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Why details about Invest NI pose even more questions

By John Simpson

Published 08/12/2015

Invest NI’s headquarters in Belfast
Invest NI’s headquarters in Belfast

Invest NI has gradually built up a good reputation with responsibility for encouraging business development in Northern Ireland. Its performance in terms of leveraged levels of investment and job promotion compares favourably with other regions of Great Britain. More recently, the arrival of a lower Northern Ireland corporation tax regime adds an extra dimension to the range of incentives. Less helpfully (but understandably in terms of sensible EU policies), Invest NI is now operating in a regime of more restrictive rules on permissible State Aid.

For the future, 'more of the same' ideas will be inadequate. Evidence of evolving tax and aid policies from other places, including the Republic of Ireland, suggests that locally we must 'run harder to stand still'.

The compliments arising from recent achievements must come with qualifications. Could better results be achieved? Does Invest NI merit a larger (or smaller) budget allocation from the Executive? Has the impact of Invest NI across Northern Ireland been 'even-handed'?

The laborious work of the Detail Data, a relatively new investigative agency now expected to monitor and comment on critical policy questions, has analysed information from 6,653 businesses on the impact of £323m assistance from Invest NI during the three-and-a-half years from April 2011 to September 2014. The statistical detail is forbidding, but opens the way to some new questions.

Invest NI already publishes a wide ranging annual report. However, the Detail has used Freedom of Information (FoI) legislation to access an extensive data base and has begun to test the results. Even if this fresh approach only confirmed the evidence quoted by Invest NI, it would be useful. In reality it has opened up new and wider questions.

There is a perennial debate about whether Invest NI acts fairly in assisting new and growing business projects. The initial response to that challenge is that much of the motivation for the location of new projects must inevitably rest with the business owners themselves, particularly when dealing with indigenous companies.

The geography of the impact of Invest NI assistance in 2011-14 shows some unexpected features. In simple statistical terms, based on the former 26 local authorities, the highest level of financial assistance per capita was allocated to Belfast followed by Newtownabbey, Antrim and Craigavon.

More surprisingly, the lowest levels of financial assistance went to businesses in (starting from the lowest) Ards, Moyle, Carrickfergus and Limavady. The experience of Ards and Carrickfergus merits careful understanding. Both of these local authority areas lie within the Belfast commuter belt and could be expected to be an easier recruitment area for skilled people.

For whatever reasons, their experience seems counter-intuitive. Also, coming close to this group has been the experience of (then) North Down and Banbridge, which came 21st and 22nd out of the 26 areas.

While every locality would wish to attract more new and growing businesses, geographical evidence on 'unfair' allocations is not easy to sustain.

In a parallel query, Invest NI can be asked to stand over the distribution of its financial assistance. The scale of Invest NI assistance to each of the two universities and to NI Screen is something of a surprise.

In the review period, Queen's University has attracted £19m, Ulster University £24m and Northern Ireland Screen is linked to a commitment of £64m from Invest NI. The line to draw when deciding which University spin-out projects merit support from Invest NI does not easily fit the viability tests that would apply to a trading business. Is there a case for new clearer guidelines?

Similar considerations would also apply to decisions on social enterprise businesses.

The Detail Data investigations are a potent new source for critical review.

In the refreshed political arena, this may be the right time to test the continuing effectiveness of each activity of Invest NI. Should its budget be adjusted when corporation tax rates come down?

Belfast Telegraph

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