Budget Proposal (2001-02)

Part of the debate – in the Northern Ireland Assembly at 11:45 am on 14 November 2000.

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Photo of Esmond Birnie Esmond Birnie UUP 11:45, 14 November 2000

I will start with the Barnett formula because I imagine that many Members will wish to comment on it and its impact on our Budget. Clearly, its impact is not satisfactory. By definition as a formula, it is somewhat rigid and mechanical. Undoubtedly, when Mr Barnett, as he then was, devised the formula in the 1970s he did not intend it to be a long-term arrangement. Indeed, I understand that he has recently implied that he is surprised that it is still in use a quarter of a century later.

The formula does give a certain set percentage increase for Northern Ireland public expenditure. Northern Ireland’s population is taken as a percentage of either the population figure for England or the Great Britain population figure, depending on which change or base in public expenditure is most appropriate.

For example, that affects the case of the Department of Higher and Further Education, Training and Employment, where there are clear cases of needs in Northern Ireland exceeding the relative percentage share of population. The percentage of long-term unemployment in Northern Ireland exceeds that in England. In percentage terms, there are also more 18- to 21-year-olds, and there are greater training needs.

What then must be done? First, I applaud the fact that the Northern Ireland Executive had success during the summer in negotiations with the Treasury in London, when the aim was to get a fairer base with respect to the changes in public expenditure in either England or Great Britain, which would then be set up for comparison and multiplication through the formula to give the Northern Ireland increase.

We could commission a fully fledged needs assessment to shift the measurements of increases in public expenditure in Northern Ireland from the rather mechanical and rigid Barnett-type formula to one based on an assessment of needs.

We could even — though this is a longer-term and perhaps tentative suggestion — allocate Northern Ireland a certain percentage of tax revenues that are collected locally. We could move closer towards the sort of federal system of revenue sharing that operates in a number of countries around the world.

At the same time, Members must recognise that the "begging bowl" approach — as it might be derogatorily described in some quarters — does have dangers. In some sectors a needs assessment might lead to Northern Ireland receiving a smaller percentage increase than it currently does because there are greater social needs in certain sectors in Wales or Scotland. When negotiating with the Treasury, Northern Ireland can only plead its special case status for so long. We have an opportunity to do that at the moment, but it will not last for ever. Northern Ireland’s GDP per capita is already higher than that of some regions in Great Britain, and its unemployment rate is lower than the European Union average.

Yesterday we received advance notice of the provision in the Budget for cross-budget activities and the implementation bodies. Their budget amounts to approximately 0·2% of the roughly £6 billion in the departmental expenditure limits. The total employment in the six implementation bodies in Northern Ireland amounts to several hundred, compared to a central Civil Service employment in Northern Ireland of 20,000.

I raise those statistical comparisons for the sake of some Members in this corner of the House who seem agitated about the extent of North/South activity. Those Members should recognise that much of that employment relates to activity that has been going on for many years — for example, running and maintaining waterways and maintaining lighthouses. Don Quixote attacked windmills; some Members of the DUP probably want to attack North/South lighthouses.