Belfast Telegraph

Can Northern Ireland firms meet the powerful challenge of CBI chief?

By John Simpson

John Cridland, the director-general of the Confederation of British Industry, believes that Northern Ireland's medium-sized businesses "must stand up and be counted". His appeal, or challenge, was delivered to an audience representing many of the significant businesses in Northern Ireland. Essentially, Mr Cridland is delivering two powerful messages to both his members and the Northern Ireland administration. First, local businesses can and should do more to harness their talents to grow the economy. Second, the business community should support a radical public sector reform agenda because this reform agenda needs to apply across the UK.

This positive policy direction from the director-general is a startling wake-up call.

Local business representatives are not shy about seeking greater use of devolved powers to reduce corporation tax, but they are less conspicuous in identifying specific steps to radically reform the role, scope and size of the public sector and how changes can be made which see the private sector accept a wider agenda which integrates with a diminished role for the public sector.

One notable point from the director-general is that he is unambiguously supportive of the devolution of power to set a Northern Ireland rate of corporation tax. The HQ of the CBI has been hesitant on the merits of this change in legislative authority, but it is now accepted as potentially helpful.

From that starting point, the CBI advice is that local businesses must now play a bigger role in encouraging growth in the local economy. Interestingly, he has chosen to relate this challenge to medium sized businesses (MSBs).

The usual definition of a MSB would be a firm employing less than 250 people (and more than 50). Of the 50,000+ businesses in Northern Ireland, less than 300 would be classed as 'large' and over 10,000 might be classed as 'medium' sized.

The director-general is appealing to the businesses which conduct about 70% of all private sector activity.

The director-general pointed out that private sector employment in Northern Ireland has grown by nearly 14% in the last decade and added that this rate of growth is the highest regional achievement in the UK. This comparison is surprising and may indeed overstate the recent improvements. Nevertheless, there is an unexpected reassurance in the evidence of how well the private sector has developed in recent years.

In other words, our private sector has performed quite well, but the challenge is to do better.

At that point, the obvious questions focus on what might incentivise a stronger MSB response. That takes Mr Cridland's argument to the other suggestions of introducing radical public services reform.

Against a backdrop of falling public sector employment in the rest of the UK, attention is drawn to the marginal reduction in public sector jobs here.

Mr Cridland has entered this debate at a critical juncture. Stormont departments have recently launched a difficult and painful rationalisation programme across most parts of the public sector. He asks for a radical reform agenda "creating flexible, innovative, (and) sustainable public services fit for the 21st century". The thrust is to "reshape the state to meet our population's long-term needs".

He asks that "we should remember that the private sector is part of the solution when it comes to public sector challenges" and adds that "the state will need the support of the private and third sectors to provide the quality services people expect".

That thesis can be challenged. If the private sector is to provide more quality services, is there assurance that the quality will be as good as or better than when provided by the public sector and also, if services transfer to the private sector, how will the strained finances cope with extra workloads?

Essentially, his argument is that some good quality public services could be supplied more efficiently by a more ambitious private (or third) sector. That is a major challenge.

Belfast Telegraph

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