Corporation tax on the Stormont agenda... 30 years ago

Jim Prior was the Secretary of State for Northern Ireland in 1982

The battle to convince the Treasury to reduce the rate of corporation tax in Northern Ireland has been raging for almost 30 years, according to a recently declassified letter.

Political and business leaders in Northern Ireland are currently campaigning for control of the tax to be devolved, which would then allow them to cut the rate.

The letter released by the Public Records Office NI shows that as far back as 1982 senior officials were suggesting tax measures were needed to attract international investment.

It was drafted by Sir David Fell, then a top official in the department of commerce, after the Hyster forklift company chose to invest in the Republic instead of Northern Ireland.

He wrote the letter with the intention that the Secretary of State, Jim Prior, should send it to Sir Leon Brittan who was then chief secretary to the Treasury.

Sir David wrote that "in the final analysis" Hyster chose the Republic because it could offer greater financial incentives.

He added that while it would have been extremely difficult for any country to out-bid Northern Ireland "in terms of cash support", the Republic's trumped that with their lower tax rate.

'Weapon'

He wrote: "One must strongly suspect that the availability of a corporation tax rate of 10% in the Republic through to the year 2000 was a significant factor in the decision.

"It is clear that in cases of this nature, the fiscal incentive can be a most potent weapon in the industrial development armoury."

He also laid out the view that if Northern Ireland was to attract international investment the incentives on offer needed to change.

"I am greatly attracted by a tax-related incentive, but there may well be others which could prove equally effective," he added.

It is not clear if the letter was sent - nor how the Treasury responded.

Sir David rose to become head of the NI Civil Service and later went on to become a leading business figure. He is currently chairman of the financial consultancy Goldblatt McGuigan.