Wednesday, May 25, 2005

Allister lobbies for Special Status of Northern Ireland

A press released from Commissionner Danuta Hubner on regional policy shows that 'Evaluations of the 1994-99 programming period suggest that GDP was between 1.3 and 4.7 per cent higher than it would have been in the absence of EU-funded programmes in Greece, Spain, Ireland, Portugal, eastern Germany and Northern Ireland. Preliminary results from the current programming period (2000-2006) suggest a similar impact." In the meantime, Jim Allister has released a statement where he reminds his lobbying "in Brussels to try and secure for Northern Ireland a special status under Commission proposals for Regional Aid guidelines.As the proposals stand, Northern Ireland would be unable to continue to offer Selective Financial Assistance in order to attract inward investment from 1st January 2007, as such would then fall foul of anti-state aid provisions." More here

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Blogger Thomas said...

Here is the Briefing Paper from Jim Allister

Briefing Paper

SOCIAL AND ECONOMIC ISSUES IN NORTHERN IRELAND

April 2005
Introduction

Despite being a region in one of the most advanced post-industrialist economies within the European Union, Northern Ireland’s economy remains dominated by the public sector. This state of affairs will need to be addressed in order to foster an environment in which entrepreneurship, technological innovation and knowledge-based business activity can grow. Much remains to be done to achieve the Lisbon Agenda.

The country is also afflicted with serious social challenges: vast tracts of inner city Ulster are plagued with social deprivation and educational under-achievement: the stagnation and steady decline of heavy industry and the subsequent relocation of manufacturing jobs to lower wage economies in the Far East have helped to produce long term economic inactivity.

The European Union has a valuable role to play in facilitating the transition of Northern Ireland’s economic circumstances from their current position and in this regard must be careful not to impede our economic development through a rigid approach to State Aids. A situation whereby 62% of Gross Domestic Product is public expenditure is not analogous to economic expansion, growth and a burgeoning knowledge-based sector.

The purpose of this briefing is to describe briefly some of the main areas of concern and to suggest that by permitting the continuance of Selective Financial Assistance the European Union could make an important contribution.







Economic Realities

It has already been stated that 62% of Northern Ireland’s GDP is public expenditure. Reliance upon the public sector is further demonstrated by the fact that over 50% of the employment market in Northern Ireland is taken up by the public sector. In addition to over-dependence upon the public sector, Northern Ireland faces a massive deficit in terms of infrastructure. As the United Kingdom did not qualify for Cohesion Fund Aid, this deficit has never been addressed.

The rate of business start-up in Northern Ireland is lower than other regions in the UK. The lack of an environment where entrepreneurial skills and innovative business venture can flourish is reflected by the worryingly low rate of research and development spending. More worrying still is the fact that spending in this field is contracting rather than expanding.

The insidious presence of paramilitaries within our society has also played a major part in strangling the proper development of a modern economy in the province. Protection rackets, intimidation and wilful damage to business premises by paramilitary thugs have deterred people both inside and outside Northern Ireland from starting up businesses. A tough policing solution is called for to create an environment in which business can expand without fear of paramilitary interference.

A package of constructive state aid that would help alleviate the excessive costs to business of electricity in Northern Ireland has yet to be approved by Brussels. It is a matter of record that electricity prices in Northern Ireland are amongst the highest in the European Union. These exorbitant costs are strangling business and militating against Northern Ireland as an attractive venue for outside investors. When combined with the drive to meet certain targets in the environmental sphere, particularly relating to waste management, Northern Ireland struggles to be competitive as a business location.

Social Detriment

The social problems created by nearly forty years of paramilitary orchestrated violence are deep rooted and require long term solutions.
Northern Ireland has enormous social problems, 185,000 households exist below the poverty line, and 30% of 16-24 years olds have no basic educational qualifications. The European Union has a capacity to assist in the alleviation of these problems.

A Way Forward

Northern Ireland, as a region of the UK, is unique. It alone shares a land border with another Member State which in terms of attracting inward investment is a competitor. Northern Ireland's difficulties are accentuated by the fact that its contiguous border counties in the Republic of Ireland will qualify for a level of regional aid denied to Northern Ireland under the current proposals. The competitive advantage to the Republic of Ireland is further bolstered by its 12% Corporation Tax as opposed to the UK's 30% and its infrastructure benefited greatly from Cohesion Fund monies.

In keeping with the Lisbon agenda, the primary target for "Invest NI" has been to attract hi-tech industries. In light of the aforesaid competitive pressures from across our land border, the loss of the capacity to continue to afford Selective Financial Assistance (SFA) could be catastrophic for Northern Ireland's efforts and thus for our long term economic growth.

The Commission's consultation paper on Regional Aid guidelines, published on 30/04/04, did note that the particular Northern Ireland position needed to be reassessed and promised careful consideration as to the impact of its proposals for Northern Ireland. Responses during consultations with Member States would suggest the Commission is not adequately addressing the steps necessary to protect NI's interests.

It is submitted that a specific codicil is required to permit the continuance of SFA within NI, otherwise our economic potential will not be achieved, our socio-economic needs adequately addressed nor shall we be in a position to compete effectively with our neighbour for large scale inward investment. Horizontal aid will not be enough; the ability to give vertical aid is essential.

It would surely be a great shame if "one size fits all" EU restrictions were to stymie Northern Ireland's progress towards being an innovative, dynamic and competitive economy.

5/25/2005 1:51 p.m.  
Blogger Thomas said...

Comment From Jim Allister on the Commission examining special status for Northern Ireland on Regional Aid Guidelines - Allister

Statement by DUP MEP Jim Allister:-

"Over recent months I have been lobbying in Brussels to try and secure for Northern Ireland a special status under Commission proposals for Regional Aid guidelines. As the proposals stand, Northern Ireland would be unable to continue to offer Selective Financial Assistance in order to attract inward investment from 1st January 2007, as such would then fall foul of anti-state aid provisions.

As part of my campaign, I have met with the Regional Commissioner, Mrs Hubner, the Competition Commissioner, Mrs Kroes, and I have also spoken with Peter Mandelson. I left with each a copy of a briefing document which I had prepared on the subject (copy attached). In this document I made the case for Northern Ireland on the basis of our socio-economic situation and the gross disadvantage which the intended guidelines would place us vis-a-vis competing with the Republic of Ireland for inward investment.

I am encouraged to have received a letter from Commissioner Kroes which indicates that consideration is now being given to Northern Ireland's position. In her letter Mrs Kroes says "I have taken note of your suggestion for granting a specific status to Northern Ireland under the Regional Aid Guidelines for the next programming period 2007-2013. We are currently examining the detailed contributions from the UK authorities on this issue and we are reflecting on different possible options."

The obligation now shifts to the N.I.O. to press home the needs of Northern Ireland on this issue and, accordingly, I will be urging the Economic Development Minister to vigorously do so. This is a battle which we cannot afford to lose."

5/25/2005 1:52 p.m.  
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