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

Lord Kilclooney Excerpts

2nd reading (Hansard): House of Lords
Tuesday 12th March 2019 Lords Chamber

[Lord Kilclooney (CB)]

My Lords, I will speak on the Northern Ireland (Regional Rates and Energy) (No. 2) Bill in particular. I declare an interest, as shown in the register, as the owner of two non-domestic properties in the cities of Armagh and Belfast and the chairman of a company that owns 14 properties in different towns across Northern Ireland. The issue of rates is, therefore, important to me and those who work with me.

The subject of this Bill should, of course, be for the Stormont Assembly, as several noble Lords have already stressed. I am a strong supporter of devolution and was very much involved in the negotiations that led to the Belfast agreement. I believe in shared government at Stormont—a cross-community Government comprising Catholics and Protestants, Unionists and Nationalists. That is the best way forward for Northern Ireland. The imposition of GB rule on Northern Ireland is not a solution, but Sinn Féin makes this devolution unlikely. For at least one year it has stalled the creation of devolution. It does not want responsibility for unpopular decisions at Stormont as it prepares for the southern Irish general election, which could be within the next year. The campaign for equality of Irish with English is only an excuse for delaying the restoration of the Executive at Stormont, as only 1% of the people of Northern Ireland speak Irish daily—much less than those who speak Chinese, Polish and Portuguese. It was wrong to link rates and the renewable heat incentive scheme together in the Bill. The RHI scheme is a major and controversial subject in itself and I am glad that the Minister—I hope that he still is a Minister because I have just heard that the Government were heavily defeated by 149 votes in the House of Commons—has decided that the Committee stage of the Bill will be next Tuesday and not rushed through tonight. That is appreciated.

I welcome the decision to keep rates on non-domestic properties to zero plus inflation, as some retailers in Ulster towns—like elsewhere in the United Kingdom—are suffering from online competition and closing down. In contrast, life is buoyant in border cities such as Newry and Armagh, as the Irish cross the border in their thousands each day to do their shopping. The reason for that is, of course, the change in exchange rates following the Brexit referendum. Last year, Irish shoppers spent £415 million in Northern Ireland. It is expected that this year they will spend a further £500 million on daily shopping in Northern Ireland.

Has the reorganisation of local government, from 26 councils down to 11 super-councils, resulted in savings, as was suggested at the time? There seems to be a growing democratic deficit in local government in Northern Ireland. People no longer know who their local councillors are; it used to be that they were known individually. Some of the new super-councils are making major decisions in committee, where even the media are often excluded. Approval of the committee’s decisions is at monthly council meetings by a nod of the head, without proper public debate. There needs to be greater transparency in the affairs of some of the 11 new super-councils in Northern Ireland.

The RHI scheme is a problem area, due to a decision of the European Union. Here I quote the Secretary of State, Mrs Bradley, in the other place:

“As I said, this situation has resulted from a decision of the European Commission on state aid rules, and failure to do this”—


to pass the Bill—

“will mean no subsidies being paid to anybody”.—[Official Report, Commons, 6/3/19; col. 1012.]

The European Commission, therefore, is very much a problem when we discuss the whole of the RHI scheme. As the decision on the scheme must be made by 1 April 2019, as we have been told, but we are leaving the European Union in advance of that on 29 March 2019, will the Minister say whether the EU rules on state aid still apply after 29 March 2019?

Finally, the problem with the RHI is that almost 2,000 businesses feel that they were badly misled by decisions made by both the DUP and Sinn Féin at Stormont. Both were involved, not just one. The problem appears worse, as people in the rest of the United Kingdom will be getting £20,000 per year for a biomass incinerator, whereas their equivalents in Northern Ireland will be getting only £2,000 per year. Likewise, the scheme in the Republic of Ireland will be more favourable than that in Northern Ireland.

People in Northern Ireland who got involved in this scheme on the recommendation of politicians now feel very aggrieved at this unfair treatment. These RHI proposals are very complicated and we will debate them at greater length in Committee next week. However, many feel that they were misled. A number might be forced into bankruptcy—it is as serious as that. The form in which the changes in the RHI scheme are presented, almost as an afterthought to announcing the annual rates, is mischievous, to say the least.

I oppose this Bill, and should either Her Majesty’s Opposition, who are not particularly present this evening, or the Liberal Democrats, who also are not noticeable by their presence—there must be something going on in the other place—propose amendments next Tuesday, I will probably vote with them.

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

Lord Kilclooney Excerpts

Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Tuesday 19th March 2019 Lords Chamber

[Lord Kilclooney (CB)]

My Lords, I support the amendments and, as I said during Second Reading, I feel inclined to oppose the Government on this Bill.

The position we are in has arisen due to people having been somewhat misled, as the noble and learned Lord, Lord Mackay, said. They were given guarantees by government that are now not being honoured. People feel very aggrieved about that, and not just farmers. Someone said that it was an act of faith, and I notice that some gospel halls were also involved in this heating scheme. They feel aggrieved because there is no Assembly, as Sinn Féin, the DUP, the Ulster Unionists and other parties have not reached an agreement about an Assembly. This is a devolved matter, and we are debating it here in this Chamber because the other opportunities have come and gone. The Stormont Assembly failed.

The other place did not make a decision favourable to those involved in the scheme. Those who now feel aggrieved—there are thousands of them—and who will be hit financially very hard are holding up the House of Lords as the last place in which they might be rescued. Therefore, this is a very serious matter for this Chamber.

As the noble Lord, Lord McCrea, said, there is a deadline of 1 April. The European Commission ruled that the present scheme was contrary to the European Union’s state aid rules, and therefore—I do not like saying this phrase in relation to Northern Ireland—we basically have a gun to our head. We have to reach a decision. It has been suggested that there will be an interesting report from the Northern Ireland Affairs Committee in the other place. I keep asking myself: is it far too late for that committee to discuss this matter? This issue has been going on for well over a year. At this late moment, the Northern Ireland Affairs Committee will eventually—I am told promptly—consider this subject.

There is great praise for the Minister, and deservedly so. He is embarrassed by the praise that he gets from Northern Ireland, but he takes a genuine interest in our problems across the entire community. My question to him is this: since we have a deadline of 1 April from the European Commission, should the Northern Ireland Affairs Committee come out with different proposals in a month or two, will it be possible to rescue this scheme and save the farmers and the other people who are suffering as a result of doing what the Government asked them to do?

[Lord Browne of Belmont (DUP)]

My Lords, I said at Second Reading that this legislation is controversial and far-reaching. We all know it is regrettable that there is a lack of scrutiny. The legislation is extremely complicated and, indeed, was flawed from the outset. People genuinely entered into the scheme in good faith; they deserve to be treated fairly so that they do not suffer hardship.

However, we have to pay attention to the legalities of all this. The tariffs in the Northern Ireland (Regional Rates and Energy) Act 2018 are sunsetted. Therefore, if this Bill does not pass today, the department will have no legal authority to make payments in respect of boilers accredited under the scheme before 18 November 2015—some 1,800 boilers are, I believe, involved. So there are legal aspects to this that we must pay attention to. The other thing is that an independent review—the Ricardo report—said quite clearly that, under European Commission state aid rules, we had to stick to a rate of return of 12%. Can the Minister confirm that the base case tariffs or a compulsory buy-out have to be compliant with European state aid rules?

I can be brief—I think my other points have been made—but I hope that noble Lords will pay attention to the legalities involved in this scheme. We do not want anyone to suffer hardship, but we have to be very careful that these payments can be made. If we stop them there will be more suffering.

--- Later in debate ---

[Lord Duncan of Springbank]

One of the challenges in trying to compare the schemes across these islands is that a like-for-like comparison of the various elements is hard. However, the rate of 12% is broadly the constraint within which all must operate, because that is the state aid rule. Were the NIAC to discover a particular inequity which breaches beyond that point, they would be compelled to act in that regard. However, the 12% being applicable to all should mean that there is fairness. The noble Lord should be aware that, because the earlier scheme in Northern Ireland set its returns at such an extraordinary rate—upwards of 50% —the challenge remains that any adjustment thereafter down to 12% on the basis of averages would take that 12% higher than it would otherwise be, had it been 12% at the outset. I do not wish to make any particular point about that issue, I merely note that the challenge is now to remain within the law as specified by the European state aid rules.

[Lord Kilclooney]

One of the problems with the Bill, which has already been underlined during the debate, and which the Minister has been honest enough to state himself, is that it is wrong to link rates—which is council tax in England—with this heating scheme. They are two totally separate subjects and should not be in one Bill. Should the Bill be rejected, would it then be possible to introduce urgent legislation for rates only?

[Lord Duncan of Springbank]

The noble Lord is right to raise that. I dearly hope that we do not reject the Bill now because, even if we were to act with a certain degree of urgency, it would still be a delay to what we need to deliver in terms of the rates themselves. If we are unable to address the rates question in real time, we are talking about a substantial loss to the revenue of Northern Ireland.

I hope that noble Lords will recognise that the endeavours this evening have been solely for the purpose of trying to address the genuine hardships experienced by those in the scheme. The purpose of the Bill is to make sure that nobody is considered to be part of an average and that each individual is seen as such. That data will then be used to inform the development of an appropriate element of the overall bill which will then be determined and placed before noble Lords in written form, so they can see it. There is no attempt on my part to mislead the Committee or to sell noble Lords something in a poke that you cannot put your hand into.

I hope that this is adequate for my noble friend Lord Empey. I know how much effort he, and all the Northern Ireland Peers, have rightly put into this matter. It concerns them on their doorstep, but it concerns all of us in these islands. Equity, fairness and justice must be the cornerstone of any Government. I hope that we have been able to reflect this evening on what this Government can do, within the constraints of state aid rules and the wider timing question. I hope that, on that basis, the noble Lord will be able to withdraw the amendment.