Invest NI needs helping hand on jobs creation
Invest NI promoted 5,550 new jobs in the year to March 2016. Given the changes in the wider economy, the recent changes in functional responsibilities affecting Invest NI and the recent changes in the EU-wide agreed State Aid rules, the new jobs-promoted figure was a creditable outcome.
Invest NI has had a good record in the last three years. It exploited, to Northern Ireland's advantage, the one-off acceleration effect of the anticipated tighter State Aid rules which favourably distorted the inward investment figures in 2013 and 2014.
But job creation, for Invest NI, faces new challenges. It is important that the momentum for private sector investment is refreshed.
The political parties in the Executive have a goal of adding 50,000 extra jobs during the mandate of the new Executive. Not all 50,000 jobs will emerge from the remit of Invest NI. If Invest NI can directly negotiate to create 20,000 of those jobs, most of the remainder might emerge as natural growth in the economy.
In the aftermath of the setting up of the Executive there is a risk that the essential momentum of private sector business development will slow down. There is a time-lag between the election and the formulation of the Programme for Government including the parts of that programme that relate to employment creation and the enhancement of high quality jobs.
The 14 published statements of desirable outcomes for the programme are ambitious and comprehensive. These outcome objectives are backed by 42 key statistical performance indicators. After a period of consultation, this platform will be reshaped into a formal series of Programmes for Government.
This period of reflection and consultation should not be allowed to delay the formulation of refreshed, refocused and re-calibrated objectives for Invest NI.
More of the same tactics as in the years before 2015 is neither practical (since some of the rules have changed) nor adequate (since delivery mechanisms and incentives need to be strengthened).
Invest NI remains the core agency to deliver foreign direct investment (FDI) and major investments by existing businesses. However, the general terms of reference need to be refined and made clear to potential beneficiaries. First, Invest NI needs to ensure that the line between Invest NI and the role of the 11 local authorities and their enterprise incentives is better understood. What is the line between the different agencies?
Second, Invest NI needs to clarify the continuing scope for its assistance and, negatively, the former types of assistance that are now ruled out. For example, what discretion lies behind the statement that Invest NI 'is no longer able to support job creation as part of large company expansions?' Business investors might expect some explanation of this dramatic statement. Is this a consequence of local policy making or a consequence of some change in the State Aid rules as applied as part of EU policies? Is the statement correct?
Third, with a remit and budget for 'skills' what can Invest NI now offer new and existing businesses to assist skills and training development or, indeed, to support special skills for R&D projects?
Fourth, looking further ahead, Invest NI should now be well prepared for the introduction of lower corporation tax. Does Invest NI have ideas on how the tax rate change could, or might, be made stronger by further local legislative adjustments to company taxation? R&D spending (including patent protection and pilot (or experimental) projects) could be enhanced if the capital and spending allowances in Northern Ireland were locally set. Does Invest NI have any case to make for this further enhancement of fiscal devolution which could make corporate tax changes more effective and diverted from possible higher dividend allocations?
Invest NI needs the support of internationally competitive local cost structures, an enhanced corporation tax base and continuing access to EU markets. Will they all be available?