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By George - north could be £100 million better off

Published 06/12/2012

Gary McDonald Business Editor




NORTHERN Ireland could be the best part of £100 million better off as result of the British government's Autumn Statement.

Chancellor George Osborne committed to annual infrastructure investment of £33 billion for the duration of the current comprehensive review period to 2014/15, - which means the executive gets a boost to its capital spending of £131m.

But because Westminster government departments face a one per cent spending cut, the Barnett Formula - which calculates the amount of money going to the regions - will cut Stormont revenue spending proportionally, by around £34m.

The budget has raised hopes that key capital projects, including the bridge across the border at Narrow Water, Co Down, will start soon.

Business advisers PwC believes the north ought to be "reasonably con-tent" with the outcome of yesterday's statement.

Chief economist Dr Esmond Birnie said: "With planned executive capital expenditure running at £1.2 billion, this additional funding represents a small but useful four per cent increase in spending power.

"The chancellor is anxious to get capital projects moving to stimulate infra-structure investment, economic competitiveness and the construction sector, so the executive has now got increased leverage to do the same.

"The challenge now is to find big projects in Northern Ireland that are shovel ready and can stem the continued haemorrhage in the local construction industry."

In a move to boost overseas and domestic investment, the chancellor also reduced the headline rate of corporation tax again.

It will now fall to 21 per cent by 2014 but there was no move on devolving the tax-setting powers to Northern Ireland, where there is a campaign to slash the rate to as low as 10 per cent.

Mr Osborne also announced additional infrastructure investment, including expanding ultra fast broad-band in 12 cities, including Derry.

The executive can also defer £50m of borrowing through the Reinvestment and Reform Initiative from 2012-13 to 2014-15, which will help fund investment in the A5 road.

Around 615,000 people in Northern Ireland will have less income tax to pay and scrapping a planned 3p increase in fuel duty will save local motorists an average of £40 next year.

However, a range of benefits like Jobseekers Allowance and Child Benefit will only go up by one per cent, less than half the rate of inflation, and that increase is pegged for the next three years.

And with the proposed changes to UK welfare spending intended to save £3.7bn by 2015/16, there will undoubtedly be further pain for those on benefits and the long-term sick.

PwC tax partner Martin Fleetwood says: "Given the prolonged recession and the continued state of the eurozone economies, this was about as good as it was likely to get.

"We didn't really expect an announcement on corporation tax for Northern Ireland so the overall reduction in the headline rate, plus the additional net £100 million for the executive's capital spending is relatively good news.

"And while the likely incentives for shale gas exploitation will prove contentious, overall we should be reasonably content with the chancellor's statement."