Economic growth in Northern Ireland: new and emerging sectors

The UK Government’s Industrial Strategy identifies eight sectors that will drive growth, and these map well on to Northern Ireland’s sectoral strengths, as well as the Northern Ireland Department for the Economy’s sectoral plans. There are, however, a multiplicity of central and devolved government missions and strategies, which fail to provide clarity for businesses on what the overall economic strategy is for Northern Ireland, and how it will be interpreted and delivered. (Conclusion, Paragraph 21)

The UK Government and NI Executive need to work together more closely on economic issues, aligning their strategies and co-ordinating their delivery. The NIO should set this out in the “economic vision” referred to in its annual report, and publish this within six months. In this “economic vision”, the NIO should include the steps the UK Government plans to take to deliver economic growth in Northern Ireland, and set objectives that are specific, measurable, achievable, relevant and time-bound (SMART). To that end, the NIO should note (in numbers) the additional economic growth, employment and productivity it expects this economic vision to provide. (Recommendation, Paragraph 22)

There should be a Northern Ireland representative on the Industrial Strategy Advisory Council, to ensure the voice of Northern Ireland’s business community can feed into policy development and ensure that the Strategy appropriately supports economic growth in Northern Ireland. (Recommendation, Paragraph 23) Support for SMEs

SMEs are the dominant business structure in Northern Ireland. If they are to innovate, take risks and build economic growth in NI, they need specific support, particularly in navigating dual market access to the EU and UK internal markets. Currently, the multiple bodies providing support in different areas may be confusing matters rather than helping. We welcome the Government’s commitment to establish the one stop shop 29 recommended in the Murphy Review, but there should be a mechanism that is wider in scope, creating a central hub for business support. (Conclusion, Paragraph 33)

The Government should establish a completely overarching one-stop shop for NI SMEs trading in goods and services. This facility should bring together support on accessing innovation funding, trading East-West, North-South and more widely in the EU, as well as wider business support to enable businesses to invest and grow. The Government must clarify when in the next financial year this one stop shop will be open for business. (Recommendation, Paragraph 34)

Intertrade UK has the potential to be a key source of advice and solutions for the UK Government, but its Board membership needs to be broader to ensure that the east-west trade challenges faced by GB-based businesses are considered. It has taken longer than necessary for the Government to establish Intertrade UK. We expect more agility now it is funded and its work programme is in place. We plan to engage with it and may suggest pieces of work for it to undertake. (Conclusion, Paragraph 39)

The Secretary of State should appoint a GB representative to the Board of Intertrade UK. (Recommendation, Paragraph 40) Unlocking economic growth

We have received no evidence to date that the Executive has a thought through or deliverable plan to address and reform the deficits in planning policy and processes. (Conclusion, Paragraph 55)

City and Growth Deals have the potential to support not only sectoral growth, but growth and increased prosperity across the sub-regions of Northern Ireland. To that end, future deals might include local government to a greater extent. While current deals are focused on much-needed capital investment, there remain concerns that a complementary skills element is not in place to ensure that this investment is sustainable. Northern Ireland’s productivity and skills challenges are long-standing and well known, as are its problems with infrastructure, energy and planning. We have ongoing concerns about the Executive’s effective use of the Skills Barometer 2023–2033 and the ability to maximise the opportunities to deliver policies. Given the UK Government’s economic growth mission and the responsibilities of NIO Ministers for supporting economic growth, they cannot be ignored by Whitehall. Without the facilitating infrastructure and connectivity in place, growth will be slower and concentrated in fewer places. (Conclusion, Paragraph 58) 30

Future City and Growth Deals should include greater powers for local government in Northern Ireland. Deals should also include complementary funding strands on both skills and core infrastructure. (Recommendation, Paragraph 59)

The ‘economic vision’ that the NIO is developing, including time-bound objectives as we recommend earlier in this report, should clearly set out how the Government will address the structural weaknesses associated with the largely devolved but unignorable policy areas of skills, energy, planning and infrastructure. It should align with the infrastructure strategy, on which the NIO has been working with the NI Executive. (Recommendation, Paragraph 60) Local Growth Fund

Tackling economic inactivity is one of the keys to economic growth. In Northern Ireland, this has been carried out largely by the community and voluntary sector using revenue funding. Under the forthcoming Local Growth Fund, the proportion of revenue funding will be severely curtailed due to a new 70–30 capital-revenue split. In our correspondence with the Government and in oral evidence from the NIO, we have not been given a justifiable reason for this new arrangement. We are concerned about the knock-on effect this will have on NI’s justice, social services and health systems. We are frustrated by the Government’s lack of movement on this issue, and believe the NIO has a duty to advocate better for organisations delivering economic activity programmes in NI. We are disappointed at the way the sector has been treated and the position in which organisations and recipients have been placed. This makes us question the effectiveness of the NIO in voicing the concerns of Northern Ireland in Whitehall. (Conclusion, Paragraph 72)

The Government should urgently reverse the capital-revenue split of the new Local Growth Fund in Northern Ireland. Failing this, the NIO should work with the Ministry of Housing, Communities and Local Government, HM Treasury and the NI Executive urgently to identify alternative and comparable sums of money for economic inactivity programming, such as through PEACEPLUS, and ensure the application process is expedited and streamlined. (Recommendation, Paragraph 73) 31

We remain unclear as to what the NIO’s ‘economic vision’ for Northern Ireland is, or in what format it exists, or if the Government has even completed it. (Conclusion, Paragraph 20)

We reiterate our previous recommendation that the Northern Ireland Office should publish its ‘economic vision’. It should do so alongside its response to this report. (Recommendation, Paragraph 21)

The instability of the Executive has been raised as a significant constraint on economic growth in Northern Ireland, delaying critical economic and infrastructure decisions, and undermining business and investor confidence. Northern Ireland’s inadequate infrastructure and ongoing skills challenges are persistent barriers to growth. The ongoing absence of an Executive budget means that these barriers cannot be effectively tackled, putting further strain on economic growth in Northern Ireland. We remain concerned about the Executive’s ability to use the tools at its disposal effectively to overcome Northern Ireland’s skills and infrastructure challenges. (Conclusion, Paragraph 27)

We are concerned that the ongoing inability of the Executive to agree a budget is preventing vital investment in areas that are fundamental to supporting growth in the Northern Ireland economy. This risks entrenching long term economic barriers and disadvantaging the people of Northern Ireland. (Conclusion, Paragraph 28) Targets and objectives

We welcome the new Secretary of State’s focus on the promotion of economic growth in Northern Ireland, but we remain concerned that the NIO has not set transparent and measurable objectives for that growth. Without clear and objective metrics, it is impossible to accurately assess the impact of the NIO’s interventions on the economy. As the Northern Ireland Audit 21 Office (NIAO) has noted, setting milestones and performance indicators is important for public accountability, and failure to use these measures can lead to poor value for money and costly delays. (Conclusion, Paragraph 43)

The evidence we have heard since the publication of our interim report strengthens our view that the NIO should publish specific, measurable, achievable, relevant and time-bound (SMART) objectives, where appropriate, or other key performance indicators for its economic interventions. The NIO should set out how it will monitor and measure the effectiveness of its interventions, setting appropriate targets for their output. This is vital for ensuring that significant public funding commitments provide value for money for the taxpayer. (Recommendation, Paragraph 44)

The NIO should also develop SMART objectives for the ‘one stop shop’ that will support small businesses to navigate the Windsor Framework. The NIO should publish progress against these objectives in its Annual Report and Accounts. (Recommendation, Paragraph 45) Northern Ireland Office and Whitehall

The implementation of the Local Growth Fund clearly demonstrates the challenges the Northern Ireland Office faces in advocating for Northern Ireland in Whitehall. We remain concerned that cross-Government structures remain ineffective in promoting Northern Ireland’s interests and believe these should be reformed. (Conclusion, Paragraph 58)

Northern Ireland’s economic strengths and untapped potential have the potential to boost the UK’s wider economic growth, and Whitehall should take Northern Ireland’s economic growth seriously. The Government has said that the creation of Number 10 North, alongside the revived National Economic Council, will ensure that decisions about the country’s economic future will no longer be made exclusively in Westminster. In this spirit, we call on the Government to do more to consider the impact of UK-wide policies on the UK nations, and especially Northern Ireland. (Recommendation, Paragraph 59)

The Northern Ireland Office Parliamentary Under-Secretary of State should convene a new Business Advisory Council for Northern Ireland. This should include representatives from each business from each of the sectors in the Industrial Strategy. These should be businesses that are not regularly heard in Whitehall, and represent all parts of Northern Ireland. The group should be responsible for providing advice to the Minister on how the UK Government can support economic growth in Northern Ireland. (Recommendation, Paragraph 60) 22

The Northern Ireland Office Parliamentary Under-Secretary of State should also convene a new quarterly Ministerial working group attended by Ministers whose remits impact economic growth in NI. Through this group, the Minister will hold other Departments accountable for supporting economic growth in Northern Ireland and make sure Northern Ireland’s unique economic conditions are considered. This group should include relevant Ministers from HM Treasury, the Department for Business, Innovation, Science and Trade, the Ministry for Housing, Communities and Local Government, and the Minister for Skills from the Department for Work and Pensions. (Recommendation, Paragraph 61) 23