Postal Packets (Miscellaneous Amendments) Regulations 2023
Lord McCrea of Magherafelt and Cookstown Excerpts(1 year, 5 months ago)
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Lord McCrea of Magherafelt and Cookstown (DUP)
My Lords, I thank the Minister for outlining these regulations as she and the Government desire to present them. As we look closer at them, and upon further investigation, we know that the reality for people living in Northern Ireland will be quite different.
What does the Minister think Northern Ireland’s constitutional position is? Is it a part of the United Kingdom or not? In reality, all the Government are doing through this statutory instrument, these regulations, is strengthening opposition to the Windsor Framework within the unionist population in Northern Ireland because people are seeing the unfolding of the reality. The reality is that the Windsor Framework was sold by the Prime Minister and the Secretary of State for Northern Ireland on spin, not reality.
These regulations directly contradict what the Prime Minister stated when introducing the Windsor Framework on 27 February, namely that it
“removes any sense of a border in the Irish Sea”.
That is a very clear statement. So, does it? In reality, the framework deepens the border in the Irish Sea rather than removing it and does so without there being any redeeming upside in the regulations, which the Government claim exist and existed in the Stormont brake SI.
The regulations have been the subject of a critical report from the Secondary Legislation Scrutiny Committee, which called attention to them on the grounds of there being no consultation or impact assessment. It also highlighted the Government’s refusal to answer key questions about the regulations, which creates the clear impression that they are hiding something.
The fact that the Government seek to hide the true implications of these regulations is reflected in the answers that they provided to the Secondary Legislation Scrutiny Committee. Specifically, they claim that the impact of the regulations is modest and that they just need to be able to give HMRC and the border agency powers to detain and seize illicit movements. In an effort to change the subject, they go on to talk about the introduction of a “green lane” for packages on 1 October. Specifically, they say that their purpose is to secure the integrity of the Windsor Framework by
“ensuring that Border Force and HMRC have powers to detain, inspect, and seize goods moved illicitly in parcels from GB to NI”.
It is interesting that, when the committee in the other place discussed this, attention was drawn to the Minister’s reply that she was concerned about “hazardous” substances, “invasive species” and other things mentioned in the Explanatory Memorandum being transferred by post from Great Britain to Northern Ireland. However, would the Minister not be concerned about them being transferred in parcels from London to Scotland or to Wales? If the regulations are all about protecting markets, why are the Government singling out Northern Ireland?
It sounds reasonable that provision should be made so that the requisite authorities can detain illicit movements, for example of drugs, in parcels but, through the deployment of “illicit”, these words conceal the fact that what is in view is not the movement of drugs and the like but, rather, any goods movements across the border created by these regulations that is in violation of them—movements that are perfectly legal today and just part of what being in the same single market means. Therefore, rather than restoring Northern Ireland’s place in the United Kingdom single market, these regulations give effect to the additional sense in which Northern Ireland is placed outside the single market, which is increasingly becoming a Great Britain single market.
The simple effect of these regulations is to build in the Irish Sea a border that currently does not exist, in relation to which full customs requirements can be made. The consequences of this include packets going from Great Britain to Northern Ireland having to be put in the same category as foreign packages. That is why I asked this question: where does the Minister see Northern Ireland? Is it a foreign country, a third country, or is it a full constituent part of the United Kingdom, equal to every other part? The definition of “exporting” is being changed to include movements from Great Britain to Northern Ireland, replacing references to “the United Kingdom” with “Great Britain”. On the question about what the Minister thinks, empty words and rhetoric will not be sufficient because this is reality. These regulations—the statutory instrument—are reality.
The Minister and the Government mentioned the Belfast agreement—I have no doubt that others will before this debate is finished—and how it is so important to protect it. It constitutes international law. At the heart of the agreement is the following statement:
“acknowledge that while a substantial section of the people in Northern Ireland share the legitimate wish of a majority of the people of the island of Ireland for a united Ireland, the present wish of a majority of the people of Northern Ireland, freely exercised and legitimate, is to maintain the Union and, accordingly, that Northern Ireland’s status as part of the United Kingdom reflects and relies upon that wish; and that it would be wrong to make any change in the status of Northern Ireland save with the consent of a majority of its people”.
I believe that the Postal Packets (Miscellaneous Amendments) Regulations 2023 plainly change the status of Northern Ireland such that it is to be treated as foreign with respect to the rest of the United Kingdom for some custom purposes. That is totally wrong and is deeply offensive to the people of Northern Ireland who, as the noble Baroness, Lady Hoey, mentioned a few moments ago, sacrificed so much——many of them gave their lives—to remain part of this great, cherished United Kingdom.
Lord Berkeley (Lab)
My Lords, I rise to speak briefly about another milestone in what I see as the postal service’s disaster this week. I listened very carefully to what noble Lords said about the parcel service, or lack of, between Britain and Northern Ireland, but the other disaster is what many people call the most widespread injustice in British legal history, which is the Horizon IT inquiry. Will we have post offices at all in the future and will they operate properly? It is a very serious issue. The chair of the inquiry, Sir Wyn Williams, published his first interim report on 17 July, which is well documented in the Guardian today. I will give a few highlights of this long-running matter, which has been going on for 20 to 30 years. There are comments that Post Office staff were grouping the suspected postmasters, most of whom have been demonstrated to be innocent, by the colour of their skin. I find it quite extraordinary that this can happen in this century—this was in 2011.
Tourism Industry and VAT
Lord McCrea of Magherafelt and Cookstown Excerpts(9 years, 9 months ago)
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Mr Williams
The hon. Lady is right that it is about developing for a social perspective and building a skills base for the future. Many parts of the tourism sector are ideal way for doing just that.
I will proceed and not take any more interventions. The Cut Tourism VAT campaign commissioned a report by Nevin Associates Ltd, which suggests that a change in VAT would give the UK a £4 billion economic boost, with £166.5 million coming to Wales. There would be 6,000 more jobs in Wales and 120,000 across the UK. In my constituency, with its vibrant local tourism sector, that could amount to a £5 million injection into our economy.
My hon. Friend the Member for Torbay (Mr Sanders) talked about a £10.5 million impact in his constituency, but £5 million would be very important to Ceredigion’s economy. That could create 166 jobs directly and many more indirectly.
Let us look at the arguments borne out of the research a little more closely. First, we need to talk about the increased tax revenue for HM Treasury. Research indicates that, yes, there would be a net revenue loss to the Treasury for the first two years, but after five years such a move would generate a positive net value of £668 million and over 10 years that value could reach £4 billion. Those are significant figures.
Where does that money come from? The research indicates six key areas. First, there will be lower prices, which will create greater demand and much higher turnover in the sector. Secondly, the Treasury will receive increased income tax and national insurance payments generated by the new jobs that we have talked about and, critically, by higher wages in the sector. Thirdly, there will be savings in social security payments as a consequence of lower unemployment, with some of the new jobs created in the sector taken up by those who were previously unemployed. Fourthly, there will be increased corporation tax payments as a result of the higher turnover and growth in those businesses that we all aspire to. Fifthly, there will be an increase in income taxes paid on dividends to shareholders, which would be generated by the accommodation and attraction sectors. Sixthly, there will be the multiplier effect of the additional taxes generated down the supply chain from the accommodation and attraction industries.
I think back to debates and the petitions presented at the time of the VAT measure on static caravans, which stemmed from an unfortunate Budget. I am sure that tomorrow’s Budget will be vastly more successful than that. I remember talking to operatives in my constituency about that very narrow thing, the sale of static caravans in west Wales, and the knock-on effect of the reduction on VAT was immense. The highly integrated nature of the tourist economy was clear in that debate, so the knock-on effects of this change could be hugely significant for the rest of the economy. As I said to my hon. Friend the Member for Newton Abbot (Anne Marie Morris), it would be a real boost for regional economies and tourism-dependent areas such as mine. In my local economy, if we take out the big employers, such as the national health service, the local authority and two universities, a cross-section of small businesses is left, largely involved in farming and tourism, and we need to grow those businesses.
I move on to the impact that this change would have on the UK’s balance of trade. New research published in this area has provided information that was not considered before; the research shows that a significant boost would be provided to the UK’s exports. That is important, given the internationally competitive nature of the sector and concerns about the UK balance of trade deficit. In 2013, tourism expenditure by overseas visitors to the UK was £21 billion, which accounted for 3.8% of the UK’s total exports of £550 billion. Over a 10-year period, the research by Nevin Associates Ltd indicates that the total improvement in the UK’s balance of trade in response to a VAT cut would be £20 billion, which is a huge potential contribution.
The other area of growth is the number of businesses paying VAT. We all know that the UK tourism industry is populated by a very large number of very small firms that may or may not choose to expand or invest in order to keep below the VAT threshold. If my hon. Friend the Member for Aberconwy (Guto Bebb) is called to speak, he may want to talk specifically about the issue of VAT thresholds. Lower VAT would encourage these companies to register for VAT and develop their businesses.
Dr McCrea
I congratulate the hon. Gentleman on securing the debate. He has been emphasising all the pluses and why we should be acting to reduce VAT, but has he made an assessment of the likely effects on the economy from failing to act on reducing the rate of VAT to accommodation, restaurants and visitor attractions?
Mr Williams
Well, I am specifically talking about visitor attractions and accommodation. In this House we are all united by one thing: we want to see our economy growing and thriving. My contention is—I think it is the contention of most people in the Chamber today—that reducing VAT is a strong way of boosting our economy. Lower VAT would encourage these companies to register for VAT and develop their businesses. In France, the amount of businesses falling outside the tax regime has been cut by an estimated €720 million a year, following hospitality VAT reductions.
As the Minister is aware—this is the root of this debate—differential rates of VAT can be introduced due to EU legislation, and all but three countries in the EU have a reduced rate of VAT on the tourism sector. Only the UK, Denmark—which has no reduced rates for goods or services—and Slovakia have not reduced rates. Lithuania used to have no reduced rate, but in January, they lowered their rate of VAT on hotel accommodation to 9%.
Looking at the Irish experience—perhaps pre-empting comments from friends from Northern Ireland today—according to the review of the policy in Eire by the Irish Government, who cut tourism VAT in 2011, they have seen employment increase by 20,000 people directly in the tourism sector. Operators have passed VAT reductions down to customers and as a result, we have seen a sustained growth in tourists and earnings, meaning that what was a temporary measure is now to become a permanent one.
The Minister will also be aware of the work of Professor Blake and the evidence session of the Select Committee on Culture, Media and Sport in which he spoke in January. He concluded—he is a former Treasury adviser—that reducing tourism VAT was a very efficient tax reduction for two reasons. First, he said that VAT on tourism was not an efficient way of creating revenue, as tourism was an elastic product, meaning that demand would go up as well as down. Secondly, he said that tourism VAT was a tax on domestic goods while foreign goods were being left untaxed. Therefore, that made the VAT highly inefficient, as customers will buy foreign goods over domestic ones. Those of us who are trying to promote growth in the domestic sector want people to have holiday weekends in Aberystwyth and Aberaeron, not over in Barcelona and Torremolinos. That is the nature of the competition that we face.
As part of the recent Select Committee on Welsh Affairs report, it was agreed to look at this issue. The Select Committee agreed and included in its recommendations to the UK Government that
“the UK Government review its policy on the VAT rate for…tourism…with the ultimate aim of reducing the current 20% rate.”
The Government rejected that. I am not expecting a miraculous change overnight on the basis of this debate, although that is what I wish for. However, I hope that at the very least, this debate will promote continued reflection on the matter by the Treasury. There is a message there for the Labour party as well, because sadly, to date, the messages we have had on this issue from Labour have not been particularly robust either. However, what I can say is that the Cut Tourism VAT campaign will continue to push the case as robustly as we can.
Finally, the global recession may well have been the main reason, between 2006 and 2012, for falling numbers of visitors to these islands. However, since 2013, we have experienced—Wales included—an upward trajectory, which we all celebrate. The Government, through VisitBritain, have put funds into promoting tourism to good effect, as have our Assembly Government in Cardiff. However, our contention is that there is a vast potential for growth. As the economy continues to grow, as deficit reduction yields results and as public finances are managed, the Government—whatever their political complexion—need to address this issue.
I detect a huge enthusiasm in large parts of this country for developing the tourism sector. There is a great deal of innovation and some really impressive personalities out there developing their businesses. Reducing VAT in this selective way—on accommodation and on visitor attractions—would be the biggest boost imaginable for our very important tourism sector.
Oral Answers to Questions
Lord McCrea of Magherafelt and Cookstown Excerpts(9 years, 9 months ago)
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Andrea Leadsom
Yes, my hon. Friend is exactly right. There is the risk under Labour of a return to an anti-business system that has already been recognised by people who are themselves trying to run businesses in the UK that are contributing to our economy. She has been assiduous in her constituency in supporting business. She has more than 8,000 new start-ups, and I was delighted to visit Clare and to meet the Ealing Mums in Business, who are doing everything that they can to build successful businesses from small beginnings, to talk to them about access to finance.
Dr William McCrea (South Antrim) (DUP)
One of the steps designed to assist businesses in Northern Ireland is the devolution of corporation tax. In light of the reneging of Sinn Fein on the introduction of welfare reform, what implications does the Minister see in the devolution of corporation tax in Northern Ireland?
Andrea Leadsom
As I think the hon. Gentleman will know, we will agree to devolution for Northern Ireland if it is sustainable, and if it is felt by all sides to be a sustainable proposition.
Corporation Tax (Northern Ireland) Bill
Lord McCrea of Magherafelt and Cookstown Excerpts(9 years, 9 months ago)
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Dr William McCrea (South Antrim) (DUP)
I can assure the hon. Gentleman that my right hon. and hon. Friends support his amendment, and I trust that the House will accept it.
Mark Durkan
I thank the hon. Gentleman for that support and endorsement and hope that the House will today accept at least the spirit, logic and compelling sense of the amendment.
As I said in my opening remarks, there is no argument from these Benches, or indeed from any of the parties in Northern Ireland, whether or not they are in the Executive or the Assembly, that large-scale financial services should be able to shift profits or any of their activities simply to net benefit from devolved corporation tax provisions. However, we want to ensure that legitimate, bona fide, not-for-profit mutualised activity is not penalised as a result of the restrictions that are rightly being included.
Credit unions and mutual building societies such as the Progressive have long-standing histories, have done nothing speculative, did not need any Government bail-out and had no questions about their books, or about anything else, so there is nothing untoward, whiffy or sniffy about any of their activities, because they were solid, prudent and sensible. There is absolutely no question but that the parties would want to see such organisations penalised and unable to benefit from the same sort of devolved tax rate that would be available to small and medium-sized enterprises. When we look at the scale of the individual credit unions—remember that they are regulated individually, not as some sort of conglomerate activity—we see that the idea that they would find themselves caught, for corporation tax purposes, in the same category as a large bank, for instance, is absolute nonsense.
However, there is a bit of a rub in this. I know that the credit unions and others have listened carefully to our proceedings on the Bill. For instance, on Second Reading the point was made that the provisions on some classes of back offices, even those working for financial services companies, could qualify for the devolved tax rate, and there seemed to be an inference that some of those lines had been drawn with particular operations in mind. For instance, Citigroup was mentioned on Second Reading, and it was suggested that we should all be assured that its jobs are protected and that that work would be subject to the devolved tax rate. That leads to a situation in which companies such as credit unions and the Progressive building society are saying, “Well, if the back office operations in Northern Ireland can qualify for the devolved tax rate, which obviously we hope will be lower, why should the back office jobs of the Progressive Building Society not qualify?”
The Progressive building society is being advised by Her Majesty’s Revenue and Customs that only 5% of its activity might qualify for the devolved tax rate, and it has been given no reason for that, other than that it seems to be the multiplier figure in the Bill. For no reason that anyone can understand or source, it has been told that only 5% of its activity might qualify. The Government are telling other financial services that they want them to work as hard as possible to maintain a high street presence, which the Progressive building society has done, including new investment in my constituency. It just seems bizarre that it should be penalised without a thought. That is why so many hon. Members are here to support the amendment.
Dr McCrea
Let me begin by thanking the Secretary of State and the Minister of State for the Bill, and thanking Opposition Members for supporting it.
I must also apologise for the absence of some of my colleagues. As a number of Members will know, the father of my hon. Friend the Member for Strangford (Jim Shannon) has died, and was buried this afternoon. That is why my hon. Friends the Members for East Antrim (Sammy Wilson) and for Upper Bann (David Simpson) are not present either, although they have a tremendous interest in this subject. On behalf of all Members, I wish to express our sincere sympathy to my hon. Friend the Member for Strangford. We pray that the Lord will strengthen and comfort his family, especially his mother, at this time of their grief and sorrow.
I know that some Members have felt rather envious as they have sat back and watched the progress of the Bill to its present stage. Nevertheless, both the Government and the official Opposition have acknowledged that the circumstances of Northern Ireland are unique because of its land border with the Irish Republic, which has one of the world’s lowest corporation tax regimes. Government policy has directed us to rebalance the economy—to move away from our high dependence on public sector employment and boost the local private sector—but we cannot do that with no more than an instruction from the House; we need the tools that will allow us to do the job. We have an earnest desire to move Northern Ireland forward, and to transfer our people from the unemployment list to meaningful and gainful employment.
Mr Redwood
I assure the hon. Gentleman that many of us have pressed for a measure of this kind for a long time, and welcome it greatly. I like to see all parties united behind the simple proposition that tax cuts make us a more prosperous society. I only hope that they learn the lesson in respect of the other parts of the Union and the other taxes.
Dr McCrea
I thank the right hon. Gentleman for his comments. I certainly believe that we need to be very prudent in our expenditure, but we also need to allow people to have more of their own money in their pockets, and we want to see prosperity across the United Kingdom. I certainly want to see that achieved. After we have gone to the 20% corporation tax there has, rather worryingly, been some talk of moving back to 21%. That would be a retrograde step and I trust it will be put to bed this afternoon because it would have implications for the block grant for Northern Ireland. We need to get that clarified.
Businesses throughout my constituency tell me that corporation tax could be a game-changer, or at least assist in our genuine efforts for growth. Those who have in the past opposed the devolution of corporation tax stated that this would assist only large multinational companies, yet Her Majesty’s Revenue and Customs estimates that a reduction in corporation tax in Northern Ireland would affect some 34,000 companies of all sizes, including 26,500 small and medium-sized enterprises.
As the hon. Member for North Down (Lady Hermon) said, corporation tax is not a silver bullet that will transform the economy of Northern Ireland, but it allows us to go out with confidence on to the world stage and sell Northern Ireland without being undercut by our neighbours in the Irish Republic. I accept that other economic reforms are necessary. We need to train and upskill our work force, and focus on skills and competiveness, and strengthen our infrastructure, thereby achieving a stronger economy and a higher standard of living for all our constituents.
I welcome today’s debate. I am disappointed in the Minister’s response to the amendment tabled by the hon. Member for Foyle (Mark Durkan) and supported by the hon. Member for Belfast East (Naomi Long). However, we are getting an opportunity to assist the Northern Ireland Executive in gaining greater power to rebalance the economy and boost employment and growth by attracting more high-quality investment. Opportunity awaits us. To do nothing is unacceptable; to do our best is honourable.
Diverted Profits Tax
Lord McCrea of Magherafelt and Cookstown Excerpts(9 years, 11 months ago)
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Dr William McCrea (South Antrim) (DUP)
Does my hon. Friend accept that doing nothing is not acceptable? However, as questions have been asked about the new scheme that the Chancellor spoke about, is it not best that we look at those questions and ensure that the legislation that is being introduced will tackle the problem we face?
Jim Shannon
My hon. Friend is absolutely right. We need to have legislation in place that enables us to oversee the loopholes that have been outlined. We are all hoping that the Minister will tell us how it will work in her response. I hope she will address the questions that have been asked.
Starbucks employs 8,500 people in the UK, so it makes a contribution in employment, wages and associated taxes, but it pays no corporation tax. Amazon, another global company, employs 15,000 staff in the UK and reported sales of £3.35 billion in 2011, as well as profits of £74 million, but it paid only £1.8 million in corporation tax. That annoys me greatly. Google, one of our favourite search engines, made £396 million in 2011 and paid only £6 million in corporation tax. Some of the companies have of course been stung into making tax contributions, although those have been minimal.
An article by Joseph Brothers that I read last month in the magazine Tax Notes International sums up the subject of the earlier intervention by my hon. Friend the Member for Upper Bann (David Simpson) on brass plating. Brothers suggested that Apple, reacting to a threat by the Irish Government to shut down one of their lucrative, corporate-friendly, tax-avoiding laws, would switch strategies to escape taxes in Ireland. He wrote that the so-called “Double Irish” might soon be replaced by a new “Bermuda Triangle”: instead of ships and planes mysteriously disappearing in it, it would be a triangle of tax treaties between Ireland, the Netherlands and Bermuda, exploiting rules that do not quite align and creating the space for profits to vanish, at least to the eyes of the Internal Revenue Service auditors.
If that strategy works, Google and others are likely to follow suit. The outcome could well be that the big corporate tax dodgers achieve what a noted tax lawyer calls “stateless income”: siphoning profit out of high-tax countries in Europe, Japan and North America and moving it around under tax treaties until it is not subject to any tax, because any profits are being reported in a non-existent country called “nowhere”. That is the bottom line of what could happen if our legislation is not correct and if the loopholes, disparities and open questions are not dealt with.
I am using those three companies as examples, but there are many others. Unfortunately, a common trend is filtering down through to a large number of companies. At the end of the day, we must remember that UK-based companies pay corporation tax on their taxable profits wherever those are made. It is only right, therefore, that foreign companies pay tax in the UK on profits made in this country. We must make it clear that the UK is not a country to come to for freeloading. Those are the issues.
Many British-based global companies do pay their taxes. They are concerned that the new legislation might give HMRC too much discretion. Furthermore, as the head of the tax policy unit of KPMG here in the UK noted in the company’s latest annual tax competitiveness survey, companies value “stability” and “simplicity”, but unfortunately, one criticism of the proposed legislation is that it does not offer simplicity. Many questions therefore need to be answered and much transparency applied to ensure that the legislation, while welcome—we have to take a step in the right direction—can work in practice.
The aims of the legislation are admirable as well as necessary. In a recent poll of more than 500 accounting and small business professionals, taken immediately after the Chancellor’s autumn statement, 56% of respondents said that the most significant tax announcement in the speech was the one about the diverted profits tax. Many, perhaps all of us—if not the companies trying to avoid the measure—welcome it, but we need to be sure that everything is in place.
Will the Minister tell us about another issue raised by the hon. Member for Amber Valley: the IT equipment necessary to ensure that expertise is in place? There is also the question of the resourcing of moneys. I understand that the initial set-up will cost £2.3 million in staffing for the first year and £1 million per year thereafter. At a time of HMRC cuts, of which we are all aware in every area, perhaps the Minister will indicate whether provision has been made for the IT equipment and the necessary staffing resources to ensure implementation.
It is of course important to remember that big businesses are always welcome in the UK and, as other Members have said, we do not intend to turn any away. We want companies to be based in the United Kingdom, but we, like everyone else, want them to make their contribution to the tax system. It is always extremely pleasing to hear that another company has made the decision to expand in the UK, and we are seeing a lot of that at the moment in Belfast. It is good to have those companies providing employment opportunities and taxes, and spending money so that our economy in Northern Ireland grows. That is super news for local people, local business and the local economy. It is also vital, however, that those big companies pay their way, otherwise it is not so lucrative after all for local businesses, people and economies. Instead, the money will simply stay in the hands of the global giants.
Will the Minister say what steps the Government will take to deal with the tax havens in the Isle of Man and the Channel Islands? Will we have some influence there, or access to information? Gone are the days when money was hidden under the mattress, the bed or the floorboards; people now put it overseas in tax havens. Will the Minister give some indication of the direction of policy?
Newry HMRC Centre
Lord McCrea of Magherafelt and Cookstown Excerpts(11 years ago)
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Mr Gauke
Let me say a bit more and I shall answer the hon. Lady’s question directly. Those who wish to take up the exit package will need to apply by 18 December and decide on a formal offer by 31 January. Their last day of service will be 30 April. As she says, other people will not want to leave and there is no compulsion on them to apply for a voluntary exit if they wish to stay, but they have been given notice of the likely longer-term picture for their offices and will ultimately need to consider their future after 2015. HMRC will not be closing Newry or any of the offices where it invited people to consider applying for a voluntary exit before April 2015, in line with the picture it gave in 2012 about how long it would be based in current locations.
I do not underestimate the fact that for many people this news was a shock and was unwelcome, but I believe that HMRC was right to provide its staff with an honest assessment about the future of their offices or, in some cases, their roles, and to offer them the opportunity to consider applying for a voluntary exit.
HMRC needs to do further work to be able to say if and when it sees itself moving away from Newry and the 13 other locations where all lines of business will be reducing. A future decision to close the office will need to be accompanied by a proper consultation process and equality impacts, involving the employees themselves, their trade unions, right hon. and hon. Members and other local interests.
Let me pick up on a couple of the questions asked by the hon. Lady. She asked why there has not been consultation at this point and I stress that HMRC has not yet taken a decision to close Newry or any other office. Newry does not feature in HMRC’s long-term plans, but as long as there are people in the office, HMRC will not break its previous commitment that no occupied office will close before April 2015. HMRC follows a tried and tested process in these circumstances. If and when there is a proposal to close the office, consultation will be undertaken with interested parties, both within and outside the Department, and feedback will be invited from staff, unions, hon. Members, other elected local representatives, and the local community. Any representations will be considered fully before a final decision is made.
Dr William McCrea (South Antrim) (DUP)
Is the Minister not playing with words? I am listening to what he is saying but, in reality, has a decision not already been made?
Mr Gauke
I reiterate that HMRC will honour the commitment made earlier in this Parliament that Newry will be open at least until 2015. A final decision will be made only after consultation, as I have outlined. I do not wish in any way to hide from the point—indeed, HMRC has been very clear about this—that HMRC does not see Newry having a future in the long term. The final decision as to when any closure would take place will be made, as I have said, after consultation. The choice for HMRC in the circumstances is to try to conceal that and leave things to the last minute or to try to be as open as possible, engage with staff and provide opportunities at an early stage for those who might want to leave voluntarily with a severance package.
Air Passenger Duty
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Dr William McCrea (South Antrim) (DUP)
I congratulate all Members who have taken part in the debate, and in winding-up on behalf of my colleagues I want to say that it has been an interesting discussion. I congratulate my hon. Friend the Member for East Antrim (Sammy Wilson) on the usual skilful and robust way in which he introduced the debate, and I thank him for sparing us his full views about green issues. His thought-provoking speech was certainly worthy of careful consideration, and I trust that those on the Treasury Bench listened to it carefully.
I welcome the Economic Secretary to the Treasury to her post, and as she said, we welcome the good economic news from Northern Ireland. I found it strange, however, that despite representing a party of low tax, she defended the highest APD anywhere in the world. I trust that when the Minister winds up the debate we will hear some different views.
I welcome the shadow Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), to her post, and thank her for her keen interest. I accept her point that APD is an issue that affects the whole country, not simply Northern Ireland. Our motion acknowledges that because we have spread it out, taking in the whole United Kingdom, rather than only Northern Ireland.
The hon. Member for Spelthorne (Kwasi Kwarteng) proclaimed his low-tax conservatism. Having done that, however, he went on to defend why we should have the highest taxation in Europe—it was amazing to have the hon. Gentleman draw that to our attention, because in reality United Kingdom taxpayers are being taxed silly. He mentioned bringing down corporation tax. I acknowledge what the Government have done on that, but perhaps he should also bear in mind that Northern Ireland has a land border with a country that has a corporation tax of 12.5%, which is far below anything that the Government have done. We in Northern Ireland have a double whammy of taxation.
Kwasi Kwarteng
The hon. Gentleman will know that in this House I am absolutely in favour of low taxes, and I have said to the Chancellor that I think we should have corporation tax of 15%. I will always be in favour of lower corporation tax.
Dr McCrea
I thank the hon. Gentleman for that helpful intervention.
I thank the hon. Member for Brigg and Goole (Andrew Percy) for acknowledging the problems faced by regional airports—many hon. Members acknowledged that point in the debate. The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) is right that statistics are worth repetition because they might get through to the Government, who must then answer to them.
The hon. Member for South Down (Ms Ritchie) drew attention to the impact of the Irish Government on Northern Ireland. She was exactly right. It has been said that the UK Government cannot do what the Irish Government have done because of the deficit. However, I draw the House’s attention to the fact that the Irish Government have a greater deficit problem than the UK Government. The Irish Government nevertheless believe that removing APD was of greater value economically. The Minister should bear that in mind when he expounds why we should not abolish APD—he should not say that it is because we are dealing with the deficit. As I have told him, the Irish Government have a greater problem, yet they have announced the measure in their budget.
I am happy that the hon. Member for Mid Norfolk (George Freeman) spared us the details of his trip to Amsterdam. Nevertheless, I hope he has learned something from the debate and will change his mind on any decision he makes later.
I share the experience of my hon. Friend the Member for Strangford (Jim Shannon): a lot of ordinary people come to my constituency office because they have no Sinn Fein representation in the House and we must represent them. That is a disgraceful situation, but it is a fact, and we must accept the reality. The hon. Member for North Antrim (Ian Paisley) gave the House an interesting report of the statement by Mr Hastings. That, too, is worthy of our consideration.
It is clear from the debate that the civil aviation sector is one of the main pillars of economic growth in the UK, driving job creation and growth both at home and overseas, as well as providing air transport for goods and passengers. More than a third of world trade is delivered by air, and about half of international tourism is facilitated by air links. However, as hon. Members commented, UK passengers are taxed more for air travel than passengers anywhere in the world, with APD rates expected to rise again in line with inflation from 1 April 2014.
In March 2013, the UK was ranked by the World Economic Forum as the world’s least-competitive country in terms of taxes and charges levied on air passengers. The TaxPayers Alliance has described APD as
“an unwelcome burden on family holidays, a cost to business and redundant with the EU Emissions Trading System now being applied to aviation”,
and has called for APD to be phased out entirely.
Our vision for a strong and prosperous Britain can be achieved only with healthy and vibrant transport and economic development sectors. Air connectivity is the key to efficient trading and, as the UK economy continues to transform in the face of domestic and global change, it is essential that the aviation industry is given the certainty and incentive necessary to allow it to plan and invest for the long term. Time and again we are presented with the argument that APD has deterred airlines from opening new routes, especially in Northern Ireland, where robust air links are fundamental to underpinning our regional economy, and has compromised the ability of local businesses to attract new foreign direct investment.
The situation is similar in Scotland. Amanda McMillan, managing director of Glasgow airport, has stated:
“Due to the size of the market in Scotland, we will always find it difficult to attain and sustain new routes and this situation is compounded even further by APD which simply serves to artificially depress demand and dissuade airlines from basing aircraft here…Unless APD is reformed, people travelling to and from Scotland…will continue to face some of the highest levels of taxation in Europe which is clearly a disincentive to travel.”
In an evidence session to the Northern Ireland Assembly Finance and Personnel Committee on 18 September, the director of the City of Derry airport, Damien Tierney, described APD as one of the “big factors” influencing airline decision making. Low-cost carriers such as easyJet and Ryanair, which account for most of the Province’s air travel, are particularly influenced by APD.
Mr Nigel Dodds (Belfast North) (DUP)
Does my hon. Friend agree that APD has long since ceased to be an environmental tax, if it ever was, and is now simply a means of revenue generation for the Government?
Dr McCrea
I thank my right hon. Friend for his intervention. Throughout the debate, Government Members have acknowledged that APD is a way to deal with the deficit, so my right hon. Friend is spot on in identifying that this is another form of taxation on the people of the United Kingdom.
Belfast International airport has noted in similar terms that APD has been held up as a barrier to airlines that might otherwise have shown interest in operating services in Northern Ireland, thereby limiting market opportunity and creating competitive disadvantage for operators. A 2011 report by PricewaterhouseCoopers, entitled “Helping Economic Take Off”, looked at Northern Ireland’s geographical location, which makes us unique in both a UK and EU context. We are the most westerly part of the European Union and the only region of the UK separated by water, yet we share a land frontier with another member state. We have to travel and we have to trade, and air connectivity is the essential springboard from which future economic growth will be launched. The report, however, found that the continued imposition of APD would serve as a significant deterrent to further investment by existing or new carriers in existing or new air routes.
Much has already been said in today’s debate about the Netherlands experience. The Dutch Government introduced an aviation tax in 2008 for passengers departing from Dutch airports. The Dutch air passenger duty proved controversial from the outset and decreasing passenger numbers, combined with the global economic crisis, led the Dutch Government to subsequently abolish it on 1 January 2010. Belgian plans for a ticket tax were not implemented for similar reasons and a Danish tax was withdrawn due to adverse economic impact. In January 2013, the German Government announced that they would freeze their air passenger tax, while the German Transport Minister has publicly stated that he would like the tax to be abolished completely. Will our Government not listen to what is happening across the rest of Europe? Surely those decisions are being made in the light of economic circumstances.
The decision announced in last week’s budget by the Irish Government—that air travel tax is to be removed from 1 April 2014—has once again thrown APD into sharp focus, particularly its potential impact on the aviation sector in Northern Ireland. Concern has already been expressed by the Consumer Council of Northern Ireland that demand for air services in Northern Ireland could face decline, as people head south of the border to avoid tariffs. As Belfast International airport, in my constituency, has commented:
“Any tax or regulation prevailing in Northern Ireland which makes our gateway less attractive than those across the border is entirely retrograde with regard to economic development”.
As recognised by the Northern Ireland Affairs Committee in its two previous reports, Northern Ireland suffers greatly from its shared land mass with the Irish Republic, where the abolition of air travel tax, along with low corporation tax, start-up incentives and marketing funds, will now make it even harder for Northern Ireland to compete for cheaper fares and new route development. Belfast International airport, which lies on the shores of Lough Neagh in my constituency, is the main international port of entry for the province and has proved itself to be an essential component of the local economy and regional growth, as well as being a strategic asset nationally.
In conclusion, I realise that time has run out and I want the Minister to have the opportunity to respond to the debate. I thank every right hon. and hon. Member for participating. I trust that the Government have listened to what has been said and will take away the motion and the thoughts of the House, rather than seek to divide it.
Economic Growth
Lord McCrea of Magherafelt and Cookstown Excerpts(11 years, 7 months ago)
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Mr Pat McFadden (Wolverhampton South East) (Lab)
The central question since the financial crash has been how to secure recovery in tough economic times. When the election took place, economic growth had been restored and unemployment was falling, but since then we have seen precious little growth, and unemployment is rising once again. Dealing with that should have been the central purpose of this Queen’s Speech and this debate.
There are measures in the Queen’s Speech—some worth while—to help small businesses to recruit new employees, which we called for, and to extend apprenticeships, which were significantly expanded during our time in government. However, one is left with the impression that although some of the measures may be worth while, as a whole they are not equal to the depth and durability of our economic problems. In fact, the Government seem to have given up and are waiting desperately for the new Governor of the Bank of England to secure the economic growth that they have so signally failed to secure.
The Queen’s Speech seems to be more about positioning and fear of the UK Independence party than about genuinely dealing with the country’s economic problems. UKIP, however, is a movement against the political establishment as a whole. It is based on a vision of the United Kingdom as it used to be, not as it is or how it will be. I have to say to Government Members that they cannot fight nostalgia with policy or positioning; the only way to answer nostalgia is to offer a better tomorrow, rather than having an argument about a better yesterday.
The Queen’s Speech has been completely overtaken by the argument about Europe. The amendment has attracted more and more signatures, and as it has done so, the Prime Minister’s professed relaxation has become greater and greater—presumably, by 7 o’clock tonight he will be completely asleep. His relaxation is not strength but weakness, and it fools no one. It is not only about the Back Benchers; while he is in the United States arguing for a European-American trade agreement, his own Cabinet Ministers are touring the studios to say that they would vote to come out of the European Union. It all feels very familiar, and it is little wonder that John Major’s former press secretary said this week that
“there are some parallels with the back end of John Major’s premiership.
One of the differences is, that was when the Conservatives had been in power for 17 or 18 years. Now the Conservatives have only been in power in coalition for two or three years.”
No wonder President Obama had to warn the Prime Minister this week that the UK’s influence is greater when we are engaged with and in the European Union. The notion that we can swap membership of the European Union for some other transatlantic embrace is confounded by that warning, which I hope is heard on the Government Benches.
Dr William McCrea (South Antrim) (DUP)
Is it not about time that we asked the British people—that the people of the United Kingdom made the decision, rather than politicians dictating to them the future relationship with Europe?
Mr McFadden
We then come to the draft Bill. There was no talk of that beforehand, no suggestion of it in the Queen’s Speech. It is a panic response to the amendment, a failed attempt to buy off tonight’s rebels. This tells us so much about how the Government operate—short-term tactics, not long-term strategy. However, the tactics fail to buy off the rebels, who are simply emboldened and come back for more. Even this afternoon we have heard people saying, “2017 is not soon enough. We need the referendum now.”
The truth is that whether the Bill is a private Member’s Bill or a Government Bill in this Parliament, no Parliament can bind the next Parliament. The time to put legislation forward to have a referendum is before the Government want the referendum, not four or five years in advance. The tactics will not work in the short term; they will simply increase the Government’s pain. Instead of stopping banging on about Europe, the Tories are back to doing little else. That is because too many people on the Government Benches care more about this than about the country’s economic problems or about being in government.
The centrepiece of the Prime Minister’s strategy is renegotiation. We have been here before, too. Harold Wilson had exactly the same strategy in the 1970s—renegotiate, then hold a referendum. He put the conclusions to the House in March 1975. To those who have not read them, I recommend that they do so. They will find plenty about beef, butter and sugar, but nothing about fundamentally altered terms of membership.
When today’s Prime Minister is asked what he wants from the renegotiation, the only specific he mentions is the working time directive. The working time directive was already renegotiated in the previous Parliament. We dealt with the on-call issue and the preservation of the UK’s opt-out. The important thing about that is that it was done without threatening to leave the European Union. If that is all that the Prime Minister can come up with, no one will believe it. Of course the European Union needs reform. It needs to be more flexible and less rigid and it needs to concentrate more on growth and jobs. The Prime Minister has a far greater chance of achieving those goals if he is not threatening to leave at the same time. This is a broader argument about our vision of the UK. Is it to be engaged or is it to retreat into nostalgia? I know which I prefer.
amendment of the law
Lord McCrea of Magherafelt and Cookstown Excerpts(11 years, 9 months ago)
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Dr William McCrea (South Antrim) (DUP)
I thank you, Mr Deputy Speaker, for giving me the opportunity to speak in this Budget debate.
Like all right hon. and hon. Members, we waited to hear the Chancellor’s proposals that would kick-start the economy, lifting it out of the despair in which it finds itself. The Secretary of State for Communities and Local Government opened today’s debate, outlining Government policy in the Budget for a house building programme. I appreciate that our constituents across the United Kingdom have difficultly getting on to the housing ladder. Having listened to my colleagues here in England, I can say that there is undoubtedly a social housing build problem, with affordable housing described as a national emergency.
Members of Parliament from Northern Ireland have difficulty offering proposals to resolve the housing problem, because housing is devolved to the Northern Ireland Assembly. However, the Chancellor has offered some hope to homebuyers in the Budget, with interest-free loans of up to 20% of the value of a new build property. I appreciate that there is some confusion about the proposal, but I trust that homebuyers seeking to get on the housing ladder will not be lost in the midst of a policy that seems not to have been thought out before being announced.
On Budget day, my hon. Friend the Member for East Antrim (Sammy Wilson) rightly welcomed a number of acceptable announcements. He endorsed the decision to protect Government front-line services in health and education. He also acknowledged that the Government had recognised the key role that capital infrastructure enhancement plays in stimulating economic growth. That is important not only for short-term economic growth, but for our country’s long-term prosperity. However, we face a serious problem, with little or no economic growth across the United Kingdom but, sadly, no sign of it changing in the near future. We need to stimulate our economy. The Secretary of State told the House today that we needed to give business a leg up. To do so, we need to bring confidence back into the business community. Businesses need to be sure that the Government have a plan to take us out of the mess we are in. No one can deny that there is a lack of confidence. As a result, those who have money are not spending or making the investments in industry that we need so much in our economy.
Anne Marie Morris (Newton Abbot) (Con)
Has the hon. Gentleman read the latest report from the Federation of Small Businesses bureau, which says that the level of enthusiasm and belief that we are heading towards a recovery is higher than it ever has been? Confidence is at an all-time high.
Dr McCrea
I thank the hon. Lady for her remarks. I think that if we really went out into the community, we would still find a lack of confidence. If confidence were out there, those who have the money—and some certainly do—would be investing. We need to get those people to spend that money within our economy. On the other side, there is not only a lack of confidence, but a lack of finance. Small and medium-sized businesses are being starved and crippled by denial of finance.
I do not believe that we should talk down our economy, but we must be realistic about the economic situation in our United Kingdom. We want inward investment and we need to kick-start the economy. I would certainly like to see the Chancellor giving more encouragement. Many businesses are crying out for finance. They go along to the banks, but no matter how many times the Chancellor and even the Prime Minister have assured us that they are encouraging the banks to give them the money, that needed money is not getting into the coffers of SMEs. We have got to do more about that.
My constituents welcome the cancellation of the 3p increase in fuel duty, which would have been an additional tax burden not only on businesses, but on virtually every other person and family in our community.
Mr Gregory Campbell
Does my hon. Friend agree that if the Chancellor were in the business of freezing one duty and reducing another, it might have been more cost-effective and beneficial to the economy if he had frozen the beer duty and reduced the fuel duty?
Dr McCrea
I thank my hon. Friend for that suggestion. In fact, that suggestion would have been profitable for the economy, especially bearing in mind that we in Northern Ireland already pay higher fuel prices than any other region of the United Kingdom. We also welcome the low cost of borrowing from the banks over a sustained period, but I have to say that there is another side to that because we should have some sympathy for many pensioners and other savers who depend on savings to supplement their income. They are suffering greatly from the very low interest rates.
I acknowledge the reduction of corporation tax to 20%, ensuring a single rate for businesses in April 2015. In welcoming this step, however, I would ask the Chancellor when corporation tax is going to be devolved to the Northern Ireland Assembly, particularly bearing in mind the fact that we compete with the Irish Republic, which has a 12.5% rate. We want to be able to compete on a level playing field, or better, to bring inward investment into our Province. Northern Ireland’s population has a strong work ethic, but we need policies that will build confidence, bring that inward investment and help industries in the local community to invest in the future.
Air passenger duty is another issue. I believe it is detrimental to our economy. I acknowledge that APD exists for transatlantic flights from Northern Ireland, but we need to challenge this, so I call on the Chancellor to reconsider his position. There is anger, too, over the millionaires’ tax cuts, while at the same time there is the hurt over the bedroom tax. Where will our constituents find the houses for the downsizing? It is easy to talk about these imaginary houses, but that offers no relief to families that face turmoil in getting a roof over their heads.
Oral Answers to Questions
Lord McCrea of Magherafelt and Cookstown Excerpts(11 years, 9 months ago)
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Danny Alexander
I certainly agree that there is a need to diversify the range of funding sources, including the one my hon. Friend describes, particularly for small businesses and businesses with high growth potential. That is the purpose of the seed enterprise investment scheme. The business bank has a remit to try to diversify the range of sources of finance available for small businesses, because in this country we are too dependent on solely bank finance. I shall certainly consider what my hon. Friend said.
Dr William McCrea (South Antrim) (DUP)
Small and medium-sized businesses are still finding it difficult to get banks to lend them essential finance. What further steps can the Minister take to reconnect banks with the reality of business? Up to now, it seems that banks have been a law unto themselves.
Danny Alexander
The hon. Gentleman makes a very good point. That is the purpose of a number of the schemes I mentioned earlier. The funding for lending scheme is designed to get banks to lend more to small businesses, and a complaints process has been put in place, allowing independent adjudication when cases go wrong. I encourage the hon. Gentleman to refer constituents to the scheme, which has overturned bank decisions in a large number of cases.