Official Report: Minutes of Evidence

The Chairperson (Mr McGlone): We move to the oral briefing from the Institute of Directors (IoD) Northern Ireland. I welcome Mrs Linda Brown, director of the Institute of Directors; Mr Mervyn McCall of MNV Ltd and past chairman of IoD Northern Ireland; and Mr Bill Beers, Beers Engineering Consultancy and a member of IoD Northern Ireland. You are very welcome indeed. Thank you very much for attending. I invite you to make an opening statement, after which we will have a question and answer session.

Mrs Linda Brown (Institute of Directors): Thank you very much, Chairman. I will begin by reiterating that I am director of the Institute of Directors and that Mervyn McCall is a past chairman. He has extensive experience of business development in export markets, supporting start-ups and helping companies to invest locally and overseas. Bill runs his own consultancy company specialising in energy and is a member of our Northern Ireland committee and business environment committee.

I would like to start by voicing our concern about the current difficulties around welfare reform. If this issue derails progress on the devolution of corporation tax varying powers, it would be very regrettable. In our view, the best thing that can be done for someone who is forced to depend on welfare is to give them the chance of employment. While cutting corporation tax is by no means the single solution to creating jobs, it is a major stimulus and it would be a great shame if this opportunity were missed because we do not believe that it would be offered to us again quickly.

That brings me to the subject in hand. What else is required in the mix to fully exploit the potential for job creation that a lower rate of corporation tax affords? This was very well covered in the jobs plan that you have probably all seen, which was produced in 2010 by a group of business bodies. The essentials were: a stable political environment; a labour force with the skills needed by business; the flexibility to retrain people to meet the needs of new investors, inward and indigenous; infrastructure investment to support growth and investment; access to finance for growing businesses; and delivery of public services to enhance productivity and outcomes. In the main, these still hold true and, in our written submission to you, we highlighted a number of particularly key issues. They are as follows: in infrastructure, stability of energy supply; in funding, exploitation of the potential of EU funding mechanisms; in public services, unleashing the potential of public-sector purchasing; and in the political environment, making hard decisions that will, ultimately, improve the delivery of services to the citizen.

I will ask Bill Beers to explain why we believe that stability of energy supply is a crucial factor in supporting investment by local companies and attracting new companies.

Mr Bill Beers (Beers Engineering Consultancy): A lot of our members, particularly in rural areas, where the grid is stretched, are looking for increased energy supply to expand their companies. We believe, from an economic policy point of view, that investment in grid infrastructure and what we are doing with the whole issue of power generation has a big impact on the economy and on businesses that are currently here. When, hopefully, the corporation tax issue is resolved, we have to prepare for an influx of inquiries from businesses, and, if we are struggling in rural areas at the moment, it begs this question: where do we put any new inward investment? Are we going to be ready? Energy infrastructure takes time to put in place. It takes perhaps five years to complete a power station, if planning goes your way.

We have infrastructure issues, and the last time there was major investment was in the 1950s and 1960s. With a 50- and 60-year replacement requirement, we are at a cliff edge and need to invest in the grid infrastructure and on the generation side. There are issues with the North/South interconnector that are constraining the operation of the single electricity market and costing consumers in Northern Ireland millions of pounds. We in the IoD have big concerns about the strategic medium- to long-term plans for increased generation, bearing in mind that Kilroot, a coal-fired power station, is coming off the grid in 2020. There are also the plans for the North/South interconnection, the interconnection to Great Britain and so forth.

We also have issues with renewable targets. It is great that we are at 20% or thereabouts, but the target of 40% has major implications for infrastructure, and, above 25%, there are huge issues, particularly with the interconnector. Those issues translate into costs and constraints, which we at the IoD are very concerned about. In addition, because of these investments, the fixed-cost element of the electricity bill will greatly increase.

It is disappointing that we have had to rely on the temporary generating capacity, although it is great to have that 250 megawatts of power. The disappointment is that the medium- to long-term strategies are in difficulties. Whilst we are talking about the impact on the economic policy and where you can put inward investment, a 100 megawatt data centre cannot be located anywhere in Northern Ireland. Another one has just been announced for Southern Ireland, which already has Microsoft and Google, in the west at Athenry. It is a great piece of infrastructure. There is an argument that it does not bring many jobs, but they are high-quality jobs and, more importantly, that type of steady-state draw from the electricity grid gives you a huge advantage when paying for the infrastructure. We could not have a 100 megawatt centre anywhere; perhaps we could have one at 30 megawatts, which would be small to medium-sized. In fact, I do not know where we could even put a 30 megawatt centre in the Province.

In summary, there are impacts on jobs in rural areas and on the economy. If there is an influx of demand, how long will it take us to deliver the increase in electricity generation and what will be the resulting delay in providing jobs?

Mr Mervyn McCall (MNV Limited): The things that need to go along with the devolution of corporation tax are regulatory issues and government services to make it easier for business. It is not all about foreign direct investment, although that is going to be very important, especially for attracting profit centres. In the past, our grants system has been more about cost centres. Part of it needs to be streamlining to make it easy for business to relocate here. Lower corporation tax will be the attractor, but we then have to ensure that everything else is in place. That will involve things outside this Department but, as this Department has responsibility for the economy, I see it acting as the point of contact. People need one point of contact, to resolve a planning issue for instance. I know that that is going to the super-councils but there still needs to be a central influence so that things can be fast-tracked if necessary to ensure that the economy gets the right status.

Money is available from the European Investment Bank. Again, that will be targeted more to the local councils than to the Executive, because it cannot lend the money to the Executive. However, the Executive need to set the framework for where that money can go and what will be expected to come from that. I think that the Department needs to start thinking bigger to make sure that we can pull all those services together in a much more joined-up fashion.

On employment, further education and higher education needs to be better targeted to the businesses that we are going to attract. That is another area that goes back to one point of contact for everything: what does business need? Corporation tax is one factor, but what else is there that makes things work? One example from the Republic was during the frost and the really bad weather that we had a few years ago. The Southern Government targeted someone in particular to make sure that the roads to all the key manufacturing businesses were salted so that they were able to get their exports out. It is about that hands-on approach. Business is important; it is where the jobs are going to be. We are talking about 40,000 new jobs. That will transform everything so we just have to make sure that we get behind that in the right way and get those jobs.

The Chairperson (Mr McGlone): Thank you. Members have a number of questions, but I will start. I looked through your submission last night. One paragraph states:

You go on to make further reference to that. Looking at the practicalities, what are Departments not doing at the moment that they should be doing, or, more to the point, how are they not doing things at the moment in the way that they should? What private-sector investment are you specifically thinking of?

Mrs Brown: Our specialist in EU funding was not able to come this morning. He is very closely linked up with European bodies, and he is very much aware that there are potential funds that just are not being accessed. He is Michael Smith; you have probably come across him.

The Chairperson (Mr McGlone): Yes.

Mrs Brown: He is an economist. I think that the Committee should meet him and discuss that in more detail.

The Chairperson (Mr McGlone): That would be very helpful but, maybe in the meantime, as part of your submission, he could provide us with something in writing as a bit of signposting. You mentioned specific funds or specific areas that we could be concentrating on. We have already heard — I heard it at an event yesterday — that access to finance is crucial. In your submission, you referred to the construction sector as being just one example.

We have some issues being dealt with later on, I hope, around procurement, if Máirtín comes, but I will maybe deal with that if he does not come.

Your submission refers to an investment plan for Europe. Specifically, how should we go about tapping into that?

Mrs Brown: I am sorry. Again, that is Michael's —

The Chairperson (Mr McGlone): That is his brief. OK.

Mrs Brown: I apologise that I have not come with the information on that.

The Chairperson (Mr McGlone): That is OK. That is grand. I have a question about civil servants. Your briefing states:

Will he cover that as well?

Mrs Brown: Yes. There is an extensive list of projects that have been submitted from countries across Europe — thousands of them — and there is a lack of —

The Chairperson (Mr McGlone): If he could give us some of that detail, please, it would be very helpful.

One issue that comes up time and time again is the skills deficit. It comes up at virtually every event that I attend where business and expansion is being discussed. Foreign direct investment is discussed around the edges but it is usually local indigenous businesses here that talk about the craftsmen that are required. Have you suggestions on that or issues that you have identified? We can all identify the problem, but it is the solutions. I have encountered this issue not just in manufacturing but among skilled tradespeople because it appears particularly in construction.

Some construction firms are doing exceedingly well but it is not through work generated here. They are away to Scotland or Australia. One local firm, McAleer and Rushe, which is probably one of your members, has just got a big £10 million contract in Dublin. I was talking to a couple of contract firms last week, and one is talking about Canada as an operational move, such is the scale of skills requirements in Canada for a lot of projects. Another firm is very active in London. The big concern is that those firms are moving out and taking with them all their skilled tradespeople, some of whom will, inevitably, put down roots in those countries. Therefore, when we, hopefully, come out of the recessionary times and into good times, we could be left with a skills void. What are your opinions and thoughts on that?

Mrs Brown: It is a bit of a catch-22 because the companies that have continued to survive and do well have had to go outside. Indeed, you would encourage people to go outside, but more for selling their products. When you are selling your workforce outside, it is not such a benefit to us. Hopefully, in the long term, those people will be able to be employed here. If we had the investment in energy infrastructure, roads and projects still to be developed, there would be options for people here to develop those skills. Apprenticeships are vital. We also very much welcome the higher apprenticeships and the proposal that the Department for Employment and Learning and the Department of Enterprise, Trade and Investment will come together so that there will be much more joined-up thinking on those, although they have worked very well together.

Mervyn, you have experience in the construction sector.

Mr McCall: Yes, I do not think it is quite as concerning a problem as maybe you think. I was involved with Mivan for 30-odd years and almost all our work was around the world. We would have been the pioneers in taking people from here and exposing them to different markets around the world. I accept that there are happily married and settled Northern Ireland people all around the world as a result, but lots came back with new and better skills, more experience and knowledge, and settled here. A certain number come back and those who come back are more skilled.

Rather than worrying too much about those skills going out, because they are helping Northern Ireland companies to export around the world, the underlying problem is making sure that we are bringing through enough new skills and graduates. We need to make sure that we are prioritising the right sectors and giving STEM — science, technology, engineering and mathematics — subjects priority. That is the skills area that almost all this new investment is going to require. Whether in IT or construction, the STEM subjects are the core of the skill base.

Mr Beers: If I could add one thing as a practical example: an SME with two sites in Northern Ireland is thinking of closing one site and concentrating on the other for growth because the support that he is getting from a further education establishment in that area is so practical and positive in terms of R&D and the apprenticeship scheme. It is vital to get the right courses in further education colleges. That will give us the success we need for our own SMEs and for FDI. In considering expansion now, it is about apprenticeships and the R&D support he is getting from those further education colleges.

The Chairperson (Mr McGlone): Thank you. Just by way of clarity, Mr McCall, my concerns around skills have been reflected to me from within the industry. I am chair of the all-party group on construction, where we hear it from the professional industries. I am reflecting their concerns.

Mr McCall: I am not playing it down, but there are advantages, too, and it tends to be people in the construction industry who do not go outside Northern Ireland who worry about it more because they see it as taking away some of their skills base. They do not necessarily appreciate that some of those people come back better skilled.

The Chairperson (Mr McGlone): Further enhanced. Thank you.

Mr Frew: On the issue of the skills base, I am an electrician by trade — a foreman electrician for 10 years — and I worked alongside Mivan on many construction projects. Even at the best of times for the construction industry in Northern Ireland, it was dependent on a boom in Dublin, as well as a choice of work in mainland UK and further afield. In some cases, I suspect that the work in England subsidised the work in Northern Ireland, even at the best of times. There is also the matter of skill sets, and I always say, as a spark, that you want to see young apprentices coming through, but not too many. It is a fine balancing act. You do not want to flood the market with sparks because that affects wages. What are your thoughts on the present skill set, the availability of apprenticeship courses, the people going towards them, and how that will ultimately affect wages?

Mr McCall: We have to bring the whole of Europe into that discussion, because that has made a big change now. That is one of the reasons why wages in construction have not gone up as much as they might. We are not only competing with indigenous people now in the skills base, but with the rest of Europe. I think that the wages are going to be restricted to the European wage and whether you can employ other people. It is more complex than it used to be, quite honestly. Having said that, I do not think there is any reason not to do everything we can to bring in more apprentices. There has never been a problem where we have had too many people and not enough jobs. It has always been the other way around; getting the skills.

There is a balance now. Twenty years ago, I advised all my family and friends to get their sons an apprenticeship, "Don't be sending them to university because you won't be able to buy a plumber in 20 years' time." The whole Eastern Europe thing changed that. There is a limit on it now. What happens is that it balances. You can see, even now, what has happened in the construction industry. Five, six or seven years ago on a construction site in London, you would almost not have heard the English language spoken. If you go to one now, you do hear it because, as the market slows down and there is not the same demand, the foreigners go away again. It averages itself out, but the more we put in, the more we encourage employers to take on apprentices, and I think that has to be good.

Mr Beers: From my experience, working with a lot of SMEs around Northern Ireland, I concur with Mervyn that we do not have too many, but too few, at the moment — too few good, skilled apprenticeships. The difficulty is in getting that aligned correctly for expansion and so forth.

I have to confess that I am a graduate, and we need to get people confessing that they are apprentices, raising the parity of esteem. That is the issue. I have a young son who has just made his choices for GCSE and I am very open-minded as to whether he does an apprenticeship or a degree because I see the jobs. The SMEs that I am dealing with have difficulty getting good apprentices who want to stay the course in the right subjects, whether that is a steel welder, electrician or joiner.

Mr Frew: It is always the case, though, that demand will dictate wages to a degree, and if a tradesman is prepared to move companies, that would help to increase wages, which is key because there is no point in being an electrician or a plumber if you earn low wages. It is about the balance of trying to keep wages up, which will be about demand because, when Dublin boomed, it sucked a lot of work down there. That meant that there was more for us up here, and fewer of us to do it, which increased wages. If you were bold enough to negotiate with your company, or were prepared to move, you raised wages even further. There is still that balance to be struck.

I will change tack now and talk about one of your main planks and concerns, which is energy. You will be aware of the work that this Committee has done this year and the three reports we have produced on energy, one of which was on energy prices. You state in your report that we are three times more expensive than in North America. We also know through the work we have done that, for industry and large commercial, we are second only to Italy in Europe for energy prices. What impact do your members see from energy prices at the present time?

Mr Beers: Energy prices are a big concern for businesses. If it is down to 5% of turnover or thereabouts, it is still a big concern. If you are in manufacturing, which is energy intensive, it becomes even more difficult. We are in a world where we are obviously compared with North America. In the last year, we have dealt with several North American owned businesses operating in Northern Ireland, and energy infrastructure is a huge concern for them, both in terms of price and the ability to expand in the areas where they are located. There is the length of time it takes them to understand how much it is going to cost to get an increased grid capacity, but also the cost of that grid connection.

We said in our submission that more and more businesses are moving. We all know about Bombardier's plan to come off the grid because, I suppose, of the comparison with North American prices. The bigger concern is that, for some of the businesses that I have personally worked with in the last year, installing a generator is cheaper for them, because to go on grid means a 15-year payback in the rural area where they are located, such is the cost of the grid. That strikes at economic policy and what we want to do with quality rural jobs. That is the concern.

We must look at things like the renewable target of 40%. I am all for renewables. I have an environmental consultancy; I drive an electric car. It is not that it would not be great to reach that target, but the question is whether it is affordable when we have all this other investment to do. Renewables are great, but you still have to have the fossil-based and the gas-fired energies as support.

What is our policy for generating in Northern Ireland? Have we given up on that? Are we just going for interconnection? It is unclear, but you see ahead of us the investment in the current grid infrastructure and the investment required for renewables at 25%, never mind 40%. Then you look at the investment in our 33 kilovolt and 11 kilovolt grid. There is a big concern as to where that will put the fixed element of our costs.

Mr Frew: I will come back to that in a minute, but would you, as an organisation, support a review, which is currently being undertaken, to reduce that target of 40% for renewable energy?

Mr Beers: From the information that we have, and given all the investments that we have to do now, it is absolutely sensible to review it. It is not just about renewables. We are pushing the boundaries in Northern Ireland, worldwide really, with our mix of renewables. It is about affordability as well. It is great to have a target, but you cannot have a target without knowing its impact on the economy and fuel poverty, and knowing what it is going to cost you in overall terms. The more renewables, the much less on our existing grid infrastructure.

Mr Frew: To give you a couple of examples, I have heard from a business in Ballymena that has planning permission for a turbine. They were given a letter last week by NIE to say that they cannot get connected to the 33 kilovolt grid. NIE cannot afford to lose that demand. I have also heard from a farmer up in Shillanavogy, away up in Glenwhirry, who also has planning permission for a wind turbine but cannot connect it because the grid, at that point, is not capable of taking it.

It seems to have been a running trend over the last number of weeks that NIE have, because of the price argument last year, basically thrown up the head and said that the grid cannot take any more.

Is that just in my area, or are those issues Province-wide?

Mr Beers: I am not here to defend NIE or any one company. The grid is stretched. The grid was built, in the 1950s and 1960s, to be fuelled by two power stations at that time and three big power stations. We have flipped it to microgeneration without necessarily considering the impact. Once we get to 20% or 25% on, it will be better for the stability and the integrity of the grid. It is vital that we do a review here and now. It is great that we are at 20% or 19·5% or whatever up to March of last year. That is terrific. There is now a pause, and we now understand the implications of going further. We need to pause and reflect and see where we should go and what it will cost.

Mr McCall: To answer your question, this is a Province-wide problem. It is a problem in Tyrone and everywhere. It is the same issue. If you were putting a turbine up now, normally you would go to where you have the most — [Inaudible.]

— where you get a connection because the connections are so few, so it is a real, real restriction.

Mr Frew: Obviously, there is a difference between domestic prices and industrial prices. Would you support the redesign of the tariff?

Mr McCall: I am not quite sure what you mean.

Mr Frew: We all get charged for the kilowatt-hour, but industry has capacity charges, network costs, generation costs and supply costs. The Republic of Ireland, Germany and other states have reconfigured that.

Mr McCall: Can I give you —

The Chairperson (Mr McGlone): I am conscious that we could be veering slightly off onto another train here.

Mr McCall: I will come back to the question of what our members think about energy prices. They all think that they are too high; however, if you are a local company competing locally, that is OK, because we all pay the same electricity prices. One shop pays the same as the next. However, if we want to expand our economy and encourage exporters and encourage FDI, it does really become a roadblock to investment. It is really an issue that needs to be dealt with. My last point is on lowering the goal from 40%. I think that it should be lowered because it will be economically unsustainable.

Mr Frew: I will leave it there if you wish, Chair.

Mr Humphrey: Thank you very much for your presentation. Mike Smyth gave evidence to the Committee for the Office of the First Minister and deputy First Minister a couple of years ago. I think that it would be useful to have him here at some stage because I am interested in his view on whether Departments here are sufficiently joined up on the issue of Europe, particularly European funding, which we simply play at compared with the Irish Republic. Some of you have touched on that. I think that that would be useful.

In your opening remarks, Linda, you talked about yesterday's debacle around welfare reform. I spoke to a number of business people yesterday, and I am afraid that that has caused considerable concern in the private sector. How does what happened yesterday and what will play out of the next few days look to you guys at the coalface?

Mrs Brown: Our main concern is that it will derail the devolution of corporation tax. That seemed to be all on track, and we are all getting geared up to it actually happening. All of the main parties seemed to be supportive of implementing it once we were given the powers. It is a bit of a blow. We wondered whether we should bother coming today. Is there still going to be an interest in it? It is disappointing to hear that, because, as has been said, one of the items in the jobs plan is the stability of our political environment. If that is up in the air again, it is another difficulty for us when we are trying to present Northern Ireland as a place to come and do business in and grow your business.

Mr Beers: Investors in business like stability. They like stability in legislation. They like to know where things are going with a degree of certainty.

Mr Humphrey: In fact, that was the point that I had written down here: stability for foreign direct investment. Political stability is part of that. We have not travelled that far in time from the bad place to the stability that we have now. There are people out there who want to destroy that stability. When you or your members go out into the world to sell products or services for Northern Ireland plc, how damaging is this going to be? The point about stability is absolutely right. For example, it looks as though the visit to Washington next week by the two senior Ministers in this Administration is not going to happen at this stage. How could it, when you think of it? The stability that you talk about, which is so vital, just is not there at the moment. How damaging is that to Northern Ireland plc, and for the private sector in particular, when you go out internationally?

Mrs Brown: For 40 years or so, people have gone about their business and managed to keep on going. It seemed that we had an opportunity to take our future into our own hands and take a step forward. It is a feeling of disappointment. I imagine that people will still go on. It might make Invest Northern Ireland's job a bit more difficult.

Mr McCall: I spent a big part of my life out around the world selling a Northern Ireland company through the Troubles. It is an obstacle and something that you have to deal with, but, by and large, you find a way of dealing with it. The First Minister and deputy First Minister are experts at putting on a good front when they go abroad. So, the damage is twofold One is when people start to get a little bit of detail, they get past the first thing and they start talking to their advisers. The first thing that anybody considering investment in a new location will look at is the political risk and whether the legislation will stay the same, whether there is consistency and all those sorts of things. That will definitely cause a problem.

The second problem is that, from dealing with businesses in the last year, I just get the feeling that we are coming out of a recession and people are looking up and feeling more positive. If people feel positive, the economy recovers. It is all about morale. Since the announcement of the Stormont House Agreement and the whole agreement on corporation tax, there has been a whole buzz that we are serious about this; we just have to get a date and a rate agreed, and we can go out and sell ourselves. What has happened has just let the air out of the balloon. What is the point? I think that that is where the big damage will happen.

Mr Humphrey: The point is that, for Invest Northern Ireland, which is the organisation that is charged to go out to attract that foreign direct investment, it is a very difficult set of circumstances, because if welfare reform is not resolved, the probability of the devolution of corporation tax being realised is probably nil. What effect will that have?

The Chairperson (Mr McGlone): It is hard because we do not have a crystal ball. Touch wood, the situation now might change in the next week or so. We do not know about that.

Mr Humphrey: We can only deal with the circumstances that we are dealing with now.

The Chairperson (Mr McGlone): Our inquiry is about what happens post-2017, touch wood, when it happens. If I could just intervene on that point, Mr McCall, you are a person of considerable experience in these matters. If you are going abroad to the US or mainland Europe, what are the current and potential positive selling points for the North? You have been there through the really difficult times when bombs were exploding on our streets and people were being murdered. Take us a stage further and tell us the positives that are currently there and the positives that, potentially, will be there.

Mr McCall: The positives are the fact that we have a good education system. We have a good, well educated workforce. We have the skill base. We all know our problems, but you are asking me what story we tell, which, by and large, is true. We have a really good work ethic and have people who really want to get the job done and have a will-do, can-do attitude. Those are all the things that you talk about. You talk about the fact that you are part of Britain and people talk about working to British standards ISO. People understand British standards easily. You also talk about the fact that you are Irish, because everybody loves the Irish. That is quite good.

Going forward, what will make the difference is lower corporation tax. That is important. I would love to be able to say, "Better than that, we have a dedicated Department in our Government that covers everything you ever need to know or every support you need. If you come and invest here, you have one place to go. Whatever your issues are, they'll point you in the right direction for solutions." Invest does that a lot for indigenous companies, but we need some sort of body like that to help the people coming in. Those are the two big pluses you want — that and corporation tax. I am taking political stability as a given. I want to be able to talk about political stability, no matter about some of the cracks that might be there.

Mrs Brown: We have a population that has an appetite for change and growth. There is a willingness to be flexible, with young people who can be quickly translated from one type of business into another. The good skills work that is being done by the higher apprenticeships programme is a good step forward because we can say that we can deliver people and train them up quickly. We have always said that our major asset is our people. That has been recognised. The investment that is put into FE and HE is very important. We have young people coming through schools with a clear understanding of what their career opportunities are. Good steps have been made in those areas.

Mr Beers: The other important thing, looking forward, is the speed with which we can implement things on the ground when you are talking about investment. Is it going to be held up in planning? Is it going to be held up because the infrastructure is not there? If that is the case, they will just —

The Chairperson (Mr McGlone): I think that we will be coming onto that. Gordon wants to explore the infrastructure stuff later. William, you wanted to follow through on some of the points that you made.

Mr Humphrey: You said, Linda, that you wondered whether it would be worth your while coming here today. From the point of view of my party, we want to see corporation tax devolution happening. It would be hugely beneficial for Northern Ireland, given the right deal around the block grant and all that. What is the opportunity cost or the impact to business in terms of international markets if the devolution of corporation tax does not happen?

Mr McCall: For business, it will be as you were. We will still carry on doing our best, but —

Mr Humphrey: With a hand tied behind your back.

Mr McCall: Yes, but our best has not been good enough. That is the point. Our economy is not growing. The private sector is not growing. We are not creating enough jobs. So, we will just go on as we have been. We will do our best, but it is not good enough. That is the thing. In 20 or 30 years, we will still be worrying about the most vulnerable in society because we will have not actually done anything to change things. If we do not do something to change it, we will still have vulnerable people and we will still be arguing about whether they are being looked after well enough. The way to look after the most vulnerable is to create enough jobs so that anybody who wants a job can have a job. That is the best way to get people out of poverty.

Mrs Brown: We are moving from a situation where we are dependent on state aid — European funding has changed; it has largely gone — to a situation where people have an incentive to create more wealth through lower corporation tax. They will not just buy a new car with it; they will invest it in their business. Every morning, you hear on 'Good Morning Ulster' a story about another company investing money and more jobs being created. People want their businesses to grow; they want to provide employment for people. They want Northern Ireland to succeed. Corporation tax is one of those incentives. It would give us a little bit extra that they will not find in other parts of GB. Obviously, we have them in the South of Ireland. It gives us that opportunity to compete, with something different.

Mr Dunne: Thank you very much for the presentation. Apologies for nipping out. You talked about investment in infrastructure. I think that we are all very supportive of that. There was mention of how a well-developed infrastructure reduces the effective distance between regions. Can you elaborate on that, please?

Mr Beers: I suppose that what we mean is that, in our economy, a lot of areas appear rural, perhaps because of the infrastructure, the roads to them and where we have greatest strength in the electricity grid.

Mr McCall: Yes, infrastructure includes roads, but it is also the electricity grid, broadband —

Mr Dunne: Yes, and IT.

Mr McCall: And, you know, broadband has the ability to bring something right to where you are, in rural Tyrone. A better road reduces your travel distance from one hour to 40 minutes, which makes a huge difference. All those things make it easier. We are small enough to be one, really; but infrastructure is the thing that makes the difference between central Belfast and somewhere more remote.

Mrs Brown: There is still a lot of potential to be had from broadband and the existing connections, the speed and infrastructure that we already have. They should be exploited.

Mr McCall: I always think that we are very good, but I do not live that far from Belfast. Then I speak to people outside Belfast who say that they cannot get this or that. We are better provided for than most other cities.

Mr Dunne: Interestingly, we had representatives from Manufacturing NI here recently. They said that 70% of the manufacturing jobs are outside Belfast. That is quite interesting; we do not tend to think that way. There are a lot of small businesses doing well in the rural settings, and they have those issues that we are very much aware of: broadband, and the need for superfast broadband. Accessibility and transport links are obviously critical. The more investment that is put into roads and improvements the better. Sewerage systems and water are all issues of concern for business.

Mrs Brown: I think that a lot of companies have really adapted to the new technologies. Down in Enniskillen, there is a company that sells plastic bottle labels. It personalises those Coke bottles that bear your name, and it can provide those from Enniskillen to everywhere. It can all be done very quickly because of the technology, but, sometimes, the transport and getting the product out is difficult. We need to make sure that we have the connections.

Mr Beers: The other important thing that we imply, in the passage on the issue of regionality or being rural, is this. If — no, let us be positive — when we get corporation tax —

Mr Dunne: Correct.

Mr Beers: — we will potentially have a deluge of enquiries. We need to be very clear about what our priorities are as to the type of business that we want to attract and to which we give our finite resources. We also need to be clear as to where we want those businesses. I am not saying that you can overly influence businesses, but businesses that are reliant on broadband can be situated anywhere where we have good broadband without too much cost impact to that business.

Mr Dunne: So, broadband is important.

Mr Beers: Broadband is the issue, but also perhaps we are at a stage where, if we want corporation tax powers and jobs delivered speedily on the ground, we should choose where those hubs should be. That is a bigger policy issue, and it is political, obviously. However, we are going to have to invest in infrastructure ahead of time, perhaps in Invest NI's business parks or whatever, but we need to be clear about the other types of infrastructure that we are talking about. What type of industry are we trying to attract?

The Chairperson (Mr McGlone): Are you hinting that you hope to target certain businesses, or maybe you are doing more than hinting at it. For example, in the South, they have targeted specialisms and key areas of business.

Mr Beers: Getting Apple to go to Athenry is a huge win, on a data centre. There is no need for a data centre to be in the centre of Belfast, if that is what we attract. It could be anywhere, if we have sufficient infrastructure of the right type. However, we need to be clever in what we target and in how we prioritise this attractive corporation tax rate and target our resources and manpower to deliver at the right places.

The Chairperson (Mr McGlone): It is very obviously strategic. Sorry, Gordon.

Mr Dunne: That is OK. I think you have raised some good points that will be of benefit to us. Thanks very much.

The Chairperson (Mr McGlone): Just picking up on that, so much work, depending on the nature of your business, is done via smartphone technology. Have you done any work with Ofcom around the issue of tackling the roll-out project through Arqiva?

Mr McCall: No.

The Chairperson (Mr McGlone): No, you have not then. On the not-spots thing. That means so much to sales people. The ability to pick up on calls and all of that sort of communication with companies is very important.

Mr McCall: I meant to cover that along with broadband. Mobile technology and coverage are so important, and 3G coverage —

The Chairperson (Mr McGlone): 4G now.

Mr McCall: — and 4G is becoming so important everywhere.

The Chairperson (Mr McGlone): OK; thank you for that. We had scheduled someone else to speak here. It is an issue that actually came up yesterday, and, again, it probably feeds into this from more or less the same quarter. I hosted an event here yesterday for the Federation of Master Builders, and a big issue that came up was the whole question about the impact of procurement regulation, particularly on SMEs. You have raised it as a concern. You have also raised the issue of inconsistencies between public-sector procurement practice here and in other parts GB and, indeed, the rest of Ireland. Will you just tease that through with me? For the purposes of the record, will you give some examples of how you see that being problematic?

Mrs Brown: Where to start? Our view is that there is an extreme lack of competition in public procurement here. Everything is now within the Central Procurement Directorate (CPD). It has grown like Topsy and brought everything in. I know that the rationale behind it is about centralising and that there should be efficiencies of scale and so on, but for a lot of contracts there seems to be a lack of individual specialist information. What we get is the tick-box, one-size-fits-all mentality, but it does not fit all. There is no doubt about it.

In other areas you get private-sector people who are specialists in devising procurement contracts, overseeing and monitoring them and making sure that they happen and are delivered as the contractor says they are going to deliver them, rather than a situation where a standard contract goes out, things get added in, costs increase and no one really takes control of it and says, "Look, this what you said you were going to deliver; you deliver that". That monitoring role is not happening, whereas if you have a private-sector person in charge of the contract, they will make sure that it happens as per the contract. That is what we seem to see in other areas. Things work quicker. There is more knowledge from the private-sector company because it is working to the brief given to it by the commissioning body or organisation.

There is also more scope for innovation. I know that some work is being done with CPD on creating more innovation, but in our view that could be considerably increased. We are not even necessarily getting good value for money for the public purse.

The Chairperson (Mr McGlone): I am glad you raised that point, because you are taking me in the direction of an issue that has come up on numerous occasions. At what point does good value for money become sub-economic tendering? To my mind, based on experience of dealing with cases, the sub-economic tendering issue has an impact on our local economy, because many of us have sat in a room with subbies and contractors. There are only two outcomes to that, ultimately. Either the firm that is sub-economically tendering is sucking off another profitable part of its business to sustain that — and that usually goes wallop and hits the wall — or a whole crowd of suppliers and subbies are, basically, shafted financially. That is where I see the point of procurement delivering sufficiently and on time, but making sure that no one is financially disadvantaged as a consequence of out-and-out wrong pricing.

Mrs Brown: A private-sector specialist will know what the right price band is.

The Chairperson (Mr McGlone): It seems to me that you are saying that there is a lack of knowledge in the public sector around these issues to be able to deal with them. That is one element, but would you welcome increased regulation and control to make sure that prices are sustainable?

Mrs Brown: It would depend on what system we are operating. We would like CPD to be brought down to the kinds of services and products that are more generic. There is no problem with CPD doing a stationery contract; that does not matter, but if it is a contract for a new building for a hospital, you would like people with an expertise in that to handle that contract and to understand what value for money will look like and what the right level of pricing will be. We are not in favour of greater regulation, I have to say. It is about whether the system fits.

The Chairperson (Mr McGlone): How do you deal with that? You want to have an efficient economy, no matter whether you have corporation tax powers or whatever. How do you make sure that you do not wind up in situations where people are trod all over and cast aside financially or, indeed, where a project could be stymied or have to be re-tendered? God knows we have seen enough of that at Desertcreat. You are probably well aware of that fiasco. How do you ensure that that experience of realistic pricing — you are the people who know about these things — is enshrined in practice?

Mr Beers: We have always argued for the right balance between private- and public-sector knowledge being brought to the table for given contracts. As Linda said, what that mix should be depends on the nature of the contract. That flexibility does not seem to be there at the moment in the CPD environs. We have had examples recently, where a specification in the rest of GB, which complies with European law, is not deemed adequate in Northern Ireland. How can that be, in terms of adequacy of meeting European requirements?

The Chairperson (Mr McGlone): Are you saying that some of these Europe-initiated laws are interpreted differently here than they would be in GB?

Mr Beers: Absolutely.

The Chairperson (Mr McGlone): It would be helpful if you could give us a few examples of that; I do not mean now. To get back to my original question, how do you ensure that fair pricing is enshrined in procurement practice if not by regulation?

Mr Beers: One of the big fears here is that it always seems to be based on the lowest cost. There is a preponderance to that. It is about the ability of whoever is making the decisions through the tender analysis process to be able to say that it is quality and it is cost, and below that base cost the bid cannot be accepted.

The Chairperson (Mr McGlone): You know that quality and cost are included in that and it is about the weighting that you give to them.

Mr Beers: It is about the weighting and the difficulty in getting beyond the weighting of 30:70.

The Chairperson (Mr McGlone): I take that point; it is a fair one. Thank you very much for that. You have given us a lot of food for thought and a lot of very valuable information. Linda, you will be able to provide us with some information on the European issues.

Mrs Brown: Yes.

The Chairperson (Mr McGlone): Thank you very much indeed. That has been very helpful. I hope that we have productive success, including the delivery of corporation tax enabling powers as well.

Mrs Brown: Fingers crossed.

The Chairperson (Mr McGlone): Fingers crossed. Thank you.