Energy support for small and medium sized businesses will be reduced
By Clodagh Rice
BBC News NI business correspondent
The rising cost of doing business in April has been called a “perfect storm” for small companies in Northern Ireland, as rates bills arrive.
For some businesses, the new financial year brings an increase in costs such as wages, water bills, corporation tax and business rates.
In England, retail, hospitality and leisure properties will get 75% rates relief, up to a cash cap of £110,000.
As a result of that decision Stormont received £163m, but that money did not go towards business rates relief because there was no minister or executive to allocate it.
A Department of Finance spokesperson said the additional funding would not cover the cost of implementing the same schemes in Northern Ireland.
“Any decisions in relation to new rate relief measures for business in Northern Ireland would be for the secretary of state or a future executive to make, having considered the full competing priorities for public funding,” they said.
Alan Lowry, policy chairman of the Federation of Small Businesses in Northern Ireland, said members were being hit with a “perfect storm”.
“There’s a 75% rates reduction being given to retail, hospitality and leisure in England and Wales. We need to see that over here,” he said.
“That money has been given to the Northern Ireland economy through the Barnett consequential, but we actually need to see that hitting the ground here and actually getting to our members and the other people who really need that support right now.”
Alan Lowry said businesses need support
Robert Bell, managing director of SD Bells tea and coffee business in Belfast, said the situation was “really unfair”.
“I do think the 75% rates rebate in England and Wales shines a light on the fact that it is not available to us,” he said.
He employs about 30 people and wages are the company’s biggest overhead, so the rise in minimum wage will have the largest impact on its bottom line.
“Across the board, 9.75% is a big hit. It makes it very hard to maintain pay differentials as well,” he said.
“So it is, in a sense, inflationary. It might mean that we end up paying fewer people, fewer hours.
“There may be a contraction in the number of hours, I hope not, but that might be an unintended consequence of the increase in minimum wage which is a worry.”
Businesses in Northern Ireland are also facing an above inflation increase in water charges of 13.4%, which will also affect Mr Bell’s running costs.
“We consume a lot of water, it’s certainly not our biggest cost, our electric and gas would be higher but it’s still a worry,” he said.
“I mean a 13% water increase is not insignificant, but we can’t just pass it all on to our consumers that easily so it’s another worry.”
Keeping staff employed is a top priority, Robert Bell said
So how much of this can be passed on to customers in the form of higher prices?
“There will certainly be a small increase I’m sure across the board to our customers, but we will try to absorb as much of it as we can and try to make other efficiencies,” Mr Bell said.
The government is scaling back support for businesses from April.
Under the new scheme, firms will get a discount on wholesale prices rather than costs being capped as under the current one.
Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others.
But firms will only benefit from the scheme when energy bills are high.
Some business groups have warned it falls short for those struggling with soaring costs.
Mr Lowry said it would mean a lot of businesses were unsustainable.
“They are either going to have to take on more borrowings with additional interest rates as they continue to increase or else they are simply going to have to close,” he said.
“If they don’t put prices up, they don’t make enough money to pay their staff, their suppliers and therefore they can’t keep the doors open. The only other option is to close their doors or put their prices up.”
