A decade of innovation

Deputy Secretary for the Economic Strategy Group at the Department for the Economy (DfE), Paul Grocott discusses the importance of transparency in economic development policy in the absence of an Executive.

Borrowing a quote from Harvard professor Martin Linsky’s take on leadership, Grocott says the Department is “relentlessly optimistic about the possibility of changing our place in the world, and also brutally realistic about the difficulty of getting it done”.

Operating in the absence of an Executive, policymakers in the Department for the Economy have attempted to transparently present plans for economic development, an example of which was the 10X Delivery Plan published in July 2023.

The Deputy Secretary acknowledges the current and future “difficult decisions” required as a result of DfE’s budget allocation, but stresses that this does not mean the Department “is without the means to effect change”.

“The Department for the Economy has control over significant economic levers, but we must learn to use them in a more focused way and make the best use we can of all our partners’ activities in a coordinated way.”

Discussing the overarching 10X vision of supporting innovative economic growth in a way that is inclusive and sustainable, he states: “We need to ensure that our interventions are focused on areas of existing or potential strength and taken forward at a scale sufficient to support genuinely transformational change.

“What is clear from our work on the 10X vision to date is that we cannot continue to keep doing the same things over and over and expect different results.”

In adopting the 10X Delivery Plan as the Department’s business plan for the year, the first time a DfE business plan has included activity from right across all of their partner organisations, Grocott says that the Department recognises that policy responses and interventions must be developed and delivered in parallel.

Explaining further, he says: “We need to be clear that we will support activity that can be shown to contribute to those goals, but we must also consider stepping back from activity that is not able to make that contribution. Proper use of public funds requires nothing less.”

With the Department currently engaged on the delivery of an action plan for 2024/25, Grocott says that the focus will now be on delivering objectives at scale.

Innovation

One of the Northern Ireland economy’s most recognisable challenges is longstanding low productivity. Northern Ireland averages a productivity rate some 20 per cent below the UK average, and, more strikingly, 40 per cent below the Republic of Ireland’s rate.

A central component of that low productivity is a smaller percentage of innovation-active businesses than the small, advanced economies chosen for comparison. This challenge is further compounded by sub-regional variations of innovation, leading to regional inequalities.

“We know that businesses which innovate have higher productivity, are more likely to create new jobs, and are more resilient to market shocks. So, we want to encourage more companies to innovate, and for companies that innovate already to move further up the value chain,” says Grocott.

“Part of the solution to this regional inequality lies in supporting more businesses to innovate and supporting more people to have relevant skills.”

The Deputy Secretary points to significant capital investment through the City Deals programme as some of the efforts ongoing to address the issue but adds: “This is not just an issue for government to address. If we want higher innovative growth, better skills, and more efficient supply chains, we must work together on this shared interest over the coming years to deliver this change.”

Better jobs

Supporting better jobs is cited by Grocott as a second critical aspect of productivity. He states that there is a major skills gap in the labour market, referencing DfE figures which demonstrate an “overall poor performance” at skills attainment among the cohort of people educated to level three (A-level) and above.

“Supporting innovation to deliver growth and more trade is only part of the 10X vision: we must also ensure that growth supports better outcomes for all our citizens,” he says.

“We can deliver our 10X aims if we move forward in a spirit of partnership as we seek to transform our economy.”

Grocott calls on employers in Northern Ireland to “draw upon some of the untapped potential we have in the labour market”. “We have high levels of economic inactivity and part of the reason is that many people face unreasonable barriers to employment.”

He also outlines how having “better jobs” will ensure that Northern Ireland has a more inclusive society. Citing that Northern Ireland has the largest proportion of people with disabilities out of employment in the UK, Grocott explains how a person without disabilities and with low levels of qualifications is more likely to be employed than a disabled person with a higher-level qualification: “That cannot be right, both in moral and economic terms.”

Having better jobs will, Grocott asserts, ensure that there are reduced levels of regional inequality in Northern Ireland. “Making the most of the potential of our people can really have an impact at regional and local level, and we can target programmes in Northern Ireland’s most deprived areas to support this,” he says.

However, he states that “we must collectively recognise that we are not tapping into our human capital as well as we should be”.

“Part of the issue is barriers to people accessing employment that makes the most of their skills, so we need collectively consider what changes we can make to our recruitment practices to tap into this potential.”

Sustainability

Grocott asserts that small, advanced economies such as that of Northern Ireland need to “deliberately develop unique strengths to give us a competitive advantage”.

“Too often, government has failed to deliver change by shying away from difficult decisions. In the current budget context this is no longer an option,” he says.

One aspect of how this is happening, he explains, is that Department officials are identifying Northern Ireland’s strengths to build up the sectors that can make “best use of these unique selling points”.

Collaboration across all sectors, he asserts, will be key to addressing these challenges, whether across government or between government and the business sector.

“The aspect of focus, and one that directly reflects the whole 10X concept, is perhaps more challenging; we must focus on those policy interventions that have the most impact.”

The path forward

Grocott’s overriding message is that “we are now moving from concept to delivery”.

“The first delivery plan has got us moving in the right direction, but we really need now to see change happen. The next delivery plan for 2024/25 will set out our plans to achieve that. The objectives that have been set for 10X delivery are deliberately ambitious, and we need to follow through at scale to deliver real change.

“We recognise that achieving this vision will not be easy, and we will not be able to do it without support from all of our partners, whether this is through your engagement in innovation activity, critically examining your recruitment policies or making changes to reduce your carbon footprint. These are unavoidable imperatives in today’s economy, but we can deliver our 10X aims if we move forward in a spirit of partnership as we seek to transform our economy.”