JTI Gallaher

Debate between Laurence Robertson and Ian Paisley

Monday 27th October 2014 Commons Chamber

[Ian Paisley]

I thank the hon. Gentleman for that. Government policy should be based on evidence. If there were evidence to show that plain packaging will reduce consumption, the Government would have every right to attempt to implement the policy. But given that it is basically guesswork, and that the trial on the ground in Australia shows that consumption is not decreasing as a result of plain packaging, but that illicit trade is increasing, the Government should take stock immediately.

[Mr Laurence Robertson (Tewkesbury) (Con)]

rose—

[Ian Paisley]

I give way to the Chairman of the Northern Ireland Affairs Committee.

[Mr Robertson]

As a fellow member of the Select Committee, does the hon. Gentleman remember that when we looked into the illicit trade issue and interviewed the head of the relevant department in Her Majesty’s Revenue and Customs, his view was that plain or standard packaging would actually increase counterfeiting and the illicit trade?

[Ian Paisley]

The hon. Gentleman is making my case for me. He is clearly demonstrating, through his knowledge of this subject and what HMRC has told him that the Government’s policy is wrong-headed and will not prevent people from smoking. I say again: I want to see a reduction in smoking, but we have to have a policy that works and is proven to work. The evidence is not there to achieve the Government’s policy.

Northern Ireland Economy

Debate between Laurence Robertson and Ian Paisley

Thursday 1st March 2012 Westminster Hall

[Mr Laurence Robertson (Tewkesbury) (Con)]

It is a pleasure to serve under your chairmanship today, Sir Alan. Usually, you and I jointly chair the all-party group on racing and bloodstock industries, so today’s debate is a diversion, but I am sure that it is extremely important, just as our other debates are.

It is a pleasure to open this debate on the Northern Ireland economy on St David’s day, and I am delighted to be doing so. I start by thanking all the members of the Northern Ireland Committee—both past and present—who have worked extremely hard in compiling the reports that we have produced, which I will refer to. I also thank the Committee staff, who work extremely hard.

This is a very important debate, as are all debates on the economy at this time. Just today, we have all seen bad unemployment figures throughout Europe. We hope that our own economy in the UK is starting to recover, but I think we all feel that there is a long way to go and that there will be some very difficult decisions to make, so, as I said, any debate on the economy is important. I am pleased to introduce this debate, which is about rebalancing the Northern Ireland economy.

As well as having the honour of chairing the Northern Ireland Committee, I have the privilege and pleasure of being joint chairman of the British-Irish Parliamentary Assembly. I am quite new to that role and I am the British chairman of the assembly. I mention that to demonstrate my friendship with the Republic of Ireland, given that I shall refer to that country in my remarks.

Of course, we are all aware of the difficulties that Northern Ireland has gone through. Most hon. Members would probably agree that those difficulties are due—at least largely and probably entirely—to the terrorism that existed in the Province for many years. There were 30 years of real, hard terrorism when people suffered terribly; lives have been shattered, and many lives were lost. If that was not bad enough, as a result prosperity in the Province has been a lot lower than it would and should have been otherwise. This debate is a contribution to the attempt to start turning that situation around.

When we discuss the economy in Northern Ireland, it is important to recognise that there are a number of bright spots. The unemployment rate is lower than in the rest of the UK and is falling, and there is a higher level of manufacturing production. Research and development investment in Northern Ireland increased by 6% last year, albeit from a low base. Belfast is the second most attractive city in the UK after London for foreign direct investment. For 16 to 18-year-olds in Northern Ireland, there are better educational outcomes than in the rest of the UK, although there is a lower level of qualification among those in the working age population. This year there are increased tourism opportunities, with the Titanic anniversary, and next year there will be celebrations with Londonderry being the city of culture. These are all bright spots, and there are others that I have not mentioned.

However, we would be derelict in our duty if we did not recognise that there are problems, and one of them is the size of the public sector. Let us just consider employment. Of those who are employed, 27.7% work in the public sector, as against an average of 20.6% in the rest of the UK, which makes Northern Ireland’s public sector the biggest of all the UK regions. Of course, that results in higher public spending, £10,706 per person in Northern Ireland as opposed to £8,845 in the rest of the UK—21% higher in Northern Ireland, which is a significant cost. There is no doubt in my mind that that increased cost is largely, if not entirely, due to the 30 years of the troubles.

If we look at the number of employed people, 67.9% of the working-age population in Northern Ireland are employed as opposed to 70.3% in the rest of the UK. That is another statistic that is not favourable for Northern Ireland. Productivity per job is only 85.3% of the UK average. If we look at gross value added, Northern Ireland, with GVA of £15,651, is again lower than the rest of the UK, which has GVA of £20,476. Indeed, Northern Ireland is the lowest region of the UK in terms of GVA, apart from Wales. The fall in GVA since the pre-recession peak has been more pronounced in Northern Ireland, and growth in Northern Ireland is projected to be slower than in the rest of the UK in the coming year.

There are a number of other problems. There will be a reduced rate of assistance from Europe from 2013, and there are also higher fuel and energy costs. Recently, the Select Committee visited the Coolkeeragh gas plant, which is just outside Londonderry. People at the plant highlighted a big problem that I hope the Minister will take on board; I have raised it in the Commons already. That problem is the carbon floor price. When it is added to the taxes and everything else coming from the EU, it could make Northern Ireland very uncompetitive in terms of energy production. I hope that the Treasury will take that point on board and consider what can be done to avoid penalising companies in Northern Ireland that are only doing the right things.

What do we need to do now? Obviously we must try to increase the prosperity of people in Northern Ireland, so that they are less dependent on taxpayers in the rest of the UK, and we need to do that not only to improve prosperity but to cement the peace that so many people have worked so hard to achieve. I am not for one moment suggesting that poverty is an excuse for violence or law-breaking of any kind—it certainly is not; but we must recognise that when people are unemployed, with time on their hands and nothing better to do, they are more likely to turn to activities that are not to be approved of. That is not an excuse, but we should recognise the fact that it is a likely outcome for some people. Increasing prosperity in the Province and giving people opportunities to work or to receive education and training will surely divert people who might just turn the wrong way. That is very important and it is one of the things that we have stressed in our reports.

What changes are needed to increase prosperity in Northern Ireland? I have a list of suggestions. We probably all accept that we need to reduce the size of the public sector and increase the size of the private sector. Again, that raises the question of how we do that. One of the things that the Select Committee has looked at is trying to make Northern Ireland more competitive, so as to attract more inward investment. I shall turn to the corporation tax proposals shortly, but there are a number of other issues that I want to discuss briefly.

A short while ago, the Select Committee carried out an inquiry, and produced a report on air passenger duty. One of our concerns at the time was that Continental Airlines, the one and only carrier from Belfast to New York, was in serious danger of pulling out and stopping those flights. That really was a threat to the economy in Northern Ireland. We conducted a short inquiry and came up with the proposal that the APD for long-haul flights should be reduced, and the Government responded by reducing it to £12 per flight, which is the APD for local flights. Before that it was £60. For a family of four flying to New York from Belfast, that was £240 in tax before they had even got on the plane. The airline was carrying that cost, which made it extremely uncompetitive, and was threatening to pull out. It was a serious threat, and we lobbied hard for the Secretary of State for Northern Ireland and indeed the Treasury to try to do something about it urgently. I congratulate Ministers and the Government on responding so quickly and reducing the tax. We hope that we can move forward in that respect.

We also suggested that the policy for setting the rate of air passenger duty for long-haul flights be devolved to the Assembly. I am pleased that that is now the Government’s policy and it will be enacted through the Finance Bill. I welcome that move, which is a step in the right direction.

We need to improve the planning situation in Northern Ireland. Again, that is a devolved issue, so I will not dwell on it too long. Everyone would accept that planning has to become more efficient. We have just heard of the new golf course near the Giant’s Causeway finally being given planning permission, but it took 10 years to get to that point. It is hardly an incentive for new businesses to try to do anything good when they face that type of planning process, although I am aware that there were several objections to the planning application.

[Ian Paisley (North Antrim) (DUP)]

The golf course is an important investment opportunity for Northern Ireland, and it does indeed turn the page for a part of the economy that has seen very dark days. Does the hon. Gentleman agree that the Government should encourage everyone in the public and private sectors, particularly the National Trust, which is a key stakeholder in the area, to get behind that tourism project in this year of tourism initiatives, and support a key investment in our locality?

--- Later in debate ---

[Mr Robertson]

I am grateful to the hon. Gentleman for his intervention. He is a very active member of the Select Committee. I entirely agree that the golf course is extremely important. It is a great investment and a great opportunity. I hope that Northern Ireland goes on to attract the Open Championship—not necessarily to that course, but to a course in Northern Ireland. It is important to move in that direction. I urge the Government to get behind the project. I know that it is a devolved matter, but there is great frustration with regard to the planning situation, as there probably is in most local authorities. There certainly is in mine, but it is particularly the case in Northern Ireland.

In about two weeks’ time, we shall publish our report on our inquiry into the smuggling of tobacco, alcohol and diesel. Obviously, I cannot go into detail at the moment, but I can reveal a couple of figures. Fuel fraud costs Northern Ireland £70 million and tobacco fraud costs £42 million, making a total of £112 million, which could be in the pockets of the health service or the education service. Indeed, it could help to reduce taxes in Northern Ireland. That is something that we are looking at. I cannot go into too much detail at the moment, but it is a real issue. Not only does smuggling cost the economy a lot of money, but it provides opportunities for paramilitaries, ex-paramilitaries and people who are up to no good to engage in activities that do the economy, Northern Ireland and the UK no good at all.

On creating a genuinely shared future and reducing the cost of division, we have made huge progress—let us not forget that—but we need to do more. Yesterday, I read a report on the BBC website that claimed that when the agreement was signed, there were 22 peace walls, but there are now 48. Segregation of housing and education is not only divisive in an area that needs to end division; it is costly as well. We need to find an affordable way of dealing effectively with the past. I do not want to get into a debate about what the Secretary of State calls costly and open-ended inquiries. This is not the time or the place, but we have to find a way of dealing with the past effectively and more affordably.

I turn to the corporation tax report that we produced. We spent a lot of time looking at corporation tax in Northern Ireland. To be fair to everybody concerned, I note that not every member of the Committee agreed with the proposals that were made. However, many members did agree.

[Ian Paisley]

Does the hon. Gentleman agree that perhaps one reason why there was not unanimity was because there was a cloud of judgment over exactly what the Treasury is asking for in terms of costs? It is essential that we get absolute top-desk clarity from the Treasury on what the measure is going to cost; we need to be clear about how it is going to make that calculation. It is important that it takes on board the fact that Northern Ireland will have increased income tax and increased national insurance contributions so as to make the cost less for us as an Executive.

[Mr Robertson]

Indeed, that was one of the points that we made in our report. We were astounded that the Treasury did not have a figure that we could use to assess the cost. I will explain the background. Because of the Azores judgment in Europe, it appears that if corporation tax is reduced for one area of a jurisdiction—not for all the jurisdiction—that part has to take the hit in terms of the outcome. In other words, if the tax take drops by, say, £100 million, it cannot be made up by Westminster. It has to be part of the block grant. We were astounded to find that the Treasury did not have that figure. Our report urges the Treasury to put a mechanism in place that will tell the Assembly—not so much us—what it will cost.

Corporation tax across the United Kingdom is on its way down. At the moment, it is 26%. In the Republic of Ireland, it is 12.5%. It is important to note that Northern Ireland is the only part of the United Kingdom to share a land border with another European Union state—the Republic, where there is a massive tax difference. The location of Northern Ireland is also important. It is an island off an island; it is peripheral. In my view, it certainly needs something that it can wave and advertise to attract inward investment, otherwise it may be easier to invest in other mainland areas or countries with lower tax rates. It is not immediately obvious why one should come to Northern Ireland, but it is easy to see why people go to the Republic of Ireland. It is possible that Google, Facebook and Twitter were attracted to Dublin because of the very low rate of corporation tax. Of course, inward investment is extremely important, but if a company is making a profit and paying a percentage of that in taxation, it has less money to actually spend on reinvestment.

As I said, not all Committee members agreed, but interestingly the Irish Government agree. The present Taoiseach has said publicly that he would approve of Northern Ireland reducing its corporation tax to 12.5%. That is an amazing situation to find ourselves in. We are competing with the Republic and we want to compete even more strongly, and they are in favour of that. Perhaps it is a mark of the progress that has been made in the incredibly good relations that exist between the Republic of Ireland and this country. It is certainly to be welcomed.