Belfast Telegraph

Sale of Stormont's prize asset has its risks

Editor's Viewpoint

News that the Stormont administration is considering selling off a prize asset to fund the devolution of corporation tax will send a few shudders of apprehension through even the staunchest supporters of this job creation initiative.

The major concern would be the price that the politicians have put on the Belfast Harbour Estate.

At a reported £400m, the asking price is less than half what the area was valued at just three years ago. This is an important piece of real estate, being home to 700 firms employing 21,000 people, including big brands like George Best City Airport, Harland & Wolff and Bombardier.

In recent times the politicians have not proved themselves to be very adept at handling finances, as evidenced by the fact that Northern Ireland nearly went broke within the last few months and had to be bailed out by a loan from the Treasury.

It is anticipated that cutting the rate of corporation tax here to somewhere near the Republic's 12.5% from the current 21% will mean lost revenue of some £300m.

The hope is that the lower rate of tax will entice more inward investment, which will then provide a greater tax take in the medium and long-terms.

The sale of the Harbour Estate is seen as a way of offsetting the initial losses which would come out of an already stretched block grant. This seems to be a fairly straightforward equation, but it does have risks.

The primary one is that an asset is sold but that cutting corporation tax does not produce the expected dividends, or at least not as quickly as hoped for. How then will the shortfall be made up? By selling other Government assets?

There needs to be a strong business case put forward for the sale of the estate. The apparent asking price seems to be far below the value of the asset and smacks of a rush to sell. It would be folly to put this asset on the market at too low a valuation, as the money realised would only last a relatively short time.

This newspaper has long been a strong advocate of cutting corporation tax rates in Northern Ireland to allow us to compete on a level footing with our nearest neighbour across the border. We still believe that it is a potential game-changing initiative in the efforts to rebalance our economy, but all the implications have to be considered carefully and managed well.

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