Review of Public Administration

Oct 19, 2005

Invest Northern Ireland has recently submitted its views on the future role of local government, particularly in the area of local economic development, as part of the consultation exercise on the Review of Public Administration.

The key elements of the Invest NI response include:-

- Invest NI is supportive of the proposed two-tier model of Public Administration based on regional and sub-regional responsibilities and is of the view that the seven-council model would offer the most efficient and effective structure for the delivery of local government services in Northern Ireland;

- There is a continued need for strategic direction on economic development policy from Central Government and for a strong regional agency to deliver key services;

- The role of Invest NI should be based on a clear understanding of the segmentation of the economic development market in Northern Ireland and, consistent with this, Invest NI should retain responsibility for:-

  • Supporting clients selling in external markets;

  • Supporting start-ups with early export or global market potential;

  • Selling Northern Ireland as a location for investment and the attraction of foreign direct investment;

  • Providing export assistance to companies;

  • Sectoral strategies;

  • Services relating to innovation and R&D for Invest NI clients;

  • Strategic management of property for economic development; and

  • The provision of venture capital and the delivery of institutional initiatives to address gaps in the market for debt and equity finance.

- Local Government could take responsibility in a number of areas of economic development, including:-

  • Support for business start-ups servicing the local market;

  • Business development support for businesses primarily serving local markets;

  • Support for community businesses and the social economy;

  • Support for some local aspects of tourism;

  • Local Enterprise Agencies (LEAs);

  • Provision of workspace and incubator units for locally focused companies.

Commenting on the submission, Professor Fabian Monds, Chairman of Invest Northern Ireland, said:-

“We consider that this review offers a unique opportunity to shape the future delivery of economic development in Northern Ireland and see an ongoing central role for Invest Northern Ireland.

“Our response has been shaped by the objectives set out in our Corporate Plan 2005/08 and by the very real benefits of our own experience, where the Invest NI model provides a cohesive service delivery model with consequent improvements in efficiency and effectiveness.

“As an organization, Invest NI supports businesses that have the greatest potential to make a positive impact on the Northern Ireland economy, regardless of size or ownership. The most important wealth-creating players in the Northern Ireland economy, today and in the future, are innovative and entrepreneurial companies selling into external markets.  It is on these companies that our support is, and should be, focused.

“We also recognize that local government’s strength is exactly that – it is local and it therefore follows that this is the area in which local government should concentrate its economic development activities, provided the activities enhance the overall strategic approach to economic development.  

“Our view is that local government should have a role in working with micro-businesses and companies whose focus is primarily within the new council area  and with little or no potential to trade outside the area.

“It is also important to note that (apart from Business Start programmes) there are few significant Government programmes anywhere in the UK, offering support for locally-focused micro businesses, and where funds are available for local economic development, they tend to be relatively small. It would, therefore, be for local councils to determine whether monies raised from rates (or elsewhere) should be allocated to such activities.”

Colin Lewis, Managing Director of Corporate Services, Invest NI, said:

“Key issues of the RPA consultation document that require clarification are firstly the definition of “local” in the context of responsibility for “local economic development” being transferred to the new councils, and secondly the definition of  “SME” (Small and Medium-sized Enterprises).

“It is important that the role of SMEs in the Northern Ireland economy is clearly understood.  Invest NI subscribes to the European Union definition of an SME as being “an independent company with fewer than 250 employees and either an annual turnover not exceeding Euro 40m (£28m) or a balance sheet total not exceeding Euro 27m (£19m)”.  Almost all companies operating in the UK (99.8%), in Northern Ireland (99.9%) and in Invest NI’s client base (95.4%) are SMEs.  In fact, of the total Invest NI client base, only around 90 companies fall outside that definition.

“It should be noted that the vast majority of business enterprises (both in the UK and in NI) are micro businesses, typically employing less than 10 people.  This includes the self-employed, those in agriculture, small retailers and service providers, most of which will be entirely focused on a very local market and are outside the remit of Invest NI. It is in this area that we see the Councils having an economic development remit.

“We are very clear where we see Invest NI’s support being directed. It is unfortunate that the lack of understanding on this matter has led to confusion and misunderstanding among elements of the business community. Despite recent statements to the contrary and, having read the submission of the Ulster Society of the Institute of Chartered Accountants to the consultation exercise, it is clear that their submission does not include any adverse or critical comment on the performance of Invest NI in relation to supporting the small business sector, or indeed any other part of our remit. Furthermore, the USCA has subsequently written to confirm its continued support for Invest NI.”

The full submission of Invest Northern Ireland to the Review of Public Administration is available on the RPA website (www.rpani.gov.uk/responses05/Invest%20Northern%20Ireland.pdf)

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