It’s a great pleasure to join you at the annual conference of the British-Irish Chamber of Commerce and I’d like to thank your CEO, Steve Aiken, for his kind invitation.
I’m very pleased that you’ve chosen to hold your conference here at Titanic Belfast. Since it opened just a couple of years ago this building has become one of the city’s major landmarks. So it’s fitting today to congratulate Tim Husbands, CEO of Titanic Belfast, on receiving an MBE in the New Year’s Honours list.
Since the British-Irish Chamber was launched to coincide with the historic visit of Her Majesty the Queen to Ireland in 2011 you have gone from strength to strength. Relations between the United Kingdom and the Republic of Ireland economically, culturally, socially and politically have never been stronger than they are today. That was brought home to me when I attended one of your events in London last March.
I had the privilege of speaking alongside An Taoiseach, Enda Kenny, before he went on to Downing Street for his annual summit with the Prime Minister. That followed on from the Joint Declaration of 2012 which set out a course for UK-Irish relations over the ensuing decade covering a range of areas where we can benefit from closer co-operation.
That includes the first ever joint UK-Irish trade mission which took place this week with ministers from London, Belfast and Dublin attending the Singapore Airshow together. And this has brought further good news for Bombardier with potential contracts worth £479 million. And progress on all the issues covered by the 2012 Declaration will be reviewed when the Prime Minister and the Taoiseach meet again next month.
Two other events also symbolise the closeness of the modern UK-Irish relationship.
Just before Christmas the Prime Minister and the Taoiseach made a joint visit to the western front war graves in remembrance of those tens of thousands of Irishmen who gave their lives in the Great War.
And of course in April we’re looking forward immensely to welcoming President Higgins for the first state visit by an Irish President to the United Kingdom. I know he’ll receive a Great British welcome.
But today I want to concentrate on a business and economic theme with a focus on the signs recovery across the UK and the steps we are taking, alongside ministers in the executive, to strengthen the Northern Ireland economy and to help it succeed in the global race.
When the Coalition came to power the UK had suffered the deepest recession in living memory and unemployment had increased by nearly half a million. We had been left with the biggest budget deficit in our peacetime history and the government had a choice between spending more and borrowing more until the money finally ran out and crisis erupted. Or taking difficult decisions to control spending and deal with the deficit.
So we set out our long term economic plan to build a stronger, more competitive economy and secure a better future for the whole of the UK and for future generations.Today, as a result of sticking to that long term plan and the sacrifices of the British people our economy is now well on the road to recovery.
The deficit has been cut by a third.
2013 was the first year since before the crisis in which the economy grew in all four quarters.
There are now 1.3 million more people in work that at the election.
That’s 1.3 million more people able to bring home a wage and provide greater financial security and peace of mind for their families.
Across the UK there are 1.6 million more private sector jobs and 400,000 more businesses.
Our opponents predicted that cutting spending would result in a double or triple dip recession and that unemployment would rise by a million. They have been proven wrong. The government has comprehensively won the economic argument.
We’ve done this by bringing down the deficit to keep interest rates as low as possible.
By cutting corporation tax from 28p to 20p by the end of this Parliament.
And by other measures which back small business and enterprise like lower jobs taxes.
The new allowance for employer national insurance will save nearly £5.5 billion per year for hardworking businessmen and women.
That’s the equivalent of £200 per employee a measure to help business from a government that backs business.
But we recognise that the recovery is still in its early stages and serious risks remain.
So it’s essential that the government sticks to its long term plan and resists calls for more borrowing and more debt.
That is the only sustainable way to deliver rising living standards.
Recovery in Northern Ireland
I very much welcome the news that the Irish economy is showing increasing signs of healing, not least because of the positive impact that is likely to have here in Northern Ireland.
It is self evident that the economies of the UK and Ireland are highly inter-dependent and nowhere is that more true than here in Northern Ireland. And here too, there are increasing signs of recovery.
Economic activity in Northern Ireland rose by 1.6 per cent in the third quarter of 2013.
The numbers claiming unemployment benefit has fallen for eleven months in a row.
Business confidence is rising.
And there have been a number of significant announcements on exports, investment and jobs.
Bombardier, Thales, Wrightbus, Harland and Wolff, Ryobi and Fujitsu have all had good news to share over recent months.
Indeed the Ulster Bank PMI survey for January showed local firms reporting their fastest rate of growth in a decade, with the private sector exceeding their counterparts in the equivalent UK survey for the first time since October 2007.
So that’s the good news.
Yet for all that it’s also clear that the recovery in Northern Ireland is still lagging behind the rest of the UK.
Levels of economic inactivity are higher than elsewhere and we have a bigger proportion of workless households.
For many families times remain incredibly tough and that’s why the government is doing what it can to help with measures such as freezing fuel duty and cutting tax for over 600,000 in NI to help hardworking people be more financially secure.
And of course Northern Ireland’s economy remains too dependent on public spending which remains at 25 per cent per head higher than in England.
That’s why the government and the Northern Ireland executive have been working together to look at other ways in which we can boost the private sector and rebalance the economy.
In fact we’ve been working more closely than at any time since the restoration of devolution in 2007, closer than is the case between the UK government and any of the other 3 devolved administrations.
So last June, the Prime Minister and I, with the First and deputy First Ministers, launched an ambitious new economic pact and we have been making real progress on implementation.
Our highly successful Start-Up Loans have been extended to Northern Ireland to help young people wanting to set up their own business.
We’ve given the Executive an extra £100 million in borrowing powers to enable them to take forward projects which bring the community together, such as the shared education campus at Lisanelly.
In October the Prime Minister attended the international investment conference where he made a powerful pitch for Northern Ireland as a great place to do business - a sentiment echoed by companies like Bombardier, HBO and Allstate who have invested so successfully here.
We’ve established a joint ministerial task force on banking and access to finance, responding to a major concern for the business community here.
In addition, as part of the package we were able to maintain Northern Ireland’s 100% EU Assisted Area Status a key ask from the Northern Ireland ministers and powerful tool to attract business something the Northern Ireland executive has done with great success in recent years.
And we are continuing the necessary technical work on the potential devolution of corporation tax from Westminster to Stormont.
Our goal is to ensure that if the decision by the Prime Minister this autumn is a ‘yes’ we can introduce legislation with a view to putting it on the statute book by the time of next year’s General Election.
I know that for many people here devolving corporation tax and reducing the headline rate to the same level as the Republic of Ireland is the key to Northern Ireland’s future economic success. I agree that it has the potential to have a very significant impact, and like my predecessor I have made sure my Cabinet colleagues in London are well aware of the strength of the support here for devolution.
But corporation tax even if it is devolved can’t do it all. Taken on its own corporation tax might not have anything like the desired effect unless it goes alongside other important measures to reform the economy and the way business is done here.
Northern Ireland has many great assets as a place to do business: a highly talented workforce, a very competitive cost base and a telecoms infrastructure second to none, to pick out just a few examples.
But at the same time there are still things done wholly by the public sector that elsewhere in the UK and Europe have benefited from greater private sector involvement and expertise. There are areas where business is more heavily regulated than in other parts of the UK. And aspects of the planning system prompted the Chief Executive of Sainsbury’s recently to declare Northern Ireland:
the hardest place in the UK to line things up.
So if we’re to maximise the opportunities for Northern Ireland as a place for investment it’s important that we look at all of these.
Northern Ireland needs a planning system that operates in an effective and timely way, safeguarding environmental concerns but also giving enterprise the chance to grow without having applications bogged down for years with successive challenges and litigation. And it is important that the Executive agrees on the right way forward.
Hard working entrepreneurs can also be held back from growing their business if they are tied up with red tape. That’s why at Westminster the Government embarked on The Red Tape Challenge.
We are determined to be the first Government ever to have fewer regulations at the end of a Parliament than at the beginning and by then we expect to have scrapped or improved over 3,000 regulations.
So it’s encouraging that the executive here - under Arlene Foster - are now undertaking their own project to reduce red tape. This was an important NIE commitment in the economic pact.
We also need to build for the future. As in the rest of the United Kingdom, this means continued investment in infrastructure.
Despite the unprecedented pressures on the public finances as a result of the deficit we inherited, the UK government has continued to prioritise capital expenditure.
For example, we have embarked on a major programme of improvements to road and rail infrastructure in England and through the Barnett formula, that is reflected in the capital settlement for devolved areas.
Capital funding for the executive has been increased by £600 million since the 2010 spending review and there will be a 9.2% increase in real terms next year. As a result, we remain on course to deliver £18 billion of capital investment to Northern Ireland by 2017.
Last month Commercial Secretary to the Treasury, Lord Deighton the man who delivered the 2012 Olympic Park on time and under budget was in this very building to promote infrastructure as a key driver of economic growth.
In the economic pact the UK government made clear that we would apply our Infrastructure Guarantee Scheme flexibly to ensure that locally or regionally significant projects in Northern Ireland will be eligible.
Public service reform
But all of this needs to go hand in hand with reform of the public sector, so that high quality public services are delivered more efficiently.
In an age when people have unprecedented access to information they want services that are flexible and more directly tailored to their individual needs.
Public sectors the world over are reforming radically and looking at innovative ideas to rise to this challenge and Northern Ireland can be no exception.
So I very much welcome the Finance Minister, Simon Hamilton’s, commitment to public sector reform and support him in his efforts to take this forward. I believe that a strong focus on all of these areas is essential if Northern Ireland is to have more dynamic economy that delivers greater prosperity across the whole of society.
And another key element is welfare reform.
It’s simply unsustainable to continue with a system that too often fails to reward those who work, parks people on benefits and then forgets about them and has a cost which is spiralling out of control. But that’s what Northern Ireland risks if it decides to break with parity and go it alone.
It’s reported that the Finance Minister now estimates that this could cost more than £1 billion over the next five years money that could otherwise be spent on schools or hospitals or transport.
Let me be clear. Our welfare reforms are designed to help people out of poverty by ensuring that work pays, to tackle the causes of welfare dependency while being fair both to those in genuine need and the taxpayer that foots the bill.
The Department of Work and Pensions has agreed a number of flexibilities with the executive to suit Northern Ireland’s particular circumstances. I strongly believe this is the right reform for Northern Ireland and I hope the Welfare Reform bill will start to make progress through the Assembly.
So in conclusion, we live in an increasingly competitive world and the government is determined to make the UK one of the best places in the world to do business. We have a long term plan to turn our country around. And that includes here in Northern Ireland, where a stronger economy would undoubtedly help our efforts to build a more cohesive society.
So working with the devolved administration, we are pushing ahead with implementing the economic pact we signed last June. A pact we agreed just as the eyes of the world were starting to focus on the G8 summit which did so much to highlight the many opportunities Northern Ireland has to offer.
We are determined to secure a better future for Northern Ireland and more prosperous economy and we want to work with you in the British Irish Chamber of Commerce and right across the business community to help deliver that.