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NI Economic Strategy Public Consultation NICVA David Sterling Permanent Secretary, DETI

NI Economic Strategy Public Consultation NICVA David Sterling Permanent Secretary, DETI 23 January 2012. Overview. 2. 1. 3. FISCAL INCENTIVES. EXECUTIVE’S ECONOMIC PRIORITIES. DEVELOPING THE NI ECONOMIC STRATEGY. Corporation Tax . Vision for 2030 .

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NI Economic Strategy Public Consultation NICVA David Sterling Permanent Secretary, DETI

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  1. NI Economic Strategy Public Consultation NICVA David Sterling Permanent Secretary, DETI 23 January 2012

  2. Overview 2 1 3 FISCAL INCENTIVES EXECUTIVE’S ECONOMIC PRIORITIES DEVELOPING THE NI ECONOMIC STRATEGY Corporation Tax Vision for 2030 IREP & Executive Sub-Committee Air Passenger Duty Evidence Base Rebalancing the NI Economy Current position/ Next Steps Economic Framework & Initial Consultation Rebuilding the Local Labour Market

  3. Developing the NI Economic Strategy 1

  4. Prioritise exports and inward investment as the key drivers of regional economic growth R&D that promotes Innovation and business sophistication is the most important long-term driver of productivity The individual company / firm is the key agent of economic growth Focus on the quality of FDI, not just the volume Contribution of FDI will be greater if more inputs are purchased from local suppliers, especially SMEs Cities are key drivers for growth across a region Input from The Independent Review of Economic Policy

  5. A range of research was been carried out to identify what has worked successfully elsewhere Building Economic Competitiveness: Lessons from Small Peripheral Economies Changing Face of Innovation Policy: Complementing R&D Initiatives Promoting Investment & Creating Employment for the Economically Inactive Productivity, Innovation and Competitiveness in Small Open Economies Significant body of research has taken place over past 2-3 years Focus has been on success factors of small open economies Highlighted a number of key themes on which successful economies are based Research

  6. Economic Trends Forecasts Living Standards Recession UK NI • No convergence on key economic variables forecast • Gap with UK average on living standards and labour productivity expected to increase by 2030 • GVA per capita remained around 80% of UK average • Caused by low employment / high inactivity and too few high value job opportunities to increase wealth • Large falls across the private sector since 2008 • Services output -12% • Production output -17% • Construction output -27% Full evidence base available at http://www.northernireland.gov.uk/economic-strategy-evidence-base.pdf

  7. …and identified seven key themes underpinning these

  8. Key Issues raised in that exercise are reflected within the draft NI Economic Strategy • Broad support for the Strategic Economic Framework agreed by the Executive Sub-Committee • Endorsed the importance of focusing on Export-led private sector growth • Recognised need to take action to address the impact of the recession on the local labour market • Strong case made for Public Sector Reform Initial Consultation

  9. The Executive’s Economic Priorities 2

  10. Vision is long term, reflects the reality that it will take some time to rebalance our economy and build a stronger private sector Executive sub-committee also recognises the need to rebuild the local labour market following the recession The Economic Vision for 2030 • “An economy characterised by a sustainable and growing private sector, where a greater number of firms compete in global markets and there is growing employment and prosperity” Vision

  11. Support £300m investment by businesses in R&D, with at least 20% coming from SMEs Support 500 businesses to undertake R&D for the first time and secure 120 Collaborative Projects in R&D Support 200 projects through the Creative Industries Innovation Fund by 2015 Support our Universities and Further Education colleges to undertake 155 knowledge transfer projects on behalf of local businesses by 2014 Innovation, R&D and Creativity – Key Commitments R&D, Innovation & Creativity

  12. Deliver 210,000 qualifications at Levels 2, 3, 4 and above by 2015, through Further Education, Higher Education, Essential Skills and Training Increase skills in subject areas important to the NI economy such as STEM and implement the actions within the STEM Strategy Improve support to companies and increase the number of people gaining skills in management and leadership Skills & Employability – Key Commitments Skills & Employability

  13. Promote 5,900 jobs from inward investors with 75% paying salaries above the Private Sector Median [PfG total jobs = 25K] Allocate £3m per annum for the Assured Skills programme to help attract and embed FDI and meet the skills needs of indigenous companies creating new employment Increase the value of manufacturing exports by 15% by 2014/15 Encourage first time exporters by promoting 60 new start ups selling outside UK markets and a further 440 selling to GB Develop an agri-food strategy and action plan to drive export led growth in the sector Competing Globally – Key Commitments Competing Globally

  14. Promote £330m of investment and 6,300 jobs in locally owned companies (with 50% paying salaries above the Private Sector Median) [PfG total jobs = 25K] Promote a further 6,500 new jobs in new start-up businesses [PfG total jobs = 25K] Support 160 Social Economy Start-ups Invest in social enterprise growth to increase sustainability in the voluntary and community sector Increase visitor numbers and revenue to 3.6m and £625m respectively by December 2013 Business Growth (1) – Key Commitments Business Growth

  15. Work to ensure that NI achieves the best possible outcome in relation to Regional Aid ceilings and coverage post 2013 Enable 300 SMEs to access funding through Invest NI’s Access to Capital Strategy This includes equity through the NISPO, co-investment and development funds and debt through the £50m Growth Loan Fund Invest NI is also investigating the need for a further small loan fund aimed at micro enterprises as well as SMEs Reform Planning – targets in PfG Business Growth (2) – Key Commitments Business Growth

  16. Progress the upgrade of key road and rail projects Encourage industry to achieve 20% of electricity consumption from renewable sources and 4% renewable heat by 2015 Improve the landscape in public areas to promote private sector investment in towns and cities Optimise mobile networks for delivery of superfast mobile broadband services (4G) and increase access to high-speed telecoms services Economic Infrastructure – Key Commitments Infrastructure

  17. Promote 6,300 jobs with 4,000 to be created by March 2014 under the Jobs Fund Support people (with an emphasis on young people) into employment by providing skills and training (114,000 by 2014/15) Provide an Employer Subsidy for businesses to recruit individuals who have been unemployed or economically inactive for a period of more than 13 weeks Capital Investment (including social housing) to help the Construction Sector Maximise the social benefits of investment through the use of social clauses in construction, supplies and services contracts Rebuilding the local labour market – Key Commitments Rebuilding

  18. Target those areas with greatest potential for growth Targeted Sectors • Other Key Sectors • Creative Industries • Tourism • Social Economy • Rural Economy • Services Sectors • Business Services • Financial Services • MATRIX Sectors • Telecommunications & ICT • Life & Health Sciences • Agri-food • Advanced Materials • Advanced Engineering Prioritisation

  19. Draft Strategy underpinned by a Comprehensive Action Plan for the immediate Budget Period Specific action plans being developed for Innovation and Business Growth themes Performance against key output targets and outcome indicators will be regularly tracked by Executive Sub-Committee Monitoring arrangements put in place to ensure delivery Implementation Implementation

  20. Overall success will be measured by four long term strategic indicators Increase the level of exports and external sales as a proportion of NI output 1 Increase the proportion of the working age population in employment 2 3 NI private sector output growth to exceed the UK average NI economic competitiveness to improve relative to other developed economies 4 Implementation

  21. Business Growth Action Plan Currently under development – commitments from Departments, agencies across the Executive as well as key stakeholder/partner organisations. Focus on promoting enterprise, entrepreneurship and creating necessary conditions and providing access to finance to enable businesses across all sectors of the economy to grow. Includes commitments on growing exports, diversifying into new markets, improving the capabilities of exporting businesses and support for entrants into new markets. The findings of the Treasury consultation on rebalancing the NI economy will impact on the timetable for completion of the Action Plan. Actions focussed on developing and supporting the Social Economy Sector being taken forward by a cross departmental Social Economy Policy Group Business Growth

  22. Social Economy Actions Actions will include: Public tender competition to appoint a service provider to design and deliver an agreed Social Economy Work Programme (SEWP) Public tender competition to appoint a service provider to undertake a joint DETI/ DSD mapping exercise of the Social Economy sector Design and delivery of social economy awareness raising events Management of various sponsorship events including a second series of Social Economy Master classes. Business Growth

  23. Corporation Tax 3 Corporation Tax

  24. HM Treasury Paper is looking into giving NI power to set its own rate of Corporation Tax 2010 Coalition Government announces plans to publish paper on rebalancing the NI economy, including consideration of Corporation Tax 2011 Paper was announced in UK Budget 2011 and published on 24 March for public consultation until 24 June Consultation period closed with over 700 responses received, with the majority (76%) in favour of devolving the powers to vary Corporation Tax to NI Joint Ministerial Working Group has been established to address issues associated with devolving corporation tax powers to NI, first meeting on 15 December 2011 NOW Working Group currently examining these issues , with a decision due to be taken early this summer

  25. Clear commitment in the draft Programme for Government and Economic Strategy to secure these powers in a timely and affordable manner Joint Ministerial Working Group established to address issues associated with devolving corporation tax powers to Northern Ireland First meeting on 15 December 2011 Expect group to report Summer 2012 Commitment to Press for Corporation Tax Powers Corporation Tax

  26. Taking Advantage of Corporation Tax Ensure the supply of skills meets the demands of the economy Strengthen innovation andR&D capabilities to support investments Compete globally for high value investors through targeted promotion and support • Support the growthof local SMEs and develop supply chain linkages Ensure appropriate infrastructure is in place to meets needs of new investors REDUCTION IN CORPORATION TAX Implementation

  27. Implementation The focus is on how CT powers can be implemented in a systematic and transparent way Setting out intentions in advance of implementation would provide the certainty needed by businesses Any announcements on corporation tax will set out the following:  The goal / level to lower the rate of corporation tax; The timing of any steps towards that goal; Plans to ensure the impact on public finances is managed; and Work to reassess all aspects of the NI proposition to maximise the return on our investment. Implementation

  28. Air Passenger Duty (APD) • Recently announced reduction in APD for direct long haul flights will assist in retaining the existing flight from Belfast to Newark • NI Executive will work with the UK Government on the proposals to devolve APD powers for NI to ensure that we are able to improve our direct long haul connectivity • Help support efforts on increased FDI, exports and tourism APD

  29. Public Consultation period ends on 22 February 2012 Important all Stakeholders make their views known Consultation events being undertaken to cover NI Economic Strategy, PfG and ISNI Conclusions Close

  30. NI Economic Strategy Public Consultation NICVA David Sterling Permanent Secretary, DETI 23 January 2012

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