Belfast Telegraph

Don't be in a rush to grab extra powers, says minister

By Liam Clarke

The Finance Minister has warned that he would oppose a rush to devolve too much tax and spend powers to Northern Ireland in the wake of the Scottish referendum.

The Government has pledged to publish detailed proposals on new powers for Scotland next month and to complete consultation on them by November.

Corporation tax powers, long sought by all the Executive parties, is likely to be offered along with other powers to the devolved regions at that stage.

Yesterday Secretary of State, Theresa Villiers raised hopes of the change. She stated: "Detailed technical work has been under way for some months on how a devolved corporation tax regime might operate in Northern Ireland.

"This has progressed well. The UK Government will be looking carefully at whether devolution can go ahead and we are committed to announcing a decision on this by the Autumn Statement."

Local parties are sharply divided on what powers should be devolved.

If we get tax varying powers money is deducted from our annual subsidy from Westminster of about £10bn a year, half of our total spending.

Finance Minister Simon Hamilton argued: "We have to be sure we derive a net benefit from varying the taxes."

He revealed that his department considered income tax, stamp duty and landfill tax. Stamp duty is a tax on house sales, which he said could be reduced to stimulate the building industry or raised if house prices were running out of control.

He said: "We would be cautious about income tax. It raises £2bn to £3bn a year here. That is very big money and a big risk for no clear benefit.

"If you lower it, how would you pay for that? And raising it might be regressive.

"In Wales they have asked about income tax and they have been told there is a 'lock step principle'. That means that if they increase one band they have to increase the others.

"If you put up the top band, as Sinn Fein have suggested in the Republic, then you have to raise the bottom band too."

His approach puts him at loggerheads with Martin McGuinness, the Deputy First Minister, who wants the transfer of all tax raising powers to Northern Ireland followed by a border referendum.

"All of the parties are agreed that we should have the power to set our levels of corporation tax. We will also be calling on the British Government to transfer full fiscal powers to the Assembly," Mr McGuinness said yesterday.

On the border poll, he said that the Scottish referendum showed "it is possible to discuss important constitutional issues in a spirit of respect for all sides".

"I believe we could do that without opening up divisions which would be detrimental to the institutions."

He added: "We have many challenges to face and it is clear that there is a rump within the DUP of between nine and 12 powerful individuals who have been blocking progress in the Assembly."

The statement immediately put him at odds with Peter Robinson, the First Minister. Mr Robinson dismissed his proposals, saying: "I would always be more impressed when people asked for the transfer of full fiscal powers if they had shown a competence in dealing with the powers that we have."

Mr Robinson discussed devolution issues with Carwyn Jones, the Welsh First Minister, by phone yesterday in an attempt to adopt a common approach.

There was less co-ordination between the DUP and Sinn Fein. Their relationship in government has been plagued by disagreements over welfare reform, which is creating a budgetary black hole, as well as flags, parading and dealing with the legacy of the Troubles.

Next week Ms Villiers will attempt to find a way through this in talks with all the parties.

It is understood that she will focus at first on setting up a commission of inquiry into parading in north Belfast as a prelude to broader talks.

Later in the week David Cameron, the Prime Minister, is expected to comment on the situation here.

Yesterday he set his priorities saying that Northern Ireland would be given a greater say over its affairs.

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