Belfast Telegraph

Lords call for corporation tax power for Executive

By Nicholas Randall

The Government has come under pressure in the House of Lords to give Stormont the power to set its own corporation tax rates.

A joint ministerial working group on rebalancing the province's economy is considering the issue and is likely to conclude its discussions soon.

Bombardier, Northern Ireland's biggest private sector employer, yesterday called for power over corporation tax to be transferred to Stormont - a move that would allow the current rate of 24% to be brought closer into line with the Republic of Ireland's rate of 12.5%.

The plea was echoed by peers including former secretary of state for the province Lord Reid of Cardowan and former leader of the Ulster Unionists Lord Empey.

At question time in the Lords, Labour's Lord Reid asked: "Will the Government bear in mind that Northern Ireland truly is a unique case - not only because of its border with another sovereign state, which is the only nation in the United Kingdom to have one - but because of the decades of very difficult and dangerous circumstances through which the people there have come?

"And also because of this ultra-high dependence on the public expenditure both in terms of the economy and employment. Will the Government at least look for some additional spark to move the dynamism of the private sector in Northern Ireland to the benefit of all the people there."

Lord Empey said: "The case for devolution for these powers is stronger than equivalent demands from the Scottish Government."

He urged the Government not to be influenced by the campaign for Scottish independence when making their decision.

Liberal Democrat Lord Alderdice called for an assurance that the interests of the people of Northern Ireland would not be set aside because of "excessive rigidities" from the Treasury or "inappropriate comparisons with other parts of the United Kingdom which do not have and I trust will continue not to have an international frontier".

Lord Newby, for the Government, said the joint ministerial working group was currently examining the "issues associated with potential devolution of corporation tax".

He added: "This group has made good progress but there remain some crucial areas where differences of opinion between the Northern Ireland Executive and the Government still exist. The group is due to meet again later this week to continue discussions."

He said to comply with the European Azores judgment, Northern Ireland would have to take "full fiscal responsibility for a tax change" and therefore face a reduction in its block grant from Westminster equivalent to the corporation tax raised.

"If you devolve Northern Ireland corporation tax rate setting to the Northern Ireland assembly you do face a significant financial cost to the Northern Ireland budget, which when last estimated by the Treasury was thought to be in the region of £300m," he said.

But he added: "Northern Ireland is clearly in a different position from the other nations and regions of the UK simply because it doesn't have a land frontier with them but it does have a land frontier with the Republic of Ireland."

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