I beg to move, That the Bill be now read a Second time.
I rise to ask the House to give a Second Reading to a piece of proposed legislation that delivers on this Government’s commitment to ensure good governance and stable public finances in Northern Ireland. The Bill seeks to achieve those outcomes by bringing forward two essential measures. First, it will enable the collection of regional rates in Northern Ireland. Secondly, it will ensure that fair and appropriate tariffs and cost-capping measures are in place for the renewable heat incentive scheme in Northern Ireland.
As we discussed yesterday, the Government are committed to devolution. I am working hard to restore devolved government in Northern Ireland at the earliest opportunity. I firmly believe that this is the best long-term plan for the people of Northern Ireland and I profoundly believe it is in the best long-term interests of the Union. Important local decisions should be taken by locally elected politicians in Northern Ireland. I share the frustration felt by some Members of Parliament and the public that taking forward important proposed legislation in this manner in this House is not the ideal situation. However, in the absence of devolved government I have made it clear that I will continue to take the urgent and necessary decisions to ensure good governance and to protect public services.
The Secretary of State will recall that during the passage of the Northern Ireland (Executive Formation and Exercise of Functions) Act 2018, we raised an urgent issue that crystallises at the end of this month: the forthcoming resources available to our housing associations in Northern Ireland. Because of an Office for National Statistics definitional issue, they would not have been able to draw down on financial transactions capital tax. Will she confirm today that Her Majesty’s Treasury has agreed to extend the derogation on that definition and that legislation will be brought forward in this Parliament to resolve this issue satisfactorily, so that our housing associations and co-ownership and other schemes have the funding available that will not impact on our block grant, but will allow people to have a sustainable future home in the Province?
I thank the hon. Gentleman for raising that important issue. It is clear that the derogation needs to and will continue, but that is not a long-term, sustainable solution. As he will know, the Northern Ireland civil service is putting together legislation and we await copies of that so that action can be taken.
I am very grateful for that response. I understand that the legislation is there and is ready to be brought forward. Will the Secretary of State confirm that subject to parliamentary business, it will be introduced as soon as possible, and before the summer?
The hon. Gentleman may have more information than me. All I can say is that we know the Northern Ireland civil service is looking at that and we will act appropriately at the appropriate time.
The measures in the Bill are limited yet necessary interventions in Northern Ireland. They provide the certainty and support that Northern Ireland Departments and, indeed, the wider public need and deserve for the year ahead. I will now give more detail on the measures. Clause 1 addresses the collection of the regional rate. The UK Government have set the Northern Ireland regional rate in the absence of an Executive for the past two years. The level of rate to be applied this year was set out in my budget statement to Parliament last week. As part of the wider budget package of support to Northern Ireland for the 2019-20 financial year, the UK Government have set a 3% plus inflation increase on the domestic rate and an inflation-only increase on the non-domestic rate.
The Secretary of State outlined the percentage rise in the regional rate. I will say something about that in my speech if I am called later, Madam Deputy Speaker, but will the Secretary of State say something to the House about how the 3% was arrived at?
Throughout the whole budgetary process, we have ensured that we have liaised with the main parties in Northern Ireland and politicians to make sure that we reflect both the priorities of the programme for government that was in place before the Executive collapsed and the priorities of the politicians of Northern Ireland. Clearly, an increase in the regional rate was needed to meet the budget gap. It is quite right that, as well as the Treasury providing additional money to bridge the gap in the budget, the people of Northern Ireland should make a contribution towards the public services that they receive, and 3% was an appropriate number.
The retailers organisation, Retail NI, has expressed disappointment at the rates, and has argued that Northern Ireland businesses would be paying the highest business rates in the UK. Will the Secretary of State give some words of sympathy or encouragement to them?
I understand the concerns that have been raised; I have met Retail NI and others. Clearly, we are only increasing business rates in line with inflation, but a number of measures are available to businesses in my constituency that are not available to businesses in Northern Ireland. That is as a result of Northern Ireland not having an Executive to deliver those. This comes back to the point that we discussed at length yesterday: what we need is an Executive to deliver on the programmes, incentives and support that are available, as is right and appropriate for Northern Ireland. It may be that what is needed in Northern Ireland is not the same as the incentives in Great Britain.
I am grateful to the Secretary of State for giving way; she is being very generous with her time. On the domestic rate—the 3% plus inflation; so 4%, there or thereabouts—clearly some residents in Northern Ireland will be able to afford that based on their income, but lots of people living in Northern Ireland are on the minimum wage, in low-income families, so will she set out for the House what support she will put in place so that there is some sort of relief to meet the costs of that rise?
What we are doing today is setting the rate. We are not setting any of the reliefs or allowances or support that is already available. Nothing that is there is changing and we are not able to change anything with the Bill. We are just setting the rate, but the hon. Gentleman is right that there may be things that people in Northern Ireland would like to see. Again, if there were Ministers in Stormont, they could do the right thing for Northern Ireland. It would be wrong to transpose the situation for councils in England, Wales or Scotland to Northern Ireland because it needs specific measures, and only Ministers in Northern Ireland can appropriately and properly deliver those.
This approach to regional rates, and therefore the measures in the Bill, represent an important contribution to delivering a sustainable budget for 2019-20. The second element of the Bill concerns the administration of Northern Ireland’s renewable heat incentive scheme. I must make it clear that the UK Government have not taken the decisions on the revised scheme. This remains a devolved matter and the Government are taking forward this legislation at the request of the Department for the Economy. It is crucial that that happens because without this legislation, there will be no legislative basis to maintain the current cost-control measures.
I am grateful to the Secretary of State for allowing me to intervene. I have received a large number of emails mostly, if not exclusively, from individuals who are not constituents of mine but who feel extremely aggrieved by the proposals in this legislation. They entered into the RHI scheme in good faith and feel that they are now being unfairly penalised. I would like the Secretary of State to address that issue this afternoon. Will she assure those people who have raised concerns and who feel very strongly aggrieved by the Bill that there is fairness in the proposals, and that they will not find themselves making their way to the local court to challenge the legislation, because it is in breach of human rights, for example?
I will come on to the details of why the decisions have been taken, the advice that we have received from the Department for the Economy and the request that it put in. However, I assure the hon. Lady that the measures we are taking today are the only legal ways in which any subsidies can continue to be paid to anybody on the RHI scheme. Failure to do this will mean the closure of the scheme and no subsidies at all. We need to bear that in mind when looking at this matter. I well understand that people feel concerned when they have entered into an obligation in good faith and then the subsidies that they receive are reduced. I will come on to explain why that is the situation.
The Secretary of State will be aware of our concern that there has been a lack of proper scrutiny of these proposals. While we await the report of the public inquiry in Northern Ireland, it may be that one of the issues on which it makes recommendations is how we scrutinise this kind of measure going forward. We would have hoped that Parliament could set an example for that, yet we are not getting that opportunity, so would she care to address that concern and the timing of this proposal, coming so close to the end of the financial year?
As I said, this situation has resulted from a decision by the European Commission on state aid rules, and failure to do this will mean no subsidies being paid to anybody. I fully accept the right hon. Gentleman’s point about scrutiny, but it comes back to the point we discussed at length yesterday: in the absence of an Executive, there is simply no way scrutiny can take place appropriately.
While we await the findings of the inquiry, would the Secretary of State agree that whoever’s fault the RHI debacle is—policy makers or politicians—it is certainly not the fault of the people who entered the scheme, and that, at a time when farmers in Northern Ireland are facing great uncertainty and huge challenges, this will be seen as hugely detrimental to them?
As I say, I have enormous sympathy for people in this situation. I have met the Ulster Farmers Union and my officials have met individual farmers to talk about it. I well understand the concerns but, faced with a choice between no subsidies at all and cost cutting at 12%, I think this is the right and only legal approach we can take.
I thank the Secretary of State for at least acknowledging how grossly unfair this is to many people, but she must recognise that the Bill the Northern Ireland Office has put before the House today does far more than she has indicated. Less than half a page of the Bill deals with the regional rate. The rest—five pages—deals with the RHI scheme, and her proposal for the scheme will bring all renewable activity to an end for a generation. No one will ever again apply for a renewable scheme or a Government-backed deal in Northern Ireland. That will be the effect of her proposal.
I thank the hon. Gentleman for his comments. I will come on to the detail of the renewable heat measures and the work undertaken.
The Department for the Economy in Northern Ireland undertook an extensive public consultation in the last year to ensure that revised measures could be introduced in time for new legislation to come into effect from 1 April 2019. The tariff levels set out in the Bill are based on an analysis of the additional costs and savings of operating a biomass boiler in Northern Ireland. The Department has also engaged with the European Commission in developing the long-term tariff. The Commission has indicated that it is not in a position to approve a tariff that delivers a rate of return higher than 12%. Recognising that a small number of participants with lower usage needs or higher capital costs could see returns below the intended 12%, the Bill makes provision for the introduction of voluntary buy-out arrangements.
I recognise that some scheme participants in Northern Ireland will be concerned about these new tariffs. Both the Department for the Economy and my own Department have heard their views in person and in writing in recent weeks, as I said earlier, and I empathise with those people and businesses across Northern Ireland.
I thank the Secretary of State for going into the detail. She mentions the 12% rate of return. Why can the rest of the UK set a rate of return on the same scheme fluctuating between 8% and 22%? Why are our officials being told that Europe will only accept 12% for Northern Ireland, but will accept a differential rate for the rest of the UK? Officials have a duty to tell the public why that is.
We cannot easily compare schemes: there are different set-up costs and fuel costs in different parts of the United Kingdom. Differences apply. The work done by the Department for the Economy with the Commission is thorough and has ensured that the recommendations it put to me and the tariffs we are legislating for today mean that the scheme remains legal. That is the important point. If we do not have a legal scheme, there will be no subsidies.
The Secretary of State says there are different set-up costs, but under state aid rules that is not allowed. State aid rules declare that the set-up costs are X for the provision of the boiler. In England, different set-up costs are being used, and our Department in Northern Ireland is changing those set-up costs according to its interpretation of what the law demands. Does that not ultimately reflect the need for more scrutiny? To rush the measure through the House is not right, fair or equitable.
There are differences in fuel costs and transport costs. There are differences between different parts of the UK. I am interested in making sure that the scheme in Northern Ireland remains legal so that people with boilers can continue to receive some subsidy. I know it is not at the levels they were receiving previously, but it is still some subsidy.
I understand why there has to be a change, but for farmers who have borrowed £250,000 or £500,000 to install a boiler and went to the banks with a guarantee of 20 years of subsidy, a change from £13,000 to £2,000 a year per boiler is a real concern. Many will not be able to pay the money back and will go under.
That is why a buy-out scheme is available: so that boiler owners can choose individually. I cannot say exactly what the rate will be, because it will depend on, for instance, the subsidies that have been received to date. The calculations will be individual, but a buy-out will be available to boiler owners who do not believe that the subsidies now available will enable them to continue in business.
The Secretary of State talked about a 12% rate of return. She knows that participants in the scheme will be listening very carefully to what is being said today. According to figures that were given yesterday, over the 20-year period of the scheme the rate of return will be 60%, but whether it is 12% or 60%, officials were indicating that the money had largely been paid. Will the Secretary of State confirm that, and does she agree with those figures?
As I have said, the figures will all be individual, and it is impossible for me to give the hon. Gentleman a generality from the Dispatch Box. However, he is right to say that the subsidies that have been paid to date will, on the whole, be higher than the subsidies that will be paid from now on. The point is that unless those steps were taken, the subsidies that were being paid would breach state aid rules, and the scheme would be illegal and would be closed. This is the maximum level at which subsidies can be paid if the scheme is to continue to be legal.
Representatives of the Department for the Economy will meet other interested parties, such as the banks and those in the agri-food supply chain, to discuss the impacts and seek support for affected participants. The Department has also agreed to provide additional advice and technical assistance for participants. I know that this is a very difficult matter, but I believe that the measures proposed by the Department for the Economy are fair, and strike the correct balance between the rights of participants and the wider public interest.
I am very grateful to the Secretary of State. She says that I am irresistible; how could I disagree? She is very kind to give way for a final time.
I want to focus on the fact that the Secretary of State said there was a fixed rate of return of 12%. Participants can hear today that they will not receive that money in the forthcoming years under the terms of the Bill. Is it not the case that the Department for the Economy is saying that they have already received it?
As I have said, these are the measures that we need to take now to ensure that the scheme remains on a legal footing. These are the steps that need to be taken to ensure that any subsidies can continue to be paid from the scheme and allow it to remain within the state aid rules. However, I am sure we will debate this issue further at a later stage, and I do understand the hon. Gentleman’s points.
The Bill does two things, both of which are required for good governance and stable public finances in Northern Ireland. I hope that colleagues on both sides of the House agree that it is important for us to make progress now to protect the best interests of all people in Northern Ireland, and to that end I commend the Bill to the House.
The Bill is in many ways an abuse of the processes of the House. I hope that the Minister will take this seriously. There is no connection between the regional rates and the structure surrounding the renewable heat incentive scheme, and they should have been presented in two separate pieces of legislation. It is already obvious from the debate so far that there is massive concern about the RHI proposals on both sides of the House, and the level of scrutiny that we will be able to achieve this afternoon simply is not up to the importance of the Bill.
This is not a trivial matter. It is not trivial because in the end the concern expressed by the hon. Member for North Down (Lady Hermon) and others that there will be casualties of this process is real. My hon. Friend the Member for St Helens North (Conor McGinn) makes the point that many farms in Northern Ireland—small firms, quite often—are in a parlous state. It matters enormously if we get this legislation wrong.
I hope the Secretary of State will consider that, and I hope that we will not see again an attempt to bludgeon legislation like this through the House in such a short space of time. This should have been taken in Committee; there should have been the opportunity in Committee for a much more leisurely but much more intense form of exchange between the Secretary of State, the Minister and interested Members. That is the right and proper way of doing something of this import.
On regional rates, I want to pick up the point raised about business rates. It is difficult to argue against business rates being uprated by inflation—I think even the greatest quibblers would resist that—but it is important to register that across the different towns of Northern Ireland in particular, there are businesses that are struggling. I do not pick as in a vendetta on the town of Ballymena. I know there is some good news that the hon. Member for North Antrim (Ian Paisley) has been involved in—there are some new jobs coming into the town—but I think he will accept that I make no criticism of one of his towns if I say that the Ballymena of today is not the Ballymena of my youth. It is a town that does need uplift; it needs its businesses supported and an injection of resource.
I appreciate the shadow Secretary of State making those kind and glowing references to Ballymena. It has a significant part of the industrial base of Northern Ireland, but that has of course been damaged by the loss of jobs and EU regulations, and to some extent just because of world economic factors. But the fact of the matter is that there is a spirit of change and a spirit of trying to get new jobs back, and I am delighted that today about 60 new jobs will ultimately be financed at USEL—Ulster Supported Employment Ltd—in Ballymena, which is a wonderful scheme that brings disadvantaged young people on and into the workplace and encourages the development of a circular economy.
Like the hon. Gentleman, I very much welcome this piece of good news, but it has to be set against the fact that we do need to see renewal in many towns, and I want to return to a question I raised with Ministers yesterday about the stronger towns moneys. I did not get a response to the question I raised; there was no certainty on that. The Communities Secretary made it clear that the stronger towns moneys were available of course for England but also for Wales, Scotland and Northern Ireland. In Wales and Scotland, I assume those moneys will be diverted through the devolved Administrations there, but with Northern Ireland, we do need some certainty that there is political process and there will be political decision making that can ensure that, whether in Ballymena or any other town, there will be access to the stronger towns moneys. That is important in the context of the debate we are having; yes, we welcome the relative capping of the business rates but we want a recognition that there is still need for legitimate support for businesses across Northern Ireland.
I want to pick up the points made by my hon. Friend the Member for Ogmore (Chris Elmore). He made some interesting comments about the impact of the domestic rate increase. An increase of 3% plus inflation is perhaps supportable for many people, but it is interesting to compare with the Government’s proposed uprating for benefits: for universal credit, for example, that will be 2.4% in total. So 3% plus inflation is a bigger cost being imposed on the many families in Northern Ireland who struggle—for instance, low-income families or families on minimum wage. That kind of impact must be considered.
The Secretary of State says that the people of Northern Ireland should make a contribution as well as the Treasury, but let me make the obvious point that the people of Northern Ireland do make a contribution to Treasury moneys: they pay income tax, they pay VAT and they pay all the other taxes that are paid by people throughout the United Kingdom.
In those terms, this is effectively a redistribution from UK-wide taxation—which is perhaps not as progressive as I would like, but at least it has some sense of progression—to a more regressive form of taxation around regional rates. Nevertheless, the many sectors such as local authorities and, most importantly, education spend and health spend that depend on regional rates certainly need to see these resources coming in, so it would be hard to resist the case for this legislation being needed. It also has time import, in that the new financial year will not be long delayed.
However, that is not the case with the legislation relating to the renewable heat incentive. The consultation on the present scheme began last May and finished last September, and this legislation should have been brought before the House long before now if the intention was to implement it on the third parties on 1 April. It is unacceptable that we are now having to legislate at breakneck speed, just as we did yesterday. The legislation is being forced through the House without the opportunity for proper scrutiny. I have to say to the Secretary of State, although not unkindly, that I did not find her answers convincing when she responded to questions raised by previous speakers. I did not honestly feel that the House knew whether the legislation was necessary. I shall go into further detail on that in a moment.
Will the Secretary of State tell me when the Department for the Economy in Northern Ireland began to talk to the Northern Ireland Office about the need for an uprating? We know that there was an uprating last year, roughly 12 months ago, and it should have been obvious to everybody, particularly as this had gone out to consultation, that there would be a need for legislation, so why are we doing this so late on? Alternatively, why has it been necessary to do all this today? Could we not have had a Second Reading today, after which the Bill could have gone into Committee in the normal way and completed its progress later on, having had proper scrutiny throughout the process? This matters, for all the reasons that have already been given in exchanges with the Secretary of State. We have to be certain that the scrutiny is sufficient to reveal exactly what is happening.
On the specific details, I want to ask the Secretary of State some questions that are parallel to those already raised by hon. Members. An argument that is used to underline her case is that only by moving in this direction can we ensure state aid compliance and that this is the only legal basis, other than the complete abolition of the scheme, for reform of the RHI system. I do not know whether that is true. Nothing that has been presented to the House gives us any reason to believe that this is exactly what the European Union has said.
The hon. Member for North Antrim asked why the situation in Great Britain should be different from the situation in Northern Ireland. Why does one involve state aid compliance but not the other? Conversely, one of the proposals in the Ricardo review was to look at the introduction of the GB tariffs in Northern Ireland, and if those tariffs are legitimate for my constituents in Rochdale, why are they not legitimate for people in Northern Ireland?
The shadow Secretary of State is making some good points. The financial difference is stark, because the amount in the rest of the UK will be £20,000 per year per boiler, whereas the amount that we will be moving to in Northern Ireland will be just £2,000 per year per boiler. That is not a small difference.
The hon. Lady makes a valid point. Obviously, it is not a small difference; in fact, it is a huge difference to those on what could be described as the receiving end, those at the £20,000 level, or the non-receiving end for those at the £2,000 level. The details for a particular farm that I will come on to bear out exactly the point that she makes.
We need to know about state aid compliance, not only what lies behind it but how it has the system so circumscribed that we can do no other. I want to challenge Ministers on some of the things that they have told us. For example, the Secretary of State said that the cost of fuel might be different in Great Britain from Northern Ireland. I am told, however, that a lot of our non-home-grown fuel is imported from the Baltic states, where there is an awful lot of wood—I can assure the House of that, because I have seen it. Those pellets are shipped from the Baltic states to the UK generally, and I can recognise no enormous difference in the cost thresholds such as to produce a very different cost profile in Northern Ireland—a much cheaper one—from that in Great Britain. That we would have such different cost pressures does not seem logical. We need proper answers to such questions, although I fear that we will not get them today.
I agree with much of what the hon. Gentleman is saying. The purported purpose of this legislation is to give certainty. I have rarely seen the Government produce legislation that is so obviously ripe for legal challenge on the basis of legitimate expectation. In such circumstances, at the end of the day, surely we will not even give the people concerned, the recipients of the subsidies, the certainty that the Government claim they want.
The right hon. Gentleman is absolutely right, and to the extent that some of those affected were in court this morning. Specifically, I understand that the judge said that he will not rule on the request for judicial review today because the scheme has not yet been implemented and is therefore not yet in breach. However, he will ensure that any judicial review is expedited once the scheme is in operation. I was going to make this point later, but I will simply do so now, and the Secretary of State and the Minister of State need to address it. What will the Government’s position be if they face judicial review and a challenge that the measure is outwith the competence of our legal framework? There is real risk of that, given that people have signed up to things in expectation of a certain income flow over the years and decades to come, as hon. Members have said. Such issues are not trivial.
The shadow Secretary of State is absolutely right. Apparently, this morning, at the High Court in Belfast, a judicial review was not launched and the date for the hearing will be the first week of April. We therefore have to wait until a few days after the change to the new financial year to have an answer. Surely it would be far better to postpone a decision until we have an answer, keeping the current rate until then.
That seems logical, but—I am not a lawyer, so the hon. Gentleman will forgive me if I am not right—the problem is that the judge has ruled that, because the scheme is not in operation, he cannot yet judicially review it. So we have to wait for the implementation of the scheme before the judicial review can be taken forward. One way or the other, that is not a satisfactory way of organising our affairs.
I now come on to the question of installation, which is important. The Secretary of State suggested that the buy-out scheme will protect people. I will use a specific example, which I have no reason to doubt. A Northern Ireland farmer installed a boiler and system in 2015, at the end of the scheme. He tells me that the boiler and the feed system cost just under £36,000 to install. On top of that he had to pay £8,600 for plumbing and electrical costs, so a total of £44,600. He also had to do necessary works to house the boiler properly. He talks about various different things. The total further cost was some £28,000. I will not go into the different costs, but his case to me is that, in total, he had to invest some £76,000 to make this system work for him and his farm.
When the Secretary of State tells us that the buy-out scheme will look at the cost of the boiler and so on, plus 12% for the expected return, what is the basis for the boiler costs that will be allowable? Is it simply the cost of the boiler, or is it the cost of the boiler, the necessary installation and those things necessary to allow the boiler to work? That is material because, in the real world, boilers do not sit in the middle of a field—they do not sit in isolation.
There are real issues in such cases. This farmer tells me that he is likely to have to find an extra £3,000 a year as a result of all these changes. That £3,000 is material to a marginal business, so we have to take into account the impact of real damage to individual farms. This farmer tells me that he took out a loan over 10 years at an interest rate of 3.5 percentage points over the base rate. The annual repayment costs are some £9,000. Those are material costs that he will continue to have to pay unless the buy-out scheme covers him on the impact of the change to the scheme.
I thank the hon. Gentleman for his generosity in giving way. Is it not a fact that the weight of what he says is that the scheme now operating here on the British mainland must therefore be flawed? It has to be in breach of the state aid rules, or else the Northern Ireland Office’s proposals are wrong. They cannot both be right, and that matter must be challenged and identified.
It is crucial that we tease out the details before we give our approval—if we give our approval—to this Bill. In the wind-up, I would particularly like the Minister to give further detail on what the Secretary of State said about how the Department for the Economy will seek support for affected participants: those who invested in the renewable heat incentive scheme in good faith. She failed to give any details at all about the efforts of the Department for the Economy to get some support for those who will be adversely affected if we approve this Bill. They had a legitimate expectation of the tariffs that would be paid to them for 20 years, so I would like details from the Minister.
That is a fair point. There is nothing in this Bill that talks about post-legislative scrutiny. We need some capacity to measure the impact of the legislation after it leaves this House, because it will have an impact. The scheme was a disaster from its inception. That is most certainly true. It is also most certainly true that controlling the overall level of cost is and ought to be a matter of public policy, which is in the interests of people in Great Britain as well as in Northern Ireland. Coming up with legitimate control is not something that divides the House, but we need to make sure that we measure the impact on those affected, and that is simply not there.
The clause 4 powers to instigate the buy-out arrangements are to be exercised only in the period while there is no Executive. So this place would have a duty to scrutinise that, because under this legislation once the Executive are back up and running, the job of scrutiny would return to the Northern Ireland Assembly.
That has to be right. We have a duty to ensure not only that we dispatch the legislation where it is appropriate to do so, but that we monitor its impact to make sure that no injustice is caused by the clumsiness of the legislation.
I will draw my remarks to a conclusion, but the point I have sought to establish all the way through is that the Secretary of State has not given answers with the level of detail that this House ought to demand if we are to say that this scheme is legitimate in terms of protecting the wider public interest, as it rightly and properly should do, and does no injustice to people who, in reasonably good faith—some may have seen a large amount of pound coins rolling in their direction—invested in a scheme that we as a society wanted to promote: a more environmentally sound system of heating. We need to insist that we get that balance right, but I am not convinced that I can see that in the Bill, the explanatory notes or the Secretary of State’s opening remarks
I repeat what I said at the beginning: the way the House is being asked to dispatch this legislation today is incompetent and unreasonable. I hope the Secretary of State will reflect on that, because even at this stage it would be possible for the Government to take part of the legislation back and say that the capacity to scrutinise could be done very differently.
Finally, I wish to make a slightly wider point. Once again, the House is being asked to do something that the Secretary of State talked about as being limited but necessary. There are many limited but necessary schemes that she is refusing to do. In response to the hon. Member for Belfast East (Gavin Robinson), she made the point that she would be looking to legislate on providing the necessary support for housing associations in Northern Ireland. We would not want to oppose that, as it is necessary to have those housing associations working. Again, however, we come down to questions such as: who will make the decision on the medical school in the Derry and Strabane city deal; when will we see progress on Hart if we are still stalled on getting a devolved Assembly in Stormont; and what are we going to do about the important question of public sector workers, such as nurses, physiotherapists and others in the health service, who will not see the uprating in their pay that their counterparts will see in the rest of the UK? Such issues are within the Secretary of State’s capacity to address. It is difficult for us to see any longer when she will act. Yes, protecting public money and allowing public moneys to be spent by local authorities at the Northern Ireland level is important, but so are these issues. There is no clarity any more—
Is the hon. Gentleman aware that, as far as we are aware, senior civil servants do have the power to give pay increases? In fact, many of them have done so, particularly for nurses, the police and those in the Prison Service—this has been recently announced. The senior civil service does have that ability because of legislation passed in this House previously. Does he agree that we also need to encourage those permanent secretaries to make those decisions earlier, because many of them have taken considerable time, and many people are waiting and are out of pocket? The power is there and we just need to get those decisions made by the senior civil service in a timely way.
A guarantee that everybody in the health service receives the same uprate as their opposite numbers in the rest of Great Britain would be welcome. I think the hon. Lady knows, probably better than me, that the most senior civil servants are still traumatised by the judicial review that found that their level of competence to make decisions was limited. Although we brought legislation through the House, I think few people believe that that really did much more than to codify what was already there, rather than to expand their capacity to make decisions. I would love to believe there was a transparent and accountable decision-making process, and hence coming back to Stormont in operation, but we do not have that at the moment, so the only system of accountability for pressing matters lies ultimately in the House of Commons and the Department.
Whenever that legislation was discussed by the House, it was very much part of the context that it should give clarity. I accept the hon. Gentleman’s point that because of the judicial review there was clearly apprehension among the permanent secretaries in some of the Departments about making decisions. The legislation was designed to give that certainty and that legal basis, but we are still seeing a reluctance in some Departments. Does the hon. Gentleman agree that guidance for all the Departments in Northern Ireland would perhaps be helpful, to tell all the civil servants exactly what types of decisions they could and should be making in accordance with the legislation passed by this House?
It may be helpful to deliver that kind of guidance. The problem we all have to face is that, in the end, decisions made by senior civil servants without reference to a policy framework determined here, or in some logical sense determined when the Stormont Executive were operating, will be challengeable. Judicial review can and will take place, and if civil servants face such a review, that will make them cautious about making the wrong decision. Every Member of this House would face the same kind of reluctance. I am sure that some will by instinct be a little braver than others, but something still circumscribes such decisions. I do not actually think that the legislation we passed materially changed the boundaries. Perhaps that debate is for another occasion, but it is important.
I have come to the end of my remarks, but I wish to emphasise that we would not want to oppose the passage of the regional rates legislation, because it is timely and it is important that there is certainty at the beginning of the new financial year. However, I repeat that the Secretary of State should not have allowed these two separate items of business to be conjoined. It forces the hand of those in the House of Commons and in the other place in an unacceptable fashion. It forces us not to scrutinise properly the legislation she has put before us. She has to think seriously about whether this is the right way to take this legislation through the House. I suggest to her that, even at this stage, she should think about whether she can technically decouple these two pieces of legislation and allow a slower process and more time for the consideration of the RHI.
These are unusual times for Northern Ireland and this is an unusual Bill. It is difficult to avoid the conclusion that what we have today is something of an essay crisis; that is to say, something presented as being urgent and in need of consideration by the House in one day that could in fact easily have been considered more electively.
It has been said that we should decouple the two elements of the Bill. In truth, most of the Bill relates to the renewable heat incentive. The regional rate issue is largely unobjectionable and would pass with the greatest of ease through the House on a bipartisan basis, but we have to accept that politically the renewable heat incentive is an extremely toxic issue. After all, it has brought us to the sorry pass that we are currently in, with the collapse of the Executive and the Assembly. It is absolutely central to the political chaos that currently afflicts Northern Ireland and that is adversely impacting on the lived experience of people in Northern Ireland, so it demands that we look at the legislation closely and in a considered and measured fashion, of the sort that usually involves a proper Committee stage. That is not being offered on this occasion. I share the surprise expressed by the hon. Member for Rochdale (Tony Lloyd) that these two completely different issues have been conjoined in this rather unusual Bill. I have sympathy with his suggestion that the two might be separated so that we can pass that which is unobjectionable and straightforward and consider on a more elective basis those bits—those clauses—that are more complicated.
A 12% return is pretty good by any standards. A casual observer of our proceedings would wonder, I suspect, what the fuss is all about—I would love to have a 12% return on my investments—but the fact of the matter is that those small businesses that invested in this technology did so on the copper-bottomed understanding that they would get a different rate of return. The institutions that lent on that basis would have been similarly advised, and the investment would have been procured on that basis. We now have to unpick something of a disaster on the part of the Department for the Economy in Northern Ireland, and I understand the Secretary of State’s dilemma. This is not easy; something has to be done. However, when Bills are before us in this place, we must consider those people who will be inadvertently disadvantaged. Like most hon. and right hon. Members in this House, I have been lobbied by such people who point out that they invested in good faith and that their small businesses might be brought to the edge because of the change in circumstances over which they have no control.
Does that not go to the heart of the matter? The existence of a voluntary buy-out scheme seems an implicit recognition to me that exactly the situation that the hon. Gentleman identifies is one that is likely to occur. That surely means that the legitimate expectations of the recipients of the subsidies are so adversely affected that any legal challenge would be successful.
I share the right hon. Gentleman’s concerns in that respect. As a lawyer, he will know better than me that there is every prospect of a judicial review in this matter. It would be very surprising, given the propensity of individuals and organisations in Northern Ireland to seek judicial review on a range of things, if that were not the case in this instance. Indeed, that includes their representative organisations. Clearly, the Government need to do everything in their power to ensure that they are protected against such an eventuality, including, I suggest, ensuring proper scrutiny of this Bill, as inadequate scrutiny will surely be cited as a reason for such a review to result in a judgment that is in favour of those bringing the case forward. However, fear of judicial review is one thing, but what we need to do in this place is to ensure that individuals are not disadvantaged. That means scrutinising this Bill properly and trying to ensure that, if possible, those hard cases are avoided.
I understand the rules on state aid and I understand that the buy-out is a mechanism of trying to be generous to those who may be disadvantaged, but within the rules that have been set. I also have concerns because the Department that has advised on this matter—the Department for the Economy—is, of course, implicated in the mess in the first place. I would be worried if the Secretary of State were being overly reliant on the advice that she is receiving from that Department and, in all candour, I suggest that she needs to be extremely careful about that.
Scrutiny—challenging advice—is what we do in this place. It worries me that this controversial Bill on this most toxic of issues is not undergoing such scrutiny. It would seem to me to be entirely sensible for Ministers to ensure that this measure has all possible scrutiny to hedge against the possibility that what it is doing, on advice from the Department for the Economy, is in fact erring in some important respect, as indeed the advice to Ministers has been from that Department in the past.
I also worry—this has been touched on already—about what confidence institutions will have in these sorts of Government schemes in the future, given that they will have assumed that anything backed by or instituted by Government is copper-bottomed, safe and triple A rated. They now find that that is not the case, and that any loan they may have made on the basis of an expectation of, admittedly, fantastically high returns—nevertheless, backed by Government—will in fact result in a return much less than that. Indeed, in the event that some of these businesses go to the wall, these investments may have to be written off.
We have to reflect on the fact that many of these businesses are marginal concerns. Many of the 1,800 businesses are farms, and we know that farming in Northern Ireland is quite different from farming in the rest of the United Kingdom. They tend to be small, marginal farms. The people from those farms who have invested in this scheme may find themselves embarrassed financially by this particular decision. It is quite possible that we might be able to design some sort of scheme that is based around hardship for special cases. There is no recommendation to that effect in this Bill other than the buy-out scheme. I commend the Secretary of State for that, as it is absolutely right to bring such a scheme forward within the constraints of state aid, but there is very little beyond that, and there will be cases of hardship. In the context of Northern Ireland—a small place with lots of small businesses and small farms—would not it be tragic if we found some of those businesses going to the wall as a result of this change in policy?
Of course, this legislation has to go through because if it does not, on 1 April people will be faced with getting nothing, but I gently suggest to Ministers that this is an imperfect Bill that needs further scrutiny and input. I hope very much that my new clause 1 will catch your eye, Madam Deputy Speaker, and that we may debate this matter further in Committee. It would be extremely good if we could do so, because the new clause makes some sensible recommendations about how we can ensure that this difficult part of a Bill that is otherwise unobjectionable is given the scrutiny that it deserves so that people can therefore have greater confidence in it.
In general, the Secretary of State is quite right to bring this legislation forward. It is a pity that we have not had the scrutiny of the whole Bill that it really deserves. Given the issues that currently apply at Stormont, we need to be particularly careful in this place that we give matters that relate to Northern Ireland all the scrutiny we can possibly can. This represents something of an essay crisis that was absolutely avoidable had we brought the measures forward in a more timely manner and decoupled these two very different elements of a particularly unusual Bill.
I rise to speak briefly in this Bill on devolved Northern Ireland business. The hon. Member for Strangford (Jim Shannon) can rest assured that there will be no green cheese in today’s remarks; and these will be remarks, as they will hardly be a speech.
As the Chair of the Northern Ireland Affairs Committee said, it has been over two years since the renewable heat incentive brought down the Northern Ireland Executive and Assembly, grinding all decision making to a halt. Since that occurred, the Secretary of State for Northern Ireland and the UK Government have simply not done enough to restore Northern Ireland’s political institutions and restore confidence in power sharing while championing Northern Ireland’s devolution settlement.
We have just passed yet another fast-tracked budget Bill that, by rights, should have been debated and decided on in Belfast. Today we will fast-track yet another Bill—this one on rates and the renewable heating scheme, albeit a scheme with huge and unintended political consequences, but the criteria of which were designed in Northern Ireland, for Northern Ireland.
I reiterate one of the central points that I made yesterday as we debated the Northern Ireland Budget (Anticipation and Adjustments) (No. 2) Bill: these debates should not be ours to have and these decisions should not be ours to make. Decisions on devolved issues must only be taken in devolved legislatures or by Ministers of devolved Executives and Governments—not in this place and certainly not in Whitehall. Of course, Stormont’s politicians need to start serving the people they were elected to represent, but this Government must up their game to get the two sides round the table—and if they cannot, as I said yesterday, they should bring in a third party who can. I accept that this Bill must be passed, but we cannot continue passing such legislation in this place—that is not how devolution should ever work.
I promised to be brief, and brief I will be. I very much hope that this is the last time that I, or anybody else in this place, makes a contribution on a matter like this that is for other devolved legislatures.
The reason we are here is that the Assembly has not been sitting for over two years now. There are many members of the Northern Ireland Affairs Committee here this afternoon. In our public evidence session this morning, the leader of the Green party in Northern Ireland said that she thought that the Assembly would not be up and running for the rest of this year. It is therefore likely that we will be returning here in the next few months, or maybe even this time next year, with similar Bills looking at the budget, as we did yesterday, and rates. I hope that is not the case.
Many of us are putting pressure on all political parties to get back around the table and get the Assembly up and running because, as we now start to scrutinise devolved issues, we hear week in, week out, about the impact that that is having. We have heard from headteachers in Northern Ireland about issues of procurement. Even simple, basic supplies are not being procured properly and effectively, and money is being wasted on them. We have heard from the Commissioner for Children and Young People that the Salisbury review of education has meant that some funding reforms that should be taking place to enable money to be better spent in small rural schools are not happening because there is no one to take that decision. It is not just about not getting the money to spend; scrutiny of the decisions on how it is spent is not happening either. Both are equally important. The RHI is a classic example of why we need that scrutiny. The RHI was a significant factor in the fall of the Assembly in the first place. The fact that we are now making decisions on it without any real scrutiny apart from a couple of hours in this Chamber is significantly worrying given the impact that it will have on small businesses in Northern Ireland, particularly in the farming community.
I have sympathy with the Secretary of State, and I agree that we have to make a decision this afternoon, or else any subsidies will stop completely, which would be a huge disservice to the people of Northern Ireland. However, the fact that it has been left to the last minute to make this decision will have a real impact. As a member of the Northern Ireland Affairs Committee, I have been contacted by Northern Ireland businesses telling me that many of them—some have 10 biomass facilities on their farms—have gone to the banks to borrow £250,000 or £500,000 in the expectation that they would get a guaranteed subsidy over a 20-year period. In any other walk of life, someone who breached that agreement would be in court having to defend that or having to pay compensation.
It is not the fault of anyone here in this Chamber that we are in this position, but neither is it the fault of farmers or businesses who took these decisions. Many will go under if we do not address this issue. To add insult to injury, people in the rest of the United Kingdom will be getting £20,000 per biomass incinerator, whereas farmers, or whoever else has installed them, in Northern Ireland will gain only £2,000. That is a real concern. The Ulster Farmers Union has rightly raised that issue; I know that the Secretary of State has met its representatives to listen to their concerns. They point out that this is happening at a particularly difficult time for Ulster farmers with Brexit day looming.
We should not be making these decisions, and that is a great reason why we need the Assembly back up and running. The decision was made to set up the scheme, and it should be the Assembly taking responsibility when the budget has spiralled out of control and tough decisions are required. It is frustrating that, once again, people in Northern Ireland have gone to the polls and elected representatives but have no representation in Stormont. Some communities have no representation here so are completely at the mercy of politicians such as me, who have an interest in Northern Ireland but are not at the coal face, experiencing the impact of the decisions. It is down to Northern Ireland politicians to get back round the table and sort this out.
I have a few questions for the Minister to respond to when he sums up. Can the Northern Ireland Affairs Committee have ongoing scrutiny of this issue, so that we can look at how the buy-out system is working and the impact of the reduction in subsidy and take quick action if it is having a devastating impact, as some fears suggest? What happens if the Executive are restored in the meantime? We heard this morning in the Select Committee that that is unlikely to happen soon, but if it did, there would be an impact on clause 4 in particular and how the budget would be set. We cannot set in place a system today that will be overturned in, say, six months. That would be really unfair on those affected.
Can we have clarity on why there is such a difference between Northern Ireland and the rest of the United Kingdom? A number of Members have raised that, and it would be helpful to understand it. Can we have further scrutiny of how buy-out payments will be achieved? I have grave concerns that it will be based on the cost of biomass installations, but far greater costs, such as interest payments on loans, will have to be taken into consideration.
I share Members’ concerns—we should not be in this position. It is not this Government’s fault that a scheme was set up that was never going to work financially, but we have a responsibility to the people of Northern Ireland to ensure that the solution put in place is fair and does not have a detrimental effect on those who invested in all good faith.
It is a pleasure to follow the hon. Member for Lewes (Maria Caulfield). I thank her for her genuine interest in Northern Ireland affairs and for contributing to the debate.
As has been pointed out, this Bill contains two totally unrelated pieces of legislation. The reasons for that have been given, although I am not convinced that this is the best way of dealing with the issues at hand. Let me deal first with rates. I accept what the Secretary of State said; it is important that people in Northern Ireland contribute through their rates to some of the public expenditure required to keep services going in Northern Ireland. But when we impose those additional charges, whether on domestic or business rates, it is important that we bear in mind two things: the ability to pay and the impact that any taxation has on either the businesses or households concerned.
I have reservations about the level of the domestic rate increase, which is above the rate of inflation—it is the rate of inflation plus 3%. That will cause difficulty for households, as some people will not qualify for housing benefit on their rates but are still in low-paid employment and want to stay in employment. That will cause difficulty, but it is nothing compared with what was originally proposed. Let us not forget that the original proposal was 10% plus inflation. I am glad that the Secretary of State did not pursue that. The party of government, like my party, believes in leaving people with as much of their money to spend as possible. People know how to spend their money better than the Government. It would have been a travesty if the Government had proposed an 11.8% increase in the rates that people pay for their home, especially given the Government’s boast time and again—one they ought to be proud of—that they are seeking to bring down the level of taxation. I am pleased that my colleagues and I had a role to play in knocking that figure down.
On the issue of business rates, this is really a 0% increase in real terms. Nevertheless, business rates in Northern Ireland are, for a number of reasons, some of the highest in the United Kingdom. The Chancellor has announced some business rates relief schemes—incidentally, we did have a Barnett consequential for that in Northern Ireland—but because of the non-functioning of the Assembly, it was not possible to revise the small business rate relief scheme in Northern Ireland. While that money was made available to the general purse, it was not translated into reductions for businesses.
In the long term, I think we need to look at the whole issue of business rates. It is of course a tax that is not related in any way to the ability of a business to pay. It does not reflect the buoyancy of the business or, indeed, the income from the business; it simply reflects the size of the premises and the rateable value of the premises that businesses happen to be occupying. For some people, that will lead to under-taxation because they could afford to pay more, but for many businesses it leads to over-taxation because their overheads go up or stay the same even though their income and their ability to pay are going down, which affects so many.
I suppose it is not just an issue for Northern Ireland, but this is one of the reasons why we have so many vacant premises on so many of our high streets. As businesses have come under pressure from online retailing and from the changes in the way consumers spend their money, they find their revenues going down, but the overhead of rates still remains the same. In the longer term, I think we need to have a review of business rates. I am pleased that at least there has not been a real-terms increase in rates for businesses, although I know many of them will struggle even with the inflationary increase in this piece of legislation.
Let me turn to the second part of the Bill on the changes to the renewable heat incentive payments. I do not think anyone can say that this scheme has been a success by any means. In fact, it has been a disgrace, and the way in which it was set up and has been abused required there to be a change. However, I must say that when it comes to subsidies for renewable heat, I do not think that some of the practices instigated through this Parliament and in this part of the United Kingdom would stand up to scrutiny any more than the renewable heat incentive stood up to scrutiny in Northern Ireland.
We have a situation at present that makes the subsidy in Northern Ireland disappear into insignificance. At Drax B power station, the subsidy has climbed from £250 million a year when the Liberal Democrat Minister introduced it to £800 million this year, and it is going to go up to £1,000 million a year, when coal could be mined two miles down the road. And what do we do? We bring in wood pellets from America. We chop down trees in America, put them in a boat, bring them to England and burn them in a power station, and we pay a subsidy of £800 million a year for it. I wonder how many houses in the south of England are having their outdoor swimming pools heated with boilers for which people get a renewable heat incentive payment. Is that a good use of public money? The renewable heat incentive has not received the same level of scrutiny in other parts of the United Kingdom as in Northern Ireland, where it was seen to be abused. However, there are big questions to be asked about the scheme, not just in Northern Ireland but in any other part of the United Kingdom.
I have several points to make about the need for review. We have been told that the legislation has to pass today instead of being given the level of scrutiny required. Many hon. Members have asked detailed, probing and important questions, but we are told that if the Bill does not pass today, no subsidy regime at all will be available at the beginning of the next financial year, and that if we continue with the existing subsidies, we will be subject to infraction proceedings from the European Union.
Why was all this brought forward at the last minute? It is not that the review of the scheme has been forced on the Department in the past three or four months; it was initiated by the last Minister for the Economy before the Assembly fell, more than two years ago. What has happened in the meantime? Why has it taken two years, with a rush to pass the legislation at the very end? The joke in Northern Ireland is that evolution works quicker than some of our Departments. However, given that the review was initiated more than two years ago, I have to ask why, at the last minute, we are suddenly being presented with a piece of legislation that raises a lot of questions, instead of being given time to carry out the proper scrutiny, in Committee and so on, that the hon. Member for Lewes and the Chair of the Northern Ireland Affairs Committee have suggested.
It strikes me, as an MP who is still fairly new in this place, that the attitude is often, “It’s only Northern Ireland, so we can whizz it through in a day.” It should not be right for any Bill to pass Second Reading, Committee and Third Reading in one day without any suitable scrutiny.
The hon. Lady makes her point well, as she did in her speech.
Not everyone abused the scheme. Some did, and it is right that their subsidies were cut, but many people had the scheme sold to them by the then Sinn Féin Minister of Agriculture and by the Minister in the Department for the Economy. It was sold to farmers and many other businesses as a subsidy for heating their premises because they were using the kind of energy that was in vogue with the Department, which wanted to cut down on CO2. I am not really sure how burning wood cuts down CO2 emissions—I am told that it puts as much CO2 into the air as coal, and some of the pellets are imported from miles and miles away—but that was the thinking at the time.
People undertook in good faith to install the boilers. They borrowed money, expecting a certain level of return and a flow of payments. They could have put in gas boilers and got cheaper energy, but because of the hysteria against fossil fuels, it was decided to subsidise wood burning, so people installed a more expensive boiler and expected to get money in return.
We are told that the sudden and very substantial reduction in the subsidy happened because the EU said that it was required to keep us to the average 12% level. There has been some dispute, in discussions with officials, about whether the rate of return can be between 8% and 22% so long as it averages out at 12%, or whether it is a maximum of 12%. If we had had the time or a mechanism to bring forward officials we could have probed into that, but we are told it is 12%.
In England, the subsidy per boiler is about five times higher than the subsidy per boiler in Northern Ireland. The scheme in the Irish Republic pays about six times more per boiler than in Northern Ireland. The question is this: how can you pay a subsidy five times more in England and still be within EU state aid limits? You can pay a subsidy that is six times more in the Republic of Ireland and still be within EU state aid limits. In Northern Ireland, however, it has to be at the level of £2,000 per boiler to stay within the state aid limits.
The explanation given—I cannot question it as I do not have enough information—is that, “Oh, the cost of boilers and the cost of fuel is different in Northern Ireland from the cost in England”. I could believe that if we were talking about, say, a 10% difference, but we are talking about a percentage difference in the hundreds here. Why does a boiler cost substantially more in England than it does in Northern Ireland? You might argue that it is because of transport costs, but then why does it not cost more in the Irish Republic? If a boiler has to come from England or another country, it has to be transported across the sea to the Republic of Ireland. Why should fuel cost substantially more in Northern Ireland than it does across the border in the Irish Republic? There might be some explanations as to why it costs less than in England, but why should there be such a huge difference between the two jurisdictions on the one island?
There could be perfectly good explanations for that, but given that the Department for the Economy got its figures so wrong for the initial scheme, you can understand, Madam Deputy Speaker, why people in Northern Ireland are sceptical about any figures that come out of the Department. The Department did not spot that the subsidy was substantially more than the cost of fuel and got its figures so wrong that there was a massive overspend. Figures for any scheme it brings forward need to be scrutinised properly. There is no opportunity to do that, despite whatever questions we ask Ministers today. A lot of these things come out through discussion, not through a question and a quick answer back from a Minister.
Those are the kinds of issues that need to be addressed. Unfortunately, I think we will have to vote for the Bill tonight, because there really is no alternative and it would be far worse to leave people with no scheme by voting against it. However, the Chairman of the Northern Ireland Affairs Committee suggested that there ought to be a commitment to allow the Committee, even after the Bill is passed, to have the opportunity to bring officials and anyone else necessary along, so that it can question them on the figures. If those figures are shown to be wrong, the scheme has to be amended to ensure that the level of subsidy paid reflects the true costs of the scheme. That is the one assurance we have to give to those who have been badly bitten.
I welcome the intervention and the fact that there was also some discussion on the budget, albeit late in the day. I think it was only two or three weeks ago that we were first given sight of what was proposed in the budget, but because the decision had to be made internally—purely by the Northern Ireland Office and the Department of Finance—there was time to revise the enormous increase that was being proposed initially for the rates. In the case of the renewables scheme, it had to go back to Europe. Thank goodness that after 29 March, we will not have to worry about state aid rules. We can make our own decisions. That is a good thing and another reason why the House should make sure that we get out on 29 March, so that we can decide on the kind of support that we want to give industry or the lack of support—
I agree with the hon. Lady. One of the reasons why we need scrutiny of the legislation, even after it has gone through, is so that we have a chance to revise it if we see that the figures are wrong. Since people have bought the boilers and had the infrastructure installed, would it be better to find a level of subsidy that enables people to continue to use them rather than just buying them out? The fact that we have a buy-out clause in the Bill shows that the Government and Department know that there will be hardship for people, although I suspect that the terms of the buy-out will be so draconian that it will not be worthwhile people doing that.
We will be supporting the legislation, albeit reluctantly, but on the basis that there will be an opportunity for the good questions that Members across the House have asked today to be looked at in more detail.
Before I call the next hon. Gentleman to speak, I have to announce the result of today’s six deferred Divisions on questions relating to regulations on exiting the European Union. In respect of the question relating to financial services and markets, the Ayes were 303 and the Noes were 250, so the Ayes have it. In respect of the question relating to electricity, the Ayes were 302 and the Noes were 44, so the Ayes have it. In respect of the question relating to gas, the Ayes were 300 and the Noes were 44, so the Ayes have it. In respect of the question relating to food, the Ayes were 303 and the Noes were 44, so the Ayes have it. In respect of the question relating to electronic communications, the Ayes were 301 and the Noes were 257, so the Ayes have it. And, in respect of the question relating to road traffic, the Ayes were 301 and the Noes were 251, so the Ayes have it.
We will recommence the Second Reading debate with Mr Vernon Coaker.
[The Division list is published at the end of today’s debates.]
It is a pleasure to follow the right hon. Member for East Antrim (Sammy Wilson), who, apart from the last couple of sentences, I thought made a really good, interesting speech.
I make these points very seriously. I agree with virtually every comment that has been made in the Chamber. It is particularly important, given the fact that the devolved Assembly has not been meeting for over two years, that we in this Parliament, without moving towards any sort of direct rule, are seen by the people of Northern Ireland to be joining others who take an interest because they represent Northern Ireland to scrutinise properly the legislation that has a massive impact on the people who live there. In that context, I will make a couple of points—first, about regional rates and more generally, about the RHI.
The majority of Members of this United Kingdom Parliament would consider it quite inadequate to be given information that makes bland statements of the sort the Secretary of State made in her introduction. That is why I intervened. She basically announced that the Government were going to increase the regional rate by 3% plus inflation. There is no explanation of how they arrived at that figure. What debate was had? I am not talking about the ability to amend the figure or take on the civil servants in Northern Ireland, but that figure was not plucked out of thin air. There have been discussions. There have been discussions—quite rightly—with representatives here, and we now hear that 10.5% or 11.5% was suggested. The vast majority of Members, given the absence of the devolved Assembly, would have been completely unaware of that.
Whatever the rights and wrongs, what is the consequence of reducing the rate to 3%? Somewhere along the line, the Northern Ireland Office, in consultation with representatives in Northern Ireland—business and so on—arrived at 3%. Was there an option to go lower? The right hon. Member for East Antrim rightly made the point that for some families even 3% plus inflation will be a significant cost. No information has been given to Parliament, yet we are set to agree the rate. I am not suggesting we should not agree it, but what reasons were given for a lower increase?
In her written ministerial statement, the Secretary of State said:
“This budget position has been constructed on the basis of a 3% (plus inflation) increase on the domestic regional rate, and 0% plus inflation on business rates. I consider that this is a necessary and important step to continue to support public services”.—[Official Report, 28 February 2019; Vol. 655, c. 24WS.]
In any other public debate, the Secretary of State or Minister would explain how they had arrived at that figure. I am not saying it is wrong; all I am saying is that I have no idea from the information I have gathered—from a few media reports and from what Northern Ireland Members have said—how it was arrived at. Since we are making this decision, in the absence of the devolved Assembly, the Government should be making more information available, while respecting the fact that we are in circumstances none of us wishes to be in.
The regional rate will make up roughly 46% of the overall domestic rate in household bills from April. Most local authorities have struggled to maintain below-inflation rate increases, and they will be impacted because the public will not understand that a large percentage is a regional add-on to the rates bill. They will not see that the 5.8% is a regional add-on.
That is an interesting point. The hon. Gentleman has shared with the House another important piece of information that will no doubt be reported and on which it is important that Parliament reflects. Nobody is saying this is wrong or that the Government are in a state of confusion, but where is the information that would allow us to consider this in a much more measured and informed way?
I know it is unrelated to the Bill, but we were told time and again in yesterday’s debate, “It’s been agreed we should spend more on education and health and that necessarily means less on other areas”. It is stated, not argued. The House is given no information for why it is. It is just asserted. In the present circumstances, I would suggest to the Minister, the Secretary of State and the Northern Ireland Office that they consider much more carefully how they inform the House of how decisions have been arrived at. That is not to usurp the functions of the civil service in Northern Ireland or to seek to replace the devolved settlement, but if we are being asked to make decisions, we should have much more information.
I have a similar view about the business rate. The business rate increase is 0%, but plus inflation, so it is not 0% as such. Again, the right hon. Member for East Antrim outlined some of the difficulties for business. Notwithstanding the investment that is taking place in Northern Ireland and the success stories there, there are issues surrounding the business rate. Those who google or read the Northern Ireland press will be able to see some of what businesses are saying about what they perceive as the unfairness with which it operates. It is not necessarily for the House to say that it should be changed, because that is not our function, but if it is 0% plus inflation, it is certainly our function to consider it.
Why was it necessary for the right hon. Member for East Antrim, rather than the Secretary of State or the Minister, to outline some of the problems that businesses were identifying in respect of the increase? The Secretary of State, and the Minister, when he responds to the debate, should say something about this, to demonstrate to the people of Northern Ireland that we understand what is going on, and that the decisions that are being made in the present circumstances reflect that. The hon. Member for Lewes (Maria Caulfield) said something very similar, unless I misinterpreted what she said. As I have observed on numerous occasions to various Secretaries of State, we seem to be rubber-stamping things without proper scrutiny and without being given any proper information.
Let me now make some comments about the RHI scheme. No one would want us to be where we are now, but the seriousness of this is simply astonishing. As has been said by the right hon. Member for East Antrim and others—including, I think, the Chair of the Select Committee, the hon. Member for South West Wiltshire (Dr Murrison)—the House has not much alternative but to pass the Bill as it stands. According to the explanatory memorandum, 1,800 small and medium-sized businesses—about 100 per constituency, on average—will be affected if it is not passed, because no subsidy arrangements will be available to them. This is a phenomenal problem. No wonder the people in those businesses will be looking at what is happening here and, in many cases, will be in despair. As we all know, small businesses depend considerably on cash flow. Many are already struggling, and people are working hard to make ends meet. Of course some sort of scheme must be in place, but I agree very much with the Chair of the Select Committee. It does come to something when, essentially, we are approving this scheme because it is a case of “Oh my God, if we don’t, we will be in trouble.”
The hon. Gentleman has put his finger on a number of issues. We have been told that it is the legal opinion of the Department that that is the case, but we are not able to see or challenge that legal opinion. That is why a judicial review has been launched. It could actually be that the legal opinion that the Department is proffering is wrong, and that we could, at the end of the month, revert to the original payment scheme.
The hon. Gentleman is absolutely right. We are caught in the headlights. The threat that is being made is that if we do not do this, we will be responsible for ensuring that farmers get zero. That is not right.
I cannot really add to what the hon. Gentleman has said, other than to agree with it. That sums it up. Members of the public will be looking at us—they will not be distinguishing between the Government and the Opposition—and wondering how on earth we have let it come to this. All I can say to the Minister is that, notwithstanding the fact that it looks as if we will have to pass the Bill otherwise people simply will not know what the position will be after 1 April, I think there is a great deal of merit in what the Chair of the Committee said. I think that the Minister—I hope he is listening to what I am saying—needs to take account of what has been said by every single Member on both sides of the House. They are saying even if it is necessary to pass this legislation for the reasons that we have heard—to give that certainty—notwithstanding the fact that there is a legal challenge and notwithstanding the fact that we seem to be doing this because we have no choice and we are caught in the headlights, the Government must recognise the strength of opinion about this. They must take up at the very least the very reasonable suggestion by the Chair of the Select Committee and check—particularly if there is a legal challenge, in which case they will have to—whether the statistics are right and whether the Committee can look at this. If it is found that there is an alternative to what is happening at present the Government can perhaps review the legislation.
I know what will happen in the civil service, with all due respect; it will say it is not possible. My experience of Government is that if there is a will everything is possible, and it is perfectly possible for the Secretary of State and the Minister of State—two of the most senior members of the UK Government—to take responsibility and say they are not prepared for 1,800 businesses to be treated unfairly, because by and large those people are totally innocent. In totally good faith, they took on the RHI, and they should not pay the price of a public policy failure. If that means that as a result in a couple of weeks, a month or six weeks, the Government have to review what has happened, I think that will be a price worth paying, because that will be fairness. People expect the Government to operate in a way that is fair to all.
I hope that the Minister heard what I said about information that should be made available to this Parliament on how things like a regional rate are decided, not in order to disagree, but to have greater information to understand how a decision has been arrived at. On the RHI, can the Minister reassure the House whether something can be done in a few weeks should it prove possible to do that and should it prove to be the case that the statistics were wrong?
I hope—as I know the Minister, the Secretary of State and every Member of this House does—that in the longer term, whatever that means, we can see a restoration of devolved government. I gently say to all of them that what might need to happen is, rather than just wishing it, we should try to see whether there is something new we can say or do that will hasten the restoration of devolved government in Northern Ireland.
It is good to follow the hon. Member for Gedling (Vernon Coaker). When he said, “Where there’s a will there’s a way,” I thought he was going to get into the Brexit debate, like my right hon. Friend the Member for East Antrim (Sammy Wilson), and say, “If there’s a will, there’s a way,” and we hope that in the next few weeks we find that will from our negotiating partners and then find a way out, truly, of the EU. But I digress by straying on to the Brexit debate.
The debate on the Bill has largely been masked by the debate around RHI, and it would be remiss of me not to pass some comment on clause 1 and what has been achieved. My right hon. Friends the Members for East Antrim (Sammy Wilson) and for Belfast North (Nigel Dodds) and my hon. Friend the Member for Belfast East (Gavin Robinson) have been heavily engaged for the last number of weeks on that point. As has already been alluded to, we would have been facing a massive rates hike if it had not been for that negotiation. If only it had been the same for the second part of the Bill: that we had had early sight of it and could discuss and challenge and probe it and therefore see a much more beneficial change than the one that has come forward on RHI. We must, however, congratulate our colleagues on their hard work in trying to significantly improve the rates issue.
The shadow Secretary of State, the hon. Member for Rochdale (Tony Lloyd), made some very kind remarks about the situation in Ballymena. I believe that there is an agreement today to see new opportunities created there by USEL, an employer that has set up a site on the Woodside Road industrial estate, and that is leading directly to the employment of 60 new workers in the constituency. Unfortunately, I was unable to attend the opening of that site because of duties here in Parliament, but I know that the Gallaher charitable trust, which I chair, led with key financial support to that building and that employer and that that has directly resulted in the employment of those people. Where did that charitable trust money come from? It is a legacy fund left over from when JTI Gallaher had to close its doors, and I am delighted that the first thing we have been able to do, through paying out money and resources, is to help to create 60 new jobs in the constituency. I hope that in the next few years we will see not only the charity that I chair but other employers adding to the local economy and creating new jobs and skills, leading to a revival in local employment.
I hope that the measures on the city deals will shortly come before the House, as they could apply very beneficially to the Mid and East Antrim Borough Council area, as could the Heathrow hub scheme. All those projects could see a huge increase in the employment and opportunities coming to my constituency, and I am delighted with the work that will be done in that regard. I want to ask the Secretary of State and her Minister to challenge Translink to hurry up and create more orders for the local bus building company in my constituency. It is great to see it getting orders from places all over the world, including Latin America and Hong Kong, but I would love to see more orders coming through to it from Translink, and I encourage the Secretary of State to push for those orders to come forward.
We now have to turn to the perplexing issue of the renewable heat incentive. The shadow Secretary of State was absolutely right to say that we are being presented with an amalgamation of two Bills. That is wrong; there should be a stand-alone piece of legislation on the RHI, because it is so controversial and far-reaching, and because the consequences of the issue will be felt by a lot of people in Northern Ireland for a very long time—indeed, probably for the next 20 years. Instead, these measures have just been stapled on to the back of this Bill, and we are now being expected to nod it through without serious, appropriate scrutiny. I do not believe in nodding through legislation; nor do I believe in the emergency process by which we are taking through this legislation. Northern Ireland deserves better, and this House has to demonstrate to Northern Ireland that we are going to give it better.
Officials in Northern Ireland have handed us these proposals, and I believe that they think we should accept them without challenge or scrutiny. That would be wrong, because it would be unfair on the people we represent. I think that people will understand and accept our caution, given that these are the very same officials who brought forward the first flawed scheme. We are now expected to accept the evidence they are giving us today as being good, beneficial, tested and rigorous and to accept that it will be all right on the night. That is not the case, however, because there are flaws in what is being put to us, and even in the manner in which it is being put to us, and they should be properly challenged.
Those in the Department are privately telling us that they would welcome the opportunity for further scrutiny. They do not want the debacle of the past to happen again; they want to learn from the mistakes of the past, rather than to repeat them. I believe that any such extra scrutiny would be very beneficial. A new clause has been tabled to the Bill—it stands in the name of the Chairman of the Northern Ireland Committee, the hon. Member for South West Wiltshire (Dr Murrison), and several other Members from across the House—and I hope that the you, Madam Deputy Speaker will be kind enough to select it and allow us to debate that issue properly.
Two wrongs never make a right. The obvious historical problems with the RHI tariff are the subject of an ongoing inquiry, and it would not be right to press those matters here today. However, the future ought never to be held to ransom by the past. Unfortunately, the Bill that the Secretary of State has brought to us today will hold the future of the RHI to ransom because of what has happened in the past, and that is wrong. We need to treat people fairly and honestly going forward. No matter what the RHI inquiry throws up, which will have to be dealt with on its own terms, we have a duty and a responsibility to treat the RHI owners in a way that is respectful, honest and fair, and equitable with the rest of the United Kingdom.
Everyone can look at the measures and the proposed cuts in support—from as much as £13,000 to about £2,000 per annum—and then at those same people who have bank loans signed up to on the basis of the original business plans and legal arguments. The banks, however, will not go back on the original plans. They will not say, “We’ll just forgive all that debt; it’s all over.” Banks do not operate like that, and why should they? They were given business plans guaranteed by the Government—legal guarantees—and they expect people to honour the payments agreed.
The Government have to accept that the way in which the issue has been brought forward tonight is not fair to 2,020 boiler owners in Northern Ireland. The vast majority of them, as the hon. Member for Gedling said, have done nothing wrong; they followed the rules, totally and absolutely, yet tonight they are being held to ransom by the system. Most of those RHI users are not abusers of the system, but they will all be punished by the system that is to be introduced now. Again, that is grossly unfair.
People can look across the channel to see the English system, or south to see the RHI system that has been proposed but not yet introduced in the Republic of Ireland, where support will be significantly higher than even here on the British mainland. The Bill will not only punish but in effect end for the next 20 years all renewable energy plans and damage forever anyone who claims a copper-bottomed guarantee from the Government, no matter the shade of that Government, because they will look back at this scheme and say, “Look how we were done over, treated shabbily and given no answers to our questions. This will lead us to a situation in which we are treated badly.”
Today, I tabled questions about levels of support and Barnett consequentials for RHI payments in both Scotland and Wales. The proposals in the Republic of Ireland will be so much more generous even than what will be made available here in England, as well as in Scotland and Wales. The only part of the United Kingdom that will therefore be treated unfairly is Northern Ireland. The cuts are to the bone, and through it.
The argument presented by the Department yesterday in a 15-minute presentation was that this would stop a breach of state aid rules. That simply is not good enough. We have to be given more substance and the legal arguments to demonstrate the precise nature of those state aid requirements, which do not appear to apply to another European Union member state—namely, the Republic of Ireland—or to the rest of the United Kingdom or any of its regions, whether Scotland, Wales or England. State aid rules are supposed to apply in the same way, yet Northern Ireland has been singled out to be treated differently.
The Department has a duty to make the case in public. It and the Secretary of State cannot give a 15-minute briefing to the shadow Secretary of State or us as Members of Parliament in a conference, and then expect us to sell it to the public. Do they think we are mad? That is not acceptable. The Department has a duty to stand up in public and to defend itself. Will the Secretary of State make herself and officials available to the Northern Ireland Affairs Committee for us to ask them the difficult questions? Let us at least have the opportunity to put those questions to the Secretary of State, because so far today we have had no answers to any questions.
For example, how did the Department come to the figure for the average cost of boilers in Northern Ireland? What was the basis on which that was done? The Department has given us a figure for the average cost, and are we just to accept it? We are not equipped to challenge that figure unless we see the evidence, but we are not allowed to see that evidence. We are just told that we have to accept it. We have the great sword of Damocles hanging over us—“If you don’t accept it by the end of the month, farmers will not be paid.” Blackmail is all that is, and it is wrong.
What is excluded from the cost assumptions in Northern Ireland? Are those same exclusions made to the cost assumptions here in England? We did not get any of that answer. We asked three or four times during the 15-minute presentation, and there were raised eyebrows, buts and tuts, and, “Ask someone down the video line. He might be able to tell you.” We were not able to confirm whether the £2,500 plumbing costs or the £1,000 electrical costs are included in the English scheme but excluded from the Northern Ireland scheme. If so, why? If they are, I am not the one to sell it to the general public in Northern Ireland on the basis of a 15-minute presentation; it is up to the Department to sell it.
When a person applies for one of these boilers, they have to seek planning permission, which is a costly exercise. They have to pay a lawyer and, usually, an architect. Is all that included in the English scheme but excluded from the Northern Ireland scheme? Apparently, it is included in the English scheme but excluded from the Northern Ireland scheme. If it is excluded from one on the basis that it is against state aid rules, I can tell the House there is an express train coming down the tracks towards those who try to include it in the English scheme. We have to address those issues.
Do the cost assumptions differ from what is permitted in England? If so, why do they differ? The Department and, indeed, the Secretary of State need to answer that question. If 12% is the rate of return, why can the rest of the UK work on a rate of return of between 8% and 23%, as my right hon. Friend the Member for East Antrim said? Why is there that differential? We were given an excuse yesterday. We were told 16 times that the European official had told the Department for the Economy that it could not move from 12%. Why can it not move from 12%? It is up to the Department to reveal the answer, if it has one. Why should I go out and sell it to my constituents when the Department told me that Europe has said it cannot do it? That might have been all right for the past 40 years, but from 29 March it will not be acceptable. Europe cannot tell us all those things, and it is therefore wrong, 23 days before we leave, that the EU is allowed to hold us to ransom on that point.
When we ask whether the state aid rules will still apply after 29 March, some lawyers say they will and others say they will not. Why should I make the case in public? It is up to departmental officials and the Secretary of State to make the case, and they have to answer those questions. Officials say that the EU does not allow them to stray from 12%. Why is that the case? A judicial review was lodged this morning, and the appeal will be heard in April. Is it really appropriate for us to change the tariff about 30 days before that judicial review hearing? I do not believe it is. I think that in itself could constitute knowledge that we were doing something wrong, and I think the Department needs to move.
The right hon. Member for Orkney and Shetland (Mr Carmichael) made the point well that the buy-out scheme is an admission that this scheme is flawed. If that is the case, the Government will pay out even more compensation if it goes to judicial review. Will the state aid rules apply after 29 March?
If we were successful in voting against the Bill tonight, would the payments stop on 1 April? The Secretary of State made that case. When we asked yesterday for evidence to back it up, we were told that it is just a legal opinion, but that legal opinion is being tested in the courts today because there is another equally valid legal opinion saying that it is a wrongful interpretation. We will know the outcome in the first or second week of April.
All those questions need to be answered in advance of our taking a decision. We are not being given the proper time to scrutinise this properly. It is little wonder that we have been inundated by calls, emails and personal visits from hundreds of constituents, businesses and farm families who are affected because this touches more than 2,000 owners in Northern Ireland. If those businesses go out of existence, that would be the equivalent of 60,000 or more small businesses closing here on the British mainland. That perhaps gives a sense of the proportion of what has been affected; we are talking about tens of thousands of families who would be affected if this was transferred over here. We have to address that matter properly. The Department has a duty to make that case in public. It is not our duty to make the case for it, because it is sitting on the evidence. I would therefore welcome the opportunity to scrutinise it properly; the Secretary of State and officials should come before the Select Committee. They should make themselves available instead of expecting us to nod this matter through.
I agree that if Stormont was in place tonight, this debate would be better placed there—that is where it should be taking place—but we have to deal with the cards as they are currently, and Stormont is not in place. It would therefore be a dereliction of our duty to do this in what we would describe locally as a “half-baked way”. Frankly, what we are doing here tonight is half-baked; this is not proper scrutiny, with Parliament at its best, but Parliament doing something and taking shortcuts. That will result in problems down the line. I fear that in a matter of months something will come out and people will say, “You really should not have taken that decision on 6 March 2019. It was a huge mistake.”
We are therefore right to be cautious about supporting this part of the Government’s proposal tonight. This House has a duty to carry out scrutiny, in the absence of the Assembly, and to do it properly. The Department, whenever we met its representatives, outlined how it came to its calculations, but the only conclusions I can draw is that if the Department for the Economy is right in what it has told us, the scheme currently operating here in England is unlawful. If that is the case, an even bigger question is raised. I have asked that very question of officials and looked at their answer. If officials know that that system was unlawful, they are on notice today that they had knowledge of it and, in effect, they let us know that they had knowledge of an unlawful system operating on the mainland. If that is the case, the scheme being proposed for the Republic of Ireland would, similarly, be unlawful under state aid rules. So the Government have a duty to allow us to scrutinise this properly. I welcome the fact that an amendment has been tabled, which we will get to debate later, and I hope the Government will be able to concede some of the points we have put to them and that we will be able to address those issues fairly.
I wish to end my remarks by referring to a couple of emails that I have received out of those from the hundreds of people who have been in touch with us. Whenever we boil things down to the actual person and family involved, we actually see what is happening. Jacqui and Thomas are from a farm family in my constituency. They said that the Department for the Economy has been “ignoring” them for months. They said that they have been emailing the Department, trying to make contact with it and sending it their questions about these matters when the consultation originally came out, but it has been ignoring “genuine RHI users”. Jacqui says:
“I totally object to be financially punished for adhering to the requirements of the Scheme and blame this department for putting my farming business at risk.”
That will have been repeated up and down the country, not just in my constituency, but across County Tyrone and in all of County Antrim, where we are a major food producer for these islands.
We must remember that this is largely about producing poultry that is sold in supermarkets up and down the UK. Most of the poultry eaten on this side of the channel is grown in County Antrim and County Tyrone. If this puts farm businesses at risk, it damages our food security and our biosecurity and everything is now at risk. That is the consequence of what we are doing; it damages businesses and it damages what we actually feed to our children. So let us address it and address it properly.
Does my hon. Friend not think it is rather ironic that we have had all these debates in the House about the impact of Brexit on supply chains, yet here is a measure that, as he has rightly pointed out, could have a massive impact on the supply chain of the agri-food business in Northern Ireland and throughout the United Kingdom?
The consequences of and ripples out from this are so significant. It is not about cheap energy; it is about how we run our economy efficiently and effectively. What is our economy in Northern Ireland? It is principally small businesses that produce the best viable, traceable, tastiest food in these islands. We are putting that at risk, and we are putting those jobs and farm families at risk. We really need to pause, and the amendment tabled by the hon. Member for South West Wiltshire gives us that opportunity to try to get this right. I look forward to the second part of proceedings.
It is always a pleasure to speak in this House at any time, whether it be first or last—whatever the case may be—and I relish the opportunity to do so today. I wish to follow on from the comments of my hon. Friend the Member for North Antrim (Ian Paisley), my right hon. Friend the Member for East Antrim (Sammy Wilson) and others, but I wish first to touch on the regional rates. Come 1 April, when many people get their regional rates bill, they will wonder exactly what it is that they are getting for their rates. They will ask that question because of the degree of increase, and I can understand that.
I definitely very much appreciate the city deal relationship that the Government have put forward, in association with my party and my hon. Friend the Member for Belfast East (Gavin Robinson), my right hon. Friend the Member for Belfast North (Nigel Dodds), my hon. Friend the Member for Belfast South (Emma Little Pengelly) and those further afield. The advantage of the city deal is that we in Strangford, North Down, East Antrim and South Antrim will also get some of the benefit, because it will ripple out to the towns and villages.
What can we do for the high street? I ask primarily because in just the past fortnight several shopkeepers in Ballynahinch, Newtownards and Comber in my constituency were asking whether there is any help for the high streets at this time. The initial reason for this debate was the rates, so perhaps the Minister or Secretary of State can give us some indication of that.
I was very pleased about the stronger towns scheme, which was referred to in last night’s debate and which will ripple across and affect every region of the United Kingdom of Great Britain and Northern Ireland. We are not yet sure what the figures are going to be, but there is potential to help the high street and those from all over the United Kingdom.
I wish to dwell on the RHI issue and scheme. I thank the Secretary of State for moving the motion. The RHI scheme has been an issue of tremendous difficulty in Northern Ireland, although I must make it clear from the outset that it has been used as a weapon by abstentionist Sinn Féin to strong-arm and foist an Irish language Act, among other things, on the people of Northern Ireland. They used it for their own purpose—for what they wish to achieve. They are not holding out for the inquiry conclusion and report on RHI to come back to do their job. They are using an opportunity to circumvent democracy and impose their will on the people of Northern Ireland. That cannot be borne and nor should it be allowed.
I was not overly au fait with RHI. We were never asked directly to help a constituent to apply and I was not in the Assembly at that stage, so the articles I read in the paper were the foundation of most of my knowledge of the scheme. Of course, as time has passed, I have been contacted by genuine businesses in my constituency—those people who applied legitimately, honestly and fairly, who never abused the scheme at any stage, and who have used it appropriately. Pastors and ministers of churches applied for the scheme. Farmers, too, applied for the scheme for their chicken houses and so on. Many of them invested tens of thousands of pounds in the equipment to qualify for the scheme and it is for those people that I feel extremely aggrieved—those people who did it right but who now find themselves in a very awkward place.
There is no doubt in my mind that the scheme has been massively abused by some people who do not even keep the livestock or the broilers in the sheds as the heat is far too much. They leave the windows open and are burning to make a profit. These people must realise that this cannot be acceptable and that they should not profit from this. They must be held to account.
However, by the same token, there are people who have loans based on an appropriate use of the scheme who may well not be able to pay those loans back and who will lose their businesses—not because they were greedy, but because they are using, and not abusing, the scheme. Let us be honest, when most of us have taken out a mortgage to buy a house or a new car, the bank manager will have always asked us how we would repay it. He would ask for a business plan for repayment or a direct debit. If the house is much more, he would look for collateral as well. Decisions to loan money—whether it be to a business or for a mortgage on a house—are based on a proven business plan, endorsed and agreed by the banks and, in this case, agreed by Government as well.
I wish to read out a letter from one of my constituents—I will not mention their name or where they are from in my constituency. Over the past few weeks, I have been contacted by many constituents—those who applied for the scheme and legitimately joined it on an honest basis. My constituent said:
“I am emailing to inform you of my circumstances as a poultry farmer in Co. Down in the constituency of Strangford. I have legitimate need for heat and I joined the scheme to make my business more sustainable, with the assurance of the 20-year RHI payment guarantee. Under this agreement, I took out substantial business loans. Although these boilers are significantly more expensive to purchase and install, and six times more expensive to service, I could budget for this knowing that RHI payments were secure for 20 years. I had confidence in the scheme when I entered it because the scheme was Government run”—
and so you would have—
“I now feel outraged that my business will suffer as a result of the lack of competence of some decision makers. It is not my fault that the rate was set too high, yet my business suffers as a result. I feel that I am being discriminated against; Northern Ireland is part of the UK so tariffs should have been set the same. I am already feeling the financial pressure to meet repayments and costs associated with running these boilers due to the 2017 amendments, but further cuts proposed by the DfE will leave my business under real threat.
Realistically, in order to keep my business running I will have to purchase oil boilers whilst still repaying off debt associated with the biomass. I don’t know where the money is going to come from. I therefore fear business closure. I would not have entered the scheme if the tariff was set at this proposed level! It is not financially viable! In addition, businesses from both communities in NI have joined the scheme”—
businesses from all parts of the community—
“I don’t understand why this has become a political issue. I hope you will support my business and do the right thing for the economy of NI by voicing my objection to the tariff cuts.”
That is one constituent of many who, under the deal that the Government introduced, went to the bank and got their loan with the tariffs. They did it the right way, yet they find themselves in a very serious position. These people have farmed all their lives. Their businesses are successful. They are family businesses; Northern Ireland is full of family businesses. These small and medium-sized enterprises across the whole of the United Kingdom of Great Britain and Northern Ireland do great things for people and for their families. I despair that, through no fault of their own, my constituents find themselves in such financial difficulties.
Let me be clear that I am wholeheartedly behind a cut to the scheme, so that people burning ash to get cash cannot do so. However, the genuine people—the person I just spoke about and many others—will take a closer look at the 2019 GB scheme and see that alignment with this scheme would ensure that businesses, although not able to profit, will be able to survive. We want businesses to survive and to contribute to the Northern Ireland economy. That includes family farms. Individuals from churches and others also took out these schemes. The 2019 scheme is substantially lower than the original Northern Ireland scheme, and rightly so, but it also allows those who have invested more to recoup some of the running costs. My hon. Friend the Member for North Antrim and the right hon. Member for Orkney and Shetland (Mr Carmichael) referred to the buy-out scheme. That scheme indicates a certain legitimacy.
I stress again that this is not about retaining the current scheme or ensuring that people who abuse the scheme continue to do so; it is simply about a sensible UK-wide alignment that will not put genuine people out of business, while halting the systematic abuse. The Chair of the Northern Ireland Affairs Committee has tabled an amendment, which others have signed. It is important for us to give that amendment an opportunity so that we can see what can be done about the scheme. Hopefully, it will bring us a bit closer to finding a system for the honest people who have found themselves in great difficulty. We must have more time to consider this issue, and the amendment would give us that opportunity.
I urge the Secretary of State to give consideration to alignment with GB at this time, and to understand the dire straits that some of my constituents are facing due to the machinations of unscrupulous people and a scheme that we now realise was not fit for purpose when it was initiated. This situation is not of their making, and it seems grossly unfair for them to pay for it when there is a UK-wide answer.
During the wind-ups, it is customary to say that we have had a wide-ranging debate, but we have not. We have had a very narrow debate with very wide-ranging agreement, and there is a great deal of sadness at the fact that we are having to implement these measures.
I think we would all agree that it is a basic principle of any democracy that there should be no taxation without representation. As my hon. Friend the Member for Gedling (Vernon Coaker) said, we do not really know how this 3% increase has been arrived at and we do not know the implications, yet we are being asked to agree to it. We are all facing rate increases in our local areas, and local taxation is a subject of great debate in our constituencies. Rate increases are a controversial matter that generally need to be justified and accounted for by local councillors, and reported to local people. As the hon. Member for Strangford (Jim Shannon) expressed well, the impact on our high streets concerns most of us, yet again we are not really able to dig beneath the figure to see the implications of this decision.
The Government are once again cherry-picking what can and cannot be discussed, and what should and should not be done, here in Westminster. There has been no assessment or mitigation of the impact of this decision and, as my hon. Friend the Member for Ogmore (Chris Elmore) said in an intervention, there is no information about any support for those who face the impact of this decision, especially people on low incomes. As I said yesterday, we will of course support these measures this evening so that businesses can continue, but the situation really is highly unsatisfactory.
We all know that there is huge interest in the renewable heat incentive, particularly in Northern Ireland. Anyone following the inquiry will know how damaging this issue has been, further eroding confidence in Government and Government’s ability to deliver. I have been a member of the Public Accounts Committee, and I looked at some of the schemes operating in Britain, largely as a result of initiatives under the coalition Government. I think it was the right hon. Member for East Antrim (Sammy Wilson) who said that we must learn from the now rather large body of evidence across the United Kingdom about how incentives work in these sorts of schemes, and I agree with him. However, I do think—perhaps disagreeing with him—that these schemes have the laudable policy aim of reducing our dependence on fossil fuels.
Let me turn to how we have been considered in this process. The consultation closed in December. In that consultation, it was stated that legislation would be needed, so it was known by officials and the Secretary of State that we would come to the point at which someone would have to take legislative action. I ask the Minister—this has been raised by many other hon. Members—why we were not involved in those discussions before now, and why, as the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) said, we are again rushing through another important piece of legislation. I welcomed the opportunity, on behalf of the Opposition, to attend a briefing yesterday morning, although we were initially approached about it only on Monday evening. My hon. Friend the Member for Rochdale (Tony Lloyd) was not available for that briefing; many of us made ourselves available. We knew that legislation was coming, but there should really have been some sort of opportunity for pre-legislative scrutiny before we got to this point. I think that many of us would have made ourselves available for that, and then many of the questions that we rightly have could have been addressed.
Hon. Members have highlighted how this situation impacts on many good, genuine people who put their trust in Government. We have heard some examples today, and we have also received emails about the real impact on families and family businesses. It is fair to say, however, that the majority of individuals are not affected—and for the greater population, a decrease in the reliance on oil or fossil fuels is a good policy aim that we would support. There is not an awful lot of sun in Northern Ireland, but a fair amount of water and wind in order for renewable energy to play a really important role in future. It would be very unfortunate if this sorry episode blighted that developing agenda. This is important for the Department as it considers how to rebuild trust in any future schemes on renewable energy.
I will try to address a series of specific points that various Members have made during the course of this debate. I will also try to address some of the broader questions, some of them quite fundamental, about the RHI scheme and its many and manifest problems and shortcomings. That is partly because those issues were raised in the debate, but also because we are going on to consider an amendment in Committee and it may help to have a bigger shared fact base. This will not answer all the questions that will, quite rightly, be raised in Committee, but it may at least lay the foundations of that debate and help us to address them at that stage.
As the hon. Member for Bristol South (Karin Smyth) rightly said, we have had quite a narrow debate although with widely shared views across the House. I strongly agree with one point that she made at the end of her remarks, which is that it is easy to forget, amid all the concern about the flaws in the RHI scheme, that it was introduced for a very noble purpose as part of an attempt to decarbonise our economy by increasing the amount of renewable energy in Northern Ireland. That is part of a broader tapestry of other initiatives that are being introduced right across the UK and, indeed, in other countries around the world. We clearly should not lose sight of that—it is a vitally important point.
Does the Minister agree that it is rather ironic that a scheme that is meant to decarbonise—for some people that is important; for others it is just an expensive burden on the economy—finishes up with wood being put into pellet form in North America, brought in ships across the Atlantic ocean, and then burned in boilers here in the United Kingdom? Does he really think that is a way of cutting down on carbon emissions?
The right hon. Gentleman said that he was not quite sure why burning wood was any better than burning other things, because the emissions are similar. If my hon. Friend the Member for Richmond Park (Zac Goldsmith) were here, he would make the point that we have to be extremely careful about how we calculate the carbon footprint of some supposedly renewable fuels, because if we cut down virgin rainforests to grow things that are then pelletised and burned, the overall genuine carbon footprint is much worse than people like to pretend.
However, my hon. Friend would also make a sharp distinction between what I think is called long-cycle carbon—in other words, fossil fuels, where carbon has been locked away for millions of years, are a net release that makes an overall difference to the level of carbon—and short-cycle carbon, which is a sort of short-term recycling whereby things are grown in the course of our lifetime and burned. I will not try your patience, Madam Deputy Speaker, by going into the detail of the level of greenery, but I hope we can all agree that this scheme, with all its manifest flaws, intended to pursue a noble purpose.
Before I go on to the details of the RHI scheme, I will address a few other points. The hon. Member for Belfast East (Gavin Robinson) asked a series of questions about Northern Ireland housing associations and, I think, was hoping to pin us down on when a piece of legislation might be introduced. I want to reassure him—my right hon. Friend the Secretary of State made this point, but I will repeat it—that the Government will take that forward as soon as parliamentary time allows.
The hon. Member for Rochdale (Tony Lloyd) asked about the stronger towns fund and said that he did not feel he had enough of an answer yesterday; I want to ensure that we try to provide that today. He will be aware that the Secretary of State for Housing, Communities and Local Government made an announcement yesterday. The Treasury will apply the Barnett formula in the normal way and confirm the funding for each region in due course. We do not know that yet, but it will come out, and we will seek to ensure that towns in Northern Ireland, Wales and Scotland can benefit, building on the success of the Government’s growth and city deals.
The hon. Gentleman also asked about the applicable costs of the RHI scheme. I will address that specific item before coming on to the broader points. The scheme guidance, which I am sure we are all itching to go through in huge detail, has been published, and it sets out clearly the eligible costs. They are primarily the costs of the boiler. He mentioned costs to do with installation, pipework and the like, and some of those are included as well. Interest costs on borrowing are apparently not included as an eligible cost in this scheme. I wanted to share that with everybody, so that we have a shared fact base before we go into Committee and discuss the detail of the amendment tabled by the Chairman of the Northern Ireland Affairs Committee, my hon. Friend the Member for South West Wiltshire (Dr Murrison).
Questions have been posed about the up-front payments and how they would be calculated for people who wanted to opt out of the scheme because they felt that if they remained in it, they would lose out too badly. Straightforwardly, an individual’s costs—that means the cost of installation, the capital cost of the boiler and other eligible installation and running costs—will all be included, and they will be reimbursed up to the 12% target rate of return for the revised scheme. All the additional costs of the renewable technology above a fossil fuel one will be reimbursed. That is crucial, because a number of Members have raised questions about what happens to people who are worried that they are going to lose out. The hon. Member for Strangford (Jim Shannon) read out an email he received from someone with precisely those concerns. If they are concerned that it will no longer be economic for them to stay in the scheme, they can opt out. It will be a free option for them, and they are guaranteed to have made 12% on their money if they decide to opt out at that stage.
The Minister needs to address the point raised by a number of right hon. and hon. Members about those who entered the scheme in good faith with the legitimate expectation that it would last for 20 years on a particular tariff. How do the Government square that and address that really key point?
I am very happy to address that point. There is one thing that I know a number of people have found shocking. In fact, the right hon. Member for East Antrim (Sammy Wilson)—I am probably slightly misquoting him, but this is broadly speaking what he said—was right to say that the RHI scheme as originally conceived has turned out, in spite of everyone’s best efforts, to be both a failure and a disgrace. Very sadly, he absolutely accurately describes what has happened.
It is also true to say—the hon. Member for Strangford was quite right to make the point—that very many did not go into the scheme with the intention of abusing it. Some of them were pastors in churches, and so on and so forth. The scheme was introduced for a good reason and, in the vast majority of cases, people entered into it for good reasons.
I therefore found it pretty shocking, and I am sure other people will share my shock, that of the participants involved—many of them with all the right intentions, as I have just described—80% have already, by today, received a 12% return for the entire 20 years of the scheme. If they did not get another penny piece, they would already have received a 12% return on their money. Even if there were another 14 years or however many years of the scheme left to run, since the day they entered it they have made a 12% return. The hon. Member for North Down (Lady Hermon) is absolutely right to raise the question of legitimate expectations, but the participants have done incredibly well.
I will come to the hon. Gentleman in a minute, if I may.
I remind Members that although the scheme as it was originally conceived was supposed to have an average return of 12%, the actual rate of return on average for people has been 50%—a 50% return on their money. That is extraordinary, particularly when we consider that that money comes out of taxpayers’ pockets. Quite legitimately, people have asked why provisions on the rates and on the RHI modifications have ended up in the same Bill. It is fair to say that there are only five substantive clauses in total for both those issues, but it is worth remembering that one of the reasons they are together is that the costs of this extraordinary bounty are not just magicked out of thin air or paid for by nobody.
I will take interventions in a moment, but I want to finish this point.
The costs are paid for by taxpayers, and by rate payers in Northern Ireland as much as by anybody else. It is important for us all to remember the fundamental injustice that this unintentional, but none the less very serious, miscalculation has caused. I will go on to talk about what the miscalculation was in a minute, but a number of colleagues want to intervene and I will go to the hon. Member for Strangford first.
I gave the example of one of my constituents, whose legitimate expectation was to have repayments over a 20-year period. He negotiated the loans accordingly at a bank—the bank is very strict when it comes to borrowing money—and invested somewhere between £250,000 and £500,000, as did some other constituents. Given the expectation of a 20-year roll-out, the impact on these small businesses and family farms will be extensive. Is it not right that the 20-year long-term plan should be delivered?
Some people will have done very well out of this scheme, but I think the House will have a great deal more sympathy with those who have received below the average. I think that is the point the hon. Gentleman is making. The average may be extremely high and some people have done extremely well, even including those who have not run their boilers all the time, lived with the windows open and so on, and he gave examples of people who have not done that. Those who have received well below the average and are worried that they are going to lose out because they are well below the 50% average rate of return that has been achieved so far will still be able to opt out and will be made good. None of the historical payments they have received will be counted if they decide to opt out, and they will basically be told, “You will have a 12% return based on the money you’ve invested so far.” There is a route out for people who are worried; they will still be made whole and should not lose out. They may not make out extraordinarily or become rich, but 12% is a return that many of us would be very happy to earn on most other investments.
I am grateful that the Minister is being so generous with his time. None of us has any brief for those who have done extraordinarily well out of all this; they should not have been allowed to be so lucky, but we should not let that delay us. The reality is that it is accepted as part of the scheme that there may be losers, as is recognised in the buy-out clause that the Secretary of State and the Minister pray in aid. A 12% return seems quite a good rate, but the fundamental problem is that the cost that the Minister tells us will be allowable as the basis for that return is not the same as the cost of the boiler plus installation. We need a guarantee that the problems faced by the potential losers will not be compounded by an incompetently designed buy-out scheme that cannot work for them financially.
I am delighted to be able to set the record straight. I think that I have already mentioned this, but perhaps I can expand on it: the point about the buy-out scheme is that it will be a 20% return—sorry, it is minus payments already made; I misspoke. It is a 12% return on the capital costs of the boiler and the other eligible installation and running costs that I mentioned in my reply to the hon. Member for North Down. It will be tailored to individual circumstances, and obviously people will need to produce receipts and so on, but if they have ended up paying slightly more for their boiler, they will not lose out. The hon. Member for Rochdale raises a perfectly valid question, but people who might otherwise lose out should be made whole, as the hon. Member for Strangford pointed out.
I appreciate that the Minister is making the case that has been given to him by the Department, but the crucial thing is how we set the average, because that is the basis of the calculation. The shadow Minister cited a cost to a constituent of £76,237, which suggests that the average cannot be £35,000. The more general average cost of the scheme in Northern Ireland appears to be settling at £44,607, but the Department in Northern Ireland has set the average at £35,900. If that average is set wrongly, the Minister’s figures go out the window. The trouble is that we have to rely on what the Department is telling us, but—as the Chair of the Northern Ireland Affairs Committee points out—we have no evidence for it. We should be able to challenge the figures, but we have not been given the evidence to enable us to do so.
We will have to come back to the question of how to get more evidence into the room, as it were, but I will try at least to answer some of the questions that have been raised today. I appreciate that I will not be able to answer every one—the hon. Gentleman is absolutely right about that—but I will try to cover as many as I can.
The averages that I am describing are average rates of return, which are calculated according to a whole range of things. Capital costs differ, because some people have bought bigger or more expensive boilers and because all sorts of other costs are involved, such as installation and fuel, but the target number is the average rate of return. As we have heard, the rates of return that are actually achieved will be distributed around that average; some people will do better, while some will do worse. That is why the buy-out scheme for those who will potentially lose out is so important. It is also worth while pointing out that the average rate of return is directly comparable across the rest of the UK. It will become 12% in Northern Ireland and it is 12% in Great Britain. As I understand it and for what it is worth—I appreciate this is of tangential relevance, but it is perhaps interesting information—the intended return of the Republic of Ireland scheme is 8%, not 12%.
The Minister, in response to a number of interventions, has repeatedly relied on data and detailed figures. Can he confirm that they are not in secret documents held in confidence within the Department for the Economy, and that they could be made public tonight and put in the House of Commons Library? I ask for the calculations to be published in the House of Commons Library within the next 24 hours. It is outrageous that we are being asked to approve a Bill tonight based on facts and figures that I certainly have not had sight of—perhaps others have—and I would like them to be made publicly available to the House within 24 hours.
There is an old saying that if you want something to be kept secret, you announce it on the Floor of the House of Commons and nobody will pay a blind bit of attention. I am trying to put some of the facts in, but I take the hon. Lady’s point. I will see if inspiration strikes me later on in my remarks as to whether that can be done, or whether my right hon. Friend the Secretary of State can help in that regard. It is clear from everyone’s remarks on Second Reading that there is not just a thirst and an appetite but a genuine democratic need for proper scrutiny and for more details to be understood. That is what I am trying to do by what I am laying out now, but I take the hon. Lady’s point. Other Members have made a similar point. We had comments to that effect from my hon. Friend the Member for South West Wiltshire the Chairman of the Northern Ireland Affairs Committee, the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) the SNP spokesman, my hon. Friend the Member for Lewes (Maria Caulfield), and the hon. Members for Gedling (Vernon Coaker), for North Antrim, for Strangford and for Bristol South.
I hope we have dealt with quite a lot of the points that were raised. The one point that I think remains at this stage—I am sure we will go into more detail in Committee in a moment—relates to process. Before I go any further, I should mention that a number of colleagues—there is clearly a political movement in North Antrim and in East Antrim—are pretty leery and worried about state aid rules. The hon. Member for North Antrim and the right hon. Member for East Antrim both raised this point and asked whether the state aid rules would continue after we leave the European Union. I am not sure if I am pleased or sorry to disappoint them both, but the answer is yes they will. We have agreed to port across, to begin with at least, all EU rules into UK law, including, obviously, state aid rules. They are both absolutely right to point out that it will then be up to this Parliament, rather than anybody else, to change them if we want.
However, we all need to be a little careful about what we wish for. For those of us who are free marketeers and free traders, or even those of us who are not but just want to see fair play, the changing of state aid rules needs to be approached with great care, because it can easily either slant the playing field in favour of foreign firms trying to export into Britain in ways that are unfair for British manufacturers and British producers, or alternatively create political favouritism and lobbying games. So we would need to approach that with a great degree of care. I know that it would be approached with a great deal of care on both sides of the aisle. It is theoretically possible, but on day one, I am sorry to tell the hon. Gentlemen from Antrim, they will not be changed and they will still apply.
Inspiration has just struck. I understand that the figures the hon. Member for North Down was asking about have already been published. They were published last May. We are trying to track down precisely where they are in order to make sure that they are properly available. I will come back to her, or my right hon. Friend the Secretary of State will come back to her, with the final version of the figures and make sure they are properly available. If we cannot track them down, we will try to come up with duplicates if we can.
The Minister said that the figures have been published. What I would really like are the calculations underlying those figures. We need to know how the figures were arrived at. Are those calculations in the public domain or can they be put in the public domain? That is what I would like to see.
I think the answer to the hon. Lady’s question is yes. I have not actually seen the figures—the ones published in May—but we will endeavour to clarify that and get them out there for her as soon as we can.
Let me finish by saying that there is a link between the decisions that have been taken by the Executive and where we are today. A number of colleagues asked whether the sunset clause will apply if we do not take a decision today. I remind people that back in March 2015, the Executive at the time took the decision to introduce some caps. Those were renewed roughly this time last year and expire at the end of March this year. That is the reason why we are so concerned about the timescale. I appreciate that this does not answer some of the questions about why we are having this conversation today rather than two weeks ago, or whenever it might be, but I reassure people that this is not something that someone has plucked out of the air. It has been extended on an annualised, fixed-term basis and is therefore due to expire at the end of this month. That is why this needs to be dealt with and sorted out, so that roughly 1,800 of the people who currently receive money can at least have the legal option of continuing to receive that money in future.
I should just say to the hon. Member for Gedling, who was muttering in concern, that when I said I had not seen the figures, I was talking about the precise figures that were published back in May. I have not seen those particular documents and therefore do not want to speak to what may or may not be in them at this stage rather than the broader point.
With that, I will sit down and let us move on to a more detailed conversation in Committee about the RHI scheme because there is clearly a material appetite to do that, and I do not want to stand in anybody’s way.
Question put and agreed to.
Bill accordingly read a Second time.