“This Report is a major contribution to the debate..”

RTÉ reports some of the recommendations, and some of the criticisms of Invest NI, in the Independent Review of Economic Policy (IREP), chaired by the University of Ulster Vice-Chancellor, Professor Richard Barnett – full report here [pdf file]. In yesterday’s Belfast Telegraph David Gordon asked the question for the report to answer, “Are Invest NI really up to the job?” The Northern Ireland DETI Minister, the DUP’s Arlene Foster has welcomed the publication and “[intends] to carry out a short period of consultation on the report” – Here are the recommendations highlighted in the University press release.

Key recommendations put forward by the report include:
• Core economic functions (covering DETI and DEL areas of responsibility) should be brought under a single ‘Department of the Economy’
• The Executive should establish a permanent sub-committee, chaired by the ETI Minister, to prioritise action on the economy. The committee should oversee the development and implementation of an economic strategy, building on the findings of the IREP, as a matter of urgency
• More emphasis needs to be placed on developing a portfolio of policies to promote Innovation and R&D, and there are a number of specific recommendations in this regard
• Invest NI should have a more focused, dedicated and professional approach to strengthening export performance in both manufacturing and tradable services
• Invest NI should be allowed more freedom to operate, enabling the organisation to be more responsive to business needs
• A small business unit to be created within Invest NI, and the approach of working only with ‘clients’ should cease

And the full list of recommendations in the report [pdf file]

Full List of Recommendations

Policy Development
• As part of the review of structures within DETI (proposed in Chapter 8), the department should ensure that more resources are dedicated to policy development and monitoring
• DETI should appoint an independent economic advisor (with extensive experience as an economist) to strengthen capacity in economic policy making

Policy Delivery (Invest NI)
• The concept of Invest NI ‘clients’ should be removed to allow Invest NI to work throughout the entire business base to raise awareness and provide support for businesses undertaking Innovation, R&D and exports
• Invest NI should work to significantly reduce the number of its support programmes
• Most assistance delivered via SFA should be redirected between now and 2013 to provide greater levels of support to Innovation and R&D
• Grants for business expansions should be phased out towards 2013, after which such grants are unlikely to be available under EU state aid rules
• Business expansion not involving Innovation and R&D should, where necessary, be supported in the form of co-investment in companies that have already been successful in securing funding from the private sector. Invest NI assistance should be in the form of sub-ordinate debt or equity
• Invest NI should further reduce its support for company training, and concentrate support mainly to small firms and to projects with a high Innovative content, where retraining is necessary to realise a substantial rise in productivity
• Invest NI should transfer its budgets relating to tourism accommodation back to DETI to be redistributed to a more appropriate body

Portfolio of Innovation policies
• A portfolio of new Innovation policies should be developed over time, but should initially include four elements:
– A new institution for commercially-oriented research should be explored in NI, along the lines pioneered by the successful VTT institute in Finland. The institution should be outside the University system and not subject to the constraints of the Research Excellence Framework (REF). It is envisaged that this would incorporate a number of existing near market research organisations in NI and would be charged with reviewing and taking forward the MATRIX agenda
– Additional research in Universities and public sector bodies should be aligned closely with the needs of industry in NI and potential inward investors to NI. Furthermore, the development of specific new research capabilities should be used as an incentive to attract potential investors
– Industry-led Innovation communities, as suggested in the MATRIX report, should be developed as a pilot to bring together business, academia and Government and exploit available market opportunities
– More should be done to support Innovation in service sector firms beyond software, which we believe is well served. The concept of Innovation in the service sector should include the broad range of areas outlined in the definition of Innovation (presented in Chapter 5)
• Additional support for Innovation and R&D should not involve new public expenditure but instead be financed from savings in grant support for investment by existing firms and in property development
• Invest NI’s export assistance should become more dedicated and professional, adopting a similar model to the fee-charging export agencies identified in Chapter 6, with two tiers of charges depending on whether the company is an SME or large firm

Policy Delivery (DETI)
• As soon as practicable, DETI and other relevant departments should commence work on preparing a case for retaining state aid limits that support the changes outlined in this Review
• Promoting greater energy efficiency / conservation in the private sector should be accorded a higher priority in the 2009 Strategic Energy Framework (reflecting, where appropriate, the current and ongoing work of the Green New Deal for NI)
• DETI and Invest NI should undertake an immediate and focused review of its overall strategic and sectoral approach to capitalise on the benefits of new telecommunications connectivity in NI

Policy Performance
• DETI, as the funding department, should report on the strategic performance of Invest NI, with the co-operation of Invest NI statistical staff
• Relevant policies and accompanying resources should be updated annually to quantifiably demonstrate how individual policies/organisations contribute to the PfG productivity goal
• Wherever data availability / quality allows, ‘impact’ targets for economic development should be expressed in relative terms (to the UK average or appropriate subsection of UK regions) rather than in absolute terms
• When reporting on performance, DETI / Invest NI should include targets specifically for investments new to NI (expressed as a share of equivalent jobs coming into the UK)
• The Invest NI data collection system needs to be developed as a single database, to be maintained by DETI. The IREP database, constructed specifically for the Review, will be transferred to DETI to help facilitate this process

Finance
• Aside from those funds designed to support seed stage projects, Invest NI should disengage its direct involvement with venture capital (VC) funds. Rather than direct participation in the market, Invest NI should act as a facilitator between companies and VCs. In the case of seed stage VC funds, Invest NI should avoid placing restrictions on the market as outlined in Chapter 3

Project Appraisal
• Project appraisal rules should be re-assessed to ensure that projects involving investment in Innovation and R&D, which generally present uncertain and wider outcomes, are not placed at an unreasonable disadvantage

Further Research
• A study should be undertaken to determine how NI can more rapidly shift the pattern of inward investment towards higher value sectors
• A study of industrial land provision should be commissioned to determine why there is a perceived need for Invest NI to purchase large amounts of land over the next few years
• DETI and other relevant departments should undertake a study to establish how the social economy might be further helped to reduce deprivation and increase labour force participation in disadvantaged areas within NI

Co-ordination of Economic Policy
• If Northern Ireland is to achieve a step change in economic performance, the economy should remain the top priority of the Executive for many years to come
• DETI, DEL and Invest NI should work together to more effectively implement their existing liaison arrangements
• As part of the review of strand one institutions, the core economic functions (covering existing DETI and DEL areas of responsibility) should be brought together under a single ‘Department of the Economy’
• The FM / dFM and the Executive should establish a permanent sub-committee to prioritise action on the economy, to be chaired by the Minister for the Economy (in the interim, the Enterprise, Trade and Investment (ETI) Minister)
• The Executive sub-committee should agree an economic strategy, building on the findings of the IREP, as a matter of urgency

Governance Arrangements
• DETI should undertake an internal review of its structures to ensure that the allocation of staff is more fully aligned with its policy objectives
• The core functions of strategic policy development and performance monitoring should be brought together within any revised DETI structures. The department should also provide the necessary support, professional and otherwise, to the Executive sub-committee on the economy
• Invest NI should consider an internal reorganisation that reflects the differing skill sets required to support FDI, exports, Innovation / R&D and small business support
• A small business unit should be created within Invest NI, with responsibility for the development and c0-ordination of relevant support to SMEs thoughout NI
• World class training in sales and marketing should be provided for relevant Invest NI staff (particulary those working in international offices). In addition, staff should be recruited with relevant experience to meet the demands of investment decisions that are increasingly based on Innovation and R&D
• Invest NI should be allowed more freedom to operate, with DETI having less involvement in operational matters, to enable the organisation to be more entrepreneurial and responsive to business needs
• To help achieve greater autonomy for Invest NI, their delegated authority limits should be both simplified and increased significantly. The current DFP delegated limits for mobile SFA (currently £10m) should also apply to Innovation and R&D projects
• An NI version of the Central Project Review Group (CPRG) should be established, incorporating Invest NI, DETI and DFP, in order to speed up the decision making process for major industrial assistance cases
• Given the non-executive composition of the Invest NI Board, it should cease to perform executive functions and focus on providing strategic direction and oversight
• A senior member of the DETI Departmental Board should be represented on the Invest NI Board
• High level experience in international business and expertise in economic development should be sought when the Invest NI board is reconstituted
• Invest NI should be given greater autonomy and flexibility in managing its budgets,
including End Year Flexibility (EYF) where required
• For projects involving financial assistance to industry, ex-post assessments of value for money should be taken on a portfolio basis
• The DETI / Invest NI Accounting Officer Memorandum should be reviewed in light of the revised governance arrangements implemented as part of the IREP
• The Management Statement and Financial Memorandum (MSFM) should be reviewed and revised, where appropriate, in light of the recommendations contained in this report

Advisory Bodies
• The ETI Minister should stand down the Economic Development Forum and establish a small advisory body, comprising expertise on regional economic development (drawn from business and economics) to provide independent advice on the economy
• Stakeholders involved in economic development should continue to engage with the ETI Minister on a bilateral basis

Skills
• The local education system should prepare now to meet the anticipated increased demand for higher level skills in STEM and other Innovation relevant subjects arising from the increased prioritisation of Innovation and R&D
• The current focus on technical and professional qualifications, including apprenticeships and vocational training, should be extended to emphasise higher level qualifications at levels 4 and 5
• DEL, DETI and Invest NI should work to significantly develop management and leadership skills in NI and support the proposal for government to sponsor a ‘Management Masterclass’ to identify and develop the best managers from local industry and the public sector

Infrastructure
• The Executive should ensure that the third ISNI plan takes a much greater economic focus by committing more investment into projects that will maximise NI’s future economic performance

Planning
• In the context of reform, the Planning Service should be given processing time targets which are comparable and competitive with those countries and regions against which NI is competing for mobile international investment
• Planning Service should work to ensure that the legislative timetable for reform is met
• The Strategic Projects Team should deal with all applications relating to investment new to NI. In addition, in terms of what constitutes a ‘regionally significant development’, a clear definition and qualifying criteria should be developed and agreed between DoE, DRD, DETI and Invest NI
• The Pre-Application Discussion (PAD) process must be as efficient as possible and the time allocated for PAD should be included when reporting on timings for all applications

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  • Coll Ciotach

    My experience of Invest NI is that they only wish to back those who have succeeded and wish to expand. There is little support for smaller business who, at least in my case, have got past that initial set up phase and wish to push on to market more and recruit employees. To my mind if you have done that yourslf and succeeded then they want to come in. In other words they back winners. In their defence I can recall that whe they did back smaller firms the were castigated for that too as it was said they were too high risk. So we have went from one extreme to another.

    I also looked at the paperwork I was required to fill in. Too onerous. So I never bothered and tore on and ten years later I am doing okay, perhaps I could be doing better but at least I am in control.

    I really cannot see the point of InvestNI. Unless of course you are already making the money and want the public purse to pay for your expansion rather than yourself.

  • Glencoppagagh

    It’s always depressing how little attention serious economic threads get here. Mind you, this is a pretty complex issue, even for those interested in these matters.
    I can’t make up my mind about INI. Sometimes you get the impression that there would be no business initiative here at all without INI holding people’s hands. That’s maybe down to our feeble business press which relies heavily on a steady stream of press releases from INI. Hopefully, there are a lot of other businesses out there who are just doing well quietly and giving INI a wide berth.
    On thing that does surprise me is the recommendation that INI should withdraw from venture capital. To me, that is the one thing it should be doing rather than throwing grants around.
    I also think that INI succumbs too readily to the pressure of our witless politicians (the sort who cheer the opening of yet another Tesco/Asda and laud all the new jobs ‘created’) who like to see lots of little jobbies being announced but care little for their quality.
    However, the local populace need to be better acquainted with economic realities and told in no uncertain terms that they should be doing the jobs that have come to be thought of as only fit for migrant workers.
    Random thoughts I know but better than ignoring the subject completely perhaps?

  • Sunningdale1973

    Glencoppagagh

    “It’s always depressing how little attention serious economic threads get here ” – absolutely – if this was a sectarian slagging match it would have 20+ posts already.

    As for INI, your point on businesses often giving it a wide berth is only too true – I have only occasionally worked with them, as small businesses need to move quickly and that is one thing INI has never been able to do.

    But I am delighted to see the end of INI’s bizarre notion that it should have ‘client companies’ – which meant that most of us were excluded from much of the help anyway.

    I don’t agree with you on the merits of them withdrawing from venture capital – I don’t think that Government should ever have been there. The VC market here is beginning to expand due to the work of the NI Science Park. And (for the old cynics out there) you may be surprised to note that a lot its best work is pro bono business to business mentoring and VC forums.

    As regards the input of our politicians – perhaps those of us (myself included) who rage about their lack of nous on economic matters might reflect that the lack of intelligent engagement goes both ways.

    I suspect that they are constitutional beasts and always will be but the Assembly can work on a cross party issue through Departments and committees and if we are prepared to be constructive – and maybe take a lead we might get somewhere. I was hopeful last year that the Matrix initiative might do something, but until today hadn’t seen or heard much more on it – but I see it is in the recommendations so perhaps there might be some movement there.

  • The Raven

    “I can’t make up my mind about INI. Sometimes you get the impression that there would be no business initiative here at all without INI holding people’s hands.”

    I agree on that. I haven’t read the full report yet, but will shortly. I am wondering how much mention is given to the only real supporter of small business in NI – local councils, with whom local economic development has sat for years. They have done a reasonable job, handling several pots of EU money as well as their own former “5p in the pound” allocation for this sort of work. And their job creation costs are much lower.

    I’ve often wondered how many INI staff have run their own business, or been at a strategic level within others. I’m not looking for Branson or Gates here – even people from the micro-business end of things would be good to see in there. Be interesting to find out.

    I think something like 94% of our businesses here are “micro-enterprises”, employing less than 10 people. To be honest, I am going to guess that a lot of this report is going to be stating the obvious. Anyway…initial thoughts…I am going to have a read, come back and come in at the tail end of what I am sure will be about 40 posts….

  • willis

    Kudos to Pete and all of you who have taken the time to write thoughtful posts on a serious subject.

    And oh what a serious subject.

    Pete’s first link told a sorry tale. RTE reports? Where is the BBC take on this?

    Fair play to UTV

    http://new.u.tv/Blogs/Jamie-Delargy/Wheres-Stephen/2540f0d3-5316-4f48-ac75-448bc64b7799

    Jamie Delargy asked some pretty intelligent questions and had some sharp observations.

    “But I am not sure if Invest NI really gets it. They have produced glossy report after glossy report detailing how well they have been doing. (By contrast this new study is largely contained on computer discs.) The Barnett review says INI should not have primary responsibility for reporting on its own performance. But then the organisation shouldn’t have needed to be told that.”

  • Ex-INI

    As a former employee of Invest NI, albeit at the lowest rung of AO, I can safely say that the place exists to keep itself in existence. Reams and reams of pointless paper work and budget reports, for both staff and ‘clients’ to complete religiously. There was a hell of a lot of meetings that achieved, well, not much really. Businesses that managed to get funding from INI had to put up with umpteen visits from their ‘client managers’ as well as being required to complete paper work that was normally filed away and never looked at again.
    The most eye-watering thing however was the yearly staff conferences – a half-day festival of the most cringeworthy back-slapping on how ‘great’ INI were and how targets had been met again. One year they got Donna Traynor to present the conference, and another year we were subjected to that ‘comedy’ duo off the Donegal Catch adverts.

  • John East Belfast

    When the Low Corporation Tax lobby was trying to get the UK Govt to agree to lower CT in NI they should have offered the bulk of Invest NI in return.
    Their big mistake was asking something for nothing.The annual NI CT take is about £120m from memory – they could have taken all that off INI budget and more and asked for zero CT.

    I have been dealing with Ledu/IDB/Invest NI for 20 years and although it contains some good people, some good intentions and the odd good initiative I agree with the ex employe above that states it ultimately exists for itself.

    The govt is not good at promoting business and should keep out of it with business being free to plough the bulk of its own profits as it sees fit instead of giving it to the Govt who then decides thereafter to what other desrving business it should be re-cycled to.

    I would have INI as a one stop for FDI (information and minimum grants) and also advice for NI exporters.
    I am not convinced they do R&D well and I think the Tax breaks for R&D already provide substantial incentives there anyway which INI support under EU legislation only gets in the way off.

  • Glencoppagagh

    Is it possible to clone Sir Allen McClay? By a long way our most outstanding entrepreneur. More like him, problem solved.
    And unlike so many others he didn’t pack it in when he got the big offer for his company and retire to the golf course.