Posted on Thursday 21 June 2012 by Ulster Business


Swift action will have to be taken to up-skill our workforce to meet the needs of future inward investors if Northern Ireland is granted the powers to lower its rate of corporation tax.

That was one conclusion of a new report titled Preparing for a lower corporation tax environment, prepared for the Department for Employment & Learning by Oxford Economics and published yesterday.

The report says that a cut in the top corporation tax rate from 24% to 12.5% could create double the jobs that would otherwise be produced locally, equating to 58,000 additional jobs by 2030, more than half created by home-grown companies.

Of that number it predicts there would be around 10,000 new jobs in the IT and software sectors by 2030, effectively doubling the size of the industry here, while there would be an almost 70% increase in science & technology professionals to over 31,000.

Those forecasts were certainly welcome on a day when unemployment figures showed another 300 people joined dole queues in Northern Ireland in May, taking the number claiming unemployment benefit to 62,600. The claimant count rate of 6.9% is the second highest among the UK regions.

However, the DEL report also indicated that it is in the very areas where high demand could be created that Northern Ireland will potentially experience skills shortages if no action is taken.

Oxford Economics surmised that there was increased likelihood of high level skill supply shortages in computer science and mathematical sciences, and well as in agriculture, creative arts & design, engineering & technology, and physical and biological sciences.

Employment Minister Stephen Farry told journalists his department’s NI Skills Strategy and the Executive Economic Strategy had identified areas for priority skills support.

DEL’s Assured Skills programme, run in tandem with Invest NI has already helped secure 1,100 jobs working with companies like BT, Axiom and Heritage Fund Managers.

And there is, he said, evidence the government is “beginning to turn things around in STEM” with more school children opting for STEM subjects (science, technology, engineering and maths) and more students pursuing them through to degree level.

“A lowering of Corporation Tax has the potential to transform our local economy but not in isolation and we need to ensure that we are ready with policies that support economic drivers including skills,” he said.

“The report sets out the importance of developing our skills base and the employability of our people. It highlights in particular the importance of strong skills in STEM; management and leadership; and literacy, numeracy and employability skills if we are to capture the full benefits of a lower Corporation Tax.”

However, the Minister acknowledged that more would have to be done to make sure the first wave of international companies attracted by the lower tax rate get what they need.

The report suggests some three quarters of the jobs created by foreign direct investors would be for managers and professionals, which would require an increase in 100,000 of those with level 4 qualification and above – equivalent to an HND or foundation degree.

There would also need to be a drive to up-skill the low skilled workers across the province so they are “work-ready” for the new environment. The report suggests that by 2030, under the low corporate tax scenario, only one in eight job vacancies will require no qualifications.

Northern Ireland has around 370,000 working age people not in employment and 125,000 economically inactive with no qualifications, which the Minister admitted presented a “huge challenge for employability”.

“We need to invest in skills across the spectrum and to move people up the skills ladder. Experience from other countries shows they don’t have this long tail of economically inactive. There’s more we can do to provide opportunities,” he said.

“It is better to overachieve than underachieve in skills provision as skills at a high level are transferable… Without corporation tax we flat-line. We see further stagnation in the economy.”


Speaking last night at a function hosted by law firm Tughans at Queen’s University’s Riddell Hall, First Minister Peter Robinson reiterated his commitment to getting the corporation tax decision across the line.

The Minister will attend the final meeting of the joint working group comprising representatives from the Executive, Treasury and the Northern Ireland Office on Monday, but said he did not expect there to be a clear recommendation from Treasury as had been first hoped.

Instead Mr Robinson said whether Northern Ireland was given tax varying powers is now likely to be a cabinet decision.

It had been expected that a decision would be made either way over the summer and the DUP leader said he was still hopeful this would be the case.

While the First Minister implied there is opposition to devolution of corporation tax among Treasury officials he said he remained confident of a positive outcome because the issue has cross part support in the Executive and a cheerleader at the cabinet table in the form of Secretary of State Owen Paterson.

It was apparent from listening to Mr Robinson that this is an issue he is not about to let go lightly, and which he obviously believes will have a genuinely positive economic impact.

The Minister clearly sees it as a key differentiator for Northern Ireland, stating that he would like to see the corporation tax rate cut to 10%, not just 12.5% in line with the Republic of Ireland.

Those leading the charge for a cut in corporation tax say that even if it took two or three years to create the legislation and mechanisms needed to implement the separate tax rate, a firm commitment that it will happen will allow Invest NI to use it as a carrot to attract overseas firms and to encourage indigenous companies to plan future investment in their business.

That said, Employment Minister Stephen Farry and his department are to be commended for starting the ball rolling in assessing the progress that will have to be made in preparing our workforce in the immediate future, rather than waiting to see what happens and then scrambling to react.


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