Cameron rules out lower CT. What now is the strategy for Northern Ireland’s recovery?

As I feared and after all the hype, the presumed coping stone for a Northern Ireland expansion strategy has been kicked in the long grass. ( Did Cameron stub his toe?) Even though the 12.5 % company tax looks safe in the Republic, (although still tbc) the British government has balked at introducing a similar rate for Northern Ireland, according to the Prime Minister in an interview with the Bel Tel.

The reasons are not hard to find and are overwhelmingly political.  Despite  the unanamity of the f ront benches at Westminster in favour of a British contribution to the Irish bailout sections of the soft left – like Polly Toynbee in a Guardian column re-run by the Irish Times – are in an unholy Little England alliance with the europhobe Tory Right like Bill Cash to slam the Irish ” tax haven” for helping “to cheat tax form the world’s treasuries for decades.”  As if no other country is allowed to vary its tax base if it annoys the London chattering classes.

Nevertheless in face of this pincer movement, Cameron is probably wise to beat a retreat – even before he ordered the advance.  It would do NI no good at all to be put in the corner with the Republic when xenophobic British insecurities are running high. What price now Enterprise Zone Northern Ireland?

From the Cameron interview…

While calls continue from politicians and some business leaders for Northern Ireland’s rate to be brought in line with the Republic as a means of attracting overseas investment, Mr Cameron indicated that was unlikely to be a major short-term priority.

He said: “In terms of the low corporation tax rate, I think we have to be careful here. I do believe it’s up to countries to set their own tax rates, I don’t believe in a European-wide setting of tax rates.

“I think we have to be careful before we do too much insisting on what people should do. It’s important that countries set tax rates that are sustainable.

“In terms of Northern Ireland, this issue I don’t think has gone away, but obviously the focus will be much more on how we get the Southern Ireland economy much more stable and growing.

“We will have to see where the tax rate ends up at the end of that before taking forward this agenda.”

, , , , , ,

  • Frederick Chichester

    Can we have some precision here please, Brian?

    First, Cash and the Tory right don’t object to Ireland’s low CT – they object to Britain bailing out a eurozone country.

    Second, Cameron seems to be ruling out an opportunist attack on the Republic’s low CT, not reducing Northern Ireland’s rate (though yeah, I wouldn’t hold my breath).

  • pippakin

    Perhaps Cameron knows more than some of us. The CT appears safe but for how long?

  • DC

    Are you sure this is the case? Cameron has ruled it out?

    British pharmaceutical are leaving Britain anyway, seems strange?

    You definitely sure this is a non-runner? Besides, not like Cameron to flip-flop!

  • latcheeco

    And because they have a selfish and strategic interest in making sure industry goes to the home counties before the six counties

  • DC

    Thing is the business is leaving anyway, pharmaceuticals are leaving Britain and moving to Ireland regardless.

    If parity doesn’t come in this environment it will be unlikely to come any time soon, I reckon the EU would gladly look the other way or put up v little resilience if Britain tried it as they want Ireland to ditch the low rate – if parity was shared in both jurisdictions the tax rate policy would lose its edge – as tax take would be shared more fairly. Ergo, 12.5% would become less competitive for Republic anyway.

    Probably another sop to the Republic after Britain spewing out shitty toxic credit all over the housing market there, rather than business interests this time round.

    Let me see, 500 million lost here in taxes plus better jobs in NI, or keep rate 12.5% only in Republic in bad to stimulate a rallying recovery so that Britain can get back its £150 billion its bank have just blown there.

  • DC

    *in a bid

  • JH

    Actually I just blogged about this from the perspective of a small business based in the North. I don’t know if it’s kosher to post a link but it is relevant – http://sas.unsemble.com/

  • The headline of this post is misleading.

    Cameron has not “ruled out” lower CT. I read the article. It looks as though the implementation is being postponed, pending ensuring the Irish economy recovers.

    This is a very clear indication of where the Government believes its priorities are.

    It is exceptionally important that we have some clarification on CT for Northern Ireland very soon as we need to keep British companies, who would otherwise leave the UK, within the UK.

    One thing this crisis in Ireland has done is advertise over and over again that they have this low CT rate.

  • DC

    One thing this crisis in Ireland has done is advertise over and over again that they have this low CT rate.

    Yes very true, the EU member states don’t like it one bit either, but it is a case of getting 100s of billion back or 100s of millions back, Britain will favour the Republic for its billions.

    It also shows up the diffs people in NI have in becoming more entrepreneurial.

  • If this is a postponement of the CT plan for NI (it looks as though it is) on the basis of what is happening in ROI only, I dont believe that postponement will last all that long (a year at the most).

    My view, having looked at a multitude of stats, is that the Irish position will stabilise much faster than many people are believing at the moment.

  • bob wilson

    To be fair I think people reading too much into this.
    In The Bel Tel Cameron was pointing out the obvious – we need to see where things settle south of the border
    If conservatives announced by the end of the year that they were going to give the Assembly the power to set Corpor tax that would have to be legislated for at Westminster. Then the incoming Assembly after the May elections would have to introduce legislation – probably in the autumn 2011

    Who knows what might have happened during this time (Apart from Commission reluctance and German, etc objections) the Republic may have had to push Corpor Tax up to say 15%

  • Glencoppagagh

    It’s a wonder there is any FDI in NI at all with the higher corporation tax rate and what on earth is a succesful indigenous company like First Derivatives doing in Newry? Did nobody tell them about the RoI’s rate?
    The RoI has managed to keep its rate for now but as and when recovery takes place it is likely to come under renewed pressure from Europe. From the perspective of countries which charge ‘normal’ rates, it looks like a subsidy.

  • IJP

    Bob

    A good defence – but actually an inadequate one.

    I didn’t realise Conservatives believed the UK had ceded its sovereignty to such an extent that tax rates were dependent on what happens in the Republic of Ireland and Germany!

    At the election I said to the voters we would find a way to offer lower corporation tax (i.e. lower than the rest of the UK) to the NI Assembly. I didn’t make that reliant on other countries. If the political will existed, it would happen.

  • KPB

    Lowering CT in Northern Ireland is ultimately against Britain’s interests as it breaks EU rules, harms British industry and reduces the tax revenue generated for the block grant and ergo deficit repayments. Also they probably don’t think a region with a population smaller than the Manchester conurbation deserves special treatment. Cameron simply admits he either didn’t know he couldn’t do it, or he has found out that running this CT distraction has served its purpose.

    How can he delay the impossible?