Lord Caine
Main Page: Lord Caine (Conservative - Life peer)Department Debates - View all Lord Caine's debates with the Cabinet Office
(3 years, 1 month ago)
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Lord Caine (Con)
My Lords, a key objective of government policy in Northern Ireland since 2010 has been to rebalance the economy by boosting the private sector and bringing in more foreign direct investment. One element of this was to look at reducing the business tax differential with Ireland. Yet, following the Budget, corporation tax is set to rise in Northern Ireland to double the 12.5% rate in Ireland. While I appreciate that CT rates are not the only factor in determining where companies locate, when it comes to deciding between Northern Ireland and Ireland, it can, as I know, be decisive.
In the 2014 Stormont House agreement, the Government agreed to devolve CT powers to the Northern Ireland Executive subject to their finances being on a sustainable footing. The Corporation Tax (Northern Ireland) Act 2015 made provision for this, and all that is required to make the transfer is secondary legislation here.
In the 2015 fresh start agreement, the Executive set a date, 2018, for a 12.5% rate and began marketing this in places such as the US. Regrettably, however, a few months after that agreement, the Executive ran into trouble and, as we know, subsequently collapsed for three years.
The biggest obstacle to devolving has always been that, under state aid rules, the Executive would have to fund any reduction from the block grant. Whether there is any appetite for this in the current climate remains to be seen. Yet I am convinced that reducing the rate of corporation tax in Northern Ireland to at least the same level as that in Ireland could have a transformative impact on the economy, which could in turn help to embed further peace and stability.
The commitment to devolve corporation tax powers made it into the 2019 Conservative Northern Ireland manifesto. I therefore finish by asking my noble friend the Minister whether, in the right circumstances, this remains policy should a request be forthcoming from the Northern Ireland Executive.