Why good planning is the bait that hooks investors
Arlene Foster, as Minister for the Economy, has invited a small team of specialists to offer advice on how to get the local economy to grow.
The Economic Advisory Group (EAG) is chaired by Kate Barker, former member of the Bank of England Monetary Policy Committee and a highly regarded author of influential studies in England on the way that the planning system should work.
Kate Barker is optimistic about the challenge: “I cannot believe that the natural potential of this region means that we cannot make progress. I am absolutely sure that the [low productivity] problem can be tackled.”
There is a ready acceptance by Ms Barker that Northern Ireland’s economic situation differs from other UK regions, partly because of the impact of a land border with neighbouring areas, which brings significant differences in trading conditions, exchange rates, and (a recurring mention) a different corporate tax regime.
The agenda is to examine the key economic questions, including the possibility that planning systems are a barrier to growth, the maintenance and
priorities of infrastructure investment, the selection of appropriate training and skills programmes, the encouragement of effective research and development programmes, and the use of variations in taxation or public funds to deliver key incentives to selected types of business activity.
Interestingly, Ms Barker spontaneously emphasises the importance which she ascribes to planning policy.
“If you are trying to attract new businesses, the prospective investors are impatient. Not because they necessarily want a decision tomorrow, but because they seek clarity on timing and certainty in decision-making processes.
“Misleading reassurances really upset businesses who then feel let down. Planners do not necessarily have to do what businesses want, but they certainly have to give due weight to what businesses wants.”
The EAG will review the achievements, or failures, of Northern Ireland in the provision of opportunities for more people to get the training and skills experience that will strengthen the economy, and also enhance their life-time earnings potential when they successfully complete these programmes. Local employers should have an assurance that they can find employees who have the necessary talents and skills so that, as the business moves up the added-value scale, the people who can help to make these productivity improvements are available.
The agenda also includes consideration of the scale and range of higher and further education provision, subject, in this context, to consideration of the needs of the economy and improving the earnings capability of qualified people in a growing economy.
Taxation as a regional lever
In Northern Ireland there is a debate on whether the ability to apply a lower rate of corporation tax should be devolved.
“I find that [concept] quite appealing, particularly for Northern Ireland where competition across the border [with the Republic] is a clearer issue, rather than for Scotland or Wales,” said Ms Barker.
“Corporation tax is not the only thing that could be transformed. Additional tax credit systems could be helpful. “Until we know the price that the Treasury would impose, it is hard to know if the option is worth taking.
“However, ministers now accept that there is a need to do something to build the private sector because we know that the public sector is going to struggle.”
Ms Barker expects the EAG to consider a complete range of other incentives, ranging from tax incentives based on research and development, innovation, training programmes, and marketing efforts. There is an open-ended agenda to be tested.
One particular caution was highlighted by Ms Barker: “It is important to think about measures to attract new businesses to Northern Ireland. This should not be at the expense of down-playing an emphasis on strengthening the companies that are already here.”