Owen Paterson floats lower corporation tax for Northern Ireland

By Paul Goodman

The troubles of the Irish Republic will obviously have an effect on Northern Ireland in particular as well as the UK in general.  I thus read Owen Paterson's Leonard Steinberg Memorial Lecture, delivered at Policy Exchange this evening, with a special eye to its economic passages.

What leapt out at me in the section dealing with the economy is Paterson's proposal for a lower Corporation Tax rate for Northern Ireland.  This would obviously raise issues of equity for the rest of the United Kingdom, and it's obviously far from certain that Ireland will maintain its present competitive rates.

Paterson said -

"Despite its current economic problems in the first six months of this year the Republic of Ireland attracted over 50 foreign direct investments, including a number of big global hitters.

There’s an obvious reason for this and it does put us at a real competitive disadvantage.

So we have to find ways of getting the private sector moving to lead the recovery and create the jobs of the future.

That’s why, by the end of the year and working with the Executive, the Government will produce a paper on rebalancing the Northern Ireland economy. 

This will look at possible ways of turning Northern Ireland into an enterprise zone and potential mechanisms for giving it a separate rate of corporation tax to attract significant new investment.

I first discussed this with Sir George Quigley at the investment conference at Hillsborough in April 2008.  Since then I’ve become more and more convinced that it can be a game changer for Northern Ireland.

Rebalancing will take time, perhaps up to 25 years, though as I’ve said on many occasions to do nothing is simply not an option.  Equally, doing anything too rapid would be reckless.

But I am determined to make a start and against a background of peace and stability begin the process of turning Northern Ireland once again into an economic powerhouse."

The rest of the lecture contains a defence of the Party's stance on and involvement in Northern Ireland, an assessment of the present terror threat from republicans, and a section on dealing with Northern Ireland's past.  Paterson also defends the Government's deficit reduction programme - no surprise there.

On Party involvement in Northern Ireland, Paterson offers a robust defence of the Ulster Unionist-Conservative alliance at the last election, but casts little light on what the future may hold - probably because the election of a relatively new Ulster Unionist leader has taken the matter partly out of Tory hands.

On dealing with the past, he plainly has no time for a South-African style Peace and Reconciliation Commission, and is distinctly sniffy about a Legacy Commission.  He doesn't say that the Bloody Sunday Enquiry was a waste of time and money - and reminds his audience of the Prime Minister's apology - but certainly suggests that the Wright inquiry was better not undertaken:

The Billy Wright inquiry took six years and cost £30 million.  Yet it could not answer the most basic question as to how the guns that killed him was smuggled into what was then Europe’s most high security prison.