Yesterday (30 October 2024) we saw Rachel Reeves announce an extra £1.5billon for Northern Ireland - something that will be very welcome given that there is a predicted £750m overspend in this financial year, just to meet our everyday needs.
Of course, this huge injection of cash was welcomed by all parties. However, Finance Minister Dr Caoimhe Archibald still predicts a £120m shortfall this year.
As always there are many competing pressures including housing, policing and health to name a few. The PSNI Chief Constable had previously taken the unprecedented step to meet directly with the Prime Minister to press him for extra funding. Our Health Minister opposed the Stormont budget which health leaders said would inflict “serious harm” on the public.
Our business sector did not fare as well, with the huge increase in employer National Insurance contributions. Despite what anyone says, this will impact the ability to hire more staff and for businesses to grow. For businesses with around 30 to 40 members of staff, this equates to approximately another full-time wage being spent on tax. The Office for Budget Responsibility projects that this rise in employer National Insurance will impact employees, and indeed the Chancellor herself has admitted her budget will likely hit pay for workers.
Our farmers also fared badly from increases to the minimum wage, likely leading to higher food prices for locally grown food, and changes to the Agricultural Property Relief, with many in the sector saying the low threshold will leave businesses burdened with debt to meet the tax liability. Farmers are often asset rich but cash poor, with the average farm valued around £3m, meaning a £400k inheritance tax bill. Many say this announcement has shattered trust and signals an alarming disconnect between policymakers and the challenges facing family run farms.
Within Northern Ireland, our agri-food sector continues to play a vital role in our economy, so these decisions will likely have an impact far beyond the farm gate, and will compromise our nation's food security.
For our rural communities, there was also a signal of trouble ahead with changes to Vehicle Excise Duty in the spring. Labour says they will increase the differential between electric vehicles and those running on petrol and diesel vehicles.
Many of those in rural areas rely heavily on private transport to get around due to a lack of available public transport. While many aspire to own an electric vehicle, the cost remains prohibitive (in 2023 the cost of an average new EV in the UK was £48,000). Couple that with the lack of infrastructure, it remains a barrier for many in rural communities.
There was other good news, however, with the unpausing of city growth deals in the Mid South West and Causeway Coast and Glens areas which will come as a relief to many.