Official Report: Minutes of Evidence

Committee for Enterprise, Trade and Investment, meeting on Tuesday, 3 November 2015

Members present for all or part of the proceedings:

Mr Patsy McGlone (Chairperson)
Mr Conor Murphy (Deputy Chairperson)
Mr Gordon Dunne
Ms M Fearon
Mr P Girvan
Mr William Humphrey
Mr Fearghal McKinney
Mr M Ó Muilleoir


Mr Diarmuid McLean, Department for the Economy
Mr Shane Murphy, Department for the Economy
Mr Jeremy Fitch, Invest NI

Inquiry into Economic Growth and Job Creation in a Reduced Tax Environment: DETI and Invest NI

The Chairperson (Mr McGlone): With us today we have the officials, Mr Diarmuid McLean, head of the Department of Enterprise, Trade and Investment economic policy division; Mr Shane Murphy, senior principal, DETI analytical services unit; and Mr Jeremy Fitch, managing director of business international, Invest NI. Thanks very much for attending today. It is good to see you again. Are there any initial issues that you want to raise before we move into the question and answer session?

Mr Diarmuid McLean (Department of Enterprise, Trade and Investment): Not particularly, Chair. Obviously, the issue has been the subject of a report that you produced, the Minister submitted a written response and the issue was debated in a motion in the Assembly. I am joined by Jeremy and Shane today. Hopefully, we will answer any questions that you might have.

The Chairperson (Mr McGlone): One that has come up on occasion is the pilot enterprise zone: where are we with that?

Mr McLean: The First Minister and deputy First Minister wrote to the Chancellor of the Exchequer within the last week setting out the land that they propose for designation as an enterprise zone in the Coleraine area. We are awaiting a response from Treasury on that correspondence to the Chancellor.

The Chairperson (Mr McGlone): There is one that puzzled me — the review of EU legislation to be undertaken. A statement has come back fairly bluntly to say that it is not the Department's responsibility to do that. I find that a bit odd, because, at one level, you say that DETI has a responsibility to review where red tape is blocking things or holding up things for business, yet it appears that the Department says that EU legislation is not for the Department to consider. I will tell you where I am going with this. We have often heard of EU red tape blocking x, y and z. You have heard it and I have heard it. However, if you go down the road 100 miles or so you could be dealing with the same EU legislation that does not, in practice, have as much red tape as it has here. In other words, the perception is — it could be the reality — that it is the officials who are implementing it. Some seem to adopt a tick-box approach to things in order to ensure compliance as they see it, whereas officials in a different jurisdiction look at it entirely differently and see how the law can be interpreted to facilitate business, farming or consumers — whatever it might be.

What dialogue does the Department have with other EU member states, including the other one on the island here, around issues such as that to say, "Right, we have an issue here, which is perceived to be red tape: how are you guys in Dublin doing it? You guys seem to have accommodated this, or circumvented this, or whatever"? Is there an approach there of seeking solutions to rather than compliance with red tape to the point where maybe the compliance with the red tape becomes the overriding issue, rather than compliance with the legislation as others see it?

Mr McLean: I am not sure that I would agree with that perception. Obviously, as part of the UK, we have to operate through the UK mechanisms for transposition of EU legislation into law in Northern Ireland. There is a structure in place whereby we, as part of the UK, get notification of the European Commission's annual work programme, and that is circulated to Departments in advance of legislation being proposed at EU level. We feed any comments, suggestions or difficulties that we believe there might be into the national process, but the negotiation of the actual legislation and what is to be put in law at EU level is done through the national UK Government. When it comes to transposition of that into legislation here, we have to abide by the guidelines and principles set for us across the UK.

In relation to the red-tape work that has been done by the Department of Enterprise, Trade and Investment, we are looking at legislation where it affects businesses — EU legislation, in some instances — and we have sought the views of Departments to ensure that that is not overly burdensome on business where possible, while bearing it in mind that they have to comply with EU legislation or they can be taken for infraction.

The Chairperson (Mr McGlone): As seen by Westminster?

Mr McLean: Yes.

The Chairperson (Mr McGlone): This is not a perception that I have, but it is a perception that business people have: on occasions, what is potentially an issue here is not an issue in other parts of the EU where they do business. It may well be because of non-compliance by the nation state, as you referred to it, or it may well be because the nation state is a bit more creative in applying its diligence to the interpretation of the legislation.

Mr McLean: If they believe that there is not proper implementation of legislation on an equal basis across the EU, the route to address that would be through notifying the UK and for the UK to raise it at European Commission level. It is difficult for us to get involved in comparisons with other members states while we are responsible through the UK Government.

The Chairperson (Mr McGlone): I appreciate the constraints within which you work. You, in Invest NI, are the point-of-contact people with businesses. Has your organisation encountered issues where your clients have directly raised problems with EU legislation — the bureaucracy, as it is referred to, or the red tape or the stymieing effect of some EU legislation? If that is the case — it may not be, although I would be surprised if it was not — what approach do you take with the Department to address or solve that issue, if it can be solved?

Mr Jeremy Fitch (Invest NI): The issue you refer to regarding other member states is hardly ever raised with us now. I understand that it used to be raised more often when people asked whether other states interpreted the legislation in a different, perhaps more flexible, manner. From my experience, that has not been raised regularly recently.

We liaise with other agencies — Enterprise Ireland, for example — or with the other devolved Administrations. We meet them to discuss their interpretation. One specific example of this is that the legislation for selective financial assistance changed at the end of June 2014, and the new legislation from 1 July 2014 has concerned a lot of businesses here. They are wondering what we can offer. We have raised the issue with Enterprise Ireland and with the other devolved Administrations. We have asked them how they are interpreting it, because there is no case law on some of the issues as yet.

The Chairperson (Mr McGlone): Is it done on an ad hoc basis, as and if it arises, or is there a process for dealing with this with other regions or with Enterprise Ireland? Is there one item that is regularly put on an agenda when you meet them, or do you just meet them as and when required? How does that mechanism work?

Mr Fitch: It is a bit of both. Formal meetings are set up, so UK Trade and Investment meets the devolved development agencies, the regional development agencies, that exist. Whether something is an issue depends on the agenda for the day. In addition, something can be raised on an ad hoc basis. For example, we are discussing a particular issue with Enterprise Ireland at the moment. We are asking what its approach is to that, because we wanted to see whether there is more flexibility than has been suggested to us.

Mr McKinney: I would like to deal with recommendation 1 and the concept of a long-term strategic vision. Do you not expect a strategy to tackle growing unemployment and prosperity to be both short-term and long-term?

Mr McLean: I think that the economic strategy in place sets out the vision through to 2030 but, obviously, as you move through that process, you would expect to see policies and implementations that would help to deliver growth in the short, medium and long term.

Mr McKinney: Can you point to those?

Mr McLean: A range of actions and deliverables is in place through the likes of Invest Northern Ireland whereby we aim to help grow businesses and investment now and look at putting the strategies and policies in place that will help the economy to grow in the longer term, such as the potential effects of corporation tax.

Mr Shane Murphy (Department of Enterprise, Trade and Investment): Of course, the current economic strategy had a particular theme, which they believed was a short-term theme given the height of the recession, and so forth, at the time that the strategy was put in place. There was a longer-term rebalancing theme and the more immediate rebuilding theme. That was very much there in the current economic strategy.

Mr McKinney: How come then that, decades later, the same high-density pockets of long-term unemployment and deprivation persist? I think that six or eight of the government districts across the UK that top that league table for bad news are in Northern Ireland.

Mr McLean: Again, you are into long-term issues across a range of areas. There are areas where, for example, even at the peak of employment in Northern Ireland in the mid-2000s, those pockets existed. They existed in parts of Northern Ireland that had very high concentrations of jobs. There are ongoing issues with skills, educational attainment and so forth that need to be addressed as well.

Mr McKinney: Given that those issues persist, can you point me to what is being done to address them?

Mr McLean: Obviously, under the Programme for Government, we are attempting to bring policies and programmes into place that will help to address and alleviate some of a range of issues. You have to bear in mind —

Mr McKinney: Do you accept that they have not worked?

Mr McLean: I accept that there has been a persistent problem in some areas where, despite the efforts that have been made, it has been difficult to make significant impact.

Mr McKinney: What is the failure there?

Mr McLean: It is hard to put the failure down to one issue, but, as Shane says, there are issues around the large level of economic inactivity —

Mr S Murphy: You are into issues of economic inactivity, skills —

Mr McKinney: What is being done then to change that with regard to skills?

Mr McLean: I cannot speak on behalf of the Department for Employment and Learning, but it obviously has programmes in place around trying to put apprenticeship programmes into place to get the skills that are required. It also led on developing an economic inactivity strategy for a longer-term approach to tackling those issues.

Mr McKinney: At this point, we can say that it has not worked. Whatever has been going on, it has not worked.

Mr McLean: As we have tried to get investment and jobs into the region, it has to be borne in mind that other regions are also moving ahead as well. While there have been efforts, it has to be said that there are still pockets where there are persistent problems of unemployment and inactivity.

Mr McKinney: Is there a targeted strategy for those areas? Can you point to that?

Mr McLean: The Department for Employment and Learning has led on developing an economic inactivity strategy with a number of strands aimed at tackling some of the longer-term underlying causes for economic inactivity in Northern Ireland as a whole.

Mr McKinney: To sort out this problem, everybody has to buy in. Has the business sector bought in to your economic vision?

Mr McLean: I believe that the current economic strategy was consulted on widely when it was being developed. As we go into the next Programme for Government and revise the economic strategy we will, of course, look to consult with a wide range of stakeholders, including the business community and the voluntary and community sectors, to get their views and take them on board when shaping any revisions to the economic strategy.

Mr McKinney: How do businesses input? How is buy-in measured?

Mr McLean: I am not sure what you mean by measuring buy-in.

Mr McKinney: Well, is it through process, for example? Do you meet them all the time? Are they fully aware of everything that you propose? Is it consistent with what they propose?

Mr McLean: We certainly consult them on the shape of the overall strategy and take their views on board. Invest NI has regular meetings with industry representatives to discuss the programmes and activities that it runs and whether they align with the needs of industry. For example, in relation to the discussion that we had a number of weeks ago on export strategy, we consult the businesses involved to ensure that the programmes, offerings and support provided through government agencies or other bodies align with their needs. There would be little point in us running programmes that did not line up with business needs. Of course, we must operate within the framework of what is allowable under state aid rules etc.

Mr Murphy: Around the time of the publication of the economic strategy, both draft and final versions, there was consultation with the business bodies, and consultation events were held across Northern Ireland, giving business and the public the opportunity to raise questions with departmental representatives and others.

Mr Fitch: From a Programme for Government perspective, which cascades to the economic strategy and then to the Invest NI corporate plan, which is, in a sense, a subset of that, when preparing our corporate plan, we consulted at the start with our client companies and with the wider business space by asking what issues they were facing. We then presented them with a draft corporate plan on a consultative basis.

In answer to your question on buy-in, their buy-in was measured by the feedback that we got. If they had said, "You are way off here; you have not got this right at all", we would have known that we needed to go back and make adjustments.

Mr McKinney: Back to the point I raised about areas of persistently high unemployment and deprivation: what are you doing specifically to target them?

Mr Fitch: There are two separate issues. Is it the responsibility of business to sort out areas of high deprivation?

Mr McKinney: No, it is the responsibility of joined-up government to sort out the parameters and the strategies that will allow the problems to be addressed.

Mr Fitch: Absolutely.

Mr McKinney: So what are you doing? What is your bit?

Mr Fitch: A range of things is happening. Invest NI is encouraging businesses to become more competitive, so that they can grow in export markets and provide employment opportunities for people in their area, whether the businesses are owned locally or internationally.

Mr McKinney: But given that they persist, would you say that you have succeeded or failed?

Mr Fitch: It depends on what measure you use overall. The progress on the specific areas that you are talking about is not as good as we would like.

Mr McKinney: Failure? Given that the problems have persisted for decades.

Mr Fitch: It comes back to who ultimately is responsible.

Mr McKinney: That is why we are here. We are talking about joined-up government. The Minister said that there was a joined-up approach to dealing with the economy: do you believe that there is?

Mr McLean: I believe so. The Executive has a subgroup that looks at economic issues, and, certainly, there is an attempt to ensure that the issues are lined up. There is interaction at official and ministerial level, certainly on unemployment, the economy and skills.

Mr McKinney: Do we know how many times that group has met since 2011?

Mr McLean: I do not have the numbers since 2011.

Mr McKinney: I know that these are maybe political calls in the end, but was cutting the DEL budget to cut university places consistent with bringing in corporation tax, which was about attracting university graduates to more highly paid employment?

Mr McLean: That issue would best be addressed at a political level. The Minister and the Executive decide, within they budget have, where to set the priorities and what budget to set for the various areas of activity.

Mr McKinney: Does it have the feel of joined-up government?

Mr McLean: I do not feel competent to comment on that. We certainly work within the framework and the budgets allocated to us as best we can to ensure that there is a joined-up approach.

Mr McKinney: Was the issue brought to the economic advisory group (EAG)?

Mr McLean: I cannot be certain, but I think that the EAG commented on the cuts at the time.

Mr McKinney: What did it say?

Mr McLean: We would have to go back and check. I do not have that —

The Chairperson (Mr McGlone): Can you confirm that to us in writing, please?

Mr McLean: Yes.

Mr McKinney: Was it concerned?

Mr McLean: As I say, I do not have that. I believe that it was, but I will have to check what it actually said at that time.

Mr McKinney: OK. I will leave it there.

Mr Dunne: Thanks very much, gentlemen, for coming in again. I appreciate the difficult job that you do.

In recommendation 7 of our report, we talked about support to businesses. From the evidence we got, we gathered that there were gaps in the provision of advice and practical support to businesses; a number of people expressed that to us. We are disappointed in the Department's response when it states that it is generally content with what is currently being provided. What evidence is that based on? How do you measure customer satisfaction with the provision of such services?

Mr McLean: Perhaps I will ask Jeremy, because Invest NI provides an extensive range of business development support products and services delivered through a range of channels. He can maybe provide some more detail on it.

Mr Fitch: Invest NI offers over 80 programmes, depending on how you classify a programme, across a whole range of headings, be it financial assistance, advice, innovation, exports or property, and we continually review and assess them. For a three-year programme, we would evaluate it, and then, depending on the result, we would put forward a case for continuing or amending it to make it better.

If we get feedback from clients saying that there is a particular gap in the market, we will look at introducing a new programme to cover that gap. For example, we have recently introduced two new types of programme: the competence centre programme, and the accelerated programme. Our scheme to support the provision of grade-A property is another. We rely on the feedback from the companies that we deal with, which says where there is a gap that needs some form of solution, and we do our best to respond to that.

Our client satisfaction is measured in two ways. It is measured on a quarterly basis, after companies have had some sort of assistance, and on an annual basis, with all the clients. The returns we are getting on those are as good as they have ever been. They are very high, and they are meeting our targets.

Mr Dunne: Is there still an assumption that Invest NI's focus is mainly on exports or on trying to encourage exports, which certainly needs to be addressed? I think that there is still a perception that your main focus is on exports.

Mr Fitch: That is absolutely right. Our view is that, if we want to grow the economy, we need to look at markets outside Northern Ireland. With a population of 1·8 million people, we have a very small indigenous market, so we want to encourage our business base in Northern Ireland to look at markets outside Northern Ireland so that they can grow and create the opportunities that we have just been talking about. A lot of our assistance is in encouraging companies to be aware of opportunities in export markets and then encouraging them to become more competitive through innovation so that they can win business in those export markets.

If we were to encourage a company in Northern Ireland to sell just to the Northern Irish market, it may displace what is already happening somewhere else, and, therefore, it is not a good use of taxpayers' money in that sense.

The Chairperson (Mr McGlone): Unless the company had a brand new product.

Mr Fitch: If it had a brand new, potentially exportable product, we would encourage it to sell it not only to the Northern Irish market but to markets outside Northern Ireland, and we would work with companies to do that. In answer to the question, we have, through the Minister and through Alastair Hamilton, our chief executive, broadened our scope to service the wider business base. We are trying to cast our net further to ask what businesses operate in Northern Ireland that may be selling only to the Northern Ireland market at the moment but could also export. We will then try to encourage those companies to come through those programmes.

Mr Dunne: What about the retail sector? It always feels that it does not get much support. What about developing programmes to give it support indirectly?

Mr Fitch: There are some programmes that we have that are available for anybody. Some of them are advisory. One of the best programmes that we have is the website at, which offers advice to all businesses right across the range. I am not sure whether you are familiar with it, but it is a superb website that offers advice on finance, HR and legislative issues and on writing business plans. It is excellent, and it is the type of thing that we can offer on a one-to-many basis and that anyone can access.

The Chairperson (Mr McGlone): This is as much a reflection on me as on any information that comes in our direction, but I only became aware of it when I was reading the response about supply chain issues from Invest last night. You may need to do a wee bit more promotion, not least to the Enterprise Committee, about that website.

Mr Fitch: Chair, that is a fair point. We looked at the programmes, and our belief is that there is a comprehensive range of programmes there. The challenge is communicating what those are to the right people in the right positions at those times. To do that, we did a couple of things recently. One is setting up an 0800 number. Again, that is available for anybody in business. You do not have to be in export; you could be in retail or whatever. You can phone the 0800 number, and Invest NI staff will point you in the direction of what support is available on your issue, whether it is Invest NI support or broader support. At other times, we will promote the programmes on an individual basis.

Mr Dunne: Is that part of the Boosting Business programme?

Mr Fitch: That is correct.

Mr Dunne: Is that still running?

Mr Fitch: Boosting Business was a response to the downturn in the economy; it was a promotional campaign that tried to make people aware of what support was there. The support is still there, but there is not as much emphasis on that campaign.

The Chairperson (Mr McGlone): This is an issue that has cropped up in practice and in anecdotal stuff: getting to the people who need the help, advice and assistance. The sharp business practitioners all know how to do it or, if they do not know how to do it, they have somebody employed who does. It is about how you get the information to the new entrepreneurs and the young entrepreneurs who are coming through. It is a criticism of me and, potentially, of Invest that we do not know about that suite of issues. We are out in the sticks along with your people; indeed, I met one of your people, Patricia Devine, the other day, and she was excellent in helping to resolve an issue for a person. As another person said to me, if that lady had not come to me, we would not have been able to establish connection with Patricia, and she may not have been in as good a place with a new, innovative product as she could have been. Do you get me?

Mr Fitch: I absolutely understand.

The Chairperson (Mr McGlone): A bit more work is required on the communications issue that you have identified.

Mr Fitch: The first bit is to publicise the 0800 number more. If it is helpful, I would be delighted to present an overview to the Committee of what programmes are out there. I do that regularly for people. If it were helpful for the Committee to have an understanding of the suite of programmes available, I would be happy to do that.

The Chairperson (Mr McGlone): That would be very helpful. Thank you.

Mr Humphrey: Thank you very much for your presentation. I am sorry that I had to nip out at the start of it. I represent North Belfast, but I also work with many constituents in West Belfast, a neighbouring constituency. Compared with South and East Belfast, particularly if you compare North with West Belfast, North Belfast has had a rum deal in much of this. What is being done to rectify that and actually persuade people? I know that, at the end of the day, private-sector companies will make their own decisions, but there are incentivisations to encourage them to come to a part of the city. I equally accept that you can travel across the city — I have no issue with that — to employment, but what is being done to drive the location of companies into North Belfast?

Mr Fitch: Our line on that has always been that we will promote Northern Ireland as a location. That is what we have asked our overseas team to do if we are talking specifically about inward investment, which a lot of people focus on initially. Equally, we also say, "Well, what businesses are there in that locality that we can help grow?". There are two aspects to it. Overall, we are trying to encourage people to come to Northern Ireland. We hope that people in different regions can benefit from the jobs that come up within a journey-to-work time frame for those locations.

Mr Humphrey: To be fair, Jeremy, if you compare Londonderry with other towns and cities in Northern Ireland, I would have thought that, in terms of resource and financial and man hours in terms of promoting and driving inward investment to Londonderry, it is disproportionate to the rest of Northern Ireland. Is it not?

Mr Fitch: I decline to comment on that —

Mr Humphrey: I think that your smile says it all.

Mr Fitch: I am not sure that I agree. We genuinely promote Northern Ireland as a location. That is it overall. I am sure that Members from Derry/Londonderry would equally give us a hard time and say that we do not promote it enough. That is part of the challenge that we face.

Mr Humphrey: As I say, I think that your initial reaction tells the tale.

Mr Fitch: That is why I was smiling: we cannot win on that issue.

Mr Humphrey: A number of councils merged under the review of public administration (RPA). I was a member of Belfast City Council. Belfast has a track record because it had the resource in terms of people, money and the rate base to get involved in economic development in perhaps a bigger and better way than councils that did not have that resource. How will you ensure that, with RPA having happened and all the new councils coming together — they are still trying to gel as organisations — there is sufficient joined-upness between local and regional government — i.e. your Department — to make sure that it all works?

Mr McLean: We have worked with the new councils to ensure that there is a joined-up approach to economic development issues. The regional innovation strategy has transferred from Invest Northern Ireland to the councils. Jeremy will fill in more detail, but we and Invest NI have been at pains to maintain close working relationships between its regional offices and the councils to ensure that the work undertaken by them can be handed over in an effective manner. We know that councils are now working on a follow-on from the regional innovation strategy. We recently extended the coverage of the programme for, I think, a further year to allow time for the 11 councils to come forward with a proposal on a comprehensive strategy for business start-ups and innovation in council areas. Invest NI, in its regional offices, has worked with councils on the development of their economic community plans. It has helped to inform them in developing those; it has worked up and provided them with a great deal of detail, data and information in relation to businesses in their council areas.

Mr Humphrey: Before you come in, Jeremy, can I ask why you extended it for a year?

Mr McLean: The contract was due to end in March. They did not have a follow-on programme in place. They would not have had time to put a combined bid from the 11 councils in place to ensure that there would not be a gap in provision between getting an application in, approved and funded. The current contract was due to end in March 2016.

Mr Humphrey: What length is the contract that is about to end?

Mr McLean: I cannot remember how long it is. We worked with the Central Procurement Directorate (CPD), Invest NI and the councils to ensure that we can extend it for a further period to provide sufficient space for the councils to put in a —

Mr S Murphy: Just for clarity, that was the regional start initiative.

Mr McLean: Yes.

Mr S Murphy: I think that you used incorrect terminology there; I just want to avoid confusion.

Mr McLean: Sorry.

Mr S Murphy: This was the start of business.

Mr Humphrey: Right, OK. Hearing the answers, my initial thought is that if you have to extend it for a year it is not fit for purpose.

Mr McLean: No. I think that it was just that Invest NI had the regional start initiative, which ran across Northern Ireland.

Mr Fitch: We were requested to continue to look after it for an additional period to give councils time to get everything in line.

Mr Humphrey: That is my point. Are you confident that, as we sit now, after that year's extension, we will be in a position where those things will be in place and in line?

Mr Fitch: We hope so. That is what we are working towards and that is why we are giving them the extra time to work it out. To go back to what Diarmuid said, in this transition period councils develop their community plans to which there will be economic development aspects, and we will work very closely with councils. Our original business group has a number of offices of Invest NI around Northern Ireland, and the staff in those offices will work very closely with councils to develop the community plans with the economic development aspect as a key focus and priority.

Mr Humphrey: Working with councils is good. I am pleased that that is working or that you have a job of work in progress. DEL is crucial in all this, as are the regional colleges and universities for research and development and so on. How do we ensure that that works? If you look at it one way, that is the governmental side. How do we get that to work seamlessly alongside the private sector?

Mr Fitch: In what sense?

Mr Humphrey: Well, in terms of the economic development going forward. Whatever the programme is, I am not so sure that there has been sufficient joined-upness. In the past, we have given credit to Invest Northern Ireland when a job of work is done internationally, in terms of inward investment. What I am asking you is, in terms of going forward in terms of getting regional and local government, DEL, throughout its Department, including universities and colleges, to work more collaboratively with business in terms of Northern Ireland plc going forward. Is there scope for greater joined-upness there?

Mr Fitch: I can talk only from the perspective of Invest NI. The two points of interaction, of joined-upness with the councils, go through our regional business group, through our regional offices. Those offices have said that they will work with the plans. Invest Northern Ireland has quarterly meetings with the Department for Employment and Learning. We also have operational meetings, where we look at a number of different programmes. For example, DEL works with us on inward investment, with regard to assured skills. Obviously then, with the new Department for the Economy coming online, there is a lot of joined-up activity happening there as well to make sure that we maximise the benefit of that.

Mr Humphrey: Is it coming from the top? Is it being left to the regional offices?

Mr Fitch: Which part? Alastair has driven this very consciously. He said that he wants the regional offices to work with the councils on that aspect. If there is a requirement for regional offices to work with colleges in their area, that work is ongoing and they are in contact with each other on an operational basis.

Mr Humphrey: OK. What is the Department doing to work with banks? We hear from time to time about difficulties. We talk to business people in our constituencies who have difficulties, and I know that the previous Finance Minister, Mr Wilson, talked about such difficulties when he brought in the banks and so on. Is a more realistic view being taken of the difficulties faced by business and banks?

Mr McLean: The economic advisory group did a strand of work looking at access to finance during the financial downturn. During that period, an advisory group was set up and the Finance Minister and the Enterprise Minister had regular meetings with the banks, at which they spoke to them about the prospects of doing more to support business. In the past week, the EAG published on its website that report on access to finance. The findings indicate that the market is returning to a more normal banking operation, in which finance is available and there is success for applicants.

That said, we continue to liaise with the banks on issues as necessary, certainly through the work of that group and the British Business Bank, which we brought in to look at ensuring that there was greater visibility and availability of its programmes. The Ministers were also able to secure a greater understanding and breakdown of the statistics of loans at a regional level, which has helped to inform businesses about what is available and where loans and finance are going in Northern Ireland. It is an issue that we will continue to look at to ensure that there is access to appropriate finance for businesses. It will always be an ongoing issue. One of the areas raised was access to early-stage venture capital. That is an area that, potentially, we will look at. It is difficult for somewhere the size of Northern Ireland to attract a sufficient quantum of venture capital because of the deal-flow going through here. However, we want to do further research, analysis and work on that area.

Mr Humphrey: Just on that point, when you are faced with that problem, what does the Department in London do? Do you use Westminster Departments to put political pressure on banks headquartered in London?

Mr McLean: There was the joint ministerial task force that was chaired by the Secretary of State and which involved the Finance Minister and the economy Minister. That involved direct access to business and banking operations across the UK. There were certainly discussions about ensuring consistency of approach across the UK and that Northern Ireland was treated the same way and had equal access to offerings from some of those national banks.

Mr Humphrey: Did those discussions bear fruit?

Mr McLean: To a certain extent. Obviously, a limited number of banks are headquartered there or have a connection through to national level. A number of banks do not. However, referrals was one of the issues that came through. The original legislation was going to cover only national banks and not a number of banks located in Northern Ireland that are perhaps headquartered outside Northern Ireland. Through discussion with those banks, they were covered by the legislation to ensure that they would work on the same basis as banks across the UK.

Mr Fitch: In bearing fruit, some of the pressure has resulted in better information being provided by banks and with regard to the report that Diarmuid referred to. It is an analysis by DFP, InterTradeIreland and the economic advisory group. Bank lending to local SMEs recently increased: in 2014, 98% of SME loan applications were fully or partially approved, compared with 70% in 2012 and 65% in 2010. So, whilst the Committee is absolutely right that we need to keep an eye on businesses' access to finance, we are saying that there is an improvement in the market.

Mr S Murphy: There has been a big improvement from 2012. That can be seen in the survey that was completed and the British Bankers' Association's statistics on it. Things have certainly moved on in the banking world from the depths of a couple of years ago, and some of that has been reflected in recent bank announcements on the state of their finances. Undoubtedly, what might be viewed as normal in the current era is different from what might have been viewed as normal in 2006 and 2007, but, perhaps, what was normal back then ought not to have been normal practice.

Mr Humphrey: Thank you very much.

The Chairperson (Mr McGlone): I want to pick up on that theme from a different angle. Recently, I met a couple of senior officials from banks, and I intend to follow that up. It goes back to your issue, Mr Fitch, of the sharing of information and drawing down opportunities in a different sense. One of the issues that I pick up on frequently from businesses is the fact that there had been a problem with business advisers in banks, although it has changed recently. A lot of them had been upgraded as banks lost their top tier of senior managers and business people. It seems that a swathe of those left round about 2006 or 2007 to be replaced by a centralised computerised system or by people of less experience. That is the problem that they have. I have raised that issue with the banks directly, so they know about it. Hopefully, that has been got over and dealt with.

I want to talk about opportunities for finance. If I have a business proposal, for example, I go in to meet my business development manager at the bank, if I can get hold of him or her, and do not have to do it online, which is a big problem for businesses. It is about having those people fully apprised. That is where the tick-tacking, sharing of information and making sure that everybody avails themselves of every opportunity that is there to draw down finance and funding comes in. That can be finance and funding from the Green Investment Bank, EU funds — there will be something about INTERREG later — or, at the higher end of the spectrum, Horizon 2020. It must be ensured that that sharing of information is done collaboratively between yourselves and the bank so that if somebody approaches you about a new scheme for enterprise from one of your Invest NI clients, you will know about it.

For example, if one bank is about to announce a new scheme for enterprise shortly, you, collectively, know about the range and suite of other opportunities that are available. Likewise, information sharing must be with the banks so that every potential to support businesses is availed of. It is not there at the moment. It depends on how good the person you are dealing with in the banking sector is at signposting people. If your bank will not lend, your project is going nowhere. However, if it does lend and can signpost you to other available opportunities for you as the business development proposer, the situation can be transformed to a win-win all round. The bank gets a customer, the business gets a development proposal, but the business is availing itself of all those.

What more can be done with the banks to change that situation? I know that people meet occasionally and sporadically, but it is about making it more strategic so that it is recognised good practice, as opposed to being left to how good or how poor the person at the bank is who you are dealing with.

Mr Fitch: It is difficult for us to comment specifically on the banks' service to their customers.

When we meet the banks, we want to be made aware of what funding opportunities they have. When a company comes to Invest Northern Ireland for funding, we want it to have exhausted all the private sector funding opportunities before we use taxpayers' money on a project. We want companies to be aware of all the available opportunities.

We also need to be careful. The banking sector is competitive, and, if a client of ours already has a relationship with a bank, we have to be careful not to distort competition by recommending another bank over their existing one. We need to be particularly careful in those —

The Chairperson (Mr McGlone): That is not what I was suggesting; it was that there may be a suite of other funding sources. There are European sources, the Green Investment Bank has the potential to be a funder in some cases and there is rural funding through local action groups (LAGs). As a practitioner, you know that, when putting together a package, it could be that the wee 5% or 10% that would put together a good collaborative package is absent. That wee 5% to 10% might be out there, but the person in the bank does not know about it, potentially somebody in Invest NI does not know about it and the client certainly does not know about it. That tipping point can make the difference between a business proposal going ahead or not.

Mr Fitch: I understand. In answer to the question, the starting point for an Invest NI company is to speak to its client executive. If the client executive does not know the full suite that is available, the company can tap into expertise in a number of teams in the wider organisation. We have, for example, a corporate finance team that can advise on what is available or on access to finance solutions. A lot of these people came to Invest NI from the banking sector or accountancy, so they can advise what the banks can offer. Equally, companies can go to the research and development team, which can offer all the support that is available there, or the team that advises on Horizon 2020 and some of the other EU funding.

Interestingly, our board has asked the same question. There is a lot of complexity in all the funding, particularly that which is available from Europe through Horizon 2020 and other programmes. The board has asked whether there is a way in which we can improve how we signpost companies to where they are given their level of technological readiness. We are developing a new digital solution whereby companies can look online at the type of area they are interested in, and, from that, they can narrow the types of support that they would like to target and identify the relevant contact point. We hope to launch that early in 2016.

The Chairperson (Mr McGlone): You also have to make sure that the contacts in the banks are as professionally competent and aware as the contact people in Invest NI.

Mr Fitch: Absolutely. We are happy to stay close to the banks to advise them on what other funding is available as well.

The Chairperson (Mr McGlone): You might be happy to, but what is being done about it? What will be done about it?

Mr Fitch: The client executives, who are the contact points between Invest NI and businesses, are able to advise businesses on everything that is available and then, if necessary, ask whether they need to have the banks at particular meeting to talk about —

The Chairperson (Mr McGlone): I do not mean on a case-by-case basis; I am talking about good practice. It is as much an issue for the banks, and I have and will put the same point to them. What are you doing about sharing information on potential sources of funding and the like?

Mr Fitch: We work closely with the Chartered Accountants Ireland Ulster Society, for example. It is holding an access to finance conference this month, and the whole purpose of that is to lay out all the different areas and sources of finance that are available to businesses.

The Chairperson (Mr McGlone): Do you work strategically and regularly with the banks on that?

Mr Fitch: It is an area that is probably covered by regular meetings rather than strategic meetings, but we would be happy to pick up on that and look at in more detail.

The Chairperson (Mr McGlone): I think that you should. It may or may not be done and it may or may not be done depending on the individuals or the banks.

Mr Fitch: We will take that away.

Mr S Murphy: I would like to add that there is an underlying theme of banking fragmentation. That basic theme was recognised by Russel Griggs, who is undertaking follow-up work on behalf of the Minister of Finance and Personnel in relation to the access to finance implementation panel. One proposal that is very much on Professor Griggs's agenda is the re-establishment of the Northern Ireland banking committee, which has disappeared over the years. He wants to establish a coherent and collaborative forum so that, first, the banks can get together and speak with one voice; and, secondly, there is a group with which to raise such issues, as opposed to several individual banks working on their own.

Mr Ó Muilleoir: Go raibh maith agat, Cathaoirleach. Gentlemen, I am sorry that I missed the bulk of your presentation.

I am interested in exploring two areas. From the inquiry, you will see that we had a high regard for the work of the enterprise agencies, although I think that they have had their heyday. They have come under increasing pressure as, due to budget cuts, we started to put less money into them, and European funding also reduced significantly. I am trying to refocus and rebalance so that more money can be put into enterprise agencies in the years ahead. I say that because, hopefully, the banks are starting to lend to small businesses, where demand is increasing for the services that they provide.

I am particularly impressed by the Ortus operation in the west of the city, our friends in Work West and the Ormeau business park. Other business parks also seem to have weathered the downturn and are champing at the bit to get stuck in. In the couple of years ahead, is there a way in which we can rebalance some of the money that was being ploughed into trying to seek foreign direct investment, particularly if corporation tax were to be reduced and we had an incentive that does not require as much marketing? Is there a way to rebalance our spending to put more money into enterprise agencies and bring them back to where they were in their heyday?

Mr S Murphy: That is a difficult question to answer. It would be subject to the framework of the overall Programme for Government and where the Executive as a whole see the priorities going forward. I do not think that it is a case of either/or; I think that it is a case of getting the balance right between the two areas and pursuing opportunities when they arise, whether that is for inward investment or growing indigenous businesses. As we already discussed, Invest NI, through its regional offices, works closely with the councils to see how they will invest in and support the Regional Start initiative. I know that councils are looking at putting together a joint proposal to cover Northern Ireland: they want to utilise Regional Start initiative funding and enhance that with European funding to provide a more comprehensive suite of support at a regional council level for some of the start-up activities and for growing indigenous companies. However, bringing foreign direct investment into Northern Ireland also creates opportunities for local companies, not only to supply companies that are locating here but to provide services to them. It is a case of ensuring that we get the balance right.

Mr Ó Muilleoir: I do not want to stop the work that has been going on, and going well. Where are we, Chair, in our conversation with the new 11 councils? The beauty of enterprise agencies is that a lot of them are based in the areas of highest unemployment and have 20 years' experience. Have we started a conversation, Chair, with the 11 councils about their economic strategies?

The Chairperson (Mr McGlone): That was raised before. I think that it was you, Mr Fitch, who mentioned that Alastair Hamilton, your chief executive, emphasised the urgency of that dialogue.

Mr Fitch: Through our regional offices, we work with each of the councils in the development of their community plans and, specifically, the economic dimension of those plans. If there is a role that Invest NI can play in helping the councils to do that, we are ready to help in that area.

Mr Ó Muilleoir: I am sure that you would be, Jeremy. Maybe we could pick that up, Chair.

Everybody is being squeezed, but it seems that InterTradeIreland is being squeezed a bit more than anyone else. It is now into six years of continuous cuts. Everyone took a hit last year and in the current budget, but InterTradeIreland took twice as much pain as most other bodies. How will that affect our exports and cross-border work? Of course, it has to affect it. As I always say to our friends in Tourism Ireland, if you reduce budgets, there has to be a drag in results. InterTradeIreland has been hit particularly hard over recent years. Do you think that there are areas where that will create particular difficulties? Are they border areas, or is it right across the spectrum?

Mr McLean: On the budget cuts, it is my understanding that the level of cut applied to InterTradeIreland last year was the same as was applied across the board. There was no differential. We recognise that, with a declining budget, difficult decisions have to be made. As the sponsor Department for InterTradeIreland in Northern Ireland, we work closely with InterTradeIreland itself and our counterparts in the Department of Jobs, Enterprise and Innovation (DJEI) to ensure that we can maximise the benefit from the available budget. One area that has been particularly successful is support for cross-border trade. That is an area of InterTradeIreland's work that we want to be continually prioritised, as far as possible, within any available budget.

Mr Ó Muilleoir: One of the difficulties is that, when we reduce funding to InterTradeIreland, it also loses the money from the South, which is a higher proportion.

Mr McLean: That has to be looked at at North/South Ministerial Council level. There is parallel funding from two jurisdictions.

Mr Ó Muilleoir: Can we look at the InterTradeIreland figures again at another meeting, Chair?

The Chairperson (Mr McGlone): Fine, OK.

Mr Fitch, news about Michelin in Ballymena is coming through to us. Apparently, production is to stop at 11.00 am for a briefing at 12.00 noon. It seems from initial reports that the news anticipated is not good. Are you across that situation? Are you aware of it?

Mr Fitch: Personally, I am not, so I cannot add anything, but others in the organisation might be. I do not have responsibility for the client management of that account. Whether others in the organisation have, I do not know.

The Chairperson (Mr McGlone): It is giving concern that reports are appearing in the media already. We will come back to that.

Mr Girvan: Apologies for not being here at the start of the presentation. I had another meeting to attend.

Has a study been carried out on the benefits associated with social economy projects that have had linkage? How can you formulate policy to ensure that they are brought forward properly? I have engaged with a number of businesses that were involved in fairly major publicly funded projects. A condition of funding — a social clause in the contract — was that they had to take on board a number of apprentices. Their determination was that there was very little long-term value because the apprenticeships were not funded for long enough to enable people to come through with a recognised qualification. They felt that the 12-week approach was somewhat piecemeal and did not necessarily deliver long-term benefits to the overall Northern Ireland economy. They felt that it was creating a rotating wheel of individuals as opposed to longer-term sustainability. Have you looked at refocusing?

Mr McLean: The Department's social economy programme looks at trying to encourage and support social enterprise. We are coming towards the end of the three-year funding. We have initiated work to evaluate the benefit of the support provided to social enterprise to date. Social clauses in public-sector contracts fall within the remit of DFP's Central Procurement Directorate, and I know that it has looked at that.

Mr Girvan: DETI should have some input because there is value to be gained from the apprenticeships delivered through the programme, which is funded by public money.

Mr McLean: Apprenticeships currently rest with the Department for Employment and Learning, although that will change with the introduction of the new Department of the Economy. Certainly, Central Procurement Directorate has looked at the original social clauses and has been giving some thought to how they might be better structured to ensure better outcomes. However, I am not over the detail of that. I do not know that I have seen CPD's final report on that work.

Mr Girvan: I had occasion recently to speak about a fairly major contract in my constituency. As a consequence, it was important that I engaged with those delivering it, and the feedback from them was exactly as I have relayed to you. I have also spoken to a number of young people who felt that further and higher education colleges were not necessarily geared up to address the matter sufficiently. When I served my time — I do not mean that I served my time somewhere else, but as an apprentice — there was day release to a college to get a qualification. The young people whom I spoke to found that the support mechanism was not necessarily up to speed. What engagement has there been with DEL on this matter? I appreciate that everybody is sitting worrying in their own box, but we have to look at the overall Northern Ireland economy and ensure that everyone is working together. Is that engagement taking place to ensure that HE and FE colleges are [Inaudible.]

in the matter?

Mr McLean: DEL launched its new strategy on apprenticeships, 'Securing Our Success: the Northern Ireland Strategy on Apprenticeships' in June 2014. It seeks to put employers at the heart of the apprenticeship system by ensuring that they obtain the skills that they require going forward and that there is enough supply in sectors of high demand. I believe that the system will be introduced from September 2016.

When the Department of the Economy is created next year, we will want to ensure that there is close alignment on economic policy and skills policy, particularly in the area of apprenticeships. As I understand it — I do not know all the detail — apprenticeships will begin at level 3, with a new higher level apprenticeship at level 4 to meet employers' specific skills requirements. DEL has been engaging quite significantly and comprehensively with employers to find out what skills they require and how best to deliver those skills through FE and HE.

A couple of months ago, I had the opportunity to visit the advanced manufacturing research facility in Sheffield. Interestingly, a new apprenticeship programme had been set up that was linked directly to the university, as opposed to FE. It was the first time that I had come across such an approach, and it might be worth looking at. They had big manufacturers in the region with a demand for a high level of skills in advanced manufacturing. They had the facility there, and they were able to put in a new training facility as part of a structured approach to apprenticeships. It might be something that we should explore.

Mr Girvan: I appreciate that. Could we have feedback at some stage on the social economy approaches that have been put forward? I appreciate that there is some mention of them in the report, but it might be helpful if we had more detail on the possible changes to that approach and the recommendations that are being carried forward.

Mr McLean: We will seek to find out DFP's position on the work that it has been doing on social clauses for public-sector contracts —

Mr Girvan: And the outworkings of that.

Mr McLean: — and the outworkings of that.

Mr Girvan: Has the Department done any work, as has been mentioned, on corporation tax and how, if we can get across the current impasse, the Northern Ireland economy would benefit? The UK Government are already reducing the national corporation tax rate, but how could the Northern Ireland economy benefit? Has any work been done on how that might attract new business? That question is geared more towards Invest NI. Are there any indications of businesses that will come if we get a lower rate of corporation tax implemented?

The Chairperson (Mr McGlone): I understand that we will have a departmental briefing on corporation tax issues on 17 November.

Mr Girvan: I apologise.

The Chairperson (Mr McGlone): It is OK. We can go into more detail on 17 November, but, if you want to answer the question briefly, please do so.

Mr S Murphy: The briefing on 17 November will comprise an update from Ulster University on the macro benefits. That would have arrived with the Committee back in the summer but for the unexpected reduction in the national UK rate, which meant that all the figures had to be rerun. We expect that update to come from Ulster University within the next few days. I hope that we can still make 17 November.

The Chairperson (Mr McGlone): We will keep our powder dry until then, Paul, if that is all right.

Mr S Murphy: Over and above that, other strands of work are being prepared. Invest NI is undertaking significant work: a more detailed breakdown of the sectors that we are not competing particularly well in and in which we might start to compete in future. Where are those opportunities? From what countries around the world are they likely to come? That may feed through into approaches to marketing Northern Ireland and the skills of the people who might do that. It is envisaged that that work will have a further skills dimension. We work with DEL, which is working on the skills barometer. We will reflect the work that we are undertaking with Invest NI on the types of profiles of investment and where they might come from in future should corporation tax be lowered.

The Chairperson (Mr McGlone): Just for information, how often has the Executive subgroup on the economy met recently?

Mr McLean: The next meeting is scheduled for 10 November. I cannot recall the exact date of the last meeting. I believe that there was a meeting earlier this year, but I do not have the date.

The Chairperson (Mr McGlone): Maybe we could get confirmation of those dates, please.

Mr McKinney: The hot topic, of course, is Europe. Our report referred to that, and you guys promised a scoping exercise. Can you update us on that?

Mr S Murphy: OK. The last time I was at the Committee, I said that the Minister had given clearance to make an approach to Oxford Economics to join a UK-wide study and have that study extended to cover Northern Ireland. In the middle of October, we formally approached Oxford Economics with terms of reference to join the study. Oxford Economics came back to us in the last couple of days — I think that it was last Friday — with a proposal. We are considering that proposal, but there is a fair expectation that we will formally sign up in the next few days to join the study and, in the current financial year, have a Northern Ireland version of the impacts illustrated by Oxford Economics. That is the up-to-date position. It is not signed and sealed, but I broadly expect that we will join the study within days and have something within this financial year.

Mr McKinney: I had a number of questions that focused on work that I thought might have been done already. What is the timescale?

Mr S Murphy: Oxford Economics is doing the UK study. My understanding is that it will finish that before Christmas, after which it will do the Northern Ireland extension of that study.

Mr McKinney: Will we get a bespoke Northern Ireland report?

Mr S Murphy: That is what is envisaged in the terms of reference. We will expect some adaptation for Northern Ireland's circumstances. That is the bang-up-to-date position.

The Chairperson (Mr McGlone): I presume that there is some urgency in getting this done. We seem to be a bit of an add-on.

Mr S Murphy: Bear in mind that, in order to do the work at Northern Ireland level, you need to do the work at a UK and EU level. That has already been done as part of the study, so, by joining the study, we will get better information more quickly than we otherwise would. The work at a UK and EU level would need to have been done anyway in order to assess the Northern Ireland-level impacts. I should also mention that, once we have signed up, I hope, with Oxford Economics, we can share the terms of reference with the Committee.

The Chairperson (Mr McGlone): That would be helpful for a start. Will we be updated as it progresses? You anticipate that the work will be completed before the end of the financial year.

Mr S Murphy: It will be completed before the end of the financial year. I expect, at some stage in January, February or March, to have something tangible to report to the Committee and others.

The Chairperson (Mr McGlone): OK, thank you. That concludes the session.

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