Corporation Tax (Northern Ireland) Bill

Lord McCrea of Magherafelt and Cookstown Excerpts

Wednesday 4th March 2015 Commons Chamber

[Dr William McCrea (South Antrim) (DUP)]

I can assure the hon. Gentleman that my right hon. and hon. Friends support his amendment, and I trust that the House will accept it.

[Mark Durkan]

I thank the hon. Gentleman for that support and endorsement and hope that the House will today accept at least the spirit, logic and compelling sense of the amendment.

As I said in my opening remarks, there is no argument from these Benches, or indeed from any of the parties in Northern Ireland, whether or not they are in the Executive or the Assembly, that large-scale financial services should be able to shift profits or any of their activities simply to net benefit from devolved corporation tax provisions. However, we want to ensure that legitimate, bona fide, not-for-profit mutualised activity is not penalised as a result of the restrictions that are rightly being included.

Credit unions and mutual building societies such as the Progressive have long-standing histories, have done nothing speculative, did not need any Government bail-out and had no questions about their books, or about anything else, so there is nothing untoward, whiffy or sniffy about any of their activities, because they were solid, prudent and sensible. There is absolutely no question but that the parties would want to see such organisations penalised and unable to benefit from the same sort of devolved tax rate that would be available to small and medium-sized enterprises. When we look at the scale of the individual credit unions—remember that they are regulated individually, not as some sort of conglomerate activity—we see that the idea that they would find themselves caught, for corporation tax purposes, in the same category as a large bank, for instance, is absolute nonsense.

However, there is a bit of a rub in this. I know that the credit unions and others have listened carefully to our proceedings on the Bill. For instance, on Second Reading the point was made that the provisions on some classes of back offices, even those working for financial services companies, could qualify for the devolved tax rate, and there seemed to be an inference that some of those lines had been drawn with particular operations in mind. For instance, Citigroup was mentioned on Second Reading, and it was suggested that we should all be assured that its jobs are protected and that that work would be subject to the devolved tax rate. That leads to a situation in which companies such as credit unions and the Progressive building society are saying, “Well, if the back office operations in Northern Ireland can qualify for the devolved tax rate, which obviously we hope will be lower, why should the back office jobs of the Progressive Building Society not qualify?”

The Progressive building society is being advised by Her Majesty’s Revenue and Customs that only 5% of its activity might qualify for the devolved tax rate, and it has been given no reason for that, other than that it seems to be the multiplier figure in the Bill. For no reason that anyone can understand or source, it has been told that only 5% of its activity might qualify. The Government are telling other financial services that they want them to work as hard as possible to maintain a high street presence, which the Progressive building society has done, including new investment in my constituency. It just seems bizarre that it should be penalised without a thought. That is why so many hon. Members are here to support the amendment.

--- Later in debate ---

[Dr McCrea]

Let me begin by thanking the Secretary of State and the Minister of State for the Bill, and thanking Opposition Members for supporting it.

I must also apologise for the absence of some of my colleagues. As a number of Members will know, the father of my hon. Friend the Member for Strangford (Jim Shannon) has died, and was buried this afternoon. That is why my hon. Friends the Members for East Antrim (Sammy Wilson) and for Upper Bann (David Simpson) are not present either, although they have a tremendous interest in this subject. On behalf of all Members, I wish to express our sincere sympathy to my hon. Friend the Member for Strangford. We pray that the Lord will strengthen and comfort his family, especially his mother, at this time of their grief and sorrow.

I know that some Members have felt rather envious as they have sat back and watched the progress of the Bill to its present stage. Nevertheless, both the Government and the official Opposition have acknowledged that the circumstances of Northern Ireland are unique because of its land border with the Irish Republic, which has one of the world’s lowest corporation tax regimes. Government policy has directed us to rebalance the economy—to move away from our high dependence on public sector employment and boost the local private sector—but we cannot do that with no more than an instruction from the House; we need the tools that will allow us to do the job. We have an earnest desire to move Northern Ireland forward, and to transfer our people from the unemployment list to meaningful and gainful employment.

[Mr Redwood]

I assure the hon. Gentleman that many of us have pressed for a measure of this kind for a long time, and welcome it greatly. I like to see all parties united behind the simple proposition that tax cuts make us a more prosperous society. I only hope that they learn the lesson in respect of the other parts of the Union and the other taxes.

[Dr McCrea]

I thank the right hon. Gentleman for his comments. I certainly believe that we need to be very prudent in our expenditure, but we also need to allow people to have more of their own money in their pockets, and we want to see prosperity across the United Kingdom. I certainly want to see that achieved. After we have gone to the 20% corporation tax there has, rather worryingly, been some talk of moving back to 21%. That would be a retrograde step and I trust it will be put to bed this afternoon because it would have implications for the block grant for Northern Ireland. We need to get that clarified.

Businesses throughout my constituency tell me that corporation tax could be a game-changer, or at least assist in our genuine efforts for growth. Those who have in the past opposed the devolution of corporation tax stated that this would assist only large multinational companies, yet Her Majesty’s Revenue and Customs estimates that a reduction in corporation tax in Northern Ireland would affect some 34,000 companies of all sizes, including 26,500 small and medium-sized enterprises.

As the hon. Member for North Down (Lady Hermon) said, corporation tax is not a silver bullet that will transform the economy of Northern Ireland, but it allows us to go out with confidence on to the world stage and sell Northern Ireland without being undercut by our neighbours in the Irish Republic. I accept that other economic reforms are necessary. We need to train and upskill our work force, and focus on skills and competiveness, and strengthen our infrastructure, thereby achieving a stronger economy and a higher standard of living for all our constituents.

I welcome today’s debate. I am disappointed in the Minister’s response to the amendment tabled by the hon. Member for Foyle (Mark Durkan) and supported by the hon. Member for Belfast East (Naomi Long). However, we are getting an opportunity to assist the Northern Ireland Executive in gaining greater power to rebalance the economy and boost employment and growth by attracting more high-quality investment. Opportunity awaits us. To do nothing is unacceptable; to do our best is honourable.