Northern Ireland: Public Expenditure

Lord Shutt of Greetland Excerpts

Tuesday 22nd June 2010 Lords Chamber

[Lord Rana]

To ask Her Majesty’s Government to what extent their public expenditure reductions will affect the Northern Ireland economy and the peace process there.

[Lord Shutt of Greetland]

My Lords, Northern Ireland, like the rest of the United Kingdom, will need to play its part in reducing the budget deficit, but as the Prime Minister said recently, it will not be targeted for cuts above any other part of the United Kingdom. The Government remain committed to working with Northern Ireland Minsters to boost the Northern Ireland economy and to supporting the devolved institutions provided for by the Belfast, St Andrews and Hillsborough Castle agreements.

[Lord Rana]

Does the Minister accept that, given the impending pressures on the public sector, it is essential to promote a much stronger private sector in Northern Ireland, with a solid core of high value-added jobs? I therefore ask the Government to implement urgently the pledge given by the Prime Minister before the general election to produce a government paper examining how the corporation tax rate in Northern Ireland can be changed to attract more investment to the region. In asking this question, I declare my interest as former president of the Northern Ireland Chamber of Commerce and Industry, when I campaigned for it, and as a businessman from Northern Ireland.

[Lord Shutt of Greetland]

My Lords, I thank the noble Lord for his supplementary question and acknowledge his experience in adding to the private sector in Northern Ireland. I can advise him that my right honourable friend the Chancellor of the Exchequer confirmed today in his Budget Statement in another place that the Government, in consultation with the Northern Ireland Executive, propose to publish a paper on rebalancing the Northern Ireland economy which will examine potential mechanisms for changing the corporation tax rate in Northern Ireland.

[Lord Smith of Clifton]

My Lords, when allocating resources in the future, will the Government take into account the recent recommendations of the Select Committee on the Barnett formula, which said that Scotland had far too much, Wales had far too little, Northern Ireland needed a little more and England needed some more?

[Lord Shutt of Greetland]

My Lords, the Government have no plans to review the Barnett formula until the fiscal stabilisation plans set out in the Budget have been worked through. However, that report is still valid and will be considered at the due time.

[Lord Dubs]

My Lords, further to the answer that the Minister has just given, does he agree that the problem with the Northern Ireland economy is not that the public sector is too large but that the private sector is far too small? Does he further agree that reducing corporation tax to the same level as that in the Republic may be a very sensible move, but that the private sector will need more to boost the economy than simply that?

[Lord Shutt of Greetland]

The noble Lord is right: the biggest problem is that the private sector is far too small. However, there clearly is a difficulty when the corporation tax rate in the Republic of Ireland is 12.5 per cent—a matter which has been steadily addressed here. Northern Ireland does need more private sector jobs. It is interesting to note that between 2002 and 2010, something like 7,500 jobs were created by businesses from the United States. I have no idea what footloose industry there is about, but Northern Ireland has nevertheless gained those 7,500 jobs, and that was only the top five in that period.

[Lord Barnett]

My Lords, the noble Lord said that the very important report of the Select Committee on the Barnett formula would be considered in due time. Would he care to define the meaning of “due time”? Does he appreciate that the Chancellor has just announced that in the autumn there will be departmental cuts in public expenditure of some 25 per cent? Does the noble Lord recognise that if this is not noted and taken care of, there will be very serious problems in England?

[Lord Shutt of Greetland]

My Lords, it is not for me to take a view on when that time will be. I am not able to indicate when it is—

[A noble Lord]

Why not?

[Lord Shutt of Greetland]

Because I don’t know. If I knew I would tell him—but there we are. The noble Lord, Lord Barnett, introduced his paper a third of a century ago and we are still talking about it. I accept and personally take the view that the Barnett formula should be looked at again. The present position is that it will be looked at again, but in due time.

[Lord Forsyth of Drumlean]

My Lords, can the Minister help me? I thought that the coalition Government’s policy was to implement the recommendations of the Calman report—which specifically said that we should move to a needs-based system of funding, in line with the unanimous recommendation of the committee of this House which looked at the Barnett formula in great detail not some time ago but in the last Session of Parliament.

[Lord Shutt of Greetland]

My Lords, the need for “due time” is also apparent with the Calman report. It is a matter for consideration by the coalition Government.

[Viscount Brookeborough]

My Lords, in agreeing with the noble Lord, Lord Dubs, is the Minister actually saying that the public sector is not too large in Northern Ireland? Recognising that Northern Ireland is the same size as Yorkshire, and all the education boards and very high employment in the public sector, we in Northern Ireland believe that it is too large. Why does he not?

[Lord Shutt of Greetland]

My Lords, I am aware of the size of Yorkshire—and these sorts of comparisons are useful from time to time. I take the view that the public sector in Northern Ireland is too large when compared with the private sector, but there is no doubt that the private sector is far too small.