Speech by the Shadow Chancellor, Ed Balls MP, to CBI Northern Ireland Members 10 October 2012 Introduction It is a great honour

to be in Belfast today with my good friend and the Shadow Northern Ireland Secretary, Vernon Coaker to speak to you today about the vital importance of kick-starting the Northern Ireland economy out of recession and delivering the jobs and long-term investment which are vital to securing the economic and political future of Northern Ireland and to make this unequivocal commitment: that we in the Labour Party are determined to work closely with you to make that happen, to secure a prosperous future for Northern Ireland and help you ensure that all citizens can share in that rising prosperity. And I cant think of a better place to make that commitment and discuss with you the challenges ahead than here at the CBI the voice of business here in Northern Ireland. And thank you to your Chairman, Ian Coulter, for hosting this discussion today and to Bill Coyle from ESB Coolkeragh for sponsoring the event. The Good Friday legacy Friends, let me start by saying this: The Good Friday Agreement in 1998 was one of Labour's most important achievements in government. When we took office in 1997, we committed to putting the issue of securing peace in Northern Ireland at the top of our agenda. And with our partners in the Irish government, and the courage and forward thinking of political leaders in Northern Ireland, and building on the work of our predecessors, we achieved together something that eluded generations before. We will never be afraid to say how proud we are of that and how strongly we feel about protecting its legacy. But that doesnt mean that we think the job is finished. We arent complacent about the work that still needs to be done. That is why the next Labour government will put securing Northern Ireland's economic future at the top of our agenda. Because we know the next stage in Northern Irelands development will be centred on the economy.

It is striking to me visiting again this week how much Northern Ireland has changed - and changed for the better - since the bad old days of conflict, violence and isolation. In this city, weve seen the spectacular success of Titanic Belfast. The top tourist attraction on the island of Ireland that has had over half a million visitors in its first six months. And that tragic story of the past is helping to build a better future, with the Titanic Quarter fast becoming a home to creative industries and Northern Ireland providing a sought after film location that is the envy of the world. The economy here recouped 4.80 for every 1 that was invested in bringing film production to Northern Ireland. And with Derry looking forward to its status as City of Culture next year, creative industries, arts, culture and film and the associated tourism that brings are a big part of Northern Irelands economic future. This story speaks to an important truth but also sets us a vital challenge. The Good Friday Agreement promised a generation in Northern Ireland that theirs would be a better future. Labour stands by that commitment - we gave it then and we hold to it now. Together we must deliver. Tough times That is why we are so worried by what is happening in Northern Ireland's economy today. The UK is stuck in a double-dip recession, the longest since the Second World War - but the Northern Irish economy has been hit harder, the recession has been deeper and according to PWC the recovery is expected to take longer. Unemployment is high across the UK but it is higher here, and it is still rising. Unemployment has risen to over 8% in Northern Ireland. Nearly one in four young people are without a job. Almost half of those without work have been unemployed for over a year. And private businesses in Northern Ireland have also been hard-hit. Over the past two years, one in six local businesses have ceased trading. Business confidence is down. Too many investment decisions have been postponed or even gone elsewhere, doing long-term damage to our economy. And over 5,000 jobs have been lost in the construction sector alone - a fall of more than 15 per cent. Now I know you will be expecting me to highlight my differences today with the Tory-led government in Westminster. And I will. But I know too that the most important things businesses need are stability and predictability government decisions made and then stuck to so that you can plan ahead:

That it is the clear view of business that, where possible, we politicians should seek consensus where we can in the interests of long-term economic development; So, in the spirit of consensus, I first want to set out where, on each of the three big questions of our time, the Chancellor George Osborne and I agree on the strategic goals even if we disagree on how to get there. First, we agree on the need for banking reform. The global financial crisis started with the reckless lending practices of American financial institutions, but it exposed risky behaviour by banks and inadequate regulation in every major country of the world, including in the UK and Ireland. We agree this must never happen again. The question is how we ensure that it doesnt happen again. Second, we agree that, after the global financial crisis, we do need a credible plan for deficit reduction. For a country like the UK, open to trade and commerce, dependent on the support of international investors, a credible deficit reduction plan is now vital just as a credible independent monetary policy was one of the most important reforms I was involved in delivering in the last Labour government. And the third thing George Osborne and I agree on is that a credible deficit reduction plan is a necessary condition but it is not by itself a credible plan for jobs and growth. The question is what form that plan for growth and jobs should take. Let me take each of these three areas in turn. Banking reform First, on banking reform, I know there will be no disagreement here about the need for radical reform, as well huge frustration about the ways the banks are now behaving. Businesses in Northern Ireland were hard hit by the crisis in our commercial banks in the UK, like RBS which owns Ulster Bank, and equally by the failure of Anglo Irish Bank in Ireland. And speaking to the CBI here today, I know how frustrated many of you are that credit is hard to find and more expensive to access.

As your Finance Minister Sammy Wilson said recently: business is increasingly frustrated at the lack of availability of credit on reasonable terms and that low rates of lending are affecting Northern Irelands economic recovery.

We have supported the radical proposals from the Vickers Commission on banking reform. Vickers is right to argue that to protect customers and taxpayers we need much tougher accountability and transparency and clear, workable and robust firewalls as well as stronger competition, especially in business lending, where the Government is taking much too long to make progress. But all the signs are that the government is now watering down the Vickers proposals. That is why Ed Miliband said last week at out conference in Manchester: Over the next two years, in the run up to the 2015 election, the banks have to deliver change, showing that high street banks will operate in a genuinely independent fashion from their casino arms and will focus on supporting UK business. That means reforming banks culture, as well as implementing the letter and spirit of the Vickers Report to provide real separation - including in staffing and corporate governance. If that doesnt happen, the next Labour government will break them up by legislating to split high street from casino banks. Carrying on as they are will not be an option. So yes, we need a radical culture change in the banking industry. But we must also make sure, as banking regulation is centralised at the Bank of England, that banking regulation does not lurch too far. In regulation, we must take a careful and balanced approach Too soft: and we risk again leaving taxpayers and businesses exposed. Too heavy-handed: and we risk throwing the baby out with the bath water and ignoring the needs of businesses small and large. The easiest way to avoid any financial risks at all would be to have no transactions at all. But a lurch to regulatory risk aversion would be disastrous for the UK economy. That is why in Westminster, under pressure from us, the government has conceded that the permanent Financial Policy Committee of the Bank of England should have a clear objective, alongside financial stability and consumer protection, to promote economic growth we will hold them to this when amendments are brought forward to the Bill. In my view, we need to have in our minds the US response to the World Com and Enron accounting scandals a decade ago. The US Congress reacted with a heavy-handed piece of rules-based legislation Sarbanes-Oxley. But it didnt work. It did not stop the financial crisis which started in the US. And its complexity drove jobs and tax revenues out of the US year by year.

This audience doesnt need telling that rigid rules-based regulation is often not the answer, and that small and medium-sized businesses desperate for much needed risk capital and fair terms are likely to be the losers if regulation is too heavy-handed. Deficit reduction The second area where George Osborne and I agree on the task ahead is on the economy and the need for a credible deficit reduction plan. But the question is what makes for a credible plan? Yes, a credible plan will need to be tough in order to command confidence. But it has also got to work and that means pulling all the levers required to deliver deficit reduction. Spending cuts and tax rises are, of course, part of that package. But we also need jobs and growth to get the deficit down. In office, Labours plan was based on restoring strong, sustainable growth, getting people back into work, and then beginning the difficult task of cutting spending and raising taxes where necessary. But over two years ago, when the Coalition was formed, they took a radically different path. First, they decided that the speed of deficit reduction had to be substantially increased. Second, the emphasis of their plan took a sharp turn from increasing jobs and growth to immediate and steep spending cuts and the VAT rise. And, as is now widely acknowledged, their plan has not worked. This week we again saw evidence of this when the IMF further downgraded the UKs growth forecast. Yes the Euro crisis has made things harder, especially here in Northern Ireland. But the fact is the UK is now just one of only two G20 countries in recession the longest double-dip recession since the Second World War. And because we are in recession, the deficit is now not going down, its going up up by 22 per cent so far this year. Thank goodness the Olympics has given us a short-term shot in the arm, that might just be enough to take us out of recession this quarter. But that is no substitute for a long-term strategy. The fact is that there is nothing credible about a plan that leads to a double-dip recession, thousands of businesses bust, a million young people out of work, billions wasted on a soaring benefits bill, and borrowing going up not down.

We consistently warned going too far, too fast with spending cuts and tax rises would choke off economic recovery and lead to more borrowing and not less. And it is no surprise that the Northern Ireland economy has been hard hit by the rapid public sector jobs and spending cuts imposed by the Tory-led government in Westminster. With over 26,000 jobs set to go in the public sector, and proposals to introduce regional pay leaving workers in Northern Ireland worse off our nurses, teachers and police officers are right to be anxious about their futures. Without action now to support growth and jobs and reform our economy for the future, I fear we are in for a lost decade of slow growth and high unemployment which will leave a permanent dent in our nations prosperity. Yet George Osborne has refused to act to kick-start growth and support new business investment. Before the general election the Tories raised the prospect of a cut in corporation tax. But after two years of talking about devolving corporation tax powers to Northern Ireland, there is still no agreement about whether it should happen and what it would cost. We are clear - whether or not a corporation tax cut is the best way forward, Northern Ireland's businesses need help now. Rising unemployment and the recent announcements of major job losses show that Northern Irelands economy cant wait while the Treasury dithers. And changing the Tory face at the Northern Ireland Office isnt going to get Northern Ireland the help it needs. Northern Irelands economy needs action now - a Plan B for jobs and growth. Thats why Labour is calling for a real plan for jobs and growth in Northern Ireland. Last week we urged the government to use the proceeds of the sale of the 4G mobile phone spectrum to build new homes and kick-start a construction-led recovery. Our plans would allocate 70m to Northern Ireland over the next two years. And if the Northern Ireland Executive were to take the same decisions as England, they could use those funds to build 3,000 new affordable homes and create tens of thousands of construction jobs. We would enable the Executive to bring forward long-term investment projects to get people back to work and strengthen our economy for the future. After shedding 5,000 jobs in the last two years Northern Irelands construction industry needs that help. We would give a one-year national insurance tax break to every small firm that takes on extra workers, helping to create jobs and grow local businesses that make up over 90% of Northern Irelands private sector.

We are urging the government to reverse its damaging VAT rise for a temporary period to give immediate help to high streets and struggling families and pensioners in cities, towns and villages across Northern Ireland. We would reduce VAT on home improvements, repairs and maintenance to 5 per cent, helping to create work for our young tradesmen and women and stop them having to move away. We need to build skills through apprenticeships and training that will equip our young people for the future. They are needed at home. And because we know that young people will be the driving force behind further progress in Northern Ireland, lets levy a 2 billion tax on bank bonuses to fund a real jobs guarantee that could help 2,000 young people in Northern Ireland back to work. Young people in Northern Ireland are ambitious for themselves and their communities. But they cant realise those ambitions if they arent given the chance to get on. No job, no hope and no future are no choices at all. Our young people deserve better. Long-term plan for jobs and growth Which brings me to my third area of agreement - the need for a long-term plan for jobs and growth. But what form should that plan for growth take? All the evidence over the past two years suggests to me that the Treasury now thinks that the only thing government needs to do for business is just to get out of the way. But that wont do. It was the Business Secretary himself who wrote in his famous leaked letter, the Government lacks "a compelling vision of where the country is heading beyond sorting out the fiscal mess" He is right and - on transport, planning, skills, strategic industrial support government has a vital role to play and cannot just walk away. With China currently producing more graduates a year than the whole population of Scotland; and adults in Brazil already twice as likely to be running their own business as here in the UK I believe here we need a long-term plan for growth to support and back your leadership and innovation and risk-taking. I am not going to claim to you that Labour got everything right in government let alone that you all agreed with what we did. But many of our most successful economic policies: - an expansion of higher education and science, - a renaissance in apprenticeships, - CGT for entrepreneurs cut to 10% - faster business planning decisions, - the car scrappage scheme,

- and here in Northern Ireland, the schools, hospitals, roads and business parks that benefitted from record investment these projects were successful because we had moved beyond the old-style British debate public bad, private good? private bad, public good? and recognised that partnership between business and Government is vital if we are to rise to the competitive challenge. And at a time like this, when we need to rebuild our economy for the future and support long-term investment in innovation and skills, that partnership is needed more than ever. Northern Ireland That is why I am so committed to supporting the First and Deputy First Ministers, and the Executive, to build and develop the economy, reforming our banks, investing in infrastructure and promoting innovation and new investment for the future. Here in Northern Ireland, you have great strengths in innovation, R&D and exports, and also in manufacturing where you continue to out-perform the rest of the UK. Just look at the success you have achieved in foreign direct investment over the past decade, with Invest Northern Ireland assisting over 120 foreign companies to invest in greenfield FDI projects in Northern Ireland since 2006 - software & IT, business & professional services, film and television creating nearly 12,000 new jobs in their subsidiaries. I discussed today with the First Minister and Deputy First Minister how committed they are to delivering new jobs in investment in areas as diverse as Telecommunications & ICT; Life & Health Sciences; and Advanced Engineering. But I know too the real challenges that currently face the Northern Ireland economy: in accessing the skills you need, the finance you need, the high cost of energy, and also in air connectivity, where we, like you, remain unconvinced that the Treasury has done enough to understand the special challenges you face in Northern Ireland at a time when Belfast International Airport is losing 1 million passengers per year. And here too we need to capitalise on the benefits of cross-border economic co-operation in areas like tourism, energy, on infrastructure projects, in sharing health and education services. So the question we must ask is on taxation, regulation, education, innovation and industrial policy what can we do together across the UK and Ireland, how can we work together and what more must we do to build a long-term consensus about what needs to be done. And nowhere is such a consensus more essential than on our infrastructure. I said last week at the Labour Party Conference that the lesson of the Olympics is that if we approach major long-term infrastructure projects by building a cross-party sense of purpose then we can deliver. But I also said that successive governments including our own have ducked or delayed vital decisions on our infrastructure, allowing short-term politics to come first. And I highlighted a series of areas where if we put off major decisions for another generation, it will be our children and grand-children who will face the consequences.

how we deliver super-fast broadband across the whole of the UK and in particular here in Northern Ireland; how we draw up a clear plan to invest in power generation, including renewables so we can lead the world in delivering clean, de-carbonised energy and green jobs; alongside vital decisions on road and rail and airport capacity. Here in Northern Ireland, I know that there are key challenges that the Executive has already highlighted: upgrading of key road projects to reduce journey times; raising the proportion of electricity consumption from renewable sources; as well as improving the landscape in public areas to promote private sector investment in towns and cities across Northern Ireland. So I say, let us together draw up a comprehensive long-term plan to rebuild our infrastructure for the 21st century, and a broad and cross-party consensus to deliver it. And at a time when Government budgets are tight, we must think innovatively about how we can finance these vital projects over the coming decades, drawing on the private sector and long-term pension savings. That is why Ed Miliband and I have asked Sir John Armitt, the chair of the Olympic Delivery Authority, to consider how long-term infrastructure decision-making, planning, delivery and finance can be radically improved. Sir John is going to draw up plans for a commission or process, independent of government, that can assess and make proposals on the long term infrastructure needs of our country over the coming decades and help build that consensus. And I am pleased that the Northern Ireland Executive has agreed to work closely with Sir John on his review. Conclusion Let me conclude by saying this. I said at the beginning of my speech that it is the clear view of business that you need stability and predictability and, where possible, we politicians should seek consensus where we can in all our interests. In all sectors, but especially in manufacturing, transport or energy, that is the only way to ensure businesses can invest. Consensus is not always a good thing. But nor is headline-grabbing change for the sake of it. That is why issue by issue - whether we agree or disagree working alongside the Northern Ireland Executive - I am committed to working with you and listening to you on all issues which affect your businesses and our economic future. And securing such a long-term consensus to put jobs and growth first and make the investments we need is particularly vital here in Northern Ireland. The Good Friday Agreement in 1998 was one of Labour's most important achievements in government.

It promised a generation in Northern Ireland that theirs would be a better future. Together we set ourselves the shared task of forging a lasting peace by cementing it with rising prosperity shared by all - to make it unthinkable we could return to the conflicts of the past So this is my commitment to you today. Together let's build an economy that allows the ambition and potential of Northern Ireland and its people to be realised. Thats our promise of 2012. And that will be the promise of the next Labour government ENDS