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UK Politics

David Cameron to decide on devolving corporation tax to Northern Ireland


Proposals for devolving corporation tax to Northern Ireland will be handed to Prime Minister David Cameron at the end of the month.

First Minister Peter Robinson and Deputy First Minister Martin McGuinness agreed recommendations with the Treasury that would allow Belfast to compete with the 12.5% rate set by Dublin for the Republic.

Mr Cameron now faces a political decision over whether he wants to devolve that power to Stormont.

Mr Robinson said: "This is a step in the right direction."

Mr Robinson and Mr McGuinness want to meet Mr Cameron before he takes a final decision over the proposals to allow tax-setting powers to be transferred to the Assembly.

Speaking after the meeting with Exchequer Secretary to the Treasury David Gauke, the Deputy First Minister said today's working group had "drilled down" a number of vital issues.

Mr McGuinness said: "I hope that over the course of the next short while we can bring this to a successful conclusion but I emphasis it will be a political decision and it will be David Cameron's decision.

"We are very conscious that there is a debate out there in the ether about how this impacts on the vote for Scottish independence in 2014 but we believe our circumstances are unique.

"The reality is that we have on the island of Ireland an administration that has a corporation tax level of 12.5%.

"That has created massive difficulties for us in terms of attracting the numbers of new investors in the north so it's crucial for us to create a level playing field."

Supporters of the move believe it will attract foreign direct investment but critics fear it could hit the Assembly's finances because taking control of the tax would mean losing some funding.

The First Minister said: "We have now shown through the work that we have done that it can be done. Now we have looked at what the mechanisms are and what the costs will be, a paper will go to the Prime Minister and Martin and I will seek to have a meeting with the Prime Minister before he takes that decision.

"We think it is overwhelmingly beneficial to business in Northern Ireland if we can have the tax-setting powers and we are able to reduce the level of corporation tax. That has long been our view."

Northern Ireland Secretary Theresa Villiers, who also attended the meeting, said: "It is obviously important for the Prime Minister to take into account both the practicalities of devolvingcorporation tax but also the wider constitutional issues. I'm sure that will be part of his consideration as well."

The chairman of the Institute of Directors (IoD) in Northern Ireland has warned Westminster not to use Scotland as an excuse for failing to devolve corporation tax powers.

Mervyn McCall addressed business leaders at the IoD's annual lunch and said arguments that the Government would have to relent to similar Scottish demands were unfounded.

A joint ministerial working group gathered in London today for a final meeting on whether to give Stormont the economic lever which the business community believes will encourage local investment.

Mr McCall said: "Scotland has not asked for the power to devolve corporation tax. Indeed, several Scottish business organisations have rejected it as a proposal.

"The cost of lowering corporation tax to 12.5% would be over £2 billion per annum in Scotland. It would have little or no impact on their economy.

"In Northern Ireland we have won the economic argument and all parties agree that lowering corporation tax will create jobs, jobs and more jobs."

Mr McCall said Scotland could set its own agenda within the union.

"I fear delaying a decision could prevent our economy from rebalancing," he said.

"Northern Ireland should be given the opportunity to help itself through the lowering of corporation tax rates."