Corporation Tax (Northern Ireland) Bill

Lord Davies of Oldham Excerpts

Tuesday 17th March 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, this has been a fascinating debate, in which two obvious problems with the Bill have been identified that might not have been entirely anticipated. They broadened the debate to such an extent that I sympathise with the Minister responding to it. The breadth that has developed is obvious enough. First, questions have been directed to points of such substantial detail that we want answers this evening because this is a money Bill and we have no chance to press the issues any further. Therefore, I hope that the noble Lord—I know how scrupulous he is in observing time limits when he is winding up—will indulge himself sufficiently to respond to those very detailed points, one of which I will refer to in a moment, so that we can make as much progress as we can before we pass the Bill, defined as it is as a money Bill, by taking all its stages after Second Reading.

The second aspect that has broadened things was raised by the noble Lord, Lord Forsyth. He was not alone in this respect, although he probably presented the most challenging dimension on it. The noble Lord, Lord Shipley, accurately reflected this as well. They said that the Bill raises issues relating to devolution powers and the position of the United Kingdom.

I am absolutely delighted to welcome the contribution of the noble Lord, Lord Forsyth, on the prospects of a convention immediately after the election. He has only to vote Labour and he will help with that. Unfortunately, he is not allowed to but perhaps he can persuade the other members of his family to vote Labour to ensure that we have a convention after the election.

The noble Lord, Lord Shipley, also identified in his very useful contribution that there are real issues at stake here. I do not doubt that the noble Lord, Lord Newby, will be somewhat reluctant to indulge in that part of the debate to a very large extent. However, it is clear that this is a further step towards devolution, which is welcomed on all sides. We heard in all speeches—and know from the deliberations in Northern Ireland, particularly in the business community—that people are in favour of this measure. Of course, as the noble Lord, Lord Bew, indicated, that might be on the basis of a fairly limited perspective on what the implications are for devolution and the position of the United Kingdom as a whole—the interaction of the parts. We heard some very challenging contributions today. It is a great pity that we are able to raise them only in the context of a Second Reading debate that concludes very shortly.

Of course, we support the Bill and will give every assistance to its progressing satisfactorily. However, we have anxieties about it. Noble Lords raised the question of the trade-off between this and the block grant. Extending wider than that, there is the whole question of devolution arrangements as well. The Barnett formula came into the debate, too. We have anxieties on those issues and the Minister must recognise that when the Bill goes through, the hoped-for increase in revenue in due course will be balanced against the block grant. I hope he will appreciate that this has considerable ramifications for the Northern Ireland public.

My noble friend Lady Blood emphasised the fact that loss of resources for government might crucially affect the amount that the Government are able to invest in, for example, training and education. These are clearly issues of great importance to making a strategy for increasing the private sector’s capacity to compete successfully. Reference was made to the days of the Republic of Ireland tiger, but it was not just the business rate taxation that was crucial to Ireland. A great deal was made of that, of course. As the noble Lord, Lord Forsyth, reflected, certain companies hived themselves off to the Republic to take advantage of that, but other factors at play also made the Republic attractive at that time. Northern Ireland has a clearly important task to fulfil in matching up in certain respects.

That is why we are concerned about the effect of this. The Government have made it clear that there is a delaying timetable for the implementation of this measure. It is dependent on the Northern Ireland community, particularly the Assembly at Stormont, reaching an agreement that gives the Government confidence that there is fiscal security in the economy, and gives strength to that economy. Two years is a pretty short timetable to make that demand—it is a pretty substantial demand as well. The Minister must flesh out what his tests are for this demand being met before corporation tax reduction powers are vested in Northern Ireland.

None of us regards corporation tax as a panacea. It can play its part, and we are aware of the strength of opinion in the business community that it will help, but it is not a panacea for the economy; much more substantial improvements need to be made as far as the Northern Ireland economy is concerned. Therefore, the only thing I can say to the Government is that I understand their need for delay—they want to get the Bill through before this Parliament concludes and so they built in the delay before implementation—but delay is no friend in circumstances where things are not improving as rapidly as one would hope.

I hope the Minister will address these issues and at least have a shot at the broader constitutional problems.

[Lord Forsyth of Drumlean]

I wonder whether the noble Lord, Lord Davies, can help me by answering the question that I put to his noble friend Lord McAvoy. I am just a bit puzzled. Of course the business community welcomes the Bill, because profitable businesses will pay less tax at the expense of the resources that are available for public services. Why is the Labour Party supporting such a measure?

[Lord Davies of Oldham]

My Lords, we see that there is support in Northern Ireland for the Bill, which will give some chance of rebalancing the economy to a certain extent. We are in favour of that, but recognise that the development of the Northern Ireland economy, as with all the other parts of the United Kingdom, will depend on much more fundamental issues than the rate of corporation tax. That is why we regard this as a marginal Bill in these terms. However, it would be fruitless of us to object to it, although I accept his point about why we did not address ourselves to other issues, rather than the reduction of corporation tax. He will know, because he is so well informed on Labour Party policy, that we propose to increase the corporation tax rate for the rest of the United Kingdom, with the specific objective of reducing business rates for small and medium-sized businesses. We think that is a quicker and more effective way of giving stimulus to the business community. There we are: on two areas of policy, the noble Lord, Lord Forsyth, and I are in full agreement. I did not expect to say that this evening.

[Lord Forsyth of Drumlean]

If it is the policy of the noble Lord, Lord Davies, that it is better to reduce business rates and that that should be applied to the rest of the United Kingdom, why is it not his policy to do that in Northern Ireland? If he believes that that is the right approach, why is he proposing something that he rejects as being the right approach in the rest of the United Kingdom?

[Lord Davies of Oldham]

My Lords, has the noble Lord not noticed that I am speaking from the opposition Benches? We are not in a position where we can implement our policies at present. It is only a matter of a short delay, as the noble Lord, Lord Forsyth, will readily appreciate. But at this stage, the Government put Bills before us and this is the Bill we have. I have only two alternatives: to reject the Bill whatever its benefits, or to accept it but state that we can do better. That is exactly what I have argued.

[Lord Empey]

My Lords, I am sorry to have to interrupt this job interview for the best anti-capitalist speaker in the House, but will the noble Lord, Lord Davies, clarify one thing? I am assuming that the Opposition support the Stormont House agreement. That agreement has subsequently been ratted on by one of the parties to the it. It appears to some of us that the reason they are doing that is the hope that, after the election, were there to be a change of Government, the noble Lord’s party would be more readily prepared to put more money into the Stormont House process. Therefore, they are holding out in the hope that that might happen. Will the noble Lord clarify that that is not the Opposition’s position and that the Labour Party stands over the Stormont House agreement as it was dealt with at the end of December?

[Lord Davies of Oldham]

Is the noble Lord seriously asking me to clarify conjecture about why people have acted as they have done in Northern Ireland thus far? The Government have said that this will need to be resolved because the reason for delaying implementation of this measure is to give us time for that to be done. We will obviously take considerable advantage of such time when we come to power.