Details of the government's plans for the business sector and how the Budget will affect day-to-day business.
I’d like to speak about normal bread and butter issues just as would happen anywhere else in the UK.
“I’d like to set out the government’s plans for the business sector, how the Budget will affect day to day business and set out my vision for the economy in Northern Ireland.
Many of the responsibilities in these fields of course are devolved in Northern Ireland, and I absolutely respect that. My watchword in this area is teamwork: the Executive and the government must work closely together.
We also recognize there has to be a partnership with the business sector as we take forward the action required to boost enterprise and build a better and more responsible economic model for the UK as a whole.
Carrying out a wholesale review of all small business taxation, we want to replace it with simpler measures that prevent tax avoidance without undue administrative burdens and do all this in a way that does not restrict labour market flexibility.
And of course we’re cutting the main rate of corporation tax from 28p to 24p over the next 4 years - the best advertisement for rewarding home-grown enterprise and attracting new firms to the UK.
And I know most, if not all, will welcome the decision to reduce the rate for small companies from 21p to 20p.
There will also be an increase in the Enterprise Finance Guarantee scheme and the creation of a new Growth Capital Fund. Since January 2009, 133 eligible cases have resulted in £19.7m of loan offers made in Northern Ireland.
I hope you will all welcome the plans for the next 3 years to waive National Insurance Contributions on the first 10 jobs created by a new business in year one benefiting over 15,000 businesses in NI.
And our decision to reverse the most damaging part of the planned increase in employer National Insurance Contributions, Labour’s ‘jobs tax’, by raising the threshold by £21 a week above indexation in April 2011 will lead to a saving of around £80 million in NI.
I’d like to look at the situation in Northern Ireland now. We all know that the economy in Northern Ireland is dominated by too large a public sector. Almost 30% of Northern Ireland jobs are public sector jobs compared to a UK average of around 20%. Around 77 per cent of GDP, according to one survey is dependent on public expenditure. That is unsustainable and simply has to change. As we argued strongly at the election, Northern Ireland’s economy has to be rebalanced. In the CBI report published today the point is made that public sector earnings are 27% higher than in the private sector.
It will take time - probably around 25 years to achieve. But to do nothing would be irresponsible just as to act too quickly or precipitately would also be reckless.
The need to rebalance the economy has the full support of Northern Ireland Ministers, my colleagues in Treasury and of the Prime Minister himself. That’s why I met recently with Sammy Wilson, Arlene Foster and David Gauke, the Exchequer Secretary to the Treasury, to discuss and start to agree a way between us to turn Northern Ireland into an economic enterprise zone over the coming years.
And part of that process is the formal commitment in the programme for government and the Budget to publish a consultation paper, in autumn 2010, on rebalancing the Northern Ireland economy.
This will include examining proposals for economic enterprise zones, possible mechanisms for changing the corporation tax rate and other economic reform options in order to attract significant new investment. Work on that is now underway and we hope to have a paper later on in the year that we will consult on.
We know that Northern Ireland has special challenges to tackle. These include the legacy of the Troubles and the fact that we are the only part of the UK to share a land border with the Republic of Ireland where corporation tax is much lower.
NI has its own particular problems. While unemployment is currently lower here by a percentage point than the UK average, this is because of the cushion of the public sector which is proportionately too high in Northern Ireland and which all of us in Whitehall and in the Executive know has to change over the coming years.
And despite an unemployment rate that is the third lowest in the UK the economic inactivity rate of 28.6% is the highest in the UK.
If growth is to be balanced and sustainable, it needs to be based on an expansion in the private sector, not the public sector. UK businesses need an environment which helps them compete in a global market place yet Northern Ireland has the highest percentage of small and micro businesses in the UK accounting for 98 per cent of the private sector.
And the private sector continues to shrink. Over the last quarter NI lost over a thousand jobs in the Service Sector (1090) and almost 700 in Construction (690).
Make no mistake, we face very difficult decisions. The road ahead will be very, very bumpy. But it is a road we must follow if we are to turn the country around. We cannot saddle our children and grandchildren with huge debt from which it would take literally decades to recover.
So we must be tough and decisive, while at the same time being compassionate and fair.”