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Mr. John D. Taylor (Strangford): There are no trains.
Mr. Trimble: No trains run between Belfast and London. It might be a good idea if some did. It would certainly involve significant works and public expenditure, and the construction would generate much employment in certain regions in Scotland and Northern Ireland. We might learn from the lessons of other tunnels that have been constructed, but, realistically, all such travel must be by air.
Obviously, therefore, hon. Members will realise that a doubling of the air passenger tax has a significant impact on us. The Government may have thought that the tax simply creams a little off the holiday market, that people who go away on holiday will not mind paying an extra £5 or £10--or whatever it happens to be--and that they are so happy to go on holiday that they will not bother about the duty. Perhaps that lay behind the Government's thinking, but many people must travel within the United Kingdom by air and much of that travel is outside the holiday period and is connected with business. Like all taxes, it comes back to their effect on businesses.
This tax, particularly because of its discriminatory effect on Northern Ireland, should be opposed. According to the motion on the Order Paper, we will not have the opportunity, I am sorry to say, to debate that particular clause on the Floor of the House, or at least the Committee stage will not be taken on the Floor of the House. None the less, we shall see what opportunity there is to oppose the air passenger duty and we will do so. That should be done not just because of the special reasons in Northern Ireland, but for more general reasons.
Incidentally, I note that one of the amendments that was not selected--that in the name of the members of the Scottish National party--referred to the air passenger duty and to VAT on fuel, but, for some reason, went on to conclude that the Budget was particularly anti-Scottish. The argument that the Budget might be anti-Ulster is stronger than the argument that it is anti-Scottish, but we do not take such narrow nationalist views on the matter. Our objection to the air passenger duty is more general.
One other matter of local interest relates to corporation tax. It is pressed on us regularly at home by business men and people in Government agencies that are concerned with the attraction of inward investment. The matter is raised with us because the corporation tax rate in the Republic of Ireland is 10 per cent. Consequently, it has an effect, so we are told, on the attraction of inward investment to Northern Ireland.
We are told that people who are engaged in investment and in creating new businesses have, in some cases, gone to the Republic of Ireland to take advantage of the 10 per cent. corporation tax, rather than located in Northern Ireland or elsewhere. Business men and Government servants involved in the attraction of inward investment urge us to press on the Government the need for a 10 per cent. corporation tax in Northern Ireland.
I am not minded to do so because I recognise the strong arguments for maintaining uniform rates through the United Kingdom. Having uniform tax rates was the
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We are not minded, therefore, to argue for a 10 per cent. corporation tax rate. In any event, if there were special treatment for Northern Ireland, the same arguments would apply to other objective 1 areas, such as Merseyside and the western islands, but it should be recognised that there is competition for inward investment, and that Northern Ireland and, to a lesser extent, Wales and Scotland are in competition with the Republic of Ireland, so that consideration should be given to the effect of the Republic of Ireland's competitive advantage. That could result in us considering the possibility of reducing the UK corporation tax rate generally or it may be possible to raise the issue elsewhere through Europe, in a way that would benefit us. I hope that the Treasury will consider doing that.
Some of the income tax reductions were in the main rate and some were in allowances. I agree with the comment, reported in paragraph 16 of the Treasury Committee's report, by Professor Congdon who said:
One of the ways to ease that trap is to raise allowances significantly by introducing tax at higher incomes. I appreciate that in raising basic allowances the Government have gone further than they were obliged to go, but they should have gone even further. They should not have bothered reducing the basic rate of tax but should have put the benefit towards increasing allowances. That would have helped people at that end of the tax system.
I should like to deal with two other matters from a local angle. Increased revenue is expected to accrue from measures to cut fraud, especially social security fraud. That is a necessary approach and I hope that it is successful to the extent of the Government's hopes.
One of the interesting aspects of the introduction of the jobseeker's allowance was that it resulted in a decline in the number of people claiming benefit. Interestingly, in Northern Ireland that decline was not even. Figures are
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The Financial Secretary spoke about provision for rates on businesses. In his Budget speech, the Chancellor spoke specifically about the Government's recent provision to reduce the rates on village shops. That is an interesting measure but it does not apply to Northern Ireland and I hope that that will be rectified. It is quite inappropriate that a measure which gives rate relief to people in Great Britain should be deliberately withheld from the people of Northern Ireland. That is a fundamental mistake. The excuse that has been proffered is that there is a different structure of local government in Northern Ireland. The Province is already penalised through having no effective local government and it is doubly unfair, the Government having deliberately withheld from us a decent system of local government, that they should use its absence as an argument for withholding the rates benefit that has been granted elsewhere in Great Britain. The injustice--it is not an exaggeration to use that term--ought to be remedied and I hope that it will be.
The Government claim that while holding down public expenditure they have managed to find extra money for education and health. We heard much in debate on the Budget and on the Bill about that additional expenditure. Unfortunately, those who speak about that do not finish the sentence because they should refer to the extra money for education and health in England. It certainly does not apply in Northern Ireland, nor do I think that it applies in Scotland and Wales. That matter should be reconsidered.
There has not been a general increase in the money for schools in Northern Ireland, which are supposed to operate on what is called level funding. But it is not level because of discriminatory expenditure. There is increased expenditure in the maintained sector and cuts in the controlled sector. The terminology is relevant only in Northern Ireland. The controlled sector consists of state schools while those in the maintained sector are private church schools. Expenditure on state schools is reducing.
"the main problem with the tax system was to be found at the low end of the income scale where people could face 100 per cent. marginal tax rates because of the interaction of the social security system and the tax system."
That is the so-called poverty trap. That problem is more acute in Northern Ireland than elsewhere. In percentage terms, more people in the Province are caught in the poverty trap than elsewhere. One of the reasons for that is the comparatively lower wages in the public sector where wages generally are 10 to 15 per cent. lower in Northern Ireland than in the rest of the United Kingdom. Benefits, although nominally the same, are higher for some people in Northern Ireland, especially for those with large families. That means that more people are caught in the poverty trap.
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