Budget (No.2) Bill 2015: Second Stage

Part of Executive Committee Business – in the Northern Ireland Assembly at 8:30 pm on 22 June 2015.

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Photo of Roy Beggs Roy Beggs UUP 8:30, 22 June 2015

Let us have no doubt it: budgets are important. They are important to determine how much money will be raised in the first place, how much will be spent and what the priority will be. That is important whether we are talking about an individual household, a community group or a local council. It is interesting that local councils ended up having reduced grants given to them by the Assembly. What did they do? Did they complain and refuse to raise more money or to balance their books, perhaps cut, perhaps raise some more money and balance their budgets? No. Every council in Northern Ireland set its budget.

What if they do not set their budget and live within their means? There are regulations that would cause them to lose their authority to continue to operate if they did not do that. Just as political parties in Northern Ireland have respected their local government budgets, the Westminster Government, which financed the vast majority of expenditure in the Northern Ireland Assembly, gave us our funding. What do you think they think of us when we do not live within our means with all the money that is given to us? I can assure you that we are not well thought of by others in the rest of the United Kingdom who have had to live within their budget, whether it be local councils, other public bodies etc. I suspect that they are saying that we are demonstrating our immaturity.

So, budgets are important to a range of organisations, including non-departmental bodies and the Northern Ireland Executive as well. In the Budget, the Assembly prioritises its expenditure plans. It gives the Executive the legal authority to allow the various Departments and organisations to spend public money. They are not authorised to spend above the legal limit collectively as a Northern Ireland Executive. Individual Departments are to avoid over-expenditure unless there are exceptional circumstances, such as, for example, to protect public safety. That happens on occasion.

If an individual spends beyond their means, what happens to them? They frequently rely on credit cards and get involved in high-interest borrowing, and the issue can frequently spiral and further debts can arise. Maybe they will have several credit cards or get a Wonga loan and pay very high interest rates, but, eventually, the problems have to be faced. If not, there will be sudden cuts to individual households or bankruptcy. The Northern Ireland Executive need to understand that they are no different from rules that we expect individual households in our community to live by. During the recent election, some members of Sinn Féin promised to write off credit card debts and all sorts of things, but there is no money tree and you cannot promise that. Similarly, there is only so much funding for the Northern Ireland Executive, and we have to live within our means in Northern Ireland.

I will turn to the Budget specifically. There are several assumptions built into the Budget. For a start, some £1·7 billion in cumulative borrowing has been amassed over the years. As my colleague Leslie Cree indicated, that is some £948 per citizen, which is a higher level than in other parts of the United Kingdom. That must be of concern to us all, because, ultimately, it has to be paid back with interest. The further we kick issues down the line, the further we are passing debts on to the next generation, whether it is the next Assembly or the young folk who have to follow on from us. We all have to understand, even as politicians, that borrowing must be paid back. It is important that we live within our means.

Another fundamental assumption in the Budget is what has come to be known as the Stormont House Agreement. Those who support the Budget are approving it with the related funding and conditions that were built into the Stormont House Agreement, because that was the basis on which much of the loans, funding and financial assistance was offered to the Northern Ireland Executive. If there is a breach of the conditions, then there is a breach of the funding that has been built into the Budget. What would be the implications of that?

I will go through some of the details of the funding, because I have not heard this mentioned, in particular, so far today. I see that paragraph 3 in the Stormont House Agreement highlights that there is around a £2 billion financial package, much of it in loans offered over many years. It is based on the Assembly legislating for welfare reform, which some have chosen not to approve. They have breached some of the conditions for the funding package. I ask what the implications of that are for the Budget. Some of the financial package on offer is for £150 million, over five years, towards dealing with the past. I ask how much of this has been built into the current Budget. There is £700 million capital borrowing to fund a voluntary exit scheme. Again, £200 million is earmarked for this financial year. Has it been built into the Budget? I assume so. Without meeting the conditions on which the funding was offered, will that money continue to be available, or has there been some subtle change and welfare reform will be implemented. The sooner there are decisions, the better.

Equally important, aside from the round number of £200 million to enable the voluntary redundancy scheme, are the savings that will flow from it. I understand that most Departments have been building in six months of financial resource savings assuming that, from around September, departmental savings would kick in when some of their employees, who have volunteered to take early redundancy, take that up, the wages in each Department reduce, and savings start to manifest themselves. Those savings are important for the financial year 2015-16: the Budget that is being voted on today. Again, I ask whether that is going to happen, or will further debts accumulate in the second part of the year. It is not even just about that. The voluntary redundancies will also bring about financial savings next year; so, by not going forward clearly with what was agreed, we are pushing problems further and further down the line.

I go back to the individual household, which avoids dealing with the reality of its expenditure, takes out large loans, and makes assumptions that do not materialise. What happens to that household? Ultimately, there will be a crisis. The Executive and the Assembly are kidding themselves that they will avoid such a crisis if they do not live within their means and the conditions under which the financial offer was made.

On top of that, there is £500 million for 10-year capital funding for shared and integrated education. Again I ask, how much of that £500 million capital expenditure has been built into our Budget this year. How do we recover that, if the conditions are not met?

Next, there is a further £350 million for borrowing for infrastructure built in and, I understand, £100 million to be available this financial year. I assume that it is built in. Again, I ask whether some Members across the way will fail to meet the conditions in which that borrowing was made. Then there is an additional £50 million towards Peace IV funding, including the United Youth programme. Then there is an extra £100 million for reinvestment and reform initiative borrowing. Has all of that been built in to this Budget, which will have to be clawed back and pulled back if the conditions are not met? I see that many across the way are sitting with their head down. You should have your head down, because you are putting your head in the sand by ignoring the reality of the conditions in which borrowing has been offered to the Assembly and the Executive. At least that perked you up a wee bit.

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

The financial package is available on the basis of welfare reform, and, given the failure to implement welfare reform, certainly to date, and on the current rules we cannot go back to it for some time, I ask the Minister to confirm the implications for this Budget without welfare reform being agreed. This needs to be publicly spelled out, and we have not heard it. People are concentrating on welfare reform, but what will happen to the most vulnerable members of our community if welfare reform is not implemented?

Early years was mentioned earlier, and I declare an interest as someone who is a voluntary committee member of Horizon Sure Start. If you really want to solve long-term poverty, education, education, education is the best method to allow people to better themselves, create opportunities for themselves and claw their way out of the poverty that they may find themselves in. I speak from my father's experience of the world many decades ago and that of his family. You cannot spend your way out of poverty. We need to empower people and support early years education so that they can better themselves. We need to create the incentives so that they can better themselves.