Belfast Telegraph

Wednesday 30 July 2014

Fears of waning enthusiasm for corporation tax plans

Issue hanging in the balance, but PM stays upbeat

Secretary of State for Northern Ireland Owen Paterson

The transfer of corporation tax powers to the Assembly is hanging "in the balance", Secretary of State Owen Paterson has said.

Finance Minister Sammy Wilson last night reiterated that Westminster has yet to decide if the potential business boost should be devolved to Northern Ireland.

Prime Minister David Cameron moved to calm nerves over the issue - a flagship policy for Mr Paterson - denying the Government was getting "cold feet".

While acknowledging growing frustration over the length of time it was taking to reach a decision, Mr Cameron added there were "serious issues with it, serious things we have to look at in terms of costs - we need the answers".

The language fuelled fears that Mr Paterson may be losing his battle with the Treasury over the issue, which business leaders have described as a "game-changer" for the Northern Ireland economy.

Despite his championing of the cause, Mr Paterson appeared to be attempting to manage expectations and insisted the issue was "more complicated" than he had initially realised.

The loss of the keen competitive edge lower corporation tax brings could call Mr Paterson's credibility into question, although there is no political consensus on the issue. There are tensions over it within the Stormont Executive.

"It's in the balance. It is completely in the balance. This is exactly where we've been since the election. This is something we've gone into consult without committing to do it," Mr Paterson told the Belfast Telegraph at the Tory Party conference in Manchester.

He added: "It's very detailed and complicated, more complicated than I originally thought.

"One of my surprises coming from the private sector and working with the Government is just how long everything takes."

Mr Wilson, responding to the downbeat assessment, said: "It is understood that the Government has not yet decided on whether or not to devolve this measure."

He, along with Enterprise Minister Arlene Foster, First Minister Peter Robinson and acting Deputy First Minister John O'Dowd, are set to take part in a joint ministerial committee to "drill down" how much transfer of powers would cost Northern Ireland in terms of the block grant it receives.

The DUP minister said it was hoped the committee, which includes Mr Paterson, NIO minister Hugo Swire and Exchequer secretary David Gaulke, would be able to come up with a figure which the Treasury will accept "but it remains to be seen".

"It is understood that the work will be carried out over the winter," said Mr Wilson, who lowered public temperature on the issue recently by saying it could be four years before the current corporation tax level is cut.

He has given the impression of being less enthusiastic about the measure than his party leader Mr Robinson, who has argued that, as Finance Minister, Mr Wilson has a specific job to do in managing the public purse.

Mr Wilson said: "The Government have indicated that they are committed to working with the Executive to rebalance our economy. The Chancellor (George Osborne) reaffirmed this when announcing his proposals for air passengerdDuty.

"I have not discussed this latest announcement with the Secretary of State, but having looked at his comments it is clear that the Government are committing themselves to carrying out the necessary work to clarify the precise costs, benefits and risks of this proposal. We have been asking for this for some time."

Mr Paterson also revealed there was "widespread disagreement" with the costings included in the consultation paper which has not yet been published.

"Nothing has changed at all. We've not made our minds up and we've made that quite clear through the consultation process. But the most obvious thing is, you couldn't catapult into devolving corporation tax now, when there's no agreement on the cost."

Asked if he was facing Treasury opposition, he said: "There's debate throughout the Government on all sorts of issues", but pointed to the involvement of Mr Gaulke chairing the working group.

At a fringe conference event hosted by the Northern Ireland Independent Retail Trade Association, Eamonn Donaghy, chairman of Grow Northern Ireland, said: "There is no Plan B for Northern Ireland's economy. Corporation tax is regarded by everyone as being a game changer." But he agreed costs needed to be looked at.

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