Debate contribution: Autumn Statement 2024: Impact

Debate contribution by Mr John O'Dowd on 8 April 2025.

MLA

Mr John O'Dowd

Party at the time

Sinn Féin

Date

8 April 2025

Type

Debate contribution (made as a minister)

Business

Committee Business

Heading

Autumn Statement 2024: Impact

Assembly identifier

Official Report component 4919877

Read the official Assembly record

Text

Go raibh maith agat, a Phríomh-Leas-Cheann Comhairle.

I welcome the opportunity to participate in this debate on the impact of the Chancellor's autumn Budget statement, and I commend both Committees for the work that they have carried out. I share Members' concerns. My predecessor and I raised the impact of changes to employers' National Insurance contributions directly with the Chief Secretary to the Treasury. The changes affect the public sector and businesses alike and have served only to apply more pressure to already constrained budgets and bottom lines. It is disappointing that there has been no change in approach from the Westminster Government, despite challenges from me and my counterparts in Scotland and Wales as well as from the business and voluntary and community sectors. The spring statement was an opportunity to do that, but what we have got is the continuation of austerity, neglecting to support those who need support most. Whilst Whitehall Departments will be fully funded for the additional costs that they incur as a result of the increases, due to the different structures of our public services, the Barnett consequentials that we receive will be far short of the cost that the Executive face. Central government costs alone are forecast to be around £207 million, while the Executive will receive just £146 million in Barnett consequentials towards the costs, a shortfall of some £60 million. It is unacceptable that a policy decision by the British Government should result in financial pressures for the Executive, as a devolved Government. The uplift in the national minimum wage is welcome. It improves economic, social and personal well-being for workers and reduces inequalities, whilst there are also benefits for business in talent attraction and retention. I recognise, however, that labour costs are significant for many employers, and any increases in wages can impact on operational costs and sustainability. However, from my recent engagement with employers, the strong consensus is that the changes to the National Insurance contributions will have the most profound impact. The changes were unexpected by employers, be they in business, the broader public sector or the community and voluntary sector and social enterprises, which also provide services to many of the most vulnerable in society, have had little notice to plan for the hike. Members will be aware that the Ulster University Economic Policy Centre has taken forward work commissioned by my predecessor on the cost of doing business here. I received a copy of the final report yesterday, which I am considering. The study was commissioned following concerns raised in the aftermath of the Chancellor's autumn Budget. However, the research was broader than that. It looked at the impact of labour, energy, property, transport, materials and insurance costs on sectors and by business size, as well as the VAT differential for the hospitality sector on the island. Researchers also undertook an extensive consultation exercise with 25 sectoral and business bodies, so that they could have their say. The report provides me with an independent evidence base on which to present as strong a case as possible to the Treasury ahead of the June spending review. I will shortly write to the Chief Secretary to the Treasury, using the research to press home the need for support or mitigations to ease the impacts of the National Insurance contributions. I will also share the report and engage with my Executive colleagues to discuss the implications of the work for their Departments and the areas for which they are responsible. It is important to note, however, that, as a devolved Administration, our ability to absorb any increased costs for the wider public sector or to provide additional support to businesses because of decisions made in Westminster is limited. I note that the report produced by the two Committees includes a theme of "Business rates". When considering what local support can be provided to ease cost pressures for businesses, it is important to understand that any rate relief means forgoing revenue, charging other ratepayers more or reducing public services. My Department already provides over a quarter of a billion pounds worth of support in our domestic rating system each rating year. Around 70% of non-domestic ratepayers occupy property with some form of rate support. That rises to 75% when vacant property relief is taken into account. Almost 4,500 manufacturers here pay the lowest business rates in these islands. They get 70% off their rates by virtue of industrial derating, which is a tax relief unique to this jurisdiction. Over 30,000 businesses, from a tax base of just under 75,000, get a small business rate relief, which we have just renewed for the 2025-26 year. I also introduced legislation last month, with the Assembly's support, to renew the Back in Business scheme and the rural ATM rates exemption scheme.

Almost 57% of all pubs get some form of rate support, and 65% of those in the hospitality sector are in receipt of support via the small business rate relief scheme. Over 63% of retailers get some form of support, with 80% of that support provided to small retail properties with an NAV of £15,000 or less. The strategic review cycle of rate support measures has now been commenced, and the cost of doing business research, alongside direct engagement with business stakeholders, will help to inform those considerations.

The planned increase to employers' National Insurance contributions will prove incredibly challenging for our local businesses, the community and voluntary sector and public-sector employers. Devolved Governments quite simply do not have the financial capacity to compensate for decisions made on reserved taxation matters. This was a decision taken in Westminster on a reserved taxation matter. Now that I have an independent cost of doing business report, I will press the Treasury for a solution to its decision while working closely with Executive colleagues to consider the implications of that work within our remit and limited resources.

982 words. Text as published by the Northern Ireland Assembly.

Assessment

Not flagged

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Assessed 21 October 2026 at 12:21 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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