High corporation tax rate will hamper work of investment conference

Belfast Briefing: The countdown is under way to what is being billed as the most important economic event to be staged in the North in the last 30 years - the US/Northern Ireland Economic Investment Conference. The conference, which will be held in Belfast on May 8th, intends to showcase Northern Ireland by enticing potential US investors to come and see exactly what opportunities now exist.

The United States is already a major investor in the North. US firms have invested more than $6 billion since 1996 and the North's Executive has its sights firmly set on winning more desperately needed investment dollars.

The timing of the conference is more than just a little unlucky. The US economy is in the worse shape it has been in for decades. US Federal Reserve chairman Ben Bernanke has predicted things are going to get worse and there is no sign of any short term solution for the housing and credit market crisis.

Meanwhile, the Northern Executive is trying to transform the economy from one that is largely publicly-funded to privately driven.

Northern Ireland has a large public and voluntary sector - about a third of the entire workforce currently works for the Government.

The solution is to get more companies to create new jobs but at the moment the Executive seems to be fighting a losing battle.

Latest government statistics show unemployment is continuing to rise - the seasonally adjusted unemployment rate for the period October to December 2007 was 4.2 per cent.

On top of that the North's Department of Enterprise has confirmed it was notified of 267 proposed redundancies for the period mid-January to mid-February - out of these 113 jobs went last month.

In the past 12 months the Department of Enterprise received notification of 3,188 proposed redundancies and reported a total 1,985 confirmed redundancies.

It is a very worrying scenario for Economy Minister Nigel Dodds. The North urgently needs to attract new investors who are prepared to create high-calibre jobs, but where are these investors going to come from?

The Executive and its advisers believe one of the best sources for potential new investment is still - despite the current economic climate - the United States.

The May conference will be a high profile event, aimed primarily at the US, but also with the intention of positioning Northern Ireland on the global investment stage.

Taoiseach Bertie Ahern and British prime minister Gordon Brown have confirmed they intend to participate. Invitations have also been issued to former US president Bill Clinton and former British prime minister Tony Blair, while Ian Paisley personally invited President Bush during a meeting at the White House last December.

But the really important invitations are those to corporate America's decision makers.

This conference is first and foremost aimed at getting the men and women who decide where millions of investment dollars will be spent on to a plane to Belfast.

These are the people the Executive really wants to attract which is why a huge campaign is currently under way behind the scenes at home and in the US to ensure the conference attracts the right kind of audience.

But how receptive will corporate America be to a jaunt across the water as the economy at home continues to deteriorate and the threat of a recession looms?

It is not exactly the kind of atmosphere designed to make investors think of taking their cheque book to Belfast. However, there are some encouraging signs that the conference has attracted strong support in the US, particularly among the influential Irish American lobby.

The Northern Ireland Bureau in Washington DC is also capitalising on the goodwill which still exists towards the North in a bid to persuade more US political and business leaders to support the event.

Last October the US administration sent a fact-finding delegation of 17 companies to the North led by the US ambassadors to Ireland and Britain.

A second delegation is due to visit next week. What will it find? It will discover that the North has a well-educated, young, cost competitive workforce - more than 40 per cent is aged under 29 and just under 60 per cent is aged under 40. Its two universities - Queens and University of Ulster - produce a higher percentage of IT qualified students than any other UK region.

It will also see that Northern Ireland has a solid infrastructure, good transport links and enjoys a state-of-the-art communications infrastructure.

It was, after all, the first region in Europe to achieve 100 per cent broadband coverage.

But what any business delegation cannot fail to see are the tax disadvantages to setting up a business in the North as opposed to the South.

This is still the biggest stumbling block of all.

Corporation tax is currently levied at 30 per cent at the high end in the North compared with just 12.5 per cent across the Border.

A two percentage point reduction in the 30 per cent rate is due to come into force in April but it still leaves Northern Ireland at a 15.5 per cent disadvantage.

If that is not enough, new proposals from the British government to levy a tax on non-domiciled foreigners who have worked in the UK for more than seven years may also have an impact in the North.

The Executive sees new investment and job creation as vital components to underpin the new political structures. What is not clear is whether Gordon Brown has the political will or personal inclination to give Northern Ireland the break it now needs - tax or incentive based - to woo new investors.

Without a helping hand from the British prime minister, it will not matter how high profile the US/Northern Ireland Economic Investment Conference is in May.

It will be judged on whether it delivers on jobs and new investment.