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£155m slice from mini-budget not enough to spur a recovery, says Stormont Finance Minister

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Conor Murphy

Conor Murphy

PA

Chancellor Rishi Sunak in the Commons yesterday

Chancellor Rishi Sunak in the Commons yesterday

PA

RogerPollen of the Federation of Small Businesses

RogerPollen of the Federation of Small Businesses

Glyn Roberts of Retail NI

Glyn Roberts of Retail NI

Freddie Parkinson

Conor Murphy

Additional funding of £155m towards Northern Ireland's Covid-19 response in the Chancellor's summer economic update does not go far enough, Stormont's Finance Minister has said.

The mini-budget from Rishi Sunak includes a temporary VAT cut for tourism and hospitality from 20% to 5%, and a £1,000 bonus for companies for each employee they bring back off furlough.

But Conor Murphy said the additional funding of £155m, including £39m for economic recovery, was inadequate.

He added: "The measures are not ambitious enough to spur economic recovery.

"Covid-19 will continue to have a dramatic impact on our economy for some time to come.

"What is needed is a comprehensive stimulus package.

"This, unfortunately, does not go far enough."

Mr Sunak's mini-budget also announced 'Eat Out to Help Out', a UK-wide voucher scheme offering 50% off meals including non-alcoholic drinks up to a maximum of £10 per head on Mondays to Wednesdays during August.

This and the cut in VAT gives the local tourism sector an edge as it competes with the Republic for visitors. The Republic's rate of VAT for the sector is 13.5%.

Howard Hastings, head of Hastings Hotels, which has seven venues here, said the changes could not have come at a better time.

"We have long complained that our VAT rate at 20% was inequitable compared to the south," he said

"The decision to reduce it to 5% until January means that we can now offer even more incentives to people to travel to the north for their holidays.

"We will have new lower accommodation rates on our website and all our food menus will be repriced to reflect the VAT changes.

"The combination of both of these moves will be welcome news to people looking to book staycations who may not have considered the north previously."

Mr Sunak also confirmed a much-signposted stamp duty holiday, lifting the threshold on house purchases from £125,000 to £500,000.

But he reiterated that the Coronavirus Job Retention Scheme - introduced when the pandemic struck in March - would have to be tapered off between now and October as previously announced. Around 212,000 employees here were on the scheme.

Mr Sunak said maintaining the scheme for longer would prolong "false hope" that people's jobs will still be intact afterwards.

"Furlough will wind down flexibly and gradually," he said.

But he announced that employers will be given a bonus of £1,000 for every employee that they bring back from furlough if they are employed every month from November to January and paid at least £520 every month until January. That policy would cost the Government up to £9bn.

He also announced a 'kick-start' scheme that will reward companies with a £5,000 bonus where they give new jobs to young people, with the Government covering the new start's salary at minimum-wage level for six months. Roger Pollen, head of external affairs at the Federation of Small Businesses in NI, welcomed the measures but cautioned that not all of them apply to here.

"It is up to the NI Executive to decide how best to utilise the funding which emanates from Barnett consequentials to achieve the same sort of economic benefits," he said.

Retail NI chief executive Glyn Roberts said the statement "lacked ambition" and contained little to encourage retail spending.

"A temporary reduction in the headline rate of VAT would have been helpful in achieving this," he argued.

Alternatively, a voucher scheme to encourage spending in independent retailers could have helped, he added.

Ulster Bank chief economist Richard Ramsey said the update addressed some short-term problems but more measures - with the possibility of higher taxation - would come in the autumn.

"The UK economy has exited intensive care but its recovery remains highly uncertain and requires active monitoring," he said.

Belfast Telegraph