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

Ian Paisley Excerpts

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

[Karen Bradley]

As I say, I have enormous sympathy for people in this situation. I have met the Ulster Farmers Union and my officials have met individual farmers to talk about it. I well understand the concerns but, faced with a choice between no subsidies at all and cost cutting at 12%, I think this is the right and only legal approach we can take.

[Ian Paisley (North Antrim) (DUP)]

I thank the Secretary of State for at least acknowledging how grossly unfair this is to many people, but she must recognise that the Bill the Northern Ireland Office has put before the House today does far more than she has indicated. Less than half a page of the Bill deals with the regional rate. The rest—five pages—deals with the RHI scheme, and her proposal for the scheme will bring all renewable activity to an end for a generation. No one will ever again apply for a renewable scheme or a Government-backed deal in Northern Ireland. That will be the effect of her proposal.

[Karen Bradley]

I thank the hon. Gentleman for his comments. I will come on to the detail of the renewable heat measures and the work undertaken.

The Department for the Economy in Northern Ireland undertook an extensive public consultation in the last year to ensure that revised measures could be introduced in time for new legislation to come into effect from 1 April 2019. The tariff levels set out in the Bill are based on an analysis of the additional costs and savings of operating a biomass boiler in Northern Ireland. The Department has also engaged with the European Commission in developing the long-term tariff. The Commission has indicated that it is not in a position to approve a tariff that delivers a rate of return higher than 12%. Recognising that a small number of participants with lower usage needs or higher capital costs could see returns below the intended 12%, the Bill makes provision for the introduction of voluntary buy-out arrangements.

I recognise that some scheme participants in Northern Ireland will be concerned about these new tariffs. Both the Department for the Economy and my own Department have heard their views in person and in writing in recent weeks, as I said earlier, and I empathise with those people and businesses across Northern Ireland.

[Ian Paisley]

I thank the Secretary of State for going into the detail. She mentions the 12% rate of return. Why can the rest of the UK set a rate of return on the same scheme fluctuating between 8% and 22%? Why are our officials being told that Europe will only accept 12% for Northern Ireland, but will accept a differential rate for the rest of the UK? Officials have a duty to tell the public why that is.

[Karen Bradley]

We cannot easily compare schemes: there are different set-up costs and fuel costs in different parts of the United Kingdom. Differences apply. The work done by the Department for the Economy with the Commission is thorough and has ensured that the recommendations it put to me and the tariffs we are legislating for today mean that the scheme remains legal. That is the important point. If we do not have a legal scheme, there will be no subsidies.

[Ian Paisley]

The Secretary of State says there are different set-up costs, but under state aid rules that is not allowed. State aid rules declare that the set-up costs are X for the provision of the boiler. In England, different set-up costs are being used, and our Department in Northern Ireland is changing those set-up costs according to its interpretation of what the law demands. Does that not ultimately reflect the need for more scrutiny? To rush the measure through the House is not right, fair or equitable.

[Karen Bradley]

There are differences in fuel costs and transport costs. There are differences between different parts of the UK. I am interested in making sure that the scheme in Northern Ireland remains legal so that people with boilers can continue to receive some subsidy. I know it is not at the levels they were receiving previously, but it is still some subsidy.

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[Tony Lloyd (Rochdale) (Lab)]

The Bill is in many ways an abuse of the processes of the House. I hope that the Minister will take this seriously. There is no connection between the regional rates and the structure surrounding the renewable heat incentive scheme, and they should have been presented in two separate pieces of legislation. It is already obvious from the debate so far that there is massive concern about the RHI proposals on both sides of the House, and the level of scrutiny that we will be able to achieve this afternoon simply is not up to the importance of the Bill.

This is not a trivial matter. It is not trivial because in the end the concern expressed by the hon. Member for North Down (Lady Hermon) and others that there will be casualties of this process is real. My hon. Friend the Member for St Helens North (Conor McGinn) makes the point that many farms in Northern Ireland—small firms, quite often—are in a parlous state. It matters enormously if we get this legislation wrong.

I hope the Secretary of State will consider that, and I hope that we will not see again an attempt to bludgeon legislation like this through the House in such a short space of time. This should have been taken in Committee; there should have been the opportunity in Committee for a much more leisurely but much more intense form of exchange between the Secretary of State, the Minister and interested Members. That is the right and proper way of doing something of this import.

On regional rates, I want to pick up the point raised about business rates. It is difficult to argue against business rates being uprated by inflation—I think even the greatest quibblers would resist that—but it is important to register that across the different towns of Northern Ireland in particular, there are businesses that are struggling. I do not pick as in a vendetta on the town of Ballymena. I know there is some good news that the hon. Member for North Antrim (Ian Paisley) has been involved in—there are some new jobs coming into the town—but I think he will accept that I make no criticism of one of his towns if I say that the Ballymena of today is not the Ballymena of my youth. It is a town that does need uplift; it needs its businesses supported and an injection of resource.

[Ian Paisley]

I appreciate the shadow Secretary of State making those kind and glowing references to Ballymena. It has a significant part of the industrial base of Northern Ireland, but that has of course been damaged by the loss of jobs and EU regulations, and to some extent just because of world economic factors. But the fact of the matter is that there is a spirit of change and a spirit of trying to get new jobs back, and I am delighted that today about 60 new jobs will ultimately be financed at USEL—Ulster Supported Employment Ltd—in Ballymena, which is a wonderful scheme that brings disadvantaged young people on and into the workplace and encourages the development of a circular economy.

[Tony Lloyd]

Like the hon. Gentleman, I very much welcome this piece of good news, but it has to be set against the fact that we do need to see renewal in many towns, and I want to return to a question I raised with Ministers yesterday about the stronger towns moneys. I did not get a response to the question I raised; there was no certainty on that. The Communities Secretary made it clear that the stronger towns moneys were available of course for England but also for Wales, Scotland and Northern Ireland. In Wales and Scotland, I assume those moneys will be diverted through the devolved Administrations there, but with Northern Ireland, we do need some certainty that there is political process and there will be political decision making that can ensure that, whether in Ballymena or any other town, there will be access to the stronger towns moneys. That is important in the context of the debate we are having; yes, we welcome the relative capping of the business rates but we want a recognition that there is still need for legitimate support for businesses across Northern Ireland.

I want to pick up the points made by my hon. Friend the Member for Ogmore (Chris Elmore). He made some interesting comments about the impact of the domestic rate increase. An increase of 3% plus inflation is perhaps supportable for many people, but it is interesting to compare with the Government’s proposed uprating for benefits: for universal credit, for example, that will be 2.4% in total. So 3% plus inflation is a bigger cost being imposed on the many families in Northern Ireland who struggle—for instance, low-income families or families on minimum wage. That kind of impact must be considered.

The Secretary of State says that the people of Northern Ireland should make a contribution as well as the Treasury, but let me make the obvious point that the people of Northern Ireland do make a contribution to Treasury moneys: they pay income tax, they pay VAT and they pay all the other taxes that are paid by people throughout the United Kingdom.

In those terms, this is effectively a redistribution from UK-wide taxation—which is perhaps not as progressive as I would like, but at least it has some sense of progression—to a more regressive form of taxation around regional rates. Nevertheless, the many sectors such as local authorities and, most importantly, education spend and health spend that depend on regional rates certainly need to see these resources coming in, so it would be hard to resist the case for this legislation being needed. It also has time import, in that the new financial year will not be long delayed.

However, that is not the case with the legislation relating to the renewable heat incentive. The consultation on the present scheme began last May and finished last September, and this legislation should have been brought before the House long before now if the intention was to implement it on the third parties on 1 April. It is unacceptable that we are now having to legislate at breakneck speed, just as we did yesterday. The legislation is being forced through the House without the opportunity for proper scrutiny. I have to say to the Secretary of State, although not unkindly, that I did not find her answers convincing when she responded to questions raised by previous speakers. I did not honestly feel that the House knew whether the legislation was necessary. I shall go into further detail on that in a moment.

Will the Secretary of State tell me when the Department for the Economy in Northern Ireland began to talk to the Northern Ireland Office about the need for an uprating? We know that there was an uprating last year, roughly 12 months ago, and it should have been obvious to everybody, particularly as this had gone out to consultation, that there would be a need for legislation, so why are we doing this so late on? Alternatively, why has it been necessary to do all this today? Could we not have had a Second Reading today, after which the Bill could have gone into Committee in the normal way and completed its progress later on, having had proper scrutiny throughout the process? This matters, for all the reasons that have already been given in exchanges with the Secretary of State. We have to be certain that the scrutiny is sufficient to reveal exactly what is happening.

On the specific details, I want to ask the Secretary of State some questions that are parallel to those already raised by hon. Members. An argument that is used to underline her case is that only by moving in this direction can we ensure state aid compliance and that this is the only legal basis, other than the complete abolition of the scheme, for reform of the RHI system. I do not know whether that is true. Nothing that has been presented to the House gives us any reason to believe that this is exactly what the European Union has said.

The hon. Member for North Antrim asked why the situation in Great Britain should be different from the situation in Northern Ireland. Why does one involve state aid compliance but not the other? Conversely, one of the proposals in the Ricardo review was to look at the introduction of the GB tariffs in Northern Ireland, and if those tariffs are legitimate for my constituents in Rochdale, why are they not legitimate for people in Northern Ireland?

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[Tony Lloyd]

The right hon. Gentleman is absolutely right, and to the extent that some of those affected were in court this morning. Specifically, I understand that the judge said that he will not rule on the request for judicial review today because the scheme has not yet been implemented and is therefore not yet in breach. However, he will ensure that any judicial review is expedited once the scheme is in operation. I was going to make this point later, but I will simply do so now, and the Secretary of State and the Minister of State need to address it. What will the Government’s position be if they face judicial review and a challenge that the measure is outwith the competence of our legal framework? There is real risk of that, given that people have signed up to things in expectation of a certain income flow over the years and decades to come, as hon. Members have said. Such issues are not trivial.

[Ian Paisley]

The shadow Secretary of State is absolutely right. Apparently, this morning, at the High Court in Belfast, a judicial review was not launched and the date for the hearing will be the first week of April. We therefore have to wait until a few days after the change to the new financial year to have an answer. Surely it would be far better to postpone a decision until we have an answer, keeping the current rate until then.

[Tony Lloyd]

That seems logical, but—I am not a lawyer, so the hon. Gentleman will forgive me if I am not right—the problem is that the judge has ruled that, because the scheme is not in operation, he cannot yet judicially review it. So we have to wait for the implementation of the scheme before the judicial review can be taken forward. One way or the other, that is not a satisfactory way of organising our affairs.

I now come on to the question of installation, which is important. The Secretary of State suggested that the buy-out scheme will protect people. I will use a specific example, which I have no reason to doubt. A Northern Ireland farmer installed a boiler and system in 2015, at the end of the scheme. He tells me that the boiler and the feed system cost just under £36,000 to install. On top of that he had to pay £8,600 for plumbing and electrical costs, so a total of £44,600. He also had to do necessary works to house the boiler properly. He talks about various different things. The total further cost was some £28,000. I will not go into the different costs, but his case to me is that, in total, he had to invest some £76,000 to make this system work for him and his farm.

When the Secretary of State tells us that the buy-out scheme will look at the cost of the boiler and so on, plus 12% for the expected return, what is the basis for the boiler costs that will be allowable? Is it simply the cost of the boiler, or is it the cost of the boiler, the necessary installation and those things necessary to allow the boiler to work? That is material because, in the real world, boilers do not sit in the middle of a field—they do not sit in isolation.

There are real issues in such cases. This farmer tells me that he is likely to have to find an extra £3,000 a year as a result of all these changes. That £3,000 is material to a marginal business, so we have to take into account the impact of real damage to individual farms. This farmer tells me that he took out a loan over 10 years at an interest rate of 3.5 percentage points over the base rate. The annual repayment costs are some £9,000. Those are material costs that he will continue to have to pay unless the buy-out scheme covers him on the impact of the change to the scheme.

[Ian Paisley]

I thank the hon. Gentleman for his generosity in giving way. Is it not a fact that the weight of what he says is that the scheme now operating here on the British mainland must therefore be flawed? It has to be in breach of the state aid rules, or else the Northern Ireland Office’s proposals are wrong. They cannot both be right, and that matter must be challenged and identified.

[Tony Lloyd]

I am not being generous with my time because we have to tease out these important issues, and we have to get answers to give us some certainty that the scheme is both necessary and sufficient to protect the interests of those who have acted in good faith.

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[Vernon Coaker]

That is an interesting point. The hon. Gentleman has shared with the House another important piece of information that will no doubt be reported and on which it is important that Parliament reflects. Nobody is saying this is wrong or that the Government are in a state of confusion, but where is the information that would allow us to consider this in a much more measured and informed way?

I know it is unrelated to the Bill, but we were told time and again in yesterday’s debate, “It’s been agreed we should spend more on education and health and that necessarily means less on other areas”. It is stated, not argued. The House is given no information for why it is. It is just asserted. In the present circumstances, I would suggest to the Minister, the Secretary of State and the Northern Ireland Office that they consider much more carefully how they inform the House of how decisions have been arrived at. That is not to usurp the functions of the civil service in Northern Ireland or to seek to replace the devolved settlement, but if we are being asked to make decisions, we should have much more information.

I have a similar view about the business rate. The business rate increase is 0%, but plus inflation, so it is not 0% as such. Again, the right hon. Member for East Antrim outlined some of the difficulties for business. Notwithstanding the investment that is taking place in Northern Ireland and the success stories there, there are issues surrounding the business rate. Those who google or read the Northern Ireland press will be able to see some of what businesses are saying about what they perceive as the unfairness with which it operates. It is not necessarily for the House to say that it should be changed, because that is not our function, but if it is 0% plus inflation, it is certainly our function to consider it.

Why was it necessary for the right hon. Member for East Antrim, rather than the Secretary of State or the Minister, to outline some of the problems that businesses were identifying in respect of the increase? The Secretary of State, and the Minister, when he responds to the debate, should say something about this, to demonstrate to the people of Northern Ireland that we understand what is going on, and that the decisions that are being made in the present circumstances reflect that. The hon. Member for Lewes (Maria Caulfield) said something very similar, unless I misinterpreted what she said. As I have observed on numerous occasions to various Secretaries of State, we seem to be rubber-stamping things without proper scrutiny and without being given any proper information.

Let me now make some comments about the RHI scheme. No one would want us to be where we are now, but the seriousness of this is simply astonishing. As has been said by the right hon. Member for East Antrim and others—including, I think, the Chair of the Select Committee, the hon. Member for South West Wiltshire (Dr Murrison)—the House has not much alternative but to pass the Bill as it stands. According to the explanatory memorandum, 1,800 small and medium-sized businesses—about 100 per constituency, on average—will be affected if it is not passed, because no subsidy arrangements will be available to them. This is a phenomenal problem. No wonder the people in those businesses will be looking at what is happening here and, in many cases, will be in despair. As we all know, small businesses depend considerably on cash flow. Many are already struggling, and people are working hard to make ends meet. Of course some sort of scheme must be in place, but I agree very much with the Chair of the Select Committee. It does come to something when, essentially, we are approving this scheme because it is a case of “Oh my God, if we don’t, we will be in trouble.”

[Ian Paisley]

The hon. Gentleman has put his finger on a number of issues. We have been told that it is the legal opinion of the Department that that is the case, but we are not able to see or challenge that legal opinion. That is why a judicial review has been launched. It could actually be that the legal opinion that the Department is proffering is wrong, and that we could, at the end of the month, revert to the original payment scheme.

The hon. Gentleman is absolutely right. We are caught in the headlights. The threat that is being made is that if we do not do this, we will be responsible for ensuring that farmers get zero. That is not right.

[Vernon Coaker]

I cannot really add to what the hon. Gentleman has said, other than to agree with it. That sums it up. Members of the public will be looking at us—they will not be distinguishing between the Government and the Opposition—and wondering how on earth we have let it come to this. All I can say to the Minister is that, notwithstanding the fact that it looks as if we will have to pass the Bill otherwise people simply will not know what the position will be after 1 April, I think there is a great deal of merit in what the Chair of the Committee said. I think that the Minister—I hope he is listening to what I am saying—needs to take account of what has been said by every single Member on both sides of the House. They are saying even if it is necessary to pass this legislation for the reasons that we have heard—to give that certainty—notwithstanding the fact that there is a legal challenge and notwithstanding the fact that we seem to be doing this because we have no choice and we are caught in the headlights, the Government must recognise the strength of opinion about this. They must take up at the very least the very reasonable suggestion by the Chair of the Select Committee and check—particularly if there is a legal challenge, in which case they will have to—whether the statistics are right and whether the Committee can look at this. If it is found that there is an alternative to what is happening at present the Government can perhaps review the legislation.

I know what will happen in the civil service, with all due respect; it will say it is not possible. My experience of Government is that if there is a will everything is possible, and it is perfectly possible for the Secretary of State and the Minister of State—two of the most senior members of the UK Government—to take responsibility and say they are not prepared for 1,800 businesses to be treated unfairly, because by and large those people are totally innocent. In totally good faith, they took on the RHI, and they should not pay the price of a public policy failure. If that means that as a result in a couple of weeks, a month or six weeks, the Government have to review what has happened, I think that will be a price worth paying, because that will be fairness. People expect the Government to operate in a way that is fair to all.

I hope that the Minister heard what I said about information that should be made available to this Parliament on how things like a regional rate are decided, not in order to disagree, but to have greater information to understand how a decision has been arrived at. On the RHI, can the Minister reassure the House whether something can be done in a few weeks should it prove possible to do that and should it prove to be the case that the statistics were wrong?

I hope—as I know the Minister, the Secretary of State and every Member of this House does—that in the longer term, whatever that means, we can see a restoration of devolved government. I gently say to all of them that what might need to happen is, rather than just wishing it, we should try to see whether there is something new we can say or do that will hasten the restoration of devolved government in Northern Ireland.

[Ian Paisley (North Antrim) (DUP)]

It is good to follow the hon. Member for Gedling (Vernon Coaker). When he said, “Where there’s a will there’s a way,” I thought he was going to get into the Brexit debate, like my right hon. Friend the Member for East Antrim (Sammy Wilson), and say, “If there’s a will, there’s a way,” and we hope that in the next few weeks we find that will from our negotiating partners and then find a way out, truly, of the EU. But I digress by straying on to the Brexit debate.

The debate on the Bill has largely been masked by the debate around RHI, and it would be remiss of me not to pass some comment on clause 1 and what has been achieved. My right hon. Friends the Members for East Antrim (Sammy Wilson) and for Belfast North (Nigel Dodds) and my hon. Friend the Member for Belfast East (Gavin Robinson) have been heavily engaged for the last number of weeks on that point. As has already been alluded to, we would have been facing a massive rates hike if it had not been for that negotiation. If only it had been the same for the second part of the Bill: that we had had early sight of it and could discuss and challenge and probe it and therefore see a much more beneficial change than the one that has come forward on RHI. We must, however, congratulate our colleagues on their hard work in trying to significantly improve the rates issue.

The shadow Secretary of State, the hon. Member for Rochdale (Tony Lloyd), made some very kind remarks about the situation in Ballymena. I believe that there is an agreement today to see new opportunities created there by USEL, an employer that has set up a site on the Woodside Road industrial estate, and that is leading directly to the employment of 60 new workers in the constituency. Unfortunately, I was unable to attend the opening of that site because of duties here in Parliament, but I know that the Gallaher charitable trust, which I chair, led with key financial support to that building and that employer and that that has directly resulted in the employment of those people. Where did that charitable trust money come from? It is a legacy fund left over from when JTI Gallaher had to close its doors, and I am delighted that the first thing we have been able to do, through paying out money and resources, is to help to create 60 new jobs in the constituency. I hope that in the next few years we will see not only the charity that I chair but other employers adding to the local economy and creating new jobs and skills, leading to a revival in local employment.

I hope that the measures on the city deals will shortly come before the House, as they could apply very beneficially to the Mid and East Antrim Borough Council area, as could the Heathrow hub scheme. All those projects could see a huge increase in the employment and opportunities coming to my constituency, and I am delighted with the work that will be done in that regard. I want to ask the Secretary of State and her Minister to challenge Translink to hurry up and create more orders for the local bus building company in my constituency. It is great to see it getting orders from places all over the world, including Latin America and Hong Kong, but I would love to see more orders coming through to it from Translink, and I encourage the Secretary of State to push for those orders to come forward.

We now have to turn to the perplexing issue of the renewable heat incentive. The shadow Secretary of State was absolutely right to say that we are being presented with an amalgamation of two Bills. That is wrong; there should be a stand-alone piece of legislation on the RHI, because it is so controversial and far-reaching, and because the consequences of the issue will be felt by a lot of people in Northern Ireland for a very long time—indeed, probably for the next 20 years. Instead, these measures have just been stapled on to the back of this Bill, and we are now being expected to nod it through without serious, appropriate scrutiny. I do not believe in nodding through legislation; nor do I believe in the emergency process by which we are taking through this legislation. Northern Ireland deserves better, and this House has to demonstrate to Northern Ireland that we are going to give it better.

Officials in Northern Ireland have handed us these proposals, and I believe that they think we should accept them without challenge or scrutiny. That would be wrong, because it would be unfair on the people we represent. I think that people will understand and accept our caution, given that these are the very same officials who brought forward the first flawed scheme. We are now expected to accept the evidence they are giving us today as being good, beneficial, tested and rigorous and to accept that it will be all right on the night. That is not the case, however, because there are flaws in what is being put to us, and even in the manner in which it is being put to us, and they should be properly challenged.

Those in the Department are privately telling us that they would welcome the opportunity for further scrutiny. They do not want the debacle of the past to happen again; they want to learn from the mistakes of the past, rather than to repeat them. I believe that any such extra scrutiny would be very beneficial. A new clause has been tabled to the Bill—it stands in the name of the Chairman of the Northern Ireland Committee, the hon. Member for South West Wiltshire (Dr Murrison), and several other Members from across the House—and I hope that the you, Madam Deputy Speaker will be kind enough to select it and allow us to debate that issue properly.

Two wrongs never make a right. The obvious historical problems with the RHI tariff are the subject of an ongoing inquiry, and it would not be right to press those matters here today. However, the future ought never to be held to ransom by the past. Unfortunately, the Bill that the Secretary of State has brought to us today will hold the future of the RHI to ransom because of what has happened in the past, and that is wrong. We need to treat people fairly and honestly going forward. No matter what the RHI inquiry throws up, which will have to be dealt with on its own terms, we have a duty and a responsibility to treat the RHI owners in a way that is respectful, honest and fair, and equitable with the rest of the United Kingdom.

Everyone can look at the measures and the proposed cuts in support—from as much as £13,000 to about £2,000 per annum—and then at those same people who have bank loans signed up to on the basis of the original business plans and legal arguments. The banks, however, will not go back on the original plans. They will not say, “We’ll just forgive all that debt; it’s all over.” Banks do not operate like that, and why should they? They were given business plans guaranteed by the Government—legal guarantees—and they expect people to honour the payments agreed.

The Government have to accept that the way in which the issue has been brought forward tonight is not fair to 2,020 boiler owners in Northern Ireland. The vast majority of them, as the hon. Member for Gedling said, have done nothing wrong; they followed the rules, totally and absolutely, yet tonight they are being held to ransom by the system. Most of those RHI users are not abusers of the system, but they will all be punished by the system that is to be introduced now. Again, that is grossly unfair.

People can look across the channel to see the English system, or south to see the RHI system that has been proposed but not yet introduced in the Republic of Ireland, where support will be significantly higher than even here on the British mainland. The Bill will not only punish but in effect end for the next 20 years all renewable energy plans and damage forever anyone who claims a copper-bottomed guarantee from the Government, no matter the shade of that Government, because they will look back at this scheme and say, “Look how we were done over, treated shabbily and given no answers to our questions. This will lead us to a situation in which we are treated badly.”

Today, I tabled questions about levels of support and Barnett consequentials for RHI payments in both Scotland and Wales. The proposals in the Republic of Ireland will be so much more generous even than what will be made available here in England, as well as in Scotland and Wales. The only part of the United Kingdom that will therefore be treated unfairly is Northern Ireland. The cuts are to the bone, and through it.

The argument presented by the Department yesterday in a 15-minute presentation was that this would stop a breach of state aid rules. That simply is not good enough. We have to be given more substance and the legal arguments to demonstrate the precise nature of those state aid requirements, which do not appear to apply to another European Union member state—namely, the Republic of Ireland—or to the rest of the United Kingdom or any of its regions, whether Scotland, Wales or England. State aid rules are supposed to apply in the same way, yet Northern Ireland has been singled out to be treated differently.

The Department has a duty to make the case in public. It and the Secretary of State cannot give a 15-minute briefing to the shadow Secretary of State or us as Members of Parliament in a conference, and then expect us to sell it to the public. Do they think we are mad? That is not acceptable. The Department has a duty to stand up in public and to defend itself. Will the Secretary of State make herself and officials available to the Northern Ireland Affairs Committee for us to ask them the difficult questions? Let us at least have the opportunity to put those questions to the Secretary of State, because so far today we have had no answers to any questions.

For example, how did the Department come to the figure for the average cost of boilers in Northern Ireland? What was the basis on which that was done? The Department has given us a figure for the average cost, and are we just to accept it? We are not equipped to challenge that figure unless we see the evidence, but we are not allowed to see that evidence. We are just told that we have to accept it. We have the great sword of Damocles hanging over us—“If you don’t accept it by the end of the month, farmers will not be paid.” Blackmail is all that is, and it is wrong.

What is excluded from the cost assumptions in Northern Ireland? Are those same exclusions made to the cost assumptions here in England? We did not get any of that answer. We asked three or four times during the 15-minute presentation, and there were raised eyebrows, buts and tuts, and, “Ask someone down the video line. He might be able to tell you.” We were not able to confirm whether the £2,500 plumbing costs or the £1,000 electrical costs are included in the English scheme but excluded from the Northern Ireland scheme. If so, why? If they are, I am not the one to sell it to the general public in Northern Ireland on the basis of a 15-minute presentation; it is up to the Department to sell it.

When a person applies for one of these boilers, they have to seek planning permission, which is a costly exercise. They have to pay a lawyer and, usually, an architect. Is all that included in the English scheme but excluded from the Northern Ireland scheme? Apparently, it is included in the English scheme but excluded from the Northern Ireland scheme. If it is excluded from one on the basis that it is against state aid rules, I can tell the House there is an express train coming down the tracks towards those who try to include it in the English scheme. We have to address those issues.

Do the cost assumptions differ from what is permitted in England? If so, why do they differ? The Department and, indeed, the Secretary of State need to answer that question. If 12% is the rate of return, why can the rest of the UK work on a rate of return of between 8% and 23%, as my right hon. Friend the Member for East Antrim said? Why is there that differential? We were given an excuse yesterday. We were told 16 times that the European official had told the Department for the Economy that it could not move from 12%. Why can it not move from 12%? It is up to the Department to reveal the answer, if it has one. Why should I go out and sell it to my constituents when the Department told me that Europe has said it cannot do it? That might have been all right for the past 40 years, but from 29 March it will not be acceptable. Europe cannot tell us all those things, and it is therefore wrong, 23 days before we leave, that the EU is allowed to hold us to ransom on that point.

When we ask whether the state aid rules will still apply after 29 March, some lawyers say they will and others say they will not. Why should I make the case in public? It is up to departmental officials and the Secretary of State to make the case, and they have to answer those questions. Officials say that the EU does not allow them to stray from 12%. Why is that the case? A judicial review was lodged this morning, and the appeal will be heard in April. Is it really appropriate for us to change the tariff about 30 days before that judicial review hearing? I do not believe it is. I think that in itself could constitute knowledge that we were doing something wrong, and I think the Department needs to move.

The right hon. Member for Orkney and Shetland (Mr Carmichael) made the point well that the buy-out scheme is an admission that this scheme is flawed. If that is the case, the Government will pay out even more compensation if it goes to judicial review. Will the state aid rules apply after 29 March?

If we were successful in voting against the Bill tonight, would the payments stop on 1 April? The Secretary of State made that case. When we asked yesterday for evidence to back it up, we were told that it is just a legal opinion, but that legal opinion is being tested in the courts today because there is another equally valid legal opinion saying that it is a wrongful interpretation. We will know the outcome in the first or second week of April.

All those questions need to be answered in advance of our taking a decision. We are not being given the proper time to scrutinise this properly. It is little wonder that we have been inundated by calls, emails and personal visits from hundreds of constituents, businesses and farm families who are affected because this touches more than 2,000 owners in Northern Ireland. If those businesses go out of existence, that would be the equivalent of 60,000 or more small businesses closing here on the British mainland. That perhaps gives a sense of the proportion of what has been affected; we are talking about tens of thousands of families who would be affected if this was transferred over here. We have to address that matter properly. The Department has a duty to make that case in public. It is not our duty to make the case for it, because it is sitting on the evidence. I would therefore welcome the opportunity to scrutinise it properly; the Secretary of State and officials should come before the Select Committee. They should make themselves available instead of expecting us to nod this matter through.

I agree that if Stormont was in place tonight, this debate would be better placed there—that is where it should be taking place—but we have to deal with the cards as they are currently, and Stormont is not in place. It would therefore be a dereliction of our duty to do this in what we would describe locally as a “half-baked way”. Frankly, what we are doing here tonight is half-baked; this is not proper scrutiny, with Parliament at its best, but Parliament doing something and taking shortcuts. That will result in problems down the line. I fear that in a matter of months something will come out and people will say, “You really should not have taken that decision on 6 March 2019. It was a huge mistake.”

We are therefore right to be cautious about supporting this part of the Government’s proposal tonight. This House has a duty to carry out scrutiny, in the absence of the Assembly, and to do it properly. The Department, whenever we met its representatives, outlined how it came to its calculations, but the only conclusions I can draw is that if the Department for the Economy is right in what it has told us, the scheme currently operating here in England is unlawful. If that is the case, an even bigger question is raised. I have asked that very question of officials and looked at their answer. If officials know that that system was unlawful, they are on notice today that they had knowledge of it and, in effect, they let us know that they had knowledge of an unlawful system operating on the mainland. If that is the case, the scheme being proposed for the Republic of Ireland would, similarly, be unlawful under state aid rules. So the Government have a duty to allow us to scrutinise this properly. I welcome the fact that an amendment has been tabled, which we will get to debate later, and I hope the Government will be able to concede some of the points we have put to them and that we will be able to address those issues fairly.

I wish to end my remarks by referring to a couple of emails that I have received out of those from the hundreds of people who have been in touch with us. Whenever we boil things down to the actual person and family involved, we actually see what is happening. Jacqui and Thomas are from a farm family in my constituency. They said that the Department for the Economy has been “ignoring” them for months. They said that they have been emailing the Department, trying to make contact with it and sending it their questions about these matters when the consultation originally came out, but it has been ignoring “genuine RHI users”. Jacqui says:

“I totally object to be financially punished for adhering to the requirements of the Scheme and blame this department for putting my farming business at risk.”

That will have been repeated up and down the country, not just in my constituency, but across County Tyrone and in all of County Antrim, where we are a major food producer for these islands.

We must remember that this is largely about producing poultry that is sold in supermarkets up and down the UK. Most of the poultry eaten on this side of the channel is grown in County Antrim and County Tyrone. If this puts farm businesses at risk, it damages our food security and our biosecurity and everything is now at risk. That is the consequence of what we are doing; it damages businesses and it damages what we actually feed to our children. So let us address it and address it properly.

[Sammy Wilson]

Does my hon. Friend not think it is rather ironic that we have had all these debates in the House about the impact of Brexit on supply chains, yet here is a measure that, as he has rightly pointed out, could have a massive impact on the supply chain of the agri-food business in Northern Ireland and throughout the United Kingdom?

[Ian Paisley]

The consequences of and ripples out from this are so significant. It is not about cheap energy; it is about how we run our economy efficiently and effectively. What is our economy in Northern Ireland? It is principally small businesses that produce the best viable, traceable, tastiest food in these islands. We are putting that at risk, and we are putting those jobs and farm families at risk. We really need to pause, and the amendment tabled by the hon. Member for South West Wiltshire gives us that opportunity to try to get this right. I look forward to the second part of proceedings.

--- Later in debate ---

[John Penrose]

I will come to the hon. Gentleman in a minute, if I may.

I remind Members that although the scheme as it was originally conceived was supposed to have an average return of 12%, the actual rate of return on average for people has been 50%—a 50% return on their money. That is extraordinary, particularly when we consider that that money comes out of taxpayers’ pockets. Quite legitimately, people have asked why provisions on the rates and on the RHI modifications have ended up in the same Bill. It is fair to say that there are only five substantive clauses in total for both those issues, but it is worth remembering that one of the reasons they are together is that the costs of this extraordinary bounty are not just magicked out of thin air or paid for by nobody.

[Ian Paisley]

rose—

[John Penrose]

I will take interventions in a moment, but I want to finish this point.

The costs are paid for by taxpayers, and by rate payers in Northern Ireland as much as by anybody else. It is important for us all to remember the fundamental injustice that this unintentional, but none the less very serious, miscalculation has caused. I will go on to talk about what the miscalculation was in a minute, but a number of colleagues want to intervene and I will go to the hon. Member for Strangford first.

--- Later in debate ---

[John Penrose]

I am delighted to be able to set the record straight. I think that I have already mentioned this, but perhaps I can expand on it: the point about the buy-out scheme is that it will be a 20% return—sorry, it is minus payments already made; I misspoke. It is a 12% return on the capital costs of the boiler and the other eligible installation and running costs that I mentioned in my reply to the hon. Member for North Down. It will be tailored to individual circumstances, and obviously people will need to produce receipts and so on, but if they have ended up paying slightly more for their boiler, they will not lose out. The hon. Member for Rochdale raises a perfectly valid question, but people who might otherwise lose out should be made whole, as the hon. Member for Strangford pointed out.

[Ian Paisley]

I appreciate that the Minister is making the case that has been given to him by the Department, but the crucial thing is how we set the average, because that is the basis of the calculation. The shadow Minister cited a cost to a constituent of £76,237, which suggests that the average cannot be £35,000. The more general average cost of the scheme in Northern Ireland appears to be settling at £44,607, but the Department in Northern Ireland has set the average at £35,900. If that average is set wrongly, the Minister’s figures go out the window. The trouble is that we have to rely on what the Department is telling us, but—as the Chair of the Northern Ireland Affairs Committee points out—we have no evidence for it. We should be able to challenge the figures, but we have not been given the evidence to enable us to do so.

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

Ian Paisley Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 6th March 2019 Commons Chamber

[Tony Lloyd]

In his closing remarks, the Minister, who I believe was trying to be helpful, talked about the further exchanges that might take place in Committee. However, I think it would be remarkably difficult to prolong this debate in any meaningful detail, because of the granularity that was drawn to our attention by the hon. Member for South West Wiltshire (Dr Murrison). It will be about real-life cases of “winners, probably not, but losers, almost certainly”, which will become apparent only following the passage of some time. In that sense, I think the hon. Gentleman made an intelligent proposal when he said that we should consider how to proceed with pre-legislative scrutiny, and, indeed, I called for that on Second Reading.

In that context, I strongly support the new clause. As the hon. Gentleman said, it is not the perfect way forward, and it is probably not the best-structured way of achieving his ambitions and the wishes of other Members for adequate scrutiny, but it may well be the best that that we can achieve. I have confidence in the members of his Committee—I must have confidence in those colleagues of ours—because they do at least have a legitimate track record of both interest in the affairs of Northern Ireland and a determination to use the power of the Committee not only to hold the United Kingdom Government to account but increasingly, in this period of non-devolution, to raise matters that cannot be properly scrutinised in the context of Stormont. Ideally, if the world were different, there would be the equivalent of our Public Accounts Committee at Stormont level, but, although it existed in a functioning Stormont, it does not exist in the current circumstances.

I do not think I need to say any more, except that we support the new clause, although I am sure that if the Secretary of State has ambitions to take such action in an even better way, we will listen to her proposals.

[Ian Paisley]

It is always an honour to serve under your chairmanship, Sir Lindsay.

I support the new clause. It has the overwhelming support of the parties here and of the Select Committee, which has been rightly identified as the Committee that should try to organise the scrutiny. I approve of the requirement in the new clause that the Secretary of State should bear in mind

“any relevant recommendations made by any select committee of the House”.

A number of points were made on Second Reading but, in particular, Members asked where the evidence came from and on what we were basing this, and my hon. Friend the Member for North Down (Lady Hermon) asked whether we could see the material. Yesterday was the first time that I, and many of my colleagues, were able to see the material on which tonight’s discussion is based. I have it in my hand. There is not a lot of it: it contains 300 words and three graphs. On the basis of a 300-word document with three graphs, we are being asked to agree a multi-million-pound subsidy cut in Northern Ireland. That is not right.

This requires scrutiny. Those 300 words may have convinced some people, and the Minister made a very good fist of making the case, but they are not a compelling argument. We need to be able to see the evidence that has convinced the Department that it is doing right and the rest of the United Kingdom is doing wrong, and that, if the Irish Republic comes on stream, it too will be doing wrong. We need to see the evidence for those claims.

I asked a few questions that need to be answered by the Secretary of State or her senior officials. That can happen only in a Committee, because they have not been answered on Second Reading, and I do not know if they will be answered in Committee. I welcome the new clause that has been tabled by colleagues; I hope that it attracts support and that the Secretary of State can demonstrate to us, if she does not want us to accept it, that she will take cognisance of what a Committee will say and of scrutiny that will actually take place.

[Karen Bradley]

I recognise the concern of Members and the spirit of this amendment, which seeks to provide for additional time and scrutiny. As I have said, I empathise with the participants in the scheme. I have been very clear, during discussion both of yesterday’s legislative measures and today’s, that this situation and this process are far from ideal. What I and I think everybody in this Chamber wants to see is scrutiny of Northern Ireland policies by locally elected politicians. Nevertheless, I am committed to bringing forward measures on behalf of Northern Ireland where they are critical to good governance, as these two Bills are. I remind Members about the point I raised yesterday about the normal estimates process: by taking this legislation through as primary legislation in this House, rather than subordinate legislation, as it would have been in the Assembly, we are affording a higher degree of scrutiny and accountability to these measures.

My hon. Friend the Member for South West Wiltshire (Dr Murrison), the Chair of the Northern Ireland Affairs Committee, is right that full and proper scrutiny is what we need, and he is right to challenge us. He is also right to say that we must get this right, and I appreciate that his amendment would afford more time for scrutiny and offer a mechanism by which more scrutiny could be delivered.

The Northern Ireland RHI scheme has probably received more public scrutiny than any other. I have already mentioned the public inquiry into the scheme, which has interrogated myriad aspects of the scheme in detail, but additionally and specifically on these new tariffs, the Department for the Economy held an extensive public consultation from June to September 2018. That included making public the evidence base used by the independent experts who generated the tariffs. I believe that information is on the Department for the Economy website and we are looking to see if we can find it quickly and provide a link to it as soon as possible.

The Department held pre-consultation events for stakeholders, including all the local political parties and key representative groups, including the Ulster Farmers’ Union and the Renewable Heat Association Northern Ireland. Following the closure of the consultation, the Department set out its analysis and response in January 2019 and said that final proposals for the revised tariffs would be delivered in February this year. The Department and my officials have in recent weeks briefed parliamentarians and local parties on the new tariffs and the new legislative measures before us, including the new buy-out clause. My hon. Friend’s suggestion that there may be a role for further scrutiny in either his Committee or another Committee in the House is very welcome and I certainly would appreciate that.

With regard to the timing of the legislation today, it is important to recognise the comprehensive and technical nature of the work involved. As I have mentioned, the Department for the Economy engaged independent experts to carry out a painstakingly detailed review of the scheme, went through a full public consultation exercise and more recently an extensive discussion with the European Commission on state aid. These discussions only reached a conclusion at the end of January, meaning the Department for the Economy could not finalise its position any earlier. The current legislation is sunsetted and a failure to enact the clauses before us will mean more than 1,800 participants will not be able to be paid by 1 April.

[Ian Paisley]

On that point—I think this is critical and is probably subject to the judicial review at the present time—is it the case that payments stop? Is that the opinion of the barristers advising the Department? Or is it the case that this reverts to the original payments scheme? There is contrary advice on this and the Secretary of State must be clear with us which advice she is taking and why.

[Karen Bradley]

The advice I have received is that the payments will stop, because there will be no legal basis on which to make any payments. The payments that are currently being made have been found to breach state aid rules, so there is no legal basis on which to continue to make payments. The payments with the cost-capping involved expire on 31 March. The Department cannot go back to the original payments, because they would be illegal payments, and we will not have any other mechanism by which legal payments can be made after 31 March. I recognise that this is far from ideal, but the facts of the situation have meant that an expedited process is required.

[Ian Paisley]

The Secretary of State says that we cannot go back to the original payments, but I do not think that anyone is asking for that. However, the payments were stepped down, and I understand that she could continue with those stepped-down payments.

[Karen Bradley]

I cannot continue with those, because the advice that I have is that to continue with them would be illegal. Under the ministerial code, I cannot, as a Minister of the Crown, legislate for something that I am advised is illegal. So I am left in a very difficult situation. I understand how people feel about this. I empathise with people and I understand the implications for them of a reduction, but as Secretary of State, legislating for something that none of us wants to be legislating for in this place, I am faced with the choice of legislating for something that is legal, to allow some subsidies to continue, or not legislating, which would result in no subsidies happening after 31 March. The legal basis on which the reduced subsidies, as set out by the Executive, are paid expires on 31 March.

--- Later in debate ---

[Ian Paisley]

The shadow Secretary of State put his finger on it when he said that this is not a satisfactory process by which to scrutinise legislation. We have kicked that one around a lot today, and there is general agreement that the process could be better, whether through a functioning Assembly or through Northern Ireland business not being conducted in this truncated manner—either would be very beneficial.

It would, however, be remiss of me not to thank the Secretary of State, the Minister of State and their officials for helping us in recent days, especially on the non-controversial aspects of what we have debated today, namely the rates bill. Of course, we would like to see some elements tweaked further but, by and large, it has been a success story. It could have been a very different story. We could have been looking at a 12-point rate hike, which was averted largely down to the hard work of officials and Members of this House. We welcome that, and it would be remiss of me not to put that word of thanks on the record.

I agree with the hon. Member for South West Wiltshire (Dr Murrison), the Chairman of the Northern Ireland Affairs Committee, that we look forward to scrutinising this matter further. I hope the Secretary of State will make herself, the Minister or, indeed, senior officials available to whatever Committee ultimately considers the Bill so that the probing questions asked here today can be properly scrutinised. We look forward to hopefully finding something that allows us to go back and give some hope and satisfaction to genuinely needy people in Northern Ireland.

Question put and agreed to.

Bill accordingly read the Third time and passed.