Northern Ireland (Regional Rates and Energy) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateWednesday 6th March 2019
(5 years, 9 months ago)
Commons ChamberNorthern Ireland (Regional Rates and Energy) Act 2019 Read Hansard Text Amendment Paper: Committee of the Whole House Amendments as at 6 March 2019 (PDF) - (6 Mar 2019)
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland (Regional Rates and Energy) Act 2019 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
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The Secretary of State for Northern Ireland (Karen Bradley)
I beg to move, That the Bill be now read a Second time.
I rise to ask the House to give a Second Reading to a piece of proposed legislation that delivers on this Government’s commitment to ensure good governance and stable public finances in Northern Ireland. The Bill seeks to achieve those outcomes by bringing forward two essential measures. First, it will enable the collection of regional rates in Northern Ireland. Secondly, it will ensure that fair and appropriate tariffs and cost-capping measures are in place for the renewable heat incentive scheme in Northern Ireland.
As we discussed yesterday, the Government are committed to devolution. I am working hard to restore devolved government in Northern Ireland at the earliest opportunity. I firmly believe that this is the best long-term plan for the people of Northern Ireland and I profoundly believe it is in the best long-term interests of the Union. Important local decisions should be taken by locally elected politicians in Northern Ireland. I share the frustration felt by some Members of Parliament and the public that taking forward important proposed legislation in this manner in this House is not the ideal situation. However, in the absence of devolved government I have made it clear that I will continue to take the urgent and necessary decisions to ensure good governance and to protect public services.
Gavin Robinson (Belfast East) (DUP)
The Secretary of State will recall that during the passage of the Northern Ireland (Executive Formation and Exercise of Functions) Act 2018, we raised an urgent issue that crystallises at the end of this month: the forthcoming resources available to our housing associations in Northern Ireland. Because of an Office for National Statistics definitional issue, they would not have been able to draw down on financial transactions capital tax. Will she confirm today that Her Majesty’s Treasury has agreed to extend the derogation on that definition and that legislation will be brought forward in this Parliament to resolve this issue satisfactorily, so that our housing associations and co-ownership and other schemes have the funding available that will not impact on our block grant, but will allow people to have a sustainable future home in the Province?
Karen Bradley
I thank the hon. Gentleman for raising that important issue. It is clear that the derogation needs to and will continue, but that is not a long-term, sustainable solution. As he will know, the Northern Ireland civil service is putting together legislation and we await copies of that so that action can be taken.
Gavin Robinson
I am very grateful for that response. I understand that the legislation is there and is ready to be brought forward. Will the Secretary of State confirm that subject to parliamentary business, it will be introduced as soon as possible, and before the summer?
Karen Bradley
The hon. Gentleman may have more information than me. All I can say is that we know the Northern Ireland civil service is looking at that and we will act appropriately at the appropriate time.
The measures in the Bill are limited yet necessary interventions in Northern Ireland. They provide the certainty and support that Northern Ireland Departments and, indeed, the wider public need and deserve for the year ahead. I will now give more detail on the measures. Clause 1 addresses the collection of the regional rate. The UK Government have set the Northern Ireland regional rate in the absence of an Executive for the past two years. The level of rate to be applied this year was set out in my budget statement to Parliament last week. As part of the wider budget package of support to Northern Ireland for the 2019-20 financial year, the UK Government have set a 3% plus inflation increase on the domestic rate and an inflation-only increase on the non-domestic rate.
Vernon Coaker (Gedling) (Lab)
The Secretary of State outlined the percentage rise in the regional rate. I will say something about that in my speech if I am called later, Madam Deputy Speaker, but will the Secretary of State say something to the House about how the 3% was arrived at?
Karen Bradley
Throughout the whole budgetary process, we have ensured that we have liaised with the main parties in Northern Ireland and politicians to make sure that we reflect both the priorities of the programme for government that was in place before the Executive collapsed and the priorities of the politicians of Northern Ireland. Clearly, an increase in the regional rate was needed to meet the budget gap. It is quite right that, as well as the Treasury providing additional money to bridge the gap in the budget, the people of Northern Ireland should make a contribution towards the public services that they receive, and 3% was an appropriate number.
Maria Caulfield (Lewes) (Con)
The retailers organisation, Retail NI, has expressed disappointment at the rates, and has argued that Northern Ireland businesses would be paying the highest business rates in the UK. Will the Secretary of State give some words of sympathy or encouragement to them?
Karen Bradley
I understand the concerns that have been raised; I have met Retail NI and others. Clearly, we are only increasing business rates in line with inflation, but a number of measures are available to businesses in my constituency that are not available to businesses in Northern Ireland. That is as a result of Northern Ireland not having an Executive to deliver those. This comes back to the point that we discussed at length yesterday: what we need is an Executive to deliver on the programmes, incentives and support that are available, as is right and appropriate for Northern Ireland. It may be that what is needed in Northern Ireland is not the same as the incentives in Great Britain.
Chris Elmore (Ogmore) (Lab)
I am grateful to the Secretary of State for giving way; she is being very generous with her time. On the domestic rate—the 3% plus inflation; so 4%, there or thereabouts—clearly some residents in Northern Ireland will be able to afford that based on their income, but lots of people living in Northern Ireland are on the minimum wage, in low-income families, so will she set out for the House what support she will put in place so that there is some sort of relief to meet the costs of that rise?
Karen Bradley
What we are doing today is setting the rate. We are not setting any of the reliefs or allowances or support that is already available. Nothing that is there is changing and we are not able to change anything with the Bill. We are just setting the rate, but the hon. Gentleman is right that there may be things that people in Northern Ireland would like to see. Again, if there were Ministers in Stormont, they could do the right thing for Northern Ireland. It would be wrong to transpose the situation for councils in England, Wales or Scotland to Northern Ireland because it needs specific measures, and only Ministers in Northern Ireland can appropriately and properly deliver those.
This approach to regional rates, and therefore the measures in the Bill, represent an important contribution to delivering a sustainable budget for 2019-20. The second element of the Bill concerns the administration of Northern Ireland’s renewable heat incentive scheme. I must make it clear that the UK Government have not taken the decisions on the revised scheme. This remains a devolved matter and the Government are taking forward this legislation at the request of the Department for the Economy. It is crucial that that happens because without this legislation, there will be no legislative basis to maintain the current cost-control measures.
Lady Hermon (North Down) (Ind)
I am grateful to the Secretary of State for allowing me to intervene. I have received a large number of emails mostly, if not exclusively, from individuals who are not constituents of mine but who feel extremely aggrieved by the proposals in this legislation. They entered into the RHI scheme in good faith and feel that they are now being unfairly penalised. I would like the Secretary of State to address that issue this afternoon. Will she assure those people who have raised concerns and who feel very strongly aggrieved by the Bill that there is fairness in the proposals, and that they will not find themselves making their way to the local court to challenge the legislation, because it is in breach of human rights, for example?
Karen Bradley
I will come on to the details of why the decisions have been taken, the advice that we have received from the Department for the Economy and the request that it put in. However, I assure the hon. Lady that the measures we are taking today are the only legal ways in which any subsidies can continue to be paid to anybody on the RHI scheme. Failure to do this will mean the closure of the scheme and no subsidies at all. We need to bear that in mind when looking at this matter. I well understand that people feel concerned when they have entered into an obligation in good faith and then the subsidies that they receive are reduced. I will come on to explain why that is the situation.
Sir Jeffrey M. Donaldson (Lagan Valley) (DUP)
The Secretary of State will be aware of our concern that there has been a lack of proper scrutiny of these proposals. While we await the report of the public inquiry in Northern Ireland, it may be that one of the issues on which it makes recommendations is how we scrutinise this kind of measure going forward. We would have hoped that Parliament could set an example for that, yet we are not getting that opportunity, so would she care to address that concern and the timing of this proposal, coming so close to the end of the financial year?
Karen Bradley
As I said, this situation has resulted from a decision by the European Commission on state aid rules, and failure to do this will mean no subsidies being paid to anybody. I fully accept the right hon. Gentleman’s point about scrutiny, but it comes back to the point we discussed at length yesterday: in the absence of an Executive, there is simply no way scrutiny can take place appropriately.
Conor McGinn (St Helens North) (Lab)
While we await the findings of the inquiry, would the Secretary of State agree that whoever’s fault the RHI debacle is—policy makers or politicians—it is certainly not the fault of the people who entered the scheme, and that, at a time when farmers in Northern Ireland are facing great uncertainty and huge challenges, this will be seen as hugely detrimental to them?
Karen Bradley
As I say, I have enormous sympathy for people in this situation. I have met the Ulster Farmers Union and my officials have met individual farmers to talk about it. I well understand the concerns but, faced with a choice between no subsidies at all and cost cutting at 12%, I think this is the right and only legal approach we can take.
Ian Paisley (North Antrim) (DUP)
I thank the Secretary of State for at least acknowledging how grossly unfair this is to many people, but she must recognise that the Bill the Northern Ireland Office has put before the House today does far more than she has indicated. Less than half a page of the Bill deals with the regional rate. The rest—five pages—deals with the RHI scheme, and her proposal for the scheme will bring all renewable activity to an end for a generation. No one will ever again apply for a renewable scheme or a Government-backed deal in Northern Ireland. That will be the effect of her proposal.
Karen Bradley
I thank the hon. Gentleman for his comments. I will come on to the detail of the renewable heat measures and the work undertaken.
The Department for the Economy in Northern Ireland undertook an extensive public consultation in the last year to ensure that revised measures could be introduced in time for new legislation to come into effect from 1 April 2019. The tariff levels set out in the Bill are based on an analysis of the additional costs and savings of operating a biomass boiler in Northern Ireland. The Department has also engaged with the European Commission in developing the long-term tariff. The Commission has indicated that it is not in a position to approve a tariff that delivers a rate of return higher than 12%. Recognising that a small number of participants with lower usage needs or higher capital costs could see returns below the intended 12%, the Bill makes provision for the introduction of voluntary buy-out arrangements.
I recognise that some scheme participants in Northern Ireland will be concerned about these new tariffs. Both the Department for the Economy and my own Department have heard their views in person and in writing in recent weeks, as I said earlier, and I empathise with those people and businesses across Northern Ireland.
Ian Paisley
I thank the Secretary of State for going into the detail. She mentions the 12% rate of return. Why can the rest of the UK set a rate of return on the same scheme fluctuating between 8% and 22%? Why are our officials being told that Europe will only accept 12% for Northern Ireland, but will accept a differential rate for the rest of the UK? Officials have a duty to tell the public why that is.
Karen Bradley
We cannot easily compare schemes: there are different set-up costs and fuel costs in different parts of the United Kingdom. Differences apply. The work done by the Department for the Economy with the Commission is thorough and has ensured that the recommendations it put to me and the tariffs we are legislating for today mean that the scheme remains legal. That is the important point. If we do not have a legal scheme, there will be no subsidies.
Ian Paisley
The Secretary of State says there are different set-up costs, but under state aid rules that is not allowed. State aid rules declare that the set-up costs are X for the provision of the boiler. In England, different set-up costs are being used, and our Department in Northern Ireland is changing those set-up costs according to its interpretation of what the law demands. Does that not ultimately reflect the need for more scrutiny? To rush the measure through the House is not right, fair or equitable.
Karen Bradley
There are differences in fuel costs and transport costs. There are differences between different parts of the UK. I am interested in making sure that the scheme in Northern Ireland remains legal so that people with boilers can continue to receive some subsidy. I know it is not at the levels they were receiving previously, but it is still some subsidy.
Maria Caulfield
I understand why there has to be a change, but for farmers who have borrowed £250,000 or £500,000 to install a boiler and went to the banks with a guarantee of 20 years of subsidy, a change from £13,000 to £2,000 a year per boiler is a real concern. Many will not be able to pay the money back and will go under.
Karen Bradley
That is why a buy-out scheme is available: so that boiler owners can choose individually. I cannot say exactly what the rate will be, because it will depend on, for instance, the subsidies that have been received to date. The calculations will be individual, but a buy-out will be available to boiler owners who do not believe that the subsidies now available will enable them to continue in business.
Karen Bradley
I do want to make some progress, but I recognise that many interests are involved. I will give way to the right hon. Member for East Antrim (Sammy Wilson) and to the hon. Member for Belfast East (Gavin Robinson), but then I will conclude my speech.
Sammy Wilson
Does the Secretary of State accept, first, that the terms of the buy-out scheme are not clear and, secondly, that a large number of people—probably those who are most affected by these changes—will not be able to avail themselves of it?
Gavin Robinson
The Secretary of State talked about a 12% rate of return. She knows that participants in the scheme will be listening very carefully to what is being said today. According to figures that were given yesterday, over the 20-year period of the scheme the rate of return will be 60%, but whether it is 12% or 60%, officials were indicating that the money had largely been paid. Will the Secretary of State confirm that, and does she agree with those figures?
Karen Bradley
As I have said, the figures will all be individual, and it is impossible for me to give the hon. Gentleman a generality from the Dispatch Box. However, he is right to say that the subsidies that have been paid to date will, on the whole, be higher than the subsidies that will be paid from now on. The point is that unless those steps were taken, the subsidies that were being paid would breach state aid rules, and the scheme would be illegal and would be closed. This is the maximum level at which subsidies can be paid if the scheme is to continue to be legal.
Representatives of the Department for the Economy will meet other interested parties, such as the banks and those in the agri-food supply chain, to discuss the impacts and seek support for affected participants. The Department has also agreed to provide additional advice and technical assistance for participants. I know that this is a very difficult matter, but I believe that the measures proposed by the Department for the Economy are fair, and strike the correct balance between the rights of participants and the wider public interest.
To conclude—
Karen Bradley
I was about to conclude, but I will give way to the hon. Gentleman, because he is irresistible.
Gavin Robinson
I am very grateful to the Secretary of State. She says that I am irresistible; how could I disagree? She is very kind to give way for a final time.
I want to focus on the fact that the Secretary of State said there was a fixed rate of return of 12%. Participants can hear today that they will not receive that money in the forthcoming years under the terms of the Bill. Is it not the case that the Department for the Economy is saying that they have already received it?
Karen Bradley
As I have said, these are the measures that we need to take now to ensure that the scheme remains on a legal footing. These are the steps that need to be taken to ensure that any subsidies can continue to be paid from the scheme and allow it to remain within the state aid rules. However, I am sure we will debate this issue further at a later stage, and I do understand the hon. Gentleman’s points.
The Bill does two things, both of which are required for good governance and stable public finances in Northern Ireland. I hope that colleagues on both sides of the House agree that it is important for us to make progress now to protect the best interests of all people in Northern Ireland, and to that end I commend the Bill to the House.
The Minister of State, Northern Ireland Office (John Penrose)
I will try to address a series of specific points that various Members have made during the course of this debate. I will also try to address some of the broader questions, some of them quite fundamental, about the RHI scheme and its many and manifest problems and shortcomings. That is partly because those issues were raised in the debate, but also because we are going on to consider an amendment in Committee and it may help to have a bigger shared fact base. This will not answer all the questions that will, quite rightly, be raised in Committee, but it may at least lay the foundations of that debate and help us to address them at that stage.
As the hon. Member for Bristol South (Karin Smyth) rightly said, we have had quite a narrow debate although with widely shared views across the House. I strongly agree with one point that she made at the end of her remarks, which is that it is easy to forget, amid all the concern about the flaws in the RHI scheme, that it was introduced for a very noble purpose as part of an attempt to decarbonise our economy by increasing the amount of renewable energy in Northern Ireland. That is part of a broader tapestry of other initiatives that are being introduced right across the UK and, indeed, in other countries around the world. We clearly should not lose sight of that—it is a vitally important point.
Sammy Wilson
Does the Minister agree that it is rather ironic that a scheme that is meant to decarbonise—for some people that is important; for others it is just an expensive burden on the economy—finishes up with wood being put into pellet form in North America, brought in ships across the Atlantic ocean, and then burned in boilers here in the United Kingdom? Does he really think that is a way of cutting down on carbon emissions?
John Penrose
The right hon. Gentleman said that he was not quite sure why burning wood was any better than burning other things, because the emissions are similar. If my hon. Friend the Member for Richmond Park (Zac Goldsmith) were here, he would make the point that we have to be extremely careful about how we calculate the carbon footprint of some supposedly renewable fuels, because if we cut down virgin rainforests to grow things that are then pelletised and burned, the overall genuine carbon footprint is much worse than people like to pretend.
However, my hon. Friend would also make a sharp distinction between what I think is called long-cycle carbon—in other words, fossil fuels, where carbon has been locked away for millions of years, are a net release that makes an overall difference to the level of carbon—and short-cycle carbon, which is a sort of short-term recycling whereby things are grown in the course of our lifetime and burned. I will not try your patience, Madam Deputy Speaker, by going into the detail of the level of greenery, but I hope we can all agree that this scheme, with all its manifest flaws, intended to pursue a noble purpose.
Before I go on to the details of the RHI scheme, I will address a few other points. The hon. Member for Belfast East (Gavin Robinson) asked a series of questions about Northern Ireland housing associations and, I think, was hoping to pin us down on when a piece of legislation might be introduced. I want to reassure him—my right hon. Friend the Secretary of State made this point, but I will repeat it—that the Government will take that forward as soon as parliamentary time allows.
The hon. Member for Rochdale (Tony Lloyd) asked about the stronger towns fund and said that he did not feel he had enough of an answer yesterday; I want to ensure that we try to provide that today. He will be aware that the Secretary of State for Housing, Communities and Local Government made an announcement yesterday. The Treasury will apply the Barnett formula in the normal way and confirm the funding for each region in due course. We do not know that yet, but it will come out, and we will seek to ensure that towns in Northern Ireland, Wales and Scotland can benefit, building on the success of the Government’s growth and city deals.
The hon. Gentleman also asked about the applicable costs of the RHI scheme. I will address that specific item before coming on to the broader points. The scheme guidance, which I am sure we are all itching to go through in huge detail, has been published, and it sets out clearly the eligible costs. They are primarily the costs of the boiler. He mentioned costs to do with installation, pipework and the like, and some of those are included as well. Interest costs on borrowing are apparently not included as an eligible cost in this scheme. I wanted to share that with everybody, so that we have a shared fact base before we go into Committee and discuss the detail of the amendment tabled by the Chairman of the Northern Ireland Affairs Committee, my hon. Friend the Member for South West Wiltshire (Dr Murrison).
Questions have been posed about the up-front payments and how they would be calculated for people who wanted to opt out of the scheme because they felt that if they remained in it, they would lose out too badly. Straightforwardly, an individual’s costs—that means the cost of installation, the capital cost of the boiler and other eligible installation and running costs—will all be included, and they will be reimbursed up to the 12% target rate of return for the revised scheme. All the additional costs of the renewable technology above a fossil fuel one will be reimbursed. That is crucial, because a number of Members have raised questions about what happens to people who are worried that they are going to lose out. The hon. Member for Strangford (Jim Shannon) read out an email he received from someone with precisely those concerns. If they are concerned that it will no longer be economic for them to stay in the scheme, they can opt out. It will be a free option for them, and they are guaranteed to have made 12% on their money if they decide to opt out at that stage.
Lady Hermon
The Minister needs to address the point raised by a number of right hon. and hon. Members about those who entered the scheme in good faith with the legitimate expectation that it would last for 20 years on a particular tariff. How do the Government square that and address that really key point?
John Penrose
I am very happy to address that point. There is one thing that I know a number of people have found shocking. In fact, the right hon. Member for East Antrim (Sammy Wilson)—I am probably slightly misquoting him, but this is broadly speaking what he said—was right to say that the RHI scheme as originally conceived has turned out, in spite of everyone’s best efforts, to be both a failure and a disgrace. Very sadly, he absolutely accurately describes what has happened.
It is also true to say—the hon. Member for Strangford was quite right to make the point—that very many did not go into the scheme with the intention of abusing it. Some of them were pastors in churches, and so on and so forth. The scheme was introduced for a good reason and, in the vast majority of cases, people entered into it for good reasons.
I therefore found it pretty shocking, and I am sure other people will share my shock, that of the participants involved—many of them with all the right intentions, as I have just described—80% have already, by today, received a 12% return for the entire 20 years of the scheme. If they did not get another penny piece, they would already have received a 12% return on their money. Even if there were another 14 years or however many years of the scheme left to run, since the day they entered it they have made a 12% return. The hon. Member for North Down (Lady Hermon) is absolutely right to raise the question of legitimate expectations, but the participants have done incredibly well.
John Penrose
I will come to the hon. Gentleman in a minute, if I may.
I remind Members that although the scheme as it was originally conceived was supposed to have an average return of 12%, the actual rate of return on average for people has been 50%—a 50% return on their money. That is extraordinary, particularly when we consider that that money comes out of taxpayers’ pockets. Quite legitimately, people have asked why provisions on the rates and on the RHI modifications have ended up in the same Bill. It is fair to say that there are only five substantive clauses in total for both those issues, but it is worth remembering that one of the reasons they are together is that the costs of this extraordinary bounty are not just magicked out of thin air or paid for by nobody.
John Penrose
I will take interventions in a moment, but I want to finish this point.
The costs are paid for by taxpayers, and by rate payers in Northern Ireland as much as by anybody else. It is important for us all to remember the fundamental injustice that this unintentional, but none the less very serious, miscalculation has caused. I will go on to talk about what the miscalculation was in a minute, but a number of colleagues want to intervene and I will go to the hon. Member for Strangford first.
Jim Shannon
I gave the example of one of my constituents, whose legitimate expectation was to have repayments over a 20-year period. He negotiated the loans accordingly at a bank—the bank is very strict when it comes to borrowing money—and invested somewhere between £250,000 and £500,000, as did some other constituents. Given the expectation of a 20-year roll-out, the impact on these small businesses and family farms will be extensive. Is it not right that the 20-year long-term plan should be delivered?
John Penrose
Some people will have done very well out of this scheme, but I think the House will have a great deal more sympathy with those who have received below the average. I think that is the point the hon. Gentleman is making. The average may be extremely high and some people have done extremely well, even including those who have not run their boilers all the time, lived with the windows open and so on, and he gave examples of people who have not done that. Those who have received well below the average and are worried that they are going to lose out because they are well below the 50% average rate of return that has been achieved so far will still be able to opt out and will be made good. None of the historical payments they have received will be counted if they decide to opt out, and they will basically be told, “You will have a 12% return based on the money you’ve invested so far.” There is a route out for people who are worried; they will still be made whole and should not lose out. They may not make out extraordinarily or become rich, but 12% is a return that many of us would be very happy to earn on most other investments.
Tony Lloyd
I am grateful that the Minister is being so generous with his time. None of us has any brief for those who have done extraordinarily well out of all this; they should not have been allowed to be so lucky, but we should not let that delay us. The reality is that it is accepted as part of the scheme that there may be losers, as is recognised in the buy-out clause that the Secretary of State and the Minister pray in aid. A 12% return seems quite a good rate, but the fundamental problem is that the cost that the Minister tells us will be allowable as the basis for that return is not the same as the cost of the boiler plus installation. We need a guarantee that the problems faced by the potential losers will not be compounded by an incompetently designed buy-out scheme that cannot work for them financially.
John Penrose
I am delighted to be able to set the record straight. I think that I have already mentioned this, but perhaps I can expand on it: the point about the buy-out scheme is that it will be a 20% return—sorry, it is minus payments already made; I misspoke. It is a 12% return on the capital costs of the boiler and the other eligible installation and running costs that I mentioned in my reply to the hon. Member for North Down. It will be tailored to individual circumstances, and obviously people will need to produce receipts and so on, but if they have ended up paying slightly more for their boiler, they will not lose out. The hon. Member for Rochdale raises a perfectly valid question, but people who might otherwise lose out should be made whole, as the hon. Member for Strangford pointed out.
Ian Paisley
I appreciate that the Minister is making the case that has been given to him by the Department, but the crucial thing is how we set the average, because that is the basis of the calculation. The shadow Minister cited a cost to a constituent of £76,237, which suggests that the average cannot be £35,000. The more general average cost of the scheme in Northern Ireland appears to be settling at £44,607, but the Department in Northern Ireland has set the average at £35,900. If that average is set wrongly, the Minister’s figures go out the window. The trouble is that we have to rely on what the Department is telling us, but—as the Chair of the Northern Ireland Affairs Committee points out—we have no evidence for it. We should be able to challenge the figures, but we have not been given the evidence to enable us to do so.
John Penrose
We will have to come back to the question of how to get more evidence into the room, as it were, but I will try at least to answer some of the questions that have been raised today. I appreciate that I will not be able to answer every one—the hon. Gentleman is absolutely right about that—but I will try to cover as many as I can.
The averages that I am describing are average rates of return, which are calculated according to a whole range of things. Capital costs differ, because some people have bought bigger or more expensive boilers and because all sorts of other costs are involved, such as installation and fuel, but the target number is the average rate of return. As we have heard, the rates of return that are actually achieved will be distributed around that average; some people will do better, while some will do worse. That is why the buy-out scheme for those who will potentially lose out is so important. It is also worth while pointing out that the average rate of return is directly comparable across the rest of the UK. It will become 12% in Northern Ireland and it is 12% in Great Britain. As I understand it and for what it is worth—I appreciate this is of tangential relevance, but it is perhaps interesting information—the intended return of the Republic of Ireland scheme is 8%, not 12%.
Lady Hermon
The Minister, in response to a number of interventions, has repeatedly relied on data and detailed figures. Can he confirm that they are not in secret documents held in confidence within the Department for the Economy, and that they could be made public tonight and put in the House of Commons Library? I ask for the calculations to be published in the House of Commons Library within the next 24 hours. It is outrageous that we are being asked to approve a Bill tonight based on facts and figures that I certainly have not had sight of—perhaps others have—and I would like them to be made publicly available to the House within 24 hours.
John Penrose
There is an old saying that if you want something to be kept secret, you announce it on the Floor of the House of Commons and nobody will pay a blind bit of attention. I am trying to put some of the facts in, but I take the hon. Lady’s point. I will see if inspiration strikes me later on in my remarks as to whether that can be done, or whether my right hon. Friend the Secretary of State can help in that regard. It is clear from everyone’s remarks on Second Reading that there is not just a thirst and an appetite but a genuine democratic need for proper scrutiny and for more details to be understood. That is what I am trying to do by what I am laying out now, but I take the hon. Lady’s point. Other Members have made a similar point. We had comments to that effect from my hon. Friend the Member for South West Wiltshire the Chairman of the Northern Ireland Affairs Committee, the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) the SNP spokesman, my hon. Friend the Member for Lewes (Maria Caulfield), and the hon. Members for Gedling (Vernon Coaker), for North Antrim, for Strangford and for Bristol South.
I hope we have dealt with quite a lot of the points that were raised. The one point that I think remains at this stage—I am sure we will go into more detail in Committee in a moment—relates to process. Before I go any further, I should mention that a number of colleagues—there is clearly a political movement in North Antrim and in East Antrim—are pretty leery and worried about state aid rules. The hon. Member for North Antrim and the right hon. Member for East Antrim both raised this point and asked whether the state aid rules would continue after we leave the European Union. I am not sure if I am pleased or sorry to disappoint them both, but the answer is yes they will. We have agreed to port across, to begin with at least, all EU rules into UK law, including, obviously, state aid rules. They are both absolutely right to point out that it will then be up to this Parliament, rather than anybody else, to change them if we want.
However, we all need to be a little careful about what we wish for. For those of us who are free marketeers and free traders, or even those of us who are not but just want to see fair play, the changing of state aid rules needs to be approached with great care, because it can easily either slant the playing field in favour of foreign firms trying to export into Britain in ways that are unfair for British manufacturers and British producers, or alternatively create political favouritism and lobbying games. So we would need to approach that with a great degree of care. I know that it would be approached with a great deal of care on both sides of the aisle. It is theoretically possible, but on day one, I am sorry to tell the hon. Gentlemen from Antrim, they will not be changed and they will still apply.
Inspiration has just struck. I understand that the figures the hon. Member for North Down was asking about have already been published. They were published last May. We are trying to track down precisely where they are in order to make sure that they are properly available. I will come back to her, or my right hon. Friend the Secretary of State will come back to her, with the final version of the figures and make sure they are properly available. If we cannot track them down, we will try to come up with duplicates if we can.
Lady Hermon
The Minister said that the figures have been published. What I would really like are the calculations underlying those figures. We need to know how the figures were arrived at. Are those calculations in the public domain or can they be put in the public domain? That is what I would like to see.
John Penrose
I think the answer to the hon. Lady’s question is yes. I have not actually seen the figures—the ones published in May—but we will endeavour to clarify that and get them out there for her as soon as we can.
Let me finish by saying that there is a link between the decisions that have been taken by the Executive and where we are today. A number of colleagues asked whether the sunset clause will apply if we do not take a decision today. I remind people that back in March 2015, the Executive at the time took the decision to introduce some caps. Those were renewed roughly this time last year and expire at the end of March this year. That is the reason why we are so concerned about the timescale. I appreciate that this does not answer some of the questions about why we are having this conversation today rather than two weeks ago, or whenever it might be, but I reassure people that this is not something that someone has plucked out of the air. It has been extended on an annualised, fixed-term basis and is therefore due to expire at the end of this month. That is why this needs to be dealt with and sorted out, so that roughly 1,800 of the people who currently receive money can at least have the legal option of continuing to receive that money in future.
I should just say to the hon. Member for Gedling, who was muttering in concern, that when I said I had not seen the figures, I was talking about the precise figures that were published back in May. I have not seen those particular documents and therefore do not want to speak to what may or may not be in them at this stage rather than the broader point.
With that, I will sit down and let us move on to a more detailed conversation in Committee about the RHI scheme because there is clearly a material appetite to do that, and I do not want to stand in anybody’s way.
Question put and agreed to.
Bill accordingly read a Second time.
Northern Ireland (Regional Rates and Energy) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateWednesday 6th March 2019
(5 years, 9 months ago)
Commons ChamberNorthern Ireland (Regional Rates and Energy) Act 2019 Read Hansard Text Amendment Paper: Committee of the Whole House Amendments as at 6 March 2019 (PDF) - (6 Mar 2019)
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland (Regional Rates and Energy) Act 2019 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Chairman
With this it will be convenient to discuss the following:
Clauses 3 to 5 stand part.
Amendment 1, in clause 6, page 5, line 26, at end add—
“(4) Section (Regulations) comes into force at the end of the period of 3 months beginning with the day on which this Act is passed.”
Clauses 6 and 7 stand part.
New clause 1—Regulations—
“(1) The Secretary of State may make regulations by statutory instrument amending any provision within sections 2 to 5 of this Act or within the Schedule to this Act.
(2) Regulations under this section may not be made unless a draft of the statutory instrument containing them has been laid before Parliament and approved by resolution of each House of Parliament.
(3) The Secretary of State may lay draft regulations under this section before Parliament only if the draft regulations take account of any relevant recommendations made by any select committee of the House of Commons.”
The purpose of this new clause is to ensure prior consultation, and full and proper scrutiny, of proposed changes to the renewable heat incentive scheme in order to ensure that current participants are not disadvantaged by changes to the scheme.
That the Schedule be the schedule to the Bill.
Karen Bradley
We have had significant debate on this matter on Second Reading and I do not wish to prolong proceedings any further at this stage. I look forward to hearing from right hon. and hon. Members.
Dr Murrison
I am grateful to you for calling me to speak in this stage of our proceedings, Sir Lindsay. The complexity of the Bill, apart from clause 1, has been demonstrated by the level of discussion that we have had. That really underscores the need for full and proper scrutiny of this Bill. Forcing this through all its stages in a day is a challenge, and I fear we have not explored sufficiently the complexity of this matter. It is a matter that bears on the lives of many people in Northern Ireland and we must get it right. I know the Secretary of State is as keen as I am to ensure that that happens.
I am grateful to the parliamentary draftsmen for their assistance in crafting my new clause, which is available in manuscript form. It turns what I thought would be a simple matter—that of dividing the largely uncontroversial part of the Bill from the more difficult bit on the RHI—into something that, in my mind, is really quite complicated, but that is the nature of this place and of parliamentary draftsmanship. We cannot consider these two parts separately and be sure the matter will be finalised in time for people to get their money on 1 April, so in consultation with parliamentary draftsmen, we have devised a new clause and an amendment to clause 6, which is the commencement clause.
I am grateful to the members of the Northern Ireland Affairs Committee who have co-signed the new clause and amendment. I have appended to the new clause what I hope is a helpful explanatory statement. It explains that the new clause is essentially a patch-up job that I hope will help to facilitate consultation and fuller and better scrutiny of proposed changes to the renewable heat incentive scheme to ensure that current participants are not disadvantaged by changes to the scheme. I appreciate that this is imperfect—I would have preferred for it to be dealt with separately and for the Bill to have been divided into two parts to allow for a proper debate on the RHI clauses and schedule—but I accept that we are faced with the choice of supporting the Bill or not and that if we do not support it many people will be financially disadvantaged, which is not acceptable. I hope that the new clause provides a mechanism for scrutinising this matter, albeit imperfectly, and for making recommendations that the Secretary of State might implement to ensure that as few people as possible are disadvantaged.
I am not in the business of job creation, and I gently point out that my Select Committee is the most productive in the House of Commons, according to figures I have seen—we are pretty busy, particularly at the moment—but it might be thought a proper Select Committee to undertake this work. If so, I will discuss it with my Committee, but I make no prescription. I am quite clear that this complicated element of our business needs proper detailed scrutiny and that we need to see and examine the data produced.
Several right hon. and hon. Members have been a little critical of the Department for the Economy. It is after all implicated in this situation, as the informatics it produced and the advice it gave are partly to blame for where we are, and that means we are doubly obliged to examine closely any material it has produced. That is fair and proper scrutiny. I gently suggest that whichever Select Committee undertakes this work focus heavily on that information so that we can be clear what is being recommended to the Secretary of State and are better able to make recommendations to minimise the hard cases that we are all concerned about in the course of this legislation. I hope she will consider the amendments carefully, and I look forward to hearing what she has to say.
Ian Paisley
It is always an honour to serve under your chairmanship, Sir Lindsay.
I support the new clause. It has the overwhelming support of the parties here and of the Select Committee, which has been rightly identified as the Committee that should try to organise the scrutiny. I approve of the requirement in the new clause that the Secretary of State should bear in mind
“any relevant recommendations made by any select committee of the House”.
A number of points were made on Second Reading but, in particular, Members asked where the evidence came from and on what we were basing this, and my hon. Friend the Member for North Down (Lady Hermon) asked whether we could see the material. Yesterday was the first time that I, and many of my colleagues, were able to see the material on which tonight’s discussion is based. I have it in my hand. There is not a lot of it: it contains 300 words and three graphs. On the basis of a 300-word document with three graphs, we are being asked to agree a multi-million-pound subsidy cut in Northern Ireland. That is not right.
This requires scrutiny. Those 300 words may have convinced some people, and the Minister made a very good fist of making the case, but they are not a compelling argument. We need to be able to see the evidence that has convinced the Department that it is doing right and the rest of the United Kingdom is doing wrong, and that, if the Irish Republic comes on stream, it too will be doing wrong. We need to see the evidence for those claims.
I asked a few questions that need to be answered by the Secretary of State or her senior officials. That can happen only in a Committee, because they have not been answered on Second Reading, and I do not know if they will be answered in Committee. I welcome the new clause that has been tabled by colleagues; I hope that it attracts support and that the Secretary of State can demonstrate to us, if she does not want us to accept it, that she will take cognisance of what a Committee will say and of scrutiny that will actually take place.
Karen Bradley
I recognise the concern of Members and the spirit of this amendment, which seeks to provide for additional time and scrutiny. As I have said, I empathise with the participants in the scheme. I have been very clear, during discussion both of yesterday’s legislative measures and today’s, that this situation and this process are far from ideal. What I and I think everybody in this Chamber wants to see is scrutiny of Northern Ireland policies by locally elected politicians. Nevertheless, I am committed to bringing forward measures on behalf of Northern Ireland where they are critical to good governance, as these two Bills are. I remind Members about the point I raised yesterday about the normal estimates process: by taking this legislation through as primary legislation in this House, rather than subordinate legislation, as it would have been in the Assembly, we are affording a higher degree of scrutiny and accountability to these measures.
My hon. Friend the Member for South West Wiltshire (Dr Murrison), the Chair of the Northern Ireland Affairs Committee, is right that full and proper scrutiny is what we need, and he is right to challenge us. He is also right to say that we must get this right, and I appreciate that his amendment would afford more time for scrutiny and offer a mechanism by which more scrutiny could be delivered.
The Northern Ireland RHI scheme has probably received more public scrutiny than any other. I have already mentioned the public inquiry into the scheme, which has interrogated myriad aspects of the scheme in detail, but additionally and specifically on these new tariffs, the Department for the Economy held an extensive public consultation from June to September 2018. That included making public the evidence base used by the independent experts who generated the tariffs. I believe that information is on the Department for the Economy website and we are looking to see if we can find it quickly and provide a link to it as soon as possible.
The Department held pre-consultation events for stakeholders, including all the local political parties and key representative groups, including the Ulster Farmers’ Union and the Renewable Heat Association Northern Ireland. Following the closure of the consultation, the Department set out its analysis and response in January 2019 and said that final proposals for the revised tariffs would be delivered in February this year. The Department and my officials have in recent weeks briefed parliamentarians and local parties on the new tariffs and the new legislative measures before us, including the new buy-out clause. My hon. Friend’s suggestion that there may be a role for further scrutiny in either his Committee or another Committee in the House is very welcome and I certainly would appreciate that.
With regard to the timing of the legislation today, it is important to recognise the comprehensive and technical nature of the work involved. As I have mentioned, the Department for the Economy engaged independent experts to carry out a painstakingly detailed review of the scheme, went through a full public consultation exercise and more recently an extensive discussion with the European Commission on state aid. These discussions only reached a conclusion at the end of January, meaning the Department for the Economy could not finalise its position any earlier. The current legislation is sunsetted and a failure to enact the clauses before us will mean more than 1,800 participants will not be able to be paid by 1 April.
Ian Paisley
On that point—I think this is critical and is probably subject to the judicial review at the present time—is it the case that payments stop? Is that the opinion of the barristers advising the Department? Or is it the case that this reverts to the original payments scheme? There is contrary advice on this and the Secretary of State must be clear with us which advice she is taking and why.
Karen Bradley
The advice I have received is that the payments will stop, because there will be no legal basis on which to make any payments. The payments that are currently being made have been found to breach state aid rules, so there is no legal basis on which to continue to make payments. The payments with the cost-capping involved expire on 31 March. The Department cannot go back to the original payments, because they would be illegal payments, and we will not have any other mechanism by which legal payments can be made after 31 March. I recognise that this is far from ideal, but the facts of the situation have meant that an expedited process is required.
Ian Paisley
The Secretary of State says that we cannot go back to the original payments, but I do not think that anyone is asking for that. However, the payments were stepped down, and I understand that she could continue with those stepped-down payments.
Karen Bradley
I cannot continue with those, because the advice that I have is that to continue with them would be illegal. Under the ministerial code, I cannot, as a Minister of the Crown, legislate for something that I am advised is illegal. So I am left in a very difficult situation. I understand how people feel about this. I empathise with people and I understand the implications for them of a reduction, but as Secretary of State, legislating for something that none of us wants to be legislating for in this place, I am faced with the choice of legislating for something that is legal, to allow some subsidies to continue, or not legislating, which would result in no subsidies happening after 31 March. The legal basis on which the reduced subsidies, as set out by the Executive, are paid expires on 31 March.
Dr Murrison
I appreciate the Secretary of State’s dilemma. She is having to act on the basis of advice that she is getting from the Department for the Economy, a Department whose advice has been shown to be flawed in the past. Does she understand that we need to examine this closely? She has been told that, legally, she has to do this, and we in this place have to accept that, but we also have to scrutinise the legislation. I hope that she can give me sufficient reassurance that she will note our examination of this matter and our recommendations on it, and that she will not take at face value the advice that she has been given from a Department that has erred in the past. I very much hope that she will be able to tailor her remarks accordingly, and I am all agog as to what commitment she can give to providing the scrutiny that I have described in my amendment.
Karen Bradley
I thank my hon. Friend for his questions, and I will come on specifically to those points in a moment.
I want to come back to the question of whether there is an option to delay. I agree with the principle and intention behind the amendment, but it is not the solution to the wider problem. As I have said, the tariffs set out in the legislation are the only tariffs available that will bring the returns on the scheme into line with the 12% approved by state aid. The tariffs strike a fair balance between the interests of scheme participants and the wider public interest, in ensuring that the Northern Ireland budget and public services are protected and that taxpayers’ money is spent to achieve value for money. The only lawful alternative would be the closure of the scheme.
Paul Girvan
In relation to the figures that are being presented, I have done a very simple back-of-the-envelope calculation—perhaps not a very wise thing to do—of the payments that would have been received in the early stages at the maximum permissible amount. If we calculate that in, then take the reduction over the next couple of years that has been calculated in, then multiply by the factor that has been put forward, it comes out at 3.1 times less than what the rest of GB is getting on the average tariff.
Karen Bradley
I hope that the scrutiny that the Chair of the Northern Ireland Affairs Committee has offered will help to address a number of those issues. I know that there is concern about the differences between the scheme in GB and the scheme in Northern Ireland. I am not using a visual aid here, but I can assure Members that we have a copy of the document that is on the Department for the Economy website. It is available for download, and we would be happy to send a link to all Members here today, to ensure that they have an opportunity to see the very detailed information, tables and calculations, which I am sure they will absorb and enjoy.
To resume, delay of the legislative measures, such as the amendment would achieve, would serve only to put at risk payments to all the participants in the scheme. For there to be a lawful basis for the RHI scheme come 1 April, the legislative process and Royal Assent need to be completed by 31 March. The current tariffs are designed to pay the maximum 12% rate of return to a typical participant, so there is no lawful way to introduce higher tariffs to the scheme. A delay would not change that fundamental issue.
Karen Bradley
I beg to move, That the Bill be now read the Third time.
I thank everyone who has participated in this debate and the one yesterday. We have had a good discussion. We are all dissatisfied with the level of scrutiny afforded to these measures in the absence of an Executive, but I think it is fair to say that the debates in this Chamber yesterday and today have meant that there has been scrutiny and that we have aired a number of the issues that right hon. and hon. Members wished to air. I thank all who have participated and look forward to the work that the Select Committee has set out it will do.
I thank my Minister of State, the Minister in the other place, the Whips, the Opposition, the Scottish National party, the Members from the Democratic Unionist party and the hon. Member for North Down (Lady Hermon) for their participation over the past two days. Finally, I thank the Bill officials because, if it were not for the people who spend hours and hours coming up with the very technical points and working incredibly hard through that, we would not be able to deliver in this place in the way that we do.
Northern Ireland (Regional Rates and Energy) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 12th March 2019
(5 years, 8 months ago)
Lords ChamberNorthern Ireland (Regional Rates and Energy) Act 2019 Read Hansard Text Amendment Paper: HL Bill 165(a) Amendments for Committee (PDF) - (11 Mar 2019)
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland (Regional Rates and Energy) Act 2019 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Duncan of Springbank) (Con)
My Lords, I will speak to both Motions standing in my name on the Order Paper. When I last brought forward a budget Bill for Northern Ireland, I stated that it would be the last time. Events have made a liar of me. I apologise for that.
In the absence of devolved government in Northern Ireland, the UK Government have a responsibility to ensure good governance and to safeguard public services and public finances. I therefore ask your Lordships to give a Second Reading to two pieces of necessary legislation.
The Northern Ireland Budget (Anticipation and Adjustments) (No. 2) Bill will have all its stages in your Lordships’ House today. However, following engagement with a number of noble Lords, the regional rates and energy Bill will have only its Second Reading here today. All further stages will take place on 19 March, primarily to allow time for further discussion and reflection.
With your Lordships’ permission, I will discuss each Bill in turn, The Northern Ireland Budget (Anticipation and Adjustments) (No. 2) Bill would put Northern Ireland finances for the 2018-19 financial year on a legal footing and enable Northern Ireland’s departments to continue to deliver public services into the first half of 2019-20. Your Lordships will recall that the UK Government legislated for the 2018-19 budget for Northern Ireland last year. This legislation was necessary to provide a clear legal basis to Northern Ireland departments, enabling them to manage their resources. The resulting Northern Ireland Budget Act 2018, which passed in July, did not direct any spending but rather allocated funds to departments to be spent by the Permanent Secretaries according to departmental commitments. As we approach the end of the financial year, those spends need to be placed on to a legal footing, as is standard practice in any budgetary process. That is what this Bill does.
In addition, the Bill provides for a vote on account for the first half of next year, which will give legal authority for managing the day-to-day spending in the run-up to the main estimates process. This year, following discussion with the Northern Ireland Civil Service, the Bill provides a higher than normal level of vote on account, some 70%. This is in recognition of the known increased spending pressures and the lack of Ministers in place to react and respond to emerging or escalating pressures. It also recognises the uncertainty of the political situation in Northern Ireland in the coming months. A higher level of vote on account funding is prudent, providing the practical and legal certainties to protect public services in any and all circumstances up until the point that legislation on the Northern Ireland budget for 2019-20 is taken forward.
Your Lordships will recall that my right honourable friend the Secretary of State for Northern Ireland published a draft budget for 2019-20 in February. It is important to recognise that this budget Bill does not legislate for that budget position. Those allocations will require their own legislation later this year. The vote on account in this Bill and the draft Northern Ireland budget position for 2019-20 provide the necessary clarity and certainty to Northern Ireland departments to enable them to plan and take decisions in the coming year.
I will briefly turn to the Bill’s contents. In short, it authorises Northern Ireland departments and certain other bodies to incur expenditure and use resources for the financial year ending 31 March 2019. Clause 1 authorises the issue of £16.8 billion out of the Northern Ireland Consolidated Fund. The allocation levels for each Northern Ireland department and the other bodies in receipt of these funds are set out in Schedule 1, which also states the purposes for which these funds are to be used. Clause 2 authorises the use of resources amounting to some £20 billion in the year ending 31 March 2019 by the Northern Ireland departments and other bodies listed in Clause 2(3). Clause 3 sets revised limits on the accruing resources, including both operating and non-operating accruing resources, in the current financial year. Clause 4 sets out the power for the Northern Ireland Civil Service to spend from the Northern Ireland Consolidated Fund some £11.8 billion for the forthcoming financial year. This is the vote on account provision I outlined earlier. It is linked to Clause 6, which does the same in terms of resources. The value is set at around 70% of the sums available in both regards in the previous financial year. Schedules 3 and 4 operate on the same basis, with each departmental allocation simply set at 70% of the previous year. Clause 5 permits certain temporary borrowing powers for cash management purposes.
The Bill would ordinarily have been taken through the Assembly. As such, at Clause 7, there are a series of adaptations that ensure that the Bill will be treated as an Assembly Budget Act once approved by this Parliament, enabling Northern Ireland public finances to continue to function notwithstanding the absence of an Executive.
Alongside the Bill is a set of supplementary estimates for the departments and bodies covered by the budget Bill, which was laid as a Command Paper in the Library of the House on 28 February. These estimates, prepared by the Northern Ireland Department of Finance, break down the resource allocation in greater detail. For those who wish to delve in, they are thoroughly set out in the document of which I have a copy here. As your Lordships will recall, this process is different from estimates procedure at Westminster, where the estimates document precedes the formal Budget legislation, and is separately approved. However, this would also be the case were the Assembly in session.
I also ask the House to give a Second Reading to the Northern Ireland (Regional Rates and Energy) (No. 2) Bill. This Bill would deliver two essential measures: it will enable the collection of regional rates in Northern Ireland, and will ensure fair and appropriate tariffs and cost-capping measures are in place for the renewable heat incentive scheme in Northern Ireland. The bills are not without their controversies, as noble Lords will be aware. However, the measures are necessary.
The first clause of the Bill addresses the issue of regional rates. In the absence of an Executive, the UK Government have set this rate for the past two years. My right honourable friend the Secretary of State for Northern Ireland intimated the rate—an increase of 3% plus inflation on the domestic rate and an inflation-only increase on the non-domestic rate—in her budget Statement of 28 February.
The second section of the Bill, specifically Clauses 2 to 5, concerns the administration of Northern Ireland’s renewable heat incentive scheme. I need to be clear that this is a devolved matter. We are taking forward legislation at the behest of the Northern Ireland Department for the Economy. Without legislation, there will be no legal basis to maintain the payments to participants in the scheme.
The tariff levels set out in this legislation are based upon analyses of the additional costs and savings of operating a biomass boiler in Northern Ireland following extensive consultation, assessment and analysis under- taken by the devolved Department for the Economy and through detailed discussions with the European Commission. These rates are significantly lower than previous tariffs. The European Commission is clear: the tariff rate cannot deliver a return higher than 12% per annum. For participants with lower usage needs or higher capital costs who have returns below 12%, the Bill introduces a voluntary buy-out scheme.
As I have said, these tariffs, and indeed this scheme, are not without controversy; I appreciate the desire of noble Lords to consider this significant and complex subject in more detail. There will be a Committee stage, on Tuesday of next week, where these proposed RHI measures and the amendments that noble Lords have tabled can be addressed separately. I will ensure in the intervening period that my officials, together with officials from the Northern Ireland Civil Service, are available to engage directly with issues that your Lordships may wish to raise on this matter. In addition, my officials will issue a detailed question-and-answer script addressing commonly asked questions; this note will be distributed to interested Peers shortly.
In conclusion, I hope your Lordships will recognise the necessity of the actions that I have presented today. On that basis, I beg to move.
Lord Duncan of Springbank
My Lords, no matter how much homework I do before I come here, I am always confronted by new questions, so I will try as best I can to do justice to all of the questions that have been presented this evening. I also stress that the opportunity next week to examine in greater detail the renewable heat incentive will give us a further opportunity to discuss that issue.
I start on a positive note and I will try to weave my way through all of the other questions. A number of noble Lords mentioned the medical centre in Derry. Derry/Londonderry will secure significant funding through the city deal initiative. Noble Lords will be aware that the Belfast city deal has been set at around £350 million. There will be substantial funds going into Derry/Londonderry and into the medical centre. If it is able to secure the correct construction of its bid, that is exactly the sort of thing that the city deal should be able to move forward. I am not across the details, but I will be, and I will report back when I have more to say. It is a useful initiative to take forward.
The common theme from noble Lords this evening was to ask why we always seem to do this at the last moment and at short notice. It is important to place this in context. The Bills before us are, in a sense, a reconciliation of the moneys broadly spent in the financial year soon to close. The budget for that was set before and we are now reconciling it. It is happening now because we had to wait until the figures were available, and that happened only within the last month. That is why we are doing this today.
On the question of the rates, again, noble Lords were right to flag up that this could have been examined at a different time, but the two issues have been put together in this package. The heating initiative concept also falls into this debate because we face a time limit of the deadline by which we must introduce an adjustment to the scheme because of the grandfather clause that will bring it to an end.
The point noble Lords are making is different: if this is how we are doing things, why are there not more opportunities for further scrutiny by different parts of this House and others, either through committees or elsewhere? I am going to take that away from the discussion this evening because I agree. We should be looking at how to move that forward in a fashion that does not rely on the methods we have used thus far. I do not think they are adequate. When we are spending such sums of money, there should be thorough, careful and detailed scrutiny—not in one evening, not even spread over the two opportunities we have—to ensure that those who are tasked with examining these things are capable of doing so.
I will try to move forward on several of these smaller but important questions. I have had several meetings with the noble Lord, Lord Hain, about pensions. I recognise how important this is and that we need to move forward for the very reasons that a number of noble Lords have struck upon this evening, not least the noble Lord, Lord Murphy. These people are ageing and dying off. We are awaiting the information from the Victims Commissioner. We believe that it will come very soon and hope that we will be able to move forward on this initiative once we receive that. I will come back when I have more details and am in a better position to do so.
The noble Lord, Lord Bruce of Bennachie, raised the wider question of the Hart inquiry. I wanted to get the exact wording, so forgive me if I read it out. My right honourable friend the Secretary of State for Northern Ireland has made it clear that, in the absence of an Executive, she will consider the next stages when she receives advice from the Northern Ireland Executive. We need to move this forward—I recognise how urgent and important it is—and we will do so when we have received that information. Even if there is no Executive, we will not let this settle. We need to make progress now.
I will touch on one of the other, bigger issues, the role of an Assembly, not necessarily as a generator of legislation but as a place where debate and discussion can take place. There is no impediment to the Assembly meeting. It would have to select and elect its own Speaker and its own Presiding Officer, but it could do so. One noble Lord flagged up one of the difficulties: to be an appropriate place for this discussion to take place, it would need to bring together all of those parties. I am aware of the challenge that that may represent. Perhaps noble Lords here gathered can do something to help. On a cross-party basis, they could write to each of the MLAs and ask if they would be willing to sit and meet in such an Assembly now.
There is no doubt that the noble Lord, Lord Murphy, has flagged up an important point. Just along the corridor in the other place, an extraordinary event has unfolded. It has centred on Northern Ireland, yet the voices of Northern Ireland have been remarkably quiet in this process. It is not just about flags outside but voices in here. Any small progress will be a step in the right direction.
Lord Alderdice
I am very grateful to the Minister, but it feels as if he is giving a veto to one party. When Lord Prior was Secretary of State, an Assembly was able to meet for some years without any nationalist representation at all. We are not talking about that in this situation. I understand what he is saying very well. The Government would be very ill advised to hand out a veto in that kind of way.
Lord Duncan of Springbank
The noble Lord is absolutely correct. That is why I am trying to be very careful in putting this forward.
Lord Cormack
I am most grateful. I would like to follow up: I think we see this as one. I appreciate the suggestion that we might take part in some way. However, I would ask that the Secretary of State herself writes to every single elected Member, saying that there will be a meeting on a particular day and inviting them to come. It would be wrong to allow any single segment or group to veto that initiative. It has to be taken at the highest level, by the Prime Minister or Secretary of State.
Lord Duncan of Springbank
I accept the words of my venerable and noble friend. I am trying to find a way of moving this forward as best I can. I wonder whether there might be an opportunity for us to meet collectively in a different forum to discuss that very thing. I do not think I will be able to resolve it on my feet. I do not doubt that in a few moments or so I will be getting little notes from my assistants in the Box.
Lord Hay of Ballyore
To follow the remarks of the noble Lords, Lord Alderdice and Lord Cormack, has there been any discussion on the idea of a shadow Assembly within the talks at any time? Has it been put by the Secretary of State to the parties? What has their reaction been, if any at all?
Lord Duncan of Springbank
The noble Lord raises a question to which I do not have the answer, I am afraid; I do not have it to hand. That is why if we are in a position at a date soon hereafter to sit down and explore some of these issues in an effort to move them forward as best we can, that would not be a bad initiative. Let us revisit that. I am not trying to park it in any way.
I hope noble Lords will forgive me for being a little disorganised: I seem to have an awful lot of papers spread in front of me. I will try to take the points raised by each noble Lord in turn. The noble Lord, Lord Bruce, asked about the RHI situation and how it compares with other parts of the United Kingdom. We are broadly agreed that the scheme in Northern Ireland was not well constructed; we can probably all accept that. The unfolding inquiry into that will set out clearly exactly what has gone on. In response to the question from the noble Lord, Lord Alderdice, yes, we can have that debate should your Lordships desire to have one at the stage when a report emerges; I am happy to say that.
The scheme set out a 12% return; that was at the heart of what was meant to be achieved by the initiative. It is indeed 12% in Great Britain itself; the scheme that we anticipate in the Republic would be 8%. One of the reasons that we end up with different figures is that there are different ingredients going in. For example, the scheme in Great Britain is a 20-year scheme, whereas that anticipated in Northern Ireland is a 15-year scheme. Some of the capital costs involved in the scheme depend on when the emergent technology became more cheaply available. The scheme in Northern Ireland that commenced in earnest in 2015—although it opened earlier—contrasts quite clearly with the scheme which opened in Great Britain in 2012, during which there were significant cost reductions.
The scheme construction also differs significantly between Great Britain and Northern Ireland, not least the element of “tiering” which exists in British schemes but not in Northern Ireland and the digressive component. I will not go into greater detail on that; we will have an opportunity to do so next Tuesday evening. In the intervening period, I recommend that any of your Lordships who are minded to find further details meet my officials so that those who have serious concerns can have them addressed.
To put this into context, the 12% return that we talk of is the needful part within the state aid rules. The scheme in Northern Ireland as it initially emerged had a return rate of 55%—noble Lords will see the contrast between 55% and 12%. It is not difficult to see how those individuals, who, through clear guidance, accepted a scheme with its various component parts and invested on that basis, now find themselves in the invidious position of all their calculations being blatantly wrong, based as they were on incorrect information. It is important for me to stress that those who were responsible for the wrongness of that scheme, I do not doubt, will emerge from Patrick Coghlin’s report; we will have an opportunity to discuss that further.
I stress that those within the Northern Ireland Civil Service undertaking the work on the current proposals are not the same people. This has been conducted in a very different fashion, based on significant investment in looking at the actual data rather than forecast data. Rather than trying to anticipate what the figures will be, the report itself and the consultants who examined it looked at the actual data. Again, it might be worth getting into the detail of that at an opportunity that will be provided by my officials and by others, because noble Lords will be surprised how quickly this moves from a high-level discussion into extraordinary technicalities.
I have written at the top of this page: “still a Minister”. I think that must reflect on what was going on down the Corridor. I will check when I leave, obviously.
Lord Duncan of Springbank
The night is still young, exactly.
Returning to the remarks of the noble Lord, Lord Empey. In stressing the notion of the cancer strategy, he placed his finger on one of the more important questions: in the previous Act we set out our ability to offer guidance to civil servants in Northern Ireland but at what point does a civil servant in receipt of information feel he is comfortable to implement it or not? There is no doubt in my mind that there is a strong difference between a civil servant who feels so empowered and a Minister who wishes to move things forward, and there is no point pretending that one is the same as the other. I recognise that a cancer strategy is only as valuable as it is implemented in all its manifest forms, and I also recognise how important that will be.
The noble Lord asked about turning capital funding into resource funding. In the current arrangements there will be £130 million of that, and he is absolutely right that the Treasury has in the past not been overly fond of this approach. This particular approach is one method of trying to balance out that budget, but I recognise that there will be other challenges. He rightly points out that there are enough capital projects in Northern Ireland to keep Northern Ireland busy for some time, which is again why there will be £200 million from the confidence and supply arrangements, focused primarily upon infrastructure. That should in some sense help to recognise how we can balance out these particular aspects.
My noble friend Lord Lexden was very critical, and I accept his criticisms in the spirit in which they were given. We deserve some criticism in this area. We should be doing better, so I will take that on board. Again, he flags up the vital role undertaken by the Northern Ireland Affairs Committee, which should have a stronger role in all the things which we are discussing. There is no point in having a Northern Ireland Affairs Committee if the only thing it does not discuss is what you are up to in Northern Ireland in this context, so I shall take that on board. He was right also to remind us of the role of Airey Neave, and the tragic circumstances in which he died. There is much to learn from that period about how we can move things forward.
The noble Lord, Lord Kilclooney, asked several questions. The first one, which he has touched upon previously, was: has the reform of the council structure had any benefit? I do not have an answer to that but I am going to find one and report it to him directly. He also asked what the role of state aid will be after the point at which we depart. The reality is that the state aid approach will be adopted broadly by a UK-based entity called the Competition and Markets Authority, which will apply common rules. I will write to him with more detail so that I can set out at greater length the information which I am here slightly gliding over the top of.
I hope I have answered the questions raised by the noble Lord, Lord Alderdice, so I will glide over the top of those and move on.
The noble Lord, Lord Morrow, like many others, raised the very serious point of scrutiny. I hope we can find a way of doing this differently. This time last year, I somewhat foolishly made a bold promise, which I will not be doing it again, as I have discovered that Northern Ireland is not the place to make bold promises—certainly not as far as I am concerned. However, I believe we need to find a different way of scrutinising. It is right and necessary that the people of Northern Ireland have faith and confidence in the way that their money is being administered, and that is going to be done only if they have genuine confidence. The notion of using expedited or emergency powers creates this sense of emergency, which in itself is self-defeating, so we want to move away from that as best we can.
The noble Lord, Lord Maginnis, asked certain questions on proxy voting. I will chase up the responses tomorrow and ensure that the noble Lord gets them. He read into the record one of the letters from the responsible devolved Minister, reminding us again that all those individuals who have written to each of us about the RHI scheme did so on the basis of very clear, simple, straightforward guidance. They did the right thing, and so it is important that is on the record and part of the wider discussions that, I do not doubt, will follow on from the report which will be published. That echoes the points raised by my noble friend Lord Cormack, and I am pleased he was able to raise the issue of pensions on behalf of the noble Lord, Lord Hain, which we should be able to move forward on, once we are receipt of that information from the victims’ commissioner.
The noble Lord, Lord Bew, asked about how much the Scappaticci affair cost. I do not know, but I will find out and report back to him. I hope I was able to give him some comfort on the Derry medical school.
Lord Duncan of Springbank
I will make sure the letter covers that point as well. On the housing association aspect, I have assurances from my right honourable friend the Secretary of State for Northern Ireland that we will find time, and this will move forward as quickly as we can. Whether it will be by the summer will slightly depend upon events, but there will be an ambition to move forward quickly. The longer we delay in moving this aspect forward, the greater the cost to the Exchequer, as the noble Lord will know. If we do not make progress by the end of the financial year, it will have cost us £45 million, which is money we could better spend on a thousand different areas.
The noble Lord, Lord Rogan, reminds us of the challenges we face if we are not able to deliver, and he is right to point out the challenges of a vacuum, and who will fill it. It is a stark reminder, and we are living through that reality now. We need to make sure we can make some progress, because it is too important an issue for it to fall into that particular abyss, from which it will be harder and harder to extricate ourselves.
The noble Lord, Lord Murphy, as ever, brought forward a useful summary, and trenchant criticism, which lands upon us as the Government. It is important that we recognise the issues we have tried to take forward, and how we can improve the way we do business. He asked a specific question about the small towns initiative, to which I do not have an answer, but I will get an answer and I will write to him, lodging my answer in the Library for those who wish to have that information at their disposal.
The noble Lord, Lord Bruce, posed a question on scrutiny, and the noble Lord, Lord Empey, touched on this. The actual spend is scrutinised by the Northern Ireland Audit Office, but there is a difference between scrutinising post facto spend and the other way around. I take that on board, as I hope he will understand. The noble Lord, Lord Bruce, also asked why the flaws in the RHI scheme were not caught earlier. It is a good question, and there have been attempts throughout the process to ameliorate what has become a significant problem. When the scheme was set up, the figures being discussed were in the £20 million range, but when we look at the simple costs now for this scheme, were it to have run the full distance, we would already be at £500 million, which is a significant overshoot. The reason why the judicial review, which is going to appeal and will report soon, found that there should be reform of this is because we need to balance the commitments we make to individual participants in this scheme, and the wider sense of common good and public finances, which are challenging in this regard.
The noble Lord, Lord Maginnis, also raised proxy voting. It is important that we get clarity on this, and I will write to him and will share that information with others.
I think I have answered all the questions I can. If I have not answered particular questions, noble Lords should grab a hold of me, and I will answer them. If I cannot do that, we will arrange a meeting where I can answer properly.
Northern Ireland (Regional Rates and Energy) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 19th March 2019
(5 years, 8 months ago)
Lords ChamberNorthern Ireland (Regional Rates and Energy) Act 2019 Read Hansard Text Amendment Paper: HL Bill 165-I Marshalled list for Committee (PDF) - (15 Mar 2019)
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland (Regional Rates and Energy) Act 2019 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
Lord Murphy of Torfaen (Lab)
My Lords, I support the amendments in the names of my noble friends Lord Empey and Lord Rogan. I call them both my noble friends of over 20 years, despite the eccentric seating in place today.
This is a sorry business, all of it—a terrible mess. The whole situation in Northern Ireland for the last two years started with the collapse of this appallingly planned scheme. We cannot get away from that. Sir Patrick Coughlin is currently conducting an inquiry into the scheme, the courts are ready to pounce and the Northern Ireland Affairs Select Committee has been asked to look at it as well. The difficulties go back to the way the legislation first came to us. There should not have been a Bill that, on the one hand, decided the regional rate in Northern Ireland and, on the other, decided the details of the RHI.
Equally wrong was the length of time taken by the department in Northern Ireland to deal with its consultation process. As a result, apparently, all the details that we need to consider for the Bill did not arrive until January, even though it was known full well that the previous Bill put forward was sunsetted to end at the end of March. This meant there would be totally inadequate scrutiny of the Bill by Parliament. What is done is done, but it means that we are in a mess. The noble and learned Lord, Lord Mackay, referred quite rightly to the fact that some of the people who, in good faith and on the advice of the Government, went to their banks and decided to take out loans to deal with this issue are now in a terrible mess. What happens to them? The Government are in a dilemma—partly one of their own making, because of what I have just referred to with respect to process.
If we do not pass the Bill, there will be no regional rate in Northern Ireland and the scheme will collapse, so people who are currently benefiting from it, in whatever sense, will not have any money to deal with it. At the same time, in the other place, the Secretary of State welcomed the Select Committee on Northern Ireland looking at it. Perhaps she did not realise that, under the circumstances of the Bill, it would have just under two weeks to consider it, which of course is impossible.
The Government and the Minister in particular, who has been rightly praised by all sides of the House on this and other issues, have to come up with a solution that will satisfy my noble friends Lord Empey and Lord Rogan, and the rest of us, about what can be done. They to ensure that the rates are collected and that the scheme does not collapse but, at the same time, looks after the people who took part in this scheme in good faith. There may well be ways the department could look sympathetically at cases in Northern Ireland. There may also be a way, although I cannot see what it would be at the moment, for the Northern Ireland Affairs Select Committee’s recommendations to be taken into account after the legislation has been improved, unless further primary legislation could be brought before this House to amend the Bill we are considering—it may come to that.
A general point has to be made: so long as there is no devolution in Northern Ireland, with no Assembly or Executive, we cannot have Northern Ireland legislation coming to us in bits or as emergency legislation that denies proper scrutiny. The dilemma that all of us, and the Government in particular, are in today results from the fact that the business managers have not taken Northern Ireland legislation seriously. That has to change, until such time when the institutions are revived in Northern Ireland, which I hope will not be that long away.
These Benches will support a Division, if my noble friend Lord Empey calls one. I hope that can be avoided with what the Minister is about to tell us, because we want to ensure that the legislation goes ahead. However, we also want to ensure that the hundreds of people in Northern Ireland who are now in a sorry state because of this RHI can be dealt with in a proper, decent, humane manner.
The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Duncan of Springbank) (Con)
My Lords, I will begin in a slightly eccentric way. I have to make a correction of one of my earlier statements. In the debate last week, I stated that,
“the scheme in Great Britain is a 20-year scheme, whereas that anticipated in Northern Ireland is a 15-year scheme”.—[Official Report, 12/3/19; col. 1009.]
Noble Lords will no doubt realise that I meant to say that the anticipated scheme in the Republic of Ireland, not Northern Ireland, is a 15-year scheme.
That was the easy bit. I will see what I can do to take us forward. Let me begin at the beginning. All the points made by noble Lords this evening on the amount of time and the manner in which scrutiny has been facilitated in this House have landed, and landed well. It is not acceptable that this House is treated like a rubber ball to be bounced gently into some sort of decision. I accept that. It should not happen. There needs to be proper scrutiny in this House and in the other place—now more than ever, in the absence of an Executive.
On combining the two elements of the Bill—namely, the regional rates and the heating incentive—there is no doubt that they do not fit comfortably together. There is also no doubt that, depending on your Lordships’ will this evening, the situation regarding the heating incentive will have an impact on the regional rates. These rates remain an important element of the overriding Northern Ireland budget. That combination was a mistake and I do not think we should ever find ourselves in a situation with two elements which clearly do not fit comfortably together. I need to reflect on that. There should be opportunities for this House to look at them separately and, where appropriate, give endorsement to that which it seeks to endorse, and criticism and understanding to that which requires further work.
Lord Maginnis of Drumglass
I apologise for interrupting the Minister. In reference to the mistake he just alluded to, would I be right in saying that this was not a mistake but a tactic which emanates from the Northern Ireland Office and which, despite the good offices of the noble Lord and others, has landed us in this situation?
Lord Duncan of Springbank
The noble Lord makes an interesting point. Unfortunately, I will not comment on it at this particular moment. The reason the noble Lord, Lord Empey, and I seemed to be scrambling to get in here at the beginning of this debate was because we were sitting next door trying to work out how we could find a way through some of the challenges encountered this evening. I am blessed that he managed to find his way to his place and that I did too.
Lord Duncan of Springbank
Interestingly enough, this was always known; it was just never fully understood or applied. What the Government here have sought to understand is exactly what information the Northern Ireland Executive has been in receipt of. We have been very clear about pinning that down, because the 12% was always there; it was simply not used correctly, which allowed it to spiral massively, up to and in excess of 50%. We have had sight of correspondence from the European Commissioner that tells us very clearly that, were we to maintain the rate as it stands, we would be in breach of state aid rules. Civil servants in Northern Ireland—noble and diligent as they are—cannot move forward on the basis of an illegal rate. That is why we find ourselves where we are today.
I will touch on a couple of points made by the noble Lord, Lord Empey. He notes that this proposal really covers the medium-sized boilers. He is correct that it does not affect the larger boilers or the micro boilers. These matters were to be considered after we had settled this question, which covers the bulk of boilers in Northern Ireland. That said, the issue is a very simple one, and the noble Lord, Lord Cormack, put it very well: it is fairness, justice and equity. That is the issue we need to address tonight.
There is no question that the individuals who have emailed us, setting out their case and their distress in black and white, must get an adequate response. I am hopeful that I can put forward a proposal to the noble Lord, Lord Empey, and the noble Lord, Lord Rogan, that will help us move this matter forward, but your Lordships must be more of a judge of that than I am. My proposal is that the Department for the Economy in Northern Ireland—not on our instruction but because it believes it to be the right course of action—sets up a unit within the department, under independent chairmanship, that will be responsible for examining the case of every individual who has received funds from the RHI initiative and believes that they have experienced hardship. I propose that each element of their case is considered in thorough detail and with their participation, in order to understand exactly what that hardship looks like.
As a consequence of that, and with the Northern Ireland Affairs Committee inquiry running alongside that, those two elements should together help inform the part of the Bill that covers the issue of the voluntary buy-out. Currently, the voluntary buy-out is more or less a statement that lacks mechanical details. If we construct the buy-out to adequately and appropriately meet the needs of the farmers who rest within it, it could be adjusted in accordance with these elements. At the same time—and necessarily—the Northern Ireland Affairs Committee will consider future issues, and this should inform the overall functioning of this—not just the buy-out but the wider questions that rest within it.
Now, I will not try to sell your Lordships a pig in a poke, so what I will need to do to make this function properly is lay a written report before your Lordships’ House, so that your Lordships can see what this would look like in practice. There is no point in pretending that this can be achieved in a fortnight—there are too many cases that need a thorough and detailed examination. The point is, however, that we need to be in a situation where the compensation element is adequate and informed by these elements. If we can move forward on that basis, we can go some of the way towards meeting the issues raised by the noble Lord, Lord Empey.
Lord Cormack
My noble friend is obviously trying very hard to be helpful, for which we are grateful. Would it be possible, on Third Reading, to add a short schedule to the Bill that would refer to this proposal?
Lord Duncan of Springbank
I always like to be asked a question, and I turn my eye gently and think: I have no idea of the answer to that. I will, however, find out the answer and report back to the noble Lord in real time as soon as it is available.
The reason that I am putting this proposal before your Lordships’ House tonight is because it would be unfair to pretend that we can treat all those individuals as an average; we need to see each in their own terms, understand how their world fits together and how this invidious scheme has been constructed to their detriment. It is unfair of this or any Government to expect those acting in good faith to be penalised for that. We must also be cognisant of the draw on the public purse—there is no point pretending that there is a bottomless pit of money for our approach to this matter. The noble Lord and I have, however, had discussions about what moneys might be required.
It says here, “No to bringing back on Third Reading”. I am afraid, therefore, that the answer to the question from the noble Lord, Lord Cormack, is no. I can, however, put on record that we will need to understand the timing of this to be able to deliver it—without the timing there is a risk it will drift into the long grass. I give an assurance that we will be able to—
Baroness Harris of Richmond
While the Minister is looking at that for Third Reading, can he also indicate how much will probably need to be put aside for this independent review?
Lord Duncan of Springbank
The noble Baroness asks a question to which I once again do not have an adequate answer, but I think that it would be fair to say that appropriate funds must be set aside to address these issues. That might seem a vague assertion, but it need not be. I recognise that, where those hardships have been iterated and are evidence based, there should be support for the individuals concerned. I am afraid that I do not know what the overall sum would be; I know that the sum set aside under current arrangements is £4 million. Clearly, if there are to be adjustments to those arrangements, there will need to be adjustments to that figure, and I suspect that they would be in the upward and not the downward direction. As to the exact figure, I am afraid that I do not have that information. If I am to report back to the House in a Written Statement, I think that I will be able to put the figure to the House very clearly, because, by that stage, we would know exactly what this looked like.
I do not know whether that satisfies the noble Lord, who is sitting on the friendly Benches behind me, but I hope that it is. I hope that both he and the wider community recognise that we are seeking to ensure that we make progress.
A number of noble Lords have raised the issue about what happens with the grandfathering clause. The grandfathering clause of 1 April creates serious problems for us. Moving forward on that basis would mean that we were unable to ensure the functioning of the scheme full stop, let alone at any rate which noble Lords might wish to see or set. In addition, as we see the scheme moving forward, we need to make sure that it is fully compliant with the base of the law. We have also to recognise that expecting civil servants in Northern Ireland to act in a fashion which they know to be illegal is simply not possible nor a fair request of that service. It is for those reasons—and I am loath to say it—that we must move forward within the basic structure and parameters of the Bill but allow for the adjustments that I have outlined, which I believe will take us some way to address the genuine hardships which have been reflected to all here gathered.
Lord Maginnis of Drumglass
I apologise for interrupting the Minister again, but will not his solution lead to a divide-and-conquer situation? Do we have any idea of how many individuals will require to give evidence, what the length of time will be and whether that will again be manipulated to take us out of the time limits that have been placed on us?
Lord Duncan of Springbank
The noble Lord is correct to ask about the parameters. I cannot say with accuracy what the exact numbers are. I am aware of how many emails I have received—that number is 75—but I suspect that there are many more. I am not sure whether we are all copied into the same 75, so there may be considerably more even within this round, but there are a significant number. There will be those whose participation in the scheme is not subject to the various issues which we are taking forward today because they are functionally comfortable within the returns that they have been able to expect, but there will be those—the 75 may be a reflection of that figure, but it could be higher—who find themselves in the invidious and unpleasant position of being in financial constraint and hardship as a consequence of simply being faithful to the guidance given by Ministers and civil servants in Northern Ireland. It is to those we must turn our attention.
As many noble Lords will be aware, the scheme was such that there will no doubt be participants who have sought to benefit from a remarkably generous scheme. To those, the notion of hardship will not necessarily apply in the way that it does to those who have written to us setting out in some detail the pain and disaster they face as a consequence of this situation. I hope that there will be adequate time for this. We need to ensure that we move in a more appropriate fashion; we cannot allow this to be delayed.
Lord McCrea of Magherafelt and Cookstown
Can the Minister clarify the position on a question which I asked? Should the Northern Ireland Affairs Select Committee find that an injustice or inequality has been done, given the tariffs received by those in England or those in the Irish Republic under the state aid rules, will the department ensure that that will be rectified immediately and further repayment made accordingly?
Lord Duncan of Springbank
One of the challenges in trying to compare the schemes across these islands is that a like-for-like comparison of the various elements is hard. However, the rate of 12% is broadly the constraint within which all must operate, because that is the state aid rule. Were the NIAC to discover a particular inequity which breaches beyond that point, they would be compelled to act in that regard. However, the 12% being applicable to all should mean that there is fairness. The noble Lord should be aware that, because the earlier scheme in Northern Ireland set its returns at such an extraordinary rate—upwards of 50% —the challenge remains that any adjustment thereafter down to 12% on the basis of averages would take that 12% higher than it would otherwise be, had it been 12% at the outset. I do not wish to make any particular point about that issue, I merely note that the challenge is now to remain within the law as specified by the European state aid rules.
Lord Kilclooney
One of the problems with the Bill, which has already been underlined during the debate, and which the Minister has been honest enough to state himself, is that it is wrong to link rates—which is council tax in England—with this heating scheme. They are two totally separate subjects and should not be in one Bill. Should the Bill be rejected, would it then be possible to introduce urgent legislation for rates only?
Lord Duncan of Springbank
The noble Lord is right to raise that. I dearly hope that we do not reject the Bill now because, even if we were to act with a certain degree of urgency, it would still be a delay to what we need to deliver in terms of the rates themselves. If we are unable to address the rates question in real time, we are talking about a substantial loss to the revenue of Northern Ireland.
I hope that noble Lords will recognise that the endeavours this evening have been solely for the purpose of trying to address the genuine hardships experienced by those in the scheme. The purpose of the Bill is to make sure that nobody is considered to be part of an average and that each individual is seen as such. That data will then be used to inform the development of an appropriate element of the overall bill which will then be determined and placed before noble Lords in written form, so they can see it. There is no attempt on my part to mislead the Committee or to sell noble Lords something in a poke that you cannot put your hand into.
I hope that this is adequate for my noble friend Lord Empey. I know how much effort he, and all the Northern Ireland Peers, have rightly put into this matter. It concerns them on their doorstep, but it concerns all of us in these islands. Equity, fairness and justice must be the cornerstone of any Government. I hope that we have been able to reflect this evening on what this Government can do, within the constraints of state aid rules and the wider timing question. I hope that, on that basis, the noble Lord will be able to withdraw the amendment.
Lord Empey
My Lords, I am grateful to the Minister for his contribution. I also thank the noble Lord, Lord Murphy, from the Labour Party, and the Liberal Democrat Benches, for supporting these amendments alongside other colleagues on this side of the House. I just want to repeat my interpretation of what I think the Minister is saying, because if you withdraw amendments at a point such as this, it is your last throw of the dice and you lose control of the whole process.
First of all, the Minister is not in control of the Northern Ireland Department for the Economy; that is a fact. Therefore, in the Budget, £4 million was set aside in each of the next three financial years to deal with the buyback or buyout scheme. If that was simply looking at the individual burner in isolation, I could understand why such a sum of money might be payable. But, of course, many users used the profit on the boiler, perfectly legitimately, to lever out additional borrowing to do other things. The point that my noble and learned friend Lord Mackay of Clashfern has made all along is perfectly true: there is a moral issue. There is also, of course, a legal issue, but that will follow its proper course.
If I recall correctly, the facts, according to the Minister, are these. One point I understood him to make is that, as of 1 April, there is no ability for the state to pay subventions for these boilers—the point made, I believe, by the noble Lord, Lord Browne of Belmont. On the European issue, I would argue that the scheme has been ultra vires state aid for a long time, not just now. It has been wrong from the very beginning, when payments in excess of a 12% return were made. As my noble friend Lord Lexden said, the 12% figure was set in the original letter in 2012 by the European Commission, approving the scheme in the first place. From that point, the 12% was always there but, of course, it went astray.
Let us get back to the point of fairness, justice and equity, because that is the key to all of this. We want to ensure that people get fairness, justice and equity, bearing in mind that the taxpayer has a big stake in this as well. Originally, a compensation or buyout scheme was planned. This is my interpretation of what the Minister is saying; if he disagrees with anything, perhaps he will let me know. He is saying that the status of that group will be upgraded to the point where it will not be an internal issue within the department but will be chaired by an independent, outside person who is not a member of the Northern Ireland Civil Service. He is saying that he will put forward, in writing to this House a Statement setting out the terms of reference. The question I need to ask him is: how does he do this when he is not in charge of the department? At the end of the day, my anxiety is that if we let the thing go, it will slither away, and somebody somewhere will say, “Well, I’m not doing that. The Minister can give an undertaking to the House of Lords, but he doesn’t rule me”. There is a genuine opportunity here to ensure that what is taken into consideration is not only the cost of the boilers versus the revenue that they would now be getting, but the leverage they used to ensure that the borrowings they undertook for further activities on the strength of that. That is the key issue, which was missing—if I may say so—from the original suggestions.
Can the Minister confirm those two points? Can he also reiterate for our benefit the answer that he gave—either to the noble Lord, Lord Browne, or the noble Lord, Lord McCrea of Magherafelt and Cookstown—about the legality and so on? I do not worry about the state aid issue because, in my view, we have been wrong on that from the very beginning, and it has gone on for years without any legitimacy. But could he just clarify those points before I conclude?
Lord Duncan of Springbank
My Lords, I thank the noble Lord for affording me the opportunity to make some points of clarification. He is absolutely right to say that I am not in charge of that department. My comments are based on conversations earlier today with senior officials in the department. I cannot instruct them, but the discussions led to that proposal, which I believe would be a step forward for noble Lords this afternoon and this evening, on that basis—not my instruction but rather an acceptance on their part that this would be the right way to move this aspect forward. On the terms of reference, yes, these need to be very clearly understood. Financial hardship must be understood in all its manifest forms and I believe it would be incumbent on all those who are investigating and considering to ensure that all aspects of financial hardship, whatever their source or their cause, are examined in detail to ensure that there is a fair and equitable understanding of the situation. So I think the answer to that is yes.
As for what happens on 1 April if we have not made progress, it is very simple: we will not be able to move forward on this scheme, because as a number of noble Lords noted, we have grandfathered in the clause to end on 1 April. At that point, irrespective of our desire to be able to offer or afford support, without the legal underpinnings we will not be able to do so.
On state aid, there has clearly been a kerfuffle, for want of a better word, in Northern Ireland over what that rate should be, but the one thing that has been clear throughout is that the European Union Commission has had no dubiety about what it should be: it has been very clear that it should be 12%. That this has been, one might argue, misinterpreted by certain individuals in the Province is the reason we are having this wider discussion tonight and why there is a particular scandal being investigated across in Northern Ireland. None the less, we are still bound by that rule—namely, state aid at 12% return—and we cannot move away from that.
I hope those points of clarification help the noble Lord to move forward.
Lord Mackay of Clashfern
I should like to be absolutely certain that there is nothing in the Bill that damages any legal right that people had in Northern Ireland as a result of dependence on the action of the Northern Irish Government taken on behalf of that Government by authorised officials or Ministers. Because that is the fundamental matter: if that is not affected by the Bill, the way in which matters should be brought forward to encourage that is perfectly reasonable as a way forward. The fundamental point is that the legal rights of those who may have been damaged by their contract with the Northern Irish Government, through Minister or official, would not be touched.
Lord Duncan of Springbank
My noble and learned friend makes a useful point. I can happily confirm that this will not affect the legal rights or standing of any of those who have been affected by the scheme thus far.
Lord Empey
I thank the Minister for those points of clarification. He will be aware that everybody who spoke in this debate was basically on the same page: we want to help these boiler operators and owners. We want, as he put it, fairness, justice and equity. I have to say to him that if we accept these assurances—if I withdraw the amendment—and we were to find subsequently that these conditions were not being honoured, in spirit as well as in letter, there would be a great deal of anxiety and angst in this Chamber. The Minister needs to be very clear about that, because there are more people in this room tonight than I have seen here on a Northern Ireland issue for years. He knows, and his colleagues in the Northern Ireland Office and in the Department for the Economy who are watching this know. I had the honour to be Minister for the two departments that were merged into this department, so, to coin a phrase, I know who they are and I know where they live.
We are talking about the livelihoods of good, honest, decent people and it is the will of this House to see that justice, equity and fairness is delivered to those people. If there is any variation or moving away from that, there will be a lot of very angry parliamentarians. On that basis, I beg leave to withdraw the amendment.
Northern Ireland (Regional Rates and Energy) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 19th March 2019
(5 years, 8 months ago)
Lords ChamberNorthern Ireland (Regional Rates and Energy) Act 2019 Read Hansard Text Amendment Paper: HL Bill 165-I Marshalled list for Committee (PDF) - (15 Mar 2019)
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland (Regional Rates and Energy) Act 2019 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
Lord Cormack (Con)
My Lords, I want to speak very briefly to reiterate something that we said last week at Second Reading and touched on again earlier this evening in Committee. When there is no Northern Ireland Executive and no Assembly in session, it is quite wrong for Bills touching the lives of virtually every citizen in Northern Ireland to be disposed of so unnecessarily quickly in this House. I know my noble friend has some sympathy with this point of view—if I may say so, he was magnificent in Committee. I would be grateful if he discussed it yet again with the powers that be through the usual channels. I am delighted to have seen the most senior representative of the usual channels, take a place—not his place—while I have been speaking.
There is one other point I would like to make. At Second Reading last week, my noble friend said that he would try to come back when we were dealing with the Bill today with any further information on the plea that many of us have made for the Assembly to be called into being and on the desirability—which I think we all share—of having some mediator figure to convene the various parties in Northern Ireland. It is now well over two years since we had an Executive or an Assembly. People in Northern Ireland have been short-changed by their politicians.
It is also deeply unfortunate that, when the real stumbling block over Brexit has been the border, we have had no opportunity to hear what the politicians elected to the Assembly in Northern Ireland think or for them to put anything into the debate. Although none of us knows whether this would have made any significant difference, given the fact that 56% of Northern Ireland voted to remain in the European Union and none of the elected representatives in the Westminster Parliament take that view, it would have been an opportunity that might just conceivably have produced some interesting ideas. So for every possible reason—and I am glad to see the noble Lord, Lord Murphy, nodding assent—I hope, as we all do, that we have an Assembly and Executive in being before long; but that we devote more time in this Chamber, where so much responsibility does and should lie, in the absence of a devolved Administration. I look forward to my noble friend’s response in due course.
Lord Bruce of Bennachie (LD)
My Lords, like other Members, I was somewhat compromised by the early business and not able to be here in time for the start of it. I do not wish to repeat the debate. I want to show appreciation for the amendment in the name of the noble Lord, Lord Empey; the fact I was not able to speak to it was for no reason other than that, although I supported it, I wanted to observe the courtesies of the House—which I noticed not every other noble Lord did.
In those circumstances, I want to say two or three things. First, this Bill presents this Chamber with a choice between a rock and a hard place. Most of us are, I think, very unhappy about the fact that rates and the renewable heat incentive scheme were lumped together in the Bill. While the Minister did not acknowledge that that was a tactic, he did say it was something he did not approve of and hoped would not happen again.
My second concern is that we were faced with the situation—it probably determined why the noble Lord, Lord Empey, withdrew his amendment—that if we passed the amendment, there was a danger people would receive no payment on 1 April, which is a consideration. At this stage, it is important to acknowledge that the Minister has clearly presented a constructive compromise—but, as the noble Lord, Lord Empey, pointed out, one he does not have the authority to guarantee. The House has accepted that in good faith but with real concerns as to where it might lead us. Had we supported the amendment from the noble Lord, Lord Empey, the consequences might have been difficult.
Like most other Members, I have received emails from a number of different businesses across Northern Ireland—not all of them farmers—expressing their angst and concern. I have engaged with them, responded to the emails and forwarded them all to the Minister. I do not need to repeat it, but we need to acknowledge that we are passing a Bill that effectively—how can I put this?—gives authority to the denial of ministerial responsibility for giving guarantees and assurances on which people relied and on which they have been betrayed. I am not comfortable with giving a Bill that does that a Third Reading, and I do not think your Lordships should be either.
The thought that has occurred to me throughout the whole process around the renewable heat incentive scheme is this: the 12% return was known from the beginning, as the Minister acknowledged. I find it difficult, if not impossible, to believe that on two separate occasions the Northern Ireland Executive introduced tariffs which could not conceivably have come close to representing a 12% return on the investment and which were, as anybody providing any objective analysis would very quickly have observed, in breach. That raises the most fundamental questions of propriety, honesty and integrity, of both politicians and, I am afraid, civil servants too. My instincts, however, are that civil servants did not understand what they should have, but I do not think that lets them off the hook.
People will look for a price to be paid, and the two prices to be paid are these. First, will the people who genuinely relied on this and suffered get compensation? Secondly, in the process of doing that, are we in danger of compensating people who took advantage of the system and who could get an extra twist out of it? That, I suggest to the Minister, is something that we need to avoid.
Having said all that, we have no choice but to pass this Bill tonight. However, we should record that it is being passed under duress, at speed, without adequate consultation and with consequences to follow both in the courts and in the political arena that will probably haunt Northern Ireland for many years to come.
The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Duncan of Springbank) (Con)
My Lords, perhaps I may touch upon the remarks of my noble friend Lord Cormack. My team will reach out to him very shortly on the question of the Assembly and what we might well be able to do to go forward. There is no doubt that there are lost voices in Northern Ireland. Perhaps now more than ever those voices would have been appreciated and might well have been instructive, and they must be heard. I will return to my noble friend in the next few days, I hope, but certainly very soon.
The noble Lord, Lord Bruce, and my noble friend Lord Cormack talked about the notion of being bounced into this situation. In the absence of a Northern Ireland Executive, we must ensure adequate scrutiny in this place and the other place of issues that have a significant impact on the lives and livelihoods of the people of Northern Ireland. Of that, there is no doubt. We must ensure that we, the Government, do better at allowing for that scrutiny and at allowing time for questions to be asked. I fully appreciate that. I accept every point that has been made. I will take them away and do all that I can to change the way in which we do business, which is inadequate for this moment and for the times that we are in.
As the noble Lord, Lord Bruce, pointed out, we are between a rock and a hard place—between a deadline and a necessity. We are between the hardships that we have witnessed through the emails and letters that we have received, and the reality of the challenge of an impending grandfather clause that would place everyone else who is in that situation in a far worse predicament. Therefore, I accept again that this is ill timed.
The noble Lord, Lord Bruce, is right to point out that I cannot give a guarantee on behalf of the Northern Ireland Executive—I am not equipped to do so, constitutionally speaking—but I could not in good faith return to this House if I were not able to live up to the statement that I have made today. I hope that noble Lords will accept that statement and the intent with which it has been given. I hope they will recognise that it has been given on my word of honour, and I will not come back here unless we can live up to the statements that I have made.
Today, as in every situation when we look at Northern Ireland, we have to tread as carefully as we can. On one hand, we are bound by state aid rules, which place upon us a responsibility. On the other, we are bound by the realities faced by many individuals who have written to us about the hardship they are experiencing. I hope that the noble Lord, Lord Empey, who is now in his correct place, will recognise that his efforts and labours on behalf of those individuals have been well landed and well understood. I also hope that, on the basis of the withdrawal of his amendment and my promissory note about what we can do, we will be able to move forward to achieve that fairness, equity and, ultimately, justice.