Tue 23rd Feb 2021
Budget must be based on strategic, long-term objectives
Last month, Finance Minister Conor Murphy announced the Draft 2021-2022 budget, which is out for consultation until later this week (Thursday).
One of our immediate concerns with the draft NI Budget is that it is a one-year budget and not a multi-annual one. This imposes significant constraints on how the Executive supports and invests in strategic priorities. If the issue isn’t addressed, then over time it will lead to a potential mismatch between what is promised through government policies and what is affordable, because short-termism around finance will inevitably kick in.
NI Chamber strongly believes that when it comes to the Budget, the priority should be an allocation of resources on the basis of clear policy choices to achieve strategic long-term objectives, rather than simply managing from year to year. A multi-annual Budget has therefore never been more important and would facilitate that strategic planning.
Local businesses will play a critical role in our economic recovery, so it is critical that the Department for the Economy has adequate resources to support them. A vibrant and externally focussed private sector is vital in order to grow the economy, generating income from abroad and supporting sustainable employment and earnings. In line with that, Invest NI must also get the resources it needs to broaden our export base and expand its own international bases.
The loss of EU funding is also a significant blow and immediate clarification about how it will be replaced is required. We are now fully outside the EU and at this point, not knowing how lost EU funding will be replaced in full and how much will be in the control of the Executive, is extremely concerning for businesses. It is also crucial that there is a dedicated support package in place to support the region and particularly the business sector, to trade and navigate its way through this EU exit as seamlessly as possible.
NI Chamber would also like to see a much more explicit focus in the Budget around how spending relates to green growth and recovery. There is a huge opportunity for Northern Ireland to be recognised as a leader in this policy space, if it is funded appropriately. The draft Budget does give some indication as to how public finances will be used to support ‘green’ objectives. However going forward, the extent to which the overall Budget is targeted towards ‘green’ initiatives should be given greater emphasis.
A lot of businesses are surviving at the moment because of the Job Retention Scheme and if that is not retained there is certainly the need for a recovery budget. This is backed up NI Chamber’s most recent survey, published last week, which revealed that the job retention scheme has been a vital support, providing flexibility to how businesses manage the fall-out. Four out of five members rated it positively and around half of respondents are still using the scheme to varying degrees. This survey clearly demonstrated that there is a need for the furlough scheme to continue – 40% of businesses said they would make staff redundant if it ended in April.
Therefore, until the economy can open fully, an appropriate level of business support must remain in place. A decision from the UK Government about the extension of the furlough scheme is required urgently – to end it prematurely could have enormously damaging consequences in terms of redundancies, reduced staff hours and cutting back on operations.
At the same time, our other ask is for a cross departmental recovery plan that identifies and supports key strategic areas. For example, health transformation is impacted by the university funding budget held by the Department for the Economy. Health is also impacted by the social care budget held by the Department for Communities, as is the green economy and education.
Significantly greater resources are required to support the reboot of the Northern Ireland economy to deal with the fall out of the pandemic and the consequences of EU exit, let alone to drive forward the ambitions set out in New Decade, New Approach and the new Programme for Government outcomes.
To that end, Westminster must support a stronger funding package for Northern Ireland, which meets all the objectives for the region and economy, which are in all of our interests to achieve.