Corporation Tax (Northern Ireland) Bill

Debate between Lord Empey and Lord Forsyth of Drumlean

Tuesday 17th March 2015 Lords Chamber

[Lord Forsyth of Drumlean]

My Lords, I hesitate to intervene in a debate on a Bill which is exclusively concerned with Northern Ireland. I do so because I am opposed to the Bill because I do not believe that it is a unionist measure. Indeed, in the Second Reading debate in the other place on 27 January, the Secretary of State, Theresa Villiers, in describing the proposed regime, which is different for small businesses and large businesses, said:

“Larger businesses will need to divide their profits between Northern Ireland and Great Britain, as they do now between the UK and other countries”.—[Official Report, Commons, 27/1/15; col. 744.]

The very fact that she should use phraseology like that goes to the heart of this Bill and to why it is thoroughly undesirable.

I realise that it is perhaps a little rude to be critical of a legislative provision for Northern Ireland on St Patrick’s Day, but on St Andrew’s Day we had the policy of further, not-thought-through devolution to Scotland, on Burns Night, we got the draft clauses which were subsequently amended and which do not work and on St David’s Day, we got votes for 16 year-olds as part of this continuing package of piecemeal dismantling of our constitution and our United Kingdom. All I can say is: thank goodness St George’s Day will be during the election campaign and there will be no opportunity to come along with further measures that relate to England.

Obviously there is great support from people who have a distinguished record of representing Northern Irish interests but I am genuinely puzzled as to what the point of this Bill is. Apart from it being called the Corporation Tax (Northern Ireland) Bill and the Speaker of the House of Commons having certified it as a money Bill, I can think of no reason why it should be a money Bill other than it enables the Government to rush it through Parliament as part of the deal they made for a balanced budget in Northern Ireland and for agreement to welfare reforms which are now being reneged on. Indeed, my noble friend said from the Dispatch Box in introducing this Bill that the Government have no intention of implementing it unless the deal they agreed, which is the reason this Bill is being rushed through the House, is actually met. This is a very shoddy way in which to go about major constitutional reform.

A number of things are being said, such as the Republic of Ireland benefiting because of its lower corporation tax regime. It is true that the corporation tax regime for some revenues is 12.5% but it is 25% for revenue that is not allowed. The reason this Bill takes 87 pages to allow Stormont to set the rate of corporation tax and prevent it from setting or changing any of the allowances is because it adds huge complexity to the tax system. Back in 2005 the then shadow Chancellor asked me to do a tax commission report. We laboured for a year and were charged with having a simpler, flatter, fairer, lower tax system. This is the antithesis of that. There are pages and pages explaining how dredging, films or a whole range of other activities will be affected and how large companies have to decide which of their profits have been earned as a direct result of Northern Ireland. I declare an interest as a director of a bank and an insurance company. Financial services are not allowed to take advantage of this although I think that if you can certify that 70% of the back-office activity is in Northern Ireland it is allowed, but only as a one-off option. What about call centres and things of that kind? The Bill creates huge complexity, which may very well tempt people to go to Scotland where they do not have to have two sets of accounts rather than Northern Ireland. All of this is being done in order to give Stormont the opportunity to set a different corporation tax rate. We assume, if it is about tax competition, that that rate would be set closer to the level of the Republic of Ireland for trading activities at 12.5%. According to the Government the cost of that will be £325 million. My noble friend Lord Shipley talked about distortions in air passenger duty. I think I am right in saying that Stormont already has the power to set air passenger duty but does not because it would cost £50 million to do so. Yet here we have something that could cost—

[Lord Empey]

The air passenger duty issue was designed to enable the link between Belfast International Airport and New York to survive. It has been applied only to that route because it is the only direct route from Northern Ireland to the United States. No attempt has been made to alter domestic air passenger duty.

[Lord Forsyth of Drumlean]

I understand that. I was making the point, perhaps wrongly, that one reason why it has not been done is that it would result in a reduction in the block grant—the point made so eloquently by the noble Baroness, Lady Blood. I think that my noble friend Lord Alderdice earlier referred to the position in Scotland, where the Scottish Parliament allowed its income tax raising powers to desist. They were never used. The reason they were never used was that using them would have resulted in a corresponding reduction in the block grant. It is not terribly electorally smart to tell people that you are going to put their income tax rate up by 3p and, in return, you are going to have the block grant—which is already very generous because of the Barnett formula—reduced by exactly the same amount, so you ask people to pay more tax in order to stay where they are. Exactly the same applies here, unless you believe that a reduction in corporation tax will result in more revenue. I do believe that that is the case, but I would prefer to see this Government, who have made fantastic progress in reducing the rate of corporation tax for the United Kingdom as a whole down to 20p for the next financial year, continue in that way. If we think that there is such a huge problem in tax competition from the Republic of Ireland, the answer to that is to reduce our corporation tax rates nearer those of the Republic of Ireland. But we do not do that because the cost would mean that we would have to make cuts in other public services, such as health and education. Exactly the same applies to Stormont.

Scotland Bill

Debate between Lord Empey and Lord Forsyth of Drumlean

Thursday 26th January 2012 Lords Chamber

[Lord Forsyth of Drumlean]

My Lords, I hope I can persuade the noble Baroness to be a bit braver. We should not be too concerned about how people present it. The noble Lord’s amendment is not actually imposing anything, it is just saying that a committee should be set up to look at these issues.

I am told that I am supposed to be terribly grateful, as a Conservative, for the system of election that was put in place for the Scottish Parliament, and that I am the fellow who lost every seat when we had 8.5 per cent of the vote. I noted at the last Scottish elections that the Liberals’ share of the vote was down to 5 per cent; I think on the list system it was about 7.8 per cent. We never reached that particular nadir. The relationship with the number of seats that people win in Scotland because there is a four-party system is odd, to say the least. The nationalists have now got 45 per cent of the vote because of the way the system operates, like an avalanche, once a particular shift occurs.

There are a number of faults with the system. I will not repeat the arguments. Of course, one is this problem of having people in your patch trying to do you down, using constituency issues for that purpose. When I was the Member of Parliament for Stirling, one-third of my constituency had never had anything other than a Tory for as long as people could remember; one-third had never had anything other than Labour; the other third could go either way. This is going back to ancient times, but in 1983, even though I was a Thatcherite Tory and many of my constituents were not particularly committed to that view, you were respected as the Member of Parliament, and you made sure that you treated everyone equally, regardless of how they voted, and did your best. You were first and foremost the representative of your constituency.

I have watched what is happening in my constituency now, where you get different parties playing politics and constituents going to one after the other, and people trying to get stories in newspapers and using public funds to promote themselves, and undermining that relationship between the Member of Parliament and his constituents, which is an absolutely vital part of our system and which has been further undermined by the scandals over expenses and other matters. The whole system of being a Member of Parliament works—not because you have any real power but because when you send a letter on the headed notepaper, whether it is the Scottish Parliament or the Westminster Parliament, people sit up and take notice. I regret to say that is happening less effectively because of the damage that is being done and the fact that you have people playing politics.

Goodness knows—I will be tempted—if we are going to have elected Members of this House on a 15-year term, and the average lifespan of a Member of Parliament at the other end of this building is about eight years, that means we will have elected Lords who will last twice as long as Members of Parliament, and who will then be in a bigger patch, using their position to kill off all their opponents. I cannot think of anything worse. So there is an issue here that the noble Lord is right to identify.

There is something else I would like to say, which is probably going to get me into trouble with my party and upset a number of my colleagues. In this system, the way the list operates means that all you have to do to get into the Scottish Parliament is to make sure that you are in the right position on your list, as the noble Lord has pointed out. In my party, that means that all you have to do is get the membership to vote for you. If you are the incumbent and have been around for a long time, it is easier to achieve that because they know the name. Built into the system is something that gives the incumbent an advantage. That can be a good or a bad thing but the worst feature of this is that because you rely on the membership voting to give you your place on the list, you have a vested interest in having a declining membership. All political parties have suffered a lower membership. When I was Member of Parliament for Stirling, I used to recruit members. We had 2,500 members. Now we have 300. I thought, “What is going on in Stirling?”. Then I discovered that in the whole of Scotland we had 10,000 members. Yet we have got about 18 MSPs. We have a system that creates a self-perpetuating hierarchy who have an interest in having less and less contact with their constituents. If ever a system needs to be looked at and reformed, this is it.

[Lord Empey]

Perhaps I may say to the noble Lord that there is no perfect system. We use STV for local government, the Assembly and for Europe. While the same applies in terms of the selection of any candidate for any form of election having a small party that he or she can rely upon, the other ingredient that you have with STV is alphabetic. We have examples of people changing their names and using a hyphenated name—Aardvark-Bloggs or something like that—because they prefer to be at the higher end of the alphabet, and under STV they come first.

In my party, I have examples of councillors who have changed their names to double-barrelled names beginning with A. There is no absolute perfection in all this. People abuse any system and if the noble Lord wants to become Senator Aardvark-Forsyth, we look forward to that as well.

[Lord Forsyth of Drumlean]

I will take that as a speech in favour of first past the post. I should declare an interest because the first election I won was for a Labour ward on Westminster City Council. Of the three candidates, I was the only Conservative who was elected and I am sure that it was because my name began with F. That is certainly a good point to make.