Posted on Tuesday 21 August 2012 by Ulster Business

Peter Robinson

Peter Robinson pauses momentarily before greeting me in his corner office at Stormont Castle.

He’s standing at his desk tapping away at an iPad, catching up, I assume, on some important emails after finishing a series of TV interviews following news that the First Minister and his deputy Martin McGuinness had reached agreement on a number of key issues.

However, the DUP leader is quick to correct me. It turns out he is actually checking the live streaming of the Open golf championship, keeping track of Northern Ireland’s elite golfers.

“Well, I’ve got to get my priorities right!” he jokes.

It’s a light-hearted opening to what quickly becomes a serious discussion on the state of the Northern Ireland economy, during which I want to find out if the First Minister really is leading from the front when it comes to rebuilding and rebalancing.

CORPORATION TAX

I raise the subject of corporation tax, and the protracted negotiations between the Executive, Westminster and the Treasury over whether Northern Ireland will be allowed to set a lower rate of corporation tax to the rest of the UK.

At the time of writing the early ebullience of local business leaders had given way to concern the Treasury was determined to sink the bid. I ask whether it’s effectively a dead issue.

“It’s getting to the stage by the end of summer where a decision is going to have to be taken by Cabinet. We’re agreed that it can be done, we’re agreed how it should be done, the big issues that are outstanding are around cost,” he says, clearly less bullish than a few months ago.

EU law means Northern Ireland has to make up any shortfall in lost tax receipts with a reduction in the block grant received from Westminster, should it bring corporation tax into line with the Republic’s 12.5% rate.

“When the consultation document came out from the Government it indicated a cost level to our block grant in the region of £300m and that has grown and grown as Treasury have thought up other issues they should throw into the pot. It just seems to me that the general strategy of the Treasury was to grind down the process to make it as slow as possible and as costly as possible so we would be the people that would walk away at the end of the day,” adds Mr Robinson.

“Ultimately it will be cabinet’s decision as to how many of the Treasury add-ons they include. There is a point obviously that will be reached where the loss to our block grant would be of such as scale that it would cost us more jobs than would be created by being able to have a lower level of corporation tax.”

If the Treasury gets its way and ups the ante to that point, what next, I ask? What other way is there to stimulate our economy?

“I suspect that is the question I will be putting to the Prime Minister because it was the Prime Minister who indicated that we needed to rebalance the economy,” says the First Minister.

“If he rejects or makes this proposal unpalatable then there has to be another set of proposals. There are other things we could do but all of them come back to dealing with tax in one way or another, so will Treasury be any more helpful with an alternative?” he asks.

“We’re getting to the stage where in Europe we are running out of road on the length of time we’ll be able to put offers on the table (through Selective Financial Assistance). If that happens we’re down to having to sell Northern Ireland on the basis of the skills that are available, the fact that we are competitive in terms of both property and labour, and we have well educated young people in abundance.”

FOREIGN INVESTMENT

The First and Deputy First have certainly worked hard to promote Northern Ireland’s attributes overseas, participating in trade missions to the US, China, India and the Middle East in the last year.

He believes they have made a good start in changing the perception of Northern Ireland in the rest of the world, but only a start.

“There will still be many people in business throughout the world who will see the events of the 12th of July in Ardoyne as the only point of reference they will have about Northern Ireland... who’ve watched television over the last 30 or 40 years and all they’ve heard is people being shot and killed,” he says.

“A major job has to be done to show that as a society we have changed and they shouldn’t judge us by 800 yards around the Ardoyne shops. If Martin McGuinness and I are out there, people are forced to face the reality that something has changed.”

Earlier this year the Ministers met Xi Jinping the deputy premier of China and Madam Liu Yandong, the most senior female politician in China. Having established those relationships, they have been invited by Madam Liu to go to China later in the year, which Mr Robinson sees as a big opportunity.

“We’ve had a good relationship with the US and we will continue to put a lot of effort into it. But we have to recognise that India, China and some of the Middle East countries all have massive potential. To get a very small part of the Chinese or Indian market would make a massive difference to a small country like Northern Ireland,” he says.

He points out that once one big name investor is attracted others follow, using the example of the New York Stock Exchange. Its decision to set up a base in Belfast helped encourage Chicago Mercantile Exchange to also establish an office here.

“Off the back of CME we now have another Chicago company that is looking at Northern Ireland who are involved in IT. Our best selling point is that 70% of the companies that come by way of FDI and invest in Northern Ireland then reinvest in Northern Ireland,” he adds.

CONFIDENCE

It’s clear the First Minister is well briefed on the economic issues facing Northern Ireland and he’s keen to reinforce the Executive’s mantra that the economy is at the centre of its Programme for Government.

Those claims have been called into question, particularly by commentators who believe the Executive has shied away from difficult policy decisions – for example introducing water and prescription charges – that would raise revenues but make the politicians unpopular with their electorate.

It’s an argument Robinson rejects: “We have easy answer economists out there who, because they want more money to be put into stimulating business say people should pay more. Go out there where people are finding it very difficult to make ends meet or hold on to their job, and say, we need another £400 a year off you and that would have a massive impact on those individuals. We can’t look at just one aspect of the responsibility we have.”

The Minister is equally critical of the media for what he sees as a relentlessly negative and harmful approach to business stories.

“You can’t turn on the television or the radio or lift up a newspaper without hearing bleak and dismal stories about the economy. That has the impact of encouraging people to hold on to their money, keep it in the bank or to not go out and make major purchases. That lack of confidence hits the retail industry and more generally the construction and manufacturing industries as well. Who is going to go out and buy a house if they think it will be 10% cheaper in another six months time,” he aks.

But surely, I suggest, it is official Government or independent figures that show unemployment is still rising and house prices are falling, and that’s what the media reports?

“The media choose to take the negative lines out of the labour force statistics,” counters the First Minister.

“They could equally have said that Northern Ireland has fewer people unemployed than Scotland, England and Wales, our percentage is lower. That’s the story the media could have published – instead they report there are another 400 people out of work. If statistics are going to be used let’s have all the statistics and not just the dismal ones.”

The Executive is working to restore confidence doing what it can, he says, pointing to the recently finalised Investment Strategy. It envisages an investment programme of £12.6bn, with £5.4bn to be delivered between now and 2015, potentially supporting 13,000 construction jobs.

“The important element of having the strategy is that it allows the department to plan and it allows the construction industry to plan. They know what we are building and when we are building it. It is something the construction industry made clear to us was important,” says the Minister.

“I cannot but think that the property market has reached the bottom. What we need to do is to build up confidence for people to come into the market to buy, or people can’t build. It is vitally important the market is up and running again and there are some good indicators that will hopefully encourage people to take their money and start spending it again.”

And Mr Robinson believes there are some genuine reasons for optimism.

“I think we have all of the skills within the business community, there just needs to be a bigger business community in Northern Ireland. And we need the business community that is there to be more involved in export led growth in their companies,” he explains.

“Less dependence on the public sector has to be the way forward if we are to improve our GVA. That requires us to bring in high value jobs – financial services, business services, IT, green technologies.

“If we do get the lower level of corporation tax we’re no longer looking for the back office or mid office jobs, we’re looking for the shop front where profits can be gained in Northern Ireland and companies can keep more of them.”

Whether there will be the opportunity to test that theory, remains in the balance.

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