Northern Ireland: Economy

Lord Alderdice Excerpts

Wednesday 19th October 2011 Lords Chamber

[Lord Alderdice]

My Lords, I am grateful to and congratulate my noble friend Lord Lexden on obtaining this debate on rebalancing the economy of Northern Ireland, which is a challenge. The value of this debate in your Lordships’ House is that we are not under any compulsion to do other than try to explore the questions honestly and in a fashion that might be helpful to Her Majesty’s Government in fulfilling their responsibilities in relation to the Province.

I note that in chapter 2 of the book that launched the consultation there is a list of some of the strengths of the Northern Ireland economy: a relatively young population, high quality education and training, persistently competitive labour costs, a flexible and responsive skills system, a track record of attracting inward investment, 100 per cent broadband coverage, good transport links, a relatively low crime rate, strong tourism potential and so on. That list, more or less, is one that many of us in Northern Ireland are familiar with because we have spent a good deal of our lives trying to use lists of this kind to sell Northern Ireland to other places. Indeed, it is not hard to be convinced that we have these great strengths and potential. Some noble Lords have laboured for some years in Belfast City Hall. It is hard to inhabit such a building and not feel a sense of confidence and pride in a city that could produce something of that kind for its main building. It is an acknowledgment of the strength of the local economy at the time. Belfast is the city that produced and launched the “Titanic”, and we still produce T-shirts that say, “She was all right when she left us”. There is a great sense of pride in these things, and anyone who in the great days of the shipyards stood in one of the hulks that were being produced—cathedrals of engineering—could not but get a lump in his throat and feel a sense of pride about living in a place that could make such extraordinary products.

But it is important not to inhale when dealing with your own propaganda and to recognise that, although there are great strengths in Northern Ireland, our problems with the economy did not all come from the Troubles. Of course we had great strengths at the end of the 19th and the beginning of the 20th centuries when we were a central feature of an empire that spanned the world, and with all sorts of economic differences from the world in which we now live. It was also the case that many of those who laboured long and hard in the shipyards, the linen mills and other industrial aspects knew very poor circumstances in terms of their own health and welfare. That was one of the reasons we were successful too.

The truth is that after partition in the early 20th century, when the world moved into depression and we did too, it became increasingly difficult to sustain a Northern Ireland economy that was independent in terms of its own taxation and economic strength. As the 20th century moved on, it became even more difficult for our industries to be competitive, and long before the Troubles broke out we were in very substantial difficulties and already needed support from the rest of the UK economy. There was a certain amount of optimism in the 1960s when Brian Faulkner was Minister of Commerce. He certainly brought a degree of energy, enthusiasm and a sense of optimism that there were new possibilities, and it is not at all clear how things would have gone had he been able to remain in post, the Troubles had not happened, and so on. But if we stare long and hard at the reality we quickly come to the conclusion that we could not assume that, without the Troubles and all that came with them, everything would have been well in the Northern Ireland economy.

The Troubles added to our problems in two ways. First, they chased away business, whether internally or through inward investment. Who would want to invest in a country that was at war with itself? But there was another almost insidious way in which our economy was damaged, and that was through the sustenance that was necessary from the British Government and the British Treasury to maintain some cohesion in the community, ensure that public services were delivered, and that security did not suffer any more than was absolutely necessary. What that did over two generations was to produce a population in Northern Ireland that was extraordinarily dependent on the public sector and public expenditure. It is not just that it was the case in practice; it was a culture that was espoused and adopted—it was taken into the whole community.

When my noble friend talked about “jobs, jobs, jobs”, as he quite rightly did, the problem with the phrase is that there is an assumption that it is up to the Government or someone else to provide us with those jobs, whereas actually what we want is a community that sees itself taking the initiative in order to provide its own wealth creation. I am afraid that I found it enormously difficult in east Belfast—a community that would like to live with the myth of an enthusiastic, entrepreneurial and largely unionist population—to persuade local people to start up their own businesses and try to create wealth for themselves. It was always a question of being dependent on the Government doing something or someone else providing the jobs.

The reason I mention this is not because I am particularly sceptical about any of the proposals around. My noble friend mentioned the corporation tax proposal, which seems to me to be a potentially substantial jolt. It is not going to be a requirement that the Northern Ireland Executive should institute a particular level of corporation tax. The challenge is this: are you prepared to take on board this opportunity? I hear in Scotland, for example, all sorts of talk about wanting the power to set corporation tax, but the Government there are not even implementing the capacity they already have to raise income tax, should they choose to do so. It makes me wonder whether what is in truth required there is a serious economic power or whether it is a political game being played for wholly other reasons. But the possibility that people would take responsibility for something as large as corporation tax, or perhaps more modestly, aircraft passenger duty, is to say to our local elected Assembly and Northern Ireland Executive, “You now have the responsibility as well as the power to do some of the things that are necessary to make a change. Are you up for it?”. That, in a sense, is the question that I come back to my noble friend with because, as has already been said, some months on from the election to the Assembly and the establishment of the Northern Ireland Executive, the plan is not at all clear.

No one went into the election in Northern Ireland in any great doubt as to which would be the major parties of government or who were likely to be the First and Deputy First Ministers. When an election was held in the United Kingdom as a whole and the largely unexpected outcome—at least in some circles—of a coalition came into being, it took only a few days to put together a coalition agreement. One might be critical or otherwise of it, but the fact is that it took only a few days—and there was no clarity before the election that there would be that kind of an outcome. In Northern Ireland, it was absolutely clear what the outcome would be, and months later we still do not have the kind of plan that is necessary to take the country forward. Although the question of corporation tax and other fiscal freedoms is important, and although it is true that we have great strengths and possibilities, we have two major problems. One is the fact that our peripheral position and our previous dependence on heavy engineering and other aspects of the economy are disadvantages, and we have a cultural disadvantage in that we have become an institutionalised, dependent economy which is much more difficult to get out of because it needs a change in people’s mindset.

But I come back to the fact that there are strengths. We have two universities and relationships with other universities that produce ideas and the possibility that those ideas could be productive and help to build up and strengthen our economy. It is also true that, even now, many of our most creative young people find themselves having to leave Northern Ireland rather than be able to stay and develop their skills in order to build our economy. If there are things we can do to help nudge—perhaps it requires more than a nudge; perhaps it requires a really substantial push—those who now have the responsibility for Northern Ireland to take that responsibility seriously for the development and rebalancing of the economy, and if this debate contributes to that, I think we will have done a worthwhile job and made a contribution.