Peter Cheney discusses the idea with the NIO Minister.

Instead of a cover for cuts, Hugo Swire sees the Big Society as a kind of confession. The NIO Minister, who leads on the subject in the province, describes it as an admission that “big government can’t always do it, shouldn’t always do it and when it does things, it doesn’t always do it very well.”

He sums up David Cameron’s concept as a transfer of power from the state to local people so they have more of a say in how their lives are run. The fundamental belief is that “the people who do things best for their communities are those people who live in those communities themselves.”

The Minister earlier addressed the UK Association of Preservation Trusts’ national conference at the Crescent Arts Centre. The Big Society, he told delegates, had three pillars:

1. decreasing the power of Whitehall and bringing decisions much closer to people;

2. reforming and opening up public services; and

3. encouraging social action.

Ministers have been keen to stress that the Big Society already exists and they want to make it ‘bigger’.

The UK Government’s plans will have the most impact in England, where Westminster has a free hand. Elsewhere, it has financial levers but otherwise has to persuade devolved administrations. Some voluntary sector groups are supportive, others sceptical.

Cameron launched the name Big Society through the Guardian’s Hugo Young lecture, in November 2009, but has emphasised the same theme since his leadership election speech in October 2005: “We know we have a shared responsibility, that we’re all in this together, that there is such a thing as society; it’s just not the same thing as the state.”

That contrasted with Margaret Thatcher’s 1987 comment: “And who is society? There is no such thing.” Swire points interviewers to the full quote, which continues: “There are individual men and women and there are families and no government can do anything except through people and people look to themselves first.”

Transferring power from government, he thinks, is “rather radical” and not unique to Conservatives. Many of his party members in East Devon are involved in charities, churches and fundraising. So too are people from other political backgrounds: “We want to recognise those people. We want to support those people. We want to encourage those people and we want there to be more of those people.”

Critiques

“Our critics have to say something,” he says when rejecting Ed Miliband’s view of the Big Society as “a cloak for the small state”. Swire adds: “As a Conservative, I actually believe personally that it is the individuals who should be empowered against the state. If that’s radical, so be it.”

From the right wing, Adam Smith Institute Director Eamonn Butler says the idea is a ‘brand’ and any ‘good’ government policy will be called the Big Society. “I think that what that’s missing is the very clear things that we’re doing,” Swire responds, pointing to Big Society Capital and National Citizen Service.

“It’s actually a sort of philosophical change. It’s a mindset. It actually represents a very fundamental shift in thinking and I think, ultimately, will come to define David Cameron’s premiership.”

Charities, social enterprises, private companies and co-operatives (including those owned by public sector workers) will compete to run public services, at least in England.

The proposed Big Society Bank has been renamed Big Society Capital to distinguish it from high street banks and is due to operate from April 2012.

Big Society Capital will not make direct grants but will instead act as a wholesaler of capital, attracting funding from foundations, institutional investors, companies and private individuals, to invest in intermediary organisations. Applicants, from all parts of the UK, could approach the intermediary organisations and access capital at a more competitive rate than through a normal bank. Independent of government, the organisation will initially receive an estimated £400 million from dormant bank accounts and £200 million from HSBC, RBS, Lloyds and Barclays (so-called Merlin money).

Swire was most passionate about the National Citizen Service as, after the English riots, “if there was ever a time to give teenagers a sense of belonging and purpose, it is now.”

The service, piloted in England last summer, brings together 16-year olds from different social backgrounds for a residential trip. Similarly to the Duke of Edinburgh Awards, young people take part in outdoor pursuits, design a community project and carry out 30 hours of part-time social action. Ten thousand young people took part and the UK Government is discussing a Northern Ireland version with the Executive.

Whether or not that goes ahead, Swire notes that the province’s Big Society is “alive and well in myriad different forms”. Indeed, he brought David Cameron to see the ARC healthy living centre in Irvinestown back in June, a high profile illustration of Britain learning from Northern Ireland’s experience.

Down to specifics

The Big Society is often written off as woolly and waffly but detailed policies are now taking shape. The National Citizen Service and the Big Society Capital Group are the two highest profile examples to date. In May, the Cabinet Office released its giving white paper, which highlights the following UK-wide schemes:

• Cutting inheritance tax from 40 to 36 per cent where 10 per cent or more of an estate goes to charity (takes effect from April 2012);

• Charitable giving through ATMs, being explored by banks, building societies and cash machine operators (operational later this year);

• JustTextGiving launched by the mobile phone industry (in May) after a challenge from government;

• The Do Some Good app for iPhones;

• The independent Philanthropy UK service encouraging more giving from wealthy individuals

(to receive £700,000 from government to develop its work).

Innovative pilots include the Round Pound scheme, allowing shoppers to round up their bills to the nearest pound and donate the difference to charity, and the Spice initiative (pioneered in south Wales) which thanks volunteers with a small gift e.g. off-peak swimming, spare theatre seats.

Community and voluntary groups across the UK can also apply for Big Society Awards. Winners receive a signed certificate from the Prime Minister and are invited to a networking event and 10 Downing Street reception.

The British Empire Medal (see page 7 in this edition) is being reintroduced to reward volunteering.

All UK Government ministers have pledged to volunteer for a day in the community. Swire had an army of NIO “weeders, sweepers, painters and cleaners” and was open to suggestions for projects.

More info: www.cabinetoffice.gov.uk/big-society

Public facilities have long since recognised the critical role that providing a comfortable environment plays, by maintaining appropriate levels of heating, cooling, lighting and air quality within buildings – from hospitals to schools and government offices. At the same time, growing budgetary pressures and rising prices are putting a focus on reducing the cost of providing these services.

These cost and efficiency drivers necessitate the delivery of more energy services for less energy input, at a lower cost – through investment in more efficient technology, more efficient operating practices, improved controls and monitoring and management to ensure sustained benefits are delivered and to take corrective actions when they are not.

The issue of ageing and inefficient energy infrastructure can, in parallel, be a serious concern to many establishments, distracting from their core priority. A partnership with an energy services provider, whose core focus is energy efficiency and guaranteed saving reductions, can deliver these benefits. Partnership would bring security of energy provision with cost, energy and carbon savings through overall efficiencies and improvements in the site’s running costs, allowing a healthcare provider for example to concentrate on their primary goal. To illustrate, the provision of lighting, heating and cooling, while critical, is non-core, and presents an opportunity to outsource delivery.

For success, organisations need the support of energy management professionals who understand that energy efficiency can only be achieved through a full energy cycle approach with delivery know-how. For any site to do this sustainably, they need firstly to take a long-term view of their business, their site and their relationship with the energy and utilities management company they work with, as the required contracts can last anywhere between 5 and 25 years.

Securing the supply of input energies such as oil, natural gas, biomass or electricity is the first and vital step in terms of comfort and care; however, it is not the end goal. These input energies need to be transformed (e.g. converting oil into heat, electricity into cooling etc) into useable forms, distributed (for example hot water through piping networks) and then consumed at the point of customer need (radiators, light fittings etc). Efficiencies and cost savings can be made by focusing on one of these steps. However, it is through the integrated management, measurement, monitoring and targeting of the entire energy process in a co-ordinated, structured approach which delivers the maximum benefits to the establishment.

Dalkia customers benefit from:

• Operational improvements (security, availability and reliability of utilities supply, energy efficiency, risk transfer)

• Cost & financial efficiency

• Carbon reduction

To discuss what your organisation could look at towards achieving sustainable energy efficiency improvements, contact: Tony Doherty, General Manager at Dalkia Energy & Utilities Services, at 07879036270 or email infoni@dalkia.co.uk or info@dalkia.ie

Northern Ireland is to receive an extra £142 million (including £134 million for capital projects) up to 2015 following the Chancellor’s autumn statement but may lose £150 million in current expenditure. Those reductions are expected in Barnett consequentials i.e. cuts in UK Government departments being matched by the Executive.

The whole UK is expected to experience lower growth in 2012 (0.7 per cent) with the Government borrowing an extra £111 billion over the next five years.

Critically, the Office for Budget Responsibility predicts 710,000 public sector job losses by 2017, up from its last estimate of 400,000. Public sector pay rises will be capped at 1 per cent after the freeze ends in April 2013. A review of regional pay could result in salary reductions and spending cuts will continue to 2017.

However, several announcements will benefit the Northern Ireland economy.

Fuel duty is frozen until next August (when a 3p rise is due). Local businesses can apply for the National Loan Guarantee Scheme, support from the Business Finance Partnership, and the national insurance exemption (which continues up to April 2013). Belfast is one of four cities to share the £100 million urban broadband fund, designed to achieve 80-100 MBps. Six others will be selected in a UK-wide competition.

Sammy Wilson claimed that there would be no compulsory redundancies but said he did not know how many voluntary redundancies would eventually be made. Wilson expected more invest-to-save decisions by ministers and said these had to be looked at “fairly quickly”.

Conor Murphy repeated Sinn Féin’s view that Northern Ireland had to break its dependency by taking on “maximum fiscal powers” and building a strong all-Ireland economy.

Alliance’s Naomi Long asked the Chancellor for action on air passenger duty on regional flights but was referred to the forthcoming UK aviation strategy. Long had wanted to see reduced VAT on renovations, to help the construction sector, but welcomed the moves to release credit to small businesses. However, she said there was “no serious effort” on pay restraint in company and bank board rooms.

The UUP was supportive and called for realism, but SDLP leader Alasdair McDonnell said that “squeezing” public sector workers “will simply cause pain and hardship for hardworking families and will have a negative impact on businesses here.”

Owen Paterson reiterated his defence of deficit reduction, which was “keeping interest rates lower for longer”. He claimed that the only alternative was “more borrowing and more spending … precisely the something for nothing economics that got our country into this mess in the first place.”

A wider divide opened up between the business and trade union responses.

CBI Director-General John Cridland said the statement “works with the realities of today and provides an imaginative framework”. The CBI in Northern Ireland wants changes in British employment law, including ‘protected conversations’ with older employees, extended to the province.

ICTU Assistant General Secretary Peter Bunting told striking workers that the public sector was “being sacrificed in the name of an ideology which favours the 1 per cent.”

Whatever you think of its estimates, the Office for Budget Responsibility has established its independence as a professional forecaster, according to Robert Chote. agendaNi spoke to him at the Northern Ireland Economic Conference on the first anniversary of his appointment.

“The key thing we needed to do on arrival,” he stated, “was to establish the reputation of the OBR as a source of rigorous, well-explained coherent analysis that people may well disagree with but at least they know it’s not politically-motivated wishful thinking.”

That independence, he comments, has been respected by the Treasury. The office also discloses all meetings with ministers and special advisors online, as well as its forecast timetable.

While many people are “very focused” on the short-term outlook, the medium-term outlook “matters more than anything” to the OBR. Its key task, when looking at the short-term trend, is to work out whether it is “temporarily bad news that we’ll bounce back from” or if it says something about medium-term prospects: “And that’s one of the tricky judgements we have to make.”

Asked to assess the euro zone’s performance, he quipped: “The days when I was a professional commentator on the merits of broadly based currency areas are long behind me.” Again, the key question for the OBR is the impact on the UK’s medium-term outlook, bearing in mind that the euro zone has an impact through export markets, interest rates for government borrowing, and general economic confidence.

More locally, corporation tax is the central policy objective of Northern Ireland’s business organisations and the Secretary of State, although the political will at Stormont is increasingly in doubt.

Chote was pressed for his view on whether corporation tax would be devolved, but replied that it was “not a decision for us to make” and “not for us to say whether this is a good idea or not.”

If the decision went ahead, the OBR’s task would be “relatively limited” i.e. producing forecasts and assessments. “Interestingly,” he added, “we’re having a similar role and similar challenges in Scotland because of the fact that from the Budget of next year, we’ll have to start forecasting Scottish income tax receipts and other areas.”

Scotland is to receive its new income tax powers by 2015 with the first changes taking effect a year later.

“One issue with corporation tax is that, of course, it is one of the more volatile streams of tax revenue,” Chote noted. “It goes up and down more than taxes on income or taxes on spending. It doesn’t make the task of forecasting receipts from it any easier.”

In the absence of lower corporation tax, Northern Ireland will continue to rely heavily on its subvention from Westminster. It was put to him that this dependence increasingly reflects badly on Northern Ireland, as a UK region, but he replied: “I wouldn’t say so.”

Chote continued: “It’s not our job to look in regional areas but I mean, clearly, if you think that we’re engaged in a fiscal consolidation at the moment and significant cuts in public expenditure, then those parts of the economy that are more dependent on the public sector are going to see more of a direct effect from there.”

A region in that situation will “need to be thinking about policies that will allow the public sector to rebalance” but he concluded: “It’s not unique to Northern Ireland and it’s a challenge for everybody.”

While still keeping the economy as first priority, the draft Programme for Government offers few radical solutions for the province’s problems.

As expected, the economy is described as the Executive’s first priority but its aims are considerably less ambitious than before. This reflects the recession but also the risk-averse influence of the Civil Service.

Closing the productivity gap with Great Britain (a major goal for decades) is not set as a firm target. The previous programme aimed to halve the difference with the UK average (excluding South East England) by 2015. Instead, the draft Economic Strategy calls for private sector GVA growth to exceed the UK average.

As of June 2011, almost a third of employees (31.3 per cent) worked for government. The public sector workforce stood at 218,000 while the private sector employed 481,910 staff (with both figures seasonally adjusted). This compares to 221,980 and 487,790 respectively in June 2010.

Northern Ireland’s unemployment rate stood at 7.3 per cent of the workforce (63,000 people) between July and September. A further 51,000 economically inactive people want a job but fall outside the official definition, which in practice brings the unemployment total up to 114,000.

The programme claims that the same number of benefit claimants will be moved into employment by 2014 through welfare reform. No estimate of the inevitable decrease in public sector jobs is included.

Against that, the Executive promises to “support the promotion” of over 25,000 new jobs (5,900 from foreign direct investment) by 2015. Promoted jobs are those expected to be created by Invest NI-supported projects. A total of 15,565 jobs were promoted between 2007 and 2010, although statistics do not show how many still exist.

A call for the “timely and affordable” devolution of corporation tax is contradicted by Sammy Wilson’s prediction that no cut will happen before 2015. Separately, the Executive will lobby the European Commission for the “best possible outcome” for regional aid after 2013.

The regional rate is pegged to inflation. Industry will be encouraged to achieve 20 per cent of electricity consumption from renewables, which depends on adequate grid reinforcement.

Irish Government A5 funding was cut just before the draft Investment Strategy was published. Its specific goals include Belfast rapid transit (construction due from 2012 onwards), the Lisanelly campus, the Desertcreat training college, electronic prescribing in hospitals and a regional library.

Ministers expect tourist numbers to reach 3.6 million by 2013 (generating £625 million), with the help of the Titanic centenary and Derry’s status as UK City of Culture. The 2009 totals, for comparison, were 3.29 million visitors (1.92 million from outside Northern Ireland) and £529 million in revenue.

The SME liquidity scheme was publicised as a £50 million loan fund, although the maximum in this Assembly term will be £30 million.

Ninety per cent of large scale investment planning decisions should be made in six months by 2015. However, 100 per cent was promised immediately in 2008. The modest interim target is 60 per cent in 2012-2013 and 57 per cent was achieved in 2010-2011.

The value of manufacturing exports (currently £5.1 billion) is to be increased by 15 per cent over the next four years. Exports fell by 0.6 per cent in 2010-2011.

DCAL’s creative industries innovation fund would support 200 projects. DEL plans to fund an extra 540 places on STEM courses. The creation of a new food strategy board recognises farming’s strong economic contribution.

Living standards

Two overlapping chapters cover quality of life, officially termed “Creating Opportunities, Tackling Disadvantage and Improving Health and Wellbeing” and “Protecting Our People, the Environment and Creating Safer Communities”.

Practically, this would involve building 8,000 social and affordable homes and the full double glazing of Housing Executive stock. The house-building total is to be expected given that 2,104 were started by housing associations in 2010-2011.

The SDLP and UUP contend that the £80 million Social Investment Fund could go to community groups linked to the DUP and Sinn Féin, a charge denied by both parties. A separate Social Protection Fund, similar to the December 2008 hardship payment, will receive

£20 million per annum. Child poverty is to be reduced, using both funds.

The promise of one year’s pre-school education (from 2013) does not guarantee a nursery school place. Around 90 per cent of children currently have places and the Department of Education already aims to provide one-year places to all parents.

Forty-nine per cent of young people from disadvantaged backgrounds should achieve five GCSEs A*-C by 2015, including in maths and English. The 2009-2010 figure was 31.3 per cent and that target is in keeping with the current annual increases. The same percentage for all young people should increase to 70 per cent, up from 59 per cent in 2009-2010.

Legislation to ban age discrimination in goods, facilities and services is to be drafted next year but only enacted in 2014-2015. To deal with the legacy of the Troubles, OFMDFM also promises to launch a dedicated ‘victims and survivors service’ in 2012-2013.

More chronic condition patients should be able to take up programmes to help them manage their own conditions from 2014-2015. The Health and Social Care Board will co-ordinate existing programmes and roll these out across the province. £7.2 million is set aside to tackle the growing obesity problem.

Environmental commitments include the plastic bag levy, a 35 per cent cut in greenhouse gas emissions over 1990-2025 (compared to 42 per cent by 2020 in Scotland) and 45 per cent of household waste being recycled by 2015.

For criminal justice, a 3 per cent reduction in violent crime is set as a target. PwC Chief Economist Esmond Birnie commented that the draft programme was “aspirational but lacks substance as well as the necessary milestones and stretching targets.”

He added: “Transformation to a new, prosperous, internationally competitive and socially inclusive Northern Ireland can’t even begin till we’ve defined what it might look like.” Consultees, Birnie said, should not miss the opportunity to become persuaders for a more radical document.

Draft Investment Strategy breakdown (£ million)

*includes the Assembly and minor government organisations

Financial crises and recessions are nothing unusual. There were 195 stock market crashes and 84 depressions between 1860 and 2006. However, the 2007 crisis marks a turning point in that for the first time the entire world was affected. The trigger was the collapse of Lehmans, which called into question one of the unspoken assumptions of global finance: some banks are too big to fail. This assumption was based on a double guarantee. First, big banks had enough assets to cover potential losses. Second, if not, the government would step in. Both guarantees proved to be worthless for Lehman’s, but when the entire financial system threatened to implode, states acted quickly to restore the second guarantee.

Governments committed $11.4 trillion to saving the system, the equivalent of the 2007 GDP of Japan, the UK, Germany and France combined. That represents a worst case scenario, and includes guarantees that may never be called on or the cost of purchasing assets and equity, whose value may go up. Supporting the banks is a work in progress, so the final cost won’t be known for years. What is certain, is that the initial crisis led to the sovereign debt crisis we’re seeing now. And in addition to shorter term concerns, the legacy of sovereign debt could interact with increased pressures on public finances caused by population ageing.

At the other end of the age scale, there are fears that the crisis could create a ‘lost generation’ of alienated, marginalised young people, given how long it usually takes employment to get back to pre-recession levels. For example, it took the US job market seven years to recover from the previous recession.

Even lost generation scenarios assume that the recovery will be relatively long lasting, and the social unrest and other consequences of frustrated hopes will be relatively circumscribed. But ‘Make Markets be Markets’, by (among others) Robert Johnson of the UN Commission on Financial Reforms, argues that the economic system is in the grip of a “doom cycle”: banks behave recklessly during the boom, confident in the knowledge that during the bust the state will clean up.

Although sound corporate governance and a strong risk management culture should enable banks to avoid excess leverage and risk taking, there will always be players eager to push complex products and trading beyond the needs of the real economy. Indeed, such activity is once again driving the rapid profit growth of some banks, with little learned from the past.

Critical links

The crisis shows how some aspects of the world economy can be both positive and negative, notably interconnectedness. Global linkages help the world to grow richer, but they also facilitate the spread of shocks. Securitisation for instance distributed risk across a larger number of players, with two major consequences. First, it increased interconnectedness among financial institutions themselves, and of these institutions across countries. Second, it gave the impression that risk had diminished. It hadn’t, but individual shares in the risk and responsibility for managing it had become diffuse, creating a false sense of security.

The financial crisis spread rapidly to the real economy, with stock market collapses, decreases in business and consumer confidence, a credit crunch, a sudden contraction in international trade, and a sharp drop in investment.

However, the BRICs (Brazil, India, China, Russia) fared better than most. Their emergence as new global players will transform the geopolitical landscape, with impacts potentially as dramatic as the decline of the European empires and the rise of the United States. How they exercise their growing power and whether they relate co-operatively or competitively to other powers in the international system are key uncertainties.

The one major certainty is that there will be other shocks, with three characteristics. The fact that a few people such as financial market traders can provoke major disruptions reveals an aspect of today’s global socio-economic system that will grow in importance: asymmetry. Another example would be the panic caused by the fear of a small country like Greece defaulting on its debt. The reason is that the interconnectedness mentioned earlier can amplify relatively small, local problems (such as sub-prime mortgages) into systemic risks.

In addition to asymmetry and amplification, a third ‘A’ is likely to become more important: asynchronicity, for example lags between economic activity and commodity prices or decoupling of countries from swings in the global economy. Asynchronicity undermines the case for global solutions to a number of problems.

The Great Recession was due to the unravelling of tensions in the system. These tensions were not reduced thanks to any government policy, but built up until they exploded into a systemic shock that caused misery for billions of people and would have destroyed the financial system if states hadn’t pumped trillions of dollars into the economy. Is pay up and hope things improve the best we can do?

Profile Patrick Love

Patrick Love is Senior Editor with OECD Publishing and the author or co-author of five books in the OECD Insights series, including one on international trade and one on the economic crisis. He is currently working on the OECD Green Growth Strategy and the OECD project on future global shocks. Patrick blogs at www.oecdinsights.org

Briefly outline EST’s current work in Northern Ireland:

We provide free and impartial energy saving advice to around 50,000 householders in Northern Ireland each year. In the face of rising fuel prices and last year’s cold winter, the provision of advice and information on the smaller ‘behaviour changes’ is as essential as insulation and helps cut heating and electricity costs. This empowers people to affect change themselves with regards to making their homes warmer and more energy efficient. Early figures from last year would suggest that our advice helped householders in Northern Ireland save over £3 million in fuel and electricity costs.

We continue to act as programme administrator for the Utility Regulator’s Northern Ireland Sustainable Energy Programme, which is a £7 million levy fund, comprising many energy saving schemes.

Clients, such as utility companies, benefit from the provision of data, insight and statistical verification work via our knowledge team.

What innovations lie ahead in energy advice?

Ongoing work to reduce domestic energy consumption through the more traditional channels is still necessary, and are now helping energy related organisations to provide their own bespoke advice to their customers directly, via our Endorsed Advice Service, which has UKAS accreditation. This will support and assist companies to provide the right information best suited to their customers’ needs.

But I suppose the next ‘big thing’ we are looking at involves water efficiency. This hasn’t been fully explored in Northern Ireland and, in particular, the associated savings through efficient hot water use. Approximately a quarter of domestic CO2 emissions and a third of gas bills are attributable to heating water. This would result in a double win; by reducing water consumption at the user end and realising additional energy savings via a reduction in the overall energy consumption of providing clean water and waste-water disposal. The Energy Saving Trust has developed online consumer tools and a commercial water modelling tool to simulate the impacts of retrofitting water saving devices. We are also looking at the provision of behaviour change advice to complement any retrofit activity.

How will charitable status change the organisation?

Charitable status will allow us to be more innovative. We will be able to take the initiative, and respond effectively to the carbon-saving opportunities that may arise through new business, like the Great Britain Green Deal. Our not-for-profit company will continue to deliver substantial government-funded programmes while the wholly owned trading subsidiary will provide an innovative range of services, which businesses and organisations can buy to benefit their customers. Surplus monies earned via the trading subsidiary will be channelled back to the charitable foundation.

We will remain independent and committed to the provision of impartial advice to householders, whilst continuing to be the public face of energy saving, but now we are able to utilise our know-how to help grow the green economy, assist people out of fuel poverty and remain at the forefront of energy saving in the UK and beyond.

If you would like more information on any of our services, please contact Patrick Thompson, Operations Manager at the Energy Saving Trust patrick.thompson@est.org.uk or call 028 9072 6006

While the Republic has drawn down €290 million from Europe’s key innovation programme, Northern Ireland’s applications total just €30 million. That gap is an urgent wake-up call for the Executive to promote the region’s R&D, especially as the Seventh Framework Programme finishes in 2013.

Statistics for 2010 make clear that business leads the way in local innovation. The private sector spent 22 times more on R&D than government and had a 66 per cent share. Higher education made a substantial contribution (31 per cent) while a mere 3 per cent is done inside government.

That said, government departments have the potential to boost R&D across the board by securing funds from EU R&D programmes.

Most Northern Ireland applications to the framework programme have come from higher education (€21 million), with the remainder from businesses. The programme started in 2007. SMEs are deterred by the cost of participation, inadequate access to finance and problems with finding appropriate partner organisations.

The Irish Government hopes to receive €600 million from the programme over 2007-2013 and many southern researchers were seeking a larger sum. Based on its share of the island’s population, Northern Ireland should therefore be receiving €240 million over the programme’s lifetime. The UK does not have a specific target but has gained £3.27 billion to date.

Business R&D is dominated by externally-owned firms (68 per cent) and large enterprises (61 per cent) i.e. those with more than 250 employees. Small and medium enterprises spent £10.9 million less compared to 2009, an 8 per cent fall, and their share has declined over the recession from 58 per cent in 2008.

Total expenditure in real terms (£521.4 million) was up from £497.1 million in 2009, representing a 5 per cent increase. Using that measure, higher education spending increased by 10 per cent, business spending by 3 per cent and government spending dropped by 6 per cent.

Almost all business R&D spending (94 per cent) is carried out in-house, totalling £324.2 million in 2010. Of this, £234 million was generated in manufacturing. In cash terms, Northern Ireland had the second highest increase within the UK regions (9.1 per cent) in 2009 but that rise is offset by having the second smallest spend; Wales is last with a virtually static £244 million figure.

UK R&D is concentrated in East Anglia and along the M4 corridor, with strong pockets in the East Midlands and North West England.

The province’s R&D investment rate was initially measured as a share of 2009 GVA figures; new statistics are due in December. A 1.1 per cent figure for Northern Ireland makes it sixth out of 12 regions but the regional average is only a modest 1.3 per cent. The UK’s latest overall percentage (R&D of GDP) is 1.87 for 2009, with the Republic just behind on 1.77 per cent.

Business R&D spend in the Republic reached £1.87 billion in 2009 but fell to an estimated £1.6 billion in 2010, with medium and large enterprises cutting their budgets in a turbulent economic climate.

Scandinavian states were Europe’s R&D leaders in 2009: Finland (3.96 per cent of GDP), Sweden (3.62), Iceland (3.1) Denmark (3.02). The most recent US and Japanese figures, for 2009, were 2.77 and 3.44 per cent respectively.

Israel is recognised as the world leader in R&D, particularly in agriculture, defence and engineering. Its rate of GDP will be 4.2 per cent this year, according to the US-based Battelle Memorial Institute.

Battelle’s global R&D forecast, published last December, predicted that worldwide spend would reach $1.19 trillion in 2011. Asia’s share was estimated at 35.3 per cent, having overtaken the USA (34.4 per cent), while Europe’s estimate was 23.2 per cent. China had Asia’s largest R&D budget ($153.7 billion), just ahead of Japan ($144.1 million).

“Leading Asian nations recognize that their economic expansion can be sustained by continued commitment to R&D investment across a wide range of science and technologies,” the study said. In contrast, experienced researchers were becoming harder to find in the US and Europe, and European government support for R&D was being hit by deficit reduction plans.

Speaking to agendaNi last year, European Science Commissioner Máire Geoghegan-Quinn warned that research budgets were seen as an easy target for spending cuts. She recognised that North America and Asia were better at getting research to market and Europe therefore had to catch up. Northern Ireland’s performance therefore needs a radical step change if universities and businesses are to reach their potential in the global knowledge economy.

UK manufacturers can create a global edge by backing up their products with high quality support services, according to Work Foundation author Andrew Sissons. The trend, known as manu-services, was the subject of his ‘More than making things’ report, which he launched in March.

Manufacturing is essential for rebalancing the economy and closing the strategic trade gap but the UK is slipping back at the high-tech end. From 2007 to 2010, UK high-tech manufacturing lost a third of its workforce, declining twice as fast as its low-tech counterpart.

Speaking at the Northern Ireland Economic Conference, he explained that manu-services was an entirely new business model, not just an add-on.

Around 42 per cent of manufacturing workers make things but the majority are employed in other processes e.g. design, marketing and after-sales care. Manu-services involves integrating all those operations effectively.

It’s already happening. Complex services are needed to ensure that Boeing’s products (from outsourced plants around the world) match up to specifications. Apple produces the iPhone and then provides after-sales support.

Manu-services often result in manufacturers leasing goods to customers (rather than selling them) and adopting the risk on their products (which they may be able to manage more efficiently). While manufacturers could also lock customers into longer term contracts, the customer could play a greater role in designing the product “and you might not even know when you sign the contract what the final product is going to look like.” Lasting relationships with customers would be developed.

The manufacturing workforce fell from 6.6 million in 1979 to just under 2.5 million in 2010. Services tend to be more labour-intensive and integrating them with manufacturing could help to rebuild employment.

Data suggest that manu-services firms currently struggle and are more likely to go bankrupt. Smaller companies are better at manu-services but less able to get into the market, given the risks involved.

Government policy can support manu-services by creating “world class” networks of businesses, universities, banks and research institutions to develop this work, and by tackling specific barriers to growth. A publicly-backed insurance fund for manu-services could mitigate the risk for smaller companies.

The Work Foundation estimates that manu-services already represent 15-20 per cent of manufacturing turnover and therefore generate around 2 per cent of UK GDP, roughly the same as all lawyers and accountants.

High-tech manufacturing is becoming increasingly competitive, with countries like China catching up, and he sees manu-services as “a new opportunity for Britain to set itself apart”. The processes involved are complex and therefore harder for other countries to copy.

“Given the darkened economic climate, it makes efforts like this as important as ever,” he said. “Really the only way to get out of this sort of situation for Northern Ireland is to focus very heavily on exports. Those exports are going to come particularly from new types of manufacturing.”

Rather than “beating the drum” for manufacturing per se, he urged political leaders to look at the “nuance” behind the changes in the sector and understand its complexity.

www.theworkfoundation.com/reports

The most recently published figures show that Northern Ireland expenditure on research and development in 2010 was the highest ever, with spending by businesses increasing by 6 per cent on the previous year to £344 million, with spend by locally owned companies up 27 per cent to £109.9 million in 2010.

Businesses very clearly recognise the value of investing in new products and processes to keep ahead of the competition and strengthen their long-term position.

In the first half of this year, Invest Northern Ireland made 70 offers to businesses towards expenditure in R&D, with total planned investment of £33 million.

However, the fact remains that too much of our R&D activity remains concentrated in too few companies, and mainly larger ones at that.

Whilst many companies are showing an increased appetite for R&D, Invest Northern Ireland is encouraging more Small and Medium sized Enterprises to become “innovation-active,” particularly in the area of market-led R&D.

For small companies which have never contemplated getting involved in R&D, or maybe have not done so within the past five years, an enhanced rate of assistance (up to maximum 75 per cent, maximum grant £50,000) will be available, whilst small and medium sized businesses which are already benefitting from Invest NI R&D support will also be eligible to apply for up to 45 per cent assistance (maximum £50,000).

Much of the focus is on promoting and encouraging prototype development and exploitation, including funding for prototype development, and identification of the most appropriate route to market. For SMEs, support is also available for intellectual property costs and to support trials and testing.

Applications will be sought on an open call basis, with three separate calls anticipated between now and the end of March 2012. A simplified and streamlined process also aims to encourage SMEs to apply and make the programme more accessible to first-time R&D applicants and enable Invest NI to deliver short, sharp interventions within faster turnaround times.

Invest NI’s established application and/or approvals process will continue to cater for large companies and for SME proposed projects requiring more than £50,000 assistance.

For many businesses, the intellectual property they hold can be one of their most valuable assets. But for many, especially smaller companies, protecting and successfully commercialising their intellectual assets can be a major challenge to manage and to finance.

To assist small local companies with this challenge Invest Northern Ireland has also recently introduced an IP starter pack which includes guides to the main types of intellectual property including patents, trademarks, copyright and design registration. Non-disclosure agreements and information on licensing are also explained.

These measures are part of Invest NI’s Boosting Business initiative to support businesses to remain competitive, invest for the future and grow market share.

For more information about Invest NI’s Boosting Business initiative please visit www.boostingbusinessni.com.