Monthly Archives: April 2017

How to strangle an export industry 

Brexit , now that is is really happening, is going to cause a major strain on this country. In that context, and accepting that we don’t want to steal their boots while the body is still warm, it beehooves Ireland to take every opportunity presented to take business from the UK.

Much of the discussion on gains to be made has concentrated on the financial services area. There is a natural synergy here – a lot of back and middle office activity in London needs to move, to keep within the Eurozone, and Dublin has a fair amount of attractions to these activities. In addition,  there should be some potential for agribusiness to take up now UK based activities exporting to the EU. Much of the existing cross border trade comes from the agrifoods area. While nobody wants to destabilise the North, the reality is that the days of exporting material for further processing in the north then reimporting for another stage, these are gone. Agribusiness to the UK will also take a hit – upwards of a billion euro is at stake here. However, the UK also exports a lot of agrifood to the EU – 73% of its exports go to the EU. With even the softest barriers these will decline, and that represents an an opportunity for Irish agribusiness.

To its credit the Government and the state are aware of these issues and work is ongoing to mitigate the effects.

Behind all this however we have a sector which has evidenced potential for significant post Brexit export growth where the state, far from encouraging it is in fact strangling it.  This is the higher education sector.  Every non –Irish student who comes to study is an export. Exports of  educational services from Ireland represent a potentially enormous market. In the UK some 400k students per annum enter to study, many in the area of English language but as many for longerterm degree and diploma studies. Ireland has approximately 12,500 students from outside the EEA in its institutes of technology and universities.  Some 32,500 are in areas such as English language or private colleges.  This is a large body of exports.  It is responsible for approx. 1.75b in value added per annum

Two strangulations exist. First, we have a dreadful reputation in the English language school area.  Despite this the department of education and skills has yet to fully implement its own recommendations and to put in place a statutory framework around quality in the area. It remains essentially self regulating, and we know that that is a system which ultimately fails.  Until these schools are regulated we cannot grow them in confidence.

Taking the state related bodies an even more bizzare issue hobbles these. In the financial crisis a regulation known as the Employment Control Framework was put in place on all universities and Institutes of technology.  This in effect had a dual effect – it controlled overall numbers of staff and also controlled the distribution of staff (academic and professional) as between grades.  The ECF, as it was known, was implemented for the 2011-2014 period. Yet, as we come towards the middle of 2017, it is still being implemented.  It is being implemented due to the lack of the Department of Educatin and Skills , again, agreeing a new framework with the universities. As a consequence, universities and institutes of technology cannot grow other than by non exchequer funds. Willy nilly, in the absence of a serious commitment by the Department of Education and Skills (perhaps it should be renamed the Department of Primary and some Secondary Education) as to a stable financial system for higher education, the sector has moved decisively from state to non state funding.  This is most evident in the university sector. Thus my own institution, TCD, in 2015-6 , obtained 138m from the state ( HEA block grant, free fees waivers and state research funds awarded) , 38% of total income . TCD is probably on track to have 25-30% of its income from the state in the medium term, based on the trajectory of the last number of years.  UCD in 2015 obtained just over 30% of its income from the state.  Over the last decade state funding has declined by 25% while numbes of students have gone up by 25%. But the state remains , via the HEA, which provides less then 15% of income, the arbiter of not just staff numbers but staff deployment. 

This strangles any opportunity post Brexit to grow. More students need more resources, and dismay some as it might, higher education is a environment where staff, costly staff, are needed. But if staff cannot be hired, then the system cannot grow.  Exports are choked off.   This makes no sense. 

Published as a column in the Irish examiner