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SPEECH BY BARBARA ROCHE MP, FINANCIAL SECRETARY TO THE TREASURY,
AT THE BELFAST PRODUCTIVITY ROADSHOW, 1 FEBRUARY 1999
Introduction
- Thank you for your welcome to Belfast - I am delighted to be here.
Thank you all for coming to this, the ninth in a series of ten Productivity
Roadshows. And to our hosts today, Interpoint .
- Northern Ireland is entering a new era following the Good Friday
agreement. So having created a framework for peace, we must now
create a framework for prosperity and that is why I am here today.
I want to discuss with you how the UK as a whole - and Northern
Ireland in particular - can increase its productivity and raise
its game.
- This series of Roadshows is the first time the Government has
consulted the UK on what should be in a budget. We want to exchange
ideas and discuss solutions with you on what steps need to be taken
to help us match the best in the world.
- The Chancellor's strategy for increasing the UK's productivity
was set out in the Pre-Budget Report. To compete effectively in
the global economy, we must improve our skills base, encourage enterprise,
attract investment and promote innovation.
Northern Ireland Initiative
- These were the themes underlying the Chancellor's Northern Ireland
Initiative launched here last May. The Initiative is founded on
funds for four key areas for building a new framework for prosperity
in Northern Ireland: employment and skills, enterprise, investment
and innovation and tourism.
- A £315 million package, to renew and modernise the Northern
Ireland economy and underpin the Good Friday Agreement. And a new
agenda for prosperity. Let me update you on progress.
- First, unemployment here is still consistently above the level
in the rest of the UK - and people here are unemployed for longer.
We need to deal with this head on. That is why the Chancellor announced
the £65 million Employment and Skills Fund:
- A £42 million New Deal programme was launched in December,
providing up to 30,000 places for the for the long-term unemployed
over 25.
- A £9 million pilot giving disabled people the opportunity
to improve their employability through work experience, training
and education
- And a £14 million Skills Fund, to build up the skills base.
An initial skills assessment has been completed and the report will
be available later this week.
- Second, we want to help small businesses turn themselves into
large and growing businesses. And so we must encourage the ambition
of entrepreneurs. That is why the Chancellor set up the Enterprise
Fund, to help businesses here invest and grow. There will be extra
help for those investing in SMEs that will benefit 99% of Northern
Ireland's businesses.
- We have also established an Enterprise Excellence Programme, to
help create higher value-added businesses and build a more entrepreneurial
culture.
- In the UK as a whole, our venture capital industry is much smaller
than in the US. For businesses to start up, grow and be successful,
we need a strong venture capital market. Options for setting up
a venture capital fund of at least £10 million are being considered
by DED and the European Investment Bank. The fund will focus on
the development of smaller businesses and the service sector, including
tourism.
- Third, the new £150 million Investment Fund will help create
the physical infrastructure that Northern Ireland needs. Good transport
links, decent housing and better schools.
- £87 million has been allocated to advance a number of high
priority road programmes. We are on course for all programmes to
be completed by the end of 2002 [the Belfast-Larne road, the Westlink
and the Antrim-Ballymena road].
- £11 million has been allocated and progress is under way
to modernise and improve some of the worst housing estates throughout
Northern Ireland.
- And £18 million is being used to finance 7 high priority
capital projects in schools.
- Fourth, we must also invest in innovation. Innovation plays a
crucial role in boosting productivity. Northern Ireland has a growing
reputation in research and development - and we will support that.
We want to ensure that ideas created here are turned into successful
businesses here too.
- Later today I will be visiting Randox Laboratories - a company
that from the humble beginnings of a parents garage has developed
in to a company that employs over 300 people and exports its products
world-wide. This company is an excellent example of what can be
achieved. We need to ensure that we take advantage of the existing
science base in Northern Ireland.
- To help companies like Randox Laboratories, we have set aside
£21 million for the Innovation Fund:
- A £3 million Research and Development Challenge Fund will
soon provide support for small, innovative spin-out companies and
enable them to turn their ideas into good commercial products.
- Northern Ireland will also have its own £10 million Science
Park. This is an exciting and highly significant project that will
provide a centre of excellence for businesses spun out from the
universities and from the Enterprise Excellence Programme. And it
will support the growth of Northern Ireland's knowledge-based economy.
- Many creative ideas for the Park have been received and are now
being assessed. An announcement will be made in the near future
on the proposed way forward.
- Finally, the £4 million Tourism Challenge Capital Fund was
launched in September. It will boost tourism here and improve the
competitiveness of all sectors of the tourism industry. Over 150
applications are now being considered and the results are due to
be announced later this month.
- This all amounts to a very significant Initiative, which builds
on the opportunity presented by lasting peace and political stability.
Good progress is already being made. The challenge now is to promote
enterprise and inward investment, to get people back to work and
equip them with the right skills, and to build the infrastructure
for a modern economy in Northern Ireland.
Productivity Challenge
- The whole of the UK is faced with a similar challenge - the productivity
challenge. We must all face up to the fact that we are not as productive
as our major competitors. There is now a 40 per cent performance
gap between the UK and the US and a 20 per cent gap between us and
France and Germany.
- We must make closing this gap a national priority because increasing
our productivity is central to promoting growth, creating jobs and
building an enterprise culture. It's about working better - encouraging
enterprise and innovation, improving our education and skills base,
increasing access to finance for investment and intensifying competition.
- Improvement is needed across the whole economy, from manufacturing
to services. This cannot be achieved by Government or business alone.
We must all raise our game.
- To encourage businesses and entrepreneurs to set up here, we need
stability. Not only the stability that comes from lasting peace,
but also economic stability. We have already put in place the right
framework for this. Bank of England independence and the Code of
Fiscal Stability, to give business the confidence to invest; our
company tax reforms, to provide the best climate for business to
grow; and extra education funding, to equip the workforce of tomorrow
with the skills that business needs. We now need to build on this
platform of stability to secure the high levels of growth and employment
that we all want to see.
- The Pre-Budget report issued last November by the Chancellor set
out a number of proposals to improve our productivity:
- encouraging innovation and enterprise - we are considering measures
that will incentivise entrepreneurs to make further business investments;
- helping small businesses - we are considering a further tax reduction
for small businesses;
- encouraging venture capital - we are considering new incentives,
including how to encourage our most successful companies to invest
in start-ups;
- ensuring that businesses have access to the right finance for
growth - Don Cruickshank is now conducting an independent review
of innovation, competition and efficiency in UK banking;
- encouraging employee share ownership - we will make it easier
for all employees - not just the managers - to become stakeholders
in their company; and
- encouraging closer links between education and business - we
want to ensure that pupils and students are better prepared for
the world of work.
Conclusion
- Northern Ireland now has a unique opportunity to develop a world
class economy. For too long, political and economic instability
have held back the economy of Northern Ireland. The Good Friday
Agreement and the Chancellor's Initiative both offer a fresh start.
We must ensure that we grasp this opportunity and build a world
class economy in Northern Ireland.
- I look forward to discussing these issues with you.
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