First Report - Investment in Northern Ireland

NI received proportionally less than Scotland, Wales and England in the first round of levelling up. There has been no satisfactory explanation from Government for this under allocation. This should be rectified urgently. The Levelling Up Fund White Paper acknowledged long-standing under-investment and economic challenges in Northern Ireland. We are pleased to see the Government’s resolve to address some of these issues through this funding scheme. However, we urge the Government to pursue further means of collaboration and engagement with the Executive, when formed, on the delivery of these funds. This would ensure the money is in line with the Executive’s economic priorities, and that investments are economically efficient for both the taxpayer and Northern Ireland’s economy. Consideration should also be given to transferring more control over these funds to the NI Executive.

We note the Government’s intention to ensure that the UK Shared Prosperity Fund and funding from the Multiply scheme match by 2024–25 the level allocated under the European ‘Structural Funds’ (ESF and ERDF). Service providers need certainty, however, and therefore the Government must set out the amount of SPF and Multiply funding, and EU funding, to be allocated each year up to 2024–25 so that stakeholders understand whether there will be any shortfalls or gaps in funding annually up to that point.

We acknowledge the interest that the Government will have in the allocation of funding and the delivery of Shared Prosperity Fund projects in all parts of the UK, including Northern Ireland. We are pleased, however, to see that Whitehall has begun to engage with Northern Ireland through the UKSPF Northern Ireland Partnership Group. The Government should publish a timetable for, and readout of, each meeting of this group. It must also explain how it will collaborate and engage with the Executive on the SPF, to ensure that funding is not duplicated, that funding gaps do not emerge, and that investment is in line with the Department for the Economy’s 10X Strategy. In the expectation that an Executive will be up and running again soon, we urge the Government to re-consider Stormont’s role in the delivery of the UKSPF, which is currently very limited. Consideration should also be given to transferring more control over these funds to the NI Executive.

We are encouraged by the progress of the Belfast Region City Deal under this funding scheme. However, the Government must now set out how it plans to provide ongoing support, including day to day resourcing, to current and future projects. We also ask the Government to set out what plans it has to work with local stakeholders and facilitate longer-term strategic investment to account for the potential periodic non-functioning of the Northern Ireland Executive.

The commitment to funding under the New Decade New Approach agreement was instrumental in: re-establishing the Executive in 2020; the allocation of funding for health workers’ pay and public services and securing the Executive’s finances on a sustainable footing. The extent to which NDNA has turbocharged infrastructure investment is, however, unclear. We ask the Government to set out how much 32 Investment inNorthern Ireland Barnett-based and other NDNA funding has been allocated for infrastructure investment since 2020. We note the Government’s general six-monthly updates on progress against NDNA objectives. However, we recommend that to increase transparency the Government publish periodic, detailed financial updates, breaking down how it has allocated NDNA funding so far, and how it plans to allocate the funding that remains, against NDNA objectives, including for example against the objective of using that funding to achieve 5,000 cybersecurity professionals by 2030.

We urge the Government to publish up to date information on the delivery of the New Deal for Northern Ireland funding package. We also encourage the Government to ensure that this funding is ringfenced, so it can be used to fulfil its intended aims, and that any underspend should be able to be rolled over to the next financial year. (Paragraph 36) Brexit, the Protocol and the Northern Ireland economy

We are pleased with the Government’s decision to set up a new DIT hub in Belfast and we acknowledge the economic benefits this could bring to Northern Ireland. However, we urge the Government to publish up to date information on the delivery of the Northern Ireland International Trade plan, the establishment of a new Trade Advisory Board, the appointment of Northern Ireland Trade Ambassadors, the development of a Trade Accelerator Plan and a “Made in NI” campaign.

The Protocol means Northern Ireland occupies a unique position among the four nations of the UK: with its feet in both the EU single and UK Internal Markets, it is attractive to some investors; while the bureaucracy involved in maintaining that stance may deter others - the two subsidy control regimes currently in place being one example of this. The Protocol also means that new free trade agreements are bound to have a different impact on Northern Ireland compared with the rest of the UK. Imports from third countries to Northern Ireland may still attract tariffs, EU regulations will still apply there (even if the UK’s own rules change in future) and EU rule of origin provisions will apply to Northern Ireland if both the EU and UK have an agreement with the same third country. We are therefore surprised that the Government did not make an assessment of the effect of the Protocol on its recently negotiated agreements, and by their description of the figures in those assessments as “relatively ballpark.” Investors and existing businesses crave certainty. Therefore, we ask the Government to clarify how it plans to manage regulatory divergence between Northern Ireland and Great Britain, and what plans it has to leverage Northern Ireland’s unique position as part of the UK Internal Market and the EU Single Market, including its approach to resolving subsidy control complications, to benefit the local economy and inward investment prospects. To provide businesses with a clear idea of how future trade agreements will affect their sectors, the Government must also (a) incorporate the effect of the Protocol into detailed and precise economic impact assessments and (b) include for each agreement an explanatory memorandum setting out where it expects the provisions of the Protocol to take precedence over the provisions of the agreement. All of this is subject to change pending UK-EU negotiations and the NI Protocol Bill. (Paragraph 49) Investment inNorthern Ireland 33 Educatio

The university cap leads many Northern Ireland students to leave to obtain high- level qualifications, which they then take into employment elsewhere in the UK or overseas. This places a handbrake on the Northern Ireland economy, with international and other firms either less willing to invest in the first place or unable to fill job vacancies and increase their existing investments. We recognise that the cap is an Executive responsibility. However, we urge the Government to explore with the Executive, including through the NI Department for Economy’s review of higher education funding, how the cap on university numbers might be raised to enable the retention of home-grown talent in Northern Ireland and an expansion of the high- skilled sectors of its economy.

We understand the importance of education and skills in growing Northern Ireland’s economy and providing jobs for people in all parts of society. Therefore, we recommend that current and future Government investment, through the UKSPF and City and Growth Deals for example, at least match existing EU funding in this area and take account of the Executive’s skills strategy and NI’s growth sectors to address the skills gap. We also note the dissatisfaction towards the apprenticeship levy in Northern Ireland, where businesses do not see an identifiable return on their contributions. The Government must work with the Executive to ensure that the money which businesses contribute to the apprenticeship levy is ringfenced, so it is used for its intended purpose. (Paragraph 60) Creating a sustainable and equal economy

We acknowledge the importance of building sustainable, viable industries to secure Northern Ireland’s economic future in the net zero era. We ask the Government to set out its investment and policy plans for Northern Ireland to enable research into and the development of its green economy. We also recommend that the Government brings forward a hydrogen strategy for Northern Ireland.

Functioning societies need people who have the skills to deliver services in all areas of the economy. These people need to be paid competitively - and fairly. We acknowledge the importance of equal access to opportunities for men and women, and the negative socio-economic effect of existing gender disparities in the workplace. We ask the Government to set out, by means of its funding streams such as City and Growth Deals, how it plans to ensure that future investment takes account of the importance not only of ensuring STEM opportunities for all, but of improving the pay and conditions in currently low-salaried and female-dominated sectors, so that there are better jobs in all areas of the economy. (Paragraph 70) 34 Investment inNorthern Ireland