Call For Action: The Need For A Rates Break
150,000 jobs are in manufacturing itself or directly depend on it in NI
One family in 5 gets a wage packet from a Manufacturing employer
Manufacturing drives 25% of the local economy
Recent months have seen job losses in the sector as high as 1,000 in a week
NIM support the wide ranging proposals made by other trade bodies in recent months particularly those relating to finance and credit insurance – manufacturing is not an ‘add-on’ to the economy but an integral part that needs the remainder to flourish, as well as helping to drive activity in construction, finance, research and elsewhere
Manufacturing remains absolutely vital in providing employment across a range of skill levels, this is particularly so in rural areas which don’t have the call centre and ICT opportunities that make up most of Invest NI’s case book
NIM are a practical organisation who want to work with Government to provide tangible relief for manufacturing
Action is needed now while jobs can still be saved – our proposals today reflect that position – there is also a window in which innovative actions can be implemented quickly as State Aid constraints have temporarily been loosened
The UK economy contracted 0.8% between April and June, more than double the figure economists had expected. The ‘green shoots’ looked for in Spring have receded as we face the risk of a second ‘down leg’.
A fall of 2.4% was seen in the first quarter – the annual rate of decline has increased to 5.6%, the biggest fall since records began in 1955. The data showed that hopes for a recovery had run ahead of reality.
A leading think-tank, National Institute of Economic and Social Research (NIESR) is predicting it may take another five years for income per head to return to the level it was before the recession hit in early 2008.
Lower tax receipts as the economy shrinks has doubled public borrowing in June compared with last year.
New figures from debt monitor Stubbs Gazette show that personal bankruptcies in Northern Ireland rose to 572 for the first half of 2009 and will reach 1,000 by the end of the year
· Given our high dependence on public sector jobs NI will suffer disproportionately from future public spending cuts – it is vital to preserve private sector jobs now.
· Manufacturers value the existing cap introduced by the First Minister when he was Finance Minister. The cap has undoubtedly saved jobs in NI as well as sending a welcome message to manufacturing that local politicians understand its importance, as their electorate works in and alongside it
· Despite the cap the current take from industrial rates is still some £20m a year, a burden which manufacturing didn’t have in the 1970s and 80s when it saw steep falls in its employment
· The current level might have been affordable by manufacturing in more recent times but is not sustainable in the present economic climate. There is no doubt that any study carried out into industrial rates would conclude that now was not the time to add to manufacturing’s costs.
· Rates is a fixed cost which becomes more and more pressing as output falls. This can create a vicious circle making successive levels of activity no longer financially viable and hence prompting a much more widespread collapse of activity than was necessary
Business is paying £23m more in taxation this year through increased sewerage charges imposed from April 2009 – the Assembly has saved this amount in a reduced to NI Water.
So overall – even with a Rates Break – businesses will still be paying more than was asked of them pre-credit crunch
· The role of a Rates Break is to ensure that capacity is there when good times return, as manufacturing is asymmetric, jobs once lost are rarely recovered as plants close and skills wither.
· A Rates Break has an immediate benefit in terms of company cashflow, keeps people in jobs and eases pressure on other sources of credit – thus dealing directly with the main concerns of today
· A further advantage is that this measure can be implemented immediately and with negligible administration costs
· Recent relaxations to State Aid rules allow such an initiative
· The NI Assembly will be seen to have taken tangible and direct action to preserve manufacturing and jobs in NI.
· Our proposal only extends to industrial rates – retailers, banks etc would not benefit.
· With VAT set to rise at the end of the year there is the prospect of a negative impact on consumer and wider business confidence. This must be offset by clear decisive action protecting jobs.
Opportunities: Renewable Energy
· Renewable Technologies have the potential to provide over 30,000 new jobs in NI by 2020 (Carbon Trust - NI Renewable Energy Supply Chain Report 2008)
· There will be huge growth in this market as all European countries struggle to meet their Carbon Reduction Commitment – opportunities range from the supply of new equipment to after-market supply of spare parts for existing installations and maintenance contracts.
· NI has the potential to become a centre of excellence for new technologies, particularly in wind generation, delivering huge export potential - action to encourage manufacturers into this new market is needed now – Government investment will provide a ready local market and save CRC charges for Departments, Local Authorities and Health Trusts with typically a 3-5 year payback.
· The private sector will play its part – a proposal has already been made to Invest NI for a Centre of Excellence/Innovation Centre in the North West located in the former Seagate factory in Limavady.
· The concern seen recently at the prospect of the loss of the only wind turbine manufacturing plant in the UK shows that there is a widespread acceptance of the importance of this sector and that it would be reckless to endanger the progress that has already been made in Northern Ireland in developing a capability to exploit the associated market opportunities.