Debate contribution: Cost of Doing Business

Debate contribution by Ms Aisling Reilly on 2 June 2025.

MLA: Ms Aisling Reilly
Party at the time: Sinn Féin
Date: 2 June 2025
Type: Debate contribution (made as a minister)
Business: Opposition Business
Heading: Cost of Doing Business
Assembly identifier: Official Report component 4981680

Text

Go raibh maith agat, a Phríomh-Leas-Cheann Comhairle.
I welcome the opportunity to respond on behalf of my colleague Minister O'Dowd. I begin by saying that it is important for our local businesses to thrive and create good jobs. That is central to our Programme for Government priority to grow a globally competitive and sustainable economy that works for everyone. It was therefore disappointing when the Chancellor announced changes to employers' National Insurance contributions last autumn. In response, just a few weeks later, the then Minister of Finance, Dr Caoimhe Archibald, proactively commissioned the Ulster University Economic Policy Centre to carry out a sectoral study of the cost of doing business here. I am sure that, by now, all Members have had the opportunity to read that independent research, which was published by the Department of Finance on 6 May. It included an extensive consultation exercise with over 25 sectoral groups and drew on comparisons with Britain from a wide range of available data. It considered a number of factors, including the impact of labour, energy, property and transport costs. A key concern for the North, however, relates to the changes to National Insurance contributions. The report identifies those changes as likely having a more significant impact here than in Britain owing to our lower earnings. It was therefore right for the Minister of Finance to send the report to the Chief Secretary to the Treasury as an independent evidence base ahead of the forthcoming spending review. The research showed that the sectors that will be hit hardest by the National Insurance contribution changes will include hospitality, agriculture, retail, the arts and entertainment, as well as the community and voluntary sector. Those are important and vital sectors in our economy. In addition, the research highlighted the disparity in VAT across the all-island economy and the negative implications for businesses, especially hospitality businesses, that operate near the border. I share the concerns of many in the Chamber about the impact of changes to employers' National Insurance contributions. Alongside other increasing cost pressures, they will put further pressure on employers here. I acknowledge the proactive and consistent efforts that my colleague Minister O'Dowd has made in making the case to the Chief Secretary to the Treasury. He has impressed on him in writing and when they met last month the need for support or mitigations to be put in place to ease the impacts of the National Insurance contribution changes. The changes place additional strain on already stretched budgets across the public, private and third sectors. It is unacceptable that that additional pressure has been put on employers. With little advance notice to allow for sufficient budget planning, businesses, public bodies and community and voluntary organisations have had little time to prepare, and the consequences are being felt across the board. It was a decision taken in Westminster as a taxation measure, and the Executive do not have the ability to mitigate it. The spending review is an opportunity to remedy the situation for the employers who are most affected across the sectors instead of continuing the pattern of austerity, where those most in need are left without the support that they deserve. Minister O'Dowd, through his engagement with them, has asked that business representative bodies use the report to lobby Westminster to take account of the implications of its decisions and the impact that they have had on individual sectors. I ask Members here to do the same: take every opportunity available to you to highlight our case to Westminster. The Finance Minister has also shared a copy of the research with his Executive colleagues so that they can consider the implications of the work for their Departments and the areas that they are responsible for. While the Executive do not have the financial capability to mitigate decisions taken in Westminster, they are committed to supporting businesses and our economy. That is evident from the 2025-26 Budget, which provides investment in skills, childcare, agriculture and capital funding to stimulate economic growth. The constraints that many employers face are understood, and the independent research is an important evidence base that sets that out. However, the Executive also face budget constraints while the demand for public services is growing. It is becoming increasingly difficult, if not impossible, for the Executive to mitigate the decisions that are being made in Westminster. However, Minister O'Dowd has vowed to continue to make the case for better funding and to work with Executive colleagues to support our employers, workers and communities. In terms of what local support the Executive or individual Departments can provide to ease cost pressures for businesses, it is important to understand that any new funding measures will require decisions to cut funding elsewhere or to increase revenue. It is easy for members of the Opposition to call for more support. Suggestions of where cuts could be made to pay for that increased support are less forthcoming from those Benches. Ministers do not have the luxury of ducking those hard questions and stark choices. The Department of Finance, through Land and Property Services (LPS), already offers a wide range of rate support schemes to support business ratepayers, providing £250 million of rate support. The Department recently extended the small business rate relief scheme, which supports almost 30,000 businesses, and restored the Back in Business and rural ATM schemes to support businesses. In addition, policy reviews of the small business rate relief and non-domestic vacant rating as part of the Department of Finance's strategic rates review are under way. The business community wanted those areas to be prioritised. The terms of reference for those reviews have now been published, and the process will utilise the cost of doing business research in its suite of evidence. The motion calls on the Minister of Finance to establish a cost of doing business advisory forum. I understand that the purpose of Retail NI's five-point plan is to ensure that small businesses are fully consulted before any new legislation, rating policies or levies are introduced. The Minister of Finance and his officials already engage extensively with the business community on matters of mutual interest, most recently hosting a business round table just last month. Indeed, the rates review has already been determined by what the business community wanted to be prioritised. Without giving it a name, that is, essentially, already happening as part of Minister O'Dowd's day-to-day business for the areas within his remit. Amendment No 1 calls for retail, hospitality and leisure rate relief to be introduced. That measure is being phased out in England. It was reduced last year from 75% to 40%, with proposals to adjust the business rates system under the British Government's 'Transforming Business Rates' paper. That paper and the important context of the local tax base are the key aspects of the strategic review of small business rate relief that is now under way. The cost will also be a key factor. Any new rate relief means either forgoing revenue or charging other ratepayers more, as every pound that is raised through the rating system stays here as a resource to pay for hospitals, schools and other essential public services. There are calls in the motion to recall the high street task force and for the Minister for the Economy to work with the Minister of Finance to publish proposals on how the recommendations contained in the high street task force report will be implemented. However, the high street task force recommendations cut across the remit of many Departments, such as the Department for Communities' work on urban regeneration and improving places. The Department of Justice will also play a role through its work on safer communities. One or two Departments alone cannot tackle the issues. The Department of Finance was responsible for the rating elements in the report and has already undertaken actions in response to the recommendations, including extending the small business rate relief scheme for 2024-25 and the reinstatement of the Back in Business scheme to incentivise the use of long-term vacant retail space by helping new ventures across our council areas in their vital first years in business. In addition, the "Fair Work on Our High Streets" recommendation aligns with the Minister for the Economy's priority on good jobs. Minister Archibald is proactively taking forward measures to support that.
Minister O'Dowd has taken a number of actions to address the issues that are highlighted in the report on the cost of doing business. He has called on Treasury to take action on the taxation matters that are identified in the report, and he is actively engaging with business bodies on the outcomes in the report. That work will complement the policy review work that is already under way as part of his Department's strategic rates review. Devolved government should not be left to pick up the pieces following decisions taken on taxation matters. What we need is action from Westminster.
I want to get through this, if that is OK. I will bring you in at the end. The spending review is an opportunity to do the right thing and support workers, families and businesses. We will know the outworkings of that next week. I will bring the Member in now, if he wants to come in.
I thank the Member for that intervention. Ministers have difficult decisions to take, and they do not duck them. With the Benches opposite, sometimes we are damned if we do and damned if we don't. We are absolutely committed, through the Programme for Government, to supporting businesses. The Minister of Finance is committed to doing that, as was the previous Minister of Finance.

1,610 words. Text as published by the Northern Ireland Assembly.

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