Corporation Tax (Northern Ireland) Bill — House of Lords, 2015-03-17
Topic: Macroeconomics
Thomas McAvoy (Labour, Centre-left): There is a bit of role reversal going on here. It is me who is supposed to attack the capitalists, not the noble Lord or the Minister. I am starting to feel a bit dizzy That is the balance that it is hoped to be reached. The noble Lord shakes his head. I would say to him, "O ye of little faith". There will be a vested interest for Stormont Ministers to make sure that they balance extra corporation tax against a reduction in the block grant. I fully agree that one has to be very careful here so that this does not result in less money for services but we have been assured that there will be no dramatic impact, and I am always willing to listen to government Ministers. The noble Lord, Lord Newby, is looking a bit puzzled. I hope that he will comment on that point Has there been any study or consideration—perhaps the noble Lord, Lord Forsyth of Drumlean, is right—of how the volatility of corporation tax might impact on Northern Ireland’s economy? That is a valid concern. While devolution is devolution, we are devolving the power and are therefore looking for some kind of guarantee in this matter. We hope that its devolution goes ahead in 2017, but a potential stumbling block is that Northern Ireland’s finances must be on a stable footing. It concerns us that we do not know the precise fiscal conditionality required before the Government devolve this power. Can they make any estimate of the resulting decrease in the block grant? There are various calculations, but I would like the Treasury people to have looked at that I repeat, in case of doubt, that we support the Bill. In the other place, highly contentious remarks were made to the effect that Labour had done a U-turn because it had previously attacked the devolution of corporation tax. That is quite untrue. We have expressed legitimate concerns, but if anyone wishes to pursue that point, perhaps they could turn to the minutes of the Public Bill Committee, where Nic Dakin asked the Secretary of State for Northern Ireland whether she had seen comment by the Institute for Fiscal Studies that, "Corporation tax is not a good candidate for devolution" The Secretary of State replied that there were risks. The Labour Opposition are not using scare tactics but asking legitimate questions. This process is not the be-all and end-all but could and should be a helpful tool for Northern Ireland Briefly on the background to all this, Laurence Robertson, chair of the Northern Ireland Select Committee in the other place, indicated that when the committee was in the United States of America recently it watched violent scenes on the streets of Belfast and Northern Ireland, involving fires and smoke-bombs. That is the biggest turn-off when trying to attract industry into Northern Ireland. There is a two-way street here: devolution is coming from this place, after consideration, but there also has to be a payback, if you like, by people trying to work together—hard as that may be because the past is always there. The damage being done by those scenes is quite substantial We hope that this is a contribution to further periods of peace and stability in Northern Ireland. Going back in history, I think that great credit is due to Sir John Major for initiating this process and to Tony Blair and his team for pursuing it. It is to be hoped that the devolution of corporation tax will be a further measure along the road to peace and stability in Northern Ireland.