Budget predictions

Ahead of the spring Budget and the general election, which is expected in May, four major business organisations in Northern Ireland were asked these two pertinent questions.

If you were Alistair Darling, what single initiative would you implement in the Budget as a major economic stimulus for Northern Ireland?

FSB

What is needed urgently is an incentive that will make it possible for small businesses to recruit new staff, innovate and grow. This could all be achieved by cutting employers’ national insurance and in turn would provide the entire economy with a much needed boost. Mr Darling’s decision in November to go ahead with a further 0.5 per cent increase in employers’ national insurance contributions has had a far reaching and detrimental effect on the economy with more than three in 10 (31 per cent) of respondents to the recent FSB/ICM survey saying a cut in employers’ national insurance would improve their economic prospects in the recession.

NICVA

We don’t expect to see much from a spring Budget before an election. It’s what happens after the election that will most affect us. As for now, why can’t Alastair Darling just move ahead on a big idea like the Green New Deal, where most of the levers we need are already within Northern Ireland? The proposed Green New Deal package, supported by the voluntary and community sector, employers, trade unions, economists and many others, offers us the opportunity to act to create local employment, decrease our dependence on imported energy, reduce bills and tackle fuel poverty. We don’t need the Chancellor for this one, although some good news in the Budget on renewables, energy feed-in tariffs and the parallel carbon budget would help. We also know that childcare provision is a major stumbling block to economic participation for many families – a Barnett consequential on this one would be a big help, as long as the Stormont Executive followed through with a proper strategy and services here.

CBI

At the front of our wish list in the spring Budget is for the Chancellor to create the conditions to deliver more robust and sustainable growth. Hence tax policy must be adjusted to help achieve this goal. Firstly, there is a need to reconsider the increase in employers’ national insurance, which is due to rise by 1 per cent in April 2011, adding £120 million to business costs in Northern Ireland. This will damage growth and employment prospects. Secondly, he must reconsider the decision to reduce the climate change levy relief from 80 per cent to 65 per cent for companies participating in climate change agreements. And the Chancellor must also review his decisions to increase taxes on fuel duty, air passenger duty and increase landfill tax on inert wastes, all of which have a disproportionate impact on Northern Ireland businesses.

NIIRTA

The key challenge for the incoming UK government is to urgently address the huge budget deficit facing the economy and the threat to our international credit rating. The Chancellor needs a clear and credible plan for bringing the structural deficit down, and I would also urge him to give serious consideration to the Economic Reform Group report on the need to reduce Northern Ireland’s rate of corporation tax. If our economy is to stand any chance of being fit for purpose we need some new radical thinking. Other measures such as a national insurance holiday for small businesses for one year also deserve examination by the Treasury.

What would your preferred make-up be for the new Westminster Government after the May general election and why?

FSB

As a national organisation we work with all political parties, both locally and nationally. The important thing is that a strong government is elected with a declared commitment to work with small businesses, which represent 98 per cent of businesses in the UK. Importantly, the new government must take on board how small businesses will play a role in rebuilding the economy after the worst recession for decades and address concerns such as access to finance, which have been so damaging to date. The FSB will be campaigning hard in the coming weeks to ensure its message is heard, and loud – and no politician will be in any doubt of where the small business stands.

NICVA

What Northern Ireland and the UK needs in terms of their economic futures is stability and some degree of predictability. A hung parliament would be unlikely to contribute to that. We expect stiff cuts to public expenditure of more than three per cent a year in real terms, regardless of who wins the election, and these cuts will ultimately work their way through the Northern Ireland economy, first hitting the public, private and voluntary and community sectors and then the public at large.

NIIRTA

The key question for the next parliament is not who is in power, but what their policy agenda is. We should not forget that Westminster still bankrolls Northern Ireland and has all the major fiscal levers which could have a real impact on the fortunes of our economy. We are launching our own policy manifesto Programme for Prosperity which sets out our priorities for every one of our government departments. That said, it would be interesting if the Northern Ireland political parties held the balance of power in a hung parliament. Could they use this situation effectively to argue for measures such as reduced corporation tax?

Contributors

• Seamus McAleavey
• Wilfred Mitchell
• Nigel Smyth
• Glyn Roberts