Corporation Tax (Northern Ireland) Bill

Debate between Owen Paterson and David Simpson

Tuesday 27th January 2015 Commons Chamber

[Mr Owen Paterson (North Shropshire) (Con)]

I was never quite sure that we would see this day. I heartily congratulate my successor as Secretary of State and the Financial Secretary on following this proposal through from the dark days when it was knocked on the head.

For the benefit of the shadow Secretary of State, I will go over the history of the proposal, because he does not realise the enormous benefit that it could bring to Northern Ireland. I see it as the coalition Government’s opportunity to deliver a long-term benefit to Northern Ireland as big as that brought by the Belfast agreement.

When I was appointed shadow Secretary of State for Northern Ireland, most of the major negotiations had gone through, although we had not quite got policing and justice through. I made it my business to go to Northern Ireland every week. I found an economy that was dependent on public spending for 77.6% of its GDP. We all know the horrible historical reasons for that, but it was clearly unsustainable.

On my weekly visits, I found world-class businesses and very skilled people. There were businesses that had come in, often tempted by the generous grant regimes, that were very pleased with the quality of the work force and the education of the staff. However, time and again, we found cases of large investment opportunities being missed because of corporation tax. The hon. Member for East Londonderry (Mr Campbell) is not here, but I remember a very clear case where a big investment could have gone to East Londonderry, but it went to Letterkenny. With the deepest respect for Letterkenny, it is quite a small provincial town.

[David Simpson (Upper Bann) (DUP)]

I pay tribute to the right hon. Gentleman for all the work he did in Northern Ireland as Secretary of State and before that. He had several meetings in my constituency with companies. I want to put it on the record that he was a great enthusiast for this proposal, which has eventually arrived.

[Mr Paterson]

I thank the hon. Gentleman for his kind comments.

I would like to stress that this has ultimately been a team effort. I will list the people who have been involved. This proposal came from a black moment. I have cited the examples that I saw on the ground in Northern Ireland. At the time, a parallel process was going on. The last Government had asked Sir David Varney to conduct a report on the benefits of introducing a lower rate of corporation tax for Northern Ireland. In parallel, significant major figures in the business community were involved. The sadly late Sir George Quigley, to whom we should all pay tribute, had made significant representations. The Northern Ireland Affairs Committee had been involved, as had the Institute of Chartered Accountants in Ireland, led by Eamonn Donaghy.

Varney came up with a lukewarm response. He said, quite rightly, that corporation tax was not the only answer and that a skilled work force was also needed, as had been successful in the Republic. However, he missed the big picture that, time and again, major investment projects went to the Republic because of a lower rate of tax. The late Brian Lenihan, who was the Irish Finance Minister when I was shadow Secretary of State, said that the corporation tax rate was the “cornerstone” of the Republic of Ireland’s “industrial policy”. It therefore seemed bizarre that Varney looked not at the real advantages, but at the disadvantages.

I remember the crushing disappointment when the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), knocked the proposal on the head. There was a conference at Stormont and then a bigger conference at Hillsborough. I remember Sir Tony O’Reilly waving his arms around and making a great burlesque speech about the advantages of lower corporation tax. Sir George Quigley was also there. Then the Chancellor knocked it on the head and came up with a number of palliative measures that were typical of him. I remember writing letters in subsequent weeks to try to get to the detail. He had stood up in public and said, “These measures will bring the same advantages as lower corporation tax,” but frankly, there were a lot of fiddly little deals that did not deliver. That was a black moment.

I remember sitting next to the late Sir George Quigley, by complete chance, and going over the matter. He was bitterly disappointed because the whole business community had been looking to the proposal. One reason why it had been knocked on the head was that the British state could not afford the forgone tax. At about the same time, we had the Azores judgment by the European Commission, which we could pray in aid. It said clearly—Varney took this conclusion—that corporation tax could be devolved. Lisbon had tried to reduce a tax arbitrarily in the Azores region and was told firmly that there were three conditions.

First, there had to be a democratically elected assembly with a clear jurisdiction over a defined geographical area. Northern Ireland qualified. Secondly, that assembly had to have complete decision-making powers, which could not be interfered with by central Government. Thirdly—it is a pity that the Scottish nationalists are not here to listen—there could be no compensation from central Government for the forgone tax, which had to be borne by the local assembly. For the record, Scotland pays about £2.5 billion in corporation tax, so if it dropped to the rates we are talking about it would have to find £1 billion. Perhaps the Scottish nationalists might consider that when they come back into the Chamber. Sadly, the figure is much lower for Northern Ireland because there are no FTSE 100 companies. Corporation tax is currently about £500 million.

We therefore came up with the idea, in accordance with the Azores judgment, of knocking the forgone tax off the block grant. Government spending in Northern Ireland is £23 billion—£13 billion raised locally and £10 billion from the block grant. If tax went down to Republic of Ireland levels, there would be a reduction of £200 million in the block grant. That is a very small investment to bring to Northern Ireland the sort of businesses that would come in.

That idea began to take shape. Following the dark days after it had been knocked on the head at the conference that I mentioned, two things happened. First, we set up a report by the TaxPayers Alliance, the investigation group, on corporation tax. Secondly, and I think more importantly, Sir George Quigley got together with others and pulled together a key group of people, to whom I pay tribute. There was Sir George, who at the time was chairman of Bombardier; Victor Hewitt, the head of the Economic Research Institute of Northern Ireland; Eamonn Donaghy, the head of tax at KPMG, who has been tireless throughout; Graham Gudgin and Neil Gibson, economists at Oxford Economics; Professor Mike Smyth, professor of economics at the university of Ulster; and finally Mike Hall, a tax partner at Ernst and Young. They formed the key Northern Ireland Economic Reform Group, and their report, which came out in February 2010, said categorically that if corporation tax in Northern Ireland changed from 28% to 12.5%, it would result in the creation of 80,000 new jobs over a 20-year period.

The previous year, there had been the terrible murder of Police Constable Stephen Carroll in Craigavon, which was an appalling event. We all know how divided the communities in Craigavon, Portadown and Lurgan have been. I remember clearly during one of my visits going to the great pharmaceutical company Almac, which employs about 2,000 people. The chief executive said, “If you can get this through and get corporation tax rates down to the level of the Republic, we’ll double the business and we’ll double the work force.” My direct response to the shadow Secretary of State and doubters in the Labour party—I am delighted that they have come on board today and said that they will support the Bill—is that they should think of the benefits to Northern Ireland, not just economically and socially but politically, of a further 2,000 people being on pharmaceutical-level wages and injecting money into their communities. The Labour party should get its head around that long-term benefit.

On that basis, and with strong support from the Prime Minister, I committed in March 2010, on behalf of the Conservative party, to devolve corporation tax. That became a manifesto pledge in our Conservative and Unionist manifesto. Although we did not quite win the election, that pledge was continued as part of the coalition programme. At the same time, there was real enthusiasm for the idea across the business community. In October of that year, Grow NI was formed, involving pretty well every business organisation—the CBI, the Institute of Directors, the Federation of Small Businesses, the chambers of commerce, the Northern Ireland Independent Retail Trade Association, Manufacturing Northern Ireland and about a dozen others. They lobbied people not just in Westminster but in Stormont, and importantly they got support from all five political parties in Northern Ireland. I pay tribute today to all those parties—I had endless discussions with them at that time, and they all came together. I think it was a unique event—I am not sure whether we had ever got all parties allied on a single policy before.

Key to that process was the Financial Secretary to the Treasury, who was then the Exchequer Secretary—I am pleased that he is in his place. He completely got on board with the long-term benefits not just for the Northern Ireland economy but for the UK economy. To pick up on the comments of my hon. Friend the Member for Amber Valley (Nigel Mills), if we can make Northern Ireland more economically viable, it will be of real benefit to our constituents in Shropshire and the east midlands. It will reduce the need for the block grant if the economy prospers and grows well. There is a massive UK-wide reason for supporting the devolution of corporation tax, and the then Exchequer Secretary really got that point.

My hon. Friend the then Exchequer Secretary and I went to Kelvatek, a splendid example of a Northern Ireland business, led by John Cunningham. All five political parties came along and we launched the consultation. It is important that the shadow Secretary of State understands that there was a lengthy consultation throughout 2011, and there were further launches for Grow NI, including the big launch at the Lyric theatre. There were about 750 responses to the consultation, and they were overwhelmingly in favour of the idea of devolving corporation tax.

That autumn, with the help of the then Exchequer Secretary, we began joint meetings involving the Northern Ireland Office, the Treasury and the Northern Ireland Executive. The first was in December 2011, and the last one in which I was involved was in June 2012. After that, I was delighted that my successor took up the baton. She has manoeuvred around Whitehall with great skill, because there was considerable hostility to the idea and real nervousness about it among significant elements of the establishment here. It is a tribute to her skills that we have the Bill today.

The Bill is quite something. This is a day that we will remember—as I said, in the long term, the benefits will be equivalent to what the last Government did in the Belfast agreement. It could help to create long-term prosperity and bring to disadvantaged communities the wealth that the shadow Secretary of State mentioned. The key thing is to get the message across. I would like members of the local parties to go back to Northern Ireland tonight with a clear message. The start date in the Bill is April 2017, and it is incredibly important that not only local businesses but UK and foreign businesses have a clear signal of what will happen on that date.

Oral Answers to Questions

Debate between Owen Paterson and David Simpson

Wednesday 30th November 2011 Commons Chamber

[Mr Paterson]

My hon. Friend is spot on. We came to power with interest rates higher than Italy’s. Thanks to the very disciplined and determined manner in which the coalition has addressed the deficit, we now have interest rates level-pegging with Germany’s. That is of benefit to every single person in Northern Ireland.

[David Simpson (Upper Bann) (DUP)]

The Secretary of State will be aware of the pay-as-you-go heating oil tank developed by Kingspan Environmental in my constituency. Could the Secretary of State give us an update on the development of the enterprise zone that he piloted and tell us what benefits that will bring companies such as Kingspan in my area?

[Mr Paterson]

I am extremely interested in that project. In opposition, I talked about turning the whole of Northern Ireland into an enterprise zone. That resulted in the consultation earlier this year looking at ways in which we could help develop the private economy. Quite separately, my right hon. Friend the Chancellor has proposed enterprise zones throughout the UK. Establishing those enterprise zones is entirely in devolved hands and I very much hope the Executive will take up the offer made in the Budget a few months ago.

Oral Answers to Questions

Debate between Owen Paterson and David Simpson

Wednesday 19th October 2011 Commons Chamber

[Mr Paterson]

I am afraid that I simply do not agree. We inherited an impasse and have come up with a solution. I have talked to senior members of the Irish Government and I talked to the Tánaiste this week after he had seen the family. On this issue, sadly, we will simply disagree with them. We will not let this one issue undermine the extraordinarily good relations we have with the Republic, nor will we let it undermine the settlement. If the hon. Lady had been at Hillsborough last night and seen people from right across the community welcoming the President, she would have seen just how far Northern Ireland has moved on. We are all determined to keep that going.

[David Simpson (Upper Bann) (DUP)]

One legacy issue that has never been addressed is the role played by elements of the Republic of Ireland’s Government in creating, financing, training and arming the Provisional IRA, and Dublin’s shielding of the provos by refusing to co-operate fully with extradition. Does the Secretary of State accept that the families in Birmingham, Warrington, London, Aldershot and elsewhere deserve to see Enda Kenny step to the mark, acknowledge the failings of the southern Government and formally apologise for those killings?

[Mr Paterson]

I think that it is outside my remit. If the hon. Gentleman has questions that he would like to address to the Government of the Republic, he should write to them direct.

Rosemary Nelson Inquiry Report

Debate between Owen Paterson and David Simpson

Monday 23rd May 2011 Commons Chamber

[Mr Paterson]

My hon. Friend is absolutely right. I paid full tribute to the RUC in my statement, but we do the RUC no favours by glossing over any failings. The report makes trenchant criticisms of those failings, but my hon. Friend is right that policing is quite different today. It has a much broader base of support, and is responsible to a locally elected Minister and Policing Board. That is why the report makes no specific recommendations.

[David Simpson (Upper Bann) (DUP)]

This murder took place in my constituency. Today we have the report, which shows no evidence of collusion in relation to that murder. However, in the same area, 18 RUC officers were butchered by the Provisional IRA. We have had Teebane, La Mon and numerous other atrocities in Northern Ireland. We hear on the rumour mill that another inquiry—into Pat Finucane—could be announced. If so, will the Secretary of State also ensure an inquiry into the 18 deaths of RUC officers that occurred at La Mon and into other atrocities, in the interests of equality?

[Mr Paterson]

I am grateful to the hon. Gentleman for his question. I am fully conscious of the tragedies in his constituency and the area where he lives. In June 1997, very shortly before the events dealt with in the report, Constables Johnston and Graham were murdered in Lurgan. On the Finucane inquiry, I made a written statement to the House in November, and there was an extended period of reflection while we took in representations. I shall make an announcement soon.

Oral Answers to Questions

Debate between Owen Paterson and David Simpson

Wednesday 23rd March 2011 Commons Chamber

[Mr Paterson]

The hon. Lady probably does not know that I have been using the phrase “enterprise zone” as a cover-all term for a whole range of measures that would revive the private sector in Northern Ireland. I am sure she agrees that it is unsustainable for—according to one report—77.6% of the gross domestic product of the Northern Ireland economy to come from public spending. Tomorrow, we will publish a paper blending our ideas with those of the Executive on how we will rebalance the Northern Ireland economy.

[David Simpson (Upper Bann) (DUP)]

Does the Secretary of State agree that an enterprise zone across the whole of Northern Ireland is one thing, but if it is interpreted as it was in the 1980s, that will cause major displacements throughout the Province?

[Mr Paterson]

I repeat again what I just said: I have used the phrase “enterprise zone” over the past three and a half years as a cover-all term for referring to investing in a whole range of measures that will help revive the private sector. I have visited the hon. Gentleman’s constituency, and he agrees with me that we must rebalance the economy. The Chancellor will announce the detail of specific measures on enterprise zones in a few minutes, and I hope they will be taken up by the Executive, who will have responsibility in Northern Ireland.

Oral Answers to Questions

Debate between Owen Paterson and David Simpson

Wednesday 9th February 2011 Commons Chamber

[Mr Paterson]

I endorse my hon. Friend’s comments. We had an excellent meeting at Hillsborough only last week with a number of major businesses, at which we saw significant investment coming in from Denmark. I am pleased to say that our plans were endorsed by a coalition of significant business organisations last week.

[David Simpson (Upper Bann) (DUP)]

Will the Secretary of State outline his assessment of the potential impact on the Northern Ireland economy of the reduction in corporation tax, and of its cost?

[Mr Paterson]

The coalition of businesses that I mentioned gave an estimate last week of 94,000 jobs, and the Northern Ireland Economic Reform Group published a report yesterday with an estimate of 90,000 jobs. On the costs, the hon. Gentleman should consider the case of Canada, where corporation tax has been reduced over recent years and revenue has increased. He will have to be patient and wait for the publication of our paper, which I hope will happen soon.

Oral Answers to Questions

Debate between Owen Paterson and David Simpson

Wednesday 15th December 2010 Commons Chamber

[David Simpson (Upper Bann) (DUP)]

The Secretary of State will be aware that it has been announced that individuals from my constituency will stand trial next year for the murder of the soldiers in Antrim. Does the Secretary of State agree with me that the full rigour of the law needs to be applied and that the sentencing needs to fit the crime?

[Mr Paterson]

I think that is a sub judice issue. We support the rule of law and it should be pursued by the legitimate people in authority in the legal sphere and the judicial sphere. It is not for us as elected politicians to interfere.

Oral Answers to Questions

Debate between Owen Paterson and David Simpson

Wednesday 10th November 2010 Commons Chamber

[Mr Paterson]

I am most grateful to my hon. Friend for his question, and for his interest in Northern Ireland affairs. I do not think I can give a better example than the fact that the current Chief Constable always had good relations with his neighbour when he was chief constable of Leicestershire, but has said that his relations with Fachtna Murphy, the Garda commissioner, are even better. I should like publicly to pay tribute to Fachtna Murphy, who is, sadly, retiring at the end of the year. He has been a great friend of Northern Ireland. The collaboration between the Garda and the PSNI is at an exceptional level, and I look forward to helping it continue.

[David Simpson (Upper Bann) (DUP)]

The Secretary of State will be aware of the recent series of dissident republican operations in my constituency, including the bomb at a railway bridge and a previous bomb that almost killed three local children. Does he share the Chief Constable’s current assessment of the levels of resources and manpower available to the PSNI?

[Mr Paterson]

I am grateful for that question. I am also pleased to send on my sympathies to the hon. Gentleman’s constituents who have been subject to such intolerable attacks, which, thankfully, have not caused death or injury. Last week the Chief Constable said:

“We are absolutely putting huge resources back in, we are going to sustain that next year and the year after until those responsible are brought to justice or they can be persuaded to give up.”

Oral Answers to Questions

Debate between Owen Paterson and David Simpson

Wednesday 15th September 2010 Commons Chamber

[David Simpson (Upper Bann) (DUP)]

3. What recent assessment he has made of the level of dissident republican activity in Northern Ireland.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

With permission, I would like to make a brief comment about the shadow Secretary of State for Northern Ireland, the right hon. Member for St Helens South and Whiston (Mr Woodward), and his deputy, the shadow Minister of State, the right hon. Member for Wythenshawe and Sale East (Paul Goggins), as this might be their last outing in their current positions. We should put on record our gratitude for the work that they did when in office and for pulling off the great final stage of ensuring that policing and justice were devolved. We all owe them—and everyone in Northern Ireland owes them—a debt.

The threat level in Northern Ireland remains at severe. The security forces continue to bear down on these terrorist groupings. So far this year, there have been 163 arrests and 56 persons charged with terrorist offences. That compares with 106 arrests and 17 charges in the whole of 2009. The numbers involved are small in terms of the overall population, but not insignificant in some areas. Everyone must play their part in demonstrating that these people have nothing to offer but suffering, damage and the diversion of money that would be better spent elsewhere.

--- Later in debate ---

[Mr Paterson]

I am grateful for the hon. Lady’s question. This was a disgusting murder, carried out at just after 1 o’clock in the afternoon in front of good, ordinary people going about their daily business, and it should be utterly condemned. The IMC report makes clear how extremely serious the matter is, but it does not recommend that we consider specification. We in Westminster, those in Stormont, the police, those responsible for security in Northern Ireland and, above all, the community have to bear down on this small number of people. I pay tribute to the very large number of people who turned out for the funeral, showing what the local community really thinks.

[David Simpson (Upper Bann) (DUP)]

The Secretary of State will be aware of a recent attack by dissident republicans in my constituency, in which two young children almost lost their lives. My understanding is that six or seven people were arrested by the Police Service of Northern Ireland, but all were released. Does the right hon. Gentleman understand the frustration of my constituents at the fact that no one has been charged for that and other offences, or is it the case that the PSNI no longer has the experienced detectives that it needs?

[Mr Paterson]

I am very sympathetic to the problems that the hon. Gentleman has in his constituency. This small number of people are wholly unrepresentative of the community. What they are doing is utterly irresponsible and risks serious damage to lives—it has to be utterly condemned. We have to respect the operational independence of the police. As I cited earlier, arrests are up and charges are up this year. We have had 56 charges as against 17 last year, but it is not for me to interfere with the processes of the police or of justice. The hon. Gentleman has good contacts with the local Minister and this is a devolved matter. If the local judicial system can be accelerated, that is now in local hands; we should not tamper with the independence of either the police or the judiciary.

Billy Wright Inquiry

Debate between Owen Paterson and David Simpson

Tuesday 14th September 2010 Commons Chamber

[Mr Paterson]

I thank the Chairman of the Northern Ireland Affairs Committee for his comments, and commend the Committee for the work that it does for Northern Ireland. He is absolutely right to say that the more we go into the details of these cases, the more apparent the traumatic waste of the troubles becomes. We would like to work with him and his Committee as we seek a way forward on handling the past.

On the question of Omagh, I shall be having a meeting with the relatives affected by that appalling atrocity reasonably soon. As I said earlier, it is our intention to talk to as many people as we can over the coming months, to see whether we can find a means of handling the past that attracts broad support. Sadly, however, I am fully conscious that however hard we try, we will not come up with something that pleases everyone.

[David Simpson (Upper Bann) (DUP)]

I thank the Secretary of State for this report and for his comments today. I want to pay tribute to Mr David Wright, Billy Wright’s father, who is one of my constituents; the family as a whole lived in my constituency. David Wright went the extra mile to try to find the truth of how his son died. No matter what his son was in prison for, he was the responsibility of Her Majesty’s Government and the Northern Ireland Prison Service.

We got the report this morning. It contains 700-odd pages, and even Einstein could not have comprehended it all in the given time. It highlights to me, however, the difficulties that existed at that time in the prison. I pay tribute to the prison officers, who have done a sterling job down through the years, but the senior management of the Prison Service have some questions to answer. Will the Secretary of State tell us what confidence he can give to the people of Northern Ireland in relation to the Prison Service going into the future, and whether any of the senior management who are still alive will pay a price for this?

[Mr Paterson]

I thank the hon. Gentleman for his comments, and I endorse his feelings for his constituent, Mr David Wright, whom I met a couple of weeks ago. He has battled staunchly to try to find out how his son died. I also echo the hon. Gentleman’s comments, and those of the Chairman of the Select Committee, about those who work in the Prison Service, who were given great praise in the report.

As for the future of the Prison Service, that matter is now in local hands. It is down to the local Justice Minister, who is accountable to the Assembly and sits on the Executive. I will sit with him on Monday and we will go through the very serious failings that have emerged from the report—which are, of course, from another era—and through its recommendations. What happens next, however, is very much down to the local Minister, working with local politicians.