The introduction of a pilot enterprise zone in Coleraine is "another tool to lever economic growth", the Finance Minister has said.
Chancellor George Osborne announced in his Budget yesterday that a site close to the University of Ulster campus in the town would be the location of a pilot enterprise zone.
It is already the planned location of a new £20m data centre to be set up by UK company 5NINES, which will be able to avail of enhanced capital allowances, the business incentive which will apply in the zone.
Finance Minister Simon Hamilton and Enterprise Minister Arlene Foster applauded the enterprise zone move. Mr Hamilton said: "It will enable the 5NINES project to benefit from the additional incentive of enhanced capital allowances, which allows them to claim 100% first year allowances for qualifying plant and machinery expenditure. This is particularly attractive to capital intensive investments such as this data centre."
It's hoped that the data centre will attract more high-tech businesses to the area, the location where Project Kelvin fibre-optic line between Northern Ireland and the US comes ashore.
The town's UUP mayor David Harding said the designation was a "balance" after news last week that 300 Driver and Vehicle Agency jobs would be moved away from Coleraine. "Young start-up companies and entrepreneurs coming out of the university will hopefully be able to avail of an enterprise zone to create jobs and wealth in the are," he said.
There are already 24 enterprise zones in England and another seven planned for Wales.
Economist John Simpson said the announcement merely set out the principle and that operational details had to be clarified.
He added: "It's an important idea but in the past they have not been successful in Northern Ireland because we really just used them to move businesses from one side of the street to the other."
The prospect of a Northern Ireland enterprise zone was first raised in the Building A Prosperous and United Community agreement in June last year between the Prime Minister, the Secretary of State and the First and deputy First Ministers.
But First Minister Peter Robinson told the Assembly at the time that the zone could merely have the effect of displacing investment from one area to the other.
PwC economist Dr Esmond Birnie said it could have a limited impact: "The pilot enterprise zone in Coleraine will only offer enhanced capital allowances which permits 100% first year allowances for expenditure on qualifying plant and machinery.
"And while this is welcome addition to the economic development arsenal, there are restrictions on the benefits that can accrue to organisations locating within an enterprise zone, so I suspect the Coleraine zone will focus on attracting activities like data centres."
EY tax partner Rob Heron said the announcement of an enterprise zone for Coleraine was "a positive and welcome step".
Zones a key part of growth strategy
According to the Chancellor's Budget yesterday, enterprise zones in the UK have created 7,500 jobs and attracted £1.2bn in private investment.
He described them as "a key part of the government's strategy for enabling growth in local areas". Businesses in Coleraine's pilot enterprise zone will be offered "enhanced capital allowances" so that they can write off the cost of equipment for tax purposes – though business rate discounts apply in other zones.
Lisa McAteer, an assistant director at commercial property agents CBRE, said it had lobbied for the introduction of enterprise zones but added: "Whilst we are encouraged by the announcement, it does not go far enough and needs to be applied to all of Northern Ireland, together with other measures including a reduction of corporation tax."
Meanwhile, First Minister Peter Robinson was more lukewarm on the subject in the Assembly in June. He said: "If the whole of Northern Ireland was being considered as an enterprise zone, I would be very much in favour of it. One difficulty I have found with previous enterprise zone exercises is they are often the cause of displacement. We may not bring in new jobs but simply move the jobs from one area to another."