Guarded welcome for UK budget from business figures in North
Absence of Executive threatens to overshadow potential gains, Chamber warns
British chancellor of the exchequer Philip Hammond leaves 11 Downing Street on Wednesday before presenting the government’s budget to parliament. Photograph: Daniel Leal-Olivas/AFP/Getty Images
More money for an absent Executive, no tourism tax cuts and a nod to both Brexit and corporation tax concerns mean Northern Ireland business and industry leaders were left with more questions than answers from the latest UK budget.
The Northern Ireland Chamber of Commerce and Industry gave the budget a “guarded welcome” but warned that the lack of a local government threatened to overshadow any potential gains from it.
Northern Ireland Chamber of Commerce chief executive Ann McGregor said while the additional £650 million from chancellor of the exchequer Philip Hammond was welcome “there is no Executive in place, so it is unclear how the money will be spent and where the priorities lie across key areas including the economy, infrastructure, health and education”.
But she said: “We are relieved that the government remains committed to giving the Executive the power to set the rate of corporation tax. Again we stress that the Northern Ireland Executive must be restored.”
Michael Hall, EY managing partner, Belfast, said while the boost to public finances was one of the “positives” – as was the chancellor’s pledge to review air passenger duty and VAT on tourism – there was little in terms of real help on offer for small to medium-sized businesses.
“Measures to encourage capital expenditure such as the annual investment allowance or to further enhance R&D tax credits for SMEs, as there was for larger companies, would help to promote productivity and innovation at such a crucial time in Northern Ireland’s economy,” he added.
The Construction Employers Federation said any increases to Northern Ireland’s budgets were “hugely welcome” because they would in turn deliver a boost to infrastructure spending, which would benefit the construction sector in the North.
But Dr Patrice Cairns, policy manager with the Royal Institution of Chartered Surveyors in Northern Ireland, said there also needed to be a prioritisation of capital funding “to spend on key infrastructure projects that support the economy and boost productivity”.
Belfast, according to PwC, may emerge as one of the big winners from this budget thanks to Mr Hammond’s proposed “city deal” which would give it greater economic powers.
“Moving towards a city deal for Belfast should provide the city with a more cohesive set of levers to boost competitiveness across the entire region where Northern Ireland is already struggling to grow productivity that is still languishing around pre-recession levels,” said David Armstrong, PwC partner in Belfast.
Hospitality businesses in the North were likely to be among the most disappointed in Mr Hammond, having hoped for a cut in tourism VAT rates but coming away with just a promise of a review of rates next year.
Hospitality Ulster chief executive Colin Neill said the current 20 per cent hospitality and tourism VAT rate in Northern Ireland left the industry “at a distinct competitive disadvantage, particularly as our nearest market, the Republic of Ireland, has a 9 per cent tourism VAT rate.”
The chancellor’s decision to freeze short-haul airport passenger duty – which is a £13 charge on all flights departing from Northern Ireland, which has been abolished in the Republic – was also greeted with dismay by local airport operators and by many in the tourist sector.
Chartered Accountants Ireland’s Northern Ireland tax committee chairman, Paddy Harty, said the budget provided little wow factor for businesses in the North, despite increases in personal allowances and additional research and development funding.
He said micro-businesses would welcome the VAT threshold remaining at £85,000 although they would be impacted by a planned increase in the UK minimum wage.