‘We need responsible budgeting’: NI businesses warn against more tax hikes

A budget is “a quantitative financial plan that tracks expected income and planned expenses over a specific period of time”.

Schools, businesses and households all have them – it’s how we manage our affairs.

As Chancellor, John Healey, prepares for his first budget at Westminster, rumours and speculation are already swirling that he may target businesses instead of individuals – again. French statesman, Jean-Baptiste Colbert, famously remarked that “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

Business may not have ‘hissed’ but it has pushed back hard in the face of recent tax and national insurance hikes. When new costs are imposed, something has to give and, recently, we saw a slowdown in hiring as one of those responses. But the art of a budget isn’t just to raise money – it’s also to manage spending to live within the means available.

In the Stormont Assembly we have the bizarre situation of being in the seventh month of the financial year with no balanced budget yet agreed. Our local parties have found some relatively rare common ground – in demanding more funding from Westminster - and it appears to be working, as the Secretary of State has brought an average of an extra £500 million per year for the next three years. But beyond income, the other side of the balance is causing real concern to policymakers.

In the past two years public sector headcount increased by a staggering 6,600 new employees at a cost of £300 million. To put that into context, if Stormont were to raise just £100 million locally, it would require a 6% increase in the rates bill for all households and businesses – an 18% hike to raise the £300 million that these new roles are costing.

I don’t intend to debate the necessity of these roles but I need to highlight the choices that our Executive must consider. We have many world-leading businesses, and a compelling offering for inward investors, but we have a shameful record on delivery of the infrastructure needed to maximise opportunity, create employment, and produce wealth to invest in our services.

The vital infrastructure that a modern, efficient, economy requires – the A5, the York Street Interchange, an effective water and sewerage network to name but a few – continues to slip down the list whilst other needs are prioritised. This cannot go on. We need responsible budgeting that prioritises genuine growth – not simply ‘spending’ that gets called ‘investment’ yet never produces a return - and we need government that lives within its means but invests in the economy so as to expand those means.

The Chancellor has some difficult decisions to make in his Budget next week and business has not been shy about making the case for a pro-growth, pro-business budget that will create the conditions for a more buoyant economy that will generate surpluses over time. The question of whether we will get two Budgets within the month can only be answered by our politicians at Stormont.

In a period where we have seen unwelcome headlines shared around the world about the situation at Drumcree, we risk reinforcing the impression of an unstable region by moving into the third quarter of the financial year with no Budget yet agreed. These are unhelpful messages that make the job of businesses here yet more difficult, at a time when global affairs are already causing real challenges.

We must all strive to work our way through these challenges at pace and be constantly mindful of the extra burdens that their continuance can cause to our entrepreneurs who are already encouraged to be risk-takers for the benefit of wider society but who shouldn’t be expected also to have to navigate self-inflicted problems.