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Government’s Economic Pact

Volume 594: debated on Wednesday 11 March 2015

An annual progress report on the economic pact was published last July. The range of items so far delivered include improvements to business access to finance; funding projects secured from the Green Investment Bank; the continuation of 100% assisted area status for Northern Ireland; and a record year for inward investment following the G8 and follow-up investment conference.

With one in six people in Northern Ireland on low pay and intergenerational poverty remaining stubbornly high, should not the Government be getting a move on to raise the minimum wage to at least £8 an hour and get as many people as possible on to the living wage to make this a recovery in living standards for all the people of Northern Ireland?

The hon. Gentleman will be aware that my right hon. Friend the Chancellor said he would like to see increases in the minimum wage. We are cutting taxes for those on the lowest incomes. We have cut taxes for 670,000 people in Northern Ireland, and those on the minimum wage have had their income tax bills halved. We have also seen unemployment in Northern Ireland fall for the 25th consecutive month—it has fallen by 1,700—giving many more people the security and reassurance of a pay packet.

Will the Secretary of State meet the Northern Ireland union leaders, as I did recently, so that she can understand the frustrations of squeezed teachers, bus drivers and health workers, and praise their vital work rather than condemn them for being forced to vote for industrial action?

I have met trade union groups on various occasions, including in Northern Ireland, and I am of course hugely supportive of the work done by our public servants and our front-line workers. It is important that the whole public sector takes part in the austerity programme, and the Government are doing everything they can to put our public finances right to ensure that we can continue to provide the best possible public services for the country.

What impact does the Secretary of State think another round of stalemate at Stormont will have on measures to attract investment and encourage growth in Northern Ireland?

There is no doubt that the announcement by Sinn Fein on Monday was a significant setback for the Stormont House agreement, but it is inevitable that there will be bumps in the road with agreements of this nature. That has been the case in the past. I will be working hard to get things back on track and to help the parties get this matter resolved. Political stability is, of course, crucial when it comes to attracting inward investment. That is one of the many reasons why we need to press ahead with implementing the Stormont House agreement.

Does the Secretary of State accept that people in Northern Ireland and those who observe the Northern Ireland political scene are stunned, bewildered—and, indeed, angry—at what Sinn Fein has done in reneging on its agreement on welfare reform, without any good reason whatsoever? Does the Secretary of State wish to spell out now from the Dispatch Box the implications for corporation tax and other issues of the Stormont House agreement not proceeding? It is clear that Sinn Fein is putting its own narrow party interests ahead of vulnerable people and the entire community in Northern Ireland.

As I have said, this is a serious setback. I believe that Sinn Fein’s change of mind is unhelpful and hugely disappointing. As I have said, however, the task now is for the Northern Ireland Executive parties to continue their efforts to implement the Stormont House agreement. I hope to get the party leaders together as soon as possible to discuss how to resolve this welfare question, but the Stormont House agreement will not be reopened; we need to press ahead with implementation. The corporation tax question is difficult. It is expressly linked with the resolution of welfare reform. The Bill contains a commencement clause, and there is no question but that this welfare issue must be resolved. The Executive must fulfil their obligations under the Stormont House agreement before the commencement clause can be operated. In the interim, the Government propose to continue with the legislation and to complete its parliamentary progress, because we are determined to implement the agreement fully and fairly. Let me be clear: Northern Ireland will not get these devolved powers until the Stormont House agreement has been implemented.

It is important now that people in Northern Ireland, this House and everybody looking at the political scene are clear that the responsibility for the current crisis lies squarely with Sinn Fein, which is reneging on its commitments clearly made and openly expressed in the Stormont House agreement. Will the Secretary of State be clear that she will not take this blanket condemnation or blame approach, but focus on the problem—Sinn Fein?

I will indeed focus on the problem. The right hon. Gentleman is right that this current setback is the result of the actions of Sinn Fein, which is, as I have said, hugely disappointing and unhelpful. To be honest, it was a significant surprise, too, given the enthusiasm with which the Deputy First Minister and Sinn Fein were promoting the agreement. Now I think we all need to work together to try to get this sorted, because it would be a huge step backwards if the Stormont House agreement were to be jeopardised. It would potentially plunge us back into the sort of budget and political crisis with which we were grappling last year.

May I, on behalf of my party, associate myself with the tributes paid to Lord Molyneaux of Killead, and convey our condolences to his family, friends and colleagues?

Given the need to create economic and political stability in Northern Ireland, will the Secretary of State prevail on the Chancellor to reduce VAT on United Kingdom tourism products in next week’s Budget? That would have important financial consequences for the tourism industry in Northern Ireland.

Let me also take the opportunity to associate myself with the comments of the right hon. Member for Lagan Valley (Mr Donaldson) and my hon. Friend the Under-Secretary of State about the distinguished record of Lord Molyneaux. He was indeed a very distinguished parliamentarian over many years, and this is a sad loss to Northern Ireland.

The Chancellor is well aware of the campaign for the tax change that the hon. Lady would like to see. Tax reductions are difficult because the imperative must be repairing the public finances, but the Chancellor has relieved tax burdens on business by reducing corporation tax, introducing an employment allowance and, of course, helping people into work.

May I associate my party with the comments that have been made about Lord Molyneaux?

As the Secretary of State has said, economic progress and political stability in Northern Ireland are inextricably linked. Does she agree that the unravelling of the Stormont House agreement would be an unmitigated disaster for economic and political confidence in Northern Ireland, and that now is the time for responsible leadership which accepts the need for a reformed welfare system that mitigates the impact of cuts on the most vulnerable while also being affordable and sustainable?

I very much agree with the hon. Gentleman. Now is the time for level-headed consideration of how we can resolve this matter. In the autumn, Northern Ireland faced a budget crisis that was so serious that the very sustainability and future credibility of the institutions was at stake, and we were looking over a cliff at the possibility that devolution would collapse altogether. Returning to that position would be a huge step backward. The Stormont House agreement was a big step forward, and it is vital for all parties to work to ensure that it is implemented fully and fairly.

Does the Secretary of State intend to convene urgent all-party talks in an effort to put the Welfare Reform Bill back on track? By what date must the Bill be passed, if the Executive rather than civil servants are to set next year’s budget in Northern Ireland?

As I said earlier to the right hon. Member for Belfast North (Mr Dodds), I expect to meet the five party leaders in the coming days. I hope to do so tomorrow, but that will depend on when the First and Deputy First Minister return from New York.

It is vital for progress to be made on welfare reform. That is a key part of the Stormont Castle and the Stormont House agreements. I will press for such progress, not least because without it the Northern Ireland Executive’s budget will become unsustainable, which will hugely impair its ability to function effectively.