Public Expenditure: September Monitoring 2008-2009

Ministerial Statement – in the Northern Ireland Assembly on 3rd November 2008.

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Photo of William Hay William Hay Speaker

I have received notice from the Minister of Finance and Personnel that he wishes to make a statement on the public expenditure September monitoring round for the 2008-09 financial year.

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

With permission, I will make a statement regarding the outcome of the September monitoring round, following the First Minister and deputy First Minister’s approval of the recommendations by the less-than-satisfactory means of urgent procedure. I am in a position to announce to the Assembly a sum of almost £50 million in funding allocations for local public services across a range of Departments.

In my statement to the Assembly on the June monitoring round, I highlighted the substantial public expenditure pressure that had come to light in respect of the Northern Ireland Civil Service equal pay claim, as well as the impact of the downturn in the property market. In response, the Executive agreed to adopt a two-stage process whereby only limited allocations would be made as part of the June monitoring round, with the position to be reviewed when negotiations with the Treasury were completed.

Over the summer and early autumn, work has been ongoing to address the equal pay pressure faced by the Executive, and discussions are continuing with the Treasury — at official and ministerial level — on how to minimise the impact on public services. Engagements with the aim of resolving the issue have commenced with the trade union, and they will continue.

The one-off payment to staff could cost in excess of £100 million, although Members will appreciate that that figure is dependent on a range of factors that we are in the process of considering. The Executive remain mindful of the need to ensure a fair deal for the civil servants affected, although there is the potential for a significant impact on public services from a provision of that amount.

In that context, we are also seeking to ensure that the public expenditure implications are managed in a way that does not require reductions to the spending plans for future years that were agreed and announced by the Executive in January.

It remains my clear belief that the equal pay claim is a legacy issue for the United Kingdom Government. However, at the same time, we cannot ignore the broader UK public expenditure context. In recent weeks, I have met both the Prime Minister and the Chief Secretary to the Treasury to press the case for Northern Ireland on equal pay, as well as a range of other measures, including the level and duration of winter fuel payments.

The equal pay issue involves a large number of complex issues and thus, as the employee representatives have pointed out, may involve protracted negotiations. Therefore, although I recognise the desire of staff on the lowest pay scales to receive payment as soon as possible, a final settlement may not be reached for some time.

As regards capital receipts, the property market has shown little sign of improvement since June monitoring, with Departments still indicating that they expect a significant shortfall against the planned revenue from asset disposals this year. That, in turn, impacts on the Executive’s investment programme. Although Departments are taking steps to address the shortfall, the position on housing receipts remains difficult.

The continuing instability in local property and national financial markets was highlighted last Friday when it was announced that the Workplace 2010 project would be suspended. That will allow time to assess the impact of recent changes in the financial and property markets on the proposed procurement. In addition, the continuing media speculation that the remaining bidders for the contract will come under common ownership had the potential to affect the procurement process. Although that confirms that the potential £175 million capital receipt for the project will not now be realised in this financial year, it was no longer possible to proceed uninterrupted with the project at a time when there was such unprecedented uncertainty in the financial and property markets.

Workplace 2010 procurement will be reviewed early in 2009, by which time we hope that the present uncertainties affecting the process will have been clarified. I remain committed to the principles underpinning the Workplace 2010 project, and the Civil Service will continue to work towards creating a modern, flexible working environment for its staff that will enable the delivery of better public services.

As regards the impact on the Executive’s investment programme, we must recognise that the nature of capital investment projects means that there will always be some degree of uncertainty in the precise timing of both expenditure and receipts. Rather than adopt an overly cautious and conservative position in setting out our spending ambitions for capital projects for the next decade, the Executive adopted an approach that sought to encourage Departments to seek to deliver the greatest possible level of investment in public infrastructure over the Budget period and beyond.

At the same time, however, the Executive were prudent in committing funding to projects, particularly in the early years of the period covered by the investment strategy. In addition, the position on capital expenditure has been proactively managed during the subsequent in-year monitoring process. That has meant that over £130 million was available following the September monitoring round to address potential shortfalls in the overall capital position for the remainder of this financial year.

It is also expected that additional capital resources will become available during the second half of this financial year, as some projects spend less before next April than was planned initially. Therefore, I believe that there is sufficient scope to accommodate the loss of the Workplace 2010 receipt during the remaining months of this financial year without the need for action to scale other projects currently under way.

A further issue that has arisen since June monitoring relates to Northern Ireland Water, which was previously classified as a public corporation. Although the final decisions have yet to be made on the future funding arrangements for local water and sewerage services, Her Majesty’s Treasury has indicated that the company should be reclassified this year as being within central Government. That is in light of the fact that the company does not derive a sufficient share of its income from customer charges to still be considered a public corporation and is, therefore, largely a technical matter. However, it has real-world implications on the level of Budget cover required to support the company, the scale of which will be dependent on the outcome of the ongoing discussions with the Treasury.

Members will also be aware of the significant increases in household energy bills announced in recent months, which has placed an intolerable burden on households at a time of rising unemployment and uncertainty in the banking sector. Although it would be pure delusion to suggest that, on their own, the Executive or the Assembly can resolve issues that have worldwide impacts, it is also important that we recognise the actions taken already by the Executive.

Those include the freeze on regional rates that was announced as part of last year’s Budget, and the deferral of water charges. That means that those costs are significantly lower in Northern Ireland than in the rest of the United Kingdom. In addition, the concessionary fares scheme will be extended this year in order to provide free public transport for everyone aged 60 and over, while generous Budget allocations to the Department of Health, Social Services and Public Safety (DHSSPS) have enabled plans to be put in place in order to abolish prescription charges.

Although there is a need to go further, it is essential that that is done in a way that leads to a sustainable solution rather than adopting seemingly attractive quick fixes that build in recurrent costs to the detriment of the delivery of public services more generally. To that end, I am taking forward a cross-cutting fuel poverty action plan, which will involve working with the Minister for Social Development, the Minister of Health, Social Services and Public Safety, and the Minister of Enterprise, Trade and Investment. Once completed, that work will be submitted for agreement by the Executive and for consideration as part of the December monitoring round.

It is clear that the overall context for the September monitoring round is, perhaps, even more constrained than was the case in the previous monitoring round. However, unlike the situation in June, there is now less scope to defer decisions in light of the emerging pressures that Departments have identified. As regards current expenditure, the Executive concluded the June monitoring round with an overcommitment of £85 million. That figure has been offset by the £41·1 million of reduced requirements that Departments identified, although the total amount of reduced requirements in the year to date remains below that in recent years. Further details on the reduced requirements that were declared in the September monitoring round are set out in table 1 of my statement.

In addition, the latest forecasts from Departments, as set out in table 2 of the statement, suggest that little further current expenditure will be released through to the end of the financial year. However, Departments indicated close to full spend at this time in the 2007-08 financial year, yet then declared significant levels of reduced requirements in the later monitoring rounds, as well as a high level of underspend. In that context, therefore, I repeat the call for Committees to challenge robustly the expenditure performance of all Depart­ments in order to ensure that resources become available for reallocation as early as possible so that we can make the best use of the resources at the Executive’s disposal.

Although departmental forecasts have tended to be overly pessimistic in that respect, there is a need to leave scope in order to address pressures that emerge later in the year. It was, therefore, agreed that there were sufficient resources to make £21 million in current expenditure allocations to Departments, against the £137 million of spending proposals that Departments submitted.

The allocations that were agreed include a further £5 million for the Department of Health, Social Services and Public Safety as part of the first call on available resources agreed in the Budget process; £5 million for extended schools, in recognition of that programme’s importance — although I remain of the view that those funds could have been found from the Department’s own resources; and some £3·5 million in order to address pressures in respect of animal health, as the rising market price of animals has implications for the level of compensation payments.

A figure of £1·5 million was allocated to the flood-relief scheme for payments to households and district councils after the severe weather conditions in August, and £2·5 million as a contribution to the increased cost of the special purchase of evacuated dwellings scheme — although I hope that the Department for Social Development (DSD) will take steps to meet the remainder of the additional costs. In addition, £1·5 million was allocated to help to meet the increased costs of establishing the new Northern Ireland library authority, and £500,000 for the re-imaging communities initiative, which supports local communities as they replace divisive symbols and murals of the past with images that are a positive celebration of the future. Finally, £1·5 million was allocated in order to enhance the collection of rates arrears, with the additional revenue being used to meet the residual costs of Civil Service reform rather than that pressure being met from the scarce resources available in this monitoring round.

I explained the approach to managing the in-year capital position, including holding back more than £130 million to set against the pressures emerging on in-year budgets due to the impact of the downturn in the property market and the wider difficulties in financial markets. There is also continuing uncertainty surrounding the technical reclassification of Northern Ireland Water.

However, there was judged to be scope for limited capital allocations, and the following were agreed: £15 million to the Department for Social Development in order to address 30% of the remaining capital receipts shortfall after proactive action by the Department to minimise the pressure on its housing programme. In not meeting the full shortfall now, the Depart­ment for Social Development is being encouraged to continue to maximise its capital receipts in the current financial year.

The Department for Regional Development (DRD) will receive £6·2 million for work at Warrenpoint harbour, which, although fully committed, has slipped since the 2007-08 financial year.

The Department of the Environment (DOE) will receive £1·9 million for the Electronic Planning Information for Citizens (e-PIC) system, which will enhance the operation of the Planning Service, and £1·9 million for the implementation of aspects of the cross-departmental Civil Service reform programme.

The allocations mean that the Executive leave the September monitoring round with a planned overcommitment in current expenditure of £65 million and an under-commitment of £132 million in capital expenditure. Although the position on the Workplace 2010 project has crystallised, that risk had already been incorporated into our plans for the current financial year. Therefore, confirmation of the Workplace 2010 position will not require significant changes to be made to our plans, or my recommendations, on the September monitoring round. However, it does highlight that the downturn in the property market has affected the public sector as well as private developers.

Northern Ireland Departments still plan to deliver their highest-ever level of investment in capital projects in the current financial year, which will provide significant help for the local construction sector. However, it must be recognised that the Executive have limited scope to go further than their current plans. Following the boom of the past few years, the construction sector should focus on making the structural changes necessary to allow it to compete on a sustainable basis over the longer term.

The Executive entered the September monitoring round facing a range of pressures at strategic level and at departmental level. The wider financial situation meant that it was not possible to address all those pressures at this stage. However, a prudent and responsible approach is being taken, which balances the need to address the immediate pressures faced by Departments and the creation of sufficient flexibility to accommodate pressures that may emerge in the remainder of the financial year. I commend the September monitoring position to the Assembly.

Photo of Mitchel McLaughlin Mitchel McLaughlin Sinn Féin 12:15 pm, 3rd November 2008

Go raibh maith agat, a Cheann Comhairle. I thank the Minister for his statement and for the courtesy that he and his officials afforded the Deputy Chairperson and me in briefing us on it.

The Budget for 2008-09 included a planned capital receipt of £175 million from the Workplace 2010 project. The Minister outlined the position regarding Workplace 2010, and the project’s suspension was announced last Friday. That was the correct decision, and I agree that it was prudent and responsible. The Minister also outlined how the shortfall will be managed, and it is important that the Minister believes that a black hole will not open in the economy, despite comments to the contrary from some people in the media.

Capital receipts for all Departments in the current financial year were projected at £486 million. Will the Minister comment on the extent to which that target will be met and the work of the capital assets realisation team in that regard? During a recent briefing with the Department of Finance and Personnel (DFP) officials, the Committee was informed that all Departments had reassured the central finance group that they would spend their entire budget in the current financial year. Indeed, the September monitoring allocations forecast that underspend will be zero after the reduced requirements have been taken into account. Is the Minister confident that cross-departmental underspend will be minimal at the end of the current financial year?

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

I thank the Chairperson of the Committee for his contribution. I welcome what he said about the position of the Workplace 2010 project. Given the unprecedented conditions in the financial and property markets, the decision to suspend that project was correct. Capital receipts represented less than 10% of the overall gross investment by the Northern Ireland Departments in 2008-09. Our in-year investment programmes have already set aside some £130 million to deal with the implications of the volatility in the property and financial markets.

Slippage on planned capital spending is also likely before the end of the year. In those circumstances, the issue will be revisited in early 2009 in order to take stock of the financial position and the two companies involved in the bidding process — in that context, there has been considerable speculation about a merger.

The Chairperson of the Committee for Finance and Personnel also talked about capital receipts and the downturn in the property market, which I mentioned in my statement. That situation has improved little since it was dealt with in the June monitoring round and substantial amounts of capital funding have been set aside in order to manage it proactively. There will be reduced in-year requirements coming through and, given the scale of the projects, some slippage will occur. That ties in with the Committee Chairperson’s last point — about Departments forecasting that they will spend their full financial allocations. My statement pointed out that that has been a recurring theme over the years. Therefore, it is not entirely surprising that that is what Departments are saying. However, given what has happened historically, and the nature of the process, it is expected that the position will be much clearer in the December monitoring round and as we move towards the end of the financial year.

I could stop everything now; halt everything in its tracks, cease all spending and take up a very cautious position. That may suit me, but it would not be good for the local construction industry or for Departments. The best way to manage the situation is through careful monitoring; setting aside money while recognising the reality of what might happen later on, and taking a detailed look at the situation in December. That approach avoids taking money away from Departments; something which I am determined to avoid doing at all costs. Ultimately, Departments must be able to deliver on the priorities, objectives and goals of the Programme for Government.

Photo of William Hay William Hay Speaker

It is understandable that the Minister’s statement has attracted a lot of interest in the House and quite a number of Members wish to ask questions. I remind Members that they must ask a question — not make a further statement or ask multiple questions. If Members bear that in mind, all those with questions may get an opportunity to speak.

Photo of Simon Hamilton Simon Hamilton DUP

Thank you, Mr Speaker. I will do my best to comply.

I thank the Minister for his statement and I agree with him; the agreement of the statement by urgent procedure is less than ideal. All Executive decisions affecting Departments must be taken at Executive meetings.

The Minister mentioned many emerging pressures and his discussions with the Treasury on a range of issues. Has he considered asking the Treasury for greater access to Northern Ireland’s stock of end-year flexibility? I also remind the Minister of the concerns that the Committee for Finance and Personnel has raised consistently about the lack of funding for Civil Service reform projects. Will the Minister assure Members that those projects remain a priority and on-track to be implemented given their importance in realising efficiencies?

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

I thank the Deputy Chairperson of the Committee for Finance and Personnel for his remarks. I agree that it is less than satisfactory to use urgent procedure in order to proceed with the monitoring round and allocate money to Departments. It is probably less than they would like, but £50 million is a considerable amount of capital and current funding that will enable Departments to manage their budgets and move forward.

(Mr Deputy Speaker [Mr McClarty] in the Chair)

It is less than satisfactory that the matter is being dealt with by urgent procedure, because it cuts out the opportunity for discussion, debate and consideration around the Executive table. It is vital that that should happen. It is unsatisfactory, by any stretch of the imagination, that matters cannot be discussed and agreed at Executive meetings.

Mr Hamilton mentioned end-year flexibility; we continue to press the Treasury on the issue. At the end of the year, any underspend goes back into the Treasury, and we have to negotiate that. It is all the more important, therefore, that money that is not required is released during the in-year monitoring round and reallocated as quickly as possible. We are negotiating the position on end-year flexibility as part of our ongoing discussions on equal pay, and it will be extremely important to have access to the money as quickly as possible.

I assure Mr Hamilton that the Northern Ireland Civil Service reform projects are proceeding. Civil Service reform is important to realise efficiencies and, most importantly, to deliver a better service to the public. At the end of the day, that is what Civil Service reform is all about.

I hope to be in a position shortly to announce progress on some projects that come under that agenda. As the Member will be aware from my statement, money has been allocated in this monitoring round to address some of the issues regarding funding for taking forward cross-departmental, cross-cutting projects that will benefit all Departments and people across Northern Ireland.

Photo of David McNarry David McNarry UUP

I thank the Minister for his statement. The First Minister recently claimed responsibility for almost every good initiative that the Executive have managed to produce, including free prescriptions, which required a lot of money. Will he then take responsibility for the frighteningly large black hole of potentially £500 million in the Executive Budget? What will be his responsibilities in the crushing effect of the emerging shortfall of a further £500 million hole in the coffers of the Department for Regional Development?

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

I thank the Member for his succinct question. It is not a new question, but I will answer it again for the third or fourth time.

Photo of David McNarry David McNarry UUP

I will keep on asking it.

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

I am sure that the Member will keep on asking the question, because nothing seems to be getting through. Nevertheless, I will have a go at answering it.

There is no black hole in the Budget. I should be happy for officials to sit down with the honourable Member. I sincerely mean that — leaving aside the knockabout stuff — because he is a member of the Finance and Personnel Committee, and it is important that Committee members have an opportunity to discuss the process with officials. However, I assure him that there is no black hole in the Budget.

There is nothing new in the idea that Governments face spending pressures. It happens all the time, and I have been very open about that in various statements to the Assembly on the in-year financial position. The Executive have the in-year monitoring process so that resources no longer required by certain business areas can be used to meet pressures in others.

The Member talked about a black hole, but we have set aside £130 million in the capital budget. In 2007-08, £230 million in current expenditure and £270 million in capital expenditure were declared surplus by Departments, even before the significant levels of underspend were declared at the end of the year.

It would be easy to say that I will protect myself and the Department of Finance and Personnel by stating that there will be no more spending and that we will ensure that every penny is in place now, or I could tell the Departments that I will ask for money back. I am not prepared to do that because the delivery of services to the community is vital.

We will be able to manage our way through this situation. We have proactively done that already, and we will continue to do so. We will revisit the situation during the December monitoring round, by which time we will have a clearer picture. I stress that it is vital that Departments recognise that we are all in this situation together, and that if there are areas in which money cannot be spent and is unlikely to be spent, it is far better to free up those resources so that we can address shortfalls in areas such as housing where that money can be spent productively and sensibly now.

That is why I decided, even in this constrained situation, to put another £15 million into housing capital. I took the view that although we could hold that money back and keep waiting to see what happens, it is important to keep moving forward and to try to deliver on the objectives of the Programme for Government.

We will continue to monitor the situation, and, as I said, I leave open my offer to the Member to meet officials —

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

I understand that the DRD position relates to an internal document on the strategic stocktake. There will always be emerging pressures and reduced requirements within Departments. All Departments’ returns will come to DFP. We will examine them all, and we will make decisions on that case. However, as we saw in the present monitoring round, even this year, there were bids worth £137 million. There will always be pressures and easements; it is a question of managing them as we go forward.

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

I thank the Minister for his statement, but he has said that £130 million of capital expenditure will not proceed. That is a statement to the construction industry — which is in crisis — that there will be a spending cut of that order, largely in respect of construction projects. The Minister must state, not to me but to that industry, why, instead of expenditure going ahead, as the industry requested, it is being cut to such a degree.

The current stocktake has been described as nothing more than a glorified monitoring round. In view of the huge pressures on the Budget, a few of which the Minister enumerated, such as Workplace 2010, the equal pay issue, the loss of revenue from property sales — and one could mention the property at Crossnacreevy in particular — will he give us a commitment that he will bring a revised annual Budget before the Assembly?

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

I thank the Member for his contribution, but he must under­stand that there has not been a cut of £130 million in the capital budget. That money has been set aside and proactively managed to deal with the issues that are emerging, in year.

No doubt, the Member would be the first person to criticise me if I were to say that those pressures were emerging, and we had not set anything aside. He would be the first to ask what type of way that is to manage public finances. Of course such matters will have an effect. Next he will say that, if certain Departments — perhaps some Departments are closer to his heart than others — experience reduced requirements, they are, somehow, suffering a cut.

What this is really about, as the Member must understand, is that all Departments, at certain times, experience reduced requirements in certain areas. That is not to say that they will not have increased demands to spend money in other areas. Therefore, there is no cut.

As for the capital investment strategy, I wish to be very clear that the public sector is providing the construction industry with more than 40% of its total turnover in Northern Ireland. For instance, the Department of Health has seven major projects under construction this year, with a total value of £264·6 million. There will be capital spend of £440 million on roads this year. Northern Ireland Water has £127 million available for the Belfast sewers project and £90 million for 10 waste-water treatment projects. Contracts for an additional four schemes, with an aggregated value of £45 million, will be awarded this year.

The Department for Employment and Learning (DEL) has projects currently under construction that total £83 million, including South Eastern Regional College, South West College, Northern Regional College, and North West Regional College.

The education and library boards have embarked on a major programme of works with a total value of £120 million. The Department of Education (DE) will, shortly, work on other programmes and PPP projects that are worth £84 million at the contract-award stage.

Let us not allow party-political point-scoring to paint a different picture of the situation. Over the next three years, £925 million will go into housing in order to meet the objectives of creating 10,000 new affordable social houses by 2013, and £5·5 billion will be spent through the investment strategy over those three years.

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

The Member says “perhaps”, but is it not far better to aim for a progressive, ambitious programme than to say that ‘we will spend only £3 million and will keep all the other money back’? I could take a far more cautious approach. I am taking a prudent approach, as are the Executive. Through that, we will try to move ahead as much as we can in order to help to deliver the infrastructure projects that the Departments and the public want, at the same time helping our construction industry. Let us not be senseless about the £130 million that the Member mentioned. It is not a cut; it represents prudent management, given our current situation.

Photo of Stephen Farry Stephen Farry Alliance

The Department of Finance and Personnel has committed to giving the Department of Health, Social Services and Public Safety first call on the £20 million that is available in the monitoring rounds. According to the Minister’s statement, it appears that that new money will be phased in, or, in practice, backloaded. Is that not self-defeating for the health budget?

Bearing in mind the existing flexibility that is available to the Minister, as well as the new money in the monitoring rounds, how will we ensure transparency in the manner in which that money will be spent? The public is confused about the situation in which an announcement about free prescriptions is followed a week later by news of cuts — including the possible loss of 700 nursing posts — in front-line services.

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

The allocations to the health budget are part of the commitments that have been made in the overall Budget process. The Department of Health, Social Services and Public Safety has already allocated that money in its budget, so the extra money will simply go into that budget. There is no issue, because that Department knows that that money is coming.

The Minister of Health, Social Services and Public Safety is responsible for the announcements that have been made, and Dr Farry and his colleagues should raise those issues — and the question of transparency — with Mr McGimpsey.

Finally, to go back to Mr O’Loan’s contribution, I should have made the point that £100 million of the £130 million that he mentioned is coming out of end-year flexibility from previous years. Therefore, it is even less of a concern to him than it would otherwise be.

Photo of Barry McElduff Barry McElduff Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. Will the Minister explain why £1·5 million was allocated to the new library authority? It is my understanding that the nature of a monitoring round is such that allocations are made on the basis of unforeseen and unanticipated pressures. How could such sudden circumstances have arisen with regard to the new library authority?

In my capacity as a private Member, will the Minister tell me whether he received a bid from the Minister of Health, Social Services and Public Safety for health and community-care centres? The establish­ment of several of those centres has been put on hold, including projects that were earmarked in the Western Health and Social Services Board area for Carrickmore and Fintona, which are in County Tyrone.

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

I will answer the Member’s second question once I have taken advice on the matter.

To answer his first question, the bid that was made was partly successful. The reason for the request was that the creation of the new library authority will require five redundancies at senior level. Those are inescapable calls on the Department of Culture, Arts and Leisure (DCAL).

If that bid were not to proceed, the anticipated savings that would otherwise be made by the establishment of the authority could not be realised. There is a difference between sudden pressures that may or may not emerge and inescapable pressures. It is not a matter of anyone’s being taken by surprise; it is just that those pressures have crystallised at this time. There are other issues that we may know about, but when they crystallise is another matter; and they may only come to be decided during an in-year monitoring round.

Photo of Adrian McQuillan Adrian McQuillan DUP

I thank the Minister for his sensible approach to public finances. Given the downturn in the property market, why can the Executive not simply borrow more to implement projects to help the construction industry?

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

There are several approaches that could be taken on the financial position. More money could be raised through the regional rate or through increases in manufacturing or business rates. However, the Executive have taken the right decision in those regards by freezing the regional rate over the next three years and capping at 30% the industrial de-rating for the manufacturing industry as well as business rates.

No one in the Assembly can print money — although I was reminded that there may be some people who may, but not legally. Under the reinvestment and reform initiative, the Executive could seek more borrowing from the Treasury; a substantial amount has already been borrowed under that facility — about £250 million. It would not be wise, in the present circumstances, to increase that, and in so doing meet considerable resistance from the Treasury on public expenditure issues. That is unlikely to be a runner.

Northern Ireland receives a block grant — a finite amount of money. Money could be raised through rates, but that would be at the margins. Therefore, we have to manage the money over the three-year period, recognising that we do not have the resources to accrue new money unless it is given to us through the Treasury. That is one of the reasons underlying the call for a Budget process — despite the decision of the Executive and the Assembly to reject that process this year.

A Budget is decided on when setting out new governmental or Executive priorities. Surely no one is suggesting in the current circumstances that what the Executive are trying to do with the allocations that they have made and with the general thrust of trying to push the economy forward needs to be revisited. What do need to be revisited are the in-year pressures and how those are addressed. If Members are telling me that we need fundamentally to revise the allocations that were agreed in the Programme for Government, they should be upfront in outlining where they propose to cut money and where they propose to put it, because that is the only thing that can be done in a new Budget round. I would love to hear the Members who call for that revision outline where they would like to see more money spent and where they would cut the Budget. If they want a new Budget round, that is what they will have to do.

Photo of Leslie Cree Leslie Cree UUP

I thank the Minister for his statement, and I support the view that having a fire sale of Government assets would be futile at this time. Will the Minister dispel the media speculation about the bidders coming under common ownership as a result of Workplace 2010 and that it will, therefore, not be necessary to re-advertise that important contract?

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

I thank the Member for his question, which, if I may say so, is a very important one.

Since the idea was first mooted and the bidding system set up, the process has taken many twists and turns, including the withdrawal of one bidder. The recent decision to suspend procurement, which I announced at the end of last week, was prompted by a significant development in the sale process of one of the companies.

The Member mentioned a fire sale. Given the fact that the cost of borrowing has risen steeply and that there has been a downturn in the property market, it is right to suspend now and take stock again early in 2009. I remain committed to the view that we are on the right lines in trying to obtain a modern estate in which civil servants can work better and deliver a more efficient service to the community.

If the two bidders were to merge, the contract could still be awarded; it is not uncommon to procure through sole-source negotiations. One example of that is the procurement process for the aquatics centre for the London 2012 Olympics. We will carefully consider and assess our position when the intention of both bidders becomes clear.

Photo of P J Bradley P J Bradley Social Democratic and Labour Party 12:45 pm, 3rd November 2008

I thank the Minister for his statement. He referred to the figure of £1·5 million that was allocated to the DOE for flood relief in August. No reference was made to a request from the Depart­ment of Agriculture and Rural Development (DARD)regarding flood relief for farmers, who have perhaps suffered more than some householders. Was any request made from that Department?

My colleague Declan O’Loan mentioned the DARD-owned property at Crossnacreevy. Will the Minister confirm whether consideration of the value of that property disrupted his entire thinking on the monitoring round? Will the reduction in value by an estimated £195 million result in an ongoing loss?

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

The receipts for the sale of the property at Crossnacreevy will not be realised in the current financial year and do not fall within this year’s in-year monitoring process. However, it is important to take the matter into account when considering the strategic stocktake. I am sure that the Department of Agriculture will be raising the issue as part of its strategic stocktake, and it would be entirely sensible for it to do so. That is matter for that Department because it came forward with that proposal.

I am delighted that, at the time of the flooding, the Executive were in a position to move quickly to ensure that a payment was made. It was not the purpose of the scheme for that payment to be compensation, but, in August 2008, an immediate payment was made where there was evidence of suffering of severe inconvenience. That payment to councils is an inescapable bid.

I met the Minister of Agriculture and Rural Development in relation to the monitoring round, and she pressed me on the priority of the allocation to animal health. To date, I have received no business case relating to flood relief for farmers, and, therefore, I am not in a position to consider a bid sensibly and properly.

Like other Members, I have much sympathy for, and understanding of, the concerns of farmers. However, farmers cannot be compensated by the Executive; just as we cannot compensate householders. I can only respond to the view that a payment should be made if it is pressed on me as a priority ahead of other priorities and if I have a business case on which to make a decision. As yet, no business case has been forthcoming.

Photo of David Ford David Ford Alliance

I thank the Minister for his statement. The sum of £1·5 million that has been allocated to enhance the collection of rates arrears compares with a bid from Land and Property Services for £2 million in the June monitoring round. Will that be entirely adequate to meet the backlog in rate collection, which is part of the Minister’s potential income?

I also notice that the Minister called for Committees to robustly challenge the expenditure performance of Departments. Will he remind his fellow Ministers of the importance of ensuring that Committees get adequate time to carry out that process, given that that has not been the case for several Committees so far?

Finally, on a technical point, will the Minister ask his staff to examine the figures in table 2 of his statement? It seems that several figures have misplaced decimal points, which suggests that Departments are doing better than they actually are.

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

Mr Ford’s concern about the decimal points has been duly noted. If the figures are wrong, they will be corrected.

The importance of reducing the level of rates arrears as quickly and by as much as possible has been raised in Committee and elsewhere. A certain amount of rates arrears will be accrued every year, because some people, by nature, will not pay as quickly as others. Steps have recently been taken to reduce substantially rates arrears. The extra money allocated will reduce rates arrears even further. It is important that we do that. The money will also fund the reform agenda of Departments.

Like Mr Ford, I am also concerned that Committees do not have sufficient time to challenge Departments’ expenditure performance. We must work to ensure that Committees have sufficient time to examine those issues. I know that the Committee for Finance and Personnel has done some work on that. I have pledged the full co-operation of my officials with the Committee on that piece of work.

Photo of Tommy Gallagher Tommy Gallagher Social Democratic and Labour Party

I thank the Minister for his statement. Mr Ford’s point about rates arrears collection is a reminder about the importance of rates relief for small businesses. From reports, I understand that rates relief is available to small businesses in England, Scotland and Wales. Will he comment on, or give an assessment of, the possibility of rates relief for small business in the future?

Finally, the statement makes no mention of roads maintenance, despite the serious deterioration of roads, particularly minor and rural roads, and how that is linked to road safety. What are the Minister’s views on that?

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

I thank the Member for his question. I was sympathetic to many of the suggested bids. From my statement, the Member will be aware — as Ministers are well aware — that the Departments collectively proposed £137 million worth of bids. All Ministers presented strong arguments for their particular bids. Some arguments were more valid than others, but, nevertheless, they were strongly felt.

However, there came a point when I had to say that if I were to allocate funds to a particular bid, for which there was no surplus money, I would have to remove it from somewhere else. Departments have the flexibility to reallocate money. If a Minister decides that something is of pressing concern and requires higher priority spending, he or she is at liberty to examine reallocations internally within his or her Department.

Forgive me, but I forget what the Member’s first question was.

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

I thank the Member for the reminder. The Member will be aware that that matter is under consideration, along with several other rates relief issues. After consultation with, and consideration by, the Committee, my Department recently announced several decisions on rates relief.

A number of other issues are still to be decided, one of which is rates relief for small businesses. A report has been carried out, and it has raised issues about how effective rates relief would be in helping small businesses, as opposed to just putting money into the hands of landlords. Therefore, the issue needs to be considered. There are other schemes, as the Member said, and we will be considering them carefully.

We must be mindful that every time we do things like this — and there may well be good arguments for doing so — it means less revenue for the Executive and the Assembly to distribute than would otherwise be the case. On the one hand, the Member is calling for more money to be spent on roads maintenance; on the other, he wants us to not raise as much money as we otherwise could through other ways. It is always important to bear in mind that the money that we allocate has to come from somewhere; it does not grow on trees, and we cannot raise the amounts that we need by ourselves. We have a finite, block amount of money, and when we allocate money to one area, that inevitably has an impact on another area in the public expenditure round.

Photo of Edwin Poots Edwin Poots DUP

Given that the monitoring round deals with unforeseen pressures in spending, has the Minister received any advice from my Ulster Unionist colleague in Lagan Valley? I hope that he does not take too much of that advice if he receives it.

Will the Minister indicate whether the Minister of Agriculture has raised with him the possible £28·5 million disallowance that the Department of Agriculture and Rural Development may face following an EU audit into single farm payments? We are all shocked to hear that no bid has been submitted for flood relief when the Committee was informed that that was going to be the case. With respect to extended schools funding, will the Minister tell us where the Department of Education may find the £5 million in its own resources as indicated in his statement?

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

The Department of Agriculture did submit a bid for flood relief. However, when I met the Minister of Agriculture, highest priority among the bids submitted was given to payments to the animal-health sector. There is presently no business case forthcoming; therefore, we are not in a position to make a sensible decision on the matter in this in-quarter monitoring round.

The Member raised another important point — the emerging issue of the potential common agricultural policy disallowance of the single farm payment. My Department will work with the Department of Agriculture to assess the current and future implications of that disallowance. We will advise the Department on the need for a provision, or a contingent liability, for the amount involved. We will assess the financial implications and consult with the Treasury and the Department for Environment, Food and Rural Affairs on the UK position and what assistance they may provide. Now that that issue has emerged, we will offer assistance.

Everyone agrees that the extended schools programme has been extremely useful. I met primary school teachers and head teachers in my constituency recently to discuss that and other issues. I made a point about the Department of Education’s budget, which is relevant to other issues floating about regarding the extended schools programme and issues affecting the boards. My reason for saying that the money may have been available is that the Department’s resource underspend in 2007-08 was £50 million, some 2·8% of the final allocation, and its resource underspend in 2006-07 was even greater at 4·3%, some £70 million. Past performance indicates that there would be more than sufficient scope for the Department to meet those costs and others as well as emerging pressures.