The Northern Ireland Assembly could take the power to set corporation tax as part of a consultation on helping the private sector grow.

The treasury paper is due to be published tomorrow and considers the case for Northern Ireland having a lower rate of corporation tax than the rest of the UK, chancellor George Osborne told the House of Commons. It will focus on ideas from the British Government and Northern Ireland Executive.

Companies in the region have to compete with those in Ireland, where the lower rate of 12.5 per cent has attracted increased foreign direct investment.

“In Northern Ireland tomorrow the treasury will publish a paper on how we help their private sector to grow," Mr Osborne said.

“To deal with the unique issues posed by the Irish Republic’s business tax regime, it considers the case for Northern Ireland having an even lower rate of corporation tax than the rest of the UK."

One option in the consultation document was expected to be handing the Assembly the power to set its own rate of corporation tax.

Corporation tax is at 28 per cent in the UK but only 12.5 per cent in the Republic of Ireland. Mr Osborne announced today that UK corporation tax will be cut to 23 per cent to stop international firms from quitting the country.

Campaigners argued that bringing the tax in line with the Republic could help invigorate the Northern Ireland economy. However, there are Government concerns any reduction would be paid for in a cut in the block grant from Westminster.

PA