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10/04/2003
Budget medicine may not cure local ills, say PwC
Yesterday's Budget should get a cautious welcome in Northern Ireland - largely because it could have been much worse.
That’s according to business advisors, PricewaterhouseCoopers (PwC) who said the statistic-laden, 58-minute speech, wooed small firms, promised new measures to encourage employment and announced initiatives to combat child poverty.
Pensioners, lone parents, bingo fans and motorists all got something, but tax partner Geoffrey Ruddock says the overall package does relatively little for Northern Ireland: “The Chancellor was big on rhetoric but low on specifics. There are tangible benefits for pensioners and lone parents, incentives for the long-term unemployed.
“But for Northern Ireland, the overall package does not counter the impact of the 1 per cent increase in National Insurance Contributions and the potential future effect of the abolition of industrial derating.
“Road hauliers will be happy with the freeze on fuel and the new Child Trust Fund is a sensible initiative, although the future value of a typical fund remains to be determined.
“Nearly 40 per cent of Northern Ireland CEOs say abolishing red tape is the single most important action government can take to help their business. If Gordon Brown delivers on his promise, local firms should be pleased.
“However, charging stamp duty on leased commercial property will be less welcome. A company with a 20 years lease on property costing £10,000 per year will face an eightfold increase in stamp duty.”
PwC chief economist, Philip McDonagh added that despite the depressed growth forecasts the UK economy remains strong. He also said that tackling red tape and changing the regulations governing research and development would benefit Northern Ireland companies: “The Chancellor has lowered the minimum expenditure to qualify for R&D tax credit from £25,000 to £10,000 and that is good news. He also abolished the rule that prevented small firms from claiming the tax credit if they had received state aid.
“Invest NI will be happy with that decision. With 40 per cent of Northern Ireland's largest family-owned companies undertaking no product development in the past five years, Northern Ireland needs a dramatic increase in investment in R&D. So, while this is a valuable measure, it was unfortunate we did not see specific incentives for local firms.
“The promised relocation of civil service jobs from London to the regions will hardly benefit Northern Ireland. However, if his new regional inflation index is the first step towards a future regional policy on civil service pay, that will not be welcome amongst Northern Ireland’s 200,000 public sector workers.”
Mr McDonagh said that if business welcomes this Budget it was because it could have been much worse.
"It corrects some inequalities- such as R&D- and introduces several useful measures. But overall it fails to excite. Northern Ireland needed a major injection of confidence and a range of fiscal measure to stimulate investment. The Chancellor’s medicine may perk up other parts of the UK, but it won’t cure the local ills," he concluded.
(MB)
That’s according to business advisors, PricewaterhouseCoopers (PwC) who said the statistic-laden, 58-minute speech, wooed small firms, promised new measures to encourage employment and announced initiatives to combat child poverty.
Pensioners, lone parents, bingo fans and motorists all got something, but tax partner Geoffrey Ruddock says the overall package does relatively little for Northern Ireland: “The Chancellor was big on rhetoric but low on specifics. There are tangible benefits for pensioners and lone parents, incentives for the long-term unemployed.
“But for Northern Ireland, the overall package does not counter the impact of the 1 per cent increase in National Insurance Contributions and the potential future effect of the abolition of industrial derating.
“Road hauliers will be happy with the freeze on fuel and the new Child Trust Fund is a sensible initiative, although the future value of a typical fund remains to be determined.
“Nearly 40 per cent of Northern Ireland CEOs say abolishing red tape is the single most important action government can take to help their business. If Gordon Brown delivers on his promise, local firms should be pleased.
“However, charging stamp duty on leased commercial property will be less welcome. A company with a 20 years lease on property costing £10,000 per year will face an eightfold increase in stamp duty.”
PwC chief economist, Philip McDonagh added that despite the depressed growth forecasts the UK economy remains strong. He also said that tackling red tape and changing the regulations governing research and development would benefit Northern Ireland companies: “The Chancellor has lowered the minimum expenditure to qualify for R&D tax credit from £25,000 to £10,000 and that is good news. He also abolished the rule that prevented small firms from claiming the tax credit if they had received state aid.
“Invest NI will be happy with that decision. With 40 per cent of Northern Ireland's largest family-owned companies undertaking no product development in the past five years, Northern Ireland needs a dramatic increase in investment in R&D. So, while this is a valuable measure, it was unfortunate we did not see specific incentives for local firms.
“The promised relocation of civil service jobs from London to the regions will hardly benefit Northern Ireland. However, if his new regional inflation index is the first step towards a future regional policy on civil service pay, that will not be welcome amongst Northern Ireland’s 200,000 public sector workers.”
Mr McDonagh said that if business welcomes this Budget it was because it could have been much worse.
"It corrects some inequalities- such as R&D- and introduces several useful measures. But overall it fails to excite. Northern Ireland needed a major injection of confidence and a range of fiscal measure to stimulate investment. The Chancellor’s medicine may perk up other parts of the UK, but it won’t cure the local ills," he concluded.
(MB)
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Northern Ireland WeatherThis Evening and Tonight:A dry night, save for a few light showers around the coasts, with prolonged clear spells and light winds bringing a frosty dawn for many in central and southern parts. Minimum temperature -3 °C.
