Rates (Amendment) (Northern Ireland) Order 2004

HL Deb 09 March 2004 vol 658 cc1125-8

Baroness Amos

My Lords, I beg to move the second Motion standing in my name on the Order Paper.

Moved, That the draft order laid before the House on 10 February be approved.—(Baroness Amos.)

Lord Laird rose to move, as an amendment to the Motion, to leave out all the words after "That" and insert "this House declines to approve the draft order laid before the House on 10 February".

The noble Lord said: My Lords, the draft Rates (Amendment) (Northern Ireland) Order 2004 is an important piece of legislation for Northern Ireland and my colleagues and I remain in favour of the rating of vacant property. The proposal provides a clear benefit to society as a whole. However, I cannot help but feel that the Government have not fully considered the arguments against the phased removal of industrial derating despite a full discussion of the order in the Grand Committees of both this place and another place. Therefore, as the order stands, it fails to offer the people of Northern Ireland the reform package most suited to its particular economic circumstances.

In its present form, the impact of these legislative proposals would have a severely detrimental effect on many businesses throughout the Province. The Government have simply not given sufficient consideration to the potential impact on employment figures and on Northern Ireland's manufacturing industry. Our fear remains that the Government's calculations on employment figures have been solely based on a study by DTZ Pieda Consulting for the Department of Finance and Personnel. This suggested that the impact on profits that firms generally make would be no more than 2.7 per cent. However, as has been pointed out to the Government on numerous occasions, other stakeholders argue that the impact would be much higher. For example, the CBI Northern Ireland has indicated that the impact of rates could be between 15 and 20 per cent. According to the CBI, the agri-food, clothing, manufacturing, engineering and electronics sectors will be hit hard by these proposals.

The Government have argued that there is no evidence actually to support the argument that I am reiterating on behalf of my colleagues and the relevant stakeholders in Northern Ireland. The Government point out, however, that any job losses would be a matter of great regret, yet jobs are created and lost all the time for a variety of reasons. I feel that it would indeed be a matter of extreme regret if jobs were lost in Northern Ireland as a direct result of the Government's refusal to acknowledge and consider the evidence that my colleagues and I have highlighted, both in this House and in another place.

It is also the Government's view that those who claim that 30,000 jobs will be lost as a result of this legislation are wrong. I am glad that the Government are so eager and confident in their proposals. However, I should be much happier if the Minister would give a guarantee to this House that the phasing-in period will be extended to 10 years to allow for any unforeseen negative consequences, as it will be Northern Ireland's industries that will have to carry the consequences should the Government's calculations be imprecise.

If manufacturing profits do fall by the more negative estimates of 20 per cent, then, of course, we are going to see excessive job losses in Northern Ireland. There can be no doubt about this. The Government have admitted that the impact of this move will, depend on the circumstances of individual firms and on a range of other factors". Obviously this indicates that the Government's assertion that there will be no negative impact on Northern Ireland's employment figures is ill founded and that their modernisation programme has not been properly thought out. I am disappointed that the Government have not seriously considered the points my colleagues and I have made. As such, I beg to move.

Moved, as an amendment to the Motion, to leave out all the words after "That" and insert "this House declines to approve the draft order laid before the House on 10 February".—(Lord Laird.)

Lord Glentoran

My Lords, I spoke at some length in Grand Committee and indicated that I was not happy with certain parts of this rates order. In particular, I pointed out both the strength and the fragility of the Northern Ireland economy and its fragility in competition with the Republic of Ireland for inward investment and other matters.

Lord Smith of Clifton

My Lords, we on these Benches will support this order. As I said in Grand Committee, it is an attempt to modernise the rating system in Northern Ireland. It has been introduced with sufficient understanding of the industrial situation in Northern Ireland. At the moment, Northern Ireland is much more prosperous than previously. It is not the worst region in the UK. Now is as good a time as any to introduce this reforming measure. We shall support it.

Baroness Amos

My Lords, this is an issue that we discussed at some length in Grand Committee. I can assure the noble Lord, Lord Laird, that the decision was not taken on the basis of the DTZ study. The policy proposal to phase out industrial derating was subject to a regulatory impact assessment that concentrated on the impact on the manufacturing sector. A separate assessment was carried out on the quarrying sector. Full account was taken of the current economic climate and of the concerns about competition that were raised in the consultation.

A number of figures have been quoted about the percentage of profit that would be lost. The figures include that of the DTZ study, 2.7 per cent, that of Invest Northern Ireland, 8.5 per cent, and the CBI's figure of 15 to 20 per cent. It is our view that the Invest Northern Ireland study is likely to be the best available indication of profit impact but this does not mean that profits will fall by 8.5 per cent as a result of the phasing-out of industrial derating.

The noble Lord, Lord Laird, raised the point of the impact on jobs and the claim that some 30,000 jobs could be lost. The claim does not take account of the fact that rates are being phased in over a prolonged period of time. The noble Lord asked for an extension of that period from eight years to 10. There will be ample time during the eight-year phasing-in period continually to look at the impact on the economy in Northern Ireland. If we have to think again, we shall have an opportunity to do that over the phasing-in period. Given the consultation that has already gone on in relation to this order and the fact that the phasing-in has been agreed, it would not be right to move from eight to 10 years at this time.

Rates are but one element of firms' cost structures and cannot be considered in isolation. There is no evidence to support the argument that a large number of otherwise sustainable jobs will be lost as a direct result of having to pay rates in seven years' time. I note the concerns that have been raised by the noble Lord but I hope that, in the light of my explanation, he will feel able to support the order.

Lord Laird

My Lords, I thank the Lord President for her remarks, which I have taken into consideration. I shall look at those remarks in more detail. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Motion agreed to.