With local politicians and the Executive back in action, the business community are feeling much more confident about moving forward on policy issues such as reform of planning, childcare and progressing net zero carbon commitments.
But as Economy Minister Conor Murphy pointed out in his Economic Vision statement to the Assembly last week, many key growth levers such as trade and fiscal policy are reserved to London.
Local firms therefore recognise the importance of having a strong business voice feeding into the Chancellor’s ear ahead of each budget and autumn statement.
The Spring Budget on March 6 could be the last opportunity before the General Election to tackle poor company growth and ease the cost of doing business. The UK and local economy need a major ‘pick-me-up’ following the latest GDP figures that showed it had slipped into recession.
The CBI’s Budget submission called for the Chancellor to futureproof the labour market and establish a sound business environment.
Despite a little loosening in the labour market, firms are still worried about skills shortages, which act as a drag on economic growth. In Northern Ireland, employers have expressed concern about the impact of new migration rules combined with a steeply declining working-age population forecast.
Over the next 25 years, the Northern Ireland pensionable age cohort is set to increase by over 40%. If we don’t start looking for ways to future proof the local labour market now, we are only storing up big problems for the future.
The CBI has also asked the Chancellor to:
- Increase the support employers provide by expanding health tax incentives, starting with making employee assistance programmes tax-free.
- Deliver the planned expansion of eligibility to 30 hours of funded childcare to help working parents.
- Ameliorate business concerns about labour shortages by supporting productivity improvements and technology adoption.
At a local level there is now an emphasis on supporting the economically inactive back to work and tackling affordability around childcare provision. Fiscal support available to tackle these problems in England must also be available to the devolved nations.
Local companies are keen to see better support for upskilling and reskilling and more innovative policy solutions will also need to be explored.
CBI members support the creation of an all-island work visa to help with future proofing our medium and long-term labour supply. With the Migration Advisory Committee historically agreeing that Northern Ireland could deviate from GB migration rules if it has a unique relationship with the EU, it’s time to start exploiting those opportunities.
The Spring Budget should also be an opportunity to remove barriers to growth and establish a sound business environment. As the UK economy faces strong headwinds, it is vital to finish the job on supporting investment.
The Autumn Statement announcement around making full expensing permanent went down well with Northern Ireland businesses. Full expensing allows companies to write off the cost of investment in one go, rather than having to do so over the term. This helps with cash flow, in particular for mid to large-sized businesses, and fuels investment. The Chancellor should go further and extend this policy to cover leased and rented assets on March 6th.
Businesses tell me daily that the cost of doing business is getting out of control. At a national level, the CBI has asked the Chancellor to cap the business rates multiplier for another year while inflation remains significantly above target. Business rates relief should be extended in Northern Ireland by Jeremy Hunt to ensure the region has a stable and sustainable fiscal floor.
Another CBI ask from the Chancellor is around reviewing the Approved Mileage Allowance Payment (AMAP) set by HMRC. With the significant rise in fuel and vehicle maintenance costs since the last update 13 years ago, the current rates are not fit for purpose.
Some employees. are left out of pocket and are not making commercially essential business trips. There are firms that refrain from paying higher rates due to the additional tax and extra administrative reporting requirements. The HMRC should commit to annual reviews of the allowance.
A further business tax ask is around the introduction of a globally competitive R&D tax credits scheme. One area where the current system falls behind is the inability to claim for capital spending related to R&D.
The current R&D first-year capital allowance available has no immediate value to loss-making businesses – which includes most innovative businesses at the start of their lifecycle. The CBI is calling for the UK to move in line with competitors in Ireland and France where capital is already in scope of their R&D tax credits.
We also encourage the Government to commit to publishing a long-term strategy for infrastructure delivery. The Strategic Investment Board will undoubtedly be delivering their 2050 investment strategy to the Executive for approval and the business community is keen to see that our recommendations around prioritising that list and ensuring that water infrastructure is at the top of it have been taken on board.
Balancing support for industry at a national and devolved level is essential. In Northern Ireland we cannot create the economy we desire in isolation. Achieving the right support from London – and Dublin, which announced the Shared Island Fund last week – could be transformative for the economy.
- Angela McGowan is director of CBI Northern Ireland