Fergus O'Dowd (Louth, Fine Gael)
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I welcome representatives from Trade NI. Joining us to discuss the all-island economy are Mr. Glyn Roberts, Retail NI, Mr. Colin Neill, Hospitality Ulster, who are both online, and Mr. Stephen Kelly, who is present, from Manufacturing NI. I thank them very much for their attendance.

I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present, or who give evidence from within the parliamentary precincts, is protected pursuant to both the Constitution and statute by absolute privilege. However, witnesses and participants who are to give evidence from a location outside the parliamentary precincts are asked to note that they may not benefit from the same level of immunity from legal proceedings as a witness giving evidence from within the parliamentary precincts does. They may consider it appropriate to take legal advice on this matter. Witnesses are also asked to note that only evidence connected with the subject matter should be given. They should respect directions given by the Chair and the parliamentary practice to the effect that, where possible, they should neither criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of that person or entity.

Members are also reminded of the long-standing parliamentary practice to the effect that we should not comment on, criticise or make charges against a person outside the Houses, or an official, either by name or in such a way as to make him, her or it identifiable.

I will call speakers in the following order: Mr. Kelly, Mr. Roberts and Mr. Neill, if that is okay.

Mr. Stephen Kelly:

I thank the Chair. I am chief executive of Manufacturing Northern Ireland. We take the largest definition of manufacturing in the North. We cover anything from aeroplane wings to chicken wings and everything in between. That gives a little insight into the type of products our members make.

Manufacturing NI represents approximately 4,500 manufacturing businesses, the vast majority of which are SMEs, as is the case in most economies. These businesses are located across every constituency in Northern Ireland and are particularly strong in our rural communities, where manufacturing represents the largest part of that rural economy. The sector represents approximately 15% of the North’s GDP, which is equivalent to about 11% of total jobs directly. That is about 90,000 people who are directly employed in our manufacturing community. Despite the perception that manufacturing is perhaps the sunset part of our economy, it is quite the opposite. Since 2010, we have seen that 21% more people are now employed in our manufacturing than were in 2010. Manufacturers continue to employ more people, creating wealth and work across Northern Ireland.

Approximately 70% of those manufacturing jobs are outside of Belfast. As I said, it is a big contributor to the rural and regional economy. The impact becomes particularly pronounced in council areas such as Mid Ulster, Mid and East Antrim, and Armagh City, Banbridge and Craigavon. In Mid Ulster, approximately one in four jobs are direct manufacturing jobs; it is about one in five in the other two councils. However, when the additional jobs that are 100% supported by the manufacturing community are included, it means that in a place such as Mid Ulster more than half the people are directly or indirectly dependent on a manufacturing wage. The figure for the areas of Armagh City, Banbridge and Craigavon, and Mid and East Antrim, is approximately 40%. Overall, this means that across the North approximately one in four families are dependent upon that manufacturing wage to run their homes and households.

The manufacturing sector’s impact goes much wider and well beyond that immediate core economic impact as regards jobs. Wide-ranging benefits are created for the Northern Ireland economy as a result of our manufacturing activities. I will give some examples. Just last week, a report from the Department for the Economy, which we shared with the committee, showed that exports of manufactured goods, which are a critical part of a small regional economy's wealth, for the year to June 2023 stood at £9.9 billion. That is about £3 billion more than it was in 2016. In the year to June 2023, exports to the EU were up by 19% and exports to the rest of the world were up by 20%. There is a slight health check on those figures in that these are nominal figures that have not been adjusted for inflation.

Ireland continues to be our largest export market, which is not surprising given our proximity. In addition to that £9.9 billion in good, clean, external cash we bring in from the goods that we make and sell across the EU and the world, we also have the benefit of selling into the UK market. In 2021, the goods element alone for the UK market was worth a total of £6.7 billion in 2021, which was the last reported year. In addition to almost £10 billion in export sales, we have almost £7 billion in external sales to the UK. If we treated that like an income into a family, we are bringing in and spreading a very significant chunk of money across communities in Northern Ireland.

Manufacturing also accounts for approximately 60% of total business investment in the North. It not only supports the development of quality products but keeps our sector competitive. Manufacturers contribute about 50% of the North's R and D spend. When government and academia are excluded, however, it means about two thirds of all business spend on R and D is from our manufacturing community alone. Today, our manufacturing economy is about 5% larger than it was pre-pandemic. We came back quicker, stronger, and employing more people and making a larger economic contribution. We know that the forecasts we have had done, and forecasts from the Department of the Economy and others, show that our manufacturing community is set to grow faster than elsewhere in the UK. That is partly driven by the unique market access we have as a result of the post-Brexit arrangements. We know that where that market access comes and where we are able to bring additional cash in, people are investing it in people and products. That investment in R and D I mentioned will continue to have a greater impact, not just now but into the future.

In a short paper I provided in advance to the committee, I suggested potential areas it may be interested in exploring. These include the experience in Northern Ireland post Brexit, since January 2021, and the engagement and structures in place to manage issues that may materialise, the practical experience of the Windsor Framework, which was agreed earlier this year between the UK and the EU, and the structures in place for the North’s production sector to deal with issues resulting from that framework.

It would be interesting to explore both passive and deliberate acts of divergence, either by the EU or the UK, which result in issues that may materialise in Northern Ireland, perhaps looking at the performance of the all-island economy since 2021 and the benefits we have begun to see in terms of dual market access. Since Brexit there have been new or returning barriers to the all-island economy which may be of interest to the committee. On the cost of doing business, which is common across the island, and particularly the issue of the all-island electricity market, we have some insight into that if the committee is interested. There is the availability of labour and the barriers to free movement that exist post-Brexit across the island of Ireland.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Mr. Kelly. There is food for thought there and I have plenty of questions. I invite Mr. Roberts to make his opening address. He is very welcome.

Mr. Glyn Roberts:

I thank the Chair for the opportunity to present. I am sorry I cannot be with the committee in person. I am the chief executive of Retail NI. We represent more than 2,000 independent retailers, wholesalers and suppliers to our sector. In fact, we have become a supply chain organisation in our own right because we now actively work with many small agrifood businesses developing their routes to market with our retail and wholesale members.

My role as one of the three core organisations of Trade NI is to outline our prosperity plan which the committee members have received a copy of. First, the three organisations are not here to talk about our past or our problems. We want to talk about the potential of our region. Despite the political situation we are well and truly open for business. As we meet I am encouraged that progress seems to have been made in returning devolution following the talks in Hillsborough this week. I know we have still some way to go in all of this but I hope that this week there has been progress made to a restored Assembly, Executive and cross-Border bodies.

This year is a very special year in which we remember and celebrate 25 years of the Good Friday Agreement. One of the things I observed was that while it was good to celebrate how far we have come in the last 25 years what we now need to focus on is the next 25 years for our region and for our island. We have had a peace process and an ongoing political process. The central message in our plan is that we now need a prosperity process. That is why we believe that the big, bold plan we have presented today can identify some of the solutions. We launched this plan at the House of Commons with the Secretary of State earlier in the year and in Dublin with the Tánaiste at Iveagh House. Our event at Westminster was one of the biggest ever Northern Ireland events with more than 80 embassies present. The event we did with the Tánaiste a few months ago brought a very significant Northern Ireland business delegation. Many were small businesses that perhaps had not done much in the way of cross-Border or all-Ireland trade in the past .

Whilst our report recognises how far we have come in the last 25 years it is about charting a path to greater economic success over the next decade and beyond. In many respects it has elements of a draft programme for government for a restored Assembly and Executive. We have been very clear in everything we do that we want Northern Ireland to be the very best place in the UK and Ireland to locate, start and scale up a business. Our report identifies key strengths of the Northern Irish economy and how these can be leveraged to deliver greater economic growth and prosperity in future decades for local communities and businesses. We want to see a restored Stormont but a restored Stormont that is not what it was in the past. We want a Stormont which actually does stuff, things like a budget and a programme for government and does not collapse every few years. We also need to make sure we fix our planning system to facilitate speedier construction of major infrastructure projects, invest in our educational institutions and ensure that our workforce for the future has the right skills and competencies.

We have vast untapped potential in Northern Ireland. We have a skilled workforce and a steady pipeline of talent from our higher and further education institutions, dual market access, as Mr. Kelly stated, and emerging clusters in new industries such as tech, cybersecurity and health and life sciences.

Northern Ireland's journey to prosperity is not just beginning. It is a journey that businesses in our region have been on for many years. Despite the challenges that existed and the disconnect in external perceptions businesses have demonstrated extraordinary levels of resilience and determination to make things better. We need to build on that positive momentum. The Windsor accord gives Northern Ireland opportunities to be the gateway to the European Union and to be a truly global-facing region and above all else to make Northern Ireland an ecosystem of innovation. We will not achieve any of this unless we have a restored Executive and cross-Border bodies.

In conclusion, in terms of North-South we need to reimagine and re-energise the North-South agenda. Our business community is the key pathway to do this. In many respects in developing the North-South we almost have to take the politics out of it. We have members who trade the length and breadth of this island every day. We make the points today not for political reasons but to make our shared island a peaceful and prosperous one.

There are two immediate opportunities that we can identify to make that step change. The €1.1 billion PEACEPLUS fund launched in September has been delivering economic regeneration as one of its core objectives and the all-island strategic rail review that has the objective of the delivery of the 200 km intercity service connecting Belfast, Dublin and Cork. If we look at what could be a big game-changing infrastructure project for this island, having a high-speed rail service between Belfast, Dublin and Cork would surely be one and move us towards a much more connected island. I thank the Chair for his time.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Mr. Roberts for his constructive suggestions. I now invite Mr. Neill to make his opening address.

Mr. Colin Neill:

I thank the Chair and the committee for the opportunity to present. As Mr. Roberts has covered the prosperity plan, I will give a bit of background into hospitality in Northern Ireland and its role in the economy. The industry body, Hospitality Ulster, was created 151 years ago, before Partition. It is by nature a membership body for the hospitality industry.

The hospitality industry in Northern Ireland is Northern Ireland's fourth largest private sector employer, with a €2 billion annual turnover and sustains 72,000 jobs. Over the last ten years hospitality has outgrown the Northern Ireland average for job creation and employment. Our sector grew more than 30% as opposed to the Northern Ireland average of 18%. We play a huge role in the agrifood sector. The hospitality sector buys a third of all Northern Ireland's agrifood and indeed we account for two thirds of Northern Ireland's tourism spend.

Mr. Kelly touched briefly on Brexit and the Windsor Framework. A very simplified, and I stress simplified, update on that in our context is that it has not really caused that many problems for beverage because a lot of our beverage is packaged on the island of Ireland. The beverage companies tend to be global operators and are used to a lot of customs paperwork. Where we have seen changes is in food service because it is based on a wholesale system. The majority of our food service comes through the red lane because the businesses have an island of Ireland footprint and want to be able to trade freely. Donegal is predominantly supplied in food service from the North.

On issues that would go across, Tourism Ireland and the growth of tourism potential in Northern Ireland is currently approximately half of what is could be so there are huge economic opportunities there. There are a few challenges such as the electronic travel authorisation that will be brought in and that will cause barriers. There are also opportunities. In particular, we have had initial discussions with the Tánaiste's office about joint programmes North and South and about skills particularly for young people and how we can help people who are not economically active into the economy. We have a huge opportunity because we have no barriers to entry and have jobs at every level.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Mr. Neill. We will do our rotation and I will explain how we do this for our guests. Each group will have ten minutes and will ask questions.

We have people online and Mr. Kelly here. Witnesses should answer in the manner they think appropriate. We try to manage our meetings informally. The order of speakers is Fianna Fáil first, followed by Fine Gael, Sinn Féin, the SDLP, Independents, Alliance and so on. Those who are online may not be able to see the clock so I will indicate when there is a minute left.

Niall Blaney (Fianna Fail)
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I hope the Chairman will allow a little leeway because there is much that is interesting in the three presentations.

Fergus O'Dowd (Louth, Fine Gael)
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I do not have a problem with that. We will have 15-minute slots. There is no issue.

Niall Blaney (Fianna Fail)
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I welcome Mr. Kelly, Mr. Neill and Mr. Roberts and thank them from their presentations. Mr. Kelly gave a very positive outlook in relation to manufacturing in Northern Ireland. There is an enormous number of businesses. The figure is shocking. One would never think that Mr. Kelly would represent 4,500 in Manufacturing Northern Ireland. That says so much about the sector. Moreover, there is much that we in the South can learn from that. We have shifted from manufacturing towards tech and pharma and have forgotten what we used to do, to the extent that we depend too much on certain sectors. There are lessons we could learn from Northern Ireland because we could have much more manufacturing than we do. I say that in passing. It is not an issue I intend developing with Mr. Kelly today.

I am interested in the mid-Ulster issue. I have stated at different times that 40% of exports come from manufacturing in mid-Ulster. It is funny that there has been a shift from Belfast to mid-Ulster. What are the reasons for that? I wonder if the motorway network and the development of the A4 has something to do with that. East Tyrone has developed well whereas west Tyrone has not, and the A5 is still an outlier. The whole west of Northern Ireland has not really developed and the infrastructure has not developed either. Has that been a major contributing factor in Mr. Kelly's view? West of the Bann, at the northern end, it is good to see the 20-odd miles of motorway from Derry to Dungiven completed. It would be nice to see the last section done. Will that be a major contributor to possible future development in manufacturing, and jobs generally, in the north west of Northern Ireland, particularly around Derry?

Mr. Kelly predicts that manufacturing will grow faster in Northern Ireland than in any other region. I would like to know more about that and Mr. Kelly's reasons for making that statement. Mr. Kelly has nearly given the questions. I would like to hear him answer them.

There has been a lot of talk in recent months about the Windsor Framework not working. Given that manufacturing is doing so well, what is Mr. Kelly's opinion in relation to the framework? Are there still barriers that need to be addressed or are things working fairly well? Does Mr. Kelly want to see anything changed?

Manufacturing Northern Ireland members export many of their goods to the EU. Since Brexit, it no longer has representation in the EU. Is that a barrier for manufacturing businesses? What would Mr. Kelly like to see replace that or is there a battle among businesses in Northern Ireland to have some other mechanism of representation in Europe? What are Mr. Kelly's views on that?

Mr. Roberts represents 2,000 retailers. On the all-island rail review, he is dead right. It is important that we see this happen. As somebody from north Donegal, close to Derry, it is important from a Northern Ireland perspective that a spur is made from the Belfast to Derry route. It would really make Northern Ireland and every aspect of the northern part of the country. I and others have been battling hard to have this spur included at some stage. I do not care when but we need to start talking about it and lobbying for it. I would appreciate Mr. Roberts view on that.

I thank Mr. Neill for his presentation on hospitality. We have a squeeze here in the South with the different wars that are taking place. Refugees, including Ukrainians, are coming here which has put a bit of a squeeze on tourism. Is Hospitality Ulster finding the same with its hotels? What is Mr. Neill's view on joining up the Wild Atlantic Way with the causeway coast and the eastern coast, so that there would be an all-island approach to tourism? The Wild Atlantic Way in the western region has been one of the great examples of how tourism should be run in this country. Tourism numbers have taken off since that was developed. It would be a smart approach, and one Tourism Ireland should and could push more, to join up and take an all-island approach to tourism with an all-island route.

Mr. Stephen Kelly:

I could answer all those questions on my colleagues' behalf but I will let them get a word in edgeways.

I thank Senator Blaney for his questions. In terms of a shift of manufacturing jobs out from Belfast into provincial Ulster, it is driven by two things. The first is the Government never turned up in mid-Ulster and created jobs and the people there decided that they needed to work and the only way they were going to work was if they created these jobs themselves. This has all happened for cultural and entrepreneurial reasons and based on a view that the government will not come and do this for us.

Some 40% of the world's supply of mobile crushing and screening equipment comes from a little triangle, as the Senator correctly says, between Cookstown, Dungannon and Omagh. That was driven by a number of local entrepreneurs starting and growing a business. Nine months after the Good Friday Agreement was signed, an American firm was attracted by the stability and the peace that had arisen in the North and invested in that business. It now has eight facilities and dozens of other businesses which do similar things have spun out from that one business. They dominate the world as a result of the expertise and experience they have gathered during that period. At its core is an ability to bring engineering solutions to the world and having the gift of the gab to be able to sell this to the world.

We often undersell our ability to sell. Colleagues of ours talk about how, if one ever asked anybody from the Northern Ireland business community how they are doing, they will always say, "Not too bad." "Not too bad" is code for "We are doing really good but we dare not say it." Like the old adage that you should never drive a better car than your boss, they will be shy about showing their success. That is evident, even in that community where there is such success in terms of world dominance in the products they make.

Undoubtedly, connections to the ports have helped. These are big pieces of equipment. On getting those to the ports, the Senator's comment on the development of the A4 road was correct. Equally, the absence of good infrastructure further west from there is the reason that area has been held back. I live in Derry city.

As someone who has travelled the road from Belfast for 19 years now, I can tell members how difficult an experience it was until the new section of the A6 opened between Dungiven and Drumahoe, as was mentioned. That one section has been transformative in terms of the attitude towards the north west, to the point where we brought our manufacturing leaders to Derry for the leadership summit in May, roughly four weeks after the road had opened. There were many manufacturing leaders and others who had not been to Derry in a long time, despite the fact they were only an hour away. They had the experience of going there and driving on that road. The city was looking beautiful, as usual. It was quite a tropical day. The weather was fantastic. The city was looking great, but their journey to the city was really smooth and straightforward. They began to see the opportunity that exists in the north west, the expertise and experience that people have up there and the availability of labour. More particularly, they recognised that it is easy to connect with the city. Finishing the job on the last section of the A6 from Drumahoe, to connect into the city's network itself, is absolutely critical. It is dependent on the outcome of a court case around potential environmental crime. Hopefully, we will get it resolved as quickly as possible.

Alongside that is the A5 road, which leaves the Border at Aughnacloy and goes up into Derry. It is a very personal road for me, because I lost my father on that road. He was one of dozens of people who were killed because of the state of the road. It is a very personal road for our family. It is not just a professional interest that I have in it. The upgrade of the road is long overdue. The Irish Government gave commitments in terms of its development, which were greatly appreciated. Those commitments were rowed back on a little bit. It would be great to see them remade. The road will be critical to the economic ambitions of people in the west and critical to the safety of people travelling there. It is important that both of those are considered. What price do you put on a life? I know the pain and hurt that was caused when my father was lost on that road, and that has happened dozens of times. It continues to happen to this day. That is the real cost. It is not the cost of the tarmac, the central reservation or whatever else; it is the cost of people's lives that needs to be borne in mind.

The Senator asked a question about the Windsor Framework. The Windsor Framework did very little for our manufacturing community, apart from maintaining our dual market access. That is the jewel in the crown that needed to be maintained. Some adjustments and easements have been made, but 1 October 2024, when the customs elements come into place, marks the start of the critical period. We may explore a bit of that later on. I am conscious of time running out of time for colleagues.

In terms of where we have moved to, a lot of the work that was done by the business community in the North was about shining a light on the consequences of choices that were being made by the UK Government in ensuring that when the UK and EU negotiated, the interests of people and the economy in Northern Ireland were protected. That has largely been done, with the exception of some points of friction that remain. The big challenge going forward is that the EU or the UK will either passively or deliberately diverge. It is at that point that we need a voice speaking on behalf of the businesses and communities in Northern Ireland in the EU. We cannot rely on the Irish Government or the EU to do that. We will not have our own representation there. We are out of the EU and will not have that representation. Having MEPs in Ireland who have an interest in the North and, potentially, a presence there in order to get closer to the people and the issues affecting them will be critical for us. We are worried about the long-term and divergence issues. We do not have proper sight of what may be coming. Equally, the EU does not have proper sight of the impact that its decisions may have in the North.

Fergus O'Dowd (Louth, Fine Gael)
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I do not mean to interrupt, but there is only one minute left. Perhaps we should have 20 minutes per group. I am conscious that Mr. Kelly's colleagues need to contribute. We will add another five minutes on.

Mr. Stephen Kelly:

I was just about to finish anyway.

Fergus O'Dowd (Louth, Fine Gael)
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Mr. Kelly is very good. I could listen to him all day because he talks a lot of sense.

Mr. Stephen Kelly:

I want to reinforce the concern that we have, as a business community in the North, that we do not have a voice in those structures. The EU will not permit it, and rightly so. We are not a member of the EU. No other third country in the world occupies the position that we do currently. That is difficult for the EU. We need to ensure that there is a free-flowing, open conversation that includes the voice of people of the North being represented in some fashion.

Fergus O'Dowd (Louth, Fine Gael)
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Do Mr. Kelly's colleagues want to come in?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Could I just ask-----

Fergus O'Dowd (Louth, Fine Gael)
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Just one second. I have no problem with the Deputy asking a question. I am just trying to get this thing right. I am conscious that everyone should be able to make a contribution. I want to bring in the other witnesses, if they wish to contribute.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I have to go back to the Chamber.

Fergus O'Dowd (Louth, Fine Gael)
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I just want to get the times right. I do not want people complaining that they cannot contribute. We started off with ten minutes and we are now at 20. There is no issue with time; I just want to make sure that everybody is fairly included. If Deputy Smith wants to ask a question, that is fine.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Apologies for missing the earlier part of the meeting. I was in the Chamber for parliamentary questions. I am due back there to ask another question.

With regard to the promotion of Ireland from an industry point of view, it is great to hear the very positive message that the witnesses have. I represent Cavan-Monaghan, and there is huge interdependence between the counties. I have met Mr. Kelly in Derrylin and Tirmonen on a number of occasions. Does the witnesses see merit in a closer divergence between the Enterprise Ireland, IDA Ireland and Invest NI? I know, from partaking in trade missions in the past, that Northern Irish companies and businesses were always represented on the trade missions led by Government Ministers over the years. That was always positive. Do the bodies represented here today have adequate links with our research institutes and our colleges of further and higher education in terms of preparing people with the skills and the knowledge for the jobs that the sector envisages will be available in the future?

Fergus O'Dowd (Louth, Fine Gael)
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If Mr. Roberts and Mr. Neill want to comment on any of the issues or questions, or to add to the discussion at this stage, they are more than welcome to do so.

Mr. Glyn Roberts:

Perhaps I could touch on the point about infrastructure. When I last presented to the committee in 2017, with our colleagues in Retail Excellence Ireland, we flagged up the high-speed rail service between Belfast and Dublin. At that point it was seen as quite a left-field idea and it was not even on the radar. Now, it is a mainstream policy objective for the Irish Government and, indeed I hope, a restored Northern Ireland Executive. It would open up the opportunity for people to commute between Belfast and Dublin. It would certainly take the pressure off the housing situation in Dublin as well. It has to be one of the big projects that we have a serious dialogue about when Stormont is restored. We should not forget about the A5, as Mr. Kelly rightly pointed out. There is also the York Street interchange. It is very striking that you can drive all the way from Cork and the first traffic you lights you will come to are on York Street in Belfast. We need to make sure that we get that interchange there.

We have members in every village, town and city. I am very conscious that many of our members in rural towns feel left behind. They are of the view that infrastructure needs in our small towns are not being given the priority that they deserve. One of the things that Retail NI has highlighted is the need for a rural town infrastructure fund to make sure that those towns can get their share. There is also a very strong case for more levelling up money to be ring-fenced for rural towns. Indeed, we are always of the view that the shared island and levelling-up funds, and the money that we are due to get for town regeneration from the UK Government, should be aligned in the one direction.

On the point about Invest NI, obviously, a new CEO will soon be in post, an ex-IDA Ireland career person. It is due to recruit a new Chair as well. I hope that gives the organisation a new start, because it does need it. Invest NI has been punching below its weight for quite some time. I think it does a reasonably good job in terms of foreign direct investment, but one of the challenges of us is the indigenous business base. Many of the small businesses that we work with feel that Invest NI is simply not cutting the mustard. One of the things that Retail NI has suggested, in the review of Invest NI, is that we almost need an office for micro and small businesses to make it as easy possible for people in Northern Ireland to start a business. If there is one thing that we cannot have too much of, it is entrepreneurs.

I believe that with dual market access and with the progress we have made with the international investment conference and the senior American delegation, we have, in the medium to long term, considerable opportunity to be a Northern Ireland powerhouse that will transform not just our region but also make the whole island an island of opportunity.

Fergus O'Dowd (Louth, Fine Gael)
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Would Mr. Neill like to come in?

Mr. Colin Neill:

I will be as brief as I can because I realise we are pushed for time. There were questions about the impact of conflicts around the world on our accommodation sector. There are some differences. With Ukraine, the UK Government chose schemes to put people in private dwellings and support that approach. We have not had the same pressure but some hotels are holding people who are seeking asylum and are in that immigration process. However, it has not had the same consequences. Some of our colleagues down South, and we have worked a lot with partners in the South, have said they have seen a drop in footfall and food and beverage spending because the country does not have the accommodation levels to cope.

Joining the Wild Atlantic Way, the Causeway Coastal Route and other routes makes total sense. Northern Ireland wants to grow tourism, and indeed the island does. We have to look more at getting people to stay and spend for longer. We are moving into a different world of environmental impact on travel. As we grow tourism, we must learn from around the globe about the impact on communities. We have to do tourism with communities and not to them. We cannot impose tourism. Our rural communities must see the benefits as well. They cannot just be places to which coaches arrive, people get off to take a picture and move on. It is important that as we grow tourism, we approach it in an holistic way. We must connect our main offers and try to get people to stay longer.

Both my colleagues have touched on infrastructure, which is key for our hospitality and tourism sectors. It is not just about our road network but also our air and sea networks. There are particular opportunities for air travel. Dublin Airport is reaching capacity. There is an opportunity to develop the international airport in the North. We need significant numbers of flights to arrive, North and South, from our key markets. That would help to benefit everybody across the island.

Frank Feighan (Sligo-Leitrim, Fine Gael)
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It is great to see Mr. Neill, Mr. Roberts and Mr. Kelly. We have seen a lot of them in the past year, which is positive. I attended the launch of the report in Iveagh House in July and it was incredible to see how the Northern Ireland economy has changed. Retail Northern Ireland will drive growth and prosperity in the next ten years and we need more of that. It is welcome.

We have been talking about infrastructure and other areas. There are one or two areas about which I want to talk. The cost of doing business and the cost of energy in the all-Ireland electricity market has its pluses and minuses. What are our guests' views? Businesses in the Republic, and I am sure the same is true in Northern Ireland, have faced considerable increases in the cost of energy. I know the situation is beginning to stabilise. How do our guests see that situation? Do they think it is the right model?

The are issues in respect of the availability of labour and the barriers to free movement. Many workers are coming in from the EU and outside the EU. Does Northern Ireland have the same challenges as we have?

Our guests have spoken about the area to the west of the River Bann and the requirement for more infrastructure. I have noticed since the Covid-19 pandemic that talented people are moving into non-traditional areas because of the availability of broadband. Some people from Dublin and London have decided to fix their roots in rural Ireland and Northern Ireland. Have our guests noticed that? It is very positive. How do we capitalise on that in the future?

We need to take more cross-Border action in respect of education. We are thankful that we now have the Atlantic Technological University, comprising Letterkenny, Sligo, Castlebar and Galway. There is a lot of collaboration we can do. I am happy to see our guests again and they are welcome.

Emer Currie (Fine Gael)
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It is nice to see Mr. Kelly, Mr. Roberts and Mr. Neill. I was introduced to them by my cousin, Mr. Darragh Cullen, who is MD of Edge Innovate. I loved the mentions of Dungannon, Coalisland and Edendork, and how well those areas are doing in manufacturing. I am proud of my cousin and the work that Edge Innovate is doing.

My first question relates to the North-South Ministerial Council and the consistent absence of a working council since 2017. Will our guests give me an indication of the kinds of things they think we are missing out on as a result of not having that level of co-operation?

What can the Irish Government do to support manufacturing and the work our guests are doing? They are saying they cannot rely on the Irish Government but at the same time, the figures they have presented today are really impressive. It would be good for us to hear more about what they are doing and we should also understand what we can do to support them.

I believe that a salary cap of £37,500 has been put on workers coming into Northern Ireland. Is that correct? What impact is it going to have?

My last question relates to services and the all-island economy. We hear a lot about how well goods and trade are doing but at the same time, our services are lagging behind. Is that something we can address?

Where I am coming from this morning is a desire to talk positively about the all-island economy. Our guests' areas are performing well. However, I would agree that tourism is not doing as well as it could be doing. I want to hear about the institutions and structures, and how they could be working better from a political point of view to support the businesses our guests represent.

Mr. Glyn Roberts:

It is good to see Deputy Feighan and Senator Currie again. There was quite a lot in their questions. What we need to achieve is to consider how the Northern Ireland Executive does its programme for Government. Committee members will be familiar with the fact that the first thing the current Fine Gael, Green Party and Fianna Fáil Government did was to agree a programme for Government and then doled out the ministries. In the North, we do it the other way around. That has led to disjoined policy, a silo mentality and a lack of collective, joined-up government. It is good that the head of the Civil Service in Northern Ireland, Ms Jayne Brady, is engaging with the political parties on what a programme for Government in a restored Executive would look like. It is not just the policy we need to change. We must also change how we do policy in Northern Ireland. We in the business community do not want to be merely consultees. We want to be partners. A good example of the work of the previous Assembly and Executive was the high street task force, of which I was one of the chairs. Mr. Neill was also a member of that task force. We produced an agreed 14-point plan. It was not just agreed by the five political parties at Stormont.

It was also signed up to by some 33 business, trade union and voluntary sector organisations, so Northern Ireland can do "joined up". More importantly, it is about co-design, and "co-design" is maybe the one key word in our restored Executive. It is co-design between not just business but civic society, and Northern Ireland is well served by its strong civic society.

On the point about the cost of business, we in Northern Ireland are not just experiencing a cost-of-living crisis. It is a crisis in the cost of doing business as well. It is not just the energy stuff that is a challenge but it is also business rates. We pay the highest business rates in the UK by a country mile, and we were particularly alarmed by the reports this week that the Treasury wants us to increase our business rates by another 15%. That is just bonkers, to even consider such an idea when businesses are closing because they cannot afford to pay their rates bills. Reforming business rates has to be a number one priority, and that is something that an Assembly Executive can do.

Quite often we forget that it is not just the Assembly Executive that is down. The North-South bodies have not been able to function for quite some time as well, so they need to be re-energised and refocused when Stormont is restored. In saying that, despite those cross-Border bodies being down, our members are getting on and doing their trade cross-Border. Many of our members' staff in Border areas come from the other side of the Border. Our members' customers come from there. There is no such thing a Border when it comes to retail on the island of Ireland. They have been getting on and doing it, and I hope they are making a contribution to the economy. Let us not forget that retail is not just the largest sector in Northern Ireland; it is the largest sector on this island. Back in 2016 and 2017, with our colleagues in Retail Excellence Ireland, we produced an all-Ireland retail policy priorities document. That might be something we need to update at some point in the future.

Fergus O'Dowd (Louth, Fine Gael)
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Would Mr. Neill like to come in?

Mr. Colin Neill:

I thank the Chair, and again I will try and keep it brief. I am in an office where one has to move to turn on the lights. We are very energy conscious here. It stops one sleeping as well.

Starting with energy, while we are not the biggest energy users per seas individual businesses, as a cost of doing business we are actually the second most impacted. We were open 18 to 24 hours a day, and whether one has one customer or a 100, one is burning light and heat, and there are cooking costs and all of that. Energy is cited as one of the biggest challenges our sector has faced. Hospitality and tourism suffered heavily during the Covid-19 pandemic, and then the cost-of-living and cost-of-doing-business crises have impacted, so we have had three years where one has had to work hard just to break even.

On the point of labour, there are huge labour challenges in Northern Ireland. Yes, we have a substantial number of people economically inactive, and despite repeated government initiatives, that dial has not shifted. Whether that is down to the initiatives not being right, or whatever, I will leave that to someone wiser but we have got to find a way to engage the economically inactive. That said, to grow at a rate we need, we need exterior labour as well. There just are not enough people in Northern Ireland. We hear talk about benefiting from the Windsor Framework. One could not build a big new plant or premises here without the labour to actually run the thing, so it is a huge challenge.

The salary cap was mentioned. The new immigration salary cap is £38,700, which is going to come into effect in the spring and will be imposed by the UK Home Office. The median wage in Great Britain is £35,000 per year, and the median in Northern Ireland is about £32,000, so there is a huge challenge there again. It cuts off another labour source, and that was really important for a lot of our chef and managerial posts. They are important because tourism is much more developed around the world, and bringing in people of other nationalities from other locations and countries brings that experience and expertise that we do not have. We need to infect our own people with that enthusiasm for the industry as well.

Finally, on the all-island economy, correct me if I am wrong but I think Tourism Ireland is one of the few all-Ireland trade bodies that has got really well established on the back of the Good Friday Agreement. I would always be biased and say that with Tourism Ireland, if I was a company and I saw one of my areas had huge potential to double, that is where I would put my money. However, I know it is not as simple a thing as that. Historically, there have been challenges with the UK funding into Tourism Ireland being adequate, and that needs to be corrected. Then we need to make sure that every opportunity, whether that is growth areas in the North or growth areas in the South, is really targeted under that institution. Again, I reiterate what Mr. Roberts said about one huge challenge in Northern Ireland. We have progressively seen that the non-domestic or business rates have continuously been the area from where the Northern Ireland Assembly has sought to get money. It only has one revenue-raising power, which is rates. However, it has gone to such an imbalance now.

I live just on the outside of Larne. Some members might know it; it is a port town on the north coast, or the actual Causeway Coast. If one looks, 62p in the pound is what one pays in business rates. If I compare that to the City of London, it is 52p in the pound, and that is with the extra security and policing levy in London. There is just not the headroom to increase business rates any more. It is getting to the point where nobody can make enough money to pay them.

Mr. Stephen Kelly:

I thank the Chair. I will try and capture everything that has not been answered and maybe reflect back on Deputy Smith's questions as well. I will begin with the cost of doing business. It is an absolute scandal that this week, the regulators North and South published the profitability report for all the generators on the all-island electricity market, and it showed that they made 28% net margin. Some €1.6 billion of a profit after tax was achieved by the energy generators on the island. That money has hurt. That was for the year 2021 so that was not even the worst year with regard to the energy spike. We are being robbed blind as businesses and domestic consumers because it is only us that puts money into that market. It is not government money, North, South, UK or European. It is Irish people, North and South, and money out of their own pockets that is paying that €1.6 billion worth of profit.

Unless we can fix that market, there are no economic ambitions that can be realised, North or South. We are the second most expensive energy market in Europe. When it comes to manufacturing businesses, that is the second largest input cost for many of those businesses. If we are serious about having any economic ambition on the island, we need to fix that market. It was designed in the interests of the energy generators. We warned about this at the time. It is a model taken from central Europe where there are massive amounts of interconnection and trades can flow really freely. It is not fit or suitable for this island, and as a result of the misdesign - that is the most inoffensive way I can describe what has happened there - we are all picking up the cost of that. It is a scandal, and it shocks me that people on this side of the Border do not make as big a fuss what is going on there than they do. It is impacting people. There are people cold this winter while there are people earning €1.6 billion profit from that marketplace in one year. It needs to be fixed.

On the labour issue, Mr. Neill has dealt with that, absolutely. What it equates to is about €21 per hour. It is not actually that this is a high salary level per sebut for organisations and businesses that are organised and structured in particular ways, it is what that means in terms of the differentials. If someone comes in at a UK level, for instance, on the national living wage, they are entitled to that wage, and in manufacturing very few people earn national living wage or well in excess of that. What happens is that every other band rises at the same time, and that is where the impact has a massive effect.

The £38,700 of salary cap level that is coming into play is one thing but more cruel is the fact that those people will not be able to bring their family members.

We are asking to people to travel from south-east Asia, South Africa, the Indian sub-continent and not bring their families with them. Irish people have travelled the world and wanted to bring their families with them for a reason. We are a family-based people and we have a sense of community about us. We are asking these people to leave where they are living, come here and not bring their dependants with them - their two-year old child who is not going to work, for example. The problem with the UK system is more than just the salary cap, it is the cruelty involved in it. It is also the latest piece of economic incoherence that the current UK Government is displaying towards business. It started with the Brexit stuff and it has continued on through a variety of economic choices that it has made. It is just one additional hurdle and barrier to the UK trying to meet any expectations that it has of growth.

Senator Currie mentioned her cousin who is a member of Manufacturing Northern Ireland and a great guy. He summed it up really simply for me. He said that if we do not have labour we cannot grow. If we do not grow we are going to die. Businesses across the island need the labour in order to grow, to meet the economic ambitions of the country and of those businesses.

On the education piece, there is incredible partnership developing, particularly in the Border regions between Ulster University and the Atlantic Technological University, ATU. This is largely through its campuses in Letterkenny and Sligo. That is exactly where we need this cross-Border co-operation to happen. It is fine on a government to government basis. We absolutely need that but it also needs to be driven down right through all our institutions and businesses. InterTradeIreland does a fantastic job of partnering businesses north and south to increase the flow of trade in both directions. Technology, information and research are being shared north and south by businesses and academic institutions. That is to our strength. The North's economy is different from that of the South. It is not a competitor of the South. We are in different spaces in terms of taxation, salaries, government structures and economic plans. We have a different offer which we can take to the world and the collective piece is incredibly attractive if we can get that pitch correctly done.

On the North South Ministerial Council, we would have been in a much better place through the entire Brexit process if those types of institutions were in play. Particularly now with the Windsor Framework and hopefully with the Assembly back up and running again, the issues and problems being identified can be easily resolved on a government by government basis and with the UK in terms of those further institutions, not just the North South institutions. We would greatly welcome them back. We have needed them on many occasions where we as a business have had to step into that space instead.

Fergus O'Dowd (Louth, Fine Gael)
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The comments from all our witnesses have been very interesting. They have raised some challenging issues.

Mr. Chris Hazzard:

I thank the Chair and welcome the other witnesses. Today has been really interesting. Everyone mentioned public infrastructure and the importance of the movement of goods and people. However, successive Conservative administrations in London have reduced public spending on infrastructure to the lowest rates in the G7 and one of the worst in the OECD. It is clear we will need to invest a significant amount of money to get back up to the standard, never mind move ahead.

We have talked today about rail and roads. Regarding digital infrastructure and climate and energy resilience, in south Down last month I saw Downpatrick and Newry destroyed with flooding. It is clear we need significant investment around mitigation when it comes to climate change, digital infrastructure, be it broadband and even connecting to the grid in some instances. Mr. Kelly mentioned the eye-watering greed of energy producers which is making it almost impossible. We need to take control of this. What work is being done on those issues?

Both Mr. Neill's and Mr. Robert's sectors depend on people having the ability to spend money after they have looked after their household bills. We know that times are really tough. Inflation on household costs remains very high. The economic outlook remains fairly bleak in the short to medium term. How do we transform our town centres? How do we boost our evening and weekend economy in the here and now? My friend and I usually go into Belfast city centre most Christmas times. This year we are not going to do so because of the unavailability of taxis, and the poor public infrastructure options. How do we make it so that people can move more quickly in their towns and see town centres at night time as a viable option in which to go out and enjoy themselves and to spend money in our local economies?

Mr. Stephen Kelly:

It is good to see Mr. Hazzard again. I thank him for his comments. I will let my colleagues talk about the devastation in south Down some weeks ago. When it comes to the issue of the climate emergency and net zero our businesses are trying to see it as an opportunity, as good entrepreneurs and engineers do. We have businesses that are leading the way in terms of finding a net zero grid that never fails. That sounds inoffensive, but all of our power systems are designed to have bulky power stations at one end of the cable and all the consumers at the other end. In a net zero grid, the generation is happening everywhere. The existing grids are not designed to meet that requirement. As we would expect, entrepreneurs and innovators are trying to see the climate emergency and net zero as an opportunity.

We are developing alternative fuels, solutions on carbon capture and the circular economy. The friction lies largely in the energy space. This is not just the exorbitant costs people are being forced to endure but also the issue of availability. While much of our manufacturing community did not suffer from many of those weather incidents in recent months, they still suffer in terms of the availability of connections to open new facilities and grow their businesses.

In the digital space we are pretty well served. The North has probably one of the strongest digital infrastructure networks in Europe. To be fair to those digital providers, they actually see the North, in many ways, as a good test location for this stuff. BT and their partners in Openreach and others are doing projects in the North that simply do not exist elsewhere. This is because it is a closed market and it is easy for them to manage the space. We saw a large investment through the UK Government in Project Stratum which has brought digital infrastructure right in to the rural communities. Many of my members benefited enormously from that. Previously, they had to go home and pay the wages on a Friday because they all do digital banking. Now at least they are able to do it from their offices which sounds ridiculous but that is the scenario in which we found ourselves. From the point of view of digital infrastructure, we are in a really good place. From an energy infrastructure point of view, the grid needs to be upgraded. We need to do so in an efficient way that does not kill off businesses.

Mr. Glyn Roberts:

Regarding the flooding, Mr. Neill and I were active in trying to get support to many of the businesses in Mr. Hazzard's constituency and Newry. If we had a minister with responsibility for infrastructure in place we could have done a better job in getting help to those members. Quite frankly, the money on offer does not cut the mustard. It was almost insulting that it was not new money but was re-profiled money from elsewhere in the budget.

We have to make sure we do so much more to get that help, particularly at this time of year, because for many of those businesses in retail and in hospitality, Christmas in the harvest time. It is when they make the most significant profit, which sustains the business throughout the year. If they cannot open or are running subpar, it means that those businesses just will not survive, so we need to go further and faster. As the committee will recall, we were trying to get the whole movement on rates. The rates hardship fund in Northern Ireland is simply not fit for purpose.

On Mr. Hazzard's broader point about town centres, people sometimes overcomplicate what we mean by 21st-century high streets. It is not rocket science because successful high streets are fun, family-friendly destinations, or they should be, to which people want to come back time and time again. There are ecosystems of lots of different types of business. Retail and hospitality, obviously, are big players in that, but it is about making them fun, family-friendly destinations with a good range of retail and hospitality but also service provision. Belfast city centre is very slowly becoming a living community where more and more people are now living. In many respects that will create an entirely new community in Belfast city centre that has not been there since before the start of the Troubles. That is encouraging.

On the point about green technology, one of the things we were exploring with Conor Murphy, when he was finance minister, is how we could use the rating system we have in Northern Ireland to incentivise business investment. One of the things we put forward was that if a business invests in significant green technology and sustainability, it would then be able to claim maybe six months' rates relief or be exempt from paying rates for six months as an incentive to change its business model, become more sustainable and invest in green technology. Refrigeration for a lot of our members is probably the most expensive cost they have. Again, technology in that area in terms of sustainability is just not there in an affordable way. It is about using our rating system as an enabler rather than a disabler. There are lots of other incentives we can use with the rating system to do that. Coming back to the point about high streets, independent retailers have such an important role to play in that. The successful town centres we will see the length and breadth of this island are where independent retailers and hospitality businesses and small businesses are offering something different and distinctive from the big multiples. There are so many good examples of that in every part of this island.

Pauline Tully (Cavan-Monaghan, Sinn Fein)
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I thank all the witnesses for their contributions. I found it quite refreshing that there is a lot of positivity from them all about the growth in their sector and the potential for further growth, and they have talked about some of the barriers. They have talked about infrastructure, availability of labour, the energy and the institutions not being up and running and, by extension, the cross-Border bodies not operating, but are there other barriers? Mr. Kelly mentioned new or returning barriers within the all-Ireland economy in his statement. I ask him to identify what those are and to elaborate on what he means or to give examples of divergence between Britain and the EU and the impact it has had.

What damage will be done to the all-Ireland tourism industry by the electronic travel authorisation for tourists? I ask the witnesses to talk about that and whether it will have any impact on the movement of labour. We know that many people live on one side of the Border and work on the other. While many of them are Irish or British citizens so it will not affect them, but many are not. I think one fifth of our workforce was born outside the island, and while some may have obtained citizenship, not all of them have. Will that have an impact on their circumstances?

Mr. Stephen Kelly:

We are a miserable lot in the North. We are never happier than when we are miserable. We like to moan and groan about things. That is a really happy place for us, so it is interesting that the Deputy has picked up that we are probably a bit more positive today. What we have had to deal with since 2016 has been challenging for us all, so we are maybe now just facing forward a little, even for our own sanity, never mind anything else. It is interesting she picked up on that.

As regards her question about new or returning barriers, Northern Ireland is not in the EU. The protocol and, by extension, the Windsor Framework do not mean that Northern Ireland is in the EU; it is just a series of roles that Northern Ireland businesses have to adhere to in order to avoid a border on the island of Ireland. Even in the manufacturing community, our manufacturers cannot lead on public procurement projects in Ireland, for instance. Services are not covered at all. We do not have freedom of movement. A Northern Irish entrepreneur cannot establish a business in the South unless there is a resident of the State on the board. All those things that were not in place when Northern Ireland, as part of the UK, was in the EU alongside Ireland have returned now. I refer to the recognition of professional qualifications, etc. The two economies have never been so far apart since before we were jointly members of the EU. The challenge or the call that Northern Ireland is still part of the EU is simply not true. We left the EU as part of the UK, and barriers now exist that did not exist prior to both countries acceding to the EU.

We have seen the Irish Government introduce good economic plans or programmes. I will give a couple of examples. There was a liming scheme for improving soil quality on farms. The initial rules for that basically completely excluded the mills in the North that produced the lime. It was blatant. Lime can only be bought from producers in the South. That was an unnecessary barrier to the all-island economy. That first piece was removed but then the criteria in terms of the type of lime that could be used meant that no mill in the North could do it anyway. There are passive barriers and some barriers deliberately being put in place in terms of that all-island economy, in the interest, to be fair, of producers in Ireland. In one respect, that is exactly the right thing to do.

The new DRS system is open, and our new DRS will launch on 1 February, I think. As somebody who resides on the Border, I can see across County Donegal those new deposit return schemes, where people will bring their plastic bottles or PET bottles. Many drinks producers in Northern Ireland cannot participate in that scheme, despite the fact that some of them sell millions of units in Ireland, because they cannot get the QR code or the logo. When they ask where they can get those, no one will tell them. There are barriers being placed here all the time. There are probably good reasons, from a taxation point of view or a waste transfer point of view, for Derry not gathering up a hundred thousand bottles and just taking them up from Donegal and starting to claim the tax back on them. I can understand that. However, thought should be given to how businesses North and South should be participating in both those things.

European rules on CBAM were launched on 1 October. It is really going to come in from the beginning of February. The Revenue Commissioners in the South are contacting engineering firms in Ireland and have said, "You need to begin the reporting on this." Businesses in the South have said, "This is a problem for us now." They went immediately to their supply chain and said, "This is your problem, not my problem." They contacted their suppliers for engineering products in the North and said, "You need to give us all this information for CBAM." Nobody has any idea about it because we are not part of it. We have not been introduced to it. When we talk to the UK Government, it says that is an EU thing and none of its business. When we talk to the Irish Government, it says it is waiting for guidance from the EU. When we talk to the EU, we say we are trying to work out what is going on. There will always be these wrinkles, these little bumps in the road, in terms of the relationship with the UK and, by extension, Northern Ireland out of the EU.

We need structures in place to ensure two things. One is that before either the EU or the UK moves on divergence, it thinks about what the mitigation should be and ensures that the mitigation is in place before the policy is introduced. The second is that there are structures, processes and people in place to manage what the fallout from those divergence issues may be.

The Department of Foreign Affairs has been useful to the business community in Northern Ireland during the whole Brexit process. We have had incredibly good relationships with officials and successive Ministers. That has been critical to getting where we are today. We are only at the starting line of what Brexit looks like for Ireland and Northern Ireland. We will have this in perpetuity now because the UK is not going to join the EU again. There will always be issues and problems which will be identifiable first on the island of Ireland. The UK's new import border comes into play on 1 February 2024. Only at that point will the rest of the UK understand what Brexit looks like because there was an open door until that point in time. That will be a big challenge for Irish traders selling goods into the island of Britain. Equally, it is a challenge for us because we are meant to have unfettered access. Dublin Port is critical for us getting goods to market in Great Britain. The next few months will present a series of problems and issues. The Windsor Framework will continue to roll out until October 2024. We need as many people as possible continuing to talk, taking an interest and, potentially, taking a Northern Irish voice to the European Parliament while we are not there in person.

Fergus O'Dowd (Louth, Fine Gael)
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Those were very interesting and important points. I have a small issue which I want to get right. Two of our guests have to go at half past the hour and I have to allow Deputy Wynne in, as she has not spoken yet. There is 1 minute and 40 seconds left in the Deputy's slot but I was going to take Deputy Wynne and then go back to the others and anybody else who has not spoken at the end.

Rose Conway-Walsh (Mayo, Sinn Fein)
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It is important to let the other two witnesses comment on the last matters were talking about.

Fergus O'Dowd (Louth, Fine Gael)
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We will not have time because there is an Independent member waiting. She is next in line.

Rose Conway-Walsh (Mayo, Sinn Fein)
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The Cathaoirleach is using up my time.

Fergus O'Dowd (Louth, Fine Gael)
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There is only a minute left. We have given 23 minutes to every group.

Rose Conway-Walsh (Mayo, Sinn Fein)
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With the Cathaoirleach let Mr. Roberts and Mr. Neill in?

Fergus O'Dowd (Louth, Fine Gael)
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We have given 23 minutes to everybody. There is nobody not being included. It is important to take Deputy Wynne because she has not had an opportunity to ask a question. We will then go back to all of the speakers or anyone who wants to comment.

Violet-Anne Wynne (Clare, Independent)
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I hope I will leave time left over and it will balance itself that way. I thank the Cathaoirleach for letting me in. I welcome all of the witnesses and thank them. This morning's discussion has been extremely interesting, to say the least. The main points I noted, especially being from a rural county, County Clare, were the need for the rural town infrastructural fund and an office for business startups and, in particular, the information about the need to reform business rates. I was not aware of the difficulties in that regard and the desire of the powers that be to increase them by 15%. On tourism - a big sector in County Clare - I agree with comments about the need for local communities to see a benefit from tourism. That is a real issue in County Clare - people travel there, take a picture and move off. I receive many lobbies from hairdressers, in particular female workers. The VAT rate in the South increased to 13.5%, what it was before Covid. They point to the challenges facing their businesses, on which the VAT rate increase has had a hugely disproportionate impact, as well as employment.

The number of economically inactive people was mentioned. I am interested in that area. Are there statistics? Is it starting to increase? Has there been an increase in youth becoming economically inactive? I would be interested in knowing if the witnesses have that information. The CSO released statistics recently. For example, in County Clare, the best-paid sector is information and communications. The witnesses stated that retail is one of the biggest sectors in the North but do they have any information as regards which is the best paid? I am curious about that because there is a pay discrepancy in County Clare. The difference between females and males is 17.5%, which is quite significant; I think it works out as €6,500. Also, 15-24 year-olds earn the least, quite significantly. I wish to raise those issues today and find out what the difference is in the North.

Mr. Kelly in his opening statement stated that the "... forecast shows that over the next ten years manufacturing will grow faster in Northern Ireland than in any other region in the UK but it also faces a substantial challenge from competition from abroad and rising costs ..." Will he elaborate on those challenges? I would be interested to hear about that. I echo the need and importance of joining up the Wild Atlantic Way. That is it from me. I thank the Chair.

Fergus O'Dowd (Louth, Fine Gael)
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To help everybody, if our two guests have to leave at half past the hour, would it be fair to allow them in-----

Mr. Stephen Kelly:

I can stay here the rest of the day.

Fergus O'Dowd (Louth, Fine Gael)
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We have Mr. Kelly for the following hour, by the way, I hope. We will allow our two guests online to come in, if that is okay. We will then go back to Mr. Kelly answering questions and everybody can get in then because there is no time pressure. I believe Mr. Neill wanted to say something.

Mr. Colin Neill:

I thank the Chair. I will answer a few of the questions posed along the way. The Deputy mentioned VAT at 13.5% - we feel your pain because we are at 20%. That causes huge issues on the island of Ireland because as Dublin and Cork compete, so does Belfast with Cork and Dublin and such. We have a 6.5% higher VAT rate and higher costs on rates. It puts us at a competitive disadvantage. On the economically inactive, I should know this; I apologise. Mr. Kelly probably has it off the top of his head. I think it is circa 25%. It dropped slightly but by a percentage of a point. It is stubborn. We sit higher than the rest of the UK. It is an area about which I am quite passionate. We are putting lots of money in and we are letting people down. Hospitality and tourism have a role because you can come in with no qualifications, be a supervisor within 18 months to two years and can progress through the system. People start as kitchen porters and end up owning their own restaurants and having successful careers. We must find out what the barriers are to that. There are pilot projects our industry codesigned with colleges that have been rolled out. They are short, sharp courses. We are seeing a 50% plus into-work rate out of them because they are codesigned and run in premises in the towns and villages in which we need to get to people. That is one reason I am speaking to the Tánaiste's office and our counterparts down South to see if we can work together in that space. There is a lot of work to be done.

The current national minimum wage in Northern Ireland, when you round it out for a 40-hour week, is about £22,000. That is planned to go up by 10% in April next year. In hospitality, we often we get a bad reputation and people say we are all low-paid. We are not when you see that 45% are managerial-skilled. There are people on the minimum wage but I saw some government job adverts today offering the same wage for different roles. There is a huge chance in our industry to start at that wage, quickly move up through the ranks and improve on that. We would like to pay more. The problem is that we have one of the lowest disposable incomes in the UK.

Our price points are capped. It is only possible to charge what the market can pay and that then affects the costs right down through it. It is about wanting to pay more but needing to have the headroom to pay it. We need to look at VAT, national insurance contributions and stuff. We want people to get more money but that has to be worked out with government. We also talked to the low pay commission in the UK about having it for those who come in at 18, with incremental pay increases to try to put pressure on businesses which do not train and develop to train and develop them. If that pay is to go up, that person needs to be skilled enough to earn the money meaning the business should invest in them. We need to turn it into that sort of model so that we are not just paying a wage but are actually supporting and investing in people. Northern Ireland is part of a UK-wide initiative - a well-being and development promise to treat our staff properly, develop them properly and provide a career path for those who want that.

Chris Hazzard asked about connectivity. We talk about infrastructure and transport strategies. We need a connectivity strategy in the North. We can build roads and such but without working out a public transport strategy to connect with each other - the same applies with taxis, etc. - we are missing a key point.

Fergus O'Dowd (Louth, Fine Gael)
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While we are recording everything the witnesses have said, if they want to send us in any further ideas or recommendations they think the committee might include in its report, we would be more than happy to try to take them on board if we can.

Mr. Glyn Roberts:

I thank the Chair for his question. We owe our retail staff a huge debt of gratitude. Only a few years ago, at the height of the pandemic, many retail staff were making sure that people the length and breadth of this island were able to get food and other essential products. Many of them were working in retail environments where there were no masks and no vaccines. We owe them a huge debt of gratitude. One of the continuing problems we have is the dreadful abuse retail staff got during the pandemic and since. It is something we are exploring with the PSNI. We would certainly like to see tougher sentencing for those who abuse, threaten or assault retail staff.

Regarding pay, it is a changing environment. Good retail staff are often hard to find. Many of our members are small independent retailers. They can be flexible and adaptable by giving people shifts, working around caring responsibilities and so on. We are seeing many more older people working and they want to work part time. It is a changing environment. Many of our members are family-owned businesses and dealing with the transition is an issue. This is not something unique to the farming community. In many family-owned businesses, the kids do not want to take on the business. That transition is a continuing challenge. We need to work out how we get more retail entrepreneurs to start up. That is why we want Northern Ireland to be the best place to start up and scale up a business. We are working actively with many new retail entrepreneurs who are beginning their business journey.

Many of our members are in agrifood businesses. We are actively working with our members to help them market their products to grow their share of business. We are working actively to help startup agrifood businesses with their route to market. One of our biggest success stories was Mash Direct one of whose first customers was one of our members in Killyleagh. From there it grew to be almost a global business. We are working with startup retail entrepreneurs and new agrifood businesses to get their product into our members' stores.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Mr. Neill and Mr. Roberts for their contributions. I now call Mr. Kelly, after which we will hear from people in the following sequence: Sinn Féin, Fianna Fáil and Fine Gael, as we agreed in the beginning. If anyone wants to change that, we can do that after Mr. Kelly has made his contribution.

Mr. Stephen Kelly:

I will start by answering an earlier question about the common travel area and labour mobility on the island. The common travel area is incredibly helpful and incredibly useful, certainly for somebody like me who lives half a mile from the Border. The Border is a fundamental part of my life. It was designed in the 1920s for an Ireland and indeed a UK that no longer exist. We are incredibly diverse countries. We have welcomed people who have enriched us with their own culture as well as their labour in recent decades. Those people do not share the same rights and benefits under the common travel area as I do as someone born here. It may scare the life out of the Department of Foreign Affairs or others in government, but is it time to review the common travel area so that it is more reflective of the island of Ireland as it is today and indeed these two islands as we find them today?

It seems ridiculous to me. My wife is a daily communicant who goes to Mass every morning. There is a Filipino priest who serves in the local chapel in Derry. They were doing a bus trip into Donegal and the priest could not go. I wondered what was going on there. It is because of the migration issue post Brexit. He does not have the right to go and therefore did not take the risk. The same thing is happening on both sides of the Border relating to schoolchildren on school trips. I know it sounds like nonsense and is not the biggest economic issue in the world. However, it is a really important issue for individuals and what it says about this being an open welcoming place for people to come and make a contribution to civic and economic life. Maybe now is the time to try to find the original document, dust it off and make it fit for purpose for the island we have now North and South and for the UK as it stands.

We suffer from a lack of availability of labour. Many of our businesses which are headquartered in the North have facilities in the South. Just moving people between those two facilities has become incredibly difficult. One of the largest pharmaceutical firms in the North works on a cross-Border basis. It is constantly trying to do a kind of 3D jigsaw to try to work out which members of staff can actually go and support work in other parts of its business elsewhere on the island. This is down to some of them not being an Irish or UK national and not having the rights under the common travel area. It is a big issue and something that needs further exploration not just by this committee but by this House. It is a potential piece of work for the Department of Foreign Affairs or others.

Deputy Wynne asked about those who are economically inactive. Mr. Neill is right that one in four of people in the North who are aged between 16 and 65 are economically inactive. We have an increasingly positive picture of that cohort of people in that the number is reducing all the time. I tweeted about it last night. I encourage people to look at our Twitter account, @ManufacturingNI, where they will get all the statistics from an academic at Ulster University on this.

We cannot simply say that one in four people who are economically inactive would be available for the workforce because they would not be. Some people have disabilities or are at stages where they just cannot work. Never mind people with minor levels of disabilities who have challenges there, there are also people who cannot work because of caring responsibilities. There are a whole raft of reasons some of these people are just not available for the workforce. There is a rough example. About one quarter of that one quarter would potentially be in a position to actually take up some work. It is a big challenge for us in the North.

When employers looked at the economically inactive, they found the cost of bringing someone through to a productive place in the workforce to be ten times what it would have been to engage in the UK's migration regime and bring someone from English-speaking nations such as South Africa, the Philippines or India.

That route has now been taken away, so employers need to step up and think differently about how they manage bringing into the workforce people who are probably the farthest away from it at this point.

At the core of the question around wages for information and communication technology being the highest in Clare - I suggest it is the same across the island - Ireland's economic future is about increasing the well-being of the people who are here. That comes from people in work earning more money. It is a simple equation. However, as regards getting where we need to be - as productive an economy as possible - from the North's perspective, we have a productivity problem which is largely driven by two things. One is that we have too many civil and public servants. Almost one third of the workforce works directly for the Government. The second is that we have too many small farms. They are allowed to be there and continue to be there because of policy choices. They have benefits outside economic benefits. It leaves the rest of us to ask what we need to do to make our businesses more productive.

If you drive productivity up, you drive wealth into the business and that wealth is shared with people in supply chains and so forth. We need to meet that productivity challenge. The biggest barrier to that is the quality of the people who are leaving businesses. We are trying to ensure that our manufacturing leaders - I am sure it is the same for my colleagues in other industries - not only get training and become skilled but also go and explore good leadership in other manufacturing businesses. That is happening across the island. We bring manufacturing leaders together at least once a year. Equally, we are running programmes with InterTradeIreland where we are sharing knowledge and experience on a cross-Border basis on leadership positions. Leaders are the most important tool in a business, because they drive the rest of the business, including where the investment goes, the strategic direction and the culture in the organisation that allows people to contribute more. If that can be improved, we will be well on our way to improving our productivity.

The final question was around cost pressures and competition. I already mentioned that we have the second most expensive energy market in Europe. That needs to be addressed. It is in everyone's interest, including homeowners, not only factory owners. We are an island situated off an island that is situated off a continent. We are at the beginning and end of every supply chain. That comes, by the force of gravity and geography, with additional costs. It is not only the cost of energy; it is the cost of transportation and how we design the economy we have. We are not in the business of making low-value items. We need to be at a much higher part of the value stream as regards what we make and sell internationally. Second, it is about trying to sell more internationally. We are a small island. It is a decent sized economy, but we need to extend what we sell into markets overseas, to bring good hard clean cash back to the island, which will be to the benefit of us all.

Rose Conway-Walsh (Mayo, Sinn Fein)
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This is a really interesting conversation and it is really useful for us for the report we are doing on the constitutional future. I am glad we have had the opportunity to look at this today in such a forensic way.

A couple of things strike me. The first is the absolute necessity for the Executive, the assembly and the North-South bodies to be back up and running and operating at their full potential. We have talked before about bringing education into the North-South Ministerial Council to give it focus as we have identified a lot of areas.

The other thing that strikes me is the impact of Brexit and that we are not yet fully able to measure it. We identified some of the opportunity costs, but the exact measurement and diversions will really cause us problems, not only in goods, but also in services. Today we are looking at what we can do. I smiled when it was said we are out of the EU in perpetuity. I would like to think that we are not, as an island, as the EU has said that in the event of reunification, the whole island would go back into the EU. We all see the benefits of that and the problems we have in the agri-industry and many other industries because of being outside the EU.

We have not even touched on the surplus yet. There are things we can do immediately. Mr. Kelly identified the all-island energy market and strategy. We are also looking at that in the committee we are on in the British Irish Parliamentary Assembly, BIPA, as regards how we can become sustainable and the opportunities including onshore wind energy, offshore wind energy, other renewables, decarbonisation, the things we have to tackle as an island and what we can do for business in terms of decarbonisation and the exchange of learning. We have also done some of that in this committee.

All-island human capital development was mentioned. We must look at how to expand our workforce and human capital. It is interesting to look at the needs category comparing NI with anywhere else. I will offer two things on that. One is the success of our DEIS programme in keeping 15- to 19-year-olds in school. It has worked. it would be good if we exchanged that across the island and had something targeted like that. It is interesting to look at Germany because Germany is even more successful at looking at pre-university, pre-further education and how to hold those youngsters in the education and skills system. We can also work on those things.

On the destination for third level education, there have been some encouraging things recently. We did a report in the education committee. The ESRI followed with another report. We know what we need to do, including the development of further access here for students from the North and vice versato encourage student mobility. We can continue to do really good things but we need to do them at a faster pace to mitigate the risks of Brexit and to capitalise on the opportunities presented by dual market access. If we have labour constraints we will not be able to capitalise on them in the way we want to. I am sorry for going on.

We cannot get a measurement of political stability and having the institutions back up and running for the North. We can for the UK and for the South, but not for the North. That is a problem. We talk about having proper data all the time and being able to examine these things fully and deeply.

I will ask about taxation and the Fiscal Commission report recommendations on corporation tax, how we look at other taxation, the responsibilities of the British Government and the devolution of fiscal authority. We are in the OECD situation where we will be 15% and the North will be 19% possibly. How useful would it be for businesses the witnesses deal with and where we want to go as regards prosperity and growth and the impact on GDP and GNI* to have tax harmonisation across the island?

Mr. Glyn Roberts:

I will respond on that and then, unfortunately, I have to go. The Senator made some good points. Fixing the broken, antiquated system of business rates is a bigger priority than corporation tax. In the medium to long term, we need to address the fact that we have two different rates of corporation tax on this island. However, having an antiquated, expensive, outdated business rates system must be the top priority for any incoming Executive. In the recent budget, the Chancellor gave independent retailers and hospitality businesses a 75% reduction in England, but we did not get it in Northern Ireland. It went straight into the black hole of our budget situation in the North.

We need to address this as a priority and it is something that can be fixed. It is a fully devolved matter. If we get movement on business rates and on the other challenges facing our members, I think this would be a good bit of work done in the early stages. Equally, as well, we have outlined different ideas about how we can use our rates system in terms of start-ups and also scale-ups. The scale-up element is so important. How can we use our rates system to incentivise businesses to make the next move and to scale up? For instance, if a business invests in new technology and new staff and increases its size, then I think such an enterprise should be able to get help with its rates to do that. As I said earlier, this is about turning the rates system from a disabler into an enabler. We saw how this worked during the pandemic, so there is a lot a new Stormont administration could do in its first 100 days.

What we have to get, though, are the institutions back on a sustainable and affordable basis. Huge challenges are facing our public sector. We have significant challenges around public sector pay that we need to address. If Stormont does come back, it cannot come back in the way it was before. It must be sustainable. It must operate like any other coalition government, admittedly in the unique circumstances we have here. It must do things like a budget and a programme for government. It must do all these things. It must have proper collective responsibility. From the perspective of the business community, we just do not want to be consultees. We want to be partners in building this new Northern Ireland, including in changing how we do things on this island as well. Alas, I have to go, but we will be very happy on a future occasion to revisit this topic and to meet with the committee again. I hope to do another event in Dublin at some point in 2024, so we will definitely be in touch with the committee again.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Great. I thank Mr. Roberts.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Mr. Roberts very much. We look forward to meeting him again. Earlier, in fact, we were talking about, hopefully, having an early visit up to the North, especially if the Assembly and Executive are up and running again. It will be an important opportunity. Obviously, the picture will, hopefully, have changed significantly by then. We certainly appreciate Mr. Roberts giving us his time. I reiterate that if there is anything additional he would like to send on to us, we would be more than happy to take it on board. I also thank Mr. Neill for his contribution. I call Senator Blaney.

Niall Blaney (Fianna Fail)
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I just have a few things to address to Mr. Kelly. He and Deputy Tully were starting to develop a conversation there on immigration. Once we open the issue of immigration in this country, there is nearly a tendency to say you are anti-immigration. Mr. Kelly was coming at it this morning from the perspective of how much we need immigrants. I do not think anyone here would disagree with him. We really do need immigrants. From that perspective, there needs to be a parting of the way for those people in the asylum process and those immigrants we need here. I say this because there is a tendency to paint everyone with the one brush. The second thing concerns people in the process of getting residency here. I refer to how we deal with them.

I cannot speak so much for Northern Ireland, but for the Republic, and I say this without having a political hat on, our process of dealing with them needs a review. I think we need to look at those people there and waiting in the system. We need to create a system that will allow these people to get into the labour force while they are waiting for an outcome. We need to deal with their applications, but we also need to allow them to work. I feel the system we have now is contributing to creating a situation where people who are coming in here are on a payment and get into a role or a mode of not working. I do not think this is helpful or useful. This might be a conversation for another day, but perhaps Mr. Kelly might care to comment on this point.

Energy was also touched on. If Mr. Kelly could, I ask him to develop that point further. We hear an awful lot now about the potential of offshore energy. In the last couple of years, we have seen the difficulties we have faced in ensuring the lights did not go out. We must ensure there is a transition from power generated from fossil fuels to green energy. From my perspective, certainly, and that of Donegal, we have an infrastructure to carry the potential we have now, and not talk about the potential offshore, to export into all the other markets, whether in the EU or beyond. I think we are sitting in a good position. From a Northern Ireland perspective, then, I would like to get a view from Mr. Kelly on the energy situation there. Moreover, in recent times, we have heard of difficulty in getting the interconnector in place from County Armagh down into County Monaghan. With that in mind, are we thinking far enough ahead in relation to our infrastructure on the island? Are we thinking far enough ahead from the point of view of opening up our offshore potential to export energy to other nations?

Fergus O'Dowd (Louth, Fine Gael)
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I thank Senator Blaney. I call Mr. Kelly.

Mr. Stephen Kelly:

I might take the questions posed by Deputy Conway-Walsh first, and then come back around to those from Senator Blaney. I do not want her to feel like I was not answering her questions. On the stability piece, we absolutely need a Northern Ireland Executive back. There is no doubt about it at all. I recall the time we were dealing with Theresa May's No. 10 and the efforts she was making to try to get the backstop through Parliament. The question was asked of what that looked and felt like. I described it as that scene in "Wallace and Gromit", where Gromit, the little dog, is in front of the train, frantically laying down bits of track to try to avert disaster. If there was a picture portraying how that British Government operated, that is what it looked like to me, staring in and sometimes being in and around the middle of it.

That was not a very stable British Government and we do not need a Northern Ireland Executive to come back and have that "Wallace and Gromit" train analogy as the way it does government as well. Mr. Roberts is correct. This is not just about having the Executive back or about having the stability in that regard. It is also about having resilience around that, which is why the conversations this week in Hillsborough are so important. It is because we have been starved of cash for too long to run public services. To get any Executive back with any hope at all of sustaining itself, we need that cash injection. This might, perhaps, include support from the Irish Government, which has been kind, including, for example, by investing in the university in my home city. The shared island funds have been incredibly welcome, not just by the university but by other projects happening too. EU funding is now coming in as well, etc. Stability, therefore, takes a number of forms. It is not just being present in government. It means having a government that can be sustainable and this takes the funding needed.

This leads us to the point concerning the Fiscal Council report. A bit like Mr. Roberts and his organisation, my members say the easiest bill they have to pay is the corporation tax bill. This is because if a company owes money for corporation tax, then it has made a profit. If a company has made a profit, then it does not mind spending some of it on paying the state, whichever state it is in terms of paying corporation tax, because it has done well. It is, therefore, the easiest bill for all my members to pay. A number of other potential levers were identified in the report from the Fiscal Council, as was said. There is probably a lack of confidence in the business community that Stormont, in its entirety, including the public services and the public sector bodies themselves, can manage that money effectively.

We had a review of our public administration. Mr. Roberts and Mr. Neill were very focused on business reach for obvious reasons. Reducing the 26 councils down to 11 was based on a promise that the outcome would be more efficient and that public services would be more efficient and cost less money. The reality was that the very first action taken was to give a £2 million pay rise to all the councillors. The new system, then, actually cost more from day one. What is promised, therefore, and what is delivered often do not bear much resemblance. When it comes to Stormont potentially having other taxation powers, this is seen by my members as a means of just gathering more money to waste. Alongside any new taxation powers, then, there needs to be a reform agenda, an efficiency agenda and an agenda that says we are going to use this public money in the most efficient and effective way possible. If this is in place, with a government and with the taxation powers, then we will have a much more stable place. I do not deny that at all.

It should all be focused on driving productivity.

In the report I shared with the committee earlier this week, the North's productivity between 2011 and 2021 grew by 13.5%, which was much faster and stronger than other parts of the UK. However, in the middle of that was the pandemic. Northern Ireland came to the response to the pandemic in terms of testing, drugs, etc., so our productivity growth on the face of it is very good but it is actually distorted because of that pandemic period. What has distorted it are the things we have made with our hands in the North so if we are serious about growing, and comments were made earlier about how important manufacturing could and should be for the island and I accept that we have looked at other types of industries, the most stable and successful economies in the world are the ones that are based on making things with our hands. We are good at it, we are from a largely rural background, we make, mend and do, and we get on and find those solutions. If our productivity gain is to be really analysed as to the cause of that, it is caused by people making things, not digital technologies, so we need to get on and make more things on this island. That is the fair answer.

The comment on perpetuity relates to the UK. What the UK looks like is for the people of the UK to decide, be that the people in the North, Scotland or Wales. Even England may leave. We do not know. It is their choice.

Regarding migration, I go back to that initial comment from a member of ours who said we need labour to grow and if we do not grow, we are dead. We do not have the people. If we gave the North's labour market as a quick example of what this looks like, because of Brexit, we lost one third of our EU migrants and because we do not have freedom of movement, we cannot replace those EU migrants. The UK's migration regime has effectively been shut down to us so we cannot bring people in that way. There are people on this island who do not benefit from the common travel area so we lose access to those people as well. During Covid, lots of people retired earlier and did not return so they have not stayed on but, more fundamentally, in the seventies, eighties, nineties and noughties, on average, about 80,000 people of working age, net, came into the workforce in the North. In the current decade, it is less than 2,000 so it is fewer than 200 new people per year, net, and it goes flat and below zero in the decades beyond that.

We do not have enough people to do the jobs we have, never mind the jobs we will have in the future, so we have been recommending to businesses that they should assume from this day forward that they will never be able to recruit anyone ever again. It is a pretty extreme piece of advice but it is to lift and shake them and get them into a different place strategically within their organisation. Before, they would have jumped on an aeroplane and gone to Lithuania or Hungary and come back with 12 welders or whatever the case may be. You cannot do that anymore so if you cannot recruit anyone, what do you do to retain the people you have and invest in their well-being and their "stickiness" within the workplace? It is about wages but it is also about working conditions, the job they are doing and increasing their training and the value and contribution they make to the workplace. Equally, it is about automating, robots and digitisation. It is about doing more with fewer people where we possibly can. We are trying to shift the mindset of our industrial leaders in the North to a place where if you cannot recruit anyone, make the people you have as sticky as you possibly can because you are not going to be able to replace them. It is then about what you are doing to drive that productivity improvement through investing in digitisation and automation.

We have a plan in the North in terms of achieving net zero by 2050 and there is a stage post in 2030. The sad thing is that the numbers in this plan are designed based on technologies that do not exist so we are already going to fail to meet the 2030 target. The choice then is whether to push it out to 2035 but I think that would be the wrong thing to do. I think targets are incredibly powerful. If we can just push out a date by which we have to achieve something, as we all have done in our daily lives, it is a case of saying, sure we can do that next week and then we procrastinate. The times and targets are critically important because they will drive the innovation.

There is a massive opportunity for the island of Ireland in offshore wind and even onshore wind. The problem is the lack of interconnection across the island. I am not that old yet but I might be retired by the time the north-south interconnector is visible. The cost of it may be prohibitive by the time some wires are put across. There is that lack of interconnection between North and South but the Celtic interconnector into continental Europe is more critical. To give a practical example, Scotland has lots of onshore wind but the UK does not always need it. There is an interconnector between Galloway and County Antrim. That wind is blowing hard in Scotland but when it gets as far as there, there is congestion. The national grid in the UK pushes that electricity to Northern Ireland even though we are generating our own through our own wind generators but because it has a glut of supply. We are switching off our own generators because it is selling electricity at a price that is cheaper than what we generate for here. We are not taking the power from the wind generators we have because we have to take this power from Great Britain on the basis that it is cheaper. That is the right choice because it is cheaper for consumers but if we had that interconnection and it connected further out into Europe, we would have a market for that energy. That is what I said at the start. The market design of the wholesale market on the island of Ireland has been developed for really strongly interconnected markets in central Europe. Germany is connected left, right and centre. We do not have that. That single investment in the Celtic interconnector, expensive as it is, is vitally important for the future, not just of net zero and energy security but also the cost of energy on the island of Ireland. The sooner we can get that done, the better.

I am not just saying this because I live right by it but the ideal location on these islands for servicing that offshore wind off the west coast of Ireland, and off Donegal, north Donegal, the west of Scotland, the north coast of Northern Ireland and the Irish Sea, is Foyle Port. Foyle Port is a cross-Border port so that is of particular interest to both jurisdictions.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Is it time for an all-Ireland IDA seeing as the IDA has been so successful in driving FDI here? A recent Invest NI review was interesting.

Mr. Stephen Kelly:

We have just stolen one of the directors of the IDA to be the new chief executive of Invest NI. We do not always come south in peace. Sometimes we come to steal your people. The new chief executive has yet to start but as a business community, we hope that lots of the energy and the go get it and not be defeated in the marketplace-type culture will travel with him.

Rose Conway-Walsh (Mayo, Sinn Fein)
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That is welcome. We need a bit more than that. In looking at both of them and examining what they have done and led to in terms of FDI, it is time to look at an all-island structure based on the principles of the vision of the IDA to drive the whole island forward and to try to meet some of the challenges. We did not really develop in terms of procurement and the barriers there but that is a very serious situation we must try to mitigate somehow.

Fergus O'Dowd (Louth, Fine Gael)
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Many of the issues that have been raised are not political but economic. Some of them exist in the UK as well. While the North remains part of the UK in constitutional terms, the only way we can see light going into that tunnel is a softening of or an improvement in the relationship between the UK Government and Europe. Until we get that, or until we get a different configuration on this island, those problems will get worse.

Mr. Stephen Kelly:

It is a constant surprise to many in the North.

No one in the business community welcomed the protocol, or the Windsor Framework. People think we have done so but we have not because it is full of problems, challenges, costs, frictions and issues.

We welcomed the fact that there was agreement between the UK and the EU, both in 2019 and earlier this year. Why did we do that? We did so because the relationship is more important than anything else. Where you have a decent relationship, you can resolve issues and problems. We had found ourselves in a position where both sides were staring down the barrel of each other, perhaps justifiably on both sides. The UK was threatening to unilaterally legislate for some of the things we now have in place in the Windsor Framework. The EU was also threatening legal action if the UK did not adhere to its international treaty obligations. The clue is in the name - "framework". The framework is not the final plan but it is the basis from which to build out. When designing a town there is a framework. There will be parks here, houses there and schools over there but you get into the detail of what they will look like much later, when the planning is being done.

When Prime Minister Sunak and President von der Leyen came to an agreement it created a moment of massive decompression in that relationship. The business community felt that as well because we were in the middle of all of that. That is critically important. We have seen this work already. There were issues with certain categories of steel product coming into Northern Ireland on which 25% EU tariff was to have been applied. In the Windsor Framework, it was agreed there would be two categories, category 7 and category 17, but since then another five categories have been agreed, with no fanfare or aggravation and with nobody jumping up and down and threatening to legislate. The parties just got on with it and did boring work because there is a framework and relationship in place to get stuff done.

We have had a lot of politics in the North for a long time. When I asked my members what they are looking forward to in 2024, which I did because the newspapers always ask me to do so, the first response I got was that they want it to be boring. It has been too exciting, politically, in recent years. Can we not just have a boring year for a change and get on with stuff? We would all welcome that.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Good luck with that.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Mr. Kelly and our other guests. The ideas they have put forward have been informative and helpful and we will seek to incorporate them in our report. We will reflect on some of the important points the witnesses made. This engagement has been beneficial to us all. I look forward to meeting the witnesses again. I wish you all a happy Christmas and I hope Santa looks after you.