Northern Ireland (Stormont Agreement and Implementation Plan) Bill

Debate between Lord Browne of Belmont and Lord Trimble

Thursday 21st April 2016 Lords Chamber

[Lord Trimble]

My Lords, I indicate my support for this amendment, which, as my noble friend Lord Empey says, was tabled in the other place and debated there. I think it was tabled by Sylvia Hermon, the Member for North Down, and it is a very sensible provision. What is the value of these pledges and undertakings if they can be disregarded? There has to be some form of penalty or sanction available in the event of the undertakings not being honoured.

At Second Reading, the Minister gave two reasons why the amendment was not accepted. The second of the two reasons was to refer to established mechanisms by which the Assembly holds its Members to account, including adherence to the Assembly code of conduct and so on. This is like asking IPSA to take on such a highly political job as deciding what sanctions to apply to Members who take directions from paramilitary and terrorist organisations and so on. That is not a terribly good reason to give for not accepting this. The other reason the Minister gave was that:

“The Government are firmly of the opinion that it would not be appropriate for us at Westminster to pre-empt the Assembly’s own consideration of this issue”.—[Official Report, 12/4/16; col. 225.]

I can understand that—it sounds reasonable enough—but you then have to bear in mind that the likelihood of the Assembly agreeing to significant sanctions as things stand at the moment is round about zero, and maybe even less than zero. Therefore that, too, is not a good reason.

I also add a rider to say that one of the things that disturbs me about our Government’s attitude to the devolved Administrations—it is not just in Northern Ireland but comes across in their attitude to the Scottish Parliament and the Welsh Assembly—is that an exaggerated view of their position runs through all of this. This is the sovereign Parliament of the United Kingdom. We have devolved matters, but power devolved is power retained. At the end of the day responsibility in all these matters rests with Her Majesty’s Government. For the Government to say, “Oh, we’ll leave it up to the devolved Administration” might sound appropriate and diplomatic but it gives far too exaggerated a view of it. To see how at the end of the day that puts you in difficulty, just look at the history of Stormont. The same exaggerated view of Stormont’s position from 1922 onwards was taken by this House, and the result of that was not good in that it led the central Administration not to pay proper regard to what was going on and not to involve themselves in what was going on. If Government here had paid closer attention to it, we might have avoided the Troubles. That is a small point, but I hope the Minister will bear it in mind.

Finally, I understand the Minister’s desire to be diplomatic, on the basis that he is only being diplomatic, and I realise that it will not be possible to accept the amendment without losing the Government’s timetable to get this out before the end of the Session—and that is fine. Can the Minister then change his language slightly when he says that he will leave it to the Assembly to see what it does with regard to it? However, if the Assembly fails to take action on this matter, the Government will have to consider what they do.

[Lord Browne of Belmont]

My Lords, I support Amendment 4, proposed by the noble Lord, Lord Empey. As I have said before, Northern Ireland goes to the polls on 5 May and it is only right that anyone who engages or supports paramilitarism should have no place in a democratic institution. Newly elected Members will thus be obliged to give an undertaking to abide by the principles outlined in Clause 8 and Schedule 2.

I fully concur with the noble Lord, Lord Empey, that it is only right and proper that, when a Member of a legislative Assembly gives an undertaking and then is seen to breach that undertaking, within Standing Orders there should be a robust mechanism, first, to enable an investigation of any alleged breach of the undertaking, and, if proved, surely there should be sanctions that can be enforced. Otherwise, the undertaking those Members take will be meaningless. If not, the public in Northern Ireland will have little confidence in their elected Members and in the operation of the Northern Ireland Assembly.

Of course, it is only right that the Northern Ireland Assembly should prescribe the nature of the sanction, but surely, as we have heard from the noble Lord, Lord Trimble, it is for the sovereign Parliament to ensure that the Standing Orders of the Northern Ireland Assembly reflect the need for such sanctions.

Corporation Tax (Northern Ireland) Bill

Debate between Lord Browne of Belmont and Lord Trimble

Tuesday 17th March 2015 Lords Chamber

[Lord Browne of Belmont (DUP)]

My Lords, I congratulate my noble friend Lord Hay of Ballyore on an excellent maiden speech. During his long public service, he has continually sought to achieve consensus between the two communities in Northern Ireland and he has had a great deal of success in that. His fair-mindedness, negotiating skills and ability to remain calm when faced with adversity will enable him to make a useful contribution in this House.

I wholeheartedly support the Bill and it is fitting that it will complete its parliamentary stages on St Patrick’s Day. I am not suggesting that we will be celebrating the Bill in 1,000 years’ time, but it has the potential to transform Northern Ireland’s economy in the long term and to ensure a level of prosperity that the Province has not enjoyed before. Although today is the end of the parliamentary process, this is far from the end of the corporation tax story. To quote Sir Winston Churchill,

“this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning”.

Indeed, what a long beginning this has been. The campaign for the devolution of corporation tax for Northern Ireland in its present form dates back a decade. I thank the business groups that have supported the campaign to build a political consensus on this issue for many years. Their work helped to build support for corporation tax devolution not just among Northern Ireland’s politicians but among key Northern Ireland Office and Treasury Ministers. That support proved invaluable when difficult times came.

I pay particular tribute to Northern Ireland’s First Minister, Peter Robinson, who played a very significant role in championing this cause in the Northern Ireland Assembly. I also thank the present Government for taking the initiative on this and responding to the united political call from the Northern Ireland parties. I am sure that at times it would have been easier to accept the Treasury orthodoxy on such matters rather than to take a new policy initiative. Despite any doubts that it may have had, the same Treasury did not hesitate to commit itself to drawing up the Bill. I know that the policy of corporation tax devolution has not been enthusiastically supported by the Labour Party but I must acknowledge its role in ensuring the Bill’s smooth passage through Parliament.

Strictly speaking, the Bill does not devolve corporation tax powers to the Northern Ireland Assembly but allows the Assembly to set the Northern Ireland rate of corporation tax, with every other aspect of the regime remaining the responsibility of Her Majesty’s Revenue and Customs. That is why I think that those who have some concerns about the Bill on constitutional grounds are wrong. The Bill does not in any way undermine the union between Great Britain and Northern Ireland. Indeed, if this policy proves to be a success, it will mean that Northern Ireland will make an increased contribution to the United Kingdom economy. That can only be good for Northern Ireland in particular and for the United Kingdom as a whole.

There are others who argue that Northern Ireland will not reap the rewards of a lower rate of corporation tax but will pay too heavy a price in the reduction of public expenditure. Time does not allow for a comprehensive rebuttal of this argument but I will briefly make the following observations.

First, most economists agree that a reduction in the corporate tax rate is one of the most effective policy tools to achieve a rebalancing of the Northern Ireland economy towards the private sector, which in my view is an essential prerequisite for future economic prosperity. Convincing evidence is provided in a recent study by Ulster University’s Northern Ireland Centre for Economic Policy, which has estimated that the lowering of the corporation tax rate to 12.5% from April 2017 would result in the creation of 37,500 additional jobs by 2033. In simple terms, that means more jobs and better jobs. It means more money circulating in the local economy, and a higher standard of living and a better quality of life for everyone in Northern Ireland. In the longer term, it means that we have the capacity to fund public services at the level many of us would wish to see.

A lower rate of corporation tax is good not just for foreign direct investment but for our indigenous businesses. While a reduced level of corporation tax for Northern Ireland is not in itself a panacea for all our problems, the Bill as drafted provides useful safeguards on several technical issues. The separate arrangements for large companies and SMEs and the exclusion of profits from investment and certain other activities seem eminently sensible. This should discourage tax avoidance through brass-plating and encourage employment-creating trading activities and foreign direct investment.

Secondly, the experience of the Republic of Ireland would indicate that a lower level of corporation tax has been one of the key drivers of its economic success. It is no coincidence that, even at their lowest economic ebb, this is the one policy that the Republic of Ireland’s Government have refused to give up.

Thirdly, it must be recognised that this policy will involve difficult decisions about reductions in public expenditure. In my view, the Northern Ireland Executive will have to prioritise interdepartmental discussions to arrive at a budget agreement to facilitate the earliest possible implementation of the rate cut.

I do not pretend that significant issues and challenges do not remain, both in terms of agreeing all the final details and in relation to the other measures that the Northern Ireland Executive will have to put in place to ensure that the policy is a success. I am confident, however, that these challenges can be overcome.

After today, the next phase is the rollout of this power: it will pass to the Northern Ireland Executive to take forward. We now need the Executive to agree what the Northern Ireland corporation tax rate should be, from when it should apply and over what period it should remain in force. In these areas, with some compromise on all sides, I believe that agreement can be reached.

My party’s preference would have been for a 10% corporation tax rate, but it is prepared to go along with the emerging consensus that the rate should be 12.5%. The earliest possible date for the introduction of this rate is April 2017. Given that we have waited so long for this power, the rate should be introduced as soon as possible after that date. A quick decision will enable Invest Northern Ireland to go out and sell the policy to those investors for whom a low headline rate—

[Lord Trimble]

I thank the noble Lord for giving way. He is talking about the desire to have quick decisions on this. Did I miss something? Did I miss him saying when the implementation of the Stormont House agreement would be sorted out through fully providing for welfare reform and implementing it? I did not hear that.

[Lord Browne of Belmont]

I am saying that this cannot be implemented until all these things are sorted out.

Finally, I hope that there will be a political consensus that the lower corporation tax is not merely a short-term experiment but a policy that will be in place for many years. That is what is needed to give the long-term confidence to businesses and investors that Northern Ireland is the place to do business. The Bill will provide a sound basis for the development of a productive economy fit to survive in the very competitive global economy. It is a good example of positive co-operation between the Northern Ireland Executive and the Westminster Government and I trust that it will be one of many in the coming years.