The goals of Northern Ireland’s economic development agency are laudable enough, but how effective has the public body been at achieving its goals? And at what cost? Lyra McKee reports.
Invest NI has offices worldwide, from London to Kurdistan. Their main purpose is to drive investment back to Northern Ireland. In Government-speak this is known as Foreign Direct Investment, or FDI. Sales teams are dispatched to these locations like religious missionaries, sent to spread the “good news” about Northern Ireland to businesses abroad. Foreign companies opening shop means more jobs for locals. At least, that’s the idea.
For those of you not familiar with Invest NI, this snippet from the About section of their website sums up what they try to do: “As the regional business development agency, Invest NI’s role is to grow the local economy. We do this by supporting new and existing businesses to compete internationally, and by attracting new investment to Northern Ireland.”
FDI is a big part of Invest NI’s strategy. According to a source familiar with their global operations, it’s believed to be the quickest and cheapest way to create new jobs, a key political priority for any administration. Foreign multinationals already have the cash and resources to expand immediately, whereas generating jobs through local companies is a longer-term strategy.
But pursuing international business can be expensive. In 2011-12, Invest NI spent nearly £1.7 million on its North America offices alone. Many say the effort is paying off and point to the figures in Invest NI’s annual reports. During 2010-11, the reports claim 2,816 new jobs were created through FDI. In the 2009-10 report, it was 1,875 jobs. The 2008-9 report claimed 4,055 jobs and for 2007-8, the number was 1,839.
These numbers sound great. But are they accurate? Information released under the Freedom of Information Act has revealed that Invest NI does not measure how many jobs it creates through FDI. Instead, it measures “jobs promoted”. It works like this: each sales team is given a number of targets, including “meetings achieved with potential investors”. One of these targets is “jobs promoted”.
An international company will agree to open a base in Northern Ireland. They’ll work with an Invest NI executive and submit a business plan with details of how many jobs they plan to create (that’s “plan to”). These are known as “jobs promoted” or, in Invest NI’s language, “jobs expected to be created over the life span of the project as outlined in the investor’s business plan.”
It’s these numbers that are used to measure the performance of Invest NI’s sales teams, not the actual number of positions created.
And no one knows how many of these jobs have actually been created, because Invest NI – perhaps sagely – does not follow up or record the figures. A DETI spokesperson confirmed to The Kernel that neither DETI nor Invest NI measure the numbers beyond those provided in company business plans.
What’s even more worrying is that Invest NI appears to purposefully obfuscate the distinction between jobs created and jobs planned. In its annual reports dating back to 2007-8, they do not explain or provide any caveats about their FDI job figures. While references are made to “jobs promoted”, these are vague, with no explanation of what that actually means.
Any journalist examining the figures would be forgiven for assuming that these are real-world vacancies that have been filled by local candidates.
The Northern Ireland Audit Office (NIAO) has been very critical of the practice. In a report published in March, they said that Invest NI’s estimate that 78 per cent of “jobs promoted” were in fact created, and still in existence, was “likely to be over-stated”:
“In 2010, Invest NI estimated that, for new Foreign Direct Investment projects supported between April 2002 and March 2008, 78 per cent of jobs promoted were actually created and still in existence. Invest NI acknowledged that this is ‘subject to some estimation’. Furthermore, it was based on an overall employment headcount for client companies rather than the jobs specifically created within the assisted projects.
“This means that the job creation ratio of 78 per cent is likely to be over-stated, and we therefore do not consider that this analysis can be viewed as sufficiently robust. In an attempt to measure more accurately jobs created within assisted projects, Invest NI generated data which took account of only the initial project for first-time investors to Northern Ireland between 2002-03 and 2007-08. This suggested that 4,295 of the 5,731 jobs promoted within this category were created (that is, a 75 per cent job creation ratio).
“Whilst this analysis is limited to a sample of 57 per cent of the total jobs promoted during this period, we acknowledge that it is likely to provide a more accurate measurement than the company ‘headcount’ approach (see paragraph 3.23). However, it is important to note that the job creation data within this analysis reflects the position at the completion of the project implementation stage, rather than current job levels.
“As many of the projects have now been in place for some years, it is likely that the number of jobs still in existence will be lower. Accurately measuring the number of jobs actually created clearly represents a challenge for all economic development agencies (EDAs), and our findings indicate a need for Invest NI to establish appropriate processes and systems to gather more robust job creation data.” [our emphasis]
An official from Invest NI’s press office confirmed to The Kernel that the organisation is now working to implement better measurement processes: “Invest NI is looking to capture job creation data for projects that have been undertaken since the start of the last Corporate Plan period (1st April 2008).”
While this is to be commended, it has come rather late. Invest NI’s predecessor, the Industrial Development Board (IDB), was told to do the same thing… 12 years ago.
A report by Westminster’s Public Accounts Committee, published in 2000, was extremely critical of how IDB measured job creation through FDI – the same way Invest NI continues to do it. One concern raised by the Committee was that by only measuring “jobs promoted”, the process could be easily manipulated. During a cross-examination of IDB’s deputy chief executive, Leslie Ross, a committee member asked:
“Have you ever had the feeling, Mr Ross, that in the companies that you have been dealing with, after they have closed down or after they have failed to deliver those jobs promoted figures that you have painstakingly negotiated and agreed with them, have you ever had a feeling that these companies were taking you for a ride? Is there any instance where you feel: ‘Actually, we have just been shafted here’?”
This highlights what is wrong with the FDI process: the system could be easily gamed, both by the private sector and the public. Isn’t it remarkable that despite spending millions in taxpayer cash, Invest NI simply cannot say how many jobs they’ve created since 2002?