Corporation Tax (Northern Ireland) Bill

Baroness Ritchie of Downpatrick Excerpts

Wednesday 4th March 2015 Commons Chamber

[Mark Durkan]

We await with bated breath the Minister’s great revelations and technical epiphanies.

Whatever the Financial Secretary says about the complex dimensions of this, there is nothing complex about the simple logic and justice of the proposition that wholly and solely-owned mutuals and credit unions should be able to benefit from a devolved tax rate.

[Ms Margaret Ritchie (South Down) (SDLP)]

Is my hon. Friend aware that the Assembly’s Committee for Enterprise, Trade and Investment, which he used to chair, is also supportive of the stance that he and other Northern Ireland Members are taking? It believes that mutual societies and credit unions based in Northern Ireland should be included within the Bill and able to avail themselves of the same reduced rates of corporation tax as other Northern Ireland-based organisations.

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[Naomi Long]

I am aware of the pressure to want to do that quickly, but it is also important that, as the Executive do that, the cost of it to the Northern Ireland economy is thoroughly assessed and we work out how we are going to pay for it in the interim. Otherwise, before we reap the benefits, we could leave a gap in our public finances that creates pressure, particularly from those that are already under financial pressure. It could lead to a push back against the corporation tax reduction. Getting that balance right is important. I agree that it would be wrong for people to be unnecessarily tardy, but I also think it is important that proper due diligence is done around what that level should be.

Reaping the maximum benefit from the changes under this Bill requires political stability. It requires people, when they look to Northern Ireland, to see the positive images that are so often broadcast, as opposed to some of the more negative images we have seen in recent years. If we want lasting prosperity, it has to be shared among everyone in our society. It is therefore hugely important that we see political maturing not just in terms of the Unionist-nationalist question and how that is handled politically in Northern Ireland, but in terms of the productivity of the Assembly.

[Ms Ritchie]

Does the hon. Lady agree that along with having corporation tax as a financial lever, and the need to create political and economic stability in Northern Ireland and the need to encourage people to come and visit, there is also a need for the Treasury to look at reducing VAT on tourism? That would enable us to be more competitive with the south of Ireland in terms of visitors and the economy.

[Naomi Long]

I am aware that the hon. Lady has long since advocated such a move, as have I. Unfortunately, the Treasury response has been that in some way reducing the VAT on leisure would encourage people to have a rather lackadaisical attitude to the workplace. In fact both inward and outward tourism generates a significant amount of money into our economy, so I think a future assessment would be valid.

Today marks a very welcome step forward in the potential for Northern Ireland to rebalance its economy and encourage further growth of the public sector. I hope that when the Executive meet, as they will do over the coming months, they will meet the challenge of setting the rate and stepping up around infrastructure and skills, as well as around stability and peace building. We will then be able to reap the maximum reward for the work that has been done.

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[Ian Paisley]

This is not the place to debate all of the Stormont House agreement, but given that we were instrumental in helping to achieve it, we will, of course, be pursuing every line, every jot and every tittle to ensure that we get the best deal for Northern Ireland in all of that arrangement.

Between 2013 and 2014 we had a record year of investment in Northern Ireland. Nearly 11,000 new jobs were promoted and 23 first-time investors were welcomed into Northern Ireland. If we can do that in one year in advance of the corporation tax Bill, what can we not do if we can now go out around the world and start to market Northern Ireland as the place with what I hope will be the lowest level of corporation tax on these islands? If we can do that, we really will have the opportunity to see Northern Ireland attracting even more companies. Our attracting 23 new, high-calibre investors in the past year, in the hard economic climate we have been coming out of, is a signal that things they are a-changing.

[Ms Ritchie]

Does the hon. Gentleman agree that as part of lowering the level of corporation tax in Northern Ireland there is a need not only to rebalance the economy, but to ensure that a balanced regional development approach is taken to the location of foreign direct investment and other investment, to ensure that all citizens benefit from this lowering of corporation tax?

[Ian Paisley]

The hon. Lady makes a good point—it is key. This tax is not just about investment in Belfast, Londonderry or key cities; it is about investment in the whole of Northern Ireland. The Prime Minister recently stated that he wanted to make the United Kingdom the “factory of Europe” and attract more jobs into the UK, and I hope he was speaking for every part of the UK. I hope he wanted to see those investments coming across not just to London and the south, but to all of the UK, because that is what we really need—we need more investment. I know that the hon. Lady wants to see investment in her constituency. My constituency is carrying what is going to be the single largest job loss in Northern Ireland in several years, with the closure of the JTI Gallaher factory in 2017. I want to see those jobs filled. I want to see opportunity created whereby more investment will be happening in my constituency and more factories will be brought there. If the current Government are returned, I hope that they will add meat to the bones of that call to turn the UK into the factory of Europe by bringing jobs, not only to the hon. Lady’s constituency, but to mine and, indeed, to all our constituencies. I hope we see a balance in the investment that is going to be made.

In an earlier intervention, the hon. Lady also called for a reduction in VAT, especially on our tourism trade, and I fully support that. Tourism is one of the key areas where we are trying to grow our economy and attract new business investment, with new hoteliers and new companies. If we can reduce VAT in that sector, we will see it grow. Again, we compete with the Republic of Ireland in that sector, but it has a lower tax rate and that damages us. We really need to try to make progress on that.