Corporation tax opportunity cannot be lost
Whatever the validity of the Chancellor's argument that Northern Ireland's politicians must prove their financial acumen - including agreeing to welfare reform - before corporation tax varying powers are devolved to Stormont, it's beginning to look like a risky tactic, as we predicted yesterday.
George Osborne is a Tory toff, born into a gilded life, and educated at a public school and at Oxford. It was never likely that Sinn Fein - which opposes the Government's welfare reforms - would change tack just because he said that they must.
Unless Mr Osborne knows something that the rest of us don't, it looks like he has simply created another stand-off. Sinn Fein has responded to the Chancellor's demands by issuing its own list of preconditions which have to be met before the party will consider any movement on welfare reform. This is a wish-list which has little chance of success, but it allows the republicans to construct a narrative that, in order to implement corporation tax devolution, which will put money in the pockets of the rich, the Tories are demanding that the poor be further ground down by austere welfare reforms.
Of course, this is all nonsense, and the real concern is that corporation tax-varying powers may be lost because of a debate built on fallacies.
The truth is that no government, even a Labour one, is going to row back on welfare reform.
The simple reason is that the country cannot afford to
The second truth that republicans and every one else has to accept is that reducing corporation tax is not some sort of bonus for fat cat business owners. It is an incentive for investors to come here, just as they did to the Republic where the corporation tax rate is 12.5% compared to 21% on this side of the border. Devolution of tax-varying power would allow Stormont to eventually equalise the rates.
We desperately need to rebalance our economy by bolstering the private sector. News of thousands of potential job losses in the Department of Education, the Department for Social Development and the Department for Employment and Learning show the urgency of the task. Perhaps the British, Irish and American governments can spell this out clearly at the inter-party talks next week.