Northern Ireland: Corporation Tax

Debate between Lord Lexden and Lord Newby

Monday 18th March 2013 Lords Chamber

[Lord Lexden]

To ask Her Majesty’s Government, further to the answer by Lord Newby on 15 October 2012 (HL Deb, col. 1251) and the Written Answer by Lord Sassoon on 6 December 2012 (WA 187), when they plan to announce whether or not corporation tax is to be devolved to the Northern Ireland Assembly.

[Lord Newby]

My Lords, the joint ministerial working group on rebalancing the Northern Ireland economy has concluded its discussions on the potential devolution of corporation tax and reported its findings to the Prime Minister. The Prime Minister is committed to meeting the First Minister and Deputy First Minister on 26 March to discuss these findings.

[Lord Lexden]

My Lords, my noble friend will be aware of the deep concern that exists in Northern Ireland over this issue, which is taking so long to bring to a conclusion. I welcome very much the news that he gave us about the forthcoming meeting. Since the Republic of Ireland has a corporation tax rate of 12.5%, it is widely felt that Northern Ireland needs its own low rate to help it to compete for new inward investment. Will my noble friend confirm that there is widespread support among businessmen and employers in the Province for the devolution of corporation tax to the Assembly, and that all the main parties are in favour of it? Have their views been fully taken into account? Finally, I pay tribute to my noble friend and his colleagues for their commitment to rebalancing the Northern Ireland economy by stimulating the growth of the private sector, which the Province needs so badly.

[Lord Newby]

My Lords, I think that account has been taken of views expressed from many quarters. However, the complication, as the noble Lord will be aware, is that if the Northern Ireland Assembly were to cut the rate of corporation tax significantly, its own budget would have to be cut by an equivalent amount.

Northern Ireland: Corporation Tax

Debate between Lord Lexden and Lord Newby

Monday 15th October 2012 Lords Chamber

[Lord Lexden]

To ask Her Majesty’s Government whether, following their recent review, they propose to devolve responsibility for corporation tax in Northern Ireland to the Northern Ireland Executive.

[Lord Newby]

My Lords, a joint ministerial working group on rebalancing the Northern Ireland economy is currently examining the issues associated with the potential devolution of corporation tax. This group has made good progress but there remain some crucial areas where differences of opinion between the Northern Ireland Executive and Her Majesty’s Government still exist. The group is due to meet again later this week to continue the discussions.

[Lord Lexden]

I thank my noble friend for his Answer. As this prolonged review finally draws to a close, will he confirm that the Government remain wholly committed to rebalancing the Northern Ireland economy in order to enlarge private sector wealth creation? Will he tell us the last issues that still remain to be resolved by the ministerial group? If the Government decide not to transfer corporation tax to the Northern Ireland Executive, what contingency plans do they have to stimulate the private sector in other ways?

[Lord Newby]

My Lords, I can confirm that the Government are committed to rebalancing the Northern Ireland economy. The remaining issues, not surprisingly, are financial, and essentially there are two. The first relates to the initial reduction of the block grant, which follows from any devolution of corporation tax to Northern Ireland. There is something called the Azores criteria, which means that if a devolved Administration take full fiscal responsibility for a tax change, they must face a reduction in their block grant equivalent to the current corporation tax take from firms based in Northern Ireland. The second point is about how you deal with the ongoing adjustment over time to take account of inflation. At this point, it is far too early to say what will happen if the working group does not reach a positive conclusion.