Rates rankle with businesses after NI budget

Business rates are now higher in the North than anywhere else in the UK, hospitality chief says

Northern Ireland secretary of state Karen Bradley plans to fund some increases in key public service budgets by increasing rates, in a move not welcomed by businesses organisations. Photograph: Jack Taylor/Getty Images

Northern Ireland secretary of state Karen Bradley plans to fund some increases in key public service budgets by increasing rates, in a move not welcomed by businesses organisations. Photograph: Jack Taylor/Getty Images

 

Businesses are in revolt over the next draft budget for Northern Ireland ,which promises to deliver an additional £140 million (€163m) of new funding but which, they claim, fails to “address the growing problem of business rates”.

The Northern Ireland Secretary of State published her second direct rule draft budget “in the absence of devolved government”. It will provide a working budget of £11.2 billion for 2019-20.

Karen Bradley said her budget, which was drawn up chiefly by local civil servants, “ensures a real-term increase for vital public services”, including a 3.8 per cent increase for health budgets and a 1.1 per cent increase to the education budget.

But she plans to fund some of these key public service budget increases by increasing rates, in a move not welcomed by businesses organisations.

The government plans to raise £28.6 million through an increase of 3 per cent above the rate of inflation in the domestic regional rate. Non-domestic rates will increase by inflation only.

Colin Neill, chief executive of Hospitality Ulster, said the budget is “an own goal”.

“While additional money for the health service, broadband and infrastructure projects are to be welcomed, we feel this budget did not address the growing problem of business rates in Northern Ireland being higher than anywhere else in the UK.

“This ignores the fact that many business in Great Britain with a net annual value of £51,000 now get 30 per cent business rate relief. A pub in Sheffield with a rateable value of £37,750 will save £6,178 in business rates next year, while the same pub here gets nothing.

“This budget may plug a gap, bit has missed the boat in terms of addressing our out of control business rates and funding to assist the development of our town and cities across Northern Ireland,” Mr Neill warned.

Aodhán Connolly, director of the Northern Ireland Retail Consortium, which represents major retailers and multiple groups also believes the business rates system in the North is no longer “fit for purpose”.

“Retail can no longer pay a quarter of rates when it is less than 12 per cent of the economy. The rates burden must be equitable and we must widen the tax base.”

Public services

Separately, the Construction Employers Federation has warned that an unusual move in the draft budget which will see £130 million of existing funding – usually ring-fenced solely for capital spending – being diverted into dealing with ongoing financial pressures in public services, will not help the Northern Ireland economy in the long term.

CEF assistant director David Fry said: “While we are in no way doubting the funding pressures on our public services, the reason we are in this position of having to transfer money from capital to resource is the year-on-year policy of our collective political class to duck the big decisions.

“It is pretty clear that the construction industry will have to now shoulder in 2019/20 a large element of the result of years of politicians putting their heads in the sand with respect to systemic and fundamental challenges which should never have been ducked.”