Belfast Telegraph

Our fate is in the hands of shadowy figures who wield great influence

By Clare Weir

If the Treasury wanted to kill this idea it would have done so." These were the words of Exchequer Secretary David Gauke just over a year ago on the issue of Northern Ireland setting its own rate of corporation tax. Now Whitehall civil servants have been accused of trying to stall progress on the issue once again.

Speaking in London on Tuesday night as 60 business leaders gathered to state the case for lowering the rate at Westminster, First Minister Peter Robinson accused civil servants of delaying change.

Mr Gauke's words leave spectators in no doubt as to the influence wielded by lesser-known names working behind the scenes in the corridors of power.

To comply with European laws, responsibility for the tax must be devolved to Stormont and the block grant must be reduced accordingly, something that has caused concern.

The current Northern Ireland Act does not give any tax powers to Northern Ireland, so a change to the act is required, and also a modification of tax legislation.

The Treasury's job is to work out the cost of the move, but experts say that this will be hard to estimate.

The Treasury has added all the costs of lowering the rate of corporation tax and estimated it at £400m - but supporters of a lower rate say that subtracting the potential benefit will mean a much lower cost of £220m.

One major difficulty is that no one has ever tried to separate the Northern Ireland figures from the overall UK before - but just as the costs are estimates, so are the benefits.

Critics say while civil servants are quick to take into account costs, they appear to be slow to take account of estimated benefits, being more conservative and pessimistic in their outlook than is necessary.

Head of tax at accountancy firm KMPG Eamonn Donaghy said that in the upper levels of Government, MPs seem to be in favour of the proposals.

"It is hard to see why it won't get to the House of Commons," he said. "I think there is a fear that if Northern Ireland get devolution of tax-setting powers, Scotland will then demand it. However it is not something that Scotland has asked for yet.

"If lower corporation tax gives us a chance to stop us relying so heavily on Great Britain, why would the Government not accept it as long as they do not get spooked by what is going on in Scotland."

Quintin Oliver of Stratagem cited a speech made at the London Stock Exchange last month by former senior civil servant Sir Gus O'Donnell, who openly admitted the Treasury is capable of frustrating policy change.

Sir Gus said that the iron law of tax changes meant winners stay silent and losers scream.

He added you need to "have the Treasury on your side if you are making big changes. Money will be needed to compensate the screamers. If the Treasury aren't supportive the money will not be forthcoming, the policy will fail, and the Treasury will be the first with the 'I told you so' response".

So perhaps the First Minister is not so wrong to point the finger at shadowy Whitehall figures who have a make-or-break role in determining the economic future of Northern Ireland.

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