Official Report: Minutes of Evidence

The Chairperson (Mr McGlone): With us today are Stephen Kelly, chief executive of Manufacturing NI; Con O'Neill, chairman of Manufacturing NI; Niall Irwin, director of Irwin's Bakery; and Mark Cuskeran, managing director of South Derry Coachworks Trailers. You are all very welcome. It is good to see you all again. Thanks very much for coming along today to impart your experiences and knowledge to this inquiry. It is very opportune that we are dealing with this at the moment. You will have picked up on some of the flavour of the issues that have started to come in our direction.

Mr Con O’Neill (Manufacturing NI): Chairman and members, first of all, thanks very much for the invitation to meet the Committee again. We looked at the questions that you posed to us, Mr Chairman, and Stephen has prepared a short presentation to address those matters.

Mr Stephen Kelly (Manufacturing NI): Good morning, Chair and Committee members. As Con said, thanks very much for the invitation to come here today. Circulating at the moment is a paper copy of some slides that we sent, which, I am sure, you may already have. It is for reference but it is also a call to action from Manufacturing Northern Ireland on behalf of manufacturing businesses on the conditions that this Assembly can help to create so that manufacturing businesses can thrive and create more wealth and employment.

The Committee is first to see this document. We will be launching it later today, so we are very pleased to bring it, in the first instance, to the Committee. Europe has an ambition that 20% of its GDP will come from manufacturing industries and that Europe will reindustrialise. Our best guesstimate is that, currently, manufacturing represents about 12·5% of GDP. If you consider growing from 12·5% to the European target of 20%, what would that mean for the success of Northern Ireland? What would that mean for employment, investment and generating wealth in every constituency? Roughly one in five families depend on a manufacturing job, so growing the manufacturing base here would make an enormous difference to every constituency that you represent.

From our perspective, the main thrust of what we are calling on the Assembly to do is to look at the cost of doing business here in Northern Ireland. The success of achieving responsibility for setting the corporation tax rate is very welcome, but it is only one of a number of tools in the toolbox that needs to be used by this Assembly to ensure that the economy grows. I know that the Committee's view is similar to ours in that corporation tax is only one element of what needs to be done and, thus, you have launched this investigation.

For us, it is about creating the most competitive region in Europe in which to start, sustain and grow a manufacturing business, thus creating wealth. In order to do that, we have presented this document to you today, which highlights the areas where we think the Assembly can make a positive difference on behalf of manufacturing businesses and, in a wider sense, all businesses in Northern Ireland.

We have presented some simple, straightforward measures, including some things that do not require any investment, which, I am sure, will be a welcome relief to most members around the table and will make sure that the conditions are created to ensure that businesses are successful.

For us, there are three main policy gaps that the Assembly should really look at. The first of those begins with establishing a manufacturing strategy for Northern Ireland. There are a number of strategies in which manufacturing is referenced. There are innovation strategies and strategies for agrifood businesses etc, but there is no real overarching industrial strategy for Northern Ireland. We think that is a glaring policy gap, particularly as the European target is to set the ambition of 20% of GDP. As we may hear, and I am sure that you will question colleagues here today, there are areas where there is overlap across Departments, but there is not necessarily connection across those Departments, which will be critical to maximising the benefit that corporation tax setting will actually bring.

The second policy area is on energy prices, which is no surprise, I am sure, to the Committee, having held your own investigation into energy pricing. Currently, they talk about the "energy trilemma" and the need for sustainable, secure and affordable energy. There are targets on the sustainability area — 40% by 2020 — there are targets for security of supply, which is the minimum standard that is required to make sure that the lights stay on, but there is no policy target for where we sit from a competitive point of view in Europe. We believe that that is an area that creates weakness in the whole energy debate, and, as a result, the area of price becomes the softest and most fragile leg on that stool, and the one that could give way. We believe that the Executive should establish a target on affordable electricity prices.

The third area, which was key at the formation of our campaign and organisation, is around industrial rates. Thankfully, the Assembly has been very good for manufacturers in establishing an industrial derating policy. It has maintained that from a regional rate point of view, and held it firm over the last number of years. That is very welcome. It has ensured that the businesses represented around this table and others that we represent are still here. However, there is uncertainty about the long-term future of that. That is creating uncertainty around investments that manufacturers are looking to make because those investments are for the long term.

Those are the three main policy issues that, in addition to corporation tax, we believe would make a significant difference: industrial derating established in law, an executive strategy on manufacturing, and a target for competitive energy prices.

Looking at rates, where are we? You asked a number of questions about where we are, what are the priorities, how are we doing and where we go from here. For us, establishing a long-term commitment to industrial derating is critical and needs to be locked in through legislation. How are we doing? As I said, the Assembly has been very supportive, and it is a pre-accession relief. It is something that we have here that other regions do not have, so it is a massive selling point that Invest NI and others should use to encourage manufacturing investment here either as FDI or within their existing businesses.

When it comes to the review of public administration, we all hope — this House and others — that the promised and anticipated savings from the review of public administration will be seen on the ground by domestic and business ratepayers. The rate in the pound is just as important as the industrial derating policy. What actions are required? Industrial derating needs to be secured in legislation, as we have said. The rate in the pound should not exceed its current levels. We have already seen a number of councils — Belfast, amongst others — setting a zero rise in their rates, which is to be very much welcomed, but, unfortunately, some of the other councils have seen rises in their rates. We need to make sure that the Assembly's policy of holding the district rate in the pound is maintained in the longer term and that demonstrable examples of economies of scale are being reviewed by people on the ground in respect of that rate poundage.

When it comes to energy, what is needed? Energy prices, specifically in electricity, need to be competitive in a European market. I mentioned the lack of a policy framework around price and affordability. That is a massive gap that is impacting all businesses.

How are we doing? There was good news from Power NI and Budget Energy last week, but that really affects the smaller consumers in Northern Ireland. As we sit with the regulator's reports, we have the second or third most expensive energy for everything other than the very small businesses. Of course, those small businesses are really important, but some 50% of consumption is dependent on the large businesses in Northern Ireland. Those are the people who are suffering some of the highest rates of energy prices, electricity prices in particular. There is much work that can be done.

With regard to the actions that are required, again, it is about setting a competitive price. There is great detail in the document that we have provided you with this morning. It is about getting control of the margins that are achieved by the generators, driving efficiencies in how the all-Ireland single electricity market operates and works, and taking out a lot of the costs that are added to the bill that do not necessarily contribute to the electricity that people receive through the wires.

It is about supporting demand reduction and allowing people who have the ability to be participants in the market, either through their own generation on site or aggregating generator units that may be there as a standby. It is about avoiding unnecessary additional costs in the market, breaking monopolies, particularly around the connections policies and NIE's dominance of that, and allocating costs in a cost-reflective manner across customer groups so that businesses have the opportunity to achieve reasonable energy costs.

The third area is around labour. We have seen a greater investment in providing a skilled workforce, but big gaps still remain, and there is some confusion around who does what, for whom and when. It is about investing in a skilled workforce at all levels. If you wish, we can talk about a leadership programme that we are participating in with Queen's University's Clinton school, funded by DEL. It is about a review of employment laws that makes it easier for people to employ people on a full-time permanent basis. The Committee may wish to discuss that further.

How are we doing? According to the CBI, we are ranked forty-fifth, compared with GB, which is ranked fifth for labour market efficiencies, so there is a clear difference there that we need to bridge. We have jobs that remain unfilled, not just in the IT sector but in particular parts of manufacturing. Despite the fact that there are 80,000 jobs out there, we believe that careers in manufacturing are not necessarily valued in the way that they should be. The actions that are required are about providing a fit-for-purpose employment law regime. It is about a greater availability of quality leadership and specialist leadership training within manufacturing businesses, as well as those entry-level apprenticeship jobs. It is about trying to make sure that there is a closer working relationship between business and education at all levels. We can provide you with some examples of where it is going wrong later in our presentation. It is about enhancing that profile of apprenticeships. A lot of work is happening there. It is about making sure that some funding is passed back to the employers because the success rate is a lot higher than it is through the colleges when that takes place. It is about prioritising STEM, and I am sure that you will have heard that many times in the Committee's previous investigations. It is about investing in that third-level education, not just in Belfast but right across Northern Ireland.

Finally, the last area is around the physical and enterprise support infrastructure that we have in and around business. We need to make sure that that serves the manufacturing sector very well. How are we doing? As somebody from the north-west, I know that the pace at which some of the physical infrastructure projects get off the ground is tortuously slow — 51 years for the strong connection between Derry and Belfast, for instance — and it remains unfunded in many cases. There is a fear that Departments are gold-plating some of the enterprise support restrictions and roles whereas other regions in Europe find very agile ways to provide that support. For us, in terms of what actions are required, it is about finding those really flexible ways to support capital investment, in particular in manufacturing businesses. It is about this House lobbying Westminster on some of the accountancy roles around enhanced capital allowances, which will see a large amount of the savings from corporation tax turned back into capital investment such as plants and machinery. It is about a streamlined and simplified process with the support mechanisms that are here for enterprise through Invest NI and others. It is about starting the A6, getting the A5 up and running, and making sure that we have broadband and those other key business infrastructures, and being able to use those infrastructures to get the product to and from ports. It is about our ferry travel, which is sometimes five times more expensive between here and Scotland than it is between England and France, and it is about trying to make sure that there is a single delivery body for capital spending projects that the House and the Assembly is providing for.

I will not go into detail about that summary. I am sure that you will want to have a conversation around that, but I will just remind the Committee that the three key policy areas for us are around providing an overarching, cross-departmental manufacturing strategy for Northern Ireland. It is about securing industrial derating in law and setting a target for competitive energy prices.

The Chairperson (Mr McGlone): Thanks very much, Stephen. As I was going through your list, I was thinking to myself, if you were going abroad, how would you sell the North at the minute, and how would you hope to sell it? That is, essentially, what the inquiry is about.

Mr S Kelly: We have a very creative, innovative, industrious workforce that has proved itself to be able to compete internationally. That is the key area that we would concentrate on. We have a lot of very strong, family-owned businesses, particularly in manufacturing. Those strong, family-owned businesses have proven themselves internationally to be able to win. That is the area that we would focus on.

The counter to that is that they need to be given the conditions that they need in order to be able to continue to compete more often and in other markets. That will happen only if we can establish and get to grips with the cost base that we have and the areas outside of what the business can control.

The Chairperson (Mr McGlone): Taking it a stage further than the cost base and the issues that you have raised around infrastructure, and looking ahead to R&D and innovation, does more need to be done here by way of selling ourselves in attracting those? It would probably be helpful if you were to look at a very good Assembly research paper, which we will share with you after the meeting. South of the border, they have gone for key specialist sectors and sought out specialisms in key areas. Is there any area where you feel the game needs to be upped a bit, whether in research, sectoral advancement or specialisms of the Northern economy?

Mr S Kelly: Two things continually come back to me in my travels around the country visiting manufacturing businesses. The first is that the administration around R&D, Invest NI support or any other engagement that they may have with government is a very burdensome process for them. They are busily getting on, doing their work and selling their products in markets at home and abroad, and the additional burden of that administration is something that they neither look forward to nor welcome or seek out in many respects. In our document, we talk about a more agile form of enterprise support. Our understanding is that, when it comes to the Republic of Ireland, there is greater investment in that client management process. It is not just about hand-holding; the whole process is smoothed out by people who are experts in the administration side. That is not necessarily the manufacturers themselves. Greater agility in providing that support would be very welcome.

The Chairperson (Mr McGlone): I saw that word used, and it has popped up several times. In practice, what does it mean? In other words, what is not being done to the same extent or in the same way at the moment as it should be done?

Mr S Kelly: I am not being critical of Invest NI, just to be clear, but, in Enterprise Ireland, there seems to be a much hungrier approach to making sure that the funding that is available is made available, and that the processes revolving around making sure that that funding is accessed is achieved in a much smoother way for businesses. Those are the comments that we hear from others.

We have noticed a big change in Invest NI, to be fair. I think that it is safe to say that the relationship was not the best to begin with, not necessarily with our organisation but with manufacturing in general. The organisation has changed and become much more enterprise-focused in how it approaches its work, and that is to be welcomed and encouraged. However, that does not always filter down to every single layer in the organisation. Sometimes, you are very dependent on getting really good client managers in order to support the process that you are running through with them. We found the leadership to be very supportive in making sure that they understand what the barriers are and helping to provide the assurance that colleagues in Invest NI need, and we hope that that will continue.

Mr Frew: Thank you, gentlemen, for your attendance today at what is a very important inquiry for us to undertake. Although this has been generated from the corporation tax debate — I have said this many times in the Chamber and in this Committee — when I speak to the large employers in my constituency, who are mostly manufacturers, they tell me that what is more important than corporation tax powers is the cost of energy. When we look at countries across Europe for examples of best practice, we look, of course, to Germany. It made a decision some time ago about its network charges. The Republic of Ireland also has a different tariff from us. What are your views on changing the tariff in this country? How would that affect all customers, particularly domestic users?

Mr C O’Neill: The first thing that we would like to see a focus on is the size of the cake before it is sliced and ask, "Can the size of that cake be reduced in the overall cost base of the network that we have?" We have seen some elements in that cost mix increase year on year, and Stephen is actively talking to the regulator's office and the System Operator for Northern Ireland (SONI) about that. We have to ask how we can bring that cost base down.

The second thing is that those two jurisdictions that you have mentioned took a very aggressive approach and said, "We are going to guarantee that manufacturing and other high energy use businesses have an affordable cost and, therefore, create employment, and, through that employment, generate the wages." The non-industrial sector members who are having to pay that higher cost at least have a wage cost to pay it, or the cost is dealt with in some other way in their accounting.

We have seen that it is not just a matter of energy costs. Stephen was part of a recent programme that was organised with DEL and the Clinton Institute at Queen's. One of the modules was a four-day trip to Germany, which was academic and practical, with a factory visit to see manufacturing businesses and how Germany is approaching matters. Having spoken to the companies that we visited, we found out that it was not just energy that was more agile and cost-effective; there were a number of other issues. They generally felt that their manufacturing sector was fostered and that people were very focused not just on the direct employment that those manufacturing businesses had provided, but the indirect employment. Sometimes, we lose sight of that, especially in rural areas where, whilst there might be one big factory that may be the focus of a lot of employment, there is also a supply chain not just those doing services but subcontracted services as well.

We need to focus on driving down the total cost of energy and, if we are going to be more favourable to the industrial sector, there needs to be some proportionate adjustment for the domestic sector. The Republic of Ireland seems to have found a reasonable balance, and it certainly seems to be working as far as attracting large pharmaceutical and IT employers is concerned. Whilst there are occasional announcements of job losses, they generally seem to be replaced by new ones. That may come back to your point, Chairman, about them having targeted certain market sectors. They seem to have targeted the market sector with the type of jobs that they want. They have looked at energy policy and other support mechanisms so that they have a joined-up approach.

Mr Frew: I want to turn to the cost of the carbon charge in our industrial belts and the capacity payments. You talked about a smaller cake, but would you support the decoupling from the system of the marginal price of a carbon cost to the generators who do not use carbon, and also the capacity cost? If renewable energy, for instance, cannot be relied upon, why should it get a capacity payment?

Mr S Kelly: We very much support the Committee's view on that. Those were two of the key recommendations in the Committee's report on energy prices, and we have since written to the Committee and offered our support for those. It is our view that generators should get a fair price for the work that they do. It is very important work; but they should only really achieve the price that is due to them and not necessarily receive payment for things they are neither consuming nor generating.

Mr Frew: The North/South interconnector is vital, of course, for security of supply and addressing the imperfections costs. Action 5 in your report indicates that there would be a mechanism for receiving support from Europe for the North/South interconnector. Can you give us more detail on where that support would come from?

Mr S Kelly: We do not have the detail on that, Paul, but other regions certainly seem to be very good at obtaining European funding for infrastructure projects. Europe has set itself the ambition to become more interconnected in energy. This is a European objective for which funding seems to be available. Certainly, others were able to get it. The last cost that I saw for the North/South interconnector was €150 million. Even if it is €1 million off, that is much better than nothing. It needs to be borne in mind that every single euro, cent, pound or penny is passed on to customers, so anything that can be done to reduce that cost has to be welcomed.

Mr Frew: If we ever get the North/South interconnector off the ground — we desperately need it, of course — it would take about £30 million off the imperfections charge of about £160 million. Maybe that has gone up. Thirty million off £160 million is not that much of a cut for something that we desperately need. By what other means can we reduce imperfection costs?

Mr C O’Neill: Although £30 million may not sound like an awful lot, people need to realise that, especially for larger energy users, a few decimal points of a penny, given the volume that they consume, can add up very quickly. Before long, you reach the cost of a job or two or three jobs, because of the volume that they consume, despite all their endeavours to be efficient. As I have said to the Committee before, we have to continuously take off a little bit here and a little bit there and not just think, "Well, it is only a few million". If we can get a little bit off each of the cost elements of the cake that I referred to, we will gradually start to reduce the cost base. That is what we have to focus on.

It is not always about going for one big cut of £100 million. Let us take an issue, look at it, make sure that we are getting value for money and see what further savings we can make. Part of our problem is that we are a small organisation. The electricity market is so complex that, at times, it is really hard to get your mind around it. Once you turn on a button over here, you might not realise that, indirectly, you have turned on another button over there.

We need to focus, through the regulator's office and SONI, on trying to take more of that cost out. The imperfections cost is difficult to understand, and it is difficult for us to understand at times why the connection charges for some manufacturing businesses that want to expand are also so high. So, we need to continually challenge that cost base.

Mr Frew: The movement on the aggregated generator units and the demand-side units seems to me to be positive and a step in the right direction. There was the issue of large users becoming independent of the grid. How will that alleviate the problem, and how does it fit with the issue? What other incentives are there, such as the renewable heat incentive, that can help manufacturers?

Mr S Kelly: There are a couple of things in that. The regulator announced at the end of last month that licensing arrangements will be put in place for demand-side units and aggregated generator units. That will allow manufacturers to participate in the market. It may be only a few thousand pound — it may be more for someone, depending on availability — but that all comes off the overall pricing and has to be welcomed. The aggregated generator unit and demand-side unit industry is a little concerned by the regulator's proposal. From our perspective, however, it is certainly a move in the right direction and is to be welcomed.

You are right about aggregated generator units. They will not have a big impact on manufacturers coming off network. That becomes a big issue only when a manufacturer becomes energy independent. In our view, there is a requirement for an alteration to the transmission and distribution licence for NIE to protect all customers when someone comes off the grid so that the payment that NIE would have achieved is not spread across all other consumers. We believe that that is possible.

Mr Frew: How would you achieve that? I understand why you want that to be the case, but what mechanisms are there to prevent the burden of network charges being pushed on to everyone else?

Mr S Kelly: There will be a requirement to change the transmission and distribution licence. At the end of the day, NIE will not be running as much network, so the income it achieves from that should surely not be the same as others.

Mr Frew: I am going to change tack now and talk about water, which is also in your manifesto. Action 1 on water says that:

I have experienced that, even over the last week. The sewerage bill alone for a large employer in my constituency, which will remain nameless for commercial reasons, of course, has gone from £800 to £1000 a month in one fell swoop. To add insult to injury, it has also been given a retrospective bill of something like £80,000 dated back to September 2013. It is incredible that in this day and age something like that could happen. That seems to be typical of a problem running through NI Water and the industry. What is your view on that?

Mr S Kelly: People are happy to pay for what they consume and to pay a fair price for it. I am aware of the example that you referred to. That bill arrived completely out of the blue, and it seemed to be timed in such a way to create concern within the company, because NI Water was about to review the volumes of intake and discharge. It is interesting that it fired first and sent the bill, rather than getting the evidence and the facts correct. I know that there is a dispute about that.

That is not unusual for us, and it is not unusual in business. You will be aware of the work that the Consumer Council has done for Altnagelvin Hospital and hairdressers in east Belfast and other locations, which have got a lot of money back. We have heard of a number of examples of where what people are being billed does not necessarily reflect their consumption. To give another small example, a major manufacturer in the north-west has two intakes but one overall water consumption and discharge. However, because it has two intakes, it gets two separate bills. The volumes of those two bills are measured in two separate bands, which means that the company pays about £50,000 more than it should for one single supply. When the manufacturer approached NI Water about it, to paraphrase a television programme, it was told, "the computer says no." The two individual items could not be joined up. So, there are issues. The regulator's own price control on NI Water says that it was 30% less efficient than a comparable company in GB. Some very good work has been done on that, and NI Water and the regulator are to be congratulated, but there is much more to be done.

Mr Frew: You bring me to my last question on multiple metering in some businesses. How, in practical terms and in billing, can that be prevented? Obviously, bills should be paid based on consumption, rather than through a metered service. There may some large sites that have two inputs, so in practical terms, how can that reversed to one, and how would that affect the bill?

Mr S Kelly: There may be large sites with different inputs, but they are one customer. I think that these gentlemen here and others we represent understand that you bill your customer what they are due to be billed. There may be different parts of the business, but they are still one customer. Whether it is an IT issue or whether someone is looking at the big consumers and taking an interest in them from a client management point of view or whatever, you should certainly be billing customers only once for what they actually consume and not for any other format. That is our view.

Mr Frew: Chair, just before I give up my time, can I ask that we write to the Regional Development Minister and Committee to ask them to investigate this? I can provide the details of the company that I talked about.

The Chairperson (Mr McGlone): Please do, Paul. I just want to tease that issue out a bit further, because I have dealt with cases like that myself. I did so successfully, although it was not on the same scale as the one that you referred to, Paul.

Stephen, just for clarity on the case that you referred to in the north-west, I presume that there are two separate meters and two bills and maybe two different addresses — whatever it might be. There might be two different roads into the place or whatever. Often, the bills include a sewerage charge. In the case that you mentioned, are there two meters with charges for water intake and for a sewerage amount?

Mr C O’Neill: I think, Patsy, that there is the practical aspect, in that your overall consumption might put you in a different tariff band. If you have two smaller intakes, your overall volume gets you into that next band even though the two meters are beneath that. Because of the way the bills are done for these businesses, as well as a charge for your intake, there is a proportional charge for any return to sewerage, so you are picking that up twice. That is to do with volume, Patsy, more than anything else.

The Chairperson (Mr McGlone): Without getting laboriously tied down in one particular case, you are getting two water connections coming in and one sewage exit, yet you are getting two bills for the sewerage. Is that what you are saying?

Mr S Kelly: Yes, the discharge is charged as a proportion of what you are taking, rather than there actually being another meter at the discharge area.

The Chairperson (Mr McGlone): I appreciate that, but those bills contain a sewerage element.

Mr C O’Neill: Yes.

The Chairperson (Mr McGlone): Right. That is clear enough.

Mr S Kelly: Just for clarity, in this case, it is one single contained site; it is not that there are various buildings spread across different parts of the town.

The Chairperson (Mr McGlone): I appreciate that, but there are obviously two water connections and two meters coming into it someplace. That is grand. Thank you.

Mr Dunne: Thanks very much, gentlemen, for coming and making your presentation. Where rates are concerned, Stephen, you mention in your report that:

That is a rather strong statement. Have you any evidence to add to that?

Mr S Kelly: Yes, we have. In arriving at this document, we went across the country and invited manufacturers and, indeed, MLAs and MPs from the area to meetings. At some of the meetings, a number of manufacturers said, "We intend to expand, but we need certainty about what that will cost us in the long term".

Those investments are made for a 20-year period; they are not made quickly and passed on. If you are building an extension to your factory, you intend to stay in that location for a long period. Without naming individual companies — I am happy to do that outside the evidence session — there were a number that we spoke to that said, "Please ask the Assembly to provide us with clarity and certainty for the long term so that we have the confidence to go to the bank or other funders and to then go to a builder to get this done".

Mr Dunne: OK. Do you reckon that the extension of industrial derating is critical to a lot of businesses' long-term viability?

Mr S Kelly: Absolutely. Outside any other part of the economy, the thing with manufacturing is that it needs a lot of space to do what it does. In one of the engagements that we had in Fermanagh, we were with the old Fisher Engineering, which I am sure you are very familiar with. It has acres and acres of space because it does big engineering, but you could walk around that site and not see many people. However, if you walked into an office or a shop in other parts of the economy, you would find people everywhere. Manufacturing needs a lot of space to do the type of work that it does. The Assembly should be congratulated for the work that it has done to provide industrial derating, and we hope that that will continue in the long term.

Mr Dunne: What is your attitude to the 40% target for renewable energy? Should we push forward with that?

Mr S Kelly: We have no objection to the 40% target, provided that it is proven to be cost-effective. On one level, we have an opportunity to create a renewables industry in and around Belfast port and in other parts of the industry. Just this week, one of our members began constructing their own 250 megawatt generators. That is a new part of the industry and is to be very much welcomed. We also have an opportunity in servicing that industry. There is no objection to renewables — absolutely not. However, we object to renewables getting payments that they do not necessarily deserve. The Committee picked up on some of that in its report on energy prices. If those generators are to be there for the long term, they should be able to compete on an equal footing with all other generators to ensure that customers achieve a reasonable price from that market.

Mr Dunne: Do you recognise that a number of manufacturers and suppliers are involved in the renewables industry here?

Mr S Kelly: Absolutely. I mentioned some of those already. There are others who have set up —

Mr Dunne: I do not see a lot on renewables in your report, but perhaps —

Mr S Kelly: We talk in that section about a centre of excellence.

Mr Dunne: OK.

I will move on to the skills gap. Con, perhaps you could come in on that. A number of us have been to Harland and Wolff, and we recognise the excellent job that you are doing. Can you give us any information on the skills programme that you are involved in? I understand that it was a success.

Mr C O’Neill: Thanks, Gordon. We worked with DEL on the new approach to an academy. I think that we put 17 people through the first phase of that. Five of them are now in employment with us, and another five are coming in on Monday, I believe. They spend an amount of time in the two technical colleges, and they then move in and do two to three weeks with us on finalisation, which means that they are essentially doing longer and more complex weld runs. At the end of that, they are assessed. We hope to start the next batch, as I said, on Monday, and there is then a final batch to come in just to make sure that we have everyone up to speed on their welding capability.

We would certainly like to see that programme extended to a further phase not just on welding but potentially to other trades such as pipe fabrication, steelwork etc, to build up a skills base. We would also like that rolled out across the Province. I know that Stephen has been speaking to a number of our members in mid-Ulster and south Derry etc, about linking with the regional colleges in their areas and trying to get a similar approach. It certainly seems to be a good idea that the DEL budget has been used in this case to create and sustain a programme that is suitable for local businesses in that area.

We have a good link, and we have done very good work with the two colleges in Newtownabbey and Belfast. I know that there are similar programmes that can potentially be done in the various campuses of the South West Regional College. So, I would like to see more of those. They may be small acorns, Gordon, but we have to start somewhere, prove the programme and then expand it. We would certainly like to do more work on it.

Mr S Kelly: I will give you another example on the back of that, Gordon, that would be useful to the Committee. When we were going round the country and talking to manufacturers, MLAs and others about arriving at this document — Patsy was at the meeting at SDC — we saw that there was an engineering firm in a community in County Derry, but there was one high school there. The high school no longer did metalwork. This is an engineering firm that depends on that local community and on that school to bring young people out with an interest in that area so that it has long-term sustainable employees coming through to ensure that it is sustainable in the long term itself. However, the school no longer does any metalwork. That is a little example of what is happening in many other parts of Northern Ireland, which is a concern. It might be useful to ask Mark to comment on that.

The Chairperson (Mr McGlone): I was just going to call on Mark. I know from visiting your place on a number of occasions that there have been issues on skills development. We touched on it, Mark, and we had a discussion at SDC about this. You have brought us into the first area, which is the curriculum. The second element is the connectivity between the local schools and businesses so that people can get it into their heads that this is a place where they can go and get good, well-paid jobs. The third part is the connectivity and the response of the local FE sector. It would be helpful if we could get some thoughts from you on that, Mark.

Mr Mark Cuskeran (SDC Trailers): Yes, thanks very much, Patsy. We had a meeting last year and one the year before. I want to keep this positive, but it seems that we are pushing for the colleges and everyone else to start programmes. I would like the schools to be ringing every week asking for visits and to maybe send over some of their teachers. We are working with the chamber of commerce and, especially, with Business in the Community and are taking some STEM teachers on work placement with us. We are bringing the Bloodhound supersonic car to local schools so that we can get people interested in engineering. We were talking about an Executive manufacturing strategy, but we would like a joined-up engineering and education strategy. We obviously have INI, DEL and the FE colleges, but in our case, we would like one agency that we can work with, because we have started our own training academy. It seems that there are too many agencies to talk to at the moment.

Mr C O’Neill: The feedback from our members — I have family experience of this in mid-Ulster — is that, when you get everybody joined up and get it working, it delivers. As Mark says, it is about getting it there. We need to focus on that and get it working simpler. Who do we talk to? Who is going to pull all this together? I think that that would be a great goal and a great achievement.

The Chairperson (Mr McGlone): That goes back to Gordon's point about the strategic stuff. I am sorry about that, Gordon; I just wanted to make sure that we covered that.

Mr Kinahan: Can I come in on the education side of that?

The Chairperson (Mr McGlone): Yes, but I want to allow Gordon to continue.

Mr Dunne: I will just finish off. I appreciate that, and obviously, Mark, you are competing with Belfast and the large manufacturers that probably pay slightly more. That may be an assumption on my part, but that has been the case. They are perhaps seen to be offering better opportunities in career development. Obviously, those are issues that you have to compete with.

Mr Cuskeran: We benchmark our salaries, and we find that we are at the higher end of the scale. Even if you look at our factories in the UK, you see that we pay more in Northern Ireland. We think a lot of our staff.

We have been trying to promote our business in the last number of years. Obviously, we want to promote the product, but we also want to promote the business so that we can get the right type of people. We want to have manufacturing not the way that people see how it was in the 19th century but for the 21st century. What we are trying to do, and what Manufacturing Northern Ireland is trying to do, is to promote manufacturing as a career.

Mr Dunne: I appreciate what you are doing by bringing in schools and teachers and by getting the message out and giving people a real feel for what it is about. That is to be commended. I recognise that the colleges have done a lot as well. They are so willing to design courses to suit the customer. That is what is important. I suppose it is all about joined-up working between DEL, DETI and the various Departments. Those are real challenges.

Mr S Kelly: Gordon, those are really good points. A lot of really good work is taking place.

Mr Dunne: It is.

Mr S Kelly: The secret now is to take that really good work and make sure that it is common throughout the sector. If I brought 10 manufacturers here and asked them, "Who should you ask about supporting your workforce development to encourage people to be here plus the people who are there?", I am sure that you would get 10 different answers. There is no single answer.

We were talking about there being no real clarity about the point of entry and how to manage the process. That joined-up approach between Invest NI, DEL, the colleges and schools etc, is a really important piece of work that the Committee and others can do. When it works, it works really well and is a very big benefit.

Mr C O’Neill: It is not just the FE colleges. Places on the manufacturing course that I mentioned that Stephen coordinated with DEL and Queen's at Riddel Hall sold out inside 24 hours. That says that there is a demand from local manufacturing businesses for that type of tailored course.

We are now working to get more of those courses, because it was an opportunity for local manufacturers to develop. Once you get all the dots joined, the courses that we can put on are very good.

Another member in the group is Seamus McKeague, who has done a lot to try to develop leadership. A key point that we saw with the course at Riddel Hall was that it is an opportunity to develop that level of leadership as well. So, we have to keep the focus on delivery on the ground.

The Chairperson (Mr McGlone): Just for the record, could you talk about the importance of skill development for the enhancement of your industries? This is all going on record.

Mr C O’Neill: That is important, Patsy, because we can then bring in that talent and grow those manufacturing businesses. We can go back to Stephen's first point and consider the presentation that we had here last year by Daniel Crespo, the EU director general for enterprise and industry. He set the target for us and asked, "Why isn't Europe going for 20% of GDP for manufacturing?" He was not just setting that as a big global European target; it had to be delivered at a local level.

The way that we are going to deliver that is by small companies such as Niall's or Mark's having access to that pool of people who can help them to grow their businesses.

The Chairperson (Mr McGlone): OK, thank you.

Mr Frew: I have my own view on this. I am on a number of boards of governors of schools, and I have got to the point where I believe that you need to cut out the middlemen. I want your views on this, but I have thought of an example of a school in a certain area surrounded by businesses. Some of those businesses are represented on the board of governors, basically non-executive governors. They would be recruited through no means other than being a local business. That would mean that you could advise the principal and teachers about what their technology unit should look like, what equipment it should have and how you get a pupil to be more employable. What are your views on that?

Mr Cuskeran: The CBI is urging its members to become school governors. I do not know the uptake of that, but that would be very useful. If you look at a board of governors, you find that often you will have ex-teachers or lawyers or whatever. People in the industrial and manufacturing sectors possibly have not put their name forward. It just does not seem like a natural or an established fit.

Mr Frew: For a businessman, most board of governors' meetings would be like watching paint dry. If there were an attachment whereby a group of business people in that area were joined together and could be used by or could input into the board of governors to mould the school into something different in the future, that is where we need to be.

Mr Cuskeran: That is an excellent idea.

Mr Frew: Where you have the situation in which Invest NI and the other groups may well not be clicking right or doing it right, you would cut out those middlemen.

The Chairperson (Mr McGlone): People take individual initiatives, and you rely on that. What you are talking about is the strategic development of all this stuff. If it is happening down in the Creagh but is not happening in Belfast or Portadown or wherever it may be, then it falls flat on its face.

Mr S Kelly: To be fair, manufactures need to make themselves available. We would be approached by governors and others who are putting on events, and we would reach out and try to get manufacturers recruited to go to careers days, or whatever the case may be. Let us be honest, they do not always make themselves available. It is a two-way process. If one message comes out from here today it should be that everyone needs to work together on this, whether they are educationalists or manufacturers, and the opportunities are there because the jobs are there.

Mr Humphrey: I commend the very point you have just made, Stephen. A lot of companies, including businesses in the community that work very well with the Girls Model, which has a number of events each year in north Belfast that I attend, are excellent at that. I commend the companies who take part in that.

Stephen, you mentioned a manufacturing strategy. I think that is something that cannot be delivered or achieved by you working in partnership with DETI alone. Listening to the presentations and the questions and answers today, it would seem to me that, at least, DETI would have to be joined up with DRD, DOE and the Employment and Learning Committee. Would you agree?

Mr S Kelly: Absolutely. Indeed, if we extend it further, we would include the Department of Education. This needs to be a cross-cutting, all-encompassing strategy for the Executive rather than being just a DETI strategy. It probably has a neater home in DETI, as regards reporting on it and measuring against it. For the manufacturers who are here today and the others we represent, this is not just about DETI; it is also about DEL and the Department of Education. In some occasions, it is about DARD. It is about DRD in terms of roads and water etc. This is something that, pretty much, cuts across most of what this House, in its totality, deals with.

Mr Humphrey: You mentioned transportation costs. You would think that fuel costs, like energy costs, should be coming down given the situation we face with the price of oil at the moment, where there has been a significant reduction. I think you said that it was five times more expensive to ship across the North Channel than it is to cross the English Channel. Is that due to competition in ports such as Felixstowe or Dover, or is it more than that?

Mr S Kelly: This is something that has come out from, in particular, people involved in the food industry. They are manufacturing food here, which is going into the big supermarkets in GB. The cost of transporting product from here to there is greatly impacted purely by ferry charges. In their view, there is lack of competition and that there is much more competition on the English Channel, which has driven down price, not just among ferry companies but due to other forms of transportation such as the Channel Tunnel.

We believe that this is something that the House, and not necessarily this Committee, could usefully look at. The cost of travel between here and Scotland is something that food manufacturers, in particular, are flagging up to us as being a big issue.

The Chairperson (Mr McGlone): Niall, do you want to comment on that?

Mr Niall Irwin (Irwin's Bakery): There does not seem to be the same capacity on the Irish Sea as there is on the English Channel. I suppose that that drives it. I suppose that it is a chicken-and-egg situation. There probably is not the same demand for extra capacity as what there is on the other side, but it certainly is more costly. We have noticed that. We do not ship onto the Continent at all, but we have priced it, and there is a disparity. For us, it is not a major problem, but I suppose that, if you are taking the competitiveness of Northern Ireland as a whole, yes, it is a thing that needs to be looked at. It is another spanner in the toolbox, just as corporation tax is another spanner in the toolbox. That is all that it is, but it is to be strived at for the good of Northern Ireland plc as a whole, and that is really what we are here for.

Mr Humphrey: Stephen, when you say that there is something that the Assembly can look at, what do you think that the Assembly can do in that context? For example, the Minister mentioned air connectivity when she was here last week. The Minister is working hard to build up the number of international flights leaving Aldergrove to go to wherever, but, realistically, there is only so much that government can do without giving incentivisation. Is that what you are suggesting?

Mr S Kelly: No, not necessarily. There may be opportunities there through other operators that can be encouraged from a ferry travel point of view. Sometimes just putting a spotlight on these issues flags up opportunities that you did not necessarily believe existed in the first place. The manufacturers are saying to us that this is a big cost. It is impacting on their ability to compete in GB and then onwards to Europe. A lot of product is leaving Northern Ireland to continental Europe through the Republic of Ireland and bypassing GB completely, so that limits the trade going through our ports etc. It is not the biggest issue that we have. Let us be absolutely clear about this. It is something that members are asking us to flag as an issue that needs to be resolved.

Mr N Irwin: I think that the road haulage industry would be the one to talk on that.

Mr Humphrey: Yes, I was just going to make that point. I am hugely sympathetic, because, for 16 years, when I worked in the private sector, that was one of the costs, and geography puts us at a disadvantage. I am hugely sympathetic to the point that you are making. On the matter of the A5 and A6 and planning appeals and so on, have you had meetings with the Minister in DOE to try to push these forward?

Mr S Kelly: Today is the first showing of this document, and it will form the agenda for our organisation. Just to be clear, this is our document. This is not anybody else's in any respect. This is our agenda going forward, and we will be seeking meetings with the Minister and others. I have examples of where I have manufacturers who are looking to expand their operations and are looking for available space. The single biggest issue that comes back all the time is that that space needs to be near the transportation infrastructure that we have. For instance, one particular manufacturer needed to double its space. It is looking to increase its production by 80% this year, which is a great news story. It was looking for additional space, and we looked around and asked around and found that there was space available in the north-west and other places. The manufacturer said no because it needed to be near the roads infrastructure. That has begun to really flag up to us the importance of the Moneynick Road project, which is ready to go in many respects if it receives funding, and the importance of continuing the A5 road.

Mr Humphrey: Have you done any work on what the opportunity cost is of these infrastructural improvements like the A5 and the A6 not going ahead? What is the cost to companies now or in the future?

Mr S Kelly: We do have examples where the existing road infrastructure has not been made available in some respects for people trying to get product to market. I know that the Minister had meetings yesterday with one particular manufacturer on that issue. Yes, there are implications: there are cost implications; there are implications in terms of where the investment for that capital is put in place. It would be very positive for regional development across Northern Ireland. Manufacturing is largely not based in Belfast. About 70% of manufacturing is outside Belfast, so they are very dependent on good roads infrastructure to get product to them and product shipped from them.

Mr Humphrey: Finally, point 3 in the actions under the "Infrastructure" heading is about a supportive regime within Transport NI. What does Manufacturing NI envisage that looking like, and is it not supportive at the moment?

Mr S Kelly: I can go only with an example, which I mentioned briefly. One member who is based in the mid-Ulster area wanted to ship some material to Warrenpoint, and the natural way would be through Moneynick, down the M2, through Belfast, and down the A1 to Warrenpoint port to get the product to GB. They were not permitted to take the motorway route and, instead, were directed up the A and B roads, which meant going through Armagh, Donaghmore and a whole raft of other provincial towns with a big cumbersome product. It seems nonsense to me that the roads infrastructure that we have is not permitted to be used. The argument was around bridges and stuff — I do not think that it was Transport NI specifically, but the contractor that was managing the motorways — so, instead of sending them round structurally sound bridges on motorways, they directed them down country roads with brick bridges that may be 150 years old and, in some places, may be even older. There are practical things, in and around the roads infrastructure and how they are able to use that roads infrastructure, that are inhibiting manufacturers getting product to market.

The Chairperson (Mr McGlone): Gordon, did you have a brief query on the back of what William said?

Mr Dunne: No, I am OK, thanks.

Mr Kinahan: In all my time in Stormont, I have longed to see lists of actions, rather than strategies, so it is wonderful to see. On education, we need to get you in front of the Education Committee to get it joined up there, and I will do my best to get that. I know that we struggle with resources and some do not get as much as they would like; STEM is only touching a few. If we could get there and really push it, I will do my best.

Action 7 under infrastructure states:

When I read through all this, I was wondering how on earth we get it all to happen. We do not seem to have think tanks or a private group. Is there something that you think we should be setting up as a driving force that pulls together all the Departments, takes each action and takes a step-by-step approach through?

Mr S Kelly: The CBI, in particular, has been concentrating on a piece of work, which is about the fact that there are lots of infrastructure projects — whether they are for roads, schools or whatever — that are planned, go through the processes and are taken so far, but then the whole thing begins to stall. Part of that is because there is duplication in communication across delivery bodies both centrally and within the Departments. Our view, which we share with the CBI, is that there should be a single, central delivery body, where the Minister could stand up and decide what is spent on his or her budget, decide the priorities and the projects that come first and the speed at which those projects happen; then, as you would have in a business, that goes to another group, and its job is to make sure that that happens quickly, efficiently, effectively and expediently. We certainly believe that that would save a significant amount of money and that it would speed up the whole process of making sure that there are infrastructure construction projects on the ground very quickly.

Mr Kinahan: That is what I wanted to emphasise. We all have to push for it.

When it comes to corporation tax, point 3 of your actions on finance and taxation states:

What extra fiscal matters can be put in place, whether borrowing from Irish or European ideas? Are there key ones that we are missing?

Mr S Kelly: I am not a tax expert or an accountancy expert for that matter. I am looking for support around the table.

Mr C O’Neill: That view was reflected when we spoke to a number of members. Going back, I suppose that members have a memory of a different capital allowance regime that was in place a number of years ago. There have been changes to that, such as industrial buildings allowance regimes etc. Members were saying that they felt that some of those items were valuable and wanted to have those as well. The whole document reflects the views of members across the Province, and members were saying, "In bygone years, we had various tax allowance regimes around capital and buildings. They are not the same as they used to be. Can we revisit that?"

Mr S Kelly: I have a little example. The hope and expectation of this House and everyone else, and what manufacturers want, is that savings that come from a discounted rate on corporation tax are ploughed back into the business and that the funding that becomes internally available is used to increase space, productivity, employment and wealth for the company and for the people who work there. If we are able to have an adjustment in terms of capital allowance changes, it makes that funding more likely to come back in. Some people understand that making a capital investment in a piece of machinery or equipment is written off in their balance sheet across a period of 20 or 30 years or whatever the case may be, but they want that to be congested into a much tighter period, so that your capital allowance is written off in a shorter period, whether that be one year, three years or five years. That makes it more likely that that investment will be put into ensuring that the saving on corporation tax is turned into capital investment either in the product, the service or the space that they are manufacturing in.

Mr Kinahan: We need to take those points on board. I read the research, which the Chair referred to, and I was really shocked that, in Ireland, some of the changes started in 1958, long before they really kicked in. There is a long way to go on all this.

This is my last point. One thing that is not in your list of actions is procurement. When I was in Scotland with the Education Committee, I saw that Scotland had cleverly set up hub companies at a very high level that competed under EU regulations for who got the contract, but then they were able, below that, to pass all their contracts to small local companies. That seemed really good. Procurement is under some of the other headings in your document, but we have to do that quicker and better.

Mr S Kelly: Absolutely. To be clear: there are a number of business organisations in Northern Ireland, and we try to let them do what they do. The CBI, the IoD, the chambers of commerce etc will all have their own areas of work and interest, and we concentrate on the cost-of-doing-business piece largely.

Mr Kinahan: Thank you. It is a really good paper.

Mr Ó Muilleoir: Go raibh maith agat, Patsy. Gentlemen, it was a very male-oriented presentation today. It was the same on our side as well, except for Ms Fearon. I apologise for that. I see that, in the powerhouse economies, manufacturing has been a great way into careers for women as well.

Mr S Kelly: That is in our document.

Mr Ó Muilleoir: Good. I enjoyed the document and the bit of the presentation that I heard. We appreciate the upbeat attitude that you are displaying here. I thank you and congratulate you on your contribution as business leaders and manufacturers. I am more familiar with Mr Irwin's products than some of the rest. I think that we are on the same side. We like your coming in with a fairly sharp, short shopping list, but there are two things that you could maybe help us with.

First, there are those of us who believe that the introduction of corporation tax has the potential to open up a whole new era of job creation. I would like to hear from you where that would be. Where are the sectors in which we could increase our activity, grow the number of jobs and be more successful? You mentioned earlier the great hope that we have that the additional profits that companies make, if they are in profit, will be ploughed back in. How could that happen and what are the areas we should focus on?

In that respect, this gives us an opportunity to internationalise our businesses, because the prospect of having a tax equalisation of 12·5% would be very attractive to American companies, Southern companies and European companies that want to partner up with some of our local companies. I wanted to know if you have given any thought to that. This would be helpful to those of us who are saying that we should see how we develop the argument around corporation tax and look at what we really need on our side — someone mentioned the word "turbocharge" — to drive forward. We need an idea of the benefits beyond that nebulous idea that we plough profits back in. That, for me, is very important.

The second area, which Mr Kinahan touched on, is education and skills. I wonder whether it is possible to set a target. You have asked us, or maybe all of us together, to set a target of moving from 12·5% to 20% of GDP. We are talking about 80,000 jobs, but no one has put a figure on what 20% would be in term of jobs. It might be useful if we had a target for looking for sustainable, well-paid manufacturing jobs into the future if the corporation tax reduction comes in, as is being suggested, in 2017. What would that target be? Could we get to 100,000 jobs? When will we get there? Would it be 90,000 jobs? That target would be useful, not only for us but for your sector and your industry. Do you want to come back on any of that?

Mr S Kelly: I will kick off on that, and I will take your second point first. We have been very careful not to put a target or a number on that. Very many business organisations and others say that there are 50,000 jobs here and 30,000 jobs there etc, and people begin not to believe the numbers that are being put out there. We are not in the business of putting numbers out that we cannot stand over ourselves, so we have deliberately not done that.

If you look at the employment levels currently, and you grow the manufacturing sector significantly — we hope that this House and others share our ambition to do that — jobs undoubtedly come with that. The one thing about manufacturing jobs is that they are in every constituency in Northern Ireland. This will benefit Fermanagh as much as it will benefit Belfast city centre, and that is not to be overlooked. The Committee might look at that and ask, if we hit 20%, what that would mean in terms of jobs and the size of our economy, but we are not in the business of putting those numbers out there, deliberately.

Mr Ó Muilleoir: Does Mr Irwin agree with that? Do you think that there should not be targets? We all have targets of some type in our own businesses. You need to throw us a lifeline here, because people are asking what will happen with corporation tax, and we are saying that it will increase jobs. Someone needs to say where they will be, what the target is and here is how we will work towards that.

Mr S Kelly: I can give you some examples of the type of jobs.

Mr N Irwin: I agree that it would be nice to have a target. It is something that we have generally stayed away from. As things change, job attractions can call for different numbers of jobs. I think that we would prefer to stay away from commenting on that.

Mr C O’Neill: Our basis, as a group, was to try to focus on individual items and target that. While we are very supportive of what the guys working on corporation tax have done, we have tried to focus our group and our resources on other aspects. It is not that the boys do not want to answer your question; it is not something that we have focused our time on. We have tried to focus on issues that we feel we can deliver on. As Niall said, it is another spanner in the toolbox. As we move Northern Ireland out to a more export-focused economy and continue to drive that forward as we are doing now and create jobs in the economy, the more spanners we have in the toolbox the better.

All the competing regions will be trying to catch up with us.

The Chairperson (Mr McGlone): The question may be this: do you see the reduction in the rate of corporation tax as a significant lever — an item in that toolbox — that will help you increase the number of jobs in your respective firms?

Mr C O’Neill: Yes. I think that it is one of them. People such as Eamonn Donaghy have done tremendous work in the area and have access to a whole bank of information that we do not have. For an individual business, the situation with corporation tax is similar to the one in which we found ourselves many years ago, where the current rates legislation allowed us to retain some element of the money that we made to make ourselves more competitive, and we were able to plough that back into the business. I see the same thing happening with corporation tax.

Mr S Kelly: I can give you one example, Máirtín, that will probably be pretty helpful. One of our members in the engineering field from the heartland of mid-Ulster is owned by a North American company. It has two main production facilities. It has a centre in Northern Ireland and one in North America. The news that corporation tax-setting powers may come here has already sparked an internal conversation in the organisation that could result, in the managing director's view, in a doubling of the production capacity in the North, which, in turn, could double employment. The parent company — the main host — in North America is already beginning to plan should corporation tax powers be accepted and set here. That is just one example. That is FDI, but not in the traditional sense. It is not a new business arriving but one that is already here and receiving FDI internally in its own organisation that could be doubling the number of people whom it employs.

The Chairperson (Mr McGlone): Can you give us some sort of ballpark figure?

Mr S Kelly: For that one company, it would be the equivalent of another 300 jobs.

The Chairperson (Mr McGlone): OK. Thanks for that.

Sorry, Máirtín. Is that all right?

Mr Ó Muilleoir: No. First, I see that you represent quite a lot of indigenous manufacturers. We have great respect for that, because some of our friends — we have many friends — have their headquarters in Chicago and New York. Often, you cannot get your head around them because they are subsidiaries, so we really want to get behind our indigenous industries and businesses.

We meet the IoD, CBI, Grow NI, and so on. I am saying this to all our friends. Guys, if we pitch for this, we need to see businesses responding as well. The ball is in our court. We need to get our infrastructure sorted. It is a disgrace that we still do not have the A6 sorted out. We need to go back to the Minister on that again and again. Energy prices are deliberately bewildering and a burden on us all as well.

Mr S Kelly: If you had a spare week, I could take you through it.

Mr Ó Muilleoir: If we get a spare year, you could go through it.

Rates and the rate rebate for industry are very important. I think that what you are saying to us is that you are here to do more than that. Of course, you are paying for much of this through your taxes, rates, and so on, but, if we do our bit, you will do your bit. What I have been saying to all our colleagues in business is that we need to put some meat on the bone. We need to agree and say, "This is where we think we can go from 2017 to 2020". We are in this together. I say that as a partner in all that you are trying to achieve.

Mr S Kelly: The purpose of the document is to show that the two worlds have joined there, which is very useful to us from a timing point of view. The Committee have launched this inquiry. The document is on what needs to happen in a post-corporation tax era, or even in a pre-corporation tax era, to really help build our economy. Our focus is on manufacturing businesses. The big thing that comes back from them is the cost of doing business, so that is what our proposals are on. Others will have other areas that they will focus on.

Mr Cuskeran: We have a factory in the UK and a factory in Northern Ireland. When we look at where we are going to invest, our heart very much says that we want to invest in mid-Ulster, whereas our head sometimes says that there are a lot of reasons to develop in Mansfield in Nottinghamshire. What we are trying to do with the policy — I am talking personally — is to say that, if we can get the cost base down in Northern Ireland so that our head then says that we want to expand in Northern Ireland, that is where we want to be.

Mr Ó Muilleoir: We understand that. That is why some of us are going to be pitching for the rate of corporation tax to be reduced as well. If we can do that, that would be another attraction. We appreciate what you are saying. You have much more experience of it than I have.

The Chairperson (Mr McGlone): There is one brief thing that we should talk about while we are on the subject of corporation tax. Your action point 2 states:

While we are here, do you want to expand on that a wee bit?

Mr S Kelly: A lot of the commentary on the potential to have corporation tax powers here is around the marketing tool that the powers become for Invest NI to sell Northern Ireland for FDI. That has real benefits, which I am sure you will hear about from the Federation of Small Businesses, Pubs of Ulster, the Northern Ireland Independent Retail Trade Association and others. It is reaping benefits for companies that are here already. If we get the powers, we would encourage the setting of a rate, or a signal about what it is going to be, very quickly. If we do that, we have to make sure that we promote the benefits for people already here, and not simply have our eye on a potential marketing tool.

The Chairperson (Mr McGlone): Absolutely. Thank you very much for that, Stephen.

Mr Flanagan: Thank you for your presentation. This is a very useful report for us to study. I am hopeful that we will adopt some of the recommendations and action points in it, both in the Committee's report and in future Assembly and Executive actions.

For your information, I want to tell you about overcharging for water. Between 2008 and 2014, 6,705 commercial organisations were overcharged for water, to the tune of £2·18 million. In the same period, 2,767 commercial accounts were undercharged, to the tune of £4·5 million, and £136,000 of that was written off. The Minister says that that work is continuing and that further account corrections are to be expected. However, when you see such figures and know that NI Water has the ability to achieve 100% clawback, where is the incentive for it to bill customers accurately, if it has up to six years to go back and claw back money for water for which it did not charge customers? I think that that is an issue that we have to take forward with the Department and the Committee. For me, that is not good enough performance from NI Water. I do not want to get into the whole issue of electricity and energy, because we produced what I think are three very good reports, yet our recommendations have been largely dismissed out of hand. I do not think that they have been afforded the credence that they deserve, and the scale of the issue has not been acknowledged by either the Department or the Utility Regulator at this stage.

I want to move on to discussing the wider manufacturing sector. I spend an awful lot of time on the road, travelling up and down to this place. I have noticed a considerable increase in the number of lorries and vans coming out of Fermanagh, particularly from Tracy Concrete, Ernecast and the Quinn Group. Those vehicles travel along the M1 and the A4. You have neglected to call for the upgrading of those roads, yet I think that they need upgrading from Ballygawley to Sligo. Is the increase in the number of vans and lorries transporting goods on our roads an indicator that the manufacturing sector is growing and performing well?

Mr S Kelly: The short answer to that is yes. I was stuck at Moneynick this morning counting white vans and, on my way home tonight, will be counting the white vans at the end of the M2. The number of people transporting goods is certainly an indication of the health of the economy.

While in Germany as part of the programme that Con referenced earlier, I was amazed to see the amount of manufacturing product that is moving about. At the European Business School University of Business and Law on the banks of the Rhine, not a minute passed that a boat did not go by, transporting some material up and down the river. There is a motorway right in front of the university, and it was full of lorries transporting manufactured product to the north, south, east and west. Behind the university, there is a railway line that had a few commuter trains, absolutely, but the majority of the stuff that was being transported was manufactured product or raw material being taken to manufacturers. Manufacturing accounts for about 27% of the German economy. That is an ambition that would really transform this place. We really should be aiming for it to be 20% here, because that is a European target and ambition.

The number of vans and lorries on the roads is a good, healthy indicator of how well things are going, or otherwise, as the case may be. Unfortunately, particularly for the building sector, a lot of those vans may be dropping people to Belfast International Airport and Belfast City Airport to go to jobs and contracts in GB or elsewhere. That should be a concern for the Committee as well. We should be trying to make sure that those manufacturing skills in particular are retained here and used to our benefit.

Mr Flanagan: I know plenty of people who fly out on a Sunday night and fly back in on a Friday evening. That really has a detrimental impact socially on the people whom we represent as well as on the economy.

On the need to tackle regional disparities, and I know that you have a personal as well as commercial interest in this, we all know that manufacturers create an awful lot of jobs outside greater Belfast in rural communities, where you will not get a computer programming company to base itself. We cannot expect everybody to go and do a degree in coding or computer programming and then move to Belfast. What support can we bring forward specifically to help manufacturers create more jobs in rural communities, where people abandoning rural communities to move either to Belfast or emigrating overseas is a serious problem.

Mr S Kelly: I will pass that question on to Niall and Mark. You have heard a lot from me.

Mr N Irwin: Gee, thanks. [Laughter.]

Joined-up thinking would be the biggest help. Joined-up thinking, as far as education is concerned, can prevent duplication of effort. Physical encouragement, such as being available for the launch of a company's general publication, is also important.

Northern Ireland's manufacturing sector wants to do the job. You guys have given us great hope. The biggest hope came when you answered the call on industrial rates. The vibrancy of Northern Ireland as a place is tremendous. We have something that other regions will not be able to get. We get it because we are small, can talk to one another and can get things done. The biggest thing that the House can do to help rural activities is to be there, be accessible and encourage them. We have something tremendously special in Northern Ireland, and, as manufacturers, we get great hope from the response from Members. That is to be treasured, and it is a wonderful organisation. As I said, the biggest thing that the House can do is to keep on encouraging and keep on being available, and then you will be surprised what happens. Do not think that we need to do anything groundbreaking. Northern Ireland has the heart to deliver: just help it.

Mr Cuskeran: We very much think the same as Niall. We have our Assembly, so we have a direct link. I have the mobile numbers of a number of MLAs, and the engagement is really important to us. In the past, we kept doing what we were doing and did not really engage too much.

We talk about social responsibility. We have realised that we have to improve engagement with you, schools, universities and Invest NI. We are excited about what is going to happen in future. We just want to promote manufacturing. As I said, we want to promote it as a career and as an industry. We do not want to put numbers on how many jobs we are going to promote, but, when we look at what we are at the minute — 12·5% of GDP — and at where 20% would get us to, I want us to strive for that 20%. We have created 300 jobs in the past three years, and we want to keep creating jobs. We thank you for all the support that you have given us in the past three or four years since the recession.

Mr Flanagan: Have you taken a position on what impact the North being dragged out of Europe would have on your members?

Mr S Kelly: Sorry, Phil. Can you repeat that?

Mr Flanagan: Do you want time to think of an answer? [Laughter.]

Mr S Kelly: No. Genuinely, I am dosed with the cold.

Mr Flanagan: I noticed.

Given the prospect of the North being dragged out of Europe by the British Government, have you taken a position yet on what impact that would have on your members?

Mr C O’Neill: It is not something that we have thought about. For those members that export, it could become an issue. For organisations such as mine, even the recent change in the rate of the pound against the euro has had an impact on us. It is a difficult issue, but it is not one that we have sat down and talked about as a group.

Mr Flanagan: Is it something that you might do ahead of the forthcoming election?

Mr S Kelly: We will need to take a view on it, absolutely.

Mr Flanagan: Finally, what level of engagement do you have with manufacturing organisations not based here? What level of contact does Invest NI have with potential manufacturing companies? What I am hearing is that Invest NI does not bother trying to get manufacturing companies here owing to the uncompetitive cost of energy. Do you have any evidence that that is the case, or is Invest NI trying to attract manufacturing companies to here?

Mr S Kelly: We do not know what Invest NI is doing in that regard. We do not engage with any organisations outside of this place. We are a membership-based organisation. We are a campaign rather than another CBI in many respects, so we do not have that type of engagement. We are not part of the marketing tool for Northern Ireland. It may annoy some people at times that we say things that appear to be counterproductive —

Mr Flanagan: Or true.

Mr S Kelly: — but we are here to represent our members, as you all are here to represent your constituency. We are not afraid to say what people are hurting about. If I were an executive for Invest NI, knowing the cost base that we have here, and were knocking on the door of big manufacturers elsewhere in the world, I probably would not receive much of a response. Energy is traditionally the third-largest input cost for any manufacturing facility. Our current prices are despite drops in global commodity prices. Every other part of the world would be achieving the same benefits at the same time, so it is very unlikely that we would be attractive. We have members that have chosen other parts of GB or the island of Ireland to locate or extend manufacturing plants purely because of the cost of energy. When they sat down with a spreadsheet and worked out what the short-, medium- and long-term benefits were of any particular location, they chose locations other than here.

Mr Flanagan: In a hypothetical situation, if the rate of corporation tax were reduced to 12·5% but energy still remained as uncompetitive as it is at the minute, would it become much more attractive for potential manufacturing investors to locate here or would they still be put off by the high cost of energy?

Mr C O’Neill: The reality is that the lower rate of corporation tax will make that part of the calculation more attractive. We should not just accept what the cost of energy is today. We have to try to come up with alternative ways of doing things and get a similar cost advantage over time with that as well. We should not just accept the status quo but challenge it. We might have to shake things up a bit to try to make it competitive. Hopefully, we will get the announcement on corporation tax. If we then get a couple of other levers, that will make things more attractive in the first place to those of us who are here to expand and grow our businesses, and to those who might come and join us.

Mr S Kelly: Domestic consumers and small businesses, which make up the vast majority of the headcount of electricity customers, are at the middle of where Europe is at, whereas the people consuming most of the energy are at the wrong end of the scale. Why can both not be in the middle? If we are able to achieve that for small businesses and domestic consumers —

Mr Flanagan: There needs to be acceptance first from some people that there is a problem. Every time that we raise the issue, we are told that there is not a problem.

Mr S Kelly: To be fair, in recent correspondence from the Minister, there has been an acceptance that there are issues for large energy consumers.

Mr Flanagan: That is a welcome development.

The Chairperson (Mr McGlone): Thanks very much, gentlemen.

Mr Dunne: Chair, may I come in on a point?

Stephen, you mentioned Invest NI. Apologies, but I was out and missed the question. You recognise that Invest NI has exceeded its targets in the past year. You recognise its good work. I take it that you have met its chief executive.

Mr S Kelly: Yes.

Mr Dunne: Therefore, you have engaged with Invest NI.

Mr S Kelly: Absolutely. Perhaps you were out of the room at the time, but I did say that that is very much an improving relationship. The issues around the target that was missed for manufacturing exports should be a concern for this Committee and others. The number of manufacturers that are exporting is down. The latest numbers are skewed by a couple of big orders, and that should also be a concern. A major concern, and one that formed the basis of the engagement that we had with the chief executive, is that the money that Invest NI has in its budget from its uncommitted pot of money should go to supporting the things that really make a difference to manufacturers and other indigenous businesses. On the face of it, Invest NI looks as though it is getting more money from the Budget, but that is largely to pay for jobs that have been bought but not paid for yet. There is a reduction in the core uncommitted pot that supports businesses around this table, which will have an impact on energy efficiency, lean manufacturing, skills development and so on. The Committee should be concerned about whether Invest NI receives the right level of funding in the right parts of its budget, not just an overall number, which largely makes up the commentary around the budget that it has achieved.

Mr Dunne: No doubt it could improve. Even the representatives here today have, I am sure, received support from Invest NI. It is a challenging business, given the competitiveness of it all.

Mr S Kelly: We have said that we want to see Invest NI well resourced to continue what it does.

The Chairperson (Mr McGlone): You did put that on record.

Mr Cuskeran: Both Minister Foster and Alastair Hamilton helped us out. When we were in the Middle East two weeks ago, they were part of our launch. Therefore, we appreciate the work that Invest NI does.

The Chairperson (Mr McGlone): I think that I recognised a voice on the radio about that.

Mr Cuskeran: That was all Barry Turley's fault.

The Chairperson (Mr McGlone): Gentlemen, thanks very much for your time and effort.

I have just one more wee thing to say. SurveyMonkey has sent out a survey, so, perhaps you could encourage your membership to participate in it.

Mr S Kelly: The Committee Clerk shared it with me. We have shared it with our membership and will continue to do that. When is the deadline?

The Chairperson (Mr McGlone): The deadline is 10 March.

Mr S Kelly: OK. We will remind our membership between now and then.

The Chairperson (Mr McGlone): That is great. Thanks, Stephen. See you later. All the best in the meantime.