Belfast Telegraph

Friday 11 July 2014

DebateNI home of Northern Ireland politics

Taxing times await for DUP's new high-flyer Simon Hamilton

Uphill task: pension reform will be just one of the issues facing new DUP Finance Minister Simon Hamilton

Barring mishaps, Simon Hamilton obviously has a long political career ahead of him. Previous DUP finance ministers have included Nigel Dodds and Peter Robinson, the party leader, so being entrusted with this role at the age of 36 shows that he is destined for greater things.

His predecessor, Sammy Wilson, who taught Mr Hamilton the ropes in finance, is also an impressive performer.

The former economics teacher steered the Budget through a period of swingeing cuts from London and learned to roll with the punches.

Under Simon Hamilton's watch, Wilson believes the biggest dangers facing the Assembly could come from self-inflicted wounds.

Unlike the DUP, which has rotated ministers and brought younger talent like Mr Hamilton to the fore, some of the governing parties, Wilson believes, are still stuck in Opposition mode.

"We started off in the Assembly with people who, for 30 years, have never had a chance to exercise responsibility," he told me. "You can still see the legacy of that in some of the Assembly debates.

"Simon will have people constantly telling him what he should spend money on, but never factoring in the consequences of these decisions in other areas."

Wilson believes that the most immediate danger is that there will be no consensus to implement welfare, or pension reform, because of fears of a backlash at the cuts involved. Not doing so would lump the Executive with huge bills.

If we preserve benefits, we would not only have to foot the bill from a fixed Budget, but also pay the cost of administering a separate regional system.

We are already carrying £17m a year for opting out of the 'bedroom tax', but further changes would cost more and would involve really hard choices. The parties would need to agree to impose taxes elsewhere, or cut deeply into other budgets, if they want to go it alone.

Glib talk of 'efficiencies' simply won't cut it. Mr Hamilton needs to spell this out convincingly enough to build political consensus.

Mr Wilson doesn't mention it, but we have also opted out of the UK National Crime Agency. This denies us resources paid for by central Government and places extra burdens on our policing budget.

There has been no serious discussion of what will go to pay for this shortfall.

If we are allowed to devolve corporation tax, it will cost about £25m a year for every percentage point we cut it. Four hundred million pounds is the cost of matching the Republic's rate.

On his first day in office, business leaders were lining up to tell Mr Hamilton that tax cuts must be accompanied by more capital spending to boost industry.

They have a point. But there are consequences. Something else will have to come short – either we will have to run up debts, or some other tax will have to be raised to cover the cost.

Mr Hamilton has degrees in both politics and law and a background in accountancy. Add to that a pleasant, straightforward manner and he ticks most boxes for a political high-flyer.

Taking the hard decisions as minister – and the flak that follows – will complete his education.

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