Corporation Tax (Northern Ireland) Bill — House of Lords, 2015-03-17
Topic: Macroeconomics
Alastair Cooke (Conservative, Centre-right): My Lords, the noble Lord, Lord Bew, is an old friend from academic life and it is good to follow him. It is good, too, to have an opportunity to congratulate the noble Lord, Lord Hay of Ballyore, on his maiden speech. It is clear that he was a faithful and dedicated servant of the Northern Ireland Assembly, just like his predecessor, my noble friend Lord Alderdice I share the hope that has been widely expressed in this debate that the Bill before us will assist the progress of Northern Ireland and help secure its longer-term prosperity. The important measure of devolution for which the Bill makes provision has not, like some other measures of devolution, been conceived in undue haste or brought forward with insufficient preliminary work. The case for devolving the rate of corporation tax in Northern Ireland was advocated powerfully in Ulster Unionist circles in the 1980s, as my noble friend Lord Empey has told us. It was taken up enthusiastically by my right honourable friend Owen Paterson when he was Conservative shadow Secretary of State for Northern Ireland before the last election. A commitment to action was included in the Conservative Party’s 2010 manifesto and in the manifesto of the Ulster Unionist Party then led by my noble friend Lord Empey. Indeed, it was the subject of discussion between the two parties as part of the work that was done with the aim of creating an enduring partnership between them. I regret that that aim was not in the end successfully accomplished. Ulster’s position in the United Kingdom would have been strengthened by such a partnership After the election, the coalition made clear in its Programme for Government that it would, "work to bring Northern Ireland back into the mainstream of UK politics"— a commitment to lift all true unionist hearts. In the course of doing so, it would examine, "potential mechanisms for changing the corporation tax rate in Northern Ireland" That examination began exactly four years ago with the publication of a government consultation document stressing the overwhelming need to rebalance the Northern Ireland economy by increasing the size of its private sector, which over several generations had shrunk so alarmingly. From 2011 onwards, I inquired about the progress of the Government’s work through a number of Oral and Written Questions. There is little doubt, I think, that the announcement of the Government’s decision was delayed to avoid discussion of it during the Scottish referendum campaign of last year. The decision was finally made known in the Chancellor’s Autumn Statement last December, and I welcomed it in the debate on the Statement which took place in this House. It is important to remember that the Bill implements clear commitments that have been given to the people of Northern Ireland. It would have been extremely regrettable if a measure so long in gestation and enjoying such widespread support in Northern Ireland had not been carried into law before the election We are all extremely conscious of the acute difficulties that have arisen within the Northern Ireland Executive. It is obvious that they must be resolved if the scene is to be set successfully for the transfer of power over the main corporation tax rate to the Executive in 2017, the target date. I express my admiration for the tenacity and determination with which my right honourable friend the Secretary of State for Northern Ireland continues to work with the political parties in the Province to try and overcome the severe problems. Her predecessor, my right honourable friend Owen Paterson, pressed the case for the devolution of corporation tax with immense fervour. The arguments which he and many others made have been accepted widely, if not universally, in Northern Ireland. In these circumstances, it would be tragic if political instability in Northern Ireland should, at the final hour, deprive the Province of the prospect of benefits which so many economic experts predict and which so many business men and women hope to deliver When the Chancellor announced the Government’s decision in favour of devolution, in his last Autumn Statement, the Northern Ireland Chamber of Commerce and Industry declared that, "our politicians must grasp this opportunity" There is no doubt that that is exactly what Northern Ireland politicians, as a whole, wish to do. I hope that, with the assistance of my right honourable friend the Secretary of State for Northern Ireland, they will be able to make that wish a reality and then go on to deal successfully with the challenges that will at once arise, most notably through the reduction of Northern Ireland’s block grant, which has rightly featured prominently in this debate This is a money Bill but, as a number of noble Lords have stressed, it has significant constitutional implications. It adds a new element to the unbalanced and asymmetrical arrangements that characterise the United Kingdom’s three devolved settlements and create resentment in undevolved England. The justification, as we all know and has been stressed often in this debate, is the existence of a low rate of corporation tax in Northern Ireland’s neighbour, the Republic of Ireland, with which it competes for international investment. Will the greater imbalance that this measure will introduce within the devolved settlements be accepted on all sides in Wales and Scotland? As we have heard, it is clear that it will not. Nationalist politicians in Scotland and Wales have said that what Northern Ireland has, they must have too. How will the main British parties react? That is the question to which we now need to know the answer This Bill has been conceived in the best interests of Northern Ireland and could serve those very well indeed. However, at the same time, it could add to the United Kingdom’s constitutional instability which, sadly, is so marked a feature of life in our country today.