It was a bit of an enigma to some of us on the Committee. Although we asked the Minister about it, not much light was cast on the limbo status of credit unions whereby they are neither included nor excluded. Subsequently, I asked him about the power in clause 1, page 66, to amend the definitions of “excluded trade” or “excluded activity” or to make provision about the meaning of “back office activities”. That gives the Treasury a fair degree of leeway in making subsequent adjustments. I asked him whether that implied that some accommodation could be made regarding the particular sensitivities around credit unions—and now I add Northern Ireland-based mutuals, as we are all joined in making that case. I hope that he will be able to shed some light on that. If he can assure us that we are all working under a misapprehension and that our concerns can be allayed, then so much the better, but people want to see it clearly in the Bill and do not know why it should not be there.
The Northern Ireland credit unions fall within the legislative remit of the Assembly in respect of their registration and some of their activities, so it would be bizarre if it was denied the specific power to set their corporation tax rate in the same way that it would for SMEs, for example.
As credit unions are well embedded into the communities in which they are based, it just does not seem fair that they should be subjected to a corporation tax rate that is very different from the rate for the businesses they work alongside in those communities and neighbourhoods.
As we identify in the amendment, we want to extend the same consideration to the Progressive building society, for instance. Ministers may suggest that designing the clause to suit the particular circumstances of the Progressive building society would create the danger that we might somehow admit all sorts of others to the benefits of doing such activities. However, just as the details of regulations specify a threshold of business for small and medium-sized enterprises, the amount of employment, and the percentage of work time and expenses in Northern Ireland as opposed to elsewhere in the UK, so other measures could easily be built in to protect building societies and mutuals that wholly, solely or at least very largely base or centre their activities in Northern Ireland, rather than organisations that operate more widely and might artificially skew some operations to the north of Ireland to benefit from the corporation tax rates. If that is a concern or issue for Ministers, it could easily be accommodated.
It is clear that there is broad support on this issue from the parties in this House and from the wider range of parties in the Northern Ireland Assembly. Nobody intended, assumed or understood that credit unions and legitimate, bona fide locally based mutuals, such as the Progressive, would be caught in the Bill’s preclusions. We are seeking targeted and focused exceptions with the aim of ensuring that credit unions in Northern Ireland do not unduly pay corporation tax.
The amendment is an attempt by the parties to recognise that—unlike credit unions in Great Britain, which have been able to benefit from Government finance in the
form of growth, development and modernisation funds over the years—credit unions in Northern Ireland have not benefited from direct funding. Credit unions in Northern Ireland are adjusting to the new regulatory obligations under the Financial Conduct Authority and the Prudential Regulation Authority, which have created issues of corporate governance, training and IT standards, but none of that has been funded or supported in any way. One compensation that we might, with due diligence, seek to extend to them would be to make sure that they are at least exempted from the higher rate of corporation tax that is meant to apply to big corporates and businesses in financial services. That is the salient point of the amendment.
I hope that the Financial Secretary will acknowledge that amendment 1 would not trigger any of the difficulties that he said would have arisen from the original amendment in Committee. The scope of this amendment extends beyond credit unions to take in other legitimate mutual organisations, such as the Progressive building society—in fact, that is the only one I can distinctly identify—and that is included for a purpose. I hope that the Financial Secretary and the Secretary of State, who has received representations from Committees of the Assembly, will show some understanding. I look forward to hearing any explanation but also, more importantly, any assurances about how the Government intend to respond to such issues as the Bill is taken forward and as its various rule-making powers are operated in future.