Belfast Telegraph

Chancellor Osborne in 'listening mode' over corporation tax cut for Northern Ireland

A proposal to lower corporation tax rates in Northern Ireland is worth very serious consideration, the Chancellor insisted as he pledged that a decision would be made in the autumn.



On his first visit to Belfast since taking office, George Osborne said he had received a very clear message from Stormont leaders that the move would help regenerate the region's economy.

Mr Osborne held talks with First Minister Peter Robinson and Deputy First Minister Martin McGuinness on the issue of devolving the power to set business rates to the power-sharing administration.

All main political parties in Northern Ireland and the business community have championed reducing the rate from 26% to something closer to the 12.5% in the Republic of Ireland, amid claims that it would generate 4,500 new jobs a year.

The proposal was identified as an option in a Treasury paper on kick-starting the region's economy which is currently out for public consultation.

The Chancellor said he came to Belfast in "listening mode".

"I wouldn't be here and we wouldn't have had a Treasury paper if we didn't think it was an idea worthy of very, very serious consideration," he said inside Stormont Castle.

Mr Osborne said the Government would consider its final decision once the consultation ends next month.

"I think a reasonable period of time is to consider this over the summer and in the autumn give you our response, and that's what we intend to do," he said.



The issue is not straightforward for the Stormont Executive as, while a cut in business tax may stimulate investment and create jobs, it would also be accompanied by a proportionate reduction in central funding from the Treasury of an estimated £385 million a year.

Unions are opposed to the move, claiming it would take money from frontline public services to line the pockets of big businesses.

But the overwhelming political consensus at Stormont supports reducing the rate. Northern Ireland Secretary of State Owen Paterson is also a vocal advocate.

While Scotland has also lobbied for the power, both Mr Osborne and Prime Minister David Cameron have stated that Northern Ireland is a special case as it shares a land border with a jurisdiction with substantially lower rates.

After a 45-minute meeting with Mr Robinson and Mr McGuinness, the Chancellor, who was accompanied by Northern Ireland Secretary Owen Paterson, was scheduled to have talks with the leaders of the other main parties at Stormont before heading north to visit the Wright Bus manufacturing firm in Ballymena, Co Antrim.

He insisted he would not pre-empt the consultation by signalling whether the Government intended to hand the powers to Belfast.

"I don't think it's right to launch a consultation and then turn up in the middle of it and pre-empt it, so I am here to listen to both Peter and Martin and the leaders of the other parties I am going to meet and also to listen to the Northern Ireland business community, I want to hear what they have got to say," he said.

But he added that the outcome of the consultation was not the only factor to consider when making the decision.

"We have to balance also the views of the rest of the United Kingdom," he said.

"And the UK Government has got to take a view on corporation tax across the whole UK but, as I say, I wouldn't be here, we wouldn't be consulting on this, if we didn't think it was an idea worthy of very serious consideration.

"I have had a very clear message today from the First Minister and Deputy First Minister that they are in favour of this idea. I think the Secretary of State's views are well known as well."

He added: "I am in listening mode today and you will get a decision later this year."

Corporation tax was not the only issue on the agenda at Stormont Castle.

The level of air passenger duty levied at Northern Ireland airports was also discussed.

Mr Robinson and Mr McGuinness insist the tax level is too high, forcing travellers to use Dublin airport instead and threatening the future of the region's only transatlantic route - Continental's service to Newark from Belfast International.

A Treasury consultation on passenger duty ends today and the Stormont Executive has made a submission asking for the powers to set its own rate.

"Passenger duty, I understand, is an important issue here," said Mr Osborne.

"I am well aware of the particular geographic challenge you have in Northern Ireland with the proximity of the airport in Dublin and the importance also of the air link with the United States of America and that Continental flight, and we are at the Treasury consulting on the future of air passenger duty.

"That consultation ends today and we have talked about views that the executive has about that."

Treasury changes to how it deals with end year flexibility (EYF) resources - the money that goes unspent each year by UK Government departments and the devolved administrations - were also on the agenda.

Stormont ministers claim restricted access to this pot at the start of this financial year deprived them of around £315 million.

But the Chancellor said the Government had made specific EYF concessions to Northern Ireland that had not been made to other parts of the UK, which allowed it to carry forward budget amounts from this year on.

On the primary issue of corporation tax, Mr Robinson reiterated the collective stance of the executive.

"We put very strongly the benefits that we see of having power over setting the level of corporation tax in Northern Ireland: the disadvantages we have been facing, the need to rebalance our economy and the benefits that can flow from it," he said.

The First Minister said business tax was not the only way the administration would work to revive the private sector.

"This isn't simply a case of us relying on a lower level of corporation tax to solve our problems," he insisted.

"We have a range of instruments that we are using to attract business to Northern Ireland but we feel that this would be a game changer that would be of very considerable significance."

Mr McGuinness said the Chancellor's decision to visit Stormont was positive.

"I think the fact that he's here is a very strong signal that this matter is being taken very seriously indeed," he said.

The Deputy First Minister said corporation tax was a very important issue for the local administration.

"We recognise, as many people have argued, that it's not a silver bullet but it is an essential tool if we are to attract foreign direct investment and to encourage private investment among our own entrepreneurs," he said.

"Some major employers here in the north are strongly of the view that they can double their workforce within the next 10 years if we can get corporation tax devolved to our administration.

"But it has to be affordable, we all recognise that."



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