Theresa Villiers: Stormont needs to be in 'best possible shape' for tax powers

Stormont needs to be in the best possible shape if it is to take on the devolution of corporation tax rates, Secretary of State Theresa Villiers has said.

Theresa Villiers said it would be hard for the executive to fund a corporation tax cut whilst there is an impasse over welfare reform.

Northern Ireland faces penalties for not endorsing welfare reforms.

Ms Villiers was speaking at an event organised by CHAMP in Birmingham.

"Stormont needs to be in the best possible shape if it is to take on such a significant fiscal devolution," she said.

"That means sorting out the impasse on welfare reform and the budget, since it is hard to see how the executive could fund a corporation tax cut as well as meeting mounting bills to run a more expensive welfare system."

While the secretary of state is not issuing an ultimatum, she said a decision would be taken soon on whether corporation tax powers should be devolved to Stormont.

'Complex'

She said much work was being done behind the scenes but she would not detail how much the devolution of such powers could cost.

Under European law, Northern Ireland would have to meet the full costs of tax cuts and that would come from the block grant - the money Stormont receives from London.

"The devolution of corporation tax rate setting powers would be a complex piece of devolution to deliver and various work streams are yet to be completed," she said.

She confirmed that extensive discussions had taken place between the Treasury in London and the Stormont Executive, adding that the "UK government has had some informal discussions with the European Commission on state aid implications".

Earlier this month, Stormont Finance Minister Simon Hamilton said a reduction in corporation tax rates could create thousands of highly paid and skilled jobs across Northern Ireland.