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Can Labour revive Northern Ireland’s economy?

July 9, 2024
in Finance
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Can Labour revive Northern Ireland’s economy?
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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

In a once-derelict corner of the Belfast shipyard that built the Titanic, the future is again taking shape.

Chip giant Nvidia is among 140 companies that occupy space at Catalyst, a non-profit science and technology hub founded 25 years ago to cultivate technology businesses in one of the poorest corners of the UK.

After Labour’s victory in Thursday’s election, Catalyst chief executive Steve Orr is hoping the party can now help deliver prosperity to a region hobbled by some of the UK’s lowest educational attainment, productivity and skills.

“We want to prove an economic miracle is possible in Northern Ireland,” said Orr, whose company was that day hosting a session teaching school-age leavers how to pitch ideas to businesses.

Steve Orr of Catalyst hopes Labour can help deliver prosperity to a region hobbled by some of the UK’s lowest educational attainment, productivity and skills © Catalyst

Sir Keir Starmer has made economic growth his government’s priority.

The prime minister visited Northern Ireland on Monday in his UK tour, meeting with first minister Michelle O’Neill and deputy first minister Emma Little-Pengelly, as well as political leaders from other parties.

They discussed Northern Ireland’s budget crisis, the nation’s health service — where waiting lists are the longest in the UK — and financing for the Casement Park football stadium that officials hope will be a venue for the Euro 28 tournament, he told reporters after the visit.

“I have been very clear that my government has a mandate for change, for stability here in Northern Ireland and a different way of doing politics,” he said.

He stressed the region’s challenges were “important to me” and would be addressed “in a collaborative way”.

Prime Minister Sir Keir Starmer and NI secretary of state Hilary Benn leave after meeting with Northern Ireland first minister Michelle O’Neill and deputy first minister Emma Little-Pengelly at Stormont Castle
Keir Starmer, right, meets, from left, Michelle O’Neill, Emma Little-Pengelly and Hilary Benn at Stormont Castle © Charles McQuillan/Getty Images

His visit, coming less than 72 hours after being elected, has raised hopes that were already sky-high.

“People have an expectation of a Labour government that is very different to a Conservative government,” said Gerry Murphy, assistant general secretary at the Irish Congress of Trade Unions. “What they expect is that they will intervene directly to assist working people, working families.”

Yet the challenges — and choices — remain significant.

One of the biggest issues will be cash. Northern Ireland raises hardly any revenue and relies on an annual £15bn payment from London.

However, Hilary Benn, the newly appointed Northern Ireland secretary, who visited the region ahead of Starmer’s visit, has previously made clear there will be “no blank cheque”.

The previous Conservative government acknowledged that Northern Ireland has been receiving less than it needs, while the region’s Stormont power-sharing executive will be fighting for an improved funding formula to boost spending.

While locals may hope for more generosity from Labour, “I wouldn’t assume that it’s going to be sunshine in the garden on day one,” cautioned Matthew O’Toole of the small Social Democratic and Labour party, opposition leader in the Stormont assembly.

Andrew Irvine
Andrew Irvine, chief executive of East Belfast Mission: ‘You wouldn’t pour water into a bucket that has holes in it’ © Phil Magowan/Press Eye/FT

Analysts and locals, however, said the region must make its own changes if it is to attract more funding.

Andrew Irvine, chief executive of the East Belfast Mission, which runs community services in a part of the city that is one of the UK’s most economically deprived, said the country needs to reform if it wants pleas for additional cash to be taken seriously by the new government.

“You wouldn’t pour water into a bucket that has holes in it,” he said — pointing out that two-thirds of adults in his area are neither working nor looking for jobs, which is more than double the region’s level overall.

Nearly 11 per cent of Northern Ireland’s working-age population are classed as long-term sick or disabled.

Compared with the UK overall, Northern Ireland had “a higher level of people who have no, or very low, qualifications and a higher share of the working age population without basic numeracy and literacy qualifications”, said Ann Watt, director of Pivotal, a think-tank.

Ann Watt of Pivotal
Ann Watt of Pivotal noted Northern Ireland’s ‘higher share of the working age population without basic numeracy and literacy qualifications’ © Liam McBurney/PA

More immediately, Starmer enters Downing Street with the future of thousands of jobs at one of Belfast’s oldest manufacturing businesses up in the air as Boeing and Airbus carve up Spirit AeroSystems.

Recommended

Campaigners outside Belfast High Court in February

But long-term, boosting prosperity in a region that has the lowest spending power in the UK and where wages are lowest will be crucial.

“Labour is talking about growing the economy but you can’t grow the economy unless you get people working,” said Declan Doherty, head of the Derry Youth & Community Workshop, which is at risk of closure after European funding dried up after Brexit and was not replaced by UK cash.

David Jordan, a lecturer at Queen’s Business School in Belfast, said: “The danger is that Northern Ireland is seen as a problem that, while important for people here, is down the priority list for any UK government.”

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