Sir David Varney has this week published the results of a government report conducted
into how tax policy can support growth in Northern Ireland.
Having spent the past nine months working on the report, Sir David has reached
the conclusion that implementing a different corporation tax rate for Northern
Ireland, as compared to the rest of the UK, does not offer the best way forward
for building a strong investment strategy for Northern Ireland.
His report, published on Monday, noted that the Northern Ireland economy has
historically been reliant on public sector investment for its growth, but that
political progress over the last ten years to transform Northern Ireland to
a peaceful, stable society has already helped attract inward private sector
investment.
The restoration of devolution on 8 May is a major turning point and incentive
for such further inward investment. Sir David, therefore, recommended a strategy
to develop private sector investment in Northern Ireland based on maximising
the benefits of the competitive advantages that already exist in Northern Ireland,
including current financial investment incentives, and realising the potential
further to improve this competitive advantage.
The report also recommended further improvements in basic and technical skills,
reducing the size of the public sector and improving efficiency, better university
and business collaborations; and promoting trade and investment across government,
working with Invest Northern Ireland, the Irish Investment and Development Agency
and UK Trade and Investment.
Sir David announced on Monday that:
"I have reviewed all the evidence carefully and visited both Northern
Ireland and the Republic of Ireland. While there is not a clear and unambiguous
case for changing corporation tax in Northern Ireland beyond the UK-wide measures
announced in the 2007 Budget, I am convinced that, in the light of the successful
peace process, Northern Ireland can potentially emulate the economic success
of the Republic."
"I am encouraged by the commitment to economic growth shown by the UK
Government, the Northern Ireland Executive and the Irish Government as well
as by the private sector. I hope that my report will provide a positive contribution
to the development of economic policy in Northern Ireland."
The UK Government also revealed on Monday that a second review would be conducted
by Varney, building on the first review and focusing on identifying further
measures to promote private sector investment.
It explained that:
"In the light of Sir David Varney's review of Tax Policy in Northern Ireland,
published on 17 December and the Northern Ireland Executive's draft Programme
for Government and draft Budget published in October 2007, Sir David Varney
will undertake a second review."
"Building on Sir David's earlier analysis and agreement from all parties
about the unique circumstances of Northern Ireland (in relation to the opportunities
provided by the peace process, the need to strengthen the private sector, to
create increased employment opportunities and to reform the public sector) this
review will explore in more detail how to expand the private sector and to enhance
Northern Ireland's competitiveness."
"In this context, the review will look at incentives for supporting the
sustainable growth of businesses, investment and employment in Northern Ireland
and the implications for reducing the historic dependency on the public sector.
This will include examination of incentives for growth in Northern Ireland that
fall within the responsibility of the Northern Ireland Executive and the UK
Government."
"Sir David will aim to report in good time for the US Investment Conference.
He will be supported by a small secretariat and will receive direct and regular
input from Northern Ireland Executive officials."
Welcoming the publication od Monday's report, UK Chancellor, Alistair Darling,
stated that:
"I welcome Sir David Varney's report, which provides a professional and
in depth analysis of the case for a lower rate of corporation tax in Northern
Ireland. The Government accepts his finding that there is no convincing case
for such a change."
"The Government also endorses Sir David's findings that the Northern
Ireland economy is already benefiting from the peace process and that there
is substantial scope, which Sir David has outlined, for building on this in
the future."
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