Cross-border Crime

Mark Durkan Excerpts

Wednesday 11th March 2015 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

It is a pleasure again to follow the hon. Member for Belfast East (Naomi Long), as in the previous debate. Again, much of what I say will find agreement with what she has said, and indeed with what some other hon. Members have said. I might need to take up some other points that were directed particularly at the SDLP.

I am glad to endorse the motion and commend my colleagues—right hon. and hon. Members from the DUP—for introducing it. It is important that we now harness every single effort that we possibly can to combat organised crime in all its forms and at all its levels, conscious of all its effects and impacts.

As other hon. Members have said, some people perhaps labour under a false impression that fuel laundering or smuggling is a victimless crime, but it is not. It robs revenue from hard-pressed public services. Such scams are not against big business and the taxman, but against neighbours, the community and consumers, as well as against public services and the revenue on which those services depend. In that sense, we are all victims of these crimes.

Nobody should have any fancy notions about the rackets and scams happening in this part of the 21st century being in any way connected with little family, folklore stories of people smuggling butter during the war years. They are nothing like that, and should not be seen in such a way. This is ruthless big business, and people are in it not just for their own mercenary motives, but with lethal menace. They go about their business in that way, and people who dare to interfere with them, are suspected of cutting across them or make a tip-off about their rip-offs face very serious consequences. That is why people who are conscious of, or surmise that, things are going on, first, find that it is very difficult to say anything, and secondly, find it hard to believe that more is not being done by the authorities who know about it, seem to know about it or should know about it.

Other hon. Members have mentioned cases in which action has been taken, but such action has been taken at a time or in a way that means people have removed themselves from a property and destroyed the evidence there before the authorities arrive. That raises all sorts of questions about how such situations arise.

There is a sense of scandal in many quarters about the fact that, as we moved on from the paramilitarism in all the forms we knew during the troubles, there was basically an acceptance that it was okay for some paramilitaries to privatise themselves into various criminal activities so long as someone within their broad political community could vouch for their staying on the right side of the argument over the peace process. The authorities were told to be careful about interfering with or coming down too heavily on some of those people because it might upset the balance of opinion or of favour within their republican base. That sense of scandal is one reason why the authorities need to be seen to be acting with full intelligence and full vigour, and why people want to see the courts follow through on prosecutions brought by policing authorities and HMRC, with convictions and credible, meaningful sentences. Rightly or wrongly, there is currently the sense that in that regard something does not add up or some connection is not being made.

Hon. Members have touched on the environmental impact of some of these crimes. Just as the criminal activity—the sourcing, processing and transfer for sale of the materials—is of a cross-border nature, so too have been the hazardous environmental impacts. Materials have been dumped into watercourses and have found their way into various counties and communities, as well as into waterways contributing to the public water supplies, on both sides of the border. That shows that the people committing these crimes are not just content with acting against the authorities or big businesses, but are prepared fundamentally to risk the health and well-being of neighbours and communities.

Hon. Members have mentioned the delegated legislation Committee that met in the House this week to discuss providing for the NCA to have full powers in Northern Ireland, and that is something I welcome and that we have worked for. When the legislation was first introduced in the Chamber in 2012, we made it clear that our concern was not opposition in principle to the role of the NCA, but a requirement that the NCA should meet the Patten threshold. We set those terms and they have been reached. I acknowledge the role of the Home Secretary and her ministerial colleagues in the Home Office, as well as that of the Minister of Justice in Northern Ireland, the NCA, its director, and the PSNI leadership, in helping to tease through those issues. The Chair of the Home Affairs Committee said that a circumstance has been arrived at that means Northern Ireland has a scheme of accountability and insight for the work of the NCA that he would like for parts of Great Britain as well. We have arrived at something stronger.

It must also be noted that the legislation does not only give the Policing Board Patten-style oversight and accountability in terms of the work of the NCA. It does not only vest particular responsibility in the Chief Constable, or only ensure that the ombudsman’s reach on issues arising with the NCA entirely matches the reach that it has for the PSNI. It also gives the Policing Board responsibility for encouraging public co-operation and support for the work of the NCA, which is hugely important. People need to understand what the work and role of the NCA will be so that they cannot misrepresent it in some sinister way, as some may try to do in the aftermath of the debate last month in the Assembly and the legislation passing through this House. That must be clearly understood, and I am sure that Members of all parties—certainly all those represented in this House—who are on the Policing Board will want it to discharge that role of assisting in full public co-operation with the NCA, as well as all the other vital roles that will fall to the Policing Board under these arrangements.

As we have heard, this debate is not just about fuel crime because there is also the issue of counterfeit goods. Again, criminals are using significant networks to make real profit for themselves at the expense of consumers. Those consumers are not buying quality or reliable products; they are buying products that are not only substandard but can be dangerous and risky in many ways. All of a sudden the House supports the added profile coming from organisations such as the Trading Standards Institute, again to help make people aware of the situation. It is important that some of these messages do not always appear to come from traditional law enforcement mechanisms but come from other civil purpose agencies as well, so that perhaps people will listen to them differently and hear—or at least credit—a warning that they do not hear from somebody else. We need to see that issue cracked, and action against it.

There is also significant waste crime in Northern Ireland and, of course, in the island of Ireland. Some of that waste crime has been cross-border in character, but not all of it. There have been debates about the NCA, and whether delays in passing legislation on that issue mean that all the work of the Serious Organised Crime Agency and other policing responsibilities that still fell to the police during that period will stop. One point that has been made is on waste dumps. One significant illegal waste dump was found in recent years in my constituency. It clearly represented an illegal business on the scale of millions of pounds. It emerged because of a random activity by the Northern Ireland Environment Agency. It was not known to anybody in policing, anybody in HMRC or anybody in SOCA. Nobody knew it. Everybody knows that it was essentially sourced and directed not from my constituency but from South Armagh. It seems strange that the Northern Ireland Environment Agency happened to stumble on it. It was not because of a tip-off or anything else—it was pursuing another matter and it came to its notice. Given the provenance and the scale of the business, it is hard to believe that nobody knew it was going on.

That brings us back to the concern that other hon. Members have reflected. There is a sense that a blind eye is being turned, and that there is some sort of set-aside deal going on, where people are saying, “You can have those rackets up to that point so long as you don’t transgress in other matters.” The hon. Member for Upper Bann (David Simpson) mentioned the 2p in the pound. I would certainly refer to deals done between SOCA and people it was meant to be pursuing in respect of criminal assets. Those deals were for pennies in the pound. The story is that such deals were brought before the High Court. What choice would the High Court have but to say, “Here is an agreement between SOCA and somebody it is pursuing”? Of course the High Court would accept that agreement. Word has it that that sort of agreement not only applies to the individual in that case, but has the status of a group deal—it becomes the going rate for offers to join in on those terms.

That is one of the issues that the Social Democratic and Labour party was at pains to ensure could be addressed in future. We want oversight and accountability mechanisms that apply to the NCA. Many of the questions asked in the debate could be framed, raised and properly addressed in the Policing Board’s engagement with the Chief Constable, and with the director of the NCA, whenever they hear NCA reports and plans, and whenever they monitor the effectiveness of the NCA’s work. That all goes to the Policing Board under the arrangements. It would be right and proper to pursue that.

Another experience of SOCA that I hope will not be repeated under the NCA arrangements is that we had evidence, which I took to the Secretary of State and others, that MI5 was promising that, if people turned and joined dissident organisations and essentially became MI5 agents, it could remove a working SOCA interest in them. We presented evidence that showed that SOCA seemed to be pursuing people not so much for SOCA’s purposes, but to help frame operations that had MI5 at their heart. We must ensure that none of that happens in future. We must ensure that the NCA’s work and the work it carries out in Northern Ireland with the PSNI under the approval of the Chief Constable has none of that about it. If it does, it brings the NCA into disrepute, and compromises the Policing Board’s important role in ensuring the fullest support for, and engagement with, the NCA’s future work.

Revenue and Customs needs to be more active in these areas. On many of the cases referred to by other hon. Members, it has been less than authoritatively convincing in its silence. More assurance is needed.

We need to encourage fully the significant cross-border work that takes place under the Organised Crime Task Force. I recognise that that extends not just to the areas of crime that many of us have touched on today, but to other areas of crime—this was touched on by the hon. Member for Belfast East—relating to human trafficking. It was heartening that one of the first engagements of the new UK Anti-Slavery Commissioner was a meeting with the Minister of Justice in Northern Ireland and his southern counterpart to address this issue. The Under-Secretary of State for the Home Department, the hon. Member for Staffordshire Moorlands (Karen Bradley), will recall that this was one of the issues on which I tabled amendments during the Committee stage of the Modern Slavery Bill, to ensure that all aspects of the Bill would either apply to Northern Ireland or be compatible with legislation that was then going through the Northern Ireland Assembly. In particular, I wanted to ensure that the new commissioner would be able to consider issues in Northern Ireland, and the performance of enforcement agencies not just in Northern Ireland but as they operated and liaised and engaged with their counterparts in the south as well.

I am very glad that we have legislation not just in respect of the NCA, but modern slavery provisions. That puts us in a stronger position to address different aspects of serious crime as they happen in Northern Ireland and across the border.

Oral Answers to Questions

Mark Durkan Excerpts

Wednesday 28th January 2015 Commons Chamber

[Dr Murrison]

The hon. Gentleman makes his points in his usual robust fashion. It is clearly important that justice is done in Northern Ireland as it is throughout the United Kingdom, and that when there are failings they are properly investigated.

[Mark Durkan (Foyle) (SDLP)]

4. What steps she is taking to safeguard records relevant to the work of the Historical Investigations Unit, the Independent Commission for Information Retrieval, inquests, and other inquiries into the past.

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

The Northern Ireland Office takes responsibility for safeguarding its records very seriously and will continue to follow existing protocols.

[Mark Durkan]

The Secretary of State gave the commitments on behalf of the British Government in the Stormont House agreement to ensure that whenever the new mechanisms come into place all records will be given to them. What steps is she taking to make sure that all current records will still be available? She knows that there have been many cases where files or their contents have disappeared, to the dissatisfaction of those dealing with them. What steps is she taking to safeguard against that?

[Mrs Villiers]

The Northern Ireland Office undertook a review of record keeping in the wake of the problems that occurred in relation to the cases involving the RPM—royal prerogative of mercy. We are satisfied that all necessary measures are in place to ensure that records will be available for transfer as appropriate, but we will also take steps to make sure that sensitive material is protected from onward disclosure by the institutions concerned.

Corporation Tax (Northern Ireland) Bill

Mark Durkan Excerpts

Tuesday 27th January 2015 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

I join fellow Northern Ireland Members in acknowledging not just the enthusiastic contribution from the right hon. Member for North Shropshire (Mr Paterson), but his long-standing role on this issue. I know that when he was Opposition spokesperson on Northern Ireland, he took a deep interest in the issues facing the community in different parts of the country, and he was particularly interested in helping those who were trying to develop the economy. I recognise that he had a particular sympathy with the case that was being made, but giving Northern Ireland the capacity to differentiate itself in respect of corporation tax was not getting much of a hearing from the then Government.

I recall chairing the Enterprise, Trade and Investment Committee in the Assembly during some of those years, and in that capacity I had meetings with David Varney, who had been asked to produce a report by the British Government. It was quite clear from my conversations with David Varney and when we collectively as an all-party Committee met him that he was picking up different sentiments from across the political parties, and certainly from the permanent Government. A particularly sceptical attitude was notable on the part of certain quarters in the civil service, who may or may not have been speaking for their Ministers. The strong suggestion was made that the case noisily being put collectively by the Northern Ireland parties via the business groups—I recall the late Sir George Quigley doing great work on this—was not being matched by what was being said in private. That is what the Government were saying.

That might have reflected some trepidation about the possible impacts of the change or the price that would have to be paid for making it, but it was always the case that a price would have to be paid when it came to corporation tax. I remember when the Business Alliance had its first meeting about corporation tax. I recently heard that that ball was thrown in by Peter Robinson when he was Finance Minister. This was back in late 2002, after the Assembly had been suspended, and it went into 2003. Some of us said then that the issue would come down to whether we were prepared not just to seek the devolution of corporation tax, but to pay the price for such devolution, and that we needed to prepare for that conversation. At that stage, some of the parties said no, as they did not think that was needed, so the issue was ducked.

To be honest, I do not think we shaped up enough to make the case as well as we might have done. That was not the first time that the issue of capacity in relation to corporation tax was raised because it came up in the negotiations leading to the Good Friday agreement. Some of us said that we wanted to build in capacity for fiscal discretion, particularly in relation to corporation tax and some other taxes that had an economic impact. That was certainly the SDLP’s position.

The right hon. Member for Torfaen (Paul Murphy) was chairing the detailed negotiations on strand 1, and that is often forgotten, when everybody else claims all sorts of credit for the peace process. He honestly reflected that he was under strictures from the Treasury not to encourage too much discussion on the issue, but he nevertheless facilitated and allowed it. It just so happened that there were not too many takers among the Northern Ireland parties for it at that time. Perhaps people did not believe that we would get an agreement at that stage. There were certainly not many takers. With the exception of the SDLP, which put forward arguments about corporation tax and other matters, and the Alliance party, which favoured the Scottish-style proposal of 3% on income tax, there were no other takers for according fiscal discretion to the Assembly. The argument and the case were made, but for whatever political reasons, people did not embrace them.

So the argument was put back on the table by the Business Alliance between late 2002 and early 2003, but it particularly came back into play with the restoration of devolution in 2007. To be honest, the question arises as to why more of a case for it was not made when the terms for restoring devolution were discussed. Some of us raised the issue again during all those negotiations in 2005, 2006 and 2007, but there were no takers or backers for it. Perhaps people needed the confidence of seeing a more settled phase of devolution before they could fully turn their minds to the issue.

Perhaps if we had achieved the devolution of corporation tax much earlier, we would have been much further down the road when it came to all the benefits it can offer. We are told that all this opportunity and prosperity can come on the back of this corporation tax differential, so would it not have been much better if we had done this years ago—at a time when we had a much healthier budget management situation for the devolved Executive?

[Mrs Villiers]

Given that the hon. Gentleman’s party holds the environment portfolio in the Executive, does he agree that one way to get the full benefit of corporation tax devolution is by making Northern Ireland more competitive by reforming the planning system? It would be good to see back on the agenda in the Assembly the amendments that were debated on the reform of judicial review and planning, because it seems that the system is getting in the way of some important and worthwhile infrastructure projects in Northern Ireland.

[Mark Durkan]

I think that is a very unfair criticism of previous Ministers of the Environment who presided over that very system for many years and who are here. Yes, we hold that portfolio at the moment and, yes, we have made significant moves and improvements. What we did not agree with was the attempt to abandon planning criteria on the basis of the say-so of the First Minister and the deputy First Minister by designating a particular area. We thought that would lead to controversy, and the resistance to it came not only from the SDLP Minister but from many stakeholders, including many economic representatives, who were very sceptical about this strange approach. There are straighter and better ways of improving the planning system in Northern Ireland and of making it more efficient and more effective.

Many people have raised the issue of Northern Ireland’s competitive position compared with the south of Ireland. We need to remember that the sort of factors at play in the south of Ireland’s very successful drive for inward investment and its successful growing of its indigenous companies to become increasingly global players—to be acquired and, indeed, to conduct acquisitions themselves—go beyond just the corporation tax regime. They include the very significant long-term investment in further and higher education—not just at university level, but at the level of the institutes of technology. Many people are going to graduate from the technical universities as well, and this has happened alongside heavy investment in infrastructure and a very responsive and better managed planning system to deal with the needs of companies. The planning system in the south might have been long and delayed for some infrastructure projects, but when it comes to industrial projects, it has moved with a fleet of foot, and Northern Ireland does not compare well with that.

Like others, I believe that corporation tax on its own is not a silver bullet, a magic bullet or any other type of bullet. We in Northern Ireland are not meant to like bullets nowadays, but we sometimes find ourselves talking about them in contexts such as this. The fact is that we need to consider other policy measures as well. The Executive will be put under some strain by the budget scenario that they will face over the next few years when it comes to the other drivers that will be needed to maximise the benefits of corporation tax in a way that would compare favourably with the success of the south.

Mine is a border constituency. The Foyle constituency contains the city of Derry, or Londonderry as some Members would be quicker to call it, and many people in the constituency work in businesses across the border. The right hon. Member for North Shropshire referred to investments in Letterkenny. Many of my constituents work there, and there is strong cross-border co-operation. Something that is good in Letterkenny is good for Derry, and something good in Derry is good for Letterkenny.

There are firms that are paying 12.5% in corporation tax, but that does not mean that we have full employment in Derry. Some Derry firms are in nearby Donegal, and firms there that are Derry-based and originated in Derry employ many Derry people. A peripheral border region will face other infrastructure challenges, and the corporation rate on its own will not deliver high employment.

We must ensure that the Bill does not create unnecessary complications or confusions for the firms that would benefit from it, or create reputational problems for the region and its governance. The Chairman of the Select Committee, the hon. Member for Tewkesbury (Mr Robertson), wanted to know whether some clauses would be taken on the Floor of the House during the Committee stage or whether the entire Bill would be dealt with upstairs, but, in any event, we shall need to go through all the detail. I agree with the hon. Member for Bury South (Mr Lewis) that the Bill requires the fullest and best possible scrutiny, so that we do not find ourselves surprised or confused by what may emerge later, whether it is the behaviour of businesses or the response from the Treasury or Her Majesty’s Revenue and Customs. We may be confronted by patterns and practices that we did not anticipate, or that we assumed would be dealt with by measures in the Bill.

The Bill introduces not just the capacity to devolve corporation tax in the sense of allowing the Assembly to set a different headline rate, but a whole calculus in relation to the effects on the block grant. There is what could almost be called a new ecosystem of company definitions: for instance, the Bill defines Northern Ireland regional establishments, Northern Ireland small and medium-sized enterprises, and Northern Ireland rate activity. All that will clearly provide a field day for the accountants and others who will have to work their way through it and take companies through it, but we, as legislators, will have to be careful when dealing with those terms. We shall need to understand how they will operate in practice, and how they will be interpreted. We shall need to know how the relevant profits will be measured, not least the relevant intellectual property profits.

The Bill states that the Government—the Westminster Government—will retain full control of allowances and credits, and I can see the case for avoiding an arrangement whereby the regional Government would be responsible for both the headline rate and for allowances. The devolved Government might well be susceptible to particular pressures from particular sectors for specialised allowances. That could create more difficulties and confusion, and it could also create a risk of some regional disrepute. There is, rightly, an increasingly worldwide movement in favour of more transparency in respect of tax matters and the conduct of taxation. We in Northern Ireland are not in the business of trying to create twilight zones in relation to tax adherence, and we recognise the need for a proper balance.

Today a Tax Dodging Bill campaign is being launched by a very active alliance that includes Action Aid, Christian Aid and Oxfam. The aim is to broaden efforts to create greater transparency in respect of corporate taxation, to establish new standards, and to bring about the introduction of a Bill in the next Parliament. I support the campaign, and was involved in many of the preliminaries. I must make it clear that there is no tension or contradiction between supporting the principles of that campaign and supporting Northern Ireland’s capacity to set its own differential rate of corporation tax.

Other Members have talked of the need to balance the economy, Growing our indigenous private sector while also attracting more inward investment and investment from industries that can partner our local companies is hugely important, and the corporation tax measures can open some windows for us in that regard. However, it is not just a question of rebalancing the economy; we must rebalance the region. The west of Northern Ireland—not least my own constituency—is clearly lagging behind in terms of both infrastructure and employment. We must ensure that, we well as the corporation tax rate, we have other instruments that have been properly developed. We need infrastructure investment to underpin shared growth across the region, and we also need significant advances into tertiary education.

People refer to corporation tax as a game-changer, but most people and businesses in my constituency are clear about the fact that the single biggest game-changer for us would be an expansion in higher education. That is not just needed to enhance the university status of the city of Derry; it is needed in Northern Ireland, which is, in effect, exporting a university campus every year. Given what is happening in the south of Ireland, the north will lose out very badly if it decides that corporation tax is the only thing on which it wishes to compete with the south. We are not competing with the south, or indeed this country, on further and higher education.

However, we also need to recognise this is not just about competing with the south. There has been almost an obsession with Northern Ireland’s competition with the south in relation to corporation tax. We need to recognise that the game is changing when it comes to competition in cities and city regions. Important things are happening on this island. For instance, enterprise zones have developed and taken on a different life. As we have heard from the Opposition, it is not a question of “Life on Mars”, or a return to the 1980s. Enterprise zones have had different effects in different areas, and some have been more vibrant than others. More and more Opposition Members want them in their constituencies, along with city deals and growth deals.

Cities and other locations in Northern Ireland are not just competing in economic terms with parts of the south, but with places on this island as well. Alongside the latitude on corporation tax, I should like the Executive to pursue the idea of creating their own version of city deals, and recruiting support from the Treasury and any other support that is needed from Whitehall. That is what happened in Scotland in connection with the city deal for Glasgow. Therefore we could, and should, be developing more tools, rather than leaving everything to corporation tax alone.

The hon. Member for East Antrim (Sammy Wilson) and others raised issues to do with the financial sector, and I think it is right that there are limitations and qualifications there. People would have been very sceptical if a corporation tax measure for Northern Ireland had meant that the banks were freely able to move their brass plates or some of their offices purely to avail themselves of lower corporation tax. I do not think people in Northern Ireland would want that, and certainly people elsewhere would not want it. Would it happen? Well, we suddenly saw at one point during the Scottish referendum campaign that banks were saying they might move, depending on the result. That would have been the first bank run in history in which the banks were going to move yet the money was going to stay, but that was what was being talked about, so there is reason to believe that might happen.

We will have to tease out in Committee or at another time some of the questions around the financial sector and other sectors in terms of the interpretations and implications of what does or does not count as a back office. Similarly, questions have been raised around what we have been told about the calibration that will be done in relation to allowances and credits, so that, for instance, the film industry and other creative industries may be told that there will be a clawback of some of their other allowances and credits if they are in Northern Ireland, to take account of the benefit they are getting in terms of corporation tax. We need to tease out whether people actually have to have those benefits and receive them before the clawback will take place, or whether they will be told that on paper they could benefit from that as they are in a different corporation tax environment and that therefore they are in a different environment as far as the allowances and credits are concerned. So the question of when some of these things are triggered or kick in is important.

There are similar issues in relation to the impact on the block grant. If we are going to start with assumptions being made as to the opportunity cost in revenue terms of the lower rate of corporation tax for Northern Ireland, this issue arises: once we know what it actually is, will adjustments be made year on year to the block grant, so that if less is forgone in one year than was anticipated, that will be made up in next year’s block grant? Similarly, will more come out of the block grant if there is deemed to have been more uptake in relation to the corporation tax differential? We need to tease out more detail.

The credit union movement is very dear to many people in my constituency. The credit unions are strong in my constituency. They pay corporation tax and they would like to think that they will not be counted as benefiting from the lower rate, because they are rooted in the community and exist totally for, and are dedicated to, the community, so they will not be salting away profits in an egregious way. They will not be abusing the system, and they want assurances that they can be protected and that they will not be treated in the same way as the banks in terms of the protection against any possible undue benefits going to the financial sector.

On procedure, the hon. Member for Tewkesbury (Mr Robertson) has made the point that he would like this Bill to be taken on the Floor of the House. I believe it could be, and certainly significant clauses could be taken on the Floor of the House, so that if and when issues arise in a few years’ time, none of us has the excuse of saying that we did not know and we were not in on that. I am not afraid of the questions that arise from the Scottish position, the Welsh position or anything else, so I do not agree with those who say we should just take this away in secret Upstairs, and that we cannot afford to answer any questions that might arise. I think we can address those questions.

It is my belief that, as this plays out, Northern Ireland will end up with lower rates of corporation tax but probably not for long, because I think a deal will be done in future that sees corporation tax devolved in some form or other to Scotland, and I think that on the back of that there will be strong pressure to say that the corporation tax rate in England must come down further. The Government who have produced this Bill are a Government who have reduced corporation tax throughout this Parliament, as the Secretary of State said in her opening remarks, and I cannot believe that they will not be committed to trying to reduce corporation tax if they are in government in any future Parliament—and of course they would use the lower rate of corporation tax in Northern Ireland and Scotland to drive that measure and catch the Opposition in the same way as they think they caught the Opposition today.

--- Later in debate ---

[Mr Gauke]

The sense of direction in increasing corporation tax would be a mistake. I will not detain the House for long on this matter, but I also note that Labour’s pledge is to have the lowest corporation tax rate in the G7, which would allow it to increase corporation tax to 26%. That would be a major reversal of the progress made by this Government. However, I am sure you would like me to return to the issue of Northern Ireland, Madam Deputy Speaker.

Let me add my tribute to those that have made to my right hon. Friend the Member for North Shropshire (Mr Paterson). Having worked with him in opposition and in government on this policy, I can testify to the vision, tenacity and infectious enthusiasm he has shown. He demonstrates, as does this Bill, what can be achieved by a Minister with his determination and vision, and he deserves much of the credit for the progress that has been made. He also rightly paid tribute to the current Secretary of State, who has demonstrated great skill in making progress on this matter. He put a lot of the momentum into the process, but it has also required her talents to bring us to this point.

The hon. Member for East Antrim (Sammy Wilson) made an excellent speech about the history of this progress. He and I have had many conversations and meetings on this matter. He described the progress by saying that we would go forward a bit and then back a bit, and that at times it was frustrating. I can tell him that I shared that experience, but he made a good case for the progress we have made. He also made an important point about the Republic of Ireland’s resistance to raising corporation tax at times when it faced great financial difficulties. That point was also made by my hon. Friend the Member for Tewkesbury (Mr Robertson), the Chair of the Northern Ireland Affairs Committee, who described how important it was to the Republic of Ireland to maintain low rates of corporation tax and to grow the private sector.

My hon. Friend made a couple of other points that I wish to address. He mentioned timing and said it would take a couple of years before this measure comes into effect. As has been said by a number of hon. Members, it is important that we set a sense of direction so that businesses can see where things are going in future years, but it takes some time to implement a change of this sort. Therefore, the 2017 timetable is as fast as is realistic. He also asked whether we should have the Committee stage on the Floor of the House or upstairs. That is largely a matter for the usual channels, but given that we want to make progress as quickly as possible and that a limited amount of time is left in this Parliament, it is right that we take every opportunity to make progress on this as quickly as we can. The fastest and easiest way of doing that is by holding the Committee stage, which will involve detailed scrutiny of some 87 pages of legislation, upstairs.

The hon. Member for Foyle (Mark Durkan) rightly made the point, as did a number of other hon. Members, that other issues will drive growth and this measure should not been seen as a silver bullet. He also said we should not create a new twilight zone where businesses and individuals can play the tax system to their benefit, and I will deal with that briefly in a moment. My hon. Friend the Member for Redcar (Ian Swales) made similar points about tax avoidance and also mentioned the impact of this measure on the UK more widely, and I will deal with that in a moment also.

The hon. Member for Belfast East (Naomi Long) made an excellent speech. A couple of points worth highlighting are the need for Northern Ireland to get its financial house in order and to have sustainable public finances, something that is well recognised, and the fact that political stability is important for providing the environment for economic growth in Northern Ireland. I agree with her on that.

My hon. Friend the Member for Amber Valley (Nigel Mills) brought his technical expertise to this debate. He raised a number of points that are probably best addressed in Committee. I do not know whether he was making an application to serve on that Committee, but he certainly raised a number of important points.

The hon. Member for Upper Bann (David Simpson) talked about grasping the opportunity to help economic growth in Northern Ireland. The hon. Member for South Down (Ms Ritchie) made a similar point. She also highlighted other matters, and talked about how to help the Northern Ireland economy. She asked about our engagement with the Northern Ireland Executive. I can assure her that, over the course of many years, there has been significant engagement, that the Northern Ireland Executive have been involved in discussions on the joint ministerial working group and the subsequent design process, and that we have kept the Northern Ireland Executive informed of progress in the design of legislation and taken their views into account when agreeing the final design. There have also been regular discussions at official level between the Executive, Her Majesty’s Revenue and Customs and the Treasury. I am grateful to the Executive for their co-operative approach at ministerial and official level, and that engagement is continuing.

To conclude the debate, the hon. Member for Strangford (Jim Shannon) also highlighted additional challenges that Northern Ireland faces, including improving the planning system and ensuring that the skills base and education system is working for Northern Ireland, and all of those were good points.

Let me pick up on a few of the issues to emerge from the debate. The most significant point, which was raised on a number of occasions, was ensuring that this is about real economic activity. This is not about profit shifting or a brass plate. I can assure the House that we very much share that view. This is not about finding a way in which companies can reduce their tax base through contrived or artificial arrangements, but about encouraging jobs and growth in Northern Ireland. We will ensure that HMRC has the capacity to deal with these matters. For example, when dealing with transfer pricing matters, HMRC will have a risk-based approach to ensure that the system works, so that we do not see the type of activity that so concerns Members.

[Mark Durkan]

On the subject of HMRC capacity, I know the Minister is talking mainly about its powers and where it is sited, but has any thought been given to the regional capacity that it will need in relation to these new discrete considerations that will apply in Northern Ireland, because that might lead to a revision of HMRC’s projection for its staff needs in Northern Ireland?

[Mr Gauke]

The important issue here—it was also a point raised by my hon. Friend the Member for Redcar—is ensuring that there is the capacity to deal with the transfer pricing issues. Transfer pricing is a highly skilled and specialised discipline within HMRC. It is important that the transfer pricing team has the capacity to deal with those matters. That is best done on a centralised basis rather than having people dispersed around the United Kingdom. The hon. Gentleman and I have had many conversations over a number of years on the issue of HMRC’s presence in Northern Ireland. Let me stress that this is a matter of ensuring that we have the right skills, that the customer relationship managers work closely with businesses and that there is a good understanding of how this differential rate will work and be applied.

It is worth pointing out that it will not be possible for companies to set up a brass plate to benefit from a lower rate in Northern Ireland. The rules require a permanent physical presence in Northern Ireland and, more fundamentally, a calculation of Northern Ireland’s trading profits based on the profits that the Northern Ireland activity would have made as a stand-alone entity. That separate enterprise approach coupled with the exclusion of investment profits from the Northern Ireland regime should ensure that common international tax avoidance arrangements cannot be replicated within the Northern Ireland regime. As a Government we have a proud record of progressing the international debate on the issue, and we are not going to allow an opportunity for abuse in our system.

On the block grant adjustment, the Stormont House agreement sets out that the block grant will be reduced to reflect the tax revenues forgone by the UK Government as a result of devolving tax powers. We will continue to work with the Northern Ireland Executive on the detailed mechanics to ensure that the Northern Ireland block grant is reduced appropriately. The reduction will depend on the rate that is set by the Northern Ireland Executive. To answer a point made by my hon. Friend the Member for Redcar, there are no particular restrictions on that. Conceivably, it could be a 0% rate, but that would have to be paid for and it would be expensive. An estimate of the cost to the Northern Ireland Executive of a 12.5% rate is in the region of £300 million by 2019-20, which is when the steady state will be in place. That will depend on a number of factors, not least the growth of the economy.

I am conscious of time and the fact that there is another debate to be had, but let me conclude by saying that there is a strong case for action in this area. The Northern Ireland economy is significantly more dependent on the public sector than the rest of the UK, with about 30% of workers employed there, compared with about 20% in the rest of the UK. The Northern Ireland corporation tax rate of 21% has to compete with the rate in the Republic of Ireland of 12.5%. If corporation tax is lowered in Northern Ireland, about 34,000 businesses in Northern Ireland stand to benefit, including 26,500 small and medium-sized enterprises.

The Northern Ireland Executive will have greater power to rebalance the economy towards a stronger private sector, boosting employment and growth. Northern Ireland will attract more investment and become more competitive, boosting the entire UK economy and the standard of living of people across Northern Ireland. The Bill is conditional on the Northern Ireland Executive continuing to work to balance Northern Ireland’s budget to ensure that people across the UK can benefit from the stronger economy and fairer society that this Government have been building. I hope that the House will give the Bill a Second Reading, and that we have the support of the whole House.

Question put and agreed to.

Bill accordingly read a second time.

Corporation Tax (Northern Ireland) Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Corporation Tax (Northern Ireland) Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 12 February 2015.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed. —(Dr Thérèse Coffey.)

Question agreed to.

Corporation Tax (Northern Ireland) Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Corporation Tax (Northern Ireland) Bill, it is expedient to authorise:

(1) any increase in charges to corporation tax by virtue of a resolution made by the Northern Ireland Assembly setting the Northern Ireland rate of corporation tax, and

(2) any increase in charges to corporation tax by virtue of the Act. —(Dr Thérèse Coffey.)

Question agreed to.

On-the-Runs Scheme

Mark Durkan Excerpts

Tuesday 27th January 2015 Commons Chamber

[Mrs Villiers]

For some, confidence in the legal system has been shaken by the OTR scheme. But that is a reason to be very clear that it was not an amnesty; it never was. It was a scheme designed to ensure that individuals who were not wanted by the police were told that that was the case as a matter of fact at a particular point in time. It is important that the scheme is described in such a way to provide as much reassurance as possible to the people who have been understandably distressed by what has happened.

[Mark Durkan (Foyle) (SDLP)]

The Secretary of State will recall that much of the negotiations in relation to the Stormont House agreement revolved around concerns to protect the option of the inquest process into the future. Does it not strike her as somewhat disappointing that after parties such as the SDLP and Sinn Fein argued to defend that very process, an inquest has been compromised by what has happened in relation to this discredited OTR scheme? Although we will not join the call for the publication of the names of everyone who received letters, we ask the Secretary of State to assure us that those letters and the details around them will be shared with the new bodies that will be dealing with the past, which were set up as a result of the Stormont House agreement. In that way, no one else can be surprised by events in the way that they were with this twisted and terrible case.

[Mrs Villiers]

I agree with the hon. Gentleman that inquests were a key matter that were considered at great length in the Stormont House agreement talks. Although we could not build a consensus on the way to reform inquests, we did reach a consensus on the fact that the inquest system needs to be reformed because, at the moment, it is not working effectively enough to give proper answers to families. I am working with the Justice Minister and others in the devolved Executive to do everything we can to take that reform process forward; it is vital that we do that. Disclosure was also debated at length, and I can assure the House that the Government are committed to the fullest disclosure in relation to the new bodies to be set up under the Stormont House agreement. But when it comes to onward disclosure, we will of course need to put in place national security measures, which are broadly equivalent to those that apply in respect of current institutions. In conclusion, I wish to pass on my condolences to the O’Connor family, who must have been distressed and upset by recent events.

Stormont House Agreement

Mark Durkan Excerpts

Wednesday 7th January 2015 Commons Chamber

[Mrs Villiers]

I thank the hon. Gentleman for his comment. It is a hugely important step that the five parties reached an agreement on a way forward on welfare reform. It is indeed a matter for the Northern Ireland parties that they have applied the top-up in relation to certain matters, including the spare room subsidy, which they are funding through their block grant. It is now vital that progress is made on implementing welfare reform as soon as possible, so that we can press ahead with the rest of the agreement.

[Mark Durkan (Foyle) (SDLP)]

The Secretary of State will be glad that I will not rehearse the issues of welfare and finance that many of us concentrated on in the negotiations. She is right that we should not understate certain aspects of the agreement. However, it would also be wrong to oversell other aspects, where we have superficially strimmed the long grass, not least in respect of parades. Does she now regret her misadventure in proposing a panel on north Belfast, believing that that would somehow assist the talks, when we now know from the Unionist parties that their position was that, on the expected promise of the panel, they were not going to negotiate on parades in those discussions?

[Mr Dodds]

Rubbish.

[Mark Durkan]

We heard it from them today and we heard it from their leaders this week. That is why we had all the nugatory discussions in Stormont House about parades, and therefore ended up with no negotiations on parades, and those who wanted a panel have now ended up with no panel. That is the Secretary of State’s fault.

[Mrs Villiers]

I pay tribute to the hon. Gentleman and the Social Democratic and Labour party for the work they did on welfare reform and, in particular, the past, where their ideas have been highly influential. I think everyone would acknowledge that there is more work to be done on parades, and that it will be crucial to take that forward for the good of all in Northern Ireland whose lives are potentially disrupted by parades and for those who want to conduct their parades and express their culture in the way they have for hundreds of years.

As for the panel, as I said to the right hon. Member for Belfast North, unfortunately there was just not enough support for it. It was well intentioned, and I still believe that we need to find a way to mediate between the two sides and find an inclusive process that can engage as widely as possible. It became apparent that the panel would not be able to do that. We need to find a way forward, and I will be working with the Northern Ireland Executive and their parties to seek to do that.

Northern Ireland (All-party Talks)

Mark Durkan Excerpts

Monday 15th December 2014 Commons Chamber

[Mrs Villiers]

As I have said many times, the solution to these problems cannot be a big cheque from the UK Government. That is partly because it would not solve the problems, and partly because there is no more money. We have made it clear that we are not prepared to subsidise a more expansive welfare system for Northern Ireland. We are certainly prepared to continue to discuss the funding of matters such as new institutions on the past.

[Mark Durkan (Foyle) (SDLP)]

Does the Secretary of State recognise that £700 million of an existing borrowing power that we originally negotiated for strategic capital investment to be used for voluntary exit schemes does not seem to people to be new money or a big attractive offer? Is she not concerned that she has informed the House that the issue of inquests will be difficult? The two Governments propose that the families who have fought for inquests and had new inquests opened will now be told that, no, they will not now have an inquest. There is to be a new arrangement as part of the historical investigations unit that may not work in respect of the inquest and also damage the working prospects for other key aspects of the HIU’s work.

[Mrs Villiers]

I assure the hon. Gentleman that the flexibilities offered in relation to borrowing powers would be of significant assistance to the Northern Ireland Executive in delivering the voluntary exit scheme for which they are calling. It was a significant and serious offer, but one that accepts the realities of the financial constraints we are under. I fully appreciate the difficulties concerning inquests. The Government are in listening mode, and we will continue to discuss the matter with the parties over the next couple of days. Whatever the outcome, it is vital that the cases be dealt with within a framework that is fully compliant with our obligations under article 2 of the European convention on human rights.

Oral Answers to Questions

Mark Durkan Excerpts

Wednesday 29th October 2014 Commons Chamber

[Mrs Villiers]

These are matters for the Northern Ireland Executive, but the UK Government recognise the crucial importance of the haulage industry, which is one of the reasons why we have frozen fuel duty, which is saving the haulage industry millions of pounds every year.

[Mark Durkan (Foyle) (SDLP)]

The Government cite city deals as a way to support the economy in the cities and regions on this island. If the Executive put forward a proposition for a city deal for Derry, would the Secretary of State work with the Treasury and other colleagues to support and deliver that deal as a way of implementing a lot of the key targets of the One Plan?

[Mrs Villiers]

The economic pact between the Executive and the Government was modelled on some of the approaches we take with city deals, but I would be delighted to talk to the hon. Gentleman about any proposals he might have to replicate the city deal model for Derry/Londonderry.

Hallett Report

Mark Durkan Excerpts

Tuesday 9th September 2014 Commons Chamber

[Mrs Villiers]

Clearly, much of the distress caused to victims was the result of the scheme not being transparent. People did not know it was happening and that has caused great distress and contributed to anxiety and misunderstanding about the scheme. It was clear that the PSNI knew that indications were being given to OTRs about their status and it was pretty clear that the Royal Ulster Constabulary knew from the start that indications were being given—though not necessarily how—but there was not enough clarity about how it was being done. A key problem identified by Lady Justice Hallett was that the PSNI did not see the text of the Northern Ireland Office letter until December 2011. The lack of transparency created problems not only for the general public, who did not know what was going on, but internally by making errors in the scheme more likely. With hindsight, that aspect of the scheme should have been handled differently and it is regrettable that it was not dealt with more transparently.

[Mark Durkan (Foyle) (SDLP)]

The Secretary of State tells us that the letters are not rescinded, but that they are not to be relied upon. Should it arise that someone finds themselves in a court and seeks to rely on the letter and on the case law, how confident is she that a court would not decide as it did in the Downey case? Does she expect that, in that situation, evidence would again be given by former Secretaries of State and a former adviser to the Government which presents things in a different light from that presented to the House today?

[Mrs Villiers]

As I have said, while doing everything possible to reduce the risk that an abuse-of-process defence might succeed in future cases, today’s statement cannot eliminate that risk. If a case were brought against an OTR with a letter, it is certainly possible that they could seek to rely on that letter. What I am saying very clearly is that it is no longer safe to rely on those letters. What is more difficult to deal with is reliance that has already taken place. That is certainly something that the courts can and will take into account, but I am confident that this statement does everything possible to try to ensure that an abuse-of-process defence does not succeed in the future. The Government are being completely clear that it is no longer safe to rely on the letters, and such reliance is obviously a key plank of an abuse-of-process defence, as it was a key plank of the Downey judgment.

Hallett Review

Mark Durkan Excerpts

Thursday 17th July 2014 Commons Chamber

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. I am very keen to ensure that all hon. Members get to participate in this statement. I appreciate that the Secretary of State is giving very full answers. May I gently suggest slightly clipped and crisp questions, and crisp answers, as we do have quite a lot of business that we need to move on to?

[Mark Durkan (Foyle) (SDLP)]

Does the Secretary of State recognise that although Lady Justice Hallett makes it clear at the start of her report that it is not a whitewash, it does leave a couple of black boxes in respect of Operation Rapid, not least the fact that there is little explanation as to why during that period so many cases on the list went from being “wanted” to being “not wanted”? Lady Justice Hallett gave an assurance that there was no chilling effect, but why then the frozen response on the part of the PSNI whenever it clearly realised that mistakes were made in respect to the Downey letter and why the frozen response whenever the Historical Enquiries Team indicated that it had identified possible evidence in relation to Mr Downey and offences in Northern Ireland?

[Mrs Villiers]

The hon. Gentleman rightly says that there is further work to be done—there is no doubt about that. One important aspect of that work is the police investigation of all of these cases to check whether the “not wanted” judgment was the correct one. The reason Lady Justice Hallett has selected 36 cases as a priority for that investigation is that she believes the police might have been applying the wrong threshold to decide whether an individual was wanted or not wanted. Clearly, therefore, it will be very important to look carefully at those cases, and I am sure the PSNI will do so.

Oral Answers to Questions

Mark Durkan Excerpts

Wednesday 16th July 2014 Commons Chamber

[Mrs Villiers]

I think there is great scope for growth in this area. The Digital Derry initiative is one that immediately springs to mind, but I believe that the strength of Northern Ireland’s creative industries also opens up great opportunities for success in the digital media world. A number of software companies have had great success in Northern Ireland, which is now ranked by the Financial Times as one of the best places in the world for financial services technology investment.

[Mark Durkan (Foyle) (SDLP)]

11. Some four years into this Government, we had the announcement this year of the first pilot enterprise zone in Northern Ireland. When does the Secretary of State believe that we might be able to have further enterprise zones, and is she open to the idea of working with the Irish Government and the Executive to have a cross-border enterprise zone in the north-west?

[Mrs Villiers]

We are certainly open to discussions with the Irish Government about cross-border initiatives to boost the economy, which could well include enterprise zones. Our report back on the Government’s economic pact with the Northern Ireland Executive made it clear that the Treasury is prepared to discuss the possibility, subject to affordability, of additional enterprise zones in Northern Ireland, and I think it would be great if those discussions went forward.