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Fiscal Flexibility

Volume 597: debated on Wednesday 24 June 2015

5. What discussions she has had with the Chancellor of the Exchequer on the implementation of greater fiscal flexibility for Northern Ireland; and if she will make a statement. (900429)

I have regular discussions with Treasury Ministers, including the Chancellor. The Government are giving £2 billion of extra spending power to the Northern Ireland Executive under the Stormont House agreement.

I am glad to hear that Northern Ireland Ministers are having conversations with the Treasury, but will the Secretary of State and her Minister now act as persuaders on behalf of Northern Ireland, which would benefit from a reduced rate of VAT on tourism for the whole United Kingdom?

I know that is a matter of great importance to the hon. Lady and her party. The reality is that the Government have to act with caution when it comes to reductions in taxes. We have identified further increases to the income tax threshold as our priority, but no doubt the Chancellor will be able to share more information on those matters in his Budget.

I am sure the Secretary of State will agree that the last party that should be seeking additional fiscal flexibility for Northern Ireland is the SDLP, given the way in which it and Sinn Féin have put the budget in Northern Ireland in jeopardy. But will she spell out for us the implications for the budget of the financial mess that the refusal to implement the Stormont House agreement has made? What are the implications for the devolution of corporation tax, which has already been agreed?

The implications are very serious: if the welfare question is not resolved, it means that the pressure on the Northern Ireland Executive budget grows considerably and, ultimately, that the Executive will get to a point where they cannot pay their staff and bills, and front-line services will suffer as a result. Without resolving the welfare question, the prospects of corporation tax being devolved and reduced are remote.