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EU Regional Aid Motion 9/4/2013

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I beg to move
That this Assembly recognises the positive effect that Northern Ireland's 100% coverage for EU regional aid has had on the economy; believes that it has been significant in aiding economic growth and inward investment; is concerned that removing this automatic coverage would have a detrimental impact on the economy, jobs and growth; and calls on the Minister of Enterprise, Trade and Investment to continue to lobby the Government at Westminster and the European Commission to ensure that EU regional aid is retained for all of Northern Ireland.

It is a great honour to propose the motion, which is on a rather important issue as far as the Assembly is concerned.  It is certainly significant for the Northern Ireland economy overall.  If the Government go ahead with the removal of Northern Ireland's automatic 100% coverage as an assisted area, addressing the needs of the Northern Ireland economy and its importance as part of the Government's strategy to address regional disparities will be made all the more difficult.  

There are a number of critical factors that combine to set the scene for Northern Ireland's economic strategy.  They include the difficulties in the world and UK economies and the immediate throwback that they have for the Northern Ireland economy; the current difficulties, which have been well rehearsed in this Chamber, that local companies have in trying to access suitable finance for their business plans; the impact on the local market of the UK-wide welfare reform agenda; the scope for the Northern Ireland Executive to support company development under revised EU regional aid guidelines; and the long-standing structural issues, which we are all very well aware of, that continue to hamper economic growth in Northern Ireland.  

The economy is inevitably influenced by the downturn in the global economy, with external trade and foreign-direct investment in particular remaining a vital source of employment and wealth.  We can only but appreciate the work that the Minister and the Office of the First Minister and deputy First Minister (OFMDFM) have done in that area.  The slowdown in the private sector has had a significant impact on the local labour market, with the number of private sector employees in Northern Ireland falling.  Particularly hard hit has been the construction and manufacturing industries, where overall falls have been dramatic.  Indeed, along with other sectors, retail has faced its difficulties.  

Alongside the impact of the recession, Northern Ireland continues to face long-term challenges that hamper our economic growth.  Living standards have persistently lagged behind those in GB, with the main factors being lower levels of employment and lower levels of productivity.  Growth in output and jobs has tended to be in relatively low value-added areas, although significant work has been done in that area in the past few years.  Indeed, average wages in Northern Ireland tend to remain significantly below others in the UK.  As we all know, we have an over-reliance on the public sector as a driver for economic growth.  The comparatively small private sector here also contributes to a very large fiscal deficit.  

The economy has, historically, been under-represented in the higher added-value sectors.  A large proportion of our popular —

Regional aid plays a key role in attracting new foreign direct investment (FDI), as well as in encouraging local investment, and the foreign aid companies already here, to expand and invest from the base on which Invest NI attracted them in.  As the Independent Review of Economic Policy highlighted, the changes in regional aid from January 2011 have necessitated a new approach to supporting company investment.  Those changes have placed an added emphasis on our determination to secure the powers that vary corporation tax in Northern Ireland.  However, in securing those powers, if we are able to, that just becomes just another tool, along with regional aid, to grow and improve the economic competitiveness of the Northern Ireland base and to ensure a competitive Northern Ireland, particularly in the subregions.  Competitiveness overall is going to be a significant feature for the future.   

Everyone in Northern Ireland will be well aware of the economic challenges that we face and our dependence on the public sector.  Those structural difficulties are not faced by other regions of the UK.  Therefore, the retention of regional aid for Northern Ireland is of more significant importance than it is for other areas.   

Over recent years, regional aid has been key to attracting many thousands of jobs to Northern Ireland, with many major companies locating in Northern Ireland because of the support that Northern Ireland and the job creation agencies have been able to offer through regional aid.  There are a number of examples of that, including Allstate Corporation's presence in Northern Ireland, which has dramatically increased with support from regional aid, bringing many jobs to the Province.  That has also been the case for many other inward investment companies.  Indeed, my party colleague Diane Dodds recently met the EU Commissioner for competition to press the Commission to rethink the current proposals that would restrict the ability to offer foreign companies those incentives to invest in Northern Ireland.  It is vital to Northern Ireland's economic well-being and this community that the campaign continues, and involves not just our EU representatives or contact with the commissioners but, indeed, the Government at Westminster pressing home the importance of this aid for Northern Ireland.   

The proposals would prohibit regional aid support for large enterprises in areas such as Northern Ireland on the basis that there is no clear incentive to justify a continuation of this type of aid.  I just simply do not accept that argument.  It is not an argument that stacks up.  It is not an argument that I believe any industrialist with the potential for investing in Northern Ireland would accept.  It is not an argument that would be accepted by any company wishing to expand in Northern Ireland.   

I hope that the very least this motion will do is highlight the vital role that regional aid plays in the economy of Northern Ireland.  Issues of corporation tax are extremely important, and we should press that as much as we can between now and the date, as is, I think, recognised by the Minister and her team.  However, although that is an important issue and a key driver for change, it is also important that we press the issue of regional aid as another vital tool in the toolbox that will aid the Minister and the job creation agencies as they attract foreign direct investment and allow local companies to expand, grow, thrive and prosper.

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