what price Northern Ireland?____________________ M.BIades, D.Scott 4s young fabian pamphlet 22 20p young fabian pamphlet 22 what price Northern Ireland? contents 1 introduction 1 2 heritage 2 3 Unionist response 7 4 value for money ? 12 5 conclusions 17 6 recommendations 19 this pamphlet, like all publications of the Fabian Society, represents not the collective view of the Society but only the view of the individuals who prepared it. The responsibility of the Society is limited to approving the publications which it issues as worthy of consideration within the Labour movement Fabian Society, 11 Dartmouth Street, London SW1. November 1970. SBN 7163 2022 3 1. introduction The unhappy events of the last two years have served to bring Northern Ireland’s political problems to the attention of a large section of the British public. At the same time many people have come to recognise that much of the political and social unrest has its roots in personal economic insecurity and that a prerequisite of political peace must be the creation of a prosperous community, on a par with the rest of the United Kingdom. Yet there is little doubt that the political unrest has in itself served to further retard industrial development and the general achievement of this goal. Faced with this vicious circle, with the Conservatives now firmly committed to a reduction in public expenditure, and with the strong possibility of a change in regional policy, this seems an opportune moment to examine in some detail Northern Ireland’s major economic problems, particularly since the war, and to attempt to assess the effectiveness of economic policy pursued by successive Unionist governments. Ever since the now famous white paper of 1944, successive British governments have maintained the commitment to full employment. While regionally there have been variations in the level of unemployment, a phenomenon to be expected in a dynamic economy, Northern Ireland has had a persistently higher rate than the national average. This high level of unemployment cannot be considered to be temporary, since it has endured throughout the economic fluctuations since the war, thus it is necessary to reiterate the national commitment to full employment. In the United Kingdom this has come to be associated with a level of unemployment not in excess of 2.5 per cent of the labour force. Alongside this commitment some reduction in the rate of migration is desirable, on the grounds that a high level of emigration represents an economic loss to a community since it is largely amongst the young and most educated that emigration takes place. Heavy migration seems undesirable on social grounds alone. Together with these assumptions a regionally and structurally balanced economy appears to be a reasonable and well accepted aim of modern government. It is in the context of these assumptions that we judge past and present policies and make recommendations for future action. TABLE 1 MAIN INDUSTRIES IN TERMS OF EMPLOYMENT AND PERCENTAGE CHANGE IN EMPLOYMENT 1949/1967 trade group percentage of total percentage employment change 1949 1967 linen 31.0 13.1 — 54 textiles other than linen 3.0 7.5 + 171 textiles 34.1 20.6 — 34 clothing 10.6 10.7 + 10 engineering 24.0 23.9 + 9 food, drink and tobacco 9.6 12.7 + 45 mineral products 1.5 2.1 + 48 timber and furniture 1.8 1.6 — 4 paper, printing and publishing 2.3 2.6 + 28 other manufacturing trades 1.8 3.5 + 104 total manufacturing 85.7 77.7 — 1 construction 11.1 18.3 + 80 gas, electricity and water 3.2 4.0 + 38 TOTAL 100 100 + 10 source: report on the census of production, 1967 2. heritage Since its inception in 1921 Northern Ireland has experienced a high and persistent level of unemployment. While prior to 1939 this was a common problem throughout the United Kingdom, its persistence in Northern Ireland in the post war period indicates the magnitude of the underlying problems of the Northern Ireland economy. The loss through this persistently high level of unemployment, while very real in terms of lost output to the United Kingdom, must also be measured in terms of the human suffering and misery which is brought about by long term unemployment. Two major elements stand out which are of great importance; first, the fact that there has been a constantly growing population and, second, the structural decline and readjustment process with which industry has been faced. population _________________________ The population of Northern Ireland in 1951 was 1,370,921. By 1966 it was almost 1,500,000. Projecting present trends the estimated population in 1981 will be somewhere between 1,640,000 and 1,700,000 people. If we look at the birth rate figures (the most significant in calculating the natural increase in population) we find that while births per thousand of the population have fluctuated, the rate, at 21.4 in 1964, has been persistently higher than in the rest of the United Kingdom. While the future birth rate is difficult to estimate, given present trends, Northern Ireland is going to have one of the fastest increases in population in the United Kingdom for some time to come. Thus a large and increasing number of school leavers will have to be absorbed into the labour force, increasing the problem of high unemployment, migration and structural adjustment, and making the proposed aim of full employment more difficult. During the period 1964 to 1970 5,500 young people have sought work in Northern Ireland each year. In the latest development programme (Northern Ireland development programme 1970 to 1975) it is assumed that this figure will rise considerably, perhaps to as many as 6,000 per year. The nronosal to raise the school leaving age to 16 in 1971 combined with the increasing numbers staying on at school will to some extent ease the problem, but there is little doubt that the pressure of demand for new jobs from this source will continue and that, as in the past, a shortage of suitable job opportunities will force emigration on many educated young people. The figure for new workers seeking employment would have been further expanded had it not been for migration, which between 1961 and 1966 accounted for an annual average loss of 7,000. An examination of table 2 gives reason for thinking that a good deal of this migration is out of economic necessity rather than choice. While many of these regions share similar economic problems to those encountered in Northern Ireland, the fact that, in Scotland and Northern Ireland. migration rates are more than twice that of the highest English region, reflects the lack of opportunity in these regions. Involuntary migration, which is sometimes put forward as a solution to Northern Ireland’s unemployment situation, is thus already quite substantial. Only when the creation of full employment is the only economic objective can such migration be justified. If, however, the object is self sustaining economic growth, such a loss would seem to be undesirable. TABLE 2 MIGRATION BY REGION 1961-1966 Northern Region 2.1 Yorks. Humberside 0.2 North West 0.4 Scotland 8.0 Northern Ireland 4.7 source: niec manpower. Apart from emigration, internal migration has in the past been significant, the East of the country gaining at the expense of the West. See table 3 from which it can be seen that between 1961 and 1966 the largest percentage increase in population took place in counties Antrim and Down. These counties which border Be!- 3 TABLE 3 POPULATION CHANGE intercensal persons per county borough variation 1961 to 1966 acre 1966 or county 1961_____________ 1966 number percentages__________ county boroughs Belfast 415,856 398,405 —17,451 — 4.2 24.87 London Derry 53,762 55,694 + 1.932 + 3.6 25.26 counties Antrim 273,905 313,991 +40,086 + 14.6 0.45 Armagh 117,594 125,164 + 7,570 + 6.4 0.40 Down 266,939 286,631 + 19,692 + 7.4 0.47 Fermanagh 51,531 49,886 — 1,645 — 3.2 0.12 London Derry 111,536 118,964 + 7,428 + 6.7 0.25 Tyrone 133,919 136,040 + 2,121 + 1.6 0.17 Northern Ireland total 1,425,042 1,484,775 +59,733 + 4.2 0.44 source: 1966 census of population Northern Ireland fast have a substantial percentage of Northern Ireland’s new industries. Their growth and Belfast’s decline can, to a large extent, be attributed to the city’s slum clearance and rehousing programme. Excluding the special case of Belfast, percentage population growth has been least in those counties having the least density of population whi'e Fermanagh with 0.12 persons to the acre suffered an absolute decline in population over the period. structural maladjustment Some indication of the magnitude of the structural problem can be obtained by looking at unemployment rates, particularly compared with the level prevailing in the United Kingdom. Table 4 shows that unemployment in Northern Ireland has been on the average about four times that of the United Kingdom as a whole over the period 1951-1966, although only three times greater during the second Labour government. If a comparison is made between Northern Ireland unemployment rates and those of other regions of the United Kingdom a similar pattern emerges. In May of this year unemployment in the prosperous South East of England was 1.6 per cent, while the highest throughout Great Britain was in Scotland, which had 4.0 per cent. This compares with Northern Ireland's 6.6 per cent. Inside Northern Ireland the percentage fluctuates widely. Tn the peripheral towns such as Londonderry, Newry, Enniskillen and Coleraine the rate is much higher, often as much as twice the Northern Ireland average, indicating regional imbalance. In addition the activity rate in Northern Ireland tends to be lower in all groups than in the United Kingdom generally. (The activity rate is the percentage of the total population aged 15 and over who offer TABLE 4 UNEMPLOYMENT AS A PERCENTAGE OF THE WORKFORCE 1951 1952 1953 1954 1955 1956 1957 1958 1959 NI 6.8 10.2 7.9 6.7 6.8 6.4 7.4 8.9 7.35 UK 1.2 2.0 1.6 1.3 1.1 1.2 1.4 2.1 2.2 1961 1962 1963 1964 1965 1966 1967 1968 1969 NI 1.5 2.0 2.5 1.6 1.4 1.5 2.4 2.4 2.4 UK 1.5 2.0 2.5 1.6 1.4 1.5 2.4 2.4 2.4 1960 "6:65 1.6 source: 4 themselves, or are prepared to take up employment, students, housewives, and the chronically ill being the main groups which fall outside this category.) The activity rate for males was 64 per cent in 1968 for Northern Ireland compared with 74.4 per cent for Great Britain, while female rates were 35.2 per cent and 39.9 per cent respectively. While the female rates can be seen to be lower in Northern Ireland the rate for males is considerably lower than in the rest of the United Kingdom. The distribution of unemployment between the different categories is as important as the total number of unemployed. In December of 1968, for example, 35.7 per cent of the men classified as unemployed and 26.5 per cent of the women could be described as long term unemployed, that is those who have been out of work for six months or longer. The total long term unemployed (given the above definition) expressed as a percentage of the labour force is 2.8 per cent, which is a full percentage point higher than the United Kingdom’s total average unemployment over the period 1951 to 1969. Apart from the fluctuations which roughly follow the British pattern (see graph 1) the high long term trend of unemployment is a reflection of the decline of certain key industries on which Northern Ireland has been heavily dependent. In 1949, 138,600 persons were employed in agriculture. This figure has declined every year since, until in 1969 67,000, or less than half that number, were thus employed. The linen industry, too, has traditionally been a major employer. In 1949 it employed 58,000 people, but by 1967 this figure had been reduced to 27,000, a fall again of over one half. The other major category, shipbuilding, has shown a downward fluctuating trend falling from 23,700 in 1951 to 9,200 in 1969 (see graphs 2, 3, 4). These three categories together have accounted on average for the loss of over 6,000 jobs per year since 1949. While other areas of the United Kingdom have faced similar structural readjustment, the problem has normally been eased by compensatory growth in new sectors. Northern Ireland, in common with the rest of the United Kingdom, has experienced a continuous flow of labour out of agriculture. This loss of employment is considerably more acute in Northern Ireland than elsewhere in the United Kingdom, as agriculture occupies a relatively greater position as an employer of labour. Between 1949 and 1969 employment in agriculture declined by over 50 per cent, representing an average loss of 3,500 jobs per annum (see graph 2). The enormous importance of agriculture as a source of employment is well illustrated by the fact that in 1949 19 per cent of the total civil employment was in agriculture, while even today this sector accounts for 10 per cent of employment ; and, despite the long term decline, it still remains the largest single employer of labour in Northern Ireland. The province is characterised by the large number of small farms, and while the decline in employment has taken place almost entirely among those farms classified as very small (that is, holdings providing less than 200 standard man days of employment per year) in 1968 46 per cent of all holdings were still classified in this group. These 18,000 small holders accounted for only about 15 per cent of the total farm output. It is clear that there is considerable under employment among these small holders and that there remains scope for increasing productivity. Compared with the rest of the United Kingdom, Northern Ireland has exactly the same proportion of its farmers classified in this group as the United Kingdom as a whole, but the average annual earnings of these very small holdings in Northern Ireland is reckoned to be only £250. Part of the difficulty in raising incomes arises from the fact that many of the farm inputs in Northern Ireland have to be imported, and two thirds of final output exported again. While a payment of £2 million is made by the British exchequer to Northern Ireland to help cover the additional costs involved by the remoteness of the region, in 1965 this “remoteness grant” was only sufficient to cover the cost of transporting feed grains from Britain. 5 In 1968 there were 21,000 full time farms in Northern Ireland. Of these between one sixth and one fifth were capable of providing employment for two or more men. Given this and the international trend towards larger farms, it is clear that employment in agriculture will continue to contract, and will remain one of the main sources of pressure on the demand for new jobs. The latest development programme favours some rationalisation, implying an even faster rate of decline in employment. Farmers in Northern Ireland depend almost entirely on government subsidies for the maintenance of their standard of living, and the government is therefore directly involved in agricultural affairs. The net income of Northern Ireland’s farmers was just under £28 million in 1963/64 and, according to the development programme it has failed to rise above £30 million since. In 1967/68 fiscal subsidies under the various acts were approximately £20 million. The Economist of 23 August 1969 put the figure as high as £35 million. Regardless of which is the more accurate figure it is clear that Northern Ireland’s farm incomes are derived very largely from government subsidies. With the high level of unemployment in Northern Ireland and the relatively greater dependency on agriculture as an employer of manpower, it might well be that policies differing substantially from those pursued in the rest of the United Kingdom may be considered desirable. textiles Northern Ireland’s textiles sector has in the past been dominated by the linen industry, and it has been in that industry that the highest percentage decline in employment has taken place. While employment in the textile sector as a whole fell by 16,000 or 25 per cent during the period from 1949 to 1969, employment in linen fell by 31,000 or by more than 50 per cent in the period 1949 to 1967 (see graph 3). The result of this decline has beeen a considerable restructuring of the textiles sector, for whereas 91 per cent of the persons engaged in textiles in 1949 were employed in the linen in- dustry, by 1967 linen accounted for only 54 per cent of the textile employment. Also because of the heavy dependance of linen on female labour, a fall in the linen labour force led in 1969 to a reduction of the percentage of females in the textiles labour force to 50 per cent. The decline in the linen industry has counterparts in other areas of the United Kingdom and came about, to some extent, as a result of the substitution of synthetics and cheaper textiles coming from the less developed countries. Linen goods are essentially luxury goods and the industry has a considerable export market. As such it is particularly sensitive to fluctuations in world trade and international competition. In the post war period some countries protected their own growing textile industries while the United Kingdom remained more open than most to imported textiles. Thus both on the home and export markets the industry has had to compete for business. Changing tastes and improved textures of synthetic fibres have further weakened its hold of traditional markets, and a slowness to reequip and modernise in the face of declining sales has also contributed to its decline as an employer of labour, despite rising productivity and some recent attempts to blend linen fibre with man made fibres. Nevertheless, much more could be done to promote the undoubted quality of linen goods. shipbuilding The shipbuilding industry has been established in Belfast for more than a century, but has been a dwindling source of employment in the post war period (see graph 4). Shipbuilding is well known as being highly competitive and orders have to be won in international markets. The Belfast industry suffers the disadvantage of not being located near to the centres of steel production in the United Kingdom, thus most of the inputs to the industry have to be brought in by sea. These factors combine to make the industry susceptable to the fluctuations in world demand for ships, and contribute to any loss of international competitiveness. The rate of decline of employment 6 in the industry has been higher than the United Kingdom average. Whereas the United Kingdom’s shipbuilding employment declined by 30 per cent over the period 1956-65, the same period in Northern Ireland saw a decline of 42 per cent in such employment; Northern Ireland’s proportion of the uk’s total shipbuilding labour force has declined from 7.4 per cent to 6.2 per cent. There is also evidence to suggest that the Northern Ireland shipbuilding industry suffers proportionately more from cyclical unemployment in times of recession than does the rest of the uk, and that in times of boom employment is proportionately higher. The big decline in Northern Ireland’s shipbuilding employment occurred in 1961, when 8,000 men were made redundant by Harland and Wolff. This decline was largely as a result of the fall in world demand for new ships, as can be seen from tables 5 and 6. The continuance of the decline in employment during the 1960’s did not result in a decline in the proportion of the United Kingdom’s shipbuilding carried on in Northern Ireland. This was largely due to the considerable modernisation and rationalisation which took place throughout the rest of the British shipbuilding industry and which resulted in the reduction of the labour force. Consequently the Northern Ireland proportion continued to average about one tenth of the United Kingdom’s total. Despite the maintainance of its share of United Kingdom shipbuilding, the Northern Ireland producers, Harland and Wolff, announced a loss of £4 million in 1966, during a period of intense rationalisation and reorganisation. The appointment of Sir John Maillabar to head the reorganisation programme augured well for the future, and 199,000 gross tons were launched in 1967, a post war peak. The viability of the yard seemed to be assured. Other factors which gave rise to optimism about the future were the devaluation of 1967, which clearly helped British yards; the shipbuilding industry bill of the same year which, amongst other things, made £8 million available to finance Harland and Wolff’s new £13 million building dock; and, in 1969, the raising from £200 million to £400 million, of government guarantees to British shipowners for orders placed in United Kingdom yards. However, in March 1970 the company announced a loss of £3.8 million, despite a full order book, and the resignation of Sir John Mallabar. Rising labour and material costs had eaten away the profit margins allowed for in the fixed price contracts. With the completion of the yard’s largest ever ship of a quarter of a million tons in its new building dock, which has the capacity to build one million ton tankers, the yard seems to have all the physical advantages necessary for international survival. Although fears of any imminent closure of the yard have been allayed by the Northern Ireland government, and the redundancy rate appears to have fallen off, the industry still faces considerable problems in competing profitably in international markets. At the same time, one would expect considerable gains from the recent rationalisation, although the first priority is, as it has been in the past, dynamic and efficient management. TABLE 5. ORDER BOOKS FOR MERCHANT SHIPS. GROSS TONNAGE United Kingdom World 1952 6,181,000 15,630,000 1953 5,331,000 13,053,000 1954 3,947,000 11,249,000 1955 4,417,000 17,821,000 1956 5,188,000 29,248,000 1957 5,734,000 34,511,000 1958 5,373,000 27,395,000 1959 4,116,000 22,314,000 1960 3,296,000 17,975,000 1961 2,551,000 18,656,000 1962 2,068,000 18,320,000 1963 2,374,000 18,890,000 1964 2,427,000 21,840.000 source: Geddes report 1966. Thus agriculture, linen and shipbuilding have accounted for the loss of more than 120,000 jobs since 1949, a formidable problem in a province where total manufacturing employment was only 183,000 in September 1969. 3. Unionist response Post war legislation, following the development of policy in the United Kingdom, falls roughly into two periods. The period 1945 to 1966 and the period 1966 to date, which has been characterised by increased concern for regional development. Northern Ireland’s legislation has followed the general trend of British legislation and divergencies have been more of degree than of kind. The first major post war acts were the industries development act 1945 and the capital grants to industry act 1954, subsequently amended. Under the latter act, grants up to 25 per cent of capital expenditure on machinery and new buildings were made available to all manufacturing and processing concerns, regardless of employment created. These grants enabled existing firms to re-equip and modernise at a considerably reduced capital outlay and it can reasonably be assumed that a large proportion of the modernisation of industry which did take place during the life of the act might not have occurred had capital grants not been available. TABLE 6 GROSS TONNAGE LAUNCHED ni as a United Kingdom Northern percent-Ireland age of uk 1949 1,267,000 97,353 7 1950 1,325,000 130,720 10 1951 1,341,000 118,174 11 1952 1,303,000 129,977 10 1953 1,317,000 104,663 8 1954 1.409,000 115,447 11 1955 1,474.000 121,606 8 1956 1,383,000 104,913 8 1957 1,414,000 137,156 10 1958 1,402,000 100,352 7 1959 1,373,000 120,421 9 1960 1,331,000 185,547 14 1961 1,192,000 103,959 9 1962 1,073,000 86,657 8 1963 928,000 97,710 11 1964 1,043,000 85,507 8 1965 1,073,074 134,158 12.5 1966 1,084,299 93,421 9 1967 1,297,678 198,640 15 average: 10 per cent source: Geddes report 1966. Northern Ireland digest of statistics (uk figures) Lloyd’s register of shipping.__________________________ The rate was subsequently increased to 33 per cent in 1959. Grants to firms which began production after 1956 were limited to a maximum in any one year of £130,000 in respect of plant and machinery, and £70,000 in respect of new industrial buildings. In the first five years of the act only an average of some £2.6 million per annum was spent. This helped to generate a gross capital expenditure by industry on new buildings and machinery of an average of some £10 million per year. Under the industries development act, assistance to new firms was much more discriminatory and was related to such factors as the desirability of a particular new industry, the type of employment provided, the potential growth and proposed location within Northern Ireland. Under the act considerable discretionary powers were given to the minister. Some indication of the magnitude of spending under this act can be gauged from the fact that between 1957 and 1962 a total of £21.1 million was spent, of which grants to new industry totalled £3.1 million, and factory building £18.0 million. During the same period total expenditure on industrial development and re-equip-ment averaged approximately £9.25 million per annum. By 1960 regional policy in the United Kingdom was being accorded a higher degree of priority than previously, and the first tentative steps were being taken towards establishing growth areas and towards regional economic planning. Largely because of the deteriorating position in the development districts of the United Kingdom, interest in regional policy had been growing throughout the early 1960s, finding its counterpart in the legislation of 1966. The Northern Ireland industries development act of 1966 was parallel to the United Kingdom act. It repealed the 1945 acts, its amendments, and the re-equipment of industry act 1953. The criteria for assistance was the creation of employment, that an industry should be successful, or to assist the transfer of an industry to Northern Ire- 8 TABLE 7 ACTUAL EXPENDITURE year no. of loans machinery building employm’t removal other total projects _ 1967-68 55 342,741 5,076,590 375,968 965,877 111,084 310 6,529,829 1968-69 58 373,758 7,664,225 1,375,968 1,224,829 282,731 310 11,125,948 land. The main type of assistance offered is the provision of premises and sites by a variety of means, and the modernisation and equipment of these premises for proper occupation. Emphasis continued to be laid on the provision of the variety of services demanded by modern industry, for example, new roads. The intended flexibility of the act gave the ministry of commerce, and in particular the minister, power to allow special assistance to be given to types of industry not previously represented in Northern Ireland, and to those industries employing a high percentage of male labour. The capital grants, unlike investment grants, had the advantage of being paid quickly. In the first period after the act became law, from March 1967 to March 1968, 5.400 jobs were expected to be created as a direct result of the incentives. During the second period, from March 1968 to March 1969, the number of expected jobs had risen to 6,700, though the percentage of new. male employment remained the same at 4,400. Half of the 1968 employment was created in 17 new firms, the other half being in 26 schemes of expansion. Two groups, textiles and engineering, accounted for 72 per cent of these new jobs. Assistance is given in the form of loans and grants, and tables 7 and 8 show the amounts and categories in which assistance was paid and offers accepted in March 1969. TABLE 8 COMMITTED EXPENDITURE year no. of loans machinery projects Thus during the year ending March 1969 the cost of creating a job under this act was approximately £1,670. It can be seen that there had been a marked increase in expenditure in the creation of new jobs, the greatest increase coming in the financial year 1968-69. From October 1969 the grant to new and expanding industries on fixed capital and buildings has ibeen raised from 45 per cent to 50 per cent. This scheme, which was to last until 30 September 1972, has now been replaced by a capital grants scheme giving 45 to 60 per cent of the cost of fixed capital and buildings, depending on the location of the new plant and the employment offered. The Northern Ireland industrial investment general assistance act of 1966 replaced the previous capital grants scheme for the manufacturing and extractive industries with a system of investment grants of 40 per cent to apply to all new buildings, plant and machinery, regardless of employment created. This grant is given virtually automatically to all industries in the designated categories, and unlike its predecessor, no limits were set on the amount of grant an industry could receive in a single year. In the case of mineral exploration, the generation of energy, and shipbuilding, the rate was to be 20 per cent. Again, however, the minister was given considerable freedom to make loans towards categories not mentioned and to vary the rates of grant. building employment removal other 1967-68 49 2,072,700 7,986,800 3,852,800 975,050 " 62,098 123,850 1968-69 59 __1,771,400______19,357,143 4,766,762^ 2,121,600 709,621 69400 total: 1967-1968, 13.000.442.__________________1968-1969, 27,024.226 source: industries development assistance act: 1970 report. 9 TABLE 9 GRANTS FROM THE INCEPTION OF THE SCHEME TO 31.3.69 trade group_____ plant and machinery buildings total mining and quarrying 372,726 36,135 408,861 food, drink and tobacco 1,618,606 514,347 2,132,953 engineering 1,488,474 262,790 1,751,264 textiles 2,541,327 458,114 2,999,441 clothing and footwear 245,761 38,975 284,736 bricks, pottery, glass ,and cement, etc. 1,754,399 682,619 2,437,018 timber and furniture, etc. 162,196 41,722 203,918 paper, print and publishing 451,629 174,794 626,423 remaining manufacturing 975,367 43,697 1,019,064 construction 1,275,755 53,391 1,329,146 total £10,886,240 2,306,584 13,192,824 source: 1969: report on industrial investment act, 1966. The minister was also given power to make loans to the designated groups for new machinery, the terms and conditions of the loans being left to the minister. Table 9 shows the breakdown of the grants made from the inception of the scheme until 31 March 1969. Loans were also made to firms for machinery, plant re-equipment, new premises or modernisation. Firms eligible for investment grants are also eligible for loans, the total paid being given in table 10. Until 1966 inducements to firms to move to Northern Ireland tended to be more generous than those granted to other development regions of the United Kingdom. The 1966 acts are at least in theory unfavourable to Northern Ireland because the acts passed toy the United Kingdom and Northern Ireland parlia- TABLE 10 OTHER ASSETS type of asset £ ships 1,000,878 computers 89.196 mining works 43,755 leased assets (minimum initial lease: 3 years) 33.172 leased assets construction industry (no minimum lease) 58,661 total 1,225,662 grand total (inc. table 9) £14,418,486 ments brought the incentives offered into line. The theoretical rate of return fell as a result from 12.2 per cent to 10.7 per cent. In practice, however, the Northern Ireland government has been able to maintain its discriminatory advantages by using the industrial development act on more generous terms than those offered in other development regions. The latest development programme analyses the relative competitive position of Northern Ireland vis-a-vis the other regions as far as incentives are concerned. Table 11 takes into account all assistance. It shows a large improvement in what Northern Ireland can now offer. An example of the related advantages which Northern Ireland has in stimulating investment over the other regions of the United Kingdom is industrial derating. Northern Ireland industry is derated by 75 per cent. There is no comparable assistance in England and Wales, and in Scotland industrial property is derated TABLE 11 COMPARISON OF INCENTIVES. ASSISTANCE AS A PERCENTAGE OF CAPITAL COSTS______________ region 1964 1970 Northern Ireland 68.5 62.9 development districts 62.4 50.6 rest of Great Britain 50.7 34.1 source: 1969: report on industrial investment act, 1966. source: Northern Ireland development programme 1970 to 1975. 10 by only 50 per cent. The annual savings by Northern Ireland industry as a result of this is about £3 million. Also, an industrial fuel subsidy introduced in 1953 provides a contribution of about £1 million per year towards the cost of coal, gas, electricity or oil used in Northern Ireland. The regional employment premiums which affected all the designated regional development areas of the United Kingdom were the first incentives which directly subsidised labour costs. Similar proposals in the Hall report in 1962 had been rejected, largely on the grounds that they would be difficult to withdraw once introduced. The scheme applied to all manufacturing firms and not just new firms. It amounts approximately to an 8 per cent subsidy on wage bills; however, the selective employment tax premium is to be withdrawn from Northern Ireland in 1971. There are also considerable aids to industry which constitute indirect assistance. manpower training For a long time it has been a well documented fact that one of the major needs of a firm contemplating a move to a development area is an adequate supply of skilled labour. It was to meet this need that the 1964 industrial training act was introduced. The act empowered the minister of labour to set up industrial training boards for different branches of industry and commerce, financed by levies on firms and grants from the government. The act was also directed towards assisting firms in installing machinery for training; and where more specialised skill is required, government training centres have been established. Financial assistance to trainees in the development areas was doubled in 1967. The act also subsidises firms renting accommodation for training and tuition for managerial, supervisory and technical staff. Northern Ireland has made greater progress than the rest of the United Kingdom in the provision of training facilities for there are proportionately more places and centres, and the annual output of trainees now stands at 3,000. Of the 4,300 male adults who have attended courses in government training centres in recent years, the majority have received instruction in engineering crafts. Apprentice courses, however, offer a much wider range of occupational choice, the training in initial skills for young people accounting for two thirds of the places in these establishments. The industrial training boards are mainly aimed at seeing that the training given for each industry is enough in quantity and quality to meet the needs of replacement and expansion. The engineering training boards, for instance, gauged the needs of the industry as about 1,000 to 1,600 apprentices each year. The board itself recruited about 500 craft apprentices in 1966 for a year’s off the job training in government training centres or technical colleges prior to placement in firms. To give the scheme some flexibility apprentices undertake a common course for nine months in basic engineering skills. The longer term training of adults in government training centres for certain skills is faced with some understandable opposition from trade unions. The movements towards upgrading or dilution have been carried out at industry level in discussions between unions and management. In the engineering industry the national agreement for the relaxation of customs provides a fairly sound basis for local action. physical planning During the early 1960s there was a revival of interest in regional economic development planning in Northern Ireland. The Matthew report was perhaps the most significant contribution. Professor Matthew was asked to produce a survey and plan of the Belfast region, relating the needs of the area in broad terms to the geographic, economic and cultural pattern of Northern Ireland as a whole. The wide ranging nature of the brief, marks something of a step forward in the concept of planning in Northern Ireland. The majority of the recommendations were accepted by the government, perhaps the most important of which was 11 that the uncontrolled expansion of Belfast should foe ended. The government is now attempting a “stop line” on development in the Belfast urban areas. Professor Matthew advised, and the government accepted, the development of growth areas other than Belfast. Professor Wilson in his economic plan recommended the development of a new city which was to have an eventual population of 100,000. Further growth centres were recommended in Antrim, Ballymena, Bangor, Carrickfergus, Downpatrick, Larne and Newtownards. Professor Matthew recommended that industry should be concentrated in particular areas such as Londonderry, Coleraine, Dungannon, Enniskillen, Newry and Omagh. By 1966 outline plans had been produced for Antrim and Ballymena, which is projected as a single industrial complex with both towns the site of new developments. By 1968 plans had also been published for the expansion and renewal of Londonderry, with a projected increase in population of approximately 30,000 by the end of the century. Area plans have also been prepared for the Coleraine, Portrush, Port Stewart triangle and for North Down, Newry and West Tyrone. Power has also been taken to protect and develop specified areas of interest to scientists and naturalists. The central development office administers much of this planning and periodically reviews regional plans and prepares area plans under the guidance of steering committees made up of interested parties. The office is also involved throughout the whole field of infrastructural development, including housing and the reform of local government. Much emphasis has recently been placed on the development of roads, and since the war some £200 million has been spent. The ministry of development is responsible for legislation, planning and all matters concerning roads. During 1968 the 38 mile motorway between Belfast and Dungannon was opened. This is part of a general pattern of development with a view to providing good access to the designated growth areas. Because Northern Ireland is separated from the rest of the United Kingdom by sea, much of her trade is dependent on the quality of the shipping service and in particular on the port of Belfast. The Hall report drew attention to complaints about the quality of the facilities and the effects they had on the attitudes of firms considering moving. Whilst many of these complaints were discovered to be ill founded a number of the working party considered that there was some justification for a subsidy to overcome the inhibiting effect of the sea 'barrier. Since 1955 about £1 million per year has been spent on modernising the port of Belfast, including the building of specialised container and deep water berths, and two oil jetties. The importance of the port can be gauged from the fact that it handles some seven million tons of cargo each year. Two smaller ports at Larne and Londonderry handle about one and a half million tons each. Lame has also a substantial passenger traffic. This then has been the framework of government response to Northern Ireland’s problems. During the past few years interest and activity has considerably increased and accelerated. The direct inducements to industry are largely contained in the revised and expanded industrial investment general assistance act and the industries development act passed in 1966. Apart from these acts, Northern Ireland shares the incentives given to other United Kingdom development areas. Agriculture receives much the same treatment as in other regions, though there is a remoteness grant and a loans scheme operated through the Northern Ireland government. Since the Hall and Wilson reports much more emphasis has been placed on development in a wider context than the previous attempts to attract new industries. This is largely a reflection of developments in regional policy in the rest of the United Kingdom. Much greater emphasis is now being placed on the development of growth centres with some attempt to restrain the expansion of Belfast. This is a definite shift in development policy from that of the ’fifties. Some attempt has been made to draw together the various areas of policy to create an environment favourable to new industrial development. 4. value for money? Given this response to the situation, what have been the results? Since the war legislation aimed at increasing employment had, up to 1969 brought about the creation of 69,000 jobs. When plants and projects assisted in this way come into full production, employment created is expected to rise to 88,000. Recent experience seems to indicate that some of these jobs have been lost again through closures and redundancies. The exact extent of this loss is not easy to gauge, but some of the more dramatic closures have served to highlight this pro'blem. For example, British Sound Reproducers who were attracted to Londonderry at a cost of some £700,000, closed down again in 1967 with a loss of more than 1,000 jobs. While as yet no surveys of the efficiency of this method of attracting industry have been carried out, it would not toe unreasonable to assume that the failure rate at least is similar to that of the Reputolic of Ireland at about 7 per cent. From 1945 to March 1969, the cost of creating these jobs under the industries’ development acts of 1945 and 1966 TABLE 13 COMPARISON OF COSTS PER JOB BY REGION Cost per job between Region 1.4.60 and 31.3.68 1.4.68 and 31.3.69 Northern 557 655 Merseyside 672 795 South West 445 525 total England 542 675 Scotland 700 770 Wales 680 815 total Great Britain 640 730 Northern Ireland 1400 1670 (1945-1969) source: local employment act report, 1960-66. has been £122,900,000. This represents an average cost over the period for each new job of approximately £1,400, while the annual average cost of creating a new job is currently running at £1,670. The total cost of industrial development and promotion in the post war period TABLE 12 COMPARISON OF JOBS area number of projects CREATED BY REGION factory general building building purpose grants loans and grants plant total and machinery grants estimated jobs created 1.4.1960 to 31.3.1969 * Northern 2,792 24,710 24,100 26,661 7,191 82.662 148,196 Merseyside 830 5,333 21,126 23,448 5,671 55,578 82,769 South West 320 835 2,124 1,998 141 5,058 11,377 total (England) 3,986 31,881 49,888 52,344 13,141 147.254 249,044 Wales 973 19,613 9,528 9,026 651 38,818 55,626 Scotland 3,812 30,224 58,307 34,766 7,595 130,892 192,575 total 8,771 81,718 117,723 96,136 21,387c? 316,964 497.245 1.4.1968 to 31.3.1969 Northern 760 4,582 4,801 7,441 194 17,081 25,980 Merseyside 178 732 3,144 2,854 109 6,839 8,661 South West 120 215 811 673 nil 1,699 3,273 total (England) 1,060 5,623 8,756 10,998 315 25,692 38,004 Wales 406 5,358 2,517 3,978 6 11,859 14,558 Scotland 948 2,913 7,700 6,617 134 17,364 22,572 total b 2,414 13,894 18,973 21,593 b: includes former development districts not included in d: a number of offers made prior to 31 March 1968 were 455 54,915 development areas, declined. 75,134 source: local employment act 1960 to 1966 report. 13 has been £211.900,000. How can the success of these results be judged? Perhaps the best and most meaningful criteria for assessing this performance is by comparing it with the results obtained in the other development areas of the United Kingdom. From table 13 it can be seen that the cost of creating a job in the development areas in the rest of the United Kingdom during the year ending 31 March 1969 was approximately £730. The highest average cost per job, apart from Northern Ireland, was in Wales at £815, followed by Merseyside at £795. Thus for reasons not immediately obvious the cost of creating a new job in Northern Ireland is twice that of the next highest region, and considerably more than twice that of the British average. It would seem reasonable to suggest that the linking of assistance to capital expenditure has the effect of creating a bias in favour of capital intensive industries. As Northern Ireland has consistently offered higher capital grants than the rest of the United Kingdom, there is at least the basis of a case for arguing that it has had the effect of encouraging this type of industry. On the other hand the actual amounts offered have, if the wording of the legislation has been implemented, been related to the number of jo