Lessons Britain can learn from Ireland?

Nope, it’s not to do with learning from the ever shortening circles of our turgid peace process. The Tories’ shadow Chancellor George Osborne reckons there is much to be learned from the Republic’s economic miracle. Ireland is no longer, he says, “Britain’s poor and troubled country cousin”.

Irish average incomes are now 20 per cent higher than in the UK. After being held back for decades, the productivity of Irish companies — the yardstick of economic performance — has grown three times as quickly as ours over the past ten years. Young Irish families once emigrated in their millions to seek a better life overseas; these days it is young people across Europe who come to Ireland to find good jobs. Dublin’s main evening newspaper even carries a Polish-language supplement.

He goes on to draw three chief lessons:

First, Ireland’s education system is world-class. On various different rankings it is placed either third or fourth in the world. By contrast, Britain is ranked 33rd and our poor education performance is repeatedly identified by organisations such as the OECD as our greatest weakness. It is not difficult to see why. Staying ahead in a global economy will mean staying at the cutting edge of technological innovation, and using that to boost our productivity. To do that you need the best-educated workforce possible. It is telling that even limited education reform is proving such a struggle for the Prime Minister.

Secondly, the Irish understand that staying ahead in innovation requires world class research and development. Using the best R&D, businesses can grow and make the most of the huge opportunities that exist in the world. That is why it is shocking that the level of R&D spending actually fell in Britain last year. Ireland’s intellectual property laws give incentives for companies to innovate, and the tax system gives huge incentives to turn R&D into the finished article. No tax is paid on revenue from intellectual property where the underlying R&D work was carried out in Ireland. While the Treasury here fiddles with its complex R&D tax credit system, I want to examine whether we could not adopt elements of Ireland’s simple and effective approach.

Thirdly, in a world where cheap, rapid communication means that investment decisions are made on a global basis, capital will go wherever investment is most attractive. Ireland’s business tax rates are only 12.5 per cent, while Britain’s are becoming among the highest in the developed world.

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  • Dutch

    That article is very misleading. On many measures Ireland does not have a world-class educational system. I would be very interested in hearing about the survey that put Ireland’s system third or fourth in the world. There was even a report this week putting Ireland bottom of the EU in foreign language skills.
    Ireland has one of the lowest R&D spends in the world and none of its universities made the top 100 in the world in the University of Beijing survey last year.
    Ireland has had much success due to having a young, English-speaking, mobile workforce and a tax regime that encourages foreign investment. The IDA also notable targetted particular industries in the 1980s and 1990s which built up strong knowledge clusters around pharma and IT.

    The UK is world leader in several R&D fields and has many top class universities. It could well learn lessons from the Irish secondary education system but Finland would be a far better place to look for a sustainable approach to economic growth than Ireland in my opinion.

  • abucs

    Perhaps Finland is his next stop ?

  • IJP

    There is a huge amount we can learn from the Irish Republic, but I’m a little wary of the Tories jumping on this bandwaggon. They are using it as if to say ‘they were right all along’ – if so, why no mammoth boom under the Tories?

    Osborne makes some extremely could points, but entirely misses the ‘social contract’ (the work done with trade unions) which was central to the ‘Celtic Tiger’ (and which worryingly may be unravelling if the Irish Ferries dispute was anything to go by – one hopes it isn’t).

  • DK

    Er, I think there was a boom under the tories. Although the discovery of North Sea oil and mass privatisations (looting) may have helped fund it.

    I suppose the next step is to lower corporation tax – yippee for businesses, but really bad news for Ireland.

  • smcgiff

    ‘I suppose the next step is to lower corporation tax – yippee for businesses, but really bad news for Ireland.’

    It’s not as easy as it sounds. You can’t go from 30% to 12½% corporation rate in one year. The UK couldn’t maintain it’s current high standards of living by allowing the intake of corporation to be reduced by more than half in such a short time.

    The logic of low taxes is that by reducing Corporation tax you’ll attract more investment and create employment etc, and thereby increasing overall tax take.

    1st the UK is already at full employment (perhaps not the exact employment desired, but full nevertheless), contrast this to the availability of a highly educated under employed Ireland of the time. Also contrast the current UK standard of living compared to the Irish Republic in the mid 80s. Things could hardly get worse in the Republic of the time. Not so in current day UK.

    2nd It takes time before the reduced tax rate attracts enough business to offset the lower tax take per company and for the overall tax to increase. This takes many years.

    Assuming you couldn’t for revenue purposes reduce the tax rate in one fell swoop, then you’d have to do it gradually, say, by 2% points each year. It would take approx 9 years before you got to Irish corporation tax rates. So, for a full nine years it still wouldn’t make sufficient tax sense to switch from the UK to Ireland. And all that time the UK’s tax take has been significantly reduced. Plus, it still wouldn’t have proved to have been as stable as the long lasting Irish corp rates. Okay, I’m rambling but you can see that it’s not just a simple case of Gordon Brown announcing a 12.5% corporation tax rate in the next budget.

  • Nathan

    Good to hear that George Osborne’s fact-finding trip to Ireland has given him alot of food for thought in all areas relating to the economy.

    Mr Osborne should realise however, that the Irish Republic not only has the upper hand in most matters relating to economic performance, it is the most prestigious country in the British Isles for other reasons as well. For instance, its constitutional affairs are more advanced than the UK.

    Firstly, the Irish Republic possesses a relatively sophisticated form of PR in its parliamentary elections – as a result Ireland has given alot more political representation to its minorities than can be said for Britain. The Irish Republic manages also to engage in regular use of referenda, in order to decide on key, controversial issues. By contrast, in Britain it is the government and in particular the Prime Minister who largely decides upon controversial issues (e.g. whether Britain should send its troops to war). Indeed, through the Royal Prerogative, the British PM has the authority to make fundamental, unilateral decisions without the approval of UK legislators. For that reason, the Irish Republic yields better accountability than the UK.

    Secondly, the UK denies civil rights to those who won’t swear the Oath of Allegiance. By contrast, in the Irish Republic there is no such parliamentary oath. In practice, then, an Irish politician is entitled subscribe to royalism as has been the case in the past (e.g. the Dockrells). Moreover, royalists can participate in constitutional organs without having to swear an oath to republicanism e.g. Colonel Harvey Bicker OBE, who didn’t need to trade in his beliefs as a quid pro-quo, in order to become a member of the Council of State.

    Thirdly, in the UK ordinary folk cannot aspire to holding the highest office. There are laws in place which enshrines religious intolerance, sex discrimination and racial discrimination, in relation to the highest office. By contrast, the Irish Republic has had women, Protestant and homosexual Protestant contenders for the highest office in the past.

    I think I rest my case – the left hand side of the British Isles is more advanced than the right hand side, in more ways than one. I’m glad Mr Osborne is realising that fact, slowly but surely.

  • Brian Boru

    Nathan you are right except for the term “British isles”. I think the term needs to be ditched in relation to Ireland, including by commentators, politicians, geographers and the media generally. I am glad that Sky apparently has a policy of not using the term for Ireland (according to something I read in wikipedia chat).

    I think however, that Osborne left out one important contributor: the euro and the Republic’s membership of it, and the associated simplification of trade with mainland Western Europe, and the lower interest rates than the UK. The UK should sign up too. The problems in France and Germany have been theref
    for decades preceding the euro and as such are in no way to blame for them. Austria, Luxembourg, ROI, and Holland all have unemployment rates of between 4.4% and 5%. Note that UK unemployment is 5%.

  • Sean fear

    I presume that post 6 is satirical.

  • Mick Fealty

    Nathan,

    Some of your argument jars somewhat with recent history:

    “Secondly, the UK denies civil rights to those who won’t swear the Oath of Allegiance”

    – Can you share this with us? I thought the “Hoon money” proposal was passed by Labour in an attempt to sort this anomaly out?

    – There was considerable controversy over the stand off between the Minister for Justice, and the Director for the CPI, just before Christmas, which so far as I can see has not been publicly resolved in favour either of the executive, or the people.

  • Nathan

    Sean

    No – not satirical, it’s called been deadly serious.

    Mick

    I’m not at all familiar with the technical term your referring to i.e.) ‘Hoon money’. I’m presuming it’s got something to do with the parliamentary allowances that Sinn Fein have been in receipt of, from time to time – but I may be wrong.

    Such token gestures are not to be treated as though they are equivalent to full civil rights because they are most certainly not equivalent. Republicans are not in receipt of all their civil rights. They are barred from public life, merely because they refuse to express a commitment (via the Oath) to the political system that currently exists in the UK. I believe this is unjust, because we should all have the right to choose the political system we wish to belong to whatever our nationality. And we all have the right to fight for that system provided that the methods we use are peaceful and democratic.

    With regard to the CPI controversy, I won’t pretend I have an in-depth knowledge about the matter, other than little bits of articles I did read in the IT and the Sindo at the end of last year.

    The CPI controversy exposed the deficiencies that are inherent in the Irish constitution, namely the inadequacies of Article 40.6.1. Moreover, the friction that exists between people’s civil rights and perceived threats to the security of the state, and the interests of those who hold public office. These deficiencies are a common feature of both countries, I’m afraid – I still maintain however that on balance, the left hand side of the British Isles has the upper hand on most legal/constitutional issues. There are occasional lapses in Irish law however, e.g. the Law of Libel which has not yet been totally liberated from the heritage of the UK monarchy. I would like to see reform in these areas ASAP, so that Irish law becomes more aligned with the republican and democratic nature of the Irish State.

    Brian
    I prefer a more neutral term for the archipelago e.g. the North Atlantic Isles, but the ‘British Isles’ term is currently in ascendancy, hence my reason for using it on a public forum such as this.

  • DK

    I thought that the oath was a bit of a red herring. Haven’t Scottish Nationalists been getting around it for years by simply preceding the oath with something along the lines of “I am about to utter some words that I do not agree with called the oath – here is the oath…”

  • Ciaran

    What is it about us Irish that we cannot accept praise, even if it is slightly off the mark?

    Ireland is currently the world’s most globalised economy, according to the AT Kearney Globalisation Index ( based on amount of foreign capital here per head of population).

    I hope George Osbourne gets better treatment from his party colleagues than Alex Sammomd of the SNP who was rebuked by his party colleagues for suggesting Ireland as a role model for Scotland.