Government Financial Support to Business in Northern Ireland - An Analysis

16 Jun 2017 Geoff Nuttall    Last updated: 16 Jun 2017

Government support for the private sector in Northern Ireland is an important part of its economic strategy. This report considers how this support impacts on people on low incomes.

On balance this is a positive report. It outlines numerous areas in which the private sector can access financial support from government and reflects on the fact that the support available is generally well received.  It makes a number of suggestions for how the support could be improved and how new enterprises can be better supported.  Perhaps most crucially the report explores how people on low incomes can be supported to establish their own business. This is an interesting and important inclusion as the option of self-employment for people on benefits or low incomes is not often a feature of debates about unemployment, poverty and worklessness.

The Northern Ireland Executive’s economic strategy promotes several core themes aimed at improving the competitiveness of the Northern Ireland economy with a focus on export led growth.  Specifically, the strategy aims to: 
Stimulate Innovation, R&D and creativity

  • Improve employability and the level, relevance and use of skills
  • Encourage business growth
  • Compete in the global economy
  • Develop a modern and sustainable economic infrastructure that supports economic growth

Significant levels of business support are provided from public funds.  In the context of a difficult public sector spending environment, slow economic growth and impending policy decisions on how best to fund a reduction in Corporation tax, NICVA’s Centre for Economic Empowerment commissioned Webb Advisory with support from Ross Boyd Limited and Ulster University to map business support provision that contains an element of financial support and to consider whether the effectiveness of this support could be improved.  This report is accompanied by a spreadsheet that covers:

  • Financial support programmes
  • Capital gains tax reliefs
  • Business owner taxes
  • Corporation taxes
  • Investor reliefs
  • Employee tax allowances
  • Alternative finance

Top line conclusions: 

  • Provision of the right business support is vital for growth
  • Government has an important role to play
  • Financial support must be aligned with policy aims and identified weaknesses
  • Integrated solutions are more valuable than money
  • Capability and access is key

Specific Recommendations

The Startup Refunds for Entrepreneurs (SURE) is a tax relief incentive in Ireland where new business owner operators can apply for an income tax refund on up to €100,000 of income in the previous 6 years to the value of the investment made in establishing their business. In addition, Startup Company Relief provides relief from corporation tax for new startup companies for the first three years of trading in respect of profits from a new trade and chargeable gains on the disposal of assets used in the trade.   As with all taxes, there are eligibility criteria and exemptions but if Northern Ireland’s policy aim is to create a more entrepreneurial, private sector led economy, we recommend exploring how the potential impact of introducing a similar policy in Northern Ireland.  Might this be as effective, or more effective, than reducing the headline rate of corporation tax to 12.5%?  

Secondly, the West Belfast works programme that is currently being funded through the social investment fund aims to deliver 300 salaried work placements in West Belfast and Shankill.  Self-employment has been included in the programme meaning that 20people are able to progress to self-employment while receiving a guaranteed wage through the West Belfast Works programme.  Early indications are that the self-employment element of the programme is proving to be a success, enabling people who wouldn’t have been able to make the transition into self-employment to do so.  It is important to track the results of a full post project evaluation but it may be worth considering how to expand this programme to a wider audience.

 

 

by Geoff Nuttall

Head of Policy and Public Affairs

[email protected]