Kevin Holland, recently appointed chief executive at Invest NI, is working on a package of recovery measures for local businesses. He is having a tough test of his ability to deal with unexpected economic developments since he took the job in autumn 2019.
As businesses developed last year there was evidence of growing success across many sectors in Northern Ireland. Less than six months later, Covid-19 has brought a major lockdown to parts of the economy, many jobs are furloughed, and international trade and travel reduced to uneconomic levels.
At Invest NI there is both an acknowledgement of the seriousness of the recession which has been caused and, in a constructive response, of the need to respond with appropriate advice and assistance to act in support of businesses as they tackle the changed market conditions. Help for firms to recover is being refined and improved even though, as the CEO has acknowledged, not every business will recover.
The present state of business for Invest NI client companies shows serious concerns but it would be wrong to present them as a gloom and doom story. Mr Holland conveys an ambitious optimism because he sees evidence of resilience and adaptability that are strengths that can be used to advantage. The experience of Invest NI clients in national and international markets confirms that, as markets adjust, businesses are capable of regaining (or increasing) market shares. As confirmation of the underlying abilities of local business, Randox Healthcare has been an example of adapting to changed opportunities and the needs of the health service. Randox, along with a number of local specialised companies, has become an acknowledged supplier to international buyers, of advanced laboratory and testing methods.
Over the next 18 months Invest NI will be delivering the different parts of a recovery package for local firms. An allocation of £30m has been earmarked for the Department for the Economy to help viable firms with particular hardship difficulties. Invest NI, drawing on assessments of recovery prospects, will develop packages of assistance from these hardship funds.
Invest NI has not sought additional funds for its own budgetary discretion. Rather, it is relying on tailored support from NI budgetary allocations or from the extensive funds which have been released by the UK Treasury.
The theme of the recovery plan is a combination of measures to encourage improved productivity, stronger levels of innovation, bigger commitments to schemes for research and development proposals, and the delivery of a workforce with enhanced levels of skills. Essentially, the core elements of the emerging recovery plan are an intensive application of generic policies to strengthen the local economy.
The published results, achieved by Invest NI in 2019, confirm that on three of the main performance yardsticks, performance was ahead of targets. Over 29,000 new jobs were created in the last three years. The value of sales increased by £4.5bn and external sales grew by £3.5bn. The major shortfall was a significant gap in research and development spending between a target of £160m in four years and an outcome of only £25m in the first two of the four years.
The shortfall in the commitments to R&D is large enough for Invest NI to reconsider both the size of the target and also whether the form and scale of R&D incentives may merit reconsideration.
In a contrasting outcome, Invest NI offered a highly successful Innovation voucher scheme with grants of up to £5,000. An extra £4.5m has been allocated to this scheme over the next five years.
There are some pieces of unfinished policy on the agenda for Invest NI. The Brexit operational details of the Ireland-NI Protocol are still under discussion between the UK Government and the EU. Invest NI is keenly interested in gaining clarity of the final details. There is continuing interest in an unfinished debate on the way in which the new emigration policies will be applied to NI. There is still some uncertainty about whether NI will be asked to continue to observe the EU rules on State Aid.
Mr Holland, has an impressive grasp of serious questions in managing the awaited economic recovery. The months ahead will be challenging for Invest NI and its CEO.