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

Debate between Maria Caulfield and Sammy Wilson

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

[Sammy Wilson (East Antrim) (DUP)]

It is a pleasure to follow the hon. Member for Lewes (Maria Caulfield). I thank her for her genuine interest in Northern Ireland affairs and for contributing to the debate.

As has been pointed out, this Bill contains two totally unrelated pieces of legislation. The reasons for that have been given, although I am not convinced that this is the best way of dealing with the issues at hand. Let me deal first with rates. I accept what the Secretary of State said; it is important that people in Northern Ireland contribute through their rates to some of the public expenditure required to keep services going in Northern Ireland. But when we impose those additional charges, whether on domestic or business rates, it is important that we bear in mind two things: the ability to pay and the impact that any taxation has on either the businesses or households concerned.

I have reservations about the level of the domestic rate increase, which is above the rate of inflation—it is the rate of inflation plus 3%. That will cause difficulty for households, as some people will not qualify for housing benefit on their rates but are still in low-paid employment and want to stay in employment. That will cause difficulty, but it is nothing compared with what was originally proposed. Let us not forget that the original proposal was 10% plus inflation. I am glad that the Secretary of State did not pursue that. The party of government, like my party, believes in leaving people with as much of their money to spend as possible. People know how to spend their money better than the Government. It would have been a travesty if the Government had proposed an 11.8% increase in the rates that people pay for their home, especially given the Government’s boast time and again—one they ought to be proud of—that they are seeking to bring down the level of taxation. I am pleased that my colleagues and I had a role to play in knocking that figure down.

On the issue of business rates, this is really a 0% increase in real terms. Nevertheless, business rates in Northern Ireland are, for a number of reasons, some of the highest in the United Kingdom. The Chancellor has announced some business rates relief schemes—incidentally, we did have a Barnett consequential for that in Northern Ireland—but because of the non-functioning of the Assembly, it was not possible to revise the small business rate relief scheme in Northern Ireland. While that money was made available to the general purse, it was not translated into reductions for businesses.

In the long term, I think we need to look at the whole issue of business rates. It is of course a tax that is not related in any way to the ability of a business to pay. It does not reflect the buoyancy of the business or, indeed, the income from the business; it simply reflects the size of the premises and the rateable value of the premises that businesses happen to be occupying. For some people, that will lead to under-taxation because they could afford to pay more, but for many businesses it leads to over-taxation because their overheads go up or stay the same even though their income and their ability to pay are going down, which affects so many.

I suppose it is not just an issue for Northern Ireland, but this is one of the reasons why we have so many vacant premises on so many of our high streets. As businesses have come under pressure from online retailing and from the changes in the way consumers spend their money, they find their revenues going down, but the overhead of rates still remains the same. In the longer term, I think we need to have a review of business rates. I am pleased that at least there has not been a real-terms increase in rates for businesses, although I know many of them will struggle even with the inflationary increase in this piece of legislation.

Let me turn to the second part of the Bill on the changes to the renewable heat incentive payments. I do not think anyone can say that this scheme has been a success by any means. In fact, it has been a disgrace, and the way in which it was set up and has been abused required there to be a change. However, I must say that when it comes to subsidies for renewable heat, I do not think that some of the practices instigated through this Parliament and in this part of the United Kingdom would stand up to scrutiny any more than the renewable heat incentive stood up to scrutiny in Northern Ireland.

We have a situation at present that makes the subsidy in Northern Ireland disappear into insignificance. At Drax B power station, the subsidy has climbed from £250 million a year when the Liberal Democrat Minister introduced it to £800 million this year, and it is going to go up to £1,000 million a year, when coal could be mined two miles down the road. And what do we do? We bring in wood pellets from America. We chop down trees in America, put them in a boat, bring them to England and burn them in a power station, and we pay a subsidy of £800 million a year for it. I wonder how many houses in the south of England are having their outdoor swimming pools heated with boilers for which people get a renewable heat incentive payment. Is that a good use of public money? The renewable heat incentive has not received the same level of scrutiny in other parts of the United Kingdom as in Northern Ireland, where it was seen to be abused. However, there are big questions to be asked about the scheme, not just in Northern Ireland but in any other part of the United Kingdom.

I have several points to make about the need for review. We have been told that the legislation has to pass today instead of being given the level of scrutiny required. Many hon. Members have asked detailed, probing and important questions, but we are told that if the Bill does not pass today, no subsidy regime at all will be available at the beginning of the next financial year, and that if we continue with the existing subsidies, we will be subject to infraction proceedings from the European Union.

Why was all this brought forward at the last minute? It is not that the review of the scheme has been forced on the Department in the past three or four months; it was initiated by the last Minister for the Economy before the Assembly fell, more than two years ago. What has happened in the meantime? Why has it taken two years, with a rush to pass the legislation at the very end? The joke in Northern Ireland is that evolution works quicker than some of our Departments. However, given that the review was initiated more than two years ago, I have to ask why, at the last minute, we are suddenly being presented with a piece of legislation that raises a lot of questions, instead of being given time to carry out the proper scrutiny, in Committee and so on, that the hon. Member for Lewes and the Chair of the Northern Ireland Affairs Committee have suggested.

[Maria Caulfield]

It strikes me, as an MP who is still fairly new in this place, that the attitude is often, “It’s only Northern Ireland, so we can whizz it through in a day.” It should not be right for any Bill to pass Second Reading, Committee and Third Reading in one day without any suitable scrutiny.

[Sammy Wilson]

The hon. Lady makes her point well, as she did in her speech.

Not everyone abused the scheme. Some did, and it is right that their subsidies were cut, but many people had the scheme sold to them by the then Sinn Féin Minister of Agriculture and by the Minister in the Department for the Economy. It was sold to farmers and many other businesses as a subsidy for heating their premises because they were using the kind of energy that was in vogue with the Department, which wanted to cut down on CO₂. I am not really sure how burning wood cuts down CO₂ emissions—I am told that it puts as much CO₂ into the air as coal, and some of the pellets are imported from miles and miles away—but that was the thinking at the time.

People undertook in good faith to install the boilers. They borrowed money, expecting a certain level of return and a flow of payments. They could have put in gas boilers and got cheaper energy, but because of the hysteria against fossil fuels, it was decided to subsidise wood burning, so people installed a more expensive boiler and expected to get money in return.

We are told that the sudden and very substantial reduction in the subsidy happened because the EU said that it was required to keep us to the average 12% level. There has been some dispute, in discussions with officials, about whether the rate of return can be between 8% and 22% so long as it averages out at 12%, or whether it is a maximum of 12%. If we had had the time or a mechanism to bring forward officials we could have probed into that, but we are told it is 12%.

In England, the subsidy per boiler is about five times higher than the subsidy per boiler in Northern Ireland. The scheme in the Irish Republic pays about six times more per boiler than in Northern Ireland. The question is this: how can you pay a subsidy five times more in England and still be within EU state aid limits? You can pay a subsidy that is six times more in the Republic of Ireland and still be within EU state aid limits. In Northern Ireland, however, it has to be at the level of £2,000 per boiler to stay within the state aid limits.

The explanation given—I cannot question it as I do not have enough information—is that, “Oh, the cost of boilers and the cost of fuel is different in Northern Ireland from the cost in England”. I could believe that if we were talking about, say, a 10% difference, but we are talking about a percentage difference in the hundreds here. Why does a boiler cost substantially more in England than it does in Northern Ireland? You might argue that it is because of transport costs, but then why does it not cost more in the Irish Republic? If a boiler has to come from England or another country, it has to be transported across the sea to the Republic of Ireland. Why should fuel cost substantially more in Northern Ireland than it does across the border in the Irish Republic? There might be some explanations as to why it costs less than in England, but why should there be such a huge difference between the two jurisdictions on the one island?

There could be perfectly good explanations for that, but given that the Department for the Economy got its figures so wrong for the initial scheme, you can understand, Madam Deputy Speaker, why people in Northern Ireland are sceptical about any figures that come out of the Department. The Department did not spot that the subsidy was substantially more than the cost of fuel and got its figures so wrong that there was a massive overspend. Figures for any scheme it brings forward need to be scrutinised properly. There is no opportunity to do that, despite whatever questions we ask Ministers today. A lot of these things come out through discussion, not through a question and a quick answer back from a Minister.

Those are the kinds of issues that need to be addressed. Unfortunately, I think we will have to vote for the Bill tonight, because there really is no alternative and it would be far worse to leave people with no scheme by voting against it. However, the Chairman of the Northern Ireland Affairs Committee suggested that there ought to be a commitment to allow the Committee, even after the Bill is passed, to have the opportunity to bring officials and anyone else necessary along, so that it can question them on the figures. If those figures are shown to be wrong, the scheme has to be amended to ensure that the level of subsidy paid reflects the true costs of the scheme. That is the one assurance we have to give to those who have been badly bitten.

I welcome the intervention and the fact that there was also some discussion on the budget, albeit late in the day. I think it was only two or three weeks ago that we were first given sight of what was proposed in the budget, but because the decision had to be made internally—purely by the Northern Ireland Office and the Department of Finance—there was time to revise the enormous increase that was being proposed initially for the rates. In the case of the renewables scheme, it had to go back to Europe. Thank goodness that after 29 March, we will not have to worry about state aid rules. We can make our own decisions. That is a good thing and another reason why the House should make sure that we get out on 29 March, so that we can decide on the kind of support that we want to give industry or the lack of support—

[Maria Caulfield]

rose—

[Sammy Wilson]

I knew that that would get the hon. Lady going.

[Maria Caulfield]

May we ask the Minister if—when we leave the EU on 29 March—we could look again at the subsidy issue, given that state aid rules will no longer apply?

[Sammy Wilson]

I agree with the hon. Lady. One of the reasons why we need scrutiny of the legislation, even after it has gone through, is so that we have a chance to revise it if we see that the figures are wrong. Since people have bought the boilers and had the infrastructure installed, would it be better to find a level of subsidy that enables people to continue to use them rather than just buying them out? The fact that we have a buy-out clause in the Bill shows that the Government and Department know that there will be hardship for people, although I suspect that the terms of the buy-out will be so draconian that it will not be worthwhile people doing that.

We will be supporting the legislation, albeit reluctantly, but on the basis that there will be an opportunity for the good questions that Members across the House have asked today to be looked at in more detail.

Northern Ireland Budget (Anticipation and Adjustments) (No. 2) Bill

Debate between Maria Caulfield and Sammy Wilson

2nd reading: House of Commons
Tuesday 5th March 2019 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

General disappointment has been expressed that, for the third year now, expenditure in Northern Ireland is being approved through this unusual process in the House, with little or no scrutiny or knowledge of how the allocations to Departments have been decided. We do not know what arguments were made for giving 3.8%—or whatever it was—to health and 1.1% to education, while other Departments suffered an overall reduction and others’ budgets were kept static. We have had no opportunity to ask civil servants what cases were made or whether they were valid. As my hon. Friend the Member for Belfast East (Gavin Robinson) pointed out, it is not that there is no mechanism for such scrutiny; it is simply that a choice was made not to use the mechanism that is available through this House.

Of course, this should all have been done at Stormont. During the budget process, its committees ought to have brought civil servants in, asked them what bids were being made and what arguments were being employed, and then made a judgment on the merits of each case. However, we are not in that position—not because parties in Northern Ireland do not want the opportunity of scrutiny at Stormont, but simply because they have been prevented from carrying it out.

Using the terms of the arrangements for setting up a Government in Northern Ireland, Sinn Féin has been able to prevent the coalition arrangement that was forced through in the Belfast agreement from being implemented. Because including the two main parties in the Executive is a compulsory imposition rather than a voluntary arrangement, if one of those parties throws a hissy fit and decides that it does not want to be in the Executive, everybody is kept out—not just from the Executive, but from Stormont and from all the roles and responsibilities that they were elected for and would normally be entitled to carry out.

The Secretary of State quite rightly says that this process should be done at Stormont, but she knows that it cannot be done there. Like the shadow Secretary of State, I do not place the blame totally at the door of the Secretary of State. She has to operate within the rules, and the rules state that if one party decides to veto, not a great deal can be done about it. For reasons that I will explain in a moment or two, no powers of persuasion will persuade Sinn Féin to go into Stormont at this particular time; they have made that quite clear. Sinn Féin have thrown up every barrier. Whatever magic wand the Secretary of State might wave, she is not going to persuade them otherwise. However, there is one way in which she could put pressure on them, which is by making it quite clear to them that, through their inaction, the very thing that they do not want to happen—that is, rule by London—will happen, unless they are prepared to accept their responsibilities in Northern Ireland.

We find it difficult to understand why there has not been a willingness to take Sinn Féin on in that way, but I suspect that it is because of the advice given by the Northern Ireland Office, known colloquially among Unionists in Northern Ireland as the nest of vipers. The position of the Northern Ireland Office seems to be, “Don’t annoy Sinn Féin and don’t annoy the Irish Government.” I suspect that a large part of the reason why we have not moved to greater scrutiny and greater decision making by Ministers here is the advice of the Northern Ireland Office: “Don’t rock the boat.” But if we don’t rock the boat, we are going to stay on the path that we are on at present, which does not provide scrutiny of the most important issue for politicians—the expenditure of resources for the benefit of the community.

Not only do we not have scrutiny of the overall budget allocation, we do not even have scrutiny of the efficiency of current spending. Looking through the various headings for expenditure last year, or through the proposed 70% expenditure for next year, we can see many areas where there is great concern about the way in which money is spent. I will pick out just a few. Take, for example, the Department for the Economy. We have been trying to increase connectivity in Northern Ireland, yet despite all the evidence that supporting access to air services to other parts of the world helps economic growth, we have found an unwillingness to spend money in that area. One of the reasons that the Department has given is, “We don’t have any direction from a Minister. It’s not a decision that the civil service can make.” My hon. Friend the Member for South Antrim (Paul Girvan) has lobbied hard on this issue because Belfast international airport is in his constituency and there could be huge opportunities there.

Petroleum licensing is another example. There are huge opportunities in Northern Ireland but we cannot even get consultation on licences that could create hundreds of jobs in mining and oil exploration in rural areas in the west of the Province, where high-paid jobs are hard to come by. Money for broadband has been reprofiled because, despite the fact that £150 million was made available, decisions have not been made about spending that money. Hopefully, with the start of the money that has been allocated this year, we will find that the programme will be accelerated over the next number of years.

We allocate money to Tourism Ireland, and many people query whether that money is used effectively. When people travel into Belfast international airport, what hits them in the face when they come off the plane? An advert to send tourists who arrive at that airport down to Dublin—and our money pays for it. Yet there is no scrutiny of whether that is an effective way of spending public money to promote Northern Ireland.

I could go on with lots of other examples, but that is the kind of vacuum we are left with because of the lack of scrutiny not just of the general allocations of money across Departments but of the specific allocations within Departments.

[Maria Caulfield (Lewes) (Con)]

As members of the Northern Ireland Affairs Committee, we hear at first hand, nearly every week now, about how the lack of an Assembly and an Executive is affecting ordinary people, whether it is money not being spent on healthcare, schools where parents are having to bring in toilet rolls, or the Police of Service of Northern Ireland not knowing whether it can pay its staff at the end of the month. This is impacting the real lives of real people.