Written evidence submitted by Belfast City Council, relating to the Investment in Northern Ireland inquiry (INI0023)

 

Belfast City Council is the largest Council in Northern Ireland. We work closely with the other councils in the Belfast City Region Deal area as well as those along the Belfast Dublin Economic Corridor. We also work closely with Invest Northern Ireland both locally and internationally to attract investment into the region.

We launched an extensive physical investment programme, which involved a £400 million citywide commitment to making Belfast a better place to live, work, visit and invest. The programme includes around 400 projects. This momentum has now been taken forward through our Belfast Agenda, the community plan for Belfast, which places attracting investment as one of the key levers to achieve our primary goal of sustainable inclusive economic growth where everyone in Belfast benefits from a thriving and prosperous economy, everyone in Belfast fulfils their potential, and where Belfast is a vibrant, attractive, connected and environmentally friendly city. The Belfast Agenda sets an ambitious target of attracting £1 billion of private sector Foreign Direct Investment.

 

Steps the UK Government can take to encourage investment in NI, including through the Levelling Up Fund Shared Prosperity Fund and Internal Market Act.

Regarding the levelling Up Fund, Shared Prosperity Fund:

 

Regarding the issue of encouraging investment in NI Belfast City Council believe there are a number of steps government should take:

 

High Streets and City Centres

Though not specifically asked for in the Call for Evidence, Council believes that strengthening High Streets and City Centres adds to the overall investment appeal of a region. In relation to overcoming and addressing the significant issues these currently face:

 

Steps the UK Government can take to ensure investment, including foreign direct investment, is economically effective

As highlighted by The Innovation and Inclusive Growth Commission (IIGC) Report ‘Reset for Growth’ there is an opportunity to:

 

Belfast City Council has been working collaboratively with DIT to promote capital investment opportunities in Belfast and the wider city region. This has involved:

Council considers there is an opportunity for DIT and Invest NI to more proactively leverage their international networks to positively position Belfast globally for FDI and real estate investment and development. In particular, more could be done to maximise the unique opportunities arising from Northern Ireland’s unrestricted access to two markets and regulatory environments.

Assistance should also be provided to develop a targeted trade & investment strategic action plan. This should include specific FDI propositions for key growth sectors; market specific investment propositions, and vehicles to fully realise the potential of the Belfast-Dublin-London relationship and the Belfast-Dublin Economic Corridor. It should build on the work already established by existing Belfast city regions investment partnerships such as the Renewed Ambition partnership, and Innovation City Belfast.

 

The potential effect of City Deals on Economic Growth in NI

Belfast Region City Deal (BRCD) seeks to deliver a 10-year programme to increase GVA by £470m and create up to 20,000 new and better jobs across the Belfast City Region (6 Council areas). Within Belfast, it will support the delivery of the Belfast Destination Hub; active travel through a new cycle & pedestrian bridge; a Smart District; as well as innovative University-led centres of excellence in life & health sciences, data analytics and virtual production. It is expected to attract c.£150m of direct capital contributions plus a further £1bn of private sector investment. The BRCD funding of £850mn of UK and NI government funding will be a significant catalyst to attract even more investment across the region. While this City Deal was always going to be important for Belfast, as well as towns and rural areas; it is now a critical element of the post-Covid recovery.

A key element of economic recovery will involve Digital Investments including:

 

Steps that business can take to invest effectively in NI

Prior to the pandemic, Belfast was on an impressive growth trajectory. The City witnessed record levels of office, hotel, and student accommodation development. Investment transactions from 2015 to 2020 totalled £717 million.

Further Private sector investment is required to continue to drive the delivery of key regeneration projects; and to bring forward housing developments across all tenures to help create a vibrant, functioning city centre. This is necessary to achieve the Belfast Agenda’s ambition to attract 66,000 new residents and create 46,000 new jobs in the city by 2035. Additionally, investment in commercial developments will provide the office accommodation required to capitalise on Belfast’s current position as one of the most attractive investment locations in Europe for tech start-ups and FDI.

Belfast Region City Deal is expected to attract c.£150m by way of direct capital contributions from the private sector. However, it also includes opportunities and a requirement for a further £1bn of private sector investment in order to deliver the benefits through jobs and productivity set out within the business cases.

 

Steps the UK Government can take to encourage investment that addresses the skills gap and increases the employment opportunities for people with few or no qualifications.

There are a number of key areas that need to be focused on to address the skills gap and increase employment opportunities:

 

Steps the UK Government can take to support the decarbonisation of industry in NI and stimulate investment in a sustainable economy

Manufacturing contributes over £1 billion to the local economy accounting for 11% of employment and over 15% of GVA, making it a key sector in the Northern Ireland economy. The city is a global leader in aerospace and defence, marine manufacturing (which supports the needs of the maritime, offshore and renewable energy sectors), materials handling, automotive, electronics, Onshore/ offshore wind Energy efficiency, Energy storage and intelligent systems, Waste and recycling Water and waste water. The low carbon sector employs more than 12,000 people in over 300 companies with an annual turnover in excess of £1.7bn.

The Climate Change Committee’s 6th carbon budget estimates that the UK must invest 1% of GDP every year for the next 30 years in order to decarbonise at the rate and scale required.

The delivery of the green growth and net zero ambitions will need to be resourced effectively and efficiently to ensure that public sector funding catalyses the level of private investment that is required to deliver at scale and at pace if we are to meet the targets.

Council are working closely with the Place Based Climate Action Network, the Just Transition Alliance and the UK Climate Investment Commission to explore a range of financing models that could unlock private capital and also have initiated work to develop a pipeline of net zero investments for Belfast.

Financial institutions are seeking net-zero investment opportunities but complain of a lack of investable projects and programmes of the right scale and form, while businesses have good net zero ideas but struggle to make them investable and source finance on a project by project basis.

What is required is the intermediary layer that can develop and consolidate projects and programmes and match them to different forms of finance.

There is a clear need to bridge gaps between projects and investment by building capability, capacity and connections to match projects with institutional investors.

One of the steps that the UK Government could take is to establish a series of Place-based Climate Finance Platforms as a way of bridging the divide with the capability to:

Strong evidence suggests that unlocking climate finance this way would both enable decarbonisation and deliver local environmental, economic and social benefits whilst generating effective financial returns. This would enable a green recovery and promote levelling up.

There is a strong case for these platforms to operate at the local/regional scales in a place-based way that understands both the specific opportunities and the capacities needed to address them in a suitably nuanced way. The case for such platforms is increasingly accepted.

Therefore, to decarbonise industry in NI, Council suggests the Government considers:

We have already seen commitments from the UK Government. For example, the relevant UK Government Departments jointly published a statement setting out the approach to transposing the 2020 Circular Economy Package waste measures, the Business and Energy Secretary announced in March 2021 an ambitious blueprint to deliver the world’s first low-carbon industrial sector and over £1 billion to cut emissions from industry, schools and hospitals. The new Industrial Decarbonisation Strategy sets out the government’s vision for building a competitive, greener future for the manufacturing and construction sector. Part of the government’s path to net zero by 2050 measures will create and support 80,000 UK jobs over the next 30 years whilst cutting emissions by two-thirds in just 15 years.

 

Relationships between schools and local Universities

Although the Council has no statutory responsibility for education, we have developed a close relationship with local universities and schools to address skills and employability issues within the city. In particular, we consider that the prevailing challenges around educational attainment, especially within disadvantaged communities, should be a focus for investment in the context of the Levelling Up ambitions and commitments.

In considering options for investment, the council recommends the following:

 

Assessment of the understanding of the importance of education

The Government should develop a comprehensive and long-term range of programmes and interventions to address systemic issues in STEM imbalance. It should invest in interventions to overcome barriers to inclusive participation in technology, particularly by young people, in order to inspire the next generation of scientists and entrepreneurs. School engagement through careers provides a clear opportunity to instil excitement around this vision.

We support investment in a sustained intervention of scale that:

 

Status of technical, vocational education and apprenticeships

Belfast City Council’s work with partners has identified that there is a need for significant additional investment in apprenticeships, particularly in new and growth sectors such as fintech, CDI, cyber, creative, advanced manufacturing, and tourism.

Additionally, there needs to be radical change to the apprenticeship levy investment model. Currently employers see no benefit from this. Instead, it is seen as an additional cost that adversely affects their bottom line, which makes the apprenticeship model less appealing.

To strengthen NI’s skills pipeline there is a need for targeted interventions in key sectors, such as computer science where data indicates that many jobs cannot be filled due to shortages of graduates. Prioritising certain sectors and skills by introducing grant systems is one intervention that may help address supply side deficiencies. However, skills supply interventions are generally long-term in nature. Therefore, shorter-term approaches could focus on upskilling aspects of the existing workforce, especially those individuals adversely affected by COVID-19. To promote diversity across R&D roles, potential exists to look at alternative educational pathways beyond the traditional academic route usually associated with these roles. Vocational pathways such as apprenticeships and higher-level apprenticeships are examples of alternative routes into these roles.

 

Identifying sectors of investment and employment potential

There is a need for better tools and data sources for identifying high potential growth clusters in Northern Ireland. The 10X Economy Ambition proposed that NI should be hyper-focused on those sectors that have the potential to greatly increase productivity and generate jobs. Investment proposals should align with those identified sectors. However, in keeping with the commitments around levelling up, government should ensure that investment is focused on inclusive economic growth.

NI has struggled in the past to provide detailed quantitative analysis of these sectors (and for example their relationship to translational research strengths of our universities). Much of this was due to paucity of local data or the absence of common metrics. Work is now underway between the Council’s City Innovation Team and Innovation City Belfast to exploit new technologies and techniques to better understand the landscape for cluster growth. We will work closely with Government to ensure that there is a place-based approach to investment that can maximise return for all partners.

Talented people are the key ingredient to a successful innovation ecosystem. Hence a number of different initiatives are needed, particularly in light of Brexit and the implications for NI which faces a potential ‘brain drain’ outside of the region. This requires both a focus on creating a strong domestic skills pipeline and attracting talent, particularly within those key sectors.

 

January 2022