Expert: Corporation tax 'could mean a lot of brass plates'

Help

An expert in public finance warned MLAs to be that the Executive had been "led up the garden path" by the UK government on the devolution of corporation tax, on 11 February 2015.

Prof David Heald from Aberdeen University said the danger for Northern Ireland was that "you get an awful lot of brass plates".

Prof Heald was briefing the Stormont Finance Committee as part of its review into the operation of the Barnett Formula.

He said that one of the reasons that corporation tax was on the Westminster agenda was "because it destabilises Scotland".

Another problem he foresaw was the need to convince the EU that the devolution of corporation tax did not not amount to unlawful state aid.

Prof Heald said the example of the Republic of Ireland was that boards of directors simply flew into Dublin for meetings.

This was challenged by Sinn Fein's Mairtin O Muilleoir, who said that "10 out of the 12 biggest pharma companies in the world are south of the border".

On the subject of the Barnett Formula, which is used to calculate the block grant of funding from Westminster, the professor said one of its advantages was that "it keeps the Treasury off your back".

He said he believed that something like Barnett would survive, but it would have to be much more transparent.

"Information is power," he said, adding that the Treasury did not want to surrender that power.

The DUP's Adrian McQuillan asked how the devolution of corporation tax could affect the development of the Barnett Formula.

Prof Heald said Northern Ireland would probably come out badly from a needs assessment.

"The needs assessment would lead to a very big argument," he said.

The professor said that, in his opinion, "the UK is in a constitutional mess", and that the Scottish referendum solved nothing.

He said that the fact that 84% of the UK's population lived in England "rules out conventional federalism".

Officials then briefed the committee on the Department of Finance and Personnel's budget and savings delivery plan for 2015-16.