GEORGE Osborne's expected backing for the devolution of Corporation Tax to Northern Ireland will spark demands from the SNP Government to have similar control devolved to Edinburgh.

 

Crucially however, it is thought the Chancellor's move in the Autumn Statement will not result in any transfer of control of the tax until after the May General Election, meaning that the Tories, if short of an overall majority after the May 7 poll, could do an electoral pact with Northern Ireland's Democratic Unionists to push the proposed tax change through.

Mr Osborne's signal on Corporation Tax is expected despite warnings from Danny Alexander, his Liberal Democrat deputy at the Treasury, that the Nationalists in Scotland would seize on it to demand control of the same powers at Holyrood.

Already, Nicola Sturgeon, Scotland's new First Minister, has criticised the powers offered by the UK parties agreed within the Smith Commission process as falling short of what the nation needs to create more jobs and prosperity. At the weekend, she made clear that if Northern Ireland got control over CorporationTax, then so too should Scotland.

However, it is thought Mr Osborne feels Northern Ireland is different to Scotland because it does not share a land border with the rest of the UK.

There is a political consensus in Northern Ireland that Stormont must control Corporation Tax to be able to compete with the Republic, where the rate of tax on company profits is much lower at 12.5 per cent; across the UK it is 21 per cent.

It is argued that being able to lower Corporation Tax would enable Northern Ireland, which is the part of the UK most heavily dependent on the public sector for employment, to create new jobs within the private sector.