Short Money

Alasdair McDonnell Excerpts

Tuesday 23rd February 2016 Commons Chamber

[John Penrose]

I devoutly hope that the result of this process will be an increase in transparency. We already have improved transparency in pretty much every other area of taxpayer-funded spending, and we already have transparency that is far better than that for Short money on policy development grants—a very similar kind of grant. It would therefore be increasingly out of step with the modern world for us to assume that Short money should somehow be magically exempt.

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

I would challenge the Minister, because I do not see this money as being for politicians; it is for our staff and our support teams. It is essential that we have those staff and support teams so that we deliver, and deliver well, for our constituents and the people we serve. Transparency is not an issue. None of us in this House, as far as I am aware, will dispute the need for transparency, and any moves towards transparency would be broadly supported. However, the problem is that my arithmetic seems to have gone awry. My figures tell me that in 2010 the Chancellor employed four special advisers, at a total cost of £230,000, and today he employs 10 special advisers at a total cost of £700,000. That is a 204% increase, according to my arithmetic; perhaps I am wrong. How can the Minister defend a 24% cut to those of us who are trying to make things work and a 204% rise for those in the Chancellor’s office? The Chancellor’s Spad team now costs more than the total cost of policy development grant given to all of us on these Benches—DUP, Plaid Cymru, SNP and SDLP Members. The Chancellor gets more than we get.

[John Penrose]

As I said, the cost of special advisers has fallen since the last general election. I would just point out that Gordon Brown, when he was Chancellor, had more Spads than the current Chancellor, and that the average salary of a special adviser is currently £2,000 less than it was under Gordon Brown’s Government in 2009.

Northern Ireland Economy

Alasdair McDonnell Excerpts

Thursday 1st March 2012 Westminster Hall

[Mr Robertson]

I am sure the hon. Gentleman is right, and there may be political reasons why the Irish Government want the same rate. There may be political reasons why they want a lot of things the same across the island of Ireland. As the hon. Gentleman knows, I speak as a strong Unionist. However, the issue is bigger than any of those problems. The hon. Gentleman may be right in that case. He leads me to an important point.

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

Does the hon. Gentleman agree that the outcome, the product and the result are more important than any misgiving or misconception that there might be about the motivation?

--- Later in debate ---

[Sammy Wilson]

I am glad that the hon. Gentleman has clarified that, because I noted down his remark about reducing the size of the public sector. If he was speaking relatively, we are both arguing on the same lines.

My second point is that Northern Ireland still has a strong entrepreneurial spirit, despite all the years of trouble and how that put off private investment, and even drove out some of what was there. Indeed, the hon. Member for South Down (Ms Ritchie) talked about the level of self-employment in Northern Ireland, which is higher than elsewhere in the United Kingdom. That strong entrepreneurial spirit is growing, and many firms have weathered the current recession. The Business Secretary has visited Northern Ireland to see the work of Bombardier. That is a leading firm, internationally, in carbon fibre use in aircraft production, and it is growing; it is one of our biggest manufacturing employers. In my constituency there is F. G. Wilson, which sends generators around the world for Caterpillar, and is now back to its 2008 production levels, and Schrader Electronics, which provides a high proportion of the computerised valves for high-value motor cars, which tell drivers the car pressure. All the steel work for the Shard, which is being built down the road from here, is supplied by a firm in the back of beyond in County Fermanagh. It takes the steel in and ships it out, and because of the excellence of its manufacturing and engineering skills it can still compete for high-prestige jobs such as those that we can see from this building. I could go on.

The news is not all bad, and despite the recession there are many firms that have looked for ways to keep their work force together. One of Northern Ireland’s big advantages is that by and large work forces tend to be very loyal, and employers recognise and try to reward that. For example, Creagh Concrete just outside Toomebridge lost 90% of its business in the Irish Republic and had to lay off half its work force. It started to look for new business and is now back practically to the same level of employment, despite being in the construction industry, by making prisons that are like Lego kits. In fact, when I visited, there was half a prison sitting out in the yard and the other half was being produced. It is then taken on site and put together with all of the facilities inside it. The firm is changing from low value to high value concrete products. I could go on—there are many other examples of the desire of firms in Northern Ireland to grow.

What I say to the Minister today, I say in that spirit. We do not come to this place pleading special cases for a basket case, or as fiscal Oliver Twists holding out our hands, always wanting more and not prepared to do anything to help ourselves. People in Northern Ireland, entrepreneurs in Northern Ireland, want to help themselves and want to grow the economy. However, certain matters, as was pointed out by the hon. Member for South Down, rest with the Government at Westminster and therefore need attention.

Of course, there are matters on which the Northern Ireland Executive can act. It is not my place here to talk about them, or to talk about how adequately or inadequately they have been done. However, I have to respond to the hon. Member for South Down, who somehow thinks that the money allocated to Northern Ireland is not sufficient, not well spent and could be easily added to. She mentioned the fantastic document that her party produced on how we might raise revenue. I know that her first name is Margaret, but when I read the document I thought it was Margaret Thatcher reincarnated in Northern Ireland—the iron lady, though in the hon. Lady’s case it might be more like the tin foil lady.

The document included a list of privatisations from which money could come. Let me just list some of them: the sale of allotments; the sale of the Speaker’s house—I do not think it is his personal house, but there is a house in the grounds of Stormont; the sale of an airport that we do not own; and money from developers who are not building anymore. I could go on. Not one of them stacked up. We get the easy answers.

[Dr Alasdair McDonnell]

Does the hon. Gentleman accept that he has adopted many of those proposals in his current budgetary strategy?

[Sammy Wilson]

No, I do not think I have adopted any of them. The only one that was adopted was then condemned; namely, that we could get some money from housing associations by cutting their grant and making them borrow more in the market. When that was adopted, the first party to condemn it was the party sitting to my left. Even when we adopt some of that party’s ideas, it suddenly decides that they are not good ideas.

--- Later in debate ---

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

I welcome the chance to speak in this debate under your chairmanship, Mr Scott, and to put some of the challenges facing the Northern Ireland economy on the record of the House of Commons. I am very conscious of the time, so I will try to make my points without being quite as long-winded as some of my colleagues—[Interruption.] I am not talking about my hon. Friend the Member for South Down (Ms Ritchie)—[Interruption.] No. I was talking about the right hon. and hon. Gentlemen sitting to my right, who were eloquent but very long-winded.

The SDLP has long argued for—and indeed published—a series of constructive proposals and policies, which we believe go some way towards helping to build a reconciled, socially just and more prosperous society in Northern Ireland. Central to delivering sustained economic prosperity is the need for significant growth in the private sector. We are all agreed on that and I have not heard anyone here today saying anything different. However, as the hon. Member for East Antrim (Sammy Wilson) and the right hon. Member for Belfast North (Mr Dodds) have said, the banks are killing the private sector, and that includes Ulster bank, which is part of the RBS. Like others here, I get at least two or three problems a week relating to Ulster bank and RBS. Our private sector is shrinking.

One other issue that we need to consider—sometimes in the political context, this is difficult for some of my colleagues—is a much more proactive approach to building stronger business and trade links with business in the Irish Republic. We have not fully exploited every potential there or taken full advantage of every economic opportunity that exists in the island of Ireland as a whole. I want to see Northern business being able to take advantage of any market on the island. That does not preclude our belonging to the British market; the two things are not incompatible, but synergistic.

Achieving the growth in the private sector that we all so much desire is extremely challenging, particularly in the current financial climate, but it is a challenge that we must face and a problem that we must surmount. We cannot duck it, because it will not go away.

I am absolutely delighted to say that my friend, the hon. Member for East Antrim and the Minister for Finance at Stormont has complimented us on our fantastic documents—[Interruption.] Fantastic was the word he used. We appreciated it and we will return the favour in due course. Our documents, “New Priorities in Difficult Times” and “Partnership and Economic Recovery”—[Interruption.] No, no, the word was fantastic. The hon. Gentleman may have meant fantasist but he said fantastic. We are not looking for the negative; we are taking the positive. In those documents, the SDLP genuinely identified some of the tough choices and decisions that have to be made. We faced up to them and we should have been given credit for that rather than being abused for it. We pointed out the many opportunities for making public savings and how various types of jobs could be sustained and others could be created.

If we want to maximise the potential benefits that exist in the economy, we need to be ambitious and to exercise vision. In our document, we identified opportunities and potential for growth in education and skills training, finance, tourism and new technologies, including the biotech and nanotechnology areas.

The one area that I should like to bring to the Chamber’s attention is agrifood, which is a sector that we often forget about. It is an old industry. It is remarkable that the current Minister in the Irish Republic, Simon Coveney, has a plan, which he inherited from the previous Government when Brendan Smith was Minister for Agriculture, to double food exports within 10 years. There is no reason why we in Northern Ireland cannot take a leaf out of that book and do the same thing.

There are other aspects of the economy, such as renewable energy, which will help drive the expansion of the private sector. Others have already referred to the conversion of the old Harland and Wolff shipyard site in which many renewable energy machines, wind turbines, are being developed. That will not only reduce Northern Ireland’s dependence on fossil fuels, but put us in a stronger and more sustainable position economically in 10 or 15 years time.

If we are to attract greater foreign investment, we must invest in preparing our people, because that is the basic building block for rebalancing any economy. Others, particularly the hon. Member for Belfast East (Naomi Long), have also made reference to that. The key is the STEM subjects— science, technology, engineering and maths—in our schools, because they are our bridge to creating exciting and interesting careers for our young people. We also need to increase university places to stop the brain drain. At the moment, people are leaving; they go to England, Scotland, Wales or elsewhere to university and they never come back. We need whatever brainpower we have if we are going to lift ourselves out of the situation that we are in.

On that point, I appeal for a significant expansion of the Magee campus of the university of Ulster. That campus has worked very well, it is working well and it can work even better, providing an engine to drive forward the economy, particularly the economy west of the River Bann.

Huge opportunities for innovation exist in the renewable sector, which I will discuss briefly. Northern Ireland is perfectly placed to harness wind and wave energy, and biomass and biogas. And God knows, Mr Scott, that if you were in Stormont you would understand why an industrialist has a plan to harness all the hot air coming out of Stormont on Mondays and Tuesdays. There is a conviction that much renewable energy can be captured there, but I will leave that to the future.

[Sammy Wilson]

Most of it is recycled in the first place—[Laughter.]

[Mr Dodds]

Does the hon. Member for Belfast South have any intention of leaving Stormont and devoting himself full-time to Westminster?

[Dr McDonnell]

I have never been afraid of hard work, and I can be wherever I am needed, whenever I am needed.

Maximising all that renewable energy will not only reduce our dependency on fossil fuels but it can be a key economic driver, and not just in Northern Ireland but on the island as a whole, where we have a single energy market. My hon. Friend the Member for South Down has talked about corporation tax; I will not delay proceedings by repeating the issues about corporation tax, but they are there. I took part in the Northern Ireland Committee when it discussed corporation tax and I commend the Chairman, the hon. Member for Tewkesbury (Mr Robertson), for his outstanding chairmanship and for delivering the report on corporation tax, as well as the report on air passenger duty. We produced the report on APD in a remarkably short time; I think that three or four weeks was all the time it took to produce it.

As I say, my hon. Friend the Member for South Down covered a lot of the points about corporation tax and the economic benefits, and I will not use the precious time left to me to repeat those points. APD is an area where the private sector is disproportionately hammered. Because a business happens to be in Northern Ireland, it should not be crucified in terms of the cost of transport links with the US and the continent.

Beyond corporation tax, the SDLP is keen to explore some possibility of creating bonds, and I certainly want to see a bond of £400 million or £500 million that could be used to pump-prime the construction industry in Northern Ireland. I have no doubt that there are ways and means by which that bond could be developed, but I will leave discussion of those ways and means until another day. Such a bond would allow our construction firms to get up off their knees and begin to build the schools, hospitals and the road infrastructure that we need. Yes, we would have to pay such a bond back, but it would be easier paying it back if we had the functioning infrastructure there in Northern Ireland. Such a bond would remove many of the bottlenecks that currently exist in our economy, allowing the dysfunctional parts of the economy to function again.

We have also been working with local companies, Invest Northern Ireland and the European Commission to find ways and means of successfully unlocking European research and development funds. Certainly framework 7, as it enters its last years, offers tremendous opportunities for research and development, and framework 8 will no doubt do the same. Unlocking funds for research and development would help to boost business links, the private sector and university spin-outs.

We need to grow the private sector rapidly, but I agree with the hon. Member for East Antrim that it is a question not of dismantling the public sector but of growing the private sector five-fold or six-fold. It is only by being ambitious and courageous in our thinking, our planning and our building of dynamic partnerships between business, Government and the education sector that we will become equipped to compete successfully in global markets in the future.

Before I end, I will repeat a point I made earlier, which was also made by a number of Members, particularly the hon. Member for East Antrim, regarding the banks. The banks are a disaster, and small businesses are being crucified and put out of business. Our single biggest challenge is a lack of liquidity in the banking system. I have experienced it myself—cheques are being bounced and companies are being driven into administration and bankruptcy. That is not good for the economy. In many cases, those companies are viable but they are being put to the wall. If anything can come out of this debate today, it is that we have to get some mechanism for tackling the banks.

Loans to Ireland Bill

Alasdair McDonnell Excerpts

Wednesday 15th December 2010 Commons Chamber

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

I congratulate the Chancellor on the proposal, which I fully support. It is my understanding that this step is being taken because there was a potential domino effect, in that any damage in the Irish Republic could have led to further damage to British banks that operate there and to damage to the Northern Ireland economy, and that in turn would have had a very significant effect on the British economy and British interests. I therefore see this as a generous move, but also a move of enlightened self-interest.

The Irish economy is in its current situation because it had a banking crisis, not an economic crisis. The underlying economy is sound; the potential for growth exists, and that growth will come forward. The pharmaceuticals and other major industries in the south of Ireland are thriving. The economy is expected to stabilise this year and to begin to expand at between 2.5 and 3% in the period 2011-14. The package of measures that is in place is required in order to restore the public finances and banking liquidity by 2014. The Irish Government have rapidly moved to curtail expenditure dramatically and to raise revenue themselves. The adjustment is expected to bring the economy back into balance within four or five years.

Ireland is a small open economy in which long-term sustainable growth depends on healthy international trading, and the conditions for export-led growth are in place: good infrastructure, high-quality human capital, a favourable taxation environment and available credit for viable businesses. The national recovery plan has been put in place, and it is tough and will be difficult. Export-led growth will foster recovery in domestic trading sectors. The growth in GDP is expected to bring unemployment down fairly rapidly, and certainly well below 10% within two to three years. The balance of payments will return to surplus in 2011, so Ireland will be earning its way out of the difficulty that it is in within the next 12 months.

Some Members have referred to Ireland’s membership of the eurozone as a major difficulty, but I do not agree. It is a handicap, but it is not as massive a disadvantage as some claim. Ireland’s membership of the eurozone obliges it to adhere to stability and growth rules and to bring the general Government deficit to below 3%. The Irish Budget contained a very tough package. Initially, the 2010 Budget presumed an adjustment of about €7.5 billion over a four-year period. With hindsight, we know that the figure proved to be almost double that—some €15 billion—as we crept towards the year end. Two thirds of that is coming out of budgetary adjustment achieved through reduced expenditure, and a third out of taxation. However, by 2014, Irish expenditure will be back to 2007 levels. Total Government expenditure as a percentage of GDP will be reduced from 49% to 36% in the next three years.

[Mrs Main]

I heard what the hon. Gentleman said earlier in his speech about why we should support southern Ireland, but I am struggling somewhat with his non-condemnation of membership of the eurozone. The euro seems to be a large part of the problems, but he seems to have glossed over that fact.

[Dr McDonnell]

Some of us see the euro as a problem and some of us do not. Being in the euro has been an advantage to Ireland for many years. It has become a handicap at present because of the restrictions and constraints, but the eurozone works and has worked very well for many years. In the present crisis it has its handicaps and limitations. Some people are predicting that the eurozone will collapse shortly; I do not accept that, and that is not the view of everybody.

The point I am trying to make is that Ireland’s underlying economy is healthy. Its membership of and involvement in the eurozone is healthy, and in the long-term it will come round and sort itself out. Ireland has a financial crisis—a banking crisis—that was brought about largely by a property bubble and a lack of liquidity, rather than a flaw in the underlying economy. I want to assure people that the money will be paid, in my opinion and assessment, and that in due course—

[Mark Durkan]

I thank my hon. Friend for giving way. Lessons will have to be learned, not so much about the euro per se but about the performance of the European Central Bank. There is a serious question to be asked about its insistence on low interest rates for a sustained period. That helped to feed the property bubble in Ireland, despite the valiant efforts of the then Finance Minister to find other ways of getting out of the economy the money that was fuelling the property bubble, such as paying off the national debt, putting big money into the national pensions reserve fund and introducing special savings investment accounts.

[Dr McDonnell]

I thank my hon. Friend, who puts it better than I could have done.

I want to come on to why international intervention was needed. Ireland did its best at an internal level. It is a small country in a very tough global marketplace, and it did its best to resolve both the banking and the deficit situations internally. However, the interdependence of the modern world, Ireland’s membership of the eurozone and large market movements put some of the solutions beyond internal domestic management. Indeed, as we all know, both the European Union and the eurozone are themselves facing fundamental challenges in devising a fair and equitable response to the financial crisis in other countries.

However, although the domestic measures in Ireland did not prove sufficient, that does not mean they were not necessary. Ireland did its best to solve the situation internally, and only in the end, when nothing more could be done internally, did it resort to international help.

There are major north-south implications within the island of Ireland. All of us in the island of Ireland remain convinced that north-south co-operation is a central element of the push for economic recovery—not just within the Irish Republic but within the north. Indeed, the Prime Minister referred to such matters at Question Time. Despite the difficulties, the Irish Government have maintained some €110 million of investment in the north in various things, including major infrastructure projects of importance to both the north and the south. I am referring to roads and other aspects that are central. All that is important, and works. For the future prosperity of the island economy it is essential to build on the peace that we have achieved and to create the economic opportunities for a new generation.

I wish simply to restate a number of points about the UK’s interest. The UK is strong and robust, as we have discussed in relation to trade and all the rest. Ireland, a small country, accounts for 5% of Britain’s total exports. We are told that the UK exports more to Ireland than to Brazil, Russia, India and China put together. Allowing that to collapse would have an immediate impact on this country. The two economies are particularly linked in Northern Ireland, with two fifths of Northern Ireland’s economy dependent on the Irish Republic. Just as the two economies are linked, the two banking sectors are linked. As other hon. Members have said, the two main southern Irish banks are very active in the north, and to some extent in Britain; they also issue sterling banknotes, so that all has an implication for the whole banking sector. If this banking liquidity crisis had not been sorted out, we could have ended up with 25% or 30% unemployment, not just in southern Ireland, but in the north.

[Several hon. Members]

rose—