Belfast Telegraph

Friday 25 July 2014

Economic body hits back at Rarney rap

The Economic Research Institute of Northern Ireland today expressed " apprehension" over the prospect of a Varney Mark II report on the economy.

Erini director Victor Hewitt was commenting on the Varney Review on corporation tax, which was published on Monday.

In the report, Sir David Varney expressed misgivings about the reliability of the research produced by the institute in support of a cut in corporation tax.

But in an initial response to the report, Mr Hewitt hit back, describing elements of the report as being "entirely negative".

Mr Hewitt said: "At first glance there appear to be two reports within the Varney Review.

"The first is a professional survey of the two economies on the island of Ireland which has clearly been carried out by competent economists.

"Alas this good work ultimately fails to follow the logic of its own arguments and refuses to recognise the real role of corporate taxation as a strategic driver of investment.

"The other report is an entirely negative response to any imaginative proposal that might disturb the status quo on taxation.

"It spares no effort to magnify the difficulties of managing change and at every turn takes refuge behind European State Aid rules as an excuse not to act, without, of course, ever actually seeking a view from the European Commission."

Mr Hewitt added: "This is the product of minds that are addicted to centralising power, perhaps without realising that in doing so they put at risk the very notion of a United Kingdom.

"The prospect of putting the future of economic policy in Northern Ireland in hands such as these through a second Varney report can only be greeted with apprehension.

"The sentence: 'We are from the Treasury, and we are here to help you' remains one of the enduring great untruths."

In his report, Sir David said the review team had "concerns" with the approach taken by the ERINI study.

He claimed that the institute had "overplayed" the way in which investors would react to a change in the rate of corporation tax.

Sir David is now to carry out a second review, in conjunction with the Stormont Executive, to examine ways of boosting the private sector in Northern Ireland.

The report is due to be completed in time for next May's US-NI investment conference in Belfast.

Meanwhile, a Belfast-based firm specialising in foreign direct investment urged the business community not to become too fixated on corporation tax as the only factor which could draw companies to Northern Ireland.

OCO, which feeds information on foreign investment to the World Bank and United Nations, argued that a region's tax regime was a secondary consideration to skills levels and labour availability in sectors such as life sciences, ICT and financial and business services.

OCO's chief executive Mark O'Connell said: "Historically the corporate tax rate has been a facilitator in the Republic's success in attracting large scale investment, but today there are other factors at play in attracting the investment, particularly around skills and labour availability."

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