Northern Ireland will receive a substantial increase in funds to help the young and long-term unemployed under the "new deal plan" in the 1997 British budget, according to the Northern Ireland Economic Council (NIEC). In a report released today, the NIEC has given a broad welcome to the changes in the tax system introduced the July budget, particularly the reductions in small companies corporation tax and VAT on fuel and power.
"In respect of those consequences that are measurable the 1997 budget is good news for Northern Ireland," the report concludes.
But the council has warned that failure to curb consumer spending may lead to even higher interest rates and a still stronger sterling which would hurt manufacturing.
In the analysis of the budget - The 1997 UK Budget: Implications for Northern Ireland - the NIEC said the UK government's emphasis on economic stability was particularly important for a small regional economy such as Northern Ireland. The decision to broaden the central economic objective - to rank employment alongside economic growth and to introduce the concepts of a fairer society, equality and trust - is consistent with the NIEC's focus on "the need to promote economic development rather than simply growth".
NIEC said the 1997 budget, took an important step towards helping the poorest in society through the setting up of a task force to explore ways of streamlining and modernising the tax and benefit systems and labour market policies.
Describing the budget as more progressive than recent budgets because of the redistributive effect, the NIEC pointed out that households will lose an average of £1.31 per week as a result of the measures. But the biggest losers in cash terms were "job-rich" couples, with a two salary couple with children losing £2.57 per week. In percentage terms "no-earner" couples will lose most from the tax changes but they will benefit most from the welfare to work programme.
Northern Ireland will receive £140 million sterling from the windfall tax as part of the new deal for the young and long-term unemployed.
