Minister for Employment and Learning, Dr. Stephen Farry says we must prepare for lower corporation tax

We must prepare for lower corporation tax

As the exploration around the terms of a lower corporation tax for Northern Ireland continues with the UK Treasury, it is important that we prepare for the necessary supporting interventions that will ensure that it delivers a step-change in our economy.

A lower rate of corporation tax will not be effective in isolation. Its real impact will be on the demand side.

One of my key challenges is to efficiently coordinate supply and demand and address any current or potential skill shortages or mismatches. It is reasonable to expect that there will be changes required in our skills profile to capture the full opportunities from a corporation tax reduction.

Last week I launched a research report into the impact of a lower corporation tax in Northern Ireland on the demand for skills, labour and innovation capacity.

‘Preparing for a Lower Corporation Tax Environment’ indicates that a reduction to 12.5 per cent could create double the jobs that would otherwise be produced locally – that equates to 58,000 additional jobs by 2030.

The research shows that more than half of the additional 58,000 jobs created by a lower corporation tax will be within indigenous companies. It further indicates that higher levels of growth can be expected in certain sectors, such as ICT and agri-foods. The former could double in size.

The research looked at best practice internationally and shows that skills will be critical in driving out the full benefits of a lower corporate tax regime. It revealed that other countries have secured economic success in a low-tax environment by having a clear understanding of the demand for skills, responding quickly to market changes and increasing the quantum, quality and relevance of available skills.

It highlights in particular the importance of strong skills in science, technology, engineering and mathematics (Stem); management and leadership; and literacy, numeracy and employability skills.

There would be a 70 per cent increase in Stem professionals by 2030 compared to today.

By comparison, it is estimated that by 2030 only one in eight vacancies will require no qualification which would require a major drive on up-skilling the low-skilled to be ‘work ready’.

Both my department and the wider executive have already recognised the importance of skills to the economy. Many of the necessary policies and programmes are already in place, including a strong focus on Stem subjects.

Last week I also published an action plan for the ICT sector. The Assured Skills programme offers bespoke skill solutions to inward investors.

However, the onset of a lower rate of corporation tax will see the need for a clear shift in the scale of current skills initiatives and potentially some new programmes. A clear, coherent and cohesive approach to skills within Northern Ireland will now be more critical than ever.

This research undoubtedly puts Northern Ireland in a stronger position to understand, plan for and take advantage of the full benefits of a lower corporation tax environment. It further demonstrates that we are planning effectively for the future. Minister for the Department for Employment and Learning.