Belfast Telegraph

Saturday 19 April 2014

Invest NI aims higher after hitting targets in job creation

Mark Ennis, chairman of Invest NI, reported that in 2012-13 Invest NI produced "a very strong performance with tangible benefits for business and the economy". He quotes results which are more upbeat than might have been expected.

Invest NI is the agency charged with responsibility to assist the growth of a sustainable private sector in the economy. Other departments and agencies have supportive roles. However, Invest NI can use its resources in a variety of ways to spend an annual budget of £150m in 2012-13.

With that budget, the key question is whether the results (or outcomes) can be regarded as not just as good value for money but best possible value.

Invest NI is subject to performance targets from the Executive's economic strategy. In terms of the success in making progress towards the 16 cumulative four-year targets, from 2011 to 2015, Invest NI shows that 13 results were ahead of target.

The other three each involved new arrangements which have been slower to develop than may have been expected. The refreshed business start programme was delayed by a challenge to the original arrangements, the operation of the Growth Loan Fund for SMEs had to await approved working arrangements and, in turn, that loan fund effectively operated for only part of the year.

The core achievements of Invest NI should be assessed in terms of the degree of strengthening the local economy. That is not easily quantified so, in default, Invest NI tends to be measured in proxy measurements such as the committed level of investment by businesses or the expected number of additional employees that may be recruited when projects are implemented.

On both of these proxy measurements, Invest NI has done better than a year ago and has outperformed the annual target of the official plans. More than 7,300 new jobs were promoted and business investment of £608m is expected. The former is 14% better than a year ago – the latter is a 34% uplift.

More significantly, the balance of investment and employment has shifted in new directions.

The role of Invest NI in offering financial support towards capital investment has diminished. The average employment number in new projects is now more frequently less than 250 people and projects with a potential for 1,000+ jobs are now exceptional.

To add to its discretionary flexibility, Invest NI has successfully developed a stream of projects which benefit from the ambiguously worded Jobs Fund. The Jobs Fund has supported 2,657 employment promises, an increase of over 10% compared to a year ago.

Research and development activities attracting support have increased sharply and have agreed commitments of £105m in the year. Investment in skills development has increased sharply and will link to spending of £38m.

Following the logic of promoting an expansion of the local economy, Invest NI has increased the emphasis on encouraging exports of local goods and services. This objective is more easily articulated than measured.

The search for evidence of success, or otherwise, in growing external earnings through exports is a continuing statistical challenge. The current rules mean that sales to Birmingham are excluded whilst sales to Ballyjamesduff are included. Officially, a sensible statistical change would be to assess all external sales including Great Britain as well as the Republic of Ireland.

Perhaps the largest unanswered question is how Invest NI will be affected by, and will respond to, the expected new EU rules on regional state aid. EU proposals are expected in June but even then there may be a longer negotiation before new rules are finalised.

For 2012-13, Invest NI did surprisingly well.

Perhaps the largest unanswered question is how Invest NI will be affected by the expected new EU rules on regional state aid