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

Jim Shannon Excerpts

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

[Jim Shannon (Strangford) (DUP)]

It is always a pleasure to speak in this House at any time, whether it be first or last—whatever the case may be—and I relish the opportunity to do so today. I wish to follow on from the comments of my hon. Friend the Member for North Antrim (Ian Paisley), my right hon. Friend the Member for East Antrim (Sammy Wilson) and others, but I wish first to touch on the regional rates. Come 1 April, when many people get their regional rates bill, they will wonder exactly what it is that they are getting for their rates. They will ask that question because of the degree of increase, and I can understand that.

I definitely very much appreciate the city deal relationship that the Government have put forward, in association with my party and my hon. Friend the Member for Belfast East (Gavin Robinson), my right hon. Friend the Member for Belfast North (Nigel Dodds), my hon. Friend the Member for Belfast South (Emma Little Pengelly) and those further afield. The advantage of the city deal is that we in Strangford, North Down, East Antrim and South Antrim will also get some of the benefit, because it will ripple out to the towns and villages.

What can we do for the high street? I ask primarily because in just the past fortnight several shopkeepers in Ballynahinch, Newtownards and Comber in my constituency were asking whether there is any help for the high streets at this time. The initial reason for this debate was the rates, so perhaps the Minister or Secretary of State can give us some indication of that.

I was very pleased about the stronger towns scheme, which was referred to in last night’s debate and which will ripple across and affect every region of the United Kingdom of Great Britain and Northern Ireland. We are not yet sure what the figures are going to be, but there is potential to help the high street and those from all over the United Kingdom.

I wish to dwell on the RHI issue and scheme. I thank the Secretary of State for moving the motion. The RHI scheme has been an issue of tremendous difficulty in Northern Ireland, although I must make it clear from the outset that it has been used as a weapon by abstentionist Sinn Féin to strong-arm and foist an Irish language Act, among other things, on the people of Northern Ireland. They used it for their own purpose—for what they wish to achieve. They are not holding out for the inquiry conclusion and report on RHI to come back to do their job. They are using an opportunity to circumvent democracy and impose their will on the people of Northern Ireland. That cannot be borne and nor should it be allowed.

I was not overly au fait with RHI. We were never asked directly to help a constituent to apply and I was not in the Assembly at that stage, so the articles I read in the paper were the foundation of most of my knowledge of the scheme. Of course, as time has passed, I have been contacted by genuine businesses in my constituency—those people who applied legitimately, honestly and fairly, who never abused the scheme at any stage, and who have used it appropriately. Pastors and ministers of churches applied for the scheme. Farmers, too, applied for the scheme for their chicken houses and so on. Many of them invested tens of thousands of pounds in the equipment to qualify for the scheme and it is for those people that I feel extremely aggrieved—those people who did it right but who now find themselves in a very awkward place.

There is no doubt in my mind that the scheme has been massively abused by some people who do not even keep the livestock or the broilers in the sheds as the heat is far too much. They leave the windows open and are burning to make a profit. These people must realise that this cannot be acceptable and that they should not profit from this. They must be held to account.

However, by the same token, there are people who have loans based on an appropriate use of the scheme who may well not be able to pay those loans back and who will lose their businesses—not because they were greedy, but because they are using, and not abusing, the scheme. Let us be honest, when most of us have taken out a mortgage to buy a house or a new car, the bank manager will have always asked us how we would repay it. He would ask for a business plan for repayment or a direct debit. If the house is much more, he would look for collateral as well. Decisions to loan money—whether it be to a business or for a mortgage on a house—are based on a proven business plan, endorsed and agreed by the banks and, in this case, agreed by Government as well.

I wish to read out a letter from one of my constituents—I will not mention their name or where they are from in my constituency. Over the past few weeks, I have been contacted by many constituents—those who applied for the scheme and legitimately joined it on an honest basis. My constituent said:

“I am emailing to inform you of my circumstances as a poultry farmer in Co. Down in the constituency of Strangford. I have legitimate need for heat and I joined the scheme to make my business more sustainable, with the assurance of the 20-year RHI payment guarantee. Under this agreement, I took out substantial business loans. Although these boilers are significantly more expensive to purchase and install, and six times more expensive to service, I could budget for this knowing that RHI payments were secure for 20 years. I had confidence in the scheme when I entered it because the scheme was Government run”—

and so you would have—

“I now feel outraged that my business will suffer as a result of the lack of competence of some decision makers. It is not my fault that the rate was set too high, yet my business suffers as a result. I feel that I am being discriminated against; Northern Ireland is part of the UK so tariffs should have been set the same. I am already feeling the financial pressure to meet repayments and costs associated with running these boilers due to the 2017 amendments, but further cuts proposed by the DfE will leave my business under real threat.

Realistically, in order to keep my business running I will have to purchase oil boilers whilst still repaying off debt associated with the biomass. I don’t know where the money is going to come from. I therefore fear business closure. I would not have entered the scheme if the tariff was set at this proposed level! It is not financially viable! In addition, businesses from both communities in NI have joined the scheme”—

businesses from all parts of the community—

“I don’t understand why this has become a political issue. I hope you will support my business and do the right thing for the economy of NI by voicing my objection to the tariff cuts.”

That is one constituent of many who, under the deal that the Government introduced, went to the bank and got their loan with the tariffs. They did it the right way, yet they find themselves in a very serious position. These people have farmed all their lives. Their businesses are successful. They are family businesses; Northern Ireland is full of family businesses. These small and medium-sized enterprises across the whole of the United Kingdom of Great Britain and Northern Ireland do great things for people and for their families. I despair that, through no fault of their own, my constituents find themselves in such financial difficulties.

Let me be clear that I am wholeheartedly behind a cut to the scheme, so that people burning ash to get cash cannot do so. However, the genuine people—the person I just spoke about and many others—will take a closer look at the 2019 GB scheme and see that alignment with this scheme would ensure that businesses, although not able to profit, will be able to survive. We want businesses to survive and to contribute to the Northern Ireland economy. That includes family farms. Individuals from churches and others also took out these schemes. The 2019 scheme is substantially lower than the original Northern Ireland scheme, and rightly so, but it also allows those who have invested more to recoup some of the running costs. My hon. Friend the Member for North Antrim and the right hon. Member for Orkney and Shetland (Mr Carmichael) referred to the buy-out scheme. That scheme indicates a certain legitimacy.

I stress again that this is not about retaining the current scheme or ensuring that people who abuse the scheme continue to do so; it is simply about a sensible UK-wide alignment that will not put genuine people out of business, while halting the systematic abuse. The Chair of the Northern Ireland Affairs Committee has tabled an amendment, which others have signed. It is important for us to give that amendment an opportunity so that we can see what can be done about the scheme. Hopefully, it will bring us a bit closer to finding a system for the honest people who have found themselves in great difficulty. We must have more time to consider this issue, and the amendment would give us that opportunity.

I urge the Secretary of State to give consideration to alignment with GB at this time, and to understand the dire straits that some of my constituents are facing due to the machinations of unscrupulous people and a scheme that we now realise was not fit for purpose when it was initiated. This situation is not of their making, and it seems grossly unfair for them to pay for it when there is a UK-wide answer.

--- Later in debate ---

[John Penrose]

I am very happy to address that point. There is one thing that I know a number of people have found shocking. In fact, the right hon. Member for East Antrim (Sammy Wilson)—I am probably slightly misquoting him, but this is broadly speaking what he said—was right to say that the RHI scheme as originally conceived has turned out, in spite of everyone’s best efforts, to be both a failure and a disgrace. Very sadly, he absolutely accurately describes what has happened.

It is also true to say—the hon. Member for Strangford was quite right to make the point—that very many did not go into the scheme with the intention of abusing it. Some of them were pastors in churches, and so on and so forth. The scheme was introduced for a good reason and, in the vast majority of cases, people entered into it for good reasons.

I therefore found it pretty shocking, and I am sure other people will share my shock, that of the participants involved—many of them with all the right intentions, as I have just described—80% have already, by today, received a 12% return for the entire 20 years of the scheme. If they did not get another penny piece, they would already have received a 12% return on their money. Even if there were another 14 years or however many years of the scheme left to run, since the day they entered it they have made a 12% return. The hon. Member for North Down (Lady Hermon) is absolutely right to raise the question of legitimate expectations, but the participants have done incredibly well.

[Jim Shannon]

rose—

[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.

[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.

[Jim Shannon]

I gave the example of one of my constituents, whose legitimate expectation was to have repayments over a 20-year period. He negotiated the loans accordingly at a bank—the bank is very strict when it comes to borrowing money—and invested somewhere between £250,000 and £500,000, as did some other constituents. Given the expectation of a 20-year roll-out, the impact on these small businesses and family farms will be extensive. Is it not right that the 20-year long-term plan should be delivered?

[John Penrose]

Some people will have done very well out of this scheme, but I think the House will have a great deal more sympathy with those who have received below the average. I think that is the point the hon. Gentleman is making. The average may be extremely high and some people have done extremely well, even including those who have not run their boilers all the time, lived with the windows open and so on, and he gave examples of people who have not done that. Those who have received well below the average and are worried that they are going to lose out because they are well below the 50% average rate of return that has been achieved so far will still be able to opt out and will be made good. None of the historical payments they have received will be counted if they decide to opt out, and they will basically be told, “You will have a 12% return based on the money you’ve invested so far.” There is a route out for people who are worried; they will still be made whole and should not lose out. They may not make out extraordinarily or become rich, but 12% is a return that many of us would be very happy to earn on most other investments.