Department for the Economy’s ‘Economic Recovery Plan’ – Analysis

Economy Minister Diane Dodds has set out her ‘Economic Recovery Action Plan’, an ambitious and focused blueprint to support economic recovery and growth in Northern Ireland in the next 12 to 18 months. Inclusive of all her favourite things, not least the focus on skills, it comes heavily caveated around the need for additional funding at a time when the public expenditure landscape is extremely difficult with successful delivery requiring an additional £290m in 2021–22. 

Yet, at face value, the approach stands up to scrutiny as a strong build on the medium term economic recovery strategy published in June 2020, hitting the high and low notes notes that can support recovery and longer term growth.  This is in no small part due to the collaboration involved in the plan’s development, with strong private sector influence within the report including the department’s Strategic Advisory Forum.  The report identifies supporting a highly–skilled workforce, stimulating research and development, building a greener economy and promoting investment, trade and exports as the drivers to recovery.

Built on the premise of government intervention, the department is keen to stress that it sets out the key first steps that will be ‘quickly followed by a bold and highly ambitious vision’.  For that they see this document stimulating  conversation, with wider stakeholders, on its fit for purpose credentials.  An invitation for engagement.

Key and controversial areas aren’t shirked, but they don’t bite, they simply set out the ambition ‘to push for a permanent and complete solution to frictions with the NI protocol and securing clarity on long term trading arrangements and the regulatory environment arising from the EU exit’.  This, of course, will depend as much on collaborative political goodwill, including those endorsing and signing off on this plan as it will on anything else.  

It also doesn’t side step that much is dependent on the continued impact of Covid which continues to cause job losses, business closures and stifled demand,   However, as with any good economic plan there is a rallying call to action, stating that as a society we need to be ambitious and creative about our future, embracing new thinking and recognising that the old norms will not cut it.

On the renewable recovery, and the decarbonisation agenda, while conspicuous there isn’t the same level of tactical detail that there are in other core areas.  This is likely to be due to the influence of and detail within the pending Northern Ireland Strategic Energy Framework ‘consultation options’ due in the Spring and its final strategy due by the close of 2021.  That said, ‘the greener economy’ agenda sets out a number of tactical areas including a hydrogen economy – back to one of the Minister’s favourite things. 

Some of the actions the Department plans to take to stimulate growth include;

• the development of a flexible skills fund;

• widening access to apprenticeships by removing the age cap;

• developing proposals to implement a Northern Ireland artificial intelligence centre of excellence;

• delivering the High Street Stimulus Scheme;

• delivering a Tourism Voucher Scheme to stimulate demand;

• accelerating delivery of City and Growth Deals; and

• developing a green innovation challenge fund.

See below for context, background, core strategic areas and the view of the Minister and reaction from industry.  Also, PDF plan is attached.

See below for context, background, core strategic areas and the view of the Minister and reaction from industry.  Also, PDF plan is attached.

1. Economic Context

While setting out the vision based on opportunities, this plan doesn’t seek to disguise the challenges highlighting that the pandemic triggered an economic output fall of around 25% at the height of lockdown in spring 2020 in Northern Ireland.  Those output levels improved as the many restrictions were lifted. However, while the rebound was strong, as we know the economy has not reverted back to pre–pandemic levels before rising infections – nearly 250,000 NI workers have been placed on furlough at some point with a further 78,000 workers having availed of the Self–Employment Income Support Scheme (SEISS).

While the short term to medium term economic context remains stark, the expectation is that 2021 will be a year of recovery with the local economy expected to grow by around 4% to 6%, albeit from an overall fall of 11% in 2020.  With the roll–out of the coronavirus vaccine programme, the report states that we ‘may see a strong increase as business opens and confidence returns’.

1. Background to & approach within the Economic Recovery Plan

The Department’s “Rebuilding a Stronger Economy” document published in June outlined the priorities for a more competitive, inclusive and greener economy. The newly announced Recovery Action Plan defines the immediate actions required to deliver against that agenda. A crucial part of rebuilding will be the process of reshaping the economy through government intervention, to encourage external growth in internationally focussed high–value added sectors where NI has the ability to exploit competitive advantage.

Interventions are planned to influence;

• building a higher skilled and agile workforce;

• pursuing and securing better jobs; and, ultimately,

• producing a more regionally balanced economy.

Building on these, the Economic Recovery Action Plan sets four key areas of focus, 1. Highly Skilled & Agile workforce, 2. Stimulating Research, Development and Innovation, 3. Promoting Investment, Trade and Exports and 4. Supporting a Greener Economy.

There is a commitment to deliver policy responses that deliver inclusive economic recovery. This will involve supporting a range of jobs to reflect the volume of jobs lost and the skills of those in the hardest hit sectors e.g. tourism, retail and hospitality. To do this, the plan will build on the success of existing employment support programmes, further adapting and modifying these to address the current challenges. There are also a number of initiatives already in train which the Department sees as making a significant contribution to the economy, including the City and Growth Deals programme (close to £1.5 billion of investment across NI to act as a springboard for the recovery plan). This includes the Derry City and Strabane District deal approved by the NI Secretary of State yesterday.  

The funding issue is very significant, which would be subject to the normal approval process including tests for value for money and meeting any EU State aid / UK subsidy control requirements. However this ambitious approach sets out what is possible if the resources are made available. It states that recovery will not be completed in one year alone, and many of the actions set out will require funding beyond 2021–22 with the timing of recovery interventions under constant review and the actions needing to be agile to respond to emerging economic events.  With the Department’s commitment that the economic recovery can only be delivered through collaboration, stakeholder input to date is to be supplemented to support a wider and more detailed conversation regarding the recovery journey.  The emerging outcomes will enable the department to provide a comprehensive input into the wider Executive framework for recovery.

The Action Plan states that ‘getting to this bold and highly ambitious vision – which we will publish shortly – will only be possible if we first overcome the real damage and disruption to lives and livelihoods’.

1. Core Strategic Areas

Within each category the department sets out analysis of the current context, rationale for the focus of the various areas, how they will support the strategic priorities and a review of ‘what it has done’, ‘what it is doing’ and ‘what it plans to do’.  These include specific planned tactics delivered, underway and new targeted initiatives which it sees as integral to delivering upon the Executive Framework for Recovery.   

The areas of focus and the tactical approach to build them are outlined below.

1. Highly Skilled & Agile workforce

The Department will support this area by;

3.1.1      Growing and maintaining the Apprenticeship system as a critical skills pipeline for industry and valuable employment

3.1.2      Make apprenticeship opportunities available to more people and sectors

3.1.3      Provide a flexible skills fund to offer new opportunities for individuals to upskill and reskill to meet evolving business needs

3.1.4      Developing our Youth Training system to ensure young people with the skills to progress to higher levels of education or successful enter the labour force

3.1.5      Ensuring that the Further & Higher education sectors continue to play a key role in the response to COVID–19, raising skills levels, increasing productivity & alignment between study and the economy.

3.1.6     Launching a new Northern Ireland Skills Strategy, to help employers and individuals attain the skills needed to grow our economy

3.1.7      Building upon the existing vocational education infrastructure by establishing a Northern Ireland Skills Board, bringing together employers, providers and trade unions

1. Stimulating Research, Development and Innovation

The Department will support this area by;

3.2.1      Accelerating delivery of plans for over £550m investment in innovation and digital across the 4 City and Growth Deals in NI;

3.2.2     Creating a Chief Scientific & Technology Officer post to advise and guide on science, technology, R&D, innovation policies and strategies;

3.2.3      Providing support to businesses to engage in research and development to innovate and drive new commercial opportunities;

3.2.4        Providing advisory services and support to assist companies understand innovation and develop their innovative capabilities;

3.2.5      Assisting SMEs to gain the skills they need to engage in innovation activities;

3.2.6      Assisting businesses to exploit new opportunities through the adoption of new technologies;

3.2.7     Supporting businesses to build on recent successes in securing UK wide funding streams and ensure NI fully benefits the UK Government’s Levelling Up agenda

3.2.8      Fostering collaboration and partnership working between industry and academia.

1. Promoting Investment, Trade and Exports

The Department will support this area by:

3.3.1      Push for a permanent and complete solution to end frictions brought about by the protocol;

3.3.2      Securing clarity on long term trading arrangements and the regulatory environment arising from EU exit;

3.3.3      Building on the success of Invest NI’s International Strategy to maximise trade and investment opportunities;

3.3.4      Providing investment and employment support to business to help them rebuild;

3.3.5      Stimulating demand for local businesses including retail, restaurants and hotels;

3.3.6      Assisting businesses to explore and increase cross border and GB market trade and develop new markets;

3.3.7     Working with businesses to help them adapt to new trading conditions,

3.3.8      Ensuring SMEs in Northern Ireland are provided with support and guidance to fully benefit from opportunities for cross–border growth.

1. Supporting a Greener Economy

The Department will support this area by;

3.4.1      Delivering a net zero carbon energy transition;

3.4.2      Improving energy efficiency of buildings and industry;

3.4.3      Encouraging green innovation in renewables and low carbon technologies;

3.4.4      Developing the Hydrogen Economy and Circular Economy;

3.4.5     Enabling a low carbon workforce;

3.4.6        Working collaboratively across Government on a green growth approach to recovery.

1. Comment and Reaction

Minister Diane Dodds: “As we move slowly back to normality, we must put all our efforts into restarting, repairing and rebuilding our economy. We must encourage businesses to innovate and lead and we must support workers to prepare for new opportunities. My Economic Recovery Action Plan is the blueprint to rebuild a stronger economy in Northern Ireland. We will focus on where we have the greatest opportunity to drive innovation and develop the skills and capability of our workforce to secure better jobs.”

“Throughout this pandemic I have done, and will continue to do, everything in my power to protect jobs and livelihoods. The discovery of a vaccine is a game–changer, however, allowing us to look beyond the current restrictions and plan for recovery. The Recovery Action Plan sets out a suite of decisive actions that will further the rebuilding agenda.  Going forward our message must be clear – Northern Ireland is once again open for business, open for investment and open for visitors.”

Dr Joanne Stuart, CEO of the NI Tourism Alliance (NITA): “NITA welcomes the Department’s Recovery Action Plan which recognises the importance of the tourism and travel industry as a key economic driver for regional economic recovery. The actions outlined within the report are critical to supporting the survival and rebuilding of the tourism industry and NITA look forward to continued engagement with the Minister through the Tourism Recovery Steering Group on the development of a sustainable Tourism Strategy.”

Dr Bryan Keating, Chair of the Department’s Strategic Advisory Forum: “The Department’s Economic Recovery Plan is a significant piece of work which, I believe, will allow businesses to plan for the future. I also can see how the plan, when successfully executed, will allow young people a welcome opportunity to join the workforce and older employees or those currently out of work to either enhance their careers or re–start them.”

Kevin Holland, Chief Executive of Invest Northern Ireland: “The Department’s Recovery Action Plan sets out a wider ambition to create longer term economic prosperity. It will contribute to the trade, investment and jobs that will support the rebalancing of our economy and underpin the building of a shared future for all. We are very happy to see innovation front and centre in driving this ambition.

“We are currently building detailed delivery plans under eight economic drivers aligned to the Department’s plan. These plans can impact quickly, generate public economic success and build for the future.”

John McGrillen, Chief Executive Officer of Tourism NI: “I welcome the publication of this action plan as we continue to offer support towards the recovery of our tourism industry in partnership with the Department for the Economy. Many businesses have been severely impacted by the pandemic, but we have also witnessed huge resilience and a determination to adapt and survive.

“The recovery plan includes the development of a sustainable, regenerative Tourism Strategy focusing on economic growth, social wellbeing and the protection of the environment. The plan will also allow us to develop and deliver industry–wide training to the tourism sector, as well as campaigns and additional funding to provide the skills and capabilities to improve and grow product offerings and business models.”