Northern Ireland (Regional Rates and Energy) (No. 2) Bill

Alistair Carmichael Excerpts

2nd reading: House of Commons
Wednesday 6th March 2019 Commons Chamber

[Tony Lloyd]

The hon. Lady makes a valid point. Obviously, it is not a small difference; in fact, it is a huge difference to those on what could be described as the receiving end, those at the £20,000 level, or the non-receiving end for those at the £2,000 level. The details for a particular farm that I will come on to bear out exactly the point that she makes.

We need to know about state aid compliance, not only what lies behind it but how it has the system so circumscribed that we can do no other. I want to challenge Ministers on some of the things that they have told us. For example, the Secretary of State said that the cost of fuel might be different in Great Britain from Northern Ireland. I am told, however, that a lot of our non-home-grown fuel is imported from the Baltic states, where there is an awful lot of wood—I can assure the House of that, because I have seen it. Those pellets are shipped from the Baltic states to the UK generally, and I can recognise no enormous difference in the cost thresholds such as to produce a very different cost profile in Northern Ireland—a much cheaper one—from that in Great Britain. That we would have such different cost pressures does not seem logical. We need proper answers to such questions, although I fear that we will not get them today.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I agree with much of what the hon. Gentleman is saying. The purported purpose of this legislation is to give certainty. I have rarely seen the Government produce legislation that is so obviously ripe for legal challenge on the basis of legitimate expectation. In such circumstances, at the end of the day, surely we will not even give the people concerned, the recipients of the subsidies, the certainty that the Government claim they want.

--- Later in debate ---

[Dr Andrew Murrison (South West Wiltshire) (Con)]

These are unusual times for Northern Ireland and this is an unusual Bill. It is difficult to avoid the conclusion that what we have today is something of an essay crisis; that is to say, something presented as being urgent and in need of consideration by the House in one day that could in fact easily have been considered more electively.

It has been said that we should decouple the two elements of the Bill. In truth, most of the Bill relates to the renewable heat incentive. The regional rate issue is largely unobjectionable and would pass with the greatest of ease through the House on a bipartisan basis, but we have to accept that politically the renewable heat incentive is an extremely toxic issue. After all, it has brought us to the sorry pass that we are currently in, with the collapse of the Executive and the Assembly. It is absolutely central to the political chaos that currently afflicts Northern Ireland and that is adversely impacting on the lived experience of people in Northern Ireland, so it demands that we look at the legislation closely and in a considered and measured fashion, of the sort that usually involves a proper Committee stage. That is not being offered on this occasion. I share the surprise expressed by the hon. Member for Rochdale (Tony Lloyd) that these two completely different issues have been conjoined in this rather unusual Bill. I have sympathy with his suggestion that the two might be separated so that we can pass that which is unobjectionable and straightforward and consider on a more elective basis those bits—those clauses—that are more complicated.

A 12% return is pretty good by any standards. A casual observer of our proceedings would wonder, I suspect, what the fuss is all about—I would love to have a 12% return on my investments—but the fact of the matter is that those small businesses that invested in this technology did so on the copper-bottomed understanding that they would get a different rate of return. The institutions that lent on that basis would have been similarly advised, and the investment would have been procured on that basis. We now have to unpick something of a disaster on the part of the Department for the Economy in Northern Ireland, and I understand the Secretary of State’s dilemma. This is not easy; something has to be done. However, when Bills are before us in this place, we must consider those people who will be inadvertently disadvantaged. Like most hon. and right hon. Members in this House, I have been lobbied by such people who point out that they invested in good faith and that their small businesses might be brought to the edge because of the change in circumstances over which they have no control.

[Mr Carmichael]

Does that not go to the heart of the matter? The existence of a voluntary buy-out scheme seems an implicit recognition to me that exactly the situation that the hon. Gentleman identifies is one that is likely to occur. That surely means that the legitimate expectations of the recipients of the subsidies are so adversely affected that any legal challenge would be successful.

[Dr Murrison]

I share the right hon. Gentleman’s concerns in that respect. As a lawyer, he will know better than me that there is every prospect of a judicial review in this matter. It would be very surprising, given the propensity of individuals and organisations in Northern Ireland to seek judicial review on a range of things, if that were not the case in this instance. Indeed, that includes their representative organisations. Clearly, the Government need to do everything in their power to ensure that they are protected against such an eventuality, including, I suggest, ensuring proper scrutiny of this Bill, as inadequate scrutiny will surely be cited as a reason for such a review to result in a judgment that is in favour of those bringing the case forward. However, fear of judicial review is one thing, but what we need to do in this place is to ensure that individuals are not disadvantaged. That means scrutinising this Bill properly and trying to ensure that, if possible, those hard cases are avoided.

I understand the rules on state aid and I understand that the buy-out is a mechanism of trying to be generous to those who may be disadvantaged, but within the rules that have been set. I also have concerns because the Department that has advised on this matter—the Department for the Economy—is, of course, implicated in the mess in the first place. I would be worried if the Secretary of State were being overly reliant on the advice that she is receiving from that Department and, in all candour, I suggest that she needs to be extremely careful about that.

Scrutiny—challenging advice—is what we do in this place. It worries me that this controversial Bill on this most toxic of issues is not undergoing such scrutiny. It would seem to me to be entirely sensible for Ministers to ensure that this measure has all possible scrutiny to hedge against the possibility that what it is doing, on advice from the Department for the Economy, is in fact erring in some important respect, as indeed the advice to Ministers has been from that Department in the past.

I also worry—this has been touched on already—about what confidence institutions will have in these sorts of Government schemes in the future, given that they will have assumed that anything backed by or instituted by Government is copper-bottomed, safe and triple A rated. They now find that that is not the case, and that any loan they may have made on the basis of an expectation of, admittedly, fantastically high returns—nevertheless, backed by Government—will in fact result in a return much less than that. Indeed, in the event that some of these businesses go to the wall, these investments may have to be written off.

We have to reflect on the fact that many of these businesses are marginal concerns. Many of the 1,800 businesses are farms, and we know that farming in Northern Ireland is quite different from farming in the rest of the United Kingdom. They tend to be small, marginal farms. The people from those farms who have invested in this scheme may find themselves embarrassed financially by this particular decision. It is quite possible that we might be able to design some sort of scheme that is based around hardship for special cases. There is no recommendation to that effect in this Bill other than the buy-out scheme. I commend the Secretary of State for that, as it is absolutely right to bring such a scheme forward within the constraints of state aid, but there is very little beyond that, and there will be cases of hardship. In the context of Northern Ireland—a small place with lots of small businesses and small farms—would not it be tragic if we found some of those businesses going to the wall as a result of this change in policy?

Of course, this legislation has to go through because if it does not, on 1 April people will be faced with getting nothing, but I gently suggest to Ministers that this is an imperfect Bill that needs further scrutiny and input. I hope very much that my new clause 1 will catch your eye, Madam Deputy Speaker, and that we may debate this matter further in Committee. It would be extremely good if we could do so, because the new clause makes some sensible recommendations about how we can ensure that this difficult part of a Bill that is otherwise unobjectionable is given the scrutiny that it deserves so that people can therefore have greater confidence in it.

In general, the Secretary of State is quite right to bring this legislation forward. It is a pity that we have not had the scrutiny of the whole Bill that it really deserves. Given the issues that currently apply at Stormont, we need to be particularly careful in this place that we give matters that relate to Northern Ireland all the scrutiny we can possibly can. This represents something of an essay crisis that was absolutely avoidable had we brought the measures forward in a more timely manner and decoupled these two very different elements of a particularly unusual Bill.