Skip to main content

Corporation Tax

Volume 525: debated on Wednesday 23 March 2011

1. What recent progress has been made in discussions with the Northern Ireland Executive and the Chancellor of the Exchequer on changes to corporation tax in Northern Ireland. (47492)

I have had discussions with my right hon. Friend the Chancellor on this issue yesterday and today. A Government consultation paper on rebalancing the Northern Ireland economy will be published tomorrow. The paper will include a discussion on the potential for transferring the power to reduce corporation tax to the Northern Ireland Executive.

To what extent has the Azores judgment had a bearing on the Government’s ability to vary the rate of corporation tax in Northern Ireland and other regional authorities?

I thank my hon. Friend for that question—given that I converted him to the Conservative party in my kitchen. The Azores judgment will conform to our plans, which will be laid out in the consultation tomorrow. We agree that the powers should be devolved to an Assembly that has entire control over its own area and that there should be no countervailing intervention from central Government.

I thank the Secretary of State for his interest in the subject. Will the Government now consider the devolution of further tax-raising or tax-varying powers to the Northern Ireland Executive? Does he agree that the more economic levers the Northern Ireland Executive and the Northern Ireland community have available to them, the more the economy will be helped to develop in a better way?

I thank the hon. Lady for her question. We have no plans to devolve further powers, and I would stress to her and her colleagues that we are talking about a consultation. It is not in the bag. We have lengthy discussions with other colleagues and the Treasury, and it would help if she could galvanise a campaign across Northern Ireland to work with us.

It is good that it is not yet in the bag, because the Secretary of State will know that since 2000, 80 countries have cut corporation tax rates. I am sure that, among those, he has studied Puerto Rico, a territory of the United States which has an effective corporation tax rate for manufacturing of 2%. What assessment has he made of how that has helped tackle unemployment in that United States territory, and how it has helped those countries generally to recover from global recession?

I am most grateful to the shadow Secretary of State for his question, but Puerto Rico is a bizarre comparison. I spent three and a half years travelling to Northern Ireland every week. Week after week I went to businesses, and week after week they said that a reduction in corporation tax would most help them.

It is clear that the Secretary of State travelled week after week, but it is also clear that he learnt nothing. Unemployment in Puerto Rico went up again last month, to 16%. The economy remains in recession for the fourth year. We need Northern Ireland to get out of recession, not to stay in it, so let us be clear—and a simple yes or no will do. Given the vital importance of infrastructure, education and skills to attracting and retaining business, will he guarantee that any consequential changes to the annual block grant and from tax revenue will not leave the Executive with an annual net loss? Yes or no?

We need no lectures on the economy from the right hon. Gentleman. He was in the bunker with the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and he left us with a bill of £280,000 a minute in borrowing and £120 million a day in interest costs. We are absolutely clear that, following the example of the Republic of Ireland, we will grow the revenue.