Belfast Telegraph

Saturday 20 September 2014

DebateNI home of Northern Ireland politics

'To be blunt, Northern Ireland is far from being cutting edge'

Without investment in education, apprenticeships and research and development David Cameron's boosterism for Northern Ireland plc will count for nothing, writes Robin Wilson

Bright idea: A return to the principle of apprenticeships will help the economy grow, and will do a lot more than the soothing words of our PM

At last week's private-investment conference in Belfast, the Prime Minister, David Cameron, with a characteristic lack of any scintilla of self-doubt, declared: "Some people say it's a bit undignified for a prime minster to make a sales pitch. I say: nonsense."

Mr Cameron was, of course, a PR man before he became a politician. But when he extolled private investors to "put your money in Northern Ireland and be part of this incredible success story", he was presenting the region as a tarted-up Potemkin village for the visiting magnates – a portrait from which the latest paramilitary murders and summer of riots induced by sectarian parades (not to mention the recent OECD data confirming serious deficits in adult basic skills) had been airbrushed away.

Worse still, he was applying a simplistic and one-dimensional approach to economic policy, misleadingly framed as "rebalancing", which can be summed up as public bad, private good.

Einstein famously said that a definition of madness was doing the same thing repeatedly and expecting a different outcome. And the umpteenth investment conference will achieve no more than all its predecessors since the paramilitary ceasefires of the mid-1990s.

Contrary to expectations of a 'peace dividend', Northern Ireland has continued to bump along at about 80% of UK gross domestic product per head ever since and has shown even less evidence of recovery from recession than the insipid, property-driven version across the water.

Looked at on a broad European canvas, using Eurostat figures, around 65% of the working-age population in the region is in work, while this is true of 70% in the UK as a whole and 72%-73% in top performers, like Sweden, Denmark and Germany. Using its own statistical approach, the US employment rate is around 67%.

What is immediately apparent in this comparison is that it is precisely those economies described by the experts as "co-ordinated", where markets are "socially embedded", where employment – and job quality, to boot – is at its highest, not those where the market is allowed to operate without democratic regulation and the devil takes the hindmost.

Indeed, the only positive announcements that could be made at Friday's event were evidence of why the pursuit of individual private interests does not coincide with the promotion of the public good and why, as a result, public intervention is essential.

Neither the new research and development centre at Bombardier, nor the shared education campus at Lisnahally, would be feasible without public funding.

So what would a more sophisticated economic policy for Northern Ireland – based on evidence and not ideology – look like? It would have these elements:

* Education – the academic/non-academic division, perpetuated by the 11-plus, is disastrous for the development of technical skills and goes a long way to explain our long tail of adults with few, or no, qualifications and low productivity;

* Training – there must be a return to the principle that apprenticeships are collectively financed by that sector (as were the old industrial training boards abolished in the market fundamentalism of the Thatcher years) to avoid poaching and free-riding by individual firms;

* Social economy – punitive attitudes to benefit claimants should be replaced by productively engaging the long-term unemployed in the third sector, as with the old Action for Community Employment (ACE) scheme, while social enterprises should receive enhanced public support, given that they tend to out-perform conventional small and medium enterprises;

* Childcare – the aim must be to maximise the number of dual-earner households, but with a work-life balance, while expanding employment directly and improving child development through publicly funded childcare, a big feature of the successful Scandinavians;

* Competition – there needs to be a block on firms skimping on training and investment by competing on wages, through ensuring all companies in receipt of government support or contracts pay a 'living wage';

* Support for firms – 'grantpreneurialism' must be prevented by ensuring all commitments by Invest NI take the form of loans, or equity, with a revolving fund to support continuing strategic investments rather than public money being sunk into firms' bottom line;

* Research and development – this is a huge area of market failure which needs to be remedied by a big increase in public expenditure on specific research institutes, linked to the two universities, with a sectoral focus.

To compete in today's knowledge economy, Northern Ireland must attract not private 'money', but specialised and expert workers and entrepreneurs to develop and staff innovative projects.

This requires an outward-looking, cosmopolitan disposition – particularly an end to images whirling around the globe of riots and flag-waving-and much greater public investment in the cultural arena.

Moreover, we must rapidly 'green' the economy if Northern Ireland is to avoid falling behind market demands for environmental goods and services and for goods which are produced in an eco-efficient manner. This needs a specific strategy, worked out in conjunction with the social partners.

Last but not least, north-south collaboration is essential to be part of 'agglomerations' (industrial districts) which can compete on a global scale. The collapse of the Celtic Tiger should not lead to an underestimation of the fundamental strengths of the industrial sector in the Republic.

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