Northern Ireland: Economy

Lord Lexden Excerpts

Wednesday 19th October 2011 Lords Chamber

Asked By

[Lord Lexden]

To ask Her Majesty’s Government how they will encourage the rebalancing of the Northern Ireland economy in order to stimulate private sector growth.

[Lord Lexden]

My Lords, I am immensely grateful to have been given this opportunity to raise an issue of the greatest importance, not just to Northern Ireland but to the United Kingdom as a whole. It is an issue which for many years inevitably yielded precedence and priority to the suppression of terrorism and to the protracted search for political stability. The most vivid memories of pain and suffering will long endure in your Lordships' House, adorned as it is by distinguished former Secretaries of State for Northern Ireland, by ex-Ministers who served with them and by leading figures from the Province itself. Thanks to their efforts, and to those of so many other people of good will, the security situation has been transformed and devolution successfully restored. This remarkable progress throws into sharper relief the issue—the third great issue in the Province's life—which is the subject of this evening's short debate: its economic future. Peace and political stability need economic progress as their third companion.

Since I have never held any public office connected with Northern Ireland, a brief autobiographical note might not be entirely misplaced. My interest in the Province was first aroused while I was at Cambridge by a former Westminster MP for South Belfast, Conolly Gage, whom Churchill had failed to persuade to take junior office in 1951. He was a staunch unionist with strong progressive views. Between 1970 and 1977, I taught history at Queen's University, Belfast, where I had the inestimable advantage of working with—indeed, sitting at the feet of—my noble friend Lord Bew, at whose bootlaces I continue to stare.

During the two years before his murder, I was Airey Neave’s political adviser. On the morning that he was killed in March 1979, we finalised the Northern Ireland section of the Conservative manifesto for the forthcoming election. “I wish we had more to say about the economy,” he remarked. There was just one sentence:

“We recognise that Northern Ireland's industry will continue to require government support”.

The words may have been few in number, but they heralded Thatcherite spending on a large scale, maintained unfailingly under successive Governments of both parties, to sustain Northern Ireland's economy during the troubled years that lay ahead by attracting inward investment, supporting the Province's precious small businesses and protecting its agriculture, which constitutes an important element of the Northern Ireland economy. Public spending per head was held at a level that was one-third greater than in the rest of the country.

Such measures were essential in those times, but they have not supplied the Province with the foundations for sustained economic prosperity in the generations that are to come. The long years in which Northern Ireland required significant support have left it in a position where public spending is equivalent to more than two-thirds of GDP. Taxpayers in Great Britain have been called on to a substantial extent; they now provide the resources for around half of all government spending in Northern Ireland. That surely gives them a powerful interest in the future of the Northern Ireland economy.

Despite high public spending, in no other region is so large a percentage of the population of working age economically inactive. Yet, in this same region entrepreneurs once built vast businesses that made the north of Ireland a leading industrial centre, part of a mighty web of enterprise that also embraced Glasgow and Liverpool and created the economic basis for Ulster's enduring political union with Great Britain. In 1894—I mentioned that I was a historian—the president of the Belfast Chamber of Commerce proudly boasted that the annual output of linen yarn in the north of Ireland,

“amounts to about 644,000,000 miles, making a thread which would encircle the world 25,000 times. If it could be used for a telephone wire it would give us six lines to the sun, and about 380 besides to the moon”.

I have no idea whether the great man's calculations were accurate, but this claim that Ulster's linen industry surpassed all others is incontestable.

Having achieved so much in the past, Northern Ireland can surely set out with confidence to re-establish a thriving private sector of significant size in a form suited to the conditions of the 21st century. That, of course, is the rebalancing to which my Question this evening refers. The absolute necessity of striving to achieve it has been fully recognised by the coalition Government. Indeed, it is one of their principal objectives set out in their programme agreed after the election. Last year's Budget spelt out the details: the process of rebalancing,

“will include examining proposals for economic enterprise zones, possible mechanisms for changing the corporation tax rate and other economic reform options”.

The case for such action is constantly on the lips of my right honourable friend the Secretary of State for Northern Ireland, who puts the arguments for it with brio and such dedication. Speaking at the Conservative Party conference a fortnight ago, he reviewed progress, reiterating once more that the Government's,

“task is to rebalance the economy by encouraging private enterprise and supporting entrepreneurs and new business ... Only last week the Chancellor announced changes to Air Passenger Duty to save our vital direct air link to the United States. We’ve also provided the Executive with the money to set up new enterprise zones”.

Here my right honourable friend touches on one of the preconditions of success in Northern Ireland; that is, effective partnership between the coalition Government and the Executive at Stormont. It is surely the duty of us all to encourage the Executive to play their full part in the work of partnership. Funds have been supplied to establish enterprise zones. Proposals are now awaited from the Executive. It is frankly disappointing that five months after the Northern Ireland elections the Executive have yet to produce a programme for government.

At the very centre of discussion about how the Northern Ireland economy can be rebalanced stands the question of introducing a rate of corporation tax in the Province substantially lower than that which now applies throughout the country. The proposal stirs some instinctive unionist scepticism. Those, such as Joe Chamberlain, who called for home rule all round—devolution for all four constituent parts of the United Kingdom—at the beginning of the 20th century believed in devolved institutions with equal powers. But what we have today is, in the current unlovely phrase, asymmetrical devolution with more power vested in some devolved institutions than in others.

In this context, should Northern Ireland have its own low rate of corporation tax, particularly since across its land border, the Republic of Ireland—a key competitor in many areas—has long been reaping the benefits of a 12.5 per cent rate? The issues were set out in a consultation document, Rebalancing the Northern Ireland Economy, published by the Treasury in March. The responses were numerous with business organisations and the five parties in the Northern Ireland Assembly all expressing strong support for change. A ministerial working group is now being set up to examine in detail the complex and technical matters that need to be addressed. My noble friend Lord Shutt will no doubt have something to say about it.

Like the rest of our country, Northern Ireland today needs jobs; that is, jobs in the private sector, jobs that will last, jobs in the industries of the future and jobs that will match the vast range of talent that exists in that wonderful Province. The highly regarded Northern Ireland reform group estimates that a corporation tax rate of 12.5 per cent could create as many as 90,000 new jobs over a 20-year period. Without new and fulfilling jobs for young people in particular, much of the Province’s great talent will leave and find employment elsewhere. Northern Ireland cannot afford such loss. That, above all, is why economic prosperity, springing from private sector growth, is essential to secure the vital third element of the full restoration of the Province’s fortunes after its long, dark years. That is why so many people believe that the case for a 12.5 per cent corporation tax rate is now so compelling.