Hit and miss Bud­get for North­ern Ire­land’s busi­nesses

Cash boost wel­comed, but ni misses out on some ini­tia­tives

Belfast Telegraph - Business Telegraph - - Front Page - BY RYAN MCALEER

BUSI­NESS lead­ers here have wel­comed Chan­cel­lor Philip Ham­mond’s Au­tumn Bud­get, but ex­pressed dis­ap­point­ment that North­ern Ire­land will miss out on some of the key ini­tia­tives.

Among the busi­ness-friendly mea­sures NI is likely to lose out on is the move to cut rates bills by one-third for re­tail prop­er­ties with a rate­able value be­low £51,000 as rates is a de­volved mat­ter.

Glyn Roberts of Re­tail NI yes­ter­day called for the small re­tailer scheme to be ex­tended here.

Also ex­press­ing his dis­ap­point­ment, Aod­han Con­nolly of the North­ern Ire­land Re­tail Con­sor­tium added: “Due to no As­sem­bly, no Ex­ec­u­tive and no min­is­ters, we in North­ern Ire­land are stuck with an an­ti­quated sys­tem where re­tail­ers are 12% of the econ­omy but pay 24% of busi­ness rates. “This is sim­ply not ten­able.” Busi­ness rep­re­sen­ta­tives did wel­come most of the head­line fig­ures in yes­ter­day’s Bud­get, in­clud­ing a £350m City Deal for Belfast and eastern coun­cils, as well as a £2m re­lief fund for Belfast city cen­tre to help it cope with the im­pact of the Primark fire.

In to­tal, the Chan­cel­lor said his mea­sures would add £320m to the North­ern Ire­land block grant through to 2020-21.

Key an­nounce­ments for busi­ness in­cluded an in­crease in the na­tional liv­ing wage from £7.83 an hour to £8.21, con­fir­ma­tion that cor­po­ra­tion tax, al­ready cut to 19%, will fall to 17% in 2020 and a £240m al­lo­ca­tion, to halve the co-in­vest­ment rate for ap­pren­tice­ship train­ing to 5%.

Fuel duty will also re­main frozen for the ninth suc­ces­sive year.

Tina Mcken­zie, who chairs the Fed­er­a­tion of Small Busi­nesses in NI said: “There were a num­ber of very wel­come pro-busi­ness ini­tia­tives, such as on the Ad­di­tional In­vest­ment Al­lowance, which will stim­u­late cap­i­tal spend­ing in equip­ment as busi­nesses re­spond to the tight­en­ing labour mar­ket post-brexit.”

She added the Chan­cel­lor ( in­set) was cor­rect to re­sist any moves to lower the thresh­old at which point busi­nesses be­gin to pay VAT, some­thing she said would have ex­tended a sig­nif­i­cant ad­min­is­tra­tive bur­den on small com­pa­nies in North­ern Ire­land.

“Over­all, the an­nounced in­vest­ments, cou­pled with changes to per­sonal al­lowances and higher rate tax thresh­olds will help re­lieve pres­sures on em­ploy­ees and put more money in their pock­ets, which will be very much wel­comed by our hard-pressed re­tail­ers.” How­ever, there was no move­ment in the Bud­get to cut VAT on tourism here or an im­me­di­ate end to short-haul air pas­sen­ger duty (APD). In­stead the Chan­cel­lor pledged to set up an APD work­ing group. Tax com­men­ta­tor at PWC NI Janette Jones said while the in­crease in Na­tional Liv­ing Wage rep­re­sents a £690 an­nual pay rise for a full-time worker, she said it could pose chal­lenges for some small em­ploy­ers. “Given the size of North­ern Ire­land’s hos­pi­tal­ity sec­tor, meeting the goal of a 38p per hour in­crease will be a strug­gle for many lo­cal em­ploy­ers,” she said. Ann Mcgre­gor, chief ex­ec­u­tive of the NI Cham­ber, also wel­comed the in­crease in the An­nual In­vest­ment Al­lowance, stat­ing that it could pro­vide a strong in­cen­tive for firms to in­vest dur­ing the Brexit process. She also said the ad­di­tional £215m for the Uk-wide dig­i­tal cat­a­pult, as well as the new e-pass­port mea­sures, will be wel­comed by busi­nesses here.

The new mea­sure will al­low busi­ness and leisure trav­ellers from the US, Canada, New Zealand, Aus­tralia and Ja­pan to use the e-pass­port gates at UK ports.

Mean­while, there was some scep­ti­cism on the scope of the new Dig­i­tal Ser­vices Tax, which will in­tro­duce a new 2% tax on the rev­enues of some tech com­pa­nies from April 2020.

The Chan­cel­lor stressed it would only tar­get the so-called tech gi­ants and not small star­tups.

He said it would ap­ply to search en­gines, so­cial me­dia plat­forms and on­line mar­ket­places and only ap­ply to groups that gen­er­ate global rev­enues of more than £500m per year.

Janette Jones from PWC said: “This was widely trailed as a step to­wards lev­el­ling the play­ing field be­tween on­line re­tail­ers and the high street.

“But the Chan­cel­lor has opted for a nar­row 2% rate, an im­ple­men­ta­tion date of 2020 and aimed it at the tech gi­ants and not the on­line re­tail­ers.

“It will do lit­tle to ad­dress the woes of bricks and mor­tar re­tail­ers and could even be per­ceived as an anti-amer­i­can mea­sure and that could come back to bite us as the UK looks to move to trade talks af­ter the Brexit dead­line,” she said. Yes­ter­day’s Bud­get also re­vealed that the Of­fice for Bud­get Re­spon­si­bil­ity (OBR) has raised its eco­nomic growth fore­cast for 2019 to 1.6%, an in­crease of 0.3% from the fore­cast he made in the spring state­ment.

But Stephen Kelly of Man­u­fac­tur­ing NI claimed that the fig­ure was still a real con­cern.

“This is slug­gish and at a time where there is ma­jor dis­rup­tion to the UK’S eco­nomic model,” he said.

He said the £1.6bn an­nounced for the UK’S new In­dus­trial Strat­egy is im­por­tant, but added: “It’s yet to be seen how this can reach the re­gions in­clud­ing North­ern Ire­land.”

Ul­ster Bank’s chief econ­o­mist Richard Ram­sey sur­mised that: “In many ways to­day’s bud­get could be sum­marised as spend now, tax later.”

He added: “The UK econ­omy is still ex­pected to ex­pe­ri­ence slug­gish eco­nomic growth over the next few years.

“In­deed, 2019 has been re­vised up from 1.3% back in March to 1.6% and the fore­casts up un­til 2023 fail to ac­cel­er­ate above this level.

“From a his­tor­i­cal per­spec­tive this rep­re­sents a pedes­trian rate of growth and North­ern Ire­land is likely to strug­gle to see growth above 1% over this same pe­riod.

“This eco­nomic con­text is also pred­i­cated on a deal with the EU, re­quir­ing new emer­gency tax and spend­ing mea­sures in the even­tu­al­ity of a no-deal Brexit.”

Re­flect­ing on the Chan­cel­lor’s re­frain yes­ter­day that “aus­ter­ity is com­ing to an end”, Peter Legge from busi­ness ad­vi­sory firm Grant Thorn­ton said: “With the caveat that an emer­gency bud­get could fol­low in the spring, many are ask­ing if it is only end­ing for five months.

“That will be de­pen­dent on se­cur­ing a Brexit with­drawal agree­ment but with an ad­di­tional £500m an­nounced to fund plan­ning, the Chan­cel­lor has given him­self plenty of scope.”

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