Cameron’s corporation tax cop out


Businesses and politicians across Northern Ireland have united in condemning David Cameron’s decision to delay an announcement on devolving corporation tax powers to Stormont.

Northern Ireland executiveFirst minister Peter Robinson and his Sinn Fein deputy, Martin McGuinness, yesterday met with the prime minister at Downing Street to press for an early decision on the policy which enjoys cross party support in Northern Ireland, based on the fear that the North is being disadvantaged as a result of the South’s lower rates.

Following the meeting, however, the prime minister made clear that he and the Treasury would not be making any decision until after next autumn’s referendum on Scottish independence.

Speaking outside Number 10 yesterday, the deputy first minister outlined his concerns that the UK government is going cold on the whole idea of devolving responsibility for corporation tax, despite assurances provided by the previous Northern Ireland secretary Owen Paterson.

He explained:

“I think it is absolutely clear that no decision will be taken on this issue this side of the Scottish referendum. I think we have to face that reality.

“You all remember Owen Paterson. He came in like a knight in shining armour supporting this issue and left like a lamb.

“So I have to be concerned in the back of my head as to whether or not the Treasury are playing a more negative role than what they were playing two years ago.”

His comments were echoed by Peter Robinson, who accused Downing Street of confused thinking over the timing:

“We can’t understand that reasoning because we think it sends a message to the people of Scotland. What, effectively, you are saying to the people of Scotland is that if you want more fiscal autonomy than you have at the present time the only way to have it is through independence. I think that is the wrong message for the government to be giving to the people of Scotland.”

The decision to stall was dubbed “alarming” by the CBI in Northern Ireland:

“Our economy faces unique challenges and the economic rationale for devolving these powers is extremely strong. Without this decision the opportunity of transformative change will be lost,” said its chairman Ian Coulter responding.

The SDLP, however, accused the first and deputy first minister of not providing sufficient leadership on the issue. Its leader, Alasdair McDonnell, explained:

The people of Northern Ireland should have had their first and deputy first ministers going to the prime minister with a stable and strong political hand to make the case for devolution of corporation tax. Rather than enhance the economic argument, the political backdrop has once again distracted from it. It is clear that David Cameron turned the tables back on to Peter and Martin and their failure of leadership.

In his analysis meanwhile, BBC political editor for Northern Ireland, Mark Devenport, has suggested that David Cameron’s move may have played into the hands of the SNP. Writing on his blog, he argues:

By postponing any decision until after the Scottish independence referendum, the London government has opened itself up to renewed criticism from the SNP that the only way for Scotland to get wider powers is for voters to opt for full independence.

London ministers appear to be banking – on the basis of the opinion polls – on a Scottish ‘no’ vote.

David Cameron has said that after such a result, London would be flexible about extending extra powers to Edinburgh.

But the prime minister, it seems, would rather get into the nitty gritty of corporation tax after the Scottish poll, than

They’d hoped corporation tax might prove a “game changer” – now they are going to have to go back to playing their same, old game.

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  • http://twitter.com/SalmanShaheen Salman Shaheen

    The last thing Britain needs is another tax haven.

  • http://www.facebook.com/neil.toner.31 Neil Toner

    With the greatest respect Salman Shaheen, how do you expect us to compete with the south of Ireland for economic investment and so become less of a financial burden on the rest of the UK if we are not allowed to reduce our corporation tax to, at the very least, the same level as theirs?

  • http://twitter.com/SalmanShaheen Salman Shaheen

    A race to the bottom in terms of taxation is not in the long-term interests of social democracies. We need to be tackling the problem of tax havens, not trying to emulate them.

  • http://www.facebook.com/neil.toner.31 Neil Toner

    So I take it you think the South of Ireland should raise theirs?

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