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Mr. Nigel Dodds (Belfast, North) (DUP): We are having a wide-ranging debate. Several hon. Members mentioned pensions and I know that others wish to speak, so I shall briefly focus on matters relating to pensions and, especially, the plight of our poor pensioners, before talking about business competitiveness in Northern Ireland and the opportunities that the Chancellor missed in his Budget to help in that regard.

I acknowledge the improvements over recent years that have been made on pensioner poverty. I also acknowledge that the Chancellor announced yesterday the national bus scheme that will give pensioners free bus travel. There will also be increased funding for the insulation programme and the retention of the winter fuel allowance. However, the Chancellor failed to address several aspects of pensioner poverty. As several hon. Members have said, there is deep concern and anger among many people about the failure to continue the council tax rebate, which was applied as a rate rebate in Northern Ireland. Many people think that as the rebate was announced in the run-up to last year's election, the Government have cynically refused to continue it this year because they know that the next election will be some time away.
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If there was any logic behind the Government's position on the rebate, they would have carried forward something in the Budget for pensioners today. Pensioners will face enormous increases in their council tax bills. Those in Northern Ireland face an enormous increase in their rates bills because the Secretary of State for Northern Ireland has increased the regional rate for this year by 19 per cent., which is massively over the rate of inflation. The situation is causing great concern in my constituency, which has a high proportion of elderly people. How will they meet that sort of increase when they also face the imposition of water charging for the first time, as well as swingeing increases in electricity and gas prices? When the Paymaster General winds up the debate, will she tell us why the rebate has simply been left out of this year's Budget? What possible explanation can there be for giving welcome assistance and help last year, but none whatsoever this year? Pensioners up and down the land deserve an answer to those questions.

I welcome the fact that the winter fuel allowance will be retained, but there is a question mark over why there has been no increase to the allowance whatsoever, even to take account of inflation, since its introduction in 2000. The sum of £200 would have bought a household considerably more fuel back in 2000 than it would today, especially given the recent price increases. In view of the Government's commitment to combating fuel poverty, I would have thought that the Chancellor could increase the winter fuel allowance from its level of £200, at which it has been stuck for six years. I have no doubt that Ministers could point to the fact that the situation is a major improvement on that which went before. I accept that and pay tribute to the Government for what they have done. However, after such a length of time, surely there is an unanswerable case for increasing the winter fuel allowance to bring it in line with its original value in 2000.

A lot has been said about the Chancellor's raid on the pension funds when he first came to office. Several hon. Members have talked about crises, and many tens of thousands of people in this country are affected by the crisis caused by the closure of company pension schemes that have shortfalls. I accept that the Government have brought forward the Pension Protection Fund and the financial assistance scheme, but the fact of the matter is that although some 85,000 people and their dependants have been put in a real crisis through no fault of their own, the Government have rejected completely and utterly the findings of the parliamentary ombudsman following the investigation of the matter.

The Government have failed to provide those people with any hope of a decent standard of living in their later years, even though they paid into pension schemes in good faith—and were advised to do so by Government leaflets. The ombudsman found that the Government were at fault, but they have simply rejected that finding, not only undermining the office of the ombudsman, but leading people to question whether they should invest in pensions at all. If that is the Government's reaction to the findings of an independent ombudsman, can people have faith that if they follow today's advice about investing in pensions for the future they will not be out of pocket and facing a dire future in old age?

The Government have a responsibility and they must do more. Some of my constituents who worked for Richardson's IFI plant in north Belfast—Joe Blair was
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one of the test cases at which the ombudsman looked—are in dire straits. They believe that they were robbed, not just by the initial collapse of their pension scheme, but latterly by the Government's failure both to accept the ombudsman's report and to rescue them from poverty, heartache and hardship. The Government say that it would cost £15 billion to £17 billion to do so and that they cannot find that money. The fact is that money could be found to compensate those pensioners, not least from unclaimed assets. The Chancellor has said that he will use some of those assets for youth provision—a fine and laudable objective—so why can he not use them to fulfil his responsibilities to those pensioners? It is a very serious issue and I urge the Government to treat it as such. There is an urgent need to rescue the lives—I put it as strongly as that—of people who are in very bad way indeed as a result of what has happened to them through no fault of their own.

On the more general issue, we await the outcome of the consultation on the Turner report, but we need help for today's pensioners as well as tomorrow's pensioners. There is a growing reliance on means-testing to help our poorest pensioners. Initially, means-testing was necessary to target resources on the poorest pensioners, but in 2006 that is counter-productive. Forcing more and more people to apply for means-tested benefits and pension credit is a disincentive to save. It is demeaning for many people, who find the application process difficult. The figures clearly show that a great deal of money to which people are entitled has not been claimed. The outcome of the consultation on Turner should be that we move away from means-tested benefits and implement a properly funded, decent state pension that is indexed to earnings. That is the way forward.

Turning briefly to business competitiveness in Northern Ireland, in the next few weeks there will be a renewed effort on the wider political front to achieve political progress there. I hope that it is possible to achieve progress and restore devolution on the basis of adherence to democratic values, but even if devolution is restored and local people can make decisions through their local representatives, the reality is that many decisions by the Treasury, and by the Chancellor in particular, will be more important than all the decisions by local Ministers in Northern Ireland combined. In particular, that applies to Government fiscal policy and rates of corporation tax, which affect business competitiveness. In infrastructure and skills, Northern Ireland is every bit as competitive as our neighbours, but we lose our competitive edge in the cost of doing business.

Some of the difficulties faced by businesses in Northern Ireland are the same as those experienced throughout the country. The challenge to business from eastern Europe and south-east Asia is felt right across the United Kingdom, but there are problems that are unique to Northern Ireland. Central to that is the fact that we share a land frontier with the Irish Republic. A 30 per cent. corporation tax rate in Northern Ireland puts business at a major competitive disadvantage with our counterparts in the Irish Republic, where corporation tax sits at 12.5 per cent. No matter what incentives are offered and no matter how skilled our work force is, it is difficult for the Province to compete
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when there is a corporation tax of 30 per cent. in Newry, for instance, whereas three miles across the border it is 12.5 per cent.

It is the Government's stated wish to see the private sector grow in Northern Ireland, but we have higher energy and transport costs than the rest of the United Kingdom and higher corporation tax rates than the Republic of Ireland. We must be allowed to compete on a level playing field. If we are to be a competitive and effective economy, and if the Government want less reliance on the public sector, which we want as well, the appropriate fiscal arrangements must be put in place. I regret that an opportunity has been missed in the Budget for the Government to address some of those issues. The levy on fuel duty at the present rate in Northern Ireland, compared with the Irish Republic, encourages fuel smuggling and fuel laundering. The Government need to deal with that.

Local politicians in Northern Ireland want devolution to be restored. We want local Ministers to have responsibility. Free transport for our pensioners, for example, was a policy introduced by Democratic Unionist Ministers in the former Northern Ireland Assembly, so we welcome the fact that the rest of the country is catching up with us. However, there is only a certain amount that a devolved Administration can do. Tax rates will continue to be set here in the House and by the Government here at Westminster. On behalf of the business community and our economy in Northern Ireland, I appeal to the Government to consider the particular circumstances—the disadvantages that we suffer as a result of sharing a land border, and the difficulties that we suffer as a result of the differences in corporation tax rates between the Irish Republic and Northern Ireland. I urge the Minister to address those issues when winding up the debate.

4.18 pm

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