Official Report: Minutes of Evidence

The Committee Clerk: We appreciate that time is limited and that you all have important things that you need to rush off to do, so, to avoid too much duplication or repetition, we will not seek a response from each table to every question, but I will go to particular tables and ask for anything additional. Every table will get to feed back on at least one of the topics, but we have to be conscious of time.

We will start with topic 1, which was about the increase in the national living and minimum wage rates. When the rapporteur speaks, will they say their name and the name of their organisation? That will help our colleagues in Hansard and ensure that everything is transcribed. A transcription of this part of the event will be available online soon. I am not committing to a particular time, but it will be online soon. We can send out the transcript as well.

I will be predictable and go to table 1 first. If table 1's rapporteur raises their hand, Michael will come with a microphone. When you get the microphone, say your name and the name of your organisation and give us a sense of what came out of your discussion on topic 1, which was about the national living and minimum wage increases. Michael is making his way there now.

Mr Johnny Currie (Northern Ireland Council for Voluntary Action): Good afternoon. I knew that our table would be called first, and I was dreading it, because I need to organise my notes a bit.

The Committee Clerk: You will be fine.

Mr Currie: My handwriting is worse than a doctor's handwriting. Across all three topics, we found a lot of read-across and common themes. On the first topic, no one does not want the national living and minimum wage increases, but there is stress across the sectors. We talked about mutual dependency and the impact that sectors have on one other, from the private sector through to the voluntary and community sector. We talked about the impact on the motivation to grow a business, the likelihood of redundancies, how the impact will depend on the size of your workforce and the fact that you may need to overcompensate in other areas. Anecdotally, we talked about the practical impact of businesses closing.

As for solutions, we talked about the need for flexibility around budget headings for organisations in receipt of public funding. Things such as the Barnett consequentials are not really enough to mitigate this. Many of the businesses and charities that will be affected are the backbone, hub and focal point of local communities, and they will be under severe pressure. There will be an unavoidable impact on the sense of place, community and belonging. Those are some of the broad themes that will be picked up in other sections. Is there anything that I have left out that anyone wants to add? OK. That is us.

The Committee Clerk: That is really helpful. I appreciate it. We will move to table 3. Will the table 3 rapporteur identify themselves?

Mr Glyn Roberts (Retail NI): Thank you very much. All three topics are interconnected, so we broadly went through all of them. If you are happy enough, I will make some broad comments.

The Committee Clerk: Do you want to make some broad comments? We will try to deal with each topic in turn, and then we will get more general responses.

Mr Roberts: There was a combination of private-sector and voluntary sector representatives at our table. One of the points raised from a voluntary sector point of view was that many were already struggling before the UK Budget, as a result of losing money from the European social fund. There was a funding crisis in the voluntary sector before we even got to the Budget. Obviously, the voluntary sector plays an invaluable role, particularly with all the cuts to health and social services. We need it now more than ever.

As a general comment, the Labour Government said that their priority was growth and to protect working people. It is very clear that the Budget does neither. Surveys of my organisation show that one of the takeaways from the Budget is that staff will lose their jobs and their hours. In the retail, wholesale and hospitality sectors, working people will lose their jobs and their hours. Another takeaway is the impact on the voluntary sector.

How can you have growth when you slap on the most regressive tax possible? Stuart, who is from the Northern Ireland Chamber of Commerce and Industry, pointed out that, from a survey that it did, three in four of its members think that the Budget will have a negative effect, and three in five will cancel scale-up plans. Again, that translates into people's jobs and livelihoods. It is the most regressive tax possible. If anything, it will not contribute to growth.

We also talked about the impact on health and well-being. We need to challenge the Westminster narrative on that.

On rates reliefs, there are significant challenges. The current review is looking at the various reliefs that are there. There are areas that could be looked at: for example, empty premises and the impact on childcare providers. We have a situation where we already pay the most expensive business rates anywhere in the UK, and, again, that was even before the Budget.

The Committee Clerk: Glyn, I will stop you at business rates, because we will come back to that. I want to have a more general discussion. Is there anything else on topic 1 or more generally?

Mr Roberts: No, I think that we have covered everything.

The Committee Clerk: Thank you. I appreciate that, because we want to try to get around as many tables as possible. We will go to table 6. Please say your name and the name of your organisation for the benefit of the record.

Mr Eamonn Connolly (Newry Business Improvement District): Is this on topic 1?

The Committee Clerk: Yes.

Mr Connolly: Nobody is against the increase in the minimum wage. We feel that the issue cannot not be looked at in isolation. There are concerns about the lack of notice and consultation, the implementation of the increase and its impact on the viability of business and community and voluntary organisations. The sectors that are most squeezed by all those things will be hit again. It was felt that this is a way of creating non-sustainable growth.

The Committee Clerk: We are getting very common themes across the piece. The same sorts of issues are being raised across different tables. If you are happy enough, I will move to table 8.

Dr Joanne Stuart (Northern Ireland Tourism Alliance): What would you like me to talk about?

The Committee Clerk: Will you talk about topic 1, Joanne?

Dr Stuart: OK. Like all the other tables, we have a good mix, including those from the voluntary sector and economists. We found it quite difficult to talk about topics 1 and 2 in isolation; obviously, they come together. The challenge is that it is all coming at once. Employers feel that the full burden for the black hole is being put on their shoulders. We do not think that there is much difference between what the UK Government are trying to do by phasing it over a number of years and doing everything at the start of this tax year.

As everybody said, there are unintended consequences. It will impact on workers and on the ability of businesses to grow, be it by bringing in staff or investing in the business. We all have surveys and anecdotal information from employers who, due to that cost, are not able to grow and do what they wanted to do with their staff.

Obviously, this goes fully on to the bottom line: it is how much it will impact on individuals, in that it cannot be consumed within the business. This will mean increased costs. We are looking at business sectors that have come out of a pandemic and do not have masses of reserves to try to cover this type of impact.

I will not go into business rates or anything, but there are a couple of general things. We looked at the ability of the Northern Ireland Executive to influence UK policy. Again, it comes down to more planning and understanding what is coming down the road, so we need to look at how the Northern Ireland Executive influence the Budget from the perspective of our model and how that works.

On business rates, we talked about the lack of transparency in councils and how we start to get a two- to five-year trajectory. We know that those things will probably increase, but businesses and the voluntary sector need to plan and need to have some idea. We all understand that things can change, but we need to understand the direction of travel. That is where we also felt that there has to be much more collaboration across councils, Departments and the whole of the public sector.

Part of the challenge here is the cost of duplication, so we did the research into the cost of segregation, which was over a billion pounds, and we think that we need to look at the cost of duplication across all levels of Government.

The Committee Clerk: I will use the phrase "better cross-departmental working", which seems to come up in almost every inquiry or anything like this that we have ever done. Both Committees have been in contact with their Ministers, and the issue of not having multi-year budgets has been clearly flagged. I appreciate that that issue will be raised a fair bit today. Again, the common themes are becoming very clear.

I will see whether table 2 has anything to add. Again, say your name and your organisation.

Mr Gavin Annon (Belfast Chamber of Trade and Commerce): Hi there, I am the president of Belfast Chamber. Similar themes apply. The easiest way that we could summarise this is that it feels like a short-term fix for a long-term problem. The medium-term strategy, to us, should have been to help to stimulate growth and encourage more employment. That, in turn, would have had a longer kick-back in contributions and general growth down the line. At the minute, it just feels like, "Let's get this fixed now", and that does not have a long-term future look about it.

For the voluntary sectors represented in our group, the fixed grant funding has not increased, so you can push that level only so far. Confidence is in the negative. The willingness to grow and the risk of employing somebody now is being outweighed by the potential return.

The other hat that I wear is in my role at the Mount Charles Group. The national living wage and National Insurance contributions alone will cost us £2·6 million in addition to what we already pay. That figure is based on the 3,000 people whom we employ, so we have to think sensibly about how we recruit, because it has to be viable for us and our clients.

The general theme across the board is that this does not create an entrepreneurial or growing hunger for people to get to the next level.

The Committee Clerk: That is useful. We appreciate that. Is there anything from table 4?

Ms Janice Gault (Northern Ireland Hotels Federation): The only point that we will make follows on from Gavin's point on investment. For a lot of people, you are eroding the profits that they make, which really makes the investment questionable. The risk of lending to businesses has increased. Therefore, their repayments have become much bigger. Particularly for the voluntary, charity and business sectors, that has changed. Even with the increases, the question is this: "Does a person at that lower, more vulnerable end of employment have any more money in their pocket and more money for discretionary spend?" They appear not to. That, therefore, brings back the question of confidence: if you do not have confidence in being able to survive next week, you are unlikely to spend more. It is not those big-ticket spends; maybe your treat is having a cup of coffee at the end of the week, and you might just dump that.

The Committee Clerk: Yes, that will have a huge impact.

The Committee Clerk: Table 7, again, if you give us your name and your organisation, it will allow us to get around all the tables for the first question.

Mr Chris McCracken (Linen Quarter Business Improvement District): I am managing director of the Linen Quarter business improvement district. I am also regional chair of the Association of Town and City Management.

I will start with one positive from the national wage increase. The advantage to that is that, as well as putting money into the pockets of the least well off, that money will get recycled. There is some positive evidence that, where people on the lowest income get a pay rise, it goes back into retail, hospitality and essential services. At least some of that money gets recycled. It is a completely different story with the increase in employers' National Insurance. Obviously, that is topic 2, but we have a great deal to say on that.

The Committee Clerk: If you want to start on that one, we will move to topic 2. I am sure that others will have plenty that they want to add. Go ahead on topic 2.

Mr McCracken: You have to blend topics 1 and 2, because both are increased costs to business. Overall, this is an anti-business Budget that will have very serious implications for the providers of work. Our table talked about the childcare sector. It is a heavily regulated sector with minimum staff requirements. It cannot get away from these increases, and it cannot pass them on to hard-pressed working families either. It is stuck in a real bind.

We heard from Newry Chamber of Commerce, which represents 300 businesses. Already, there is evidence of expansion plans being shelved. That will inhibit employment, and it has been described elsewhere as "a hammer blow". For some businesses, there will be no recovery from this.

Think about the Programme for Government and the damage that this Budget will do to that. There is a 10-year tourism plan that wants to double tourism to £2 billion. How will we do that when hospitality will be very heavily impacted on? We heard evidence that there is a plan to invest £200 million in hotels. That plan is now under serious doubt because of the additional costs that business will face.

We heard about the food strategy and the importance of healthy food. We are trying to create an environment where people who are less well off can afford healthy food, not just those on the highest income. Food is grown by people who will be paid more money and whose employers will have higher National Insurance contributions to make. Those costs, maybe a 20% increase, have to be passed on to the consumer. That will deliver a hammer blow to the Northern Ireland food strategy, and it will be hugely detrimental to those who are less well off.

A Budget that was meant to be for the workers is anything but. It will have implications for sustainability: already seen as an additional cost, that will now be seen as more of a luxury. The skills agenda will be affected as well. There will be lots of insolvencies from this. It is also creating a vicious circle. We are already seeing evidence in the border regions. People are shopping and going out for the night in towns in the Republic of Ireland rather than in the border towns in Northern Ireland. That will add to that sense of decline and damage. There are things that can be done, but that leads on to the rates relief conversation.

The Committee Clerk: Thank you for that. We really appreciate it. Let us go back to table 1 for topic 2.

Mr Currie: We also had the Federation of Small Businesses and Social Enterprise NI at our table.

I have just a few points in addition to that. NICVA has produced a paper on the voluntary and community sector. Celine referred to that, and we can send it through for evidence, rather than talking about it.

We talked about specific sectors that have particular vulnerability: hospitality and care. We talked about particular geographic examples where you have to dip into your profits or, in the case of a charity, your reserves. It can have an impact if your work is very seasonal: how do you maintain that service throughout the year?

We talked about greater flexibility in public funding in meeting some of those costs within existing spend. There are some mitigation funds that can give voluntary and community organisations a wee bit of breathing space for the next year to enable them to plan for this in future years. We talked about the knock-on effect across sectors, from the private sector to the voluntary sector. Hopefully, we will try to avoid people having to access public-sector support through the healthcare system. The mutuality of a being very small space makes us very vulnerable.

The Committee Clerk: OK. I very much appreciate that. We will now move to table 2 to pick up on anything additional.

Mr Annon: Similar themes apply. A "double hit" is the phrase that we have used, simply because of the timing. Could it have been phased in a different way to give it more of a chance to become normality and for people to retrofit their businesses to being able to deal with it? Another point that we homed in on is that it is just stalling growth plans. It is making people pause and reflect on what they are doing. I refer to the stat that was on the screen earlier: 80,000 businesses are at SME level and employ fewer than 10 employees. How on earth can this Budget ever stimulate people to get to that next level, given that it is not worth the risk?

The Committee Clerk: Joanne, do you want to come in?

Dr Stuart: Just to say that there is the employer relief as well: if you are paying £45,000 a year in National Insurance, the relief that you get is doubled from £5,000 to £10,000. I know that we are focusing on small businesses, but it is not necessarily impacting on all small businesses; it is just the specific National Insurance contributions. The Chancellor, I suppose, has done something to try to help some of those smaller businesses. I just wanted to put that in context.

The Committee Clerk: Do you want to go ahead and cover topic 2 for your table, since you have the microphone?

Dr Stuart: We have sort of covered it. We do not really have anything to add to what everybody else has talked about.

The Committee Clerk: OK. Table 3, have you anything to add to topic 2.

Mr Roberts: We have pretty much covered it. Given that this region of the UK has a higher density of small businesses than any other, this will have a significant impact. Various surveys have been discussed, and Retail NI is working through a survey of its members. I was shocked by the outcomes of that: by not only how many of our members are or will be cutting back on workers' hours but how many jobs will go and how many businesses will close as a result of this. This cost-of-doing-business crisis is now an emergency.

I say this to all of the politicians in the room: this is your biggest concern, because, unless we get coordinated action from the Executive — we need to up our game at Westminster as well — we will not see significant growth in our economy. If anything, we will go even further backwards.

A lot of colleagues from the voluntary sector are in this room today, and they do a fantastic job. We have also seen the pressures that the health service is under. What will happen is that, as the economy contracts and businesses close, those public services will lose income, because the businesses will not be there to provide the tax and the rates. That is how serious it is. The sector that I represent covers nearly 15% of all jobs. It is the biggest sector of the economy. Goodness knows what impact it will have on colleagues in hospitality and other sectors as well. The Secretary of State needs to up his game on this as well and make sure that he uses his voice in the Cabinet to get across that this National Insurance hike will cripple our small-business economy.

The Committee Clerk: I appreciate that, Glyn. Does table 4 or table 6 want to add anything?

Ms Gault: The only thing for us, again, is the confidence issue: would you be confident in employing more people? Also, we take issue with the way in which it was communicated and introduced. We were simply told, "We are going to do this". The threshold and the increase came together, and there was no warning. In fact, this was a lot more difficult to digest than the rise of the minimum wage or other costs. It has been a much bigger focus for people.

The Committee Clerk: We will get a comment from table 6 as well.

Mr Connolly: I echo what has been said already. One additional point is that we have concerns about the introduction of the good jobs Bill and the costs arising from that: for example, trade union activism in businesses with 10 employees and day-1 rights. It is just a further kick to businesses that are on the margins.

The Committee Clerk: Let us try to get a bit of context around this. The picture has been reflected as being really very bleak. I am trying to get some, perhaps, historical context. Previously, was there ever a time when you experienced measures like this coming in, in a cluster with this kind of impact, or is this something different, something more and something unusual? Does anyone want to comment on that?

Mr Colin Neill (Hospitality Ulster): For the hospitality sector, the UK Budget is the straw that has broken the camel's back. It is the accumulation of COVID, the cost-of-living crisis, the cost of doing business crisis and the fact that the hospitality and retail sectors in Northern Ireland did not get any support when our GB counterparts did, so we arrived at this Budget in a weaker position than that of any part of GB.

The Committee Clerk: As you cast it, there has been a run-up to this, and this is one further issue that has pushed people over the edge. I am getting a strong sense of potential redundancies and, perhaps, a lack of scope to carry through planned investment or expansion. Let us go to table 7.

Mr McCracken: One other factor for consideration is social clauses. A lot of Government and local government contracts now require people to pay not just the living wage but the enhanced real living wage. Everyone supports the social benefits that society is trying to achieve by those clauses. However, when you add that on to all the other costs, it becomes unsustainable. People may not go for Government contracts, because they cannot afford some of those conditions. That is another area for consideration.

The Committee Clerk: That is concerning to hear.

Mr Dean Nutt (Larne YMCA): I am the chief executive of Larne YMCA, which is a community and voluntary organisation. The historical context for our sector is that, each year, we have not been able to plan ahead, because there has never been a multi-year budget. We have never got to reach our full potential, because we cannot plan past the end of March of the following year. That always means that, at Christmastime, you have the letters going out putting your staff on protective notice. So, we arrived at the minimum wage increase and the National Insurance increase in a very strained situation and asking ourselves this: how do we go into another year of flat budgets, which, in real terms, is a massive cut, as well as all those increases?

It means staying still as a public-sector organisation when there is increased demand on our services, alongside childcare, which needs to have minimum ratios and competent staff. You do not have the room to expand. Our contracts are now worth nothing on paper. They are actually costing us more than the good that they are doing for any organisation across Northern Ireland. That is some of the historical context.

The Committee Clerk: Does anyone want to say anything further on topics 1 and 2 generally before we move to topic 3?

Ms Patricia Lewsley-Mooney (Northern Ireland Childminding Association): On the back of what Dean said, historically, many organisations have multiple budgets for different staff teams. Some of those budgets have not increased, particularly those from the Department of Health. A lot of us have seen a 50% cut in our core grant. We do not know whether we will even get a core grant for next year, so there is already pressure on us before the further costs start to kick in.

Re the minimum wage and the living wage, we deliver contracts for some councils, and they are asking about the living wage. That is fine, but we need to look at social conscience. I have a young person on the autism spectrum who works 16 hours week, and he is on the minimum wage. If he goes on to the living wage, however, he will lose part of his benefit. You may want to pay the living wage, but, for anyone on benefits, that has a consequence.

The Committee Clerk: It is really useful for us to be able to capture those unintended consequences, and the more feedback we can give, the better. The plan is that the Committees will have a joint debate on this in the Chamber. If we gather as many issues as we can, that allows Members to raise them in the Chamber, and the relevant Ministers will be able to hear those.

The third topic is business rates relief and rates reform more widely.

You are probably aware that the Minister of Finance's intention is to look at the full rating system — all the reliefs available and so on — over the next 10-year cycle. We understand that a consultation on domestic rates will go out. That is not necessarily an issue for businesses, but you will want to raise issues about how that consultation and the review of rates cycle will go.

I will start with table 8. I hope that I am not surprising you, because I know that your rapporteur, Joanne, has left. Paul, will you feed back on topic 3, please?

Mr Paul Mac Flynn (Nevin Economic Research Institute): Our discussion on rates was very much about fairness and transparency. Some sectors feel that they carry the can more than others. We feel that there should be greater transparency on that. The reliefs that were made available in England were also mentioned. That is wrapped up with the fact that none of those changes come through the Barnett formula — it is a decision for the Executive. They are talking about reforms in England and Wales in order to have a more progressive system. It was mentioned that the business rates issue is not on the agenda of large businesses; it is not what they bring up. Therefore, while collecting the same amount of money, there may be capacity to collect it more fairly across large, medium and small enterprises.

The Committee Clerk: That is really helpful: the idea that broader shoulders should take more of the weight.

Glyn, I come to you, because I know you will have something to say about this.

Mr Roberts: Thank you very much. There is no doubt that our rating system is broken, antiquated and in need of major reform. We do not just need the reliefs looked at; we need the whole damn system overhauled. Colin Neil tells this story all the time: the poundage in Larne is more expensive than that in Oxford Street; that is the most telling line.

The first week in April scares the hell out of me, quite frankly, because that is when the National Insurance and living wage changes will come in and the local and regional rates will be struck. I worry, in particular, about the local rate — the rate that councils will strike — because councils also have financial pressures and have to foot the National Insurance bill for their own employees.

The Finance Minister has indicated that there will be a review of the small business rate relief scheme. There are some good ideas in that review. The vacant property rate needs to be addressed, because, effectively, the Department of Finance is indirectly funding dereliction. We have the highest shop vacancy rate of anywhere in the UK. Dereliction is a major issue on our high streets. We need to look at it.

The whole system needs to be reviewed. We come back to that time and again. It is something that the Executive can do. As has been pointed out, we did not get the same amount of rate relief that England and other parts of the UK got: 75% for two or three years, going down to 40%. We put that to the Finance Minister. The very least that independent retail, hospitality and leisure should get is a transitional relief to help take the edge off the perfect storm that will come in April. Again, that was not taken up. It is something that Stormont can do. Stormont can change it. That is important, because it is the dead hand holding back the whole economy.

Another thing that we put to the Finance Minister is the scale-up piece. That is reflected in the Northern Ireland Chamber of Commerce survey. We put forward the idea that, if you are a business that is scaling up, creating new jobs and putting investment into the economy, you should get between three and six months' rate relief as an incentive to make that change. Land and Property Services (LPS) would be quids in when that business is revalued.

There is another broader, systemic piece. The nature of how government operates here means that we have a very siloed approach. Yes, we have a draft Programme for Government, and that is good. However, many of us in this room were part of the high street task force. Indeed, it was chaired by the then TEO junior Ministers, Gary Middleton — I think Gary is still here — and Declan Kearney. The Executive have set their face against recalling the high street task force. That needs to change. The task force is not an end in itself, but it is the only way that we can get a coordinated approach to our high streets, because the issue is scattered across different Departments. The Department of Finance has rates. The Department for Infrastructure has planning and public transport. The Department for Communities has the core regeneration function. Then, there is the role of councils and the business sector. It is not a matter of blaming London or Whitehall; there are things that the Executive can do. We need a coordinated plan and action at every level of government, from councils to the Executive to Westminster. The Executive need to start delivering, and the cost-of-doing-business crisis must be top of the list for delivery.

The Committee Clerk: I appreciate that, Glyn. Janice, do you want to give us table 4's view?

Ms Gault: We looked at the larger issue: aside from rate relief, what is our ambition for what our society looks like? If we are going down the isolated rates route, where we say, "You are a church, you do not have it", or, "You are that, you do not have it", and all those different things, we have to look at the aspiration and at who is carrying the overall burden. We understand that rates is the Executive's only direct means of raising money.

There is a certain element of surprise in this. The two poundages are added together, and you have the net asset value (NAV). If all three of those change, all of a sudden, you could get a double-digit increase in one year. The idea is that a cap could be put on NAV levels and the rate poundage, so that people could budget for it. People are budgeting for 2026, but, really, they are budgeting in the wind, and do not understand the ins and outs of it. It is a complicated system, but it is about asking what we want for businesses. When I say "businesses", I mean everybody, not only people who are operational in premises. Working at home has brought a change. People may be looking at it in a slightly different way. A lot of real estate might currently be empty, so we need to look at that.

The Committee Clerk: I appreciate that. Those are useful and helpful points. I will go to table 2.

Mr Annon: Similar themes applied for us. We made the point that it is another barrier to entry and getting started. It is a big hurdle to jump before you even try to grow, do new things or extend your premises.

We also asked this: if England has recognised the challenges and done something about it, why have we not? I appreciate that the Barnett formula etc is there, but it is more about a gesture. National Insurance contributions are going up, as is the national living wage, and we have the flexibility to do something about it. If the Executive could communicate by saying, "If we try this, it will help with the total picture when it comes to your challenges", that would at least be a start — a gesture. However, it has to be a fit-for-purpose scheme.

The Committee Clerk: That is the general theme that we are hearing. Thank you. We will go to table 1.

Mr Currie: The only additional point that we raised is about revenue-raising measures and taking those seriously, be it through VAT, corporation tax or other things.

The Committee Clerk: Those are useful themes. We will go to table 7.

Mr McCracken: The way that pubs are taxed on turnover rather than profitability is completely bonkers. It does enormous damage to the trade on top of everything else. The way that it is calculated for other ground floor retail units, for example, compared with upper offices does not make sense either. The system was created in another era. I agree with Glyn that a fundamental review is required. There are too many exemptions, it is not fit for purpose, and the proposed 10-year review is too long and too vague.

There is evidence that this generation of retail families who have been trading for generations is the last one that will trade. The businesses will not be handed on to the next generation, which is a great loss for our society and of the social value that those companies bring. They are part of the fabric of their communities, and, once that goes, it will not come back. That will be a terrible blow to our high streets.

The move online is being encouraged, as it has been for some time. Again, online does not bring social value to our communities, whereas high street retail and hospitality do. There are ways of resolving this. Looking at reliefs etc is one way. We really want the Executive to look at applying Barnett consequentials to high streets rather than other areas. We can also look at how we encourage footfall in our towns and cities. The high street scheme should be brought back and resourced. It had fantastic recommendations that just need to be resourced. We need to look at incentivising residential in our towns and cities. That comes up against the barrier of Northern Ireland Water and our waste water infrastructure, which is falling apart. So many places across Northern Ireland cannot get planning approvals for that reason, so it is not an easy issue to resolve. However, encouraging living over the shop and investing in residential within towns and cities, in order to increase footfall, form one of the long-term resolutions.

The Committee Clerk: I am getting the feeling that there are solutions. We have heard about several that are found in research that has already been done by government or funds that were there but have been discontinued.

I will open it up to anyone who wants to make further contributions, because I am conscious that we have stuck with the rapporteurs.

Mr Connolly: Ian Snowden, the former head of LPS, is on record as saying that we have the highest rates in the world relative to rents. In Manhattan, there are higher rates but higher rents. Why is that? It is because we have an unfair rates system. Manufacturing got 70% relief here; that does not happen in GB. Agriculture is outside the rates system here; that does not happen in GB. Town centre rate relief of 75%, equating to £263 million, that was transferred under the Barnett formula two years ago was not passed on. Rate relief of 40% for our town centres in the previous Budget, equating to £80 million, was not passed on. There is a disproportionate effect on retail, hospitality, landlords and professional services, which, in many instances, employ the most vulnerable people and those who are on the margins of our community.

The counterpoint is that two of our strongest sectors, manufacturing and agriculture, are doing well, but they are not burdened with the fixed cost of rates. That is compounded by the fact that the eight UK councils with the highest poundages are in Northern Ireland. We have no input into how that money is spent; there is no transparency or accountability. During COVID, we lobbied the then Minister of Finance to reduce the regional rate. He froze it for two years. Our council increased the local rate by more than the rate of inflation and completely undid that.

We have a town centre planning strategy, Town Centre First. Rates run contrary to that, causing vacancies and dereliction. The Department for Communities and councils spend money on tackling the symptom, which is dereliction. The cause is business rates, and the system is fundamentally unfair and broken.

The Committee Clerk: I appreciate that.

Mr Roger Pollen (Federation of Small Businesses): Eamonn did an excellent job as our rapporteur, so I will not contradict what he said but merely add to it. We have to take a sensible look at this. The only revenue-raising power that the Executive have is rates, so that is what they always look to, and they always go to business because business does not have a vote. They do not look to domestic rates. Therein, it is automatically skewed. Two of our most successful sectors are indeed manufacturing and agriculture because, at some time in the distant past, the Executive took a decision not to bleed those sectors dry but to let them prosper and then employ people. A vast amount in rates is collected from the people who work in those industries, and we should not lose sight of that. If we turn to them as a handy cash machine, we will probably damage them in the same way as we have damaged retail, hospitality, leisure and so on.

The other thing that we are silent on when it comes to revenue-raising and corporate taxes is corporation tax. Another report came out this morning that shows just how well the economy south of the border is doing. One thing that uniquely unified all five political parties and all the business organisations here was the aspiration for corporation tax powers to be devolved and the rate reduced. We succeeded insofar as we got the Corporation Tax (Northern Ireland) Act 2015, but we never pursued that to put in place the measures that would get us a competitive corporation tax rate. That is how to do serious revenue-raising: make it attractive for businesses to be based here. They can then pay their way, and that will lift everybody. We are not doing that, which is a real opportunity lost. Instead, we keep squeezing retail businesses in Newry until the lights go out. That is unacceptable.

Ms Amanda Johnson (Social Enterprise NI): We could all give feedback from individual organisations, but I will take the opportunity to do that, because this organisation is not in the room. The hard facts and figures that we have heard on the impact that this will have, and is already having, sum up the situation.

This is something that Share Discovery Village in County Fermanagh is doing already, before the new financial year. When the new financial year comes in, Share Discovery's 29 permanent staff will cost it over £56,000 per annum. Where will that come from? Its business is quite seasonal, and that figure does not take into account all the seasonal workers. Before this comes in — this is why Share Discovery is taking actions now — it had a 90% increase in its annual insurance cost, 20% of which was in food, heat, light and power. Share Discovery has already asked all its 29 staff to take a 20% reduction in their weekly or monthly salary. That is a huge drop. People may get an increase in April, but what will that increase mean when their wage has already dropped by 20%? Share Discovery's swimming pool is open seven days a week, as it should be, but it only turns it on for 50% of the day now. That probably costs Share Discovery money, too, but it is trying to see whether that has any mitigating effect. It is starting to sell off its assets just to survive as a business.

That is an example of a huge employer in a rural area, and that has a huge knock-on effect. Forty years ago, Share Discovery Village was formed to offer respite to the families in our society who are most in need — those who have children and need a break from time to time but could never afford to have a couple of days away. When we come down to it, that is the reality of how much it will affect the everyday individual.

The Committee Clerk: Thank you. I really appreciate that.

Mr Brian O'Neill (Enterprise North West): As a representative of a social enterprise that operates in Derry city, I will build on the investment piece, the nervousness about investment and the Finance Committee's proposed legacy report. The social enterprise and charitable sector needs to be more innovative when it comes to the financial investment tools that are available to the sector. The private sector has a suite of borrowing options, whereas our sector is limited in that respect. There are organisations out there that are looking to grow, develop and deliver services on the ground that will have a wider economic benefit. The loan to acquire move-on accommodation (LAMA) fund was opened up to homeless charities in December, allowing them to borrow between £1 million and £3 million at 0·5%.

My ask of the Executive is that they be innovative when they talk to the sector. There are organisations that are not necessarily looking for a grant but that want to invest their own money in order to grow and invest. My ask is to not limit it to certain sectors but to look wider, at enterprise or care perhaps, because they may be delivering on policy aims and objectives.

I just wanted to make those points about innovation and finance for the social enterprise and charitable sector.

The Committee Clerk: That is really helpful; I appreciate that. I am going to do something that is generally considered unforgivable. Gareth Hetherington literally knows that this is unforgivable.

Mr Gareth Hetherington (Economic Policy Centre): It is unforgivable.

The Committee Clerk: I know. I apologise. Do you want to give a bit of a flavour of the research that you have embarked on? You can say no. I appreciate that it is unforgivable. I am just conscious that there are a lot of people in the room who could make a really useful contribution to that research.

Mr Hetherington: Yes. Thank you for this opportunity. [Laughter.]

I do not know how to pay you back.

The Finance Minister asked us to look at the cost-of-doing-business crisis that we face. We are primarily focused on what today's conversation has been largely about: the national living wage impact and the National Insurance contributions impact, and how those impacts vary across sectors. Some parts of the economy will be significantly impacted relative to others. We want to understand where the pain will be felt most. I have spoken to quite a few people in the room already, and I am scheduled to speak to quite a few others. It is important for me to get as wide a range of views as possible, so you are welcome to get in touch.

The Committee Clerk: Thank you, everyone.