Mr. Paul Mac Flynn:

For much of the data on health outcomes, we get Northern Ireland as part of the UK. On education, for the OECD data, Northern Ireland was included in the sample for some of the years when surveys were done. We have some good information on that point. We have built on that information to look at skills and the under-utilisation or mismatch of skills within the Northern Ireland economy. A labour market with low skills ends up having low value-added employment. This then feeds back into fewer people gaining skills, which can result in a downward spiral. I am not aware of anything specific regarding the health outcomes.

On the funding mechanism for Northern Ireland, everyone is coming around to the idea that the Barnett formula has had its day. It probably had its day a long time ago but now this idea is finally coming to the fore. On devolving taxes, the idea of having an Executive which is raising revenue does make for better policy, particularly in terms of economic development. I would argue this has been one of the Executive's biggest downfalls. However, there are real risks involved in devolving taxes. For example, income tax was devolved in Scotland. The Scottish economy ended up growing at a slightly slower rate than the rest of the UK economy. Scotland consequently ended up having a shortfall in tax revenue raised, even though it increased tax rates. The problem is that the UK should have adopted a federal system a long time ago. Like other federal systems, such as Germany and Australia, it could have had proper systems in place where states or regions or whatever they are called have their own revenue raising powers and an equalisation process occurs between them. This has not happened and is never going to happen in the UK. That is why I deal with issues of fiscal devolution very cautiously.

The issue of corporation tax is slightly more nuanced in that the Executive has permission to seek the devolution of corporation tax. It has never exercised the right because it is contingent on Northern Ireland having a stable funding situation in order to ask for it. It has not had anything like a stable funding situation since that was granted.

Any of the research I have seen on foreign direct investment shows that for the companies Northern Ireland should be seeking to attract, corporation tax is not coming up as an issue any more. Previously it was on the agenda but it has fallen down several rungs of the ladder of priorities. That is why I talk about it as being a distraction from other policies where we could be making serious inroads with those investors.