In the absence of the Chairperson, it is left to me to bring out the begging bowl on behalf of regional development and to use this opportunity to underline the importance of providing adequate resources for regional development in Northern Ireland. We must take cognisance of the economic pressures under which the Assembly needs to operate in the current climate, and we must also be aware that pockets are not quite as deep as they used to be. Previously, we complained about those pockets not even being deep enough.
Sometimes, it is all too easy to be parochial in our approaches to matters affected by the Budget. On the other hand, it is important to express the impact that reduced allocations can have on the often vital services being delivered by Departments, particularly in regional development. I am saying that to set in context the views of the Committee in relation to the debate.
The infrastructure investment programmes and transport services provided under the auspices of regional development underpin all aspects of life in Northern Ireland, be they social, economic or environmental. The people of Northern Ireland need and deserve the very best that we can provide in public infrastructure and services. High-quality, efficient and integrated roads and public-transport networks are essential to bring people to work, education and training, and social services across the Province. To connect Northern Ireland with the rest of the world, we need sustainable and economically viable ports and airports to bring tourists and businesses into Northern Ireland and to enhance our ability to compete in the global economy. The everyday quality of everyone’s life here depends on our having reliable, efficient, high-quality and value-for-money water and waste-water services, and the quality of the built and lived environment depends on sound and sustainable regional development policy.
The Committee for Regional Development continues to express its concern that the Department is facing more than £65 million in resource and capital pressures in the current year. That funding is required to meet the demands for the concessionary fares scheme, to maintain the street lighting stock, to support bus and rail services and to continue to provide transport services to older people and those with disabilities. The Committee was disappointed that funding for important and inescapable projects, such as those I have mentioned, is being sought through the in-year monitoring process.
Structural maintenance is a constant theme for the Committee, which has presented its concerns about funding levels for structural road maintenance at all available opportunities. Members are dismayed that roads structure maintenance remains significantly underfunded. Leaving aside the road safety issues that I am sure the Assembly supports, the Department indicates that, in purely value-for-money terms, it costs four to five times as much to carry out reactive maintenance as opposed to proactive treatments.
As Members will be aware, the Snaith review, a recent independent review of structural maintenance, found that around £108 million a year was needed to maintain the structural integrity of the entire network at good practice resurfacing frequencies. Structural maintenance for 2009-2010 was around £85 million, which is £23 million below recommended levels. The allocation for this year of circa £70 million is, again, below the recommended level. This year’s shortfall of £41 million is in addition to the existing £700 million-plus backlog in structural maintenance. Underfunding for structural maintenance cannot continue, and the quality of our road network underpins Northern Ireland’s competitive position and our quality of life. The impact of the prolonged periods of severe winter weather this year has yet to be finally quantified. However, it is clear that the condition of our roads has deteriorated seriously in recent months.
As we are aware, the Executive’s top priority is the economy. It is the Committee’s view that prioritising the economy means prioritising road structural maintenance. Spending on public infrastructure, such as roads and public transport, has been shown internationally to support and to stimulate growth across the economy as a whole. Such investment is never more cost effective than during a period of economic downturn. The Committee would support continued infrastructure investment to ensure that Northern Ireland is in the best possible place to take advantage of the recovery when it comes. For that reason, the Regional Development Committee is calling for additional in-year funding to at least meet the £108 million recommended in the Snaith review, together with allocations to address the backlog.
Those are just some of the difficult financial issues faced by the Department for Regional Development (DRD), even before securing future funding for vital improvements in areas such as bus- and rail-based public transport and improvements in the roads network. DRD can and will spend its allocations, and it managed its capital and resource allocations well last year. Provisional outturn figures that DFP published last week indicate that DRD has a capital underspend approaching 0% and a resource underspend of 1%.
At the outset, I want to comment briefly on some of the points that were made about water charges. I know that the Minister of Finance and Personnel has been faced with something of a dilemma in that area, particularly since 1 April, when Conor Murphy, the Sinn Féin Minister for Regional Development, moved from a situation in which the subsidy has run out, which everybody knew would happen, to one in which money has to be taken from other Departments’ budgets to fund the water service. Indeed, as far back as the previous Assembly election, some of us suggested in our manifestos that the DUP and Sinn Féin were tying themselves in knots by claiming that they would have nothing to do with water charges. However, the Finance Minister now has that dilemma to contend with.
I will move on to the education sector and the problems that it has as a result of the way the bundles are handled. I am sorry; I meant to say the budgets, but I suppose that bundles of money are being handed out to the different education and library boards. Under the current arrangements, money is allocated to the schools at the front line and only passes through the boards. The same happens with our youth services, but, thankfully, those front line services are being protected. However, the problem is that the rest of the education budget goes into what are called central or managed services in the boards. We know that there are pressures in all areas, and, until we get through this exercise, it is a pity the boards will not have clarity on the savings that they must make this year. However, that has not prevented them acting.
The resource budgets for special education, including those for children with severe learning disabilities, come not from the normal schools budget but from the centralised or managed part of the budget. That is a pretty awkward and unfortunate arrangement, especially this year, as the boards cannot cut front line services and must go to the centralised or managed services. Special education is one of the areas that has been hit.
One example of that is the recent decision to cut the provision of summer schemes on special school premises from two weeks to one week. There has been an outcry in the western board area about that decision, and I am sure that the same thing is happening and has been picked up on in other areas. The board used to provide the transport so that the children, particularly those in rural areas, could attend those schemes. However, the entire transport service has now been cut. That means that one week of the special scheme has gone and that the transport for the second week has disappeared. The result is that parents must take their children to the summer schemes. This is carers’ week, and we know that children with severe learning disabilities are largely cared for at home and that that is where the burden of that work falls. Those summer schemes provide an opportunity for respite and for parents in difficult circumstances to do other things with, for example, other family members. However, they now find themselves unable to do that. That must be looked at, and Finance Ministers, as we know, can sometimes round up money at the last minute. I am hoping that it is no different this year and that, given that we are talking about children with severe learning disabilities, some money can be found to at this late stage to save those summer schemes.
I want to comment briefly on the balance of resources, which was mentioned by one or two Members, including Stephen Farry. That is an important issue, and, if I can switch to the health sector, I will use health centres as an example. We know that the emphasis now is on developing primary care services and providing a much greater range of them. The benefit of that to the economy is a reduction in the pressures on hospitals, particularly acute hospitals. So, there are savings to be made by developing primary care services.
Unfortunately, that often requires new premises. There have been 42 or 45 centres identified for primary and community care infrastructure — in other words, newbuilds. I understand that only half a dozen of those have moved forward. If we are looking at things like the balance of resources, we should be looking at doing more to develop primary care services, which would lead to an overall saving in the hard-pressed health budget.
Go raibh maith agat, a Cheann Comhairle. I apologise to the Minister and to other Members for not being in for the whole debate this morning. I was here for a good part of it, and it was fairly interesting.
The Minister of Health made a quip to Stephen Farry at the end of Question Time about the budget for the Justice Department being ring-fenced. That was part of the arrangements for devolution. It was very clear to me that the Health Minister, who has responsibility for the healthcare of prisoners, has made it clear that there is a pecking order when it comes to delivering healthcare to prisoners. That is on the record and is something that we will be keeping an eye on.
Tommy Gallagher made some points about the Budget. I heard him take an intervention. Is he suggesting that the Minister of Finance, Sammy Wilson, should go back to the position that Mr Gallagher’s party colleague Mark Durkan had on the reinvestment and reform initiative (RRI), the rates reform, the Durkan tax on water? It seems to me that that is being thrown out. I am prepared to take an intervention from Tommy if he wants to expand on what he said, because I am quite interested in it.
There is not much point in going back if we are trying to find solutions. I can outline the SDLP’s current position on water charges, which can be summed up in four words: no new water charges.
I am glad. I have a lot of time for Tommy, which is why I gave him the opportunity to clarify that. It had sounded like he, along with David McNarry, was asking us to pay twice for water. At least Tommy was given the opportunity to clarify that.
I am on the Social Development Committee along with Simon Hamilton. I am sure that he will cover some, if not all, of the points that he raised in yesterday’s debate in more detail today. Sitting on a scrutiny Committee, one of the things that has jumped out at me has been stuff on the formalised Budget process. In his comments today and at later stages, perhaps the Minister can outline how that will be rolled out.
We do get presentations from officials. We all, including the Minister, have sat at the other end of the table and tried to draw something down and get to the bottom of it. Like many other people here, I consider myself to be tuned in as much as I can be. However, some of the language just goes completely over our heads. Some of the stuff that David McNarry was talking about earlier went over his own head, never mind anyone else’s. The point is that, as people are becoming more interested in democracy, they are asking questions that sometimes seem very technical. I am not afraid to say “I do not know” or “I will go and find out for you”. However, when I write the question down and ask officials, I get an answer that means less and is more confusing.
You are right; it is deliberate. I have arrived at the position that the use of that language is deliberate and is an art form. It is vital that every available opportunity to understand the democratic processes here, including the scrutiny of budgets, is taken.
David McNarry spoke about end-of-year monitoring. It is good if less money is available at the end of the year, because it means that the Departments are spending money properly. If less money is to be surrendered, that seems to be a good thing. I am not from the “no surrender” camp, but I understand the logic that if less money is given back, more money has been spent. My concern is still about the spending that happens, because I am not convinced that value for money is being achieved.
I do not expect the Minister to remember, but something that stuck in my mind was a paper entitled ‘Perspective on Social Housing’ (POSH). It had a glossy photograph of a housing estate in east Belfast that looked great, but over £1 million had been spent on a handful of houses. I do not begrudge people from East Belfast or any other constituency having a new home; that is a good thing. However, my query is on whether that is good value for money, and I am not convinced that it is.
Under the previous Minister for Social Development, Margaret Ritchie, many houses were bought off the shelf to meet targets. It was good that the targets were met, but the processes that were used to meet the targets suggest that something is not right. Not only were houses bought off the shelf to meet targets, more public money was put into houses to bring them up to a public standard. It does not sit right. My colleague Fra McCann has raised that issue consistently.
Particularly in this place, a lot of clichés are thrown out about the Budget. Sometimes, I can understand where they are coming from and, at other times, they are purely political. However, something needs to be taken out of the statement that we cannot cut our way out of a recession, and I understand that huge challenges will come to us all. We all have to be made accountable for those, and Ministers, in particular, will bear the brunt of that.
I agree with some of the comments of my colleague Jennifer McCann on procurement and social clauses. When Members such as me talk about social clauses, Members on the other side of the House think, “Here we go again, socialist rhetoric.” In fact, it makes economic sense.
The Member is being a bit unfair, both to herself and to the House on the issue of social clauses. All of us wish to see some social value coming from public procurement, and, indeed, that is now formalised in the procurement process. Frequently, I go out and look at public procurement projects to see what is happening on the ground and to get a flavour of where money is being spent. Especially on larger projects, I always ask whether the project employs anyone who had been long-term unemployed or has taken on young apprentices. Under procurement policy, there is a requirement to do that. I do not regard that as a particularly socialist policy. It is a good investment, because the more economically inactive people we get back into the workforce and the more people we get skilled up for the future, the better it is for the economy. If public money can help to do that, it is a good thing.
I thank the Minister for that. I will be really honest, because it is not fair to make a throwaway remark about the other side of the House. When I talked about the other side of the House, I was talking about Members such as David McNarry, and I was referring to his body language. Fair play to David, because Sinn Féin has economic spokespeople on the Committee for Finance and Personnel who are really tuned into the subject. I am tuned into it because I have an interest in social development, while other Members talk about budgetary issues all day every day. I can tune in and out with a bit of flexibility. One thing I picked up on is that, when my colleague Jennifer McCann speaks, you can almost see some Members react physically.
I accept the Minister’s point, which is the same point that I was going to expand on: social clauses make economic sense. They generally target the long-term unemployed. That is not to be unsympathetic to people who have recently been made unemployed as a result of the economic downturn. Given that their skills have been updated recently and that they may have better CVs, they will be better placed in the labour market than the long-term unemployed. I have great concerns about some aspects of public procurement.
Jennifer spoke about apprenticeships, particularly for young people, and the Minister mentioned them, too. Some of my colleagues on the Committee for Employment and Learning, have debated motions in the House on children and young people who are not in education, training or employment. This is a good opportunity for them.
I will speak about social housing from a social development perspective. Massive regeneration will potentially happen on my doorstep, and I thought that recent events concerning the Royal Exchange were disappointing and sad. Fra McCann knows the issue inside out and back again, but it struck me that Belfast missed an opportunity to secure value for money and improve the sequencing of such issues. I am sure that people from rural constituencies or smaller towns think that that is no big shakes, because Belfast gets everything. However, there needs to be better scrutiny of how money is spent during the Budget process, of how Departments roll out projects and of the sequencing of big urban regeneration projects.
I mentioned value for money. David McNarry, who is no longer in the Chamber, spoke about corporate mentality. I asked him to take an intervention, which he allowed. To be frank, I may need to be on the Committee for Finance and Personnel to understand some of the language, but I still do not understand Mr McNarry’s perspective. I am not being flippant when I say that. Through the Programme for Government, we agreed that the Budget should be spent in certain ways. Regardless of the presentational differences that I have with the Minister, the Department of Health has been historically underfunded, and it receives more than its fair share of the Budget. I support the argument that that is probably still not enough.
I formerly sat on the Health Committee, and I now sit on the Committee for Social Development and the Committee for Justice. We may need to consider other examples to see what we can do better. I accept that we have much to learn from other devolved institutions. We could pick out some models from them to use here. However, I am concerned about the pressing need to meet targets. In the process of meeting those targets, more money than has been allocated is being spent. Some big challenges need to be faced in the monitoring rounds.
I will finish by asking the Minister to expand, if possible, on what the formal Budget process entails. I am being totally up front when I say that, before the Westminster election, I was asked more questions about the Budget process than ever before. That is positive. I do not mean questions from lobbyists or big trade unions but from people whose schemes have collapsed or from the media. Although people in the media may not know the language, they see the headlines that classroom numbers are being reduced and ask questions. They may not be able to navigate the process, but they want to know, given all the cuts and the fact that money is not being spent, what we are doing with all the money. I would welcome an answer to that question. The next election is around the corner, and I know that we will be asked to explain ourselves. That is no bad thing.
I make my maiden speech during very difficult financial times for the economy in the United Kingdom, and particularly for Northern Ireland. As we look to the future, there will be difficult decisions to make. Sometimes, the best way to look at how we make those decisions and what priority we give to them is to look at what we have done in the past. Therefore, I will reflect briefly on some of what the Executive and the Assembly have been able to deliver for the people.
The Executive can be rightly proud of their achievements. The extension of free transport to 60-year-olds is a benefit that we brought in. Everybody is now entitled to free prescriptions, and I must declare an interest as someone who has a mild form of asthma and who uses an inhaler. I am now entitled to free prescriptions, and I am pleased about that. We have been able to freeze the regional rate, and we have capped the level of rating on industrial and commercial premises. We capped domestic rates. We ensured that people who were asset rich but cash poor were protected from excessive rates on their houses when the new valuation system was brought in. Water charging has been deferred for a number of years, and, this year, we introduced the small business rates relief scheme.
As the Finance Minister has indicated, the good days are over, and, in all likelihood, some of the measures that were taken over the years might not have been taken now. Nevertheless, a lot of credit needs to be given to the Executive. To listen to some programmes, one would, at times, think that the Executive have done nothing for the people. However, the record shows that that is not the case.
Tough decisions will have to be made as we move into the future. Ministers are already grappling with making 3% efficiency savings, and we know the difficulties that that has brought. In a previous role, I worked for the Minister of the Environment, and he did not have just 3% efficiency savings to grapple with; he had a 10% reduction in his baseline because of the deficit in planning income from receipts. Therefore, he has had difficulty beyond the 3% efficiency savings that other Ministers have had to find. Nevertheless, some Ministers will complain, while others will get on with doing the job and trying to live within their means.
Each Minister is given an envelope of funding. They make the case for what that envelope should be, but, ultimately, when the Finance Minister and the Executive approve the Budget spend for Departments, Ministers are responsible for delivering that to specific areas of funding. The Finance Minister is not a dictator. He does not dictate to Ministers that funding must be spent in specific ways. Ministers of those Departments are responsible for ensuring that they carry out their roles.
I agree with other Members’ comments that front line services are key and should be protected. However, it is important that inefficiency is driven out. I noted Mr Farry’s comments about how, at times, the line between front line services and backroom services can be blurred and that it is difficult to distinguish between them. However, the exercise that took place in the Department of the Environment (DOE) has identified a large amount of waste, and there are processes in place to try to tackle that. Therefore, I do not believe that the line is blurred. I believe that if there is a willingness and a determination by the Minister and civil servants in those Departments to drill down and drive out inefficiency, it can be done.
We talked about the deferral of water charges. Ultimately, it will be difficult to continue to defer water charges, but I do not believe that their deferral should be taken as a soft option. It is difficult to continue to defer water charges, but Members have commented that the pressures that those difficulties place on Departments can act as a catalyst to ensure that they drive out inefficiency. Nevertheless, the year-on-year deferral makes it difficult for Departments to plan properly, because they are often hit late in the cycle with a need to find additional cuts to allow the deferral of water charges to continue. Therefore, that is an issue that we will grapple with, and I am sure that it will be difficult to come to a resolution on it.
There will be many issues that I will want to work on as an MLA for Lagan Valley. One issue is investment in schools, and we have had very considerable capital schemes in the Lagan Valley constituency.
However, other schools are crying out for work to be done. The maintenance backlog has been mentioned in the local press of late, and I know that it is an issue in my area. Work also needs to be done on healthcare provision, road infrastructure, city centre investment and many other areas, and I will endeavour to do that.
In the education and health sectors, people who have special needs require help. As an MLA for Lagan Valley, my priority will be those who have special health and education needs. I sat on the South Eastern Education and Library Board and was one of the members who voted against the budget that led to us being suspended from that board. One reason why we did that was because it was proposed that if the board was to live within budget, the identification of special needs in children at nursery school was to be removed. There is no statutory obligation on education boards to identify children’s special needs at nursery school; that does not need to be done until the child begins primary school and enters P1. It was proposed that work on the earlier identification of special needs would be removed from the budget. We felt that we could not sustain that decision. Indeed, all the political parties on the board shared that opinion, but, ultimately, we were suspended.
(Mr Deputy Speaker [Mr McClarty] in the Chair)
During questions to the Health Minister, I mentioned the I CAN centre in Ballynahinch. That facility caters for children in my constituency and in other constituencies who have speech and language difficulties. If we do not ensure that the most care is given to those who are most in need — those who have not been blessed with the good health with which I have been blessed, and for which I am grateful — it will stand against them. I am committed to doing that work in Lagan Valley and to trying to build on the work that, as an MLA, former Member Jeffrey Donaldson carried out on behalf of those people.
I will take a few moments to comment on Jeffrey Donaldson. He is one of the hardest-working politicians whom I have come across. I know that our Finance Minister has a similar reputation. Jeffrey will always do what he can to assist anyone, regardless of whether the person is a party colleague or a member of the public, and irrespective of what time of the day or night he or she contacts him. The people of Lagan Valley endorsed him overwhelmingly at every election. Beyond the party vote, he has a huge personal vote in Lagan Valley, which is testimony to his hard work on bread-and-butter issues on behalf of those people. I am privileged to attempt to step into his shoes and to carry on the work that he has done for the people.
It is a pleasure to follow my old friend Mr Givan. I know that Members would not know it to look at him, but he and I are old friends, although I am more of an old-timer now. From our friendship over many years, I know that he has the skills, ability and attributes to be an excellent Member of the House. That is more than evident from the contribution that he has made in his maiden speech.
The debate has shown what could be described as an “evolution” of debates on Budgets in the House. When I first entered the House three years ago, debates on budgetary matters could be best characterised by Members on all sides reading lengthy wish lists. I did it, other Members here did it, and colleagues who are not here did it.
Some still do it. Yes, the Minister is absolutely right. It would appear that evolution is a slow process for some. At times, all parties and all sides of the House were guilty of rhyming off lengthy lists of what they wanted for their constituencies and pet projects and for the Departments that the Committees of which they were members were scrutinizing. The lists also contained issues that affected the Ministers from their parties and those issues that were more pertinent and relevant to them.
Thankfully, as the Minister has highlighted, that activity has not been completely disappeared, but it would seem to have lessened in some respects. There was an interim period during which Members seemed to complain regularly about the Budget, saying that there was not enough money and that there had been cock-ups, messes, foul-ups, and all sorts of things. That characterised Budget debates for a considerable period. However, I detect a healthy development. Members are now a little more circumspect in their comments. They recognise our real financial and budgetary difficulties. That harsh reality has forced Members to be a wee bit more sensible in their contributions. We do not tend to hear the lengthy wish lists that characterised Budget debates in the past.
Indeed, even Mr McNarry did two things that I thought I would never see in a Budget debate. The first thing that he did was to give way. He rarely does that. The second thing that he did was to try to put forward many constructive proposals. At least, their intention was to be constructive. If it is not unfair to pick out one person, Mr McNarry characterises the growing level of maturity that exists in the Chamber.
In many respects, Members are all in the same boat. I do not believe that anybody thinks otherwise. We now sit in an Assembly that has a five-party mandatory-coalition Executive, which represent well in excess of 80% of Northern Ireland’s people with regard to the votes cast. I am afraid that we simply cannot get away with bailing out and blaming others any more, even though some Members might have liked to do that in the past.
That harsh reality has been impressed upon us by the public spending scenario that we face. Everyone knows the difficulties that are in our midst. Mr Givan and other Members have pointed that out. We face £128 million of in-year cuts to our Budget. It is difficult enough to face reductions in the Budget when one has time to plan for them. To contend with cuts of £128 million in the middle of the financial year is desperately difficult.
The whole of the United Kingdom has a deficit of £167 billion, and it has been estimated that public sector debt is likely to grow to around 75% of the UK’s entire GDP. There is real and genuine concern that our economy could fall into the same trap that others have fallen into — not necessarily because of anything that we have done but because of the domino effect of what has happened to Greece. It has affected Spain, and other countries, such as Portugal, Ireland and Italy are on the fringes of that. That domino effect could easily hit our economy as well. Therefore, we are all acutely aware of the public spending scenario that we are in. During the next number of days, we face an emergency Budget at Westminster that will have a bearing and an impact on next year’s Budget. It could well make the £128 million of cuts seem easy-peasy in comparison.
As the Minister highlighted previously, the good times have gone. The days of sitting here and waiting for public spending increase after increase to arrive will not happen any more. The complaining that we did two or three years ago during the middle of those good times will be nothing compared to what is to come during the next number of years. I mentioned the complaints of certain Members in the House who, at times, bemoaned the Budget’s inefficiency, inadequacy and inability to deliver enough on this and that. We will look back on the 2008-2011 Budget as representing halcyon days in Northern Ireland.
If people thought that that was bad — when, year in, year out, there were record levels of investment in public sector infrastructure in Northern Ireland to build new roads, hospitals, healthcare facilities, colleges, and so on, which we have seen in all our constituencies — what will they think when that investment stops? Although it will not stop entirely, it will not grow at the same rate that it did in the past. They will not complain about the 2008-2011 Budget then.
There are years of pain ahead of us, but we do have to face those years. We can see this as a crisis, complain about how awful it is going to be, and run about like headless chickens, or we can see it as an opportunity. I hope that the growing level of maturity that is being exhibited in the House turns Members’ attention to using this time as an opportunity. I know that it is very difficult to look at the situation as an opportunity, when we are facing the level of cuts that are being proposed and are in the middle of a difficult public spending scenario, but I believe that there is an opportunity for us to do so.
When an abundance of resources is available, as was the case, comparatively speaking, we do not always look at how those resources are being spent. I agree with the Members who said earlier that we were ploughing money in, but I am not entirely convinced — in fact, I know for certain — that we were not always getting the most efficient performance in Departments, nor were we always getting value for money. I do not want to rake up old ground and pick old sores about the health budget, but that is a prime example of a situation in which record increases in investment were achieved, year-in, year-out, yet report after report highlighted the lack of productivity in the Health Service in Northern Ireland. We know that simply ploughing money in did not produce the levels of output that were expected.
In the private sector, no company will ever look at the product that it makes unless it faces competition, profits go down, or it goes into a loss or faces a downturn. It must be the same in the public sector: we must take the crisis of cuts in public spending as an opportunity to do things differently than we did in the past. That attitudinal change, which was not really there in the past, may well be enforced on us.
There is also a need and an increasing desire in the Finance Committee, of which I am a member, to have that change continue into the Budget process. Changing the Budget process will not change the amount of money going in, but it is incumbent on this House to have as rigid and robust a budgetary process as we possibly can. Given the constraints in which we are going to find ourselves, and increasing public demands, we can no longer always accept what Departments put forward. As individual Members, and on behalf of the constituents whom we represent and who benefit from the services that are provided by Departments, we need to get our teeth into the Budget lines that are coming forward and the bids that are being made by Departments. The Minister of Finance and Personnel must lead that change. We must have a Budget process that draws in stakeholders from the outside much earlier and that empowers individuals and Committees to scrutinise better the work of Departments and their budgets.
The Assembly must resource Committees better so that they have the skills and ability to do that work. We cannot simply accept departmental budgets as being the gospel truth. We must test them to ensure that they hit the priorities that have been set by the Executive. We must ensure that they deliver results for people and that they achieve the aims that we all share.
We can talk about the difficulties that we have with public spending and the cuts that we are facing, but we need to sharpen our pencils and become much better at scrutinising budgets than we have been up to now. In the past, I have read out long lists of achievements that we have made, of which we should be rightly proud, whether they are to do with record levels of investment in infrastructure or helping vulnerable people to obtain lone pensioner allowance, which has helped thousands of pensioners in my constituency to save hundreds of thousands of pounds on their rates bills. However, better financial management by the Executive has gone unheralded even though it is one of their biggest achievements, led as it was by the Finance Minister and his predecessors.
When devolution was restored in 2007, we inherited a scenario in which there was chronic underspending, year in, year out. It was a habitual problem. In 2005-06, the underspend amounted to approximately £375 million. In 2006-07, it amounted to £255·5 million. In two years alone, Departments had nearly £700,000 in their budgets that they had the power to spend but were unable to spend. That has changed drastically over the past number of years, to the point where, in 2008-09 — the last financial year but one — there was only £50 million in underspend. Between 2006-07, which was the last full year of direct rule, and 2008-09, £200 million more was spent on public services in Northern Ireland. We can see devolution making a real difference and impact, with more money being spent, rather than wasted and sent back to the Exchequer for us to bid for again in the hope that we might get it back to spend in our Budget. There has been much improvement in financial management, and we should acknowledge and support that.
Finally, I want to pick up on some points that were made by other Members. There was mention of an article in today’s ‘Belfast Telegraph’, which appears on the front page, and there is a two-page article inside the paper. I know that there are elements of the media who were enthusiastic supporters of restoring devolution, to the point of damning us all for being pathetic failures for not getting this place up and running again. As soon as the Assembly was restored, they set about trying to knock the place down again. The perverted view of certain elements of the media never ceases to amaze me.
That newspaper article is consistent with a theme that that publication has been pressing for some time. On the front page, and on two pages inside, there are all sorts of doom-laden predictions about the economy in Northern Ireland. There is a reference to a report by a leading economist in a First Trust Bank publication, which states that our subsidised standard of living must end. It refers to Northern Ireland as a “free rider”, and states that we are living way beyond our means. All those sorts of inflammatory comments might be interesting in newspapers, and might even sell a few, although I am not sure about that, but they belie the truth.
I am quite sick of hearing from the same people, whether they are economists, bankers or journalists, all of whom knock the public sector and everybody up here. No matter what party or perspective we come from, we are all here to try our best to make Northern Ireland a better place for the people whom we represent, and I am sick, sore and tired of us, this place and the public sector in general being knocked by certain people in the media, when they are very much dependent on the public sector for their employment. Economists at banks that are now totally or majority owned by the public sector and funded by the public purse are continually criticising the Governments here in Northern Ireland and elsewhere for the decisions that they make, when those banks, because of their bad decisions, have had to be bailed out by the public sector and the public purse.
During the recent Westminster election campaign, a letter arrived in my pigeonhole from three local newspapers that referred to how dependent they were on the public sector in Northern Ireland for advertisements, how important the public sector was to them and how they could not do without the public sector. However, they publish stories knocking Northern Ireland and our public sector. It is high time that they looked at themselves and their own behaviour before criticising others in Northern Ireland.
The reality is that there is a £7·3 billion funding gap in Northern Ireland. Nobody hides that fact; it is no secret. We are dependent on a subvention from the United Kingdom Government. We know that: it is the truth, it is a fact. We cannot hide it, and nobody is trying to. No one in this place denies that that is the case.
The article in today’s ‘Belfast Telegraph’ implies that we are somehow special, that we are some sort of different case altogether, and that we are a basket case alone among the regions of the United Kingdom. However, the fact, as any sensible person knows, is that every region outside of London and the south-east of England is dependent on subvention from those areas. We are not different. We are like Scotland, Wales, the north-east, the north-west, the west Midlands, the east Midlands and other parts of England. We are exactly the same in that respect, although it gives me no pleasure to say it. I wish that Northern Ireland were less dependent, but we are no different from other regions in the United Kingdom.
It is exactly the same across the border. Are parts of the west or south-west of Ireland not dependent on the Dublin economy? Similarly, the east of Germany is dependent on the west of Germany for sustaining it. It happens the world over. Certain publications do Northern Ireland a disservice when they churn out such claptrap on a weekly, if not daily, basis
I hope that, in time, Northern Ireland can make a greater contribution and that we are not as dependent. That has been my entire focus over the past number of years. The Executive’s priority is about closing productivity gaps and giving the economy a kick-start, and that is what we have been trying to do. Thank goodness that there is devolution in Northern Ireland and that we have the ability to address and be sympathetic to the concerns of people here during these difficult times.
In conclusion, I welcome today’s more mature debate in the Assembly on the issue. The style of this Budget debate has differed from those that we have had in the Chamber in the past; no doubt that has been brought on by the harsh realities that we face. We must look at the services, projects and schemes that the public sector provides and some of the sacred cows that we have with a much more critical eye than we were prepared to in the past, when there were record amounts of funding coming into Northern Ireland. It is incumbent on us to treat the situation that we will face in the next number of years not as a crisis but as an opportunity to fine-tune the Government and the Executive to make the country as efficient and effective as possible.
I begin by referring to an issue that I raised yesterday: the cost of local government reform. I declare an interest as a member of North Down Borough Council. I welcome last night’s decision to defer the reform of local government. It has been clear for many months that the original drivers for RPA cannot be achieved. The main driver for reform was savings to the ratepayer, and as those savings cannot be guaranteed, it would have been a case of throwing good money after bad. In the present economic state, it would be irresponsible to spend £118 million that we do not have in the Budget to fund those changes. I do not intend to repeat the points that I made yesterday. However, I emphasise that it is essential that we review all the priorities, policies and decisions that were made during the good times.
It is important that we see the Budget in the context of the present state of the Northern Ireland economy, which is fragile and needs tender nurturing. A recent Ulster Bank report indicated that in the second quarter of 2010, economic growth of 0·4% was achieved and the projected growth for the whole year is less than 1%. That indicates that economic recovery is extremely weak and must be treated with care. That was prior to the euro zone crisis, the Greek bail out and Mr Cameron’s latest cuts prediction.
In addition, the growth in the economy has been limited to the service sector, with manufacturing and construction continuing to decline. A major factor in the growth in the retail sector has been the influx of shoppers from the Republic to take advantage of the weak pound. However, in recent months, there has been a significant decline in the value of the euro, and as a result, traffic from the Republic is beginning to dry up. If that continues, we might fall back into recession. That is the present economic climate.
Economic activity is extremely low. There is plenty of spare capacity in the economy. Within the private sector, the service sector is producing 11% below its 2007 peak. In addition, manufacturing is down by 15% from its peak, and engineering is down by one third. That has been reflected in the level of unemployment, which has risen for 26 consecutive months. The rate of job loss has also been much more severe here than in the rest of the United Kingdom. Although unemployment fell last month, that is likely to be a blip, especially when the public sector cuts begin to hit. The Ulster Bank reports that the level of unemployment may not peak until 2012. Therefore, that is the economic climate in which we are presenting this Budget. Another worrying feature is house prices. The Royal Institution of Chartered Surveyors survey for March 2010 showed that house prices had fallen for the thirty-second consecutive month. That is very worrying.
We must ask ourselves how the Budget will impact on those economic problems. What will it do to generate economic activity? How will it reduce the unacceptably high levels of unemployment?
We must also consider the new political context in which we are working, and, in particular, the cuts that were recently set out by Mr Cameron. Mr Cameron frightens me. In comments made just before the election, he singled out the Northern Ireland economy for cuts. I am fearful of the damage that Mr Cameron’s policies will do and that they will undermine our fragile economic recovery. His record on the economy is consistent, in that he has been consistently wrong on all major economic decisions made over the past 20 years. It would appear that Mr Cameron hopes to maintain that record by getting it wrong again and destroying our recovery and slashing public services before Northern Ireland gets out of recession.
Mr Cameron’s record goes back to 1992, when he was economic adviser to Norman Lamont and Britain was forced to leave the European exchange-rate mechanism. Since then, Mr Cameron’s right wing economic views have led him to oppose the minimum wage and the decision to give independence to the Bank of England. We are fortunate that Mr Cameron was not in charge during the past few years, because his policies of refusing to help the banks and of cutting capital investment during a recession are similar to those that were adopted following the 1929 Wall Street crash, which turned into the Great Depression of the 1930s. It concerns me that the impact of applying such policies to the Northern Ireland economy would be extremely serious.
Mr Cameron’s recent response to the Budget is, therefore, disingenuous in the extreme. We have been faced with the worst global financial crisis, and the Government had no alternative but to stimulate the economy. Without those measures, unemployment could have been as high as 5 million. There was no alternative, just as cutting public expenditure now is a measure for taking us back into recession and increasing the hardship felt by millions of ordinary people throughout the United Kingdom.
Does the Member accept that there is a balance to be struck and that, in fact, if one keeps borrowing and borrowing and borrowing — similar to an extended credit card — one gets into trouble? Does he accept that Greece and Spain have shown particular difficulties because of that attitude?
Yes, I accept that. However, I am referring to the timing of cuts. The situation is that, at present, before our economy has moved out of recession, we are being asked to make further cuts.
I am always interested in the economic policies of the Green Party, which, if followed, would destroy half the businesses in Northern Ireland. When it comes to macroeconomics, the party is as well off as it would be with microeconomics and how individual business decisions are dealt with.
Does the Member accept that if we continue at current borrowing levels, there will be an impact on the economy and our recovery anyhow, insofar as debt interest — not repaying debt — will, by next year, amount to £75 billion? That is bound to have an impact here, and the danger is that there could be a knock-on effect on interest rates that would also impact on businesses. If we keep on spending in the way in which the Member is talking about, how do we get round the problem of servicing the debt without eating into the money that is available for vital services?
I accept everything that the Minister said. At present, the Northern Ireland economy is not capable of taking further cuts. There will be severe cuts in the longer term, but those will have to be phased in. It is important to get out of recession first. We are in extreme danger of ending up with a double-dip recession. The Tory, and now Liberal Democrat, economic policies are driven by the need to make immediate cuts in public expenditure, regardless of the impact on public services and ignoring the risk of a double-dip recession. Proportionately, Northern Ireland has a larger public sector than other parts of the United Kingdom, and that will, inevitably, lead to a disproportionate reduction in services.
Cuts in public expenditure are essential, but not at this stage. The introduction of further cuts now, given the earlier Budget cuts, would lead to a significant increase in hardship, particularly as Northern Ireland, unlike the rest of the United Kingdom, has barely emerged from recession. The economic recovery must be sustained, not choked at birth.
The actions of the Lib Dems are particularly disappointing. Nick Clegg went into the election with a manifesto pledge to delay spending cuts until the time was right. He immediately caved in to Tory demands, tore up his manifesto and became a cheerleader for instant cuts.
Yes, sorry. Thank you, Mr Deputy Speaker. I am trying to put the debate in the context of the pressures coming from Westminster. Further cuts are being demanded, and that is the issue on which I appeal to the Minister. Mr Cameron said that we could defer further cuts until next year, and I appeal to the Minister to follow the example of his Scottish counterpart by doing so. The Scottish Government plan to defer £332 million of cuts, and their Finance Secretary, John Swinney, said that he would defer the savings until next year:
“in order that we can entrench economic recovery.”
“At a time when economic recovery is extremely fragile, the spending cuts outlined by the Treasury risk undermining recovery and damaging our comprehensive work to support the Scottish economy.”
The Government in Scotland are saying that they cannot impose those cuts now. The Northern Ireland economy is much weaker and more vulnerable than that of Scotland, and we have already suffered cuts and made significant efficiency savings. Enough is enough: we must follow the Scottish example and defer further cuts until next year.
It is not sensible to tear up budgets that have already been allocated, and therefore, despite the reservations that I expressed yesterday, I support the Bill. We must re-examine our priorities and reconsider our previous decisions. We must ensure that scarce resources are allocated in the most efficient and effective manner. Their allocation must be focused on encouraging enterprise and expanding the private sector. In the short term, it is inevitable that the public sector will be reduced, but that will create an opportunity to develop new business, particularly in the green economy.
Go raibh maith agat, a LeasCheann Comhairle. I appreciate the opportunity to discuss the crisis and severe pressures in the budgetary position. As a member of the Environment Committee, I will touch on how those pressures relate to specific issues, how the Budget impacts on that Department and, more important, how it impacts on the public.
The SDLP did not vote for the current Budget when it was drawn up alongside the Programme for Government in 2007. We had significant concerns then about the implications of indiscriminate efficiency savings being imposed on Departments and, consequently, on front line services. The year 2007 followed a decade of uninterrupted economic growth in the North, which we hoped would continue. The year-on-year increases in public expenditure and the booming land and property market resulted in bumper capital receipts. Therefore, the economic analysis on which the Budget was based — in hindsight, it was utterly defective — made assumptions of steady economic growth. Indeed, many Departments were confident of continued growth at unprecedented levels and expanded their staff numbers and expenditure. For example, current problems in the Planning Service resulted from the presumption that those levels of growth would continue ad infinitum. There were numerous wasteful projects and ridiculous wastes of additional public money.
In recent days, I highlighted the hundreds of millions of pounds that have been spent. Further questions will be asked about the review of public administration, which has cost £113·5 million to date. We had Workplace 2010, the failure to establish the Education and Skills Authority and the failure to progress the Maze stadium. The Planning Service expended a huge amount of money on the Electronic Planning Information for Citizens (e-PIC) project, which continues to accrue additional expenditure. All those projects have cost us very dear.
Well over a year ago, in ‘New Priorities in Difficult Times’, the SDLP highlighted the black hole in the Budget finances. Crucially, we also highlighted the areas in which funds could be raised. The Assembly is now struggling with the additional cuts to our Budget of £128 million or more, with much more to come. The SDLP never claimed that our document was the finished article, but it was worthy of stimulating a serious debate, and no one else brought forward ideas for economic development.
When that document was published, it received grudging respect and, indeed, some positive comments from other parties in the Assembly, even including the current First Minister. The implementation of those proposals to assist the Budget is better late than never, and I welcome reports from my colleague Alex Attwood that the Executive are now considering some of our proposals. For example, we put forward ideas such as tackling senior civil servants’ pay, the pay of senior staff in quangos and the role of certain quangos. Ridiculously high bonuses were paid to civil servants, even on foot of poor performance. That is a serious situation and an awful indictment of the Assembly’s scrutiny of the Civil Service. We now all know that an inflated number of 39 senior civil servants who received high bonuses were based in DFP.
Another prime example that we highlighted was the role that the Belfast Harbour Commissioners could play in assisting infrastructure projects. Yesterday in the House, the Finance Minister confirmed that:
“There is a mechanism by which the cash reserves of the Belfast port can be accessed to fund infrastructure projects.” — [Official Report, Vol 53, No 1, p33, col 1.]
It is imperative that we build on some of those ideas. We must re-examine ways to invest more resources into areas that will sustain and grow employment during the recession and will position our economy to enable it to capitalise when the recovery comes. We must also show some leadership in bringing about that recovery. We must find ways for the Budget to help to create jobs, especially in the construction industry, which, given the constituency that I represent, I highlight continually.
There must be an in-depth examination to find Budget savings in the public sector, with a particular focus on senior salaries and perks. At the same time, we must protect front line services for vulnerable communities and people. In the past couple of weeks, I witnessed how cuts have impacted on vulnerable people through the closure of the accident and emergency unit of the Mid-Ulster Hospital. That, coupled with a service that is under stress at Antrim Area Hospital, highlighted some of the incredible positions that we now find ourselves in. I am angry about how that situation was managed, and the Executive must have much better budgetary planning to ensure that the public do not face continued shocks. However, I am aware that the Health Minister said that the closure was not entirely due to budgetary pressures, which is an issue that is being further explored locally.
In the Department of the Environment, we had the RPA debacle. The strategic approach in the Department seems to be almost in meltdown as people make a sort of risk reaction to cuts instead of managing them through a strategic approach. We also have the current cuts to Planning Service and difficulties within the NIEA, at a time when tackling environmental crime is supposed to be a priority for government. The actions that I have outlined are but some of those needed by DOE, but they are important and necessary for all Departments.
It is important that, in our Budget planning, we make changes. Until now, the Executive have failed to take decisive action on the Budget and the economic downturn. For example, we have seen the cross-sector advisory forum turned into a talking shop. It produced a wish list containing some good proposals, but I have no confidence that the Executive will implement them. DETI has commissioned an independent review of economic policy that the Executive have, likewise, failed to consider and implement in our current economic climate.
I highlight one more proposal from the SDLP that requires implementation: an oversight committee to look at the Budget. We have seen the mess that the Executive have made over budgetary issues in the last three years. To protect our front line services and target what limited funds there are to assist vulnerable people, we must ensure that future Budgets are properly scrutinised. We must never again see such a waste of public funds as I have witnessed both in the Assembly and as a member of the Public Accounts Committee. What has passed for public service in this place at times beggars belief. The public themselves must no longer have decisions foisted upon them that may not be based on the Budget. Often we ask ourselves on what logic such decisions are based: witness the closure of the accident and emergency department of the Mid-Ulster Hospital. It may be a local or parochial issue, but it is one that I feel deeply about, given my connection with the area. I live there, and I have seen close family friends being dealt with at that hospital.
Thank you, Mr Deputy Speaker and Minister, for your time.
Go raibh maith agat, a LeasCheann Comhairle.
It has been a long enough session today, and I apologise for being unable to speak in the debate yesterday. Had I had that opportunity, I would have left today out of the equation.
The Finance Minister has to sit through all of this, listen to it and try to make comment. Our new MLA said that the Finance Minister was not a dictator. The Minister is a likeable sort of guy; it is hard to see how he could be a dictator. There may be the makings of dictators in other Members of the Assembly, but that has not been checked out yet.
I will try to cover some areas that others would not. At this late stage in the debate, a lot has been said, so we may go over old ground no matter what happens. As Assembly Members, we are much more mature than we were a few years ago, and by now we should have seen through all the issues and into the hidden areas.
Carál Ní Chuilín asked where all the money had gone. That sort of comment tells me that there are others who wonder, as I do, where the savings will be made. We have talked at length over the last four years about savings. Every Budget was about the savings that we could make, but I have yet to see what, if any, savings have been made. That is the crux of the matter. If we cannot make savings in the Departments, we will instead have to make cuts for the future years.
Mike Smyth spoke about borrowing for the future at local council level, like taking out a mortgage, to help local enterprise. That might not be such a bad thing, because some local councils have not borrowed to the same extent as the Assembly may have done. However, that is for another day’s thinking, and it may well be worth looking at.
We can look at deflationary or inflationary models. Argentina spent 10 years cutting all expenditure back to zero but found that that was not going to work. It had to go the other way and spend, to raise the standard of living to a more acceptable level than the previous policy delivered.
We must learn from those policies. However, different Governments do different things. Given the new Government in Westminster, it is clear that people in the UK, as the saying goes, voted for cuts. That is good stuff, but it will affect us. As my colleague said, it affects our Budget, whether we like it or not. We are not separate from that.
During the debate on the Supply resolutions yesterday, the Minister and others mentioned the challenges and pressures that face existing priorities. We may think that there can sometimes be a lack of information when Committees are trying to scrutinise departmental budgets. Perhaps there is, and the Minister may even think that. He has to listen to what the experts tell him, whether he likes it or not. As Carál Ní Chuilín said, that is an art form, and convincing people can also be an art form. There is no one better at that than those who are skilled in that art. At the end of the day, we can be convinced that we are going in the right direction when we may not be.
David McNarry mentioned a figure of £7·3 billion, and he highlighted the fact that we do not take out anything like what we pay in tax to the Exchequer. He said that we get an easy ride. If all that were removed, which would probably be acceptable to me, it would be easier for us to move to a united Ireland if we did not depend on the easy ride or the pocket money that comes from the block grant, which is what we are getting at the minute.
That funding came from a background of sustaining the unsustainable, which is this entity. The North or the Six Counties was considered unsustainable, which, in its own right, it probably was. Therefore, it had to be bolstered by a tremendous amount of money. We have been in conflict for the past whatever number of years, and we did not get the kind of returns or inward investment that ROI or areas such as Scotland, Wales or England got. That was our dilemma. Therefore, it was not for nothing that that extra money was put in.
People should look at where that money was spent and where it is being spent. Each Department has a certain amount of money, and, if we were to go back through the years, we would see that the cake can be cut only in so many ways. The first division in most Departments is in wages, salaries and bonuses. Whatever little corner is left then goes on roads, stone, tendering or whatever else. It is the same with council budgets. Perhaps that needs to be reviewed. People may not be happy with that, but we are talking about jobs.
Cavan, which is the opposite county to my constituency of Fermanagh, was mentioned to me recently as an example of that situation. The Fire Service there employs 10 people to our 33. We can either sustain jobs or throw people out of them. That is a difficult situation that would not go down well with anyone. However, we may have to consider such matters in the future.
Regardless of whether it is in the North or the South, youth unemployment severely affects the whole island. Compared with the figures for a short time ago, youth unemployment in the Republic has increased by around 100,000. Here, around one in three of our young people is unemployed. That number is disproportionate, bearing in mind the size of the population. We must realise the effect that that has on young people.
Young people now have far higher expectations than we had. What is the future, cost and value for money of the education that they receive if, afterwards, they are told to clear off and find a job somewhere else? Our young people do not have the same opportunities to go to the US or elsewhere that we did when there were previous downturns in the economy.
The recent downturn and the bursting of the bubble have dashed the hopes of many young people. They are not too happy about the recently announced intention to increase student fees. A considerable increase of at least £1,000 and up to £3,000 a term was mentioned. I am not sure that that is the right direction to go in if we are to help students or encourage families from lower-income backgrounds to support their kids to continue in education, which is essential for most of them. That is an issue that must be considered.
Training programmes may ease the impact of unemployment on young people. Unemployment has led many young people into difficult circumstances, including criminal activity, which has its own massive cost. We all know that the cost of keeping someone in prison is an awful lot higher than the cost of keeping them in a job outside. However, the impact of youth joblessness extends to families and communities. Indeed, the entire nation suffers, to the extent that young people have taken their own lives because of the situation in which they found themselves. That is something that we need to consider when we make cuts at that level.
It has been mentioned that we are overgoverned and that councils and other bodies cost money. Minister Poots has often said that there are inefficiencies at council level. Well, he did not exactly point out the detail of those inefficiencies. We need to know what he means, what we can do about it and how we can put that right. Councils lend ad hoc support to many projects, sometimes without giving much thought to their overall budget, but they lend support because it is popular to do so. Perhaps we cannot afford to do those things in the future — I do not know.
Almost all Departments here run up tremendous costs in meeting rules and regulations, including the cost of meeting European rules as well as regulations that cover health and safety at work. Costs are even involved in tendering. Submitting a tender these days is a massively different story from what it was even 10 years ago because of the health and safety regulations that have to be met here. Yet, those who provide goods and services from outside Europe do not have to contend with a lot of that. Therefore, they can compete much more easily than we can. That is something that we cannot do anything about.
My colleagues from the Committee for Enterprise, Trade and Investment and I visited Europe recently. It has been suggested that perhaps more Assembly Members and Ministers should go to Brussels to keep a better eye on what Europe is doing before the regulations and rules that affect us are made, rather than work away here quietly and ignore what Europe is doing, in many instances, behind our backs. Sometimes what is done there is positive; nevertheless, some very costly rules and regulations are created. Take, for example, the issue of roads and the lowering of footpaths, which is necessary but incurs a massive extra cost. That cost was not there a few years ago, and it is not always seen.
There are various measures in the Budget to reduce the incidence of family poverty. Young people’s lifestyles are much more expensive nowadays. We can cut those measures on the same basis as we did a number of years ago, but there is a perceived need to keep young people in a particular lifestyle. They have a lot more ways of spending money than they did in the past. Therefore, families are under massive pressure to try to help their young people with housing and other interests, including education. That is an extra cost for families, some of whom are living on very low budgets or benefits. For example, an individual in the South receives €200 in unemployment benefit compared with £60 here. That difference is not always realised, and there is a similar disparity for a family with two children. Whatever we may say about its economy, it is, at least, a good thing that the South looked after some of those areas quite well. It must now meet the cost of that, but at least it is doing a good thing. We are not doing that. For those on low incomes here, poverty is much worse now than it was 10 or even five years ago because money simply does not go as far as it used to.
The Committee for Enterprise, Trade and Investment addressed fuel prices and the costs and policies associated with renewables. During our review, we tried to determine how we might become less dependent on fossil fuels, the cost of which drains every Department. No matter what, each Department has to come up with money to meet fuel costs, which bear no relation to those of five or 10 years ago. The costs of running services and of capital projects, such as road schemes, are phenomenally higher than they were, and that is not always taken into account. Nevertheless, the problem exists, and it is difficult to deal with because we have become almost entirely dependent on fuel.
People have the same problem in their homes. Relatively low fuel costs a number of years ago meant that the Housing Executive moved to being almost entirely dependent on oil. Perhaps that was a bad policy, but it had little choice in the matter. People are under tremendous pressure from fuel costs, so we must tackle the problem. I have already explained who is charging too much, but I am afraid that that information is falling on deaf ears.
The debate about harmonising corporation tax rates North and South has moved forward quite a bit, and it would be good if we could move towards that. If we could become less dependent on the block grant, perhaps we would be able to consider something like that. On the other side of the coin, the difficulties associated with state aid make the benefits of harmonisation debatable. Nevertheless, compared with the situation a few years ago, at least people are now prepared to talk about it.
As for the Health Department budget, everyone believes that it is essential to continue to plough money into front line services. It is an important Department, but maybe there is a need to scrutinise the minutiae of what is done. The Minister is told about spending at a very high level. Take, for example, the cost of mistakes in hospitals. People break limbs while in hospital. Somewhere in the South, someone said that more people suffer injuries and fractures in hospitals than on the roads. I am not sure what the long-term costs of payouts for that would be. Another cost is the considerable amount of money that was put aside to deal with swine flu, which ended up being a major overspend. Given that there was no pandemic, perhaps what happened had more to do with the agendas of large corporations and drug companies. Nevertheless, it cost us and everyone else plenty.
In the long term, we could save considerable sums in the Budget by adopting an all-island approach. As other Members said, we could make considerable changes, particularly in border areas, in respect of health, tourism and transport. In some instances, as a result of infighting over budgets, tourism bodies in neighbouring areas work against each other’s interests. Therefore, we must think about introducing cross-border or all-island tendering; there may be merit in that. I would support doing anything that would produce savings in those areas. For example, perhaps something could be done about the way in which bodies on each side of the border carry out health visits. As many as seven or eight people a week, or even a day, visit the homes of ill people, and people, North and South, have to travel great distances, all of whom claim mileage allowances and so forth.
A great deal of money is being wasted, and that wastage has not been looked at over a very long period, even though it has been staring us in the face.
I raised the issue of top-heavy Departments. There has been £800 million allocated to policing and justice. That seems to be a necessity, yet many other much more important areas will simply have to endure the cuts. We need to look at all that.
I have talked about how dividing up the cake will pan out. The Department for Regional Development has done some very good infrastructural work in the west. Although Tommy Gallagher condemns absolutely everything that is done, the Department does much good work. However, a great deal of money could be saved if all areas worked together a little bit more and took a long-term view of roads. We will seriously pay for the current underspend in maintaining our roads infrastructure. Whatever about the South of Ireland’s structural funds, I commend it for doing a tremendous job with its roads almost right across the board. We will incur serious costs in the short term through not maintaining our road network.
We are being fined £60 million by Europe because the Department of Agriculture and Rural Development overpaid, I think, £2 million to farmers under the single farm payment scheme. Some farmers must have been overpaid. I declare an interest as a farmer. However, I find that it is very difficult to get a pound over and above. How did that overpayment happen? Where was the appeals process when £2 million was overpaid? Indeed, where was the appeals process when Europe fined us? It is a serious loss. The High Hedges Bill is passing through the House, but this is about wide hedges. Europe should make up its mind and decide whether it wants farmers to create a sustained environment or for them to do the opposite? They are doing both at the minute, and Europe is fining them for both. That is absolutely ridiculous. The costs involved are completely mad.
I must mention what the Minister of Agriculture and Rural Development said today about the brucellosis infection being reintroduced purposely in farm animals so that farmers can claim moneys. There should be no winners from that. Certainly, no payments should be made, and I hope that nobody profits from such criminal activity.
The issue of water metering, or the tap tax, also came up. I will not say very much about it, but we have spent a long time saying that we will not introduce water charges. Water meters are to be introduced in the South. Farmers pay a considerable amount as it is because of metering, but it would be a much better system than simply slapping a broad, extra tax on people for something for which they pay already.
I will bring my remarks to a close. I have no way of knowing whether I have been speaking for an hour, because the clock has remained —
I am grateful for the opportunity to speak in this debate. On a minor procedural matter, I appreciated the fact that the honourable Member for South Belfast Mr McDevitt and several other Members, rather than walk in front of him, sat at the Door and waited until Mr McHugh had finished speaking.
I also noticed that Mr McGlone, the Member for Mid Ulster, sought to go out through the Division Lobby rather than walk across him. That is good news. Members are beginning to learn that it is most off-putting to have someone parade past during the middle of their speech.
Over the past two or three weeks, the Committee has had a number of meetings with the Minister and his senior officials to discuss the Budget. It has also had a long session with the chief executives of the Health and Social Care Board and the Public Health Agency. The Committee has used those meetings to drill down into the budget for health and social care. Our role was to scrutinise and to see whether the most vulnerable in our society were protected and to ensure that the impact on front line services was minimised.
It is no secret that the Minister is not happy with the budget that he has been allocated. He believes that health deserves more funding. His speeches and correspondence to the Committee are littered with figures on growing demands and comparisons with the English system. However, the reality is that the Minister has been asked to make an additional saving of £105 million in revenue in the revised spending plans. That reality is reflected in this Bill. The delivery of health and social care in Northern Ireland within the budget allocated is a complex and extremely difficult task, and no one can deny that.
I should like to comment on the job done by health and social care workers. As individuals, we have heard from nurses and doctors, lab technicians and other essential front line staff that they are rushed off their feet, and we recognise their hard work and the quality of what they do on behalf of patients and those in need. However, it must be accepted that the majority of the budget in the Department of Health, Social Services and Public Safety is spent on salaries; I believe that it is about 70%. Therefore, there is no way in which staff cannot be affected by the savings. Nevertheless, the Minister has said that there will be no compulsory redundancies, and I as Chairman, and the Committee generally, welcome the fact that no one will be forced to leave their job as a result of the savings. However, the budget has to be cut and the Minister, like every other Minister, must live within his means.
In the opinion of the Committee, the Minister has made some difficult choices. He could have gone for the nuclear option: he could have gone for hospital closures, had wards shut down, or removed a particular service. Instead, he has brought forward a programme that is more balanced. Someone has described it as salami-slicing: taking a little here and there off a huge range of services. We have not been able to get more localised details to find out just how it will affect individual trusts. We have not, as yet, received the operational plans for each of the five trusts. In fact, I understand that they have not even been finished. One of the great complexities and frustrations of being on the Health Committee is that it was announced that savings had been made in February, but we did not receive the final details until three and a half months later.
We are now well into the new financial year 2010-11, and trusts have to hit a moving target in the sense that they are spending money but they did not have a finalised budget for the current tax year.
The trust in the area that I represent seems to be aware of some efficiency savings. Ward closures have been mooted, and there will be some meetings tomorrow about that. The trust also seems to be aware of other cutbacks. Therefore, there is some talk about it in my area. However, there are a lot of concerns about cutbacks and who they will affect. Some of those cutbacks seem to be touching front line services, which concerns me.
Part of Mr McCallister’s and my constituency falls into the same trust. Indeed, there will be a highly charged public meeting in Downpatrick on 23 June to discuss these very issues. The chief executive of the trust has argued that they are not cutbacks as such: they are a rationalisation and improvement of services. He says that he can deliver the same service in Downe Hospital with the closure of an entire ward. If that is an indication of what is happening when rationalisation is going on, I shudder to think what will happen when we impose large, real-term cuts.
The details of the various discussions on how the cuts and savings will be made were outlined by me and other Health Committee members during yesterday’s debate, so I do not intend to repeat that. Instead, I will outline that the Minister is relying on balancing the books through a number of strategic choices, which have been examined in detail by the Committee. The big savings are expected in a number of areas, one of which is workforce control, whereby a 2% cut in trust payroll will save up to £40 million in 2010-11. That will cause great concern to the community and to those who work in the health and social care sector. The Committee is particularly concerned about the freeze in recruitment and the impact that that will have on staff. A vacant post will not be filled until it has been examined and scrutinised in some detail. That will take time, and, in the interim period, other staff members will be put under severe pressure in trying to cover for the missing post. That change will lead to safety issues and a potential impact on waiting lists.
Another major area of savings and cuts will come through the non-introduction of new services. Current services will be protected, but there will be some impact on waiting lists, and new services will be reduced, delayed or not introduced at all. I am particularly concerned about anti-TNF drugs, and Members who have been visited by constituents complaining of rheumatoid arthritis will know the enormous benefits of those drugs.
About three years ago, I met a young lady while canvassing in the village of Clough in South Down — one of the few areas that still votes for me — who was in severe pain as a result of rheumatoid arthritis and was campaigning for the introduction of anti-TNF drugs for her fellow sufferers. That young lady was about 28 when I first met her and, when I met her again a few weeks ago, I did not recognise her: she was a totally transformed person because of the benefits of anti-TNF drugs. They had totally revolutionised her life, she was no longer in severe pain, she was able to return to full-time employment and was making a valuable contribution to society. The term “wonder drug” is sometimes overused, but anti-TNF drugs are almost exactly that, because they have a profound impact on the quality of life of those in Northern Ireland who suffer from that awful disease. Therefore, the Committee is concerned that the commissioning plan proposes to reduce the availability of those drugs and increase the waiting list for those life-changing drugs to nine months, rather than reducing it, as was previously planned.
Some members of the Committee met representatives from Arthritis UK at a function in the Long Gallery recently, a charity for which the issue of anti-TNF drugs is a burning issue. They were disappointed that a wonder drug that offered so much hope to people who suffer from that condition had been developed, but it now looks as if sufferers will have to wait a long time to avail themselves of it.
The final savings are expected through the making of additional efficiencies in family health services, with a particular emphasis on the use of generic drugs. I am sure that Members know that generic drugs are products that have gone out of patent, and the company that originally produced them is no longer entitled to charge a large amount to recover its huge expenditure in researching and developing the drug. One drug that I looked at recently had a branded version costing £26 and a generic version costing 90p, and clearly there is huge potential to save money in the Health Service in Northern Ireland by moving towards those drugs, without affecting front line care.
However, there is a problem in that the GPs have the right to prescribe either a generic or branded version of a drug to patients; it is entirely their call. Indeed, there are some GPs who think that their patients like to have a certain branded product prescribed to them, and when the patient goes to the pharmacy, the pharmacist has no ability to alter that prescription and cannot tell the patient that they can have the same product, with the same impact, at one tenth of the cost. The Department is quite rightly making significant strides on generic drugs, but if it could bring the generic prescription level up to between 60% and 65%, an enormous saving would be made to the budget, with no difference in patient care. The Committee sees that as a way of achieving savings without affecting the most vulnerable.
The commissioning plan contains ambitious targets to increase the use of generic drugs to 64% of the total. That is already a PSA target, but the emphasis must be on speeding up the increase, especially in GP practices. We urge the Minister to crack the whip with GPs to ensure that they always go for the most cost-effective option.
Northern Ireland spends £224 per capita on medicines. In Wales, the corresponding figure is £194, so we are clearly spending too much in certain areas. There is room for improvement. According to the information that was given to the Committee, there is room for an additional £46 million of savings in that field alone.
That is significant, because, as I said yesterday, adding that figure to the possible £11·7 million of savings that could be made from eliminating consultants’ bonuses could save almost £60 million. Would anybody notice any change in front line services if that happened? Those are the types of savings, cuts and efficiencies that we have to find in the Health Service budget: those that have no impact on the patient or the person who is waiting for treatment at a GP surgery.
I have outlined the main elements of the revenue savings in the new revised expenditure plan from the Department. Before I finish, I want to point out that we are still waiting to see detailed operational plans and, despite asking on a number of occasions, we do not know exactly what has been allocated to each trust. Moreover, we do not know anything yet about the capital budget for this financial year.
Every Department has revenue and capital elements of its budget. Capital is vital, because many infrastructure projects are urgently required. We brought officials who are in charge of the capital budget before the Committee during a recent evidence session in the Downe Hospital, and they did not have a clue where we are going.
For example, the new women and children’s hospital in the Royal complex has been earmarked to be built at a cost of £360 million. Given the noises from the Department, the chances of that project going ahead are practically non-existent. However, we need to have that issue dealt with and get alternatives implemented to improve maternity care in the Royal complex.
We have received lobbying material and numerous requests for meetings from groups in the west Tyrone/Omagh area. There is a great deal of controversy over the fact that County Tyrone has been left without any form of acute service cover. Looking at the map and realising that there is nothing between Altnagelvin and Craigavon and between Craigavon and Enniskillen, one can see that the people of Tyrone have much to complain about. They are stranded in the west of the Province, miles away from a hospital with acute cover.
I have listened to people from that area with great interest. The other day, we met a west Tyrone lobby group led by Father Mullan from Drumquin. I got a very nice letter from Father Mullan afterwards, thanking me for the reception that the Committee had provided the group. I never thought that I would get a letter from a priest, so it was very nice to get that. He leads a group that has a very just cause; he said that Tyrone is the Cinderella of acute care in Northern Ireland, and I agree with him. That group demands a new hospital for Omagh in line with what has been provided in Downpatrick.
Downpatrick has a marvellous new facility, but the essential services are going out of it as quickly as one could imagine; every time I open the local paper, another service seems to have been withdrawn. However, there is no certainty about the new hospital in Omagh, because we do not know what stage it is at in the capital budget. There are scores of similar projects in the same position, including new health centres, throughout the country.
It would be lamentable if I were making these comments in the December before the new financial year, but we are more than 20% into the new 2010-11 financial year and we do not have a clue where we are going with capital expenditure.
The sad reality is that the Dáil Select Committee on Health and Children came up to see us and told us that tender prices for capital projects in the Irish Republic are coming in at 21% below the expected price and that contractors are basically buying projects to keep their staff working.
Therefore, the sad thing is that the time that we could be spending maximising the return for the taxpayer and achieving best value for capital projects is the time that it looks as though there is absolutely no money to get the projects off the stocks and get them going. For example, although the budget for Downe Hospital was £63 million, I suspect that, if it were to go out to tender today, it would be around £55 million. That would be a major saving. Therefore, that is the dilemma that we face.
However, we do not have a clue about where we stand with capital budgets. No matter what happens next year, it is essential that the Department gets its act together and that the Committee gets the figures before the start of the financial year. The Committee cannot be left lagging behind all others without knowing where it is going.
Will the Member agree that it would be helpful to revert to the Assembly’s original practice? If we were to do that, a draft Budget paper would be produced in the September or October, a couple of months would be available for discussion, debate and consideration, and, ultimately, the Budget would go through in December, rather than go through very late with limited discussion.
I understand the difficulties that the Department faced, in the sense that the announcement that a further reduction in expenditure had to be made was not known until January or February. Therefore, it would have been unreasonable to have expected the Department to have come up with a draft budget in October and to have stuck to it. However, the problem was that other Departments reacted immediately to the Minister of Finance and Personnel’s decision by going through their budgets and finding savings. They reported those to their relevant Committees to give them time to consider the figures before the end of the financial year and to report back to the Assembly. The Committee for Health, Social Services and Public Safety was left completely in the dark for the three-and-a-half months after October. Although the community was concerned about where potential savings would be made, we did not have a clue, because we did not have even one leak, and, until two weeks ago, we did not have even the slightest hint of what was going to happen.
Will the Member agree that the Health Minister’s way of carrying out the process has been much better, in that he has not presented cuts here and cuts there? He has done what Mr Wells said at the start of his speech that he would do and slashed off different bits. That has resulted in a much better outcome, because front line services will be protected, which is what we all want to see.
On balance, the Committee decided that the Minister was right to go for what is an extremely complex package of reductions in services, greater efficiencies and savings on generic medicine and so on. He has devised a difficult-to-understand and complex package, but that is not the issue. The issue is why it took so long to tell the Committee what he intended to do. We were left without even an off-the-record briefing on what was happening.
My concern is that the way in which the Minister is proceeding could be described as being too clever by half. I hope that I am wrong, but the way that he is doing this is so difficult and complex and will require such a huge degree of management and supervision that it may be almost impossible to achieve. He plans to save 2% on staffing through a freeze on posts, and each post will then be assessed on whether it should be filled. We have not even mentioned the reduction in agency nursing and locums. That will require a level of expertise that I hope the Department has, and I wish it well. If it can do it, good luck to it.
That is much more preferable than a slash-and-burn approach, which would have involved saving money by closing wards, stopping services and not having any more child protection and so on. I agree with the Minister about that. My argument is not about what he did; it is about the fact that the Committee was kept in the dark for such a long period. Next time, he could at least bring in one representative from each party at the start of the process and roughly outline his intentions, so that, when he makes an announcement, we know where he is coming from. Instead, we got the Minister’s plans in their entirety two weeks ago.
As he knows, the Committee had to go through the budget until 7.05 pm, which I think is the longest time that any Assembly Committee has ever sat. That is an indication of the serious difficulties in which we were placed, and, during the entire period, we were approached by unions, charitable groups and patients’ representatives, who were asking us what was going on. Neither Mr McCallister nor I had a clue what was going on, and the Minister did not seem particularly concerned. As I said yesterday, getting financial information from the Minister was like pulling hen’s teeth. Nothing was forthcoming from Castle Buildings.
The Committee is concerned about what the future holds. We know that harsh spending cuts are coming; we all agree on that. I would be absolutely delighted if, this time next year, my only concern was how to continue to provide a service based on the current Budget of £4·3 billion. If we were to reach that situation, we would all be happy, and we could all live with that. However, I suspect that that will not be the case. We do not know how severe the cuts will be, and everyone awaits 22 June with some dread. That is not, by the way, the date of the World Cup quarter-finals but the date that has been set for the emergency Budget. We will know our fate when the Chancellor rises to his feet and announces how much money will be given to Northern Ireland.
We must remember that, apart from a few minor powers to raise additional revenue, Northern Ireland cannot invent money, grow money on trees or create it out of thin air. Therefore, we must live with what we have been given. That will result in a difficult year for all of us, because we will have to determine how to allocate that limited Budget among the Departments. We do not know what decision the Executive will take on ring-fencing; that is entirely their decision. We could live with a decision to ring-fence some services, but we do not have the full facts, and, therefore, the Executive must take those terribly difficult decisions.
A decision to ring-fence money for one or two Departments that account for a significant proportion of the Budget would decimate other Departments. People ask why we do not ring-fence spending for health and education. However, those two Departments account for about two thirds of the Budget. Therefore, the implementation of a 10% cut in the remaining Departments, would mean cutting about one third of their combined budgets. There is no option to cut the budget for the Department of Justice, because it is ring-fenced. Those are the dilemmas that we will face. Since the devolution of policing and justice, the Health Department accounts for 40% of the Budget, and that has severe implications for our Department.
We, as a Committee, understand that there is considerable concern in the community among health charities, lobby groups and politicians about the potential impact on the health sector. The Committee will discuss that in further detail at this week’s meeting. The other day, somebody asked me what I thought would be the dominant health issues over the next year. My reply was that there would be three issues: budgets, budgets and budgets. Over the next 12 months, funding and the availability of resources for health will, without doubt, be the most dominant issues in the Department.
I thank my fellow Committee members, who recently spent many hours scrutinising Departmental officials and the Minister and trying to get to the bottom of how the budget for health and social care will be spent. It has been a long and difficult period for the Committee, but the members were up to it. They were loyal in their attendance and asked some pertinent questions. The departure of the honourable Member for South Belfast Conall McDevitt was a significant loss to the Committee, as he had asked some extremely pertinent questions in the early stages of the process. He was replaced by Mrs Bradley and, more latterly, Mr Tommy Gallagher joined us. Therefore, we have a good mix of youth, good looks and experience on our Committee. Members have worked hard on a difficult issue, and we all await with interest, and some trepidation, developments in the incoming financial year.
It has been a long debate, and I should start by apologising to the Assembly. Yesterday, I predicted that today’s debate would be reheated fare, that we would go through the political microwave and have to listen to the same old debate all over again. However, Members have spoken from many new angles today, and I wish to respond to them.
Towards the end of the debate, there was one disappointing contribution from Mr McGlone, who did the SDLP no favours. He adopted a cop-out approach when he said that the SDLP washed its hands of any responsibility. He said that his party did not vote for the Budget and did not believe that it was correct. He said that mistakes had been made and that he had never seen such a waste of public funds in his life.
He then went on to complain about the Department of the Environment and the loss of jobs in the Planning Service. When I was Environment Minister, I went to the Committee with a proposal to increase planning fees after there had been four years without an increase. It would have helped to keep the revenue, which, in turn, would have maintained jobs in the Planning Service. The charge against that proposal was led by none other than the then Committee Chairman, Mr McGlone, who lamented that if the increases went through, the cost of a planning application for a house in the countryside would increase by £100, and no one would want to build any more houses in the countryside. That was the level of discussion that we had on the issue.
(Mr Deputy Speaker [Mr Molloy] in the Chair)
It is one thing to come here and moan and whinge about the impact of the Budget changes, it is another thing to accept some responsibility. I enjoyed the experience of going along to the Committee and giving evidence to it, but if there is so much waste in the Department of the Environment, why, under Mr McGlone’s leadership, did the Committee spend so many hours and days investigating climate change, which, of course, is very relevant to people of Northern Ireland, and ask experts to come along? With all that waste in public spending, I would have thought that Mr McGlone would have had far better things to do when he was the Chairman of the Environment Committee.
That was just an introduction. I felt that I had to let off a bit of steam about something, and I am glad that Mr McGlone gave me that opportunity at the end of the debate. I will come back to some things that he said during his contribution, but, first, I will come to the contributions that other Members made.
Standing Orders require Members to confine themselves to the general principles of the Bill. Mr Deputy Speaker, you were not responsible for doing so, but another Deputy Speaker and the Speaker allowed people to make wide-ranging contributions on the issue. I do not think that there was anything lost in doing that. Once again, I express my appreciation to the Committee for Finance and Personnel for ensuring accelerated passage of the Bill and for ensuring that the legislative timetable for the debate was adhered to.
I come to the contributions that a number of Members made. First, the Chairperson of the Committee for Finance and Personnel raised a number of points. The first point, which her colleague Ms Ní Chuilín also raised, related to the procurement process and to adding social and economic value to that process. We had a wide-ranging debate in the Assembly on that issue on another occasion, and the Committee has already produced a report on procurement, which my Department has partly responded to. It will give a more comprehensive response to the report, but the general guidance on procurement states clearly that economic, social and environmental objectives are to be considered from the outset of the procurement process. Indeed, the objectives in the Programme for Government placed responsibility on Departments to produce procurement plans, which set out how procurement will assist in delivering the most economically advantageous outcomes, including specific measures that will give full consideration to social procurement.
As I said in the intervention to Ms Ní Chuilín, when going around public procurement projects to look at what is happening, I am encouraged when contractors tell me that they have taken on long-term unemployed people or have given people apprenticeship opportunities as a result of the procurement and tendering process that they had to undergo.
Ms McCann also raised the issue of poverty and winter fuel payments and talked about targeting them better to deal with child, pensioner and fuel poverty. She will know that since those are classed as benefit payments, there is parity with the rest of the United Kingdom. We do not want to break parity and so introduce means-testing, although it is up to the Minister for Social Development to make a decision on that if he so wishes.
I hear the same comments about means-testing all the time, as, I am sure, do other Members. Once means-testing is introduced, there will be a cut-off point, but many people who may not be described as poor are, nevertheless, not well off. They feel that they are being excluded from means-tested benefits simply because they have been prudent and saved a little money. Their pockets are hit, and sometimes they find that having savings leads to their being less well off. That is the other side of the coin.
Ms McCann also raised the issue of child poverty. She will know that there is an obligation, under the Child Poverty Act 2010, which went through the Westminster Parliament, to deal with child poverty. The Act requires a three-year strategy, which must be in place by March 2011. That is being undertaken by OFMDFM, but it will be the responsibility of each Department. Although OFMDFM will set the strategy and the 10-year objectives, it will be delivered across a range of Departments, and it will be for Departments and Committees to ensure that that is done.
Mr McQuillan raised the issues of tourism and savings, and we have great potential for developing tourism. His constituency attracts many tourists because of the Giant’s Causeway, but it also has huge potential for jobs and growth, especially in the private sector, and the Executive have sought to encourage it and to direct attention to it. In fact, the Giant’s Causeway visitor centre is getting off the ground.
A theme recurs time and time again throughout the responses. It perturbs me that radio phone-in programmes, their presenters — Members — journalists and the chattering classes portray the Assembly, the Executive and local government as bodies that do not deliver or even try to deliver and which make little difference to people’s lives. That is the “in thing”. It is, therefore, worthwhile highlighting the things that are done. I urge Members to look not only at the amount of money that has been made available to the Giant’s Causeway, but at the way in which the planning process sought to accommodate the facility in a sensitive area. It is an indication that the arms of government came together to provide something that will add significantly to that area’s economy.
As regards savings, I agree with the Member that Departments should make early, achievable plans for savings, which they can then bring to Committees so that proper scrutiny can be carried out. Many Members raised that issue in their contributions. Committees should push Ministers to bring those plans forward. I will certainly encourage Ministers to do so. As I outlined yesterday, the Budget process will require Departments to bring forward their plans for savings between now and the end of July. I intend to speak to each Minister about those plans during the summer so that they can be fed into the system in the new session.
Mr McNarry never comes into the Chamber to listen to me. He comes in and talks but never listens to me. We have been talking about processes, Mr Deputy Speaker, and I know that you may accuse me of digressing. However, I believe that we should introduce a system by which, if Members wish to speak in a debate, they should, at least, be present for the summing up of the debate, so that they can hear the Minister’s response. They may not like that response. However, at least they would hear the response to the speeches that they have made. Perhaps, you will pass that on, Mr Deputy Speaker. I will say no more about it, except that it would help the process of debates, rather than having Members walk in, make their speeches, walk out, and not be seen again. Ministers never have a chance to respond to them.
The Minister can be confident that if he misses any point that is made by most of the Back-Benchers on all sides of the House, they will ensure that it appears verbatim in local newspapers the following week. Therefore, he has nothing to worry about: he will be able to catch it in his local journal.
I am sure that I will. However, since I have had to sit through the debate for several hours, I would like it if Members would, at least, return to the Chamber to listen to what I have to say at the end of it.
Let me get back to what Mr McNarry said. At least his contribution to today’s debate was, perhaps, just a little notch higher than the standard that we usually expect from him. He mentioned the black hole and severe cuts. He had a go about water charges and leaked documents from the Executive — on which, of course, he would have great expertise. I suspect that his party is well used to that kind of thing.
I have just listed some of the issues that Mr McNarry raised. He mentioned the weighted scale. I am still at a loss to understand how his weighted-scale theory is any different to how projects are judged against priorities that are listed in the Programme for Government. He mentioned setting up a scrutiny Committee. I would have thought that at a time when we want to streamline the system, we should try to get rid of unnecessary Committees. Mr McNarry says no: let us have a scrutiny Committee.
What really took me to the fair was that although the Assembly has four in-year monitoring periods, all of which require feed-in from Departments, along with Executive discussion on how to allocate money, followed by debate in the Assembly, Mr McNarry wants monthly, rather than quarterly, in-year allocations. The important fact is that none of that would generate any more money for Departments. We would still face choices. We would still have to make difficult decisions because there would still be the same pot of money to spread around Departments.
Mr McNarry described measures that he believes would improve the situation. However, those measures would not magic money out of the air, make it grow on trees or persuade the Treasury to make more of it available to us. We would simply have to continue to make difficult decisions. Those decisions are not best made by saying that just because something is a high priority, it must simply be given all the money that it requires.
That seems to be what was being suggested — that a high rating meant that a budget would not be touched. When we talk about giving the growth of the economy a high priority, it does not mean that everything that comes under the heading of growing the economy is necessarily a good project or the best way of spending money. We allocate and give priority to budgets through in-year monitoring and looking at departmental baselines, among other things. When spending proposals come forward, we have a clear indication of their relative benefits when it comes to prioritising spend. We do that rather than act on an abstract notion that a priority gets money. We must look at those elements.
I want to say something about the Budget process. The more that we get down to clear lines of departmental spend, the more that we will be able to drill down and look at some of the bids that are being made and make some judgements on them.
Mr McNarry also talked about the economic projections. He loves talking about black holes in the economy and in spending. He was on about it again today. He said that, last year, we had £390 million in cuts in this Budget. I do not know how often I have to say it; I will send him a copy of the Hansard report. We reallocated £370 million in this Budget. We did not cut £370 million from this Budget. I do not know how many ways I have to say it. We decided that we could not sell some assets because of the market. We decided that we were not going to impose water charges because, politically, people said that we could not do it. We decided that we were going to help businesses with their rates. If we used the money for that, we could not use it for something else, and so we reallocated. We did not cut.
We will have to make cuts this year. We will have £128 million less. Next year, it will be the same or even more so. Those are cuts, but there was no black hole because someone lost control of the finances. A reallocation was made on the basis of decisions that were taken by the Assembly. Mr McNarry talked about the economic projections and the difficulties posed by economic growth. We may well face such difficulties, but he did not say that it has been found that levels of borrowing were less than anticipated. I do not know whether one may offset the other, but we will know that when the Chancellor makes his Budget statement next week.
Mr McNarry and Mr Farry raised the issue of corporation tax. We have had long debates on that issue. Although I will be interested to see the paper that comes forward, we must remember that it is only another paper that has been promised. We had Varney I, Varney II, and now we are going to have a third paper — Paterson or Osborne; I do not know what it will be called. We will then see what the full implications of allowing variations in corporation tax for the Assembly are likely to be.
I do not want to go over everything, because the hour is late, but when we responded to the report, a lot of queries were raised about the full cost of devolving corporation tax and allowing changes to be made by the Assembly and also the benefits. Any economic model that predicts benefits 25 years ahead is going on guesswork. No model can sustain all the uncertainties and risks that occur over a 25-year period and come out with accurate predictions. The predictions about creating 90,000 jobs over the 25 years have to be taken with a pinch of salt. It makes a good headline in the paper, but when one looks behind it to see where those figures come from, sometimes the figures become a little bit more suspect.
Mr McNarry also mentioned in-year monitoring, and he raised a query. He seemed to think that there was some contradiction in what I said about in-year monitoring getting tighter. It is, and that is good. Cáral Ní Chuilín spoke about the benefit of that. It means that Departments are spending money on what they actually planned to spend it on. It does not mean that there are no reduced requirements. There will still be reduced requirements, because unforeseen circumstances always arise where Departments planned to spend money on something but could not spend it. That is the situation this year again.
The question that the Executive must ask when we present the June monitoring round is how we deal with reduced requirements, bids from Departments and the knowledge that we have got to find £128 million in cuts. Do we simply say that we have x amount of reduced requirements, so we will give x out to Departments because there is x worth of bids? Do we say that we will only give half of x, refuse some of the bids, and use the remainder to facilitate and finance some of the cuts? Or do we give it all over to remove the cuts this year? Those are the kinds of decisions that are being made.
I do not know whether Mr McNarry is just paranoid that someone is trying to pull the wool over his eyes, but to suggest that there is something untoward going on when I say that in-year monitoring throws up less in reduced requirements this year than last year, and less last year than it did the year before — and that, just because I mentioned that maybe some of those reduced requirements could be used in a certain way, the wool is being pulled over people’s eyes — really is either stretching to find something to complain about or not understanding the process.
I have dealt with the Assembly Budget scrutiny unit and the Member’s proposal. I would have thought that we would want to move away from more bureaucracy and try to get a more streamlined system.
Mr Bradley raised the issue of the schools capital budget. It must be recognised that there has been a reduction in the schools capital budget. That is partly as a result of the fact that we made decisions to, for example, defer water charges. I noticed that, when challenged about whether the SDLP would support the introduction of water charges, Mr Gallagher was emphatic that it would not. Again, it comes down to that issue: if more money is required for one thing, where does the finance come from? In all the discussion today — I think only two or three members of the SDLP spoke — on no occasion was any suggestion made as to how the additional money that they wanted spent on things could be found.
As I have said, although there has been a reduction, we also know that as a result of the different treatment of PFI projects by the Treasury, there will be savings to the schools capital budget of £10 million this year, which is welcome. Also, as has been pointed out by other Members, construction costs have been reduced. Indeed, Mr McHugh pointed out that, in the Irish Republic, construction costs are coming in 21% below what had been expected. I think that there is a similar situation here in Northern Ireland. Therefore, even with reduced finance, hopefully we can get more projects per pound than we would have two years ago.
Mr Bradley also raised the issue of special educational needs. Although the issue that he raised about the £25 million is primarily for the Education Minister, my understanding is that the consultation responses on the special educational needs report have now been received by the Department of Education, and a summary of those will be produced by the end of the summer.
The emphasis will now be on schools, and I understand that work has already begun on developing school workforce capacity to build in the requirements and responsibilities that schools must meet to cater for children with special educational needs.
Mr Bradley spoke about school maintenance, and we must acknowledge that significant issues exist in that respect. The bill stands at £280 million, £60 million of which is required for areas that need immediate attention. Again, it is up to the Minister of Education to manage those issues by using the budget available to her.
I now come to Mr Farry’s points. I have said on many occasions that I enjoy his contributions in the Assembly. However, I noticed today that he is slipping into Lib Dem mode. He does not put up the same kind of resistance to proposals for immediate cuts that he used to, and he talks about balancing the need to raise revenue against the need to cut the amount of money spent on services. He has not yet sold his soul, but he is moving in that direction.
However, Mr Farry made a number of useful points. He and Jennifer McCann talked about the potential of North/South co-operation, and I wish to make a point about that. I do not take a dogmatic stance to the Irish Republic and ignore it because of unionists’ difficulties with it in the past. However, to use Mr Farry’s words, we must strike a balance. We are very dependent on the UK economy, and east-west links are important. However, a land boundary exists between Northern Ireland and the Irish Republic, and significant work can be done. I have no ideological reason for not wanting to try to maximise the use of resources through co-operation with the Irish Republic. Indeed, I have had discussions with the Finance Minister in the Republic about co-operation, not because I wish to drive some political agenda or ideology but because sometimes it makes sense to share resources and services and to have a useful discussion about how we can maximise the impact of resources that are spent on, for example, procurement in the Republic and here. Of course, we have already benefited from such co-operation, after the Irish Republic contributed to the roads network here when it recognised that it also serves its economy. Certain exchanges will, therefore, be worthwhile.
However, we must bear in mind that the Republic is our competitor in many other areas, so there are limits to how much co-operation can take place. I am sure that the Government in the Republic also bear that in mind when they are making certain decisions. Co-operation is useful in circumstances in which potential savings are available, and it would be wrong of us not to consider those. Co-operation will sometimes take place Minister to Minister. I have said many times in the Assembly that I prefer to do business Minister to Minister rather than through the complicated structures of the North/South institutions.
Mr Farry also mentioned the counter-cyclical measures. Yesterday, he said that it would be mature of us if we decided to introduce water charges.
Although I have some sympathy with the Member’s point, and have said so publicly, we have to recognise that the introduction of water charges is a form of fiscal tightening, in so far as those charges will remove spending power from private individuals that would have benefited the economy. Whether it is through introducing water charges or reducing public spending, there will be fiscal tightening and an impact on the economy.
It is a fairly complicated balancing act, and the Department may come to the conclusion that it is right to introduce water charges, thereby tightening the economy in one respect to balance the books and bring money in. However, it may be more economically efficient to loosen the economy in another area. Not levying water charges may not be the most efficient way to ensure spending power in the economy. There may be more efficient ways of doing that.
It is sometimes very difficult to work out the total impact of such a change vis-à-vis other methods. If money is brought in through water charges, it would leave in some other form. The question is whether it would have a greater overall economic impact, and that is where economic modelling comes into consideration. There is also a political argument surrounding water charges.
I referred earlier to Mr McNarry’s contribution. He finished his speech by demanding to know what I was going to do about water charges. However, if Mr McNarry had done his homework, he would know that I can do nothing about water charges. I have raised the issue of water charges honestly, both publicly and in the Assembly. However, at the end of the day, the responsibility for water charges lies first with the Minister for Regional Development, secondly with the Executive, and thirdly with the Assembly. On one hand, Mr McNarry puts forward the idea of perhaps supporting water charges, and, on the other, Mr Cobain says that introducing water charges would be a total betrayal. Given that record, Mr McNarry has a debate to sort out in his own party before he asks me what I am going to do about water charges. Nevertheless, it is an issue that we will come back to.
Mr Farry raised the issue of spending differentials and the fact that some Departments spend more per capita than others. He mentioned that the Health Department spends more per capita, but that, when health needs are considered, there may be a need for more spending. That is a very dangerous route for the Member to go down because, if we look at where the biggest disparity of spending per capita is, we find that it is in his Minister’s Department, where there is a 40% difference in spending per capita, compared with the rest of the United Kingdom. The average difference is 22% per capita for the Northern Ireland Budget as a whole, whereas there is a 7% difference per capita in the Education Department.
Perhaps the Member is going to tell me that he has already been lobbying his Minister to make sure that those disparities are addressed.
I know that I am going to get myself in trouble for saying this, but if we are to be mature, it is important to recognise the benefits of freezing the justice budget in the short term, given the potential crisis and uncertainty that we face, particularly the threat from dissidents. As we normalise society and as the rule of law becomes better entrenched, it is clear that there will come a time in the very near future when justice has to be paid for against other competing priorities such as health and education. The Minister of Justice gave a very clear warning of that in his keynote speech last week. Such movement will be a sign of Northern Ireland maturing as a society. I recognise that what the Minister of Justice suggested will inevitably happen here under devolution.
I used to think that Mr Farry was a rising star in the Alliance Party. With a contribution such as that, I will maybe have to rethink that position. Nevertheless, again, he has demonstrated an honesty that is sometimes lacking in other Members’ contributions by recognising that we need to take a hard look at such issues.
Although Mr Farry mentioned policing, there are other areas in the Department of Justice in which savings can be made. I admire the stance that Mr Ford took on how legal aid costs should be tackled so that we achieve greater parity with other parts of the United Kingdom. He will be taking on a big vested interest there. As with many such issues, however, that will have to happen anyhow.
Michelle McIlveen mentioned structural maintenance and underfunding of Roads Service. The infrastructure of Northern Ireland is important if we are to deliver an effective economy. Last year, Roads Service’s maintenance budget was increased to £85 million, which included an additional £15 million. From 2007-08, the budget has gone up from £63 million to £77 million to £85 million. So, we have increased the maintenance budget for Roads Service. I understand that most of that will go on the strategic road network, but other roads, including rural roads, will have resurfacing treatment.
The Member also raised the issue of DRD funding for roads and transport. The allocation is due to increase by more than 20% in the current financial year to just under £700 million, which indicates the importance that we attach to building the infrastructure in Northern Ireland. Of course, it is up to the Minister to decide how that money is allocated.
Mr Gallagher raised the issue of savings. He spoke about the problems of the Western Education and Library Board and the treatment that he believed that the board received from the Department of Education. Education spending went up by 5·8% last year, well above the rate of inflation, and there is a 1·9% increase in education funding this year. How that is allocated is, of course, the responsibility of the Education Minister, as are decisions on timing and information.
Carál Ní Chuilín raised the issue of value for money in social housing. If one looks at this Administration’s record on social housing, one can see that, last year, we had the biggest production of social housing for years, with a programme for more than 1,800 homes. The average cost to the public sector was £80,000, and, because delivery is now through housing associations, their contribution was £50,000 per unit through private lending. The standard of new houses in the public sector is well known and represents good value for money.
The Member raised an issue that is also important to me, and that is the language that is used in the Budget. I, too, am glad to see that more and more people are asking questions and discussing and wanting to discuss with public representatives the whole issue of public spending and how it is done. I suppose that it is the teacher coming out in me, but I do not think that there is any point in providing Committees or Members with documents that they do not understand.
Therefore, they should be in plain English so that people can understand them. Perhaps the Members on the Benches opposite will remember that when they speak Irish, it is sometimes just as confusing as some of the official speak that Carál Ní Chuilín referred to when talking about some of the documents concerning budgetary considerations that come across her desk.
Part of the revision of the Budget process will be to look at how figures and information can be presented in a more understandable way and broken down in a way that makes them clearer. That would enable us to have a proper debate. I do not believe that it is beyond the wit of the Departments to do that. As part of the Budget process, I hope that an easy-to-read summary will be published in the autumn alongside the draft Budget document. That will enable people other than the professional consultees to respond to the Budget, which is, of course, important to all their lives.
Carál Ní Chuilín also raised the issue of streamlining the Budget process. Again, I have assured the Assembly that we want to bring forward a new set of proposals for the Budget process. Part of that will involve Ministers trying to address the problem of Committees not receiving timely and adequate information to enable them to properly scrutinise the Budget. That problem was raised by a number of Members yesterday, today and on other occasions.
Mr Givan made his maiden speech today. If he continues to wear such ties, he will ensure that he gets himself on TV. [Laughter.] I do not want to sound patronising, but I congratulate him on his maiden speech, which was insightful, useful and delivered with confidence. I look forward to more contributions from him in the future.
He raised the issue of special needs and talked about the I CAN centre in Ballynahinch. The education and library boards have a statutory duty to identify children over two years of age who have special educational needs and determine the provision to meet those needs. The boards were established on an arm’s length basis so that they could respond to local needs, and that was based on legislation that was set by the Department. If they do not adhere to that legislation, they know the consequences, as Mr Givan described today.
Brian Wilson referred to Budget cuts and his desire to defer them. We know what is coming down the line. Next year is going to be worse and we are unlikely to be out of troubled waters by then. Therefore, simply saying that we should defer the cuts without any consideration of our ability to make some of the savings this year really is reckless. I know that the Member is in the Green Party, but I hope that he is not green when it comes to some of the economic issues. His speech was a bit depressing. He suggested that we should put it all off until tomorrow and hope that everything turns out OK so that we do not have to make the hard decisions now. We cannot heap some of the cuts that we have to make this year on to next year’s Budget.
I already mentioned Mr McGlone, but I must come back to the SDLP’s wonderful Budget proposals, which supposedly would have steered us out of the present situation. The proposals are brought up during every Budget debate. Mr McGlone said that we could take money from the budget for the Belfast Harbour Commissioners. During Question Time yesterday, I said that the commission does have a cash reserve.
However, that cash reserve is being built up in order to undertake infrastructure work to develop the port to ensure that it becomes more efficient. The port is the major outlet for goods and services from Northern Ireland and for bringing goods, passengers and everything else into Northern Ireland. If we were to take the money from that cash reserve, from where would the port get the money to do its infrastructure work? I take it that Members support the idea of improving our infrastructure. If we were to take the money from the reserve, the Belfast Harbour Commissioners would simply make a demand on the public purse by borrowing, and that would not solve anything. We would be taking with one hand but giving with the other.
Mr McGlone talked about some other problems. He said that we did not anticipate that capital receipts would fall. I must say that he failed to mention that DSD did not accurately project housing receipts. It might have been in a better position to do so than DFP. It did not accurately predict what would happen to the Royal Exchange project — money was paid out and then it had to come back in. The SDLP is adopting a hand-washing attitude: “Not me, guv. We have copped out of all of this.”
I thank the Minister for giving way. I did not want to intervene again, but he has returned to the subject of the SDLP
Earlier in his contribution, he talked about corporation tax. I am interested to know whether the Minister wishes to revise an answer that he gave to me previously. At Question Time last month, I asked him about the estimated take of corporation tax in this region, and he told me that it was somewhere between £350 million and half a billion pounds a year. Those are the Minister’s words, not mine. I did my homework and figured out that what the Minister must have been doing was extrapolating a Barnett-type formula. He had reckoned on the estimated take across the UK and assumed that we would get, more or less, our Barnett share of it. I hope that all the other comments that the Minister has made today are based on slightly stronger and sounder economic reasoning than that figure appears to be. He is a man who knows what he is talking about most of the time. Will he clarify that specific figure and tell me whether he still stands over the assertion that we are walking away with half a billion pounds in corporation tax every year from this region, as he said we did a month ago? If so, I would welcome it.
What other magic formulas has the Minister up his sleeve to deliver us out of the current financial crisis?
First, as I explained to the Member in my answer, the corporation tax take depends on how wide the scope for corporation tax is and on which businesses are included in the take. [Interruption.] The Member wants a simple answer to his question of how much the corporation tax bill is. It depends on the scope of the tax and which businesses pay it. Members talked about that when they discussed the issue in the Assembly. Not every business would be covered by a reduction in the rate of corporation tax. I heard some Members say that they would not allow banks’ profits to be covered by a lower rate of corporation tax. The amount collected will vary, depending on which businesses we include and which we leave out. I do not know that the Member has a point to make there at all.
Mr Wells raised a number of issues about the women’s and children’s hospital. I understand that the current allocated profile for its funding is during the ISNI II period. That means that the project will have to be split into two separate projects. One will start in 2015-16 and see completion in 2017-18, while the other will start in 2017 and be completed in 2021.
Mr Wells also raised the issue of generic drugs. It is my understanding is that the Health Minister is already working to roll out the use of generic drugs across health and social care services, although, as the Minister pointed out, that will often require educating GPs to use generic drugs.
Finally, he mentioned the hospital at Omagh and the need for services in that part of the west of the Province. I understand that the Western Health and Social Care Trust has reviewed the business case for a new Omagh hospital. The trust will submit a revised business case, which now includes the procurement route, to the Department of Health, Social Services and Public Safety. Of course, that will have to go into the financial melting pot.
I thank Members for their interest in the legislative stage of this public expenditure cycle. I have endeavoured to respond to most of the key issues raised. It has been a good and important debate. I loved Mr McHugh’s comment that the debate was about the “pocket money” of the block grant. We have been debating more than “pocket money” today. It is very important business for Northern Ireland. I believe that this Budget will deliver services to people across the Province, even in these straitened times.
As Members, we would be failing in our jobs if we did not notice money being wasted or spent improperly. Equally, it is our job to recognise that money is being spent on vital services. Good work is being delivered across Northern Ireland. Let us not join the doom and gloom merchants who see nothing good coming from that work or from the Budget allocations that we make. At least, let us give people hope and optimism that we are doing our best to ensure the best use of financial resources.