Corporation tax benefits are illusory and exaggerated
The Labour Party in Northern Ireland welcomes the Fresh Start agreement reached by Sinn Fein and the DUP. As shadow NI Secretary Vernon Coaker said, it gives Stormont "another breathing space".
He has asked for outstanding issues to be resolved and a fresh crisis avoided, but the agreement to reduce corporation tax to 12.5% has the potential to generate a new cuts crisis.
On the basis of highly dubious research, it has been argued that the reduction would be the game-changer that would transform our economy and create many tens of thousands of jobs.
The original proposal would have cost an unaffordable additional £500m per year out of the block grant. The fact that this would have led to massive additional cuts in public spending, jobs and benefits was ignored, even by Sinn Fein,
Anyway, the great game-changer has gone. It was killed off when the reality of its cost hit the Executive. It was further diminished when Westminster reduced the UK rate from 28% to 18%. The gap with the Republic is now 5.5%. The potential jobs gain, which was always illusory, has mostly dissolved, even if its advocates still make grossly exaggerated claims.
Yet the cost of equalising the corporation tax rate is still estimated to be as high as £300m per year. And this will still come out of the block grant, in addition to the new round of Tory cuts we can expect this parliament.
Austerity we understand and don't like, but why must we have this additional Sinn Fein austerity? How can it justify the additional cuts in public services?
We need a new game-changer. Education is central. Rather than tax cuts, we must concentrate on education, training and research so our workforce possesses the skills to match the world.
We must focus on parenting and early years education to ensure everyone can read and write when they leave primary school. This is vital for our young people to function and grow in the knowledge economy.
We also must continue to grow our vocational training and apprenticeship schemes. And we must expand - not cut - the number of university places available locally.
- Boyd Black is secretary of the Labour Party in Northern Ireland