The former Secretary of State for Northern Ireland earlier said that the Chancellor of the Exchequer’s plan to cut the UK’s Corporation Tax rate will “help rather than hinder Northern Ireland’s own plan to offer would-be investors an even lower rate”. Theresa Villiers rejected the idea that “reducing the differential between the province and Britain” will undermine one of Stormont’s flagship economic policies.

Ms Villiers argued that devolving tax powers from Westminster is “less about giving Northern Ireland a competitive advantage over the rest of the UK and more about giving it an edge internationally, to compete with eastern European countries”. She said that cutting the UK rate from 20% to 15% or less, as suggested by George Osborne earlier this month would make Stormont’s planned 2018 reduction to 12.5% more affordable, as less would have to be “sliced off” the annual Block Grant from Westminster to fund the tax cut. The Treasury has agreed to Northern Ireland having a 12.5% rate from April 2018.

She said: “It doesn’t actually detract from the competitive offer that Northern Ireland would be able to give with a 12.5% rate, because they are not really competing with Manchester; they are competing with Hungary and other countries around the world that have much higher Corporation Tax rates. I think the reduction of the main rate is good news for our long-running campaign to deliver a 12.5% Corporation Tax rate in Northern Ireland, because the cost of delivering 12.5% has just gone down.”

Stephen Kelly, the head of Manufacturing NI, said that in the event of the UK adopting a 15% rate, the 2.5% difference could be “enough to give an advantage”, and to help Northern Ireland companies save money on tax and re-invest in the business. “Our support of low Corporation Tax has always been predicated on the benefits for indigenous business, and we do not think a lower rate UK-wide will do much to affect that.”

First Minister Arlene Foster has questioned the need to off-set a Corporation Tax cut with a reduction in the Block Grant in the wake of the recent referendum on the European Union, given that the law requiring this was set by the EU. However, Ms Villiers insisted: “The stance of the Treasury will not change; the issue of fairness with the rest of the UK is more central than EU law. If this tax cut is delivered by the Northern Ireland Executive, then it needs to be funded by the Northern Ireland Executive.”