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Let's make this new cash work and deliver something shiny

Cutting VAT on tourism from its current 20 per cent rate could create jobs and increase export earnings in Northern Ireland
Gary McDonald Business Editor

HANDS up who'd accept four per cent more in their pockets right now? Most I'd suggest (unless, of course, you work for Tesco, where the basic hourly rate will jump by a whopping 10.5 per cent from next year).

Well, the Tory-DUP 'confidence and supply deal' looks like it will deposit an extra £445 million in each of the next two years into the Stormont coffers, which equates to a roughly 3.7 per cent increase.

And while it isn't exactly the shower of economic manna from heaven that some of the wider speculation had anticipated, it's not a bad starting point for any incoming regional finance minister, whoever and from whatever party he or she is from (bet your bottom dollar, though, that the DUP will wrest this post back from Sinn Fein).

The 3.7 per cent cash increase is considerably larger than that experienced in the austerity years since 2010, but it does not bring us back to the rapid public spending growth which occurred during the Blair years or in the 1970s, according to veteran number-crunchers like politician-turned-economist Esmond Birnie.

But he suggests the paradox is that it is probably a good thing that we are not getting a sudden and overwhelming increase - because the system might not have been able to cope with it without waste.

As always when "new money" lands into the pot, it's imperative that those controlling the purse strings utilise their talents and abilities to optimal use in driving forward the economy, assisting in creating new investment and jobs and making this a more prosperous place for every member of society.

The additional cash, we're told, has been earmarked for infrastructure, broadband, deprivation, immediate health and schooling pressures and health transformation.

So let's get on with York Street and the A5 and new rapid transport systems and hubs (can it be mere coincidence that within an hour of Arlene Foster's statement outside No 10, Translink confirmed it has submitted a planning application for the first phase of the Belfast Transport Hub, a project which could support 400 jobs during construction?).

Let's get on with rolling out ultrafast broadband infrastructure and dramatically improve the north's digital infrastructure, which is vital in attracting inward investment.

Let's seriously consider removing the prohibitive air passenger duty on all flights to and from Northern Ireland, which has the ability to transform our business and tourism offer.

And what about tourism VAT, which if cut from its current 20 per cent rate (it's just 9 per cent in the Republic) could potentially create thousands of jobs and increase export earnings, and there the benefits would be felt most keenly in coastal and rural areas in need of regeneration?

Let's also do that big 'City Deal' for Belfast and trust the council to get on with the additional power and responsibility. Let's also take a punt on Enterprise Zones in areas in the west and north west.

And then there's the corporation tax issue, where there is a specific commitment to examining options for its implementation in the Autumn Budget. Could we perhaps tear up that 12.5 per cent paper which is currently gathering dust and consider making it 10 per cent instead?

The £445m won't cover all of the above, but the cash must be made to work - so it's imperative that creativity comes into play and we have to some something new and shiny at the end of it all.

It's all dependent, of course, on getting the Executive back up and running, so we really can't afford any more delays.

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