Fifth Standing Committee on Delegated Legislation
Thursday 18 September 2003
[Mr. Peter Pike in the Chair]
Draft Partnerships etc. (Removal of Twenty Member Limit) Northern Ireland Order 2003
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Ian Pearson): I beg to move,
That the Committee has considered the draft Partnerships etc. (Removal of Twenty Member Limit) Northern Ireland Order 2003.
It is a pleasure to serve under your chairmanship, Mr. Pike, for what I hope and trust is a straightforward statutory instrument. The draft order was laid before the House on 7 July 2003. The order will remove the 20-partner limit in partnerships, and will further encourage enterprise in Northern Ireland by removing a regulatory measure that potentially inhibits the development of partnerships and adds administrative and cost burdens to the operation of partnerships affected by the limit.
The proposals will provide Northern Ireland partnerships with the same regulatory framework as that operating in Great Britain. The 20-member limit was enacted in the 19th century.
Mr. John Taylor (Solihull): I do not wish to be a pedant, but when the Minister says the same as that operating in Great Britain, surely he means the same as in England and Wales, Scotland having a separate body of law. Perhaps on this matter Scottish law is the same. In which case, I allow him to refer to Great Britain.
Mr. Frank Doran (Aberdeen, Central): As a Scots lawyer, may I help my hon. Friend? The hon. Gentleman is being a pedant: partnership law is exactly the same on both sides of the border.
Mr. Taylor: I offer an apology to all concerned.
Mr. Pearson: I am happy to confirm that the 20-member limit was abolished for England, Wales and Scotland last year, and it is our intention, if this legislation is passed, to do so for Northern Ireland.
The 20-member limit was enacted in the 19th century in response to a problem of the day. That problem no longer exists, so the order is a straightforward modernising measure.
My Department consulted extensively on the proposal. Respondents agreed that, although specific exemptions can be made to the 20-member limit, it does impose burdens. It prevents the expansion of businesses through the introduction of new partners, it restricts the development of multidisciplinary and international partnerships, it restricts the use of joint ventures, especially in the private equity and property sectors, and it imposes legal complexity and administrative costs.
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The order will increase the freedom of businesses to organise in a way that is most appropriate to their circumstances. It will help to facilitate the introduction of new partners, and will assist with the development of multidisciplinary partnerships. It will result in cost savings to business, and will remove the need for increasingly complex applications for exemption.
Mr. John Taylor rose—
The Chairman: Order. Before I call Mr. Taylor, it may help if I advised him that the process in England, Wales and Scotland was dealt with under the regulatory reform procedure, and I happen to chair the Select Committee on Regulatory Reform.
Mr. Taylor: Mr. Pike, that puts you in a natural position of dominance and superiority, to which you are entitled and which becomes you very well.
I shall not detain the Committee, principally because, as the Minister rightly said, the order frees up options for enterprise in Northern Ireland, and that has to be good for the Northern Ireland economy. I shall leave him with two questions, which I do not intend to press this afternoon, but if he can answer them when he replies to this modest debate I should be grateful, and if he would like further time to reflect he could write to you, Mr. Pike, with a copy to all members of the Committee.
Will the Minister give an indication of the responses received by the Department of Enterprise, Trade and Investment consultation, which was called ''Proposals for Removing the 20 Partner Limit in Northern Ireland Company and Partnership Legislation''? It was rather a long time title, but that is what the document was called.
Would the Minister care to advise the Committee as to any other action he is taking to promote enterprise and reduce bureaucracy in Northern Ireland, because I am sure that the Committee would be pleased to hear about that?
Regular attenders of these Northern Ireland Statutory Instrument Committees will know that I have adopted what I have chosen to call the Taylor tests. They fall short of a doctrine, but it may be convenient to call them yardsticks. I apply three basic tests. The first test is whether the instrument creates a new ombudsman or a new commission, and my preferred answer is that it does not. The order does not, so it passes that test.
The second test is whether there is an indication that the people of Northern Ireland want it, because it can be presumptuous for those of us who are English to get ourselves accidentally into a position of telling Northern Ireland what is good for it. I would not presume to do that. There is a fair amount of evidence that the people of Northern Ireland and the business communities want it, so that passes my second test.
My third test is whether the measure makes the law in Northern Ireland more or less convergent with the law in England, Wales and, as I am now advised, Scotland. In other words, is it legally convergent, and the answer is that it is. The reason that I put that question is that, as we live under the discipline in which people are presumed to know the law—in this
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country, ignorance of the law is no excuse—I am in favour of the minimum amount of regional variation. If I am presumed to know what the law is, I do not want it to change from county to county, or within the four component nations of the United Kingdom.
I was challenged—not in a hostile way—by a Labour member of this morning's Northern Ireland Statutory Instrument Committee, who asked whether the test of legal convergence makes me anti-devolutionary. I said that it does, because at heart I am a Unionist. The original long title of my party was the Conservative and Unionist party, and I have never lost sight of that. If the Committee wants to accuse me of being a Unionist rather than a devolutionist, it can have my guilty plea here and now.
Mr. Ken Purchase (Wolverhampton, North-East): Guilty but insane.
Mr. Taylor: That was a Victorian verdict, which we have now grown out of. I want the law to be the same in the great city of Wolverhampton.
I have also grown out of saying any more to the Committee, so I shall draw my remarks to a conclusion.
Sir Teddy Taylor (Rochford and Southend, East): If this measure is so necessary and urgent, and if everyone wants it, why will it not come into effect until two months after the order is made? The order could have a serious effect on individuals. They could end up with legal problems for having broken the rules. Paragraph 1(2) says:
''The provisions of this Order come into operation on the expiration of two months from the date on which the Order is made.''
Why do we have to wait for two months?
Mr. Taylor: I do not know the answer to that. My hon. Friend may try to catch your eye, Mr. Pike, and put the question to the Minister, but I think he heard it. I join my hon. Friend in insisting on an answer to that very point.
Mr. Roy Beggs (East Antrim): In the current state of my much limited whipping duties, as the Ulster Unionist Whip, I am more than glad to welcome and offer the hon. Member for Solihull (Mr. Taylor) that opportunity.
We in Northern Ireland welcome the order and the benefits that will flow from its implementation—
Sir Teddy Taylor: In two months' time.
Mr. Beggs: In two months' time. It will open up opportunities for many people who to date have not been involved in partnerships.
Sir Teddy Taylor: But not for two months.
Mr. Beggs: But not for two months. Does the Minister agree that individuals who may be invited into a partnership for the first time should make themselves fully aware of the responsibilities which will arise from doing so, because considerable responsibilities could fall on individuals if things go wrong?
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Sir Teddy Taylor: What penalties will be imposed on the people of Northern Ireland if they enter into a partnership of more than 20 before the two months are up? We should tell people the truth. The trouble with legislation, especially European legislation, is that people are not aware of the consequences. Why do they have to wait for two months, and what penalty will be imposed on people if they enter into a partnership of more than 20 before the two months are up?
Mr. Pearson: I thank the hon. Member for Solihull for his contribution and his broad welcome for the measure. It was welcomed by all those in Northern Ireland who responded to the consultation document. There were 12 responses, none of which were unfavourable. The Institute of Certified Public Accountants for Ireland said that it recognised that the existing limit is now largely anachronistic, and it described what we are doing as the only real viable option. It agreed that the measure should help to remove barriers to expansion, modernise the regulatory framework and encourage enterprise.
The hon. Member for East Antrim (Mr. Beggs) made the perfectly valid point that anyone entering a partnership must be aware of the responsibilities that they are undertaking when they decide to become a partner. In my experience, partners in larger organisations are well aware of the commitments they are making when they take on these responsibilities. They are set out in law, and we are not changing that law. I thank the hon. Gentleman for his contribution, and for his welcome for this measure.
The hon. Member for Rochford and Southend, East (Sir Teddy Taylor) asked why, if this measure is so important, there will be a two months' delay before it comes into operation. The order modernises and reduces the burden of legislation that dates back to the 19th century, so there has not been an urgent rush to do this. We want to implement this legislation as soon as possible. The two-month period will allow us to publicise to those who will be able to take advantage of this deregulatory measure that this order is now on the statute book. We will ensure that we can contact those who will be able to take advantage of it, and allow them to plan sensibly and to change their affairs so that they are most appropriate and efficient for their circumstances. There is no other reason, other than to inform people that the law has changed. I hope that that satisfies the hon. Gentleman.
The hon. Member for Solihull asked what we were doing to promote enterprise and reduce bureaucracy. Without wishing to stray into wider territory that is outside the scope of the Bill, I can tell him that the Government are committed to promoting enterprise in Northern Ireland. For the past five years, the economy in Northern Ireland has grown faster than in the other regions of the United Kingdom. Through the Department of Enterprise, Trade and Investment and Invest Northern Ireland, we have put a range of measures in place to support industry. Through our accelerating entrepreneurship strategy, we are
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planning to start up 2,000 new businesses in this financial year. We have recently published and been implementing our research, development and innovation strategy, Think/Create/Innovate, supporting a range of companies.
I am pleased to say that the Northern Ireland economy looks set to grow by 2.5 per cent. this year. It has the lowest rate of unemployment since 1975, and there are more people in work in Northern Ireland
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than ever before in the region's history. Those are positive signs. With continued peace and stability, and the early restoration of devolution, I am sure that the Northern Ireland economy will go from strength to strength in the years ahead.
Question put and agreed to.
That the Committee has considered the draft Partnerships etc. (Removal of Twenty Member Limit) Northern Ireland Order 2003.
Committee rose at fifteen minutes to Three o'clock.
The following Members attended the Committee:
Pike, Mr. Peter (Chairman)
Harris, Mr. Tom
Smith, Mr. Chris
Taylor, Mr. John
Taylor, Sir Teddy