Corporation tax remains the big prize
Dating back to our submission to the Government after the publication of last June's Economic Pact, we made it clear that the introduction of Enterprise Zone status, providing Enhanced Capital Allowances (ECA), may have some localised regeneration potential.
Given that the Northern Ireland Executive already has responsibility for planning, rating policy and telecommunications infrastructure, the announcement is welcome given that it contains the ECA proposal first mooted last summer.
However, only certain companies will benefit from ECAs – usually existing large, capital intensive and profitable companies – so to have the local success desired, the proposed Enterprise Zone should focus on economic activity where it is best undertaken, with a potential view to building on specific clusters and sectors in order to achieve the best impact.
It therefore makes sense to locate the zone near the University of Ulster campus in Coleraine thus seeking to maximise the existing technology and high-speed transatlantic connectivity already in place through Project Kelvin. We look forward to seeing further detail on how the pilot zone will operate, and what additional tools and levers those investing in it will be able to benefit from.
We also argued last year that extending Enterprise Zones to all of Northern Ireland would not be good value for money – and therefore welcome the recognition of this in the announcement.
It is crucial though that the introduction of this pilot zone does not distract from the campaign to secure the devolution of corporation tax powers to the Northern Ireland Assembly.
This must remain our premier focus in both the business and political communities over the coming months as we approach the Prime Minister's decision in the autumn. We welcome the continued progress that is being made here and reiterate the importance it has for Northern Ireland's economic future and its attractiveness as a region to do business and invest in. Other initiatives must not take attention away from this fundamental goal.
David Fry is senior policy advisor at CBI