Corporation Tax is not Northern Ireland’s elephant in the room…

So, Corporation Tax cut bites the dust, for another year at least. I doubt we can entirely blame disunity at OFMdFM for this particular dropped ball though. It was very much a project of the previous Secretary of State. The Chancellor (or rather the Treasury) was never keen, and David Cameron does not need to queer his Scottish referendum pitch.

The latest indicators suggest that the number of entrepreneurial businesses have halved, even if those surviving are now more profitable. Tougher conditions from banks desperate to right their balance sheets have been squeezing otherwise good business out of business, with little help from government only kind words.

David Elliott in the Telegraph today:

While it may seem as if the movement has lost traction (perhaps that’s the effect of the snow?), the deferment doesn’t mean the issue has been shelved for good and at least David Cameron hasn’t said no.

Rather than shutting the door on the issue he’s made clear that he’ll revisit it in 2014, an answer which isn’t ideal but is much better than the ‘no’ he could have given.

Still, it’s a shame that Mr Cameron hasn’t been brave enough to grant an action which was novel, clever and self financing.

The Northern Ireland economy has suffered enough through the years from disadvantages that weren’t created by the hard working business people who make up our number but which still curtailed our daily operations.

With cuts coming down the line, Northern Ireland is going to face massive social challenges not yet seen. Corporation Tax is one practical measure. But, no more than massive investment from Europe, it is not enough to enable Northern Ireland to regenerate.

For that we need an overhaul of the education system, greater inward investment and smarter use of community employment.

But the elephant in the room, is our seemingly terminal inability to deal seriously with the causes of violence and disorder, amongst the most pressing being poverty and alienation.

  • OneNI

    Some folk seem to have short memories. Mark Devenport compares Varney exercise to the Conservative one. But Varney was appointed with the sole purpose of killing the idea!
    Cameron and the Conservatives are not hostile to it at all but unlike Robbo et al his primary goal is the maintenance of the Union so the delay til next year was inevitable.

    Let us not forget that by then Cameron will have cut Corporation Tax to 20% by then – virtually halving the gap between RoI and ourselves.

    Do we honestly think that if Cameron had devolved the power on day one if Downing St that the Dysfunctional NI Executive would have bitten the bullet and implemented 12.5% in one go?

    The truth is that the Executive is completely directionless – it has totally failing to rein in revenue spending and government costs. Where are the Draft plans implement the sort of savings that would need to be made to introduce this even on a phased basis?

    The Executive has only curtailed government costs under pressure from Westminster – when faced with a tough decision it tries to duck it.
    So Cameron is forcing the Executive to gradually get its house in order (and they are failing to do so properly) whilst narrowing the gap (and ultimate cost) of moving towards 12.5 or 10%

    Of course Mick hits the other nail on the head – that NI’s case for Inward Investment was dealt a much heavier blow by UUP/DUP inspired Flegs protest than this announcement yesterday. So forgive me if I find the DUP and UUP pronouncements hard to take!
    Ie Finance Minister Sammy Wilson on Nolan on Corporation Tax derogation “we’re prepared to pay the price. We’re prepared to take the risk.”
    Yeah right Sammy!
    Nesbitt talking nonsense too.

    All the business organizations know this to be true too but are afraid to say

  • IJP

    Sorry, but David Elliott is just talking nonsense.

    Deferral to late 2014 makes legislation impossible prior to the 2015 election, and deliberately so. There is not a hope in hell of any UK Government now doing NI that type of favour without also offering it everywhere else in the UK – thus rendering it much less beneficial in any case.

    From the moment Salmond won conclusively in 2011, it was a political impossibility. Frankly, you should never trust any political analysis from people who don’t understand that obvious political point.

  • Coll Ciotach

    There was never any hope of the English, and I mean English, cutting their own throats on this. This was always pie in the sky stuff. The reality of the union is that we are at the mercy of Englands interests.

  • Mick Fealty

    And England’s largesse…

  • Morpheus

    “The reality of the union is that we are at the mercy of Englands interests.”

    Should that not be the case considering the English are footing the bill for Northern Ireland? We generate £12.7b but spend £23.2b – a deficit of £5k for every man, women and child every year – shouldn’t the guy who pays the piper call the tune?

    Personally I think the CT should be cut asap to give us a chance of attracting big businesses who employ large numbers of people.

    12.5% of something is still better than 100% of nothing.

  • Coll Ciotach

    Just like an addict going back to the pusher who got them hooked? A powerful argument for seeking the next fix.

  • JH

    “Should that not be the case considering the English are footing the bill for Northern Ireland? We generate £12.7b but spend £23.2b – a deficit of £5k for every man, women and child every year – shouldn’t the guy who pays the piper call the tune?”

    Even if that tune keeps us in perpetual poverty?

  • jthree

    David Elliott is in a somewhat invidious position.

    When the chief executive of the firm which owns the Bel Tel came out and said, explicitly, that he was in the tank for the corporation tax cut then room for journalistic maneouver was tightly constrained.

    http://www.belfasttelegraph.co.uk/business/business-news/cut-in-corporation-tax-could-kickstart-northern-ireland-economy-28541445.html

  • Morpheus

    Even if that tune keeps us in perpetual poverty?

    Therein lies the conundrum JH.

    I think we can all agree that it is in the best interests of everyone in Northern Ireland for it to be the best it can be – for the unemployment rates to go down, for inward investment to go up, for reliance on social security to go down, for tax revenues to go up, for education levels to go up, for crime to go down etc.

    The problem with that is that the better Northern Ireland does and the more self-sufficient we become, the less reliant we are on the English to support us. The less the English need to support us the more likely a United Ireland will become.

  • Otto

    Plan B

    How do you become a Crown Dependency?

    Jersey, Guernsey and the Isle of Man set their own rates and let GB pay for defence, foreign policy a monetary policy.

    How do the numbers look if we do that?

    http://www.justice.gov.uk/downloads/about/moj/our-responsibilities/Background_Briefing_on_the_Crown_Dependencies2.pdf

    “The Crown Dependencies raise their own public revenue and do not receive subsidies from or pay contributions to the UK. They do, however, make annual voluntary contributions towards the costs of their defence and international representation by the UK.”

    Voluntary contributions. We’ll not volunteer for a bit eh?

  • Coll Ciotach[10.46]
    When the Scots finally untie the knot and go their own way, and even if not in 2014 it will happen at some date], England will ‘re-negotiate’ the block grant to NI and it will be severly cut. Robinson knows this well.

  • RegisterForThisSite

    The 23Billion is a bigger elephant in the room, tiny NI’s contribution is circa One Billion for defence and another Billion on interest.

    The UK is banjaxed financially, come 2015 it will be the most indebted state in western Europe owing £1.4 trillion.

    The people paying the piper (even after 80 billion in cuts) are German and French banks, lending HM Treasury about 120 billion this year.

    So I think Merkel will have the last say on NI’s budget in a few years time,

  • BarneyT

    Surely the calls from Unionism to effectively align NI CT with that of the ROI are inconsistent with their all inclusive UK wants for this part of Ireland? I welcome it, for various reasons, but I am curious as to why they would set NI in competition with Scotland or any other part of the UK, as in attracting investment into NI it would perhaps deprive other UK regions.

    Is this a case of cake and eat it?

    Personally for the Island (along with more cross border cooperation and an increased common operational infrastructure) I applaud this call.

  • Reader

    Otto: Plan B : How do you become a Crown Dependency?
    Judging by the hints contained in the rest of the post, you probably need to get back into credit first. That would give far more freedom of action.
    That could be a problem…

  • Reader

    BarneyT: but I am curious as to why they would set NI in competition with Scotland or any other part of the UK, as in attracting investment into NI it would perhaps deprive other UK regions.
    A small corporate tax haven could well be in the overall national interest, soaking up whatever FDI is available, without cutting the tax revenue from the rest of the state.
    But in hard times, and in a devolutionary atmosphere, it would take a strong central government with nerves of steel to go for it. So, no chance.

  • Old Mortality

    Register
    ‘The UK is banjaxed financially, come 2015 it will be the most indebted state in western Europe owing £1.4 trillion.

    The people paying the piper (even after 80 billion in cuts) are German and French banks, lending HM Treasury about 120 billion this year.’

    Odd that the financial markets haven’t spotted this yet with 2-year gilts yielding 0.2% and it’s amazing that French and German banks haven’t realised they’re buying virtually the whole of this year’s new gilt issues.
    You’re obviously a serious contrarian. Just how big is your short position in sterling and gilts?

  • Barnshee

    Sadly NI cannot have its cake and eat it. A lower NI rate of Corporation tax will cost the Treasury – so the block grant will be reduced to make up the shortfall

    How much?? –nobody has a clue –so who is going to risk the fallout should the policy fail? Not Sammy

    The pursuit of the corporation tax cut highlights the sheer incompetence of the local politicians. Surely there are Economists.Tax Experts etc. in the assembly? Oh maybe not.

  • Barnshee

    ‘The UK is banjaxed financially, come 2015 it will be the most indebted state in western Europe owing £1.4 trillion”

    Perfidious Albion is up to its old tricks The crafty bastards are outside the Euro They allow their auld pound to depreciate( -they been at it for decades).

    The arse falls out of it and the poor dupes who bought –,well basically anything-find they have lost out badly on sale and repatriation to their native currency. Its even worse there is sfa they can do about it -the mansion in Kensington is er –attached to the ground. The shares and bonds are banjaxed ,They can only unload items onto another poor dupe. Repeats– they have been at it for decades

  • Old Mortality

    Barnshee
    I think this campaign was initiated in ignorance of the Azores judgment and even when the politicians became aware of it, they probably though they could play the ‘special case’ card as usual.
    In reality, I think they are all petrified by the consequent spending cuts and have been going through the motions of pushing the case just for appearances sake.

  • Morpheus

    Total income from Corporation Tax in 2010/2011 was £775 million. In an extremely crude back-of-a-stamp calculation, if the rate was cut by say 30% it would leave £232-odd million to find.

    In the same period we spent the following:

    Social protection – £7,319 million
    Health – £3,831 million
    Other – £3,652 million
    Education – £2,714 million
    General public services- £2,143 million
    Public order and safety – £1,626 million
    Defence- £1,127 million
    Accounting adjustments- £800 million
    Total – £23,212 million

    I think we could find £232m in that lot somewhere in order for us to attract inward investment, create jobs and reducing the amount we spent on social protection. That ‘Other’ section up there looks susceptible for a start, as does defense at £1.1 billion

    (Like I said, back-of-a-stamp)

  • Otto

    Accounting adjustments- £800 million

    Let’s just stop adjusting our accounts 🙂

  • Morpheus

    Policing bill from the flag protests – £15m. Policing the marching season – make the OO pay for policing, another £7m saved.

    That’s £22m saved in 5 seconds.

    You’re welcome

  • Morpheus

    So between me and Otto we have saved £822m. Problem solved.

    You’re welcome

  • Otto

    Yay!

  • Coll Ciotach

    Time to get rid of the civil servants that really are not needed, run vehicle licensing from Cardiff for example, cut back on all the other vestiges of a civil service for a country instead of a region. That will save some money.

  • Otto

    “run vehicle licensing from Cardiff for example, cut back on all the other vestiges of a civil service for a country instead of a region”

    What What?

    We should be doing the lot here. In fact civil service outsourcing should be one of our core competencies.

    1. We speak English (sort of)
    2. We’re do good phone
    3. We put brighter people in the civil service than your average UK region
    4. We’re cheap!
    5. We’d give all the outsourcing boroughs and departments an excuse to come to Ireland for a “business trip”
    6. We’re cheap!

    We need to start a company like SERCO.

    What do we call it?

  • Reader

    Otto: We need to start a company like SERCO.
    What do we call it?

    CIVCO, or PUBCO – to attract the outsourcers.
    or ‘Department of Administrative Affairs’ to avoid scapegoating by the newspapers.

  • Morpheus

    No no no Coll Ciotach (*slaps wrist*), we need to keep as many jobs in NI as possible. More jobs leads to more wages which leads to more disposable income which leads to more money in the tills which leads to more jobs, more wages etc…you get the picture.

  • Otto

    I like those Reader.

    But I was thinking

    LURCO – The “Let Us Run-it Company”

    John O’Dowd could do sales

    or

    NARCO – The Northern Administrative Resource Company

    somebody else from SF could do sales

  • Coll Ciotach

    I get the picture – and it is more Hieronymous Bosch than Caravaggio.

  • Otto
  • Otto
  • sherdy

    I blame our negotiating team!
    Did anyone notice, when the terrible two arrived home from their expensive US junket and they were interviewed at the airport, there was absolutely no interaction between them. Similarly, when interviewed outside No10 yesterday, they were like two guys who just happened along at the same time.
    Since Robbo chickened out over the flegs protest and refused to be seen beside Marty, their relationship has fallen to zero.
    We have a first minister who will not or cannot act on behalf of the whole population, and his deputy who, understandably will not forgive him for it.
    You cannot expect any results in negotiations with such a divided team – disgraceful!

  • DC

    @sherdy

    The two men are nominated by their respective parties to be FM and dFM; when it was the GFA, the status quo ante, it used to be the case that both first ministers could only become so after a cross-community vote in the assembly, the ‘house’. You currently have party political leaders rather than regional leaders, as both remain without the backing of the regional assembly.

    Of course it remains highly debatable whether even these two men would today receive such backing if a vote were to be called on it.

    Frankly, Peter Robinson takes to the First Minister dispatch box sounding liking a reverend taking to the pulpit in terms of his style delivering, on the other side of the house martin mcguinness and much of SF’s front bench look like a bunch of depressives who if not already should be on anti-depressants.

  • I’m hearing that David told Peter and Martin a few home truths and that Martin felt patronised. It’s likely that the encounter will have been presented as a constructive meeting.

  • FDM

    Nevin (profile)

    28 March 2013 at 9:35 pm

    I’m hearing that David told Peter and Martin a few home truths and that Martin felt patronised.
    ————————–

    Hardly bloody surprising when some intellectual child who has had his ass whipped by a butler from he was born, who is only in the position because he was born with a silver spoon firmly jammed between beneath his clenched cheeks, tries to tell a man who actually forged the time in which we live how the world works.

    What an ass Cameron is. What an empty vessel is Robo. A car pulls up to Stormont with no-one in it and Peter Robinson gets out.

  • FDM, I don’t recall any reference to butlers but I understand that mention was made of buses here being driven by civil servants – perhaps a nudge towards privatisation. I also understand there was a mention of zero enterprise zones here whereas they have been established in England, Scotland and Wales. Peter and Martin have also failed to deliver on a shared future strategy but perhaps David doesn’t appreciate that such a strategy is not possible in the context of the 1998 constitutional arrangement.

  • FDM

    I can’t believe I am being drawn into an debate where we actually have to take David Cameron, seriously. You know like a serious politician.

    If Ron Burgundy was head to head with bland Dave for the premiership, my vote goes to the Anchorman for the comedy value.

    If Italy can get away with Carlo, France with Sarkozy, surely we can slip in Will Ferrell without anyone noticing?

  • FDM, this is a political conversation with some stray insights; it’s not a debate; sledge hammers are not required. I’m just passing on some comments I picked up on the Grapevine.

  • FDM

    @Nevin

    FDM bows and retires the field.

    Thank you for the insight.

  • Seamuscamp

    Mick
    Cliche of the week in The Times today is “an elephant in the room”. I’m sure “dropping the ball”, “queering the pitch” and “hard working people” would rank pretty highly as well. (Thinks: who are the hardest done by – “hard working people” or “hard-working people”?)