Belfast Telegraph

Saturday 30 August 2014

Saved from a levy that would have added 15% to power bills

Northern Ireland has been saved from a tax which will save £175m in the next five years, the Finance Minister has revealed.

Sammy Wilson said Chief Secretary of the Treasury Danny Alexander had exempted Northern Ireland from a carbon tax.

The concession was mentioned in a statement by Theresa Villiers, the Secretary of State, but no figure was given.

Instead she concentrated on other aspects, such as a £59m increase in Northern Ireland's block grant. She also highlighted the fact that raising the income tax threshold will free 7,000 lower earners from paying any at all.

"The big gain for us is that over the next five years we are going to escape £175m in carbon tax on our power stations," said Mr Wilson.

"That has fantastic benefits for Northern Ireland. It is not just that we are going to escape £175m charges. It preserves employment by preventing our generators being put out of business. It will avoid electricity price increases of around 15% and it will give us greater security of supply."

The environmental tax from which Northern Ireland has been exempted is designed to cut carbon emissions. It would have hit the province hard as it is dependent on oil and gas for power generation. As a result of competition rules suppliers would have then been forced to buy more electricity from the Republic where the tax is not levied.

Asked if Ms Villiers had fought Northern Ireland's case at the cabinet table, Mr Wilson said: "I don't think it had anything to do with Theresa to be quite frank and I am not being churlish. Danny Alexander fought our case on this and the £59m additional money we got on our block grant was just how the Barnett formula works."

The Barnett formula is used to calculate Northern Ireland's budget as a proportion of spending in England and Wales.

As much as 80% of Stormont's spending goes on health, education and policing – a higher proportion than in Great Britain, where these areas are ringfenced against cuts. The net effect is that this time the formula delivered us more money than before.

Mr Wilson gave these concessions and a freeze on fuel duty a cautious welcome, but warned that their effect was "at the margins" and would not turn the economy around.

He called for an injection of funds into infrastructural projects, citing the A6 road from Londonderry through Dungiven to Toomebridge as an example of a project that would provide both immediate jobs and a long-term return.

"We need jobs right now," he added.

Last night Northern Ireland Office Minister Mike Penning pledged that he and Ms Villiers would put the case to the Treasury if suitable capital projects could be developed.

"There is the possibility of more money but it must be justified in a business case and it must be something you can actually press the button on," he said.

"There is no point telling central government, 'We would like to do Project X some time in the future and we hope for planning permission, so give us some money'.

"These are really difficult economic times. We have to be able to bring forward projects which we can confidently tell the Treasury are both ready to go and are likely to produce an economic return."

Mr Penning added: "Compared to most other areas, Northern Ireland has done well out of this budget. I recognise that the unemployment figures are disappointing and we need to get to grips with that and the Executive needs our help to do so. As it is, I think some of the stimulus, particularly the break on employers' National Insurance, will help."

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