Corporation Tax (Northern Ireland) Bill

Ian Paisley Excerpts

Wednesday 4th March 2015 Commons Chamber

[Mark Durkan]

Those are points that I shall touch on in my remarks, and I am sure that other right hon. and hon. Members will do so as well. By way of response to the hon. Lady, I make the point that there have been efforts over a number of years. When I chaired the Assembly’s Committee for Enterprise, Trade and Investment, we conducted an inquiry into credit unions in Northern Ireland, which have a very large membership base and a very strong savings base, far beyond those of credit unions here, which by comparison are merely developing.

The fact is that credit unions in Northern Ireland have been precluded from having as broad a range of services to offer their members, unlike credit unions here, and the key to broadening the range of services, of course, was to have credit unions in Northern Ireland regulated by the Financial Services Authority—subsequently the Financial Conduct Authority and the Prudential Regulation Authority.

However, while credit unions in Northern Ireland will be regulated from London institutions for those financial services, they still come under a devolved legislative window. That goes back to the Northern Ireland Act 1998, which deliberately ousted credit unions from the reserved power in relation to financial services through specific mention of the fact that devolution would include the Credit Unions (Northern Ireland) Order 1985. Credit unions are therefore in a sort of dual-control legislative and regulatory environment; they are registered under devolved legislation but regulated under financial services legislation of this Parliament, and rightly so.

However, that leads to some quirks and bumps in interpretation. A credit union Bill that would address some of those issues seems to be held up somewhere in the Assembly processes. In those circumstances credit unions are particularly concerned that they might become unintended casualties of some of the restrictions and exceptions that are rightly being introduced with the devolution of corporate tax by the Government and with the agreement of the parties in the Assembly.

[Ian Paisley (North Antrim) (DUP)]

Does the hon. Gentleman—indeed my hon. Friend—accept that in addition to that being grossly unfair to credit unions, mutuals such as the Progressive building society, which employs almost 200 people and operates solely in Northern Ireland, in fact its back office applies only to Northern Ireland, could end up being penalised by this legislation?

[Mark Durkan]

The hon. Gentleman is exactly right. I have to be honest that the slightly left-handed amendment I tabled in Committee could have introduced its own difficulties, as the Minister pointed out at the time. This less left-handed—I apologise to any cuiteogs in the House—amendment addresses the salient point in respect of credit unions and also takes in for the first time a point that I had overlooked in Committee: the position of a mutual building society based wholly and solely in Northern Ireland, such as the Progressive. This wider amendment, which thankfully has been seconded by the hon. Member for Belfast East (Naomi Long), is therefore designed to cater to both circumstances.

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[Ian Paisley]

Does that not really take the biscuit when the Progressive is told by the Treasury that only 5% of its back office will apply for an exemption? Its staff are scratching their heads, wondering what part of their work does not apply to Northern Ireland and to activity solely related to Northern Ireland.

[Mark Durkan]

Exactly. I take the hon. Gentleman’s point. There is no known rational basis for it. In circumstances in which we are talking about arrangements aimed at preventing any artifice on the part of companies, just coming up with such an arbitrary figure does not particularly help. In circumstances in which we see that larger firms can be advised and assured that their existing operations of large and hopefully growing scope will be covered by the new devolved tax rate and will not be caught in the exclusion of financial services, it seems strange that the financial services entities that are not for profit, which are not taking money out of Northern Ireland but recirculating it into the local economy, would be penalised.

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[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

I would like to associate myself with the Minister’s comments about the quality of our debate thus far on the Bill. We have had a thorough discussion. It has been shorter than originally anticipated, but that is because the Bill has wide-ranging support across the House, and it is a pleasure to rise, once again, to support the measures in it.

We are committed, as are Members across the House, to supporting measures to increase inward investment into Northern Ireland and support the much-needed rebalancing of its economy. We have all recognised that Northern Ireland has lagged behind the rest of the UK on productivity and prosperity. Over the years, measures have been implemented to boost the Northern Ireland economy, including through increased levels of investment and job creation programmes, but few have met with long-term success. It is important to consider a measure that would put a rocket-booster under the approaches taken so far to rebalancing and strengthening Northern Ireland’s economy. In that spirit, we have supported the Bill.

As I noted in Committee, the Bill is both straightforward and complicated. It is short in respect of the number of clauses, but those clauses include a huge amount of detail, some of which has still to be worked out. The Minister alluded to that in his comments. It is important to recognise that we are at the start-point rather than the end stage of the process.

Let me draw out a couple of issues that will be the subject of live discussions between the UK Government and the Northern Ireland Executive. Before I do so, however, let me reinforce a point made in the intervention by the hon. Member for North Down (Lady Hermon)—that it would be a mistake to think that corporation tax devolution will, in and of itself, do what is needed to rebalance Northern Ireland’s economy. It has to be part of a much wider picture that includes other policy drivers to help make this measure a success. That is certainly the experience of the Republic of Ireland, whose extremely low corporation tax does not sit alone; it is supported by other policy measures, particularly on skills and infrastructure. If this Bill is to be a success in Northern Ireland, it will be important for all parties to work together to ensure that the rest of the policy framework is in place to allow the rebalancing that we all want to happen.

[Ian Paisley]

I welcome the shadow Minister’s comments, but does she accept that much of this is about perception and the business-friendly nature of our economy, which will allow it to grow? It is about offering investors incentives to come in by providing good profit returns for their hard-earned labour. If we continue to build up and push that perception, does she agree that opportunities will flow from it and that this Bill now offers the best way forward in the current economic climate?

[Shabana Mahmood]

The hon. Gentleman is right to say that the perception of business is really important, but he will recognise, I think, a point that businesses often make to Members of all parties—that headline rates of corporation tax are extremely important for decisions about where to locate businesses, but that they are not the only factor that businesses take into account. I recognise the importance of this Bill for Northern Ireland, given the unique situation in which Northern Ireland finds itself. As I say, it is putting a rocket-booster under the approach taken so far to try to rebalance the Northern Ireland economy, but it will not succeed on its own—it has to be part of a wider policy framework. Despite recognition of the importance of a wider policy framework, we have not yet heard a huge amount of detail about what it will look like on the ground in Northern Ireland. These are matters largely for the Northern Ireland Executive, but they need to know and to hear that the Opposition support them in having a wider framework of policy measures around skills and infrastructure that will help to make all this a success, which we all want to see.

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[Ian Paisley]

Thank you, Madam Deputy Speaker, for giving me the opportunity to speak in this important debate on corporation tax. Today is a red-letter day for Northern Ireland. The Bill certainly gives the lie to those who suggest that nothing ever changes in politics or that devolution does not actually do anything. It sends out the powerful signal that, after much diligent hard work, the constant dripping has eventually worn away the stone and we have achieved something positive for Northern Ireland: we have ensured that we can at last set our own rate of corporation tax.

This is what devolution is supposed to be about. It is supposed to allow the economies that make up the United Kingdom to compete according to their strengths, to set their own pace of change and to be agile. Many of us have argued for this change for a long time, and we at last see the legislation in print. We now see it moving forward on a very positive footing. So those who oppose devolution and say that nothing really changes can eat their words today, and I hope they choke on the Bill—

[Lady Hermon]

So to speak.

[Ian Paisley]

Indeed.

Some Members have suggested that the devolution of corporation tax is not a silver bullet, but I do not think I ever heard anyone say that it was going to be a once-in-a-lifetime, miracle-working, stand-alone solution. No one ever thought of it like that. It is one of the arrows in the quiver, to be fired at the right target at the right time.

The important thing about the corporation tax measure is that it will change people’s perceptions about our economy. We have a go-forward, low-tax, incentivised economy. Indeed, that seems to be part of the Government’s own economic plan. They have tried to reduce taxes time and again, and I welcome that. I agree with the right hon. Member for Wokingham (Mr Redwood), who has often contributed to debates in the House by demanding that we have even lower taxes across the whole of the United Kingdom. Would it not be a far better day today if the Bill were introducing a reduction in corporation tax for the whole of the United Kingdom? That is what we should really be debating, and I hope that one day Government Members will follow our lead and reduce their corporation tax to the new levels that Northern Ireland has ambitions to achieve.

The Government’s plan to reduce tax is welcome. When we look at the history of the economy of the Republic of Ireland, we see that it was not corporation tax reductions alone that supported the country’s boom years. There were other unique selling points that it is important to consider. The Republic sold the fact that it had a great, well-educated and advantaged youth population who made the country cheaper, as an offshore part of Europe, to invest in. Northern Ireland competes on exactly the same footing as that, and I believe that we can do it even better. After all, we are British. We are an offshore part of Britain: we are Britain offshore. If we can use that to our advantage as a unique selling point, we should do so, and I welcome those who will join us. As other Members have said, this change will affect 34,000-plus local companies, 26,500 of which—the small and medium-sized enterprises—form the backbone of our economy. I know that many of them welcome this measure, and I look forward to the opportunities that the legislation will create.

I welcome the fact that those on the Front Benches have changed their minds on this matter. For a long time, certain Members were like John the Baptist, in that they were preaching in the wilderness. Eventually, however, they have managed to convert; I think that those on both Front Benches recognised that they needed to do so. That is a good thing. There has been a lot of thought on this issue on both sides of the House and I welcome the change of heart, particularly on the Labour Front Bench. I remember the former Prime Minister telling us in 2007 that he could not do this. He gave us the Varney review and told us that we could tamper with this, that and the other. Indeed, the then Treasury spokesman, the right hon. Member for Leigh (Andy Burnham), said at the time that corporation tax reduction for Northern Ireland

“does not offer the best way forward”.—[Official Report, 17 December 2007; Vol. 469, c. 74WS.]

I am glad that we have recognition today that it is the best way forward, and I hope that we will have unanimity on the matter in the House.

As I have said, this is not going to be a one-night wonder; it will not change things overnight. It will probably take at least a decade before we reap the benefit of the change, but anyone who knows that Northern Ireland’s economy also has a strong agricultural sector will appreciate what I am about to say. Before we can reap the benefit of the changes, we have to sow, and today we have very good seed that I believe we are going to be putting into very good ground. I look forward to seeing the game-changing strategy that is being put in place today reaping a wonderful economic harvest for Northern Ireland over the next 15 to 20 years. I believe that anything the Republic of Ireland has been able to offer as a result of its corporation tax reduction, Northern Ireland will be able to do on steroids. We will do it better. After all, we are part of a G20 nation, and the benefits of that stability should be recognisable to all.

In 2011, the Select Committee, under the watchful eye of the hon. Member for Tewkesbury (Mr Robertson), indicated that this measure was going to be a game-changer. The Select Committee is to be congratulated on pursuing this matter and encouraging the Government to look afresh at it. At that point, it had been dropped from the agenda and people thought that it was all over, and the Chairman of the Committee should be singled out today and congratulated on pushing the matter forward.

Over the past five years, the Northern Ireland Executive have demonstrated their ability to look at other good competitive economic measures that we should be embracing.

[Mr Dodds]

Would my hon. Friend acknowledge that, in addition to some people here giving up on devolving the power to set corporation tax rates, there were parties and politicians in the Northern Ireland Assembly who had also given up on it? Our party did not give up on it, however, and we are glad to be seeing the fruits of our labour today.

[Ian Paisley]

I have to say that I am shocked. My right hon. Friend wants me to start electioneering in the House. He wants me to say that it was us that won it. Well, it was! We know that and the electorate know it; we will prove that on 7 May.

[Mr Dodds]

Look at the record.

[Ian Paisley]

I know that the record is a powerful one. We did not give up on this; we pushed for it. I think the hon. Member for Tewkesbury will confirm that it was our party that pushed the Select Committee to press the issue and to hold not just a desktop inquiry but a solid investigation. That investigation took us overseas, to the Republic of Ireland and to the United States. We looked at the issue, we pushed it solidly, and today we are reaping the benefits of that. Some of the foot-draggers did not want to see this day, but I am glad that those of us who were swift of foot have now reached the finish line.

Northern Ireland offers a unique brand for people to invest in. Obviously, we have a land border with the Republic of Ireland, so we have to demonstrate additional economic stimuli to get our economy going. The Bill will allow us to do that. A recent Ernst and Young survey on global cities of the future found that Belfast was one of the most business-friendly medium-sized cities in the world to invest in. That shows that what Northern Ireland is offering, to foreign indirect investment in particular, is an agile and capable economy with workers who want to see their economy change and grow.

We export the best buses; they come from my constituency to this city. Northern Ireland also exports the best pavements. I think that they come from the constituency of the hon. Member for South Down (Ms Ritchie), and they are used to pave London. We also export some of the best drink to ply the workers with, from Bushmills, and all our existing exports represent a continuing opportunity to grow the Northern Ireland economy. Northern Ireland is a good place to invest in. Indeed, 75% of investors reinvest after having been in Northern Ireland. Not only do they go there to make their initial investment but the lion’s share of them go back and reinvest because they see it as the place where their pounds can grow.

[Lady Hermon]

The hon. Gentleman will have noted that the Minister made the valid point earlier that the devolution of corporation tax to the Northern Ireland Executive was contingent on the implementation of the Stormont House talks. I am sure that the hon. Gentleman, who is speaking loudly for the Democratic Unionist party, would like to confirm that his party is absolutely wedded to the full implementation of all the commitments and recommendations that resulted from those talks.

[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.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I know that the hon. Gentleman will be very careful in sticking to the narrow confines of the Third Reading of this Bill. I appreciate that the points he is making are tangentially attached to the Bill, but I am sure that, in concluding, he will be referring entirely to the Bill.

[Ian Paisley]

Thank you for that prompt, Madam Deputy Speaker. I was actually at the point of conclusion, and I thank you for reminding me that I do have to conclude. I know that hon. Members are captivated by my oratory today and want me to continue, but I must desist and so I shall leave those points with the House.