Northern Ireland’s business support agency has failed to achieve its goal of raising productivity levels and average pay packets in the region, despite spending £1 billion (€1.09 million) in the seven year’s since its inception, according to a report published today.
Invest NI has put too much focus on supporting firms that offer low wage jobs rather than investing in companies which would help close the gap in living standards with the rest of the UK, review panel chair Professor Richard Barnett said at the launch of the report.
The study, commissioned by Economy minister Arlene Foster last December, called for major changes to how the agency and wider government backing for the business sector.
Foremost among these are realigning Invest NI’s spending priorities and the creation of a single Economy Department at Stormont - by merging the current Department of Enterprise, Trade and Investment and the Department of Employment and Learning.
While one of Invest NI’s main aims is to attract multinationals to set up in the region, Prof Barnett found it has spent less than 10 per cent of its budget doing so.
The University of Ulster academic also discovered that 30 per cent of its grants were allocated to just 10 companies.
At the launch of the findings in Belfast today, he acknowledged that the Executive had made the economy a top priority but questioned whether it was equipped to meet its goals.
“The chief concern of the Panel is that, despite the high level of Invest NI support historically, the current portfolio of policies delivered by Invest NI has not made significant progress towards achieving the goal of improving productivity, which, as the report recognises, is the single most important measure to raise wages and living standards in NI,” he said.
Key recommendations contained within 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.
- More emphasis needs to be placed on developing a portfolio of policies to promote Research and Development (R&D) and Innovation.
- 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.
The panel also called for the creation of a commercially orientated research facility in Northern Ireland. The 276 page report questioned whether Invest NI’s main investments had actually triggered more activity within the economy.
Prof Barnett said more “additionality” could be achieved by investing in research and development and innovation projects.
“In acknowledging the positive impact that DETI and Invest NI have had in developing the economy, the panel believes that there should have been a much greater emphasis on supporting value added investment during a period when the local economy was much stronger than it is currently,” he said.
“The report calls for a significant realignment of the Invest NI budget to provide greater support for innovation, R&D and exports throughout the local business base. This should also become the central plank in enabling the region to attract potential inward investors and integrate them more fully with local supply chains”
Giving Invest NI more autonomy would also release it from the “risk averse” culture often in play within government bodies, he added.
The professor said the current structure of government - with economic responsibilities spread across departments - means the administration could not respond quickly and efficiently to issues when they arose.
“In the report, we have emphasised not only the need to improve the focus of DETI/Invest NI policies and programmes, but also the importance of delivery of economic policy,” he said.
“In making our recommendations, the panel has consulted widely and conducted an in-depth analysis of performance. Furthermore, we have carried out a review of global best practice in economic development to inform our recommendations for change.”
Both Invest NI and Ms Foster welcomed the review’s publication. The minister said she would now launch a public consultation exercise on the findings.
“I will now give the report my full and urgent consideration and will work closely with my Executive colleagues, listening to their views and seeking a consensus on the way forward,” she said.
“I want to reach timely conclusions and to initiate purposeful actions, as soon as possible.
“I want to thank Professor Barnett and his colleagues on the Review Panel for providing such a substantial report. It is clear that they have worked extremely hard in addressing a wide range of highly important and complex issues.
“This report is a major contribution to the debate on how we can achieve the economic goals outlined in the Programme for Government. I and my Executive colleagues are committed using all the tools available to us to raise living standards across Northern Ireland.”
Stephen Kingon, chairman of Invest NI, said: “The Review Panel has clearly considered the wide range of issues which impact on economic development, many of which are well beyond the scope or influence of Invest NI.
“As a board, we welcome the continued priority which the Executive places on the economy, and the recommendation that it should remain so in the years ahead."
PA