No decision on Northern Ireland corporation tax powers until September 2014

Tuesday 26 March 2013 18.05
Stormont has sought the power to set its own corporation tax rate
Stormont has sought the power to set its own corporation tax rate

Britain will make no decision on devolving corporation tax powers to Stormont until after next year's Scottish independence referendum.

A spokesperson for the British government said the matter would be resolved in the autumn of 2014.

Business leaders have warned delaying a decision will prolong the suffering of local industry.

A Downing Street spokeswoman said Prime Minister David Cameron's meeting with Stormont First Minister Peter Robinson and Deputy First Minister Martin McGuinness in No 10 was constructive.

"They made good progress on setting out a timetable for a decision on corporation tax in the autumn of 2014. If the decision is in favour of devolution we agreed to look at the best way of legislating within this parliament. Further discussion was agreed to take forward this process," she said.

Mr Cameron restated the British government's commitment to revitalising the Northern Ireland economy and outlined a wide-ranging package of options to help growth and tackle some of Northern Ireland's "long-standing" problems.

Mr McGuinness said the Coalition was unwilling to act until after the Scottish independence referendum on 18 September 2014.

"It is very, very clear from the meeting that the whole issue of the referendum in Scotland is playing in big time to this debate on corporation tax and I think it is absolutely clear that no decision will be taken on this issue this side of the Scottish referendum," he said.

Chairman of the Institute of Directors in Northern Ireland Mervyn McCall said he was disappointed.

"The longer it is deferred, the longer Northern Ireland suffers as a region and we cannot understand the reasoning behind delaying the judgment," he said.

Businesses in Northern Ireland have been pressing for the tax rate to be cut to 12.5% in line with that in the Republic, credited with attracting foreign investors and fuelling an unprecedented boom within the Irish economy until the financial collapse.

Concerns have been expressed that the issue could ignite nationalist passions in Scotland with an administration in Edinburgh also eager for more powers but Northern Ireland First Minister Peter Robinson vowed not to give up the fight for the power.

"There is absolutely no reason why a decision could not be taken today if there was the political will to take that decision today," he said.

There have been fears devolution of the key tax could prove difficult and expensive for the Treasury and Stormont.

The Executive would have to compensate the Treasury for any tax reductions by returning a portion of its annual budget to meet the requirements of European law.

That could cost hundreds of millions every year, though the reduction of the main rate of UK corporation tax to 20% by 2015 reduces the cost.

Supporters like the CBI in Northern Ireland believe the economic boost to the region from inward investment could far outweigh the cost to the public purse.

Those with reservations about devolving the power point to the falling UK rate to argue the rate difference between Northern Ireland and the Republic is reducing.

The Prime Minister`s spokeswoman said making better use of European funding was discussed.

There will be a 5% cut to European structural money for Northern Ireland.

The UK Government is providing Northern Ireland with a total allocation of around €457 million, an uplift of €181 million compared to the amount that Northern Ireland would receive under the EU formula for allocation of the funds to the UK.

Mr Robinson said today`s meeting had been adjourned rather than completed because other issues required officials to meet in the next few weeks. The leaders will meet again in April.