During the past year, while Northern Ireland's politicians have been struggling to implement the Good Friday agreement, a strategy steering group appointed by Mr Adam Ingram, Minister of State for Northern Ireland, has been preparing, in consultation with the non-political community, proposals for the economic development of the area. It does not seem to have consulted the politicians, however, and this could prove unfortunate, for a new administration in the North, should one emerge next week, may not have the feeling that they "own" this realistic plan.
Given that peace gives Northern Ireland its best development opportunity in decades, the group proposes that it now build on its comparative strength vis-a-vis the rest of the UK, namely its more favourable demography; its greater level of participation in higher education; its 10 per cent lower cost of living; its strong "green" image; and its excellent telecommunications network. These are all strong points - although it has to be said that except, perhaps, for the cost-of-living factor, the Republic is even better placed than Northern Ireland in these respects.
But the report is also frank about Northern Ireland's weaknesses - its high rates of long-term unemployment and benefit dependency; its small and weak manufacturing sector which is dependent on government grants; its poor record in technical education and job-related training; its low spending on R & D and low uptake of information and communications technology; its high electricity costs; and, above all, its very high dependence on public expenditure. It also suffers from the unfavourable comparison between corporate tax rates North and South. It has lost Objective 1 status, which all the neighbouring counties of the Republic retain.
Some of these are problems which we share with the North but in several the North is at a severe disadvantage vis-a-vis the Republic. These include its electricity costs, its far higher corporation tax rate, and some aspects of its educational system.
The group has proposals to deal with each of these.
Electricity prices in the North are uncompetitive with the Republic, Britain and Europe. It says this cannot be resolved "while the existing contractual arrangements for electricity generation remain", and proposes that the revision of these contracts be brought to a speedy conclusion. As an interim measure £40 million held by the Department of Economic Development from the abolition of the nuclear levy in the UK should be used "to buy out generating capacity currently under contract".
It also proposes that an all-Ireland market for energy be established as a matter of urgency and that future energy investment decisions be taken in the context of this wider energy market. On corporation tax the report is trenchant. Despite past disappointing discussions with the Chancellor on more minor tax issues, it proposes the creation of a special rate of corporation tax for new inward investments over a five-year period. However, following the failure of the British government to secure Objective 1 treatment for Northern Ireland, together with German and other opposition to our existing low corporation tax rate, EU approval of this crucially important proposal may prove impossible to achieve.
On education, the report draws attention to the fact that in 1997-98, 62,000 Northern Ireland residents were in higher education in Britain or the Republic, while within the North there were only 50,000 places - some of them filled by students from here. And of those who go to Britain only 25 per cent return after graduation, which represents an appalling brain drain for any community.
Among many worthwhile recommendations the group proposes the implementation of the Dearing Report recommendations for additional higher education places, although, given the scale of this brain drain, I doubt the long-term adequacy of these recommendations. It also calls for the establishment of a "valued sub-degree level vocational education programme" - a recommendation which presumably reflects concern at the unfortunate dearth in Northern Ireland of institutions such as our RTCs.
The report also accepts that while "the educational qualifications of those at the lower end of the spectrum in Northern Ireland are increasingly similar to other regions of the UK . . . UK educational standards are low by international standards. This reduces the attractions of Northern Ireland as a location for mobile investment (and) retards indigenous economic growth."
Although education in Northern Ireland is generally much more generously financed and better-staffed and equipped than in the Republic, the combination of the English 11-plus test and A-level exams at the end of the secondary cycle seems to produce a high rate of early drop-outs as well as a shortage of flexible and adaptable school-leavers. And, together with a much higher proportion of university graduates available here, it is the existence of precisely these kinds of school-leaver that draws US industrial investment to Ireland and Scotland rather than to Northern Ireland, England and Wales.
ANOTHER element in industrial promotion not referred to in the report is the issue of North-South co-operation in this area. Such co-operation is all the more necessary because, while the report does not specifically advert to the fact, the industries targeted by the strategy group as having the greatest potential for growth are precisely those on which our IDA has been concentrating its efforts: electronics, telecoms, software, health technology and tradeable services such as financial services and call centres.
Clearly there is a powerful case for joint North-South action in this area, but, unhappily, the establishment of a joint North-South IDA-IDB was opposed by the UUP in the Good Friday negotiations. In the Republic we are now facing a situation in which we will be unable to supply manpower for the volume of new industrial investment we are capable of attracting. The North is short of such investment in precisely the same range of high-tech industries. That imbalance could be remedied if we had one industrial promotion agency for the island. We must hope that when a new administration has had a chance to settle down this issue may be revisited.
It would be a mistake to underestimate the scale of the problem Northern Ireland faces in securing the kind of economic growth that will be needed to increase employment by 1.5 per cent a year, and to raise its GNP per head from 80 to 90 per cent of that of the UK within the next decade - which implies a growth rate of about 3.5 per cent.
Now, 3.5 per cent a year is less than the growth rate achieved by the North during much of the decade preceding the outbreak of violence there. But European growth rates were then twice as high as they are today, and in the 30 years that have since elapsed the North's economy has atrophied, deprived of the chance to modernise by the appalling violence of the intervening years. Today its degree of dependence on subsidies approaches that of East Germany and the Mezzogiorno of Italy.
As a result, its public sector now accounts for 55 per cent of regional GDP as compared to 40 per cent in the UK, and the proportion of the population at work in that sector is over 50 per cent greater than in the UK.
Turning around such an economy so that it becomes viable is a huge task, which will need not merely the support of the UK but also every assistance we in this State can provide. Generous support for a Northern economic recovery should now become a key element in our national strategy.
This report shows that there is sufficient vision and wisdom within the non-political element in Northern Ireland to assist a new administration there to lead it towards a more prosperous future, with a possibility of moving towards full employment. We must hope that the new indigenous political leadership which may now emerge will have the skills and dynamism to build on this firm foundation.