Corporation tax: A golden ticket within our grasp
Northern Ireland has won the argument to have corporation tax-varying powers devolved to the Executive, but only in principle, as the Westminster government has attached conditions to the move.
Chancellor George Osborne showed that Westminster is prepared to play hardball on the issue by saying that powers will only be devolved if the Executive can demonstrate that it can manage the financial implications. It will take its cue on that from the results of the current inter-party talks which include trying to find a way of ending the impasse over welfare reform.
It can be argued that Westminster's stance is a reasonable one given that the Treasury recently had to give Stormont a £100m loan to prevent Northern Ireland going broke in this financial year.
The implications of Stormont's financial mismanagement - as well as fines imposed by the Treasury over the failure to implement welfare reform - were starkly outlined yesterday when a senior official at the Department of Education warned that 2,500 jobs - 1,000 of them teachers - could be axed because of the swingeing £198m cut to the department's budget. A drip feed of other public sector job losses is likely in the coming months.
Against that background there certainly are risks attached to the devolution of corporation tax. While it may well be a game-changer in efforts to rebalance the economy, it is proper that local politicians demonstrate a strong grasp of the economic realities involved. However, the Chancellor's tactic is also not without its dangers. Already Sinn Fein is arguing that corporation tax is being used as a bribe to force them - and to a lesser extent the SDLP - to drop their opposition to welfare reform.
The party, which has made big electoral gains in the Republic due to its anti-austerity stance, may find it hard to adopt a different position in Northern Ireland - but compromise is essential. It might have been a safer tactic by the Chancellor to leave the veiled threats unsaid in public and instead have the pressure applied in the inter-party talks. This newspaper has been a long-time advocate of Northern Ireland having the power to vary corporation tax rates to bring them more into line with the Republic.
It still believes it is a move which should be implemented sooner rather than later.