Economic Downtown/Credit Crunch

Office of the First Minister and deputy First Minister – in the Northern Ireland Assembly at 2:30 am on 13th October 2008.

Alert me about debates like this

Photo of John McCallister John McCallister UUP 2:30 am, 13th October 2008

1. asked the Office of the First Minister and deputy First Minister if it has met with the Minister for Finance and Personnel to discuss the implications for the economy of the economic downturn and the credit crunch.            (AQO 579/09)

Photo of Peter Robinson Peter Robinson DUP

Unfortunately, it is apparent that the economic downturn and the credit crunch are not fleeting events; their effects are likely to endure, and the crisis may deepen even further. We continue to experience falling property prices coupled with high inflation, food and fuel prices.

That challenge can only be managed effectively at Executive level. I have discussed the implications of the economic downturn with the Minister of Finance and Personnel on several occasions. On 18 September, I met ministerial colleagues, including Minister Dodds, to discuss those issues.

Additionally, the deputy First Minister and I have met local interest groups to listen to their concerns and gather their ideas for mitigating measures that we might put in place to offset the worst effects of the economic downturn. In preparation for those, we have drawn on advice and information across ministerial portfolios.

The deputy First Minister and I intend that addressing cost-of-living pressures should become a key item of Executive business, to ensure that we collectively address the problem across the full width of Government.

Photo of John McCallister John McCallister UUP

Have the First Minister and the Executive identified which programmes at the bottom of the Executive’s priorities will be sacrificed first if the Government’s peak income targets are not realised because of the economic downturn and the credit crunch?

Photo of Peter Robinson Peter Robinson DUP

Capital budgets and current expenditure must be considered. There could be an impact on the capital expenditure if, for instance, land and property sales were to provide less income than previously expected.

Significant increases in revenue costs can also have implications. Each Minister and Department will have to manage those issues. During the course of the monitoring rounds, they will acquaint the Finance Minister with the pressures that they are under, and he will attempt — by using underspend — to meet the pressures in the system.

Photo of Tommy Gallagher Tommy Gallagher Social Democratic and Labour Party

Has the First Minister raised concerns with Department of Finance and Personnel about the successful legal challenge to the Central Procurement Directorate over the way in which public contracts are awarded to private-sector contractors —

Photo of William Hay William Hay Speaker

Order. I remind the House that supplementary questions must relate to the original question. The Member is straying beyond the remit of the original question. By all means, he should ask his supplementary question, but try to relate it to the original question.

Photo of Peter Robinson Peter Robinson DUP

I caught the gist of the Member’s supplementary question.

I have not spoken to the Finance Minister about the issue, but I have spoken to the chief executive of the Strategic Investment Board (SIB) about it. The Member will be aware that two legal challenges have been made, concerning systems and procedures in procurement policy. We are considering whether it is appropriate to appeal those decisions: that is being done within the Finance Department. The other option is to move to more conventional means of procurement.

Photo of David Ford David Ford Alliance

I appreciate what the First Minister has just said, but it seems to me that there are two issues. First, what discussions has his Office, or any part of the Executive, had with the banks with regard to support for the business sector — especially small and medium-sized enterprises (SMEs) — given the difficulty that we currently have in attracting external investment? Secondly, given what he is saying about procurement and the complete shortage of private finance, how does he propose to go about conventional means of procurement in the current economic climate?

Photo of Peter Robinson Peter Robinson DUP

First, the deputy First Minister and I have had a meeting, not just with the banks, but with the other lending institutions in Northern Ireland. There was a readiness and a willingness on their part to lend money, and they indicated to us that they had money to lend. In present circumstances it is obvious that they may be more careful about their requirements before they lend money.

The big issue is the building of confidence because, until last night at least, the banks were not lending money even to each other. That must be freed up, and steps have been taken internationally. It is a global problem, and the role that we have is only on the edges, particularly with the banks and lending institutions. We have done everything that we can to encourage them to get the system moving and to ensure that money flows within Northern Ireland.

Secondly, regarding the Member’s question on procurement policy, the Executive have identified in their 10-year investment strategy for Northern Ireland, an average of £2 billion per year of capital spend in the public sector. That funding came directly from HM Treasury. In the present economic climate, therefore, that should remain unaffected. It becomes important that we roll out, perhaps in an accelerated fashion, the public spend that we are planning. Using conventional means might just be a method of bringing that out more expeditiously.