WEDNESDAY 14 JUNE 2000

SIR REG EMPEY MLA, MR LESLIE ROSS AND MR BILL PAULEY

  440. One other question and one quick comment. When you come to provide the statistical data that you referred to earlier on, is it possible to give any indication of the extent of the three plus one each rule that you talked about? You said for each three jobs created there is one within the local community, whether this is from a reduction of claimants in benefit or whether this is from an increase in national jobs, or whatever, some indication of that whether that is Province-wide or whether that is a sub-regional phenomenon would be greatly appreciated. Can I say that I may have been perceived as being unfairly critical of you when I said in reference to the WBEF statement "they have not got a good word to say for you." Can I stress strongly that that was not meant to refer to you, Sir Reg, they have not got a good word for the IDB. The only contact I had with an individual member of the forum was, in fact, extremely complementary about you and your undoubted commitment to economic development and in no way was I either stating or repeating any criticism of you.
  (Sir Reg Empey) I did not take it that way anyway.

  441. I felt it was important for the record.
  (Sir Reg Empey) I do know a number of them and I work with a number of them on local economic development projects, and as far as I am concerned any approach I would be making to them would be irrespective of whatever views they may hold on anyone, whether it is me or the IDB. Let us face it, no organisation dealing with these matters is above criticism or is perfect, and we have to understand that. I would have to say that the West Belfast Economic Forum is not perfect either. I think I can find one or two criticisms of them, but the reality is that we are where we are, we are trying to start with as clean a sheet as we can, and I think by working together and in partnership we are more likely to achieve results than by throwing stones at one another. If I can ask Mr Ross to respond on that multiplier issue?
  (Leslie Ross) Chairman, we can certainly see what statistics we can produce for you. The multiplier figure is dependent on the sector. In other words, if you have a manufacturer the figure can be one to one. If you have a network service project—in other words a call centre—it can be one to five or maybe less than that. So there are variations by sector. We will seek to produce whatever statistical data that we can for the Committee.

  442. I am conscious we have tried your patience by the hour that we have reached. I have the job of winding up and I will try and do it as briskly as I can. One tidying up question I wanted to ask related to some of the exchanges which have occurred previously in relation to the Republic in the sense of the competition between yourselves and the Republic for inward investment. I readily see that both in the context of the Troubles and in the context of what I will paraphrase as fiscalities the Republic has an advantage. Looking beyond that in terms of where we now are, does the province, in your view, have any comparative advantage either in terms of infrastructure or in terms of labour availability, whether generally or in particular sectors?
  (Sir Reg Empey) The answer to that question is I believe, yes. Do we have specific advantages? I believe we have and one of those I referred to earlier and is in our labour market availability and our skillbase. I think certainly in the greater Dublin area all the evidence that we have is that they are over-heating in certain sectors. There are cost of living difficulties in the Republic where housing cost is astronomical, it is far more expensive than Central London in many areas, and there are also other infrastructural matters as well. Yes, they do have an advantage when it comes to the flexibility on what you described as fiscal issues and there is not a lot that we can do, but it depends what jobs you are targeting. For instance, if you have an investment which is a cost centre, if it is a research and development facility, if it is a business solutions system which is servicing computer companies world-wide—in other words, it is not generating any profits—a lot of the Republic's fiscal issues are irrelevant because in fact you are generating costs and not profit. That is why we have been very successful in some call centres and we have had a very good run in recent times on call centres, some excellent ones. Halifax have recently come forward with an excellent one and there are others. There are certain sectors where we can also assist. Our capital grant system very often is attractive to certain investors where they would achieve capital grants which may be more generous in certain cases than in the Republic's situation. Indeed, our capital grants are tax-free and in the Republic they are not tax-free, so we do have an edge in that particular regard. The other thing is that we do not currently have rates charged on the property of manufacturing businesses, whereas there are obviously taxes in the Republic. So it is horses for courses. The two things that we have lacked, Chairman, are first of all, we have had the millstones of terrorism around our necks and the Republic has not. The second thing is that we have lacked confidence in ourselves. We have a good story to tell and we have been inhibited in doing so because we have been dragged down by terrorism. I know you personally have been into the US and out doing this work and trying to sell against the background of the glass coming in around you and you know how difficult that is, and you have personally had hands on experience of that. I think we have to instill a confidence amongst our people that they have got, I believe, a very unique product. I see us being a gateway to the European Union, particularly from countries in North America. We have been trying to open links between various parts of Northern Ireland and the eastern seaboard of the US and we have built up quite a link. That sort of Atlantic arc with us marketing ourselves as a gateway where we have a common language, where we have a common legal system and where we have still got that capacity in terms of labour. Do not forget we have other calls on labour that perhaps the Republic does not have. We currently—and this is a criticism that is made of us very frequently—have a larger share of persons in the public sector. We want to see that going down and the private sector going up, but it means that we have additional capacity to move into the private sector. We have to maybe turn what now appears an economic negative into an economic positive. So for a whole range of reasons I do think we have a good story to tell and I think we have a good product, and it certainly will be our intention to market that as hard as we possibly can.

  443. Let me ask a wrap-up question and if you want to throw in anything that you think we have not touched on in the context of the IDB in responding, do not hesitate to do so. I infer from a number of answers that you gave that you think that there is an improvement in the value which IDB is giving to the United Kingdom taxpayer. The first question is whether you foresee that continuing and, if so, why? Secondly, do you foresee the IDB stance and style changing over the next five years in terms of the thing which it regards as important, particularly given obviously the overall difference in the climate? Finally, do you foresee significant change—again I think I can infer your answer on this from answers that you have given previously—in the nature of inward investment in Northern Ireland over the next five years?
  (Sir Reg Empey) Those are good questions, Chairman. I think that the answer to the first one is that it is now a matter of policy to continue to reduce overall the amount of funding that goes into each investment. There will be variations within that on a case by case basis, but the policy is established and if you look at the tables you will see that that pattern is now established for a five year period and the graph has been consistently downward. There are others and Strategy 2010 did indicate that we were advised to move to other areas of activity for attraction of companies other than simply financially driven ones, and I believe that we will do so. I believe there will be significant change. I did flag up to you earlier, Chairman, that Strategy 2010 did indeed recommend certain structural change. I have been careful not to come to any conclusion on that, first of all, because the administration as a whole will have to take a view and, secondly, I have to take a view myself and I just have not had time to sit and think and work out and consult myself to see what is the best way to proceed, because we have to work on the basis that if it works you do not fix it. You know that there is nothing more debilitating in organisational terms than if people feel in a position that they are threatened and you can turn an organisation into turmoil internally by proceeding. I believe the style will have to change because the market is changing. What we did 20 or 30 years ago in any walk of life is no longer necessarily valid today. We have to be much more targeted. I think we have to be, and it is already coming in because a smaller level, the LEDU people have already introduced several schemes and I know that the IT people in IDB are also aware that the bureaucratic procedure from when an application comes in to when it is dealt with in certain industries is going to have to be compressed very rapidly for smaller businesses. Two years ago we had representatives from the American Small Business Administration come to us, because on one of our visits to the US we had looked at how they dealt with things. Instead of a grant scheme they have a loan guarantee scheme to assist companies. In an emergency they were able to turn round an application in 36 hours. Bearing in mind that they are assisted by commercial banks and they have certain banking laws in the US that requires banks to assist communities and so on, I believe that the way in which we deal with things will have to be to some extent devolved somewhat more from the centre, which is where I have brought local government in, Mr Beggs, because in one example it is the same. Perhaps individuals in organisations are going to have a bit more personal freedom. I think our marketing is going to have to be more targeted and we will have to get continuously more professional. I think we are going to have to get more aggressive and not be sort of saying, "I am from Northern Ireland." I think we have got to be proud of the product that we are trying to market and I think we are going to have to be more aggressive. I do see changes coming. I think those changes are market driven. The type of approach that we have traditionally done is not going to wash with the hightech IT sector, they do not work like that. They want quick decisions and they want people to be up front and clear, because time is money to them, people are money to them, and getting a few more pounds in terms of a grant to come to Northern Ireland is irrelevant to them because time is money for those people. I think the organisation is going to have to change fairly significantly and that will be market driven.

  444. Minister, I do not know whether you are conscious of it, but we certainly are, this is the first time that a minister from the devolved administration has given evidence before us. I am quite certain that I speak on behalf of all of those are in the Committee today to say that the manner in which you have given evidence and the extremely comprehensive way in which you have done so has been an extremely good opening for any future occasion that we might have. It has been a really most valuable occasion and very warming and thoughtful. My next observation is not in any way intended to be mischievous or malicious, but the trend which you were describing between 1995 and 2000, quite clearly you were right if you take the figures at opposite ends of the spectrum, I have to say, with one exception; in either of the sectors there is not an exception for the observation that the figures have tended to follow a switch back—in other words they may have gone down one year, but they have then gone back up the next—and, therefore, I think I would like to see a few more years before I become confident that your confidence is justified and that you are going to be able to carry on and give the overall direction. I totally agree with you that over the two five year periods from beginning to end there is a visible change. Let me, on behalf of the whole Committee, thank you most warmly. It was a most impressive performance and certainly added most considerably both to our knowledge and to the inquiry on which we are engaged.
  (Sir Reg Empey) I thank you, Chairman. As I said, it has been a rather unusual experience insofar as we are confronting the West Lothian question head on in these circumstances, because you have a report which you will present to the House, but you will not have a Minister to actually take ownership of it, and obviously I cannot do that and Mr Ingram cannot do that. Speaking personally, my party was instrumental in encouraging and toiled hard to have this Committee established and I thought it would be bizarre in the extreme if having been given the opportunity to attend, I did not do so, albeit I suspect that within the system there is a little nervousness within the establishment about the precedent that may be set, but if it is a precedent I welcome that and I am delighted to have had the opportunity to come along.