Tuesday 6 June 2006
The Assembly met at 2.00 pm (Madam Speaker in the Chair).
Members observed two minutes’ silence.
Madam Speaker: In accordance with the Northern Ireland Act 2006, the Secretary of State has directed that the Assembly should sit on Tuesday 6 June 2006 at 2.00 pm to consider business as it appears on the Order Paper.
I would draw Members’ attention to the fact that since the last sitting on 23 May, the Secretary of State has directed a new Standing Order to provide for Committees of the Assembly. Copies of the Standing Order are available from the Business Office.
At the sitting on 16 May, Mr McCartney and Mr Dodds raised points of order on the matter of interventions.
Mr Dodds suggested that there was merit in considering the procedure in the House of Commons through which time may be added to a Member’s speaking time to take account of interventions. This followed Mr McCartney’s suggestion that unless I limit interventions, Members might not give way.
I undertook to consider the matter at the next meeting of the Business Committee, and I did so on 23 May.
I will address Mr McCartney’s suggestion first.
I am clear that the decision on whether or not to accept an intervention should be a matter for the Member who has the Floor, and I do not intend to interfere with that process. A Member should not, however, persist in asking another to give way when the latter has declined to do so, and it may be necessary for me to call a Member to order if that occurs.
I have some sympathy, however, with the view that our convention disadvantages the Member and discourages acceptance of interventions. This becomes particularly apparent when speaking times are restricted, as was the case on 16 May when a five-minute limit was applied.
As suggested by Mr Dodds, I have considered the procedures in the other place, and note that the Speaker is required, by Standing Order, to provide specified extra time when interventions have been taken. If the Assembly is restored in a form that allows it to make and amend its own Standing Orders, Members may wish to consider a similar provision.
In the meantime, however, I believe that interventions can provide a valuable contribution to debate and that I should offer some encouragement to Members to accept them during debate. With the Business Committee’s agreement, I have decided that, where speaking times are limited to less than 10 minutes, I will, on a trial basis, exercise discretion in allowing up to one minute of additional time to a Member who has accepted one or more interventions to his or her speech.
This arrangement is effective immediately, but will not apply to today’s debate, as it has been agreed that speaking times will not be limited to less than 10 minutes.
Mr Neeson: On a point of order, Madam Speaker. In view of your ruling, would it be in order for me to finish the speech that I was prevented from finishing? [Laughter.]
Madam Speaker: Obviously, it would not, Mr Neeson, but that will teach you a lesson for future debates.
Mr Robert McCartney: On a point of order, Madam Speaker. There appears in your ruling — which, of course, we all accept — to be some misunderstanding as to the point that I made. I was not suggesting that there should be any limitation on a Member’s right to take an intervention. However, I was suggesting that there should be some limitation on the length of time that the intervener takes in making his or her intervention.
Madam Speaker: That is sometimes a difficulty, but, unfortunately, that is not a matter for the Speaker. I am sure that the Whips will take that point to their Members.
Sir Reg Empey: On a point of order, Madam Speaker. I ask you to consider a point in relation to Standing Orders 8 and 11, regarding the conduct of business in this place. I wish to make a general point in relation to the events of the past few days, which are pertinent to our business. You will be aware that Members have been confronted with a situation in which, first, we were not going to do business, then we were going to do business, then we were going to do business at one time, and then at another time. We learned about today’s business only late yesterday evening.
You are in receipt of a letter, dated 1 June, from the Secretary of State for Northern Ireland, which begins:
“Given that there was no agreement at the Business Committee as to preferred business for the Assembly next week”.
That gives an erroneous impression of what the Business Committee decided. Its minutes show that, with the exception of Sinn Féin, which is boycotting today’s proceedings, four out of the five parties at that Committee were clear that business should be conducted in this place, this week. Because people had different ideas as to what business should be conducted, different weight was given to those. However, that is a natural occurrence. The fact was that the parties represented at that Committee that are represented in the House today wanted business done this week.
Is it possible for you to prevail on the Secretary of State to allow you and the Business Committee to decide what business this place conducts and when? We are in the business of restoring an Assembly and a Government with a budget of £11 billion, and all that goes with that, and we cannot even agree a date and time for a debate so that we can prepare our Members. I suggest that you could, as a matter of order, take that up with the Secretary of State and try to resolve this issue so that we are not in the same position again.
Madam Speaker: Thank you, Sir Reg. I have given you leeway, because your point of order is shared by most Members. We had a heated debate about the issue at the Business Committee. Those comments, and your own, of course, will be passed on to the Secretary of State.
Your point of order raises an interesting “issue” — that is a good word to use. People are concerned about the issue, and I will give you quite a detailed answer. The Business Committee has also been concerned about it.
Paragraph 2 of schedule 1 to the Northern Ireland Act 2006 provides for meetings of the Assembly to be held at such times and places as the Secretary of State directs. It is quite clear, therefore, that the Assembly cannot meet unless directed to do so.
What business is then conducted? Section 1(1) of the 2006 Act provides that the Secretary of State may refer two specified matters to the Assembly. One matter relates to the offices of First Minister and Deputy First Minister; the second matter relates to making nominations as Northern Ireland Ministers. The 2006 Act also provides that:
“such other matters as the Secretary of State thinks fit”
may be referred. It is under this third provision that today’s motion was referred and will be debated.
Standing Orders, as directed by the Secretary of State, are also clear in how they support the Act’s provisions. Standing Order 8 requires the Speaker to prepare an Order Paper for each sitting day:
“in accordance with any referral by the Secretary of State”.
That is why we cannot issue an Order Paper until a formal referral is made.
Standing Order 11 establishes the Business Committee and provides that it:
“shall make recommendations to the Secretary of State on matters that may be referred to the Assembly and perform such other duties as the Secretary of State may direct.”
Standing Orders and the Act, when taken together, are clearly designed to allow the Business Committee to recommend business but also to provide the Secretary of State with the power to decide on the business that will be discussed when he directs the Assembly to meet.
The Member has asked whether it would be in order to ask the Secretary of State to hand over the power for determining business. It would seem to me that the Member has three options if he wishes to pursue his point. The first option is, obviously, to take up the matter directly with the Secretary of State — as, no doubt, the Member may have done. The second option is for his party’s representative on the Business Committee to propose that the Business Committee make a suitable recommendation to the Secretary of State. The third option is to table a motion for debate in the Assembly, calling for the Secretary of State to refer the matter, although such a motion would, of course, have to negotiate the very procedures that the Member would like to see changed.
Ultimately, the decision will be the Secretary of State’s to make. However, I hope that I have clarified the procedural options.
Mr Robert McCartney: On a point of order, Madam Speaker. Thank you for your very lucid exposition of the position here. However, is it the case that the Secretary of State, who has nominated you as Speaker, will refer such business as he decides that this body should debate and will change, at will, the Standing Orders or procedure upon which anything that he deigns to refer may be so debated? Does not that, in composite, make this Assembly nothing more than a puppet show?
Madam Speaker: Members may, to a certain extent, sympathise with what Mr McCartney says. However, as I have said before, the ultimate power lies with the Secretary of State. The only way that we can change that is for us to turn ourselves into a restored Assembly. I hope that that will not be too long in the making.
Rev Dr Ian Paisley: Further to that point of order, Madam Speaker. Will you inform us whether the Secretary of State can, from now on, say that there will be no more meetings of the Assembly unless he agrees the business? Is that the power of the Secretary of State?
Madam Speaker: Thank you for your point of order, Dr Paisley. As I have said, all business must be referred to the Secretary of State. However, as members of the Business Committee have no doubt informed Members, we had a full and frank discussion on this matter yesterday, and we have sent a number of motions to the Secretary of State. We have yet to get a referral on that, and I hope that we do. However, I must say, yet again, that Members should be in no doubt that the Secretary of State has the power to decide whether or not we come here and debate issues.
Rev Dr Ian Paisley: Further to that point of order, Madam Speaker. If that be so, what about the date on which the Secretary of State has said we must finish our business? It would be possible for this Assembly not to meet until November if the Secretary of State says that we are not going to do any business. How can we have a deadline and a date that are meaningless unless this Assembly is meeting?
Madam Speaker: Thank you, Dr Paisley. That is not a matter for this Assembly; it is a matter for Westminster. That is dictated by the Act that was passed at Westminster. I know that you have made representations to the Secretary of State, and I hope that you continue to do so.
Dr Farren: On a point of order —
Madam Speaker: I am sorry, Dr Farren. I think that Dr McCrea was first.
Dr McCrea: On a point of order, Madam Speaker. Can you confirm to the Assembly that the Business Committee had forwarded to the Secretary of State a number of motions to be considered for debate on the Floor of the House this week?
Madam Speaker: As a member of the Business Committee, I am sure that you know that we do not discuss the specific business of that Committee here. We refer that business to the Secretary of State, and I have already said that any business that it was agreed to refer for debate has already been referred. We do not need to debate that here.
Dr McCrea: Further to that point of order, I am not asking for a debate. I am asking you to confirm that motions for business were forwarded to the Secretary of State for his consideration.
Madam Speaker: I thought that you had already seen that in the minutes. I can confirm that it is in the minutes.
Dr Farren: On a point of order, Madam Speaker. In the light of the answers that you have given to other Members, am I correct in understanding that the sooner we can restore ourselves to a fully working Assembly, the sooner the kind of idle comments that have been made, particularly about the need for injury time — surely, we are already well into injury time — and the long-suffering electorate of Northern Ireland—
Madam Speaker: Order. With due respect, Dr Farren, take your seat. The Speaker is standing. That is not a point of order, salient as your comments may be.
Mr N Dodds: On a point of order, Madam Speaker. Has any notice been given to you by Sinn Féin about the reasons for its continuing boycott of the Assembly? Members will be aware from press releases that we have been told that Sinn Féin is very anxious to make progress. However, is it not a fact that its continuing boycott of these proceedings is an indicator that it is really holding back progress in Northern Ireland?
Madam Speaker: Order. I am surprised that Members are not sure about what are points of order and what are not. It is up to every Member and every party to make their own decisions about what they do. Sinn Féin has repeatedly stated its position, here and elsewhere.
Private Members’ Business
Madam Speaker: Before I call Mr Dallat to move the motion, I wish to clarify how I propose to conduct the debate.
At its meeting yesterday, the Business Committee agreed that four hours should be set aside for the debate. The Committee also agreed that the proposer of the motion should be allowed up to 20 minutes to move and up to 15 minutes for the winding-up speech. All other Members will be allowed 10 minutes, so I hope that Members remember my comments on interventions. If that is clear, I shall proceed.
Mr Dallat: I beg to move
That this Assembly, pending the restoration of a fully devolved Assembly and power-sharing Executive:
(a) calls on the Secretary of State to freeze the Industrial Rate at 25%;
(b) agrees with the Northern Ireland Manufacturing Focus Group that the introduction of full Industrial Rates as currently planned by the Government will lead to devastation in the manufacturing sector and the loss of thousands of jobs; and
(c) therefore calls on the Secretary of State to deliver on his undertaking to act upon the agreed position of all the political parties, and cap the Industrial Rate at 25%.
I am happy to propose today’s motion. It may be our last chance to plead for sanity as regards industrial rating. We must do everything possible to save the very narrow manufacturing base in the North and to ensure that jobs are not lost for ever — and lost they will be if plans to increase industrial rate liability beyond 25% are executed as planned. This will be the final opportunity to protect up to 30,000 jobs that will be at risk if the direct rule Ministers refuse to listen, do not understand or simply continue to demonstrate the levels of arrogance that recently emerged when Lord Rooker was in charge.
It is no exaggeration to claim that the finger is in the industrial dyke, desperately holding back the tide in the hope that common sense will prevail. If it does not prevail, decisions to relocate will come fast and furious, as manufacturers are forced to choose from among the options of downsizing, relocation or closure.
Our manufacturing base is dominated by food and drink, including chicken processing, with 75% of our exports going to Britain. Several of those companies also have plants in the Republic, so it is not difficult to see why any long-term planning will, without doubt, include consolidation in the South, which has 10% corporation tax and long-standing exemptions from rates. Of course, companies can choose to relocate to many other areas, including, increasingly, eastern Europe.
In east Derry almost 400 jobs were lost recently at a long-established chicken-processing plant. Why? The reason is that profits became so squeezed that there was no choice. That is a warning sign that every company faces potential closure if additional pressure is exerted to extract even more money from the existing slim profits. Indeed, the top dozen companies in my constituency are experiencing varying degrees of financial pressure, which directly undermines confidence in future investment. That is extremely worrying.
The pattern across Northern Ireland is no different, and I know of closures that will be imminent if this issue is not sorted out. Companies need to plan for the medium and long term. Their motivation is not solely money; it is investment and creating enough resources to invest in the future, and as most of those companies have a profit margin of no more than 5%, it is easy to see why it is not possible to reinvest in the future.
Where will the money for research and development come from if the industrial rate liability goes beyond 25%? It will just not be available, and one does not have to be a genius to know what the outcome will be if there is no money for renewal or expansion. The money needed for reinvestment and research and development would, of course, be used to pay the additional rates as the whole process escalates.
A short-term gain for the Government would, without doubt, be a long-term disaster for the labour force and the economy. Without investment in plant and machinery and resources for research and development, there can be no growth, and without growth a company cannot remain competitive, so it will go out of business. It is as simple as that.
Those are not my predictions; they are the forecasts of many people involved in manufacturing. It is seriously regrettable that Lord Rooker did not listen to them when he had the opportunity. Instead, he arrogantly claimed that the manufacturers would be better at home looking after their businesses than travelling to Belfast to draw attention to their dilemma. That worries me, as it tells me that direct rule Ministers, up until now at least, have not even begun to understand the severity of the situation. Rooker clearly believed that it was a case of “Wolf, wolf!”, but if a decision is not made now, the wolf will come laden with poverty, unemployment, desolation and hopelessness for many of those companies that we depend on.
This debate creates an unexpected opportunity to make one last appeal to anyone who is prepared to listen in the interests of the 90,000 people employed in manufacturing. At least the Government should read their own report, which predicts that the best-case scenario for job losses following the imposition of industrial rates is 10,000; the worst case is a whopping 45,000, with an acceptance that 20,000 is a realistic figure. That does not take into account the ripple effect, which would undoubtedly mean more job losses in the service industries. The Northern Ireland Manufacturing Focus Group (NIMFG) predicts a loss of 30,000 jobs, and that, unfortunately, is likely to be accurate.
This could be the straw that breaks the camel’s back. Action is needed now, not in a few months’ time when companies will be unable to hold back on decisions that must be made. Confidence is ebbing and with electricity prices going up and companies facing up to 50% increases because their contracts are ending, is it any wonder that there is a sense of hopelessness which politicians should, in a normal society, be able to deal with?
How are we going to stop the roller coaster? We must stop it now, because when it starts it will not stop, and the finger in the dyke will not be sufficient to keep back the tide. When it comes, it will potentially devastate our economy, creating further hopelessness among people who believed that the dark days of the dole queues were at an end, never to return. Today, this Assembly has the opportunity to back the calls from the Manufacturing Focus Group for common sense to prevail.
I do not intend to take up my 20 minutes, so I will end on a positive note. Let the Members of this Assembly do everything humanly possible to bring about a political settlement that will allow us the right to take charge of our own affairs. Unfortunately, that is not likely to happen in the next few weeks, and that time is critical to those who are in this dreadful dilemma. They need a positive decision, and they need it now. With Lord Rooker safely gone, I hope that common sense will trickle through the corridors of power and that a reality check will be conducted so that a new dawn may emerge. I hope that those who have come here today to listen to this debate will not have to return some time in the future to say “I told you so”.
I will finish by recalling my own childhood days when my father came home to say, on more than one occasion, that he had been paid off and was back on the dole queue with no idea when he would find work again. I do not want to see that experience, that sense of hopelessness which he experienced as he tried to cope with the reality that he had no job and that he had had his dignity taken away from him and from our family. Today families have serious financial commitments that my parents did not have, so the situation is much more serious. It is vital that the Government do not continue down this road to financial ruination for many companies, particularly when there are solutions to the problem which can be implemented immediately with very limited knock-on implications for other sectors of society.
I am looking forward to today’s debate. Let us hope that those with influence are listening to the positive contributions that I expect from this Assembly.
Rev Dr Ian Paisley: Madam Speaker, I am delighted that this debate is taking place today. From what I have learned here today, and which has been made public, the Secretary of State for Northern Ireland already had this particular proposition for debate in the Assembly, but decided that the Assembly would not meet today and that this would not be debated. That needs to be put firmly on the record.
I was amazed that any Secretary of State, without consultation with any of the parties, would decide that this Assembly would not meet. This Assembly is elected by the democratic vote of the people of this Province, and its Members speak for the people of this Province. Why should this Assembly suddenly be turned off because the Secretary of State has other views that he wants to impose on its Members?
This Assembly is meeting today, however, and I trust that people looking in will see that some of the loudest voices on the matter in hand are not here to speak for the people who sent them — they are strangely absent. They fight for a place in a photograph with businessmen, but when businesses are in jeopardy they are not here to take part in the debate. Those people are loudly condemned by all right-thinking people in Northern Ireland. This is where they should be to be answerable. If they have things to say to us, let them not say it in the quiet comfort of a back room. Let them say it in the open Assembly.
I am delighted to speak in support of this motion. I do not always agree with the hon Gentleman, with whom I have had interesting debates and sword-crossing exercises. I do not know whether the points ever went in during the meetings of the Committee for Agriculture and Rural Development; that is a matter for the past. Here is something that we should be able to find unity on, because it is the basic right of a person to be employed and to get decent pay for the job that he does. Those are elementary rights in a democracy, and that is what we are standing for today.
The Government’s proposals will have a terrible impact on industry. To say, as certain Ministers from elsewhere have told us, that people are crying “Wolf, wolf!” where there is no wolf — well, there are hounds and wolves in abundance, and they are all sniping at the industries of Northern Ireland. We should be here to protect those industries and do everything in our power to see that they are safeguarded. People who have work to do, and who get proper pay for it, are the happy people. Those who are on the dole with no possibility of getting a job are not happy, and Satan finds plenty for idle hands to do.
Manufacturers in my constituency and right across the Province will be affected if the Government’s plans on rating are implemented. In the past 40 years in Northern Ireland, business has not had it easy because of the devastation caused by the troubles. Now that we have come to this time in our history, however, it is surely time for us to build opportunities for employment in our industries and to strengthen our Province’s employment base.
Traditional manufacturing jobs have disappeared from the Province to low-wage economies in the Far East and eastern Europe. At one time, this country of ours was very important for trades. However, the textile industry and many other industries have disappeared. Where are they today? They are in the Far East or in some of the new member states of the European Union.
With so much against us, we must take stock and take definite action to protect and maintain what we have, and to promote and extend that so that jobs can be secured.
Industrial derating provided Northern Ireland businesses with a competitive advantage, but that is to go. Government policy will strangle the manufacturing industry, making it unable to survive. The Government cannot, and should not, do the job of business when it is clear that they have a responsibility, as a competent Government, to create the conditions in which business can compete and win the day.
We are not asking the Government to take over businesses: we are asking the Government for a level playing field so that there will be fair play. The Government constantly point out that our economy relies too heavily on the public sector, yet at a stroke, the Government that mouth that statement are prepared to introduce rating for industrial premises, thus making it unviable for many businesses to operate. They cannot have it both ways: if the Government say that they cannot interfere in the economy, but they step in and destroy that economy’s power to rectify itself, they must take the blame.
It is ridiculous for any Minister to say that people should stay at home, work at their businesses and not come to Belfast to protest. Grotesque language is being used against decent people who, for years, have been holding the ropes at a time of grave crisis for everybody in the Province.
People who have borne the heat and burden of the day resent being lectured to by people who have never experienced such problems in their own areas. It is all right to be told what we must do, but it is totally unfair to be put in a pillory, as if we were to blame.
Mr Campbell: Does Dr Paisley agree that the situation is compounded even further in that the Secretary of State and the Government that are intent on introducing industrial rating are the same Government and the same Secretary of State who indicated that the private sector should grow in Northern Ireland, when this decision means that the private sector will shrink even further?
Rev Dr Ian Paisley: I agree entirely with my hon Friend. During a debate such as this, we are looking at our own constituencies so we have many issues in our hearts and minds. All Members have experienced problems arising from industrial rating in their own constituencies: no constituency is exempt.
I welcome the debate. We must take heed of the motion and ensure that industrial rate liability is kept at 25%.
Dr Birnie: I am pleased to speak in support of the motion, because what it asks for is reasonable. After all, it does not even ask for a reduction in industrial rates or for a return to the old situation from the 1920s until the start of this decade, whereby no rates were paid at all. Indeed, for much of the period, that differentiated Northern Ireland from other parts of the United Kingdom. The motion simply asks that the current process of transition to full payment of rates should be frozen at the level ruling now, which is 25%. Such a capping of industrial rate levels would represent an appropriate response to current economic circumstances.
Since the start of the decade, particularly in the period coinciding with the Assembly’s suspension since October 2002, there has been something of a cyclical downturn in parts of the world economy. That has meant that Northern Ireland has received less foreign direct investment than before. It was also previously envisaged that as manufacturing took up the burden of paying a full rates bill, there would at least be some compensating relief from lower electricity charges. The multi-million-pound package, first proposed four or so years ago under the then Finance Minister, Ian Pearson, is still languishing. Although the Brussels Commission is rightly often regarded as a bureaucratic monster, in this case the fault may also lie, to some degree, with London’s decision making. Given that industrial energy charges remain substantially higher than those in Great Britain, the UUP sees little support for raising rates at this time.
The motion represents a sound reaction to the fact that the Northern Ireland economy is facing increased competitive pressure, notably from the Irish Republic, but increasingly also from central and eastern European economies. They are all marked out by low rates of taxation on business profits of 15%, 10% and perhaps even lower. The competitive issue is twofold. Some companies here may shut down completely; others may move their factory or branch plant the comparatively short distance to south of the Irish border.
In bringing forward that proposal, it seems that the Northern Ireland Office (NIO) did not carry out a full regulatory impact assessment of all the options that would, of course, include the option of not removing derating. DTZ Pieda Consulting may well have been inaccurate — indeed the balance of probability is that its figures are inaccurate — when it forecast that the impact from full derating on profits would be only 2·7% of profits. Invest Northern Ireland (INI) and others have produced alternative higher, and arguably more plausible, figures.
It is true that rate payments may represent only a small proportion of total business turnover, but they represent a higher proportion of business profits. Examples include Bombardier, which could be paying £2 million annually by 2011, and Harland and Wolff, whose potential bill is £4·4 million. Obviously, those figures must be compared to the size of the profits in those companies, which at various times in recent years have been relatively constrained. Remember that for a company on the margin of viability, it does not take much of a change in its net profits — the profits after taxation — to tip it out of operation completely.
In supporting the motion, the UUP does not wish to indulge in an anachronistic central bias on economic policy-making. A job is a job, whether it involves making something or servicing something.
It is true that manufacturing represents a small percentage of our economy in terms of gross domestic product (GDP) and employment — perhaps as low as 15%. That means that fewer than one in six people is involved in that sector. Crucially, however, that sector still makes the vast majority of the exports going from Northern Ireland to Great Britain and, indeed, wider afield across the world. Therefore, in recommending the freezing of rates at the current level, we are not indulging in some old-fashioned liking for metal bashing or garment stitching per se. In any case, we would ideally like to see the burden of business taxation reduced on all enterprises that produce exportable products and services beyond the region. That should, and can, include marketing firms, design consultancies, finance and banking and — crucially — tourism. Let us start today with manufacturing.
As Dr Paisley said, the implications of the motion are political, as well as economic. Today, this Assembly — despite the chaotic background arrangements and the imperfections in the Standing Orders that have been applied to Members — is working to an extent. The Assembly is debating something of undoubted substance. I think that there is a fair chance that we will establish a consensus on this motion, perhaps even absolute unanimity. Therefore, the Assembly challenges the Secretary of State, given what he has said, to take note of what we, the elected representatives of Northern Ireland, are saying with one voice.
Finally, I return to Northern Ireland’s manufacturing sector. Its current performance is suggestive of the line from Charles Dickens:
“It was the best of times, it was the worst of times”.
Over the past 15 or so years, output, exports and productivity growth here have all substantially exceeded those in the rest of the United Kingdom. At the same time, however, rates of research and development spending, and the extent to which our companies are employing highly skilled and highly qualified technical scientific labour, are still too low, especially when international comparisons are drawn. Therefore, much still needs to be done.
According to this week’s ‘The Economist’, dated 3 June 2006, the public sector here still represents 61% of the regional GDP, only 65 private-sector firms employ more than 500 people, and half of the Province’s exports are produced by only 10 firms. However, if we look back at our industrial past, to which reference has, rightly, already been made this afternoon, this is the Province which, among other things, invented pneumatic tyres, Milk of Magnesia — perhaps we might need some of that as the debate goes on — the Ferguson tractor, and many other significant innovations.
Given the progress that has been made over the past 15 or so years, we should not, therefore, recklessly imperil what has been achieved by imposing more taxation on that sector. The best road to a higher tax revenue or tax take on the part of the Government is to have a bigger wealth-creating sector, which should be incentivised by lower tax rates. I support the motion.
Mr Neeson: Madam Speaker, may I first endorse what Dr Paisley and Sir Reg Empey said in relation to the timing of this debate. I learnt about it at 5.00 pm yesterday, and I must say that that is a totally unsatisfactory way to run any political institution. I hope that the Secretary of State takes note of today’s remarks.
I support the motion. I was proud to be part of the major rally that took place in the Waterfront Hall where thousands of workers, business people and politicians joined together to support the proposition that is before the House today. I would like to congratulate NIMFG on the excellent work that it has been doing in recent months.
It is due to their efforts that this crucial issue has been highlighted and that we are debating it in the Chamber.
There has been a lot of finger pointing at the Government today. However, a Government, made up of elected Members of this Assembly, should be in the Chamber.
Some Members: Hear, hear.
Mr Neeson: The elected Members of this Assembly should be taking the decisions.
Members have referred to Northern Ireland’s overdependence on the public sector. It is an issue that must be addressed. We cannot underestimate the importance of the surviving manufacturing base in Northern Ireland. However, as I have said in previous debates, we face many challenges, particularly from the global economy. We have seen the damage that has been done to the textile sector, which has almost disappeared. The discussions that we have had with NIMFG have shown that jobs are at risk in Northern Ireland. It is not, as other Members stated, a “Wolf, wolf!” situation.
I am sure that nobody in the Chamber was sorry to see Lord Rooker go. His whole approach, not only to elected representatives, but to the business sector in Northern Ireland, was nothing short of outrageous.
I remind Members that industrial derating was introduced into Northern Ireland to compete with the low levels of corporation tax in the Republic of Ireland. The irony is that there is clear evidence that investment from Northern Ireland is going to the Republic of Ireland, and also to eastern Europe. I have met manufacturers who are considering the possibility of investing even further afield in countries such as China and India. There is a major competition problem for all of us if we are to deal with this effectively.
The parties represented in the Chamber are agreed on the issue and have met the Secretary of State. He put the ball in our court and said that if we want to deal with the issue — he does not have a problem with us doing that — the money must be found somewhere else. That is the challenge that we face. As my party has stated on many occasions, a great deal of money could be saved in Northern Ireland. The sooner we create a shared future, stop segregation and integrate society in Northern Ireland, the sooner that massive amounts of money will be saved. That money could deal with the issue that we are addressing today.
Sir Reg Empey: Given the Member’s past record, I thank him for giving way.
It is important that this debate takes place now, rather than later in the lifetime of this body, because Departments set their budgets in the autumn. If we were to debate the issue later in the year, with Departments setting their budgets in the expectation of the next step forward, they would tell us that we are too late because they have already set their budgets. That is the significance of having the debate now. This money has not been collected or spoken for; it has been anticipated. It is easier, as I understand it, to deal with that at this stage rather than leave it. That is the significance of the timing.
Mr Neeson: First of all, when he talks about a record, I hope the Member is not referring to a criminal record.
I agree with him. I am not quarrelling with the timing of the debate. It is important that we should have it. However, it is not only industrial derating that we should be looking at. We need to look at other necessary incentives as well.
I am very much aware of the significance of the small business sector, which does not really benefit from industrial derating. Essentially, the small business sector forms the rock on which the Northern Ireland economy stands. It is important that we try to assist the growth of all sectors of business in Northern Ireland.
There is another thing that is important. When we had devolution, Sir Reg was the Minister of Enterprise, Trade and Investment and I was Deputy Chairperson of the Enterprise, Trade and Investment Committee. One thing that we did was oversee the merger of the Local Enterprise Development Unit (LEDU) and the Industrial Development Board (IDB) into Invest Northern Ireland. It has now been in existence for a number of years and, in view of the reports I am getting about its activities — or lack of activities — there is an urgent need to review its workings.
I want to point to one final issue. The enlargement of the European Union has obviously increased greatly the competition for Northern Ireland businesses. Not only that, but we have seen an influx of foreign workers into Northern Ireland. They have made a major contribution to the local economy.
The biggest incentive that we can give to the local economy is to restore devolution as soon as possible so as to create the political stability that is necessary and which, I believe, can only improve the economic climate.
Mr Simpson: This issue affects not only manufacturing industry in Northern Ireland, but the entire wider economy. I am sure that the House will be aware that today we have quite a number of businesspeople attending the debate. As a businessman in Northern Ireland, I count it a privilege to try to help them fight this cause both in this House and at Westminster, in the mother of all Parliaments.
I was going to say that a lot of them are my friends, but on second thoughts some may have had business experience, so we will not go into that at this stage. Certainly, it is a privilege to represent them and to try to do something to help their cause.
It is vital that the Government take note of what is said in this debate and act on it. I am sure that we will hear a lot from Members today that will be repetitive, but I do not think that we can talk about the issue enough. The message needs to be got out to the Government.
As someone who has been involved in business, I know personally of the impact that these increases will have on the business sector. I speak also from personal and professional experience when I say that the campaign against the Government’s proposals is a campaign to keep jobs in Northern Ireland and to attract new jobs into the Province. As a matter of fact, it is a campaign to support the Northern Ireland economy as a whole.
If the Government really wish to see our private sector grow, they must wake up and finally learn the lesson that they cannot and will not achieve that by taxing manufacturers out of business or over the border into the arms of our nearest competitors. Manufacturing in Northern Ireland has been forced to compete in very difficult circumstances. Surely anyone with the slightest genuine interest in, or concern for, the economic well-being of Northern Ireland must see that whatever advantages we have must be emphasised, supported and promoted.
(Mr Deputy Speaker [Mr Wells] in the Chair)
One such advantage was the existence of industrial derating, which Government policy now threatens. It has already been pointed out that any chief executive of any company who followed a course that would result in the destruction of that company would soon find himself on the dole. That the Secretary of State seems to want to get promotion on the back of his industrial hooliganism says much about him. The fact that the Prime Minister might reward him with a promotion says even more about the Government.
It is any competent Government’s responsibility to create the conditions in which business can compete and win, yet this Government are following a path that actively disadvantages local manufacturing businesses. The Government consistently point out that our economy relies much too heavily on the public sector, yet, as my right hon Friend, Rev Dr Ian Paisley, said, they are prepared, at a stroke, to introduce rating for industrial premises, thus making it unviable for many of our businesses to operate in the Province. Having come through the dark years of a terror campaign that, in part, sought to wound fatally our entire economy, the Government now threaten us with a policy that could do more long-term and Province-wide damage to our economy than the Sinn Féin/IRA night shift could inflict.
The proposed industrial rate will particularly affect a huge number of businesses’ profitability and viability. Thousands of jobs will be at risk if the Government drive through the measure. It is unnecessary, it is counterproductive, and it is universally loathed and opposed by the local political parties.
The Government have repeatedly told us of the need for agreement. We have seen agreement across the board in Northern Ireland on industrial rating. The matter is not so much a test of the local parties as it is a test of the Government. It is a test of their commitment to consensus and to cross-community support. If the Government are serious about that commitment, the Secretary of State must make it clear that he will heed this Chamber’s voice. Although we might not, at this stage, be able to achieve an industrial rate of 0%, the rate must be capped at 25%, which is a view that now derives support from right across the political divide. Parties in Northern Ireland can unite around the issue and send the clearest possible signal to the Government that they must think again, and this debate gives us the opportunity to do that.
We recognise the danger that the ending of industrial derating poses to local manufacturing businesses right across the Province. Direct rule Ministers, who are currently in charge of governing Northern Ireland, must get the message.
In closing, Madam Speaker, may I congratulate — Mr Deputy Speaker. My apologies; I was looking in the other direction. A sudden transformation has taken place. I shall not say whether it is for the better or for the worse, but you are very welcome to the Chair.
Some Members: Hear, hear.
Mr Simpson: He will never forgive me for that.
I congratulate the Northern Ireland Manufacturing Focus Group, and Mr Basil McCrea, who currently looks after that organisation, for all the work that the group is doing, and for the fight that it has shown in its campaign.
I wish them well, and I know that every Member of the House will support them in their endeavours to achieve the 25% levy.
Mr Hillis: I am delighted to support the motion. Without wishing to be alarmist about the future of manufacturing in Northern Ireland, we must be realistic and agree with the Northern Ireland Manufacturing Focus Group that the imposition of industrial rates is a short-sighted and counterproductive policy. Like David Simpson, I compliment that organisation on its demonstration today; its earlier demonstration in the city centre was excellent. It certainly focuses minds, and it is important to keep up the pressure on Government.
Major employers have said that the imposition of rates may well be the last straw for many businesses. Many new manufacturing businesses are based on new technology, and they are to be praised for their innovation and tenacity in difficult times. Do we seriously want to undermine further our manufacturing base by proceeding with industrial rating? That would effectively pull the rug out from under entrepreneurs’ feet. If the Government were trying to make it really difficult for Northern Ireland plc, that is exactly what they would do.
There have been many changes since our forefathers had the foresight to construct this Building. At that time, our three major industries of shipbuilding, linen manufacture and agriculture were celebrated in frescoes in the former Senate Chamber. We all know what has happened to shipbuilding and linen manufacturing; changing demands, market trends and, most importantly, price competition from abroad emphasise how important it is to be competitive in today’s world.
When I started my working life as an apprentice in Coleraine for the princely sum of £3 a week, I was frequently sent for stock from one of the many shirt manufacturers in the town. At that time, there were probably six of those, and that was representative of the whole country. The majority of those factories have succumbed to a seemingly unstoppable wave of cheap foreign imports.
Obviously, we cannot compete with cheap foreign textile imports. However, at the very least, we must not shoot ourselves in the foot — in Northern Ireland, we seem to be very good at that — by deliberately increasing baseline costs through ending industrial derating for a hard-pressed manufacturing industry.
I certainly do not suggest that we look back; we must look forward. I have had some 40 years’ experience in business, and I have learned the hard way. I understand the pressures under which businesses operate. The current Secretary of State and his direct rule Ministers do not have that understanding.
Today’s manufacturing businesses are frequently different from those of a number of years ago, but they still operate under the same baseline costs and competition. It was frightening to learn from some of the demonstrators that, after labour costs, industrial rates are the highest cost to manufacturers. That cost, with a bit of common sense, could be frozen now.
As an MLA for the constituency of East Londonderry, which is a mainly rural area with two major towns, Limavady and Coleraine, I must say that the figures for manufacturing job losses since 1999 do not make happy reading. The Limavady borough shows a decrease in manufacturing jobs of 17·1% and the Coleraine borough a decrease of 7·7%, according to Department of Enterprise, Trade and Investment statistics, published in mid-February this year.
The proposer of the motion mentioned the job losses at one manufacturer in particular — Farm Fed Chickens, which shed 70 jobs in January 2005 and, regrettably, closed with 380 further job losses very recently. The latter figure was too late for inclusion in the most recent statistics, so they are, in fact, much worse than published. An updated figure for the Coleraine borough could well be something like 13% job losses since 1999.
AVX, a very successful company under considerable pressure in a worldwide market in the microprocessing industry, employed, I believe, something in the order of 1,300 people in 2001. Regrettably, that figure is now 900, but the big plus is that the firm is still there and still working away, and I certainly wish it all the best.
Statistics are not very exciting, but those figures spell out human tragedy. Behind the statistics are real people and real families; there are dashed hopes and expectations. Where there are job losses, there are certainly mortgages, loans and credit card bills that must still be paid, so there is a human cost.
Industrial derating was introduced in 1929 to support the manufacturing sector and was abolished in England and Wales in 1963 and in Scotland in 1995. We are told that we should be treated the same as the rest of the UK. In normal circumstances, I would, as you know, Mr Deputy Speaker, be more than happy to be treated the same as any other British citizen, but there are substantial differences for manufacturers in Northern Ireland. We have a land border with another EU state — an EU state with a very different tax regime. We are on the very edge of the EU, as well as being separated from our biggest market, Great Britain, by the very-expensive-to-cross Irish Sea.
The disproportionately high cost of energy, added to our lack of natural resources, erodes the advantages of cheaper labour costs. Sadly, we must import a large proportion of raw materials. To add to that, we are still emerging from conflict, which did so much to destroy business confidence, although we are a few years on. That all adds up to a very uneven playing field.
We are now in year two of the phasing-out of industrial derating, with full rates due to kick in on 1 April 2011. I am told that the previous devolved Executive always envisaged phasing out industrial derating only when it was related to reductions in energy costs — my colleague Esmond Birnie highlighted the missing millions. That was to ensure that there would not be any disadvantage to our manufacturers in the global marketplace. Where are those energy cost reductions now?
Industrial rating certainly will not help the situation in which Northern Ireland manufacturing currently finds itself. Northern Ireland requires a freeze in industrial rating at the current level of 25% and a commitment by Government to support and facilitate the manufacturing industry through genuine partnership. I support the motion.
Ms Ritchie: Mr Deputy Speaker, as a South Down constituency colleague, I welcome you to your position.
Momentous decisions are being taken that will drastically change the political, economic and social fabric of Northern Ireland over the next number of years. The people will have no influence on those decisions — unless we give them that influence. We can do that only by using consensus to urge the Secretary of State to freeze the industrial rate at 25%, and, above all, to restore the political institutions. However, our message to the Secretary of State must be simple and straightforward. We support the manufacturing sector: our economy is based on it and on agriculture and tourism.
Consider what is coming down the road for us that will change our economic and social fabric: the Review of Public Administration; water charges; the phasing out of industrial derating, which we have already mentioned; planning policy statement 14, on which some of us agree and others do not; rises in the regional rate and the rating policy review; and the ongoing education board budgetary cuts. Many of those factors could have a pernicious impact on urban and rural communities and could stymie economic growth. However, the removal of industrial derating has the potential to be the body blow for small- and medium-sized manufacturers, who are the backbone of our community in the North of Ireland.
It has been suggested that industrial derating was introduced as a partial attempt to level the playing field with competitors in the Republic, who enjoy a corporation tax of 12·5%. That competition is tougher than ever, and that is why we want a review of incentives that will examine the issue fully. In the meantime, it is imperative that the Secretary of State freeze industrial rating at 25% and support the people who are with us today, inside and outside the Chamber, and who were with us at the Waterfront Hall on 25 April.
It is vital that we maintain a healthy manufacturing sector for a balanced economy. According to research that was undertaken by PricewaterhouseCoopers for the direct rule Administration, the number of people who work in manufacturing in Northern Ireland has halved in the past 20 years to 90,000. That research also revealed that approximately 18,000 jobs are likely to be lost over the next 10 years. Those stark statistics need further examination and require urgent political action to ensure that the manufacturing sector is not subject to further diminution.
The Secretary of State is very fond of lecturing us and the people of Northern Ireland. He tells us repeatedly that our public sector outperforms the private sector, which needs to be pump-primed and developed. That is true; it is important to develop the private sector. However, it is extremely difficult to do that when the policies that the Secretary of State and his direct rule Ministers have introduced and pioneered slice away, undermine and fracture the private sector and, in particular, the rural economy.
The majority of people live in rural areas, which are characterised by small manufacturing businesses that employ tiny groups from their communities. Those communities encompass engineering firms and those who are associated with the cement, tarmac, carpentry and furniture manufacturing industries. All those enterprises have been subjected to the onslaught of industrial rating and have had to lay off staff as a result of the increased pressure that has been placed on profit margins and output. As you know, Mr Deputy Speaker, industrial rating is a tax on the workplace, and further increases in it will simply contract the workforce and lead to job losses, closures, relocation of industry, reduction in investment, a loss of traditional skills, a loss of disposable income and a stagnation in the rural economy.
Do we in this Assembly want that to happen? I imagine that our collective response would be no. However, pending the restoration of the political institutions, does the Secretary of State have the political will to scrap his ill-thought-out proposals and save the economy or, at the very least, to freeze industrial rating at 25%? The answer is clear. He knows what he has to do, pending the restoration of the institutions: freeze industrial rating. We, the parties, know what we have to do. We must ensure the restoration of all the institutions of the Good Friday Agreement by subscribing to the principles of power sharing and partnership government and of policing reform, and by seeking an end to criminality and the creation of a lawful society. We must all adhere to those requirements in order to sustain the rural economy. That is a major challenge to the British Government, to the Irish Government and to all parties. Lest any of us be in any doubt, that is what the people of Northern Ireland want, particularly those in the manufacturing sector who are visiting here today. Everyone here should listen to their plea. Please, Secretary of State, listen to that plea.
Industrial rating will not only disadvantage manufacturing communities but will also severely disadvantage vulnerable members of the community. Those young people who are less well educated will find it harder to gain employment if the manufacturing sector is continually eroded. Do not let that happen. We have already seen examples over the past 20 years of the contraction of the textile industry — no more so than in our constituency, Mr Deputy Speaker. People have been forced to find jobs elsewhere or to join the dole queue because manufacturing companies have found economies that can do the work more cheaply. The people here have suffered, whether employers or employees. We must ask ourselves whether we want that to happen again. We must ensure a future for all the population, fight the negative forces in our society, come to a consensus today and force the Secretary of State to take account of the views of this Assembly.
Members must unite in support of the motion, and I commend my colleague Mr Dallat, the Member for East Derry, for moving it. We must ensure that industrial rating is frozen at 25%, pending the restoration of the political institutions. We must support the manufacturing sector; we must support the people of Northern Ireland.
Mr Shannon: I welcome you to the Chair, Mr Deputy Speaker; it is nice to see you there.
I support the motion. It is an important issue for us all, especially for those who represent constituencies where there have been job losses.
Northern Ireland is being beaten into extinction. The Government have introduced a taxing system that ensures that there will be little or no industrial sector in Northern Ireland, and they have done it by putting the blame on the non-existence of the Assembly. The fact is that they need to look to their own direct rule Ministers, in particular to the Secretary of State, to find where the decision came from to tax the already very shaky industrial sector into oblivion.
Mr Deputy Speaker, as you and Members of our party know, we met the Secretary of State eight or nine months ago. We pressed home the issue of industrial rating and the need to help our economy and our businesses, yet here we are debating the matter today — with little or no response from the Secretary of State. Northern Ireland has been given an economic death sentence with the rating of industrial premises. One wonders about a Secretary of State who says that he wants to see a Northern Ireland that can compete on the worldwide stage in economics and industry, while allowing the industrial sector to disappear under the weight of taxation by the Labour Government. That Government have increased taxation in order to pay for the promises that they made in 1997 on health and education. Members may have read in the papers today that the Labour Party has introduced 80 tax increases during its nine years in power.
The party of taxation is no longer the Conservative Party; it is the Labour Party — with a vengeance. The Government are also fighting wars in two countries, with poorly equipped soldiers, yet they expect Northern Ireland to forfeit the industrial sector of its economy to balance the books on the mainland.
Many small businesses in the Strangford constituency will be dreadfully affected by increased industrial rating. We have already lost textile factories such as Donaghadee Carpets, Carpets International in Killinchy and Bangor, and a plastics factory in Carrowdore. All those losses have incurred the loss of jobs for many workers who even today are still trying to find work. However, jobs will be even more scarce if industrial rating increases, as those who are making only enough to pay the wages in family firms will find that they cannot afford to pay the industrial rates and will go under. The clear message must be: “Cap the rate at 25%”.
In my area, many small businesses have about six to 10 employees. The profit for the person who owns or runs those firms will more often than not be absorbed by the increase in industrial rating. Those people are wondering whether it is worthwhile to stay in business, and whether to continue or to consider the future. Many of them will do the latter. It is not just the small firms in Newtownards, north Down and Comber; it is small firms right across the Province. We have a commendable work ethic here, but, unfortunately, the Government seem to be trying to do away with it.
Another example is of a firm that employs 25 to 35 workers. To comply with health and safety legislation, it was encouraged to increase its factory floor space. The firm did that only to find that it will be penalised with higher rates — all because it did what the Government encouraged it to do for the safety of its workers. Where is the justice in this system?
We may have our differences with Invest Northern Ireland, but one manufacturer stated that it did a great job in helping and supporting business — that could all be undone by increased industrial rating in the next five years. That is the story coming from businesses in my area and right across the Province. The Government already had these companies over a barrel by introducing legislation. They then introduced taxation for industry based upon floor space, as I mentioned. I am told that the extra bills will put the future of businesses and employers in jeopardy. People are being cautious, with so many bills expected and the same limited wages coming in. They are not spending their money in the economy, and, as a result, there are drawbacks for manufacturing. The self-fulfilling circle continues. People will lose their jobs, and all this because the Government are trying to win the jackpot of £40 million to £50 million to pay for their forgotten promises and their wars.
Receipts will be much smaller as more and more industrial businesses hit the wall and put people out of work. Some firms are considering relocating outside Northern Ireland to avoid this taxation by the Government. PricewaterhouseCoopers has stated that 25% of firms were considering relocation. If that is the case, there will be 18,000 more people unemployed and living off benefits — all because the Government are greedy, and oblivious to or — dare I say it? — disrespectful of the need for Northern Ireland people to have jobs.
Some firms have reduced their factory floor space in the hope of reducing their rates. Those are the ambitious businesses; they are run by people who have the ideas and the flair to make Northern Ireland’s economy better. By doing away with their floor space they have reduced their ability to employ more people. That is the downside of increased rating.
On a global scale, companies are leaving the developed world at a rate of knots because they can get cheaper premises elsewhere. Strangford has witnessed people go overseas because it is cheaper.
What incentive do these companies have to stay in Northern Ireland? What incentive do the Government give any business in the UK? Companies could begin to move across the border because the Government in the Republic offer taxation, insurance and rates at much lower levels than the British Government. The benefit of the Irish Government’s approach is clear to see; they have a strong economy — at least at the moment — while the UK is struggling to keep its head above water. Even on the mainland, the Labour Government have done little or nothing to stop the loss of jobs in industry.
Would the Government and Peter Hain like to tell us how many companies are making cars on the mainland, and how the industrial sector on the mainland has coped with rating? Would the Labour Government like to tell us just what they are going to do about the fact that there will not be enough money to ensure that all benefits are paid because so many people will be out of work? That will be the future under this policy if this Government keep taxing their people and their industry the way that they are at present. Cap the rate at 25%, and let the business sector get on with the job of doing business, employing local people and boosting the economy. I support the motion.
Mr Deputy Speaker: Before the Member for East Londonderry Mr Hillis got to his feet, I should have pointed out that it was his maiden speech. It is convention in another place that there are no interruptions during a Member’s maiden speech. I state that because Mr Gardiner will speak next, and it is his maiden speech.
Mr Gardiner: Mr Deputy Speaker, I congratulate you on your appointment and wish you well.
I support the motion. The ending of industrial derating sends out the wrong signal to the economy, not just in my constituency of Upper Bann, but across Northern Ireland. At a time when we should be encouraging the move from the public to the private sector, the removal of relief on industrial rating will take £201·3 million out of the Northern Ireland economy, moving it from the private sector’s hands to those of the public sector.
In the House of Lords recently, Lord Rooker, the Northern Ireland Office Minister in the Lords, replied to my noble Friend Lord Laird by telling him that, over the next seven years, the following additional amounts of revenue would be raised through the ending of industrial derating: in 2006-07, £18·2 million; in 2007-08, £26·1 million; in 2008-09, £38·2 million; in 2009-10, £58·7 million; and in 2010-11, £60·1 million.
That cannot be helpful to the stated Government policy of ending the Northern Ireland economy’s dependence on the public sector. How can the weakening of the private sector by what amounts to a tax increase on manufacturing enable its growth? The ending of industrial derating means that we must look carefully at any Government spending on the encouragement of industrial development over the next seven years and deduct £201·3 million from it. That effectively means that existing industry will pay for any Government subsidies to new businesses. This is typical of Government double-think — the taxpayer pays, and the Government claim the credit.
Manufacturing is the base activity of the economy. It is manufacturing that earns the new wealth on which all the service industry rests. People will not have new money to buy services if that new money is not generated in the first place.
Already, just 14·8% of the UK economy is in manufacturing, compared to well over 30% in Germany.
The figure in Northern Ireland is as low as 12%, which shows that we have narrowed our wealth-creating base until it is almost non-existent.
According to the latest research, the number of people working in the manufacturing industry in Northern Ireland has halved to 90,000 in the past 20 years. Another 18,000 jobs are likely to go over the next 10 years. Manufacturing in the Province is fragile, and we are far too dependent on the service sector. However, we are faced with the task of creating over 140,000 new jobs in Northern Ireland over the next decade. In the face of that daunting task and those alarming figures, is this the time to end industrial derating? I think not.
Industrial rating is a Treasury-driven policy in a nationwide Government effort to claw back as much revenue as possible to cover what is referred to in the City of London as “Gordon Brown’s black hole” — the underlying deficit in the Government’s finances that is estimated at between £10 billion and £20 billion. It has nothing to do with fair play, as the Government claim, or with industrial restructuring. It has to do with the Government’s failure to manage their books. The same is true of water charges and rate increases. It is all a Treasury-driven clawback of finances.
Northern Ireland is coming out of more than 30 years of civil strife; it needs investment, not major tax increases. It needs an imaginative peace dividend and not the withering effects of Treasury savings. To end industrial derating is a major blow to one sector, which has the ability to end Northern Ireland’s so-called dependency culture, which is criticised by the same Government that are doing little or nothing to replace our overdependency on the public sector. Only manufacturing can allow the economy to come out of the doldrums. I commend to the House policies such as enterprise zones, with major tax breaks for manufacturers in high-value-added enterprises, and not the dead hand of Government clawback.
I support the motion.
Mr Moutray: Mr Deputy Speaker, I echo the words of welcome that have been extended to you.
For nigh on 30 years, business in Northern Ireland was forced to endure a campaign of violence and destruction waged against it. Those who do not have the courage to be in the Chamber today were only too quick to give unquestioning support to those who, under the cover of night, sought to destroy our economy, pull down our infrastructure and condemn entire communities to an economic wasteland. However, what is truly staggering is that where the terrorists failed in their sectarian and fascist-style campaign, the UK Government seem determined to succeed.
The Secretary of State likes to point out that our economy relies too much on the public sector. He is correct, but what is his diagnosis? His solution is to tear down advantages from our business sector and introduce measures that threaten to cripple our private sector, making it unviable for many businesses to operate. When we consider his diagnosis and his prescribed remedy, Peter Hain looks more like the Dr Harold Shipman of local politics than a responsible Secretary of State. Government proposals on industrial rating threaten to damage the manufacturing industry, its profitability and its viability. They also threaten thousands of jobs in the process.
That situation will not have been caused by international competition or internal terrorism, but by a Government charged with helping to ensure our success.
Although manufacturing businesses using large premises may suffer initially, the introduction of the proposed rating policy will have a knock-on effect on the whole Northern Ireland economy. Northern Ireland business is only looking for the opportunity to lead the Province into a better future. No Government with a genuine interest in securing such a future would cast itself in the role of driving businesses into the ground, killing off any chance of recovery.
The Government encouraged many businesses to invest heavily in premises, equipment and human resources and they claim to want to turn Northern Ireland into a world-class economy. If that is true, they should start by showing a commitment to freezing the industrial rate at 25%. Parties are united in opposition to industrial rating. The Government now have a responsibility to think again.
Mr Gallagher: I share the concerns highlighted by Members and voiced by the representatives of NIMFG who are here today. They are also shared by many people in manufacturing from my constituency, who were not able to be present for the debate.
There will be dire consequences for the entire community if the current rating policy is allowed to move to its next phase. As we all know, it has been very difficult to attract inward investment into Northern Ireland over the years, but particularly so west of the Bann. Much of the little that came our way has gone again because many of the large manufacturers centralised their operations elsewhere or have moved out of the country to the cheap labour economies. The leader of the DUP mentioned that earlier, and he rightly highlighted the consequences for people’s lives and livelihoods. A recent example of that was the announcement of the closure of the Moy Park factory at Lisnaskea, with the threatened loss of 188 jobs. That is happening simply because the company is centralising its operations, leaving 188 people out of work in a town that has lost four factories in the past five years and a total of 480 jobs.
However, one of the more hopeful features of the economy of Fermanagh and South Tyrone and other places in the west has been the resolve of local business people to overcome challenges and to develop businesses locally themselves. Consequently, those areas now depend highly on several manufacturing businesses to provide jobs and to sustain the local economy. Like businesses everywhere along the border, they are striving all the time to overcome the disadvantages of, for example, currency differences or the more favourable conditions provided by the Irish Government for their business counterparts on the southern side of the border.
It has been clearly set out for Members that a reprieve on this issue is completely in the hands of the Secretary of State today. Yet we have assembled here elected politicians, all supposed to be accountable to those who elected us, including the business community.
However, here we are and we cannot function as accountable politicians because there are those among us who, both inside and outside this Chamber, highlight only barriers and refuse to engage in attempts to find ways to establish devolved Government.
Yesterday — as we all know — Members could not, or would not, agree a Chairperson for the Committee tasked with finding a way forward. Members can hardly blame the business community or the general public if they are cynical about what is happening in here. The economic and social interests of constituents should take precedence over party-political interests and rivalry for power. All parties must take seriously the responsibilities that they were elected to carry.
To start with, we need a commitment to making the Preparation for Government Committee work to achieve devolved Government, and the rhetoric of today’s debate could then be followed by meaningful action — action taken by those elected by, and accountable to, the public. We must resolve to get to that point without delay. I support the motion.
Mr Elliott: I welcome you, Mr Deputy Speaker, to the Chair and wish you well in your efforts and work in that role.
At this stage in a debate, we beg the question: what more can be added to everything that has been said? I have been trying to think of the answer for the past 15 minutes, as almost everything appears to have been said.
However, there are a couple of issues, and my colleague in Fermanagh and South Tyrone Mr Gallagher has mentioned a few in our constituency. Many Members have mentioned facts and figures, and I have no wish to repeat them.
The industrial manufacturing sector has been one of the biggest employers in Northern Ireland for generations and that must be protected. Recently, we became aware of a major issue in Fermanagh and South Tyrone. As Mr Gallagher stated, Ferne Foods has just announced that it intends to shut up its plant in Lisnaskea, with the loss of 188 jobs. That is a serious issue for an area that, in a very short time, has lost businesses such as Adria Ltd, the Sir Richard Arkright factory and Fermanagh Creameries.
It is the big-business-closure syndrome. Small indigenous local companies progress well within a community, but suddenly they are bought over by big international firms that eventually shut up shop. We have found that in Fermanagh and South Tyrone. Local companies, such as Fisher Engineering, the Quinn Group, and Balcas Sawmill CHP Plant, are run by local people. They started them, progressed them to a significant level and created a big employment base. However, the larger companies, or big international firms, come in and buy up the small companies and, in no time, they are closed.
We must encourage Government to support local indigenous companies. Fair enough, we need the big manufacturers to come in as well, particularly in urban areas, but we must support small indigenous companies that local people build from the ground up.
Many of those companies started with one or two employees, have built up their business and now employ hundreds of people, and that is vital. An example is Fisher Engineering, which is currently listed in ‘The Sunday Times’ top 100 profit-growth firms in the United Kingdom. The Quinn Group has its headquarters in Derrylin, County Fermanagh.
(Madam Speaker in the Chair)
During 2004, it acquired Barlo Group, a leading manufacturer of sheet plastics and radiators. Two years ago, the Quinn Group was expected to generate a turnover in excess of €900 million. Balcas is another prime example in County Fermanagh.
I wish to talk briefly about the equine sector. I am led to believe that, in Northern Ireland, there will be no rate relief for the equine sector, unlike mainland Great Britain, where there will be industrial derating and relief — it may not be called derating, but it is certainly rating relief. That will not be so in Northern Ireland unless we can pursue the issue and insist that Government provide such relief. Many people ask why the equine sector is situated mainly in southern Ireland. I have given the answer, and things will get worse if that issue is not quickly resolved. There have been several representations made to me on that matter in recent weeks.
At a recent meeting with Moy Park, the company that owns Ferne Foods, I pleaded with it to reconsider the situation at the Lisnaskea plant, where 188 jobs will go. That may not sound much to Moy Park or to its parent company, a large American firm. The number may not be big on an American scale, but it is to people in County Fermanagh, and particularly to people in Lisnaskea.
Mrs Foster: Before the Deputy Speaker left the Chair, he called two Members for Fermanagh and South Tyrone, and I am glad that you are continuing in that trend, Madam Speaker. I wish to add to the comments of those two colleagues about industry in that constituency. I am sorry that my Friend Tommy Gallagher has left the Chamber. I take his points about our taking our responsibilities seriously. However, would it not have been better if the other Member for Fermanagh and South Tyrone, the MP for the area, had been here as well — and not only here, but in her place at Westminster — to debate the issues that affect the constituency? Regrettably, that is not the case.
A lobby representing Northern Ireland manufacturing attended an Assembly group meeting some time ago, and its briefing was stark. The lobby said that 30,000 jobs would be lost to the Northern Ireland economy if full industrial rating were introduced. The then Minister, Lord Rooker, whose leaving, as has been said, is not lamented, summarily dismissed that figure. We were also told that many firms would relocate outside Northern Ireland. Lord Rooker said that there was no evidence to back up those figures and added that the manufacturing lobby was using scare tactics to secure an unfair advantage by keeping industrial derating. If he were still here, I would tell him that I have the evidence in Fermanagh and South Tyrone. My two colleagues have already given such evidence, and I can back up those figures.
It will not surprise the House that, as a border constituency, Fermanagh and South Tyrone struggles to maintain an effective industrial base, not only because its nearest competitive rival has a lower tax regime, but because of the lack of investment in infrastructure, which is an additional burden. That is an entirely different debate and one that I hope will come before this House in the not-too-distant future.
We have heard much about Lisnaskea and south-east Fermanagh. Five years ago, Lisnaskea had four thriving medium-sized factories: Coats Viyella at the Sir Richard Arkwright factory, Fermanagh Creamery, Adria, and Ferne Foods. I remind the House that three of those four are gone and that Ferne Foods is earmarked for closure and enduring a 90-day redundancy consultation. I cannot help but think that the spectre of industrial rating was a factor in Moy Park’s decision to pull out of Lisnaskea.
I have no proof of that, but I am sure that it was one of the factors that they considered when contemplating the loss of 188 jobs in that area. As my colleagues said, it was a huge blow. For many of those who lost their jobs, this was not their first experience of redundancy. For some, it is their second or third redundancy, having worked in the factories that I mentioned previously.
In the debate on the economy, I stated that our indigenous entrepreneurs need to be the focus of bodies such as Invest Northern Ireland. I reiterate that point and add that if the Government — as they say so vocally — are keen to move from a public-sector-dominated economy to one with higher private-sector involvement, they cannot imply that desire on the one hand and impose industrial rating on the other. The Government — at least, one would think — should try to be consistent in the messages that they send out. However, over the years, that has not always been the experience of my party.
“All things being equal” is a phrase that is often used in economics. It is not, however, a phrase that is applicable to the industrial sector in Northern Ireland. Poor infrastructure and consequent transport costs, the legacy of 35 years of terrorism, the unequal tax regimes with our nearest competitive neighbours, and high energy costs and unfair competition from the Far East mean that all things are not equal. Therefore, I support the motion to cap industrial rates at 25%.
Mr Armstrong: I support the motion, and call on the Secretary of State to freeze industrial rating at 25%. Expansion of the manufacturing sector is essential to a successful economy in Northern Ireland, and the Government need to work with businesses to establish a more favourable climate in which the small businesses and medium-sized companies that drive our economy can prosper and deliver more manufacturing jobs. One of the first steps should be for the Government to announce an immediate freeze on rates for manufacturers.
This is not a new debate. The issue of industrial rating has been ongoing since 2002. The Ulster Unionist Party has thrown its weight against the proposal since then. I refer to a letter that I wrote to the Minister of Enterprise, Trade and Investment in July 2002, before industrial rating was out for consultation. I highlighted my concerns regarding manufacturing output figures for my constituency of Mid Ulster, which appeared to have registered a drop that was double the national average.
Mr Weir: The Member mentioned that he wrote the letter to which he referred in July 2002. The Minister he would have written to at that stage was Sir Reg Empey. I presume that, at that point, the Minister took action and ended the slide towards the end of industrial derating.
Mr Armstrong: The Minister took what action he could at that time. In 2002, I feared that the figures would be repeated in the following years. Then we would have been in big trouble. I urged the Minister that Invest Northern Ireland should employ ways to encourage industry to expand and develop.
Mid Ulster has a strong history of small light engineering firms, many of which employ fewer than 10 people. We regard those firms as our manufacturing seedcorn for the future, and we are confident that, given time and support, a good sprinkling of those companies will turn into medium-sized enterprises. Those home-grown firms usually have roots in the local community that are not easily broken, unlike many of those that have been encouraged to locate in Northern Ireland through inward investment.
However, in late 2002, direct rule brought the so-called consultation on industrial derating, and my office was inundated by pleas for support from numerous manufacturing industries in Mid Ulster and across Northern Ireland. I have continued to consult local companies, such as Turkingtons, Forbes, Keystone, Powerscreen, Dungannon Meats, Moy Park, McEvoys, McErlain’s Bakery, Western Roofing, SDC Trailers and Macrete Ireland, to name but a few. That shows the diversity of products being manufactured and the range of firms facing the huge financial implications of industrial rating.
Direct rule Ministers have already stated that Northern Ireland is unsustainable with its heavy reliance on public sector jobs and that we must increase the private sector, yet they have failed to assist the existing manufacturing base in the Province. The Government in Westminster have been trailing their feet for years in working with the manufacturing industry. They seem to be more interested in importing. Northern Ireland has a history of being very much self-sufficient, but the Government seem to be set on reversing that trend.
There are various industrial disadvantages that Northern Ireland’s manufacturing companies must overcome to enable them to become more competitive in the marketplace, whether our home market or the UK, Europe or worldwide markets. Northern Ireland manufacturers face higher energy costs and higher raw material costs due to the lack of raw materials available here, coupled with the disadvantages of being separated from the rest of the United Kingdom by a sea border, being the furthermost region from central Europe, and having a border with the Irish Republic — which enjoys low corporation tax, no industrial rates and an industrial boom over the past 20 years.
The number of manufacturing units in Northern Ireland has fallen each year, and in the past 30 years the number of people employed in manufacturing in Northern Ireland has fallen from 175,000 to 95,000. It is not an exaggeration to estimate that 30,000 manufacturing jobs could be lost due to the imposition of further increases in industrial rates.
The expansion of the manufacturing sector is essential to a successful economy in Northern Ireland. We cannot have a secure, prosperous future based purely on public-sector and service-sector jobs. Many companies — large and small — across Northern Ireland, engaged in many different industries, are now contemplating moving across the border or closing down as a result of the ending of local industry’s last remaining competitive advantage.
Over the years, I have witnessed the establishment of many small companies. Through sheer hard work those companies have flourished, offering employment opportunities and contributing to our local economy. They are the companies that will become the backbone of our future industrial base. There are 5,107 companies in Northern Ireland affected by the end of industrial derating. Those companies operate in a highly competitive international market, and it is impossible to pass on the additional costs to their customers.
The loss of many thousands of jobs will cost much more than the estimated £53 million per annum that the Government hopes to raise through the end of industrial derating. The latest ‘Economic Outlook & Business Review’, published by First Trust Bank at the end of May, states that:
“In overall terms NI does not have a compelling, competitive offering to foreign investors.”
According to the report, Northern Ireland’s economic conditions weakened in the last quarter of 2005. The report forecasts that, although public expenditure will expand over the next 18 months, spending is unlikely to increase afterwards. It predicts that personal income and consumer spending will continue to grow but will also be hit by the introduction of water charges and higher domestic rates. Cutbacks in some sectors of manufacturing are likely to cause unemployment to increase for the first time in several years.
Direct rule Ministers have reminded us of how much the Northern Ireland economy depends on the public purse, and that in the years ahead local taxpayers will bear an increased burden in support of improved local services and infrastructure, and a cutback in the numbers employed in the public sector.
The present policy of Government to push manufacturing costs up by introducing massive rate bills will further threaten many more jobs and will see more closures. Coupled with a 20% increase in electricity prices from April 2006 and a massive increase in Phoenix Gas prices, this cannot be absorbed by industry as it is working on ever-tighter margins.
In the case of Bombardier, the additional costs of rating will be around £2 million a year when this is fully implemented in 2011. The Government are further disadvantaging industry in Northern Ireland with policies imposing restrictions on planning including renewable energy infrastructure and essential services. In a meeting in October 2003, direct rule Minister Pearson confirmed his complete lack of loyalty to local manufacturing companies when he indicated that, should they be unable to survive when industrial derating was withdrawn, he would have no qualms in securing necessary products from outside Northern Ireland or the UK.
The Government must reverse this lack of loyalty to manufacturing companies in Northern Ireland and instead give them all possible support. The Government must recognise the unique location of Northern Ireland in comparison with other regions of the United Kingdom and offer tangible support to the manufacturing sector, by imposing a cap of 25% as the maximum that industry can afford and by looking to other tax incentives.
I urge the Government to review and assess immediately the impact on businesses in Northern Ireland of the ending of industrial derating after the first year of operation. The Government have already set a precedent where some parts of the freight industry have been offered 75% rate relief because the Government believe that it is not the time to increase costs. Manufacturing should be offered similar terms. Industrial derating was Northern Ireland’s manufacturing companies’ only competitive advantage. They must be supported to maintain their competitive edge so that they can afford to invest in research and development in order to survive in the modern world. Profitable companies pay tax to Government, and that should more than compensate for any support that is forthcoming from Government.
Mr McGlone: A Cheann Comhairle.
A fortnight ago, this Assembly rightly debated Draft Planning Policy Statement 14. On that occasion there was much consensus in the Assembly that it would be bad for rural society and bad for rural economies. Based on analysis that I presented to the Assembly, it is predicted that such an ill-advised policy will have very negative effects on the local economy with potentially as many as 10,000 direct job losses. We cannot afford such a body blow to our economy, yet we are back today trying to bring the Government to their senses and to avert any potential for major job losses in Northern Ireland.
We have recently seen too many breadwinners join the dole queues and their families hit poverty due to international pressures without adding to those dole queues through a massive economic own goal — for that is exactly what the introduction of rating for manufacturing at the Government’s proposed scale will be.
There are many manufacturing businesses in the Mid Ulster area, and my colleague Mr Armstrong referred to a number of them. However, when people who I know well, from places such as Ardboe, Cookstown, Magherafelt, Draperstown, Maghera, Bellaghy and the Creagh, tell me that this will cause grave difficulties for their businesses, I listen very carefully. I trust and believe them and value their judgement deeply, far ahead of that of an academically well-qualified civil servant. The reason is that these people have been there through good times and bad. Many of them have built their family businesses from scratch — in some cases, despite efforts by paramilitaries to destroy those businesses — providing employment for local communities.
These people know what makes their businesses succeed and what has the potential to drag them down. The Government’s proposed level of industrial rating on industrial workspace will do just that, causing job losses or closures, relocation of industry, reduction of investment and capital expenditure, consequent loss of disposable income and its effect on the local economy and loss of traditional skills. The Northern Ireland economy simply cannot afford an economic body blow of this extent.
I was very proud to join the local manufacturers’ representatives on the day of their protest, to see them come out and articulate their deeply held views and share those views with them. I have welcomed them here today and am glad to see them in the Gallery, from where they can see the consensus — a consensus that the Secretary of State must heed — that has emerged in the Chamber. He must listen to the views that have been expressed in and by this Assembly and to those that small businesses have expressed, both at their protest and on other occasions, and help to build a positive economy for all of us in Northern Ireland. A Cheann Comhairle, molaim an rún. I support the motion. Go raibh míle maith agat.
Mr Beggs: I am pleased that, so far, there has been unanimous support for the motion. It is important that we send that message to the Secretary of State. It is regrettable that some Members have chosen not to attend the debate.
Northern Ireland Office (NIO) Ministers must rethink their attitude to local businesses. Policies that adversely affect local businesses adversely affect local jobs. It is not only about businesses; it is also about jobs and lives. As my colleague Mr Hillis said, it is about how industrial rating will ultimately affect the lives of individuals.
NIO Ministers have been saying that the local economy is not sustainable, yet, at the same time, they have been keen to load additional burdens on to our businesses, thus making the situation even more difficult. Take, for example, the rates burdens that have been loaded on to our larger employers. The rates for Bombardier Shorts have been estimated at £2 million a year, Montupet’s at £1 million a year, and Harland and Wolff’s at £4 million a year, although I understand that that figure may have been recalculated at £750,000 a year. Each of them faces fierce competition from other companies. Some also face stiff competition from other groups on their sites, so those additional costs will affect the bids that they place and may determine whether they win new contracts. That could have serious, long-term implications for those companies’ futures. We should not take that lightly, bearing in mind that each of those companies not only has large numbers of employees but sustains many other employees by subcontracting throughout Northern Ireland.
Industrial rating is likely to have even wider implications for our smaller employers. The rates burden tends to make up a higher proportion of smaller employers’ costs; therefore it might have an even greater effect on them.
Several Members have questioned the DTZ Pieda Report, which estimated that the industrial rate would be 2·7% of profits. I understand, however, that only 22 of the 100 companies that were surveyed had fewer than 50 employees, yet that group is likely to pay about 80% of the rates. Something clearly went wrong during that survey, and I question the conclusions that the report drew.
I wish to highlight the case of NK Fencing Ltd, which is a company that has a plant in my constituency. The company has 205 employees. It made, according to the most recently quoted figure that I have seen, £630,000 profit. It has a potential rates bill of £163,000, which is more than 25% of its current profit, not 2·7% of its profit. That would have a huge effect on any business’s long-term plans, and it is not really tolerable.
Local businesses face many cost pressures: we have additional transport costs as a result of our peripheral location; we have increasing environmental costs in order to meet European directives; and, as others have said, Northern Ireland has suffered from high electricity costs as a result of the botched privatisation, which gave the electricity companies at that time very generous contracts. The Ministers have yet to deliver the £30 million per annum rebate to rectify that situation. Local businesses also face competition from the different fiscal regime in the Republic of Ireland, with which we have a land border. The EU free market makes it easy for people to transport goods and for businesses to relocate.
As my colleague Norman Hillis said, we must not shoot ourselves in the foot on this issue. The Treasury already loses out because of motorists choosing to fill up with petrol across the border. The Treasury should look seriously at that matter, because it should not want the resultant loss of corporation tax and National Insurance if, because of the adverse conditions that Northern Ireland Office Ministers intend to establish here, companies decide to relocate.
There has been complacency among the Northern Ireland Office Ministers. In a recent statement, the then Enterprise Minister, Angela Smith, indicated a positive outlook for Northern Ireland’s manufacturing sector. However, the same document later indicated that employment in the manufacturing sector had declined by half in the last 20 years. A Department of Enterprise, Trade and Investment report by PricewaterhouseCoopers in July 2005 stated:
“The projections suggest that the management of decline … is the task facing policy makers in Northern Ireland”.
That is a defeatist attitude. Certainly, that will be the result if the Government continue to load additional burdens on employers. We must create a positive attitude, address the needs of businesses, and ensure that this is a place where business can succeed and where the best of our young people can take on the rest of the world. There are companies that are doing that, and succeeding. I think of Schrader Electronics — I have mentioned it before — which has 30% of the world market in remote tyre-pressure-monitoring systems for cars. FG Wilson, in my constituency, has been one of the best exporters in the United Kingdom.
Why should we spend millions in trying to attract foreign investment, while at the same time taking on board policies that will drive away existing jobs? Invest Northern Ireland and the Government must reassess what they are doing.
I thank the Northern Ireland Manufacturing Focus Group for their work, and I support the motion. It is important that we, as an Assembly, present a united view to the Government, and I hope that the Secretary of State will respond.
Mr P Ramsey: We are indebted to the Member for East Derry for tabling the motion, and I acknowledge the high number of representatives from the business sector who came here today. I notice quite a few from the north-west. It is only as a result of their determination in bringing forward their concerns that the issue is being debated.
Today, the Assembly has the opportunity to speak with one voice in support of NIMFG’s campaign, and it calls on the Secretary of State to freeze the industrial rate. That is why the manufacturers are here. They are not here to listen to a talking shop; they are here to make sure that the Secretary of State takes account of the resolution passed in this Chamber. I have no doubt that not only will there be a consensus, but it will be unanimous.
In recent years, my constituency has seen a huge decline in the textile industry, particularly in shirt manufacture, affecting thousands of jobs. We cannot and will not tolerate any further job losses that will, no doubt, result if this legislation is allowed to pass.
The SDLP fully supports the efforts of the Northern Ireland Manufacturing Focus Group to alleviate the burdens on industry. We favour a more reasoned and targeted system of industrial incentives, which would counteract some of the regional disadvantages borne by manufacturers. Moreover, there is a need to bring together new methods of encouraging, supporting and sustaining our existing manufacturing base in Northern Ireland. This issue does not just concern big companies; we support small and medium-sized companies and the new ideas coming from the creative-industry sector.
Businesses in the border region are relocating to the South of Ireland. Companies originally based in Foyle, my constituency, are now setting up in Donegal for higher profit margins and more favourable rates of corporation tax. The issue of industrial rating must be considered in the wider context of the competitive advantage in the South, which must be matched in order to enable businesses in the North to survive and prosper.
We all have a responsibility to ensure that central Government Departments are committed to the development and growth of all businesses across Northern Ireland in order to ensure a balanced and sustainable economy. The SDLP is determined and committed to ensure that manufacturing and business thrive in Northern Ireland, with results that clearly benefit everyone in the community.
The reduction of poverty and the creation of higher levels of employment opportunities must be our top priorities.
It is in that context that I fail to understand why the British Government are intent on pursuing a change that has no mandate from the political parties represented in the Chamber and that will have a completely negative impact across all the communities that we represent. As some of us heard from Basil McCrea this morning, it will potentially lead to a loss of upwards of 30,000 jobs; we cannot tolerate that. It could also lead to businesses closing down, as was mentioned previously, or relocating to the South of Ireland.
If the legislation is fully implemented, it will make an already difficult marketplace even more difficult for businesses to work in. Existing manufacturing companies are facing increasingly difficult trading environments. If industrial rates are not capped in some way, the gap between North and South will widen further, placing Northern border counties on an uneven playing field and at a further disadvantage when attracting investment.
The imposition of industrial rating will throw the manufacturing sector into crisis at a time when it is much harder for businesses to ensure a more sustainable future. We must also consider new business start-ups. What incentives will there be for future generations? What encouragement will be given to young people who may consider starting up their own businesses? Industrial rating will increase overheads and make it more difficult to make profits.
At a time when we are achieving a consensus in the Chamber, we not only hope but demand that the Secretary of State takes account of the motion, which will undoubtedly be passed.
Madam Speaker: Before I call the next Member to speak, I remind Members of the convention relating to maiden speeches.
Mr McCausland: I support the motion. It is quite clear from the debate that there is a broad consensus on this subject that stretches across political parties — with the notable exception of the party that happens to be missing today — across different business sectors and across the Province. Members from the west of the Province, mid-Ulster and the east of the Province have spoken on the issue.
The decision to phase out industrial derating was ill conceived and ill considered. The former Finance Minister, Lord Rooker — recently departed but not much lamented — was in favour of industrial rating. He said:
“There really is no reason why the manufacturing/industrial sector … shouldn’t pay”.
He was quite fond of the term “no-brainer”, but on that occasion, he was not using his brain, because only someone who has not thought about the matter could actually say that there is no reason.
There are good reasons why derating for the industrial and manufacturing sectors should be retained — primarily, jobs and employment. The point has been made on a number of occasions that unemployment is quite low, so what are people getting excited about? However, the fact remains that, in significant parts of Northern Ireland, many people are economically inactive, many areas have inter-generational unemployment, there are low levels of skills and people seeking work look to the manual or semi-skilled sectors.
When I mention that, I think of my own constituency, because there is a need for more investment, more businesses and more manufacturing there. For example, a few years ago, Invest Northern Ireland spent a considerable amount of money building an advanced factory at Glenbank. It sits across from some of the most deprived wards in Northern Ireland; it is a lovely factory, but it has been empty since the day it was built. It has only ever created one job — and that was the caretaker. Apart from that, they have not managed to create one job; they cannot get anybody to go into it.
Other employment opportunities came along and promised much. The American company Teletech invested in the Northgate centre in Duncairn Gardens and, at one stage, promised 900 jobs. However, it has never created more than a fraction of that, and is constantly under threat. The future of the company is uncertain.
In fact, because the firm is recruiting in places such as Holland and other continental countries so that workers can be brought in from abroad, nothing more than a handful of jobs have been created for the people in the immediate locality. Therefore, the impact on local communities is negligible.
That is why it is particularly important — and several Members have already made this point — that we stress how local enterprises, industries and the manufacturing sector are valuable to the local economy and how they can address unemployment. We should also encourage those sectors. The removal of industrial derating will discourage them, but its retention will encourage them to some degree.
We should be concerned about this matter for the sake of those who have suffered and who continue to suffer from the effects of unemployment. I am therefore delighted that there is such a breadth of support for the motion, and I am happy to support it.
Mr P J Bradley: I welcome the industrialists who are here today, and I am surprised that we are even here together. The message from the Waterfront Hall that day was loud and clear, but, as yet, no one has taken heed of it.
Many different groups are interested in the outcome of the debate. The rating exemption has been enjoyed for almost 80 years and is about to be removed. It is probably unfair to use the word “enjoy”, but the exemption was certainly an encouragement that is now under threat of removal.
The motion is not a call for the continuation of derating; rather, it is a call to freeze the industrial rate at an acceptable 25%. I am aware of over 50 industrial and manufacturing companies, some large, some not so large, but all of equal importance, in my constituency of South Down. Indeed, some of those companies have been creating employment and manufacturing in my area for over 50 years. Those companies are now faced with something that is between economic uncertainty and complete closure.
Our concerns must not stop there. We must think of those firms’ employees and their families. The local economy is also under threat, and at a time when many farmers seek earnings to supplement their farming income, it is to such firms that those about whom we have heard so much today often turn when they seek that secondary employment.
I said in my opening remarks that many groups are interested in the outcome of the ratings debate in Northern Ireland. Included, but for a completely different reason — and we have already heard about this from many Members — are the many owners of industrial sites in the Republic of Ireland who would gladly avail of the opportunity to deal with those whom the Government north of the border are forcing out of business.
We know who out there is listening with interest to what is being said in here, but I ask whether the Secretary of State is listening. If he is, he must not ignore the views that have been expressed in this Assembly. So far, 19 Members have expressed their unqualified support for the business people of Northern Ireland. The Secretary of State should also note that four of the five main political parties that were elected to the Northern Ireland Assembly are unanimously opposed to the Government’s proposals.
If Mr Hain is a democrat, he will pay heed to what democratic Northern Ireland is saying; if he is a labour-conscious politician, he will share the concerns of employers and their employees; and if he is a believer in common sense, he will recognise that the common sense that has been repeated so often in the Chamber today cannot be ignored.
I support the motion.
Mr Dawson: I welcome the debate, and I support the motion. It is interesting to reflect that, even in the worst days of the terrorist campaign in Northern Ireland, the manufacturing industry employed about 170,000 people. That was despite the efforts of IRA/Sinn Féin to destroy the economy by bombing our businesses, intimidating and kidnapping business leaders and making the country unattractive to foreign investors. During all that time, many jobs were maintained and businesses strengthened.
I take the opportunity to pay tribute to the business community and to the many companies, large and small, that weathered the storm of 30 years of terrorist violence. Business leaders, during all that period, kept their heads down; they concentrated on their businesses and on the employment and stability that those businesses could bring to local communities. In a time of terror and despair, hope was kept alive in an otherwise chaotic and difficult economic climate by the regularity and routine of business activity and business existence, and often business success, in Northern Ireland.
The business community’s contribution to maintaining some stability in that time of general instability has never been fully recognised. The irony of the situation in which we find ourselves today should be evident for all to see. Where is the peace dividend for the business community in Northern Ireland? Having striven and worked to create stability during the entire period of the troubles, the business community could at least expect to be rewarded and protected by the Government as we come to the end, it is to be hoped, of the troubled time that we have been through. There is no peace dividend for the business community and no general peace dividend for Northern Ireland across the board.
Rather than seize the opportunity to capitalise on the possibilities for further stability through the business community, and rather than look for creative partnerships to tackle long-term unemployment and use the strength of an active business community to tackle the figures on those who are economically inactive, the Government’s response is and has been to penalise the business community, to reduce its profits, to stop the possibilities of research and development, to reduce investment and, ultimately, to create further unemployment, which may lead to renewed community instability.
If ever a policy was ill thought through, ill prepared and ham-fistedly implemented, it is the one that levies industrial rates on our business leaders.
Today, manufacturing jobs are, sadly, at half the number that they were during the worst days of the troubles. Manufacturing is still competing in that global environment, but more particularly, as Mr Dallat mentioned, it is competing with businesses in the Republic of Ireland, where the overall tax regime is more beneficial. The Northern Ireland business environment is different to that experienced in the rest of the United Kingdom. We are the only part of the United Kingdom that has a land border with a country that operates a different fiscal regime and is within the euro zone. The structure of our economy is, as we know, dominated by and focused on the public sector. Members referred to the energy and transport costs, which are higher in Northern Ireland than in the rest of the United Kingdom.
Manufacturing continues to decline in Northern Ireland. Our economy still needs a period of special measures that are clearly focused on delivering a strong, competitive, outward-looking and confident private sector. Levying uncompetitive rates on the manufacturing sector will do nothing to transform our economy into a private-sector-dominated one; rather it will entrench the dependency culture and will dramatically and negatively impact on the private sector, as has been said many times today. That proposal runs counter to the published ‘Economic Vision for Northern Ireland’, as set out by the Department of Enterprise, Trade and Investment. It says little that is positive about the notion of joined-up government. The one thing that has been consistent in all the debates in this Assembly has been the criticism of the lack of joined-up government in Northern Ireland.
The House will unite today, I believe, in opposing the implementation of industrial rates beyond the current 25% level. I draw Members’ attention once again to the empty Benches opposite. Outside this Chamber, those who would sit there promote their ability and their confidence in demonstrating for the business community, yet they have nothing to offer in debate on its behalf.
Mr Storey: Does the hon Member agree with me that one of the reasons for the absence of Sinn Féin/IRA representatives in the Chamber is that they have no fiscal policy? In fact, in their proposals for the finance of the Irish Republic, they have actually proposed that those levies should be increased. It is a matter of embarrassment as to why they are not here, and it is a matter of inability because they are not able to deliver on any fiscal policies for the benefit of the people of Northern Ireland.
Mr Dawson: The hon Member is of course right that the Sinn Féin party proposal for the economy of the Republic of Ireland is increased taxation. They are the party of increased taxation, and while they proclaim that they are against increased industrial rating here, in the Republic of Ireland they are saying that rates should be put up. They are bereft of sensible economic ideas. As my hon colleague has said, they have nothing to offer in terms of the bread-and-butter issues facing the Province.
The rest of us also need to be challenged, because while it is good for us to leave this place today believing that we have represented the interests of our constituents in the business community, the plain fact remains that we need to do more to influence Government thinking. In the first debate in the Chamber, on the economy, there was cross-community support for a working party to be set up to look at the range of issues affecting the economy in Northern Ireland. Such a working party would be of more value than a contrived restoration Committee, which has no real business to conduct, but which is designed to provide a political fig leaf to the absentee politicians of Sinn Féin. The need for that working party to explore the real economic issues — rates; tax; how we can benefit the business community and drive a competitive economy through Northern Ireland, tackling the range of issues that needs to be tackled — is urgent.
Today we have expressed our opposition to increased industrial rating. That opposition is all well and good. The pressing need for this House and its Members is to find solutions that will be for the benefit of all the community; solutions that reflect the specific needs of Northern Ireland and challenge the current thinking of the Treasury beyond Northern Ireland and in relation to taxation that is levied here. I appeal to the members of other parties to ensure that that working party is set up, and that we get down to the real business of helping the economy of Northern Ireland in a meaningful way rather than complaining about what others are doing.
Some Members: Hear, hear.
Mr Girvan: I am grateful for the opportunity to debate the issue in the Chamber. I say debate; I have heard one side of the debate today. There is unanimity throughout the Chamber. Everyone seems to be united on the stance that the implementation of the rating policy put forward by direct rule Ministers is nothing but economic vandalism upon the economy and the business community. Coming from the private sector, I am only too aware of all that that implies.
Northern Ireland is a different case from any other part of Great Britain in that our energy costs are probably the highest in Europe. We also have to deal with trying to cross the sheugh, because 75% of everything that is manufactured in Northern Ireland has to be exported to GB, and that gives rise to additional costs. Businesses in my area are feeling the pinch already, not only because of corporation tax and the differential between Northern Ireland and the Republic, but because we went through 30 years of vandalism and terrorism, which has had an impact on business.
I note that the Benches opposite are empty — that party would be only too willing to lambast and shout about everything, yet for 30 years it wreaked havoc not only on the lives of men and women, but on the Northern Ireland economy and the economic well-being of this Province.
We must support capping the rate at 25%. I do not always agree with Mr Dallat, but on this occasion I do. I am glad to support the motion. The focus group has done a fantastic job of lobbying and getting its message across, and I congratulate it on that. It has been very positive in its approach. My party is 100% behind the stance that the business economy of Northern Ireland needs to be supported.
Our reliance on public-sector employment was also mentioned. The death nail is not being driven into Northern Ireland by terrorism, but by the British Government and the vandalism of direct rule Ministers. I support the motion.
Dr Farren: In supporting this motion, I believe that the issue posed by the removal of industrial derating goes far beyond whether the rate is justified, too high or affordable at all. The stark fact is that the present state of our economy and the threat to the manufacturing sector posed by the removal of industrial derating have arisen because of an absence of private-sector investment on the scale necessary to create more vibrant, wealth-creating enterprises. In turn, that failure to invest, as many have pointed out, has come about primarily because of political instability, civil unrest and terrorism.
It is critical, therefore, that we grasp the opportunity to create political stability and cease the seemingly endless game-playing that we, to our shame, allow to pass for politics here. We are already well into injury time, and it is time that we realised it — the people out there do — particularly if we are to address the issues that the motion raises.
Important as the removal of industrial derating is, the more fundamental issue is what support systems must be put in place to move into a wealth-creating, wealth-producing economy that retains as much of its manufacturing base as it can, and, where possible, adds to it. Such an economy would also be able to attract investment — whether from indigenous sources or from overseas investors — in the fast-growing tradable services sectors: in software and technology development; tourism; pharmaceuticals and so on.
It must be admitted that there has been a welcome growth in investment from overseas in recent years, but it has been very slow, especially compared to that of our neighbours in the South, as many Members have pointed out, and in comparable regions elsewhere. Aside from the image created by political instability and unrest that long deterred investment, we do not have a competitive investment offering to effectively meet that which others can offer.
It is to that issue that we must apply ourselves, and, in the meantime, take every step possible to ensure that no sector of our economy is made to carry burdens that it cannot bear. We are supporting this motion to allow a breathing space while we develop an agreed investment strategy and package of supports to ensure that the strategy succeeds.
That breathing space is necessary because our manufacturing base is under considerable pressure. However, we recognise that such pressure is not exclusive to manufacturers in Northern Ireland — that industry is under pressure almost everywhere in the Western World, particularly those forms of manufacturing that can be moved easily to places where costs are much lower. As we cannot demand access to other markets if we try to adopt anti-competitive protectionist methods, we cannot expect our manufacturers to be immune or to be unduly protected.
However, the request to peg industrial rating at 25% is not a case of seeking a form of protection. It is a tax that, because it is not income-related, has the potential to increase uncontrollably for the payee. Therefore, although this form of taxation is widely used elsewhere, in our situation, where the numbers involved in manufacturing have been in serious decline, it has the potential to do serious damage very quickly if the escalation of the rate continues. Therefore, a moratorium in its application is essential — at least until a new agreed investment strategy and the necessary support packages are put in place.
Two weeks ago in the first debate in this Assembly, Members began to tease out some of the features of such a strategy and what its support package should consist of. If my recollection is correct, we seemed to agree generally that we want our economy to develop in the way that I have just outlined. We also discussed some of the supports that we believe should be provided: tax incentives to match those elsewhere, such as the frequently mentioned 12·5% corporation tax in the South; incentives to encourage research and development; marketing and training; and reforming our education system to focus more on vocational needs.
Many Members also stressed the clear benefits of an all-island approach in which a joint North/South strategy to attract inward investment could have very positive results in pulling in key overseas investors. We urgently need to apply ourselves to putting that package together, whatever it is. We also need to examine the levels at which industrial rating should be set and how other forms of businesses, apart from those in the manufacturing sector, should be rated. For definitional reasons, there are anomalies in the present situation that exclude many businesses that might now qualify from the present concession. Therefore, it is justifiable for those of us who may put that kind of strategy together to ask how we classify and rate across the whole business sector.
If we are to put together an economic recovery package and seek support for it, we need to ensure that it is comprehensive and that it sets ambitious and challenging targets. It is an urgent task; it is becoming clear that the main driver of our economy in recent years — public-sector investment — can no longer be relied on to continue generating the levels of growth that we have experienced over the past decade.
Public-sector expenditure could well decrease as a proportion of the economy over the next few years, and many commentators expect that it will do so. Therefore, private-sector investment must play a greater role if we are not to experience lower levels of growth, an increase in unemployment and even greater threats to our manufacturing sector than it currently experiences.
We have a responsibility to address this issue. I agree with those who want to see it addressed urgently as part of preparation for Government. Indeed, I have come from a session of that Committee today. There is an opportunity in such a Committee to identify the relevant issues and examine how they might be pursued. It is a responsibility that we must discharge urgently if we are to restore the hope that the institutions should be giving to the electorate.
Mr Storey: I welcome, and concur with, the comments made today by many colleagues. In particular, I endorse the comments made by the hon Member for East Antrim, Mr Dawson. When one comes to this stage of a debate it is always difficult: many of the issues have been covered and the points made. One recurring point seems to be that we are glad to support the Member for East Londonderry, Mr Dallat, for tabling the motion. If nothing else has been achieved today, that is something that we can commend.
Rather than rehearsing all that has already been said, it would be beneficial to come at this issue from another perspective. First, I place on record my support for the motion, but I do not believe that a motion from this Assembly will carry the weight that it should unless we consider some other matters from another perspective. Let me read three statements that we should think about. The first reads:
“The climate for change”
— that is, to restore industrial rating —
“probably exists provided it is implemented incrementally over, say, a period of ten years”.
Who might have said such a thing? Was it Peter Hain, or Paul Murphy or Angela Smith? No, it was not. It was the Ulster Unionist Party.
The second says:
“Without clear evidence of necessity and effectiveness, it is difficult to maintain the argument that other businesses should foot the bill for industry in this country, given the present economic climate”.
Was that statement made by Ian Pearson, or the much-maligned, and rightly so, Lord Rooker, or David Hanson? No. In this instance it was the SDLP.
Dr Farren: Will the Member give way?
Mr Storey: No, I will not give way.
The third statement reads:
“The removal of industrial derating will give an enormous boost to the Northern Ireland economy.”
I see some Members beginning to shift nervously in their seats. They can relax, because that last statement is not true; it was made up.
I read those first two statements not to castigate or to embarrass either the Ulster Unionist Party or the SDLP, but to make a broader point. The proposals for the removal of industrial derating were initially discussed and suggested by the previous Executive, partly on the basis of an economic analysis of the subject, and partly because of the promise that alternative arrangements would be put in place. However, it is absolutely clear and evident to us today that it has not been and may not be possible to make such arrangements. From the information provided by the manufacturers who are here today, it seems that a further economic analysis needs to be carried out.
In those circumstances, as well as calling on the Government to freeze the level of industrial rates, I concur with the point that was made about pressing forward with the economic working group that this Assembly decided it would progress. It seems that there is reluctance and dragging of feet on this issue, and there should not be. There should be urgency. Let us put our money where our mouth is.
There is no point in trying to convince the manufacturers who have come to the Assembly today and who have lobbied the political parties over the past few months that we are behind them, if, when they look back, we are so far behind that they cannot see us. They must be able to see from this debate and what we do about it that we take the issue seriously.
The challenge — and I concur with the hon Member from East Antrim, Mr Dawson — is not about trying to set up some fig leaf Committee that will salve the conscience of the party that is absent today, so that we will have some form of shadow Assembly that it can use and abuse. The challenge is to establish the working group and ensure that its proposals are beneficial.
The Preparation for Government Committee must consider the wider perspective and urgently look at issues such as how to provide the best environment for industry; what the likely impact of industrial rates will be at a variety of levels; how to better assess rates for industry; how to make up for the loss in revenue; and where to cut back in expenditure terms. Unless we are prepared to confront those issues, our motion will not be taken seriously even if passed unanimously.
A major problem with direct rule that is often overlooked is that not only are unaccountable decisions taken, but it can lead to unconstructive opposition. That is understandable but it is not desirable. The members of the NIMFG visiting the Chamber today have, more articulately than most of us politicians, identified what those problems are, because they face them daily when the bills arrive and the books have to be balanced. Let us not only identify the problems but, where realistic, let us provide the solutions that will ensure that the economy of Northern Ireland continues to grow and prosper.
Mr Kennedy: Madam Deputy Speaker, thank you for the opportunity —
Madam Speaker: It is Madam Speaker.
Mr Kennedy: Sorry, Madam Speaker. If you had had the day that I have had, Madam Speaker, confusion of that nature would be expected. [Laughter.]
I apologise to you profusely. As you are no doubt aware, I have been engaged with others on the Preparation for Government Committee. I suspect I would have been of more use to my constituents had I been in the Chamber.
Some Members: Hear, hear.
Mr Kennedy: No discourtesy was intended for my absence during the debate. I am aware that it was a convention of the old Assembly that Members had to be attentive to the entire debate rather than drift in and out of the Chamber. However, thank you for your understanding.
I pay tribute to NIMFG for the way that it has led the campaign to raise awareness of this issue. It has done so in a commendable and expert manner. Those representations have been listened to, and I hope that that will continue.
Many of the local manufacturers in my constituency of Newry and Armagh have made excellent representations to me in complete support of the view of NIMFG. I pledge my full support, and that of my party, to this campaign.
I had the great privilege to be in the Waterfront Hall — and it is not often that Ulster Unionists have had the privilege to be in the Waterfront Hall.
We have often been in the Waterfront Hall, but it was pleasant to be there at the end of April to be part of the public rally organised by NIMFG, to hear its representations at first hand and to see that political support was evident from all quarters.
A compelling case has been made by NIMFG.
Politicians of all types and from all parties are aware of, and support, that case. There was widespread political support for it in the subsequent meeting with the Secretary of State, who agreed to carefully listen to and consider the points that were made, particularly that of freezing the rating level at 25%. Therefore, it is important that the Secretary of State recognises that, where political consensus exists — albeit that that consensus includes a party that has chosen to absent itself from the Chamber, but still apparently supports the principle of the campaign — he should listen to and act upon those views.
Amid the current uncertainty surrounding the Assembly, the hard-pressed taxpayers and electorate of Northern Ireland might then at least see that it, in persuading the Secretary of State to freeze the rating level at 25%, pending the full review, is capable of achieving something. I make that call and I hope that it will be unanimously supported in the Chamber today.
Mr Paisley Jnr: Like many, I apologise for not being present for all the contributions from Members. As the previous contributor said, there was other Assembly business. Some have described it as the fig leaf Committee, others as the Preparation for Government Committee, and others have said that it is about scoping. Having come from that Committee, I feel that it is like scoping without hope. Nonetheless, I apologise for not being in my place for the whole debate. I welcome the fact that there has been, from the reports that I have heard, a good debate and great support across the Chamber for the motion.
I congratulate NIMFG, which started out some time ago as the North West Group, and as all good things, was founded by a Ballymena man. The group brought concerns to elected representatives, and I congratulate it for keeping that campaign going. It is good that some people who were opposed to what the group was saying at that stage are now very much behind it and appear to be supporting it.
I remember attending a meeting that NIMFG had organised. Two Members of the current Assembly and another who is no longer with us, Mr McClelland from South Antrim, were there, and they vehemently opposed the DUP’s call for industrial derating. They told us that it was impossible and that there were all sorts of things in the bigger picture of which we should be aware. My colleagues have outlined some statements that some parties have made. I remember sitting in a meeting one night and being told that industrial derating was nothing more than a perk.
The Member who said that is sitting here today, but I will not embarrass him by naming him. Industrial derating is not a perk. It was a crucial issue for NIMFG.
Other Members have drawn attention to the fact that Sinn Féin is not here and have indicated their disappointment at that, or at least they have been prepared to highlight the fact that its unwillingness to be here demonstrates its unwillingness to discuss the crucial bread-and-butter issues. Many of us will, of course, reflect on its absence in the knowledge that, for years, the Provisional IRA was content to bomb businesses and to murder and kidnap businessmen. Today, it is still involved in robbing banks, in tiger kidnaps, and in an economic strategy that is against the very opportunity about which everyone in the Chamber has spoken today, which is the need for Northern Ireland industry to be a success. Sinn Féin’s absence today is probably borne out of embarrassment, as well as political expediency.
Other Members have commented on Sinn Féin’s economic strategy vis-à-vis the Republic of Ireland. Again, I put on record that the Provisional IRA and Sinn Féin have no interest in an economic strategy that is about economic success.
Even the Government of the Republic of Ireland have said that they would not have Sinn Féin about the place because of its economic agenda. It is important to bear that in mind.
Many people have poked fun at the person who tabled the motion. I will not do that because it is unfair to him, and I think that Members have found some agreement on the motion. However, freezing the industrial rate liability at 25% is second best for Northern Ireland. It is not our first choice; we would like industrial derating to continue. Today, our message to the Government is that the capping of the industrial rate at 25% is second best. Derating was an entitlement that ought never to have been interfered with by the Government, and signals that they could interfere with this issue ought never to have been sent by the last Executive to the Government. Its removal means that, due to European regulations, we can never return to the cherished position of having industrial derating.
Now that it has been picked over, let us get it capped at this low rate as early as possible — as has already been said. If industrial rating is allowed to increase, it will affect business, employment and opportunity. People have discussed and haggled over how many thousands of jobs will be lost. Some people have said that it could be over 30,000; others have said that it will be more than that; and others have said that it will be less. Let us be clear: if industrial derating continues in the way that the Government plan, it will affect thousands of jobs. Whether that is a few thousand or tens of thousands, we cannot afford the problems that that will bring on our manufacturing sector. It is important to put that on the record and to recognise that the loss of thousands of jobs is thoroughly and totally unacceptable, and that is why the DUP supports the motion.
The introduction of full industrial rates will not only see the loss of thousands of jobs, but it will hinder research and development opportunities. Research and development is the engine room of manufacturing because it allows for that critical progression, growth and development. If growth and development are stymied, productivity and employment are undermined, and we will see the end to many parts of what has been — against the odds — a successful manufacturing sector.
Many Members have spoken to manufacturing sector employers in their own constituencies. With my colleagues, I have met representatives from Wrightbus Ltd, the Gallaher Group, Michelin, O’Kane Poultry Ltd and several others. Those four manufacturers account for almost 6,000 directly employed people across north Antrim and beyond. Those employers have systematically said that the removal of industrial derating would hamper their opportunities and growth potential and see our constituents put out of jobs. That is not acceptable. It must be placed on record that we oppose that, and that is why I reiterate that the DUP supports the motion.
It is unacceptable to tell employers that they must pay somewhere between 2% and 15% of their profit — if they have it — on this industrial rate before they turn the key in their door. The sooner the Government get that clear and certain message, the better.
I have seen other companies in my constituency such as Tyco Electronics being undermined. The company has faced hard challenges from abroad, and on top of that, it is faced with a huge rates bill that it could have done without — indeed, it might have just kept hope alive for certain jobs.
What we need, and what my colleague from East Antrim has quite rightly put forward — as have other colleagues in the Chamber — is an industrial package. The package should not only address the rating issue, but address essential industry-related matters such as duty on transport, fuel and energy costs and pension rights in the workplace. That package of measures must be identified early and put before the Government, and we must insist that they introduce an acceptable policy.
We must send out a message that a complete package will make business flow, not seize up. We do not want to see business seize up in Northern Ireland; we want to see it flow, expand and grow. We have heard in earlier debates in this Assembly that we need to create over 100,000 jobs in the next 10 to 12 years. We shall never do that if measures such as industrial derating are removed in their entirety. We shall never create the opportunities that people wish for if we remove the benefits that our industry has been able to build on, despite its being put at a disadvantage by others.
I, like others, endorse the motion and hope that the Secretary of State is sent a clear and certain message tonight that this House supports industrial derating; calls on him to cap the industrial rate at 25%; and reiterates that he should never have allowed his Government to have removed industrial derating in the first instance.
Madam Speaker: Before I call the final Member to speak before the winding-up speech, I remind Members of the convention to be observed during Members’ maiden speeches.
Mr Newton: May I remind you, Madam Speaker, that this is not my maiden speech? I spoke in the debate on the economy.
Madam Speaker: I am sorry.
Mr Newton: That is fine; do not worry. I do not regard it as an insult. I do not consider it offensive in any way the fact that you cut short my contribution to that debate.
Madam Speaker: That is why I want you to say all that you can.
Mr Newton: Thank you, Madam Speaker. The clock has not started running yet, has it?
Madam Speaker: No.
Mr Newton: Like many other Members who have spoken, I pay tribute to the Northern Ireland Manufacturing Focus Group’s campaign, which has been very professional and worthwhile. It has highlighted some very important issues.
I know, through contact with some of the companies that are represented on NIMFG and with other companies that are not members — perhaps they fall into the category of smaller businesses — that there is major concern about industrial rating. I also know that the manufacturers are not people who would be easily got out on to the street to protest. They would not normally be willing to drive their lorries to the Waterfront Hall in Belfast to make their protest in such a public way. They are generally conservative in their attitude and pursue their business activities responsibly. They are positive individuals. To go into and to remain in the manufacturing industry today, one must be extremely positive.
We must appreciate that manufacturers are this economy’s wealth creators. They are the people who earn the exporting pounds, dollars and euro that bring jobs to Northern Ireland and that keep those jobs here. They have survived more than 35 years of turmoil and terrorist activity. I am sure that many of them can recount stories about the impact that those terrorist days had, and the impact that continuing terrorist-related criminal activity has on their business. It would be wrong to say that the Government do not care about the impact that additional costs have on manufacturing. They certainly care to an extent, but whether they follow that up with a strategy is open to question. It is only a short time since the Government listened to what manufacturers were saying about energy costs. They listened to the extent that, in meeting with the employers and listening to what they had to say about the disadvantage of manufacturing in Northern Ireland due to higher energy costs, they were prepared to consider giving a £30 million package to try to alleviate, in some way, the energy costs that are placing manufacturers in an uncompetitive position compared with other parts of the United Kingdom.
The Government took the manufacturers up the road and agreed that a subvention of £30 million would be made available and then told them that they were sorry but they could not do so because the EU would not allow it.
That £30 million was for the manufacturers, yet it is not being used in any positive way, because of the EU and because — as I understand from questions that my colleagues and I asked — DETI cannot find a way to put it into the system. It is recognised that there is a problem, but it cannot be addressed.
I am favoured to be a member of Belfast City Council, which is not a body with an irresponsible attitude. The response of the council’s development department, which is quite sophisticated, to the Draft Rates (Amendment) Order 2003 was that it considered that the consultation process regarding industrial derating was overshadowed, as it was carried out as part of a wider consultation on the future rating policy in the region. The department was concerned that relevant parties, particularly businesses and trade unions, who might have wished to contribute to the consultation process had no opportunity to do so.
There were serious concerns about the impact that this would have on the businesses of Northern Ireland.
Last year, confidence in the local manufacturing sector was so low that an official Government report urged a programme of action to include the promotion of the message that manufacturing has a future. We are in danger of talking ourselves into the idea that there is no future for manufacturing. ‘The Future Role of Manufacturing in Northern Ireland’ was the title of the report, which was commissioned by the Department of Enterprise, Trade and Investment from that well-known consultancy house PricewaterhouseCoopers. It was produced last summer because of the haemorrhaging of manufacturing jobs and the movement of companies to low-cost countries.
The report is impressive, and it now needs to be actioned. Manufacturing needs to see that something will be done as a result of that report. My concerns have been raised since reading it, and Members from probably every constituency in Northern Ireland referred to recent closures of manufacturing companies throughout Ulster. I suppose that a politician does not really understand the impact that this issue can have, and I thank the manufacturing group for raising it and for graphically presenting what might happen.
Whether you accept that there will be the 30,000 job losses that one Member mentioned or whether there will be more or less than that — the figure does not really matter — industrial rating will cost jobs in Northern Ireland.
There is a need for some positive movement on the various issues identified in the report. Employers should, and will, receive the support of this House in their campaign. Northern Ireland had a favourable rates position, but it was small when weighed against the advantages in other parts of the United Kingdom. It was a small inducement to make Northern Ireland an attractive manufacturing place for inward investment.
However, we must not shoot ourselves in the foot by detracting in any way from the impact of industrial rating.
In a Department of Finance and Personnel policy document entitled ‘Review of Rating Policy – The Rating of Vacant Property and the Removal of Industrial Derating’, a strategy option states that, through the rationalisation of property assets, manufacturers can collectively reduce rates that have been levied on them by up to 15%. However, every business implements a strategy of looking at its costs; every organic business has the right to evolve its strategy and adapt it to prosper in those conditions. Those businesses will do that, and will do it naturally.
I reaffirm my earlier agreement with the report on the future role of manufacturing, which found that innovation is the key to success. Along with my colleagues, I have asked the Department of Enterprise, Trade and Investment to place more emphasis on research and development activities. At a recent meeting with senior executives of Invest Northern Ireland, I urged the promotion of a better uptake of research and development grants to help local companies.
My party has taken the lead on this issue and has called for an immediate reduction in corporation tax to at least 12·5% or, better still, 10%, in the hope that that will spark a new business culture infused, as we have said over and over, with the spirit of innovation. Fortunately, Tony Blair has announced a study on the potential for tax breaks to boost the Province’s economy. We are at the very edge of the European Union, and are, therefore, the most remote part of it, and we need every advantage.
Madam Speaker: Can you draw your remarks to a close?
Mr Newton: I am just coming to a conclusion.
The point has been made that the Secretary of State needs to listen to this debate and to take heed of the points and the good sense of the debaters in the Chamber and of Northern Ireland manufacturers. Manufacturers need our support and encouragement.
Madam Speaker: I am sorry, Mr Newton, but your time is up.
Mr Newton: You are making a habit of this, Madam Speaker. [Laughter.]
Madam Speaker: No, I am not. Every Member has had 10 minutes to speak, and you are the first Member whom I have had to ask to curtail his remarks today.
Mr Newton: It is nice to see unity of purpose in the Chamber.
Madam Speaker: We are now at the end of a long day.
Mr Dallat: This has been a good debate. I was hoping that, with all the plaudits coming across the Floor from DUP Members, the Secretary of State would have no choice but to make an immediate decision to freeze the rates. Unfortunately, Ian junior appeared on the scene and knocked a few dents in this new-found harmony. I am sorry that he did not talk to me earlier; I could have assured him that the Northern Ireland Manufacturing Focus Group agreed with the motion. However, even if he disagreed with the motion, he had an opportunity, until 9.30 am this morning, to table an amendment.
Madam Speaker: Stop the clock. Mr Dallat, I must take a point of order.
Mr Paisley Jnr: On a point of order, Madam Speaker. I do not know whether there is anything in the Official Report that will show that I said anything against the motion. I have spoken in support of it.
Madam Speaker: That is not a point of order.
Mr Dallat: He said that there should be no industrial rating at all. Nevertheless, we have had a degree of agreement, and the fact that it happened on the sixth of the sixth ’06 is good. Perhaps all the other disagreements in the Assembly will now vanish and, in future, the Chamber will not have empty Benches, but will be packed to the gills with enthusiastic Assembly Members working on behalf of the people who elected them.
Member after Member emphasised the need to act now before budgets are set for the next financial year, a point made very clearly by Sir Reg Empey and Dr Birnie. The motion needed to be debated now — not at some time in the future. The fact that the Public Gallery has been packed with industrialists is a clear sign that the concerns are real. They are not men and women who should be at home looking after their businesses, as Lord Rooker said; they are people who are fighting for the survival, not only of their companies, but of the jobs of the people whom they employ.
I congratulate them on their just and dignified campaign. Indeed, I take hope from the fact that elected representatives and the business community have taken a partnership approach.
My colleague Margaret Ritchie made the valid point that there has been a period of rising unemployment and that during such times, the most vulnerable suffer greatest. Nelson McCausland, speaking from an urban perspective, made the same point.
Here is a simple piece of advice for the Secretary of State: he must listen to the voices of this Assembly and businesses and lay the foundations for a positive future for all our people. He must remember, as Members have pointed out, that this economy is still recovering from the past. For that reason alone, we should not create havoc in industries that have provided jobs in the worst of times and that should be allowed to continue to do so in normal times. We need to convince the Secretary of State that jobs are one of the keys to unlocking a new future that does not look to the past but that has its eyes fixed on a confident future. Perhaps it was a little unwise to draw parallels with Dr Shipman, and I regret that that comment was made.
My colleague Tommy Gallagher rightly mentioned that new employment in the west brings short-term benefits, but those are cancelled out by other job losses in the same constituency. He also reminded us that Members have a duty to resolve their differences. We may not like that, but it is a fact.
His constituency colleague Tom Elliott reiterated the problems of the west and emphasised the need to freeze the industrial rating. Arlene Foster endorsed all those points and expressed disappointment that the Sinn Féin Members for that constituency were absent. Let us hope that the chairman crisis is resolved so that it will be happy families in Fermanagh and South Tyrone.
Roy Beggs reminded us of the loss of income tax, National Insurance and the rising unemployment benefits’ bill. Of course, none of that measures the loss of confidence, the shattering of morale and the sense of hopelessness — about which I spoke earlier — that my father experienced all those years ago.
Pat Ramsey spoke passionately about the sense of devastation in the Derry area when factories closed, resulting in hundreds of job losses. The Secretary of State must surely listen. My colleague P J Bradley underlined what others have been saying all day in this Assembly: he must act decisively now.
Towards the end of the debate we had flashbacks to the past, which I am used to, but we cannot live in the past. We must move to the future, together as one voice, representing those who keep the wheels of industry turning. Some argue that the good wine is always kept to the end; and here Dr Seán Farren called for an end to the blame game. He called for support systems to be put in place so that industry can have a bright future. He welcomed overseas investment, but that is much too slow. He called for an end to industry having to carry burdens that it cannot bear. I have no doubt that industrial rating is at the top of the list.
I was a bit sorry that Mervyn Storey did not give way to Dr Farren; we could have had an entirely accurate record of what happened in the past.
Mr Storey: On a point of order, Madam Speaker.
Madam Speaker: If it is a point of order.
Mr Storey: It is. The accusation has been made that I was in some way inaccurate. I have the SDLP’s official response to the review of the rating policy, and for accuracy, I will continue to read from it. It states: “We therefore support this proposal”.
I may have not had a third-level education, but I can read and understand what that paper says.
Madam Speaker: That is not a point of order.
Mr Dallat: Madam Speaker, I also have a response from Dr Farren, which is somewhat different. At this stage of the day —
Madam Speaker: Order.
Mr Dallat: At this stage of the day, we will not fight. We have had a good debate, and I congratulate the DUP for being so well behaved all day. It would be an awful pity if they had problems now.
The main issue is to send the message back to the Secretary of State that the motion has been agreed unanimously and that he must act on it now, not at some time in the future. This affects the jobs of people who perhaps feel a lot less secure than we do — although, God knows, if politicians should feel secure in their jobs; I am not sure.
In conclusion, I congratulate all the Members who spoke today on their excellent contributions.
Question put and agreed to.
That this Assembly, pending the restoration of a fully devolved Assembly and power-sharing Executive:
(a) calls on the Secretary of State to freeze the Industrial Rate at 25%;
(b) agrees with the Northern Ireland Manufacturing Focus Group that the introduction of full Industrial Rates as currently planned by the Government will lead to devastation in the manufacturing sector and the loss of thousands of jobs; and
(c) therefore calls on the Secretary of State to deliver on his undertaking to act upon the agreed position of all the political parties, and cap the Industrial Rate at 25%.
Adjourned at 5.31 pm.