Northern Ireland Assembly Flax Flower Logo

Northern Ireland Assembly

Monday 2 April 2001 (continued)

Mr Bradley:

I compliment the Minister and her team on their tireless efforts to deal with the foot-and-mouth-disease outbreak. The Minister must be the busiest lady in Ireland - she is certainly the busiest politician in the country.

The House will share my hope that we have contained the disease that broke out around Meigh in Armagh and Proleek in Louth. Given the cross-border dimension to the problem, can the Minister say when she will next meet her Southern counterpart at formal North/South Ministerial Council level?

Ms Rodgers:

A formal meeting of the North/South Ministerial Council has been arranged for next Friday; it will take place in Dublin. The only issue on the agenda will be foot-and-mouth disease. All related issues will be discussed and decisions will, we hope, be made about how we should proceed.

Mr P Doherty:

To what extent has the lorry driver from Banbridge, who brought the sheep to Meigh, co-operated with the Department of Agriculture and Rural Development? Is it true, as reported in the media at the weekend, that his lorry stopped at other farms and marts at the time of the Meigh delivery?

Ms Rodgers:

I have already put it on record that one of our biggest problems was that we did not have full co-operation from the person - indeed, the persons - concerned. The Member will be aware that the matter is now under investigation and that the driver is being questioned. In the circumstances, it would be entirely inappropriate for me to comment any further.

Mr Paisley Jnr:

Members will note the Minister's comments on the proposed anti-disease group. Can she tell us a little about the group? We need to know the who, what, where and when. We hope that the group will be considerably more successful than the anti-disease measures taken heretofore.

Can the Minister tell us what approaches were made to her by people seeking an amnesty, either for themselves or for others? We know what her response was, but we should know who sought the amnesty. There are no cases pending before the courts, no arrests have been made and no prosecutions are ongoing. Can the Minister assure the House that people will be prosecuted to ensure that this sort of thing does not happen to our agriculture industry again?

Ms Rodgers:

I was talking about the vision group, and my response to the Member is exactly the same as that which I gave to Mr Taylor. I have asked the vision group to set up a subgroup. I do not know what the Member means by saying that the group must be better than it was in the past. There never was a group working on foot-and-mouth disease; there was a group considering the future of the agriculture industry and working out a strategy for the future. The report of that group was due on 6 March, but that has been put on hold because of the foot-and-mouth-disease problem. I have asked the group to set up a subgroup to consider the implications of what has happened in the past five weeks and make recommendations. I considered that wise.

The Member may be aware that the only approach that was made to me on the matter of amnesty was made via an ad-hoc committee that was set up in south Armagh. I was able to address some of their concerns, but I made it clear that I would not be prepared to address others. I said that I would not make promises that I could not or would not keep.

Prosecutions will be a matter for the RUC. Investigations are proceeding and I cannot respond on behalf of the RUC as to whether or not prosecutions will take place. However, I assure the Member that the Department will co-operate fully with the RUC, which may lead to people being brought to task for their wrongdoings.

Mr Kennedy:

I welcome the Minister's statement. She has outlined this morning that she will move to lift the controls on the Newry and Mourne area as quickly as possible. Nevertheless, she has alarmingly said

"However, that will not be an easy case to win."

Can she expand on that? Farmers and people throughout Newry and Mourne will want to see the restrictions lifted as quickly as possible.

I also welcome the Minister's statement on the issue of the amnesty. However, can she spell out the compensation procedure, which involves an appeal? Who conducts that appeal? Is it genuinely independent? Will it not come under any external pressure to give benefit to those who had been seeking amnesty on other issues?

Ms Rodgers:

As regards Mr Kennedy's remarks about Newry and Mourne, I appreciate his concerns as he is an MLA from that area.

When I said that it would not be easy, I was referring to various factors. First, the disease has spread within some European countries already. Secondly, there has been a new case in County Louth subsequent to the one we had in the Meigh area. Finally, there was the discovery of sheep with antibodies. Those issues will make the Commission and the Standing Veterinary Committee nervous when we go to seek a lifting of the ban. Knowing how difficult it was to get regionalisation at this stage, I am not underestimating the difficulties ahead. We may have to wait until the 30-day period following the Proleek outbreak is over. All those things have been conveyed to me as possibilities. I assure Mr Kennedy that I will do everything possible, along with my officials, to ensure that the restriction is lifted on Newry and Mourne as soon as is humanly possible.

With regard to the compensation procedure in the south Armagh area, I will reiterate what I have said publicly. The compensation will be at full market value as assessed by departmental valuers. If farmers are unhappy with that, they have access to one of three named independent valuers. That is the position. It is the same as the position in relation to the original slaughters in the Meigh area and indeed to slaughtering in the UK and the Republic.

Ms Gildernew:

Go raibh maith agat, a Cheann Comhairle. I welcome the Minister's statement. I asked her a question some weeks ago about the spreading of animal blood on agricultural land. To date, I have not received an answer. Is the practice to be outlawed? If not, can she explain why a farmer in Rosslea told me the other day that the price of a kill has gone up by almost £5 in order to pay for the additional cost of landfill for blood and animal waste?

Ms Rodgers:

As regards the first part of Ms Gildernew's question, it is not a risk. It seems to me that landfill might be a commercial issue. If prices rise, it is a commercial issue, and one that I cannot deal with.

11.30 am

Mrs I Robinson:

Will the Minister tell the House if her discussions with south Armagh farmers were designed to organise the logistics of the extended cull or to avoid a showdown with IRA/Sinn Féin in the run-up to the elections?

Ms Rodgers:

I thank Mrs Robinson for the question, although I do not entirely understand it. I assure the Member that everything I have done since the beginning of this crisis has been with one view in mind - to keep foot-and-mouth disease out of Northern Ireland. I have not had any other consideration at any time. I am pleased that the outcome in south Armagh was that I could proceed with the necessary cull - bearing in mind what Mr Taylor said about the presence of antibodies and my reply to him. My answer to Mrs Robinson's question is that at all times my only consideration was to keep foot-and-mouth disease out of Northern Ireland. So far, with the co-operation of the whole community, including farmers, we together have been successful. I hope to continue along those lines.

Mr Armstrong:

I welcome the Minister's relaxation of the movement of livestock under licence. This is due to the vigilant actions of farmers who have maintained fortress farms and Department of Agriculture and Rural Development staff who have manned the border. Everyone draws comfort from each passing day that is free from new cases of foot-and-mouth disease. There can be no relaxation on Northern Ireland's borders with the Republic of Ireland or the rest of the United Kingdom.

Will the Minister tell the House how many sheep were disposed of during the previous week in the cull at the border? Is she sure that there are no sheep left in that area, lest there be another case of foot-and-mouth disease?

Ms Rodgers:

I thank the Member for his question and his obvious concern. With regard to movement under licence, Mr Armstrong was one of the people breaking down my door during the previous week to ensure that that movement was permitted. I am pleased that I have been able to respond to him and others who made those same concerns known to me. I also appreciate his remarks that there can be no relaxation and that we must keep up our guard.

With regard to the final figures, I must say that those numbers are not yet available, because the cull has not been completed. As soon as I have them, I will make them available to Mr Armstrong in writing. I am pleased to say that as far as I know the cull will be completed today in time for regionalisation tomorrow.

Mr Speaker:

As there are no further requests for questions, that brings an end to questions to the Minister on her statement. We now move to the motion on the Pig Industry Restructuring (Capital Grant) Scheme.

Mr McGrady:

On a point of order, Mr Speaker. You and the Assembly have agreed to the convention that in subject matter debates or questions the Chairperson or Deputy Chairperson of the relevant Committees will have speaking preferences with regard to questions and/or comments. This is done on the understanding that the Chairperson or Deputy Chairperson is speaking on behalf of the Committee. Will you rule to that effect, and will you predetermine in that ruling whether the said Chairperson or Deputy Chairperson is speaking in a personal, party or Committee capacity? If in a capacity other than the last, will you ensure that he or she does not receive precedence?

Mr Speaker:

In respect of Committee Chairmen's and Deputy Chairmen's speaking opportunities, there is an element of precedence where there is a relevant Committee and the Chairman or Deputy Chairman indicates that he wishes to speak in that capacity. I sometimes have to balance that with the wishes of party Whips, because occasionally they too have a view on the order of contributors from their parties. In general terms, however, the Chairman and the Deputy Chairman will speak first.

If a Chairman or Deputy Chairman chooses to speak in a personal capacity, he or she does not take precedence. In that respect the Member is quite right.

However, it is recognised that there are occasions when a Chairman or Deputy Chairman may speak on behalf of his Committee but also properly make other remarks. In those circumstances he should indicate which remarks are being made in a personal capacity, for he cannot be called a second time.


Pig Industry Restructuring (Capital Grant) Scheme


The Minister of Agriculture and Rural Development (Ms Rodgers):

I beg to move

That the Pig Industry Restructuring (Capital Grant) Scheme (Northern Ireland) 2001 (Statutory Rule 2001 No 90) be approved.

Members will need no reminding of the difficulties which the pig industry here has had to endure over the past few years, to say nothing of the current added effects of the foot-and-mouth-disease outbreak. I hope that Members will also need no reminding of the efforts that I have been making to try to secure the introduction of an aid package for pig producers at the earliest possible date. Members will also be aware that the Pig Industry Restructuring Scheme has two elements. The Regulations referred to in the motion relate to the second element for on-goers - that is those people wishing to remain in the industry.

The control provisions needed for on-goers required subordinate legislation, made under two separate pieces of primary legislation. These have different powers and, although the controls are identical, it meant that we had to make two statutory rules - one by negative resolution in the usual way and the other by confirmatory resolution on the part of the Assembly. Both rules are similar in providing for controls on the payment of grant-aid over a two-year period in respect of interest rebates on loans for expenditure incurred in restructuring a pig production business.

Such expenditure can relate to either capital or non- capital, but the primary power to regulate for such payments on capital expenditure requires the rule to be confirmed by the Assembly. It will cease to have effect unless approved by a resolution of the Assembly within 40 days of 30 March, the date on which it came into operation. This rule and the equivalent one for non-capital expenditure provide the necessary legal basis for my Department to approve applications under the on-goers' part of the Pig Industry Restructuring Scheme. This is very important as, although no payment can be made for one year after an application is approved, we must have evidence that interest has been paid to the lending institution, and we wish to be able to make those payments as soon as that anniversary is reached. The confirmation of this rule by the Assembly will ensure that this hurdle does not exist, and I hope that Members can therefore agree to confirm the rule today.

I emphasise that these rules are important, but, essentially, controlled provisions will allow the Pig Industry Restructuring Scheme to benefit pig producers here. Accordingly, I decided that it was not necessary to prepare regulatory impact, human rights or equality impact assessments or to undertake any public consultation. I invite the Assembly to confirm its approval of the rule identified in the motion.

The Chairperson of the Committee for Agriculture and Rural Development (Rev Dr Ian Paisley):

I am speaking as Chairperson of the Agriculture Committee, and there will be no gagging of the Chairperson just because minorities in the Committee cannot have their way. Mr McGrady had better get his act together and get the two members from his party in absolute agreement before he comes attacking me in the House.

The great thing about the system here is that nobody can remove the Chairperson of a Committee. The agreement that the Member entered into to keep Nationalists and Republicans in place covers me too. If Members want to remove me they will have great bother doing so. It is ridiculous that petty statements are made because minorities cannot have their way. My Committee, by a majority vote, gives me the right to speak. However, on this matter there is unanimity, so I am speaking for the whole Committee. Of course, sometimes members are not there when decisions are made or they do not even express themselves when decisions are taken.

When the proposal for the Pig Industry Restructuring (Capital Grant) Scheme was brought to the Agriculture and Rural Development Committee on 2 March members questioned a department official on the details. As a result, the Committee was content for the Department to proceed with making the rule that is now before the House.

In reconstructing their pig production business, many farmers - and this is a concern of the Agriculture Committee - face huge capital expenditure costs which can only be met by taking out loans. The restructuring scheme provides for the payment of grants towards the cost of such loans. The scheme is welcome and it provides a lifeline in these difficult times as long as those farmers who seek it are accepted into the scheme.

Figures have been bandied about concerning how many applications were made to the scheme and how many were accepted. The Agriculture and Rural Development Committee has got no confirmation as yet from the Minister on those figures. The Committee is not content with that. It has asked officials from the Department of Agriculture and Rural Development to attend its meeting on 6 April so that members - and this was a resolution of the whole Committee - can question them to see if this is going to be effectual. Many people want to get into the scheme but some have already been told that they are not accepted. It is important that they are given another chance. It is also important that the ratio of applications to successes, 500:80, is changed and that the pig farmers who are in difficulty can benefit from the scheme.

The Deputy Chairperson of the Committee for Agriculture and Rural Development (Mr Savage):

I welcome the scheme that the Minister has introduced. It is an indication of a vote of confidence from the Department of Agriculture and Rural Development to the agriculture industry, and especially to the farmers.

Will the Minister give details of the take-up of the scheme that enables pig farmers to leave the industry and will she tell the House if that take-up has been lower than expected? Many telephone calls to me suggest that that was the case, so will the Minister tell the House how much money is left in the kitty and how much money is available for the restructuring of the scheme?

The scheme is UK-wide, and other areas are involved, but surely there was a designated amount of money for Northern Ireland. How much of that money has been used, and what contingency plans are in place for making the remainder available to more pig farmers?

With two experienced politicians - one on each side of me - I have to be careful how I proceed, but I welcome the loans scheme for pig farmers. In these days when the agriculture industry has come through crisis after crisis it is an opportunity for the pig industry to restructure, for the out-goers scheme to be successful, and for those who want to stay in the industry to do so. I congratulate the Minister and I will support her 100% in any way possible.

The agriculture industry must modernise and unless it goes forward as a modern agriculture industry, Northern Ireland cannot compete with its counterparts across the water. People must realise that we are part and parcel of Europe. It is hoped that the Minister will see fit to broaden the outlook of the loan scheme to cover other areas. Time will tell as to the major difficulties that will be faced by the agriculture industry due to foot-and-mouth disease.

I hope that, in time, the Minister will broaden her outlook and take those things on board.

11.45 am

Mr Bradley:

I too support the motion. Cattle-related matters have dominated the agriculture agenda, so it is good to know that back at the ranch people were working in the interests of the pig industry, because it is very much part of our history. I will not give into the temptation of rehashing much of what was said about farming debt and about restoring profit to the pig industry. I support the capital grant scheme. As the Deputy Chairperson of the Committee has said, it is long overdue. The on-goers will welcome it, and I thank the Minister for moving this motion this morning.

Mr McHugh:

A Cheann Comhairle, the Agriculture and Rural Development Committee agrees that this scheme is overdue. It is also a welcome opportunity for people who previously missed out on the wider scheme. There are many difficulties with funding, and there is the possibility that it may not do what it was intended to do and help farmers. Those involved in the fishing industry have also found that the scheme is so complicated that it is difficult to say whether it will benefit those who are most in need of it in the long term. This is due to a lack of information and to delays on the part of the Department of Agriculture and Rural Development in delivering and implementing the schemes.

These are the main problems that farmers face. In this instance, they have to decide if they want to, and need to, get out of the industry. They have not always had the information to allow them to do that. They have to decide if they want to leave the industry permanently, although a son may want to get into the industry in the next few years. These are all very difficult decisions. A farm has to be taken out of the business of pig production completely even if there is a possibility that it may become profitable in the future.

Farmers must decide whether to go for the scheme or to try to have a future as a pig farmer. Whether we have a future as an area that produces pig meat, or we just give in and allow imports, has an impact on the overall economy. Our debt reports have shown that most of the difficulties that farmers faced were beyond and outside the farm gate. That includes the BSE crisis and now foot- and-mouth disease, which may be the deciding factor for many farmers on whether they remain in the industry.

We have covered most of the arguments regarding the 'Restoring Profit for the Beef Producer' report. There are similar arguments in the pig industry, which was very strong in all counties 20 years ago. Most of that industry, certainly from the area that I come from, is no longer there. You could count on one hand the number of people who are involved in pig production in Fermanagh, and a number of years ago every second farm was involved in it. The pig industry now faces the foot-and-mouth disease, and pig farmers must decide whether they have a future.

We are also losing other aspects of farm production such as beef. This is due to the impact of the power of people outside the farm gate - the supermarkets and the processors - and how they deal with farmers. The reports that we published have several recommendations for putting this right. Some of the recommendations point to the Department of Agriculture and Rural Development's taking a proactive role in helping farmers who remain in the pig industry to have a future. Malton Foods and others have stood firmly against any moves towards strengthening the hand of the individual. That difficulty may be overcome if farmers can remove the fear of trying to stand against large corporate organisations that work for profit, try to stifle all opposition and create a total monopoly over the profit of an industry.

At present, those outside the farm gate have the power. When farmers are making an income of approximately £22 each and everyone else is talking about the massive economic impact in relation to farming, it shows who is making the money and the profit and who is being excluded entirely from this. It is up to the Department of Agriculture and Rural Development, in particular, to do its best and to work with the farm groups that want to move to a position of strengthening their base.

I support the motion because it allows progress and allows farmers to go for money at this point. Previously, they were afraid to move because they lacked the information to make a decision.

Mr Kane:

The benefits of the Pig Industry Restructuring Scheme and the length of delay can all be measured best and most accurately by the number of producers who have been forced from the industry. I accept that the blame for such delays in the introduction of support lies with the United Kingdom Minister and with Mr Fischler in Brussels. Delay in supporting, during crisis, any of our farming sectors is increasingly becoming the norm. However, for those producers suffering the collapse or manipulation of their markets, this is of little comfort.

The pig industry has, without support from subsidies, endured the rigour of what has often been a very uncertain market for its product. I pay tribute to those who have remained in production against impossible odds. That said, a strategically targeted £400,000 grant at this stage might have a positive impact on those who have managed to remain in production. Further developments involving Government funding for producer co-operatives would have attracted much support, both within the industry and from many members of the Agriculture Committee. In order to bring the price of Northern Irish pork into line with the United Kingdom mainland, a level of financial commitment from Government, however costly in the interim, could prove one of the only alternatives.

Regarding price differentials, I share the view of the producers that explorations of the impact of swine fever and the more extensive downsizing of the pig herd on the mainland are the factors that explain the higher prices for pigs across the water. The Ballymoney fire has had an enormous impact on the prices paid to producers, but so has the procurement of pigs in the Republic. Tie in those factors with the disadvantage of Northern Ireland's greater input costs and the fact that a level playing field of animal welfare Regulations does not exist, and the stage is set for the extinction of the pig industry. United Kingdom pig producers have been forced to accept the stall-and-tether ban in advance of other EU states, which has imposed costs on the industry that it cannot afford in the current circumstances.

This welcome, but late, injection of cash for restructuring the pig industry, involving the development of marketing structures and improving quality, is welcomed by the industry. However, it must be seen in the context of the current difficulties, and I urge the Minister not to rule out the provision of cash to fund a new co-operative initiative in the future.

Mr Poots:

The pig industry has faced many difficulties in the past few years, and many farmers find themselves with debts that outstrip their assets. To this end, the on-goers scheme must be welcomed as a step in the right direction. There are other steps that many of us would like to have seen included. Nonetheless, we welcome the steps that have been taken in the interim.

I have a number of questions arising from this issue. Mr Savage said that there may not have been a full uptake of the on-goers scheme. If that is true, is it possible for money from that scheme to be put towards the out-goers scheme where it appears that there has been a higher take up? I understand that many farmers have applied to the out-goers scheme and have been rejected. I want to question the role of the Department in that.

Farmers had to pay £350 plus VAT to get their animals valued. It has also been claimed that those who applied to the out-goers' scheme were told at meetings held by the Department of Agriculture and Rural Development that they should do it on a 10-year basis. Yet the vast majority of those who listened to the Department's advice have had their schemes rejected. What opportunity is there for those people to reapply? Is there any advice that can be given before they go down that road to ensure that they will get finance from the out-goers scheme?

Mr Shannon:

Does the Member agree that we do not have the details of how those people who have not been accepted for this scheme can be included in a second phase? Does he agree that it is a problem that farmers who applied for this scheme were told by the Department that they should apply for the full amount of money and, when they did, they were then refused? That is one of the concerns that pig farmers have about this issue.

Mr Poots:

I agree.

I know that the Minister is busy with the foot-andmouth-disease crisis. Believe it or not, we are sympathetic to the Minister. The fact that we ask awkward questions does not mean that we are trying to get at her. However, our constituents are concerned about the issues we are raising on their behalf. There are 500 farmers out there, and 420 of them are not very happy. It would be useful if the Minister could make a statement to the House at some stage on the out-goers scheme. It would be appropriate if the Minister could set out what has happened so far and the way forward as the Department sees it and allow the House the opportunity to ask questions about it.

Ms Rodgers:

I would like to thank all Members for their contributions. I understand the concerns that many of them have about this scheme, which was long in gestation.

With regard to Dr Paisley's comments, the applications accepted were based on a UK-wide tendering process. That meant we had to accept the cheapest bids. There could not be any question of regional shares for Northern Ireland, or anywhere else, but I can confirm that the out-goers' bids so far show that Northern Ireland has received approximately the proportion that we should have, based on sow numbers. That may well not be proportionate to our problem, but it is proportionate to our sow numbers.

Taking Mr Savage's points next, I have already said that we will get our share based on applications to date. There will be a second chance for others in the mark II out-goers scheme. The Member asked me to broaden my mind regarding the loans scheme. I think that my mind has always been pretty broad, but in relation to loans scheme, there is the little matter of the EU state aids regulations.


With regard to comments made by Mr Savage and Mr McGrady, the next issue is the need for a grant scheme for Northern Ireland pig farmers. I have said many times that I cannot hand money out without EU state aids approval. Although I would like to do that, it would be illegal. As Members will know from my remarks earlier today, I am not prepared to act illegally for the pig farmers or for any other farmers. I thank Mr Bradley for his comments and his support for this scheme.

Mr McHugh raised a number of issues. I accept that the Pig Industry Restructuring Scheme is complicated. That was necessary in order to satisfy the EU that we are not simply handing out money to farmers who might go and increase their pig production, which would be adding to our problems. My officials have tried to help farmers to comply with the scheme and are happy to continue to do so. Mr McHugh's point about co-operatives is noted, but it was merely an observation rather than a question. It has been made in the past by many people, including Mr McHugh.

I fully agree with Mr Kane's comments regarding the delay in approving the restructuring scheme. The delay was both inexcusable and frustrating, both for me as Minister and also for the people who are waiting for it. However, neither Nick Brown nor myself were in the driving seat on this. I have pressed Mr Brown on numerous occasions to exert pressure on the European Commission to speed it up. The other points made by Mr Kane about the cost of stalls and tethers are points that have been made in the past. I have dealt with them before.

I am grateful for Mr Poots's welcome for the restructuring scheme. It is not possible or, indeed, necessary to reallocate cash from the on-goers scheme to out-goers. The budget that we have is the maximum available. Many of the bids were low, thus allowing us to achieve the reductions at a lower price. Mr Shannon asked whether unsuccessful bidders in the out-goers scheme could reapply. The answer is that they can.

Question put and agreed to.


That the Pig Industry Restructuring (Capital Grant) Scheme (Northern Ireland) 2001 (Statutory Rule 2001 No 90) be approved.


Companies (1986 Order) (Audit Exemption) (Amendment) Regulations


The Minister of Enterprise, Trade and Investment (Sir Reg Empey):

I beg to move

That the draft Companies (1986 Order) (Audit Exemption) (Amendment) Regulations (Northern Ireland) 2001 be approved.

We are here today to debate the Regulations that propose to change the existing law on the audit of company accounts. They are made under the powers in article 265 of the Companies (Northern Ireland) Order 1986. The purpose of this proposal is threefold. First, to raise the threshold for audit exemption from its current level of £350,000 to £1 million. We are concerned that the Regulations placed on businesses not be overly burdensome, particularly to our smaller businesses. Hence, the Regulations we are debating today will reduce those burdens.

In the light of consultation by the Department of Trade and Industry in London, we are persuaded that the balance of argument favours moving the turnover threshold for audit to £1 million a year figure as a first step. We are aware that the independent company law review is specifically addressing whether some other, less burdensome form of assurance could replace the full audit for companies with an annual turnover of between £1 million and £4·8 million. That is the maximum turnover figure permitted under European rules. The review will make its final recommendation on this "lighter touch" independent assurance later this year. We have not as yet taken a view on this.

Secondly, the Regulations simplify the law relating to dormant companies - that is, companies which are still on the register but which have had no significant accounting transactions during the period. They dispense with the requirement that dormant companies must pass a special resolution to gain exemption from audit, but they do allow one if 10% or more shareholders so require. The Regulations allow certain payments required of all companies to be made to the Companies Registry while status remains dormant.

Thirdly, the Regulations require that a dormant company acting as an agent for a third party must disclose its agency status in its annual accounts.

There is little doubt that these proposals will be warmly welcomed by the business community as a means of getting rid of burdens and removing unnecessary irritations. I want to emphasise also that the changes reflect a careful assessment of the relative costs and benefits.

It may help if I give some explanation of how we reached our conclusions. Regarding the audit exemption and the background to it, I turn first to the increase in the threshold. The Companies (Northern Ireland) Order 1978 introduced a requirement that all companies should not only file their accounts with Companies Registry, but that those accounts should be accompanied by a report signed by a registered independent auditor.

On three occasions in the 1980s the Department of Trade and Industry in London consulted on whether the audit requirement should be kept for all companies. On each occasion it was decided to retain the status quo.

The first cautious step was taken in 1995, with the exemption of very small private companies from the audit, while those with turnovers of between £90,000 and £350,000 were given the option of filing a similar report in place of the full audit report. This regime was considered unsatisfactory and was abolished in 1997. The current position is, therefore, that only companies with a turnover of above £350,000 are subject to a full statutory audit.

The typical cost of an audit for a business with a turnover of around £1 million is between £1,000 and £1,500. With regard to the effects of amending the audit Regulations, we estimate that the increase in the threshold to £1 million will enable approximately 3,000 more Northern Ireland companies to take advantage of exemption from audit, leading to annual savings of £3 million to £4·5 million. Research suggests, however, that only half of the companies eligible to take advantage of exemption might be expected to do so. In that case, annual savings would be between £1·5 million and £2·25 million. The important point is that those companies will have a choice to make in the light of their own particular circumstances.

The proposals change neither the existing minority shareholders' safeguard that 10% of shareholders can require an audit, nor the treatment of groups of companies, where a parent or a subsidiary company may take advantage of the exemption only if the total turnover of the group does not exceed the threshold for individual company exemptions. The Regulations also preserve the existing separate regime for charities.

If approved by Assembly Members, the new threshold will apply for financial periods ending two months or more after the Regulations come into operation.

Regarding dormant companies, article 260 of the 1986 Companies Order draws a distinction between those companies which are actively trading and those which are not. We estimated that some 2,000 companies have dormant status - often incorporated to protect a company or brand name, or whose only purpose is to own an asset, such as the freehold of a building. Many dormant companies are in groups and would not otherwise be eligible for audit exemption. In March 1999 the Department of Trade and Industry published a consultative document on the legislative framework for dormant companies, which set out proposals to reduce the costs involved in running a dormant company. A large majority of respondents agreed with the proposals for simplification of the law.

On the proposals concerning agent companies, most respondents agreed that where a dormant company acted as an agent for another company, some action was needed to make it clear to a third party.

It is certainly legal to act in this way, but it can be confusing or misleading to a third party. Just over half agreed with the proposal that companies acting as agents should be required to declare their agency status in an annual report.

I hope that it is clear from what I have said that the consultation by the Department of Enterprise, Trade and Investment on these proposals has led to a package of measures which are practical and appropriate, which relieve unnecessary burdens on smaller companies and which have the broad support of the business community. I can confirm that in my view the amendments to the 1986 Order proposed in these Regulations are compatible with the European Convention on Human Rights.

In our modern economy, small companies are increasingly the vehicles of sustained economic growth and job creation. It is therefore vital that we reduce unnecessary burdens on them. The Regulations are a significant step in that direction. They help to make an appropriate and equitable regulatory framework for business.

I commend the Regulations to the Assembly.

Dr McDonnell:

I welcome the Minister's statement. The pertinent phrase was in the last sentence or two - "reduce unnecessary burdens". The proposals that he has outlined make sense, and a serious or legal audit should only be required where it is absolutely necessary. In my view, a full audit is certainly not essential for small businesses with a turnover of less than £1 million. Such a company will still have to do its accounts, but the problem has been the legalities and obligations imposed on it. The Minister mentioned a figure of between £1,000 and £1,500 as a possible audit figure. However, in my experience, the cost can be between £3,000 and £4,000 by the time all the documents are completed and all the Regulations that go along with the audit are complied with. The protection still exists through the suggestion that 10% of a minority shareholding can seek an audit if it is required or if there is any suggestion of underhand dealing.

The Regulations will remove a threat, burden and responsibility from small companies and allow them to get on with doing what they do best. It is up to them to meet the bookkeeping requirements. Companies will still have a choice. The Regulations proposed by the Minister are very commendable, and I hope that in the future we can look at methods of further reducing the burden on small businesses.

As the Minister has rightly suggested, even in the large US economy, growth is taking place in the small business sector, for example, where 10-person companies are expanding to become 20-person companies. The growth is not taking place at multinational level because those companies have grown almost as much as they can. This is a good start, but I urge the Minister not to leave this where he has left it today. Rather he should look at other technical means of reducing the burdens of bureaucracy and bookkeeping and the other stresses on small businesses, which are the lifeblood of our economy.

Mr Wells:

I broadly welcome the proposals made by the Minister. If he manages during his tenure of office to cut through much of the red tape that burdens small companies in Northern Ireland, he will have done something which will make a contribution to the economic development of the Province and provide new jobs.

I well remember starting out in life as an accountant. I realised that I found it as interesting as being an undertaker and that it was not for me. After three or four months in - I will not name the company -

Mr Paisley Jnr:

He got sacked.


<< Prev / Next >>