Corporation Tax (Northern Ireland) Bill

Debate between Shabana Mahmood and Lady Hermon

Wednesday 4th March 2015 Commons Chamber

[Shabana Mahmood]

The hon. Gentleman is right to say that the perception of business is really important, but he will recognise, I think, a point that businesses often make to Members of all parties—that headline rates of corporation tax are extremely important for decisions about where to locate businesses, but that they are not the only factor that businesses take into account. I recognise the importance of this Bill for Northern Ireland, given the unique situation in which Northern Ireland finds itself. As I say, it is putting a rocket-booster under the approach taken so far to try to rebalance the Northern Ireland economy, but it will not succeed on its own—it has to be part of a wider policy framework. Despite recognition of the importance of a wider policy framework, we have not yet heard a huge amount of detail about what it will look like on the ground in Northern Ireland. These are matters largely for the Northern Ireland Executive, but they need to know and to hear that the Opposition support them in having a wider framework of policy measures around skills and infrastructure that will help to make all this a success, which we all want to see.

[Lady Hermon]

rose—

[Mr Redwood]

Will the hon. Lady give way?

[Shabana Mahmood]

I give way first to the hon. Lady.

[Lady Hermon]

I am grateful. I am curious to know what reassurances a future Labour Government would give, if they were in office after the general election of 7 May—none of us has a crystal ball, so we do not know—to credit unions and the Progressive building society, which we debated earlier?

[Shabana Mahmood]

I am grateful for the hon. Lady’s intervention, but I am afraid that I am going to disappoint her a little because my reading of the Bill, what it is intended to achieve and of the agreement that has been struck is very similar to that of the Minister. I agree with him that a deliberate part of the agreement relates to trading profits. Under the new Northern Ireland regime, corporation tax is to be devolved only in so far as it relates to trading profits rather than other aspects of business. That part of the policy is designed to make it successful and ensure that this devolution results in a genuine rebalancing of Northern Ireland’s economy. With respect, I feel that takes care of the point about the credit unions.

I have some sympathy with the argument when it comes to the Progressive building society. I have received communication from it about how it feels it will be caught unfairly by these provisions. I felt that the amendment tabled by the hon. Member for Foyle (Mark Durkan) did not take care of the scope for profit shifting within the financial services sector. We are all alive to that threat, but I am afraid that the amendment did not deal satisfactorily with the problem that the good work of the Progressive in Northern Ireland could slip through and be accounted for, whereas everything else that could result in profit shifting would be excluded. To that extent, my reading is similar to that of the Minister, and that will certainly be our approach. I am happy to give an undertaking—dependent on the outcome of the general election—to continue a debate with Members who feel strongly about this point, as did the Minister.

[Lady Hermon]

rose—

[Shabana Mahmood]

I do not want to repeat a lengthy debate on credit unions, but I will give way to the hon. Lady one final time.

[Lady Hermon]

I am extremely grateful, but we need some clarity on this. There is potential for the Labour party to be in government after the general election of 7 May, so I have to ask on behalf of all the people we on the Northern Ireland Benches represent whether the Labour party is ruling out any flexibility, as the hon. Lady seems to have done this afternoon. She has said that there will be no flexibility for credit unions, whereas I think the Minister said there could be at least some flexibility to look at back-office activities and excluded trades. Is the hon. Lady ruling that out for the Labour party?

[Shabana Mahmood]

With respect to the hon. Lady, the whole scope of the Northern Ireland regime under the Bill relates to trading profits. Credit unions do not pay corporation tax on their trading profits, so this Bill does not impact on them. I am not sure how many ways there are of saying that; I feel that the different formulations of the point have probably been covered. If the credit unions did pay corporation tax on their trading profits, we would be having a different discussion. If Members wish to see a devolution regime for Northern Ireland that includes activities other than trading profits, so that corporation tax would be paid on investments, income and so forth, that is a big call to make. If provisions were to be applied but limited to credit unions alone, it would mean carving out an exception to the regime. Let me say that that goes beyond the context of the agreement struck between this Government and the Northern Ireland Executive—the agreement that we have supported and the agreement that is the subject matter of the Bill. I would have a huge amount of sympathy if credit unions found themselves caught because they did pay corporation tax on their trading profits, but that is not the case, so—