Corporation Tax

Oral Answers to Questions – in the Northern Ireland Assembly at 2:00 pm on 20th October 2014.

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Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury) 2:00 pm, 20th October 2014

3. asked the First Minister and deputy First Minister, in light of the outcome of the Scottish independence referendum, what discussions they have had with the UK Government on the devolution of corporation tax to Northern Ireland. (AQO 6852/11-15)

Photo of Peter Robinson Peter Robinson DUP

Securing the power to lower corporation tax is a key priority for the Executive to promote the growth of the local economy.  As part of our economic pact that we signed last year, the United Kingdom Government indicated the intention to make a decision on the devolution of corporation tax powers no later than the coming autumn statement, which will be on 3 December.  Since the Scottish referendum last month, we have made clear our expectations regarding further fiscal devolution for Northern Ireland.  That has involved discussions with the Secretary of State, and we have also written to the Prime Minister to press him to come to a decision quickly to ensure the swift devolution of corporation tax powers to Northern Ireland.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury)

Given the refusal of Sinn Féin and the SDLP in particular, and, to a lesser extent, the Ulster Unionist Party, to face up to the Assembly's budgetary pressures, does the First Minister have any fear that we may find ourselves in a situation in which corporation tax powers are devolved, but we are unable to deliver on a reduction of the rate because of the financial shambles imposed on the Executive by the refusal of those parties to engage in serious debate on the Budget?

Photo of Peter Robinson Peter Robinson DUP 2:15 pm, 20th October 2014

I say to my friend that my fear is not so much that the powers are devolved and we have difficulty implementing them thereafter; my fear is that Treasury might say that it expects a certain level of fiscal management responsibility and that it will therefore hold back from devolving those powers.  I am sure — I say this in order to satisfy the concerns of Treasury — that the real difference between welfare reform and corporation tax is that there is unanimity around the Executive table on corporation tax.  I am convinced that, if given the power, we will be able to deal with that in a unanimous manner around the Executive table. 

I point out that we will obviously require legislation to go through Westminster, probably in much the same way as a money Bill would go through the House of Commons and the Lords.  Even after that, there are considerable processes, particularly the procurement of the necessary IT equipment, which would probably mean that it would be, at the earliest, the end of 2016 or early 2017 before it could be implemented on the ground.

Photo of Mike Nesbitt Mike Nesbitt UUP

Notwithstanding the long wait, does the First Minister believe that, should the power be devolved, we are ready in terms of A-grade office accommodation, skill sets in the workforce and what some economists might consider other structural flaws in our set-up?

Photo of George Robinson George Robinson DUP

It would be unfair to suggest that DETI and Invest have been anything other than the jewel in the crown of the Northern Ireland Executive and Assembly, and, indeed, of Northern Ireland itself.  They have been out there hammering away at bringing in jobs and have done so successfully.  They have beaten every target that we set for them.  They have brought in more jobs over this period than at any time in the history of Northern Ireland and more foreign direct investment per head of population than anywhere else in the United Kingdom, including London.  So, they have done a first-class job.  Do I have some concerns that there are areas of infrastructure that we need to do more about?  Yes, I have, particularly office space, which he mentioned.  We have been so successful that we have started to soak up all of the available office space.  The planners and developers need to up their game to ensure that we can continue with the level of growth that we have been successful in bringing to Northern Ireland thus far.

Photo of Sean Lynch Sean Lynch Sinn Féin

Go raibh maith agat, a Phríomh-LeasCheann Comhairle.  What discussions has OFMDFM had with the Scottish Executive, and what tax-varying powers are being considered for the North of Ireland?

Photo of George Robinson George Robinson DUP

The deputy First Minister and I had breakfast this morning with the First Minister of Scotland, Alex Salmond.  Both of us had a previous conversation with him as part of our business trip to Gleneagles, when we discussed with him elements of devolution; spoke to a major company that was looking to bring hundreds of jobs into Northern Ireland; and had discussions with the European Tour about the two visits of the Irish Open to Northern Ireland.  Tomorrow, we leave here for a meeting on Wednesday with Carwyn Jones, the First Minister of Wales, on the same subject.

There is probably recognition that the same type of devolution will not be suitable for all three jurisdictions.  Therefore, we need to be satisfied of what is best for us, just as Scotland and Wales will do for themselves.  The hope and expectation is that there will be some commonality of approach in ensuring that we have the very best form of devolution for each of the three jurisdictions as we move forward. 

In terms of what tax-raising powers we are looking at, we are looking at them all.  What we come down on and which taxes are appropriate to be devolved will, ultimately, be a matter for the Executive.

Photo of Colum Eastwood Colum Eastwood Social Democratic and Labour Party

I note what the First Minister said about corporation tax.  What are the Executive doing to address the very clear regional imbalances in economic development and job creation?

Photo of Peter Robinson Peter Robinson DUP

I am glad to say that we have, through Invest Northern Ireland, been encouraging investment in every part of Northern Ireland.  I think that the Member recognises that it is much easier in the greater Belfast area.  I know that some people are very seriously considering job potential in the north-west.  I hope that we can have announcements on that in the future. 

There is no part of Northern Ireland, including the north-west, that anybody on the Executive — certainly not the deputy First Minister and I — would do anything other than encourage people to move to.  I want to see everybody in Northern Ireland gainfully employed.  I am glad to see that for 21 consecutive months, the claimant count has been going down in Northern Ireland.  I am glad to see that we are back down to 6·1% unemployment and that it is hopefully still moving further down.  All of that is a good sign.  I want people to be employed as much in the north-west as in any other part of Northern Ireland.

Photo of John McCallister John McCallister UUP

From his discussions with the Scottish First Minister, Alex Salmond, the First Minister will know whether Scotland are pursuing corporation tax.  Is he aware that no work has been done by either DETI or DFP on the impact that Scotland's getting corporation tax would have on Northern Ireland's receiving it or indeed the level at which it should be set?  Is that a matter of concern to him?

Photo of Peter Robinson Peter Robinson DUP

No.  What would have been a matter of concern is that if DETI and its various advisers had not done a lot of work to see what benefit there would be to Northern Ireland if corporation tax powers were to be devolved.  They have, and the economic advisers indicate that our benefit could be around 58,000 jobs.  That is a significant benefit to Northern Ireland. 

I am not convinced that Scotland can make the same strong case as Northern Ireland to have the devolution of corporation tax.  In Northern Ireland, we have a devolved government that is coming out of a long period of conflict and division, which makes us a special case.  We have a land frontier with another nation that has a very low level of corporation tax compared with that of the UK.  That is a disadvantage and a uniqueness in our case.  I think that, for many reasons, Northern Ireland stands apart as having a strong case for the devolution of corporation tax.  I have no doubt that the First Minister of Scotland and his successor will push to have the devolution of corporation tax, but I think that we have a far better chance of getting it than they do.