Corporation tax 2. They’re flying blind. Confusion reigns

The debate over what lower corporation tax for NI only would do for the local economy is in total confusion. That’s my verdict after listening to a couple of hours of frankly embarrassing evidence before the NI Select Committee. I’d got such a different impression from the chairman of Belfast Harbour Board Len O’Hagan yesterday. It was all so very “Ulster.”

What you’d expect for such a fundamental shift of policy is for the Executive to commission an authoritative report on whether to bid for a certain range of tax varying powers and present it to Whitehall and Westminster. This is what happened, more or less, for Scotland and Wales.

Not so with Northern Ireland. We do things differently up at Stormont. We wait for everybody else to take the initiative and then grumble when we feel railroaded by Business. This was what was played out before the NI Select Committee of MPs today ( thanks Nevin). The drive for a differential corporation tax comes from NI business, with the Assembly dragging along uncertainly behind.  NI CBI representatives Terrence Brannigan and Nigel Smyth waxed lyrical – 90,000 jobs in 20 years with a level of company tax matching or lower than the Republic’s, phased in over 4 or 5 years.  We’ve heard it before and it sounds inviting.

Then along comes NI ministers Sammy Wilson and Arlene Foster, full of problems and no solutions.

Nobody knows the cost of the downside of a lower corporation tax rate , the loss of revenue in the block grant, with NI already facing the loss of another 28,000 jobs over the next four years. The CBI wave this aside. Growth stimulated by the new jobs a lower rate would attract would make up the difference. Not that they had any figures either nor any comparators either. No one seemed to do any research; the CBI,  the local ministers and  least of all the committee members who kept asking first year business studies questions ( but not getting even first year answers). 

So what is the estimate of the costs of lower corporation tax? Nobody knows, for a host of reasons. Between £100m and £500m a year said Sammy, adding :

” The lower you set the rate, the bigger the bill.. A loss of £300m a year is not sustainable.. I would like certainty over what the government’s views are towards rebuilding the economy and a clear indication that the costs will be set at a realistic level that will not devastate what we are trying already trying to do “

Sammy and Arlene blame the Treasury for the uncertainty and the long delay. Even the Secretary of State was “disappointed” ( but could he do nothing to speed things up?)

They had agreed terms of reference for a negotiation before the summer but then the Treasury got caught up in the comprehensive spending review to 20 October. A letter had been sent to them but so far, no reply. Did Sammy try boning a Treasury minister in the corridor,  he was actually asked? Well, no.

Arlene was about to put out to consultation a very important report on rebuilding and rebalancing the economy without this important element in it.

Asked whether the corporation tax debate was confined to business and politicians, she replied revealingly:

“If we were to lose £200-£300m a year, people haven’t realised  it’s up to Northern Ireland to deal with it, and not the Treasury.”

Who’s fault’s that, Arlene?

Former BBC journalist and manager in Belfast, Manchester and London, Editor Spolight; Political Editor BBC NI; Current Affairs Commissioning editor BBC Radio 4; Editor Political and Parliamentary Programmes, BBC Westminster; former London Editor Belfast Telegraph. Hon Senior Research Fellow, The Constitution Unit, Univ Coll. London