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Government Spending

Volume 530: debated on Wednesday 6 July 2011

2. What assessment he has made of the effects on the service sector in Northern Ireland of reductions in Government spending. (63168)

Tackling the deficit remains the Government’s biggest priority, and Northern Ireland has its part to play in achieving that outcome. My right hon. Friend the Secretary of State and I are working closely with the Northern Ireland Executive to boost private sector growth and investment and to help rebalance the economy.

I am sure that the Minister will have seen that 59,500 people are signed on the dole in Northern Ireland. Whenever anyone losses their job, it is a tragedy for their family and causes hurt and pain. What are the Government going to do about it?

I welcome the hon. Gentleman’s interest in Northern Ireland, and I hope that it will continue. I hope also that he will join me in celebrating the jobs that the service sector in Northern Ireland has attracted. The New York stock exchange has attracted 400 new jobs; Citigroup financial services will attract 500 jobs over the next five years; and the law firm Allen and Overy has attracted 300 jobs in Belfast. To answer his question directly, I would say that Northern Ireland is a great place for the service industries. It is open and we want more investment, and I hope that he and his party will join us in making that happen.

Well that all sounds very good, but in the past 12 months, the Northern Ireland claimant count has increased by 7%. That is the biggest increase in the UK and 21 times the national average. The Minister will know that the Northern Bank/Oxford Economics survey has now dramatically downgraded economic growth forecasts in Northern Ireland to 1.1% from a previous forecast of 1.9%. The Northern Ireland economy needs help now. What is the Minister going to do?

It is regrettable that the Secretary of State is talking Northern Ireland down—[Interruption.] The independent Office for Budget Responsibility’s recent updated fiscal and economic forecasts show that the Government’s plans will deliver sustainable growth in each of the next five years with employment rising by 1.1 million by 2015 across the UK and the deficit falling. That of course includes Northern Ireland. The unemployment rate for Northern Ireland was down by 0.8% over the quarter and the number of unemployed people in Northern Ireland was estimated at 61,000—down 6,000 over the quarter. It is because of the Government’s determination to tackle the deficit and the legacy we inherited from a Government of which the right hon. Gentleman was part that these figures are good.

Regrettably, the only thing that is going down is an economic forecast from 1.9% to 1.1%. Undoubtedly the Minister will update his brief in due course. The Secretary of State proposes a change in corporation tax rates to help in the long term. I seek clarification. We know that the immediate impact of the cut in the block grant will be the loss of tens of thousands of jobs in the public sector, especially in education. However, if the policy in the medium term creates jobs, it follows that there will be additional revenue from income tax and a decrease in welfare payments. He wants the public sector, especially in education, to take the pain now, but in the future, if those benefits flow from increases in jobs and tax revenues, will the Treasury keep the money or will it go to the people of Northern Ireland?

The right hon. Gentleman is right to raise the issue of corporation tax. There has been widespread consultation on the issue, and all the political parties in Northern Ireland support devolving the power to Northern Ireland. We believe that it will bring growth and jobs; equally, we believe that it is important to rebalance Northern Ireland’s economy, regardless of the situation that we inherited. Like me, the right hon. Gentleman represents an English constituency, and he will be aware that Northern Ireland receives about 25% more in spend per head of the population than England. It is therefore important that we rebalance Northern Ireland’s economy and allow it to grow.