Financial Pressures  Impacting on Public Spending

Private Members’ Business – in the Northern Ireland Assembly at 11:30 am on 14th October 2008.

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Photo of David McClarty David McClarty UUP 11:30 am, 14th October 2008

In accordance with the Business Committee’s agreement to allocate additional time when two or more amendments have been selected, up to one hour and 45 minutes will be allowed for this debate. The proposer will have 10 minutes in which to propose the motion and 10 minutes to make a winding-up speech. Two amendments have been selected and published on the Marshalled List. The proposers of each amendment will have 10 minutes in which to propose and five minutes to make a winding-up speech. All other Members who wish to speak will have five minutes.

Photo of David McNarry David McNarry UUP

I beg to move

That this Assembly calls on the Minister of Finance and Personnel to detail any existing and anticipated financial pressures impacting on public spending allocations in the current budgetary period, in light of the global economic downturn and credit crunch.

This motion is a direct challenge to the Minister to be open and transparent, an opportunity for him to be convincing, and an opportunity for the House to judge his Department as custodian of the public purse strings.

The aim of the motion is not only to flush out any departmental balance-sheet dexterity, but to put to the Minister of Finance and Personnel what I assume to be the universal feelings of the Assembly: that if he agrees that he has come unstuck, he will know that we want to help and, at least, face the consequences together. The Minister will know that at the time of the debate on the 2008-11 Budget, we Ulster Unionists argued that it was tightly strung and based on an optimistic and speculatively positive approach for the economy, property prices and efficiency gains.

One of the main features of the economic storm that has been dubbed the “credit crunch” has been the factoring into the housing and financial markets of unrealistic assumptions. I fear that that factoring in of unrealistic assumptions has also been a key feature of the Northern Ireland Executive Budget, and will have serious consequences for the public finances of Northern Ireland for some years to come.

At the time of the Budget, the Ulster Unionist Party made the point that it was based on an overly optimistic outlook for the economy, property prices and realisable efficiency gains. The early signs of what has become the credit crunch were already apparent when the Budget was being formed, but, unfortunately, our concerns were ignored.

The Ulster Unionist Party argued that the Budget was based on risky assumptions, and that if it were to be deliverable, it needed the continuation of strong economic growth and a strong property market, near-perfect implementation of efficiency savings, and a lack of bad economic news and downturns. In addition, the Budget was missing the £1 billion package that everyone knew was needed in order to keep us afloat, irrespective of the looming crisis.

Unfortunately, none of those assumptions has proved realistic. Instead, there has been a sharp fall-off in economic growth to zero levels. There has been a slump in the housing market. Efficiency savings appear optimistic, to say the least. All those matters pose serious questions about the Budget’s deliverability.

As I have said, Members on this side of the House want to help. However, in order for us to do so, the Minister must share those problems — as I hope he will strive to — because he understands that he cannot respond as though they do not exist. The Assembly must be told where it stands on under-expenditure versus over-expenditure in the distribution of the block grant. It must be told what the current and projected impacts are of the reinvestment and reform initiative (RRI) borrowing, rates arrears, deferred water charges, and shortfalls in capital receipts.

Does the Minister glance across to Cardiff with envy or dismay, when he looks at the Welsh Assembly Government’s plans to raid their reserves and switch over £200 million from 2009’s spending allocation in order to serve Welsh needs and protect Welsh public services in 2008? Will the Minister tell the House whether there are any built-in or built-up reserves? Just to satisfy curiosity, can he confirm or deny whether there is such a thing as an Executive contingency fund? If such a fund exists, will he tell the House what it does and how much is in it?

I want to return, if I may, to how the over-optimistic assumptions that underpin the Budget work out in practice. Let us first examine capital receipts — the Northern Ireland Executive’s potential additional earning capacity, which were a key part of the overall Budget. By the end of the first quarter, they were already £140 million below target, largely because of the crash in the property market. Basically, development land cannot be sold because no one is willing to pay the price that was envisaged for it in the Budget.

On 9 June 2008, the First Minister admitted:

“any land or property is worth what a willing purchaser will pay for it on the open market.” — [Official Report, Vol 31, No 5, p215, col 1].

That figure has dropped dramatically during the nine months since the Budget was introduced.

Serious doubts continue to hang over the capital receipts that were anticipated from the sale of former military sites. Apart from the obvious decline in its commercial value, investment confidence has been undermined by the inability of three Departments — the Department of Culture, Arts and Leisure (DCAL), the Department of Finance and Personnel (DFP) and the Office of the First Minister and deputy First Minister (OFMDFM) — to come to a decision on the Maze. When the Secretary of State responded to the First Minister’s query about when the Government would hand over former military sites to the Northern Ireland Executive, he clearly linked any possibility of receiving those sites, and the money from their subsequent sale, to decisive action on the Maze site, which he said had been transferred six years earlier without any action being taken since.

That is ominous both politically and, more importantly, for the financial well-being of the Northern Ireland Executive. It bodes ill for future Budget receipts. It is difficult to see how the Executive can now live within their means because of a series of cash blows that are bound to render their financial provisions at the start of the financial year already badly outdated.

Problems that are linked to the credit crunch include not only rising fuel costs, but nosediving land and property prices — for instance, the reduction in the valuation of the DARD-owned property at Crossnacreevy from £200 million to between a mere £3 million and £6 million. That takes £194 million out of the Budget. Just one wrong assumption, therefore, has cost £194 million.

In addition, the Executive must fork out at least £100 million in Civil Service back pay and at least another £200 million for deferred water charges.

Even if the latter amount is carried over into the next financial year, the hole in our finances is very real. Those amounts were not budgeted for, so how can there not be a major shortfall in receipts?

Compounding this problem of insufficient receipts are difficulties associated with rates collection. At the beginning of July, DFP confirmed that rates arrears of £130 million had accrued because of the failure in the Northern Ireland Audit Office computer system. Arrears rose from £35 million in March 2005 to £48 million the next year, and they had jumped to a staggering £88 million by March 2007. By March this year, auditors found that the figure had risen to £130 million. If that money is not coming in, how can the Budget be delivered?

In light of the very significant change in world economic circumstances, and provable shortfalls in publicly known budgetary projections, it is time that the issue was faced squarely. The Minister’s response to my comments about a budgetary black hole last week was a classic example of Nigel “the Artful Dodger” politics. It would be better if the Minister were to admit the problem, and surely we can collectively do much better by trusting in the people and being straight about the situation. We, in the Ulster Unionist Party, are willing to help and to play our part with him.

To make it possible for us to help, there must be far greater transparency in the process of auditing the success or failure of the Budget. The purpose — and, therefore, the focus — of the debate is to recognise that there are obvious sensitivities in the issue of shortfalls. Where the Minister and his predecessor made dubious assumptions, current events, linked to their poor judgement, have conspired to make those assumptions unrealistic.

The House awaits the Minister’s response in eager anticipation.

Photo of Mark Durkan Mark Durkan Leader of the Social Democratic & Labour Party

I beg to move amendment No 1: At end insert

“; and further calls on the Minister of Finance and Personnel to lay a draft budget for 2009-2010, agreed by the Executive Committee, before the Assembly in accordance with section 64 of the Northern Ireland Act 1998.”

The amendment adds to the motion by stressing the central importance of the annual Budget process conducted through the Assembly and its Committees. Only in the past couple of weeks, Committees learnt that a decision had been taken in March by the Executive not to initiate a 2008 Budget process, but to conduct a Budget stocktake.

I have no problem with the Executive deciding how they want to conduct budgetary negotiations among Ministers and around the Executive table. However, the Executive do not have the right to deny the Assembly its lawful role of receiving a draft annual Budget and duly considering it, by means laid down in the previous period of devolution, including affording the Committees time to consider it, public consultation, and take-note debates in the House.

In March, only a matter of weeks after the Assembly had debated and approved the Budget, the Executive were advised by the then Finance Minister that there would be no need for an annual Budget process this year.

Section 64 of the Northern Ireland Act 1998 reads as follows:

“(1) The Minister of Finance and Personnel shall, before the beginning of each financial year, lay before the Assembly a draft budget, that is to say, a programme of expenditure proposals for that year which has been agreed by the Executive Committee in accordance with paragraph 20 of Strand One of the Belfast Agreement.

(2) The Assembly may, with cross-community support, approve a draft budget laid before them with or without modification.”

Paragraph 20 of strand one of the Good Friday Agreement reads as follows:

The Executive Committee will seek to agree each year, and review as necessary, a programme incorporating an agreed budget linked to policies and programmes, subject to approval by the Assembly, after scrutiny in Assembly Committees, on a cross-community basis.”

The purpose of this amendment is to make it very clear that the Assembly expects there to be a formal Budget process whereby a draft Budget is laid before the Assembly for due consideration.

Some Members may not appreciate my quoting only the Belfast Agreement, so for their benefit, paragraph 3 (v) of the St Andrews Agreement states that the Executive are the forum for:

“agreement each year on (and review as necessary of) a programme incorporating an agreed budget linked to policies and programmes (Programme for Government).”

It is fairly clear and unambiguous that it is, or at least was, intended and expected that there would be an annual Budget exercise. When the House debated the Public Accounts Committee reports recently, members of all parties expressed frustration that we often do not get sufficient real-time scrutiny of spending plans and performance, and are left to see mistakes in a post hoc light through those reports.

If we are to abandon or surrender the Assembly’s role as the Budget authority, we are only adding to our own frustration at a time when many people are cynical about, and critical of, the Executive for not meeting, and are attacking all MLAs, saying that we should not be paid because we are not doing our job. Neither I nor my party is prepared to surrender the lawful, proper role that we are mandated to conduct in giving due and proper consideration to an annual Budget.

The argument that was made to the Executive was that the figures voted on earlier this year included figures for the three-year period of the Budget, and that that fulfilled the requirement of laying a draft Budget before this House before the beginning of each financial year. The three-year figures are sourced in the comprehensive spending review, the home of which is Westminster and Whitehall. The fact that it is a three-year Budget does not mean that there is not a pre-Budget report and a full debate at Westminster each year. It does not mean that there is not a Budget statement with debates and votes every year. Why should Ministers in the Executive decide that there does not need to be an annual Budget exercise because the House voted on a three-year Budget? We need an annual Budget exercise.

As Mr McNarry said, many of the assumptions and targets that were presented in the three-year Budget and Programme for Government have since been surrounded and buffeted by significant changes. It would be downright folly to suggest that the assumptions that were made when the Budget votes were taken in January have not been so seriously overtaken by events that we need not do more than let the Executive undertake a simple stocktake of the Budget, which the Assembly would subsequently rubber-stamp through legislation. We need a full and proper debate on a Budget.

The authority of this House over the Budget does not just apply to the approval of spending lines. In a previous period of devolution, the Assembly passed the Government Resources and Accounts Act (Northern Ireland) 2001. Members made it clear at that time — not just me as a Minister, but people speaking on behalf of the Committee for Finance and Personnel and others —that it would change the nature of the legal budgeting exercise that the Assembly would undertake in future. It was made clear that the Assembly, as well as making decisions on the allocation of spending, would make decisions on assets.

Assumptions about assets were a significant factor in the Programme for Government and the three-year budget figures. We know that, with the change in property prices and the significant change in the overall market conditions, the sort of presumptions and targets about money that was to come from asset sales have now to be significantly revised. When will we hear that those presumptions have been significantly revised?

We cannot pretend that we approved a Budget that is no longer fit for purpose, or that because we approved it, there is nothing else that we can do about it — that it is a three-year Budget, and that is that. The Assembly must be allowed to fulfil its role, and Committees in the Assembly must be allowed to fulfil theirs.

The terms and the timescale in which the Assembly and the Committees considered the three-year Programme for Government and the three-year Budget were fairly constrained. The Budget was late, not just because the start date of devolution was later in the year than we might have wished, but because the comprehensive spending review took place later. Committee members, many of whom were new to the job and to the task of considering a Budget, did not have time to properly frisk, test, and contest some of the presumptions and plans that we were told were inherent in the Budget and in the Programme for Government. That time should have been made up during the annual round of the next Budget and during any revision to the Programme for Government.

During the debates on the Budget and the Programme for Government, SDLP Members tabled amendments stating that the Budget was unclear in its implications for water charges. That was one of the reasons why the SDLP did not vote for the Budget. I predicted that there was a risk that Members who voted for that three-year Budget would be told subsequently that they had voted for water charges, the details of which would be announced later.

Recently, the First Minister and the Minister for Regional Development talked about the deferral of water charges. That was their first public admission that as far as they were concerned, the Executive and the Assembly had agreed that water charges would come in this year. That was never clarified or specified in the Chamber, despite many invitations to Ministers to do so. The details of water charges would have come to the surface in the draft annual Budget for this year. Many of us believe that it is precisely for that reason that Ministers felt politically motivated to try to abandon or bypass the requirement for laying a draft Budget before the Assembly.

Whatever attitudes led Ministers, back in March, to believe that a mere Budget stocktake would be enough for the Executive and, possibly, the Chamber can no longer be maintained. Given the current circumstances of economic downturn and the serious pressure on public finances, on firms and households, it is not credible that the Assembly will not do its job of presenting and considering an annual Budget.

Photo of Stephen Farry Stephen Farry Alliance 11:45 am, 14th October 2008

I beg to move amendment No 2: At end insert

‘, and to report on any plans to make changes to the underlying allocations within the 2008-2011 Budget, beyond the scope of the quarterly monitoring rounds.’

I am grateful to the proposers of the motion for tabling the debate, which is very welcome. It is somewhat bizarre that we do not spend more time in the Assembly talking about economic and financial matters. The debate that the Alliance Party facilitated on the first Varney Review was one exception to that.

There is a degree of irony in the UUP having tabled this motion, coming as it does only days after the announcement that drastic cuts in front-line Health Service workers are expected over the next three years. The figures include at least 700 nursing jobs. I have yet to come across anyone in Northern Ireland who does not think that nursing staff do a wonderful job, are rushed off their feet and are indispensable.

Photo of David McNarry David McNarry UUP

What about the consultation document?

Photo of Stephen Farry Stephen Farry Alliance

I hear talk of a consultation document coming from the side. The people of Northern Ireland are quite clear about what they want — they want nurses.

There is a very fine line between efficiency savings and cuts. Efficiency savings are about changing priorities and reinvesting resources in order to find more productive ways of doing things, whereas cuts are reductions in the level of services. Quite simply, the impression is that a knife is going through the Health Service, all aspects of which are suffering equally with no proper consideration being given as to how things can be done differently and better.

It is no good the Health Minister saying that it is all the fault of the Budget; he accepted what was, to my mind, a very cosmetic compromise when he marched his troops to the top of the hill and marched them down again.

In the year since the Finance Minister tabled his first Budget statement to the Assembly, the world has changed dramatically. There has been a dramatic rise in the level of inflation; it is worth reflecting that the rate today is 5·2% — the highest figure for 16 years. Furthermore, there has been a significant growth in energy costs; there is pressure on public-sector pay; there is the so-called credit crunch and the housing bubble has burst.

There is a wider slump in the property market, and we are in the midst of an international banking crisis. Those are all major changes from the context in which the Assembly debated the Budget this time last year. I appreciate that the solution to, or even the mitigation of, many of those problems lies beyond the control of the Executive and the Assembly. Nonetheless, it is the Assembly’s responsibility to take those factors into account in its spending plans and to make adjustments should the wider financial situation demand that.

Today, by a strange coincidence, the Minister for Finance in the Republic of Ireland is introducing his Budget. It remains to be seen whether major changes will be made to the UK-wide spending plans, but I doubt that they can be sustained in the circumstances. I watch with interest to see what our devolved neighbours will do.

The Assembly must be proactive in addressing the issues, and it must recognise the different context in which it operates. The Assembly must balance the books. It cannot run up deficits in the way that national Governments do because it has neither the borrowing privileges nor tax-varying powers of other Administrations — for which the Alliance Party has long campaigned in Northern Ireland.

The Alliance Party supports the SDLP amendment. It addresses a specific point that must be made about the need, or otherwise, for a dedicated Budget statement every year. I refer to section 64 of the Northern Ireland Act 1998, as did Mr Durkan:

“The Minister of Finance and Personnel shall, before the beginning of each financial year, lay before the Assembly a draft budget”.

Although the Assembly will debate at least two Supply resolutions and two Budget Bills this year, section 64 implies that there should be an annual Budget statement. I am not a lawyer, and I note that the Department of Finance and Personnel argued that the three-year plan that it announced last year meets the spirit, if not the letter, of the legislation. I am interested to hear what the Minister has to say about that today. The Committee for Finance and Personnel is also examining budgetary procedures, and I await the outcome with interest.

The Alliance Party’s amendment is much more flexible than the SDLP’s call for a dedicated Budget statement; it takes the motion tabled by the Ulster Unionist Party one step further. Rather than simply calling on the Minister to detail the current financial pressures, the Alliance Party’s amendment calls for adjustments to be made to current plans where it proves necessary. Amendment No 2 is, therefore, a call for action. It takes an essentially static motion and calls for the Department to act to address the changed circumstances. I stress that that process may need to extend beyond the current monitoring rounds and address the underlying baselines and core allocations. It is important to ensure that whatever measures are introduced are in line with the law and address the situation.

The Assembly must reflect on the fact that the Budget was a tight settlement that was based on high expectations of land sales and efficiency savings. Furthermore, new commitments have emerged, such as possible new plans for water charges. The wider community is greatly concerned that the changed circumstances and the tight Budget to which the Assembly agreed will result in even deeper cuts than those currently forecast.

It is worth reflecting that some decisions by the Assembly have benefited the better off. As Paddy Hillyard said on the BBC programme ‘Hearts and Minds’, the freeze on the regional rate, although undoubtedly popular throughout society, helps the better off rather than the poorer sections of the community; and he advises the Executive on water charges. The rate cap at £500,000 also, generally speaking, helps the better off, and I note that a proposal for a cap at £400,000 is on the horizon.

Some short-term measures must be taken, and the inefficiencies in Land and Property Services must be examined. The situation whereby Northern Ireland and its district councils lose out through the inability of that organisation to fulfil its duties is unsustainable.

Furthermore, we must consider longer-term restructuring of financial plans in Northern Ireland — and the current situation should embolden Members in that respect. Members must reflect on the fact that a large amount of money is being spent on managing a divided society. Resources could be better invested in shared public services to benefit the entire community. Managing a divided society incurs major opportunity costs, and the Alliance Party is finalising proposals to submit to the Department in November.

Members must also consider rebalancing the economy. Are we making the correct investments? Are we making the best use of scarce resources? Are we making the correct interventions?

As an aside, one of the unforeseen consequences of the current financial and economic situation may be that the Executive can, superficially, meet their target for gross value added convergence with the rest of the United Kingdom. However, given the help that Northern Ireland receives from its large public sector, convergence would signify a change in the relative positions of the different regions rather than a step forward in the absolute position of Northern Ireland. Therefore, if convergence happens during the next two or three years, we must be careful to look behind the scenes and not assume that we have met the target for the best reasons.

The sustainability of public services must also be examined. In light of current energy prices, it is logical to invest substantially more money in renewable energy than invested hitherto. Also, we should be shifting the balance from private transport to public transport. We are in a bizarre situation where our investment strategy directs 80% of new investment over the next 10 years into roads and only 20% into public transport, of which rail is merely one component. The balance seems bizarre; it was bizarre when the Budget and the investment strategy were tabled, and it is more bizarre today.

Photo of Mitchel McLaughlin Mitchel McLaughlin Sinn Féin 12:00 pm, 14th October 2008

Go raibh maith agat, a LeasCheann Comhairle. Today’s debate is timely, given the worldwide financial and economic downturn. Sinn Féin supports the motion and the Alliance Party’s amendment.

In early 2008, when the Assembly agreed the Budget for 2008-11, Members were conscious of the tight public expenditure outlook that arose from the comprehensive spending review. Furthermore, Members were conscious that commitments on the availability of capital resource from the Treasury had been secured during meetings with the British Government. That allowed all Ministers — including the SDLP Minister — to agree that the Budget process could proceed on the basis of a three-year period during which the Assembly would take up the reins. For that reason, Sinn Féin does not support the SDLP’s amendment.

Since then, additional pressures have, undoubtedly, arisen in the normal course of business and as a direct result of the economic downturn. Given the global dimensions of the present difficulties, our authority and influence on the situation, as a local regional assembly, is limited. Nonetheless, Ministers have taken positive steps within their remits to alleviate some of the negative impacts of the downturn on the community. All Ministers should be aware that additional measures can be agreed by Departments and the Assembly. I look forward to hearing the Minister of Finance and Personnel later in the debate outlining details of the terms of reference for the Budget stocktaking exercise and its implications for the assumptions and projections that underpin the Budget and Programme for Government.

As Chairperson of the Committee for Finance and Personnel, I will outline the Committee’s focus. Given the upcoming financial pressures, the Committee has been actively working with DFP to resolve the equal-pay issue in the Civil Service and its implications on public expenditure plans.

The Committee is also mindful of the impact that falling property prices have on the scope for financing future investment from the disposal of surplus assets. The Department of Finance and Personnel’s Workplace 2010 accommodation project, which affects every Department, was earmarked to generate approximately £175 million in capital receipts during the Budget period.

Immediately after the Halloween recess, the Committee will question DFP officials about that critical project and whether those projections are standing up to the turmoil in the global economic climate. In addition, the Committee recently took evidence from the construction industry on measures that could be taken to ease the difficulties in that sector, which included front-loading capital investment and minimising underspend in Departments.

The Committee has been especially concerned about — and has consistently drawn attention to — the weaknesses in the financial management standards and processes of the Civil Service. Those manifested themselves in poor forecasting by Departments, with the resulting pattern of reduced requirements being declared late in the financial year, coupled with rising levels of end-year underspend. We welcome the equally consistent focus that the Minister of Finance has given to addressing that issue, which will result in a better outcome.

The Committee considers that the present public-expenditure context means that there is now an even greater onus on Departments to manage public finances in a way that achieves the highest level of spend within authorised limits and maximises the impact from available resources. All the Committees can have an impact by scrutinising their respective Departments, and my Committee will be questioning DFP officials about those issues at its meeting tomorrow.

In fairness to the SDLP amendment, my Committee has sought legal opinion and clarification on the issue from DFP. All Ministers agreed that they could proceed and were, at that point, content that the requirements of section 64 were satisfied. Go raibh maith agat.

Photo of Adrian McQuillan Adrian McQuillan DUP

I do not want the wrong signals to be sent out from today’s debate, so I speak with some apprehension. Everyone is aware that the global financial situation has changed beyond recognition from when the Budget was passed by the Assembly. Despite the global economic problems, it is important that we tell the world that we are ready, willing and able to do business.

The timing of this debate is unfortunate, as a fully accurate picture of the Budget position may not be available to the Minister until after the strategic stocktake returns have been analysed. However, that stocktake presents the opportunity to examine and fine-tune departmental budgets. As a realist, I fully accept that every Department faces additional challenges due to the deterioration of the world’s economy. The rising cost of energy — whether oil, gas or electricity — will affect running costs. The much-needed investment in our water and sewerage systems must continue, and the extension of the deferral of water charges could be considered again as a means of aiding households.

The income that was envisaged through the realisation of assets might not now have the financial yield for which we had hoped, as property prices are reported to have fallen by as much as 30% by the Nationwide Building Society. There is also no hope of the Treasury increasing the block grant that Northern Ireland receives.

The Assembly will require cool heads and good judgement as it faces some tough decisions, so I am relieved that we have a cool and wise head in charge of the Department of Finance and Personnel. The entire process would be greatly aided if some people would stop throwing their toys out of the pram and hold an Executive meeting so that full agreement on planning for the future can be achieved.

I end on a positive note, however. Despite the tough financial times, there have been many positive recent announcements: free prescriptions from 2010; the freezing of the regional rate; and the previous Finance Minister making funding available for the extension of free public transport to those aged 60 years and over. Despite the headlines of doom and gloom, this Assembly is delivering real change for everyone in Northern Ireland.

I support the motion and Dr Farry’s amendment.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

Go raibh maith agat. Few have not been affected by the recent global economic downturn and credit crunch, and the impact that that has had on everybody. Everyone is aware that the crisis was caused by the reckless behaviour of financial institutions and the failure of Governments to put adequate regulations in place to protect ordinary in-debtors.

We have recently witnessed large banking corporations throughout the world being bailed out with taxpayers’ money. Although that was difficult for some of us to accept, in an effort to offer security to people who had savings in the banks and to secure the jobs of people who work for businesses whose money is tied up in investments with the banks, most of us did so. Sinn Féin hopes that similar, innovative measures will be taken to tackle poverty and disadvantage among less-well-off people.

What impact will the economic downturn and the credit crunch have on public spending in the North of Ireland? Moreover, how will important targets in the Programme for Government and the investment strategy — such as child poverty and investment in the social and affordable housing programme — be affected?

Child poverty in the North — approximately 30% of children here live in poverty — is nothing short of scandalous, and in deprived areas the figure is even higher. Unfortunately, low-income households, particularly those with children, and people who already live in poverty will feel the effects of this impasse most.

Such people already struggle to pay for basic necessities, such as food, fuel and clothing, which most of us take for granted. Those people cannot cut back on luxuries or extras; they must cut back on necessities, and given the recent price hikes in basics, such as food and fuel, more families will be forced to go without. A knock-on effect is that more people will be forced to borrow money, causing them to spiral into debt that they cannot afford.

Businesses — particularly small, family businesses and those involved in the construction industry — have also been affected. When businesses take a downward slump, leading to unemployment, people are faced with even more hardship. Consequently, there is no doubt that the downturn will affect public expenditure in the next few years. More emphasis must be directed towards local businesses, and it is important that we consider innovative ways to ensure that all public expenditure here benefits the local economy and the priorities that have already been set out in the Programme for Government, such as tackling poverty and the need to build a strong economy.

How can Members help to achieve that? We must consider how public money is being spent and how to protect jobs in the construction industry and other industries. We must build local small and medium-sized enterprises and social-economy enterprises so that they can compete on an even playing field for public-procurement contracts for services, goods and works.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

I am nearly finished. Go on ahead.

Photo of Alban Maginness Alban Maginness Social Democratic and Labour Party

The Member rightly highlighted recent economic changes and difficulties with fuel and other necessities. Given the fact that her party has committed itself to a three-year Budget and that there will be no discussion about this year’s Budget, how can she reconcile that position with her wish to ameliorate our present difficulties? Surely, there should be an annual discussion about the Budget. Will she clarify her position on that?

Photo of Jennifer McCann Jennifer McCann Sinn Féin

I thank the Member for his intervention; however, I will be dealing with such points now and outlining some ways that we can help people. My colleague already spoke about the Budget.

Departments must make progress with the capital and revenue projects for which they have been allocated funds in the Budget and ensure that when the tendering processes begin, local companies can compete with larger companies.

Ensuring that social clauses are embedded in all public-procurement contracts will help to tackle poverty and need by creating employment for those who are disadvantaged and opportunities for local small and medium-sized enterprises and social-economy enterprises. In turn, that will create conditions that will help to stabilise the local economy.

Strengthening the financial services offered by credit unions would go a long way towards tackling spiralling debt and the problems that low-income households encounter when repaying that debt. Offering communities access to key financial services at affordable rates through credit unions — particularly in the present adverse financial conditions — would give people access to the most competitive rates for saving and borrowing, which, given the recent downturn in the financial climate, are essential. Furthermore, that would provide opportunities for the added income from those expanded services to be reinvested in projects in local communities, including social-economy projects, to benefit the whole economy.

Therefore, although the economic downturn and credit crunch may impact on public spending, it is essential that we consider innovative ideas and that the Governments take innovative measures that will ensure that we meet the priorities for tackling poverty and disadvantage that are set out in the Programme for Government.

Photo of Peter Weir Peter Weir DUP 12:15 pm, 14th October 2008

I consider this to be an important debate. However, listening to the Member who proposed the motion — particularly during the early part of his speech — we heard the phrases “as we told you” and “at the time” so often, and there were so many references to predictions and warnings that had been made, that I wondered for a moment whether Bob McCartney had returned to the Chamber.

Photo of David McNarry David McNarry UUP

That is a very big compliment.

Photo of Peter Weir Peter Weir DUP

It may be a compliment, because, to be fair to Bob —

Photo of David McNarry David McNarry UUP

Where is he now?

Photo of Peter Weir Peter Weir DUP

He is a member of the one party to which the Member who proposed the motion may not have spoken recently. [Laughter.]

Photo of Peter Weir Peter Weir DUP

I do not know some Members’ schedules.

Photo of David McClarty David McClarty UUP

Order. This little conversation is very nice; however, will Members please address their remarks through the Chair and stick to the motion?

Photo of Peter Weir Peter Weir DUP

To be fair to Mr McCartney, whenever he predicted something — for whatever purpose — at least there was a level of consistency in his approach. The reality is that the dire warnings that are being made now seem to have been lost on the two Ministers from the Ulster Unionist Party when they, as members of the Executive, signed up to, and signed off on, the Budget.

Perhaps the Member who proposed the motion believes that the two Ulster Unionist Party members of the Executive are not the right people and that there may be people with more foresight — perhaps Back-Bench Members of the Ulster Unionist Party — who could provide more direct advice on balancing the books or maintaining employment, for example. Indeed, if the Member who proposed the motion or any Members from the Ulster Unionist Party who speak subsequently are willing to provide such advice to the Assembly, I am sure that we will all take it in the spirit in which it is intended.

Similarly, Members on this side of the House will not take any lectures from Mr Durkan, who proposed the first amendment, about our not being robust enough on the issue of water charging, given that he, in his previous guise as deputy First Minister, and along with the then First Minister, opened the door to water charging, through the reinvestment and reform initiative.

Photo of Peter Weir Peter Weir DUP

Mr Durkan has had his chance to speak already, so if he wishes to —

Photo of Mark Durkan Mark Durkan Leader of the Social Democratic & Labour Party

The introduction of water charges was not part of the reinvestment and reform initiative — neither as negotiated by David Trimble or me, nor as agreed by the Executive. Furthermore, as a result of my prompting, the subsequent Treasury proposal to introduce water charges was rejected by the Executive twice. I will repeat that: it was rejected twice.

Photo of Peter Weir Peter Weir DUP

The reality is that the Durkan tax — or the Farren tax — opened the door to water charging, and it was left to this party to renegotiate the terms of the RRI.

I do not want to be unduly negative about the Alliance Party’s amendment, because although I disagree with some elements of it, I find some merit —

Photo of Peter Weir Peter Weir DUP

I am sorry, but I will not give way; I have a limited amount of time and have already given way once.

Photo of Peter Weir Peter Weir DUP

Mr Maginness will have the opportunity to make his own remarks; I have a limited amount of time. [Interruption.]

Photo of David McClarty David McClarty UUP

Order. If the Member has said that he does not wish to give way, he does not wish to give way.

Photo of Peter Weir Peter Weir DUP

Although I do not always agree with everything that Dr Farry says — indeed, I could not even agree with everything that he said today — I believe that there is merit in the amendment that the Alliance Party tabled. Therefore, the DUP will support that amendment.

Although no one would dispute that economic circumstances are tough at present, we must ensure that we do not induce a feeling of panic in Northern Ireland. Money has been allocated in the Budget to cover present commitments, but there is a danger that we will lapse into a state of doom and gloom.

Indeed, Ministers anticipated the tough economic circumstances that people are now facing. Consequently, when he was formulating the Budget, the then Minister of Finance and Personnel put measures in place to ensure a degree of protection for consumers. For example, in anticipation of the financial burdens that people would be facing, he froze the regional rate, which affects hundreds of thousands of people across Northern Ireland, and deferred water charges.

If we are to meet the various pressures that we will be facing, a strategic review of the Budget is needed. Therefore, I support the upcoming strategic stocktake. However, if that is to happen, the Executive must work together strategically.

A certain level of fire fighting can be done if Executive papers are progressed through urgent procedure. However, an Executive meeting is the only way in which the Executive can examine strategically how things can be rebalanced to ensure that money goes to front-line services in order to meet new needs. There is no alternative, and an Executive meeting must happen.

A range of issues, which I will not go into, has been raised, particularly by the party opposite. However, from talking to people on the streets, I know that they are worried about issues such as the credit crunch, fuel prices and the pressures that the economy is under. They want to see the Executive tackling those issues urgently.

There is a need for such a strategic stocktake in the overall Budget to ensure that we are able to maximise our ambitions and provide the greatest opportunities for people. For that to be achieved, all parties must sit down around the Executive table. However, unfortunately — and sadly — one party is blocking that meeting. I urge that party to change its position and allow the Executive to get on with their job.

Photo of Roy Beggs Roy Beggs UUP

There has been a dramatic change in our economic fortunes over the past year. Many of the factors that have caused that are outside our control, but others are in the control of the Assembly and our Ministers.

Oil prices have been unstable, varying from $100 a barrel in January to $147 a barrel in July, reducing to around $80 a barrel. Furthermore, we are experiencing the credit crunch, the tightening of bank lending, and, recently, we have seen a £37 billion rescue package for three banks. All those factors affect property prices.

Can the Minister tell us what effect that turmoil has had on Workplace 2010? That project has been budgeted to inject £175 million in this financial year to facilitate the long-term upgrade of substandard, inefficient office accommodation.

Furthermore, what would reduced property prices mean for the Budget? As other Members said, a large proportion of our capital investment is reliant on capital receipts from the sale of underused public property. Those sales are already significantly behind schedule due to a virtual stop in the property market, meaning that developers are reluctant to purchase new land. What is the current sales situation, and how will that have an impact on planned capital projects?

Another issue to bear in mind is the Crossnacreevy saga. We should not forget that DFP accepted DARD’s valuation of £200 million for land in a green belt area that had no planning approval. That was ridiculous.

The annual Budget Bill would normally be finalised in December. The purpose of the motion is to try to improve financial transparency and assist Members and, indeed, Committees as we reach that critical period in the annual Budget cycle. Indeed, in light of the recent winds of change, what stage has that cycle reached? Is there not a need for the Executive to meet to examine it?

My latter comments will concentrate on issues that are within our control. Sinn Féin has prevented the Executive from meeting and making decisions. For example, a decision is needed on whether a stadium should be built at the Maze or elsewhere or whether investment should be made in an existing stadium. With such delays, we risk capital funding being returned to the Treasury. I am not aware how the books are balanced at present, but if capital spending limits are breached at the end of the year, will funds be returned to Westminster?

The Quarry Products Association recently recorded a 23% decline in employees over the first 10 months of 2008, with further declines projected. Those types of figures could be replicated in other areas of the construction sector. Will more jobs be lost needlessly?

The planned review of Planning Policy Statement 14 (PPS 14) is another matter of concern. Some people would like to build their dream homes, but modifications to PPS 14 that would allow them to do so have been prevented by the failure of the Executive to meet. Try telling bricklayers and tradesmen about the squabble in OFMDFM between the DUP and Sinn Féin — they do not want to know. They simply want to keep a roof over their heads and pay their bills.

Furthermore, what do those investors who attended the investment conference in May think of us now, given that our Ministers refuse to meet and make decisions?

In its 2007 manifesto, the DUP claimed that all Ministers would be bound by decisions of the Executive and that that would allow for a more coherent Administration. This is not a coherent Administration: we have two factions — the DUP and Sinn Féin — who are more interested in their narrow self-interests than in the ordinary man and woman who are struggling to keep a roof over their families, food on the table and the winter cold at bay.

The Department of Finance and Personnel’s Land and Property Services is a fiasco and waste of resources, which must have budgetary implications. Its computer system is substandard. It is unable to issue court summonses; it works out inaccurate penny-product calculations; and it requires excessive manual processing. Furthermore, there are staff shortages in the agency and rates arrears are growing. In March 2007, there were £88 million of rates arrears, and this year, the figure is £130 million. The rates have not been collected. Additional resources are required to collect those overdue, backdated rates. The purse is more likely to be affected by bad debt.

Councils — and I declare an interest as member of Carrickfergus Borough Council — are failing to check properties that, it is claimed, are vacant and to value new properties as they come online.

Photo of Carmel Hanna Carmel Hanna Social Democratic and Labour Party

I support the motion as amended by my SDLP colleagues. Never has it been more important to work together and to plan for the future openly and with transparency. We are, of course, still in the middle of the financial and economic tsunami. I appreciate that the Minister of Finance and Personnel is probably as confused as the rest of us about what the implications of that are and what the options are with regard to taxation and public service.

Photo of Carmel Hanna Carmel Hanna Social Democratic and Labour Party

I am speaking for myself, but it is hoped that the Minister is concerned and worried and assessing the implications. [Interruption.]

Photo of Carmel Hanna Carmel Hanna Social Democratic and Labour Party

I could mention my concerns about water charges, rates, fuel and the shared future, and I could look for a baseline analysis of our economic and social profile and how it relates to the policy and investment goals that are set down and how they have been measured; however, I will stick to health and public safety.

I appreciate that there is never enough money, but we must look after the most vulnerable in society. The Budget’s increased allocation to the Department of Health, Social Services and Public Safety was welcome, and it vindicated Members who said that the initial allocation was inadequate. All Members appreciate that health is an area with infinite and changing demands that have to be met from limited resources.

I acknowledge the resources that went towards the completion of the Bamford Review of Mental Health and Learning Disability (Northern Ireland), the commitment to targets regarding the moving of patients from institutions to the community, the aims regarding the necessary infrastructure of sheltered and supported accommodation and the targets to reduce suicide. Members agree that no area is more complex than health and accept that a more efficient and effective delivery of services is required, but we must promote good health and coping strategies and prevent ill health.

This morning, we heard, and welcomed, the Health Minister’s statement on the end of the clostridium difficile outbreak. The Minister stated that the outbreak was compounded by a high occupancy of beds and a shortfall in nursing and cleaning staff. That is still a concern. Furthermore, I am concerned about the loss of 700 nursing jobs over three years. The impact of those job losses may be mitigated by natural wastage, as has been said, but it will be severe. People are being urged to work smarter, but they can only go so far in increasing efficiencies before basic service levels are affected.

All Members are aware of the issue of free personal care, which has been debated umpteen times; in fact, I moved two related motions. Many years ago, the Executive agreed to it, and we waited for the then Minister to produce her finalised plans. We have still not received them. I understand that the Minister of Health, Social Services and Public Safety agrees with free personal care, in principle, and has updated the figures and the assessment of the costs. We can learn from the experience in Scotland, but free personal care must be introduced quickly.

Last night’s ‘Nolan Live’ television programme and the debate on this morning’s ‘The Stephen Nolan Show’ will give people an impression of the urgency of the situation. Baroness Warnock has proposed that euthanasia should be considered for older people with terminal illnesses — especially those with conditions such as Alzheimer’s — and those with terminal illnesses who are not contributing to the economy.

Members, we must work together in the Assembly and the Executive, and commit ourselves to do what any decent legislature must do — defend and look after the elderly and most vulnerable in our society. We must do that with absolute openness and transparency. We must not allow a debate — similar to the one that I heard this morning — to continue without Members of the Assembly making a clear statement that they care for people, and that they will continue to look after the most vulnerable.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio) 12:30 pm, 14th October 2008

I am grateful for the opportunity to participate in the debate.

Members will be aware that in January 2008, the Executive agreed, and the Assembly approved, spending plans for Northern Ireland Departments, covering 2008-09 to 2010-2011. Some Members may argue that the economic circumstances in which we find ourselves warrant a fundamental review of those plans. However, when the Budget was being agreed, there were emerging signs of the global economic downturn that we now face, from the rising price of oil to the collapse of Northern Rock.

Accordingly, the plans took account of the changing economic position, particularly the growing pressure on households. Indeed, it was for that reason that the Executive agreed that the domestic regional rate would be frozen and that water charges should be deferred until 2009-10. In addition, further funding was provided to key public services, with health and social care receiving the highest-ever share of spending, supported by the additional Budget flexibilities that have enabled the Health Minister to make the recent announcement about free prescriptions. Indeed, he gave a very warm welcome to his final Budget position.

With regard to the health budget, accusations have been made recently about the 3% efficiency savings target agreed by the Executive as part of the Budget. I want to make it clear on behalf of the Executive that the objective of that target is to improve public services, with all the savings being pumped back into delivering improved services. The Assembly will, rightly, want to scrutinise how each Minister achieves those savings in his or her Department. However, the efficiency agenda overall is about better services, and the Executive were correct in setting an overall target.

Although significant time and effort were spent in developing the Executive’s Budget plans, it is also important that there is sufficient scope for the Executive to review their plans in light of changing circumstances. It is for that reason that we have the in-year monitoring process, which provides considerable flexibility in the course of any year to refine and adjust spending plans in light of changing circumstances.

As regards Mr Durkan’s amendment, the Executive’s Budget for 2008-09 to 2010-2011 set out expenditure plans for Northern Ireland Departments for the next three years. That represented the culmination of a process that had been initiated as long ago as July 2005, with draft Budgets for the three years being laid before the Assembly in October 2007.

In light of the fact that there was, and remains, no expectation of any material additional resources becoming available to the Northern Ireland block for the financial year 2009-10, the Executive agreed in March this year — as has been pointed out — to conduct a strategic stocktake of the spending plans for this year as opposed to a full Budget process. No members of the Executive raised any concerns about that approach. Some SDLP Members highlighted the fact that Margaret Ritchie was not present at the relevant Executive meeting. However, in accordance with normal procedures, the draft Executive paper was circulated to all Executive members and there was a nil return from her Department.

Furthermore, I note with interest that several Members have said — and Mr Durkan referred to the fact — that it was only in recent weeks that they had found out about the Executive’s agreed approach. However, Mr O’Loan was present at a meeting of the Committee for Finance and Personnel on 2 April 2008, where Hansard records a department official as stating:

The Executive recently concluded that there will not be a Budget process in 2008.”

The official goes on to outline the strategic stocktake approach.

I repeat that that meeting was held on 2 April 2008 — not in recent weeks or in the past few days. The Chairperson asks:

“Do Members wish to make any comments?”

That question was met with silence — silence from Mr O’Loan and other SDLP Members. Therefore, let us not have any nonsense about this matter being last minute or a sudden surprise and all the rest of it.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

No, the Member has had his say and he blew it. If he had consulted the Hansard report of that meeting or spoken to his party colleague who attended it, he might have realised that he was talking nonsense.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

No, you had your chance and you blew it.

The objective of the strategic stocktake is to review progress to date and to allow Departments to register any significant pressures or easements of which they are aware for 2009-10 and 2010-2011. It should be stressed that the focus is on surveying the landscape at this early stage and in determining our strategic approach to managing any pressures through the in-year monitoring processes. We must face the simple fact that it is unlikely that any additional resources will be allocated to the Northern Ireland block grant, and, therefore, scope to make any additional allocations in specific areas is extremely limited, without corresponding reductions in other areas. For that reason, when Members propose plans for extra expenditure, I will be interested to hear them outline the areas in which they expect cuts to be made or allocations to be reduced. That is a relevant and important consideration when dealing with spending plans.

As regards our legal obligation, the Department’s view has been set out. Of course, there will have to be Estimates, and Budget Bills will have to taken through the Assembly to provide the legislative authority for Departments to fund services on the basis of those expenditure plans.

I turn now to the motion. Although Departments face a broad range of pressures, the most significant are those that relate to the rising cost of energy, the Civil Service equal-pay claim, the funding of water and sewerage services, and the impact of the downturn in the property market on the Executive’s investment programme. Last week, I had intended to set out further details on the state of play on those matters as part of my statement to the Assembly on the outcome of the September monitoring round. The cancellation of the Executive meeting — through no fault of ours — meant that that was not possible. However, I have sought to have my proposals cleared through the urgent procedures mechanism, and thus I hope to make that statement in the near future. Of course, I also mentioned those issues in my statement on the June monitoring round, and there was an exchange at that time.

Several Members highlighted the rising cost of energy. Although prices have risen substantially over the past year, it is also clear that there is significant volatility in the market. In addition, although the Executive have a key role to play, there is a need for other bodies, such as our own Government and the energy bodies, to play their part. The Executive will, therefore, rightly wish to adopt a planned approach that involves a co-ordinated response across Departments, with efforts being focused on making the biggest difference to those most disadvantaged by rising energy costs.

I am writing to all Executive colleagues to advise them of my plans to deal with the issue of fuel poverty, which involve working with other relevant Depart­ments and engaging with local energy companies. I intend to table substantive proposals to put to the Executive ahead of the December monitoring round.

Several Members mentioned the Civil Service equal-pay claim. We are still working through the detail of that matter and have had discussions with the trades unions. The Executive’s priority must be to achieve a resolution that is fair to staff but which also safeguards public services.

One of the most important, although less glamorous, services that we provide is water and sewerage facilities. The spending allocations to Departments that were set out in the Budget were predicated on charges being introduced from 2009-10 onwards, in line with the recommendations from the Independent Water Review Panel. Of course, those charges were in line with the commitments given by parties in their manifestos in the sense that they resulted in no double charging to consumers, providing a rate rebate of £160 and ensuring that any extra revenue was put towards extra investment — in other words, no water charges as outlined by direct rule Ministers.

The significant increase in the cost of living since then makes it right for us to consider a further deferral. A main reason for the approach that the Executive took to the Budget is that the block grant’s continued funding of water and sewerage services means that resources are not available for other services. Therefore, deferral will have public expenditure implications.

In recent months, I have had discussions with the Chief Secretary to the Treasury about how both the burden of the one-off cost associated with the Civil Service equal-pay claim and the deferral of water changes can be implemented with the least possible impact on the delivery of local public services. Those discussions are ongoing and, indeed, I met with the Chief Secretary as recently as last week to discuss a range of proposals.

One of the most obvious manifestations of the global economic downturn and credit crunch has been falling prices in the property market. Regarding the Executive’s investment programme, I indicated in my statement to the Assembly on the June monitoring round that capital receipts from the sale of surplus assets — particularly house sales — would be significantly lower than what was planned for in the Budget. However, the current state of the construction market also provides an opportunity for Northern Ireland Departments to procure capital projects at lower costs. Therefore, I expect the downturn in the property market to result in both pressures and easements.

I have detailed some of the larger pressures facing the Executive, but there is a broad range of issues that will be considered as part of the strategic stocktake. I do not have time to go through all the important issues that were outlined by Members today. However, we will take into account everything that is said in today’s debate as part of the consideration of the issues to be dealt with in the strategic stocktake.

The issues raised by Dr Farry, Mr McLaughlin, Mr McQuillan, Ms McCann, Mr Weir, and Mr Beggs are important to greater and lesser extents. It should not be forgotten that, this year, the investment strategy will result in £1·8 billion of capital investment. That money is available to be rolled out and is not being held back by any “squabble”, as Mr Beggs put it. Indeed, I was very interested to hear what Mr Beggs had to say on that point.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

No, I will not give way because I do not have much time left.

I was interested to hear what Mr Beggs had to say on that point because it seemed to be a plea for the DUP to surrender on policing and justice powers. However, I suppose that that is no great surprise as it is in line with his party’s previous position.

I listened very carefully to what Mr McNarry had to say about transparency. Transparency and the opportunity for debate are absolutely vital to the workings of Committees and the Assembly in general, and I welcome this debate as a part of that. I would like to have spoken to the Assembly last week during the October monitoring round, but I was prevented from doing so by the absence of an Executive meeting. I hope that that problem can be overcome.

When listening to Mr McNarry’s proposals and his comments about a “black hole” in the economy — which is complete rubbish — it occurred to me that “Tory Dave” McNarry must be taking lessons from his new mentor “Tory Dave” Cameron.

“Tory Dave” McNarry should realise that his party should not be trying to cosy up to the PUP, the SDLP — as it did before — its new Tory friends, or some other group. The Ulster Unionist Party needs to get its act together and stand on its own two feet, rather than following Tory policies.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

I have only a very limited time left, and I should treat all Members in the same way. [Laughter.]

We must identify pressures and ensure that sufficient resources are available to address those pressures. Some Members referred to public-sector finance problems being experienced by the national Government even before last week’s announcement of measures to instil greater confidence and stability in the banking sector and, thus, the broader economy.

In that overall context, we must recognise, as Mr Farry did, our circumstances as a devolved Administration with no capacity to take measures that are available to national Governments, such as borrowing. We must recognise that we live within the constraints of the Northern Ireland block grant; that Treasury is unlikely to provide additional funding for public services; and that there will be few, if any, Barnett consequences from either the Budget or the pre-Budget report. The Treasury will also seek to apply similar constraints on enhanced access to our end-year flexibility stock, with any additional resources required to meet strategic issues.

Therefore, it is clear that the Executive have limited scope, but we will address those issues. There is no black hole in the public finances; we deal with emerging issues through the year as they emerge. We face a range of potential pressures, and, as an Executive, we take the appropriate steps in response to those pressures. As Mr Weir pointed out, the people who criticise the Executive are criticising their own Ministers, who signed up to the Budget, the process and the strategic way forward. They can shake their heads and make all the statements that they like, but they signed up to it as well.

Photo of David McClarty David McClarty UUP 12:45 pm, 14th October 2008

The Business Committee has arranged to meet immediately upon the lunchtime suspension. I, therefore, propose, by leave of the Assembly, to suspend the sitting until 2.00 pm, when the first Member called to speak will be Mr Sean Neeson to wind on amendment No 2.

The sitting was suspended at 12.46 pm.

On resuming (Mr Deputy Speaker [Mr Molloy] in the Chair) —

Photo of Séan Neeson Séan Neeson Alliance 2:00 pm, 14th October 2008

I am not sure whether I should declare an interest, as I, in common with other Members, have recently become a shareholder in some of the UK’s major banks.

I support the Alliance Party and the SDLP amendments. This budgetary issue came to light at a meeting of the Committee for Enterprise, Trade and Investment. At that time, the Chairperson and I were singing from the same hymn sheet.

What has been proposed shows the arrogance of an Executive that treat this Assembly with the greatest contempt. At present, the Executive exist in name only. The proposed monitoring process is too limited. It is worth defining the problem, because terms such as “downturn” and “credit crunch” are loosely bandied about. The Government’s difficulty is that the value of assets has decreased. Therefore, assumptions in relation to land sales — about which the Alliance Party was always wary — may turn out to be inaccurate. As much of the Executive’s future planning was based on those assumptions, there will be a significant detrimental effect.

The downturn in the Republic of Ireland will have an impact on tax receipts and, therefore, on the availability of funding for the national development plan for Ireland, which includes projects in Northern Ireland, such as the Belfast to Larne road. Again, the Alliance Party was always wary that such funding might not be prioritised in the event of unfavourable economic conditions.

The credit crunch has an impact on borrowing, but that applies more to businesses and households than directly to Government. The political challenge of how to ensure that small businesses do not suffer at the hands of warier bankers is not related to the motion. The issue is more one of an asset crunch than a credit crunch. Therefore, the motion is well timed and welcome. However, that leaves one wondering why Ulster Unionist Members consistently opposed the Budget and the investment strategy. The Alliance Party has consistently warned that it was risky to sell assets, to freeze rates and to assume that funding would be forthcoming from the Republic of Ireland.

The Alliance amendment is more flexible than the SDLP’s; although, as I said earlier, Members in my party support both. I am worried about, and have cautioned the House against, the real danger that we will talk Northern Ireland into a more serious recession than that experienced in the rest of the UK. David McNarry made the point that the Executive do not have a contingency fund, bearing in mind the present economic problems. Mark Durkan stated clearly that an annual Budget process was needed. Every other political institution has an annual Budget. In order to function properly, this Assembly must also have an annual Budget; particularly bearing in mind the daily changing economic situation in Northern Ireland, the UK, the Republic of Ireland and globally.

My colleague Stephen Farry quite rightly reminded Members that the Health Minister’s decision to cut the number of nurses is like a knife going through the Health Service. He also stated that the Alliance Party has always supported the idea of the Assembly having tax-varying powers. Last week, I was very pleased that Mitchel McLaughlin from Sinn Féin also brought the issue to the House. Therefore, there is growing support in the Assembly for such a process to be developed.

Photo of Francie Molloy Francie Molloy Sinn Féin

The Member’s time is up.

Photo of Declan O'Loan Declan O'Loan Social Democratic and Labour Party

I will begin with three quotations from speeches that Peter Robinson made in the House on 29 January 2008:

“I turn first to the consultation exercise conducted on the draft Budget proposals published last October. In my statement last Tuesday, I acknowledged the key role played by the statutory Committees of the Assembly in reviewing and reporting on the departmental and cross-cutting implications of the draft Budget proposals.” — [Official Report, Vol 27, No 2, p69, col 2].

“It would be madness for any Finance Minister to bring forward a Budget and say that it will stand for three years and not be changed in any way. That would be a ludicrous position to adopt.” — [Official Report, Vol 27, No 2, p147, col 2].

“Furthermore, the Northern Ireland Act 1998 places a duty on me, as Minister of Finance and Personnel, to lay before the Assembly a draft Budget before the beginning of each financial year.” — [Official Report, Vol 27, No 2, p149, col 2].

I could simply say that I rest my case, because SDLP’s case for the amendment is based on the law, and the law is as it is.

I wish to refer to 12 pressures on the Budget and changes that have happened, and I will state them briefly. First, the property market has changed. Secondly, there have been some gains and some losses in construction project costs, but they must be requantified. Thirdly, the construction industry is in turmoil, and we need a revised statement on construction spend.

Fourthly, more than £100 million will be spent this year to address the equal pay issue for civil servants, and more will be spent in future years. Fifthly, there may be a further deferral of water charges, but what are the consequences of that? Sixthly, the First Minister gave his support for the fuel poverty task force, but where is the money to match it? Seventhly, is there really no money in the Budget for the reform of secondary education?

Eighthly, there was a temporary solution to the childcare crisis, but what is the long-term solution, and where is the funding? Ninthly, is it really the case that no lessons have been learned from the efficiency savings exercise that ought to be factored into Budget allocations? Tenthly, Sir George Bain’s report on the decentralisation of public-sector jobs has been published, but where is the plan and the money to move 4,000 jobs in five years’ time? Eleventhly, Civil Service reform is an ambitious programme, but timings and costings have not been revised. Twelfthly, with the increasing pressure on household incomes, do the Executive have nothing new to offer on the poverty strategy, or the lack thereof? We need a revised Budget.

I will now refer to the Minister’s remarks about the matter coming to the Committee. A departmental official brought the matter verbally to the Committee, saying that the Executive had recently concluded something on the matter. No legislation was quoted, and the matter was presented in what might be described as an offhand way, containing the phrase:

The Committee might be more interested in future developments.”

Therefore, it is not surprising that the Committee did not flag it up as a major issue, never mind a legislative one.

Later in the year, however, the matter was raised in writing, and then the Committee realised that it was a serious issue. All the Committee members, including four Democratic Unionist Party members and three Sinn Féin members, demanded a detailed explanation from the Department, and that remains the position.

I wish to comment on two speeches that were made. Mitchel McLaughlin, who spoke as Chairperson of the Committee for Finance and Personnel, referred to the Committee having sought clarification and taken legal advice. Yet, I was surprised that, as a Member of Sinn Féin, he was content to prejudge that advice and to assume that it would not represent the law as we would regard it, which is the only way that it can be regarded. I find it surprising — but perhaps I should not be surprised — that Mitchel McLaughlin, speaking on behalf of Sinn Féin, is happy to give full authority to a DUP Minister to call the shots on the changes that will have to be made to the Budget.

Jennifer McCann spoke about the problems that many people face, and read out a considerable list of things that must be done. She said that we need to examine our spending but went on to say that we did not need to revise our Budget and that the Assembly and its Committees had no function in revising that Budget. That is a ludicrous and self-contradictory position.

It will be clear to the public that we have no Executive, no Budget and no Government.

Photo of David McNarry David McNarry UUP

I thank everyone who took part in the debate and listened to it. It was essential that the debate took place, because it is a test of the relevance of the Assembly. The public are worried about one thing above all else — the impact of the economic downturn on their lives. We should be concerned that the assumptions on which the Budget is based are wildly over-optimistic. If the miscalculations are of the order of the Crossnacreevy situation, we are in trouble.

I thank Mark Durkan for fleshing out the detail of the annual Budget process, which should be taking place in the Assembly. I also wish to thank Dr Farry for drawing our attention to the fact that inflation now stands at 5·2% and that energy costs have risen significantly since the Budget was introduced. However, I wish that he would resist taking cheap shots after complimenting people; I suspect that Members switched off after that and did not hear the important things that he was saying. Perhaps I should forgive the Alliance Party Members; it may be that the grubby deals for an Executive position are going to their heads.

I welcome Mitchel McLaughlin’s comments; he gave details of the Committee for Finance and Personnel’s engagement with the Department, especially with regard to the effect that falling property prices is having on receipts, and the assumptions that underpin the Budget.

Peter Weir’s message of “Don’t panic; don’t panic”, like Corporal Jones in ‘Dad’s Army’, produced almost as much amusement as his comment that he was willing to accept the advice of any other party. However, I welcome Mr Weir’s acceptance of the need for a strategic stocktake on budgetary presumptions. Again, despite his knack for knocking his former party, he left out the agony that his new party is going through over the talk about Peter Robinson’s and Nigel Dodds’s local difficulties.

I thank my colleague Roy Beggs for pointing to the fact that DFP accepted DARD’s valuation of the Crossnacreevy site at £200 million. How can we have confidence in the professionalism of DFP’s acceptance of that valuation of green-belt land at those levels? I also thank Mr Beggs for highlighting the shambles that pertains in the Rate Collection Agency. Members misinterpreted what Mr Beggs said; perhaps when they read his remarks in Hansard they will see that they referred directly to the Sinn Féin party and to none other.

The Minister of Finance and Personnel rightly drew attention to the Executive’s strategic stocktake; that is the whole point of this debate. The Executive are conducting the stocktake, not this democratically elected Assembly.

Photo of David McNarry David McNarry UUP

Indeed. As part of its report on the Executive’s draft Budget 2008-2012, the Department asked Committees for their views on the details provided in respect of departmental budget submissions, and, in particular, whether any additional information would have been of use. I do not know about other Committees, but the Committee for Culture, Arts and Leisure, in response to that question, said:

The Committee is of the view that the level of detail provided in the draft Budget document made it very difficult for the Committee to comment constructively” on the draft Budget. In particular, it was difficult for the Committee for Culture, Arts and Leisure to assess the impact of funding when the draft Budget did not make clear which specific bids would be met. I have no doubt that the Minister will take note.

The Minister also draws attention to the normal in-year process, which occurs automatically in the DFP system. However, these are not normal circumstances; they are once-in-a-century circumstances. We are in the midst of a stock-market crash on a par with that of 1929. The Minister speaks of opportunities presented by falling costs in the construction sector, as well as the threats posed by a reduction in the proceeds and receipts from property sales. Are those equal? I do not think so.

I was disappointed in the Minister today; I am glad he is here, but he has not inspired confidence. It was not just a question of style or presentation; it was the lack of a convincing argument with substance.

Speaking last week about the world economic crisis, the American inventor, Warren Buffett, said:

“It’s only when the tide goes out that you learn who’s been swimming naked.”

Minister, the tide is rolling in, and we wonder whether you will have a wetsuit on or just your flippers. On that note, I ask the House to support the integrity of the motion.

Photo of Francie Molloy Francie Molloy Sinn Féin

Order. Before I put the Question, I advise Members that, whether amendment No 1 is made or not, the Question on amendment No 2 will still be put.

Question put, That amendment No 1 be made.

The Assembly divided: Ayes 34; Noes 52.


Mr Attwood, Mr Beggs, Mr D Bradley, Mrs M Bradley, Mr P J Bradley, Mr Burns, Mr Cobain,  Rev Dr Robert Coulter, Mr Cree, Mr Dallat,  Mr Durkan, Mr Elliott, Sir Reg Empey, Dr Farry,  Mr Gallagher, Mrs Hanna, Mrs D Kelly, Mr Kennedy, Ms Lo, Mrs Long, Mr A Maginness, Mr McCallister, Mr B McCrea, Mr McFarland, Mr McGlone,  Mr McNarry, Mr Neeson, Mr O’Loan, Ms Purvis,  Mr P Ramsey, Ms Ritchie, Mr K Robinson, Mr Savage, Mr B Wilson.

Tellers for the Ayes: Dr Farry and Mr O’Loan.


Mr Adams, Mr Boylan, Mr Brady, Mr Bresland,  Mr Brolly, Lord Browne, Mr Buchanan, Mr Butler,  Mr T Clarke, Mr W Clarke, Mr Craig, Mr Dodds,  Mr Doherty, Mr Donaldson, Mr Easton, Mrs Foster,  Mr Hamilton, Mr Hilditch, Mr G Kelly, Mr A Maskey, Mr P Maskey, Mr F McCann, Ms J McCann,  Mr McCartney, Mr McElduff, Mrs McGill,  Mr M McGuinness, Miss McIlveen, Mr McKay,  Mr McLaughlin, Mr McQuillan, Lord Morrow,  Mr Moutray, Mr Murphy, Mr Newton, Ms Ní Chuilín, Mr O’Dowd, Mrs O’Neill, Mr Poots, Ms S Ramsey,  Mr G Robinson, Mrs I Robinson, Mr P Robinson,  Mr Ross, Ms Ruane, Mr Shannon, Mr Simpson,  Mr Spratt, Mr Storey, Mr Weir, Mr Wells, Mr S Wilson.

Tellers for the Noes: Mr Craig and Ms S Ramsey.

Question accordingly negatived.

Main Question, as amended, put and agreed to.


That this Assembly calls on the Minister of Finance and Personnel to detail any existing and anticipated financial pressures impacting on public spending allocations in the current budgetary period, in light of the global economic downturn and credit crunch, and to report on any plans to make changes to the underlying allocations within the 2008-2011 Budget, beyond the scope of the quarterly monitoring rounds.