UNCORRECTED TRANSCRIPT of ORAL EVIDENCE to Be Published As HC 616-I

UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 616-i

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

NORTHERN IRELAND AFFAIRS COMMITTEE

RESPONSIBILITIES OF THE SECRETARY OF STATE

WEDNESDAY 31 OCTOBER 2012

Rt Hon. THERESA VILLIERS MP, JULIAN KING and RICHARD PENMAN

Evidence heard in Public Questions 1 - 80

USE OF THE TRANSCRIPT

1. This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

3. Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.

4. Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

Oral Evidence

Taken before the Northern Ireland Affairs Committee

on Wednesday 31 October 2012

Members present:

Mr Laurence Robertson (Chair) Mr David Anderson Mr Joe Benton Oliver Colvile Lady Hermon Kate Hoey Naomi Long Jack Lopresti Dr Alasdair McDonnell Nigel Mills Ian Paisley David Simpson

Examination of Witnesses

Witnesses: The right hon. Theresa Villiers MP, Secretary of State, Northern Ireland Office, Julian King, Director General, Northern Ireland Office, and Richard Penman, Director, Northern Ireland Office, gave evidence.

Q1Chair: Secretary of State, I thank you for joining us; we have quite a packed session ahead of us. You are very welcome; congratulations on being appointed to the position of Secretary of State. It is great to see you here so early in your tenure, so I thank you and your colleagues very much. Perhaps I could ask you to briefly introduce your colleagues; I understand you would also like to make a short opening statement. Mrs Villiers: It would be great if I could do both of those. It is a great pleasure to be here and to have with me my director general, Julian King, and my deputy director general, Richard Penman, from the Northern Ireland Office. It is a real honour to be in front of you; I enjoyed the discussions we had on aviation a few months ago. I know that the work of this Committee is very highly regarded and the reports you have produced have had a significant impact on a range of important issues, not least of which were air passenger duty, corporation tax and fuel fraud—subjects that I am confident will come up during our discussions today. I very much look forward to working with you to engage in the inquiries that you will be doing over the next few months. It is a tremendous honour for me to have been given the job of Secretary of State for Northern Ireland. I have really enjoyed getting to meet people there and hearing their perspectives and views on the big issues and challenges facing Northern Ireland. They are rightly proud of what has been achieved there—not just through the peace process, remarkable though that achievement is. Northern Ireland also has a very

2 high-quality education system, brilliant universities, stunning scenery and tourist attractions; it is a great place to do business in as well. People have been very frank with me about the challenges faced by Northern Ireland. Some are held in common with the whole of the United Kingdom; some are obviously unique to Northern Ireland and flow from its troubled past. My priorities are shaped by the conversations I have been having since my appointment. Of course, my top priority is supporting the Belfast agreement and the institutions that it created; and working with the Executive as they press forward to deliver their agenda. It is hugely important to support the work the Executive are doing on the economy and the work the UK Government are doing to rebalance and boost the economy in Northern Ireland. It is also crucially important to keep people safe and secure through the security duties that I carry out as Secretary of State. As we will no doubt discuss today, the threat from dissident terrorists sadly remains very real and one that we are vigilant to counter. Lastly, an important priority for me is to represent the interests of Northern Ireland at the Cabinet table and across Government.

Q2 Chair: Thank you very much. Perhaps I could also thank you for extending the deadline on the consultation paper with regard to the Northern Ireland Assembly and the way it operates. I understand there is going to be a draft Bill introduced; will it be your intention to pass the draft Bill to this Committee or to a Joint Committee? Mrs Villiers: To this Committee, is the intention. Chair: Thank you very much.

Q3 Kate Hoey: Even in the short time that you have been there, have you come to any idea or judgment about whether the Assembly is now working in a well enough way— sufficiently bedded down in terms of cross-community work—to allow Northern Ireland to go back to having what we would call “real politics” with an Opposition? Mrs Villiers: As set out in the Government’s consultation paper, we think it is definitely worth asking the question about whether it would be right to move to a more normal style of politics with a Government and Opposition. But both I and my predecessor have also made it clear that any change would need to be able to command cross-party and cross-communal support. It is up to those in Northern Ireland who would like to see that kind of change to make the case and build the consensus for it. Any changes, of course, would have to be consistent with power sharing and inclusiveness and those principles which underpin the Belfast agreement.

Q4 Kate Hoey: Do you see a logical solution in what has been suggested about the largest unionist and nationalist parties working together in Government while the smaller unionist and nationalist and perhaps Alliance parties work in Opposition? Do you think that is a logical way forward, or do you think there might be something more imaginative? Mrs Villiers: That is one of the options that could be considered if that is the direction in which the parties in Northern Ireland wish to go. It is worth acknowledging that even without legislative change, there is some scope within the Assembly rules to move towards a more Government-Opposition type arrangement. So although we are looking at it in the context of a potential Northern Ireland Bill, if there is appetite for this change, there are options within the terms of the procedures and the rules that the Assembly controls.

Q5 Oliver Colvile: On 14 August, Owen Paterson said that he would bring forward legislation that would include providing the same security of tenure for Northern Ireland Justice Ministers as all other Executive Ministers enjoy. Do you foresee anybody ever holding that job who is not a member of the Alliance party? Mrs Villiers: The arrangements for electing the Justice Minister are a cross-community vote. It is for the Members of the Assembly to decide which party the Justice Minister comes from, so it is really up to them. They could choose a candidate from whichever party they wanted.

Q6 Chair: But would it form part of the d’Hondt system, do you think? Mrs Villiers: Whatever the procedure is, it is a matter for the Assembly. I do not think it would be very wise of me, as Secretary of State, to start indicating what political party I think the Justice Minister should be a member of.

Q7 David Simpson: Secretary of State, you are very welcome. Congratulations on your new position, and we hope that the honeymoon period is not over yet. It moves very quickly when you are in Northern Ireland. Part of the consultation paper that your predecessor put out sought views on the size of the Assembly. Would it be reasonable to assume that any representations that have been made would be in favour of reducing the numbers of MLAs? If that is the case, would it be reasonable to assume that we would look again at the reduction of numbers of the Departments within the Assembly? Mrs Villiers: The last question was about the connection between numbers of Members and numbers of Departments.

Q8 David Simpson: Yes, and if that is the case, is it a foregone conclusion that the number of Departments will be reduced accordingly? Mrs Villiers: My understanding is that the number of Departments is a matter for the Executive to determine. As regards the number of MLAs, obviously, there has been quite a wide range of support for reducing the size of the Assembly. In terms of the responses to the consultation, although the consultation is closed I have not seen the analysis of the responses as yet, so I cannot tell you their complexion. I would expect there to be a fair amount of support for a reduction in the numbers. Of course, if the proposed boundary changes across the UK were to go through, the number of MLAs would be reduced to 96. The Government is very open-minded on this. We are keen to hear from the parties whether they want the size of the Assembly reduced, and by how much. We have not been prescriptive about this, and we will be looking carefully at the responses to the consultation in terms of whether to take this forward and if so how, and the numbers.

Q9 Nigel Mills: There has been some talk about legislating to stop dual-hattedness, with the same individuals serving in the Assembly and here. Given the fact that that issue is gradually being resolved by people choosing to resign from one or the other—even the Sinn Fein MPs have nearly all sorted that out—is there still any need to legislate for that? Is that something you can just let drift away by a natural process rather than by force of law? Mrs Villiers: I very much welcome the moves that have been made by the parties in Northern Ireland away from dual mandates. I think that is very healthy. We think dual mandates should end; it is just a question of how we do it, and that is something that we will

4 respond on when we have gone through the responses to the consultation. Yes, in many ways there would be advantages to leaving it as something voluntarily undertaken by the political parties, but then we would face the insecurity of not knowing whether those positions would be maintained in the future, which would suggest that a legislative solution might be preferable.

Q10 Nigel Mills: Presumably, though, if the voters of that constituency are happy to elect someone to serve in both places, that is kind of up to them, isn’t it? Mrs Villiers: My understanding is that there has been a great deal of concern about dual mandates in Northern Ireland. It has been a particularly prevalent practice in Northern Ireland, and I really think there is a lot of support for seeing an end to it. Whether we do that by legislation or by voluntary agreement is less of an issue. I think there is pretty strong support for seeing it finish.

Q11 Chair: Presumably, it would have to apply across the United Kingdom as well. Mrs Villiers: Not necessarily.

Q12 Chair: For the sake of fairness. Mrs Villiers: With the devolution settlement as a whole we have certainly accepted that different parts of the United Kingdom have different circumstances. There is a case for saying that the concern about this in Northern Ireland is much greater than in other parts of the United Kingdom. I am certainly happy to look at this in relation to Northern Ireland without necessarily concluding that the same rules need necessarily apply elsewhere in the United Kingdom. Chair: Perhaps we will not go too far into that now: we can maybe look at it again.

Q13 Dr McDonnell: How do you assess and measure the concern? Mrs Villiers: Through the conversations I have had in my first couple of months in office.

Q14 Dr McDonnell: There are other issues that we are concerned about too— Mrs Villiers: Indeed. Chair: Perhaps we can come back to those. It is a packed programme today.

Q15 Mr Anderson: Good afternoon. Would you welcome the Assembly being faced with more contentious issues than it has so far? For example, the planning system, integrated education, reconfiguration of councils and water rates. Mrs Villiers: Certainly, it is very important for the Northern Ireland Executive and Assembly to focus on the big issues facing Northern Ireland. In particular it is very healthy that they are looking at how they can reform the planning system, because having a user friendly and efficient planning system is obviously a crucial way to ensure that you are a good place to do business in and boost jobs. In terms of integrated education, I know that the Executive is also looking at projects to link schools up and improve the contacts between different schools as a way of dealing with the divisions in education at the moment. That is very positive and healthy as well. In terms of water rates and local government reorganisation, I will not trespass on the territory of local

5 government reorganisation. It is difficult enough in England to grapple with those issues. I am sure that the Northern Ireland Executive has dealt with many difficult issues and I am sure it will provide great input and great work in relation to local government and water rates as well.

Q16 Mr Anderson: Have you had conversations with them about these issues? On the face of it, if all these were resolved, there would surely be some cost saving for the country as a whole. Mrs Villiers: I have certainly discussed planning and education. I have not discussed with the Executive local government reorganisation or the provisions on the way the water industry is regulated.

Q17 Naomi Long: You are very welcome. When your predecessor launched the consultation, he said that he intended to bring forward legislation to deal with the issue of political donations and transparency. That is something which I raised with him on a number of occasions previously. My own party publishes in line with the English and Welsh guidelines voluntarily. I know that Friends of the Earth are also running a campaign at the moment to try to have more transparency in political donations. Do you believe their assertion that it is necessary to publish the names of major donors to political parties so there is proper confidence, both in the Assembly and in political life generally? Is that something you will act upon? Mrs Villiers: I certainly think that there is a case for greater transparency in relation to political donations. I don’t think I am persuaded that the time is yet right for Northern Ireland to be subject to exactly the same system as in the rest of the United Kingdom. We still have to exercise caution on certain issues. In terms of donor identity, that is something I’ll be looking at and we will publish our proposals in due course.

Q18 Naomi Long: To follow up, in order to stand for election, for example for local government in Northern Ireland, you have to have signatories with addresses on your submissions. So people are already willing to declare their views on those matters in a public forum, despite any residual threat. I am interested to know on what basis you would be concerned that those who donate to parties would be concerned about security and not that parties would be concerned about who funds them being exposed. Mrs Villiers: We need a solution here which not only protects people’s safety, but also protects their ability to donate to the political party of their choice. As a direction of travel, greater transparency is clearly where we want to go. As I have said, I think we have to exercise a degree of caution, because it would be very worrying if people felt constrained from making political donations by the transparency rules. It is a difficult balance to get, but I will consider your representations and what you have said to me today before I decide what the changes to the regime for transparency in Northern Ireland should be.

Q19 Ian Paisley: Secretary of State, you are very welcome. It is good to see you in post; I wish you all the best with it. One concern raised with me every week since I have been an MP, by Government and Opposition Members, is about those MPs who do not take their seats here yet claim allowances for running offices at Westminster, and essentially flout the rules. How do you intend to address that issue? Mrs Villiers: You will appreciate that is a House of Commons and IPSA matter. We know that all political parties have had problems with expenses over the years. These issues

6 are never easy. The ideal outcome would be that the Sinn Fein Members took their seats. I appreciate there is no imminent prospect of that happening. I am happy to discuss with them and others their views on the allowances system. We do also have to bear in mind that Members who are elected on an abstentionist platform have a degree of endorsement from their electorate for the stance they take on attending Parliament.

Q20 Ian Paisley: I appreciate that it is for a resolution of this House ultimately to determine those rules. However, you and your Government will have input into that discussion and decision, and the framing of how that takes place. What is the Government’s view on it? Mrs Villiers: As I said, it is a matter for the House of Commons. These matters are traditionally decided on an unwhipped vote in the House of Commons. I am happy to talk to the parties about these matters and I am sure that the Leader of the House would be as well in his capacity to deal with these matters.

Q21 Ian Paisley: Do you see it as something that will be concluded one way or the other? Mrs Villiers: As I say, I am happy to engage with the parties that have concerns on this.

Q22 David Simpson: Secretary of State, you will know that the economy is top of the agenda for the Northern Ireland Executive. Are you in a position to give us an update on the current status of devolving corporation tax? Mrs Villiers: I am happy to do that; this is a good opportunity. The ministerial working group, chaired by David Gauke, concluded its work a couple of weeks ago. We are now compiling a report that sets out what has been achieved, the areas of agreement and the areas where we have not yet managed to find consensus between the UK Ministers and the FM and DFM. We have made a lot of progress in that group. We now have an idea of the shape of how a devolved corporation tax regime might work, and we have an idea of how we can do that without imposing unreasonable burdens on businesses or HMRC. However, there remain some significant practical issues that would need to be resolved, not least how you calculate the deduction from the block grant that is required by EU law, in the base year and subsequent years. The report being written at the moment will go to the Prime Minister to consider and decide whether we can go ahead in principle with devolution.

Q23 David Simpson: When do you believe that report will be available for the Prime Minister? Mrs Villiers: We are making good progress and expect to get it done pretty soon. As for when the Prime Minister will make a decision, we do not know. I am sure he will look carefully at all the issues, both the practical ones and the wider constitutional ones, before reaching a view.

Q24 David Simpson: Do you, as Secretary of State, believe that there is a realistic possibility of this being devolved? Or is Scottish independence one of the key figures that the Prime Minister will look at? Mrs Villiers: I certainly think there is a possibility that devolution could take place. We wouldn’t have done months of work on how it would operate in practice if we did not believe

7 it was theoretically possible and might be deliverable. What we do not yet know is what the ultimate decision of the Prime Minister will be, but certainly ensure that he is very much aware of the support in Northern Ireland for this, and no doubt the First Minister and Deputy First Minister have also raised that in their meetings and discussions with him over the past couple of years.

Q25 Mr Benton: Welcome, Secretary of State. First, I recall you giving evidence to this Committee about corporation tax some time back, with another hat on, if I can put it that way. You have answered a lot of my questions in your response to David Simpson, but I would like to know—this is not merely an academic question—whether you are in a position to make a personal declaration on whether you support the reduction of corporation tax, given your former role and the short but undoubtedly valuable experience you have gained of Northern Ireland affairs and its economy. I do not mean the question flippantly, but some of us get the impression—I am not trying to minimise the problems around corporation tax—that there was not a clear indication of support, particularly from the Treasury, for this easement of corporation tax and so on and so forth. It remains a problem for me I you look at these situations. It is beginning to look to me—forgive my frankness—like a stand-off from making a decision. Do we know about all the difficulties of coming to a conclusion, or is there something else lurking in the background, such as political disagreement on the actual implementation of a corporation tax reduction for Northern Ireland? As was mentioned earlier on, the economy— Chair: Briefly, please. Mr Benton: Sorry. The economy is at such a crucial stage that a speedy response to this, one way or the other, is very much demanded. Sorry, Chair, for taking so long. Mrs Villiers: I fully appreciate the enthusiasm for the change in Northern Ireland and the wish for a decision to be made on this. In terms of your questions about the practicalities to be resolved and where the areas of difference are, the primary ones relate to the size of the deduction from the block grant that would be needed to be compliant with EU law. In part, that requires an assessment of what are known as behavioural impacts, such as how firms would react in terms of profit shifting and group relief and how that would impact on the revenues that would normally accrue to HMRC as a result of corporation tax. There is also a difference of view on so-called secondary tax effects. The theoretical argument is that a reduction in corporation tax could lead to an economic boost and a consequential boost for revenues in other areas, such as VAT. The Treasury is very clear that it is not possible to include those secondary effects to offset the deduction to the block grant, but the Northern Ireland Executive would have argued the case for including those secondary effects. A final issue to be resolved is how one calculates the progressive alteration of the block grant in future years, after the initial base year. Those are three key areas where it has not yet been possible to deliver consensus, but there are a number of other areas where we have managed to do that.

Q26 David Simpson: To follow on from Joe’s question, I have a question about inward investment in Northern Ireland. When it comes to negotiating with Brussels and the UK Government, will you be giving Northern Ireland your full support to retain 100% cover in regional aid? Mrs Villiers: Yes, certainly. I think there is a good case for that and I am very happy to take part in putting that case to the Commission, which will ultimately make the decision.

David Simpson: I am pleased to hear that. Mrs Villiers: Returning to Joe’s question, I have made my views on corporation tax very clear—it is a change I would like to see, but the reality is that there are issues to resolve before it could happen, and we do not yet know whether it is going to be possible to resolve them.

Q27 Dr McDonnell: Welcome, Secretary of State. Like others, I am very glad that you are here. I had the opportunity to welcome you to your role at Northern Ireland questions last week. The big challenge facing all of us is the economy and jobs, so the question is: how do we strengthen the economy? It appears that we need to create a greater or stronger private sector. What are the Government’s intentions to help support and encourage a more robust private sector, thereby reducing the high rate of dependency on the public sector? Mrs Villiers: The whole of our economic strategy is focused on that goal. Our efforts to deal with the deficit and restore the public finances to health are crucial in keeping interest rates low, which is crucial for a successful private sector. The Chancellor has announced that corporation tax will be coming down to 22% by the end of the Parliament, again to create a competitive tax environment for business. We also hope to deliver an extended tax break for the creative industries, subject to state aid clearance. That is very important for Northern Ireland, because it would extend the tax break from films to high-end TV. We have seen success in Northern Ireland with “Game of Thrones” and that success would be cemented by the new tax break. So there is a range of ways in which our economic policy is really focused on giving the private sector the boost it needs as part of the rebalancing process.

Q28 Dr McDonnell: There is a risk that perhaps the change and movement—the reduction, if you like—either in employment terms or indeed in service terms, will impact unduly on the minority community, perhaps because many of them might be employed in the lower ranks of the civil service. Mrs Villiers: Of course unemployment is a key concern. It can have a devastating impact on those it affects, which is why the Government are determined to create the right conditions for the private sector to flourish. There is some very good news from Northern Ireland about the inward investment it has been able to attract, particularly in the financial services sector and the financial services technology sector, but we will continue to do everything we can from a UK Government perspective to boost growth. I am well aware that the Northern Ireland Executive are also very business friendly, very pro-business, which is another reason I welcome the work now being looked at in relation to planning, because that is another important way to create the right conditions for job creation.

Q29 Dr McDonnell: The concern is that the economic circumstances can leave young people at a loose end and lead them into crime, and maybe worse. The two things are perhaps more connected at times than most people realise, I think. If there is economic hardship or marginalisation—call it what you like—those who are bored will, in turn, find other outlets for their energy that perhaps we would prefer they did not. Mrs Villiers: I agree that efforts to boost the economy are crucial in Northern Ireland, for the same reasons that they are important everywhere else in the UK, but they are also crucial to ensure that we are doing everything we can to address sectarian divisions and ensure that that small minority of people who still seek to engage in violence for political ends

9 do not find fertile recruiting grounds. So an economic strategy is also part of our security and counter-terrorism strategy.

Q30 Mr Anderson: Unless Northern Ireland is different from the rest of the country, we are going to see people losing jobs in good-quality and secure public sector work, and, if they are lucky, finding work in probably less well paid private sector employment, where they will have less secure tenure of employment or less good conditions of employment. For example, sickness schemes are almost certainly not going to be as good in the private sector as they traditionally have been in the public sector. Given that, along with the impact of welfare cuts that are going to come over the next few months and have already started cutting in, has an assessment been done about the impact on people at the bottom end of society? Mrs Villiers: A huge amount of consideration has gone into ensuring that we have the right welfare reform programme. I am totally convinced that the welfare reform being taken through by the UK Government is not just fair for taxpayers but will be better for those who need the support of the welfare system. The universal credit system will provide real advantages, because it will sweep away so much of the complexity that has made it incredibly hard to navigate the benefit system. We will also see a substantial amount of money, even more at the end of the process than at the beginning, spent on supporting people through universal credit than through the benefits that it is replacing. I believe a great deal of thought has gone into how we get welfare reform right and, of course, there is a debate in Northern Ireland about adapting it still further for the particular circumstances of Northern Ireland. We have seen some recent developments on that, consequent on discussions between Nelson McCausland and David Freud.

Q31 Mr Anderson: And the impact on real people? What you have just told us is theoretical. What is actually happening to people on the ground? Mrs Villiers: It is not theoretical that people will have a single universal credit to replace the multiplicity of complex different benefits that they are currently subjected to. The goal of the reform is to support people into work, to enable them to get ready for work and to budget in the way that people in work budget. This kind of change is always unsettling, but the system will be much fairer, not just for those who pay for it—we have to take their interests into account—but recipients of benefit as well.

Q32 Mr Anderson: Even people receiving benefits pay for it, because every time you buy something you pay tax. Let’s not say that they don’t make a contribution. Mrs Villiers: For example, a basic change to cap benefits at the level that an average family takes home in income, which works out, before tax, at about £34,000 a year, is not unreasonable. It is not unreasonable to say that you should not be able to earn more in benefits than you can if you are an average family that goes out to work. That is pretty fair. Chair: The point is well made, Dave, but we can’t take it any further. Mr Anderson: More people will be needing it, because they will be out of well paid jobs and into less well paid jobs. Chair: The point is well made, but we have to move on.

Q33 Kate Hoey: Has any assessment been made yet of the impact on the Northern Ireland economy of the Olympic and Paralympic Games and, indeed, whether the opening of the Titanic site might have had a greater impact on the Northern Ireland economy?

Mrs Villiers: A number of Northern Ireland firms got contracts as a result of the Olympics—the McAvoy Group was one, and Ulster Weavers were involved in producing textiles for the Olympics. It is not easy to tell at this stage exactly what the economic impact of the Olympics has been, but it seems to have played a part in the UK as a whole going back into growth. I had the opportunity to discuss the legacy work that Seb Coe has taken on. I emphasised to him the importance of a UK-wide legacy and that is very much the approach he is taking. So we do not yet know the exact impact of the Olympics on the Northern Ireland economy, and it may be difficult to come out with a definite figure, even in the future, but I certainly appreciate the huge enthusiasm for the Games in Northern Ireland and I think it is reflected in some of the economic benefits that the UK has seen as a result.

Q34 Kate Hoey: Do you think that every person living in Northern Ireland, every Northern Irish citizen, should have the right to choose whether they compete for the British team or the Irish team? Mrs Villiers: Yes, certainly. I think it is perfectly fair. It is fantastic that Northern Ireland was fielding athletes in both Team GB and Team Ireland.

Q35 Kate Hoey: But you recognise they don’t all have a choice unless they move? Perhaps we should talk about this later. Read my article. Mrs Villiers: I will do that. I have just been prompted to say that the Olympic contracts that I am aware of that were awarded in Northern Ireland amount to £43 million. Hopefully the overall boost from the Olympics was greater than that. Chair: That is useful. Thank you.

Q36 Oliver Colvile: Secretary of State, I am very aware that you have been answering all the questions and you may want to encourage one of your colleagues to do so, as you have been on the go for 35 minutes without drawing a breath. In 2013, Northern Ireland is going to have a couple of big events. First of all, Londonderry-Derry is going to have the city of culture. You also have the world police and fire games. What benefit will that bring to Northern Ireland? Secondly, there was a very successful Irish Open in Portrush, which we had the great pleasure and delight of attending: what other ways are the NIO looking at to get similar kinds of activities for Northern Ireland, and how do you see that working into the economic story? Mrs Villiers: I am happy to engage with the work the Northern Ireland Executive does to attract events. It was great that the Irish Open took place at Portrush and was clearly a very successful event. I visited New York last week—thankfully before the storm hit—to meet a number of members of the Irish American community, and strikingly, golf tourism seemed to feature in more or less every conversation that I had. Oliver Colvile: And horse racing. Mrs Villiers: Clearly it is a great asset for Northern Ireland that it has such fabulous golf courses, and the Irish Open showcased that. I know that the Northern Ireland Executive is enthusiastic about building on tourism in Northern Ireland. I am sure that the golf side of things will be a very fertile area for attention for those focused on generating tourism for Northern Ireland.

Q37 Lady Hermon: I was absolutely delighted by your appointment as Secretary of State.

Mrs Villiers: Thank you. Lady Hermon: It is lovely to have you here before us as a witness this afternoon. It is also a pleasure to have Mr King and Mr Penman. Looking at Mr King, I am determined to hear your voice because you recently gave an interview to agendaNi, but if you don’t mind I will just keep that so you can just ponder on what you might have said to agendaNi that I want to question you on while I return to the Secretary of State. Secretary of State, the annual report and accounts of the Northern Ireland Office make fascinating reading. I am sure that every member of the Committee takes it with them as their holiday reading for the summer recess—but not this year, because it was not published in time for the summer recess. Could we have an explanation of why it did not meet the Treasury administrative deadline? Could we have an assurance that it will not happen again, because we would hate to be deprived of it before the long summer recess next year? Mrs Villiers: My understanding is that there was certain information that it was simply not possible to track down in time for the deadline. I am happy to defer to Julian to offer a fuller explanation. Julian King: It is very good to be here. We wrote at the time to the Clerk of the Committee to apologise for the fact that we would be one of 10 Departments that did not manage to make the summer recess. We subsequently published the accounts, as you know, in September. There was a problem right at the last minute with the work that we were doing in close co-operation with the NAO. They were asking us to produce documentation on payments to some of the people who work in the NIO, and those payments were done for us by other people, so we had to go to them to try to track down the paperwork. It was as simple at that. They were perfectly legitimate questions from the NAO that we able subsequently to answer.

Q38 Lady Hermon: Can we just have an assurance that while that material was missing on that occasion, lessons have been learned within the NIO and that next year it will meet the deadline? Julian King: We will certainly do everything we can to give you your summer reading next year. We will always meet the statutory deadline, which we have met in good time this year as well.

Q39 Lady Hermon: That was a perfect parliamentary response. Now, Mr King, I have a separate question, linked to what the Secretary of State has said about corporation tax. A number of MPs sitting on this Committee had an interesting briefing yesterday from a number of pensioners from Northern Ireland, particularly about fuel poverty. During your interview to agendaNi, you explained succinctly that NIO sees itself as having three roles. Among those, the emphasis is on rebalancing the economy and making sure “that those benefits get to all parts of society.” How in heaven’s name will pensioners, elderly people and those in fuel poverty in Northern Ireland benefit from a reduction in corporation tax, which takes a huge chunk out of the block grant? Chair: Can I ask for a very brief answer, because we have covered corporation tax? Julian King: First, I am extremely grateful that there is an audience out there for anything I should have to say in that august publication. I am not sure that, when I said that, I was consciously making a link between the potential benefits that could arise from a move on corporation tax and pensioners.

Mrs Villiers: It is very important to emphasise that whatever happens on corporation tax devolution, there is a range of things that can help to boost the economy in Northern Ireland. Planning is something that has come up a couple of times, but there is also the work that the UK Government is doing nationally to boost enterprise, not least of which is reducing income tax for millions of people, including around 25,000 people in Northern Ireland on the lowest incomes being taken out of income tax altogether. That helps to boost the economy, because it puts money in people’s pockets, but it is also good for social justice because you are helping people on the lowest incomes and encouraging work. I am certainly not saying, and I am sure that Julian was not implying in his article, that corporation tax is the only show in town. Manifestly, it is not. There is lots of work under way both in the Northern Ireland Executive and in the UK Government to meet the economic challenges that Northern Ireland faces, which is quite separate from and additional to whatever might happen on corporation tax.

Q40 Nigel Mills: It might be a little cheeky to ask you this when you have been at the NIO only a few weeks, but given the amount of power that is being devolved and the need to save money, do you think there is a need to maintain the three separate Departments for Scotland, Wales and Northern Ireland? Should there be some kind of merger into one Department for the devolved areas? Mrs Villiers: I don’t think it is cheeky at all to ask that question. I think the offices of the territorial Secretaries of State are all doing very good work, and I think the system works very well. I am not aware that the Government have any plans to merge or abolish them. I think it is definitely a real asset for Northern Ireland to have a voice at the Cabinet table, putting their case.

Q41 Chair: Presumably, we would end up with one Select Committee in those circumstances. Mrs Villiers: Well, who knows what would happen?

Q42 Ian Paisley: Secretary of State, for several years you were a Member of the European Parliament, so you will be aware of its many dark arts in how moneys are won and horse-traded—not as dark as the arts of the Northern Ireland Office, of course. Could you bring the Committee up to date with the European social fund’s support for a programme called the Training for Women Network? I understand that that network has trained, over the past number of years, about 9,000 women to become economically active—women who are hard to reach in the sense that they live in remote rural parts of Northern Ireland or in parts of the cities where it is hard to get them into active employment. According to a parliamentary answer, some of that money, which you will know is directly targeted for programme activity only, is now being used for departmental easements. That would be against the spirit and the rules of European social funding, as you know, and it would also be against your interests if Government money is being used to ease departmental problems, as opposed to being targeted for women’s employment issues. Mrs Villiers: I am afraid you are slightly overestimating my in-depth knowledge of various European programmes. I am happy to look at that. It would be honest to say that I am not aware of the issues you are talking about, although I am being rapidly passed a note to give me a prompt on what they might be.

Q43 Ian Paisley: Do what a Radio Ulster presenter did recently and read out what you have just been handed. Mrs Villiers: I am being told, logically enough, that the Secretary of State is not generally involved with this programme.

Q44 Ian Paisley: I have checked. This is your money. Yes, there is a section that comes to Northern Ireland Departments, and what they do with it is questionable and should be questioned, but this is your money—central Government money—and what you do with it, you will know, as a former MEP, is targeted to specific programmes and not to Government Departments. Mrs Villiers: It is obviously important that any funding by a public body, whether it is the UK or the EU, is devoted to the funds for which it is intended and used in accordance with the rules of the relevant fund. I am happy to look into this issue but, as I say, I cannot tell you whether something inappropriate has happened, because it is not an issue with which I am familiar, I’m afraid. Chair: We can keep in contact on that. Thank you. We will turn to air transport strategy. As you know, we are coming towards the end of our inquiry into that, so this session is very useful.

Q45 Dr McDonnell: Secretary of State, have you done anything about air passenger duty to do with the Treasury or your former Department, Transport? Mrs Villiers: Oh, I can tell you I have had many conversations about air passenger duty, with a whole range of stakeholders and the Treasury. I also had some very good contact with Hugo Swire and Owen Paterson when the debate took place in relation to long-haul APD devolution. I pay tribute to the work of this Committee in achieving that devolution. It is quite striking how quickly that happened in response to concern about the particular transatlantic flight. In an ideal world, we would all like to see lower air passenger duty, but we inherited the largest peacetime structural deficit in our history. That means that the Chancellor’s options with regard to reducing taxes are very limited. We have seen a really impressive step of rapid devolution of APD and reduction, which has saved that very important transatlantic flight. I am sure that the Chancellor in his future decisions on air passenger duty levels will take into account the many representations that this Committee makes, Northern Ireland makes and, indeed, the airlines make—very regularly.

Q46 Dr McDonnell: Thank you. I would be satisfied, and I think the Committee would be satisfied, if we were convinced that you were fully on the page on air passenger duty. Even domestic air passenger duty—because we have to cross the sea—is almost a tax on economic development. That is the difficulty for us. If I was living in Glasgow or Newcastle or somewhere I could get on a train. The air passenger duty is increasingly one of those things that various business interests keep bringing up in conversations. Mrs Villiers: I am absolutely very much aware of concerns about air passenger duty. Obviously, the priority of the Government has to be fixing the public finances, but the Chancellor has received many representations on air passenger duty and no doubt he will take those on board in future decisions on the issue.

Q47 Naomi Long: One of the other challenges you mentioned was direct international long-haul flights. Another problem we face because of the lack of through carriers is that people often have to pay twice the air passenger duty where they have to make a connection through one of the London airports, for example, in order to make other international flights. That is an additional charge that we have to pay that most other regions don’t have to, because most have through carriers and can travel on a single flight. Is that something that you would be willing to raise with the Treasury specifically, in trying to iron out some of those difficulties? It is quite a significant amount of money when you essentially have to pay APD four times on one international journey. Mrs Villiers: I am certainly happy to discuss that with the Treasury, though what might be the more effective way to look at it is whether there is more scope for airlines to codeshare to deliver more through tickets. I am not sure how the rules precisely operate in terms of when APD is payable and when it is not. It seems to me that if the problem is not enough through services in terms of flights to London and then an onward flight on a single ticket, it may be that the airlines might be able to provide some relief for the problem you are talking about.

Q48 Lady Hermon: If my memory serves me correctly, I think that at Northern Ireland questions last week, your ministerial colleague said not just once but twice that the Northern Ireland Executive had not made a request to the Government for the devolution of APD on domestic flights. Is my memory correct on that? Mrs Villiers: That is what the Minister said, and it is correct that they have not.

Q49 Lady Hermon: That is correct. Does it not strike you as rather strange and rather inconsistent for the Executive to be united, as all the parties are, in requesting a devolution in terms of corporation tax, but not on APD, which is a much, much lesser amount of money? Does it not strike you as strange that there is that inconsistency? Mrs Villiers: I do not think there is an inconsistency here. I think the problem that the Northern Ireland Executive would face would be the cost of a reduced short-haul APD. There are various figures floating around. I think Sammy Wilson talked about £90 million a year. I imagine the reason why the Executive have not pressed for a devolution of short-haul APD is that it would not be affordable for them subsequently to reduce it. Obviously, it is a matter that you need to take up with them, but I do not see an inconsistency in pressing for devolution of certain taxes but not others, on the basis that all those tax reductions have to be paid for because of the Azores judgment. While the Northern Ireland Executive may feel that devolution of some taxes would be affordable, other taxes may not be.

Q50 Lady Hermon: But in terms of rebalancing the Northern Ireland economy, surely it must be taken as a whole. You have received, and you explained to the Committee that you have received, umpteen—not your word, but mine—representations from a wide spectrum of people that APD is really jeopardising the growing economy in Northern Ireland. If, as was repeatedly stated by your predecessor and has been by you as his successor, rebalancing the economy in Northern Ireland is a priority for this Government, surely APD on short-haul flights must be part of that. Mrs Villiers: As I say, in terms of the priorities of the Northern Ireland Executive as to what taxes should be devolved and which should not, it is really a question for you to direct at them. When I say that they have not requested devolution of air passenger duty, I would certainly imagine that they have probably raised and urged a reduction in short-haul air

15 passenger duty. I cannot remember it having come up in my direct discussions with them, but it may well have done. As I say, I understand the concerns about air passenger duty. The reality is that across the United Kingdom, it plays a significant part in the revenue that supports public services. In an era when we have to ensure that we take serious steps to live within our means and deal with the deficit, reductions in air passenger duty are difficult to afford at the moment.

Q51 Mr Benton: May I take you back to Lord Empey’s Bill, Secretary of State? When you last appeared, in June, you indicated that the Bill, which concerns the ring-fencing of slots at Heathrow and Belfast City, would be in contravention of European law. You said that, “what it asks the Government to do is not permitted under current EU law.” The draft aviation policy framework was published in July, and the then Secretary of State for Transport stressed that Northern Ireland needed to remain connected to Heathrow, and that the UK Government would be lobbying for this. Are you in a position to report how that lobbying is going, because this is quite vital to the Northern Ireland economy? Mrs Villiers: Before answering the question, it is important to emphasise that I am very confident about the future of the Belfast to Heathrow flights. As the Committee will know, BA expressed great confidence and optimism about the viability of those flights. It seems to me that they are very full, and my understanding is that they feed in very well to BA’s long- haul network. BA has every commercial incentive to carry on running them. There are about 18,000 flights between the two airports in Belfast and the London airports. People should have confidence and feel reassured about that connectivity, which is clearly vital, given that the onward connections from London’s five airports are such an asset for those coming in from Belfast. I understand the concerns behind Lord Empey’s Bill—the anxiety about what would happen if there were changes in the future and there was pressure for slots that are currently used for Belfast flights to be used for something else. While I don’t see that as a short or medium-term concern, I can understand why there is anxiety about what might happen in the longer-term future. It is something I raised with Commissioner Kallas, both by letter and directly. It was raised in working groups by Department for Transport officials. I know it is something that has been discussed in the European Parliament. My understanding is that, to date, it has not received a particularly friendly reception. We were seeking to explore with the Commission whether they could introduce a rule in the airports package that they are debating at the moment—the possibility of ring-fencing slots for regional destinations where an airport was particularly crowded. However, there has been no sign of a huge amount of progress on that at the moment, but you would probably need to address questions to my successor as aviation Minister. The question was asked, but I have to say I am not very optimistic that the answer is ultimately going to be yes. It will be interesting—although the Commission do not seem to be hugely enthusiastic about this—to see whether interest could be generated in the European Parliament for those kind of changes. It is well worth exploring. I know Reg Empey is focused on that. I know Jim Nicholson has tabled amendments to the reports that are under discussion in committee in the European Parliament at the moment. The problem is that it is quite difficult to come up with a rule that focuses on the problem we are concerned about without the potential for it to be abused as a way to keep different airlines out of different airports. That was the blockage that the Commission highlighted concerns about. Mr Benton: Thank you. That is very helpful.

Q52 David Simpson: On the thornier issue of a third runway at Heathrow, and perhaps an extra runway at Gatwick, what benefits would you see Northern Ireland gaining from that? Mrs Villiers: The coalition makes it very clear that we are opposed to a third runway at Heathrow. I am supportive of that position. The Prime Minister has also said that we need a grown-up and evidence-based debate on how we deal with our long-term airport capacity needs. That is why a commission has been set up to look at that issue—the Prime Minister wants it to be in-depth, and he is seeking cross-party support, because it is more or less impossible to deliver projects of this magnitude, whether an additional runway at an existing airport or, conceivably, an entirely new airport, within a single parliamentary term. If we are finally going to resolve this issue of what we do in relation to airport capacity in the south- east, we need to try to build consensus across the parties. Sir Howard Davies, who is heading up the commission, has been tasked to engage with the different political parties, and it will be important for him to engage with people in Northern Ireland as well, in relation to their views. It is crucial that Northern Ireland has good connectivity to London. As I have said, its current connectivity is excellent, and the onward journey opportunities from London are also excellent. London’s airports are connected to 350 destinations worldwide. Heathrow has more flights to New York than any of its rivals, more flights to China than any of its rivals, more flights to Delhi and more flights to Singapore. London is arguably one of the best-connected cities on the planet, and the fact that there are 18,000 flights from Belfast every year gives a tremendous connectivity boost to Northern Ireland, and that is something that we want to continue.

Q53 Dr McDonnell: We have talked a lot about the air connections, but one of the bigger problems is connectivity to airports before you get on the plane. We are told that the cost of providing a rail halt for City airport at Sydenham would be prohibitive—somewhere in the region of £10 million—and a rail link to Belfast International airport would be somewhere in the region of £55 million. Is there any way that Her Majesty’s Government could help to subsidise or make some accommodation for that, or even help tap into European regional development funding for it? Access to the actual airports, as distinct from access to flights, is one of our biggest problems. Mrs Villiers: I am slightly reluctant to comment on that, because it is entirely a devolved matter. There are no obvious UK-based funding streams available to support that kind of infrastructure improvement. Obviously, in terms of airports in areas that are not devolved, the UK Government has been very supportive in improving rail access. I fully appreciate that improved rail access can tremendously boost the passenger experience, but those questions need to be directed to the Northern Ireland Executive. I am happy to engage with work on potential bids for European funding. Whether this is something that would be covered by the TENs network would be worth the Northern Ireland Executive investigating.

Q54 Dr McDonnell: There is also an opportunity for some private or semi-private arrangement whereby the commercial benefits of building a station—shopping or even offices—may help to stack it up. It is something that I have thought long about. The same applies to the Derry to Coleraine railway line, which is undergoing a major upgrade, and there will be some interest in the reopening of the Eglinton station, which, again, is adjacent to Derry airport and which would allow access. I find it difficult, because I either have to take a taxi or drive to City airport to come here, but the railway runs almost past my house. If I had a railway connection, I could use a much simpler system. All of that is contentious, and they are perhaps infrastructure issues that were neglected during difficult times. However, for us to

17 have a proper aviation strategy, it needs to take in both the plane and the connectivity to the airport. Mrs Villiers: I think you are absolutely right that a proper aviation strategy should look at service access as well, not least because there are sometimes air quality concerns around airports, and increased rail access can therefore be a good way to deal with such concerns— although there are no air quality concerns in Northern Ireland around airports. You are also right that it is worth focusing on whether there is a potential for private sector contribution. Regarding airports, the expectation has been that BAA would make a contribution towards Crossrail, because it is a project that benefits their commercial airports. Combining some private sector funding to help to improve the viability of a project that also attracts public sector funding is a good model to look at. Chair: Can we turn briefly to the issue of human trafficking?

Q55 Mr Benton: What is the position now in Northern Ireland in terms of human trafficking? I know that you share with me deep concern about this particular subject. Do you have any recent assessment, for example, of the countries of origin of people who find themselves trafficked into Northern Ireland? What are the main countries that they emanate from? Have we got any sort of report, or are any comments available, about what happens to these unfortunate people after they arrive in Northern Ireland? In other words, are you in a position to comment on this very sensitive, huge problem, which rightly concerns us all? Mrs Villiers: Obviously, it is a concern, and I welcome the initiative by Justice Minister David Ford, who was focusing on this issue just a couple of weeks ago. It was something that I raised also in the first discussion I had with Chief Constable Matt Baggott, and he was very emphatic that it is something that the PSNI take very seriously. Of course, it is one of a number of areas where cross-border co-operation is important, and I welcome the fact that on that issue, and indeed on many others, the co-operation between the Garda Siochana and the PSNI is so positive. In terms of how the victims of trafficking are looked after and helped once rescued from this practice, that falls more within the devolved space, so it is more appropriate to direct that towards devolved Ministers, but I am sure that they take very seriously their obligations in relation to the victims of trafficking.

Q56 Naomi Long: Just to clarify, I am obviously aware of the work that the Executive have done in terms of working with local councils on emergency funding for people who have been victims of trafficking. That is very much a devolved issue. Why is it that, for the interdepartmental Ministerial group on human trafficking, it is the Justice Minister from Northern Ireland who represents the Northern Ireland case, rather than the NIO? I would have thought it was a UKBA issue, so I wonder why the Justice Minister sits in that particular role. My other question is related: is that an indication that most of the trafficking to Northern Ireland actually happens through GB; people are trafficked, essentially, through GB to Northern Ireland, as opposed to directly to Northern Ireland, or through the Republic? Mrs Villiers: In terms of where the traffickees come from, I do not know the answer to your questions. It is worth emphasising that success in dealing with this problem depends on international co-operation. I specifically referred to the police services in the Republic of Ireland, but the reality is that if we are to deal with this effectively, it involves contacts from the countries from which people are being trafficked as well. That is something on which UK Border Force is focused, and it would potentially be an area for activity by the National Crime Agency, which the Home Secretary is contemplating setting up, and it is subject to debate in

Northern Ireland as to what special adaptations are needed to ensure that the new arrangements for the National Crime Agency are consistent with the arrangements for police accountability under the Belfast agreement.

Q57 Naomi Long: And with respect to the Justice Minister sitting on the interdepartmental Ministerial group on human trafficking, rather than a representative of the NIO, or instead of, as opposed to supplementing that—what is the rationale for that? Have the NIO no responsibility for this at all? Mrs Villiers: As you appreciate, policing and justice are devolved; the security responsibilities that still vest with the NIO relate to national security, so our remit does not cover human trafficking. As I said, there is a potential role for SOCA and, in future, for the NCA. Our role in relation to keeping people in Northern Ireland safe and secure is very important in the national security context, but in terms of that sort of crime, it is a devolved matter which is the responsibility of David Ford. Chair: Can we now turn briefly to fuel laundering and smuggling?

Q58 Ian Paisley: We are doing a fairly extensive investigation into the multi-million pound crime of smuggling and fuel laundering. It affects us in Northern Ireland environmentally and economically, and robs your Government of hundreds of millions of pounds each year—no exaggeration. During Northern Ireland questions last week, your colleague, Mr Penning, kindly answered a question about how the Government intend to take forward some of our proposals. HMRC told us no less than four weeks ago that such crime is decreasing, yet your Government produced, “Measuring tax gaps 2012”, an HMRC report, which shows that this year the amount of unpaid duty on laundered diesel in Northern Ireland has risen, staggeringly, from 12% to 25%. Will you assure the Committee that the NIO will get a grip of HMRC and tell it that this has to be stamped out? It must come onside with this Committee, if we make recommendations that point to new ways in which it can tackle this very old crime. Mrs Villiers: It is a serious issue and I pay tribute to the work done by the Committee in highlighting it. The numbers you have read out are certainly of concern. I am not sure that I would be terribly wise to claim that I have the ability to get a grip on HMRC, but I know that HMRC and Treasury Ministers take the issue seriously. The Government have made it a priority to crack down on those who are not paying the taxes they should be. Obviously, the matter came up at Northern Ireland questions. Around £916 million has been set aside by HMRC to improve our ability to ensure that people pay the taxes that they are due to pay. That is helping in the fight against this problem in Northern Ireland, not least in helping with extra resources to enable us to do what we can to combat this. I agree that it is very serious and deprives the Government of income that they are rightly due, so the burden falls on taxpayers who choose to pay their taxes.

Q59 Chair: Another issue we raised, which I raised with Mr Penning last week, was the inconsistency between sentences in Northern Ireland and in GB. We wrote to the Ministry of Justice about it. The letter I have received from Jeremy Wright rightly says that the sentencing guidelines are for England and Wales only. How will we get things moving in Northern Ireland, so that there is a comparison? When we looked into it, we found that the sentences for this crime were relatively very lenient in Northern Ireland. Mrs Villiers: Yes, I picked that up from your report as well. It is of concern to David Ford, too. Obviously, the judiciary are ultimately responsible for sentencing and it would be

19 inappropriate, for all sorts of reasons, for me to get involved in telling them what to do. The development is that David Ford expressed a wish to legislate to enable prosecuting authorities to appeal sentences at the Court of Appeal. To do that, he needed the consent of the UK Government, as it is an excepted matter. That consent was sought from my predecessor, Owen Paterson, who said yes. Hopefully, we can see progress on that, which will give the prosecuting authorities the option to pursue a tougher sentence in a higher court. Chair: Thank you. In view of the time and with the permission of the Committee, I will skip on to security issues. If we get time later, we can cover one or two other issues.

Q60 Ian Paisley: Can the Minister bring us up to date on the level of dissident threat to the people of Northern Ireland? Could you comment on the recent pipe bomb attack on police officers and the police service in Poleglass, in west Belfast, and on the murder of Danny McKay in Newtownabbey? Have the Garda reported back, through the normal channels, to the Government of Northern Ireland or Her Majesty’s Government on any success that they have had in locating the 30 or so high-powered rifles that were stolen in County Wicklow in September? Mrs Villiers: The threat level from terrorism in Northern Ireland remains at severe. The last two quarters have seen some fluctuation in the threat. I think that some good progress has been made by the PSNI and its partners, leading to a number of arrests, charges and convictions. However, the intent and capability of the dissident republicans remains significant, as does their potential to carry out lethal attacks. That should never be underestimated, and we remain vigilant on those matters, as I made clear during Northern Ireland questions. There have been 20 national security attacks so far in 2012, as against 25 to the end of October last year. The sophistication and potency of attacks is, on the whole, lower than in 2011, although there have been exceptions. As Committee members will be aware, in July, a number of groups—including the people who refer to themselves as the Real IRA, Republican Action Against Drugs and some unaffiliated individuals—announced a merger. We assess that new group as being responsible for the potentially lethal attack on 20 September, and we are monitoring that situation carefully. The threat level from Northern Ireland-related terrorism was reduced to moderate in relation to Great Britain on 24 October, meaning that an attack is possible but not likely. We will continue to be vigilant in the face of this continuing threat, both in Northern Ireland and in the rest of the United Kingdom. In terms of the specific cases that you mentioned, I am reluctant to comment on matters that are operational for the Police Service of Northern Ireland at the moment. I am not sure that this is the right forum to do that, but I am happy to have a conversation in a more offline setting.

Q61 Ian Paisley: I accept that. However, I would like you to assure the Committee that you will make representations to the Government of the Republic of Ireland with regard to the high-powered rifles issue. Mrs Villiers: Certainly. As I have mentioned before, co-operation between the police in the Republic of Ireland and in Northern Ireland is excellent. I had the opportunity to meet Martin Callinan in Dublin, and we had an extensive discussion about the work going on. I am confident that they take very seriously the need to counter the terrorist threat on both sides of the border. Chair: We will be speaking to the police in the Republic on Friday as part of our visit to Dublin.

Q62 Jack Lopresti: Are you satisfied with the level of support, financial and otherwise, that we are getting from central Government for countering terrorist and dissident activity? Are you satisfied that the dissidents will not disrupt the ongoing political process? Mrs Villiers: I am satisfied that the UK Government are doing everything that they can to support the fight against terrorism in Northern Ireland. The most recent manifestation of that was the commitment of an additional £200 million to address the concerns that the peace dividend was effectively taken too early and that people underestimated the level of the continuing threat. What was your second question?

Q63 Jack Lopresti: Are you satisfied that dissident activity is not of a scale that will affect the political process going forward? Mrs Villiers: I am confident that a very significant majority of people in Northern Ireland reject these methods, and I am confident that that will continue to be the case. I do not believe that they will achieve their ends of destabilising the political settlement. My strong focus is on supporting the PSNI and its partners in suppressing these people’s ability to achieve violent ends and deliver the violence that is their intention. I pay tribute to the work done by the PSNI and its partners to continue to suppress and frustrate dissidents’ attempts to commit violent and terrorist acts.

Q64 Naomi Long: You reflected earlier on the huge progress made in terms of peace and stability in Northern Ireland. However, despite that progress, there are more so-called peace walls in Northern Ireland now than there were in 1998, when the Good Friday agreement was signed. Although good and creative work is under way to remove some of those barriers, there is still ongoing pressure to replace them with new barriers in many cases. What do you think that says about the maturity of politics in Northern Ireland, the state of society and the level of division? Mrs Villiers: It is a cause of concern and sadness that there are still these divisions in Northern Irish society, some of which, as you say, manifest themselves physically as peace walls. My predecessor emphasised his concern about this, and obviously the Prime Minister is very much focused on ensuring that we as a Government do what we can to encourage progress on this issue so that we genuinely see a shared future for Northern Ireland. I welcome the progress that appears to have been made on the cohesion, sharing and integration strategy, which I am told is due for publication soon. Naomi Long: We have heard that for two years, I think, so don’t get overly excited. Mrs Villiers: I think it is an issue which the Executive take seriously, and rightly so. It may be that, in dealing with this, they will face some quite difficult decisions, ones which perhaps challenge preconceptions. Both I and my colleagues in Government, including the Prime Minister, are very keen to support them when they press ahead with those difficult decisions.

Q65 Lady Hermon: From peace walls to something completely different: the Parades Commission. Would you like to see it abolished? I don’t want to put you on the spot. Were you happy with the decisions that it has made during the summer? That is the first question. Would you prefer to see it abolished and the parties resolve among themselves how parades are handled in Northern Ireland? There are two parts to the question.

Mrs Villiers: We have always been open to a devolved solution, which would see a different body taking the decisions on parades. That continues to be the case. If the political parties in Northern Ireland can come up with an alternative which can command support— and obviously they came fairly close to that in the past—then, yes, we would be entirely happy to see a devolved solution developed. In the interim, it is obviously vitally important that the Parades Commission’s decisions are obeyed. That is the strong message I have for people. It is the only show in town and the legally constituted authority. Therefore, although its decisions can sometimes raise controversy among different parts of the community, it is vitally important in terms of law and order in Northern Ireland that its decisions are obeyed. In terms of local decision making, of course one of the best outcomes when there is an event is if there is no need to invoke the Parades Commission—if a local solution can be generated which means that there is no need for a ruling. My understanding is that that actually happens in the vast majority of parades: the vast majority take place in circumstances which are entirely uncontroversial and peaceful. In terms of how things how things went in the summer, it was very depressing when the rioting broke out in early September. These are scenes that we have come to associate with the past in Northern Ireland and it was worrying to see them on our TV screens again. Of course, that is very damaging for potential inward investment. We want to avoid that at all costs, and I am pleased that the dialogue and conversations that took place in the run up to the Ulster covenant meant that, on the day, it went well. There were certainly incidents, as there always are with big public order events, but, overall, the day was a success—[Interruption.] Chair: I am terribly sorry, but there is a Division. Is the Committee satisfied that we can leave it at this point, or is there anybody else got any absolutely burning questions? Mr Anderson: I would like to ask about Omagh. Chair: Would you mind coming back? We will suspend the sitting for 15 minutes. Sitting suspended for a Division in the House. On resuming— Chair: We will resume the public session. Lady Hermon had a supplementary question.

Q66 Lady Hermon: I simply want a little point of clarification. If the Parades Commission were to go, would you confirm that it would not be the wish of the Secretary of State or the Northern Ireland Office that it would be the Police Service of Northern Ireland which would make those very controversial and tricky decisions? It is not something that the PSNI wish to be visited upon them, but I would like this confirmed by the Northern Ireland Office and you as Secretary of State. Mrs Villiers: As I understand it, when the Parades Commission was set up, there was a general appreciation that it was very difficult to ask the police to make those kinds of decisions. Obviously, they would, in the rest of the UK, be making exactly those kinds of decisions. I do not see that that position has changed; if there were to be a devolved solution, it is highly likely that it would still be independent of the police. I do not want to prescribe what future solutions might look like, but I agree that there would obviously be difficulties if we were to ask the police to take those kinds of decisions which—with the best will in the world—are going to continue to be politically difficult well into the future.

Q67 Dr McDonnell: How do you think we will ever get an agreed solution if the main party to any potential agreement refuses to talk? Mrs Villiers: Who would you describe as the main party?

Dr McDonnell: The Orange Order. Mrs Villiers: A number of conversations did go on in relation to a couple of parades, and that is also the case for other parades. It is not quite true to say that the Orange Order does not engage in dialogue and conversations with other people on this issue. My understanding is that it does not talk to the Parades Commission. I would encourage dialogue and conversations to take place across the board as a good way to get these matters resolved in a sensible way.

Q68 Dr McDonnell: Can you assure us that the NIO does not suggest that, if the Parades Commission were to disappear, this Committee should have to take responsibility for the parades? Mrs Villiers: I can assure you that I cannot see a scenario where this Committee will be asked to take those kinds of decisions. I do not think that you will be in the crosshairs on that one.

Q69 Mr Anderson: Both this Committee and the one in the last Parliament worked very closely with the Omagh Support and Self Help Group. Serious claims are being made. Their view is that Omagh could and should have been prevented. We had problems in the last Parliament that we were not allowed to see the Gibson report. Even the chairman who offered to see the report in private was not allowed to see it in full, even though we understand that the Intelligence and Security Committee did see it. A new report has now been produced after these people took quite extensive legal advice. Have you had a chance to read that yet? Mrs Villiers: Yes, I have read that.

Q70 Mr Anderson: Have you come to any conclusions? Mrs Villiers: I am not going to come to final conclusions on that report until I have had the chance to discuss it with the Chief Constable. It would also be appropriate to discuss it with David Ford and the Irish Justice Minister, Alan Shatter. It was a terrible, terrible tragedy. I fully understand the concerns that have been expressed about the subsequent investigation. It is very important to take a very careful approach in assessing this latest report, and I will certainly need the advice of the Chief Constable before reaching a conclusion on it.

Q71 Mr Anderson: Have you any idea on the time scales? Mrs Villiers: I hope to set up some meetings fairly soon with the Chief Constable. There was a complication that the report has not yet been shared with him by the families, but I have certainly asked them if they have any objection to my sharing it with the Chief Constable. As I say, I hope to see him to discuss it fairly soon. I appreciate how crucial this is for the families involved, and I pay tribute to the work they have done over so many years on this issue.

Q72 Mr Anderson: Have you met the families? Mrs Villiers: Not yet, but I have agreed to. I think that we are endeavouring to put a date in the diary.

Q73 Nigel Mills: On 17 September, the Assembly passed a motion calling for the Irish Government to apologise for their alleged role in facilitating the emergence of the Provisional

IRA. Do you think that intervention is helpful? Would you have preferred that it had been pursued through the Northern Ireland Office or the Foreign Office? Mrs Villiers: It is a matter for the Irish Government how they respond to that. In terms of looking back at the past, the key is to try and build some consensus on a way forward. It would be useful to involve not just the parties in Northern Ireland, but the Irish Government as well. It is hugely difficult to come up with anything that is capable of commanding that kind of consensus, but it strikes me that working together to promote the mutual understanding of different perspectives in the past is a useful way forward.

Q74 Naomi Long: Can you outline for the Committee the policy concerning ex gratia payments to persons granted royal pardons or to victims of miscarriages of justice more widely? Mrs Villiers: There are no ex gratia payments paid specifically to people who have received royal pardons. There was a discretionary scheme that has closed recently. The payments made now are on the basis of the statutory scheme relating to miscarriages of justice.

Q75 Naomi Long: How many people in Northern Ireland in the last five years have received those payments? Mrs Villiers: I can’t tell you that off the top of my head, but I am happy to provide you with the details.

Q76 Naomi Long: You will be aware that the Committee has had a number of inquiries about one particular case. Would the policy that is currently in place cover the case of Mr Colin Worton, which I think you are familiar with? If so, has he been considered for such an award? Mrs Villiers: My understanding is that the statutory scheme does not cover Mr Worton, and there are no plans for compensation to be paid to him. I am aware of the case, which has been raised with me, and Ian Paisley is concerned about it. My understanding is that Colin Worton does not qualify for the statutory payments, but if he can provide new information, we are happy to look at it.

Q77 Dr McDonnell: Could you tell us whether any people are being held in prison in Northern Ireland at this time without charges against them? Mrs Villiers: As far as I know, there are not. You go to prison only if you have been convicted of an offence or are on remand. I am just checking that there aren’t any other scenarios. Is it your understanding that there are?

Q78 Dr McDonnell: Has Martin Corey been charged? Mrs Villiers: Martin Corey is on life licence. If you have a life sentence, you are always liable for recall to prison. That is the basis on which Martin Corey is being held—as a result of the life sentence he received.

Q79 Dr McDonnell: Marian Price—Marian McGlinchey? Mrs Villiers: As you will appreciate, she also had a life sentence, and those with life sentences are subject to recall in relation to their life licence. You will be aware that the

24 parole commissioners are considering her case, and will make a decision in due course on whether she should be released.

Q80 Dr McDonnell: Will they consider the health aspects and her circumstances? Mrs Villiers: Release on compassionate grounds is a matter for David Ford and the devolved Administration. Mrs Price’s health care is also a matter for the devolved authorities.

Chair: We have covered a lot of ground. Unless someone has a burning question to ask, or you want to say anything else, Secretary of State— Mrs Villiers: It has been a very thorough session. Chair: Indeed it has. Thank you very much indeed for your evidence. We wish you well in the job.