Alex Salmond warned that push for tax autonomy could cost £1.5 billion

THE Scottish Government would face a cut of up to £1.5 billion in its block grant from Westminster if the country was to gain power over corporation tax, Northern Ireland's First Minister Peter Robinson has warned.

Alex Salmond wants control over the levy to help generate growth in the economy.

Northern Ireland is the first devolved administration in line to receive the power to compete with the Irish Republic, which has a rate of 12.5 per cent compared with the 26 per cent blanket UK rate.

But, after a trilateral meeting in Edinburgh yesterday of the heads of the devolved governments, Mr Robinson said that his country was a "special case".

"There is overwhelming support in Northern Ireland for this even though we know we have to deal with a potential reduction in our block grant as a consequence," he said.

"That block grant reduction for somewhere like Scotland, from the basis of the paper that was put forward to us, would be well in excess of 1bn - about 1bn to 1.5bn of reduction.

"Every part of the UK would have to decide if that's something they would want to be pushing for."

Welsh First Minister Carwyn Jones warned there could be a "spiral to the bottom" if control over corporation tax was handed to all the devolved administrations and they started cutting in a bid to attract business.

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Mr Jones added: "What we must be careful of is that we don't see the devolution of corporation tax, then everyone just reduces corporation tax and we end up in a spiral down to the bottom."

Scotland's Budget comes from a block grant in the region of 30bn from Westminster. If Scotland is handed control of corporation tax and allowed to keep the levies collected, the Treasury would cut this block grant by a corresponding figure.

Control over corporation tax was one of the key demands of the newly re-elected SNP administration and Mr Salmond wants the forthcoming Scotland Bill changed so this can be handed over to Holyrood. Mr Salmond said yesterday that Northern Ireland was "in the lead" on the issue.

He added: "Each administration pushes for its priorities. I think the success, and I hope it will be success of Northern Ireland, in pushing for its claim on corporation tax will open up a very progressive agenda which will have implications elsewhere."

The meeting in Bute House yesterday was also attended by Northern Ireland Deputy First Minister Martin McGuinness.

UK ministers will meet the devolved leaders in London next week.