Current Economic Downturn

Private members’ business – in the Northern Ireland Assembly at 6:15 pm on 8th December 2008.

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Photo of John Dallat John Dallat Social Democratic and Labour Party 6:15 pm, 8th December 2008

I have been advised that the Executive’s response will be provided by the Minister of Enterprise, Trade and Investment.

In accordance with the Business Committee’s agreement to allocate additional time where two or more amendments have been selected, up to one hour and 45 minutes will be allowed for this debate. The proposer of the motion will have 10 minutes to propose and 10 minutes to make a winding-up speech. Two amendments have been selected and published on the Marshalled List. The proposer of each amendment will have 10 minutes in which to propose and five minutes in which to make a winding-up speech. All other Members who are called 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 recognise fully the significant potential for job losses due to the current economic downturn; to detail what assistance he can draw on from the Treasury; and to produce urgently an action plan to assist small businesses, especially with regard to cash flow relief, and the level of assistance his Department can initiate locally.

Members cannot behave as though we did not see the economic downturn heading our way. That makes it all the more inexcusable that, for five months, the two larger parties in this House squabbled over the image rights of who blinked first on concessions. Those were five months of inactive, ineffective government, during which the running of the Executive lay not with Ministers, but with unelected officials. The concessions have been banked and, depending on whom you believe, the result was not a draw. One party did better than the other.

Going to Downing Street and returning with £500 million, much of it tied up in deferment of water charges and civil servants’ back pay — did that register big time in the homes of families worried about the credit crunch? Did it bring cheers of relief from the factory floor, from the builder or from suppliers? Did it bring cheers of relief from the fisherman, the farmer, the retailer, the wholesaler or the shopkeeper? The answer is, unfortunately, a resounding no.

Furthermore, has it done anything to instil confidence? A couple — typical of many who are up against it in my Strangford constituency, and, I suspect, compatible with every other constituency — recently emailed me. They are hard-working people, who have invested in their business and created employment for more than 25 staff. They emailed me to request urgent financial assistance to help them to maintain and sustain their business in the current climate. That couple said that they were receiving little or no help from the banks, were up against a brick wall and would very much appreciate any help, advice or assistance that I could provide.

I ask the Minister how we can help that couple. What advice or assistance can she provide me with to pass on to them? They, in their own words:

“are up against a brick wall.”

That couple, like so many others, expects answers. It is not good enough for the Assembly to say that we can do little about global recessions or that the Prime Minister has said this and the Chancellor has said that. That is not good enough when people are hurting or when yesterday’s pound is worth 20% less today. That is not good enough when prices are rising and when there is unbounded uncertainty. It is businesses — particularly small businesses — that are at risk, and they expect the Executive to be on their side.

Do we not need to review urgently our current commitment to public spending? Do we not need to become flexible in our ability to fund projects across the board that will have an immediate impact, and that will inject our local employers with confidence, thus helping them to stay in business? Do we not need to have a long look at reprioritising the distribution of funding in order to keep people in work and to maintain competitiveness? Is it not irresponsible to allow those who are solvent today to slip into insolvency tomorrow?

It is difficult for a small business to find itself in the predicament of having continuity of work — perhaps at a reduced profit but, nevertheless, maintaining a solvent balance sheet. It is also difficult for a small business to win an order, which will enable it to keep people in work, only to be confronted with a “no can do” attitude from a bank — from the very bosses who used the money market as their own gambling casino, while paying themselves exorbitant salaries and bonuses.

Cash flow is crucial, but cash circulation, through wages earned and money spent, is critical. Job losses or cutbacks could wipe out a local community’s economy overnight. There is a dependency on cash circulation simply to keep businesses afloat and, therefore, important jobs in place.

The Chancellor of the Exchequer, Mr Darling, wants people who are struggling to make ends meet and people who are out of work, with their access to credit curtailed, if not cut off, to get out there and spend, spend, spend. If a person is broke, how can he or she spend? He is the author of a deferred economy, and we are meant to feel better, because he has deferred — to another day — the hammer blow that he intends to deliver when the deferment period expires.

We must take notice, not only of Darling’s deferments on VAT, and so on, but of the fact that we will be paying for the cost of water-charge deferments. When that particular burden comes, people will find it very hard to deal with. If that is a prize, it is a booby prize, because deferment is a booby trap. Where has all the talk of scrapping the water charges gone? The tap tax has not been turned off. All that has occurred is a postponement until the floodgates of water charges are opened around 2010.

Small businesses are the backbone of our economy. They generate wages, and their entrepreneurial skills circumnavigate the risks that they are taking. They have not relied on either handouts or massive cash-injected bail-outs, nor do they receive employment grants extending to thousands of pounds per job created.

In today’s circumstances, deserved recognition of the importance of small businesses is confronted by a culture of bureaucracy that advises our local Ministers with dubious forecasts and inept attitudes. The attitudes underlying the thinking of such people are not empowering, but disempowering. They focus on what a devolved Administration cannot do or does not have the power to do, rather than on being innovative and imaginative in the face of this economic crisis.

Last Monday, the headline that hit the newspapers read:

“25 days to rescue our construction industry”.

The article cited a letter signed by high-profile players in the construction industry, and that letter was backed by the editors of the ‘Belfast Telegraph’, the ‘News Letter’, ‘The Irish Times’, and ‘The Mirror’. It called on the Executive to insure against underspend in any area and for local firms to get a fair crack of procurement routes to departmental spending. The article wins my full support in proclaiming that Northern Ireland needs a Northern Ireland solution for Northern Ireland’s needs. So what about it, Minister? With 17 days left to rescue our construction industry, what is being done to provide a Northern Ireland solution for Northern Ireland’s needs?

I am surprised that the Executive have not gone into semi-permanent session given the situation that we are in. I believe that a rewriting of the Administration’s entire economic policy is required in order to reflect the changed economic circumstances. Businesses are craving leadership and a greater sense of urgency and action commensurate with the depth and seriousness of the recession that we are in. They deserve to be told that we can or that we cannot make a difference for them.

Current circumstances are vastly different, and the idea that the Finance Minister’s introduction of a strategic stocktaking process has created a financial panacea to see us through these rough times is, I am afraid, no longer acceptable in the situation. I believe that that view is reflected in the Committee for Finance and Personnel’s submission on the strategic stocktake, which the Executive have in front of them for consideration at their next meeting.

That Finance Committee report, unanimously agreed in its strategic considerations, highlighted the following: doubt as to the reliability of information in departmental submissions to the stocktake, and thus, the evidence upon which Executive decisions may be based; failure by Departments to fully address the stocktake terms of reference in identifying significantly increased requirements without setting out how those requirements will be addressed; the Budget implications of not achieving previously planned asset realisations; doubt as to the Departments’ capacity to deliver accelerated capital expenditure in the circumstances in which they are required to raise their standard of financial management and performance; and the need for clarity on the departmental budgets regarding the Chancellor’s pre-Budget report. The Committee’s report also highlights a general concern at the range and quantum of new and emerging pressures on existing budget allocations that remain to be addressed.

I could almost rest my case. I have put to the Minister the full import of what the public expects. Will the Minister to whom I tabled this motion — he is not in the House, and I regret that, but I still make my remarks to him — accept the realities of the consequences of the recession that businesses are facing? Will he move to stabilise the current pressures on business, and tell us how he is going to do that? Will he act to minimise the impact of job losses, and tell us how? Will he encourage his Executive colleagues to go into semi-permanent session? If he cannot do these things, will he tell us why? I await his response.

Photo of Stephen Farry Stephen Farry Alliance 6:30 pm, 8th December 2008

I beg to move amendment No 1: At end insert

“; and furthermore, to set out what steps are being taken to accelerate investment and to re-direct resources to both boost the level of economic activity and to re-balance the economy.”

I thank the proposers for tabling the motion for debate. It is vital that the Assembly be fully seized of the economic downturn and, in particular, its effects upon Northern Ireland. We are all conscious of its effect on households and businesses alike. It is important that we ensure that the Executive do everything that they can to address the situation.

In some respects, this debate may be the overture to the main performance of next week’s take-note debate on the Executive’s action plan. I hope that this evening’s discussions will serve an important function in shaping the deliberations of the Executive even at this, the eleventh hour. I stress again that those deliberations are long overdue.

It is important to put what the Executive can and should be doing into perspective. It is acknowledged that there is a global economic crisis, albeit with national and regional dimensions, and that action is needed at various governance levels.

Northern Ireland will benefit from global actions through the G20’s improved co-ordination and regulation of the global economy. Monetary action, such as the Bank of England’s reduction of interest rates, the rescue of the banking system, and the recent £20 billion fiscal stimulus from the British Government, will benefit the entire United Kingdom, including Northern Ireland.

Although not necessarily agreeing with the rationale or likely effectiveness of each of the incentives, one must acknowledge the sheer scale of the intervention.

As a percentage of GDP, however, the relative scale of the British Government’s intervention is overshadowed by the interventions of other Governments, including the possible plans of the incoming Obama administration.

The Executive do not have access to significant tax-varying powers or borrowing rights; nevertheless, the Executive could take action on two broad fronts. First, they can take steps to address the situation in Northern Ireland. However, they have not acted in a decisive, effective or timely manner. Recently, the Alliance Party called for the introduction of a 10-day pledge for the prompt payment of invoices by Departments and agencies. Good cash flow is critical for businesses, particularly in the current climate. I welcome the Finance Minister’s decision to introduce that pledge for Northern Ireland at the end of November. However, that was at least six weeks after the same commitment was made by Lord Mandelson on behalf of the British Government.

An even greater problem lies with the actions that the British Government took at the start of September in relation to a package of measures on fuel poverty and energy efficiency. Much of that did not directly apply to Northern Ireland; with devolution, we have our own responsibilities. However, three months on, Northern Ireland is still waiting for its own package.

Secondly, the Executive can use their spending power to make a difference. It is a matter of regret that in the current Budget, populism was placed ahead of prudence, leaving little room for manoeuvre. Priority is given to plugging holes rather than to investing for the common good and for recovery.

The forthcoming Budget stocktake will be more about covering the gaps than about shifting priorities to encourage investment to grow the economy out of recession. If better plans had been in place, a better range of opportunities would be available to make a difference.

The Executive have some Barnett consequentials coming their way and an enhanced ability to bring forward investment. The great challenge for the Executive lies in their capital investment programme. In this economic context, all Governments should be looking to accelerate investment.

For example, the UK Government are investing a further £1 billion in social housing. The question in Northern Ireland is whether this year’s capital Budget will even be spent; we have a damaging culture of underspend. This year, some Departments, notably Health and Education, are dragging their feet over investment delivery plans. Reaching the end of March with considerable capital underspend would signify a massive failure across Government.

The challenge is to rebalance and modernise the economy to be better prepared for recovery and to take full advantage of new opportunities.

There must be no complacency about the problem that is posed by the relative size of the public sector in Northern Ireland — it is a major structural weakness. In the short term, however, that may ensure that the recession in Northern Ireland is not quite as deep as in other parts of the UK or in the Republic of Ireland.

I fear that the structural weaknesses in Northern Ireland and its poor performance in investing for recovery will mean that the recession lasts longer. The onset of recession must embolden and accelerate efforts to deliver economic change. However, at present, there is no overarching economic strategy for Northern Ireland beyond the loose framework within the Programme for Government. The process of putting in place a regional economic strategy has stalled and may even be downgraded.

There is a particular question about which sectors are potential targets for growth. I am thinking about the potential for following the example of other nations in seeking to invest in the green economy. The potential of the “green new deal” in the United States is an example. There are also works such as ‘Hot, Flat and Crowded’ by Thomas L Friedman that give wider popular recognition of opportunities offered by the green economy.

I had the opportunity, by coincidence, to raise the issue of the green economy with two DUP Ministers last Monday. The Minister of Enterprise, Trade and Investment, Arlene Foster, who is in the House this evening, said:

“There are tremendous opportunities for us in manufacturing, research and development and innovation. In fact, we could be leaders in the green economy in all those areas”. — [Official Report, Vol 35, No 7, p309, col 2].

That was a very positive statement. However, later that same afternoon, the Minister of the Environment, Sammy Wilson, said:

“That is a bit like saying that, if one broke all the windows in one’s house and spent money replacing them, there would be some sort of net benefit to the economy, because one would have bought all that glass. One would be no better off; one would still have window panes but would have spent money on them.” — [Official Report, Vol 35, No 7, p344, col 1].

He went on to call that “voodoo economics”.

I suggest that the Minister of the Environment does not seem to grasp the economic logic of replacing single-pane windows with double glazing. Members are used to hearing contradictory messages from different parties on the Executive, but those statements constitute a major difference between two DUP Ministers. I hope that the Minister of Enterprise, Trade and Investment clarifies the Executive’s position in that regard.

I am critical of many aspects of the UK’s fiscal stimulus efforts, including its failure to invest sufficiently in the green economy. It is, nevertheless, worth recognising that the UK is set to spend another £535 million on that green economy.

The Alliance Party agrees with the sentiments of the UUP/Conservative Party motion; it certainly notes that the UUP has been a little more interventionist in its approach than its Conservative partners have been at Westminster. I hope that that is not the first split in their marriage. The purpose of the Alliance Party amendment is to take the very welcome motion a little further.

My party’s amendment adds two important points. First, the Executive must not only ensure that the current capital budgets are spent, but resources should be shifted in order to accelerate investment. Secondly, the amendment argues that measures to address the downturn, plan for recovery and restructure the economy must go hand in hand; they reinforce each other and must be carried through at the same time.

We can also support the SDLP amendment, because the two are not mutually exclusive; they complement each other. In particular, the SDLP amendment goes into greater detail on immediate steps that might be taken in relation to capital spending and the construction industry. The issue of prompt payments, of course, has been addressed by the Executive.

Unfortunately, the debate is at a late hour in what has been a busy day for the Assembly. However, it is important that a collective, positive and strong message is sent out that all Members are taking the issue of the economic downturn extremely seriously. I am conscious of the effects that it is having on my constituents and the business people whom I represent. I am sure that every Member could say the same thing. The response of the Executive has not been strong enough to date. I hope that that situation will be rectified in the weeks to come.

Photo of Declan O'Loan Declan O'Loan Social Democratic and Labour Party 6:45 pm, 8th December 2008

I beg to move amendment No 2: At end insert

“; and further calls on the Executive to commit all Departments and public bodies to making prompt payments to suppliers, within ten days at the latest; expedite their capital investment programme; make representations to Treasury for further measures to stimulate the economy; and exert influence on banks and Revenue and Customs to show proper consideration, support and sensitivity for local businesses and their workforces.”

I support the motion and the Alliance Party amendment, and I believe the SDLP amendment adds to the motion in a useful way. It is important for the Assembly to react in an appropriate way. Not just now, but for some time to come, the news on the economic front is not going to be good.

Serious commentators suggest that 2009 will be more difficult — perhaps considerably more so — than matters are at present. The Assembly cannot debate every piece of bad news, but there is a need for it to say meaningful things in a strategic manner at crucial moments. The present can be regarded as one such moment.

I listened to the words of incoming US President, Barack Obama, at the weekend. He said that the situation will get worse before it gets better. He also said that there is a need to jumpstart the economy, not only for the short term, but for the long term, in order to achieve sustainable economic growth. The same message applies to Northern Ireland. This is not the occasion or the time for easy rhetoric — it is the time to show that the Assembly is a serious place where meaningful things are said.

The news on jobs is certainly not good. There is a significant loss of confidence in many sectors. Retail has been affected badly. Above all, there have been dramatic job losses in house construction. I had hoped to say that the story on manufacturing is somewhat better; however, today, I heard the news that there is a noticeable downturn in that sector. That should not blind us to the fact that the manufacturing sector has, in recent years, increased its output well ahead of the UK rate. Although Northern Ireland’s manufacturing base is, indeed, too small, it is solid and must be built upon.

I want to express my support for Northern Ireland Manufacturing and to congratulate it on its new name and new policy document ‘Manufacturing Counts’. It is an important body, with some 500 members. I support its call for a new concordat between manufacturers and Government. I welcome its initiative with the Carbon Trust to save energy in production and to develop new products in the green sector. I welcome what it calls its “4 Cs”, particularly its reference to:

“changing our Culture by changing our own view of our potential.”

It is absolutely true that many barriers to success are inside our own heads.

I welcome the Enterprise Minister to the debate and I appreciate her attendance. I welcome her development of a blueprint on further exploitation of science and R&D capabilities. I also welcome her independent review of economic development policy. If I have any question on that, it is, perhaps, why it did not come into being sooner.

That will feed into the Department of Finance and Personnel’s (DFP) revised regional economic strategy. I note that, this week, it will tell the Committee about its plans for a replacement paper for delivery of economic growth in Northern Ireland. I have noted the reference to action by both the Finance Minister and the Enterprise Minister. After 18 months, people want to see action.

As for construction, there are clear indications of serious trouble in Government procurement. Delivery plans in health and education have been delayed. Work on 28 new schools is seriously behind schedule, and so, too, is the maintenance programme. Money that has already been agreed has not come through. The Assembly ought to be as shocked as I am that no less than 42% of all departmental capital spend is scheduled for the last three months of the current financial year.

There are two significant issues with that: first, far from capital spend being brought forward, which is what everyone has called for to deal with the crisis in construction, that capital spend has been delayed. Secondly, as Stephen Farry has mentioned, there is now serious danger of underspend, and that money will disappear into an end-year flexibility black hole, from which it may or may not return.

I draw the conclusion that there are serious problems with the procurement system. It is not surprising that the Committee for Finance and Personnel is conducting an inquiry into public procurement. Legal findings against DFP and the Department of Education indicate those concerns. There are serious questions about the framework approach — for example, what opportunity does it give small and medium-sized enterprises (SMEs)? Reform of procurement must make it less bureaucratic and more open to SMEs.

What use is the power to bring forward spend? The Assembly has been permitted to bring forward £86 million of spend from future years. I support that. However, what use is that provision if, at present, the Assembly cannot spend the money in the current year’s Budget? That is the situation.

I wish to discuss action that has been taken by banks. I support the remarks of the Federation of Small Businesses in that regard. I regret a point that has been made elsewhere that local banks have not come forward themselves, nor rapidly enough, to speak to the Finance Committee.

The banks have been recapitalised by Government, but that money must get to the businesses that want it. The Government must either make the banks do that or take them over. People in higher places than me — or, indeed, anyone in the Assembly — have made that point. The base-rate cuts must be passed on to businesses fully and at once. Rates of interest should be based on the Bank of England base rate rather than the — London interbank offered rate — LIBOR rate, which is a higher rate that changes weekly and gives no confidence or certainty to businesses to allow them to plan.

The Assembly and the banks must support businesses that have cash-flow problems due to unpaid bills. The SDLP amendment includes an instruction to public bodies to pay bills within 10 days. Stephen Farry mentioned that that had already been implemented, but we added the reference to public bodies and Departments. The small business finance scheme — which was introduced by the Chancellor in the pre-Budget statement — was designed to guarantee loans. Local businesses need clarity on how that scheme will operate here.

I look forward to the introduction of a small business relief scheme. A scheme such as the one that is in operation in Wales would cost only £6 million, and it would be a big psychological boost for small business. The rating of vacant business premises was brought in not long ago, when times were good. It was introduced to encourage the productive use of resources — a perfectly good reason. However, it has now become a significant burden on many businesses who cannot dispose of their property through lease or sale. I ask for that significant issue to be reviewed.

I also make a proposal in respect of social housing. The Minister for Social Development made particular reference to the proposal when answering several questions during today’s Question Time. This is not special pleading on behalf of DSD, and I would be only too happy for the Executive to take collective credit. The proposal is simply for substantially more money to be provided for social housing. For example, social housing could be promised first call in future monitoring rounds. If further dedicated funds could be obtained for social housing, so much the better

There is no measure that would give more help to our house-building sector, and it would also help to solve a huge social problem. It is the single initiative that comes to mind by which money could be injected into the system quickly. It would have a dramatic impact on unemployment and the crisis facing the construction industry. It is the single most tangible thing that the Assembly could do, and it would be a useful outcome of the debate.

Photo of Peter Weir Peter Weir DUP

The DUP supports Dr Farry’s reference to sending out a collective message of recognition about the seriousness of the economic downturn. The DUP is also happy to support the amendments that have been tabled by the Alliance Party and the SDLP, and the initial motion that was proposed by the Conservative/Ulster Unionist Party.

The Ulster Unionist Party spent much of the weekend castigating the DUP as being the “little Ulster” party. Therefore, I was somewhat taken aback when the proposer of the motion seemed to advocate some sort of economic Unilateral Declaration of Independence (UDI), where everything has to be within the prism of Northern Ireland. There must be recognition that the economic downturn is a global situation. What we do locally has to complement national policy and global economics.

The proposer of the motion showed much more of the true spirit of Conservative commitment when he seemed to distance himself from his Executive colleagues by deriding the securing of £900 million from the Treasury and the deferment of water charges. Perhaps, the proposer of the motion would have preferred for that money to have been cast back to the Treasury, for £900 million worth of cuts to have been made, and for water charges to have been imposed. That seems to be the logic of his position.

The proposer of the Alliance Party’s amendment indicated that we are part of a global situation. The FSB and others have highlighted the problems in respect of local banks.

Issues such as the difficulty in obtaining additional lending, problems with withdrawing overdrafts, the imposition of exorbitant charges, some banks’ uncooperative attitudes, and the cancellation of business Visa cards are, perhaps, reasons why banks are, as Mr O’Loan mentioned, reluctant to subject themselves to scrutiny. Indeed, the banks seem to be, at best, stand-offish. Given the level of public investment in banks — particularly from national Government — banks cannot expect, on one hand, to be bailed out while, on the other hand, they make life difficult for SMEs.

I share other Members’ reservations about some of the economic packages that have been established by national Government. It would be churlish of the Assembly not to realise that the pre-Budget report included several measures that should benefit SMEs, including more generous tax relief for businesses that are experiencing losses by allowing additional carry-back of up to £50,000 of losses to be set against taxable profits from the previous three years. Other measures include HM Revenue and Customs business payment support service — which will allow tax bills to be spread — and the new small-business finance scheme. All those measures are welcome and will benefit businesses in Northern Ireland.

In the context of the global economy and national policy, we must investigate how to increase additional value. Although some action has already been taken, the Executive will introduce more initiatives. It was important to send out a signal about prompt payments, and the Minister of Finance and Personnel, Nigel Dodds, made an announcement on ensuring, from a Government point of view, that payment was made to businesses to ensure that credit did not accrue. That practical measure can be established.

The Department of Enterprise, Trade and Investment will roll out a roadshow to deal with the credit crunch in Northern Ireland; it will extend beyond Invest NI companies and will benefit the small-business sector. All Members will acknowledge that the small-business sector is the backbone of the economy in Northern Ireland, and we must ensure that we do not over-regulate, over-bureaucratise or overtax it. There have been moves in the right direction on that issue. The Assembly’s initial Budget focused on providing regional financial support. There will be challenges in the future, but with the goodwill and co-operation of all parties in the Executive — and those outside it — the Assembly can encourage businesses to focus and can provide support during difficult times.

Photo of Mitchel McLaughlin Mitchel McLaughlin Sinn Féin 7:00 pm, 8th December 2008

Go raibh maith agat, a LeasCheann Comhairle. Sinn Féin supports the motion and is content with both amendments, which add value to it.

The motion anticipates or pre-empts — and that was perhaps the original intention — the Executive response, but I am sure that the Minister of Enterprise, Trade and Investment will consider that in her response. Members have said that businesses and the Assembly are experiencing communication problems with the four main banks. The banks must declare what practical measures they are prepared to consider to help businesses and the local economy.

Although the regulation of banks and the response to those broad policies are not transferred matters, the Assembly is concerned about that issue. However, we must address issues such as the passing on of base-rate cuts to mortgage clients, the costs of loans and overdrafts, the level of fees and charges, the calling in of loans to business, and mortgage difficulties and repossessions, which have, inevitably, arisen.

I hope that the banks will clarify any additional steps that they are prepared to consider, because it is important to tease out the extent to which businesses and customers are benefiting from the measures that Alistair Darling and the Treasury announced.

For example, there is emerging evidence that banks are compensating themselves for any reduction in interest rates by simultaneously increasing loan and mortgage arrangement fees. That is an issue about which the Assembly would have particular concern.

I welcome the attendance of the Minister of Enterprise, Trade and Investment. There has been reference, particularly from Declan O’Loan, to the issue of underspend. I have welcomed and supported the consistent commentary of the First Minister and the Minister of Finance and Personnel on that issue, warning Departments of the reaction that there would be, at this time of economic downturn, if declarations are made so late that the Executive would have no opportunity to respond, or bring forward re-allocation or re-prioritisation proposals.

Given the track record — which, unfortunately, shows a history of late declarations and underspend on an annual basis, and which is often thrown back in our face by the Treasury when Ministers are attempting to negotiate support and relief measures for the work of the Executive and its Departments — I ask that the Executive consider contingency arrangements. There is a need to have a prudent position in relation to late declarations, as well as applying, quite properly, the oversight and accountability to warn Departments that that is an issue which the public will — rightly — criticise if it emerges that money is, in effect, being handed back to the centre. We have been told that there will be much more restricted access in the current circumstances to the end-year flexibility.

In addition, it must be recognised that the Executive is very limited indeed in its ability to respond to the economic crisis. Perhaps all of the parties in the Assembly could consider revisiting the proposition that we should, perhaps, seek more powers over fiscal issues, which would allow us to develop the home-grown solutions that the situation demands. Go raibh maith agat.

Photo of Ian Paisley Jnr Ian Paisley Jnr DUP

I welcome the debate, as I do the motion and amendments. However, I was a little taken aback by the comments — indeed, the criticism — of the mover of the substantive motion, when he seemed to suggest that the Executive did not foresee the economic crisis. The fact of the matter is that the Bank of England did not foresee the economic crisis, and nor did the Chancellor of the Exchequer or the Prime Minister. I do not know how the Member thinks the Executive in Northern Ireland would be given extra gifts and powers to foretell what was going to happen. This House should be interested in how we react to the crisis, and deal with it, in order to get Ulster out of the economic downturn that is, unfortunately, upon us.

The motion, rightly, calls for the production of an action plan. There is an action plan: it is the Programme for Government and the investment strategy for Northern Ireland, in which there are numerous milestones identified, which could — if people, and this House, put their shoulder to the wheel — be delivered, thus making significant progress for all the people of Northern Ireland.

In moving the second amendment, Mr O’Loan warned about underspend. That warning is correct, and will probably be most critical for the Department for Social Development, where there appear to have been huge problems with mismanagement of land sales. The house sales-scheme — which has been consulted on since February of this year — is now in place, and does not appear to have been taken up with the drive and momentum that is required to make it work. That Department needs to move from foot-dragging on house sales, and get on with a measure that will work.

How can significant progress take place? My colleague the Member for North Down Peter Weir was right to identify the banks. That is where we have to see some movement. The latest statement from the British Bankers’ Association (BBA) explains that recession may turn to depression. We have moved from boom to depression with no discernable period of recession in between. We must take stock of what stage the recession is at before we start talking it down even further into an economic depression. The banks have some responsibility for that.

This House and the banks must create consumer confidence. Businesses have to be encouraged that there is confidence, otherwise the 34-year low in house sales will continue to be driven into an economic depression. The media have a responsibility for that and this House has a responsibility for building — not busting — economic confidence. The woe is me stuff that we often get from some politicians and media circles must cease, otherwise this crisis will become a depression.

There are some very identifiable measures. Mr O’Loan identified the derating of vacant business property. I wish that that proposal would have been included in the amendment. The Executive have also identified £3 billion of capital spend to urgently release planning approvals. The Department has £2 billion worth of planning approvals for Belfast alone, which I hope are released urgently. Fast-tracking the investment strategy for Northern Ireland could help to ramp up investment in social housing so that the Minister for Social Development can meet the need of 5,000 social homes as urgently as possible.

Most importantly, the banks should be encouraged to lend money to the public. It is ridiculous that banks have not made themselves available to the Finance Committee. That should have happened, and I hope that that happens urgently because banks are practically civil servants who are holding our money. They are only able to function because they have a subvention from the Government.

Photo of John Dallat John Dallat Social Democratic and Labour Party

The Member should draw his remarks to a close.

Photo of Ian Paisley Jnr Ian Paisley Jnr DUP

They must urgently make that money available to the public and help the world of commerce go round.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

Go raibh míle maith agat. I welcome the opportunity to take part in this very timely debate. During the current economic downturn, it is clear that there has been a rise in unemployment, a rise in economic inactivity and a sharp decline in the housing market, which has led to devastating effects in the construction sector and a huge rise in fuel prices and the cost of living. It is painful for people to lose jobs at any time, but it is much worse when fuel prices are higher, borrowing is curtailed and the cost of living in general means that an average family has to find at least £29 more each week than they did this time last year.

Businesses have also been hit. Employee levels have decreased as more people are paid off because of an overall downward trend in business turnovers. In addition, company liquidation has increased by 50% when compared to statistics this time last year. There is a total lack of consumer confidence, which is evident in the downturn as people are buying fewer items for the home and are not replacing items such as cars and other family items. The construction industry has been one of the worst hit as a result of a decline in the housing market. Unemployment in the industry is currently at its peak. Some from the sector have forecast a loss of 10,000 jobs by March next year.

My colleague Mitchel McLaughlin commented on some of the initiatives that could be taken by the British Government. I will concentrate on what I feel that the Executive could do here to offset some of the unemployment difficulties that are associated with the current economic downturn and, in particular, to support smaller businesses. As has already been mentioned by several people, it is imperative that the British Government and local Ministers challenge banks and other lending institutions about their current lending practices.

The recent injection of public money in order to steady the banks has not cascaded down to local businesses or customers. Furthermore, although some banks are now under public ownership and many others are being supported by millions of pounds of public money, money is still not readily available for business or ordinary consumers, who are facing new mortgage arrangements that will put them further into debt.

Banks are still charging high rates of interest for borrowing, and are calling in credit from businesses that simply do not have the necessary cash flow to cope. Consequently, many of those businesses are being forced to close or to go into receivership. The present circumstances also affect retail giants such as Woolworths, which recently had to close, causing more unemployment — it is becoming a vicious circle. Banks have a social responsibility, and they must pass the good will that they received on to businesses and customers.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

I do not have much time, and I have a lot to say.

The way in which the Executive deliver the investment strategy and the Programme for Government could also help to offset the social and financial difficulties caused by the economic downturn. The Executive have already set out their commitment to maximise social and employment opportunities for everyone through the public-procurement process, which, although an essential part of the investment strategy, is even more important now. We must grasp that opportunity to secure jobs and create employment opportunities. Almost £20 billion has been earmarked by the Executive over the next 10 years for the public procurement of works, services and goods. Considering the all-island context, almost €16 billion is spent on public procurement each year, and most of that goes to overseas companies.

Small and medium-sized enterprises (SMEs) account for a large percentage of businesses in the North, yet almost three quarters of them, including those from the social-economy sector, do not even apply for public-procurement contracts because they think that the tendering process is stacked against them and firmly weighted in favour of larger companies, most of which are from overseas.

By working closely with organisations such as InterTradeIreland, Invest NI, the IDA (Industrial Development Agency) and the enterprise councils, North and South, we have an excellent opportunity to develop SMEs on this island and to encourage them to secure contracts through public procurement. Businesses in the North should have the equal access to public-procurement contracts in the South and, likewise, those based in the South should have access to contracts in the North. As things stand, because of the way in which procurement process is weighted in favour of larger companies, SMEs do not have equal access to either market.

Planning is another area that could be developed in order to create employment opportunities. Last month, it was estimated that approximately seven planning applications for large-scale investment proposals were sitting in the planning system. For example, the John Lewis site at Sprucefield, which does not even require public money, has been held up at the planning stage for long periods —

Photo of John Dallat John Dallat Social Democratic and Labour Party

The Member should bring her remarks to a close, please.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

I have not nearly finished. Although the debate is focused on offsetting job losses —

Photo of Jennifer McCann Jennifer McCann Sinn Féin

It is important that we also recognise that many people have already lost their jobs, and many more are living with the uncertainty of knowing where to find money for food or to keep warm. That, too, is a responsibility —

Photo of Robin Newton Robin Newton DUP

Like my party colleagues, I support the motion and both amendments. In addition, I wish to express my disappointment with Mr McNarry’s attitude when proposing the motion. The present circumstances are not, as Mr McNarry alluded, the fault of the Executive, and, even if they were, he would be criticising two of his colleagues, who are members of the Executive. If Members are to help in any way during this economic downturn, the House must work on solutions together.

Nonetheless, I welcome the motion, because it gives Members an opportunity to put on record their recognition and concern for the business community during these difficult days.

I wish to express my support for the 10-day pledge that was outlined by Minister Dodds. It is right that councils and Government bodies have remits to promote business, and it makes little sense to spend taxpayers and ratepayers’ money encouraging businesses, while potentially creating cash-flow problems as a result of invoices not being paid by at least the due date. The 10-day pay pledge is an initiative that the entire business community will welcome, and it should be extended to all statutory agencies.

Northern Ireland has a small-business economy. Therefore, we should all be concerned when small businesses are being damaged in the current economic downturn; it affects every single one of us. More than 95% of our private sector comprises small businesses. A loss of confidence in that sector and in its ability to trade will have a most negative impact. Declan O’Loan was right to make that point.

I have met many businesspeople in my constituency and beyond — manufacturers, service providers, new start-ups and long-established, particularly family, firms — and they all have one thing in common: the need for steady cash flow in order to continue trading. Companies do not always go out of business because of a lack of orders; they frequently suffer a cash-flow problem.

I wish to turn criticism of the Executive on its head. In particular, I wish to mention, without dwelling on them, three initiatives that Minister Foster has supported. First, the Northern Ireland Manufacturing Focus Group, which has already been mentioned, will be a viable and important initiative for the manufacturing sector.

Secondly, the Matrix initiative, which the Minister launched a few days ago — and which Stephen Farry did not name, although he indicated the importance of research and development and higher-value-added products — will be an important initiative as Northern Ireland develops over the next few years.

Thirdly, the importance of the Invest Northern Ireland initiative to stretch out to organisations beyond its current client base cannot be overestimated. I ask the Minister, in her ongoing review of Invest Northern Ireland, to consider that initiative further as an integral part of Invest Northern Ireland in the future.

At the heart of the matter, as has already been mentioned, is the need for a positive relationship between the banks and SMEs in particular. Like other Members, I have heard less-than-encouraging words about that relationship from the SME sector. I have been told of banks refusing credit to very good, solid businesses when they almost expected those same businesses to extend their credit during the good times of not so long ago. We need to ensure, whether it is done via the Executive or the Minister of Finance and Personnel, that the banks start to step up to the mark and take up their responsibilities. As one businessman said to me, in short, the banks proved to be poor partners to SMEs in Northern Ireland when the going got tough.

I understand that many of the measures that will be of help to small businesses have already been announced in the 2008 pre-Budget report and will be implemented by the Treasury. I would be grateful if the Minister would confirm that that is also the intention in Northern Ireland —

Photo of Robin Newton Robin Newton DUP

Will the Minister reassure Members that we will be working with the banks to ensure that small businesses are sufficiently aware of their options?

Photo of Leslie Cree Leslie Cree UUP

The current economic turmoil arouses much anxiety and concern among the public, the business sector and the policy-making community. Eventually, the economy will recover and, I hope, resume sustained growth, but we must take urgent action now to ensure that the recession will be short-lived and that growth will take off from as high a base as possible.

The Executive must fast-track capital expenditure projects such as roads, hospitals and schools. The Minister of Finance and Personnel has stated that some £86·5 million is available for capital spend during the next two years. What is the current situation in respect of those projects, and how much can be redirected towards social housing, which would help to offset the collapse in the private housing sector? Any easements in the December monitoring round must be utilised for further projects that will help to kick-start the economy rather than to plug some hole in the Executive’s Budget. It would be most unfortunate should there be a large capital spend left in the Budget at the end of this financial year.

It is essential that our best efforts are used to keep people in work and to sustain businesses through this difficult period. The VAT concession from the Chancellor is a step in the right direction, but it is much too small a step. He should be considering a VAT holiday to encourage the public to spend and to permit businesses to invest. National Insurance rates should be reduced for a period to assist in the regeneration of the economy.

The banks have come in for justified criticism for the part that they have played in the financial crisis, and several Members mentioned that. Banks must realise that it is crucial that they free up loans in order to improve the liquidity of business and assist their cash flow. The European Investment Bank also has a role to play in that regard.

The banks should be encouraged to delay house repossessions. Instead, they should consider renting the properties back to the mortgagees until the economy recovers. At that stage, the normal business operation could be continued.

The Executive should develop a recovery plan to create jobs, to sustain jobs and to improve cash flow and liquidity for small- and medium-sized enterprises. The Executive, with the Strategic Investment Board, should recognise that economic growth necessitates continued entrepreneurial innovation. Much more needs to be done in that area, and we need to develop better ways to quantify innovation in the marketplace. We need to create a stronger framework for identifying and measuring innovation in our economy and its impact on the economy. Furthermore, we need to discuss innovation drivers, impediments and enablers. We need, dare I say it, improvements in our education system so that entrepreneurship is encouraged from primary school to third level.

The planning and regulatory environment must be proactive in its dealings with individuals and businesses. Several Members commented on the Planning Service. Energy costs remain a major impediment to business and industry. We must continue to scrutinise those costs to ensure that they are as low as possible, and we must continue to promote energy efficiency and develop a strong energy policy.

Our high expectations on new foreign direct investment may not now be realised. As a result, Invest Northern Ireland’s budget will need to be refocused on the support for existing businesses. Much more can be done to develop our tourism economy. The signature project at Titanic Quarter is welcome, but there are many other opportunities that could be exploited.

The previous Finance Minister made much of the need to improve the performance and delivery of our Government Departments. He took the responsibility upon himself and initiated the performance and efficiency delivery unit to ensure that Departments were delivering their spending plans on time and getting the best value for money for those spends. More than ever, we need to ensure that that is happening and that the people and businesses of Northern Ireland are in the best position to ride out the current economic storm.

Photo of Claire McGill Claire McGill Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. I welcome the opportunity to speak in this important debate. It gives Members an opportunity to articulate their concerns, and I will articulate the concerns of the people whom I represent in West Tyrone.

Mr Paisley Jnr said that nobody knew that the current downturn in the economy was going to happen. However, Strabane District Council, of which I am a member — and I declare that interest — commissioned a short report, with the assistance of Oxford Economics, in the summer, when the state of the construction industry in my area became obvious. We were presented with the report in August 2008, and I hope to quote from it later in my contribution, because it is important that we make the connection between this place and other places.

One Member mentioned the important role that councils can play in the current situation. Council officers, particularly those who deal with economic development, have a role to play in feeding information to the Assembly. It would be worthwhile for the relevant Member here to have that type of contact with local councils.

The paper that was commissioned by Strabane District Council was about deconstructing growth. It deals with the construction industry over the past 10 years, but focuses on the years 2008 to 2012. The paper paints a picture of what will happen in my area of West Tyrone generally, but specifically in Strabane and the surrounding area.

The figures come with a caveat, as they were forecast at a time when we were not in a recession. Things were beginning to slow down, but not to the extent that they are now. The paper states that 250 jobs will be lost in Strabane over the next two years in the base case, and that in a recession — where we are now — around 560 will be lost. The paper also refers to what it terms the second-round effect of losing jobs, when 280 will be lost, which, in a worst-case scenario, makes a total of 840 job losses.

The paper goes on to detail how much money the local economy will lose. In the best-case scenario, it will be £1·5 million, and that figure will be multiplied in the worst-case scenario. The west already has an issue with investment — and I will comment on that — but losing any jobs will have a serious effect.

A Member referred to Invest NI. I saw in the press that Mike Smyth from the University of Ulster said recently that there should be a re-profiling of what Invest NI does, and I agree with him. A review of Invest NI has already been mentioned.

I do not have the date of the paper; however, it is fairly current. I am quoting figures from the paper and, as with all figures — no matter where they come from — they can be challenged. It says that Strabane receives one fifth of the Northern Ireland average amount of investment. Over three years, that will work out as a deficit of £11 million, which is quite a bit. Apparently, Omagh receives half of the Invest NI budget — if the figures are correct. The people in my area would agree. Locally, the Invest NI office in Omagh does what it can within its parameters, and those parameters are a constraint. I support taking a good look at what is happening in Invest NI.

One local small businessman spoke to me this week about the difficulties that he Is experiencing with the Planning Service. The Executive have introduced several measures, but there are things that we could do now. We must look at big projects for Strabane town. I was delighted to hear the Minister for Social Development being so enthusiastic about what could be built on the Lisanelly site in Omagh. I hope that all the other parties will row in behind and do whatever they can to put the so-called education village on the Lisanelly site.

I welcome the debate and commend the Executive for what they have done so far. They have more to do. Go raibh maith agat.

Photo of George Robinson George Robinson DUP 7:30 pm, 8th December 2008

At the outset, I will try to make a positive contribution to the debate, which may seem a contradiction to the motion. However, we must send out the positive message to all those young people who are either at, or considering going to, university or further education colleges, that the situation will get better. We must encourage them to live and work in Northern Ireland as we require their skills, and they must bear with us during this difficult period and help us to be ready for the upturn when it comes.

I deal with the consequences of the economic downturn daily through my constituency office, as, I am sure, do most Members. Some people have already lost their jobs and others are waiting for decisions about jobs. However, as the political leadership of Northern Ireland, we must not only deal with the reality of the situation, but plan for the future. I have no doubt that the Minister has that planning well under way. It is true that the Minister is seen as the figurehead in the debate but, in reality, every Minister has his or her part to play in preparing Northern Ireland for the good times.

That could be achieved by continuing to promote Northern Ireland abroad. I have been pleased to assure people in my constituency of the dedication of the Minister of Enterprise, Trade and Investment and of the Minister of Finance of Personnel, both of whom have taken a keen personal interest in the problems of East Londonderry. For that, I thank them sincerely.

The Minister for Employment and Learning has a part to play, and he has taken a very positive step by securing places in further education colleges for apprentices who have been made redundant. I congratulate the Minister on securing that vital part of our job skills base.

All Ministers can aid the employment situation by considering whether they can secure capital expenditure and construction industry jobs. The Titanic development is a prime example of how that can be done. I urge large firms to make prompt payment to subcontractors, where possible, to ensure that they survive the downturn. Such a project will aid many firms and help to stabilise those smaller firms that supply the major contractors. That will greatly aid cash flow and is an example of how DFP can initiate growth locally. The employment generated will put money in people’s pockets, and although higher energy bills will mean that people might not have the same disposable income, they will still be able to spend money in local shops and aid cash flow at a local level.

I welcome this important motion.

Photo of Basil McCrea Basil McCrea UUP

I wondered whether I should stay to take part in this debate, given that it is late in the day and that many Members have already made up their mind about the way forward. I declare an interest: I worked for the Northern Ireland Manufacturing Focus Group, and I am a director of a telecommunications company. I have quite extensive interests in industry.

It is interesting to hear solicitors talking about the economy, about which they know little, apart from how they make their turn —

Photo of Peter Weir Peter Weir DUP

Will the Member give way?

Photo of Basil McCrea Basil McCrea UUP

No, I do not think that I will, because you have been a bit cheeky.

Photo of Stephen Farry Stephen Farry Alliance

The Member is a barrister; there is a difference.

Photo of Basil McCrea Basil McCrea UUP

In the real world, nobody cares. All we know is that you are fat cats; you take money for doing very little, apart from putting us out of business. However, that is not personal.

People have a go at the banks and ask why they will not lend more. However, the real problem — and Members heard it here first — is that banks have not yet declared their real liabilities for sub-prime lending. There is more bad news to emerge. The real issue is that as a result of lending to developers, banks have massive liabilities that they have not yet declared. If there was an accountant in the Chamber, he or she would talk about the European standards for accountancy that do not even let banks make provision for that yet.

Why will the banks not lend money? The answer is that they are in a hole that is much bigger than we yet realise. What can the Assembly do? Fundamentally, it is a matter of reducing costs and attracting high-value industry. I want the Assembly to take action rather than tinker at the margins. I have listened as the housing market was described as an engine for the future. It was simply not sustainable to have growth of 20% — which is what was happening in the housing market — when real wage increases were only 2% or 3%. That is not the way forward. The future lies in real long-term investment.

I am disappointed that Ian Paisley Jnr is no longer in the Chamber. He waved the Programme for Government around and said that it was all in that document; he told us that the plan is OK and that if we follow it, we will be all right. What utter tripe and meaningless drivel. What is needed is a step change. Mr Weir may intervene now if he wishes.

Photo of Peter Weir Peter Weir DUP

The Member is very critical of the Programme for Government. However, was that not the same Programme for Government that was endorsed by his party’s leader and his party’s Minister in the Executive?

Photo of Basil McCrea Basil McCrea UUP

Again, we hear that pathetic excuse — if it is good, we did it; if it is bad, your party was part of it, too. The position has changed. I maintain my position, Mr Weir, that what is needed is a step change in how the Assembly deals with the economy.

What went on before is not enough — relying on the old ways to make a living is not enough. We need someone to come along and say, for example, that we should run fibre optics to every house in the country — I have already declared an interest in that. We should be building infrastructure. If the Member for West Tyrone Claire McGill is concerned about investment in Strabane, we should build a railway or a road there so that it is viable to invest there and in similar areas. We must try to do something that will reduce the cost of doing business and increase —

Photo of Basil McCrea Basil McCrea UUP

I do not get an extra minute, so the Member better be quick.

Photo of Claire McGill Claire McGill Sinn Féin

There is a new road that goes past Strabane — the A5.

Photo of Basil McCrea Basil McCrea UUP

Then the investment can be made elsewhere.

What are the real issues in relation to the Official Journal of the European Union? All our public procurements are bundled into big issues, because that is easy for the Civil Service to manage, and it easy for us to say that we have conformed to the regulations. Why do we not do a bit of work and try to break those procurements down into small parcels of business that our existing small and medium-sized enterprises can compete for? A firm in my constituency has just lost a £40,000 contract because the University of Ulster decided not to tender it and gave it to a company in Wales. Who is the vice-chancellor of that august organisation? It is the person whom we will ask to lead the way out of this. We must think about the situation again.

The real solution is making speedy and nimble decisions and sorting out the planning process. If I were not here, I could be at the planning committee of Lisburn City Council trying to find a way to get the John Lewis proposal approved. Why is that being stopped? Why can we not find someone to make those decisions?

One year from now, will we look back, slap ourselves on the back and congratulate ourselves for doing a good job and fixing the problem? I wonder.

Photo of Arlene Foster Arlene Foster DUP

I thank the proposers of the motion for securing the debate at a very important time for the economy. Some important issues, and some not so important, have been raised, all of which I will try to address.

This is the first time that all the G7 countries have been in recession at the same time, which provides us with a particular set of circumstances that we have not had to face before. In the past, when one of the G7 countries was in recession, another was not, so it was able to trade its way out of recession. The Bank of England has confirmed that the UK economy is officially in recession. The Republic of Ireland and the wider EU are in recession, and output in the United States is falling. Most Members appear to be aware of the factors behind the economic downturn — others are not, but that is no surprise.

It was stated that the Executive did not anticipate the economic downturn, that the Programme for Government was a load of tripe and that a step change was required. I refer the Members who made those comments to page 27 of the Programme for Government, which states:

FDI targets are framed in the context of the prevailing economic conditions, in particular the predicted slowdown of the global economy and uncertainties in the financial markets. This may have a significant impact on the flows of FDI as companies adjust to revenue and cost pressures. The targets will be continually tracked and monitored against changing markets and, where appropriate, amended over the PfG period.”

That was written in the first quartile of this year, and it is clear that the Executive were taking action early and trying to deal with what was coming down the line.

Photo of Arlene Foster Arlene Foster DUP

No, I will not give way.

I recognise that businesses are looking to the Assembly and the Executive to take the necessary steps to help with the downturn.

Stephen Farry said that this debate was a prelude to next week, and he is absolutely right. Last Thursday, I attended an Executive subgroup on the economy, which was chaired by the Minister of Finance and Personnel and the Minister for Regional Development. The subgroup met in order to consider proposals from Executive Ministers to help to deal with the credit crunch. The full Executive will meet later today, and again on Thursday, when Ministers plan to set out their overall response to the difficult economic situation, which will be debated in the Assembly next Monday.

Furthermore, the Executive have already taken some important steps. Although Mr McNarry may feel that we have been off on holiday for the past five months, the opposite is the case. For instance, we have confirmed that domestic water charges will not be introduced in April 2009, which will leave spending power in the hands of households and consumers. We have worked to secure some additional resources from Her Majesty’s Treasury in order to alleviate immediate budgetary pressures. The full package amounts to £900 million, not £500 million, as Mr McNarry contended.

The Executive are also mindful of the severe difficulties faced by the construction industry at this time, and we are prepared to bring forward worthwhile capital projects in 2008-09 if funding becomes available through the surrender of reduced requirements by Departments in the December monitoring round. Several Members have made the point that Ministers must look to their capital underspend. As the Minister of Finance and Personnel has said again and again, there is absolutely no point in giving up capital underspend next year, when we cannot deal with the issue.

In addition, the Minister of Finance and Personnel announced recently that Departments have set a target of ensuring that approved invoices are paid within 10 days, in order to help local businesses. That is part of the motion that has already been acknowledged.

Mr Farry also mentioned the regional economic strategy. Work on a new strategy is progressing, and it will assess how Departments have fared in delivering their key goals in the economy under the Programme for Government. The new strategy will also embrace key reviews of policy delivery in Invest NI and the Department for Employment and Learning, in order to ensure that economic development policy is focused on all the correct areas of delivery; that is very important.

Mr Farry said that Northern Ireland had been worst hit by the recession. Although we cannot underestimate the implications of the downturn, Northern Ireland is not over-exposed on retail compared with the rest of the UK. It has experienced less exposure in the area of financial services, and there is nothing to suggest that the impact of the downturn in Northern Ireland will be deeper or last longer than in other regions.

Photo of Basil McCrea Basil McCrea UUP

Not “no, thank you”?

Photo of Arlene Foster Arlene Foster DUP

No, just “no”.

The MATRIX report identified potential areas for action. Mr Farry made some comments about that, for which I thank him. It is a key issue going forward. Let me be clear; the green economy was identified as a key area for action — tidal energy; wind power, onshore or offshore; and bioenergy. The reason for that is that we can make great strides in innovation, research and development and manufacturing. Therefore, I have no difficulty in restating my position and the position of the Executive on that issue. In particular, we must have a competitive, secure and sustainable energy policy. I hope that we will be able to produce such a policy when the ongoing review of energy policy is completed.

Declan O’Loan mentioned manufacturing and Government procurement. He knows well that some of the judicial reviews that have been instigated by the construction industry have, unfortunately, led us to the position that we are in at the moment on the issue of procurement. I agree with Mr O’Loan, and I regret that the banks will not appear before the Committee for Finance and Personnel. It is a matter of deep regret that they have decided to send a representative instead. However, as has been said on several occasions recently, although we regulate the banks, we do not have the power, either at a regional or national level, short of nationalisation, to force the banks to do anything that they do not want to do.

In relation to the comments that were made about ‘Manufacturing Counts’, I can assure the House that the Executive remain committed to supporting Northern Ireland’s manufacturing base. That is clearly demonstrated, for example, by the resources that Invest NI allocates to its manufacturing clients, which shows that the majority of Invest NI’s support is targeted at its manufacturing clients, with around 56% of total assistance offered by Invest NI going to such companies at present.

I have already said that the capital underspend is absolutely crucial. In my capacity as the Minister of Enterprise, Trade and Investment, I have also been able to take some short-term steps. Last Thursday, in my capacity as chairperson of the Economic Development Forum, I established a subgroup to come up with recommendations on further steps that we can take to help businesses at this time. The subgroup will report to me early in the new year.

Invest NI has established a £5 million accelerated-support fund to offer its clients targeted support during the current economic difficulties. Contrary to what Mr McNarry said about taking a holiday, the first of those meetings was held on 25 September 2008. We have had six to date, and we will hold another later this week. The accelerated-support fund has been specifically established to remove constraints to growth and competitiveness brought about by the current economic conditions. I am also glad to say that we will be able to roll out that roadshow, which Mr Weir mentioned, to non-Invest NI clients. The first of those events will be held next week in Omagh to cater for the western area. Therefore, I hope that Mrs McGill recognises that Strabane will be served by that.

Mitchel McLaughlin mentioned the banks’ increase in arrangement fees, and I acknowledge his comments. Difficulties exist with the banks, but I am pleased to tell the Member that the Minister of Finance and Personnel, along with some of my senior officials, intends to meet the banks next week to raise those issues.

Ian Paisley Jnr talked about the importance of reacting to the downturn. The Programme for Government has the economy at the centre of all that we do. Some Members from the Ulster Unionist Party clearly do not think that that is not enough. However, we believe that the economy should be at the centre of everything that we do now and in future.

Jennifer McCann spoke about the construction downturn. The Executive will spend approximately £5·5 billion on public capital projects over the CSR period. That should help to provide considerable buoyancy, especially for the larger firms in that particular sector.

Robin Newton mentioned the fact that 95% of private-sector firms in Northern Ireland are small businesses. That amounts to more than 132,000 businesses. Mr Newton is correct to say that confidence is key. His party colleague George Robinson also spoke about that issue.

The need for innovation was mentioned. We have the regional innovation strategy for Northern Ireland action plan 2008-11 and the MATRIX report, and I hope that those will progress meaningfully. I fully recognise the significant impact that the downturn is having on many sectors, businesses and individuals throughout Northern Ireland. As I outlined today, and on previous occasions in the House and elsewhere, we are taking whatever steps that we can to help.

We must also look to our national Government to deal with the issue. That is why I very much welcome some of the UK-wide initiatives that the Chancellor announced in his recent pre-Budget report. I reiterate the comments of Mr Weir, who said that he found it strange that the “little Ulster” party in the corner was so keen to talk about the greater Union at the weekend, but that now it does not want to look at what our national Government are doing for the economy. I regret that; however, let them answer for themselves.

Photo of Basil McCrea Basil McCrea UUP

You were not even listening to us.

Photo of Arlene Foster Arlene Foster DUP

I had to listen to you during the debate, thank you very much. [Interruption.]

For example, the reduction in VAT to 15% —

Photo of Arlene Foster Arlene Foster DUP

For example, the reduction in VAT to 15% until the end of 2009 should provide some stimulus to consumer spending and support for the retail sector. I welcome the small-business finance scheme to support bank lending to small exporters. I also welcome the new business payment support service, which will allow businesses in temporary financial difficulty to pay their HMRC tax bills to a timetable that they can afford. I understand that 50 firms in Northern Ireland have availed themselves of that service to date.

The deferral of the planned increase in small companies’ rate of corporation tax should also be of help. Those steps and the significant reduction in interest rates in November and again last week, alongside the recapitalisation of the banking sector, are targeted at minimising the depth and duration of the downturn in the UK economy. However, I think that we all wish that the banks would focus more on being banks, but because of the terms under which they received the Government money, they are looking to recapitalisation, instead of looking to what they should be doing — lending to small businesses.

That is an issue that we will have to examine, because, at present, the banking market is distorted. Banks are not behaving like banks, because they are more focused on paying money back to Government rather than on lending money to small businesses.

The recent fall in the value of sterling should also help. Locally produced goods and services will be more competitive, which will present good opportunities for export-based companies.

I also welcome the steps that the UK Government are taking to help homeowners at this difficult time. The new homeowner mortgage support scheme, which the Prime Minister announced last week, should enable people in proven distress to defer a proportion of the interest payments on their mortgage for up to two years, with the UK Exchequer providing a guarantee to banks and building societies.

We cannot underestimate the short-term pressures that local businesses are facing as a result of the global downturn, but it is important to keep focused on the medium-to-longer term priorities that are laid out in the Programme for Government. That includes ambitious goals for the economy, but given the downturn, we may need to be more patient as we seek to achieve those. The same holds for all Ministers of the Executive who have an input in supporting the economy at this difficult time. As Minister of Enterprise, Trade and Investment, I am committed to ensuring that the right policies and programmes are in place to deliver on the commitments of the Programme for Government.

If the Member for Lagan Valley Mr McCrea is wondering why I did not take his intervention, it is because I did not take well to being insulted as a solicitor in his initial comments. In the future, he should look to himself before he makes comments about me.

In the House last week, I announced the review of economic development policy as it relates to my Department and Invest NI. Work on the review is under way, and I look forward to those recommendations because they will be useful and timely.

I welcome the debate. Undoubtedly, these are difficult times for businesses, not only in Northern Ireland but throughout the UK and the rest of the world. However, I reassure Members that the Executive and my Department will do all that they can within the power and the resources that are available to us to assist businesses at this time. The challenge is to ensure that they are put in pole position when the global economy begins to strengthen.

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

I welcome the total consensus on the content of the motion and the amendments. There was also a fair degree of consensus during the debate, although it was certainly not total.

Stephen Farry referred to the benefit from the Barnett consequentials. Having looked at the figures, any new Barnett consequentials do not amount to very much. On capital, they amount to nothing, and on revenue, the most that they amount to in any one of the three CSR years is 0·25% of the total budget of the total departmental expenditure limit. At approximately £20 million, that is a useful amount, but it is nothing to get terribly excited about.

Ian Paisley Jnr referred to mismanagement in DSD over the sales of Housing Executive houses. We can all differ in our views, but there is no need to be gratuitously unpleasant. The use of the word “mismanagement” comes into that category. If one were to go out to the streets anywhere in Northern Ireland, one would struggle to find anyone who would say that the difficulty in selling Housing Executive houses this year had anything to do with mismanagement in the Department or by the Minister. Apart from Ian Paisley Jnr, no one would apply that word; his tone and words do not reflect well on him. When Mr Paisley got serious, he referred to the problem of the rating of vacant business properties, and I welcome his agreement on that point.

If I understood her correctly, Jennifer McCann said that firms from the South cannot compete on the same terms. She talked about large firms, and I assume that she meant large contracts, which would be advertised in the Official Journal of the European Union and conducted under EU rules.

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

I will certainly give way; it is as well that the House is fully informed about what the Member really meant.

Photo of Jennifer McCann Jennifer McCann Sinn Féin

Companies in the South face the same problems with getting access to the procurement process as companies in the North. That is exactly what I said.

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

At the time, the Member referred to large firms. I am glad to have that intervention; one can only smile at some of what goes on here, and there were some quite humorous moments in the debate.

Jennifer McCann would not take an intervention when asked, and then had great difficulty in cutting her speech short when time was called. Some lessons will have to be learned by the Sinn Féin scriptwriters so that certain sections of a speech can be marked as capable of being deleted without damaging its integrity. Therefore, when Sinn Féin Members are caught out by the Speaker, they will be able to bring their remarks to a close.

Photo of Claire McGill Claire McGill Sinn Féin

Thank you, a LeasCheann Comhairle. The Member criticised the manner in which another Member delivered his comments. I ask Mr O’Loan to reconsider the comments he has made about Sinn Féin.

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

I intended those remarks to be taken as humorous. Claire McGill cited as evidence a roughly torn-out piece of an anonymous newspaper. It is difficult to quarrel with evidence of such a standard.

Basil McCrea clearly does not like fat-cat barristers. I wonder whether that remark places him on the Labour wing of the Ulster Unionist Party.

Photo of Basil McCrea Basil McCrea UUP

Since it is Christmas, let me say that I meant no disrespect to Members who are solicitors or barristers. My point was that it is useful to have expertise in some other areas. I hope that we can all work together on that basis.

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

On another positive note, I welcome the Minister’s comments and the further immediate actions that she indicated that she will take.

Photo of Stephen Farry Stephen Farry Alliance

I agree that this was a fairly constructive debate. There was a degree of agreement across the House. The Assembly should send out a strong collective message that we are seized of the severity of the situation in Northern Ireland. It is not my intention to engage in narrow point-scoring, but to seek to challenge the Executive when they are not acting in a timely, effective or decisive manner. There are some areas in which they could act much more effectively.

That said, one must accept the context in which the Executive operate. Neither problems nor solutions lie entirely within their control — probably, the bulk of both lie beyond it.

I wish to clarify something for the Minister. I did not suggest that Northern Ireland would suffer a deeper recession than the rest of the United Kingdom; rather, I believe that it will be shallower, due to the public-sector cushion. My point concerned the fear that recovery in Northern Ireland could be slower.

Photo of Basil McCrea Basil McCrea UUP

Northern Ireland is protected in certain sectors, but it is particularly vulnerable in respect of housing because of the very rapid rise in house prices that preceded the recession. That is a particularly difficult issue for us.

Photo of Stephen Farry Stephen Farry Alliance

Housing is a big issue here, because of the extent of the price bubble. The other side of the coin is that financial services are not as big an aspect of the economy here as elsewhere in the United Kingdom.

I welcome the comments of the Minister with respect to energy and renewables. That was a very positive statement of opportunity for Northern Ireland, and we will watch closely to see how that develops.

Despite his attack on the legal profession — and his apology — Basil McCrea made a point about a step change. The Programme for Government, the investment strategy and the Budget must be seen in context. I take the Minister’s point that the downturn was acknowledged during the first quarter of the year. The combined efforts of our Executive and Strabane District Council may have served as a warning to the rest of the world.

However, things have changed significantly over the course of the year, and there is a need to reconsider the priorities in those documents. In particular, I urge the Executive to focus, not just on whether we deliver on the current capital spend, but on whether we should be accelerating the capital spend.

The second point is that, in doing so, we must examine the wider issue of how we restructure and rebalance our economy, and whether those investments can be to the long-term good. Other Members have mentioned the need to invest in various skills, such as research and development, and those are all important points.

Furthermore, the accountability of the banks has been a major theme throughout today’s debate. I wish to make a point in response to Jennifer McCann’s comments, which I do not mean as a personal attack. It is important that the banks bear in mind the support that is being given to them by the people of Northern Ireland. The overall size of the economic support emanating from the Westminster Government is around £35 billion. If that sum were divided across the United Kingdom, the taxpayers and businesses of Northern Ireland would be potentially contributing around £1 billion. In the light of that degree of commitment from the people of Northern Ireland to support the integrity of our financial system, it is clear that the banks have obligations regarding accountability. Although it has no direct responsibility for the financial sector, the Assembly is the voice of the people of Northern Ireland, and there must be more willingness from the banks to engage with the Assembly.

A number of other important points were made during the debate today: one was the rating of empty properties, which is certainly an area which we must rethink. I am prepared to put my hand up and admit that at the beginning of the year I believed it to be a good idea. In the context of the economy, at that point, I believed that it was important to ensure that buildings were used effectively. However, as the facts have changed, so too has my opinion. We must revisit the issue and apply a similar approach to our examination of the Budget, the investment strategy for Northern Ireland and the Programme for Government.

Photo of David McNarry David McNarry UUP

Today’s debate has been both good and positive; apart from the introduction of some terseness towards the end. I thank all of the Members who have participated. I also thank and welcome the Alliance Party and SDLP’s amendments, which the UUP — and the rest of the House, I see — are happy to accept.

My criticism of the Executive is based squarely on the five months of inactive, ineffective Government, while squabbling was going on between the DUP and Sinn Féin. I hope that people listened to me on that point, and did not just pick up what they wanted to hear.

Hard times in a recession bring no comfort, least of all to hard-pressed, hard-working small businesses. I have heard what has been said in the debate today — particularly by the Minister — with respect to the various initiatives that are in place. However, waiting on initiatives is a luxury that some people cannot afford.

I have pushed for fairer, more equitable access for small companies into the procurement process, and my colleagues on the Finance Committee have voiced similar views. The letter that I referred to in last week’s ‘Belfast Telegraph’ from people in the construction industry as good as — and quite rightly — demanded a fair crack at procurement contracts. However, those views, and the views in today’s debate, are being expressed while a rumour worryingly gains strength suggesting that there is an underhand, unwritten understanding between some financial bureaus and some Departments. Those rumours suggest that some — but not all — Departments are holding back on delivering projects in order to create underspends in this financial year, thus helping the Executive manage their deficit, which many now believe to be around £500 million. The House must know what is going on. We must see clear evidence that there will be no underspends, no hold-ups on projects, and that departmental spending tills will be emptied. It is up to every Member who sits on a Statutory Committee to be alert and ensure that no underspends occur under his or her watch.

Furthermore, we must urgently review all of our current commitments on public spending. That will enable us to release advanced flexibility into our economy through the funding of various projects that will have a direct impact on our economy and that will inject real confidence and certainty by helping our local employers stay in business. That is the key.

We also need to be aware that national action could have an adverse impact on Northern Ireland, and we must be proactive in preventing that.

I recently raised my concerns that the efficiency savings of £5 billion in 2010-11, which the Chancellor announced in his pre-Budget report and in his statement of 24 November, would impact directly on the Northern Ireland block grant, from which we receive the vast bulk of our spending. Certainly, the Secretary of State for Scotland thinks that it will impact on the Scottish block grant, and I do not see any reason why Northern Ireland would be any different. In our situation, we must look at every possibility: that is what this debate is about and that is why it has been brought forward. We need to take a long look at reprioritising the distribution of funding across Departments urgently and at a redesign of our overall economic package, which will help to keep people in work and that will sustain the many viable businesses that are in trouble now, largely through the disgraceful lending behaviour of the banks.

Accelerated infrastructure and construction programmes need to be put in place as a matter of urgency. We need to set up a parity watch on those accelerated programmes. The Northern Ireland economy is even more vulnerable than the UK economy as a whole: that is what people are saying about the recession. It will take longer for us to recover, and that recovery will be set back if we do not match, or even improve on, the energy and the level of activity in accelerated building, construction and infrastructure programmes of the London Government.

We must ensure that Northern Ireland does not fall behind the level of increased capital spending across the sea because of a lack of flexibility in the finances of the devolved Administration. Lack of spending flexibility must not condemn Northern Ireland to becoming an economic sink-hole. Our per capita earnings are already significantly below those in the rest of the UK. It is our duty to ensure that all local banks, which are subsidiaries of national banks, adhere to the Government’s new proposals and mortgage-support measures, which would defer repossessions by two years.

We must demand the extension of rental and buy-back arrangements with no financial penalties for those people with mortgage-repayment problems, so that as many people as possible can remain in their homes. Having and holding on to a home is so important. We must urgently review the bankruptcy and administration laws, and have a close look at no-blame arrangements similar to the chapter 11 protection arrangements for businesses, partnerships and individuals in the United States. That could help prevent the twin evils of fire sales and asset stripping that we will see.

We must also have renewed action, energy and greater imagination over the vexed issue of corporation tax. I believe that we should approach the Treasury again, but this time we should ask for a range of time-limited differential tax-rates aimed at specific types of firms, such as knowledge economy, high-research and development-focused firms. That could be set within the context of the economic downturn. It could be represented as a business recovery plan, and could be rolled out nationally and negotiated within the European competition guidelines.

Why not look again at the increase in the borrowing margin permitted by the UK Government to the Northern Ireland Executive? We are in dire circumstances. Why not seek an increase in the absolute amount in light of prevailing circumstances? If we could do that, would we not also be negotiating more favourable long-term and more relaxed use of the facility with a significant decrease in the interest that it accrues? However, that should only be done if it is part of an economic recovery plan, with the money being diverted into job-protection and job-creation measures, and cash-flow relief for the small businesses who, we all agree, are the backbone of our economy.

I have personal experience of that. However; it does not make me an expert. Due to the combination of inexperience, bad advice and cash flow, and a recession some time ago, I lost a business. I went home and told my wife and my young children, who did not really understand, that the house had to go. That is what people such as me had to do. It would probably not happen now, but it happened 25 years ago: the house did go.

I know of hundreds of people who are going through that experience now, or who will go through it in the months ahead. We cannot turn them down or shun them.

When I say that I understand that there is a global recession and that I think that we should do more to help, people chastise me or joke about the Tories and the Labour Party. I am not talking about that rubbish. I am talking about us letting people in that situation know that perhaps there is a way, but more importantly, that there is a will.

When I lost my business, the whole world collapsed. Imagine having to tell your wife that your house has to be sold. It feels as though everybody is talking about you, and there will be cretins who will talk about you for the sake of it — usually, they owe you money. Nevertheless, those people will talk about you and joke about you. They would perhaps not be able to do anything if something similar ever happened to them.

I understand small business. I am not talking about dramatic rescues, but like the couple in my constituency that I alluded to, I know that the world can fall in on people. We must reach out to what we refer to as the backbone of our economy and tell people such as that couple that we are going to find a way out. I do not know what that way is, but I know that part of it is saying to such people that we will listen to them and hear them and inject some confidence into them.

If any of those people are listening, I found a way out. I was lucky; I fought my way back, and I learned from that experience. It was tough. Let us not bring that burden on to too many people.

Photo of John Dallat John Dallat Social Democratic and Labour Party 8:15 pm, 8th December 2008

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

Question, That amendment No 1 be made, put and agreed to.

Question, That amendment No 2 be made, put and agreed to.

Main Question, as amended, put and agreed to.

Resolved:

That this Assembly calls on the Minister of Finance and Personnel to recognise fully the significant potential for job losses due to the current economic downturn; to detail what assistance he can draw on from the Treasury; and to produce urgently an action plan to assist small businesses, especially with regard to cash flow relief, and the level of assistance his Department can initiate locally; and furthermore, to set out what steps are being taken to accelerate investment and to re-direct resources to both boost the level of economic activity and to re-balance the economy; and further calls on the Executive to commit all Departments and public bodies to making prompt payments to suppliers, within ten days at the latest; expedite their capital investment programme; make representations to Treasury for further measures to stimulate the economy; and exert influence on banks and Revenue and Customs to show proper consideration, support and sensitivity for local businesses and their workforces.

Adjourned at 8.18 pm.