant will tell you that that is difficult to manage. How much of a cut are you willing to take to pay your contribution towards the cut that we will all face in public expenditure, due to a corporation tax cut, if we were to get it?

Mr A Hamilton: That is a slightly different question from the starting point. It is worthwhile to have a discussion on corporation tax — I have heard people at a very high level suggest that, if a cut in corporation tax comes in, we in Invest NI will not need to do a lot of what we are doing and, therefore, money can be taken out of our budget. I think that that requires a little bit of debate and analysis. I know that quite a few members of this Committee have gone on overseas missions, some quite recently. Some people are very active internationally. Despite what all of us may think, sitting here in Northern Ireland, there is a constant sales job to be done. Whether it is around the current proposition that is grant funded, or around a new proposition based on corporation tax, it will not fall off the shelves. You all know that there are a lot of people out there who do not even know where Northern Ireland is, never mind know that we might have an advantage in corporation tax, if that is delivered.

An interesting thing to do is to look at some of the other agencies and see how their spend has moved as their proposition has moved. More and more of what we will be doing in the future, on the corporation tax level, is getting the message out there. It will be sales, marketing and more of the events. We have been criticised, like everybody else, for our hospitality budgets and all the rest of it, but it is part of the sales mix. Yes, there is a challenge to make sure that we do it as effectively as we can and target it as best we can; but that is what we will be doing more of in the future. Once we have a tool — if it gets delivered — we will market, sell and drive it. So, I think that there will be reductions, but they are not going to be on the scale that some people have in their mind, otherwise you will end up with a tool but it will not be promoted and will not deliver on the results that people put into the business case at the very start.

Mr Agnew: To some extent, I share your analysis, but there is a mantra from the business community that says, "We want you to invest more in skills, but we want to pay less tax to create the money to invest in those skills". That has, to some extent, been repeated by you. You do not want your budget cut, but you want the corporation tax cut, which means that the overall Budget will have to be cut. My question to you is this: how much of that are you willing to take on? Or, to put it another way, if reducing corporation tax to 12·5% means that you take a significant budget cut, is it still worth it?

Mr Ennis: With respect, a cut in corporation tax is not a cut in income. The whole purpose of cutting corporation tax is to increase the tax take, so —

Mr Agnew: We have been told that there will be an 11-year payback.

Mr Ennis: That goes back to my initial point. It depends how much you are going to pay for it in the first instance. It is not an amount set by Europe, by the way; it is a negotiated amount with the UK Government, who have a different set of accounting measures from those I would put to the cost to the Northern Ireland exchequer. It is a complicated debate and discussion that we are having, but if we can say that, with clarity and transparency, we are going to reduce corporation tax to a level within a specified time — say, three to five years — we can go out and make that sales pitch now. We do not have to wait until it happens. So, we can stagger the pain to match the gain, if you like. The gain should be an increase overall, otherwise you would not do it. We should have an increase in tax take as a consequence of reducing the tax rate. That is the key that people need to understand, because it is fundamental to why we are doing it.

Mr A Hamilton: The question is a key one. I do not want you to get the impression that we are saying, "Don't cut us. We're sacrosanct. We deliver great results. Leave us alone". It is inevitable, whether at £17·5 million or another number. Whatever it is, we will do our fair share of that, but those cuts will have consequences. I say that not to make that dramatic. It is the reality of the situation. Whenever you get to a future corporation tax world, if that power is given, there will be choices that need to be taken. Those will be fully informed. So, in order to maximise the effectiveness of the tool, do you swing resource to sell, promote and drive that result, and hopefully shorten that payback period? But will that change the organisation such that there are other areas where we will pull back from support for small business, local business or whatever it is? Those are the tools, the choices and the pieces of support fabric that we will need to decide on, and we will play our part.

I should also say that one of the things that we are currently involved in is looking at whether there are support measures that we provide free of charge at the minute that, in a better economic climate, we could charge for in order to provide some revenue back into the organisation. There is an active debate at the minute about some of those areas. I think that there are some areas where we can deliver a really good job and value for money for a company that we can get a revenue stream from. We are looking at that at the minute.

Mr Agnew: It is good to know that some public agencies are not completely opposed to revenue raising.

You made a point about corporation tax choices needing to be informed. One of my frustrations is that it is not always informed. One piece of information I have — I do not know if it is your understanding — is that if we reduced the level of corporation tax and a corporation moved its headquarters from England, Scotland or Wales to Northern Ireland, and that was attributable to corporation tax, we would still have to pay the losses to the UK Treasury, even though, in our terms, it is not what we consider foreign direct investment.

Mr A Hamilton: I think that point is still being worked on. From my understanding, there are quite detailed pieces of work under way to make sure that that brass-plating position that you reflect does not happen, in that there will be an analysis of the work that is conducted by that organisation in the geography, as opposed to where its headquarters are. So I am fairly confident, based on what I know of the discussions thus far, that we will not have to pay for the vast majority of that sort of activity.

Mr Agnew: I will move on to the questions I was supposed to ask, Chair, if that is OK. How many of the 12,780 new jobs do you deem to be attributable to Invest NI?

Mr A Hamilton: Which ones?

Mr Agnew: I think that is the increase in employment we have seen in the six-month period, and then you have your own upgraded figures that you are working on.

Mr A Hamilton: The figure for jobs created is 3,255. The net change position is 8,540. That includes other areas. I hope that I am on the right track here. It is very difficult to do a cross reference between the information on jobs created and the net change position. We are still working on it, because we would like to be able to do that. There is a slight difference in the overlap of the time period between those two pieces, because the KPIs is based on a financial year for the companies, whereas the job-created information is based on a claim year period within our organisation. I cannot answer your question at the minute, but we are trying to do it.

Mr Agnew: How many of the 2,983 job losses are from companies that have had Invest NI support?

Mr A Hamilton: They are all account-managed customers. I do not have the breakdown of it, but I suspect that there would be quite a few of them if they are in that account-managed base. You have to remember that this is a net position in terms of the overall piece of work.

Mr Agnew: I assume that you do not say, "Overall, we are doing well, so we will not worry about the 3,000" —

Mr A Hamilton: No. You and the other members of the Committee can rest assured that if people are not delivering the commitments that were in their letter of offer, we will be working with them.

Mr Agnew: Can you elaborate on "we will be working with them"?

Mr A Hamilton: Generally, they have a five-year period over which to create those jobs. Some of that loss may be in-year losses that they will then recover in a future year; if that is the case, no action will be taken, and we will monitor. We monitor all of our cases where there is live support. We start with the baseline, and we end up with the total headcount number, and it is the movement between those two. So, there can be in-year reductions and following-year growth that will compensate for those two, and we do that on a project-by-project basis. If they get to the end of that five-year period, they then have a further earning period for maybe two or three years, depending on their letter of offer, beyond that. If, at the end of that period, they still have not delivered against the number, we will go into a clawback situation with that company, and there have been a few of those.

Mr Agnew: My final question is on your multiplier that for £1 invested, £9 is returned. How is that measured and how is it verified, if it is?

Mr A Hamilton: It is measured against the two charts that we have in terms of our investment calculated against every letter of offer that has gone out versus the commitment that the company has in that same letter of offer. For every offer that we put out, we say, "We will give you £1 million, and this is your investment". The investment on purely jobs-related projects is two years' salary, which is an agreed position with Treasury and the European Union. For capital projects, there is a whole definition of allowable capital spends that contribute to that investment. On every project, as part of every business case that we sign off, those two numbers are verified and agreed and then monitored in-life during that project.

Ms Fearon: Thank you for your presentation. It is always good to hear good news. I commend the work that Invest NI is doing. I think that it is brilliant. Some of us had the opportunity to experience it at first hand in June on the west coast of America. The team out there is absolutely brilliant, and I wish it all the best in the future.

You said earlier that it is important to fuel the growth. My fear is that businesses, particularly in the border region, are not feeling that particular growth. The point is made in slide 3 of the presentation that performance is driven by innovation and trade. Recently, we had a joint Committee with the Oireachtas Committee on Jobs, Enterprise and Innovation, and we heard that innovation performance is lower in the border region. Indeed, we heard the same thing from the Minister last week. What is Invest NI doing to support those border businesses to improve their performance, particularly in innovation? Does that include any work with the IDA?

Mr A Hamilton: On the last point, if it was going to be, and it is, on an all-island basis, it will be with Enterprise Ireland. The majority of the innovation drive for firms in the South comes through Enterprise Ireland. Yes, there is quite a bit of activity. I alluded earlier to some of the things that we have shared between the two organisations over the last year. Mark and I meet both the agencies — InterTradeIreland and Enterprise Ireland — every six months, and quite a lot of things that we are now doing are coming out of that shared piece that we are doing, particularly with Enterprise Ireland. The innovation vouchers is a key programme. Again — not that I want to keep harking back to budget — it is important that we continue to drive that innovation piece. It might be an area that might be easier to pull back on if your focus is absolutely on jobs.

Innovation vouchers are worth £4,000 that you can cash in for support in any university or higher and further education college on the island of Ireland. If there are companies in the North on the border, they can cash those in with institutes, universities or colleges in the Republic of Ireland. That is the first piece.

The second piece is our competence centres, which we have been developing over the last four years. We now have our fourth one up and running. A piece of work is under way with Enterprise Ireland to try to network those competence centres on an all-island basis. We have four here, and there are quite a number down South, although I cannot remember the number. We are trying to build the networks and connections between those. We met the head of Science Foundation Ireland (SFI), and we are well under way in trying to build the connections between the competence centres, North and South. Quite a bit of work is under way to support those companies on an all-island basis.

Ms Fearon: That is good to hear. I know that the border region in particular suffers higher levels of job losses, and it is harder for cross-border trade to get going because of the barriers that exist by virtue of the border. We have heard from the Centre for Cross Border Studies and InterTradeIreland about a border development zone. Do you have any opinion on establishing that?

Mr A Hamilton: At a very headline level, without knowing the detail of what is being proposed, we would be supportive of anything that helps to stimulate innovation and research and development, if that is what is intended in such a zone.

Mr Anderson: Thank you, Alastair and Mark, for coming along, once again. I congratulate and commend you on another excellent report in the very difficult and challenging times that still exist. It has not been easy, but to come forward with another report like that is excellent.

You talked about moving forward in these challenging times. Maybe we are bottoming out; maybe you do not expect the levels to be just as good. I listened to some reports from banks and things. Can you see the banks now playing a bigger role in the situation? Maybe, Alastair, the jobs and the job creation can still be maintained to a high level if we get the banks on board more.

Mr A Hamilton: I reflect on two areas where we set up funds because the banks were not lending at that time to the extent that we would have wanted. I would particularly comment on the agrifood loan fund and the growth loan fund. In both those areas, but more starkly noticeable in the agrifood loan fund, what we would have had originally by way of a projection as to what would be drawn out of that fund has not happened. The houses are still being built, but they are being funded by the banks. If that is what has happened, that is a good result. We are there where there is market failure. We are there to stimulate a response to fill that gap in the short term, but as soon as the market recovers, particularly in this funding situation, we should be pulling back. We should not be fighting with banks. That is not our game. If market failure has been addressed and banks are starting to lend, we should be pulling back.

On the agrifood loan fund, we are nowhere near the drawdown that we expected. We are well behind it, but banks and people in the sector, particularly the producers, tell us that the infrastructure is being built. The houses are being built out there, but they are being funded by banks. On the growth loan fund, quite a few offers have been made to companies. It is still very successful, and we will deliver against the £28 million Programme for Government target on the growth loan fund, but we are starting to see that tailing off a little bit. Banks are starting to say, "Well, actually, if somebody else is prepared to fund that, I should be thinking about whether I should be retaining my relationship with the customer and whether I should be stepping into that space". We are now seeing a mix of funding in that space. A higher proportion of funding is being delivered by the banks, and there is a small element of unsecured funding through our growth loan fund as a top-up measure. It is moving to being a top-up as opposed to a replacement for growth funding, which is great. In the future, if that continues to reduce, we will step back out of that space.

Mr Ennis: I support Alastair's comments. When we were reviewing the growth loan fund, we noted that there were a number of incidences where banks had set up beside us in a room looking for customers coming through, which is good, and some of the customers chose the bank, because it had a better offer. Anecdotally, you see that in the advertising: there is a lot more advertising by banks now in support of small business loans. That is a good-news story for Northern Ireland.

Mr Anderson: That is pleasing.

I want to touch on another issue. In your initial comments, you mentioned DEL and the skills. Do you think that there is a skills shortage in certain places such as engineering? The Committee visited STC, and comments were made about engineering, welding and stuff like that. With that skills shortage, how do you see that going forward? Do you still promote jobs in that sector, even though that skills shortage might exist?

Mr A Hamilton: Generally, on your last point, there is always a balance to be had on whether you continue to promote, whether that is in that manufacturing sector, IT or financial services. There always will be a tension between supply and demand. I have no doubt — you can see it from the slides — that we pushed as hard as we possibly could to secure projects while there was an opportunity in front us. It will require every possible opportunity for all of us, including higher and further education and in-company training — all of that mix of skill development — to ensure that we have the people to meet that 25,000 job position that is now in front of us. It is secured and signed; we need to make sure that we have the people.

I have no doubt that, today, as we sit here, and in the future, people will say that we have promised more than we can deliver in Northern Ireland. Every company, whether it is people meeting job requirements or whether it is raw materials into a manufacturing process, has that challenge as it moves, and we need to make sure that we do all that we possibly can to make that as painless as possible. I pay tribute to the Department for Employment and Learning, the Minister in his leadership and people in the organisation who have got alongside the economic drive that is here. I say to you what I say on almost every public occasion: I stand up and say — the people who were on some of the international programmes will say it — that we sell people. There are loads of other bits to our proposition, but we sell people, and that is the key piece that we have. There is a global war on talent, and we have been very successful at providing a solution to the companies that are engaged in that challenge. That is why I am — maybe overly — passionate today about making sure that we have the people to fill those opportunities in the future.

Mr Ennis: I take the board out round the Province to get feedback from the ground. One of the feedbacks from Cookstown was the fact that there is a shortage of engineering skills in Cookstown. When we heard that DEL was going to announce its apprentice scheme, we were very much behind that, because that filled that gap, and we see the Assured Skills programme that people have gone through. From a business perspective, my view is that DEL has been very innovative in some of the ways that it has gone about meeting shortages in demand and working with colleges and universities to address that. Just when we seem to have got to grips with that and pushed forward on some very innovative programmes, you get hit with the budget constraints, and I was echoing that concern.

Mr Anderson: That is fine. I wish you well and look forward to another good report.

Mr Humphrey: Thank you both very much for your presentation. As a mid-term report, it is first-class and hugely impressive. I ask you to convey to the staff, Alastair, and to the board, Mark, our warmest congratulations. When you look at some of the key headlines and see 24,000 jobs in two years, and just missing the target by 1,000, that, in today's climate, is hugely impressive. I pointed out to the Minister last week that we were just behind London for foreign direct investment jobs, and she is now pointing out that we are actually ahead of London. We are the UK region heading the table, and that is good.

Slide 6 states that there has been an increase of 270% in new jobs promoted. Again, that is hugely positive, and all are to be congratulated. Slide 8 details new investors. Alastair, business worldwide has been going through a difficult period and some companies are exposed, which is what we were talking about earlier before you came in. How do you minimise the risk to the taxpayer?

Mr A Hamilton: There are two risks. One is the point that you have made, which is taxpayer risk; the other is opportunity risk. I can assure you that, from a taxpayer-risk point of view, I will repeat that we pay out only when jobs have been created. As companies come on board, they create jobs and, to return to the answer that I gave about how we assure those, when they create a job, they have a period to deliver it and they must keep it for a period beyond that. There will be exceptions; it is not all 100%. There will be companies that we pay assistance to that create the jobs, but then something happens, they go into liquidation, and we are then in the same mix as everybody else trying to get funding drawn. There have been notable examples of that in the past, but that is a very small part of where we are with some of our situation. The vast majority are funded and paid for and, if they do not keep the jobs there for a period, we will retrieve the Government assistance, or, in some cases, part of the Government assistance, depending on the value that has been created at the point at which the jobs are removed and the company leaves. As far as taxpayers are concerned, the vast majority of those firms will deliver what they need to deliver, or we will take the money back.

Opportunity risk is probably more what I am interested in, although I do not want to give you the impression that I am not interested in protecting public funds, because there are really good ways of doing that. However, I am interested in whether we can get firms like these, which are really at the start of their development curve, such as the Chelsea Apps Factory, which is a wonderful company that is doing superb things to take the app world into large company enterprise space. The potential for that company to grow substantially is enormous, and therefore our plan is to get in at the very start. Some of them will grow substantially and some will not; therefore, it is about having a mix in that portfolio. The opportunity risk will be on the companies that will grow into our 500- or 600-people companies of tomorrow. We need to back a lot of them, with an assurance that we carry out the same due diligence and business case, because only a few of them will reach that point. However, the few that do will make it well worth our being there at the start.

Mr Humphrey: You mentioned DEL and its training and skills training. Obviously, the budgetary cuts will provide a real challenge for you and for DEL. Is there anything more that you can do? I realise that you have the same constraints with your £17·5 million cut, but is there anything that you can do in training and skills collaboratively with DEL and with the new councils? You also said that you were running the programme for the next six months and so on, but, because of their ratepayer base, the new councils will have greater resource. Are there opportunities there? Do those challenges provide opportunities as well?

Mr A Hamilton: You touch on a very good point; as a matter of fact, it is one that we discussed. As a team, we had a lengthy session a few days ago. One idea is about revenue recovery and all the rest of it, and that was one of the points raised, so I believe that there is an opportunity. We have not had a chat with the councils about it, but I believe that there is an opportunity through local enterprise development (LED) funding to make some of the programmes more skills-based than they may be at the minute and therefore replace either some of the in-house Invest NI-funded or DEL-funded programmes on a regional basis through the LED funding. One benefit of that is that you get better leverage because a substantial portion of LED funding is drawn from Europe. Again, we need to look at every opportunity that we can to optimise European funding in this.

Mr Humphrey: So, you have budgetary cuts that might affect expos and your reaching out to try to bring foreign direct investment. I welcome the assertion that you made about the vast bulk of your money being spent on indigenous firms. I think that that deals with a criticism that is unfairly levelled at Invest Northern Ireland. Could we face an opportunity cost, because of your budgetary cuts, of businesses going elsewhere that might have come to Northern Ireland? Is that a concern?

Mr A Hamilton: We need to wait and see how this piece of work flows out during the consultation; how severe the cuts will be; and where the Minister decides they should fall. Ultimately, she will need to decide the priorities when budgets are reducing. There is always a risk that, as you pull back on your international space, you are unable to cover the ground.

I reflect on one of those companies; I will not say which one. However, one of the companies on the list of 10 came as a result of a meeting between two people at an event in a large city in the United States. Two people met and they had a chat, and the girl in our team, who runs that operation for me in the States, followed it through: from a chance meeting, a cold call, through to the delivery of a project. That is why we need to be out there; we need to be engaging and finding opportunities. We need to be promoting our proposition, and I am concerned that, if we pull back on our ability to fund our international office network and promote the proposition, we may miss opportunities.

Mr Humphrey: Finally, Mark, you mentioned corporation tax. However, as a result of a deal with the Exchequer on corporation tax, might the emphasis on going out and creating new jobs, shift towards foreign direct investment as opposed to indigenous local companies? Is there that fear, concern or potential?

Mr Ennis: I think that that comes into the budget debate as well. It is how it will be funded and where it will come from. Corporation tax is a weapon in the armoury to attract and build jobs — and wealth — in Northern Ireland. Its primary focus will be on foreign direct investment. At the same time, depending on what budget we have left, we will continue, as we have continued, to focus on the customer base that we have at home. That is why you see that we have a bias in favour of local indigenous companies at the minute. As far as we can do that, we will.

Mr A Hamilton: You talk about focus. It is also worthwhile mentioning that a consequence of a reduction in the rate of corporation tax, if it happens, is that there will be an immediate benefit to indigenous firms as well, by way of a reduction in their corporation tax bill. There is an assumption, and I hope that it is well founded, that it will be used to reinvest in their businesses so that there will be less need for direct government intervention, in the way that we support firms today, because local firms will have a higher level of retained profits in their businesses to support their own growth.

Mr Humphrey: Thanks for those answers. I wish your organisation well.

Mr Dunne: Thank you very much, Alastair and Mark. I endorse what has been said about the positive news that you have brought to us, which is the result of a lot of hard work by a team based across the world. A number of us went out and saw the work that you are doing. We thank you, and those who supported us, when we went to San Diego and San Francisco. We were certainly well looked after and I would say that we were all impressed with the goodwill that there is for people from Northern Ireland and, of course, those from the Republic as well. So there is spin-off for Northern Ireland from what you are doing, and also for the Republic of Ireland. I think that that should not be lost.

I think that what impressed us most was how well you are organised and how professionally you do your job. Local people, people whom we could easily identify with, are in place over there and they showed a great commitment to the work that they are doing. They showed an enthusiasm and an understanding for Northern Ireland and they brought that through into their workplace. So, I think that we should record our thanks and appreciation for what is going on. Everyone is sceptical about what people are doing when they are not in your line of vision.

However, when you go and see it at first hand, you can feel the enthusiasm and drive. I think that we were all very impressed with what is going on, and other members of this Committee should consider making such trips. They should go out with Invest NI; obviously, in a reasonable and balanced way. It would be well worthwhile. We have learned a lot from what we have seen and we appreciate what is going on.

Since most issues have been covered I do not want to repeat them. You are under pressure next year in relation to budgets. How will that affect your work and your start-up programmes? Your Boosting Business programme comes to mind. It is very effective, and it is one that comes across to every man and lady in the street. I think that you have had a good response from it.

I have a couple of other quick points. What more can we do to help draw down European funding and assist firms in R&D? That is still a big challenge. That is most of the issues. I had one other point, but I will come back to it.

Mr A Hamilton: There are probably two different answers to the questions on the budget for start-up business and Boosting Business. One is that, as I said, the start-up business programme will transfer to councils, but we will run it for an extra six months to October. We are doing that on behalf of councils, and they will be funding it by way of a transfer to us. That programme will transfer, so the challenge will be with councils on how they intend, through their economic development teams, to run that programme. So, it will not really have a direct impact on us from a budgetary point of view.

The second piece was around the Boosting Business programme. I do not want to give you an answer today that we have made decisions around how we will manage the £17·5 million. There are choices that need to be taken, and it is a multiple-option piece in terms of how you mix that. However, it would be wrong of me to leave here without raising a little bit of a concern that that area around Boosting Business may come under pressure. As always in these things, the 80:20 rule applies. So, you go to that account-managed base, with the 1,050 companies that are in there. The vast majority of our exports, of our employment and of our R&D sits within that base. So, when you come under pressure and start to make choices, your choices will be where we can invest our money to get the biggest return. That is where Invest NI was seven years ago.

You know that we had an exclusive client base and did not offer either advisory or financial support beyond those 2,500 companies. I think that a lot of the comments that members here and elsewhere have made about the positivity of Invest Northern Ireland's engagement over the last few years have come about as a result of us getting out into the small business community through the Boosting Business programme. Therefore, I think that it would be a major step backwards if that were to be substantially reduced. We can all cut cloth in lots of areas, but I would not want to see a substantial reduction in our focus on the small business community across Northern Ireland. Those are decisions that need to be taken in the future.

On R&D funding, it may be worth repeating the point that I have made before. People often ask why we are not leveraging more European funding through Horizon 2020 and all the rest of it. It is quite simply because, in Northern Ireland, because of the priority that the Executive and the Assembly have put on innovation and research and development, we have been allocated an additional budget to drive a result on research and development. Driving that £300 million will deliver £500 million, I hope. Therefore, I say unashamedly that Northern Ireland is the best part of the UK in which to conduct your R&D because, if you bring forward a viable project with a good business plan for research and development support, we will support it. In other parts of the UK, through Horizon 2020, it is a competitive process, and you must find another partner in another part of the European region to make that up.

Mr Dunne: Absolutely. It is complex.

Mr A Hamilton: It is complex and time-consuming, but it is also not guaranteed funding. We will give you an answer to your R&D business case within a small number of weeks; the Horizon 2020 process will take much longer. Companies are faced with a competitive and collaborative process across multiple jurisdictions versus making a business plan to Invest NI to getting research and development met, and that is why very few go with Horizon 2020. I suspect that the mix between our direct-funded process and Horizon 2020 will change as a result of where we find ourselves.

Mr Dunne: Are you still getting use of and drawing down from the European regional development fund?

Mr A Hamilton: Yes, very heavily.

Mr Dunne: So, it is European money that is supporting R&D.

Mr A Hamilton: Yes, and you raise an interesting point. At the minute, there is an element of our baseline that has to go in to match European drawdown. Changes are coming in that will allow, in some cases, the company investment to be treated as the private match. That means that there will not be a baseline draw from Invest NI. It will be a private company's investment matched against the European funding, which should allow us to do an awful lot more on the research and development side.

Mr Dunne: Good.

Mr A Hamilton: That will be a positive move.

Mr Ó Muilleoir: Congratulations, Alastair and Mark. I congratulated the Minister yesterday. She did not claim all the credit; she said that a small bit of it goes to you and your team. They are astounding results over the last 24 months, and especially over the last six months. The challenges remain west of the Bann. It is the first time that I have been at an Invest NI presentation and heard the word "Cookstown" mentioned. I have not heard "Fermanagh" yet; I presume that that might be coming. We know that that is a challenge. We know that blue-collar jobs, jobs that are accessible to people who perhaps are not skilled, are a challenge.

On looking at opportunities, I have two questions for Alastair, the CEO. What can we do that is new in the entrepreneurship space? I see that a new strategy on entrepreneurship has just been published in the South of Ireland. I mentioned that, in New York, they have just published Digital.NYC, which is a completely new push on start-ups and the entire, I suppose, ecosystem for entrepreneurship. Is there anything new, Alastair, that we can do on entrepreneurship? We have spoken here a lot about the FDI work that you are doing.

Mark, as I asked the Minister yesterday, how important is political stability and political progress for your sales proposition? I presume that those who come here, and the four who are not in, come here partly for the talent, certainly, and also because they feel that the location is a good place to put down roots.

Mr A Hamilton: If you will allow me, I will give you a bit of flavour. I mentioned earlier that 63 announcements have been made in the last six months, 35 of which were outside Belfast. I scribbled down: Tyrone, Portadown, Londonderry, Carrick, Antrim, Ballymena, Dungannon, Portadown, Newry, Cookstown, Craigavon, Ballymena, Kilkeel, Craigavon, Fermanagh, Greyabbey, Enniskillen, Lisburn, Newry, Enniskillen, Castlewellan and Tandragee.

Mr Ó Muilleoir: I cannot believe that it was a Belfast man who got that list out.

Mr A Hamilton: That is the 30-odd on that list. I think that it has been very well balanced across that period, and there are substantial projects at Moy Park and some others in the manufacturing sector of scale outside.

On the entrepreneurship piece, I can probably give you a much fuller answer than I might have given you two months ago. The reason for the change is that, about a month ago, I had a very informative visit to Silicon Roundabout, as it has now become known, in Shoreditch in London. I visited what is now the hub of the ecosystem as far as the UK Government in London have put it together. Very exciting developments are taking place in there around a facility that Microsoft Ventures has and the Barclays Accelerator, which is a fintech-driven accelerator. There is a shared working space to enable that ecosystem to operate properly. We have spent a little bit of time investigating that, together with a piece of work that one of our previous board members Tim Brundle did about a year ago, looking at the ecosystem in San Diego and in San Francisco, particularly around the RocketSpace facility there. Members, did you get a visit to RocketSpace?

Mr McKinney: We did, yes.

Mr A Hamilton: So, you are aware of that facility. A few pieces of the jigsaw are coming together. One is the innovation strategy that the Minister has just launched; the second is the focus now on entrepreneurship. In our organisation, we have taken a fresh look, through the work of Tim Brundle, to see what we can do now to get ourselves a lot more joined-up as part of that ecosystem. You know that we have the pieces of the building blocks. We have the tech starts funding now just launched; that is the Northern Ireland Spin Out (NISPO) programme. We have the Propel programme, which is probably one of our best programmes in that space. We sponsor the Halo organisation, and we have just joined more actively with Steve Orr and his colleagues at the Science Park, particularly around NISP CONNECT. We have been very supportive of the drive that he has about the knowledge economy.

The last piece is that we are in the final stages of getting approval to deliver the first part of the innovation strategy, which is to build an accelerator in Northern Ireland. Again, provided that we can manage in our uncommitted budget to make that happen, I believe that that will be a significant development. It is one of the recommendations that Tim and his colleagues made as part of that piece of work. I think that you will then start to see visible elements of this ecosystem start to come together to develop into a better environment for us to stimulate homegrown start-ups and to attract mobile start-up opportunities from elsewhere.

Mr Ennis: There was a poll — I am trying to remember where it was, but I cannot — of all the major companies about what underpinned their investment decisions. In the top five answers, there were two common ones: political stability and access to skills were the most important factors no matter who you asked.

Mr Ó Muilleoir: This is my last question. You are certainly earning your money: you have been here for over two hours, including an hour outside. I am a new member of the Committee. What is the one thing that this Committee can do to help you in your work?

Mr Dunne: Give them praise.

Mr Ó Muilleoir: No one has asked you that before.

Mr Ennis: As Alistair said, I encourage you to accompany us on trade missions. People underestimate the benefit of political relationships with businesses, particularly in the Far East and the Middle East, but generally nearly everywhere I can think of.

That does a couple of things. It shows integration, which is a huge competitive advantage for Northern Ireland. If you go to the mainland, there is a disconnect between politicians and businesses. There is a good connection in the South, but we have an even better one. Access to our political leadership is a big positive in business: when they see a common message and a common understanding coming through, whether it is an overseas visit or whether they are visiting here, it is a hugely powerful weapon. We have had a big advantage globally with that.

Mr McKinney: Welcome, and thanks very much for your presentation. I apologise for not being here at the start and for most of the questions. If I start to ask something that has already been touched on, do not hesitate to tell me. I congratulate you on your good work and results.

I know the answer to the question I am going to ask, because both you and the Minister say that you cannot force organisations and inward investment companies to come to any particular place. However, we have a huge issue with deprivation, and if we were able to something in areas of multiple deprivation and long-term unemployment, it would substantially alter some of the pressures elsewhere.

What thinking is there about not approaching the problem with the view, "We can't force them"? How are we going to alter that narrative? It could be done by osmosis, but it should not be; it has to be strategically decided on. How do we arrive at the point where we say, "Now we have a target. We sense that the rocket is going off a certain way and will achieve results, so what are we going to do?"? Councils have roles, but what are you guys going to do and what discussions can be had that will lead to you saying, "We're going to target this now"?

Mr A Hamilton: There is a unique opportunity. We have engaged with a few groups on this. I will repeat what I have said on this in the past. It is right that we cannot force people to come here, but if you flip that on its head we can encourage people to come where there is a proposition that we know lines up against what we are looking for. Therefore, there is a substantial opportunity in the work on the development of community plans as part of the transfer of functions to councils. We are actively involved — we are part-funding quite a few of them — and we will work with those bodies.

It is not just the councils and us; it also needs to be the stakeholders and the local enterprise organisations. With regard to each council, everybody needs to be around the table and have a real hard think about the USP of the region for which a council is responsible. If the council area was the place to pitch, what would our pitch be? You have heard us pitch Northern Ireland to an American audience. What is the refinement of that? If 11 councils come up with the same pitch, it is not going to work. There are unique things in each council area that differentiate it from other places. My plea to those people is for them to sit down, work out the unique assets in their area and outline what their pitch would be if they were putting one together. That would allow us to differentiate between propositions as we identify opportunities in the marketplace.

Mr McKinney: That is within the regions in the 11-council model. Business will have a desire and councils will have an aim, but what specifically can be done in that conversation to further the issues of long-term unemployment and deprivation?

Mr Ennis: I have a view on that. It is a personal view, as opposed to the view of Invest. Someone investing in other countries will, first, tend to invest in cities. You are attracted by cities. The best thing that we can do is support our cities. That will lead to jobs being created — we have actually seen it happen — to support businesses that come into large urban hubs. That is something that we do. I am totally aware of and support Alastair's comment. I wrote to all council chief executives in my first few months in office to say that we will help and support councils but that they have to create a sales pitch. Councils have to look at where they feel they can add value to the process. If they can do that on the back of whatever is coming in, we are more than happy to place their sales brochure in front of whomever and ask whether they have thought about that area. Businesses will not invest on the back of there being a problem with employment or deprivation. That is not what they do. Take, for example, a couple of businesses that American corporations have set up. We had a conversation about that, and I asked the question that you have asked. The guy said, "Mark, I look at my own city. I can go down 10 blocks down the road and find that same problem, but we don't invest 10 blocks down the road". It is a difficult one, because it is a mindset. The areas surrounding Belfast where there is deprivation are a 10- or 15-minute bus journey away. I do not know how we get it into everybody's psyche that you cannot have a factory or office set up at your back door. Supporting transport links and accessibility areas where there is deprivation is something that we, as a community, can invest in. If we make it really easy for people to get from where they live to where the jobs are, that is probably as good as anything else that we can do.

Mr McKinney: I agree with you. There is an opportunity, particularly when you get structural change. However, there is another opportunity, in that you can never waste a crisis, and there is a financial crisis now, particularly in health. I think that this needs to be part of a conversation and, structurally, an ingredient on the list.

Mr Ennis: You are right. Another example has just struck me. I was up in the Colin community. It struck me that social enterprise was taking place there but that the area had been deprived of jobs. The reason that it has been deprived of jobs is because of the way in which we buy things. We use our procurement process to get best value. Best value tends to be interpreted in — I was going to say pounds, shillings and pence, but that would be showing my age — currency. We look at what will give us the best bottom line for that result. Maintenance of hospital estates is a classic example. We pull a proposition together that would, in fact, disenfranchise all our local businesses, because they cannot meet the criteria. I was talking to a guy who had been responsible for maintenance in his local area but had had his job taken away because it had gone to somebody across the water. The other person had a balance sheet and he did not. The social bit that you miss is that the guy would have also looked out for Mrs Smith if he saw that her post was not being picked up, or whatever. It has taken away from the community. Another thing that we can do is have a really good look at how we purchase things and make sure that the whole social enterprise factor is taken into consideration and scores points in whatever mechanism we choose to place projects.

Mr McKinney: I sense that there are conversations happening out there, but those need to be brought into a formal conversation on how we make a difference on that.

I want to touch on one other thing, although I am conscious that, having arrived late, I should not take up too much time. We were in the Dáil last week. We are all aware of breeding our children for export and that so many of them leave these shores. However, there is an issue around A levels having a lesser value. You can get into Queen's with certain A-level results but not into Dundalk Institute of Technology. It is claimed that, if people were at least being educated on the island, there would be a greater chance of them returning to the family home for employment close by. That may be more of a comment than anything else. However, it should be furthered, where it can be. We need to harmonise those things. So many people leave our shores and stay away. If your ambition is to build all of this, you need people who have been educated here to stay on the island to further the ambitions of companies.

Mr A Hamilton: Absolutely.

The Deputy Chairperson (Mr Flanagan): That is the end of the first round of questions. We will now go into the second round.

On the statement that you cannot force potential investors as to where they should go, we all appreciate that, and we know that you cannot do that. However, can you give us an overview of how you use varying amounts of selective financial assistance to encourage and incentivise employers to go into areas that may not be as attractive to them?

Mr A Hamilton: I may have mentioned this to you separately, but, in the past, we would have offered higher levels of financial support, and we have offered those higher levels of support to some of the current projects outside Belfast that have just come through than we have to those in Belfast. That is one of the tools —

The Deputy Chairperson (Mr Flanagan): The cap that exists in Belfast for offering SFA is lower than for outside greater Belfast.

Mr A Hamilton: No. From 1 July, all of Northern Ireland is a 100% assisted area with the same level of assistance. I have to be careful what I say here, but that does not mean that we give everybody the maximum on the selective financial assistance level. In fact, quite a few companies could tell you that we negotiated very hard with them over the past number of months, and they did not get that. Every opportunity is a negotiation. I am charged, and my organisation is charged, with securing every project at the least possible cost to the public purse. Therefore, do not assume that we start at the top, because we do not. We start at a level much lower than that and work our way up, depending on the negotiation. In some of those cases, there is headroom to offer a differentiated offer outside of Belfast, which is what we have done.

The Deputy Chairperson (Mr Flanagan): Does that happen frequently?

Mr A Hamilton: Probably for the majority of them, although I would need to go back and look exactly at the propositions. However, the majority of them will be offered a higher level outside of Belfast.

The Deputy Chairperson (Mr Flanagan): You spoke about perhaps not stealing but certainly copying the idea of what Enterprise Ireland does with its PMI report. I saw that Scottish Enterprise is also looking at copying some of the things that Enterprise Ireland does on the level of technical advice that it offers to companies. Has Invest considered looking at the levels of technical advice that Enterprise Ireland offers to see whether it is something that you can improve on?

Mr A Hamilton: We have looked at a whole range of measures. Technical advice is one such area. We benchmark both technical advice and the whole management information system (MIS) advice that we give, and we then look at the IT advice. Lean manufacturing is in the last one. Across all of those, we have benchmarked ourselves against those agencies, and we feel that we are delivering a very high level of service at the minute in those areas. As a matter of fact, I would be concerned that that area might come under a bit of challenge. Where we could do more, based on our assessment of Enterprise Ireland — if you want to stick with it, although we do spend a bit of our time with Scottish Development International and Scottish Enterprise — is around the whole area of trade. I know that there have in the past been discussions in Committee on that as well. Enterprise Ireland raises revenue on the back of the trade support in areas, and that is another area that we are looking at. We have not considered the technical advice, but we are looking at other areas from which we can take some hints.

The Deputy Chairperson (Mr Flanagan): If you look through the figures, you will see that the large manufacturers — those that employ more than 250 people — account for about two thirds of the export base, while just 10 exporters make up around a half. Have you a concrete strategy in place for how we can get more of our indigenous and local companies involved in export to try to reduce the reliance on those large manufacturers in order that we might hit our export targets?

Mr A Hamilton: It is a twin-track approach. To ignore that fact would be dangerous as well. The reality is that, although we need to balance that a bit, we need to make sure. We have had some notable examples in the past couple of years of some large firms that would have been on that list having changed their manufacturing location. That has had a significant impact, from a negative point of view, on Northern Ireland exports.

First, we are trying to work out what more we can do to help the large exporters, because if those increase by 5%, it makes a big difference. Secondly, we are absolutely focusing on the new-to-export category at the bottom end, if you look at that piece. A lot more work has been done this year on that new-to-export piece.

There are two other factors that are at play here that I have mentioned before. One is service-related exports. There is a real dichotomy here. We are drawing more and more international firms into Northern Ireland that are service-related, including existing firms such as PwC. Those firms offer great jobs, but they are also exporting their services. The vast majority of the services that Baker and McKenzie — to stick with a name — does are not for the Northern Ireland market. It will not do anything for the Northern Ireland market. Its services are for outside here. At present, those service-related exports cannot be counted through HMRC, and, therefore, we are missing the value of that export growth in that space.

The second factor is around consolidation. One of the downsides of using the HMRC numbers is that, if a product is shipped to GB, consolidated in Liverpool or Southampton and shipped onwards from there, it does not count as an export from Northern Ireland, because it is all done within the UK. Exports are counted from the port of departure. Likewise in the South, quite a lot of consolidation goes on in Dublin. We saw that very notably when we were in the Middle East with the food-related trade mission in September. A lot of those companies export perishable goods, by air freight and in small bulk. Therefore, they will not fill a container by themselves out of Northern Ireland. The product may be shipped to GB or Dublin, added to other product, consolidated into a consignment and exported from that point. Therefore, there are challenges for us in that consolidation picture.

I will also say something else to you, and, again, I have made the point already. I am not trying to count these as exports, so please do not accuse me of that. Rather, I am telling you this simply to complete the picture. To be on track with our export target, we are missing about £500 million worth of exports. That is the financial gap of that percentage. In the same period, sales to GB from Northern Ireland companies — that is, external sales but not exports — have grown by £477 million. Therefore, there is substantial growth in service exports which we cannot see and substantial growth in sales to GB, which we can see, although they are not exports. That probably gives you a more balanced picture of where we are on sales for companies outside this jurisdiction.

Mr Ennis: It is a good question, Deputy Chairman. We had a lunch for a cross section of Northern Ireland business as part of our developing a new strategy for the 2016 to 2020 period. That was exactly the question that we put to those companies. We asked ow can we help them, and businesses that they know, to export better. We are continually searching for innovative ways in which to help, because, and I agree with you, that is an area on which we need to continue to focus. We have only 1·7 million or 1·8 million people in this country, so we need to have export-focused businesses.

The Deputy Chairperson (Mr Flanagan): I am going to ask you a question about DEL. The Executive have made a commitment to Invest NI that, if you make an agreement with somebody who is going to create jobs, that will not be lost for a financial reason. Is that something that applies to the shared skills programmes, too?

Mr A Hamilton: I am not sure, but that is a very good question. You would think that, in principle, it should apply. It is part of joined-up government, but it is also part of our proposition. Thinking about it, the letter of offer that we give to the company includes both the Invest NI element and the DEL element. I would make a very strong case on the same basis that it is a legal commitment and, as such, would need to be supported.

The Deputy Chairperson (Mr Flanagan): What sort of message do you think that the proposed cuts to the universities and the FE college budgets sends out to potential inward investors?

Mr A Hamilton: You are probably drawing me into the politics of it all.

The Deputy Chairperson (Mr Flanagan): I would never try such a thing.

Mr A Hamilton: No, you would never try to do that. I have given you a headline view of the importance of people and skills. I cannot judge the reality. It is not up to me to question the two vice chancellors who have come out with a very public statement, but I am not in the middle of that to know how it is made up, what choices have been taken and what other debates could flow into that. All that I will say is that, if that is the situation that we end up in, where there is a reduction in the number of people going through our universities, that would be a very challenging place for us to find ourselves in.

The Deputy Chairperson (Mr Flanagan): Does that send out a worrying perception to potential investors?

Mr A Hamilton: I am hoping that it is not getting widespread coverage.

The Deputy Chairperson (Mr Flanagan): Do you intend to engage with the universities? If they have to cut the number of places, are you going to engage with them to ask them to focus on particular areas of the economy in which you see future growth and employment opportunities?

Mr A Hamilton: That conversation has already started. I was at a meeting last night on the subject.

Mr Humphrey: On the joined-up aspect, Alastair, I want to revisit the opportunity of working with local councils on economies of scale, given the budgets that they have. When I chaired the development committee at City Hall, the councils immediately around Belfast would come together, as did councils in other clusters, in what are called regional tourism partnerships. Given the opportunity that is provided by the budgetary cuts, I think that it might be an idea, and it may be something that you are considering or that you have already done, to look at regional economic partnerships with those larger councils, given their extra funding and resource from their larger ratepayer base. I just wanted to make that point.

Mr A Hamilton: On the Business Start programme that was questioned earlier on, I will quite openly say that we have made a strong recommendation to councils that the best case would be to continue to run it as a collaborative programme across all 11 councils. That is the most efficient and effective way to run it. I understand that councils will want their own independence and their own flavour on it, but that is a balance that they will need to make. As part of that discussion, we have said to them that, although it is great going from 26 councils to 11 and getting that consolidation, if there are groups of councils that want to come together to reduce further that number, it makes it easier and more effective for us to work on joined-up programmes across councils. I would welcome any of the councils wanting to work with their neighbours and colleagues in that collaborative way.

Mr Kinahan: Alastair and Mark, I am sorry that I was not here earlier. I look forward to reading up on the meeting at some stage.

One question more local to my patch concerns JTI Gallaher, what work was done and what is going on. We knew about cutbacks on cigarettes, and I wonder what has been done to help JTI and whether there was something that you missed beforehand that we could have done?

Mr A Hamilton: Overall, I think that the JTI decision was very clear. It is a client company, and we have engaged with it quite a bit, although it was not as active as some of the other large companies that would have drawn on our support heavily, particularly over the economic downturn. That is fine, however, because we are there to help companies that have growth opportunities, and so on. We have done a little bit of work with JTI over the past five years, and it has invested very heavily, as you know, in plant, machinery and processes and on driving efficiency in the organisation.

I probably should not spend long on this topic, because you probably know it better than I do. The changes that have brought about the proposed removal of JTI Gallaher from Northern Ireland are in a legislative area. Although we would have heard people telling us that those challenges were there, and their mentioning the potential of those challenges, our direct input to do something to change that is pretty minimal. We reflected that and told people definitely that there were real challenges there. Moreover, and I do not want to get into this too far, but we see a real challenge between the health agenda and the economic impact of that business, particularly as those two things come up very clearly against each other. Turning our mind to where we go from here, my team, along with the two Ministers, has met a company, and we are waiting for it to get back to us. It has asked for a period to consult with its staff and the unions. We have put some suggestions to it around what can be done, but I do not want to go into the detail here. Believe me, given the experience that we have of the F G Wilson situation and some of those other pieces, we have wrapped all of that up and put it forward as a whole range of different things that we could do. Are there other opportunities within the wider parent group? Are there scaled-down opportunities within what JTI is doing? There is a whole range of things that we are currently proposing and discussing with it.

The one thing that I will say is that, unlike where we were with F G Wilson, which was a massive reduction at a time when there was no growth elsewhere, at least we are in a position now where, although it will be painful for the organisation's employees if JTI goes ahead with what it is proposing to do — I do not want to minimise that pain at all, for I am very friendly with quite a few people living in the town — there are opportunities in the market that we are in at the minute that are not too distant from the skill sets that people in that operation have. Therefore, I am probably more upbeat for the people about the position that we are in here than I might have been two or three years ago with some other companies. Rest assured that both the Minister of Enterprise, Trade and Investment and Minister Farry, who are leading the piece, and Invest Northern Ireland and I, are fully behind whatever we can possibly do to support the organisation and support the companies at the present moment.

Mr Kinahan: I was listening to the radio last night, and Martin Craigs was on talking about the need to get into the Chinese market, particularly for tourism. I think that he said that 100 million Chinese go abroad as tourists. Is that something that Invest NI could get involved in in order to encourage people to come here, or does that stay completely outside your box? Is there a way of getting it out there?

Mr A Hamilton: It is not completely outside. We do not have responsibility, but we have a corporate citizen responsibility everywhere that we go to promote everything about Northern Ireland. Although it is the responsibility of Tourism Ireland, as the body that is charged with delivering that, nevertheless, about two years ago, we changed the geography and I now have a country head in each of the four geographies, with Michael Garvey in the Far East. The four things that he is charged with, in decreasing order of his ability to deliver them, are: first, foreign and direct investment; secondly, trade and trade support; thirdly, diaspora management through Northern Irish Connections; and, finally, education and tourism, both of which are not a direct responsibility but both of which we can promote. It is encouraging people to come to Northern Ireland for their education and, secondly, encouraging people, through our work with Tourism Ireland, to come to Northern Ireland as a location. Therefore, every time that we do a pitch or a video slot, there is a piece about what Northern Ireland looks like, the Titanic, the Giant's Causeway, Lough Erne, the golf and all of the rest of it. It is all there, but it is done in a supportive role.

Mr Ennis: An example is a recent visit from a couple of Chinese investors who are looking at health tourism. They are looking at creating an assisted living village that they could bring Chinese people over to. Northern Ireland, because of fresh air, golf courses and so on, meets their requirements quite well. On the back of that, they also looked at the potential for setting up a nursing academy in Northern Ireland to train Chinese nurses to service those assisted living villages, in both Northern Ireland and China. There is a clear focus on that.

Mr Kinahan: Lastly, I asked the Minister a question yesterday about something that has been raised with me once or twice. When you give a large amount of support, quite rightly and successfully, to a company in Northern Ireland, it is referred to as displacement, but is anyone studying in detail the effect that that has on local competitors? If you help one company, it makes it easier for it to rent key buildings. It allows that company to compete much better. Does anyone really study the after-effects to make sure that no one is being knocked a long way back?

Mr A Hamilton: In every case that we bring forward, we look at all the intervention principles. Displacement is one of those. Secondly, at the end of a period — usually three years of a programme — an evaluation will be done of the programme. It will involve talking to people and getting feedback to look again at what someone expected to get at the start of the programme and what was delivered as a result of it. Displacement and additionality are the two key areas that are looked at as part of that debate. It is quite difficult to remove completely both those areas.

Mr Kinahan: I understand that.

Mr A Hamilton: You then get into a debate about partial additionality. Inevitably — I referred to this when discussing skills availability — there will be growing pains. We have had them in the Chair's conversation around the grade A property. Where things are tight, such as property and people, there will be a challenge as you bring new projects in. I understand that indigenous companies may feel greater pain as a result of that movement, but, net met, the tide rises.

The Deputy Chairperson (Mr Flanagan): Alastair and Mark, that is probably enough questions for one day. Are you content to respond in writing to any further questions that the Committee may have?

Mr A Hamilton: Yes.

The Deputy Chairperson (Mr Flanagan): Thanks a million. Keep up the good work.

Mr A Hamilton: Thank you.