IoD Chairman Paul Terrington- Annual Dinner speech
07 February 2014
Three weeks ago, Joanne Stuart and I gave evidence to the Westminster Northern Ireland Committee on behalf of IoD – an experience, I know, shared by a number of people in the room.
As most of you know, the Committee is enquiring into, amongst other things, the local banking sector, its structure and governance and the effectiveness of national initiatives to help aid economic recovery.
That’s a pretty wide remit and at the beginning of the session one member opened with the statement “The single biggest challenge to business in rebalancing the Northern Ireland economy is access to finance – don’t you agree?”
And most of the committee nodded – clearly they agreed too.
It seemed there was an assumption that such an obvious question would attract an equally obvious answer, so there were raised eyebrows when I said that access to finance for business is not the single biggest challenge facing business in Northern Ireland.
It is certainly an issue – and for many companies looking to finance expansion, acquisition, research and exports – it is a challenge.
Indeed, in recent years, IoD in Northern Ireland has been a leader in engaging with the banks and with government to increase transparency and communication between banks, other financial institutions and business.
And much of our discussion with the Committee revolved around recommendations IoD has made in the past, many of which never quite translated into reality, including
the issue of accessing finance – the solution to which is beyond the banks alone.
Nevertheless, for the 69,000 VAT and PAYE registered undertakings in Northern Ireland, access to finance is not their single biggest challenge.
According to the Economic Advisory Group, only around 8% of local firms sought bank lending finance in 2012 – a similar percentage to that of the other UK regions
and the Republic of Ireland – with around 66% of loan applications deemed
So that backs up my point.
Coming back to the Northern Ireland Committee and their search for the Holy Grail of
rebalancing the economy.
I was tempted to answer their question by summarising the findings of the fifteen
major reviews of the local economy since the 1950s.
One after another, they recommended policies to increase productivity; stimulate
research and development, foster innovation, encourage skills… all of which are
elements in the rebalancing process.
But when I look at the world and at regions that have set themselves goals to do
better, reach higher, and run faster, I’m drawn to more intangible challenges like ‘leadership,’ ‘confidence,’ ‘trust’ and ‘courage’.
Last June the Economic Advisory Group published its Competitiveness Index for Northern Ireland, where it ranked Northern Ireland in 42nd place out of 145 countries worldwide.
At the top of a comparator group of 5 other benchmark regions was Finland at number 3, followed by the UK at number 8, New Zealand was 23rd, the Republic
of Ireland 27th and Estonia held the number 34 slot.
Looking at the factors that contributed to our 42nd place, we scored particularly highly in areas of investor protection, the governance of corporate boards, the strength of auditing and reporting standards – areas where IoD is striving to promote excellence in leadership and good governance.
However, we scored significantly below our comparator group and many of the other 144 countries in the area of Institutions – defined as how the region is governed, regulated and administered – and in that area we fell behind the five comparator group countries in 21 of the 22 main indicators.
These included: transparency of government policymaking, perceived wastefulness of government spending, the burden of regulation and public trust in politicians.
Looking at the comparator nations, where there are high levels of trust and confidence in the institutions and leadership, the regions tend to perform well - where these are lacking - as in Northern Ireland - we underperform our competitor nations.
Now this is a worldwide issue. The definitive indicator in the space – the Edelman Trust Barometer – revealed in 2014 some historic lows in public trust in institutions of government and in politicians.
And it’s no different here.
Last September’s Belfast Telegraph poll to determine voter satisfaction with the performance of the Northern Ireland Assembly, found it poor by international standards and steadily falling.
As compared to Direct Rule, the local Assembly’s approval rating was a negative 59.9%, in September 2013 - that had fallen from the Telegraph’s poll of May 2012 when the same question revealed an approval rating then, of minus 40%.
Internationally Edelman concluded that trust in business improved from a nadir in 2008 around the financial crisis, but those results offer no room for complacency.
Events ranging from oil spills to LIBOR rates, levels of tax paid to ‘payment for failure’ all have led to a growing disconnection between corporate behaviour and ethical conduct.
And this is not something remote or detached from business in Northern Ireland.
There is major focus on rebuilding trust in the financial sector here and of course
Latin scholars will know that the term “credit” comes from the Latin verb “credere” meaning to “have trust in”.
At the same time our recent experience of trust in some areas of the business
community leaves much to be desired.
We’ve had horsemeat in food chain from burgers to lasagne, bribery of public
officials in defence procurement contracts, around 40% of all diesel sold in supposedly respectable filling stations across Northern Ireland is either smuggled or laundered, defrauding HMRC of the duty and illegal dumping nets unscrupulous business nearly £30 million a year.
Business is all too often depicted as not benefitting society, but as selfishly pursuing
its own interests, regardless of the costs to others.
This fuels an environment of cynicism and suspicion towards business….. which is profoundly at odds with the actual values and behaviours of the vast majority of people working in commercial and public institutions.
This trust gap is especially disturbing because business here in Northern Ireland
and elsewhere does so many fantastic things.
It creates jobs, growth and wealth. It pays wages and generates profits from which tax revenues are drawn. It innovates to improve people’s lives. It offers people reward and fulfilment in employment. It builds infrastructure and communities.
I, like most of you in the audience, am proud to lead a business which strives to
deliver on all those goals.
And it would be wholly unfair to suggest that we have been passive in Northern
Ireland around building trust and confidence. Some recent measures do show that building confidence can be transformational.
I took part in the Investment Conference in September – an event superbly organised and executed and which shows Northern Ireland at our best.
In the past 24 months the Titanic and Giant's Causeway visitor centres came on
stream, Belfast played host to the World Police and Fire Games, a sunny Fermanagh welcomed the G8 global summit and Londonderry/Derry celebrated a visitor-rich 12 months as UK City of Culture.
And this May we look forward to welcoming the world’s top-200 cyclists from 30
countries to Belfast for the start of this year's Giro d'Italia.
That alone is expected to attract around 140,000 visitors and generate £10m worth of
worldwide media publicity.
Although I wouldn’t go as far as Alan Clarke from the Tourist Board who reportedly
described cycling as “the new golf”
Those of us who lack the svelte athleticism of professional cyclists are perfectly
content with the old golf.
However, the confidence to attract a major international sporting event a year and the trust organisations place in Northern Ireland to deliver, is compelling and is,
in turn, reinvigorating the tourism and hospitality sector.
Already around 53 cruise liners are committed to include Belfast in their 2014
itinerary bringing 110,000 visitors to Northern Ireland, while Belfast is now amongst the 50 Incredible Travel Destinations to consider for 2014.
The proposed £14million investment in new film studios at Titanic Quarter will help establish Belfast as one of Europe's largest film production locations – further confidence in Northern Ireland as a location for high-end television and film production.
And last week’s announcement of a £30 million plan to extend Belfast's Waterfront
Hall to attract 50,000 convention and conference delegates annually, will further boost the city’s attraction as a leading international convention, conference and event location.
But not all stories are as welcoming and trust and confidence are fragile commodities.
On 16 January this year WBUR, Boston’s National Public Radio station reported that
U.S. envoy Richard Haass was forced to fly home empty handed from a failed
Northern Ireland peace mission.
“This past year,” the station’s contributor said, “has proved the most violent year since the signing of peace accords for Northern Ireland.
He continued… “with young men rioting in the streets, attacking the police and each other, the fragile peace of the past 16 years appears to be slipping away.”
How does that message play to cruise passengers, cycling fans and potential
convention, conference and event delegates?
Whether in business, politics, or in our personal lives, those with whom we deal – and those with whom we aspire to deal - place their trust in our reputation.
There are few more personally scathing criticisms than “I don’t trust that person”.
And when we think of trust and confidence we should never forget that we live in a digital age.
An age where the influence of social media can erode trust, shatter reputations and a single Tweet can focus a laser beam of worldwide attention.
Within 30 seconds of Asiana Airlines Flight 214 crash landing at San Francisco International Airport on the morning of Saturday, July 6, 2013, a woman waiting for another flight had tweeted “OMG a plane just crashed at SFO on landing.”
That Tweet was retweeted 1,465 times and within six minutes she had been contacted by Sky for a live interview.
18 minutes later the first survivors we posting pictures, comments and their perception of events on Twitter.
That day, there were an estimated 27,000 Tweets relating to the accident and the airline’s share price had fallen by close to 7%.
I don’t know who coined the saying that, “trust arrives on foot, but leaves in a Ferrari,” but they certainly got that one right.
My last IoD speaking event was at the Annual Lunch in October. I was fascinated to see that evening that comments I made during the speech had been Tweeted by members of the audience and Re-Tweets and comments were happening even before I concluded my remarks and sat down to eat.
And for those of you planning to do the same tonight, don’t forget to mention the hashtag ioddinner – that’s with no spaces.
For business and for government, good governance and public trust are inextricably linked.
IoD is not a lobby organisation; we have no political agenda. We will continue to promote good leadership and governance to businesses as vital ingredients in driving sustained economic growth.
Since I became regional chairman, my colleagues and I have taken this IoD mantra to our political and community representatives.
Our engagement with political and community leaders reflects our underlying
objective: to act as a constructively critical friend to the government, the public
and third sector.
Our mission is to develop and share best practice in corporate governance,
transparency and building public trust.
But that will not dissuade us from acting as a constructively critical friend, when
we believe that is warranted.
History teaches us that no government in can deliver transformational economic and
social outcomes without demonstrating the leadership to make hard choices.
And we have hard choices in abundance:
And in the first month of a year when Northern Ireland anticipated record visitor numbers, the New York Times carried and an Associated Press story stating: “protests have already had a significant and adverse impact on the region’s economy. The conflict has cost Northern Ireland around $40 million in lost tourism and trade as well as police overtime.”
Between December 2012 and March 2013 alone, the cost of policing demonstrations in Northern Ireland reached almost £22 million.
The cost of policing the North Belfast protest has risen to nearly £7 million.
And as we gather here this evening, neither the so-called flags dispute, nor the Twaddell Avenue stand-off, are any closer to a resolution.
On Friday 21 November 2008, more than 15,000 Primary Seven children sat Northern Ireland's final 11-plus exam, notionally heralding the end of academic selection.
Yet last Saturday, thousands of children have received the results of the unregulated entrance tests for grammar schools.
I have a daughter in P4. When she went to school in 2009 we never
believed that such a process would apply to her.
Now we expect - even 3 years out that it will.
This is not just an issue for concerned parents, the OECD has said that the polarised debate over the transfer test means children are not being properly assessed and that failing to get the Education and Skills Authority up and running is detrimental to
streamlining the school system in Northern Ireland.
And of particular concern to business, the controversy and perceived lack of transparency around the Northern Ireland Housing Executive and related events, raised questions of public trust around the integrity of contractors, suppliers, officials and government.
Without entering into the relative merits of any of those issues, they have
individually and collectively combined to erode trust and confidence in the institutions of Northern Ireland and our business community.
A quotation from Othello makes the case eloquently, “he who steals my purse, tis trash… but he who filches from me my good name, robs me of that which not enriches him but makes me poor indeed”.
This really resonates for me – for businesses and for government, we are nothing
without our good name.
And while we strive to ensure that history doesn’t repeat itself and that we do
better in future, we don’t seem to be able to resolve the past.
Forty-eight hours ago, Denis Bradley and Robin Eames, authors of yet another proposal that divided communities around our shared history, simply said, “Get on with it.”
In Northern Ireland trust, like economic confidence, has been in short supply in recent years, although with the economic outlook steadily brightening, there's an opportunity for trust to recover as well.
An opportunity for us all to “get on with it”.
Getting on with it is not about fine words, but real behaviours. As Henry Ford stated when building his empire - "you can't build a reputation on what you're going to do"
And as an aside, he also said "if I listened to the public they would have asked me to build faster horses".
For Northern Ireland as with businesses and governments elsewhere, rebuilding trust is, I believe, the greatest underlying challenge.
Trust in the Assembly to develop unswerving focus on economic regeneration and social inclusion; trust in community leaders to lead their communities towards tolerance and coexistence and trust that business will develop the confidence to invest in the future – confidence of customers, shareholders, providers of finance and the wider stakeholders to which we are intrinsically now linked.
If all those elements come together we can rebalance the economy, if only one falters – or fails to step up - we will find the search for economic recovery and social inclusion equally challenging.
Let us be under no illusion, trust and confidence in a new and shared future demands hard choices about dealing with the past.
This is a shared endeavour and I know that I speak on behalf of my colleagues in the other business bodies when I say that we are ready and willing to assist as part of
These are not issues for politicians and government alone – but none of us should shirk from the issues.
I struggle to see how we can build real trust - at home and abroad – as a great place to do business, as a remarkable investment location, without tackling the issues which challenge my view that NI is welcoming, peaceful and progressive.