The North's finance Minister Simon Hamilton hopes a positive decision on devolving corporation tax powers to the Northern Executive will be made within a matter of weeks.
Mr Hamilton made his comments in the Northern Assembly today where he was outlining allocation plans for a special £100 million interest free loan he received last week from the British chancellor George Osborne to offset a budgetary crisis.
The DUP Finance Minister explained that he is allocating a total of £125 million to various departments to try to deal with “inescapable pressures” that could not be addressed from their current budgets. The extra £25 million is coming from an expected underspend by Executive departments.
Mr Hamilton said the money was being used to address “many of the most acute pressures” in health, justice, enterprise and some other departments.
"We have put out the fire in this financial year," he said. "Had we not I would have feared for the future of public services in Northern Ireland. "
Under the special allocation the Department of Health will receive an additional £60 million on top of its £4.5 billion budget. The Department of Justice which funds the cash-strapped PSNI is to receive an additional £29 million to its £1.089 billion budget while the Department of Enterprise, Trade and Industry will receive an extra £13.8 million to its £187 million budget.
The allocation comes as the British Treasury is imposing penalties of £87 million for the Executive’s refusal to adopt welfare reform proposals.
“We have needlessly squandered £87 million of funding that could have delivered significant benefits in areas like healthcare but for the political intransigence of some who have put their political aspirations in another jurisdiction above the best interests of the people of Northern Ireland,” said Mr Hamilton.
Welfare reform will be part of the talks involving the British and Irish governments and the five main parties that are to begin on Thursday. Sinn Fein ministers are using their veto in the Northern Executive to block any welfare changes.
If that issue is not resolved in these talks, the Executive will face further penalties of £114 million next financial year – on top of the £100 million it must repay the British Treasury in 2015/16.
One of the conditions of the interest-free £100 million loan was that the Executive put forward a “credible plan for a balanced 2015/16 budget” before the end of this month.
During discussion of the special allocation in the Assembly, Mr Hamilton said he was “still hopeful” the Executive’s efforts to win the power to set its own level of corporation tax would “bear fruit”.
No hard figures are established but were the Executive to reduce the North’s main 21 per cent rate of corporation tax to the 12.5 per cent rate in the Republic, it could cost £300 million annually, and possibly more, in a reduction in the £10 billion subvention from London to the Executive.
“I hope to get a positive decision on corporation tax in the coming weeks,” said Mr Hamilton. The Minister acknowledged that gaining such power would incur a “sizeable cost” in terms of a reduction in the Westminster block grant to Northern Ireland. “But I still think it is the best option that we have in terms of transforming our economy,” he added.
