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Budget 2016-17

Executive Committee Business – in the Northern Ireland Assembly at 12:15 pm on 19th January 2016.

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Photo of Mitchel McLaughlin Mitchel McLaughlin Speaker 12:15 pm, 19th January 2016

The Business Committee has agreed to allow up to four hours for the debate. The Minister will have up to 45 minutes to allocate as he wishes between proposing and making a winding-up speech. All other Members who wish to speak will have seven minutes. That does not preclude Members who take an intervention from being awarded an extra minute. I remind Members that the vote on the motion requires cross-community support.

Photo of Mervyn Storey Mervyn Storey DUP

I beg to move

That this Assembly approves the programme of expenditure proposals for 2016-17 as announced by the Minister of Finance and Personnel on 17 December 2015 and set out in the Budget document laid before the Assembly on 13 January 2016.

I am pleased that one of my first duties as Finance Minister is to bring to the House today the Budget for 2016-17. In any Administration, it is the Budget that underpins the delivery of services and, ultimately, plays a key role in the success or otherwise of those services. In agreeing a Budget for 2016-17, the Executive have provided a stable and balanced platform on which incoming Ministers and their new Departments will be able to build. It provides support for our key public services, helps protect the vulnerable in our society and paves a way for the new Executive to agree a multi-year Budget from 2017-18 to 2019-2020, which will reflect the priorities in the new Programme for Government.

The Budget process has not been without its challenges. It seems as though, when I come into post, there are always challenges. There were challenges when I came into post in DSD, and there were challenges when I came into the Finance Department. However, I think that we have endeavoured and, over the past number of months, have been able to overcome those difficulties and deal with those challenges. Those challenges came from the constrained timescale due to the late spending review announcement and the fact that it was produced on the basis of nine future Departments. It is testament to the collegiate approach of Ministers and their officials that it has been possible to agree a Budget within the timescale necessary to fulfil the commitment in the Fresh Start Agreement. That has taken considerable effort and work on everybody's part.

It is regrettable that we were not able to have the usual extensive public consultation. However, I am aware that my officials have engaged with key stakeholders, and I am sure that other Departments have been doing likewise. In addition, the Executive have agreed that new Ministers will have the flexibility to realign departmental budgets to reflect their priorities in the first monitoring round of the year. That means that there will still be an opportunity for Assembly Committees and other stakeholders to influence those decisions.

I do not intend to rehearse the detail of my predecessor’s written statement on the Budget. Members now have a Budget document that provides additional information. I would, however, like to make a few key points before we debate and vote on the 2016-17 Budget.

Members will be well aware of the financial environment confronting us in 2016-17 and in the years that follow. The spending review outcome may not have been as bleak as was originally feared, but we still face significant real-terms reductions in funding. It is impossible continually to do more with less. Therefore, the challenge facing the Executive is to ensure that we do the right things. That will mean confronting difficult decisions on what the public sector should and should not do. In that context, it is imperative that the reform and transformation of the public sector, which commenced under Budget 2015-16, continues and that the process is allowed to progress.

As well as funding under the spending review, the Budget includes the significant additional resources provided for 2016-17 under the Fresh Start Agreement. In addition, the Executive agreed to provide £135 million to top up welfare arrangements for Northern Ireland and £5 million match funding to tackle paramilitary activity. Of that funding, £60 million related to tax credits is no longer required for that purpose. While £30 million of that has been used to fund other pressures, the remaining £30 million has been set aside for further Executive consideration following the outcome of Professor Evason’s work. Where appropriate, the Fresh Start —

Photo of Mervyn Storey Mervyn Storey DUP

I have only commenced. I know that the Member would like to use the debate as an opportunity to revisit the Evason report, whether I still work to the Department for Work and Pensions (DWP) and all those issues, but perhaps he will just give me the opportunity to progress. I have no doubt that he will raise those issues later in the debate, when I will give him the answers that he probably knows I will give him anyway. That will leave him in the position of putting those points on the record, which is what he wanted to do in the first place.

I return to the overall funding that is available. The level of funding means that Departments will inevitably face a reduction in resource DEL. The Executive agreed a limited number of allocations to help to address the more significant pressures facing the key public services. They include £133 million to the Department of Health; £15 million to the Department of Justice for legal aid; £20 million to the Department for Infrastructure for road structural maintenance; £40 million to the Department of Education; and £5 million to the Department for the Economy for the skills agenda.

In addition to the £5 million provided for skills as part of this Budget, I would also like to state my commitment to providing a further £20 million for skills. This will be funded from the first £20 million available in the June monitoring round.

Although this allocation cannot be ratified until the incoming Executive consider the June monitoring paper from the Finance Minister, I feel it is important to provide education institutions with this early indication that the Executive recognise the importance of the skills agenda, especially in light of the upcoming devolution of corporation tax powers, and that significant funding will be provided. I want to give the House this assurance because I have seen comments in recent days in relation to this issue and concerns have been raised, and we have also seen the comments from the vice chancellors of our universities.

I have a task of work to do over the next number of weeks, and I, as well the Finance Minister after me, whomever they may be, will also have the task of ensuring that we have made all necessary preparations to maximise the benefit of the devolution of corporation tax. A key component of that will undoubtedly be in relation to the skills agenda. I think that is something that we need to keep focused upon.

Although this Budget relates only to 2016-17, the Executive have also agreed a number of flagship projects, where capital funding has been agreed up to 2020-2021. This will provide the certainty needed to progress these important projects.

I am sure that a number of Members speaking today will undoubtedly disagree with this Budget. That is their right as Members of this House. There will always be differing opinions on Budget allocations. That is true in times of prosperity as well as times of austerity. There will always be those who are prepared to stand up and say what services should be funded. There are not so many who are prepared to listen to the reality that we have finite resources and that extra funding for one thing means less funding for another or more taxes for everyone. I, more than most, having come into this post in recent days, am aware of those particular issues.

Mr Speaker, this represents a balanced Budget with no overcommitment for the first time in many years. That is an improvement on the situation in which our opponents and critics had us last year. Although the outcome may prove challenging, it is better than previously anticipated. Departments should also be well placed to meet these challenges as a result of the decisions already taken by the Executive on voluntary exit schemes and departmental restructuring.

To quote Jack Lew, the United States Secretary of the Treasury:

“The budget is not just a collection of numbers, but an expression of our values and aspirations”.

I hope that is what I have presented to this House today.

I commend this Budget to the Assembly.

Photo of Daithí McKay Daithí McKay Sinn Féin

Go raibh maith agat, a Cheann Comhairle. At the outset, I should point out that, by convention, the Committee for Finance and Personnel normally undertakes a coordinated scrutiny of the draft Executive Budget. On previous occasions, this has resulted in a cross-cutting report containing contributions from all the Assembly Statutory Committees and other stakeholders. The purpose of this is to influence positive change and add value to this debate. This has not, however, been possible on this occasion, due to the circumstances surrounding this Budget, which the previous Minister described as extremely challenging. The normal consultation process has been set aside.

The Committee received a briefing from officials on the overall budgetary position but, due to the time constraints that applied, the briefing focused on process and outcome. During the briefing, departmental officials explained that the construct of this Budget had been a unique exercise, with three distinct variables added to a very tight timescale. Those included the political context of the Fresh Start Agreement, the lateness of the Treasury’s spending review and the challenge of planning the transfer of functions order to merge 12 Departments into nine.

Mindful of the time constraints, I pressed the departmental officials on the scope that exists for Assembly Committees to influence any changes to this draft Budget. The officials helpfully pointed out that, despite the shortcomings in the process, it would still be possible for Committees to have influence. This could be during the upcoming June monitoring process, when the new Ministers will have considerable flexibility to reallocate resources and capital within their specific departmental budgetary envelopes.

Several other cross-departmental issues were discussed during last week’s briefing from DFP. These included what consideration has been given to revenue-raising measures and the need for robust action to avoid any year-end underspend exceeding the Budget exchange levels, especially in light of the absence of any overcommitment being carried into this Budget. The officials emphasised how challenging the Department’s own budget allocation for 2016-17 will be. Committee members were also keen to explore the implications of the voluntary exit scheme for DFP as a Department. The Committee will be monitoring the practical outworkings of losing 10% of DFP staff, the implications for sick absence, the savings realisation in respect of space reduction and the implications of additional functions and associated staff being transferred from OFMDFM.

The draft memorandum of understanding (MOU) on the Budget process, which the Committee and the Department have been preparing jointly, should be moved forward apace. It needs to be workable and it is long overdue for a number of reasons, which the Minister, as well as other Members, will understand. I look forward to the Department engaging with the Committee with a view to seeing a finalised draft MOU being considered and agreed, by the Executive and the Assembly respectively, in time for the next Budget process.

Amongst the external factors that will need to be addressed is the impact that the timing of the Treasury’s spending reviews have on the Budget processes of the devolved Administrations. I welcome the fact that the previous Finance Minister joined her counterparts in Scotland and Wales in raising that concern with the Treasury. However, I believe that further influence will need to be brought to bear on this matter going forward.

I will now make a few comments from a party position. As we face elections and the making-up of a new Assembly, we need to look forward not only to this financial year but to the next five years. There are a number of challenges on which the Assembly and Executive have done well in terms of the deal that was put forward, but we need to ensure that we get a fair deal on corporation tax. In the time ahead, the Executive also need to consider air passenger duty. A number of stakeholders in that sector and in tourism noted their concerns about the fact that there is a differential across the island. That has an effect; and we and the Executive recognised that when we addressed the issue of the long-haul rate in response to the decision around the New York route.

We need to look at how we can have a level playing field across the island when it comes to air passenger duty in order to ensure that Belfast International Airport, Belfast City Airport and the City of Derry Airport all get a good deal and that we can open new routes. New routes into the North are not just about holidaymakers; they are also about economic growth and building business connections, because there is a dearth of connections, especially to Germany. That is something that needs to be addressed as well as the transatlantic routes that the Executive have already dealt with.

On corporation tax, we need to have a strong position on the taxation benefits that will go to London as a result of any reduction in corporation tax to 12·5%, as has been mooted. I believe that the principle has already been accepted by Treasury in regard to the Scottish Government that, if a taxation policy changes and there are additional revenues due to London, they have a duty to ensure that the devolved Administration are compensated to some extent.

Those are two major issues that I believe that the Executive and the incoming Minister will need to look at.

Due to the lack of time that I have, I will conclude. The fair deal that has been put forward — the Fresh Start Agreement — has been a good deal. Others Members from my party will address these matters, but we now have a start ahead of us for the A5 and A6. That is good for rural areas. We will deliver infrastructure for all those rural commuters, and, of course, the A26 continues apace as well. That is a great result for the city of Derry. It is a great result for all those along that route. I know that some parties will try to ignore that fact, but from what I can see in the Budget —

Photo of Daithí McKay Daithí McKay Sinn Féin

I have no time, unfortunately. From what I see before us today, it is a good deal for those west of the Bann and for those in Donegal. I will close on that point, and I look forward to the debate.

Photo of Mitchel McLaughlin Mitchel McLaughlin Speaker

I gave a certain leeway to the Chairperson of the Committee. Other Members should not expect the same generosity.

Photo of Alex Easton Alex Easton DUP

I rise to support the Budget and to speak on the Health aspect of it. The Health budget has been increased to £4·88 billion, the highest ever allocation of funding for Health. With an extra £226 million of capital expenditure for Health projects, this equates to £130 million of uplift or around 3%. It is the best settlement of any Department, reflecting and recognising its priority status. It also takes the Health budget to over half a billion pounds, nearly half of the entire Budget for Northern Ireland. That does not mean that there are not problems ahead for our Health budget, as we face an ever bigger demand on our health services from the public. The Health budget is not just about receiving more money; while welcome, in itself it does not resolve the pressures that we face. We need to invest further in reducing waiting lists, and we have already seen a commitment to that, with around £40 million being allocated in the last monitoring round to tackle elective care and outpatient waiting lists. On waiting lists, it is worth remembering why there was an increase in waiting times: it was down to £120 million being handed back to Westminster in fines for not implementing welfare reform. That is the truth of the matter.

We need to continue to reform and innovate to stay ahead, such as through Transforming Your Care. That process needs to continue to be implemented, and I would like to see that happen at a faster pace. We also need to ensure that funding for Transforming Your Care is in place to fully develop what is promised. I also believe in invest to save, and I believe that more funding is needed to ensure that schemes such as electronic medical records are put in place to cut costs and save on bureaucracy.

The Department of Health has three main responsibilities: Health and Social Care, public health and public safety. It is important that, on those three main responsibilities, everybody in the Assembly has the same aim as me: to build a world-class health and social care service for the people of Northern Ireland. We need to drive up the quality of health and social care for patients, clients and carers; to improve outcomes; to safeguard the vulnerable; and to ensure that patients, clients and carers have the best possible experience in every aspect of their care and support. That is what the people of Northern Ireland want, and that is what the people of Northern Ireland deserve.

There are key challenges ahead for Health for the 2016-17 period, with new drugs becoming available to treat medical conditions and an ever-increasing elderly population, which we all welcome but which brings added pressures and increased costs in delivering primary, secondary and social care services. There are also increased pressures facing us. Cost pressures in the Health budget represent a 5% to 6% increase, largely down to pay and non-pay inflation and continued development in healthcare technologies and treatments. There are ongoing challenges on our waiting lists. In recognition of those challenges, the Executive have protected Health and Social Care through its Budget allocation for 2016-17. However, the Department and its arm's-length body will have to identify savings in order to supplement the additional Budget allocations.

In the Budget, we will see £232 million for capital expenditure for health projects to implement a capital investment programme that helps to maintain and develop the health estate and other assets in support of service delivery and reform projects. Money has been found by the Executive in joint investment programmes with Atlantic Philanthropies to deliver improved services for people with dementia and their carers. We also see £16 million set aside for the Mother and Children's Hospital and £3·9 million to take forward Desertcreat as a flagship project. We see the completion of the north-west regional cancer centre in Altnagelvin Hospital and two new primary care and community centres in Banbridge and Ballymena delivered by a DUP Minister. There is also the continuation of the redevelopment of the Ulster Hospital and Altnagelvin Hospital. The capital budget also gives important investment in ICT, medical equipment and the fleet and estates of the Ambulance Service and the Fire Service. There is also a further £10 million in transaction capital allocations for further GP infrastructure. Overall, we see a real-terms increase in funding for hospital, general medical, pharmaceutical, ophthalmology, health support, public health and paramedic services.

There are still many challenges ahead for Health. However, with the forecast for the Northern Ireland economy to grow by 1·6%, corporation tax being devolved to Northern Ireland and the voluntary exit scheme, we will, hopefully, see the potential for more funding to become available from the Executive over the next year or two, which I would like to see going to Health. Finally, I pay tribute to our doctors, nurses and all our health staff, who do such a wonderful job across Northern Ireland. We owe you a deep debt of gratitude, and we appreciate you all. I support the Budget.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party

I welcome the opportunity to speak on behalf of the SDLP on the Budget. However, I do not really welcome the content of it, which, I think, limits the scope of the discussion. Others have said that it is a Budget that lacks planning and serious analysis. I know that nobody reads a document like this to be entertained, but it is turgid and lacks imagination and some of the finesse that devolution should have put onto it.

There is no doubt that Northern Ireland faces the biggest challenges at the moment: challenges to fix the economy and deliver for young people so that our brightest and best minds do not have to keep leaving in the numbers that they have in the past decade. The challenge is to grow our economy and private sector to deliver the services that we need, but this Budget seems, in every sense, to have given up. The challenges of 21st-century infrastructure and 21st-century jobs are just not addressed at any point in this lengthy document.

Northern Ireland has shown that we can overcome big challenges and fix big problems. We have a strength, a resilience and an approach that we go around the world talking about, but none of that spirit of creativity, resilience and possibility is evident in this document. It does not outline any serious initiative in the fight against poverty or educational underachievement or in harmonising our infrastructure with that of other jurisdictions.

While seeing fit to borrow nearly three quarters of a billion pounds to kill jobs through the Civil Service redundancy scheme, the best that Sinn Féin and the DUP seem to be able to do for resource spending, tourism, employment and skills and student support is a cut of £24 million. We are borrowing to kill off jobs and taking away millions from exactly the sort of fund that is designed to create the skills and improve the infrastructure to increase those jobs. We have put a lot of eggs in the corporation tax basket, despite the fact that those rates are harmonising almost organically, and we are failing to learn the lesson that it is not just cutting corporation tax that will make the change; it is consistent investment in skills and infrastructure.

We have given up on any serious development of our infrastructure to make it fit for purpose.

Photo of Gordon Lyons Gordon Lyons DUP

I thank the Member for giving way. She has perplexed me slightly, because she said twice that there is not enough about investment in transport infrastructure. It is very clear that the money for the A5 and A6 is of great benefit to the economy. There are lots of other things. She has drawn a very negative picture. Surely she should be a little more cheerful at the start of a new year and see the good things in the document.

Photo of Mitchel McLaughlin Mitchel McLaughlin Speaker

The Member has an extra minute.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party

I thank the Member for his intervention, which I was happy to take, as I think that it is good practice. I am glad that you brought up the A5. Look at the detail. The chronic underinvestment in education is now manifesting itself in the geography that is evident in this document. We have these seven flagship projects identified, at a cost of just over £1 billion. On my reading, there is £100 million up front for these costs: we have shown how we are paying them in the first year, but it does not take an accountant to work out that the rest has not been filled in.

You talk about the Belfast to Derry road. It is a dual carriageway from Randalstown to Crawfordsburn. That is all it is. Your ambition for the north-west extends to exactly 8·7 miles. I do not think that is what people in the north-west are looking for from this Executive. We have seen it all before. I am sure that election pledges and leaflets are being designed for the north-west that talk about the road from Belfast to Derry, as they did in 2011. People have heard it all before, and this Budget does not in any way fill in the blanks on how you are going to do it.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party

No, I will not, because I have a few things to get through. I have only got three minutes; maybe I will find the positives in your Budget in that time, but I do not think so.

There are other areas that they have given up on —

Photo of Daithí McKay Daithí McKay Sinn Féin

On a point of order, Mr Speaker. The Member referred to the A6 from Randalstown to Crawfordsburn. It is actually from Randalstown to Castledawson roundabout. The Member would do well to read the document before passing comment on that piece of infrastructure.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party

Yes, as I say, the education cuts affect geography. I am glad that you have conceded that that is, in fact, the length of your ambition for the much-heralded road from Belfast to Derry.

It is not just in infrastructure and in roads that the Budget has given up. It has given up on the fight against criminality. Before, prison officers in Northern Ireland lived in fear of being attacked in their homes; now they live in fear of being attacked in the very prisons where they work. We have the infamy of Maghaberry being described as the worst prison ever inspected by the Chief Inspector of Prisons. We rely on an effective policing service, but ours is taking a 2% cut, while still addressing a lot of the manifestations of the past which the Executive have failed to deal with over many years and after many opportunities.

We rely on a strong and efficient court system, through which people can see their case progressing. However, on Monday of this week, 871 cases were awaiting trial in the courts. That is 871 victims who have not had the opportunity to access justice and have the anxiety of waiting for their case to go through, and that is happening while courthouses across the North are earmarked for closure.

Most disappointingly, as well as justice and roads, you appear to have given up on children and young people. The Budget has a reduction in spending on youth services — a drop of 5·4% — and what looks like a tiny increase in resource spending for schools themselves. We do not even have a figure in the Budget for capital spending on youth and children's services next year. I cannot imagine a Budget that not only does not appear to invest in our children and young people but does not have any indication of what we are going to build for them in the lifetime of the Budget. The childcare provision outlined, at 12·5 hours per week, falls behind the commitment announced by the Conservatives. It is a bad state of affairs when David Cameron is looking after working families better than this Budget. Is that the best we can do?

We are asked to support a Budget that appears to have given up, designed by First Ministers who have given in. They have basically taken by rote what has come across from the Treasury; there is no influence, or no obvious influence, of devolution in what we have added. There is no imagination. We have a new First Minister, and I am glad to see that, but collectively the First and deputy First Ministers, as the longest-serving Ministers in Stormont history, do not have very much to show for it and appear to have lost their fight already.

There are alternatives. HS2 across the water will have a Barnett consequential of £600 million coming our way in the next mandate. We could use that to improve infrastructure but, on the evidence of this Budget, we cannot be very confident that we will.

The Northern Ireland investment fund of £100 million will not be available until the end of 2016. We want to be confident that that will be focused on social and economic good. The reinvestment and reform initiative, which was an SDLP initiative, is being treated like a credit card; it is being maxed out on borrowing. It was envisaged to be spent on infrastructure, and that is not happening.

We will not be supporting this Budget. We are not ready to give up and give in. I do not think that people would appreciate it if we did that on their behalf.

Photo of Mitchel McLaughlin Mitchel McLaughlin Speaker 1:00 pm, 19th January 2016

The Business Committee has arranged to meet at 1.00 pm. I propose therefore, by leave of the Assembly, to suspend the sitting until 2.00 pm. The first item of business when we return will be Question Time. Mr Leslie Cree will be the next Member to speak when we return to this debate after Question Time.

The debate stood suspended. The sitting was suspended at 1.00 pm.

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