Autumn Statement

Sammy Wilson Excerpts

Wednesday 5th December 2012 Commons Chamber

[Mr Osborne]

I do agree with my hon. Friend. It is worth remembering that we put together these difficult autumn statements and the like in a coalition. We are able to demonstrate to the rest of the world that Britain has strong and decisive government. I am grateful to my Liberal Democrat colleagues who have helped me in this. I hope that Liberal Democrats and Conservatives can celebrate the increase in the personal allowance. There are many Conservatives who also wanted to achieve that, and it was in the Liberal Democrat manifesto too. The fact that we are able to do that shows that we are helping working people even in these difficult times.

[Sammy Wilson (East Antrim) (DUP)]

I acknowledge some of the positive impacts that this statement will have on Northern Ireland, including saving people from increases in their electricity bills as a result of the exemption from the carbon price floor, lifting 8,000 people out of tax, and an additional £135 million of capital spending. However, given the rocky road that the Chancellor has said lies ahead and given his credibility in the markets, could he not find his way to borrowing more money for infrastructure projects to create jobs, rather than paying to keep people on the dole?

[Mr Osborne]

I welcome the hon. Gentleman’s support for some of the measures we have taken to help the Northern Irish economy, which I am well aware has particular problems in the banking system that require even more attention. I have always sought to respond to the Executive’s proposals where there is a specific case for Northern Ireland, as we did with transatlantic flights, for example. More generally, we are committing additional money to infrastructure, and I want some of that additional infrastructure to be in Northern Ireland. We are also guaranteeing infrastructure projects across the United Kingdom, and £10 billion of projects have pre-qualified for that under the legislation we took through Parliament this autumn. That scheme is available to people and companies in Northern Ireland, and if the Executive want to talk to the Treasury about what more we can do to encourage take-up in Northern Ireland, I would be happy for those conversations to take place.

Income Tax

Sammy Wilson Excerpts

Wednesday 28th November 2012 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

I approach the debate from a different angle from some Opposition Members. I am sympathetic to the view that we ought to aim for a low-tax economy, which offers benefits. Only this week in Northern Ireland, we announced tax cuts for small businesses. Measures that we announced six months ago have had an impact in creating jobs. Fifty-two new businesses have started, and over 100 jobs have been created in return for a modest reduction in tax revenue. We are also seeking the devolution of corporation tax, so that we can introduce a lower corporation tax rate.

As I have pointed out to Members of the Northern Ireland Assembly, all of that means that there are certain things that we cannot do. We have to find efficiencies in public spending, and there are things on which we cannot spend money. The logic of the measure is accepted by Sinn Fein, which supports it, although some of its members are probably to the left of Labour Members.

However, I oppose the measure that the Government introduced to reduce the top rate of income tax for the best paid. I do not believe that the cost will be as low as the Government said. The Minister said that it will cost £100 million, but that figure is surrounded with lots of conditions and caveats, such as notions about how tax changes are sensitive to how people behave. As the Office for Budget Responsibility has pointed out, estimates of tax income elasticity vary from 0.35% to 0.48%, which is a difference of nearly 40%. Whatever the assumptions about behavioural consequences—whether people will move back to the United Kingdom or stop moving out; whether they will stop avoiding tax or keep using existing measures—given the cost of moving back or changing pension or retirement arrangements, it is unlikely that the impact will be as great as suggested.

Even if the measure were correct—the hon. Member for Dover (Charlie Elphicke) said that he was glad that the Government had divorced politics from economics in making that tax decision—we should not introduce it at a time when we are telling people across the United Kingdom that they have to tighten their belt, spend less and accept that they will have a lower income. We are saying that to pensioners, to lower-paid people and to people on middle incomes. We cannot send out a contradictory message that that is okay for people at the lower end of the income spectrum, but not for people at the higher end. If the Government really want to sell their message of austerity, that message must be clear so that people know that everyone will be equally affected. If a pensioner faces a £7 weekly decrease in their pension and a millionaire gains a £2,000 increase in their weekly income, people will not take the view that we are all in this together.

The politics of the measure is important. The Government might believe that low taxes can stimulate the economy because they will attract the rich to the UK, where they will create jobs, but it has been proven that other tax cuts costing an equal amount would provide a far greater stimulus to the economy. For the same price as reducing the top rate of income tax for the top 1%, we could reduce VAT on extensions on premises to provide jobs in small businesses in the building industry. There is much greater price elasticity in demand for that activity, as has been shown, so such a measure could provide a much greater stimulus.

The policy is wrong economically; it is wrong politically; and it is wrong on the basis on which the Government have tried to sell it. For that reason, I support the motion.

Multiannual Financial Framework

Sammy Wilson Excerpts

Wednesday 31st October 2012 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

It is a great joy to follow the hon. Member for Harwich and North Essex (Mr Jenkin). In this debate, I believe the people of Northern Ireland would expect me to lay down the marker that if we as citizens of the United Kingdom have to share in the necessary austerity measures required to get us out of our current financial problems, we should expect the same rigours to be placed on the European Union.

I have the honour of serving as Finance Minister in the Northern Ireland Executive. Over the last couple of years, I have had to defend and explain and implement a 40% cut in the capital budget of the Northern Ireland Executive. I have had to resist Ministers who stood out in the streets protesting against cuts to the education budget, the health budget and other budgets, and explain that we were at an end of making money available for all the things we had to do. I think the people would find it difficult if, when it came to the over-fed bureaucracy of Europe, we did not take the same stance. As for the arrogance of the bureaucrats in the European Union—sometimes described as the Bisto bureaucrats who think that the gravy train is still running—we need to put down a marker and say that the years of simply asking for money and getting it are at an end.

Many Members have said today that this is only a cynical exercise, that it will hurt the Prime Minister, that Labour Members are jumping on the bandwagon and that they are a bunch of hypocrites. I must say that I share some of the cynicism about what happened in the past, but this is not about what happened in the past; it is about what we are going to do now. I am sure that if the former leader of my party were here, he would tell the House that there is great joy in heaven over one sinner that cometh to repentance, and that there should be unbounded delight on the other side when a whole party-load of sinners may have come to repentance and renounced their fiscal sins of the past.

Regardless of the motives behind it, the amendment does not weaken but strengthens the Prime Minister’s position. It enables him to go to Europe and say, “The entire House of Commons supports my position, and I have to go back to the House and explain. Either you make changes in the budget, or I cannot carry it in the House of Commons, because I am facing united support for the stance I am taking.”

[Mr Dominic Raab (Esher and Walton) (Con)]

The hon. Gentleman is making his case in typically passionate terms and I am reluctant to interrupt him, but, as a realist, is he aware that the 8% increase in the last multiannual budget was the smallest increase ever agreed in the EU? The chance that Brussels will now accept a real-terms freeze, let alone a cut, is virtually zero, and therefore we are almost inevitably heading for a veto. Is not the only real question whether the Leader of the Opposition joins the Prime Minister and the Deputy Prime Minister in supporting that veto?

[Sammy Wilson]

I have no difficulty with the veto. I do not have to be ambivalent about the veto. Whatever is required in these vital negotiations—whatever leverage is required—must be used. The point I am making is that the best leverage that the Prime Minister can exert in the negotiations is his ability to say, “Regardless of their positions on the party-political spectrum in the House of Commons, all its Members support me in saying that we will not give an extra penny to the European Union, and, furthermore, we want to see a reduction in the amount of money that we give to the European Union.”

[John Hemming (Birmingham, Yardley) (LD)]

I agree that we should constrain the amount of money we send to Europe, but in financial terms the difference between the amendment and the original motion could be less than £1 a year. Why divide the House when we all wish to constrain that amount?

[Sammy Wilson]

The hon. Gentleman is wrong. As so much of our rebate is not covered in the new arrangements owing to increases for new member states, our contributions would go up by 5.3% over the seven years even if we opted for and secured a real-terms freeze in the budget. We are talking not about pennies, but about billions of pounds.

The bottom line that is suggested in the motion would actually prove very costly for the British taxpayer, which is why a motion proposing not a real-terms freeze but a real reduction in our contributions to the EU could, and in my view should, gain unanimous support in the House. That is the only way of ensuring that the austerity that people in the United Kingdom have had to experience is also experienced in the European Union. It is not that there are no ways in which money can be saved. For 17 years, the European Union’s accounts could not even be signed off because billions could not be accounted for. The amount of waste that takes place in the EU shows that it is not impossible to make reductions.

I do not know whether I shall be on the right or the wrong side of the vote tonight, in terms of who wins, but I do know that the Lobby that I go through will be the Lobby entered by Members who are standing up for people who have experienced austerity, and experienced it stoically because they believe that it is the right way to ensure the financial soundness of the United Kingdom. I will go through that Lobby because I am on the side of those who want to give the Prime Minister the best hand in the negotiations. I will go through that Lobby for the sake of the people who want to see an end to European and bureaucratic waste. For those reasons, I shall support the amendment.

Public Service Pensions Bill

Sammy Wilson Excerpts

Monday 29th October 2012 Commons Chamber

[Danny Alexander]

No, there will not. Let me describe how this works. The negotiations that my ministerial colleagues and I conducted in UK Government Departments allow considerable flexibility within the parameters of the Bill—for example, the link between the state pension age and normal pension age, and the move away from final salary—and within the so-called cost envelope set up around the schemes. For example, the hon. Gentleman will note that the teachers pension scheme has agreed a different balance between accrual rates and revaluation factors for its new scheme from that for the health workers pension scheme. There is great flexibility in the provisions, provided things stay within the cost envelope. Under the Bill, the devolved Administrations are free to make more generous provision, as happened with the offer for prison officers. The Ministry of Justice agreed to fund an additional element of the proposed scheme to enable prison officers to have enhanced early retirement factors beyond those that were affordable within the cost envelope. The Ministry had offered to put additional resources on the table from its own departmental expenditure limits, and that was part of the offer that prison officers sadly rejected. Should the devolved Administrations wish to do something similar, they will be within their rights to do so, at their own expense.

[Sammy Wilson (East Antrim) (DUP)]

One of the options open to the devolved Administrations was for their pension schemes to be included in the Bill. In Northern Ireland, the Executive decided not to take that option, which could mean that, simply because of the timing of the legislation, the new scheme will be in place here, but not in Northern Ireland, even if Northern Ireland decides to follow suit. Will there be a penalty if there is a time gap between the implementation of the legislation in the rest of the United Kingdom and any delayed implementation in Northern Ireland?

[Danny Alexander]

I am not aware of any technical reason why a time gap should occur, but I know that officials in the Northern Ireland Department of Finance and Personnel discuss this regularly with my officials in the Treasury. If there is any evidence of such an occurrence, I will be happy to consider it in the normal way. There have been regular discussions on these matters, not least in our Finance Ministers quadrilateral. We will meet again in a couple of weeks in Edinburgh, when this subject will be on the agenda, so we can discuss it then.

Business and the Economy

Sammy Wilson Excerpts

Monday 14th May 2012 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

It is a great joy to take part in this debate.

Back home in Northern Ireland, there has been a lot of criticism of the fact that Northern Ireland was not specifically mentioned in the Queen’s Speech. Newspapers, commentators and politicians have suggested that that is a vast gap in the Queen’s Speech that needs to be filled. I do not share that view, for two reasons. First, I do not believe that more and more legislation piled on to an economy is necessarily a good thing. Secondly, many of the problems that we face in Northern Ireland are UK-wide problems that require UK-wide solutions, and therefore much of what the Queen’s Speech does in dealing with the economy of the UK as a whole should benefit Northern Ireland.

I was heartened when the very first words of the Queen’s Speech talked about “economic growth” and the need to “restore economic stability”. However, as many people have said during this debate and others, once we get down to the detail, the reality is that there is no clear path as to how these proposals will get us back to economic growth. Indeed, there are many diversions—a result, I suppose, of the faddishness that has been introduced into Government decisions by the Liberal Democrats. The proposals on House of Lords reform are equalled only by some of the other proposals that the public have already rejected. At a time when millions of families were most concerned about student fees, the Liberal Democrats thought that a referendum on the alternative vote method should be the Government’s priority. The Government have been led astray by those who say that they are driving the tractor to pull us out of the mire rather than driving the digger to dig us deeper into the mire, as appears to be the case.

I am concerned about three main issues. First, it will be interesting to see what proposals the Government bring forward on stability within the euro area. Much has been said here today about the need to stimulate the economy. We have heard many Government Members say that we cannot keep on borrowing and spending, yet there seems to be no lack of that when it comes to propping up a failed currency, for which the Government keep finding money. Within the past three weeks, another £10 billion went to the International Monetary Fund to help to prop up a currency that looks increasingly shaky. That is throwing good money after bad. That £10 billion could have had a much greater impact had it been spent on infrastructure development here in the United Kingdom to boost people’s confidence that the Government believe that we will have growth eventually and need the infrastructure to deliver it.

The second issue is bank reform. In Northern Ireland especially, businesses are held back by the lack of finance from a dysfunctional banking system. The banking system in England, Scotland and Wales may be dysfunctional, but in Northern Ireland most of the main banks are not operating and we are dependent on bankrupt banks from the Irish Republic, which account for nearly half the market, and Ulster bank, which is controlled by RBS. Bank lending is not happening for businesses. Although a very ambitious target, which many firms are trying to meet, of exporting to areas outside the euro area has been set, many firms are finding opportunities but cannot get the money to finance their organisations and provide them with working capital. I hope that when the bank reforms go through, there will be greater emphasis on what impact Government policy is having on places such as Northern Ireland, where we do not even get figures published for Project Merlin and do not know whether the policies are working through the banking system in Northern Ireland.

Thirdly, there is the issue of energy prices. The Queen’s Speech says that the Government will deliver

“secure, clean and affordable electricity”.

That is a euphemism for expensive electricity. I think we all know that the pursuit of renewable electricity has added considerably to energy bills in the United Kingdom and put us at a competitive disadvantage. Whatever we call it, clean energy, green energy or wind power costs three and a half times more than coal or gas-fired power. If the Government are going to keep going down that route, they will suck growth back out of the economy in the pursuit of helping the renewables industry.

There are many areas where we need to get oxygen back into the system, including banking, cheap energy, finance and infrastructure development, and I trust that we will see that in future.

Finance (No. 4) Bill

Sammy Wilson Excerpts

Wednesday 18th April 2012 Commons Chamber

[Owen Smith]

I am not going to give way at the moment. I want to carry on with my speech, then I will give way again. Perhaps by then the hon. Member for Spelthorne (Kwasi Kwarteng) will have warmed up and will be able to give us some evidence, instead of more rhetoric.

[Sammy Wilson (East Antrim) (DUP)]

Much has been made of the effect of the top rate of tax on revenue and on competitiveness. Given that the Government have stated their intention to change the top rate of tax, is it not surprising that the Chancellor has said that he is going to initiate

“some real research into dynamic scoring, and what the broader economy effects are of changes to taxation”?

It seems that even the Government do not know the impact of the change in taxation.

[Owen Smith]

I knew it would be worth while giving way to the Treasury spokesman for the Democratic Unionist party. His intervention offers a contrast to some of the more pedantic contributions that we have heard from Conservative Members. He is right to say that it was far too early to make a decision, ostensibly based on evidence, just one year after the implementation of the new tax rate. That is what the Institute for Fiscal Studies has concluded, and it is what the Office for Budget Responsibility has effectively concluded in suggesting how uncertain the conclusions are. It is also, unfortunately, what the country is concluding.

--- Later in debate ---

[Karl MᶜCartney]

Not at this point.

It has been interesting—and would be again—to hear from the Chancellor or his Ministers what positive signs we have seen from businesses after he announced the change. Once again, why does the Labour party fly in the face of business leaders’ opinion? As I have said, the 50p tax rate raises only a fraction of what was intended and is bad economics. It is better to put the British economy first, ahead of cheap headlines, but then that was never the Labour way, was it? One would have thought by now that Labour might have learnt some economic lessons.

The cut in the 50p tax rate was never a priority of this Government. Raising the personal tax allowance and helping low and middle income earners has always been the No. 1 priority tax cut for the Government and that is what we have done. This is a Budget to be welcomed by all with far-reaching tax reform that Labour should be embarrassed it never even considered. It announces the largest ever increase in the personal tax allowance, which will benefit 24 million ordinary families up and down our country. Most basic rate taxpayers will gain at least £220 every year. In total, this Government will have taken 2 million low paid people out of tax altogether.

Labour spent much of the aftermath of the recent budget indulging in photo calls in unfamiliar territory for Labour Members—any pasty shop they could find. Even an unannounced visit to my own constituency of Lincoln by the photogenic brother of the Leader of the Opposition, the right hon. Member for South Shields (David Miliband), featured such a stunt. Among all this new-found fondness for pasties, but perhaps notably not for one bottle of a famous brown sauce, the Leader of the Opposition has strongly criticised the decision to cut the top rate from 50p.

The right hon. Member for Doncaster North (Edward Miliband) made a laughable claim when he said:

“After today’s Budget, millions will be paying more while millionaires pay less.”—[Official Report, 21 March 2012; Vol. 452, c. 809.]

He is the true heir to Blair, is he not? Soundbite, not substance—and not even basic mathematical understanding. After this Budget, not only will millions of people pay less tax, but many low earners will pay little or no income tax. If, as we know, the 50p top rate raised only a fraction of what was intended and in addition harmed our international competitiveness and, as other Budget changes have ensured that the direct cost of the reduction to a top rate of 45p has been mitigated many times over, that should surely be welcomed by Members on both sides of this House.

[Sammy Wilson]

Let me make it clear that my party is not a party of high taxation. We do not wish to see people squeezed until the pips squeak and we are not ideologically committed to high taxation.

[Michael Ellis]

Are you sure?

--- Later in debate ---

[Sammy Wilson]

The hon. Gentleman asks whether I am sure. The record is open to scrutiny. In local government in Northern Ireland, when the Democratic Unionist party is in control of any council its rates are the lowest. In the Northern Ireland Administration at Stormont, where again we have control of the finances, we have more generous tax allowances for manufacturing industry and we have held local taxation frozen at the same point for the past four years and for the next three years. The hon. Gentleman asks from a sedentary position whether we are sure, but we stand on our record. When we have the ability to influence or the possibility of influencing taxation, we want to be a party of low taxation.

My comments in this debate are predicated on such policy and should be set against that background. I want to address the reduction in the top level of tax from 50% to 45%, which I believe is a huge political mistake for the Government. More importantly, I believe that it will impact on the ability to deliver sound fiscal policy and economic policy across the United Kingdom while getting people behind the measures that are required to get us out of our dire present situation.

The Government’s main argument has been that this is a good, sound economic policy and that it is necessary for a number of reasons. It is necessary, first, because the 50p rate of taxation has not worked: it has not raised the intended revenue. Indeed, the Prime Minister today claimed that it had not raised any revenue, but if he had read the documents that his own Chancellor endorsed he would have found that that is not true.

--- Later in debate ---

[Richard Harrington]

Will the hon. Gentleman give way?

[Sammy Wilson]

Yes.

[Richard Harrington]

I am grateful to the hon. Gentleman for giving way and sorry for interrupting him mid-sentence, but in welcoming you, Mr Hood, to the Chair, I should like to ask him this question. Does he believe, as I do, that there are circumstances in which economic beliefs have to take precedence over political ones? Governments have to consider what they believe to be good in the long term for the country, for the economy and for growth, not just what might appear in newspaper headlines.

[Sammy Wilson]

I do agree, but if the hon. Gentleman had been listening he would have heard that the economic case—that we did not raise as much revenue as we should, that we will raise more revenue than we were doing and that we will improve the competitiveness of the UK economy through this new measure—has not been made. [Interruption.] The hon. Gentleman laughs, but on the basis of the Government’s own publication, the economic case has not been made.

[Richard Harrington]

To be clear, that is not what I was asking. I accept that the hon. Gentleman does not believe that the current economic policy is the right one, but does he accept my view that in many circumstances Governments have to consider what they believe to be the best economic case over and above the politics of the situation?

[Sammy Wilson]

That may well be the case. However, if a Government have to make that decision—and, yes, there are occasions when that has to be done— they must first convince people that the economic case is sound, and on the basis of the Government’s own published information, that is not so. Indeed, even the Prime Minister did not seem to know what his own Government’s information said when he was answering Prime Minister’s questions earlier. It cannot be argued that there are times when the economic case is more important than the politics and so the right decision has been made, because the Government have not made a sound economic case.

We have a political context in which the Government are saying to people: “Make sacrifices. If you’re working in the public services, take a pay freeze. If you’re a motorist, you’re going to have to pay more for your petrol. If you’re a pensioner, you must have your tax allowances frozen for some time so that allowances can catch up, with the result that you’re collectively going to lose £1 billion a year. You’re going to have to do this because we’ve got a deficit that we’ve got to address.” I could go through a whole lot of other measures. If people are going to be asked to follow a policy that is designed to reduce the deficit and to accept those impacts on their standard of living, they must understand that the weakest are not being selected for the heaviest burden. This decision is not only economically flawed but politically flawed because it will call into question the Government’s sincerity when they argue that we all have to make sacrifices together.

I have another role in Northern Ireland as Finance Minister. We have frozen wages. We have stopped all bonuses in the public sector where that has been possible and there are no contracts. We have said to people that there will be no recruitment or promotion within the public sector. We have said to people who work in the private sector, “You’re going to have it tougher because we’re going to be spending less on public sector contracts and so on, with the impact that that has on people’s jobs.” We have said about new house building and a whole range of other things, “This can’t be done.” We have said to voluntary groups and community groups, “You’re going to get cuts in your grants because we don’t have the money to do this.”

By and large, I have found that most people accept that when they see that it is evenly spread. People stop me in the street all the time and talk about the impact that it is having on their lives. They say, “We don’t like it, but if we have to put up with it because we know we can’t carry on spending money we don’t have, we’ll do it.” Nothing undermines the argument made by those of us who wish to be responsible about the budget deficit more than the news that the Government are saying to people, “Make sacrifices”, while those who are earning more than they need to live on will get a 20% or a 10% tax cut. That is why the politics of this is all wrong. The economics is not sound and the politics is not sound, and for that reason we will vote against it.

[Alun Cairns]

Thank you, Mr Hood, for calling me to contribute to this debate on amendment 1. It is a privilege to follow the hon. Member for East Antrim (Sammy Wilson). I accept some of his points about the importance of the economics, but I certainly do not agree with his conclusion. I will comment on the weakness of the argument presented by the hon. Member for Pontypridd (Owen Smith) a little later.

--- Later in debate ---

[Alun Cairns]

I could not agree more with my hon. Friend. Once again, he makes a cutting point that exposes the weakness of the argument of the hon. Member for Pontypridd.

The politics of this measure is that it sends a message to international investors that Britain is once again open for business. The 50% rate needs to be added to the national insurance rate. People could well be paying a tax rate well in excess of 60%. For some individuals, it is as high as 68%. What sort of message does that send to international investors? The politics of this is extremely important in relation to how it is interpreted by the people we want to attract to this country, because they will bring their capital with them.

[Sammy Wilson]

I am not sure what Government Members are saying is causing the lack of investment. Is it the situation in the eurozone—I agree with the hon. Member for Dover (Charlie Elphicke) about that—or is it because of the high rate of taxation? The hon. Member for Vale of Glamorgan (Alun Cairns) seems to agree with both propositions.

[Alun Cairns]

I am sure that the hon. Gentleman would recognise that there is no silver bullet. I suggest that there is a range of issues. It is partly to do with the eurozone, partly to do with the debt that we inherited from the previous Government and partly to do with the global environment. Thanks to the Chancellor and the Treasury team, we are putting Britain on the road to the recovery. The reduction of the rate from 50% to 45% is central to that because of the message that it sends to every investor around the globe, as I have outlined.

We must recognise that we have had the highest tax rate in the G20. That has an effect when international companies consider where to invest. The G20 countries are in the top league of where international companies spend their money. Obviously, I want us to be seen as the most competitive nation in the league, not for us to be at the bottom of the league. That is the situation that we inherited.

The message of the Labour party consists of nothing more than envy. Labour fails to recognise that the top 1% of earners pay 30% of the income tax in this nation. The marginal rates are exceptionally important, as has been mentioned. We need to create an environment in which Britain is open for business and make it an attractive nation to investors from the UK and from elsewhere.

The argument presented by the hon. Member for Pontypridd is hollow. He misses a number of points. First, the 50% rate was intended to be a temporary rate in the first place. In response to interventions, he said that he did not think that the temporary rate should be adjusted just yet. How temporary is temporary? He gave the impression in his response that the rate should remain at 50% for the remainder of this Parliament. That would take us up to eight years of this temporary tax. He said in another response that he could not predict the Budgets that would happen after the next general election. There are three years remaining in this term. He cannot have it both ways. He says that the temporary tax should last for eight years, but that he cannot predict what will happen in three years’ time. The reality is that the Labour party is merely presenting the politics of envy. It wants to be the tax-and-spend party once again. It was the tax-and-spend party when it left office, and it has done little to move on from that position.

--- Later in debate ---

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I rise to speak to amendment 8 in my name and those of my colleagues, and I should like to press amendment 61 to a Division.

I am short of time, so I shall keep interventions to a minimum. There has been co-operation among the parties to try to give hon. Members time to speak, and I shall try to keep my part of the bargain.

In fact, I have risen to speak in favour of a Government policy—a well-thought-out policy that would do wonders for the economy. I am speaking, of course, of the devolution of air passenger duty to Northern Ireland. I like that great idea so much that I should like APD devolved to Scotland as well. We want equality of treatment and opportunity for Scotland.

In reality, I and many in Scotland, and the aviation industry, feel that APD is unfair and that it places an undue burden on business and travellers at a time when the Government should be encouraging the movement of people and goods to spur economic growth. The amendments in my name and those of my hon. Friends therefore propose to halt the rise in APD and devolve the power to Scotland, which is a recommendation not only of the Scottish Government, but of the Calman commission.

The idea of the cut in APD is simple: the UK already has the highest APD in the world, which surely cannot boost economic growth. The industry has had its say. Derek Provan, managing director of Aberdeen airport has said:

“Aberdeen, Edinburgh and Glasgow airports issued a joint letter to the Chancellor ahead of the Budget calling on the UK Government to create a level playing field for the UK aviation industry, which is subject to the highest aviation taxes in the world…The leaders of BA, EasyJet, Ryanair and Virgin Atlantic also jointly warned that the double inflation increase would hit ‘millions of hard working families in the UK.’ They said a family of four flying economy class to Australia would pay £500 in APD, whereas in 2005, they would have paid just £80. BA also recently revealed that it had plans to halve the number of new recruits in 2012 as a result of APD.”

Jim O’Sullivan, managing director of Edinburgh Airport, has said:

“APD is already costing Scotland passengers and having an impact on tourism revenues. We know from discussions with our airline partners that it is a major factor in their decision to connect further routes to Scotland. We would urge the Westminster Government to see Scotland as it does Northern Ireland and understand the need to both reduce and devolve this unfair and damaging tax.”

[Sammy Wilson]

I agree with much of what the hon. Gentleman has said about the general level of APD, but does he not recognise that this measure is the result of the climate change legislation passed in a previous Parliament which his party supported? The chickens are coming home to roost, with extra green taxes being imposed on poor consumers across the United Kingdom.

Amendment of the Law

Sammy Wilson Excerpts

Wednesday 21st March 2012 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

We all recognise that the Chancellor has been confronted with a difficult task in this Budget. He has had to walk a tightrope: if he goes too far one way, our financial credibility is immediately questioned so interest rates have to rise, yet if he goes too far in the other direction, we impair our ability to earn our way out of the recession.

My party does not have any political points to score against the Conservative party, as it is not represented in Northern Ireland, so we simply want the Chancellor and the Government to succeed. That is the basis on which I assess the Budget. Is this Budget likely to achieve the objectives we all want: restored growth and increasing employment?

Some of the Budget’s measures are very welcome. From a Northern Ireland perspective, we welcome the devolution of air passenger duty, which will be included in the Finance Bill. That will enable the Northern Ireland Executive to set its own rate for long-haul direct flights from Northern Ireland, which is essential to our investment strategy and to tourism. We also welcome the reduction in corporation tax as it brings our rate closer to the rate in the Irish Republic, which is our main competitor for foreign direct investment—although those rates are still far apart. We welcome, too, the film and high-end TV tax concessions. We have been seeking to promote that industry in Northern Ireland. The Executive have pushed for that. “Game of Thrones” is now filmed in Northern Ireland, and it has been a big revenue earner. We have also pushed for Belfast to be chosen as one of the broadband cities.

However, although there is clearly much to be welcomed, I am concerned about three aspects of the Budget. First, the Government could spend more money on infrastructure in the United Kingdom. That would enhance economic growth. Such pump-priming by the Government could enable us to draw upon some of the funds—£700 billion in cash—that private companies are currently hoarding.

After all, does the Chancellor believe his own rhetoric? He says that both the deficit and debt have fallen as a percentage of GDP, that the public sector net debt peak will not be as high as previously anticipated, and that we are on course for deficit reduction. He must therefore know that his credibility in the international money markets is sufficiently high for him to be able to invest in projects that offer a rate of return and that could help to promote economic growth, rather than merely pay unemployment benefits. Either he does not believe his own rhetoric, or else he is deliberately—perhaps for ideological reasons—holding back on what I believe could be an important means of investment.

Secondly, I am concerned about a choice that has been made. At a time when we are preaching austerity to people who are bleeding in that many of them cannot pay their heating bills or their rent or buy food, it is bizarre that the Government should choose to prioritise reducing the top rate of tax for the top 2% of earners in this country. That demonstrates a blatant disregard for the very difficult sacrifices that we are asking people to make.

Let us consider how the money could have been spent. There has been much argument today about whether or not the rich will pay more. The one thing we do know, however, is that it has been calculated that that reduction in the top rate of tax will immediately release £3,010 million to the top 2% of wage earners. The Government are relying on tax exiles flooding into the United Kingdom and beating on the door of Her Majesty’s Revenue and Customs to ask, “May I pay my tax in the United Kingdom now?” The Treasury hide behind the theory of “behavioural assumptions”, but we need only look at the literature to see that there are a lot of assumptions that may, or may not, be realised. The same situation applies for the money that could come from stamp duty and limits on the back claims.

The fact is that this money could have been used in a better way. For example, the Government could have used it to lower fuel duty, but despite the fact that fuel prices are going up, the Government are going to take £800 million more off motorists in the United Kingdom this year.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I am thoroughly enjoying the hon. Gentleman’s speech and would not wish to interrupt it for a second, but may I ask him what money he is referring to when he talks about a better way of spending that money? What we know from the Treasury is that our top rate raised very little incremental cash and that reducing it is likely to raise more money from the same people. So what money is he talking about?

[Sammy Wilson]

According to the Treasury, the direct impact—the direct static cost—is going to be £3,010 million. That is the figure that the Treasury has put out. Some of that money will be offset by behavioural change, but that is based on assumptions about tax income elasticity and what happens to income. So real money will go back to people who currently are top rate taxpayers. My argument is this: if the Government were going to release that kind of fund, would it not be far better to release it either to bring more low-income families out of tax or to release the hard-pressed motorist from the fuel duty that is going to be imposed on them?

[Ian Lucas]

The hon. Gentleman is making a compelling case. Is he aware that just 4,000 taxpayers in Northern Ireland earn more than £150,000 a year?

[Sammy Wilson]

That is so, and I wish to discuss another measure in this Budget that will affect hundreds of thousands of people.

[Mr Nigel Dodds (Belfast North) (DUP)]

The people of Northern Ireland are grateful to my hon. Friend for the work he does as Finance Minister in Northern Ireland to move its economy forward. Does he agree that people up and down the country are terribly disappointed that the Budget contains no additional measures to reduce the amount of fuel duty and VAT on petrol and diesel, which, in Northern Ireland, is the highest in the entire European Union?

[Sammy Wilson]

The continuation of the measures that the Government have in the Budget already will take a further £800 million out of motorists’ pockets over the next year.

The final point I wish to discuss is regional pay. Some people may regard what I am about to say as special pleading for Northern Ireland, but may I remind hon. Members that this will have an impact on those who represent constituencies outside London and the south-east of England? This measure will have an impact on all the rest of the United Kingdom. Some have the idea that, because there is currently a difference between private sector and public sector wages—it is important to make the point that the difference is current—wages should be frozen for people in the public sector, so as to stimulate the private sector. I do not quite understand the economics behind that, because freezing wages in the public sector will have a deflationary impact, especially outside the south-east of England, given the prominence of the public sector not only in Northern Ireland, but elsewhere. The areas of the United Kingdom that are currently falling behind, even given the slow rate of economic growth for the country as a whole, will be the parts that will be most punished. This is one of the most divisive measures that I have ever heard about and it does not even address a problem, because there is no evidence for it. We have 3 million people unemployed and we are not recruiting in the public sector, so how on earth are higher wages in the public sector going to prevent private sector employers from being able to find workers? This argument does not work. The impact of the measure will be very detrimental. I hope that we will have an opportunity to re-examine that in much more detail in this House, because I believe it is one of the most pernicious measures floated in this Budget.

There are things that the Government could have done but have not done. There is an unfairness in this Budget; it is an unfairness in respect of not only different income groups, but different regions of the United Kingdom. I am a Unionist and I believe in the value of the Union. I believe that it is important that, as part of the Union, we bear the burden when there is a problem. As my right hon. Friend the Member for Belfast North (Mr Dodds) mentioned, that is one of the reasons why, despite the unpopularity that this has probably led to in Northern Ireland, I have made the case that if there is an economic crisis facing the United Kingdom, we cannot ask to be exempt from the burden to be borne. However, it makes it far, far more difficult to say to public sector workers that their wages are going to be frozen, to say to the ordinary citizen that they should tighten their belt and to say to people who live in Northern Ireland that they have to go through these hard times when the Government are saying to those who can most afford it, “We are asking you to loosen your belts. We are going to fill your pockets.” That is exactly where the unfairness in this Budget lies.

For that reason, although I want the Government to succeed, I believe that they have not taken the opportunity to inject money into the economy. If they have credibility, they should use it in the financial markets and borrow to invest in infrastructure, rather than paying people to sit on the dole. If the Government want people to face up to the hard economic facts, they should do things fairly and not in a unjust and uneven way. If they want to be the Government for the United Kingdom, let us make sure that some parts of the United Kingdom do not have to bear a bigger burden than others.

Oral Answers to Questions

Sammy Wilson Excerpts

Tuesday 6th March 2012 Commons Chamber

[Mr Osborne]

We have introduced various tax changes, including our seed capital scheme, creating the most tax-advantaged start-up environment almost anywhere in the western world. Indeed, it is more attractive than that in the United States. On credit easing, I can confirm that subject to final EU state aid approval, which we expect to get in the next week, we will have the scheme up and running before the Budget.

[Sammy Wilson (East Antrim) (DUP)]

Is the Chancellor aware that while fiscal policies are being used to create jobs, HMRC, through its hard-line attitude towards many small businesses with cash-flow problems, is driving people out of jobs and firms to the wall? What can he do to avoid the continuation of the situation in Northern Ireland, where 55% of bankruptcies in the past four years have been initiated by HMRC?

[Mr Osborne]

I think the figure that the hon. Gentleman cites, across the whole UK—I shall come back to him with the specific figures for Northern Ireland—has been roughly the same for many years. Many bankruptcies are ultimately caused by the taxpayer because the tax bills are the last thing that a company cannot pay, and that has been true in good times and bad. We have continued with the time to pay scheme, which was introduced by the previous Government during the recession, and we are making every effort to help viable businesses with their cash flow and to help them pay their taxes, which benefits everyone, in a way that keeps them afloat.

Living Standards

Sammy Wilson Excerpts

Monday 5th March 2012 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

There is a general acceptance in the House that if we are to increase living standards, it has to be done through economic growth. Apart, perhaps, from the Green party, which appears not to consider economic growth desirable, there is a recognition that it is the way forward, although there is considerable debate about how we do that.

I say to the Government Front-Bench team that I cannot understand why our triple A rating will not be affected by huge borrowing to pay for the unemployed, but would be affected if we borrowed for projects that showed an economic return—for some reason financial markets would apparently take a dim view of that. When we consider how to get out of the current problem, we must think about growth, spending and borrowing in those terms.

If we consider the sources of the increase in living standards over the past years—the Institute for Fiscal Studies has looked at the past 40 years—we see that the biggest contribution has come from the increase in economic activity rates, particularly those increases resulting from bringing women into the workplace and work force. If we are going to increase economic activity rates, including among young people in Northern Ireland, 44% of whom are not economically active—there are various reasons for that, one of them being the huge rise in youth unemployment—there has to be economic growth to create jobs and attract people from inactivity into economic activity. There is an important message for Labour Members from that, because it will mean having to implement some of the welfare reforms that the Government are introducing. Those reforms are good, because they give people the incentive to work. However, there is no point introducing such reforms if there are no opportunities open for people, which is why economic growth and job creation are so important.

The second thing that the Institute for Fiscal Studies identified as being associated with rising living standards over recent years is tax credits. The point has been expressed well this evening, so I will not dwell on it, but if tax credits are so important, I have to say that I find it very odd that, at a time when jobs are short and hours are being cut, the Government should think that it is a step forward to take tax credits away from people who cannot find extra hours in the week to work, even though they want to, or that this will help with current living standards.

The last point I want to make is this. One of the big things that has affected people’s living standards is increasing energy bills. Indeed, it is a bit bizarre that we should be debating this motion after the previous one. We have been encouraging the Government to pursue and invest further in the most expensive form of energy available, namely wind power. Those high-cost energy sources have already added 20% to energy bills, and the previous Government’s predictions, as well as the current Government’s predictions, are that by 2020 they will add 43%, thus increasing costs and reducing living standards.

Northern Ireland Economy

Sammy Wilson Excerpts

Thursday 1st March 2012 Westminster Hall

[Mr Robertson]

Indeed, that was one of the points that we made in our report. We were astounded that the Treasury did not have a figure that we could use to assess the cost. I will explain the background. Because of the Azores judgment in Europe, it appears that if corporation tax is reduced for one area of a jurisdiction—not for all the jurisdiction—that part has to take the hit in terms of the outcome. In other words, if the tax take drops by, say, £100 million, it cannot be made up by Westminster. It has to be part of the block grant. We were astounded to find that the Treasury did not have that figure. Our report urges the Treasury to put a mechanism in place that will tell the Assembly—not so much us—what it will cost.

Corporation tax across the United Kingdom is on its way down. At the moment, it is 26%. In the Republic of Ireland, it is 12.5%. It is important to note that Northern Ireland is the only part of the United Kingdom to share a land border with another European Union state—the Republic, where there is a massive tax difference. The location of Northern Ireland is also important. It is an island off an island; it is peripheral. In my view, it certainly needs something that it can wave and advertise to attract inward investment, otherwise it may be easier to invest in other mainland areas or countries with lower tax rates. It is not immediately obvious why one should come to Northern Ireland, but it is easy to see why people go to the Republic of Ireland. It is possible that Google, Facebook and Twitter were attracted to Dublin because of the very low rate of corporation tax. Of course, inward investment is extremely important, but if a company is making a profit and paying a percentage of that in taxation, it has less money to actually spend on reinvestment.

As I said, not all Committee members agreed, but interestingly the Irish Government agree. The present Taoiseach has said publicly that he would approve of Northern Ireland reducing its corporation tax to 12.5%. That is an amazing situation to find ourselves in. We are competing with the Republic and we want to compete even more strongly, and they are in favour of that. Perhaps it is a mark of the progress that has been made in the incredibly good relations that exist between the Republic of Ireland and this country. It is certainly to be welcomed.

[Sammy Wilson (East Antrim) (DUP)]

rose—

[Mr Robertson]

I am happy to give way to the Minister.

[Sammy Wilson]

Does the hon. Gentleman also accept that perhaps the Irish Government are keen for the rate to be reduced in Northern Ireland because it gives them some defence when it comes to their argument with Europe about whether their rate of corporation tax should be increased?

[Mr Robertson]

I am sure the hon. Gentleman is right, and there may be political reasons why the Irish Government want the same rate. There may be political reasons why they want a lot of things the same across the island of Ireland. As the hon. Gentleman knows, I speak as a strong Unionist. However, the issue is bigger than any of those problems. The hon. Gentleman may be right in that case. He leads me to an important point.

--- Later in debate ---

[Sammy Wilson (East Antrim) (DUP)]

It is a pleasure to take part in the debate. As the leader of the Democratic Unionist party in Westminster, my hon. Friend the Member for North Antrim (Ian Paisley), said yesterday, all is not gloom and doom in the Northern Ireland economy; indeed, according to the Office for National Statistics, Northern Ireland is a happy place, and its people are the happiest in the whole United Kingdom. I do not know whether that is to do with the fact that my party is the biggest and therefore has control of the Executive.

--- Later in debate ---

[Ian Paisley]

No—that’s why she’s happy.

[Sammy Wilson]

She is happy because she has such a wonderful public representative.

We should take those figures with some scepticism. If we use the same criteria, we find that the person who is typically happiest is a white male with five children who works only part time, and I am not so sure we want that as a recipe for the work force in Northern Ireland.

However happy people in Northern Ireland might be, there is a need to rebalance the economy. I should, however, make one point to the hon. Member for Tewkesbury (Mr Robertson). He talked about reducing the size of the public sector and increasing the size of the private sector. The truth of the matter is that any economy needs—

--- Later in debate ---

On resuming—

[Sammy Wilson]

I will not go back over the happy bit, because we have got that dispensed with, and I think we are all suitably happy.

My first point is that when we talk about rebalancing the Northern Ireland economy, there is a misconception that that means contracting the public sector and filling the gap with the private sector. If that is all we did we would be no better off. We would still have a cake the same size, but it would be divided differently. At present in Northern Ireland the public sector is too large relative to the private sector; but that is not a function of the public sector being too big. It is a function of the private sector being too small. If we are to improve the well-being of people in Northern Ireland we must grow the economy, but the part that must grow fastest is the private sector, because a certain level of provision for health, education, roads and so on, will always be required.

[Naomi Long (Belfast East) (Alliance)]

I agree with the hon. Gentleman on that point. Does he agree with me that if the public sector is cut too quickly, without growth in the private sector, much of the good work to try to get people into employment is undone, perversely? Also, more demand for the public sector is created, because people become reliant on benefits and other things that require servicing by the state.

[Sammy Wilson]

That is correct. In the past three years when I have been Finance Minister in the Northern Ireland Executive we have cut spending on consultancy by 56%. That is a good result, as far as I am concerned, but of course many private sector consultancy firms do not see it as a good idea at all, because people have been laid off. That bears out the hon. Lady’s point.

I am not complacent about the relative size of the public sector vis-à-vis the private sector, but we must avoid a simplistic view of how to go about things. It should not be a case of squeezing out the public sector and filling the gap with the private sector. We should grow the private sector and use what we can, and the resources of the public sector, to encourage that.

[Mr Laurence Robertson]

I think that the hon. Gentleman would accept that my speech was based on the idea of growing the private sector. The Select Committee felt—not unanimously, but by and large—that cutting corporation tax to attract inward investment was a way of doing that. As a result of that the public sector would become a smaller percentage of the whole, without necessarily getting smaller.

[Sammy Wilson]

I am glad that the hon. Gentleman has clarified that, because I noted down his remark about reducing the size of the public sector. If he was speaking relatively, we are both arguing on the same lines.

My second point is that Northern Ireland still has a strong entrepreneurial spirit, despite all the years of trouble and how that put off private investment, and even drove out some of what was there. Indeed, the hon. Member for South Down (Ms Ritchie) talked about the level of self-employment in Northern Ireland, which is higher than elsewhere in the United Kingdom. That strong entrepreneurial spirit is growing, and many firms have weathered the current recession. The Business Secretary has visited Northern Ireland to see the work of Bombardier. That is a leading firm, internationally, in carbon fibre use in aircraft production, and it is growing; it is one of our biggest manufacturing employers. In my constituency there is F. G. Wilson, which sends generators around the world for Caterpillar, and is now back to its 2008 production levels, and Schrader Electronics, which provides a high proportion of the computerised valves for high-value motor cars, which tell drivers the car pressure. All the steel work for the Shard, which is being built down the road from here, is supplied by a firm in the back of beyond in County Fermanagh. It takes the steel in and ships it out, and because of the excellence of its manufacturing and engineering skills it can still compete for high-prestige jobs such as those that we can see from this building. I could go on.

The news is not all bad, and despite the recession there are many firms that have looked for ways to keep their work force together. One of Northern Ireland’s big advantages is that by and large work forces tend to be very loyal, and employers recognise and try to reward that. For example, Creagh Concrete just outside Toomebridge lost 90% of its business in the Irish Republic and had to lay off half its work force. It started to look for new business and is now back practically to the same level of employment, despite being in the construction industry, by making prisons that are like Lego kits. In fact, when I visited, there was half a prison sitting out in the yard and the other half was being produced. It is then taken on site and put together with all of the facilities inside it. The firm is changing from low value to high value concrete products. I could go on—there are many other examples of the desire of firms in Northern Ireland to grow.

What I say to the Minister today, I say in that spirit. We do not come to this place pleading special cases for a basket case, or as fiscal Oliver Twists holding out our hands, always wanting more and not prepared to do anything to help ourselves. People in Northern Ireland, entrepreneurs in Northern Ireland, want to help themselves and want to grow the economy. However, certain matters, as was pointed out by the hon. Member for South Down, rest with the Government at Westminster and therefore need attention.

Of course, there are matters on which the Northern Ireland Executive can act. It is not my place here to talk about them, or to talk about how adequately or inadequately they have been done. However, I have to respond to the hon. Member for South Down, who somehow thinks that the money allocated to Northern Ireland is not sufficient, not well spent and could be easily added to. She mentioned the fantastic document that her party produced on how we might raise revenue. I know that her first name is Margaret, but when I read the document I thought it was Margaret Thatcher reincarnated in Northern Ireland—the iron lady, though in the hon. Lady’s case it might be more like the tin foil lady.

The document included a list of privatisations from which money could come. Let me just list some of them: the sale of allotments; the sale of the Speaker’s house—I do not think it is his personal house, but there is a house in the grounds of Stormont; the sale of an airport that we do not own; and money from developers who are not building anymore. I could go on. Not one of them stacked up. We get the easy answers.

[Dr Alasdair McDonnell]

Does the hon. Gentleman accept that he has adopted many of those proposals in his current budgetary strategy?

[Sammy Wilson]

No, I do not think I have adopted any of them. The only one that was adopted was then condemned; namely, that we could get some money from housing associations by cutting their grant and making them borrow more in the market. When that was adopted, the first party to condemn it was the party sitting to my left. Even when we adopt some of that party’s ideas, it suddenly decides that they are not good ideas.

[Ms Ritchie]

Further to the point made by my hon. Friend the Member for Belfast South (Dr McDonnell), I make the simple point that it is my clear understanding that the budget review group that sits in another place in Belfast has adopted a lot of the proposals contained in the SDLP document, “Partnership and Economic Recovery”. Perhaps the hon. Member for East Antrim might like to comment on that fact, rather than being disparaging.

[Sammy Wilson]

If I had anticipated the length of that intervention, I might have listed some of the things that had been adopted. I cannot think of too many, other than the one that has now been condemned by the party that first suggested it. I have to say that it is actually working quite well. We are getting more houses built for less money in the public sector, and of course that is a good idea.

[Ms Ritchie]

Will the hon. Gentleman give way?

[Sammy Wilson]

No, I will not give way. This debate is not about the internecine warfare that goes on in the Northern Ireland Assembly, much as I enjoy it. I am sure that hon. Members do not want a rehash of the kind of budget debates we have in that other place. I will make one point, however, because there has been a call for more devolution of tax-varying powers in Northern Ireland. There seems to be a contradiction. On the one hand, the idea is that if we had tax-varying powers we could use them to spend more money on public sector projects. On the other hand, when we get those tax-varying powers it is not to put taxes up, but to bring taxes down. I do not know how we bring taxes down and spend more money as a result, but that is the equation put forward by the hon. Member for South Down, which I think is part of her party’s policy. More recently, we have been told that if motor tax were devolved to Northern Ireland, we would be able to avoid all the changes that we do not want to introduce in welfare reform. From the devolution of motor tax we could find—according to the SDLP’s erroneous figure—£600 million. I would not like to be a motorist in Northern Ireland if we had to raise £600 million extra from a motor tax.

There are many issues I do not run away from. The Executive and the Assembly in Northern Ireland cannot run away from their responsibility for the things that they have to do to try to help to rebalance the economy. Some things are done well, some things are not being done so well, and some things still have not even been started. Those are internal matters, and the Minister may make reference to them later on. However, we are well aware that where we have responsibility, that responsibility should be taken. However, certain matters reside here at Westminster, and they are important if we are to rebalance the economy in Northern Ireland.

The first matter is the debate on devolution of corporation tax and tax-varying powers in relation to corporation tax. I would be cautious about that. It is not that I would be opposed to it, but if it is devolved it must be devolved at a price that does not put further pressure on an already pressurised public sector budget in Northern Ireland. We have lived with the cuts. I am not one of those who believes that because of Northern Ireland’s special circumstances we ought to be exempt from all of the financial difficulties that have to be faced by the rest of the people in the United Kingdom. I do not take that stance. It is an unreasonable stance for people from Northern Ireland to take.

We have lived with a £4 billion reduction in our budget in the next four years—a 40% reduction in the capital budget for expenditure in Northern Ireland in the four years. We have sought to ameliorate that by looking at what sources of revenue we could raise, what assets we could sell, how we could switch expenditure around, and where we could make savings. If, on top of that, as a result of the devolution of corporation tax, we were then hit with an additional burden—a burden that the Treasury estimates could be anything up to £500 million—that would not be either fair or sustainable. Given that the price would be paid immediately and the benefits would only be experienced in the medium term, that price would not be affordable. Nor would it produce, even in the medium term, the desired result of rebalancing the economy.

[Mr Laurence Robertson]

May I point out that devolving that power would cost absolutely nothing at all? The Select Committee’s proposal for it to be devolved costs nothing. The action that the hon. Gentleman’s Committee then takes is for him to judge.

--- Later in debate ---

[Sammy Wilson]

Of course that is true, but there is no point in devolving corporation tax if we are not going to do something about the rate of corporation tax. The whole idea is to try to give us the same advantage as there is across the land border in the Irish Republic. The estimated cost so far is approximately £500 million. However, we will be meeting the Minister and other Ministers soon to discuss this matter. There are ways of alleviating the cost of it. Built into it are indirect costs, for example assumptions about profit movements that Europe does not expect the Government to build in at this stage and, indeed, says could be looked at retrospectively once we see what happens. That would bring the bill down considerably.

No consideration has been given to the secondary effects, which my hon. Friend the Member for North Antrim mentioned, such as increased VAT, national insurance contributions and income tax. I am not holding out the begging bowl, but those are legitimate things that the Government could consider if they wish to aid and abet those of us in Northern Ireland who believe that it is important to change the balance in our economy. We must become less dependent on the public sector, and our economy must be more balanced and able to grow because of a strong, healthy, vibrant private sector that is not disadvantaged by a tax rate that is different from the one in other parts of the island.

The hon. Member for Tewkesbury rightly mentioned energy costs, which shows that he and his Committee have good soundings on the ground in Northern Ireland. High energy users in Northern Ireland are finding that we have the highest energy costs of any part of the United Kingdom. I do not want to name the high energy users: many are well known. I do not wish in any way to raise alarm about the situations in which they find themselves, but many are at present looking hard at their operations because of the rising cost of energy in Northern Ireland, with the carbon price floor being set by the Government. We can argue about whether all this is necessary: I am not getting into that debate, because hon. Members know that I probably take a different stance on these issues from many others. We could debate all day whether setting a carbon price floor is necessary to save the world in 50 years. All I can say is that when it does not exist in the Republic of Ireland or in many of our competitor countries, we are placed at a grave disadvantage.

Hon. Members should not forget that the Government are encouraging us to consider export markets, which we are doing, which means opening ourselves up to competition and competing in markets with firms that do not face these additional costs. I am not the only one saying this. Representatives throughout the UK are saying that it is having the same impact in their constituencies.

[Mr Robertson]

Does the hon. Gentleman agree that, if the energy is not produced in Northern Ireland—and assuming demand stays the same—it will just be produced somewhere else?

[Sammy Wilson]

Having two of the major power stations in my constituency, I know this already. They are considering what their investment will be in future. In a single electricity market and with that interconnection with the Irish Republic, of course, we could find ourselves increasingly at the mercy of what happens in another country, with all the difficulties that that causes. The Government should consider what can be done with energy costs, because that is important.

On devolution of other tax powers, there may be occasions when we look specifically to have control over some things. I want to put on the record my appreciation, and that of the Northern Ireland Executive, for the work done by the Government on air passenger duty, particularly on direct long-haul flights from Northern Ireland—especially to north America—which was going to have an impact on our economy. Hon. Members have mentioned the importance of tourism, but it was not just about that; it was much more about the impact on foreign direct investment and inward investment, which was worth an awful lot in respect of our economic strategy. Around summertime last year, Northern Ireland Office Ministers worked with Treasury Ministers in the middle of the recess to get this thing resolved. It would be churlish not to show our appreciation for that work and for the way that it will now go through. That was an important measure.

I am not a great fan of devolution of more fiscal powers to the Northern Ireland Executive, but there will be occasions when we perhaps need to consider specific issues. I hope that a response will be forthcoming.

It is important to mention that the banking structure in Northern Ireland is not the same as in any other part of the United Kingdom. Some 95% of banking in Northern Ireland is done through Irish banks, which are in a poor state, or through Ulster Bank, which is an annexe of RBS. Many of the other banks that people have access to in the rest of the UK do not operate in any significant way in Northern Ireland. As a result, all the surveys about how businesses are faring in respect of banking show that Northern Ireland falls well below other parts of the UK, in respect of the terms that are offered, the availability or restriction of credit, or calling in loans.

If anything will crush the ability of the private sector to grow in Northern Ireland, it will be the absence of liquidity. The Northern Ireland Executive have considered various things, including loan guarantee funds, which the Department of Enterprise, Trade and Investment operates. We are considering how we can attract equity funds and what we can do to put some money into equity funds to get venture capital, especially for start-up businesses in Northern Ireland.

It is important that the banking sector operates properly in Northern Ireland. For example, here are some things that the Government could do. Why do we not have regional figures for how well Project Merlin is operating? I suspect that, although banks are meeting their targets throughout the UK, proportionally those targets are not being met in Northern Ireland. Could the Government do something in respect of credit easing? What could the Government do to ensure that the liquidity, which is generally pumped into the banking system, is reflected in the liquidity available to banks in Northern Ireland and, therefore, available to customers?

[Naomi Long]

The banks tell me how few people they turn down when applying for loans. However, the small businesses that say they cannot access finance say that they are dissuaded, at the first hurdle, from applying for loans and are told that, if they did, they probably would not get them. A circular argument develops, with banks saying no one is asking and small businesses saying no one is getting.

[Sammy Wilson]

That is one reason why, when one looks at all the business surveys and the terms offered for loans, compared to the rest of the UK—I had the figures here somewhere, but I cannot dig them up at the moment—some 10% more businesses in Northern Ireland are saying that terms for loans have worsened between 2007 and 2011. Of course, on top of that many businesses have huge debts associated with property.

I listened to the chairman of RBS the other morning on Radio 4 saying how the bank had brought down its bad property debts. That is good from the point of view of the bank’s record, but I know what that means in places such as Northern Ireland: a good, strong business with a core operation, but with some bad land loan attached to it, is squeezed to bring down the debt on the land and, in doing so, people are being put out of work and businesses are finding it impossible to expand, even where they have good markets. The Government have to address the banking issue in the longer run.

I will mention only one more thing, so that other Members have a chance to get in, and that is VAT. I understand Government reluctance to reduce the rate when VAT brings in a lot of revenue, but to do so would of course have very beneficial effects in stimulating the economy. The Government do not have to reduce VAT rates generally; specific reductions in the tourist sector, as in the Irish Republic, or in the building sector, so that people could put extensions on their houses and so on, could stimulate a lot of labour-intensive employment not only in those particular industries but wider afield—I am not saying for Northern Ireland specifically. Come the Budget, the Government should look at that.

[Ms Ritchie]

Does the hon. Gentleman agree that the forthcoming Budget on 21 March is an opportunity for the Government and the Treasury to look at VAT? We are not coming from Northern Ireland with a begging bowl, but we would like to see some mitigation of VAT on tourism or general products. If that were possible, we would be extremely grateful.

[Sammy Wilson]

As I said, a reduction should be targeted, and not at Northern Ireland in particular. For example, we are looking to grow tourism in Northern Ireland; we have great opportunities to do so over the next number of years, because it is one of the growth areas we have identified, but any such VAT reduction could benefit the whole United Kingdom,

As someone who values the Union, I do not want to see lots of the fiscal ties broken. Equally, I understand and said earlier that, if the home nation is facing particular difficulties, we must face them along with the rest. Being part of the Union and the Union family, however, also means that there is an obligation on that family: if there are specific problems in a particular part of the kingdom and remedies are available, those remedies must be given serious consideration. As a Unionist and as someone who believes that the Union is stronger when specific problems are recognised and action taken, I hope that the Government will respond positively to some of the suggestions made by me and other contributors to this debate.

--- Later in debate ---

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

I welcome the chance to speak in this debate under your chairmanship, Mr Scott, and to put some of the challenges facing the Northern Ireland economy on the record of the House of Commons. I am very conscious of the time, so I will try to make my points without being quite as long-winded as some of my colleagues—[Interruption.] I am not talking about my hon. Friend the Member for South Down (Ms Ritchie)—[Interruption.] No. I was talking about the right hon. and hon. Gentlemen sitting to my right, who were eloquent but very long-winded.

The SDLP has long argued for—and indeed published—a series of constructive proposals and policies, which we believe go some way towards helping to build a reconciled, socially just and more prosperous society in Northern Ireland. Central to delivering sustained economic prosperity is the need for significant growth in the private sector. We are all agreed on that and I have not heard anyone here today saying anything different. However, as the hon. Member for East Antrim (Sammy Wilson) and the right hon. Member for Belfast North (Mr Dodds) have said, the banks are killing the private sector, and that includes Ulster bank, which is part of the RBS. Like others here, I get at least two or three problems a week relating to Ulster bank and RBS. Our private sector is shrinking.

One other issue that we need to consider—sometimes in the political context, this is difficult for some of my colleagues—is a much more proactive approach to building stronger business and trade links with business in the Irish Republic. We have not fully exploited every potential there or taken full advantage of every economic opportunity that exists in the island of Ireland as a whole. I want to see Northern business being able to take advantage of any market on the island. That does not preclude our belonging to the British market; the two things are not incompatible, but synergistic.

Achieving the growth in the private sector that we all so much desire is extremely challenging, particularly in the current financial climate, but it is a challenge that we must face and a problem that we must surmount. We cannot duck it, because it will not go away.

I am absolutely delighted to say that my friend, the hon. Member for East Antrim and the Minister for Finance at Stormont has complimented us on our fantastic documents—[Interruption.] Fantastic was the word he used. We appreciated it and we will return the favour in due course. Our documents, “New Priorities in Difficult Times” and “Partnership and Economic Recovery”—[Interruption.] No, no, the word was fantastic. The hon. Gentleman may have meant fantasist but he said fantastic. We are not looking for the negative; we are taking the positive. In those documents, the SDLP genuinely identified some of the tough choices and decisions that have to be made. We faced up to them and we should have been given credit for that rather than being abused for it. We pointed out the many opportunities for making public savings and how various types of jobs could be sustained and others could be created.

If we want to maximise the potential benefits that exist in the economy, we need to be ambitious and to exercise vision. In our document, we identified opportunities and potential for growth in education and skills training, finance, tourism and new technologies, including the biotech and nanotechnology areas.

The one area that I should like to bring to the Chamber’s attention is agrifood, which is a sector that we often forget about. It is an old industry. It is remarkable that the current Minister in the Irish Republic, Simon Coveney, has a plan, which he inherited from the previous Government when Brendan Smith was Minister for Agriculture, to double food exports within 10 years. There is no reason why we in Northern Ireland cannot take a leaf out of that book and do the same thing.

There are other aspects of the economy, such as renewable energy, which will help drive the expansion of the private sector. Others have already referred to the conversion of the old Harland and Wolff shipyard site in which many renewable energy machines, wind turbines, are being developed. That will not only reduce Northern Ireland’s dependence on fossil fuels, but put us in a stronger and more sustainable position economically in 10 or 15 years time.

If we are to attract greater foreign investment, we must invest in preparing our people, because that is the basic building block for rebalancing any economy. Others, particularly the hon. Member for Belfast East (Naomi Long), have also made reference to that. The key is the STEM subjects— science, technology, engineering and maths—in our schools, because they are our bridge to creating exciting and interesting careers for our young people. We also need to increase university places to stop the brain drain. At the moment, people are leaving; they go to England, Scotland, Wales or elsewhere to university and they never come back. We need whatever brainpower we have if we are going to lift ourselves out of the situation that we are in.

On that point, I appeal for a significant expansion of the Magee campus of the university of Ulster. That campus has worked very well, it is working well and it can work even better, providing an engine to drive forward the economy, particularly the economy west of the River Bann.

Huge opportunities for innovation exist in the renewable sector, which I will discuss briefly. Northern Ireland is perfectly placed to harness wind and wave energy, and biomass and biogas. And God knows, Mr Scott, that if you were in Stormont you would understand why an industrialist has a plan to harness all the hot air coming out of Stormont on Mondays and Tuesdays. There is a conviction that much renewable energy can be captured there, but I will leave that to the future.

[Sammy Wilson]

Most of it is recycled in the first place—[Laughter.]

[Mr Dodds]

Does the hon. Member for Belfast South have any intention of leaving Stormont and devoting himself full-time to Westminster?

--- Later in debate ---

[Ian Paisley]

The hon. Lady is crying “nonsense”, but she invited people to come to St Patrick’s country. In fact, the only place where St Patrick put his feet was on Slemish mountain, so I welcome her to come to North Antrim any time, and I also welcome those tourists who want to come to North Antrim.

The golf resort that has been mentioned fits in with our Department for Regional Development strategy, our tourism strategy and the various economic strategies that have been put in place. It offers vast potential, but it does so 10 years after that potential was first identified. It offers that potential at a time now with approvals, when the economic climate has changed quite dramatically. But I believe that people are up to meeting the challenge, and I hope that Government will encourage them.

Again, those people who would talk that project down and say, “Oh, it’s not the time for that type of proposal,” or, “It’s destructive of our natural environment,” really have to be put in their place by our national Government, who can say to the likes of those organisations that may be opposed to the project, “Look, do you want Northern Ireland to go forward? Are you on the side of Northern Ireland? Or do you want to be in that bank of people who talk the place down?” I hope that we can get a collective view, and I congratulate the SDLP Minister who was able to get the case over the line, but he addressed, and people must address, the fact that many misnomers have been identified.

Some people said, “Oh, this is being built on the Giant’s Causeway.” It is not. It is closer to Bushmills than to the Giant’s Causeway. A public representative today issued a statement that houses would be dotted all over the causeway. That is rubbish. They are being built in the curtilage of Bushmills village. The previous Environment Minister, my hon. Friend the Member for East Antrim (Sammy Wilson), made sure that that was in the proposal.

[Sammy Wilson]

There is a certain irony in the National Trust objecting to a golf course that will attract hundreds of thousands of visitors to the area, when it has no difficulty raising revenue on its own estates by erecting 300-foot wind turbines.

[Ian Paisley]

I agree that someone might identify that as hypocritical. I do not know whether my hon. Friend is calling the National Trust a hypocrite, but it has not yet publicly objected. There could be suggestions of an objection. That would set things back, and we must avoid that at all costs. I welcome the fact that there will be even more holy ground in the golf mecca of North Antrim.

The hon. Member for Belfast East (Naomi Long) rightly, and with pride, mentioned Wrightbus in my constituency. When I walk down Whitehall in the morning and I see dozens of bits of Ballymena passing by in bright red, it fills me with pride that that represents 1,000 jobs in Ulster. I hope that the Minister will go to Boris, the Mayor of London, and say, “Increase that order. Get the 200 buses out there. Make sure that those buses continue to roll off the production line in Northern Ireland and generate more jobs.” It fills me with pride.

A couple of years ago, I had the opportunity to visit Hong Kong, where I saw double-decker buses that were made in Northern Ireland. We were not importing from but exporting to Asia, and that is fantastic. That is the way in which we want to get our companies to work.

On the agri-sector, the hon. Member for Belfast South (Dr McDonnell) is right. It is the backbone of our economy. No matter which way we cut it, we are part of a £20 billion industry in food production across the United Kingdom. That is not to be sniffed at, but we have huge problems at a national level with regulation that unfortunately comes from Europe. Our Government must stand up to and address such regulation. I welcome some of the steps that are being taken by our Department for Environment, Food and Rural Affairs Ministers, but much more must be done to cut the red tape to allow our poultry and red meat industry and our value-added sector in food production to move forward and develop.

EU regulations, for example, on the number of fish that someone can land are destroying coastal jobs up and down the south and north Antrim coast of Ulster. That should be addressed at a national level. I hope that we will do more to help the 20,000 farm businesses in Northern Ireland. I hope that the Minister will join me to encourage our DEFRA Ministers to organise a round table discussion in Northern Ireland with all the agricultural stakeholders, so that we can put together a common agricultural policy reform plan that will help move our agri-economy forward.

We look forward to the national remedy that could be identified soon in our Select Committee report on fuel laundering and other forms of smuggling. For example, tobacco smuggling and fuel laundering in Northern Ireland accounts for some £200 million every year. That money could be far better spent by the Treasury in Northern Ireland or other parts of the UK if it was not stolen from the pockets of the people of this kingdom. We have a duty to ensure that those issues are addressed.

I hope that the Government will drop their White Paper suggestion and potential policy for plain paper wrapping on tobacco products, as it could destroy 1,000 jobs in my constituency. That is a national matter—it has to come from here. Such a proposal must be dumped, because it will be disastrous for local jobs. I hope that we can come up with some positive suggestions to address fuel laundering and recoup some of the money that is lost.

This week started badly for my constituency, with the loss of 50 jobs in the construction sector at Patton Homes. Construction and house building is a measure of economic confidence. Whenever it slows down or stops, it shows that confidence is waning. We have to make sure that we encourage our developers, our house builders and the construction industry in the ways that have been identified by my hon. Friend the Member for East Antrim and my right hon. Friend the Member for Belfast North (Mr Dodds). I hope that we can do that.

In conclusion, we should have the ability and the capacity to envision a better future for our economy and our country. We have a responsibility to do that. We should have the ability and the capacity as a country to cope with more than one major development project at a time. Sometimes, there is a view that we can deal with only one thing at a time. We must be able to adapt and show that we can deal with multiple, complex economic opportunities simultaneously.

As my hon. Friend the Member for East Antrim ably suggested today, we need to introduce significant reforms to our banking structure. I hope that in our next Select Committee report, after our aviation strategy, we will examine banking sector reform and consider whether the structure disadvantages Northern Ireland. If it does, as many of us believe, I hope that we can try to change it. Our economy has a chance. We are on the verge of writing a new chapter for our economy, but it will happen only if we are prepared to put our hands on the plough and drive it forward. The Democratic Unionist party will not be found wanting in that endeavour.