HM Treasury

Independent reviews

Sir David Varney's Review of Tax Policy in Northern Ireland

17 December 2007

On 22 March 2007, following representations from the Northern Ireland political parties, the Chancellor announced a review, led by Sir David Varney, to report on:

‘How current and future tax policy, including the tax changes announced in the Budget 2007, can support the sustainable growth of businesses and long-term investment in Northern Ireland.’

Sir David Varney has reported to the Chancellor.

Call for evidence

The Review team launched a call on 1 June 2007 for comments and evidence which would support the delivery of the terms of reference. In the call for evidence document (link below), prompts were provided as a guide to relevant issues. The call closed on 18 July 2007.

Submissions to the Review

As well as the formal call for evidence, the Review conducted meetings in May, June and July with interested parties in Northern Ireland and the Republic of Ireland.

This included discussions with: the Northern Ireland Minister of Finance; the Minister for Enterprise, Trade and Investment; the Chairman of the Northern Ireland Industrial Taskforce; the Director of the Economic Research Institute of Northern Ireland; the Northern Ireland Business Alliance; the Federation of Small Businesses; the key Northern Ireland Assembly committees on Finance & Personnel and Enterprise, Trade and Investment; and spokespeople from the main political parties.

The Review has been grateful for the volume and quality of responses.

Final Report

The Review reports on 17 December 2007, providing an analysis and explanation of the Review's conclusions to the Chancellor. The assessment of the Review is that, in considering the costs and benefits for Northern Ireland and for the UK as a whole, a clear case for a reduction in the corporation tax rate for Northern Ireland cannot be made. The Review also examined other areas of tax policy and does not consider that there is an overwhelming case for differential tax policies in these areas for Northern Ireland.

For Northern Ireland, the return of devolution marks a turning point. The report offers some areas where the Northern Ireland Executive and Assembly might wish to consider their options. Many of the important policy levers are in Northern Ireland's hands and devolution provides the opportunity for the Executive and Assembly to determine its own priorities for promoting economic growth.

Announcement of second review by Sir David Varney

The Government today announced a second review by Sir David Varney building on the first review and focusing on identifying further measures to promote private sector investment. The terms of reference are:

"In the light of Sir David Varney's review of Tax Policy in Northern Ireland, published on 17 December and the Northern Ireland Executive's draft Programme for Government and draft Budget published in October 2007, Sir David Varney will undertake a second review. Building on Sir David's earlier analysis and agreement from all parties about the unique circumstances of Northern Ireland (in relation to the opportunities provided by the peace process, the need to strengthen the private sector, to create increased employment opportunities and to reform the public sector) this review will explore in more detail how to expand the private sector and to enhance Northern Ireland’s competitiveness. In this context, the review will look at incentives for supporting the sustainable growth of businesses, investment and employment in Northern Ireland and the implications for reducing the historic dependency on the public sector. This will include examination of incentives for growth in Northern Ireland that fall within the responsibility of the Northern Ireland Executive and the UK Government."

Sir David will aim to report in good time for the US Investment Conference in May.

Sir David Varney: biography

Sir David advises the Prime Minister on public service transformation, chairing the cross-Whitehall service delivery council. Prior to commencing his review of tax policy, he was Chairman of HM Revenue and Customs from its establishment in April 2005 to the end of August 2006, and before that he was Chairman of MM02, the leading mobile telecommunications company, since its creation in May 2001. He was previously Chief Executive Officer of BG Group (formerly British Gas) and he has held a variety of senior roles in Shell. He was also chairman of Business in the Community from 2002 to 2004.

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