COVID-19: Financial Recovery Strategy

Oral Answers to Questions — Finance – in the Northern Ireland Assembly at 3:00 pm on 30th June 2020.

Alert me about debates like this

Photo of Clare Bailey Clare Bailey Green 3:00 pm, 30th June 2020

9. Ms Bailey asked the Minister of Finance to outline the Executive’s fiscal powers in relation to borrowing and revenue raising for any financial recovery strategy following the COVID-19 pandemic. (AQO 516/17-22)

Photo of Conor Murphy Conor Murphy Sinn Féin

The Executive are able to access up to £200 million of borrowing for capital purposes in 2020-21. However, the Executive are not currently facing pressures on the capital budget which would require access to borrowing. This will be kept under review. It should also be remembered that borrowing cannot be used to fund resource costs unless the Treasury agrees to a capital-to-resource switch.

The Executive cannot introduce charges that would be considered a tax or a levy without prior approval from the Treasury. However, Departments can, and do, charge for services that they provide, where that is considered appropriate.

With the significant additional funding that was provided for the COVID-19 response, the majority of departmental budgets are still to be used for the purposes provided for in the Budget for 2020-21. The second Vote on Account, which has been approved, simply provides the legislative authority for Departments to spend the additional funding that has been allocated. It does not indicate that the Executive are at risk of running out of funds. Therefore, while the position will be kept under review as the Executive develop their recovery plan, it is not considered necessary to borrow at this stage.

Photo of Clare Bailey Clare Bailey Green

I thank the Minister for his answer. I am keen to look at the underspend that has happened with COVID. The Minister told us in one of his previous answers, I think, that there was £52 million from the business support package scheme that was unspent. Is it possible to use that money and to redirect it to those businesses and people who have fallen between the cracks? For example, I spoke to the arts sector yesterday and they are engaging with us — it is cross-party — but most of them have received absolutely nothing. They are crying out for a hardship fund or some sort of rescue fund package, so could we use or allocate money to try and save that sector?

Photo of Conor Murphy Conor Murphy Sinn Féin

Yes. In response to a previous question I said that £65 million was actually unspent. The Department for the Economy have held on to a proportion of that to deal with legal matters, but £53 million was surrendered back to the Executive. We had a discussion at the Executive yesterday — yes, today is Tuesday — with regard to what to do with that. There are differing views, but I know that there is a keenness around the Executive to try to address some of the issues.

I referred to social enterprises and that is one of the issues, and there are a number of other sectors. Multiple premises is another sector that feels that it has not been properly addressed and childcare is another one. There is a range of sectors that were not, perhaps, able to avail of that. Some of them did not quite fall into the charities bracket and some did not fall into the business bracket, so they fell between them.

One thing that you learn over the last couple of months is that there is such a huge variety and complexity in the businesses that we have, so it is very hard to design a scheme that will capture absolutely everybody. So, yes, that £53 million that was surrendered can be reallocated. There is an ongoing discussion and my Department is doing a piece of work in relation to some of those sectors that we have identified. They came to us — I am sure they came to Economy and they probably came to a lot of representatives here — and said, "We have missed out on every single pot available". We will see if we can put together packages to provide support to some of them. However, bear in mind that, once you move out of the rates base as a tool for deciding who is in business, it gets more and more complex to verify who is in business, what they are doing, where they are and what support they need. However, that should not prevent us from trying our best.

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party

With regard to the question that Clare Bailey asked about borrowing powers, does the Minister agree that Northern Ireland faces a long-term crisis in investment? The major challenge in our economy is that we have underinvested for decades and we have low productivity and skills. Therefore, the fact that we are not investing enough and that we have consistent capital underspends, including the financial transaction capital, is not acceptable.

Does he also agree that it is worth communicating to the Prime Minister in London that there are bits of investment that this economy needs far more than a boondoggle, crackpot scheme to build a bridge between Scotland and Northern Ireland and that he should stop gaslighting us by coming up with preposterous ideas like that?

Photo of Conor Murphy Conor Murphy Sinn Féin 3:15 pm, 30th June 2020

I do not think that anyone apart from himself takes him seriously on those issues. If ever you want a distraction story, that is one to go for.

Yes, it is unacceptable that so much financial transactions capital is not availed of and goes straight back. We could carry over something like £20 million, but that goes back to Treasury. Legislation was to have been passed in Westminster last year to change the status of the Housing Executive to allow it to avail itself of some of that. That would have improved the situation, but it did not happen because legislative time ran out. The Department later today, I think, will bring through the Final Stage of a Bill that deals with that issue.

Once we have that fixed, we will fall into a situation where we have not been able to spend capital. For different reasons, we will probably end up facing into a capital underspend, possibly at the end of this year. We have not yet got a straight answer from Treasury on whether we will be able to transfer that sum to resource. We are encouraging Departments to bring forward capital schemes as best and as quickly as they can, because capital spend will be one way to pump-prime economic recovery. There is no doubt that, for different reasons, capital spend will continue to be challenged this year. However, at this early stage, we are encouraging Departments to do all that they can to ensure that we spend as much as we can.

Photo of John O'Dowd John O'Dowd Sinn Féin

The Minister referred to the £53 million underspend. He will be aware that that will come as a body blow to many business sectors that have not yet received support from the Department for the Economy. He will be aware that the Economy Committee has been lobbying strongly for sole traders. Will sole traders be part of the discussions on how the money should be redistributed?

Photo of Conor Murphy Conor Murphy Sinn Féin

The underspend was actually £65 million; £53 million was returned. All sectors that did not manage to avail themselves of previous business support grants should be considered, and sole traders is one that we are looking at. I know that, when the Treasury was doing a scheme, there were particular difficulties in making sure that it correctly identified those who qualified as sole traders. There is complexity to that, but that is not to say that these issues should not be looked at.

You are correct of course: as, I am sure, everyone here is aware, a range of sectors have come forward to say that they have not been able to avail themselves of this and have missed out. Now that the money has been surrendered, we have an opportunity. The Executive are looking forward to economic recovery and at how to target economic recovery, but this pot of money was used in the middle of the pandemic to keep people afloat. So, while there are still people who have not been reached, there is a valid argument for looking back to see how we achieve some of that with the outstanding money.