Posted on Monday 14 February 2011 by Ulster Business

Nigel Smyth & Ian Coulter

CBI director Nigel Smyth (right) and vice-chairman Ian Coulter

A leading business organisation has stressed that commitments to the economy made in the Executive's draft Budget need to be reflected in plans being put forward by Government departments.

CBI director Nigel Smyth and vice chairman Ian Coulter told Ulster Business in an interview that the delivery of a four year Budget would help build business confidence. But the pair cautioned that the lack of structural reform and re-engineering of government departments represented a "missed opportunity". "The big issue for us is the economy. There is a commitment to it at the highest level in the Executive statement, but we're concerned that this isn't always reflected in some of the detail," said Smyth. "We're also concerned about the proposed budget for Invest NI. It is crucial that the agency and its economic and job creation work is supported." The CBI believes providing an additional £5m-£8m to Invest NI in each of the next two years would make a "significant impact" on jobs and investment and would effectively double the amount of funding Invest NI has available and not already committed to specific projects. "The most effective way the Northern Ireland economy is going to grow over the next number of years, the most effective way we are going to create jobs, is through exports," said Coulter. "If you distil it down, Invest NI is the region's sales force. If its resources are constrained, that has to be a concern." The business organisation also calls for caution over Department of Employment & Learning's proposals to cut the over-25s apprenticeship programme and to reduce funding for 300 post-graduate, PhD places. "We do believe adult apprenticeships should be maintained. Its important to think ahead. In four or five years time, when the economy is recovering, a good supply of quality people will be vital," said Smyth. "And the same goes for high-level graduates. We should be trying to maintain a high level of graduates, particularly in the STEM area." Coulter adds: "One of the key things people who are going to invest here do is find somebody who is already here, contact them, and ask about the reality when it comes to recruiting the right people for the job. Ask anyone in the tech sector at the moment, and they'll tell you that it is difficult." Another issue for the CBI is the management of Northern Ireland's public sector pay bill. While the organisation welcomes the pay freeze for civil servants paid more than £21,000 for two years, it notes that they only represent 12% of public sector workers and that the "freeze" still includes an agreed incremental pay rise and a 1% increase in pension contributions. The CBI thinks that with average public sector pay levels now around 30% higher than the private sector, a major review of public sector pay should be undertaken. Both men agree that more planning and strategic thinking needs to go into the reform of Government in Northern Ireland. "There is very little evidence within the departments that there has been a strategic look at how to restructure, redesign and re-engineer," said Smyth. "And there is little evidence of any serious work towards outsourcing to the private sector." "All of the departments say they want to avoid job losses, and that is understandable, but this should be about avoiding cuts to services, not about job losses, most of which will come about through natural wastage," he added. The CBI also reckons that revenue raising measures in the Budget don't go far enough. In particular, it believes that Housing Executive rents will need to be increased in a phased manner; that greater efforts are required to rationalise, sell-off or secure sales and leaseback arrangements on the government estate; and that if water and sewerage charges continue to be deferred there will have to be a modest real rise in the domestic regional rate. But there is a strong feeling that the lines of communication between politicians and the business community are better than ever. "Engagement between politicians and business is definitely improving. Businesses have got to collectively build on this," concludes Ian Coulter.

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