Northern Ireland Assembly Flax Flower Logo

REPORT ON THE
DRAFT BUDGET 2002/03

COMMITTEE FOR FINANCE AND PERSONNEL:
MEMBERSHIP AND POWERS

Powers

The Committee for Finance and Personnel is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Standing Order No. 45 of the Northern Ireland Assembly. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Finance and Personnel and has a role in the initiation of legislation.

The Committee has the power to:

MembershIp

The Committee was established on 29 November 1999 with eleven members, including a Chairman and Deputy Chairman and a quorum of five members.

The membership of the Committee is as follows:

Contents

Report

Executive Summary
Introduction
Budgetary Considerations
Budgetary Processes and Timetable
Deliberations of Committees

Appendices

Appendix 1.
Minutes of Proceedings of the Committee relating to the Report.

Appendix 2.
Draft Budget Statement by the Minister of Finance and Personnel
to the Assembly on 25 September 2001.

Appendix 3.
Official Report of the Take Note Debate on the Draft Budget 2002/03 on Monday 5 November 2001.

Appendix 4.
Budget Timetable

Appendix 5.
Recommendations made in the Finance and Personnel Committee Report
on Executive Programme Funds: Second Tranche Allocations.

Appendix 6.
Submissions by Committees in response to Draft Budget.
Agriculture and Rural Development.
Culture Arts and Leisure
Education
Employment and Learning
Enterprise Trade and Investment
Environment
Antrim Borough Council
Ards District Council
Ballymoney District Council
Banbridge District Council
Carrickfergus District Council
Cookstown District Council
Derry City Council
Down District Council
Dungannon District Council
Fermanagh District Council
Limavady Borough Council
Moyle District Council
Newry and Mourne District Council
Strabane District Council
Finance and Personnel
Health and Social Services and Public Safety
Regional Development
Social Development
Committee of the Centre

Appendix 7.
Minutes of Evidence

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EXECUTIVE SUMMARY

COMMITTEE FOR FINANCE AND PERSONNEL RECOMMENDATIONS

The Committee for Finance and Personnel has prepared a report on the 2002/03 Draft Budget and has drawn from the findings a number of recommendations for the Minister’s consideration.

The formal draft budget process began in conjunction with the draft Programme for Government consultation in week commencing 24 September 2001. The Committee for Finance and Personnel asked the other Statutory Committees and the Committee for the Centre for written submissions reflecting their considerations on their departmental allocations. The Committee also initiated a "take note" Assembly debate on 6 November to allow individual Members to contribute.

The Committee’s report has been produced to reflect the concerns and issues raised. The Committee expects that the following recommendations will be considered by the Minister of Finance and Personnel and Executive when making final decisions on allocations.

The recommendations are as follows:-

1. That Needs and Effectiveness Evaluations should be used to inform the negotiations for the 2002 Spending Review. The assessments should facilitate the Executive in scrutinizing the services and programmes being provided to ensure that the identified priorities are being appropriately targeted.

2. That the Committee fully supports the Executive’ determination to address the Barnett formula with Treasury in order to seek improvements to ensure that needs are more effectively addressed. The Committee will be asking the Minister to provide a report to outline the work undertaken and the progress made.

3. The Executive must adhere to the guidelines laid down in Strand 1 paragraph 20 of the Belfast Agreement that where an activity or target is identified in the Programme for Government, it must be funded through the budgetary process in a transparent way.

4. The Committee accepts the concerns raised by several Members in the debate that there are dangers in "top-slicing" the departmental allocations to facilitate the funding of Executive Programme Funds if this leads to a reduction in resources available to meet current needs. The Committee recommends that funding "main stream" departmental priorities should generally be included in the budget and not be dependent on funding from Executive Programme Funds or reallocations from in-year monitoring rounds.

5. That a more fundamental and continuous scrutiny of departmental activities and spending is required with an emphasis on inputs and outcomes. The Committee believes that the Executive must adopt a cross-departmental approach to high priorities where appropriate to ensure that resources are co-ordinated to secure maximum benefit. The enhanced focus on cross-departmental activity must be achieved without significant increases in administrative costs.

6. There should be early consultation with Statutory Committees on the development of the Departmental Position Reports prior to submission to EPU/DFP. This would be an information provision stage and would permit the committees to articulate to departments any concerns they have on, or support for, particular priorities, services or activities. Developing an early appreciation of departmental thinking on the part of the committees would facilitate prompt and focussed responses to the Position Report.

7. That information provided by departments, in support of the budget statement in late September should include more detailed financial profiles to show the funding for various activities, divisions and functions within the control of departments. Committees would also find it helpful if they were provided with information on what could not be delivered by way of services or previously identified targets because of the draft departmental allocations.

8. That the Service Delivery Agreements should be scrutinized in conjunction with the Programme for Government, the Public Service Agreements and the budget details. The current paucity of information should be improved when Service Delivery Agreements are established.

9. That Excutive sub-committes should be established to manage the individual funds.

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INTRODUCTION

1.

Background

On 29 May 2001 Mark Durkan, Minister of Finance and Personnel, made a statement to the Assembly on behalf of the Executive Committee on the Budget arrangements and timetable for 2002/03 financial year. The Minister announced that the Executive’s Position Report to the Assembly (Developing the Programme for Government and the Budget for 2002-03 the Position Report) would be made available in June 2001 for consideration. The Statement set out the indicative timetable for the process of agreeing the Programme for Government and Budget proposals for 2002/03.

The Position Report was presented on 19 June and Statutory Committees, the Committee of the Centre and other interested parties were invited to submit their views. Committees were invited to submit their responses on the budgetary detail to the Committee for Finance and Personnel for inclusion in a co-ordinated report to the Minister of Finance and Personnel. The Minister would ensure that the views of Committees were taken into account by the Executive Committee before the Draft Budget was announced in September 2001

Mark Durkan’s statement on the Draft Budget for 2002/03 of 25 September 2001 followed and supported the introduction of the Draft Programme for Government on 24 September 2001. The statement outlined the draft plans for departmental allocations and is included as Appendix 2 to this Report.

Committees were asked to respond to the Office of the First Minister and Deputy First Minister on the Programme for Government but, in scrutinising departmental budgets, to ensure that resource allocation supported Programme for Government objectives. Committees were invited to consider and prioritise departmental allocations and to submit their views to the Committee for Finance and Personnel for inclusion in a Report to the Minister. The Committee for Finance and Personnel expects that the Minister will reflect carefully on the considered views of the Committees and ensure that this Report is fully taken into account by the Executive Committee in its deliberations in preparation for an Assembly debate on the Revised Budget in December 2001.

2.

Draft Budgetary Allocation 2002-03

The budget statement referred to the second year of the period covered in the 2000 Spending Review. The Departmental Expenditure Limit allocation as set out by Treasury identified a rise in public expenditure in 2002-03 of 5.8% or around 3% above general inflation. The allocations for 2002-03 built on the 5.5% real terms increase in 2001-02.

The statement identified that in addition to the increase provided in the 2000 Spending Review, there was £19.3m available for allocation following the Chancellor’s March Budget and a further £23.5m from reduced requirements in Departments. Mark Durkan also announced that the Executive had concluded that a projected £48m would be available for allocation based on an assumption that there would be flexibility provided from current year expenditure.

The following table outlines the draft allocations for 2002-03 in comparison to the 2001-02 provisions to Departments:-

 

2001/02

2002/03

Total departmental DEL

5,891.2

6,303.3

(7 % change)

Agriculture and Rural Development

195.4

203.8

Culture Arts and Leisure

72.6

77.4

Education

1339.8

1404.2

Employment and Learning

550.4

584.0

Enterprise, Trade and Investment

259.9

255.8

Finance and Personnel

112.8

116.2

Health, Social Services and Public Safety

2300.8

2486.6

Environment

100.8

108.9

Regional Development

468.7

538.3

Social Development

414.9

450.5

Other Departments

5.4

5.6

Office of the First and Deputy First Minister

31.1

31.9

Northern Ireland Assembly

38.8

39.9

Although Executive Programme Funds were not included in the draft allocations to Departments, the Executive planned to consider a further round of bids for Tranche 2 of the funds to focus on the strategic priorities set out in the Programme for Government. Decisions on allocations of Executive Programme Funds Tranche 2 will be made prior to the final version of the budget being published and the respective funding, while ringfenced, will increase the spending power of successful departments

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BUDGETARY CONSIDERATIONS

3.

Budgetary Findings

The Committee for Finance and Personnel has considered the detail of the Executive draft budget, taken evidence from the Minister of Finance and Personnel and officials, received written submissions from the Statutory Committees and the Committee of the Centre and initiated a "take note" debate in the Assembly. From the information that has been gathered the Committee considers that there are certain issues which should be outlined for further consideration by the Minister and the Executive as a whole.

3.1

Previous Administrative Patterns

Assembly Members have suggested that we need to break away from the apparent repetitive spending patterns that were set during Direct Rule and which mirrored the priorities and programmes considered necessary or important prior to devolution. Spending plans need to reflect local priorities based on objective assessment of need. Concern was raised, during the "take note" debate, that inherited programmes of expenditure are continuing without serious challenge as to the "value added" for the taxpayer.

The Committee recognises that following the transfer of functions to the 10 new departments it might take some time before service provision and associated spending across the departments is thoroughly reviewed.

The "departmentalisation" of budgets is therefore not surprising due to the relative infancy of the new arrangements. However, the Executive must be confident that it has decided on its priorities based on the real needs of Northern Ireland. These priorities must be addressed at a strategic level by making courageous decisions on funding being mindful of the finite resources that are available. The ongoing programme of Needs and Effectiveness Evaluations and the Regional Transportation Strategy should be beneficial in providing key information for the Executive.

During the debate several Members and the Minister stated that Departments, the respective Ministers and the Statutory Committees must try to avoid considering the relative success of the bidding and budget process measured on a simple percentage increase to baseline. This implies a concern that stakeholders are basing their funding expectations on what has gone before. The Committee believes that this mindset stifles the potential for innovative and challenging thinking to set the right priorities for service delivery in a post devolution environment.

3.2

Recommendations

The Committee recommends that Needs and Effectiveness Evaluations should be used to inform the negotiations for the 2002 Spending Review. The assessments should facilitate the Executive in scrutinizing the services and programmes being provided to ensure that the identified priorities are being appropriately targeted.

3.3

Barnett Formula

Many concerns have been raised on the Barnett formula, its basis and its application to Northern Ireland. There is a perception that Barnett does not reflect the unique needs of the Northern Ireland population. It has been argued that the Barnett formula appears to take no account of the different population profile in Northern Ireland – the higher than average proportion of old people and youth in the population and the infrastructure deficit inherited after years of underinvestment.

The Committee acknowledges that the Assembly needs to consider the disadvantages that the Barnett formula brings to Northern Ireland whilst also being mindful that expenditure per head is much higher in Northern Ireland than it is in England. Mark Durkan pointed out in the debate that "as regards services for which we are responsible and which are covered by our departmental expenditure limit (DEL), we were able to spend 25%-30% more per capita than in England in 2000-01."

The Executive has given a commitment to approach Treasury about the Barnett formula and its application to Northern Ireland. The Minister has stated that the Executive Committee will seek to make changes to the funding arrangements to allow the opportunity to maximize on the benefits of devolution. There is, however, a pressing need for substantial and urgent investment to meet the infrastructure deficit and the Executive Committee will need to make this point forcefully with HMT. The Committee accepts that while higher spending per head than in England, lower local taxation and the free provision of water and sewerage services in Northern Ireland may weaken the Executive’s argument for additional allocations, that the case for a change to Barnett must rest on the balance of need and a history of underinvestment.

The Committee commissioned a research paper from the Assembly Research and Library Service on this subject, which has recently been published. The Committee would also draw the Assembly’s attention to the House of Lords Hansard for 7 November 2001 on a debate about Barnett. The Committee notes with regret that the Northern Ireland position on Barnett was not represented in the debate. The Committee took particular note of what Lord Barnett said in his concluding remarks. Lord Barnett said:

"My Lords, the important point that has been made time and again by a number of noble Lords is that the real problem – this is even more of a problem than the fact that the Barnett formula does not help convergence – is the need to look at the baseline. That is the crucial question that has quite rightly arisen because until you look at the baseline you are dealing only with the margins."

The Committee will be asking the Minister to appear before it in the near future to report on the approaches that have been made to Her Majesty’s Treasury on Barnett.

3.4

Recommendation

The Committee fully supports the Executive’s determination to address the Barnett formula with Treasury in order to seek improvements to ensure that needs are more effectively addressed. The Committee will be asking the Minister to provide a report to outline the work undertaken and the progress made.

3.5

Budget Alignment with Programme for Government

Strand 1 paragraph 20 of the Belfast Agreement requires the Executive to:

"seek to agree each year, and review as necessary, a programme incorporating an agreed budget linked to policies and programmes, subject to approval by the Assembly, after scrutiny in Assembly Committees, on a cross-community basis".

However, concerns have been raised by certain Committees that the priorities and targets in the draft Programme for Government do not have obvious reflective funding in the draft budget.

The committees concerned have questioned the Executive’s commitment to the activities and programmes involved.

The Minister responded to these concerns, in the debate, by stating that the Executive had determined that no PfG commitments could be made for which there was no funding provision in the draft budget. He stated that a potential additional source of funding for some of the activities was via the Executive Programme Funds.

The Committee for Finance and Personnel shares the concerns of committees and considers that where a priority has been accepted for inclusion into the PfG, the funding to deliver it should be transparent in the draft budget allocations. The Committee considers that the utilisation of Executive Programme Funds to fund activities that have been outlined in the PfG is high risk. This process provides the departments involved with no guarantee of appropriate levels of funding and therefore inhibits the capacity of departments to plan efficiently.

3.6

Recommendations

The Committee recommends that the Executive must adhere to the guidelines laid down in Strand 1 paragraph 20 of the Belfast Agreement that where an activity or target is identified in the Programme for Government, it must be funded through the budgetary process in a transparent way.

The Committee accepts the concerns raised by several Members in the debate that there are dangers in "top-slicing" the departmental allocations to facilitate the funding of Executive Programme Funds if this leads to a reduction in resources available to meet current needs. The Committee recommends that funding "main stream" departmental priorities should generally be included in the budget and not be dependent on funding from Executive Programme Funds or reallocations from in-year monitoring rounds.

3.7

Funding the "Key" Priority Areas

The Committee recognises both the need for and the difficulties associated with attempting to prioritise finite resources in order to maximise returns across departments. In deciding to examine the budget allocation for the Central Finance Group of the Department of Finance and Personnel the Committee sought to scrutinise the ability of the Department to effectively carry out its strategic role as managers of the financial process and the Budget. A summary of the Committee’s deliberations on these areas is contained in Appendix 6.

Statutory Committees have a duty under Section 29 of the Northern Ireland Act 1998 to: "Consider and advise on Departmental budgets and Annual Plans in the context of the overall budget allocation." The Committee accepts that this role can lead to a sharper focus on the singular resource needs of individual Departments than may be desirable from the Department of Finance’s perspective as Budget managers. The complexities of the budget process and the limited and generally high level nature of the information provided to committees by departments makes prioritisation on a wider cross-departmental level very difficult. The result can be a tendency by committees to support departmental bids in the hope of securing a greater slice of the financial cake. The Committee for Finance and Personnel would not consider it appropriate to comment on the prioritisation attached to departmental bids by Statutory Committees. The Committee does feel, however, that the process of prioritisation itself would be helped by a greater concentration on outcomes and value for money criteria in both departmental baselines and bids.

The Committee welcomes the emphasis that many members placed on outcomes during the Assembly ‘take note’ debate on the draft budget. The need for some prioritisation of resources on key areas of need was apparent in many of the individual and Committee contributions to the debate. In opening the debate the Deputy Chairperson of the Finance and Personnel Committee, James Leslie, highlighted the need for prioritisation to ensure that public money was spent to achieve maximum value for money. The Committee for Finance and Personnel would wish to see more detailed scrutiny of departmental baselines and regular reviews of existing services, which determine the lion’s share of resources, to see whether there is room for radical improvement or potentially a need to reprioritise those services and the associated expenditure. The Committee recognises that committees have an important part to play in this regard through their statutory duty to consider and advise on departmental budgets and Annual Plans.

The Committee took the view that effective scrutiny of budgets and activity plans required departments to fully involve committees at an early stage in the process by providing details of expected outcomes against inputs and associated performance targets and measures. The Committee noted that a degree of transparency was required from departments to expose problems in service delivery to committee scrutiny. The Committee considered that such an open and accountable process would facilitate a committee’s ability to attach realistic priorities to and more effectively support proposed budget allocations across departments.

The Committee for Finance and Personnel has received written submissions from other committees considered the points raised in the "take note" debate and does have some reservations about the assessment by members of the priorities. The Committee does not comment on the individual priorities raised but noted that while there were numerous members at the debate who stated that they considered health or education to be the main priority, there were many others who quoted other areas of public service as their main area of concern and urged the Minister to reprioritise them.

The Committee is of the view that many of the programmes are interconnected and would encourage the Executive Committee to take a more fundamental look at how outcomes on, for example, Health might be considerably enhanced if greater emphasis were placed on educational and environmental issues.

The Committee believes that the implementation of Resource Accounting and Budgeting regime will be helpful in identifying what outcomes are being delivered for the investment provided. This should provide evidence on where funding would be most effectively targeted to obtain desired results.

3.8

Recommendation

The Committee recommends that a more fundamental and continuous scrutiny of departmental activities and spending is required with an emphasis on inputs and outcomes. The Committee believes that the Executive must adopt a cross-departmental approach to high priorities where appropriate to ensure that resources are co-ordinated to secure maximum benefit. The enhanced focus on cross-departmental activity must be achieved without significant increases in administrative costs.

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BUDGETARY PROCESSES AND TIMETABLE

4.

Budgetary Timetable

The Minister for Finance and Personnel made a statement to the Assembly on 29 May 2001 outlining the budget timetable for the financial year 2002-03. The timetable was predicated on the need to have agreed spending plans for all Departments and other public sector bodies in place for the commencement of the financial year. The timetable was designed to allow greater consultation between DFP, the other Departments and to enable the Assembly to discharge its scrutiny role and exercise its power to modify proposals as required in the Belfast Agreement and the Northern Ireland Act 1998.

There were recognized weaknesses in the 2001-02 budgetary timetable which the Minister has taken steps to address in the current financial cycle. The process for the 2002-03 financial year commenced at an earlier stage in the calendar year with the publication of the Executive Position report to the Assembly for consideration. This introduced a new stage into the budget process which permitted Statutory Committees and other interested parties to contribute to the priorities and targets in the Programme for Government and associated spending plans to support the delivery of services.

The Statutory Committees were asked to consider their respective Departmental bids from the information provided in the Position Report and were able to make contributions to the process via a report produced by the Committee for Finance and Personnel on the budgetary detail. Views on the PfG were canvassed separately by the Office of the First and Deputy First Minister. This new stage in the process of developing the Programme for Government and the associated Budget was universally welcomed by the Statutory Committees and the Committee of the Centre.

The draft Programme for Government and Budget consultative processes formally commenced in September 2001 when statements were made to the Assembly and draft documents were made available for scrutiny. The period for consultation was extended for the current financial cycle to address concerns that were raised in the previous cycle. The additional two weeks allowed committees to investigate and scrutinize further the details of their respective Departmental draft allocations and the outcomes/outputs that could be anticipated.

Committees believe that the process of developing the budget in parallel with the Programme for Government has facilitated a more inclusive and rational approach to financial planning by the Assembly and departments.

4.1

Recommendations

There are a number of further amendments to the process that the Committee, with the support of other committees, would recommend that the Minister should consider: -

A suggested timetable for the Budget process is included at Appendix 4.

5.

Executive Programme Funds - the process and timetable

Although the recent Executive Programme Fund Tranche 2 Round was concerned with current year expenditures, the Committee has commented on the EPF consultation and scrutiny process within this report with a view to improving the overall process of financial scrutiny of the Programme for Government and Budget.

On investigation of the processes after consultation with other Statutory Committees, the Committee for Finance and Personnel considers that there are weaknesses in the arrangements and the communication of information in relation to the exercise. Statutory Committees considered that they were not fully involved, informed or effectively engaged in the bidding round process.

In light of the weaknesses identified, the Committee undertook a short inquiry into the bidding process. As part of the inquiry, the Committee agreed to collate the responses from the other Statutory Committees and the Committee of the Centre and reflect their concerns and positions in the report, which was issued to the Minister for Finance and Personnel. The inquiry by the Committee was undertaken as a discrete part of the Draft Budget exercise. The EPF Report included the detailed comments of committees on individual departmental bids and identified a number of strategic and process related issues that needed further examination and improvement. Sixteen recommendations for improvement in the bidding process and guidance documentation were included in the Report. A detailed list of the recommendations is included as Appendix 5.

The Minister welcomed the Committee’s report on behalf of the Executive. Following discussions with the Minister, the Committee noted that he intended to make a submission to the Executive Committee which would support and include details of the Committee’s findings. Executive Committee members will be able to deliberate on the suggested improvements and recommendations in the context of concluding the Executive Programme Funds Tranche 2 Round.

The Committee concluded from the Minister’s evidence, that the process could be noticeably improved and further refined by the establishment of Executive sub-committees for the management of individual funds.

5.1

Recommendation

The Committee recommends that the Executive sub-committees be established for the management of individual funds.

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Summary of Written Submissions from Statutory Committees

Introduction

The Chairman of the Committee for Finance and Personnel wrote to Chairpersons of other Statutory Committees and the Committee of the Centre on 25 September 2001 to invite views and comments on the draft Budget as it affected their respective Departments.

Committees were asked to consider the impact of the priorities set by the Programme for Government (and related issues such as opportunities for crosscutting policy development between departments and achieving value for money) on the aims, targets and allocations for their Department. They were further asked to consider and provide an indication of their views on the priority to be attached to each budget heading, as well as any other factors relating to the bids and allocations that they wished to be taken into account.

Committees were also invited to consider the scope for asset sales and other resource measures that would help to prioritise departmental spending on services to the public. Each Committee’s submission is included at Appendix [6].

Committees were generally supportive of the stance taken by their respective Departments with regard to their budgetary needs. Some, such as the Committee for Agriculture and Rural Development and the Committee for the Centre questioned the ability of departments to fund important strategic initiatives through in-year Executive Programme Funds arrangements.

Of particular note were the strong views expressed by the Committee for Health, Social Services and Public Safety, which called for health to be made the number one priority by the Executive due to the mounting pressures on services. Other key priorities were the Committee for Employment and Learning’s identification of research and development with its cross-cutting benefits to the wider economy; and the Committee for Regional Development’s identification of the economic and social benefits that will accrue from work to modernise Northern Ireland’s roads, transport and water infrastructure.

There was a recognition that committees and departments needed to liaise more closely on the provision and scrutiny of financial information in order to facilitate more productive discussions on priorities, bids and budgets.

Many of the points raised by the committees in their written responses were expanded upon during the "take note" debate on 5 November 2001.

Agriculture and Rural Development

The Committee for Agriculture and Rural Development noted the Minister of Agriculture and Rural Development’s comment that the budget allocation was a satisfactory outcome but that she intended to avail of the Executive Programme Funds as necessary.

The Committee was concerned that the bid of £10m pre annum for funding to implement the Department’s findings of its Vision Group was not successful despite there being a commitment to implement an Action Plan in the Programme for Government (PfG). The Committee acknowledged that the Action Plan for implementation was not yet complete and that it was difficult at this stage to gauge the precise cost of implementation. It believed, however, that funds should be allocated in the 2002/03 Budget to meet the PfG commitment.

The Committee was unable to consider the relative priorities of the Department due to lack of detailed information available from the Department when the matter was being considered. The Committee noted the difficulties faced by the Department in meeting its Public Service Agreement commitments due to the foot-and-mouth crisis and commented on how this made it difficult to assess what may be achieved by DARD through its planned programmes.

The Committee went on to call for ‘integrated’ financial information to be provided on a regular basis both in-year and year-on-year to enable more effective scrutiny. This would facilitate assessments of relative priorities and achievements.

Culture, Arts and Leisure

The Committee for Culture, Arts and Leisure expressed deep concerns about the serious level of underfunding and the failure of all of the Department of Culture, Arts and Leisure’s arts bids and all but one of its sports bids. This would continue to inhibit key departmental activities, especially at a time when there is a real need for capital investment in the crumbling infrastructure of museums and other cultural buildings.

Of particular concern was the failure of the £1m bid for the Grand Opera House development scheme. The Committee stressed the very serious adverse impact that the failure of the bid would have on the performing arts. If the development site were lost to commercial developers as a consequence of this failure it would result in a permanent loss to the arts infrastructure in Belfast. The failure would also have an adverse impact on the success of Belfast’s bid to become the European Capital of Culture in 2008 and which was linked to the PfG.

Education

The Committee for Education welcomed the Executive’s prioritisation of education and the extra £20m allocated to meet various pressures. The Committee noted, however, that extra funding to meet schools’ recurrent pressures would only allow them to ‘mark time’ and would not lead to improvements to or expansion of services. This raised the question of whether core funding for schools was adequate.

The Committee supported the actions taken by the Department of Education to meet the £4.6m shortfall due to inescapable bids not being met. The Committee highlighted the need to readdress the reduction in the maintenance budget next year to avoid a serious detrimental effect on the maintenance of buildings in the longer term.

The Committee identified several high priority bids that it felt the Executive should reconsider and meet, at least in part. These were the Schools Budgets (to improve) of £13.5m, the Schools Estate – Capital and Maintenance of £10.5m and Reading Recovery of £5.2m. It also put in a marker for next year’s Budget on the need for a serious injection of money if the Review of LMS Funding and the Review of Post-Primary Education are to be taken forward.

The Committee went on point out the cost of educational administration, which absorbed almost £60 per annum. It called for the Review of Administration to be taken forward as a top priority so that this cost could be examined urgently. As part of this process the Committee also called for an evaluation of the effectiveness and efficiency of all non-school activities to help identify possible savings.

Employment and Learning

The Committee for Employment and Learning raised a number of priority areas that needed adequate funding if Northern Ireland was to benefit from a better educated workforce and a prosperous knowledge-based economy. These were adult literacy and numeracy, research and development, Northern Ireland Business Education Partnership, disabled access to higher and further education as well as training and vocational education needs.

Of particular concern was the problem of inadequate funding of research and development that was led by the universities. This would have an adverse effect on the local economy and lead to a serious loss of key staff in the universities and related organisations. Much of the research was of a crosscutting nature and could lead to benefits across the business, industrial and public sectors. The Committee called for a longer-term commitment to research and development that is adequately funded to be put in place immediately. This might need an additional £7-10m per annum, simply to achieve parity with Great Britain and remove a historical underfunding differential. With regard to maximising the benefits of allocations from public funds the Committee noted that the universities have estimated that for every £1 allocated to R&D from the Budget it was possible to raise £2 from external sources.

Enterprise, Trade and Investment

The Committee for Enterprise, Trade and Investment called for the Department for Enterprise, Trade and Investment to be given end-year flexibility to carry forward any underspend of its allocation of £7.7m for the Telecommunications Strategy into the 2002/03 Budget year to facilitate implementation of the Strategy. With regard to other issues the Committee was keen to ensure each key area of expenditure was properly scrutinised so that the benefits identified in bids were realised. The new Invest Northern Ireland agency was one such area where the potential for synergy and value for money must be maximised. Another was in the use of European Union Structural Funds.

The Committee commented on the general rise in public expenditure in 2002/03 that built on the increase in 2001/02 and the fall in the DETI budget over the corresponding years. It noted the significant cost of the establishment of Invest Northern Ireland and pointed out that the effective allocation for capital expenditure and industry promotion was therefore decreased further. The Committee stated that it would seek a clear and unambiguous justification for any further decrease in the Department’s resources, especially with regard to expenditure on dynamic and innovative industrial and business promotion.

Environment

The Committee for the Environment undertook an examination of the Department for the Environment’s Budget allocation and highlighted several key concerns. A prime concern was the intention to make a cut of £2m in the Local Government Resources Grant. This would only apply to the ‘weakest 16 rates based’ Councils while the inescapable new pressures of some £2m in EU/International obligations and EU related regulations bids (which created the £2m funding deficit) would be utilised by all areas of Northern Ireland. The Committee pointed to the New TSN and equality implications and the adverse impact on the affected Councils. The Councils have responded to the Committee on this matter and there has been near universal condemnation of the cut and concern about its implications. Copies of their responses are given as an annex to the Committee’s submission.

Finance and Personnel

The Committee for Finance and Personnel focused on a scrutiny of the Department of Finance and Personnel’s activity and resource requirements in relation to the Central Finance Group (CFG). CFG has a pivotal role in ensuring that the Executive Committee makes informed decisions on the priorities for budget allocations based on conclusive and accurate information and an objective assessment of the requirements. CFG had received a significant percentage increase in its financial allocation.

The Committee welcomed the allocation and recognised that the increased resources for CFG should enhance DFP’s strategic role as the financial manager and co-ordinator of the Budget and financial processes. This should ensure that a number of inter-departmental budget processes would be improved. These would include areas such as the information gathering process; management of the Budget, monitoring and EPF rounds; enhanced standards of advice and support to Departments and the Executive Committee; and an enhanced Value for Money function.

The Committee was concerned that any additional resources committed to internal administration should reap measurable or recognisable benefits. The Committee therefore intends to undertake in due course an examination of the effectiveness of the Department’s management of the budgetary process.

Health, Social Services and Public Safety

The Committee for Health, Social Services and Public Safety expressed great concern and disappointment at the level of Health Service funding for 2002/03. Out of a bid for £122.6m the Department of Health, Social Services and Public Safety was allocated only £31.6m. The Committee stated that this was still £5m short of the £37.1 needed to meet inescapable bids. The Committee noted the higher levels of need and demand in Northern Ireland compared to England and pointed to the lower level of the annual percentage increases in health spending over the next two years, which is some 2% less than that in England.

The Committee called on the Executive to make health services its number one priority and pointed to a number of areas where the shortfall would have a severe detrimental effect on health and social care. These included:

Regional Development

The Committee for Regional Development welcomed the increase of £42m in the Department for Regional Development’s budget. This would have a positive impact on areas such as roads and transport. The Committee noted, however, that there was still a very substantial amount of work needed on the roads, transport and water infrastructure if Northern Ireland was to reap a long term economic and social benefit from this investment.

The Committee believes that further investment in these areas must continue to be a key priority for the Executive and that adequate resources must be secured. As part of this process the Committee supported efforts to obtain other sources of finance to meet needs such as a modern bus fleet and new train sets. Such improvements were of importance in both urban and rural areas and could play a crucial role in promoting social inclusion and access.

The Committee also considered the need for improved financial information and welcomed work by the Department to facilitate better scrutiny of budget expenditure.

Social Development

The Committee for Social Development was reasonably content with the broad direction of the Programme for Government but expressed concern about the urgency and ways in which the Department for Social Development might fulfil its aims. The Committee, for example, was concerned that investments in systems by the Social Security and Child Support agencies that were aimed at improving efficiency had failed to prevent substantial increases in running costs.

The Committee also had specific concerns about the funding made available to tackle fuel poverty and housing needs. It strongly endorsed the bid by the Department for additional funds for fuel poverty and identified improved public health as one the consequential cost benefits. Increased expenditure on housing improvements such as heating and kitchen replacement was also seen as meeting the needs of the socially disadvantaged. The Committee considered that under-investment in these areas would be short-sighted with the likelihood for increased remedial costs in the future. The possible lack of funding for improvements to housing in North Belfast would also question the political commitment to the North Belfast Housing Strategy.

Office of the First Minister and Deputy First Minister

The Committee of the Centre received assurances that the budget allocation for OFM&DFM was reasonable but questioned the ability of the Department to meet its Programme for Government commitments given the level of funding.

The Committee was not reassured that funding for areas such as the Children’s Commissioner, Review of Public Administration and promotion of community relations could be left to in-year monitoring rounds or bids from the Executive Programme Funds. The Committee considered that the Review of Public Administration should be given a higher priority given its importance to improving the value for money achieved from public services. Adequate funding should be allocated to meet the estimated cost of £2m.

The Committee also noted the need for a more detailed breakdown on the Budget allocation.

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Appendix 1

PROCEEDINGS OF THE COMMITTEE
RELATING TO THE REPORT

MINUTES OF PROCEEDINGS
SIXTY SIXTH MEETING
TUESDAY, 25 SEPTEMBER, 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr James Leslie (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds MP
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Weir

In attendance:
Mr Alan Patterson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Sheila Mc Clelland (Clerk)
Ms Sharon Bowman (Executive Support)
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.36 pm. The meeting was held in open session.

Draft Budget

The Minister for Finance and Personnel and officials attended the meeting, made a presentation and took questions on:-

(i) the relationship between the draft budget and the PfG;

(ii) DFP’s own departmental budget; and

(iii) the role and timing of the Finance and Personnel Committee in the Budget exercise.

Nigel Dodds left the meeting at 3.13 pm.

Alex Attwood attended the meeting at 3.14 pm..

The Committee established that the Committee’s Report on the Draft Budget needed to be issued by 9 November 2001 to allow the Minister adequate time to fully consider the concerns and issues highlighted.

Alex Attwood left the meeting at 3.35 pm

Patricia Lewsley left the meeting 3.43pm

FRANCIE MOLLOY
Chairman

[Extract]

MINUTES OF PROCEEDINGS

SIXTY SEVENTH MEETING
TUESDAY, 2 OCTOBER, 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds MP
Mr Derek Hussey
Ms Patricia Lewsley
Mr Peter Weir

In attendance:
Mr Alan Patterson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Sheila Mc Clelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Sharon Bowman (Executive Support)
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.36 pm. The meeting was held in open session.

Draft Budget / PfG Timetable

The Committee was briefed by the Principal Clerk about its scrutiny role of the Department of Finance and Personnel’s budgets and about its role in co-ordinating a response to the Minister of Finance and Personnel from the Statutory Committee’s on the proposals in the Draft Budget.

The Committee agreed that it would wish to specifically scrutinise Executive Programme Funds (EPF) as part of the Committee’s examination of the Draft Budget and to reserve its decision on which other areas to examine.

Nigel Dodds attended the meeting at 3.00 pm.

Mr Attwood left the meeting at 3.00 pm. and returned at 3.12 pm.

The Committee discussed the resources and time required to scrutinise Departmental budgets and bids from DFP and those required to carry out an overarching role to scrutinise bids from all the other Departments. The Committee also discussed the purpose and value of its co-ordinating role and the absence of any statutory power to act as an arbiter of other committee bids.

Resolved: The Committee agreed to examine Executive Programme Funds as part of its scrutiny of the Draft Budget. The Committee also agreed to produce a co-ordinated response to the Minister of Finance and Personnel on the Draft budget on behalf of the Statutory Committees.

FRANCIE MOLLOY
Chairman

[Extract]

MINUTES OF PROCEEDINGS

SIXTY EIGHTH MEETING
TUESDAY, 9 OCTOBER, 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairman)
Mr James Leslie (Deputy Chairman)
Mr Alex Attwood
Mr Seamus Close
Mr Derek Hussey
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Weir

In attendance:
Mr Alan Patterson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Sheila Mc Clelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Sharon Bowman (Executive Support)
Mr Jonathan Briggs (Administrative Support)
Ms Lucia Wilson (Research and Library Services)

The Chairman declared the meeting open at 2.34 pm. The meeting was held in open session.

Executive Programme Funds

The Principal Clerk briefed the Committee on work undertaken by the Clerks and Research and Library Services to examine Executive Programme Fund bids from all the Departments. The Principal Clerk also described the scrutiny role, which the Committee needed to undertake on Department of Finance and Personnel bids, the bidding and consultation process and on a selection of the remaining departmental bids in order to produce a Report on its considerations of the second tranche of Executive Programme Funds.

Mr Hussey attended the meeting at 2.44 pm

4.2 Department of Finance and Personnel officials, Mr Michael Daly, Mr Edgar Jardine, Dr Gerry Mulligan and Mr Robert Beatty briefed the Committee and answered questions on the two bids on EPF for funding for a Neighbourhood Statistics project and a Statistical Compendia project.

Mr Attwood attended the meeting at 2.49 pm.

4.3 Resolved: That the Committee was content with and supported the bids made by the Department under Executive Programme Funds.

Mr Attwood left the meeting at 3.12 pm.

4.4 Departmental officials Mr David Sterling and Mr Norman Taylor briefed the Committee on the commissioning process and timetable for bids appraisal and allocations of Executive Programme Funds. The officials also told the Committee about the multi-lateral teams set up to appraise the bids involving officials from DFP and the Economic Policy Unit (EPU).

4.5 The Committee expressed a number of general concerns and a particular concern on the lack of communication and guidance to Assembly Departmental Committees on their expected participation in the bidding process and that these would be reflected in its Report on the second tranche of Executive Programme Funds.

Mr Maskey attended the meeting at 3.25 pm.

4.6 The Departmental officials briefed the Committee and answered questions on the volume, amounts and details of the bids received from departments.

Any other Business

The Committee discussed potential areas of further scrutiny in the Draft Budget and agreed that it would examine the Central Finance Group at its next meeting.

FRANCIE MOLLOY
Chairman

[Extract]

MINUTES OF PROCEEDINGS

SIXTY NINTH MEETING
TUESDAY, 16 OCTOBER, 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairman)
Mr James Leslie (Deputy Chairman)
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Ms Patricia Lewsley
Mr Peter Weir

In attendance:
Mr Alan Patterson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Sheila Mc Clelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Sharon Bowman (Executive Support)
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.34 pm. The meeting was held in open session.

6. Draft Budget – Scrutiny of Central Finance Group

6.1 The Clerk presented a paper by Research and Library Services to the Committee on the roles, responsibilities and budget details of the Central Finance Group a Directorate in the Department of Finance and Personnel.

6.2 Department of Finance and Personnel officials, Dr Andrew McCormick and Mr David Sterling attended the meeting and briefed the Committee and answered questions on the five main roles carried out by the Directorate.

6.3 The officials outlined for the Committee how the indicative budget for the Directorate in the 2002/03 financial year would enhance and improve the services provided and allow the Directorate to provide better evidence based advice in budget management issues.

6.4 The Committee considered a motion to the Assembly on its considerations of the Draft Budget.

6.5 Resolved: The Committee agreed the motion "That the Assembly takes note of the Report prepared by the Committee for Finance and Personnel following its considerations of the Second Tranche of the Executive Programme Funds".

FRANCIE MOLLOY
Chairman

[Extract]

MINUTES OF PROCEEDINGS

SEVENTIETH MEETING
TUESDAY, 23 OCTOBER, 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairman)
Mr Alex Attwood
Mr Seamus Close
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Weir

In attendance:
Ms Sheila Mc Clelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Mr Jonathan Briggs (Administrative Support)
Ms Lucia Wilson (Research and Library Services)

The Chairman declared the meeting open at 2.40.p.m. The meeting was held in open session.

5. Draft Budget 2002/03

5.1 The Committee was informed that a Take Note debate on the Draft Budget 2002/03 had been scheduled for 5 November 2001. A Committee meeting would take place on Tuesday 6 November 2001.

5.2 The Committee noted submissions by the Committee of the Centre and the Committee for Culture, Arts and Leisure for its Report on the Draft Budget 2002/03.

5.3 The Committee considered the Minutes of Evidence of its meeting with the Central Finance Group of the Department of Finance and Personnel.

5.4 The Committee agreed the Minutes of Evidence.

5.5 The Committee received a Draft Report on its scrutiny of the Central Finance Group of the Department of Finance and Personnel. This will be further considered at the next meeting.

FRANCIE MOLLOY
Chairman

[Extract]

MINUTES OF PROCEEDINGS

SEVENTY FIRST MEETING
TUESDAY, 6 NOVEMBER, 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr James Leslie (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Derek Hussey
Ms Patricia Lewsley
Mr Peter Weir

In attendance:
Mr Alan Patterson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Sheila Mc Clelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Sharon Bowman (Executive Support
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.39.p.m. The meeting was held in open session.

4. Draft Budget 2002/03 – Committee Report

4.1 The Principal Clerk presented a Draft Report, which had been written before the ‘Take Note’ debate in the Assembly on Monday 5 November 2001. The Principal Clerk identified seven key issues, which the Committee might need to specifically address in the next draft following points raised during the debate.

4.2 The Committee considered the key issues and agreed that a new draft should address them.

Francie Molloy
Chairman

[Extract]

MINUTES OF PROCEEDINGS

SEVENTY SECOND MEETING
TUESDAY, 13 NOVEMBER, 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairman)
Mr James Leslie (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Derek Hussey
Ms Patricia Lewsley
Mr Alex Maskey
Mr Maurice Morrow
Mr Peter Weir

In attendance:
Mr Alan Patterson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Sheila Mc Clelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Sharon Bowman (Executive Support
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.35.p.m. The meeting was held in open session.

8. Draft Budget 2002/03

8.1 The Principal Clerk presented a Draft Report to the Committee.

8.2 The Committee considered the Report and agreed a number of amendments.

8.3 The Committee agreed the Minutes of Evidence of its meeting with the Minister of Finance and Personnel on 25 September 2001.

8.4 The Committee agreed to include written submissions from Assembly Committees and District and Local Councils in its Report.

8.5 Resolved: The Committee ordered the Draft Report to be printed subject to the amendments provided to the Principal Clerk.

The Chairman declared the meeting closed at 5.20 p.m.

FRANCIE MOLLOY
Chairman

[Unapproved Extract]

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Appendix 2

DRAFT BUDGET STATEMENT BY THE MINISTER OF FINANCE AND PERSONNEL TO THE ASSEMBLY ON
25 SEPTEMBER 2001

draft budget
statement to the assembly by:
mr mark durkan mla, minister of finance and personnel

25 September 2001

Introduction

1. With permission, Mr Speaker, I would like to make a Statement on the Executive’s public spending plans for 2002-03. In accordance with paragraph 20 of Strand One of the Belfast Agreement, the Executive agreed a draft Programme for Government incorporating an agreed Budget at its meeting on 20 September. In line with Section 64 of the Northern Ireland Act, I am therefore today laying this Budget before the Assembly for scrutiny and for future approval, after examination and debate in the Committees and in this chamber.

2. I want to emphasise at the outset that the proposals I am announcing today are made on behalf of the Executive as a whole. Following intense and serious discussions we have drawn together spending plans for all our services. Each Minister attending the Executive has participated in thoughtful and constructive discussion on the public services that we oversee. We are aware of the serious pressures that affect all Departments. We have a clear shared responsibility for the judgements we have formed on the balance between competing demands and priorities.

3. Thus we all have to share the credit – and be prepared to share any criticism - from the implications of our agreed plans. While, of course, each Departmental Minister has to deal with their own range of issues, they are working within plans set by the Executive as a whole, and should receive the support of all as they uphold and implement what we have agreed. For my part, I am grateful for the assurances from all the Ministers who have engaged in the discussions at Executive that they will uphold the conclusions we reached. I think the clarity of the agreement we have reached shows what can be achieved in our unique form of multi party administration.

4. I also had very useful bilateral discussions with the Minister for Regional Development and the Minister for Social Development, who also indicated support for some – though not all - aspects of the proposals I am presenting today.

Consultation on the Executive’s Proposals

5. Mr Speaker, my main purpose this morning is to begin the next – and most important stage – of consultation on the spending plans for next year. In response to the Report from the Committee for Finance and Personnel last December, the Executive has fulfilled its commitment to bring forward Budget proposals straight after the summer recess, so as to maximise the opportunity for the Assembly to fulfils its scrutiny role, as envisaged in the Agreement and Section 64 of the Act.

6. When I presented the Position Report to the Assembly on 19 June on behalf of the Executive I made it clear that this was evidence of the Executive’s commitment to engage in meaningful consultation and a means to provide an opportunity for debate and comment in the Assembly and more widely on the range of issues facing us. Many have taken up this opportunity, and I am especially grateful to the Committee for Finance and Personnel for the attention they have given to this issue. The Committee’s commentary on the Position Report has been particularly helpful and there has also been extensive comment from other Assembly Committees.

7. Outside the Assembly, we have received a number of important comments from social partner organisations and other interested parties. I am very grateful for the thoughtful input they have provided.

Programme for Government

8. The spending plans which I will outline this morning have been designed to deliver the priorities and actions in the revised Programme for Government which was presented to this Assembly yesterday by Sir Reg Empey and Séamus Mallon.

9. As they have explained, the Programme for Government has set the context for our budgetary decisions. The development of the Draft Budget has been influenced by the Executive’s proposals on our policy priorities and programmes that are set out in the draft Programme for Government, as published yesterday. This year we have further strengthened the link between policy-making and financial planning, ensuring that our policies drive our expenditure and not the other way round.

10. We have been able to confirm and refine our actions and targets as explained yesterday in the Statement on the Programme for Government. In a few cases, due to prevailing constraints or other pressures, it has been necessary to defer planned actions. The Executive has agreed that, if the resource position improves, first consideration will need to be given to making good PfG commitments which have been deferred.

Spending Power

11. This Budget covers the second year of the period covered by the 2000 Spending Review. From the longer term perspective, since the 1998 Comprehensive Spending Review there has been a period of rapid growth in public spending. Our Departmental Expenditure Limit allocation as set by the Treasury shows a rise in public expenditure in 2002-03 of 5.8% or around 3% above general inflation, though I recognise that many of the costs that affect public services are rising at a faster rate than general inflation. The allocations for 2002-03 build on the 5.5% real terms increase in 2001-02 which has allowed Departments to initiate the important work started on the Programme for Government priorities.

12. I think it is important to stress that we cannot expect spending to continue to rise so substantially for much longer. Against the historic trend, the objective reality is that the public spending context now is "as good as it gets" – at least within the context of Barnett.

13. Given the problems facing many public services, we can conclude that this rapid growth is very necessary, but falls short of matching expectations for the delivery of services. This applies in particular to health spending, where it is increasingly clear that even the high rates of increase being applied in England – which we cannot afford to match – leave serious needs unmet. Demand for public services means that there are substantial bids from Departments and the needs to be addressed are very real.

Barnett

14. Mr Speaker, this leads me to comment briefly on the issue of the Barnett formula, which dominates the overall arrangements for determining public spending levels for our services. As there has not been a Spending Review in Whitehall this year, we have no new Barnett consequentials for 2002-03, other than the small amounts added in the Chancellor’s Budget in March. Barnett means less growth for our spending power than in England, and I think this is quite apparent in some of the issues we have had to address in preparing the Draft Budget.

15. Mr Speaker, the Executive remains determined to address the Barnett issue with determination to seek improvements. We need to seek change to help us take the unique opportunities provided by devolution and the Good Friday Agreement. We must also address the backlog of under-investment in infrastructure and difficulties in funding for health, education, transport and a range of other services which we have inherited and which are now being addressed with large amounts of money in England.

16. We must not overlook, however, the most obvious point which is that we have much higher spending per person here than in England. We have to recognise that the Treasury will point to the areas where our spending is high and argue that we must re-prioritise. My strong feeling is that we must re-prioritise because of our own views and values and not in response to Treasury constraints. That is what the Programme for Government and the Budget are all about. But we must be aware of the areas where relatively high spending weakens our case for help with our most acute difficulties.

17. Also, we raise proportionately much less revenue than in England, and fund our water and sewerage services from within our Departmental Expenditure Limit. The Assembly should note that if we were to raise rate revenue and water charges roughly equivalent to the pattern in England, we would have something like £300m of additional spending power for public services here. Even if we make allowance for the greater social deprivation here, this clearly makes it difficult to argue for additional money from the Treasury.

Preparing the Draft Budget

18. In the Spending Review last year, we set indicative figures for 2002-03 and 2003-04 which showed how the money might be allocated to services, subject to review this year. This accounted for all our spending power except the Executive Programme Funds.

19. In approaching this Budget, the Executive could have simply confirmed the indicative allocations set last year. We could have allocated the additional £19.3m available from the Chancellor’s March Budget, and the £23.5m available from reduced requirements in Departments – mainly additional receipts and in particular, further expected proceeds from the sale of Housing Executive houses. This would have meant that the vast majority of the bids lodged by Departments and summarised in the Position Report would have been ruled out: Departments would have had to readjust priorities to cover new costs, and forego the developments implied by the other bids.

20. However, we have looked more widely at the needs and demands facing services and at the scope to get better use out of the spending power available. We looked very seriously at the option of some redistribution within the indicative figures which had been set last year. While, in the final package of proposals, only one Department receives less than the previous indicative allocations, we did consider the possibility of wider reallocations.

21. We also took careful note of the points that have been made about the levels of reallocation that have applied in all our Monitoring Rounds so far and the high levels of end year flexibility. We are very well aware that if the balance of loading between programmes is not right at the start of the year, that will exacerbate the problem of underspending. Also, it is more difficult to explain the need to raise money from the rates if it is not being fully drawn down by our programmes. It would seem very odd for the scope and extent of our changes in a full Budget round to be on a much smaller scale than most Monitoring Rounds.

22. In considering these issues, we came to the view that health, education and roads were among the services facing the most acute difficulties, and would have to be given a degree of priority. This does not give those functions pre-eminence in the Programme for Government but simply recognises that, in the particular context of this Draft Budget, they presented the most clear cut cases for some increase over the indicative figures that we had determined last year. The key difficulty was to find ways of addressing these priorities without simply shifting the difficulty to another sector.

23. We cannot allocate resources beyond our DEL, but we can look at the prospects for future room to manoeuvre. We have concluded that we can, without undue risk, allocate some £48m of spending power for planned carry forward into 2002-03 based on anticipated underspending this year. We are confident that it will be possible to manage resources in the next few Monitoring Rounds, and through 2002-03, and be able to make good this assumption.

24. We have agreed that, in the last resort, if the pattern changes and we have insufficient underspend to confirm the assumptions we are making today, we could draw on the provision held in the Executive Programme Funds. This means we have a firm basis for additional allocations now, because the EPFs provide "security" against the risks affecting our decisions.

25. However, neither the Infrastructure Fund nor the Children’s Fund will be factored into this arrangement. We want to give particular priority to addressing the region’s strategic infrastructure and it is important that we have the EPF available to fund longer term developments such as those announced last Friday and yesterday. We also want to protect the Children’s Fund because, as well as being intrinsically important, it is about to be the subject of a major consultation.

26. Using this £48m in this way is not a cost free option, in that it puts some limits on our scope to meet the pressures that may arise in-year. I am confident however that we have acted to manage resources as effectively as possible at the Draft Budget stage by reducing the extent of reallocation necessary in Monitoring Rounds.

27. Using this £48m, the additional money from the March Budget, and by recycling the reduced requirements from Departments, the total available for allocation is £92.6m. This includes also a small reduction - £1.8m - from the indicative allocation for DSD. Of this, £13m is required to deal with our proposed approach to the Regional Rate for 2002-03, which I will come to later. On that basis, the approach I have described allowed us to meet a total of £79.6m of the spending pressures in 2002-03 over and above the indicative figures. This is clearly a much better scenario than had seemed likely in June, when the Position Report was published.

28. However, it remains the case that all Departments will have to act to absorb substantial additional costs which cannot be covered by additional spending power. This is not surprising or exceptional, but the norm for the management of public spending.

29. In reaching our decisions, the Executive examined a number of possible means of securing additional spending power. We focussed on the need to control the level of spending on Departmental running costs (DRC). All Departments will be required to examine how they could re-prioritise to ensure that spending is focussed where it is most needed on services to the public. We need to recognise that DRC spending includes some services provided directly by Departments. Thus an across the board cut in Departmental running costs would be unhelpful. We also need to ensure that Departments can address the needs of this Assembly and give proper account to its Committees and meet their obligations under the Agreement. The Executive will be considering this issue further before the Revised Budget is prepared.

30. We will also continue to examine the scope for additional asset sales or other measures which would allow us to release more resources for services. We will seek further information from Departments on this, and it would clearly be helpful if each Committee could include examination of this issue in their discussions with Departments.

Setting Priorities

31. Mr Speaker, this Draft Budget is therefore not so much about increases to plans but about how best to use the resources available. This is not about ordering up more, but getting our priorities in order. This applies both when looking at the full range of services, but also within each Department’s programme. We should not focus on the bids for more, but how we can get more from what we have. There are no free choices, but we can and should make real choices based on the values and principles we want to uphold. Making a difference does not depend only on having more money to spend. We can and should break further away from the patterns we have inherited.

32. We have to be prepared for some allocations to go down as well as up. Getting the most from public spending will mean that there is more to this process than sharing out additional money. We must focus much more on what is being achieved and delivered. As we develop the Public Service Agreements as published in the draft Programme for Government yesterday, the outputs and outcomes can and must come to mean more to us than the amounts of money, or the percentage increases in spending on programmes. This was what we wanted when the Government Resources and Accounts Bill was before us and we need to ask Departments to engage in this with increasing realism.

33. So I would urge all the Assembly Committees to focus their attention not so much on what may have happened to bids that Departments lodged, but on what will be achieved through the Departments’ programmes. We need to work on the money that can be there – as in the Executive’s proposals – and not on the money that we can’t allocate. It may in some cases be helpful for Committees to follow through with scrutiny of areas that have been questioned in the hearings and reports of the Public Accounts Committee so that the spending plans can benefit from the detailed work already completed by the PAC.

34. In making choices, we need to focus spending where the best advantage can be gained, or where the needs are most acute. This also means facing up to the fact that some spending is less essential and less beneficial. This is not a simple process of judgement. Benefits and effects can be indirect and long term, and we need at times to insist on resources being secured for long-term investment, even at the cost of short-term convenience. We need to focus on the evidence and make better informed decisions on the allocations for each Department, for the benefit of the community and without regard for the party identity of the Minister concerned.

35. I think it is important that this is seen by all concerned as the dominant issue for consideration by the Assembly. The theme of the work we need to do between now and December is prioritisation.

Key Issues

36. In finalising the Draft Budget proposals, the Executive has had regard for the views expressed by the Assembly on a range of issues. The Executive proposes that the additional resources available should be used as explained in the Budget document and in the table attached to my Statement.

37. To outline the picture of the Executive’s Budget proposals, I will comment on the position for each Department in turn and set out briefly the changes to the indicative allocations which the Executive agreed last December.

Executive Programme Funds

38. The Executive Programme Funds are a key element of the Executive’s determined strategy to ensure that spending plans are adjusted from previous patterns and spent in line with the Executive’s strategic priorities as set out in the Programme for Government. They are also designed to promote cross cutting working whereby proposals and initiatives can be brought forward for consideration by an appropriate group of Ministers working together. We believe that the special allocations from the Funds, managed and approved at Executive level, will make a real difference from previous patterns of expenditure.

39. Because some spending power has been placed in these new Funds, it follows that the amounts shown for Departments in the Draft Budget will understate the final spending power that will be available to functions in due course. I would ask the Committees to bear this in mind when considering the proposals.

EU Programmes

40. Mr Speaker, negotiations on the new round of Structural Funds have now been completed for the Peace II and Building Sustainable Prosperity Programmes, and for the Equal Community Initiative. They are nearing completion for the remaining Community Initiatives (INTERREG, URBAN and LEADER). The detailed arrangements which are required under the Programmes are nearly ready and it is expected that bids for funding will be invited shortly across the range of the Measures.

41. The allocations to functions and departments in the Budget document reflect the departments’ responsibilities as Implementing Bodies and as Accountable Departments for Measures within the various Structural Funds Operational Programmes. The figures in the summary and departmental tables illustrate the scope of the new Programmes and how they complement the Executive’s own programmes. This helps to highlight the special contribution made to the region by European programmes, and especially the unique assistance from the EU Programme for Peace and Reconciliation.

42. It is proposed that the new Executive Programme Fund for Social Inclusion and Community Regeneration will be managed alongside elements of the Structural Funds, and in particular the Community Initiatives, to maximise co-operation between the Executive, District Councils and the European Union.

Allocations to Services

43. Mr Speaker, I should now like to turn to the main features of the departmental allocations.

44. The allocation proposed for Department of Agriculture and Rural Development is some £204m. Following the crisis over Foot and Mouth Disease, the Executive wishes to see how best to secure the future of the rural economy and the communities that depend on it. In particular, we will over the coming months be examining the conclusions of the rural visioning exercise.

45. The allocation for 2002-03 includes an additional £2.2m in respect of a greatly enhanced programme of BSE testing of animals to meet EU requirements. This is in line with the Executive’s priority of attaining a low BSE incidence status so that our farmers can regain access to export markets. On animal health further provision has also been made available to take forward the Scrapie Eradication Programme and provision for Animal Disease Compensation is being aligned more accurately with actual need.

46. Funding has been made available to maintain the Beef Quality Initiative, and take forward the Agenda 2000 reforms and the Cod Recovery Plan. The Budget also provides for an increase of £0.3m in support for the Foyle, Carlingford and Irish Lights Commission, one of the North South Implementation Bodies.

47. The Department of Culture, Arts and Leisure faces some particular cost pressures in respect of museums and in completing the establishment of this new Department with its particular and distinctive role. The proposals include a significant boost in expenditure compared to 2001-02, especially for museums and libraries. The plans also provide appropriate provision for the operational costs of the Languages Body and Waterways Ireland. The proposed allocations will also cover the cost of the necessary staffing to allow this new Department to meet its wide-ranging portfolio of responsibilities.

48. The proposals in respect of Department of Education support the Executive’s priority of investing in education and skills. Planned allocations will promote a substantial programme of support for the school sector, the youth service and community relations activities. This represents a significant improvement over the indicative plans announced last December, though the proposals will still call for careful prioritisation of activities within the education programme.

49. The budget plans will enable the Department to continue the drive to improve standards and promote excellence across the whole of the school sector and to achieve specific targets on GCSE and A level attainment levels, literacy and numeracy levels and on reducing the numbers of pupils identified as poor attendees. The resources provided protect classroom provision and initiatives that are key to assisting vulnerable groups.

50. Resources are included for ongoing initiatives to improve under-performing schools and provide all schools with information and communications facilities that will increase access to many new learning opportunities and learning materials.

51. In Department of Enterprise, Trade and Investment the budget proposals represent a slight decrease in spending in comparison with the current year. The amounts required for support to industry and enterprise are difficult to predict at the budgetary planning stage. The amounts provided for 2002-03 reflect the recent trend, but take account of evolving policies in terms of lower grant rates and alternative types of support. The Executive remains sensitive to the possible need for significant investment should some particular need or opportunity arise.

52. It is not yet at all clear what effect the expected economic slowdown will have and it is intended that DETI will keep the matter under review and report at the earliest opportunity should changing circumstances reduce the budget needed in 2002-03. In setting this allocation, the Executive remains confident that the Department will still be able to meet its main Programme for Government priorities and Public Service Agreement targets.

53. It is also important to note that the Budget provision does not take into account possible major infrastructure projects such as the recently announced natural gas pipelines and the provision of broadband telecommunications in Northern Ireland. These will fall to be considered for support from the Executive Programme Funds. It is expected that the grant for the gas pipelines will fall mainly in the period 2003-04 to 2005-06, and hence this is not mainly a matter for this Draft Budget for 2002-03.

54. The budget for the Department of Finance and Personnel will support the Executive’s drive to provide modern, efficient, public services. The resources provided will enable the Department to provide advice and assistance to the Executive and the Assembly and so help them to manage the public expenditure system and decide how best to allocate scarce resources to finance Northern Ireland’s public services. The Department will also provide a range of central services to other Departments, and will complete major reviews of rating policy, public procurement policies, the arrangements for promotion and recruitment to the senior civil service, accommodation policy and the scope for the decentralisation of civil service jobs.

55. The Department for Employment and Learning’s allocation will enable the planned expansion of student support schemes to continue and will allow the delivery of other higher and further education services to be maintained at current levels. Changing needs and patterns of demand have led to a planned reduction in employment programmes but levels of service to individuals will be secured.

56. The additions made will support the Executive’s Programme for Government priority of investing in education and skills and its supporting actions to broaden access to higher and further education and to employment opportunities. Within the budget plans, an extra £30.4m is included to provide for the expansion of further and higher education places and to broaden access to these through revised student support measures that target those on low incomes and those that need additional support because of their age or need for childcare support. The Department will also seek to raise attainment levels.

57. The employment programme will continue to provide a full range of services to companies and individuals to promote economic growth and help increase the number of accessible employment opportunities. Helping people to move from welfare to work, encouraging lifelong learning through Individual Learning Accounts and other measures, and improving attainment levels within Jobskills will all continue as priorities.

58. The largest single programme within our Departmental Expenditure Limit is of course Health, Social Services and Public Safety. The proposals now presented make provision for an in increase of 8.1% over 2001-02 which reflect the Executive’s commitment to developing the service to meet the needs of our population, though this includes a technical change of £19m from the social security budget, so that the effective increase is 7.3%.

59. In our discussions in the Executive, there was clear recognition of the very significant demands on the Health Service at this time. The reality is that the health service needs increases of around 7 or 8% simply to maintain standards of care, because of the cost structure of the service. Mr Speaker, such increases are being afforded in England, and yet no-one would say that provision there is adequate in relation to the needs of the community. Yet there is increasing evidence that provision here is falling behind that available in England.

60. I think we should not allow the complexity and range of issues we face in the Budget to obscure the central fact that we have to find ways to provide adequately for the health service. This is probably the largest Budget issue that we face now and in the coming Spending Review. Change and hard choices lie ahead to make sure that the service’s structure, organisation and management serve the public interest.

61. I was also struck by the consensus that it is clearly right that we should increase the relative amount we spend on health and provide substantial resources now in the Budget. Our plans will enable the department to maintain the existing level of services and respond to the increasing demands of an ageing population and the rising costs of modern medicine. But it must be understood that we simply do not have all that we would need to allow the Department to implement all of its planned service developments. It is simply not possible to find sufficient additional resources to cover all of the department’s pay and price pressures.

62. The Executive was clearly advised that one consequence of the proposed allocation for DHSSPS would be the deferral of the introduction of free nursing care for the elderly. It would also be necessary to re-deploy the savings in fundholding administration, which we had planned to support the management costs of the proposed Local Health and Social Care Groups and other Programme for Government commitments. The Executive found that it was not possible to provide adequately for other services, set an appropriate rate of increase, and avoid these deferrals. This shows clearly the nature of the difficult decisions which faced the Executive.

63. On a more positive note, the spending plans will allow continued support for smaller hospitals and cover the cost of the temporary transfer of services to other hospitals pending the outcome of the Hayes Review. Provision is also included for the continuation of essential service commitments to address winter pressures and waiting lists.

64. Planned allocations will maintain the improvements in Personal Social Services including community care, children’s services, Sure Start and residential childcare places. Provision will also be available to address care for people with severe mental illnesses and learning disabilities.

65. Also, I would again emphasise that many aspects of Health programmes will be eligible to bid on the Executive Programme Funds and thus there is scope for these allocations to be increased.

66. Planned expenditure by the Department of the Environment will enable the Department to continue its programme of work on waste management and the control of pollution to help ensure that Northern Ireland meets the EU directives on waste management for which extra provision was made in the 2000 Budget. Additional funds are being made available in this Budget to help progress work in this area and in transport regulation where the Department has also to ensure compliance with EU regulations. Additional provision was also made in 2001-02 for Road Safety in response to the alarming accident levels on our roads. This Budget maintains this enhanced level of investment in this area to enable this important work to continue.

67. The 2000 Budget provided an increase of around 25% for planning services in 2001-02 to help meet growth in demand and this enhanced level of service will continue to be supported in 2002-03. Provision has also been made for Local Government Services to meet fully the costs of the de-rating policy to District Councils and to provide for resource grants to less well-off Councils, though it has not been possible to increase this in line with inflation this year.

68. The spending plans for the Department for Regional Development will sustain the investment programme for public transport, which shows a 36% increase over 2001-02, mainly reflecting the major investment needed following the decisions on rail safety last year. This reflects the Executive’s commitment to improve and modernise Northern Ireland’s infrastructure. The plans also include provision for free travel for the elderly, following on from the allocations made for 2001-02 in February.

69. Key to this is the need to invest in structural maintenance of our road network. This is a vital asset that has suffered from a lack of investment in the past. We have agreed in the Executive that this deterioration must be arrested and so have made provision to help maintain current levels of investment. We will also continue to press the Chancellor to exempt Northern Ireland from the Aggregates Tax on the grounds that it will increase the negative environmental impact of quarrying and put at risk a large number of jobs in that sector of our economy.

70. DRD will continue to invest in the development of the water and sewerage infrastructure to ensure that European quality standards on drinking water and waste water discharges can be met. The 2001 Budget confirms continued capital funding for 2002-03 at the enhanced level that has been built up over the last few years.

71. Provision for the Department for Social Development will cover the administration of social security benefits, child support, housing, urban regeneration and community development.

72. The resources provided will enable the Department’s Social Security Agency to provide services to high standards of accuracy and to implement the Welfare Reform and Modernisation Programme in line with its PSA targets. Following a successful pilot, and in conjunction with the Department for Employment and Learning, the ONE service will be rolled out across the service and a new joint Jobseekers allowance process will be introduced. Customer satisfaction levels will be maintained and actions and measures to reduce fraud will continue.

73. The resources will also allow the continuation of a substantial programme to promote measurable improvements to housing. Specific actions will be taken to reduce fuel poverty, to ensure that the Northern Ireland housing stock is kept at recommended standards of fitness, and to build new homes that are accessible to people on low incomes.

74. An active programme of Urban Regeneration and Community Development will continue. A new Neighbourhood Renewal Strategy will be developed and Community Support Plans for all District Council areas will be introduced.

75. The Office of the First Minister and Deputy First Minister receives a modest increase in provision which will be used to fund key research on equality and policy effectiveness, and to expand a number of existing programmes. The plans will enable the Office to continue to provide effective support to the Executive and to develop and implement actions in relation to anti-discrimination law, improving community relations, a Children’s Strategy and effective implementation of New Targeting Social Need policy. Representational offices will be maintained in Brussels and Washington.

76. Finally, the Budget proposals also include appropriate provision for this Assembly itself enabling the development of services as planned by the Assembly Commission and building on the good work that has already started. Provision for the smaller Departments will meet the administrative costs of the independent Northern Ireland Audit Office, the Assembly Ombudsman for Northern Ireland and Northern Ireland Commissioner for Complaints and the Office for the Regulation of Electricity and Gas.

Regional Rate

77. These are the main features of the spending proposals. As well as the Treasury allocation for Northern Ireland, the plans are supported by the revenue from the Regional Rate. This issue represents only about 6% of our spending power: I doubt if it will be dealt with in 6% of the time we spend on considering the Budget, but I would ask all Members to keep it in perspective.

78. The Report from the Committee for Finance and Personnel concluded that any increase in the Regional Rate for 2002-03 should be linked to the rate of inflation. I would have to point out that if we had taken that approach, we would have had to use all the additional money we received in the March Budget to achieve that objective – money we received as a result of a boost to the health and education budgets. It would be very difficult to explain to the Treasury – and more importantly to patients and pupils here - that we had diverted our share of that money to ease the position on rates.

79. The Executive has decided to repeat the increases of 7% in the domestic regional rate and 3.3% in the non-domestic regional rate which were agreed by the Executive and endorsed by the Assembly for this year. Our plans are based firmly on the conclusion that these increases will be necessary to sustain the spending levels on our public services that I am proposing here today, and to show that we are looking to ratepayers to contribute a share to the growing costs of public services. Because the standard rate of inflation is not sufficient to meet the cost of services, it is impossible to make it the going rate for revenue. In the event, while the costs of services will rise by 7%, and our total DEL by 5.8%, the total rate income will, on these proposals increase by only 4.8%. This reflects the need to hold the business rate as close as possible to the rate of inflation, as it is not out of line with the position in England. The combined effect of the lower increases agreed last February for 2001-02 and the proposals I am announcing today is that we will forego £13m of revenue.

80. Mr Speaker, we estimate that the proposed increase in the rates would cost the average ratepayer about 29p per week. Yet elsewhere, people in comparable circumstances pay several pounds a week more than ratepayers here. Also, rate revenue is supplemented substantially from housing benefit, which comes from Annually Managed Expenditure outside the Departmental Expenditure Limit. This not only ensures that the rates do not lead to hardship for those most in need, but also comes as additional income to the regional economy. Lower rates would mean we would get less from the Treasury.

81. The Executive has agreed that it would not be appropriate to make major changes on the rating issue before we have progressed the Review of Rating Policy: a consultation paper is in preparation which will provide fuller analysis of how our position compares with other regions and the options for change. We need a serious debate on these issues and I propose that this should take place as soon as possible - outside the immediate Budget context, but informing our future plans alongside the Spending Review next year.

Conclusion

82. Mr Speaker, I said last year that agreement on the Programme for Government and the Budget represented a very important step in the evolution of our new institutions. This remains no less true now. This Draft Budget marks a further step in breaking away from pre-devolution patterns and priorities. It will, I hope, prepare the way for a much more fundamental review of priorities in the forthcoming Spending Review next year. Indeed I think it is a sign of our growing economic maturity that we have been able to work together as an Executive in a tighter financial context yet have full regard for the broad range of responsibilities of all Departments, and the services which are provided for all the people in this Community.

83. Last year the Committee for Finance and Personnel, in its report on the Budget, urged that the presentation of the draft Budget should take place as soon as possible after the summer recess in future cycles. I agreed then that this would be the best way to ensure that the Assembly and its Committees have as much time as possible to undertake scrutiny. I am pleased that we have been able to secure at least an extra two weeks for Assembly scrutiny, in addition to the consultation that has already taken place on the Position Report.

84. I look forward therefore to the Assembly’s scrutiny, within Committees, of our spending plans and proposals as set out in this draft Budget and particularly the role of the Committee for Finance and Personnel in drawing together and facilitating the consultation. As Sir Reg Empey and Séamus Mallon said yesterday, this process will also include opportunities for debate in this Chamber on both the Programme for Government and the Budget. These are likely to take place in October or November.

85. Mr Speaker, today’s statement is also the start of a wider process of consultation. The draft Programme for Government and Budget will be circulated widely among our social partners in business, trades unions and the voluntary and community sector and will be made available to other interested individuals and groups.

86. Mr Speaker, I commend these Budget proposals to the Assembly, and invite all Members to consider them carefully. I look forward to working with the Assembly to complete the process of settling next year’s spending plans in December. I believe that we will then see, increasingly, that we can make a difference for the better and deliver the benefits of devolution.

DRAFT BUDGET

Allocations to Departments
 

Total Del

% Change

 

2001-02

2002-03

 

Agriculture and Rural Development

195.4

203.8

4.3

Culture, Arts and Leisure

72.6

77.4

6.6

Education

1,339.8

1,404.2

4.8

Employment and Learning

550.4

584.0

6.1

Enterprise, Trade and Investment

259.9

255.8

-1.6

Finance and Personnel

112.8

116.2

3.0

Health, Social Services and Public Safety

2,300.8

2,486.6

8.1

Environment

100.8

108.9

8.1

Regional Development

468.7

538.3

14.8

Social Development

414.9

450.5

8.6

Other Departments

5.4

5.6

4.1

Office of the First and Deputy First Minister

31.1

31.9

2.7

Northern Ireland Assembly

38.8

39.9

2.9

Total Departments

5,891.2

6,303.3

7.0

Note: this table shows the allocations to Departments. When the remaining amounts for items such as the EU Peace Programme, Welfare to Work, the 1998 Chancellor’s Initiative and the Executive Programme Funds are added, and the revenue from the Regional Rate netted off, the increase in the total Departmental Expenditure Limit is 5.8%. Full details are shown in the Draft Budget document.

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Appendix 3

OFFICIAL REPORT OF THE TAKE NOTE DEBATE ON THE DRAFT BUDGET 2002/03 ON MONDAY 5 NOVEMBER 2001

Draft Budget Statement

The Deputy Chairperson of the Committee for Finance and Personnel (Mr Leslie):

We return to more prosaic matters. If all the huffing and puffing, by some mischance, blows the House down, it would be just as well to leave the books in good order. I beg to move

That this Assembly takes note of the Draft Budget announced on 25 September 2001 by the Minister of Finance and Personnel.

On 25 September, the Minister of Finance and Personnel, Mr Durkan, presented the Executive’s draft Budget proposals for the financial year 2002-03, in accordance with section 64 of the Northern Ireland Act 1998. In making his presentation, the Minister acknowledged that Departments suffer serious pressures and shortfalls. The Committee recognises that, in producing the draft Budget, difficult decisions had to be made to strike a balance between competing demands across Departments, of which there were plenty.

I have no doubt that the Minister and the Executive devoted much thought and a considerable amount of arm-wrestling to allocating finite resources so as to obtain the maximum return and to support the Programme for Government. Members must ask whether the correct balance has been achieved.

This debate will provide Members with an opportunity to comment on the priorities outlined in the draft Budget and to argue a case for any change to them. The Finance and Personnel Committee will be taking note of the issues raised by Members. It will reflect on those issues, together with written submissions from other Committees and produce a co-ordinated report on the draft Budget. On behalf of the Committee, I express appreciation for the timely and full responses that it received from every statutory Committee and from the Committee of the Centre. Those responses will be included in full in the report.

The Budget that we will finalise in December covers the second year of the 2000 spending review. There has been a relatively rapid growth in public spending since the comprehensive spending review of 1998. The departmental expenditure limits allocated by the Treasury show a rise of 5·8% in public expenditure in the financial year 2002-03, which is about 3% above general inflation. The allocations build on the 5·5% real-term increase in the 2001-02 Budget. However, even with these increases to the departmental expenditure limits — which the Treasury has indicated that we should not expect to continue after the 2002 spending review — it remains the case that most Departments are running to stand still.

The Minister, when discussing the draft Budget, and indeed any matter relating to finance, referred to the Barnett formula. Many Members feel that much can be gained by renegotiating that formula. The Finance and Personnel Committee has questioned officials closely about its application to Northern Ireland. The Committee recognises that Barnett is often weak at reflecting the particular needs of Northern Ireland, following some years of underinvestment in infrastructure and transport and in the acute needs of the health and education sectors.

Although it would appear that Westminster accepts that the shortfalls in public services require fundamental review, and, at the Westminster level, significant additional resources are being allocated, there is no guarantee that any Barnett formula consequential for Northern Ireland will focus on the same priorities. I reiterate that it is a question of deciding what our priorities are in Northern Ireland. I trust that that will consume some of Members’ attention in this debate.

The Committee for Finance and Personnel shares those concerns about the Barnett formula and wants to see Treasury allocations to Northern Ireland reflecting the needs of the people. The Committee recognises that there is some need for caution. It is not axiomatic that Barnett should be regarded as the root of all evil. The Finance Committee welcomes the Executive’s determination to address the Barnett issue and looks forward to an early report from the Minister on whatever progress is being made.

The Committee recently agreed that a research paper on Barnett that it commissioned should be made available on the Assembly Intranet. I urge Members who have an interest in the matter to have a look at that paper. The Barnett formula is by no means straightforward — it is surprisingly sophisticated in some of its manifestations. To inform a worthy debate on it and to drive any representations that are made to the Treasury, the more Members who get their heads around it, the better.

During last year’s debate on the draft Budget, Members raised concerns about the Budget timetable and the need to involve Statutory Committees at an early stage when departmental spending priorities were being considered. The Minister said that those concerns would be borne in mind for the current Budget cycle, which would be initiated and run in tandem with the drafting of the Programme for Government.

The Committee for Finance and Personnel recognises that the Executive have gone some way to meeting those concerns. This year’s timetable has certainly been better than last year — although that would not necessarily be difficult. On this occasion the Minister has brought the draft Budget to the Assembly at an earlier date, thereby giving the Committees an additional two weeks to scrutinise the departmental allocations. There is a general consensus that the extended timetable has proved valuable in allowing Committees, among all their other work, to plan and consider the details of the proposals for their Departments. There is also a feeling that it would not matter how early you started — you could always do with more time to consider those matters.

The publication for consultation of the Executive’s position report prior to the summer recess was also a recognition that Committees and the public need to be consulted on the Executive’s developing plans for the Budget and the Programme for Government. The preparation of and consultation on the report was, in effect, an additional stage in the Budget and Programme for Government consultation process. The Committee for Finance and Personnel found that useful.

The position report provided the Committees with a focus and a starting point for the commencement of budgetary considerations. In future budgetary cycles, that stage will grow in importance as Committees have access to service development agreements, providing much more detail than is currently available to use as benchmarks against which to assess departmental plans and allocations.

Most of us are just starting to focus on these public service agreements, but they will have an important role to play in enabling us to focus on whether there has been an increase or a decrease in efficiency of delivery within Departments. The Committee for Finance and Personnel welcomes these developments. However, the Committee remains concerned that further improvement in the process is necessary if Committees are to have sufficient and appropriate opportunities to contribute to the Budget process.

It remains the case that the earlier a Committee starts looking at the Budget for the subsequent year, the more impact it is likely to be able to have on the outcomes. Essentially, it is never too early to start. Committees are beginning to identify, as the Finance Committee has, that the Departments may not be keen on Committees starting early. Indeed, from their point of view, Departments have more chance of getting their proposals accepted if a Committee starts late.

Members are now more familiar with the structures of the Departments that they scrutinise. I trust, therefore, that they can examine those matters further in advance and that they will be in a better position to drive the policies that are attached to the budgetary decisions. Nonetheless, I put on record my Committee’s generally positive reaction to the improvements in the budgetary cycle. The Minister should, however, note the intention of the Finance and Personnel Committee to pursue further improvements through its report on the draft Budget, which will soon be published.

Committees have expressed almost universal concern about the failure of Departments to consult them appropriately during the bidding round for the second tranche of the Executive programme funds. The allocations made to successful bids from the Executive programme funds represent a real increase in the Department’s spending allocation, both in-year and across the budget cycle. There is probably a greater impact — certainly a greater discretionary impact — from the Executive programme funds than is likely to derive from this Budget round.

Unfortunately, the timetable for the Executive programme funds bidding process did not, in the eyes of many Committees, deliver an opportunity to be fully involved, informed or even properly engaged in the process. Owing to the serious problems identified with the process, the Committee for Finance and Personnel decided to act on behalf of the other statutory Committees, and of the Committee of the Centre, and to raise their concerns with the Minister of Finance and Personnel.

As a consequence, on 19 October 2001 the Committee published a report co-ordinating its views with those of the other Committees. The report outlined the problems and detailed 16 substantial recommendations for the attention of the Minister of Finance and Personnel and of the Office of the First Minister and the Deputy First Minister, who share responsibility for managing the Executive programme funds bidding process. The Minister is considering the report and will return to the Committee shortly to discuss methods and suggestions for improvements to the process. I assure him that Members and Committees expect to see a substantial improvement in that area in the future. In that context, it is never too early to start focusing on the next Budget, and by the same token it would never be too early for Committees to start focusing on the next round of Executive programme funds. In any case, the general criteria and the allocations to those funds are already well laid out.

I will not go into details of the Budget; my remarks are more general. However, I draw attention to one matter in the Department of Finance and Personnel. As well as conducting a thorough and strategic examination of the Executive programme funds, the Finance Committee took considerable pains to examine strategic issues in the Department of Finance and Personnel’s central finance group section — if you like, the engine room for the Budget and the Executive programme funds process. Our aim was to ensure that the resources available to this pivotal part of the Budget management process were appropriate to meet the Department’s objectives as set out in the Programme for Government. From the concerns expressed to us by senior departmental officials, it was clear that resources in that area have been stretched to meet challenging objectives. As a result, the Committee for Finance and Personnel agreed that effective management of the financial process is essential if the outcomes that we all desire are to be achieved. The Committee, therefore, has supported, and will continue to support, the allocation of extra resources to the central finance group in the Department of Finance and Personnel in order to secure those objectives.

The purpose of today’s debate is to give Members the opportunity to raise their concerns, to support various provisions, to pose further questions and to probe the issues. It will enable the Committee for Finance and Personnel to listen to and note the issues raised, to inform its proposals and to advise the Minister accordingly.

2.15 pm

That concludes my remarks as the Deputy Chairperson of the Committee for Finance and Personnel; I now wish to make several personal ones.

Whether public services are delivered in the most effective way has become a national issue, particularly since the last general election. A great deal of soul-searching is going on over that. An interesting question arises as to whether responsibility for any fundamental changes, such as in how the Health Service is operated, should be transferred from Westminster, letting the devolved Administrations decide whether they should adopt them or not. That may well be what Westminster expects to happen. It does not need to be done in that way. We should also consider whether there is scope for the devolved Administrations to take the lead in reviewing how some services are provided and whether there is scope within existing departmental expenditure limits to look at things in what could turn out to be a radical way. I toss that thought out for consideration.

Members, and in particular members of the Committee for Finance and Personnel, must always focus on the fact that we are dealing with taxpayers’ money. Those taxpayers come from throughout the United Kingdom, and it is important to ensure that they get value for money from the public services. The public service agreements and the service development agreements are new initiatives to assist in that. However, we must look at the administrative structure that surrounds how Departments exercise their different functions. Money is tighter than it was, and that should be a further stimulus to examine whether the administrative structures are appropriate or whether there is scope to pare them down and place more focus on outcomes and less on process. I trust that when Committees are scrutinising the work of their Departments, they will take account of those matters.

Taxpayers are becoming concerned about whether they get value for money from public services. If there is to be an increase in general taxation, to go with the considerable increases that have occurred in past years, albeit of a stealthy nature, taxpayers will become increasingly cynical and question the real value that comes from that extra taxation.

I look forward to hearing the views of Members, and I welcome today’s opportunity to have an extended debate on the draft Budget.

Ms Lewsley:

I welcome the opportunity that the Committee for Finance and Personnel has given Members to take part in a wider debate on the draft Budget. There is much to be commended in its proposals. The Minister has shown insight and fairness in dealing with the difficult task of allocating funds to areas of need and social deprivation.

As I have said before, it is easy to advocate change when in opposition, but it is not so easy when in Government. It is absurd to see the people who claim that they want change, and who are the most vocal about the Executive programme funds, resisting the mechanisms in the Budget for change.

We are all aware of the problems that many of the public services face, but rapid growth in that area is essential. At present, that growth still falls short of meeting expectations for service delivery, particularly in the health sector, where there is a serious deficit in funding for current needs, let alone increased future requirements.

The promotion of interdepartmental co-ordination to deal with issues that affect people with disabilities is a positive measure for building a stronger, more concerted way to alleviate current difficulties and to promote the social inclusion of one of the most disadvantaged sections of our population. Our aim is to provide better access to services and facilities for people with disabilities and to give them better access to education and employment. I commend the Department of Education and the Department for Employment and Learning for addressing the issue in the draft Budget, because they are bringing people with disabilities in to line with the rest of society.

The draft Budget contains a proposal to allocate an extra £20 million for education in 2002-03. That represents an increase of 4·8 % on last year’s allocation. However, is that funding enough to make a real impact, particularly on TSN? Many schools are still experiencing funding difficulties, and, to advance the review of post-primary education and the review of local management of schools (LMS) grants, adequate funding will be needed to implement real change.

It is commendable that the Executive have recognised the difficulties faced by the education sector and that they have prioritised those needs. However, a revision of the Barnett formula would be preferable to ensure a more equitable allocation of funding in line with England. However, there has not been a spending review in Westminster, and it seems that we still have to work within the constraints on our spending power.

I am concerned about the effects of the proposed £2 million cut in the local government resources grant. The consequences of that could leave less-well-off councils in a serious situation with regard to services for local communities. We need all Departments to examine their spending patterns to ensure that they are relevant to the real needs of those communities.

Our targets in the Programme for Government must be reviewed and examined regularly to enable us to turn them into realistically achievable objectives. However, we cannot do that without adequate funding in the first place. To achieve that goal, we must show support for the Minister of Finance and Personnel in his endeavours to secure greater levels of funding to benefit all of our constituents.

The Chairperson of the Committee for Agriculture and Rural Development (Rev Dr Ian Paisley): My Committee met the Minister on 12 October to discuss the draft Budget and the draft Programme for Government. Members also agreed their formal response to the draft Budget during a meeting on 26 October. They had the chance to consider a draft of the contribution that I will make to the House today, and no comments were received.

One issue in regard to the draft Budget concerns the Committee more than any other: no provision is made for the implementation of the findings of the vision group’s recently published report on the future of the agrifood industry. The Committee has not completed its own consideration of the report, and we will not agree with all of its recommendations. However, through the Assembly’s research services, the Committee has established that many areas could be described as compatible or consistent with recommendations already made by the Agriculture and Rural Development Committee in its inquiry reports.

On 19 October, the Committee met some of the authors of the vision group report, who expressed disappointment that the original bid for money had not been met. One of the subgroup chairmen pointed to the group’s 208 recommendations and pleaded with the Committee to help secure the resources required to implement them. The Committee takes a similar line, pointing to its own two inquiries, which have resulted in four reports containing 73 recommendations. The vision group deliberated for more than a year, while the inquiries of the Agriculture and Rural Development Committee lasted a year and a half. If there is no finance available to at least implement a proportion of those well-thought-out proposals, then all our time has been wasted.

The Executive’s position report published in June 2001 asked Committees to concentrate on what will be achieved through Departments’ programmes, rather than on bids. However, in this case the Committee cannot separate those two aspects. If new actions are not financed there can be no new outcomes. At best, the agriculture industry will remain in the doldrums it has descended into in the last few years. At worst, it may not survive at all.

The Department of Agriculture and Rural Development’s original bid was for £10 million per annum for implementation, but this bid seems to have been totally rejected. The Minister explained to the Committee that the proposed budget settlement was a satisfactory outcome for the Department of Agriculture and Rural Development. She went on to outline her intention to bid for Executive programme funds for the necessary resources for the vision report, which she described as being £10 million — in total, presumably.

The Committee accepts that, for example, the new directions fund would be an appropriate source of funds for some of the actions proposed by the vision group and, indeed, by the Committee. There may also be scope for some reallocation of existing resources within the Department’s budget. In the face of massive change in the industry, it is inevitable and desirable that the Government’s approach must also change. However, it is not prudent to put all your eggs in the one basket. The Executive programme funds are limited, and there will be great pressures for access to them from all Departments. The Committee is concerned that the funds will not be able to satisfy the Department’s implementation demands. Members are therefore convinced that there should be some mainstream element in the Budget to fund those actions. I would like to hear the Minister of Finance and Personnel’s response to that theme.

There is a clear commitment in the Programme for Government to implementing an action plan for the strategic development of the agrifood industry. If the Executive are genuine in this commitment to the people of rural Northern Ireland — which we welcome — they must underpin that commitment by providing adequate resources that must be firmly established in the Department’s budget.

I will continue when I am called again after Question Time.

Mr Deputy Speaker:

We shall resume the debate on the draft Budget statement at 4.00 pm.

Debate resumed on motion:

That this Assembly takes note of the Draft Budget announced on 25 September 2001 by the Minister of Finance and Personnel. — [The Deputy Chairperson of the Committee for Finance and Personnel (Mr Leslie).]

Rev Dr Ian Paisley:

I want to comment on some aspects of the draft Budget for the Department of Agriculture and Rural Development. The Committee welcomes the additional £2·2 million allocated for BSE testing according to new European requirements. The Committee studied the bid carefully and supports it fully as an essential measure to regain export markets for Northern Ireland beef.

However, the matter was brought to a head by a visit of a committee of inspectors from Europe. Unfortunately, the Department had not maintained the full standards, and the leeway thus lost was used as an excuse to delay the vital decision of allowing our meat into the European market. Now that the Department has decided to spend this money, I trust that it will raise standards to the European level.

It is impossible to get away with anything in Europe. If one does not do it the European way, one brings disaster on oneself. If the standards that were set by the Department had been adhered to and the Committee had not been rushed, BSE testing might have been closer to the requirements.

The Department has allocated a further £2 million for the scrapie eradication programme. To the Committee’s knowledge, that was not the subject of a new bid. There was a successful bid for £2 million in the 2001-02 financial year, and this £2 million is presumably additional to that. Can the Minister confirm that in his response?

Workload pressures on animal disease control are also quoted in the draft Budget as part of an allocation of £3·4 million. The Committee agrees that disease eradication should be a departmental priority. Much of the Department’s annual Budget is spent on compensation payments to farmers whose animals fall victim to disease, particularly brucellosis and bovine tuberculosis.

Although it is vital to ensure that farmers’ livelihoods are protected, a concerted effort must be made to eradicate disease. Compensation is not enough; eradication schemes must also be subsidised. Therefore, the Committee expects to see positive outcomes from the Minister’s reviews of the Department of Agriculture and Rural Development’s disease policy.

Although it concentrates on the agrifood industry, the Committee does not ignore the plight of the fishing industry and of the rural communities dependent on that industry. The Committee notes that part of the draft Budget figure of £3·4 million is allocated to the Department of Agriculture and Rural Development

"to maintain existing service levels"

in several areas including the cod recovery plan. The Department of Agriculture and Rural Development was successful last year in securing £120,000 toward implementation costs in 2001-02. Members can only assume that this year’s allocation will also go to the plan’s administration and policing of fishing ground closures as part of that plan.

I want to remind Members that on 27 March 2001 the Assembly unanimously agreed a motion calling on the Minister to provide short-term financial assistance to the fishing industry to compensate for restrictions coming from the cod recovery programme. The Minister’s reaction was that it was too late to act in the current year. She undertook to review the economic effects of the closures and to discuss the possibility of compensation, as permitted by Europe, with Colleagues in the other UK Fisheries Departments. However, she warned that it has not been the policy to compensate fishermen. It seems that one can take away a fisherman’s right to fish and yet give him no compensation. That is intolerable. If extra funding can be found for the Department of Agriculture and Rural Development’s administration of the cod recovery programme, it should also be possible to find funding to compensate fishermen for the sacrifice that they are forced to make when their fishing grounds are closed under the recovery programme.

The Committee must welcome the increase of 4·3% in the Department’s budget. However, the Committee recommends, in the strongest possible terms, that the Executive allocate additional funds to the Department of Agriculture and Rural Development in support of two hard-pressed industries in the Province — farming and fisheries.

I am now taking off my hat as Chairman of the Committee and am speaking in a personal capacity. My Deputy Chairperson will be referring to the important matter of a retirement scheme. Each Committee member would be at one about that scheme.

I also want to correct a rumour that has come out of the Department. When Mr Hume and I, as Members of the European Parliament, met Commissioner Byrne, he told us that European money was available. Of course, that money would have to be matched on a retirement scheme. It has been put out by the Department that that could not be. I would have thought that the Commissioner would know more about Europe than any member of the Department of Agriculture and Rural Development or the Minister herself. The Commissioner did tell us that money was available. There were four witnesses — Mr Hume had someone with him, and I had my friend with me. Four of us heard it, and we had quite a discussion about it. If that is the case, there should be a move. There seems to be a tremendous hold-up when one mentions a retirement scheme.

I feel strongly about the fishing industry, and I regret the state that it is in. It is disastrous when men are put out of their livelihood, that their ships, with all the money that was spent on them, must be burned, battered and broken up, and nobody gets a penny. That is an utter scandal. If a man who has a boat leaves the business, why can he not sell that boat? It would not be used for fishing; it could be a residence or some sort of shed for use in the fishing industry However, he cannot do that. No matter how many thousands of pounds have been paid, the boat must be broken up, and the fisherman must pay back the money that he got to repair that boat originally. I am glad that even the Alliance Party agrees with me on that one. I am thrilled to bits — [Interruption].

Please do not transubstantiate yourself, or I might change my mind.

These are real wounds in the heart of the society of Northern Ireland, both in agriculture and in fishing. The Minister had to be Scrooge-like when he handed out his money, and I understand that. If the money is not there, he cannot hand it out. However, if we do not make some real moves to deal with these matters, the plight of agriculture and fishing will be even worse and it will be even more difficult to extricate the fishermen from the mess they are in.

Dr O’Hagan:

Go raibh maith agat, a LeasCheann Comhairle. I have some general points on the draft Budget, and my Colleagues will make more specific ones.

We are tied to the budgetary plans of the British Exchequer, which for generations has had an obsession with cutting taxes. We need a real increase in investment in public-sector infrastructure. Preoccupation with tax cuts, ahead of the duty to schools, hospitals, pensioners and a whole raft of issues, is part of being tied to the political philosophy of the British Exchequer.

Our departmental expenditure limit allocations, as set out by the Treasury, show a rise in public expenditure in 2002-03 of 5·8%, or about 3% more than inflation. However, many of the costs that affect public services are rising at a faster rate than inflation. The allocations for 2002-03 build on the 5·5% real terms increase in the 2001-02 Budget, which has allowed Departments to initiate the work started on the Programme for Government priorities.

The Barnett consequential that is used to calculate the block grant is unfair. It is a headcount that takes no account of need or of any meaningful adjustments to population structure. We have an ageing population, a high proportion of young people, higher levels of ill health and rural problems. There is an immediate need to increase spending on infrastructure, health, education, housing, roads, rail, and power, as well as on information and telecommunications technology.

Throughout the North of Ireland, and with the Dublin Government, we must find funds to build not just a North/South economic corridor, but an east-west, cross-border corridor. We do not want to see the good work done in the Assembly with the return of local democracy being undermined and undone by a parsimonious British Chancellor. An inflation-busting increase in the regional rates for the second year in a row will leave many businesses and households running for cover. Although businesses have been spared the worst of the increases with a 3·3% increase for the second year, householders have been hit by yet another 7% rates hike, also for a second year.

It is clear that the Minister of Finance and Personnel and the entire Assembly need to unite and put that matter to the British Exchequer. There is a legacy of underfunding. We have a need that is not reflected in the headcount of the Barnett formula. We are a society emerging from conflict.

4.00 pm

Sinn Féin would like to see the creation of an all-Ireland economy. That is the only way that this island’s economy can be more successful. The first step towards that goal is tax-varying powers for the Assembly. Unfortunately, we are not currently in a position to have those. In the meantime, we need a co-ordinated strategy to deal with the flawed and unfair Barnett formula that allocates our block grant. We need to ask why the massive British war machine expenditure has not been redeployed to support our transition to a more peaceful, stable, prosperous, fair and outward-looking society. The Assembly should also negotiate with the Irish Government for an increase in their commitments to expenditure on cross-border programmes and services, and on all-Ireland bodies through the North/South Ministerial Council.

We should work towards eradicating community differentials, ending discrimination and tackling disadvantage. We need to spend much more on the community and voluntary sectors, instead of starving them of resources. Their dire situation is compounded by the twin problems of the gap in the European funding that supports so much of those sectors’ work, and the retreat of mainstream funding. The community and voluntary sectors deal with problems such as drug and alcohol abuse by giving advice and practical assistance. They are a vital community resource, especially in the most disadvantaged and marginalised areas. Thousands of people employed in those sectors face job losses because of the lack of gap funding.

The regeneration of towns and villages is also a victim of the Budget, with annual allocations being slashed by 4·4%. Given the millions pumped into the Laganside project in east Belfast, expenditure on town and village regeneration should be given priority in order to create a level playing field.

Rather than tinkering around the edges, we should be developing a comprehensive plan to deal with the flawed and unfair Barnett formula that is used to work out our block grant allocation. There is also an onus on the Irish Government to spread the benefits of the "Celtic tiger", and we need to put pressure on the British Government, not only about the Barnett formula but on the provision of the peace dividend.

The peace process has been in place for a number of years, yet we are still waiting for the money sucked up by the British war machine to be redeployed. We are a society emerging from conflict, continuing to suffer the social and economic consequences of that conflict. No adequate provision is contained in the Budget or financial estimates for the legacy of discrimination, inequality and injustice in the north of Ireland that needs to be redressed as a matter of urgency. Go raibh maith agat.

Mr Close:

I do not wish to use the opportunity afforded by this debate on the draft Budget to criticise the allocation of money to the various Departments. I am sure that the Minister will be pleased to hear that. Nor do I intend to rehearse the old arguments about the iniquity of increases in the regional rate that are above the rate of inflation. I am sure that the Minister will be doubly delighted to hear that. Rather, I shall use the opportunity to question the whole concept and methodology of our Budget process.

It has been three years since the Assembly first met, and in many respects we are still slavishly following customs and practices of the past. Although such practices may have served society well in the past, they ignore the stark realities of the present. The money that we are spending is not the Government’s money; it is not the Executive’s money. It is taxpayer’s money. That money is departmentalised — it is locked away in particular Departments. It is spent by Departments, and each is hell-bent on ensuring that it gets its percentage increase year on year oblivious to, or without concern for, the stark realities of life that exist outside.

The sums of money allocated and the percentage increases awarded can be justified when viewed in the context of a particular Department. For instance, who could question that more money needs to be spent on roads, transport, water and sewerage services. However, the justification becomes less meaningful when viewed against what must be the Assembly’s number one priority: the health of our people.

The Executive say that they prioritise expenditure, and to a small degree that is true. However, words have not yet been backed up with sufficient resources. The Assembly and the Executive pronounce publicly that health is the number one priority, but do Members mean what they say? Do the Ministers and the members of each Statutory Committee feel in their heart of hearts that health is the number one priority, and do they treat it as such? Is their own Department their number one priority? Do they not clamour year in, year out for more of that finite resource called money for their Departments? Ultimately, that is at the expense of health. Everyone wants his or her extra pound of flesh.

To say that there is a crisis in the Health Service is no exaggeration; it is an understatement. It is not an exaggeration to say that people are dying because of lack of resources. Thousands of people, maybe tens of thousands, are waiting for proper coronary care. The new cancer unit has been further delayed. There is a shortage of surgeons, nurses, beds, et cetera. Members could rehearse the problems and they could beat their breasts. However, there is a huge void when it comes to doing what is necessary.

Over the past number of weeks I have tried to ascertain what the word "priority" means in the Assembly. I have asked each Minister to release at least £10 million from their budgets to alleviate the crisis in the Health Service. Such a move would increase the health budget by at least £90 million. I met with some interesting results. In a number of cases my questions were ruled inadmissible. However, I was not told that by any Minister: I was told it by others who appear to rule on whether a Member may ask a question on behalf of his constituents. That is a strange form of democracy.

Some of my questions were referred to the Minister of Finance and Personnel on the grounds that it was his responsibility. That is an interesting concept. The Minister of Finance and Personnel apparently decides whether the Department of Agriculture and Rural Development, the Department of the Environment, or any other Department, can release money. That is what I have been told. In one case I got a straight "No". The Minister in question acknowledged the pressures on the Health Service, but said that transferring £10 million would have severe implications for his or her Department.

So much for priority. So much for those citizens crying out for urgent health care. So much for those who are waiting on trolleys. So much for those who are dying. In the overall scheme of things, is it more important to save a life or to spend an extra £300,000 in support of the Foyle, Carlingford and Irish Lights Commission, or an extra £500,000 on veterinary services? Is it not more important to resource more nurses and surgeons than to increase expenditure on accommodation or give an extra £5 million to the Environment and Heritage Service?

Is transport more important than cancer care or community care packages? We are the guardians of the public purse. Our management of that purse must reflect the real and pressing needs of society — the taxpayers. Would a businessman or businesswoman continue with an expensive advertising campaign if that meant laying off production workers because of scarce resources and a cash flow problem? Would the parents of a terminally ill child spend money on redecorating their home or buying a new car, or would they keep money in the bank if that money could save their child’s life?

How can the Assembly justify keeping tens of millions of pounds in Executive programme funds for future spending, when people will die because that money is not being spent now? The draft Budget fails to give meaning to the word "priority". It fails the people. The Assembly has proved adept at changing rules over the past few days. I suggest that it put the same effort into changing practices of the past and give a real and meaningful definition to the word "priority".

Mr Watson:

During the opening debate on the draft Budget on 25 September, the Chairman of the Environment Committee questioned the Minister of Finance and Personnel on the justice of the proposal to cut £2 million from the resources grant payable to those councils with the weakest rates base. Neither the Minister of Finance and Personnel nor the Minister of the Environment has explained the logic of that proposal. It takes £2 million from the weakest councils to pay for compliance with EU legislation that is primarily on waste management, which will benefit everyone, including people in the strongest rates-base councils.

I ask those Ministers again — and Members — how that stands with the key policy theme in the Executive’s draft Programme for Government of targeting social need and the promotion of equality of opportunity. The Environment Committee has received letters from 14 local councils protesting against the £2 million cut and highlighting the unfairness of targeting the weakest rates-base councils. The Committee has forwarded those letters to the Minister of Finance and Personnel and the Executive, and has asked that the proposal to cut the local government resources grant be dropped from the 2002-03 Budget. Those letters show that the £2 million cut will have a major impact on local government services and rates in some of the poorest and most socially deprived areas of Northern Ireland. I ask the Minister of Finance and Personnel to give this matter serious and urgent consideration.

The Chairperson of the Committee for Employment and Learning (Dr Birnie):

I want to focus on two main areas in relation to the draft Budget; first, adult basic skills, and secondly, research and development spending, particularly regarding Northern Ireland’s universities.

I want to address the policy response to and funding of adult basic literacy and numeracy. The Committee for Employment and Learning was pleased that additional money was granted to that area in the first round of Executive programme funds. However, the sum granted at that time was less than the 30% that the Department had asked for. No additional funding has been provided since then. Those problems are sufficiently serious to warrant further funding. This is a fundamental social problem that has implications for individuals’ employability and state of health and has an impact on general economic growth and productivity.

4.15 pm

We welcome the fact that the most recent draft of the Programme for Government placed increased emphasis on that area. One quarter of the adult population here falls into the category of the lowest measured level of ability to either read or count. Along with Great Britain, the Republic of Ireland and the United States, Northern Ireland languishes at the bottom of the international league with regard to adult basic skills. This seems to imply that something systemic has gone wrong with basic education — particularly primary education — in the English-speaking world. That has happened in the past. Our priority is to ensure that this problem will never be recreated for future generations in primary and secondary schools. We also need to deal with those currently in the labour force who have a tragic inability to read or exercise basic numeracy. We appeal for additional moneys in that area.

My second concern in respect of employment and learning is R&D, as based in universities in Northern Ireland. The issue of the contribution of the training and education system to industry was given prominence in our Committee’s report about three weeks ago. Subsequent to that report, the vice-chancellors of Queen’s University and the University of Ulster gave evidence to the Committee in the strongest possible terms about what they saw as the inadequacy of the funding provided for R&D in general, and university-based R&D in particular.

There is a strong positive relationship between the proportion of R&D spending in any country or region as a percentage of regional or national gross domestic product (GDP) and the subsequent economic growth rate. It is worrying that Northern Ireland lies at the bottom of a second league table: that of Organisation of Economic Co-operation and Development (OECD) countries. We fall in the class occupied by countries like Turkey and Hungary. We have an R&D spend of only 0·6% of regional GDP, compared to 1% in the Republic of Ireland, where the spend has increased rapidly over the last five or six years, and roughly 2% in the United Kingdom as a whole. Thirty per cent of the R&D spend in Northern Ireland is carried out in universities, compared to under one-fifth in the UK as a whole. The universities will therefore have a pivotal role in increasing the level of R&D spend in Northern Ireland.

When presenting their evidence to the Committee, the two vice-chancellors argued very similar cases, making the point that the Welsh and Scottish Administrations have substantially increased the level of public support for university-based R&D since devolution. Locally, that has yet to happen to the same degree. It was also noted that a continued decrease in university-based R&D would have a negative knock-on effect on the economy and on society. The private sector would suffer from a resulting reduction in the numbers of so-called spin-off companies. Many of these are high-growth and high-tech entrepreneurial companies. There would also be implications for the public sector generally. The Department of Agriculture and Rural Development and the Department of Health, Social Services and Public Safety, which rely heavily on the universities to do background research to aid the development of future policies, would find resources less forthcoming.

Both universities anticipate improved performance in the current research assessment exercise. Sadly, as things stand, there will not be enough money in the kitty to reward those university departments that have improved their measured research output with a commensurate increase in funding. This will remain true even if the bid for £4·5 million extra for university-based R&D is realised from the current round of Executive programme funds. Northern Ireland’s universities, through no fault of their own, are slipping further behind their counterparts in Great Britain as initiatives and funding announced in London are not being read across to Stormont.

Other Departments may be able to make more apparently striking cases for extra money. However, the long term as well as the short term must be considered. The crucial point about R&D spending is that it is an investment. There is no doubt, according to the available evidence, that it helps increase future economic growth. For instance, it provides additional resources that could be used to provide funding for the health sector, which Mr Close talked about.

In a sense it is a partial answer to Mr Close’s point about asking each Department to give £10 million to the Department of Health, Social Services and Public Safety. That action might provide some short-term relief as regards waiting lists, but it would do nothing to generate future economic growth. That is the only sound and sustainable basis for an adequate level of health, social or educational spending in the Province. Unless the Northern Ireland Executive face up to the challenge of matching the commitment to R&D already being shown by their counterparts in London and in the other devolved Administrations in Cardiff and Edinburgh, devolution will fail to lay the foundations for a more prosperous future here.

I want to close by making some more general points about the Budget. To do so, I remove my Employment and Learning Committee Chairman’s hat. I commend the Minister of Finance and Personnel on his stamina. By the end of the debate he will probably feel that he has heard many of the speeches before, and he is likely to hear similar speeches again in the future. That is the nature of such debates. Certain matters are so important that they deserve to be returned to again and again until the Executive deal with them adequately through the Budget and the Programme for Government.

The 2002-03 Budget is designed to deal particularly with changes in spending and to focus on areas that are deemed by the Department of Finance and Personnel to be new or inescapable commitments. It is not about a fundamental review of the baseline of expenditure and of the annual growth rate of expenditure of each Department. Such a fundamental review is projected for the following year’s Budget. However, given that such a review of baselines is so necessary, I suspect that we will be treading constantly in that territory in the debate. Perhaps that is no bad thing.

In a debate such as this, many Members will yield to the strong temptation to bash the Treasury, for example, on the Barnett formula’s inadequate funding of public expenditure here. In that context, I suggest that when Dr O’Hagan of Sinn Féin speaks about tax-varying powers, it must be recognised that that will almost inevitably mean substantial tax-increasing powers. We must be clear about that before we ask for it. The danger of asking for gifts is that you will be given them and that, sometimes, they are not really gifts at all.

On the point about the island economy and the alleged desirability of it, we must be clear about what is being asked for. The level of public spending in Northern Ireland is substantially greater by several billions pounds per annum than the level of tax revenues received. Therefore, if stress is being put on the so-called all-island, or all-Ireland, dimension, it must be asked whether Sinn Féin has asked the Minister for Finance in the Dublin Government, Mr McCreevy, whether he would be willing to contribute such several billion pounds, especially as his own fiscal position has become more difficult since 11 September. I am pretty sure what the answer would be.

As I understand it, the Executive programme funds were designed to engineer innovative areas of spending additional to what would have been spent anyway. Moreover, the funds were to encourage the so-called joined-up pattern of Government expenditure that we have so often been encouraged to promote, particularly interdepartmental initiatives. It is a real source of regret that, as of yet, there have been relatively few such genuinely inter- or multi-departmental initiatives. Overall, there is not much evidence that the funds have been leading, at least so far, to genuinely additional, innovative or joined-up measures. There is a great danger that they have simply become a contingency fund for public expenditure in Northern Ireland by another name.

I support the motion.

(Mr Speaker in the Chair)

The Chairperson of the Committee for Culture, Arts and Leisure (Mr ONeill):

I thank the Minister and the Committee for Finance and Personnel for their combined efforts in ensuring that the budgetary process has, this time, allowed Committees to scrutinise the draft Budget allocations for their respective Departments more effectively than previously.

I have put it on record before that my Committee welcomed the additional allocations for the Department of Culture, Arts and Leisure, which totalled some £4·7 million. However, the Committee still has several major concerns about the level of underfunding that continues to inhibit the Department’s activities. I am required to mention a few of them on behalf of the Committee.

The first is the safe sports grounds scheme, which was warmly welcomed by the Committee and the House when it was introduced. Unfortunately that scheme received only £1 million, when there was a lot more to be allocated in that direction. It is interesting and concerning that, of all the bids for sport in our departmental budget, that was the only one that received any recognition at all. The money received was below what was expected.

There was also great disappointment among the Committee Members because of the failure of the arts bids, which totalled some £4 million. Sometimes other Committees and those who sit on them forget that the Department of Culture, Arts and Leisure has a very small budget indeed. If £10 million were taken out of it, as Mr Close suggested, that would be almost one sixth of the budget. Compare that with some of the higher-spending Departments — for example, one sixth of the health budget would amount to £250 million.

4.30 pm

Like-for-like calculations do not apply. We are working with such small amounts of money that often, if the figures for our projects were to be rounded up by other Departments, they would be "lost in the roundings". That would make a tremendous difference to our objectives.

It is important to bear in mind the need for serious action in the arts sector, particularly in the light of the launch of Belfast’s bid to become the European Capital of Culture 2008. That campaign is exciting and has captured the imagination of many, but it must be based on certain fundamental building blocks. One of the most important of those, which, in general terms would be considered a small bid — £1 million — is the Grand Opera House development scheme. The project would be a key plank in Belfast’s application to become the European Capital of Culture, and recently the Committee was very concerned to note that there was a competing interest in the site. The Grand Opera House cannot bid for the site because of a lack of funds, and the expansion programme could be in jeopardy. A unique opportunity to enhance the arts infrastructure of the city would be lost, and it would be difficult to explain that in future.

The Committee is also concerned about such important institutions in the Department’s responsibility as museums, the Armagh Observatory and the Planetarium. Recent research revealed that the budget for museums was cut by 8% in 1994. That historic underfunding has been inherited; the situation has never been rectified, and institutions have been trying to exist on a drastically reduced budget. The seriousness of the position is illustrated by the proposal to sell off Museums and Galleries of Northern Ireland (MAGNI) property, at least in part, to meet the deficit. The Committee was concerned to learn about that proposal.

Our concern is that we will have to strip the assets of our arts and culture sector in order to survive. I place on record the fact that the Committee’s deep concern was reflected in its strong opposition to such an approach.

The Department of Culture, Arts and Leisure has inherited a problem as a result of a library staffing review which was initiated by the former Department of Education for Northern Ireland at a cost of £10 million. The Department’s bid for the £10 million to cover the cost of the review until the current year is OK, but, should its in-year bid fail, the Committee would not expect the Department to find the money from its own resources. That would also be our position on any in-year bid in 2003 for the additional £2 million that is still unmet in the draft Budget. The situation was not of the Department’s making, and the Committee for Culture, Arts and Leisure would not support any attempt to fund a pre-devolution review from the Department’s already inadequate resources.

However, the Committee expressed pleasure that the Department’s bid for additional staffing had been met. That staffing is fundamental to departmental organisation, the creation of a proper corporate structure and the improvement of its services to customers and to the Assembly.

The Committee has known for some time that staff shortages have meant that progress on many important areas of work, which would have had a considerable social and economic impact on the community, have had to be deferred. It hopes that the additional resources for staffing show that some recognition is being given to placing the funding requirement for the Department of Culture, Arts and Leisure on a proper footing.

Leaving aside my role as the Chairperson of the Committee for Culture, Arts and Leisure, I wish to ask a question on a matter: that several Members mentioned: the all-Ireland economy. As we move to an integrated economy in Europe, has the Minister any comments to make on how Budgets, particularly in a cross-border setting, could be affected by the introduction of the euro? I represent a border constituency, and I know the concerns that many people have about the ordinary, everyday changes that will come about as a result of the euro’s introduction. Has the Department of Finance and Personnel made appropriate plans to cope with any problems that may emerge?

Mr Shannon:

Dr Paisley spoke about the fishing industry. He made the point about the shortfall and the need for support, especially this year, for the cod recovery plan. However, other issues must be reiterated.

The first issue came to the fore in my constituency in the past month. Complaints about health services apply across the Province, not just in Strangford. The worrying trend in Newtownards is that the trust intends to reduce the amount of time that home helps spend with pensioners and with the handicapped. That causes concern in my constituency and is a result of the stress and contraction of the budget that is allocated to the community care side of the Health Service. It is totally inadequate to deal with the needs of people in the area.

Several elderly constituents have contacted my advice centre. They were distressed because their home helps, who previously made their meals, had been replaced by meals on wheels, which the trust has said is more cost-effective. The trust has failed to acknowledge the therapy — I purposely use the word "therapy" — that home helps provide the people on whom they call. They do not simply make a meal; they spend 15 minutes to half an hour talking to the senior citizens or the handicapped people, who, in turn, are made feel that despite being infirm they are not completely divorced from the rest of the world. We must address the despair and isolation that many elderly people feel, because, ultimately, that will lead to health deterioration and depression.

Last week, I met the chief executive of the Ulster Community and Hospitals Trust. Although he sympathised with the home help situation, he felt that it was the latest in a catalogue of budgeting blunders that have left the National Health Service, both in Northern Ireland and in the rest of the United Kingdom, at a loss. He reiterated that the necessary budget is not there to cope with the demands. Last year, the Ulster Community and Hospitals Trust provided nine additional complex care packages. Members will know that there is now a greater demand on care packages; higher levels of need exist. This year, the trust has 60 extra cases, which compounds the issue.

The fact that the elderly population in Strangford is rising also adds to the problem. The population there contains 75% more elderly people than any other area in Northern Ireland. We have lost some nursing homes, and many residential homes cannot cope with the pressures that the system places on them.

In my trust area, we have been told that £500,000 would be needed to provide the appropriate level of home-help and care-package assistance. If we multiply that figure across the Province, we shall find that the issue needs to be addressed in all community trusts. It is hard to understand the situation here when we find that £300 million is available in England and Wales to get people out of hospitals and into the community. That money will dramatically reduce waiting lists. Why is the same emphasis not placed on solving the problem in Northern Ireland? Is Northern Ireland, once again, the poor relation in the United Kingdom?

Disabled sport is also affected by the draft Budget. We all remember the last Paralympic Games, and one would imagine that everyone would be behind our disabled sportsmen and sportswomen. Instead, we find that a paltry sum of £30,000 is set aside to appoint a development officer to an umbrella organisation. Nothing has been contributed to the Special Olympics. Given that our disabled athletes can bring home more medals than our able-bodied ones, the lack of funding is scandalous. Northern Ireland has many disabled sportsmen and sportswomen who were injured as a result of the troubles of the past 30 years. Often, the only release that those people can find from the frustration and anger that they feel towards those who caused their injuries is through sport. We should make every effort to ensure that disabled people who want to be involved in sport have the opportunity to do so.

The Chairperson of the Culture, Arts and Leisure Committee mentioned the details of the bids. Looking down the list, I see that almost every bid was unsuccessful. It is frustrating that the Culture, Arts and Leisure Committee has been unable to achieve the level of support needed to deal with many of the matters that fall within its remit.

It is disappointing that the Minister of Health, Social Services and Public Safety seems more intent on spending money to promote the Irish language and her culture than on spending it on health provisions that everyone wants.

A bid for £500,000 was put forward for languages, but it was unsuccessful. I am concerned, given the failure to provide money for languages, that Ulster-Scots will not receive adequate financial assistance. There has been a great resurgence of interest in Ulster-Scots, but not enough money is being allocated to it. The BBC has an Irish programme on the radio every night and an Irish television programme several times a year. However, we are yet to see an Ulster-Scots programme, and I would like to see that happen. I know that that does not fall directly within the remit of the Department of Culture, Arts and Leisure, but perhaps such programme development is something that we should all work towards. The BBC must work towards it too.

Money must be put into the programmes that people want, and into language programmes, which are clearly needed. The failure to allocate sufficient money to the Ulster-Scots language is widely recognised. Such inequality and inequity is a bitter indictment of some people’s lack of understanding about the rights and cultural identity that I share with many people in the Province.

I am disappointed that the bid for motor sport safety improvements was also unsuccessful. Only one bid out of about a dozen was successful. The Committee tries to promote and ensure improved safety at road-racing circuits. Although £100,000 was set aside for that previously, the Committee is concerned that this year’s bid for £100,000 has not been successful.

4.45 pm

Road racing is a unique sport in Northern Ireland. Indeed, it is unique within the British Isles. Road racing clubs and followers are keen to promote their sport, and it is important that the sport be encouraged and that it can progress. That can happen only if money is allocated for the necessary safety improvements. The clubs and the road racing enthusiasts are keen to see improvements in the circuits and safety standards. It would not take much money to improve the circuits in the Province, but I am concerned that the £100,000 needed to ensure the short-term and long-term future of motor sports will not be provided in the Budget. About 100,000 people follow the sport — it is truly a sport for everyone and it needs help.

Ms Ramsay:

Go raibh maith agat, a Cheann Comhairle. The Deputy Chairperson of the Finance and Personnel Committee has asked us to take note of the draft Budget announced by the Minister in September. Several Members have mentioned the problems faced by the Health Service as a whole. As a member of the Committee for Health, Social Services and Public Safety, I shall give some detail of the problems faced by the Health Service daily.

Various groups have told us about the state of the Health Service. We have heard stories from children’s organisations, the elderly, homes and hospitals, and we have heard about many problems from waiting lists to trolley waits. Everyone agrees that the Barnett formula is fundamentally flawed, that it is merely a headcount that must be changed. The formula does not take into account our high levels of ill health and the many children at risk, our ageing population and long waiting lists. I could go on — the list is endless.

The Committee for Health, Social Services and Public Safety was informed that the Department’s draft Budget bid was £275 million. The Committee was told that that was the amount needed merely to maintain the service as it is with its high waiting lists, trolley waits and so on. A plaster was put over them. However, the Department did not receive that amount. The amount received fell £121 million short of the original bid. I should like to ask the Deputy Chairperson of the Committee for Finance and Personnel Committee and the Minister where that will leave the Health Service.

I totally agree with Seamus Close. I accept that this is a test for the Executive as a whole — they must tackle this problem, and by the Executive I mean every Minister in the Executive. This is a real test for collective responsibility.

Several weeks ago the Health Committee sent out letters requesting meetings with the Office of the First Minister and the Deputy First Minister and the Minister of Finance and Personnel. It might be easier if we could meet him when he wears both hats. This is not only the responsibility of the Minister of Health, Social Services and Public Safety and the Minister of Finance and Personnel; there is collective responsibility in question.

The Finance Minister acknowledged that the proposed allocation to the Health Department would, at best, only allow it to maintain the provision of services. Critically, key commitments in the Programme for Government will have to be deferred. Given the serious situation which all parties have agreed exists, there must be a fundamental review of the allocation of money to the Department of Health, Social Services and Public Safety.

Members said earlier that if it means withholding funds from other Departments, so be it. Mr Close did point this out, quite rightly. Perhaps we can take on board what one Member from the Ulster Unionist party said about the Executive programme funds — allocate them to the Health Service to try to alleviate some of the pressures it is facing and the pressures it will face through the winter crisis.

I also sit on the Public Accounts Committee. Many who have spoken here today are criticising the Budget, saying there is a need for additional money for whatever Department or Committee they sit on. It is my view, as a member of the Public Accounts Committee over the last year, that public money has been wasted in various Departments. I need not rehearse the arguments because people have seen the media stories and have read the reports from the Comptroller and Auditor General and the Committee. We must look closely at giving value for money and at saving money from Departments rather than always crying out for additional money.

I stress that we need a review of the budget for the Health Service. Taking on board what the Deputy Chairperson has said, I shall take note of the Budget. However, I also take note of the present state of the Health Service and call for a fundamental review of its budget. Go raibh maith agat.

Ms McWilliams:

I am glad to hear that the alarm is finally being raised in the Assembly about the disappointing increase in the health budget. Unless all Members and, indeed, all Ministers in the Executive come together and agree this as the number one priority, we will bring disaster on those overstretched services, overstressed workers and demoralised staff — never mind what we are doing to the patients.

A real increase of only 7·2% was bad enough but it will be even worse, going down, not up, to a 5·4% increase for 2003-04. I do not know whether any Assembly Member can walk into a local hospital or healthcare centre and tell people what he or she is going to do. They are cutting, and cutting and cutting. We need only look at the level of hygiene, the waiting lists, the patients on trolleys and the stressed-out workers who are just walking away. They feel — and they told us — that they cannot meet their professional standards.

This is not what people were promised, and I know that it is not the fault of the Minister of Health, Social Services and Public Safety. It is time that we stopped leaving it at the Minister’s door. I am also aware that the Minister of Finance and Personnel has done all in his power to deal with these matters. However, I ask him and the Executive to look at the matter again. We await the outcome of the September monitoring round.

I would also like the Minister to know that the Health Committee is trying to save money — he may not hear that too often. We are carrying out an inquiry into why 9% of outpatient clinics are cancelled, as that clearly wastes money. We are trying to find out if some of that money can be recouped for the Health Service. It has quite a lot to do with consultants cancelling appointments at short notice — I hope that it does not happen in psychiatry, Mr Speaker, but I hear it is happening right across the board.

I agree with Mr Shannon that we could also save money in community care. The statistics speak for themselves. If we had enough packages, we could immediately start to release some of the 150 patients who are in hospital beds only because they cannot move into the community. The Committee has calculated that, as the average stay in hospital is one week, 50 additional patients could be treated each week, which amounts to 7,500 patients a year. We must think about cost-efficiency and get a proper plan in place to co-ordinate services, save money and to put it back into the service, rather than constantly demanding more.

Are the Minister and the Deputy Chairperson of the Committee for Finance and Personnel satisfied with the Executive funds? I can see neither rhyme nor reason to them, and I cannot understand how some of those headings and bids ended up where they are. They could equally come out of mainstream departmental funds, and we could explain them much more easily. They do not sit easily under their current themes or with the infrastructure funds, in which substantial funds are set aside for the development of hospitals or schools. Those moneys are welcome, but they should not be part of the Executive funds; they should be in the departmental bids, so that we could scrutinise those budgets properly. Only three of the funds were up for bids this time; the other two were not. It is difficult to keep the entire Budget together, and Committees find it hard to see what Departments are doing.

The Department of Health, Social Services and Public Safety has fared badly, and I look forward to seeing whether the new cancer hospital at the City Hospital site will get funds under the infrastructure bid, which now seems to be the only bid that still has substantial funds in it. Perhaps, the cancer hospital should not have been funded from that bid in the first place. I would never support salami-slicing the block grant in that way.

To what extent have the Minister and the Chairperson and Deputy Chairperson of the Finance and Personnel Committee been able to make criticisms of the waste highlighted in audit reports? Have Departments been asked to explain themselves? One example of such waste is the huge amount of compensation that was paid out by the Department of Agriculture and Rural Development after the Department allowed its own herd in the research centre to become infected with brucellosis and had to replace it. That was a scandal that should not have happened, as the Northern Ireland Audit Office stated clearly in its exemplary report. Has there been a proper inquiry? Our Departments would have welcomed the £22 million that was spent on that, rather than seeing it go on something that will not even produce any benefits.

There is also a question over some departmental running costs. Why did the Department for Social Development need an increase of £20 million — 12% — over last year’s figure? There may be a reason why the Department of Culture, Arts and Leisure might require a 21% increase — it is still a new Department — but why would an established Department require such a huge sum for administration or running costs? I have already said that that Department wasted £1 million this year on unpublished consultancy reports. Neither Assembly Members nor the public had the benefit of knowing what was in those reports.

There are still major concerns, and we have a long way to go to get it right.

5.00 pm

To offer the Minister some sympathy: I supported his call — and I continue to support it — to address the issue of rates seriously. If the Assembly is to be responsible and mature it can no longer expect to meet departmental bids if it does not, at the same time, ask people to address the issue of rate increases seriously. I take issue with Seamus Close — he cannot ask for money while simply saying that there should be some tax-varying power. I hope that such a proposal could be sold to people if the Assembly could show where the money was being put, particularly if it could explain that a certain percentage was going directly into health and education. I have no doubt that that would make our jobs much easier.

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

I have listened to the debate, and for the first time everyone agrees about one thing — they are all looking for support from the Minister. I agree with what the Chairperson of the Agriculture and Rural Development Committee said about the draft Budget and how it affects the Department of Agriculture and Rural Development, particularly regarding provision for the implementation of an action plan for the agrifood industry.

There is one area that he did not cover — the prospect of an early retirement scheme for farmers. Members will know that it is a subject that I care deeply about. The Committee has also frequently stated its position that there is a genuine need for a retirement scheme and new entrants’ scheme. As recently as 6 July, the Committee put down a marker that assistance could be sought for such schemes through the Executive. As the Chairperson said, Executive programme funds are likely to be oversubscribed and in big demand. There is no provision in the draft Budget for the introduction of a retirement scheme, which is necessary if farming in Northern Ireland is to be successfully restructured. The vision group, which has been working this past six months and which was referred to by the Chairperson, does not support a retirement scheme. Any funds ultimately secured for implementing the group’s recommendations will not, therefore, go towards a retirement scheme.

There remains the hope that the Minister will be convinced that a retirement scheme is a constructive way of managing structural change. When the Committee met with the Minister on 12 October she explained that she had commissioned research on it that should be available next year. A year is a long time. I trust that the research will be closely considered. Retirement schemes are run in parts of the EU, such as Holland and France.

One of the main objections to such schemes is the cost. In June, the Minister quoted a figure of £30 million for a scheme involving 750 farmers. That is nonsense. There are schemes taking place in other countries and they are self-financing. All such schemes need is the backing of the Government and the Department of Finance and Personnel. Cheaper alternatives are a fact and must be pursued.

If, and it is a big "if", the Minister agreed to implement a retirement scheme, the main funding for it would come from modulation moneys, together with Treasury match funding of those amounts. This is money that has been skimmed off farmers’ direct subsidies and is matched pound-for-pound by the Treasury. It would effectively have no impact on the overall Northern Ireland Budget.

However, if there was a shortfall and modulation funding was insufficient to cover the cost of a scheme, I suggest that money could be found from the Budget. I am sure that fellow Committee members and other Members who understand farming would agree with me. In every other sector where recruitment difficulties are being experienced, such as teaching and medicine, the Government creates special financial facilities such as cheap, interest-free loans for housing for key workers, et cetera. A recent news bulletin reported that such incentives are being introduced to rectify a shortage of key sector workers in an area of England. Why should farming be treated differently? Farmers do not want anything for free, and they are prepared to pay back any money that they might borrow under a long-term low-interest loan scheme — they are not scroungers.

If the farming industry is to meet the demands of a growing European market, it must receive the support of the Government. Primary producers and the manufacturing sector are too often ignored, yet they are the basic wealth producers on which the service industries rest. If that attitude is not supported, economic decline will be inevitable. The vision group has called for

"a dynamic, integrated, innovative and profitable agricultural industry".

However, we cannot achieve that without the restructuring of farming. Only the loan scheme proposed by our Committee will achieve all that, and it is accepted that loans must be paid back. Farming needs the protection and the backing of the Government. For too long this matter has been kicked into touch by the Minister. We debated the matter last December, almost a year ago. The Committee has now decided to initiate a study by a team of academics, which will bury a live issue in a committee of so-called experts. As I said last year, we need action. The matter should not be put on the back burner — we need action today. The rest of Europe has no problems with such action, so why should we?

I welcome the improvements that will be brought about by budgetary increases. If we do not do enough to help the industry, we will only be playing about, tinkering with the side issues. Mr Speaker, given your farming background and your interest in the industry, you will know that if farmers do not achieve support we will be in trouble. Although many Members do not think very much about farming, it must be remembered that if one of the aeroplanes taking part in the terrorist attack of 11 September had hit its target there would have been a big dependency on agriculture. We must protect and take pride in the agriculture industry.

Mrs Courtney:

I welcome the opportunity to speak in the Budget debate. I will make points relating to the Enterprise, Trade and Investment Committee, of which I am a member.

In a recent Assembly debate on the safeguarding of industries in Northern Ireland, the Minister for Enterprise, Trade and Investment said that Northern Ireland faced its stiffest economic test in more than a decade. He also said that we must ensure that Northern Ireland is strategically placed to take advantage of the upturn when it takes place.

In the proposed Budget for 2002-03 there is a slight decrease in the allocation of funding to the Department of Enterprise, Trade and Investment: £7·7 million this year, £5·8 million next year, and £3 million the following year for the telecommunications strategy. The Department’s ability to spend £7·7 million this year has been held back for various reasons. It is therefore important that the Department be given end-year flexibility to carry forward underspending from this year into 2002-03.

There are other concerns, particularly in relation to Invest Northern Ireland, which is the body that is to replace the IDB, LEDU, IRTU and some aspects of tourism funding. We need to ensure that sufficient resources are allocated to Invest Northern Ireland for maximum effect and that regionalisation is top of the agenda. There has been an economic downturn with potential for job losses, particularly in the aerospace and airline industries. The Enterprise, Trade and Investment Committee is anxious to ensure that if in-year bidding is necessary, it will be successful.

The draft Budget also indicates a decrease in EU support for economic development. Approximately £870 million of European funding is available to Northern Ireland. The Enterprise, Trade and Investment Committee will be interested in how this money is allocated.

The encouragement of an enterprise culture in Northern Ireland is a stated objective of the draft Budget and requires new and renewed investment. This is particularly relevant at a time of economic uncertainty. The global slow down, together with the terrorist events in the United States, has already begun to affect Northern Ireland’s foreign and direct investment, trade and tourism adversely. It has already been noted that the most vulnerable sectors are those exposed to global export markets, such as engineering, information and communication technology and aerospace. In the current economic climate, we must put strategies in place to ensure that the economy remains fast-growing and innovative. The Department of Enterprise, Trade and Investment and its agencies have successfully promoted Northern Ireland as an attractive location for inward investment and will continue to do so.

The draft Budget shows that energy efficiency and the use of renewable sources will be supported by an allocation of £1·9 million. It may be that the greatest potential for renewable energy and electricity here will come from immature technologies, which will need grant support to achieve commercial viability. If this is so — and the Committee has seen renewable sources in action — we will wish to ensure that the Department bids successfully for additional support for renewable energy projects. The Department also made a bid for £2 million to enhance the North/South electricity interconnector. This was unsuccessful, and it will need to be re-submitted.

In paragraph 5.7 of the draft Programme for Government, recognition of the important role of local councils in inward investment is welcome. It is noted that work with universities, further education colleges, local councils and the private sector will secure investment in 20 knowledge-based industries each year. It is not said where they will be located, nor is there any reference to TSN in this sub-priority that might suggest that priority will be given to sub-regions with high levels of unemployment. I ask the Minister to take that into account.

In paragraph 5.6, on promoting entrepreneurship, innovation and creativity, it is expected that

"local councils will continue, through the Business Start Programme, to play a key role, particularly in encouraging potential high growth businesses while our universities and centres of excellence will play their part."

The business start programme aims for 600 new business starts by March 2005, and 120 high-technology, value-added spin-out and spin-in companies will be formed in research-linked incubator units. Twenty new and enhanced centres of research excellence will be established by December 2004. These centres are clearly expected to have a major impact on the future industrial structure of Northern Ireland through spinning and start-ups, numbering approximately 700 enterprises over the next three years. They will also, no doubt, affect inward investment opportunities in their catchment areas.

Paragraph 4.7 covers enabling the socially excluded to enter the workplace. Reference is made to 1,000 additional university places. This is most welcome. Travelling outside Northern Ireland to study places a heavy financial burden on those who must do so. The largest growth in forced emigrants has been among those in the less well-qualified categories that often correspond with those whose earlier educational experience was less adequate. However, local higher education places also sustain more local jobs in the higher education industry. I ask the Minister to apply TSN to the allocation of places to the various centres of learning in Northern Ireland.

In the Budget programme for the Department of Culture, Arts and Leisure, I note that £1 million has been assigned to the development of museums. As this represents an important part of the tourist package offered by urban areas, and as industrially oriented museums can also support local industry, can consideration be given to the establishment of a museum in the north-west to celebrate the clothing industry?

5.15 pm

It is also important to note that the Budget provision does not take into account possible major infrastructure projects, such as the recently announced natural gas pipelines and the provision of broadband telecommunications in Northern Ireland. Those will be considered under the Executive programme funds, and grants for the gas pipelines will probably arise in 2003-04 and 2005-06, not in the current budget year.

It is also noted that the Executive have identified the areas of regional development, education and health as being in need of special support. It is unfortunate that due to a lack of resources the introduction of free nursing care for the elderly has been deferred. That shows the tough decisions that the Executive have had to make and will continue to make. I support the motion.

Mr McHugh:

Go raibh mait agat, a Cheann Comhairle. I support the motion and wish to debate some points regarding all Departments, not just the Department of Agriculture and Rural Development. Some Members have already mentioned the importance of departmental priorities. Members will agree that outcomes should be more important than the functioning or costs of a Department. That is certainly what those outside the Assembly believe. However, the reverse applies. Departments hold dear their spending power and sustainability — at the expense of everything else that happens beyond their Department and in public.

The needs of different areas should be regarded by Departments as a higher priority than they are at present. There must be a change of mindset in how Departments prioritise their bids, what they do with their money after receiving their funding and how they spend their money.

West of the Bann, areas such as Fermanagh and south Tyrone — indeed all of Tyrone — have always been given low priority by all Departments. Investment policy in those areas must be examined in the light of recent job losses in Fermanagh. How much will be spent on trying to change the situation in the likes of Lisnaskea, or will it be forgotten about as time passes?

I have a question for the Department for Regional Development concerning roads. Recent meetings with the last rotational Minister gave little indication that Fermanagh and south Tyrone would be treated with any sort of priority compared with urban areas or those that normally receive a high level of funding. Members request that funding for public transport and rail be dramatically increased in comparison with that devoted to roads. That is a very nice environmental policy, but those in rural areas do not have an option. The motor car as the main form of transport is not just an option there; it is essential and will probably be essential for many years.

It is unlikely that any future Budget will see a great deal of money being spent on public transport or a rail system into the rural areas of Fermanagh and Tyrone in particular. It is a non-event; it will not happen. How many passengers are brought by public transport — by bus or rail — into Belfast city centre on a weekday? How can the system be improved to move people out of their cars and on to public transport? People have got the wrong end of the stick when they start pushing larger amounts of money into public transport at the expense of rural areas, particularly where the local people will have to depend on their own transport for many years to come.

The aggregates tax is an environmental tax that exists for the right reasons in the right places, but it is an anti-roads policy.

I suggest to the Minister that road projects in rural areas need to be prioritised now because there may not be the possibility of road budgets in the future. The environmental policy will become stricter and rural areas will be given a lower priority and it may be impossible for rural roads to be brought up to the standard of roads in eastern areas. Roads in urban areas such as Belfast and Dublin will be looked after in the future. I ask that rural areas be prioritised.

Sue Ramsey mentioned that at present the Department of Health, Social Services and Public Safety has a standstill budget. That is intolerable. Other Members have mentioned the prime importance of health. Individual Members have priorities, but health must come above everything. Waiting lists must be examined. Cancer sufferers in Fermanagh must travel to Belfast to receive treatment where there are long waiting lists. That happens on a weekly basis. I was told recently that the trusts and boards have no idea how much money they are getting to deal with winter pressures and expenses. We are close to that critical time.

Massive savings could be made through providing better community care. Monica McWilliams made the point that when cuts are made in community care the cost of acute services increases. People have accidents in the home because they do not have the proper care, equipment or facilities to meet their needs. When care is not given at an early stage, the later costs are vast.

The main priority of rural areas such as Fermanagh and south Tyrone is that of overall acute care and the sustainability of services. The Hayes review is heading towards final decisions and implementation. A large amount of the Budget is required to bring those services to the proper standard. Due to the lack of consultants wanting to move to those areas, there is a real danger that some services will either collapse on to one site at Omagh or Enniskillen or will collapse altogether. Some people might think that that might be a good thing for their particular empire, but it is not something we should look forward to. It is important to sustain present services and we need an increased budget to do so. As one Member remarked, it is important that health concerns are given priority over individual departmental concerns.

How is the Budget to be allocated? The Department of Finance and Personnel must stop "top slicing". It discriminates against rural areas by giving some £1·5 million each to the Southern Health and Social Services Board and the Eastern Health and Social Services Board at an early stage and dividing the remainder among other areas later. That is working against rural areas that are the most deprived in the Six Counties. Money must be allocated on an equitable basis.

I have a particular interest in agriculture and most of my concerns have been covered in the vision group’s report. The Chairman mentioned that we were all in agreement. However, I have not argued exactly the same line. There are issues in that document that do not require money and should therefore not be allocated for. However, a section of that report concerns the important area of rural development. The Department of Agriculture and Rural Development requires a budget that allows it to implement its priorities. It does not as yet have such a budget. Which parts of the document does the Department intend to implement, given that it does not have a budget for that in the coming year?

There is also a need to work across Departments to implement much of it, including planning and roads.

There has been a considerable increase in funding for disease control, but, as has already been mentioned, much of that funding has been wasted, which may be largely due to fraud. I must point out to the Chairman of the Agriculture Committee that fraud is not confined to just a few areas, as the DUP has been saying recently. That was on a narrow margin compared to the £22 million mentioned by Ms McWilliams. There are farmers who have made more profit from bringing the disease onto their farms than from ordinary farming — not just here but also in England, Scotland and Wales. The money could be better used in other areas. Why does this happen year after year? We should be getting to the point where there is eradication, rather than continually pouring money into a bottomless pit.

The Committee for Agriculture and Rural Development questions the commitment of the British Government with regard to their policies on the North/South element. How much money is to be spent, for example, on a benchmarking exercise to compare business practices here with those in the South?

Mr Armstrong mentioned early retirement for farmers, and it is feasible under match funding and even other self-financing methods which could be considered. It is vitally important that we have new entrants.

We do not want to face another foot-and-mouth disease outbreak. This one has cost the Department very dearly in time and in commitment to other issues which it should have been getting on with. We need to know how much of the budget will be spent on an inquiry. The cost will be considerable, but it is necessary if we are to avoid another crisis.

The Department of Agriculture and Rural Development may think that it is not its responsibility, but it needs to budget for advice to farmers regarding on-farm audits. The citizens advice bureaux provide this service at the moment, but do not have adequate funding. Farmers need help to prevent debt, and the funding for that should come from the Department rather than from local councils, which is ratepayers’ money. Certainly the Department could match the funding — that is something that is amiss with the bids. I hope that, if not this year, perhaps next, that aspect could be considered. Also, the issue of women in agriculture could be mainstreamed at some point in the future. Go raibh maith agat.

Mr McCarthy:

It is good to take part in a debate such as this, particularly when one compares it to the events of this morning. Perhaps it is because only the good, sensible and important people are left in the Chamber to take part.

I fully understand that the Finance Minister works under extreme budgetary pressures. I realise that the Barnett formula does not give us the expenditure that we in Northern Ireland need and to which we are entitled.

Nevertheless, with these limitations in mind, I can only conclude that this Budget is not what we would wish for.

5.30 pm

I reiterate the comments made by my Colleague, Mr Close, and by others that we should get our priorities right. As the Alliance Party’s spokesperson on health, I want to concentrate on health issues, as many of my Colleagues have done. First and foremost, the Budget fails in its provision for the Department of Health, Social Services and Public Safety. There is no increase to help with the very serious problems in that Department. Total expenditure may rise by 8·1%, but this does not represent an increase in the money available for the Health Service.

In the Minister’s own words, it includes a transfer of expenditure that provides no new spending power for the Department. There will be no money available for the Department to introduce new service developments. There are many needs in the community and, for example, dwindling resources for people with learning difficulties throughout Northern Ireland.

Commitments that were made in the Programme for Government will be left unfulfilled. It is to be regretted that the Assembly is now unable to introduce free nursing care for the elderly, despite having given its full approval to such a scheme some time ago. Who suffers from such a deferral other than the senior citizens and frail, sick people? That simply is not good enough.

This winter will bring the inevitable hospital bed crisis — it has already begun. Services will not improve, advances will not be made, and the consequences will be more pain and suffering caused by extended waiting lists for many of our ill constituents.

More money must be found, and it must be better managed. It must not come from the Minister’s back pocket as a result of some underspending. It must be upfront and immediate. Also, there must be greater flexibility so that health and social service funding can be more effectively and efficiently used. This may be a matter for the trusts. However, it has already been mentioned in the Chamber. For example, it is indefensible that a hospital service should be subject to severe additional costs as a result of bed-blocking when relatively small amounts of additional expenditure on care-in-the-community schemes could relieve the problem. In the Ulster Hospital up to 70 people are awaiting discharge, but they cannot leave because there are no community-care packages. This must improve immediately, and I shall be taking this matter up with the Minister of Health, Social Services and Public Safety.

I am pleased to see the increase in spending for the Department for Regional Development. A sum of £8·7 million is to be used to improve roads. That is something that must be done, and we have been calling for it for some time. The rural electorate depends upon good roads for access to health care. Therefore I am relieved by the commitment to maintain and improve roads. I hope that my constituency of Strangford will benefit from the increase in funding.

When does the Minister plan to find the funds to implement the commitment that he made a year ago? When does he plan to find the money to avert, rather than manage, the annual winter health care crisis? When will he produce a Budget that will help to improve the health system for everyone? We know that our Minister of Health has asked for increased funding to provide better health facilities. There are many other financial and budgetary concerns, but the quality of our Health Service should be our first priority.

Mrs Carson:

It is a delight to hear local politicians debating something sensible after the acrimonious debate this morning and especially debating how we spend our money.

I welcome the increase in the Department of the Environment’s budget from £100·8 million to £108·9 million. That increase is a recognition of the pressures on the Department and will, I hope, support the Department in meeting its objective of improving the quality of life in Northern Ireland by protecting the environment through sustainable development and planning policies, promoting efficient local government and through improving road safety.

Further areas of special scientific interest must be designated and staff provided to monitor fully the existing sites. More finance is needed for that, otherwise the Department’s objective is only fine words.

The 12·5% increase in the previous expenditure for road safety is also welcomed. Road safety is an important part of the Department’s work. The number of vehicles on the road increases each year, and there has been a 1% increase from 1999. Unfortunately, the increase in the number of road vehicles has been accompanied by an increase in road accidents. During 1999-2000 and 2000-01, road traffic injuries increased by 7%, road casualties rose by 5% and fatalities as a result of road accidents rose from 150 to 163. We cannot have that. More must be done with increased spending to reduce those levels. A sum of £1·4 million was mentioned for road safety. However, more money should be spent, with an emphasis on the training and education of young persons before they even get behind the wheel of a car.

I welcome the emphasis on waste management and the moneys that have been made available to enable the Department of the Environment to continue its programme of waste management and pollution control. There is a statement that ensures that Northern Ireland continues the work towards meeting EU Directives on waste management. The Budget allocation provides the Department with an additional £3·4 million on the previous Budget. However, I am concerned that £1·6 million has been reallocated from departmental resources to meet new pressures in that area. It sounds like robbing Peter to pay Paul.

Provision has been made for local government services to meet fully the cost of councils’ de-rating policies and to provide resource grants to poorer councils. However, because of EU Directives, there is a reduction of £2 million in that grant. That reduction will be acutely felt in my constituency of Fermanagh and South Tyrone. The resource grant for Dungannon and South Tyrone Borough Council will be reduced by £109,000; Fermanagh District Council’s grant will be reduced by £127,000.

That will inevitably lead to a domestic and non-domestic rate increase and will put more pressure on councils, on the commerce of the area and on the residents. That will be most unwelcome, because my constituents in that area are already under great economic pressure due to the differential in the exchange rate with the Republic of Ireland. That differential has hit petrol stations, the quarry industry and the textile industry. They have all felt it greatly. I shall not mention agriculture because it has already been debated.

Fermanagh has been particularly hard hit because of substantial job losses over the past year. The Department documented £0·9 million for planning; I expect that that is for ongoing planning pressures. However, I ask the Department to find more money to co-ordinate planning policies across Northern Ireland in order that there is a similar approach to planning permission in all areas. I hope that these points are considered, and I welcome the opportunity to put them forward.

The Chairperson of the Committee for Regional Development (Mr A Maginness): The Committee welcomes the significant increase of £42 million — representing 8% from 2001-02 — in the Department for Regional Development’s budget. That increase is a recognition of the years of underfunding that have occurred in our roads, water and public transport. Poor infrastructure has had an adverse affect on many aspects of our lives, and the situation will be rectified only through the provision of proper levels of sustained funding. This increase is a recognition that this must be done and that it will be done.

The importance of our infrastructure cannot be overestimated. The road network is critical to our economy. Ninety-nine per cent of Northern Ireland’s goods are transported by road. A well-maintained road network reduces the time taken to transport freight. That in turn helps to improve business profitability, competitiveness and efficiency. Improvements in the road system will also help to reduce the number of road accidents; something that we all acknowledge is unacceptably high.

The Regional Development Committee welcomed the announcement by the Office of the First Minister and the Deputy First Minister that an additional £40 million will be made available for the trans-European network routes, Larne to Belfast and Newry to Dundalk, as well as a significant contribution to the upgrading of the Westlink. That is very important, not just for Belfast but for the whole Northern Ireland economy.

The Committee would like to see the targeting of similar funding at other trans-European network routes in Northern Ireland, particularly those in areas not serviced by the rail network. I accept Gerry McHugh’s point that parts of this region look longingly at the money given to the development of the railway network.

Improved public transport helps to ease congestion by making people less dependent on their cars, and the extension and improvement of cycle lanes provides a healthier option to driving. Furthermore, reliable and accessible public transport will make a positive contribution to the promotion of social inclusion — a key priority of the Executive. This is particularly noticeable in rural areas where up to 30% of households do not have access to a motor vehicle.

Undoubtedly, investment in our water pipelines and sewerage systems will help to improve water quality and to avoid health risks such as the cryptosporidium outbreaks experienced in the past two years.

I could mention many other benefits, but I do not want to take up the House’s time by reciting a long list. However, I seek to explain the importance and benefits of a properly funded and maintained infrastructure to all of Northern Ireland society. Page 39 of the draft Programme for Government states:

"The provision of infrastructure and major public services such as public transport, roads, water and sewerage is essential for the social and economic well being of the region."

I fully endorse that. The Regional Development Committee wholeheartedly agrees with this statement. Improving our infrastructure must be a key priority for Government. There still exists an approximate £100 million backlog in road maintenance, while the Water Service also requires major capital investment to update the pipelines and sewerage systems. If we are to achieve our objective of a socially inclusive society, we must provide an efficient, accessible and affordable public transportation system.

As a positive step towards that goal, the Executive have earmarked £48 million in 2002–03 for the purchase of new train sets.

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As with roads and water services, investment in the public transportation system is playing catch-up after many years of underinvestment. New train sets will undoubtedly make train travel more appealing, and the proposed Railway Safety Bill will help to ensure high standards. We cannot be complacent; there is much more to be done if rail travel is to become a major form of commuter transport. More money must be invested in train sets and in the improvement of access and facilities. The same is true of our buses.

By encouraging commuters out of their cars and into trains and buses, we shall alleviate congestion, particularly in the Belfast metropolitan area, as well as contribute to the economy and the environment. A reliable and efficient bus network is especially critical to those people who live in rural areas. There are genuine concerns that rural bus services may be significantly reduced if private operators continue to target the more profitable routes, thus forcing Translink to reduce services on the less profitable rural routes. Consequently, the Committee for Regional Development encourages Government to provide additional funding to improve the Northern Ireland bus fleet and to aim at reducing the average age of buses in line with the UK target.

The Committee for Regional Development is conscious of the funding pressures on the Northern Ireland block, and it believes that new approaches to funding should be considered. The possibility of leasing trains for public transportation and the development of the railway network should be considered. The Committee knows of leasing arrangements in the UK. If leasing were introduced, it would release funds for investment in other infrastructure improvements.

I note that health expenditure has increased by about 8%. That represents more than 40% of the Budget. However, standards are falling; we see underperformance in practically every area of the Health Service. The public should know why that is happening in spite of the fact that health services receive the largest share of the Budget and have received an increase in spending. There must be an explanation; it cannot simply be the lack of funding.

There are 19 trusts in an area with a population equivalent to that of Greater Birmingham. Is that the most efficient way to administer the Health Service? Does that not prevent the efficiencies that we desire? Does that not eat up valuable money and resources that we need to apply to health and to other areas? I have no answers to those questions. However, I pose the question that people are asking — if so much money is spent on health, why do we not see the results?

The Chairperson of the Committee of the Centre (Mr Poots):

I apologise for my poor attendance at this debate. I may be unable to stay because a school in my constituency has been threatened with closure, and there is a meeting about that tonight.

The Committee of the Centre scrutinised the draft Budget at the beginning of October and has discussed several concerns with the junior Ministers. The concerns centred on the approach that the Office of the First Minister and the Deputy First Minister had adopted towards the bidding process and the inadequate funding of several important programmes. The Committee noted that the draft Budget that was presented to the Assembly on 25 September had been developed in the context of the priorities and principles of the Programme for Government. The Committee is not convinced that the Office of the First Minister and the Deputy First Minister will be able to deliver on its Programme for Government priorities with the funding in the draft Budget.

During the discussion with the junior Ministers, the Committee was advised that much of the work of the Office of the First Minister and the Deputy First Minister is of a cross-cutting nature and deals with many sensitive issues. The Committee endorses that assessment, but it adds to our concerns about the Office’s ability to make progress on work in many high priority areas. There should have been a more vigorous approach to bidding to secure baseline funding, at least, for the children’s commissioner post, the review of public administration and the implementation of the cross-departmental strategy for the promotion of community relations.

The draft Budget provides for increases in expenditure in five areas: £300,000 for work on the Single Equality Bill; £200,000 for the Civic Forum; £200,000 for the Northern Ireland Bureau in Washington; £100,000 for TSN research and evaluation; and £100,000 for the establishment of a new strategic issues unit. The Committee questions the priority given to several of those areas and the benefits that that additional funding will provide. We also question whether the right balance has been struck between those and other high priorities, such as the Economic Policy Unit.

The Committee was concerned to learn, during the discussions with the junior Ministers, that the draft Budget did not contain sufficient provision for an increase in the cost of running the Office of the First Minister and the Deputy First Minister. There will be a shortfall of about £200,000. The Committee was advised that, in order to meet the costs, the Department would, in the first instance, consider the outcome of the ongoing staff review. The Committee welcomes that. However, the Minister should explain how the pressure will be dealt with. For example, the cost of the children’s commissioner is estimated to be between £1 million and £2 million. The review of public administration may cost £2 million, and a second permanent secretary post for the Office of the First Minister and the Deputy First Minister has recently been advertised. How will those costs be met without cuts in high priority programmes?

The Programme for Government gives a target date of June 2002 for appointment to the post of children’s commissioner, but the Budget does not contain any funding for it. The junior Ministers said that they might be able to get money from the Executive programme funds. However, a considerable proportion of those funds has already been used in the Budget, and any funding that might have been expected to come from the Executive programme funds is already accounted for.

In the past, substantial Executive programme funds came from the Department of Enterprise, Trade and Investment as a result of the declining need for large-scale investment in attracting jobs. However, because of the worldwide downturn in the economy and the effect of the events of 11 September, that money may not be available to the same extent, and the Executive programme funds will come under greater pressure.

The need for a children’s commissioner may not be considered to be so great if there is less money available from the Executive programme funds. There are also continuing needs in the Health Service that will have to be dealt with. I want to highlight that potential problem now. The Office of the First Minister and the Deputy First Minister has not presented the case for funding for the children’s commissioner post well enough.

From the outset of the Assembly, when 11 Departments were created, a radical review of public administration was promised to offset the cost of having five additional Departments. We were promised root and branch reform, that the quangos would be cut to an absolute minimum and that the core issues would be examined. However, we have dragged on and on, and, to date, we have no funding set aside for the review of public administration. How can we have a proper review if we do not dedicate any resources to it? That issue will not be dealt with in the Assembly’s lifetime. However, it must be dealt with — a radical review of public administration is important for the credibility of this institution, although it does not have much credibility at the moment. We want those programmes to begin without further delay.

The Committee was pleased to learn that a late bid of £750,000 for Executive programme funds for victims was lodged after we raised the matter with the Ministers. It was alarming that the Committee knew that a second tranche of Executive programme funds was available, of which neither of the Ministers appeared to be aware. It was only when the Committee raised the matter with the Ministers that the bid was lodged. I hope that it is successful. The victims’ unit needs support; it is a big issue, and we want the victims to get as much support as possible.

The Chairperson of the Committee for Education (Mr Kennedy):

I am pleased to participate in this important debate. Mr Speaker, I admire the patience and long-suffering not only of the Deputy Chairperson of the Committee for Finance and Personnel and of the Minister of Finance and Personnel, but also your stamina. You are showing remarkable endurance.

Dr McDonnell:

What about the rest of us?

Mr Kennedy:

Mr Speaker, you have the honour to listen to the rest of us. I acknowledge the efforts of Mr Leslie on behalf of his Committee. Those efforts have resulted in a more satisfactory amount of time’s being made available for Committees to consider this important matter in detail and to carry out their statutory duties. I hope that similar arrangements are put in place for the next round of Executive programme funds. I ask the Minister to comment on that.

My Committee welcomes the additional £20 million allocated to education over and above the original indicative figures. That represents a real increase of 4·8% on this year, which will enable most, but not all, the inescapable education bids to be met. My Committee has considered proposals from the Department of Education to cover those inescapable bids that have not been met. Those amount to £4·6 million. In general, my Committee supports the proposals. However, it does not wish to see a reduction in the maintenance budget for schools for longer than a year, as that would have an adverse effect and, in the longer term, could lead to increased capital costs. As Members are aware, we already face a huge capital-building problem.

I am pleased that the Executive acknowledge that as education is one of the services faced with the most difficulties it must be given high priority. My Committee believers that education must be given top priority because it is a foundation for a strong, vibrant and growing economy in Northern Ireland and that funding it is a long-term investment in the future of Northern Ireland. The pressures that schools face are very great and therefore the proposals in the draft Budget are essential.

The Education Committee wishes to highlight that this funding enables schools to meet only identified, inescapable pressures, and to mark time. It does not provide any scope to improve or expand services, which is a concern. We are also concerned that some schools appear to be struggling on an ongoing basis and are not receiving the core funding necessary to provide essential services and the core curriculum for all pupils. This was a recurring theme during evidence taken by the Education Committee in respect of the primary and post-primary funding arrangements.

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The Committee will therefore be looking for a substantial increase to improve school budgets in the next comprehensive spending review. In my view that will also be crucial if the reviews of LMS funding and post-primary education are to be brought forward.

The Education Committee is firmly of the view that early learning, early intervention initiatives and capital building investment must continue to be given a high priority for funding. The draft Budget will enable the pre-school initiative to continue, but it does not allow for expansion or improvement beyond what was already scheduled to take place. Members found that extremely disappointing. Similarly, the small increase for capital spending will not allow swift progress in addressing the problems with school buildings.

Given the amount of money spent on education administration, the Committee is concerned that there has been no clarification, or detailed timescale, produced for the review of public administration; a point touched on by other Members. The Executive must take this forward as a top priority, and the review must begin as quickly as possible to enable important decisions to be taken urgently. The Committee believes that an evaluation of the effectiveness and efficiency of all non-school activities must be carried out to ensure that the Department of Education focuses on the key priorities. The Committee also recommends that further work be carried out to establish clearer links between public service agreement and service delivery agreement targets.

The recent assurance given by the Minister of Finance and Personnel to the Assembly that he remains determined to seek improvements to the Barnett formula is welcome. The application of the formula has had a significant affect on the allocation of money to schools, and it raises issues of basic equality. Northern Ireland schools perceive that they are being treated less favourably than schools in England, and this must be addressed.

The Education Committee welcomes the extra funding for education provided in the draft Budget. This is clearly in line with the Programme for Government priorities and is an investment in the future of our children and our economy. However, we are disappointed that this level of real funding will enable schools and education initiatives to meet only existing pressures, and to mark time. It will not enable improvement or expansion of the services to take place. However, we endorse the motion.

The Chairperson of the Committee for Health, Social Services and Public Safety (Dr Hendron): We are witnessing the slow disintegration of important aspects of the Health Service in Northern Ireland, and previous speakers have mentioned that. The morale of patients and staff is at an all-time low. Waiting lists are increasing, and the unacceptable practice of patients being placed on trolleys continues. In many areas, service availability fails to meet demand. Recently Monica McWilliams and I visited the Ulster Hospital’s accident and emergency and intensive care units, and we were appalled at what we saw. Patients were on trolleys and sitting on chairs. No more trolleys were available, and that was a daily occurrence. Staff members were under so much pressure that they could not deal adequately with patients.

The position is the same at accident and emergency departments throughout Northern Ireland. If extra funding is not found, then the closure of accident and emergency departments at times is a distinct possibility in the future. The Royal Victoria Hospital is the main trauma hospital for Northern Ireland. In Northern Ireland there is meant to be cover for major trauma every day, seven days a week. A senior consultant recently told me that there is now only adequate cover every other 24 hours. I cannot go into details, but that is a serious situation.

Elective surgery is being cancelled routinely in many hospitals because of a shortage of beds. There is also a chronic shortage of specialist theatre nurses in areas such as orthopaedics and neurology, with the resulting cancellations of theatre lists. Cancer patients are regularly inconvenienced by the breakdown of old equipment at Belvoir Park Hospital, and the funding has not yet been identified for the planned regional cancer centre at Belfast City Hospital. The saga of the planned regional maternity hospital also continues, even though the Jubilee has been closed and demolished some time ago.

The Committee is greatly concerned that the annual percentage increases in health spending over the next two years are over 2% less than those in England. In 2002-03 the figure is 7·2% as opposed to 9·3%, and in 2003-04 it is 5·4% as opposed to 8%. The bulk of costs are driven by developments in England, such as in the areas of pay, drugs and clinical and other standards. Unless there is match funding, there will be a continuing deterioration in the levels of service here compared to those in England.

None of the figures takes into account the higher levels of need and demand in Northern Ireland, compared to those in England. My Committee fully supported the Minister of Health in her bid for an extra £122 million, and it is greatly concerned that only £31·6 million was allocated. Although it was hoped that the latter figure would cover essential expenditure, it is now apparent that the cost of junior doctors’ pay will be £3·5 million more than was estimated, and that the care cost for people with learning disabilities will be an extra £2 million.

The total inescapable bids are therefore £37 million — some £5 million short of what has been allocated. The remaining £91 million was to be for developments to help the Health Service to maintain its current levels. It has been noted by the Committee that the overall spending for 2002-03 is proportionately on a par with the current year. There is not, therefore, a proportionate increase in the health share of the Northern Ireland block, despite the ever increasing demands. In his Budget speech to the Assembly on 25 September, the Minister of Finance said that the Executive had come

"to the view that health, education and roads were among the services that face the most acute difficulties".

I pay tribute to the Minister and his Colleagues for giving that emphasis. Nevertheless, while I appreciate that all Departments need more money, it is time for all of us — and for the Executive in particular — to sit up and look at the current situation in the Health Service.

We are concerned that the draft Budget will do nothing to reverse the increase in waiting lists. It is alarming to note that the recent draft Programme for Government has a target, by March 2003, to maintain the waiting lists at the March 2002 level.

No one knows what the latter figure will be, so it is not possible for my Committee to accept such a target. The trend is upwards — the latest figure is 54,000. The first Programme for Government, published earlier this year, had a figure of 48,000. That was to be reduced to 39,000 by March 2004. Clearly, that target will not be met, bearing in mind the current spending proposals for the next two years.

Another major problem is the bed-blocking system. There is no extra money to provide sufficient community-care packages. With an average stay per patient, other than for those requiring community-care packages, of approximately seven days, it is estimated that the waiting list could be reduced by at least 7,500 per year if that problem could be solved.

I welcome the fact that my Colleague, Alban Maginness, talked about the structures of the Health Service. There has also been talk about the review of public administration. We have raised that issue here before. The review of public administration seems to be years away. The Health Service cannot wait that long. I urge not only the Minister present, but the Executive, to co-operate and encourage the Minister for Health, Social Services and Public Safety to at least take an initial look at the structures of the Health Service. Our Committee persuaded Dr Maurice Hayes in his acute hospitals report to look at those structures.

The point has already been made that there are 19 trusts for a population the size of Greater Birmingham. The Committee also believes that free personal care for the elderly should be made available. It is most concerned therefore to note that not only is this service not to be provided, but that free nursing care is to be deferred. With the prospect of even fewer available resources in 2003-04, it appears that free nursing care could be a long way off.

I have already mentioned the regional cancer centre. We all know the number of people in Northern Ireland who are dying of cancer. Cancer death rates will soon be higher than coronary artery disease death rates. We have had a number of meetings with people from Belfast City Hospital and Belvoir Park Hospital. We have visited both centres; we visited Belvoir Park Hospital quite recently, and I sympathise with the Minister of Health, Social Services and Public Safety regarding funding for Belvoir Park Hospital. It is going to take three years to build the dedicated regional cancer centre. In the meantime, should the Minister spend money on it, or should she wait for the new unit in Belfast City Hospital? It will take three years to build the new unit in Belfast City Hospital, but that is three years from the date when the financial package is worked out. I understand that that package has not yet been worked out.

Monica McWilliams made reference to the infrastructure funds. In our last meeting with the Minister, we put great emphasis on those funds. Over the next couple of years, £51 million should be made available. I therefore hope that those funds will be used, and that all Ministers in the Executive will support the Minister of Health, Social Services and Public Services in freeing those funds for the building of that cancer centre for all the people of Northern Ireland.

I mentioned free personal care for the elderly. There is also a great need to find funding for many facilities and services, including £1·1 billion for the implementation of the acute hospitals review.

Members of my Committee and I are unhappy with the whole overview of health spending. I appreciate the massive job that the Minister and her Department have to do. We understand that, but I sometimes get the feeling that with all the boards and trusts, people seem to be going round in circles. Of course there is a huge shortage of funding, but it is difficult to see how people’s health would be improved even if funding were increased. Our Committee has discussed whether we should ask the Comptroller and Auditor General for Northern Ireland to examine the Health Service in that regard. I am not sure that we have the right to do that, but we have asked our Clerk to look into that matter.

Even if the Department’s budget bid of £122 million had been fully met, the standard of service for the people of Northern Ireland would be lower that that to be provided in Scotland and England. With only £31·6 million being provided for 2002-03, the service must fall even further behind here. Our Committee is therefore concerned that whatever extra funding for health is announced in England, the Northern Ireland share does not go directly to the Health Service here. It is redistributed through the Northern Ireland block, and invariably the full amount is not allocated to health. There is a question mark surrounding that; I am sure the Minister will clarify the matter. This would result in Northern Ireland falling further and further behind comparable standards of service. I respectfully ask the Minister and his Colleagues in the Executive to declare that the Health Service is the number one priority in Northern Ireland.

The Chairperson of the Social Development Committee (Mr Cobain):

James Leslie said at the beginning of the debate that, along with other Committees, the Social Development Committee formally responded to the Finance and Personnel Committee on the draft Budget for next year. The element of the draft Budget with which we are specifically concerned is the suggested overall increase by 8·6% in the Department of Social Development’s budget. On the face of it, such an increase is not bad, until you note that the departmental running costs will have increased by almost 12% this year. The disparity in these increases seems inappropriate, given that the Department’s aim is to tackle social disadvantage and to build communities.

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The Social Security Agency provides front-line services, and the Committee acknowledges the difficult role it plays, but we are concerned about the continued increase in its running costs. The administration of the benefits system should run smoothly, and those who are entitled to benefits should receive the correct level of financial support at the right time. The Committee has been told that the agency required short-term investment to make efficiency savings through measures that would also improve levels of service. I hope that the increase for next year will lead to efficiency savings, and the Committee has urged the Department for Social Development to ensure that it does.

The Assembly will not be surprised to learn that the Committee has again felt the need to register concerns about the proposed allocation of funding to tackle fuel poverty and housing needs. The Warm Homes Scheme is a one-off capital cost. It has no recurring implications. If it were to be properly and urgently funded, it would have positive effects not only on the standard of housing, but on people’s health and well-being. There would be consequential savings for the Department of Health. I urge the Minister of Finance and Personnel and his colleagues on the Executive to think long and hard about that.

The Executive and the Assembly claim to be working for the most marginalised in our community, and towards equality. Are those who live in social housing are not among the most marginalised in this society, do they not deserve help? Is it right that people in social housing should have to endure longer waiting lists for the replacement of Economy 7 and room heaters? Is it right that kitchen and bathroom replacement work should be deferred because of a shortfall in the budget. I do not think so, and neither do my colleagues on the Social Development Committee.

We should not overlook the fact that my colleagues on the Committee come from parties other than mine. Like me, they have constituents to answer to. Our opinions might differ in some regards, but we are united in the view that the housing element of the Department for Social Development’s budget must not be allowed to decline. Constituents who are already socially excluded and disadvantaged will remain so if this Budget is adopted.

Much has been made of the housing strategy for North Belfast, the constituency of three Social Development Committee members and the recently reinstalled Minister for Social Development. However, no provision for that strategy is made in the draft Budget. That concerns us all, and the Committee has drawn the matter to the attention of the Finance and Personnel Committee. Recently, the former Minister for Social Development, Mr Morrow, made a statement in Belfast Castle in which he promised that the £137 million for the north Belfast strategy had already been acquired. That does not seem to be the case. I urge the Minister for Finance and Personnel to ensure that that money is made available over the next six or seven years to regenerate what was described by an independent survey as "the worst housing in western Europe."

I welcome back Mr Dodds to his ministerial position, and I assure him that the Committee will continue to press him on this and other issues. He can also expect to rely on our support in his bid for a decent housing programme. During his opening remarks, the Deputy Chairperson of the Finance and Personnel Committee also mentioned the Executive programme funds and the continued lack of consultation in that regard.

I raised that matter with the Office of the First Minister and the Deputy First Minister in April. In a written reply to AQO 1345/00 I was assured that there would be proper and early consultation. Clearly, that did not happen. I accept that we can and should be proactive in encouraging the Department, but the Committee should not get into the game of putting together detailed proposals. We do not have the resources to do that, and it is not our role. However, had the Social Development Committee been consulted, we would have encouraged, indeed urged, the Social Development Minister to seek Executive programme funds to tackle fuel poverty more extensively and to address the growing problem of homelessness.

Mr Byrne:

I congratulate the Deputy Chairperson of the Finance and Personnel Committee on tabling the motion, the Committee members on their efforts, and the Minister of Finance and Personnel and the Executive for consulting the House on the stages of the draft Budget and the draft Programme for Government.

I am pleased to be able to discuss the draft Budget today in spite of the attempts on Friday by a small minority of Members to derail the institutions and to subvert the will of the people. In the words of the draft Programme for Government, the thrust of this Budget is to "make a difference", and the Budget lives up to that commitment in many key areas. I will comment on a few issues.

First, I welcome back Mr Peter Robinson as the Minister for Regional Development. I hope that this time he will be allowed to stay in office for as long as the previous incumbent, his Colleague Mr Campbell. In general I welcome the increase by 14·8% in the allocated budget for the Department and the planned expenditure of £538 million on roads, transport, water, and sewerage infrastructure.

During direct rule the North’s infrastructure was developed unevenly and was concentrated primarily in the north-east of the region. That has led to a sense of social exclusion and an infrastructural deficit in other parts of Northern Ireland. Now that we have devolved power, the improvement of the North’s infrastructure must take place in a balanced fashion throughout the region, so that all of our citizens have equal access to good quality roads, transport, water, and sewerage services, and also to develop the competitiveness of the region’s economy.

I am pleased that an additional £8·7 million will be made available to the roads programme to avoid any reductions in planned service levels and to compensate for the effects of the aggregates tax. The capital schemes to improve some key strategic routes are also welcome. That is vital in attracting inward investment, enabling local firms to expand and enhancing safety for motorists.

The improvements to the A4 between Ballygawley and Dungannon, a trans-European network status (TENS) road, which will be financed by the Executive programme funds, are most welcome. However, I remind the Department that other important routes should not be overlooked, such as the M2/A5 TENS road, which should also be upgraded. In the constituency of West Tyrone, we have neither a mile of motorway nor a mile of dual carriageway.

I also welcome the £48 million for the purchase of new railway rolling stock. The railway network in Northern Ireland has suffered from serious underinvestment for many years, and that has compromised efficiency, passenger comfort and safety.

I am pleased that the Department of Employment and Learning’s budget will increase by 6·1%. I welcome, in particular, the additional £37·3 million that is designed to increase the number of further and higher education places, as it is important for the development of the economy that we encourage more students to remain in Northern Ireland. The additional money allocated to higher and further education and student support includes resources to provide for the expansion of further and higher education places. It will also promote access to these sectors through improved student support measures that target those on low incomes and those in need of additional assistance, such as childcare support.

Improvement in the skills level of the workforce is important to create a vibrant economy, but it is also important to ensure that resources are properly targeted so that people such as the long-term unemployed are not exploited. Therefore I welcome the Minister’s recent decision to conduct a review into the individual learning account (ILA) scheme which is open to possible exploitation by some unscrupulous ILA providers. Owing to the large number of adults in the North who lack basic literacy and numeracy skills, it is important that we implement a skills programme that encourages lifelong learning — it must be properly resourced and targeted to those most in need.

I am concerned that the planned budget for the Department of Enterprise, Trade and Investment for 2002-03 will decrease by 1·6%, especially given the effects of the events of 11 September on Northern Ireland’s aerospace industry and the general economic slow down that we are experiencing. However, I am pleased that the Executive have given a clear commitment to increase investment significantly should the need or opportunity arise.

I also welcome the planned increase of 3% in the Department of Finance and Personnel’s expenditure. It is important for the Department to be properly resourced so that it can provide effectively for the range of services to other Departments. The commitment to complete the major reviews of promotion and recruitment to senior positions in the Civil Service, a review of accommodation policy and the decentralisation of Civil Service jobs is particularly welcome. The decentralisation of Civil Service jobs, as I have previously said here, is something which the SDLP has consistently lobbied for over the past two years. The SDLP believes that the Executive should lead by example and relocate entire sections of Departments from Belfast to other main urban hubs. Such a policy would help to achieve more balanced growth beyond Greater Belfast.

I welcome the overall 7% increase on departmental spending programmes compared with 2001-02. I have some concern about the £48 million earmarked spending within departmental budget plans but which is coming from anticipated monitoring round reviews which take place quarterly. There is concern that some double accounting has gone on.

I am also concerned about the £2 million cut in local government spending for the incoming year, particularly on how it affects some district councils. There is concern among some of them. Smaller councils are particularly concerned that they are expected to bear significant cuts in their central government contribution. Based on last year’s percentage local government grant, Omagh District Council will suffer to the tune of £109,000, Strabane District Council, also in my constituency, will lose to the tune of £120,000, and some of the other smaller councils will lose between £65,000 and £100,000. Many of the smaller councils have a low district rates base of revenue income. It would be bad if some of them were to lose out now when we are trying to implement new TSN.

I welcome the fact that the draft Budget provides for a 3% increase in overall departmental expenditure and that the Executive have made a commitment to ensure that new TSN will affect policy decisions across all Departments. New TSN and the statutory equality legislation are essential tools which should inform spending decisions in the eleven Departments and ensure that all Departments deliver upon commitments given in the draft Programme for Government to create a cohesive, inclusive and economically vibrant society.

6.30 pm

The Minister of Finance and Personnel (Mr Durkan):

I am grateful for the opportunity to contribute to the debate. It is a valuable way of hearing and considering the issues that concern all Members in relation to next year’s spending plans. I am sure that those who have taken part in the debate, and all those who contributed at Committee level, will join me in thanking the Committee for Finance and Personnel for the efforts it has made, and will continue to make, in drawing all those issues together, not least those that were raised during today’s debate.

The draft Budget was developed to deliver the Programme for Government. The allocation of resources proposed in the draft has been designed to secure the objectives and priorities of the programme. I have listened carefully to the contributions made to the debate, just as I listened carefully to the points that were made to me in questions after my original statement. With my Colleagues in the Executive I will reflect on the issues and concerns raised by Members today and also in the long-term consultative feedback that we will continue to receive.

We will also look at any constructive suggestions that have been made, particularly at Committee level. When the Committee for Finance and Personnel prepares its conclusions it will find those suggestions helpful in reaching a better understanding of the full range of opinions that have been expressed in the Assembly and in Committees. I look forward to the report and to the Committee reaching conclusions and recommendations based on the exhortations the Assembly has heard today.

Some Members referred to the fact that we produced the draft Budget earlier this year than last, allowing more time for consideration. We also used the Executive position report to set out many issues and questions for the Assembly and the Committees. It was also made available for public consultation. The Executive position report was exactly the same document that was made available to the Executive, to the Assembly and to the wider public within days of Ministers receiving it.

The process has been more open and transparent than it was before, and that is only partly due to the shift of dates for the draft Budget. In future, Executive position reports could benefit from Committees focusing more sharply than they were able to this year on the issues that have been reflected here. Many of those questions were not particular to each Committee. Many concerned key priorities for all Committees to address. I hope Members will reflect on the points that they have recommended to Ministers. They should not simply look to their own Departments but to the full range of services and broader range of responsibilities of the Assembly and its Committees in their consideration of these matters.

The revised Budget will be introduced on 3 December 2001. It will include some clarification and adjustment of the figures that go with the territory in an exercise such as the draft Budget. The Executive will consider whether changes could be made to improve the balance between spending areas. The views of the Assembly are important. However, with a fixed departmental expenditure limit, any increase will be offset by a corresponding decrease. All of us need to examine departmental planning figures for savings that could be redeployed. It is an important principle that money not required for the purpose for which it was originally allocated should be made available for reallocation by the Executive and the Assembly.

We have to use our limited resources in the best possible way and ensure that action is taken to improve efficiency and effectiveness. Actions must be targeted on a priority basis; a fact constantly emphasised in the Programme for Government and in the Budget. I am glad that it is increasingly being emphasised in the Chamber, and that people are not questioning us on what we are trying to do but on whether we are succeeding and if we are trying hard enough. That is the focus the Assembly should be bringing to bear on these issues.

We need to work together to maximise our advantage — if such it is — in relation to the Treasury. We must also ensure that lessons learnt from the audit process are used to improve value for money, as several Members have already mentioned. It is important that Committees follow up on areas that the Public Accounts Committee has highlighted as requiring room for improvement. That would ensure more joined-up scrutiny as we move towards the audit and accountability legislation. It would ensure that areas that, as Ms McWilliams said, have been the subject of a report by the Comptroller and Auditor General, and which have in turn been considered by the Public Accounts Committee, are factored into our Budget considerations and that the reports are not just disappearing. It would show that we are checking that the recommendations are being followed. The Department of Finance and Personnel is meant to monitor the situation, but there is room for improvement and joining up the scrutiny role of the Executive. Departments may not welcome that, but it would be helpful.

I hope that Members appreciate that the Executive have to be convinced that the benefits of any proposed changes will outweigh the sacrifices that have to be made in other service areas. Many Members have said that there should be only one priority and have then proceeded to speak about others. They have welcomed the bigger increases that other Departments have received compared with the Department that they were complaining about. When speaking about priorities we need to be using that word more in the singular if we are to be serious about our efforts.

We are working in a relatively benign context. Mr Leslie referred to the departmental expenditure limits (DEL) as set by the Treasury, which show a rise for 2002-03 of 5·8%, or around 3% above general inflation. I recognise — and several Members have mentioned — that many of the costs that affect public services are rising at a much faster rate than general inflation. No one can make a special claim, and it should be no political boast for the Executive or myself, when some of these costs rise at a much faster rate than general inflation. The same argument applies equally when people make a case for inflation-busting rate increases because those increases are to support the additional expenditure on public services that we need. If people are saying that inflation should be the rule of thumb in one area it is very difficult if they then insist that it has to be disregarded and treated as irrelevant in another. There is more consistency in the Executive’s approach to this matter compared with some of the people who are criticising us.

The allocations for next year build on what was a 5·5% real terms increase in 2001-02. Departments have been able to initiate important work in the Programme for Government. As I stated in my draft Budget statement we cannot expect spending to continue to rise at that rate for much longer. The type of scenario that we have been in has been as good as it gets. I would like to be able to claim credit for this and say that the significant increase has happened while I was Minister of Finance and Personnel. However, it is fortuitous that my term of office and the Executive’s work on the last two Budgets has coincided with what the spending review has given us. As we move into a spending review next year and see global economic conditions recovering from what they were prior to 11 September, but even more uncertainly since then, we must recognise that the choices will become harder. Making a real meaning out of priorities will become more testing for us as an Assembly.

Several Members referred to issues relating to the Executive programme funds (EPFs). In opening the debate, Mr Leslie referred to the Finance and Personnel Committee’s report on EPFs. The EPFs are the key means by which the Executive are determined to break away from the spending patterns that they inherited. We must try to ensure that resources are targeted in line with the Executive’s strategic priorities.

Many people are unconvinced by the evidence, but EPFs are designed to promote cross-cutting working in line with the Programme for Government’s priorities. I agree with observations that were made by some Members, notably Dr Birnie, that we must do more to promote interdepartmental co-operation in the delivery of services, and that must be reflected in the way in which we plan EPFs. I accept the point made by the Committee and others that we must ensure that the processes for managing and allocating the funds are as effective and efficient as possible. Simply throwing open EPF bids to Committees at an earlier stage will not necessarily be the best, or the only, way to do that if it just adds to the mono-departmental-focus syndrome that some people claim already exists.

We must look at whether we are using the right substructure or processes at Executive level to ensure that a cross-cutting priority comes through in planning. I have received a helpful report on EPFs from the Committee for Finance and Personnel, and my Executive Colleagues and I will consider it before responding.

Several Members of the Committee for Agriculture, especially the Chairperson, Dr Paisley, asked about provision for the findings of the vision group. The draft Budget does not include any additional resources for the provisions in the vision report. That is because the public consultation process on the report will continue until the end of December. After the consultation process, the Minister will publish a plan of action for the strategic development of the agri-food industry. At that stage, firm bids for the implementation of the report’s recommendations can be developed and considered with access to the EPFs as appropriate.

Those plans must also take account of any re-prioritisation of resources within the Department of Agriculture and Rural Development. As Mr Leslie warned, we must ensure that in this or any other area we do not implement any new structures, policies or processes until we are sure that they will deliver the desired outcomes. That, again, echoes a point that the Committee for Finance and Personnel made in its report on the Executive programme funds.

6.45 pm

In that report the Committee suggested that the Executive were, in some ways, making funding allocations on spec because they wanted to pursue proposals in a particular area but did not have specific measures. The Committee suggested that allocations should not precede the firmer proposals with all the relevant appraisals. That would be a pertinent area of interest for the Committee for Public Accounts, which regularly questions Departments as to whether allocations have preceded firm plans. We are trying to ensure that we follow through on some of the points raised by the various Committees.

A number of Members, of whom James Leslie was the first, asked if there was greater scope for the Health Service to depart from policies that are determined in Westminster. I agree that we should try to determine and deliver policies that meet the needs of citizens in our region. We should not slavishly follow what is done elsewhere. There are already some good examples of that. There has been an integrated health and social services system for a number of years, but that is not to say that there are not gaps within that, nor that it meshes as well as the theory suggests.

As a result of that, the health action zones, for instance, include social services. They are more comprehensive and are probably better developed than those in other areas. Our response to the new arrangements for primary care involves local health and social care groups that can turn out to be more sophisticated and more comprehensive than elsewhere. However, I readily acknowledge the point that all Members will make that the resources must be there to match the structural proposals.

Dr Paisley, George Savage and Gerry McHugh raised points about retirement schemes for farmers. Early retirement and new entrants schemes are discretionary measures that are provided by the EU rural development regulation. Such schemes, as Members will appreciate, are expensive to run. Nevertheless, the Minister of Agriculture and Rural Development commissioned a study of their value and effectiveness. The study was not conclusive, largely reflecting a lack of research in that area. On foot of that, the Minister commissioned further research from Queen’s University in conjunction with University College Dublin into the economic, social and environmental aspects of such schemes. The results of that research will be available in the summer of 2002.

George Savage then drew attention to modulation and match funding as a source of money for early retirement schemes for farmers. Again, the Minister of Agriculture and Rural Development is considering that, but it is important to remember that any such scheme will be expensive. It should also be remembered that modulation money, for our purposes in the Assembly, is outside the departmental expenditure limit. There are constraints, not least because of EU policy on how modulation money and match funding can be used.

Quite a number of Members mentioned the Barnett formula. The Executive are certainly committed to addressing all those issues with determination. We must do so, not least if we are to be serious about tackling the backlog of underinvestment in infrastructure and the funding difficulties in health, education, transport and other services that many Members raised, particularly the Chairpersons of the relevant Committees.

We tell ourselves how bad the Barnett formula is, and how badly underfunded it leaves us, but we cannot ignore the fact that spending per person here is much higher than it is in England. The Treasury will point to particular areas where our spending is markedly higher and will argue that we must reprioritise.

The political reality is that the perceived wisdom across the water is that the Barnett formula is highly favourable to us. Many people there would argue that we should receive a lower share of public spending or that the tapering effect that the Barnett formula has on our future spending plans is exactly the way things should be going.

We must remember that others do not see the problem as we see it. In all political exercises we must bear in mind that not everyone will automatically move over to see things from our perspective.

As regards services for which we are responsible and which are covered by our departmental expenditure limit (DEL), we were able to spend 25%-30% more per capita than in England in 2000-01. People elsewhere will not miss that point. No matter how often we make the points about need and coming out of conflict we must remember that in some areas of the debate on the Barnett formula we will have an uphill argument.

The EU peace programme is extra to our allocation. Again, in a sense, it is easy for the Treasury to argue that that is a generous concession in relation to public spending and reflects the fact that we are coming out of conflict. To that extent they count it as part of their contribution to the peace dividend. The Treasury will also point out, in relation to the debate on the Barnett formula, that the Chancellor’s initiative offered us further facilities, such as asset sales, and that the Assembly chose not to use some of those. Let us be clear: the arguments will not be all one-way. The warning was well made by Mr Leslie.

Seamus Close promised that he was going to make a new point — not one on familiar territory — so I listened closely and carefully to what he said about prioritisation. Shock, horror — I agree with him. We must consider our priorities very carefully now and more fully in next year’s spending review. That is what the Programme for Government and Budget processes should be about. We have the right to choose to spend more in some areas than is spent in England. However, the corollary is that we would have to spend less in other areas — either less than is the case in England, or less than we have allocated in the past.

Mr Close said that we should not slavishly follow what has gone before and suggested we were doing just that. He talked about money being locked up in Departments, and about Departments holding on to money. I have complained elsewhere that there is a danger in that for all of us. It is not just the Departments, the Civil Service, or at ministerial level, it is also at departmental Committee level. We have had some evidence of it in the debate.

It is very easy for Departments, Ministers and departmental Committees to get locked into the "Does-my-budget-look-big-in-this" syndrome. It then becomes a matter of comparing their increases with other people’s. It becomes a matter of saying that because a budget line has existed, it must continue to exist and be increased. Therefore existing budget baselines are not scrutinised, and everyone competes for additional bids.

I hope that the point will come when the Assembly will see the same degree of interest in what Departments do with the moneys they already have in their baselines as there seems to be in what happens to new bids. There is a great interest in chasing bids, particular those that have not been met, whereas the most important financial decisions relate to the moneys in the baseline. Members have said that they want more scrutiny and openness in relation to Executive programme funds. The proportion of the total Budget represented by the Executive programme funds shows that Departments are making decisions on much bigger sums of money that are not the subject of a report or scrutiny in the House or by the Committees. Therefore, the broader processes show that there is more for us to think about.

Seamus Close remarked that we were slavishly following what had gone before. He then attacked the Executive programme funds and said that we could do without them. The establishment of the Executive programme funds, following devolution, means that money does not automatically go to Departments by the traditional route. The funds allow for a more cross-cutting approach. Executive programme funds have been used for some major regional strategic initiatives such as the road improvements that Alban Maginness referred to and the gas pipeline decisions that other Members referred to. We can make those longer-term commitments because of the Executive programme funds.

Members spoke of the amount of money that is tied up in the Executive programme funds. They must remember that that money applies to next year and to the year after; it is not available for one year’s Budget, as some Members seem to think.

Dara O’Hagan and others raised a point about the regional rate and tax varying powers. We have covered a lot of that ground before. The projected increases suggest that the regional rate will rise by about £332 million in the 2002-03 financial year. Obviously, that contributes to all of the spending that we try to undertake. I have no problem if Members want to identify priority areas that that money could go to. I recognise that there is a lot of unhappiness about, and criticism of, the rating system — not only about how the rating policy operates, but how we deal with the issues in the budgetary process. I recognise — indeed I would be a fool to not recognise — that it is not a popular area of the financial process, but it is necessary. We need to contribute to public spending.

As a Minister of Finance who wants money to be spent on public services and who is in favour of public expenditure, I defend the rate mechanism facility as a way of supplementing what we agreed would otherwise be inadequate resources. If the Barnett formula does not give us what people say that we need and deserve, and as Members are rightly stressing the plight of many services, we must find additional money from elsewhere. There is no point in fighting the end, if we do not will the means. The Executive can spend only what they have. They cannot make money appear from nowhere. Any reduction in rates, or capping of rates increases to inflation, will not give us the money that we need and will weaken our case for additional money from the Treasury.

Joan Carson, Joe Byrne and Gerry McHugh expressed concern about the position of district councils following the decision to reallocate £2 million from the resources element of the general Exchequer grant. I am happy for the Assembly, and the relevant Committees, to consider further whether that is the best way ahead. However, as Joan Carson pointed out, the draft Budget provides an 8·1 % increase in planned spending power for the Department of the Environment. That equates to a real increase of 5 %. That was planned last year to ensure further progress in the compliance with EU environmental Directives. The costs of planned actions have proved tighter than anticipated, and that is not the only area where that has happened.

The Executive concluded that with demands on other services, such as health, education and roads, it was not possible for us to improve on the substantial, real increase provided for the Department of the Environment for 2002-03. That was one of those instances where it counts as to whether health is given priority. There is a choice, therefore, in relation to reducing support for councils, moving more slowly on environmental issues or imposing restrictions on historic building grants. I noticed that some Members questioned whether environment and heritage services needed money. That is an example of a situation where hard decisions must be made. The sentiments expressed in the Chamber show that there are competing priorities.

7.00 pm

Sue Ramsey, Kieran McCarthy and Joe Hendron were among the Members who raised the question about the deferral of free nursing care for the elderly in nursing homes. In May 2001, the Executive agreed in principle to introduce such care from April 2002. However, as many Members have pointed out, the Department of Health, Social Services and Public Safety faces a range of pressures, and it is unable to meet all the demands that are already placed upon it. In that context, compared to the indicative figures that were published last December with the revised Budget, some £30 million was added to the allocation for health for 2002-03. That amounted to an increase of 8·1% over 2001-02. In the Budget statement, I made the point that that was not a full extra 8·1% because there is a technical switch from the Department for Social Development, which accounts for part of that figure. Members, and the Department, have pointed that out, but they are not pointing out anything that I had not already been upfront in saying in my original statement to the House.

Such are the pressures on health and personal social services that there are not sufficient funds available to provide free nursing care without making cutbacks in existing services. The money that was allocated to the health and personal social services baseline for free nursing care is still there, but it is needed to meet other pressures as well. That decision was not taken lightly, and we recognised the fact with great reluctance. However, it would be dishonest not to represent the situation clearly to the Assembly. That deferral releases about £9 million to help maintain existing services elsewhere. It was not a decision not to give additional money — it was a decision whereby additional money, originally given for free nursing care, will go to meet other pressures in health and social services.

Esmond Birnie emphasised the importance of research as a key investment for future prosperity. The Executive recognise that university research is an important investment. The Department of Enterprise, Trade and Investment and the Department for Employment and Learning are jointly leading the preparation of a regional innovation strategy, and it should be available early next year. Higher education funding has been increased by 5%, and that includes provision for the support programme for university research (SPUR), which will receive £40 million, funded on a pound-for-pound basis with the private sector, over the next five years. A further £7 million investment for science research was announced in February 2001.

Éamonn ONeill, on behalf of the Committee for Culture, Arts and Leisure, raised several points about areas, such as the arts, museums and libraries budget, that the Committee felt were not getting the increases in funding that were needed. Those areas fared relatively well in 2001-02 in comparison with the previous year. Between them, they received an increase of £3·4 million. That significant increase has been carried forward into 2002-03. As in other areas, that does not take account of possible assistance from Executive programme funds.

I understand that development plans for the Grand Opera House, together with other capital development proposals, are being considered by the Department of Culture, Arts and Leisure, in association with other interested parties, in an attempt to establish priorities for Belfast in the context of the bid to be European city of culture 2008. We have already identified the best way to deal with such issues as they mature, in discussions with the Department of Culture, Arts and Leisure. Members often ask us not to make allocations until we have full business plans and appraisals; on other occasions, we are exhorted to make allocations before we receive those plans. We cannot do both.

I agree with Ms Ramsey and Ms McWilliams about the health issues that they raised. They gave graphic descriptions of the pressure on the Health Service, which puts many of the smaller issues into perspective. Perhaps the Executive and Members who spoke on behalf of other Committees about other issues might reflect on that. However, we cannot simply say that money that might go elsewhere should be spent on health. As Ms McWilliams said, there is scope to examine the budget of the Department of Health, Social Services and Public Safety to see whether it is managed and organised in the best way. We should consider not only the issues relating to the overall structures of the Health Service that were raised by Dr Hendron and Mr Maginness, but the methods and means that are used.

I am glad to hear that Members and Committees are considering how we might achieve efficiency savings that would allow us to use the money in other areas. I welcome any advice on that. For example, the case was made that appropriate practices in community care would relieve some of the pressure on the acute services sector. The Department of Finance and Personnel and the Executive would not be averse to such an exercise. However, we must ensure that we work on the basis of evidence. We need a database, and work has already been done on a needs and effectiveness evaluation of health and personal social services. We must continue such work if we are to get stuck into the Barnett formula issue in the way that people want us to. It would also be useful for our own purposes, allowing us to see whether we are responding successfully to demands.

The budget for the Department of Health, Social Services and Public Safety is not the only one that contributes to health provision. The public health strategy and other cross-cutting measures have shown that other Departments make a contribution. Perhaps, when Members suggest that we should simply tax the budgets of all other Departments at a flat rate of £10 million, we should remember that other Departments’ spending programmes contribute to health outcomes. For example, spending on road safety by the Department of the Environment contributes to health outcomes, as will spending on structural maintenance or improvements to roads by the Department for Regional Development, if it helps to reduce accidents.

Work is going on in other Departments that has a bearing on health and safety issues too. We need to recognise that a cross-cutting device such as the Executive programme funds does not just help health in those services managed by the Department of Health, Social Services and Public Safety; it has a bearing on our health achievements as well.

Ms McWilliams, as well as Mr Cobain on behalf of the Committee for Social Development, referred to the increases in departmental running costs for the Department for Social Development. The Social Security Agency is obviously playing a leading role in the welfare reforms and modernisation programme, which includes working alongside other Departments to deliver more modern, integrated, efficient and customer-focused services in the area of social welfare needs. Clearly that requires an investment in departmental running costs, which is really what we are looking at when people talk about this. This programme is expected to deliver significant benefits and administrative cost savings. A ring-fenced budget of £130 million over five years has been agreed with the Treasury to ensure that the programme is delivered, which accounts for the increase that has caught the eye of so many.

Several Members, in the course of making observations on other issues, pointed to the global downturn and the impact it is having on our economy, and Mrs Courtney focused on this in particular. Obviously the downturn is something that has had an impact already, and it is likely to have a further impact no matter how resilient we hope our regional economy can be. We have already seen some job losses, but it will affect us in the longer term in two main ways. We are obviously a significant beneficiary of direct foreign investment. Therefore, in so far as the downturn inhibits and reduces that which will affect us, our export sales are also clearly going to be harmed too. A lot of this is going to be dependent on the fortunes of the US economy.

Members such as Mr Byrne have emphasised their concerns about linking this to the possible or slight reduction next year in the budget for the Department of Enterprise, Trade and Investment. However, in all of this we must underscore a commitment we previously made that the Executive will be sensitive to the need to take any opportunities to support investment, especially in the difficult context that we have.

We also have to look at how effective we can be using all our policies. We need to remember that some of the issues that could arise as a result of the global downturn are not ones that call on the Department of Enterprise, Trade and Investment’s budget and the sort of programmes it runs alone. Indeed, the Department for Employment and Learning could very well find some of its programmes and services being called on to deal with some of the effects and exigencies of a downturn if the worst fears being expressed by some Members are realised. It is not just the spending on direct support to industry that matters. In trying to make longer-term investments in our competitiveness and seeing beyond the recessionary cycle that we all fear we are looking at now, it is clearly important that we sustain investment in infrastructure as well so that we will be in a better position to pick things up in the future.

7.15 pm

In dealing with the wider economic context, people should remember that the Department of Enterprise, Trade and Investment is not the only Department that is, in many ways, contributing to the economy. Other Departments do so as well. That is one of the reasons the Executive are investing in infrastructure and transport. By making such an investment we recognise that although it is hard for us to find the money in the Budget that we want to spend on infrastructure, roads and transport systems, we know that we cannot spend the amounts of money needed equally across the region.

There are projects that attract particular priority, and we cannot even out, in a perfectly arithmetic way, the priority that we attach to every road or connection. I take the point that was made by Gerry McHugh, Joe Byrne and others that many areas feel they are still missing out on investment. However, if we are going to invest seriously in some major roads, we should marshal the resources for them wherever possible and then concentrate on trying to find the resources for the other roads. Spending many small amounts on all roads is a less strategic investment and is exactly the sort of thing that we are trying to get away from, because under-investment will not advance the equality agenda. We need to develop good targeted investment and spread it over time.

Alban Maginness referred to Water Service funding. In the Budget for this year there was an extra £14·5 million to deal with the most pressing needs. That is retained in the draft Budget for next year, with a small increase of 1·5%, so Water Service spending is just short of £221 million. We have to provide that money out of the Budget with absolutely no provision for it in our old friend the Barnett formula, because water and sewerage is not part of public expenditure across the water. We get no money for it.

There will be serious health problems and added pressures if we do not make provision. That area of expenditure clearly has a health-related outcome, as we saw with cryptosporidium, but we do not receive any money from Barnett. People need to set that against some of the concerns that are raised about rates. If we get less in Barnett than we need for the services for which Barnett allocates money, and we have to fund other services that Barnett does not provide for, we have to be realistic about the sort of money that we want to add to what Barnett gives us.

Alban Maginness also raised the matter of train replacement. This is a follow-through from significant allocations made in the last Budget, and I welcome the fact that procurement has proceeded. Leasing of trains was commended by many and was considered, but outright purchase represented better value for money. It is not that leasing was not looked at.

Edwin Poots raised several points on behalf of the Committee of the Centre. First of all, the draft Budget does provide additional resources in various areas for the Office of the First Minister and the Deputy First Minister. A bid for funding will be made next year for the review of public administration, and that is clearly understood by the Executive. I have no hesitation in sharing that with the Assembly. We clearly understand that there will be a bid for that next year.

A children’s commissioner is another area that is the subject of consultation, not least in the context of the wider children’s strategy. The intention is clearly to appoint a commissioner for children in spring 2002, thus making progress there. Some Members, Monica McWilliams in particular, were worried that the fact that there is no discernible provision for it here in the draft Budget could mean that that appointment was somehow going to be hostage to financial issues and could be deferred on that basis. I want to give an assurance that that will not be the case.

Edwin Poots also raised the matter of funding for victims. He identified the fact that a further bid of £750,000 is being considered in relation to the social inclusion Executive programme fund. It would be wrong for me to speculate or give any advance indication on what is likely to happen there. The Executive published a consultation document on a victims’ strategy in August. We have contributed almost £1·7 million to the Peace II victims’ measure. That will address needs in a variety of ways, and £500,000 from the social inclusion Executive programme fund will be available to the victims’ unit this year and in each of the next two years. I hope that Members do not labour, as some people do, under the false impression that the Executive have done nothing in this area. Because they are aware of a new bid, they assume that no existing moneys have already been given.

Fred Cobain raised issues relating to the north Belfast housing strategy. There is a funding package of £5·5 million available to Ministers for the purchase of sites for the first phase of the Housing Executive’s strategy to tackle serious housing problems. This total strategy has been costed at £133 million over a seven-year period. That is the type of exercise that we are looking at. Nobody is under any illusions that that strategy or the types of resources that it is going to require are going to be made good in just one Budget. Also, the URBAN II funding is being specifically directed to north Belfast. That is worth a total of £8·7 million.

There were a couple of points that were partly particular but raised some more general questions. Joe Hendron suggested, on behalf of the Committee for Health, Social Services and Public Safety, that the benefits from extra money for the Health Service in England were not coming through to health here, but were somehow being diverted elsewhere. The Executive have allocated more money to the Health Service than we received as a Barnett consequential of the increases in England. That is not to say that we have been able to match the sort of increases that there have been in England, but if people look at the exact amount that we got for health through Barnett, they will find that that and more has gone into the Health Service. We have not taken anything from the Barnett consequential that we get for health; we have been able to add to it.

To have made that sort of addition in health, as we did previously in education, in circumstances in which we were also having to carve out of the Barnett allocation money for water and sewerage and such like, shows that we are trying to prioritise. It also demonstrates that the Executive are trying to alleviate the difficult pressures facing the Health Service and, in particular, the very acute needs that the Minister of Health, Social Services and Public Safety is trying, with her officials and services, to meet.

That effort has not yet provided the resources needed by the health and social services sector. I recognised this in the original Budget statement, and I have not gone into denial on the issue since then. We need to face several major issues relating not only to the draft Budget, but, more importantly, to next year’s spending review. I hope that Members and Committees will be understanding of the Executive’s decisions. We have already detected that Members are making a big deal of a slight decrease in one Department’s budget.

We will not be able to take the spending review seriously if we lock ourselves into a position where there can be no decrease, where the spending patterns that we have inherited cannot be reviewed, or where we cannot review whether current expenditure is achieving the intended results. For example, if we can recognise that the intended results have been achieved, then we can afford to lessen priority in those areas and focus expenditure elsewhere.

Finally, Joe Byrne expressed a general concern about double accounting and the projection of £48 million into next year’s Budget from moneys released this year. There is no question of double accounting; we have been upfront on the matter and have stated clearly that based on our statement in the Executive’s position report, we have been able to achieve slightly broader scope for manoeuvre. That has been done by calculating the level of moneys in this year’s remaining monitoring rounds which could be carried over into next year’s Budget. It is not a question of double accounting; we have received moneys in the past through monitoring rounds. However, the level of moneys available in monitoring rounds of recent years will not necessarily continue.

Members will recall that we have already retained some moneys from the June monitoring round, and, given our knowledge of the patterns that exist, we felt that we could project a level of some £48 million. That figure is based partly on a £13 million projected underspend by the Department of Enterprise, Trade and Investment this year. We have also been using the Executive programme funds as an additional guarantee. When people tell us to wipe out the Executive programme funds they must remember that that funding is taken into consideration when projecting that £48 million. That figure provides more room to manoeuvre than was available before. I hope that there is no question of double accounting.

I will respond in writing, or during a further consideration of the Budget, to other Members’ questions. I appreciate Members’ comments. I look forward to seeing the Committee for Finance and Personnel’s digest of their points and its cogent advice on where the real priorities should lie, where we should be drawing lines through issues, and where we should be trying to move forward. As an Assembly we are becoming much more thoughtful and strategic in our approach to certain budgetary issues.

7.30 pm

Mr Leslie:

I thank the Members for their contributions to what has proved a very useful debate. I thank the Minister for his comments, and I thank those Members who have endured until the death. My recollection is that the Minister entertained us for an hour and seven minutes last year. It would be welcome if he could stick to a 7% reduction each year, but I thank him for the thorough way in which he has dealt with all the points. It does have the advantage that Members will get less from me, because they have had more from him.

The Committee for Finance and Personnel will publish a report in mid-November. That report will emphasise the points made by the Committees in their written submissions and matters that have arisen today.

I would like to comment on the conceptual issues that a number of points highlighted, rather than on specific finance matters. Some Members who made exceedingly pointed remarks to me as Deputy Chairperson of the Committee for Finance and Personnel assumed that that Committee allocates the money. That is not the case. If you regard the Minister and the Executive Committee as Butch Cassidy and the Hole in the Wall Gang, we in the Committee are organising the posse. We can try to influence events, but we do not have carriage of the outcome.

The Minister referred to comments made about the Barnett formula, which I remarked on earlier. When people ask for a review of Barnett, that is usually a coded request for more money. It is always nice to have more money, but in debating and allocating the Budget, we can focus only on what we have. It is not particularly useful to go on and on about the need for more money. We would always be able to spend more money if we had it.

If we do want more money, there are only three ways to get it: we can raise the rates, about which we have had plenty of debates; we can increase taxes, which we have also debated from time to time; or we can apply the principle of "user pays". Mr Maginness did not mention that principle in his remarks about transport and infrastructure, but we shall have to look at it in a serious way if we want to increase our overall level of spending.

Sadly, Mr McHugh has left us. Therefore, I will make the point to Sinn Féin. Its Members always invite us to copy the wonderful example of what happened south of the border. They should address themselves to what happened south of the border in the late ’70s and early ’80s when tax levels were increased to penal levels and a huge number of high earners fled the country. I was working in Dublin in the early ’80s and observed that. It became more apparent as the ’80s progressed. One of the key planks in the Republic of Ireland’s economic growth in the past decade has been a reversal of those penal taxation rates. There is an obvious lesson to be learnt there.

Mr Close raised a conceptual issue with an overall resonance about sticking to the inherited formula. Mr ONeill made the point that the Department of Culture, Arts and Leisure was landed with a commitment from the Department of Education to provide an extra £10 million for a library review. I am not sure if that means that Mr ONeill thinks that they should not do that. It is however, an example of that principle. Mr McHugh was the only person to make the point that the focus should be on outcomes rather than on inputs.

That points in the same direction as the remarks made by Mr Close. I relate that to what Mr Kennedy said about education. The general thrust of the debate was that the key priority of the Executive is health. Mr Kennedy proposed that education was the number one priority and that economic benefits can evolve from education that may enable us to address other problems.

The two areas have something in common. If children are taught to grow up healthier the Health Service will not, in due course, have to meet the same bills as it does now. I appreciate that we have to pay for the consequences of what has gone before and that it will take some years to get that out of the system, to work the ill health out of people’s systems.

If education were to be made the priority then the priorities within education should be for children to learn how to be healthier and how to protect the environment by learning not to throw litter all over the place. Councils spend enormous amounts of money collecting that litter. Children should learn about recycling waste, sustainable energy and a number of other related matters which, taken together, would make a considerable financial saving to the public service in Northern Ireland. One only needs to look at the situation in New Zealand — an example I often quote in the Chamber — to see how much better things can be done. However, the process has to be started at the beginning of the education cycle.

The Planning Service — another favourite example of mine — is constantly sucking in resources. It has received a considerable increase in resources over the last two or three years and is still looking for more. If the planning rules relating to rural development were tightened to the English levels, for instance, and if those relating to urban and industrial development were eased, the planning process would be considerably simplified. That would make it cheaper to administer, and you would get the stimuli in the right places. I say that with some hesitation with my good friend Mr Savage sitting beside me. However, I also live in a rural area and if the people who live in those areas bore the true costs of living there then most of them would not. That is something Members can conjure with for a while.

The Minister has undertaken to take full account of the Committee for Finance and Personnel’s report. It is the Committee’s duty to ensure that he does. When the final Budget comes forward in December following consideration of all these matters, I trust that it will reflect the issues that have been raised in the Committee’s written submissions and in today’s debate. I look forward to debating the matters in further detail at that time.

Question put and agreed to.

Resolved:

That this Assembly takes note of the Draft Budget announced on 25 September 2001 by the Minister of Finance and Personnel.

Adjourned at 7.39 pm.

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Appendix 4

BUDGET TIMETABLE

The timetable outlines the main actions and responsibilities required of the Executive and Statutory Committees to prepare and approve the annual Budget for the following year in the context of the Programme for Government. The process concludes with the Supply Resolutions for the Vote on Account and Main Estimates and the Budget Bills.

The timetable should promote more effective consultation with and scrutiny by Committees at each stage of the process. This will enable the Chairman of the Committee for Finance and Personnel to confirm to the Assembly that, under Standing Order 40 (2) the Committee is satisfied that there has been appropriate consultation with it on the public expenditure proposals contained in the Budget Bills.

The specific timings of actions will depend on factors such as dates of Executive Committee meetings and the process will vary in years when a Spending Review is undertaken. Statutory Committee responsibilities are in Italics. The actions in the timetable form part of Committees’ ongoing responsibilities for the scrutiny of departmental expenditure, including easements and pressures in areas such as in-year monitoring rounds and Executive Programme Funds tranches.

BUDGET DATES

ACTION

April

Development of Budget

Early April

DFP commissions Position Reports from Departments

April – May

DFP copies commissioning letter to Committee for Finance and Personnel. Departments inform Committees

Each Department consults with its Committee on priorities, draft bids.

May

Early May

Position Reports from Departments to DFP / EPU (OFM&DFM)

Late May – July

DFP scrutinise Reports in liaison with EPU

DFP briefs Committee for F&P on Budget process

End May

[Debate on Supply Resolution to approve Main Estimates for current Budget year]

June

 

Early June

Papers to Executive on draft PfG/Budget Statements

[Budget Bill (No.2) to give statutory authority for Main Estimates for current Budget year to Assembly for approval under SO 40(2)]

Early – Mid June

Executive meet to consider proposed draft PfG/Budget Position Report Statements

Mid June

Executive’s Position Report on the PfG and Budget issued to Assembly

Minister briefs Committee for F&P on Position Report

Mid June – early July (3 weeks)

Committees consider Position reports

Committee for F&P co-ordinates responses to Position Report from Committees to DFP

July – August

Summer Recess

July

DFP prepares draft Budget

End August

First consideration of PfG and draft Budget by Executive

September

Submission and Approval of Budget

Early – Mid September

Second Consideration by Executive of draft PfG and Budget

Draft PfG and Draft Budget to the Assembly followed next day by ‘Take Note’ debate on Draft PfG

Mid September

Minister consults the Committee for F&P

Committee for F&P seeks views from DFP and other statutory departmental committees on the draft Budget

October

Early October

Consultation by DFP on equality implications of draft Budget

October / Early November

Committees consider PfG / PSAs / SDAs

November

Halloween Recess

Early November

Assembly Debate on draft Budget triggered by a ‘Take Note’ motion from Committee for F&P

Debate on revised PfG

Report from Committee for F&P to Minister of Finance and Personnel on draft Budget Debate and Statutory Committee responses to Budget

Paper to Executive on revised Budget

Early – mid November

Minister consults Committee on revised Budget

First Executive consideration of revised Budget

Mid – late November

Executive decides revised Budget allocations

Revised Budget announced to the Assembly

December

Early – mid December

Statements on Revised Budget and PfG followed by debates and approval by Assembly

Christmas Recess

January

DFP prepares Budget Bill (No.1)

February

DFP informs Committee for F&P of its intention to introduce Budget Bill (No.1)

Debate on Supply Resolution on Vote on Account

March

Passage of Budget Bill (No.1) to give statutory authority for Vote on Account under SO 40(2)

Chairman of Committee for F&P confirms to the Assembly that the Committee is satisfied that there has been appropriate consultation with it on the public expenditure proposals contained in the Bill.

DFP prepares to commission Position Report for incoming draft Budget

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Appendix 5

RECOMMENDATIONS MADE IN THE FINANCE AND PERSONNEL COMMITTEE REPORT ON EXECUTIVE PROGRAMME FUNDS: SECOND TRANCHE ALLOCATIONS

committee for finance and personnel recommendations

The Committee for Finance and Personnel to examine Executive Programme Funds as part of its scrutiny of the Draft Budget. The Committee, when considering the funds also examined the process of generating bids looking specifically at the Tranche 2 bidding round, which is currently underway. The Committee scrutinized the DFP bids to EPFs that had been made as part of the Tranche 2 round. The Committee agreed to provide and collate responses from other Statutory Committees and the Committee of the Centre to DFP as part of this exercise. In examining the criteria for the funds, the types of bids received, the process employed and the overall quality of the material, the Committee agreed to make a number of recommendations to the Minister for his consideration:-

1. The Committee resolved to support the DFP bids. It was particularly supportive of the Neighbourhood Statistics project bid being cognisant of its cross-cutting nature and the benefits it should deliver, by way of information, to all NI Departments on social deprivation.

2. Clear and well publicised information on the bidding rounds and process is made available to Statutory Committees in parallel or in advance of the formal commissioning letter to the Departments. Committees must be informed of any changes in scheduling due to extraneous pressures or agreed latitude with Departments to allow them to reprofile their work schedule;

3. The role of Statutory Committees is fundamental to the evaluation of departmental bids and potential inquiries into future outputs and outcomes. The Commissioning letter should be specific about the responsibility of departments to provide committees with sufficient time to have a meaningful consultation period on their proposed bids and to allow the committees to make recommendations on changes to proposed bids or suggest additional/replacement bids;

4. The process is wasteful and encourages significant over-bidding against a finite budget. It should be more effectively managed and streamlined to encourage greater co-operation between departments on joint bids;

5. The requirement of committees to make formal comment, to whom and by what date needs to be made clear to all parties involved;

6. Timetables need to be negotiated with Departments involved and with the Statutory Committees to ensure that they are transparent, achievable and all parties are focussed and committed to them. Departments are not, currently, meeting the timetables as laid down and are therefore generating delays at the next stage in the process;

7. Bids submitted without the necessary supporting documentation and economic appraisal should be deferred for possible resubmission at a latter bidding round;

8. Information on the evaluation process and the weight given to each criterion should be made available to departments and Statutory Committees to both encourage stronger bids and to facilitate committees evaluation of bids;

9. Bids that clearly relate to core departmental functions and which may be unsustainable beyond the EPF period should be treated with some caution and subject to rigorous scrutiny against the fund criteria; and

10. The frequency of bidding rounds for tranches of Executive Programme Funds should be reduced. Where possible, the process of commissioning and generating bids from the departments should be scheduled to avoid monitoring rounds or budget round bidding periods to help minimize pressures.

11. The Committee considered that, due to the areas of concern with regard to the volume of bids and the variable quality and level of detail included with the bids that the Department or/and EPU should carry out a review of the process of bidding for Executive Programme Funds. The review should look at the following areas:

12. Advice should be provided for departments on initiative sustainability;

13. Advice to departments on evaluation and monitoring of projects that receive funding through EPFs;

14. Advice to departments and committees on the weight attached to the bid and fund criteria;

15. The Committee was of the opinion that the bureaucracy of the process should be rationalised as far as possible. The Committee considered that permitting the departments to generate as many bids as they thought appropriate, more or less in isolation of activities in other departments, created a cumbersome inefficient system. The Committee therefore recommends that the number of bids should be limited.

16. Departments should be encouraged to submit cross-cutting bids and direction and assistance should be provided centrally on the need for departments to co-ordinate action to establish benchmarks and best practice. Departments, through this process could be guided away from multiple bidding for one project or bid repetition where the policy initiative is out-with the Programme for Government.

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Appendix 6

SUBMISSIONS FROM STATUTORY COMMITTEES

WRITTEN SUBMISSION BY:
COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

DRAFT BUDGET 2002/03

Mr Leslie’s letter of 25 September, to the Chairperson of this Committee, asked for the views and comments of the Committee on the draft budget as it affects the Department of Agriculture and Rural Development.

The Committee held discussions with the Minister on the draft budget on Friday 12 October 2001. During today’s Committee meeting, members agreed this letter as their formal response to the draft budget, resolving also that it should be copied to the Minister.

The Committee noted the Minister’s view that the proposed budget settlement for DARD was a "satisfactory outcome" and that she intended to avail of further opportunities to bid for additional resources through the Executive Programme Funds (EPF). However, the Committee is all too aware of the limitations of the EPF and of the pressures in terms of bids from a variety of sources.

The Committee had fully supported DARD’s unsuccessful bid for £10m per annum in the budget in order to implement the findings of its Vision Group. There was a clear commitment to implementation in the first Programme for Government (PfG), and this has been carried through into the new draft PfG (sub-priority 8). The Committee discussed the Vision Group’s recently published Report with its authors on Friday 19 October. They expressed disappointment that the original bid had not been met, stressing the importance of action on their 208 recommendations, and pleading with the Committee to help secure the resources required.

A number of the Vision Group’s recommendations are consistent with ones made earlier by the Committee and members agree that action is essential. The Committee’s view is that if well thought out suggestions and proposals, made in reports to the Department, are not financed and implemented, then time spent on making reports is, ultimately, time wasted.

Members acknowledge that it is not yet possible to predict the precise requirement for additional funding for implementation, given that the action plan is not complete. In addition, internal restructuring and re-prioritisation by the Department should enable it to better utilise existing resources for implementation. However, members are concerned that the Executive Programme Funds may not be capable of satisfying DARD’s requirements in this area and believe that funds must be allocated in the final 2002/03 budget (and beyond) to ensure that PfG commitments are met.

Your letter suggested that each Committee might consider priorities to be attached to each of the headings within each Department’s budget. The Executive’s position Report, published in June, also asked Committees to concentrate on what will be achieved through the Department’s programmes rather than on bids. During the discussions on 12 October, the Minister undertook to provide a more detailed breakdown of the budget, according to spending areas, than that included with the draft budget documentation. Pending receipt of that information, the Committee cannot comment on relative priorities with any authority. Similarly, it is difficult for the Committee to gauge what might be achieved through DARD’s expenditure, when the Department’s progress against its Public Service Agreement (PSA) targets has been hampered by the Foot and Mouth outbreaks, and reflects only the first 6 months of the PSA period.

The Committee therefore believes that ‘integrated’ figures must be provided regularly by the Department to allow it to make comparisons of amounts allocated to work areas (year-on-year) with amounts actually spent (in-year) and with targets anticipated, and whether or not they are met. This would permit an assessment of relative priority and potential achievement.

Finally, the Committee agrees that it would have been much more helpful if the draft budget had broken down the figure of £3.4m which is to be "made available" in pursuit of service delivery in four discrete areas. The amount did not reflect any of the bids outlined in the Executive’s Position Report, but the lack of detail made it impossible for the Committee to assess whether or not the allocation had been influenced by its recommendations in response to the Position Report.

PAUL MOORE
Committee Clerk

WRITTEN SUBMISSION BY:
COMMITTEE FOR CULTURE, ARTS & LEISURE

18 October 2001

The Committee has examined the draft budget allocations for the Department of Culture, Arts and Leisure and would wish to make a number of comments.

While we welcomed the additional allocations for the Department, totalling some £4.7m, the Committee remains deeply concerned about the serious level of underfunding that continues to inhibit the Department’s activities. The failure of all the bids for sport, with the exception of the £1m allocation for the Safety at Sports Grounds Scheme, has been most disappointing.

Similarly, the failure of all the arts bids (totalling some £4m) means that there will simply be no additional money next year for a sector that is already in need of capital investment in a crumbling infrastructure. The Committee is particularly concerned that the £1m bid for the Grand Opera House development scheme was not successful. The expansion of the Opera House onto an adjacent site is a key plank on which Belfast’s bid for European Capital of Culture in 2008 is built and is directly linked to the Programme for Government. We have recently become aware of a competing interest in the site, which could seriously jeopardise the Opera House expansion project. Clearly, if the Opera House is not in a position to bid for the site because of a lack of funds, the loss of this unique opportunity to enhance the arts infrastructure of the city and the region will be lost forever and will be difficult to explain.

The Committee is also worried about the continued neglect of the fabric of our museums, as well as the Armagh Observatory and Planetarium. We understand, for example, that the budget for museums was cut by some 8% in 1994 and that this situation has never been rectified. Further, it appears that funding for Museums and Galleries Northern Ireland (MAGNI) continues on the basis of an annual battle for an adequate baseline allocation. Given that MAGNI has already accumulated an operating deficit of some £2m this year, the Committee is agreed that this situation must really be addressed immediately. As an illustration of the seriousness of the position, we were concerned to learn that it is proposed to sell off MAGNI property to meet the deficit, in part at least. While there may well be no alternative to this specific proposal, other than to go down the difficult road of staff redundancies, the Committee would be strongly opposed to any further asset stripping to meet clear funding shortfalls.

The failure of the bid for £2m to meet next year’s element of the public library staffing review, which DCAL inherited from the former DENI, is another issue of concern. The Committee is aware that the Department has bid in the September monitoring round for £10m to cover the costs of the review in-year. We understand the rationale for the review and would strongly support the principle of adequate pay for those staff involved. However, should the current bid fail, the Committee would not expect the Department to find the money from within its own resources. This would also be our position on any in-year bid in 2002-03 for the additional £2m which was unmet in the draft budget. The situation was not of DCAL’s making and the Committee would not support any attempt to fund a pre-devolution review out of the Department’s already inadequate resources.

On a more positive note, we welcome the recognition of the difficulties faced by DCAL on the staffing front. The allocation of £2m for administration next year will enable the Department to begin to create a proper corporate structure and thereby improve its services to its customers, including ourselves. The Committee is particularly conscious that staff shortages have meant that progress on many important areas, which would have a considerable social and economic impact on our community, have had to be deferred.

In terms of the process for the draft budget this year, the Committee is happy to report that we have found the extension of the time available to scrutinise the allocations very welcome.

Attached, as Annex 1, is a summary of the outcome of the draft budget for the Department, which you may find helpful.

EAMONN ONEILL MLA
Chairperson
Committee for Culture, Arts and Leisure

ANNEX 1

DCAL 2002-03 DRAFT BUDGET POSITION

Bid Details

£ million
2002-03

Draft Budget outcome
£ million

Languages

0.500

Unsuccessful

Cultural Diversity

1.0

Unsuccessful

Sports

Safety at sports grounds

1.0

Successful

Contribution to Special Olympics

1.0

Unsuccessful

Motor sports safety improvements

0.100

Unsuccessful

Implementation of soccer strategy

0.750

Unsuccessful

Sports Institute NI

2.0

Unsuccessful

Restoration of non-Lottery programme for sports

1.0

Unsuccessful

 

(Sports total bid £5.850m)

(Achieved £1.0m)

Arts

Accessibility (Adapt Scheme)

0.250

Unsuccessful

Grand Opera House

1.0

Unsuccessful

Re-introduction of non-Lottery capital programme

3.0

Unsuccessful

 

(Arts total bid £4.250m)

(Achieved nil)

OSNI

0.578

Successful

Armagh Observatory & Planetarium

Refurbishment of domes and telescopes

0.100

Unsuccessful

Review of Planetarium

0.030

Unsuccessful

Rebuild Planetarium

1.0

Unsuccessful

 

(Planetarium total bid £1.130m)

(Achieved nil)

Museums

3.0

1.0

Libraries (Job evaluations)

2.0

Unsuccessful

Inland Waterways & Fisheries (improvements to public angling estate)

0.5

Unsuccessful

PRONI

0.2

Successful

Administration

2.0

Successful

Totals

21.008

4.778

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WRITTEN SUBMISSION BY:
COMMITTEE FOR EDUCATION

INTRODUCTION

The Education Committee met with Departmental officials on Thursday 18 October for detailed discussions on:

The Committee is firmly of the view that Early Learning/Early Intervention initiatives and Capital Building Investment must continue to be given high priority for funding. We are also extremely concerned about the levels of core funding being provided to schools and the increasing indications that it is not enough to enable them to function at a satisfactory level.

DRAFT BUDGET 2002/03

The Committee would make the following detailed comments regarding the draft budget 2002/03.

1. We are pleased to note the Executive’s view that education is among the services facing the most difficulty and the need to give it a degree of priority. The Committee’s experience and regular discussions we have had with a wide range of organisations and individuals confirms this view and we would argue education must be given a high priority.

2. The Committee welcomes the extra £20 million allocated to education over and above the original indicative figures for 2002/03. In total this represents a 4.8% increase on 2001/02 and will enable most of the inescapable bids highlighted by the Department to be met. In particular the £2.0 million provided for job evaluation and ancillary staff employment is a necessary addition.

3. The pressures identified in schools recurrent funding are very real and the extra funding provided in the draft budget is essential. The Committee would wish to highlight that this, in effect, only enables schools to meet these pressures and "mark time". It will not provide scope to improve or expand services.

The Committee is very concerned that some schools appear to be struggling with funding difficulties on an ongoing basis and are not receiving the core funding necessary to deliver a satisfactory service and provide the core curriculum for pupils. In our recent evidence sessions on the Proposals for a Common Funding Formula we discussed funding arrangements with a number of Primary school and Post-Primary school Principals and this was a recurrent theme.

The Committee will expect the Department of Education to put forward a strong and robust bid for schools recurrent funding in next year’s budget.

4. While recognising that some increase in the Capital Spending Budget will be available we do not believe that this is enough to allow swift progress in addressing the school building deficiencies.

5. The Committee appreciates that the draft budget will enable the Classroom 2000 initiative, the School Improvement Programme and the Pre-School Initiative to continue but again there is no scope to improve these beyond what was already scheduled to take place.

6. In the main the inescapable bids put forward by the Department of Education have been met in the draft Budget. We have considered the Department’s proposals to cover the inescapable bids identified but not met i.e. the £4.6 million shortfall and we are generally supportive of them. We would not, however, wish to see the reduction in the maintenance budget continued for more than one year as a sustained reduction could have a detrimental effect and lead to further increased capital costs in the longer term. We would also be concerned that surplus assets will be required to play a part in any PPP deals. Disposal of assets must, therefore, be carefully considered and the Estate Management Database should be progressed as a matter of urgency.

7. The Committee is disappointed that none of the other very high priority bids put forward by the Department have been met, either in full or part. We would wish to press the Executive to reconsider and provide if possible at least some funding for the following high priorities:

Schools Budgets (to improve) 13.5 million

Schools Estate – Capital and Maintenance 10.5 million

Reading Recovery 5.2 million

8. The Committee welcomes the assurance given by the Minister for Finance and Personnel in his statement to the Assembly on the Draft Budget that the Executive remains determined to address the Barnett issue and to seek improvements.

9. We are very concerned that there has been no clarification or detailed timescale produced for the Review of Public Administration. This must be taken forward as a top priority and the Committee would urge the Executive to initiate the Review as soon as possible. Currently almost £60 million is spent on education administration costs and the system needs to be closely looked at in light of the devolved institutions.

10. The Committee will be asking the Department to carry out an evaluation of the effectiveness and efficiency of all non-school activities before next year’s budget round to ensure the focus is on the key priorities. We will expect the Department to identify possible options and savings to enable more funding to go into school budgets.

11. We will also wish to discuss in due course the outcome of the Best Value Reviews currently being undertaken by the Education and Library Boards.

12. The Committee recommends that further work should be carried out to establish clearer links between Public Service Agreement targets and funding.

CONCLUSION

The Education Committee welcomes the priority being afforded to education and the additional £20 million allocated in the draft Budget over and above the original indicative figures is essential to meet inescapable costs. We are, however, acutely aware that this level of funding will only enable schools to meet pressures and "mark time". The Committee wishes to flag up now the need for a serious injection of money into education in next year’s budget if the Review of LMS Funding and the Review of Post-Primary Education are to be taken forward.

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WRITTEN SUBMISSION BY:
COMMITTEE FOR EMPLOYMENT AND LEARNING

25 OCTOBER 2001

ADULT LITERACY AND NUMERACY

The Committee is concerned at the money currently available to address the problems of adult literacy and numeracy, which have been given an increased emphasis in the recent draft Programme for Government and were a major theme in our recent Report into ‘Education and Training for Industry.’ Action in this area will help to achieve the Executive’s aim of tackling poverty and social exclusion. According to the Department for Employment and Learning’s Annual Business Plan for 2001/02, a basic skills strategy is to be finalised by November 2001 and implementation is to begin by March 2002. The Committee welcomed the last successful bid for Executive Programme Funds in this area, but consider that more money is needed to enable the effective and urgent implementation of the strategy during 2002/03. We do not wish to see another strategy without the financial resources for its full and speedy implementation. This problem needs action and action now!

Research and Development (R&D)

The Committee considers research and development in the universities to be a major priority and, indeed, following consideration of the Department’s draft bids for 2002/03, members had oral briefings from both the University of Ulster and Queen’s University. The universities, and their research and development base in particular, are the powerhouse of developing a knowledge-based economy in Northern Ireland, but have been under funded for some considerable time. The universities are the most significant element of Northern Ireland’s research base, as it is comprised mainly of Small to Medium sized Enterprises (SMEs). It is alarming that over the last decade, funding for university based R&D in Northern Ireland has declined by some 20%, compared to an increase of 20% in Great Britain, thus increasing the differential. The universities informed the Committee that an additional £7 million - £10 million per annum is needed, simply to achieve parity with the rest of the United Kingdom i.e. to remove the historic under funding differential.

There is currently no additional money available to fund the anticipated improvements expected from the Research Assessment Exercise in mid-December 2001. If university departments, and the staff which work in them, are not rewarded for excellence, the current drain of such staff, especially to the Republic of Ireland, will be exacerbated. These are people which the Northern Ireland economy can ill afford to lose.

From its consideration of the Department’s draft bids, the Committee understands that a draft bid of £2 million for R&D submitted in June/July 2001 for the 2002/03 budget is no longer present. As this bid was to cover improvements in the RAE process, this is very worrying. However the Committee does fully acknowledge the bid for R&D under Executive Programme Funds. Members would urge the Executive to ensure that a longer-term commitment to research and development, in terms of a major increase in funding, is put in place immediately.

The Committee wishes to emphasise that this is very much a cross-cutting issue. As the universities are the most significant element of Northern Ireland’s research base, other government departments such as DARD, DETI and DHSSPS rely heavily on the universities for research and, as such, may be expected to contribute to the funding of their R&D.

The Committee has continually emphasised the cross-cutting nature of university based R&D. Publicly funded R&D has suffered from a piecemeal approach in the past, with little overview as to its strategic effect. In our submission to the consultation on the Research, Development and Innovation (RDI) strategy, the Committee offered strong support for the proposed strategy and recommended the creation of a single unit to critically assess all government-funded research in order to prioritise funding to deliver maximum benefits to N Ireland. It is also important that R&D continues to be applicable and we would re-emphasise our support for the Northern Ireland Economic Council’s recommendation that 10% of block funding for R&D should be set aside for research which is especially important for Northern Ireland’s individual needs. The RDI Strategy should define such priorities and ensure that research is feeding into policy decisions to ensue economic development.

It is also important to note that the universities estimate that, for every £1 allocated to R&D from the block grant, they can obtain £2 from external sources. However these external sources are unwilling to solely fund any areas which they consider should be funded by government.

Northern Ireland Business Education Partnership (NIBEP)

The Committee has previously welcomed NIBEP’s extended remit, which was agreed by the Department of Education and the then Department of Higher and Further Education, Training and Employment. However, serious under funding has meant that NIBEP is unable to carry out this extended remit effectively. Although this is a cross-cutting issue, the Committee would welcome additional funding for NIBEP, especially in the area of teacher placements in industry. Members noted the effectiveness of such placements in their recent Inquiry and were concerned that only 0.2% of full-time equivalent teachers in the primary and secondary sectors in Northern Ireland had experienced such placements to date, compared to 7.2% in Scotland.

Disabled access to higher and further education

The Committee is also particularly supportive of the Department’s bid in this area. Access to education for the disabled must be considerably improved.

Potential funding needs

The Committee is awaiting the results of the current Needs and Effectiveness Evaluation of Training and Vocational Education Needs, and will be keen to ensure that any recommendations arising are quickly implemented, including movement of funds, where appropriate, to ensure maximum value for money.

Central control and restrictive practices

The Committee is also concerned that the Department of Finance and Personnel did not allow any departments to bid for new projects in funding for 2002/03. The non-allocation of three year flexibility to individual departments may be an example of too much central control restricting effective budget management and, if so, should be rigorously challenged by individual Ministers. This severely reduces the responsiveness of the public sector to changing needs and is in stark contrast to practices in the private sector.

DR ESMOND BIRNIE, MLA
CHAIRMAN

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WRITTEN SUBMISSION BY:
COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT

24 October 2001

COMMITTEE RESPONSE TO THE 2002-03 BUDGET

My Committee has considered the Department of Enterprise, Trade and Investment’s Budget for 2002/03.

The Department has been allocated £7.7m for this year (01/02), £5.8m for next year and £3m for the following year for the telecommunications strategy. The Department’s ability to spend £7.7m this year has been held back due to a variety of reasons. Therefore it is very important that the Department is given end-year flexibility to carry forward underspending from this year, dedicated for this purpose, into next year (02/03).

We would also like to emphasis our concern with respect to a number of issues:

1. That Invest Northern Ireland maximises the potential for synergy in bringing together the economic development agencies in Northern Ireland. The Committee will be keen to monitor how the Department executes this major change management process and demonstrate value for money in the establishment of a dynamic new agency for Northern Ireland.

2. Sales, marketing and innovation take on added significance at a time of economic uncertainty. The Committee will be keen to review the Department’s approach particularly in relation to recourse to in-year bidding.

3. Approximately £870m of European funding is available to Northern Ireland. The Committee will be interested in how this money will be allocated and, cognisant of recent criticism from the European Court of Auditors, are keen that measures are in place to ensure that maximum benefit is derived.

4. The Committee is very keen to see the continued development of emerging industries. The Information Age initiative will require support to meet the unique challenges it currently faces. The Committee notes that €14m is available for Information Age Initiatives.

5. The Committee sees the development of the renewable energy industry as an opportunity that Northern Ireland is not currently fully exploiting. The Committee will be keen to ensure that every effort is made to promote a dynamic approach to the whole energy market in Northern Ireland.

6. The Department’s aim in the draft Budget 2002/03 is a ‘balanced, competitive, innovative knowledge-based and fast growing economy where there are plentiful opportunities for all’. The Committee is keen to monitor and support the fulfilment of this aim.

7. There is a rise in public expenditure in 2002/03 of around 3% above the general rate of inflation, building on the 5.5% increase in 2001/02. The DETI budget has fallen in each of the corresponding years. The latest budget includes increased provision for resources in Financial and Management Services of £1.1million. In addition there are significant administration costs associated with the change process associated with the establishment of Invest Northern Ireland. The effective allocation for capital expenditure and industry promotion in 2002/03 is therefore reduced further. The Committee will seek clear and unambiguous justification for any further decrease in the Department’s resources specifically in relation to dynamic and innovative industry and business promotion.

I hope you will find these comments helpful.

[Agreed by the Chairperson and signed in his absence]

PAT DOHERTY MP
Chairperson
Committee for Enterprise, Trade and Investment

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WRITTEN SUBMISSION BY:
COMMITTEE FOR THE ENVIRONMENT

26 October 2001

DRAFT BUDGET 2002-03

1. I refer to James Leslie’s letter of 25 September 2001 seeking the views and comments of Statutory Committees on the above.

2. The Committee for the Environment at its meeting of 27 September 2001 heard directly from Senior Finance Officials from the Department on how the draft Budget impacted on the Department of the Environment. The Committee followed this up with further questions and additional information requests of the Department, together with a further meeting with Departmental Senior Finance Officials on 18 October 2001.

3. The Committee’s key areas of scrutiny on the proposed DOE Budget included the following:

(a) Information on the proposed indicative cuts in Local Government Resources Grant (totalling £2 million) and a response to the point made by the Chairman at the debate on the Draft Budget Statement on 25 September 2001; that is, the cuts proposed will only apply to the 16 ‘weakest rates based’ Councils, while the inescapable new pressures of some £2 million EU/International Obligations and EU related Regulations bids (which created the £2 million funding deficit) will be utilised by all areas of Northern Ireland. The Chairman asked how this stands with the key policy themes in the Draft Programme for Government of New TSN and the promotion of equality of opportunity and good relations?

(b) A breakdown of the £2 million newly emerging inescapable costs of EU/International Obligations and Regulations, asking why this and other EU compliance work planned for 2002-03 cannot be ‘fast-tracked’ and brought forward to spend in the final months of 2001-2002, utilising the £1 million surrender under Waste Management put forward by DOE in September Monitoring and any other unavoidable surrenders in 2001-2002?

(c) A comprehensive breakdown of the Department’s ‘Discretionary expenditure (gross)’ within six areas totalling £14.6 million – categorised by priority of high, medium or low; and

(d) Details of the Department’s potential asset sales and potential income for DOE’s 2002-2003 Budget plus potential use of receipts to fund ‘baseline’ expenditure.

4. The Department’s written response to the above was scrutinised by the Committee on 18 October 2001, with further questioning of Departmental Officials. The Committee concluded that there appeared to be little scope for ‘fast-tracking’ the EU compliance expenditure envisaged for 2002-03, ‘trimming-off’ monies from the Department’s 2002-03 Discretionary expenditure, generating income from asset sales or increased use of receipts.

5. The Committee wrote to the Chief Executives of the 16 Local Councils regarding the impact of the proposed cut in Local Government Resources Grant (totalling £2 million). Although, the Councils are not due to formally respond to the Draft Budget proposals until 20 November 2001, the Committee received ten responses to date. The Councils voiced their total opposition to the proposed £2 million cut in the Resources Grant along with the proposed increase in the Regional Rate. The responses included:

(i) this is ‘not acceptable’ and ‘many businesses will not survive’;

(ii) ‘will the decision to reduce resources grant by £2 million be subject to an equality impact assessment and assessed against TSN and PAFT?’

(iii) ‘The element of the GEG is targeted at the poorest council areas and at the most socially deprived areas of NI’;

(iv) ‘The Council is most perturbed at the possible reduction of Resources element of the GEG’.

(v) Has ‘this proposed policy been equality proofed?’

(vi) ‘We plead with the Environment Committee to make every effort to avoid this injustice to Local Government’.

(vii) ‘District Councils are being made scapegoats for NI’s failure to comply with the EU Waste Management’.

Copies of the ten responses are attached.

6. The Department has now responded to the Chair’s point reflected at (a) above, by saying that ‘Any reduction in the amount of grant will affect the levels of service for all, including deprived individuals, groups and areas. Therefore, if the Resources Grant is cut, there could be negative new TSN implications although these impacts might vary depending on the Councils affected and the types of services cut. The importance given to - the principles of New TSN and Equality of Opportunity – by the Executive does not, however, mean that everything with an adverse TSN impact can be fully protected’.

7. The Committee regards this argument/explanation as totally unjustified bearing in mind that in overall terms, the £2 million reduction in Resources Grant is very small in relation to both the Department’s and the Executive’s budget, but if implemented will clearly have a major impact on Local Government Services in the poorest and most socially deprived areas of Northern Ireland as evidenced above.

8. The Committee therefore recommends in the strongest possible terms to the Executive that the £2 million proposed cut in Local Government Resources Grant be dropped immediately from the 2002-2003 Budget.

JOHN SIMMONS
Clerk to the Environment Committee

cc: Mr David Thomson (Head of Corporate Service, DOE)
Ms Jennifer McCay (Assembly Co-ordinator, DOE)

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WRITTEN SUBMISSION BY:
ANTRIM BOROUGH COUNCIL

29 October 2001

DRAFT BUDGET: ALLOCATION FOR RESOURCES ELEMENT OF GENERAL EXCHEQUER GRANT PAYABLE TO DISTRICT COUNCILS

Council acknowledges receipt of the letter from the Department of the Environment (DOE) dated 25 September 2001 (LGD3/4/01), together with the Minister’s statement of the same date.

Council would wish to make the undernoted comments and observations regarding the proposal to reduce by £2 million the resources element of general grant payable to 16 District Councils.

1. Whilst Antrim Borough Council per se will not suffer any loss, being 1 of the 10 Councils which already receive a zero allocation of resources element, Council would wish to submit brief comment from the perspective of Local Government as a whole.

2. Council recognises that the DOE "is faced with newly emerging inescapable costs in relation to EU Directives" and needs "to address the inherited backlogs on complying with EU environmental policies". We would, however, wish to make the following observations on this issue:

(a) The cost of compliance with EU Directives attracts grant aid from the EU and Council would expect full entitlement to such grant to have been taken up.

(b) We note the substantial uplifts in the DOE’s allocation (16% for 2001/02 and 8.1% proposed for 2002/03).

(c) We would have expected the combined effect of (a) and (b) above to have substantially absorbed the costs of EU compliance.

(d) If a shortfall exists, notwithstanding the sources of additional finance referred to above, Council would expect the burden to be fairly allocated over all Departmental services and not to be borne exclusively or disproportionately by the District Councils. Nonetheless we recognise that the District Councils’ general exchequer grant (resources element) now constitutes the largest individual budget within the DOE.

3. Neither the Minister’s statement nor the DOE’s letter contain specific detail regarding the costs of EU compliance - quite reasonably of course. Would the Council be correct in surmising that the root of the financing problem is the UK Government’s failure to comply with certain EU Directives, in particular the Waste Framework Directive? If so, Council would consider it unreasonable that such liabilities (including the cost of potential fines) should be levied against District Councils’ general exchequer grant. Whilst central Government has had a quarter of a century to effect compliance (the Directive having originally been introduced in 1975 and revised in 1991), Northern Ireland District Councils had no formal involved until March 2000 and then addressed the issue with extreme urgency, producing a draft plan by June 2001. In the case of the Eastern Group, to which Antrim belongs, this period of time included up to 6 months for the appointment of consultants via the EC procurement process, and completion of the democratic consultation process among Councils.

4. Whilst it is recognised that the public consultation process is still outstanding, and infraction proceedings against the UK Government are already in progress, we are of the firm view that any failure in Northern Ireland’s compliance is not the responsibility of the District Councils and, in any event, there will be sufficient time to remedy any shortcomings in compliance requirements, especially if potential fines may not become effective until September 2002.

As indicated we would consider it unreasonable and inequitable if the District Councils’ general exchequer grant allocation is being utilised to absorb the costs of non-compliance for which the Councils bear no responsibility.

NEILL P CAUWOOD JOHN R QUINN
Director of Corporate Services Director of Environmental Services

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WRITTEN SUBMISSION BY:
ARDS DISTRICT COUNCIL

23 October 2001

DRAFT BUDGET 2002/03

Thank you for your letter of 19 October 2001 seeking comments on the proposal by the Department to reallocate £2m from the resources element of the General Exchequer Grant (GEG)available to Councils in 2002/03.

This matter is still working its way through the Council’s system and this reply is therefore based on the recommendation of the Council’s Policy & Resources Committee which will not be adopted by the Council until 31 October 2001. As that Committee consists of all members of the Council, however, the recommendation is likely to be adopted.

This Council is most perturbed at the possible reduction of Resources element of the General Exchequer Grant. Given the indicative figures in letter dated 25 September 2001 issued by DOE LGD, ref. LGD 3/4/01, the possible impact of this would mean an increase in our District Rate of 2.38p in the £ or 2.17%. This in itself is beyond the rate of inflation which is presently at 1.7% and is before all the other extenuating circumstances which will affect Council rates this year, all of which are beyond the Council’s control. The result would be an increase in the rate that would be totally unacceptable to ratepayers.

In the letter referred to above DOE LGD states that this £2m reduction is to fund "newly emerging inescapable costs in relation to EU directives" but there is no clarification given as to what these directives are, whether they relate to local government functions or indeed whether or not they apply to all Councils.

If it is the case that these EU directives do not relate to current District Council functions then District Councils should not be asked to bear the burden. Furthermore if they relate to functions affecting all Councils the method chosen is unfair as it only places the burden on the 16 Councils which receive Resources element of GEG leaving the remaining 10 bearing none of the burden.

The Council is strongly of the opinion that this proposal is based on keeping the Regional rate down irrespective of the effect that this will have on the District Council rate, desirable no doubt for the Department as it will be the Councils that will have to justify an unreasonable increase rather than the Assembly or its Departments. In short, this proposal is simply a shifting of the burden from the Regional rate-payer to the District Council rate-payer and as such is totally unacceptable.

If EU or other pressures are leading to difficulties for individual Departments we would suggest that the Assembly should be addressing this issue directly rather than seeking a scape-goat in the District Councils.

A question also arises as to whether this proposed policy has been equality proofed.

We plead with the Environment Committee to make every effort to avoid this injustice to Local Government.

TOWN CLERK & CHIEF EXECUTIVE

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WRITTEN SUBMISSION BY:
BALLYMONEY DISTRICT COUNCIL

23 October 2001

Draft Budget 2002-03 – Northern Ireland Executive

Ballymoney Borough Council is most grateful for the opportunity to make comments to your committee on the specific issue of the £2M cut in General Grant funding for next year. The detailed comments are set out below and we believe that this proposal needs to be judged on the criteria of natural justice, equality and reasonableness.

At the heart of the issue is why the Department has taken the view that the sixteen councils deemed most worthy of central funding support on the grounds of new TSN, are the same ones who should pay for Northern Ireland’s share of any infraction proceedings against the UK for failure to meet EU requirements in relation to Waste. We believe that justice demands that if there is culpability in this matter it should fall much more widely, both within Local Government and beyond, and that DOE must itself bear a share of the blame for any failure to meet the deadline.

Council has considered your letter of 19th October on the above subject and I submit the following comments on its behalf.

1. The DOE has been guilty of inertia and lateness in its delivery of the NI Waste Management Strategy; the absence of this essential information and guidance has severely constrained the production by District Councils of waste management plans to satisfy the Department’s Environment & Heritage Service.

2. District councils are being made scapegoats for Northern Ireland’s failure to comply with EU Waste Management Directives, despite the Department’s own major failings.

3. The Executive is committed to New Targeting Social Need (New TSN). New TSN seeks to ensure that resources across all programmes are, wherever possible, used in a way that gives priority to those individuals and areas shown objectively to be in greatest need. All departments have received additional resources in the Budget. The purpose of Resources grant is to provide additional assistance to Councils with the weakest rates bases, i.e. the ‘poorest’ Councils.

4. It is the 16 councils deemed most in need of support under New TSN criteria, not all Councils plus the Department, who are to fund NI’s share of the cost of EU Infraction Proceedings from September 2002. Clearly this is unfair, is contrary to new TSN principles and if accepted is a charter for further erosion of support to the poorest Councils when the Department finds itself in need of budget savings in future years.

5. The impact of the £2M reduction on Ballymoney is a loss of around £62,000 based on current year financial data. This equates to a District Rate increase of 1.75 pence in the pound or over 1%. This is a significant increase for any council.

6. In many instances the increases in this Budget are substantially greater than the rate of inflation so that departments have scope for developing new services as well as redistributing existing resources to improve the outcome in equality and New TSN terms. It appears contrary to this aim for the DOE, which is to receive an 8.1% increase in its budget, to remove funding from the 16 Councils qualifying on the basis of New TSN.

7. It is difficult to see the fairness in this cut while the Environment & Heritage Service’s budget is being increased by 14.5% or £5.3M. Indeed DOE’s total budget increase is 8.1%, which begs the question why savings/reductions cannot be made in other spending areas.

8. The new formula for the resources element of General Grant, which councils are currently considering in draft form, is designed to remove the problems faced by annual fluctuations in the level. It is not clear if this £2M is a one-off cut in 2002/03, to be reinstated or indeed increased in subsequent years. A clear statement on this matter should be sought from the department.

I hope that these comments will assist the committee in its deliberations on this important issue.

John Dempsey
Chief Executive

Copied to:

Mr Reg Empey MLA, Minister of Enterprise Trade & Investment
Mr Mark Durkin MLA, Minister of Finance & Personnel
Mr Gregory Campbell MLA, Minister of Regional Development
Mr Martin McGuinness MLA, Minister of Education
Mr Sam Foster MLA, Minister of Environment
Mr Sean Farren MLA, Minister of Employment & Learning
Mr Maurice Morrow MLA, Minister of Social Development
Mr Michael McGimpsey MLA, Minister of Culture Arts & Leisure
Ms Barbara DeBrun MLA, Minister of Health, Social Services & Public Safety
Ms Brid Rogers MLA, Minister of Agriculture & Rural Development
North Antrim MLAs (6)
Ms Marie Finnegan, DOE Local Government Branch

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WRITTEN SUBMISSION BY:
BANBRIDGE DISTRICT COUNCIL

23 October 2001

DRAFT BUDGET 2002/2003

Thank you for the opportunity to comment on the Draft Budget for 2002/2003 agreed by the Executive.

At the Council’s Policy & Resources Committee meeting held on 22 October 2001 Members expressed grave concerns at the proposal to reallocate £2 million from the resources element of the General Exchequer Grant and have authorised me to make the following comments.

1. The resources element of General Exchequer Grant is a compensating payment made to Councils with the weakest base rate and it is indefensible to penalise 14 to 16 Councils to fund the cost of EU Directives, which effect all Councils. The proposed loss in General Grant represents approximately 2% of the District Rate for this Council.

2. Councils in receipt of General Exchequer Grant have been subject to repeated annual errors by the Rate Collection Agency and others. This has resulted in a demand for recovery of overpayments for previous years. In the case of this Council the Department has this year already clawed back £184,618 of resources grant for 1997/98. The cumulative effect on this lose and further reduction on General Grant is financially debilitating to a small local Council.

3. The Department are involved in a long standing and complex review of the General Grant formulae and it is essential that the resources element of General Grant are protected so as not to prejudice changes under review.

The Council urgently requested the Assembly Executive to reconsider its proposal to reduce the resources element of General Exchequer Grant. It is essential that an alternative, more equitable means of financing additional demands on Departmental expending are identified.

R A GILMORE
Chief Executive

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WRITTEN SUBMISSION BY:
CARRICKFERGUS BOROUGH COUNCIL

24 October 2001

I refer to the above and to your letter of 19 October 2001,contents of which I note.At the October Finance and General purposes committee meeting the Draft Budget 2002/2003 was considered by Council and members were very concerned by the implications the £2 million pound reduction in the resources element of the General Grant would have on the ratepayers of Carrickfergus(a potential 2p increase in the rates based on 2001/2002 figures). The Council would comment as follows :

(1) The purpose of resources grant is to provide additional assistance to councils with the weakest rates bases(the poorest councils)yet it is the councils with the weakest rates basis that will suffer.

(2) The Executive is committed to New Targeting Social Need(New TSN).It appears contrary then that the DOE which is to receive an 8.1% increase in its budget should remove £2 million from the 16 qualifying councils on the basis of New TSN.

(3) If General Grant funding is to be reduced should the reduction not apply to all 26 councils as all 26 have responsibility for waste management and other environmental issues.

(4) Will the resources grant allocation be reinstated or indeed increased for 2003/2004 onwards.

(5) The DOE has a proposed budget of £108.9 million for 2002/2003, an increase of 8.1%;can savings/reductions not be made in other spending areas.

Should you require any further clarification on any of the foregoing points please do not hesitate to contact me.

DAVID J MCCLEERY
Acting Director of Financial Services
Carrickfergus Borough Council

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WRITTEN SUBMISSION BY:
COOKSTOWN DISTRICT COUNCIL

16 October 2001

Draft Budget 2002/2003

Miss Finnegan’s letter dated 25 September 2001 was considered by my Council at meeting held on 9 October 2001.

The council was alarmed at the reduction in general grant and the impact this will have on the Domestic and Non Domestic Rate for the district.

In the letter it was pointed out that the estimated reduction in the current year’s resources grant would be 14% or £82,000.

I informed the Council that based on the current year’s estimate this would mean an increase of 2.77p in the £ on the Domestic Rate and 0.41p increase in the £ in the Non Domestic Rate.

In the Draft Budget for 2002/03 the percentage increase is estimated to be 7%, which is well above the rate of inflation and this will mean a substantial increase in the Regional Rate.

I was directed by Council to express its concern at the level of reduction in general grant and to the proposed percentage increase in the Northern Ireland executive Draft Budget for 2002/03 and the impact this will have on the Regional Rate.

Perhaps you could also clarify the following points raised by the Council:-

1. What are the European Union Directives that are being financed by the £2m being taken from the resources element of General Grant and do these directives affect all 26 Local Authorities?

2. What was the basis used by Department of Environment, Local Government Branch in calculating the indicative reduction in the Resources element of General Grant as advised in letter dated 25 September 2001?

3. Is the reduction being used to finance "Free Transport" for the elderly?

4. Is the reduction an attempt to minimise the rise in the Regional Rate at the expense of a rise in the District Rate, which will have to be explained by the members of the Council.

N A BOWNES
Chief Finance Officer/Assistant Clerk/Chief Executive

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WRITTEN SUBMISSION BY:
DERRY CITY COUNCIL

23 October, 2001

Draft Budget 2002/03 – Reallocation Of £2 million From Resources Element of

General Exchequer Grant

I refer to letter dated 25 September, 2000, (LGD 3/4/01) from Miss M. F. T. Finnegan, notifying the Council that it has been necessary for the Department of the Environment, within its draft budget allocation, to reallocate £2 million from the resources element of the General Exchequer Grant available for distribution to District Councils in 2002/03.

A reduction of £2 million from the resources element of the General Exchequer Grant will affect approximately 16 Councils with the weakest rates base and, in the case of Derry City Council, will result in a reduction in General Grant of £342,000 or 57% (based on 2001/02 provisional estimates of expenditure) if not reinstated. This would amount to an increase of 2.11% which would have to be passed on to ratepayers.

This matter was discussed by the Policy and Resources Committee of Derry City Council on 16th October, 2001, and the unanimous view of the Committee was to object strongly to the proposed reallocation on the basis that those Councils with the weakest rates bases would be affected by this decision.

Furthermore, it is also totally unacceptable to this Council that this will result in an increase of approximately 2.11% in net expenditure which will have to be passed on to ratepayers. In the present economic climate it is unfair to expect the ratepayers of Derry City Council to bear this cost in addition to the proposed increase of 7% for the Domestic Regional Rate and 3.3% for the Non-Domestic Regional Rate in the Northern Ireland Executive’s Draft Budget for 2002/03.

The Policy and Resources Committee further recommended that the Minister for the Department of the Environment be invited to attend a Special Council meeting to discuss the reallocation of £2 million and this will be ratified at the full Council meeting tonight.

JOSEPH CAMPBELL
City Treasurer

cc: Miss M F T Finnegan, DOE Local Government Division
John Simmons, Clerk to the Committee of Environment

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WRITTEN SUBMISSION BY:
DOWN DISTRICT COUNCIL

24 October 2001

DRAFT BUDGET 2002/03

Down District Council at its meeting of the Policy and Resources Committee on 8 October 2001 considered the Draft Budget (2002/03) as agreed by the Executive on 25 September 2001. The Council were dismayed at the reduction in General Grant, particularly as it affects 16 of the 26 Local Authorities. In particular, the resources element of General Grant is allocated to those Councils who do not have an appropriate wealth base on which to raise rates. The current calculation of resources element takes this clearly into consideration and in reducing the amount of resources element to the Executive is, in the opinion of this Council, contravening the Targeting Social Needs requirements of Central Government.

The Council felt that if, as indicated, the money was required to meet EU Requirements, and these fell to Government Departments, it should be met out of Departmental allocation. As these costs are met from Regional Rates, it was felt by the Council that it would be more appropriate that these are met from that Rate, which would allocate the costs across all 26 Local Authorities equitably.

NORMAN STEWART
Director of Corporate Services

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WRITTEN SUBMISSION BY:
DUNGANNON DISTRICT COUNCIL

24 October 2001

Draft Budget 2002/2003

At the monthly meeting of Dungannon & South Tyrone Borough Council held on Monday 8 October 2001 the Department’s correspondence on draft budget 2002/2003 was the subject of debate. Councillors expressed amazement and extreme concern that the Department should consider reallocation of £2m from the resources element of the general exchequer grant available to the department for distribution to District Councils in 2002/2003. The indication for this Council being that there will be a reduction of 19 per cent or £109k. This requires an additional 2.47p of local rates to be raised to maintain our present level of spend.

The Council has asked me to covey to the department its unanimous opposition, extreme concern and make the following points:

1. The distribution of general exchequer grant is not and cannot be an ad hoc arrangement but is based on the use of a formula and dictated by conditions which exist within each Council area.

2. In more recent years there has been a clear policy by government to target social need. The present proposal targets those councils with the least ability to pay and appears to be contrary to the policy.

3. Not all councils require or receive general exchequer grant. The present proposal does not treat councils in an evenhanded manner.

4. The removal of £2m from the general exchequer grant will have a serious effect on the councils concerned but is derisory in the overall budget managed by the Department of Finance and Personnel.

5. If additional monies are required to deal with province wide initiatives funding should be raised by way of the regional rate.

6. Considerable academic research has been carried out into measures of deprivation in Northern Ireland. In 1996 we had the publication of Relative Deprivation in Northern Ireland the Robson Report and June 2000 Measures of Deprivation in Northern Ireland by Noble. The Robson indices ranked Dungannon 5th out of 26 in terms of deprivation and Noble ranks Dungannon 9th most deprived out of all 26 Council areas. It is important that the Department considers their present proposal against the issue of equality.

Chief Executive

Copy: Miss M F T Finnegan, Local Government Division
Mr John Simmons, Committee for the Environment

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WRITTEN SUBMISSION BY:
FERMANAGH DISTRICT COUNCIL

4 October 2001

DRAFT BUDGET 2002/03

The Executive’s Draft Budget for 2002/03 was considered at the Council meeting on 1 October 2001 with particular emphasis on the impact it would have on local government in Fermanagh. I have been asked by the Council to write to both you and the Minister for Finance, Mark Durkin, voicing the Council’s total opposition to the proposed reduction of £2 million in the resources element of general grant and the proposed increase in the regional rate.

In Fermanagh, the regional rate comprises 56% and 68% respectively of the total domestic and non domestic rates payable by ratepayers in the district. The proposed increase in the domestic regional rate of 7% will impose an increase of 3.9% in total rates bills before any adjustment to the district rate. For the non domestic sector, the equivalent increase will be 2.25%. The proposed reduction of £2 million in the resources element of general grant will add 2.2p to the district rate in Fermanagh and total rates bills in the district will be further increased to 4.9% for the domestic sector and 2.95% for the non domestic sector before taking account of any increase in district council expenditure.

The current economic climate in the district suggests that such increases, ignoring any further increase resulting for district council expenditure, is not affordable and many businesses will not survive. The economy in this area is suffering from the continued differential in exchange rates and petrol stations in particular have substantial reductions in turnover. The quarrying industry is under threat from the proposed aggregate tax and the district has suffered substantial redundancies in the textile industry. The decline of the agricultural sector is particularly prevalent in this area with the subsequent knock-on effect to the local economy.

The Council’s view, therefore, is that the proposed reduction in the resources element of general grant is simply not acceptable and the proposed increases in the regional rate are not affordable. In addition to existing financial pressures, this Council is facing a substantial increase in expenditure in the very near future as a result of our requirement to develop a new waste disposal site and the continued development of recycling initiatives.

We note from correspondence that the £2 million reduction in resources grant is required to fund the cost of compliance with EU legislation on waste management. This will be to the benefit of all local authorities in Northern Ireland but the impact will be felt by the 16 Councils who currently receive resources grant, disproportionately in accordance with their rates base. Will the decision to reduce resources grant by £2 million be subject to an equality impact assessment and assessed against TSN and PAFT?

As you are aware, there is an ongoing revaluation of non domestic properties by the Valuation and Lands Agency, the results of which will apply to the 2002/03 year. In addition, the ongoing review of the distribution of resources grant will conclude early next year with a revised formula for distribution also effective for 2002/03. Both have the potential for significant impact on the finance available to Fermanagh District Council and on the district rate in this area. In essence, the time is not right for a major reduction in central support to local authorities.

In overall terms, the £2 million reduction in resources grant is small in relation to both the Department’s and the Executive’s budget but if implemented, will have a major impact on local government particularly here in Fermanagh. This Council calls for the reinstatement of the £2 million in the resources grant, not allowing for any indexation and requests a review of the proposed increases in the regional rate which are simply not affordable by businesses in this area.

A similar letter has been forwarded to Minister Mark Durkan, Department of Finance and Personnel and copied to the Chairmen of the Environment and Finance and Personnel Committees of the Assembly.

CHIEF EXECUTIVE

cc Rev William McCrea MLA, Chairman, Environment Committee, NI Assembly
Mr Francie Molloy MLA, Chairman, Finance and Personnel Committee, NI Assembly

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WRITTEN SUBMISSION BY:
LIMAVADY BOROUGH COUNCIL

1 November 2001

Council at a recent meeting noted with serious concern Marie Finnegan’s letter of 25 September which indicated that, as a result of newly emerging inescapable costs in relation to EU directives, your Department had found it necessary to reallocate £2m from the resources element of the General Exchequer Grant (GEG) normally allocated to district councils.

Based on figures for 2001/02, Limavady Borough Council’s apportionment of the reduction equates to 7% on £71K. With a penny product of only £30,961, this reduction in the General Grant will result in an immediate increase on the rates of 2.33 pence or 2.13% in the year 2002/03.

Over the years Council has struggled to provide a value for money service to its residents. It has done so against a backcloth of some very serious social and economic problems:-

Accordingly, Council is most concerned that the proposed cut in the General Grant will have a further major negative impact on the economy of the borough.

Council would welcome an opportunity to meet with you at an early date to explore how the General Grant can be retained at its historic levels.

Town Clerk & Chief Executive

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WRITTEN SUBMISSION BY:
MOYLE DISTRICT COUNCIL

15 October 2001

RE: DRAFT BUDGET 2002/3

On behalf of Moyle District Council, I write to express our concern regarding proposals to reallocate £2m from the resources element of the General Exchequer Grant. For Moyle District Council this would indicate a reduction on the current year’s resources grant provisions of approximately 8% (or £39,000) equating to an additional 2p on the rates.

Council also expressed concerns over moves to increase the regional rate.

In terms of equality, we feel this is grossly unfair since the burden of this increase will fall on the 16 "poorer" Councils currently in receipt of the resources grant. Therefore, we feel the Draft Budget 2002/3 is unacceptable, and disapprove of the above proposal accordingly.

MOIRA QUINN
Director of Finance & Administration

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WRITTEN SUBMISSION BY:
NEWRY AND MOURNE DISTRICT COUNCIL

22 October 2001

Consultation on Draft Budget

I refer the above and comments are as follows:-

1. Regional Rate

I refer page 15 of the Draft Budget 2002/2003 item 29.

"Domestic Regional Rate to be increased by 7% and Non-Domestic Regional Rate by 3.3% in 2002/2003".

I would point that the effect of this in the Newry and Mourne Area in respect of Domestic Rate will be to increase the overall Rate Bill by approximately 50% of the 7% which is 3.5% excluding any increase which would be levied by the District Council.

2. Government Grant – Resources Element
Reference Draft Budget 2002/2003

Local Government Services page 42 last paragraph " Provision has been made by the Local Government Services etc, etc, …… the General Grant to Councils will therefore not be maintained at previous levels".

In respect of this District Council, the Department of the Environment, Local Government Division has advised in their letter of 25 September 2001, of monies available under the resource element of this Grant. The letter sets out that the Grant after the proposed budget reduction for 2002/2003 will decrease by £236,000.

At the date of writing for the financial year 2001/2002 it seems that approximately 16 of the 26 District Councils benefit from the Resource element of the General Grant to a greater or lesser extent. If this £2,000,000 savings remains in the budget for 2002/2003, it is going to affect only 16 of the 26 District Councils. By its very nature this Resources Grant was supposed to take into account matters such as the socio/economic profile within a District Council area. The effect of the cutting of this £2,000,000 will have a disproportionate effect on these 16 Councils which the Grant already acknowledges have a socio/economic profile less than the average for Northern Ireland.

3. General Grant Review

In addition to matters at 1 and 2 above which will have an affect on the District Rate and the Overall Rate in the District for 2002/2003, you should be aware that there is already a review being undertaken how the General Grant – Resource Element is calculated for each District Council. In a consultation paper produced on the 21 September 2001 the Department of the Environment, Local Government Division advised the Council of the likely implications. It would seem that for the year 2003/2004 when this scheme will be implemented, it is likely to decrease the General Grant figure by approximately £177,000. In a previous consultation paper, which was produced on 1 September 2000, Newry and Mourne were going to suffer by an amount of £298,000.

In conclusion whether the changes take place in the year 2002/2003 or 2003/2004 the impact is a significant increase not only in the District Rate but also the Overall Rate of Newry and Mourne. A figure of 4.85 pence is suggested which represents 3.7% of the District Rate, but also a significant increase in the overall Rate. These figures are before any increase is applied for inflation or any adjustments to services.

Please note these matters in your deliberations on the Draft Budget for 2002/2003.

ROBERT DOWEY
Director of Finance

cc: John Simmons

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WRITTEN SUBMISSION BY:
STRABANE DISTRICT COUNCIL

5 October 2001

Draft Budget 2002/3

I refer to letter of 25 September 2001 received from the Department of the Environment (DOE) regarding the above.

I am writing on behalf of Strabane District Council to advise you that this Council is extremely disappointed to learn that the resources element of the General Exchequer Grant (GEG) available for distribution has been cut by £2,000,000 for 2002/3. This element of the GEG is targeted at the poorer council areas and as one of the most socially deprived districts in Northern Ireland, Strabane District can ill afford the loss of £75,000 as mentioned in the letter. It leaves Council in a very difficult position in terms of setting its own budget for 2002/3 when we take account of other factors influencing our cost base. This cut in GEG, when factored into the 2001/2 figures, results in an increase of 2.4p (2.25%).

I refer to the Consultation Paper – Proposals for a New formula for Distribution of the Resources Element of General Exchequer Grant issued on 21 September 2001 by DOE. We very much welcome this review, in particular the key objectives ‘to provide additional resources’ to the poorer district councils and ‘to target social need’. However the final objective ‘to allow better financial planning by district councils’ and with it the whole premise of the consultation paper will come to nothing if the resources element of GEG can be cut by £2,000,000 (10.5%) to accommodate new cost pressures on DOE.

Accordingly we would recommend that DOE revisit the figures and reinstate the resources element of GEG to £19,000,000 as envisaged in the consultation paper.

PHILIP FAITHFULL
Clerk & Chief Executive

cc: Mr Sam Foster – Minister of the Environment
Mr Mark Durkan – Minister of Finance & Personnel
DOE & DFP – Committees
Ms M. Finnegan

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SCRUTINY OF DRAFT BUDGET BY:
COMMITTEE FOR FINANCE AND PERSONNEL

The Committee for Finance and Personnel focused on a scrutiny of the Department for Finance and Personnel’s activity and resource requirements in relation to the Central Finance Group (CFG). CFG had received a significant percentage increase in financial allocation and the Committee examined the assumptions and projections that underpinned the additional resource allocation and the capacity for service enhancement.

CFG has a pivotal role in ensuring that the Executive Committee makes informed decisions on the priorities for budget allocations based on conclusive and accurate information and an objective assessment of the requirements. The work of the Group has increased substantially due to the additional pressures introduced through devolution and the consequent need for greater financial transparency and scrutiny by the Executive and Statutory Committees. CFG has also played a critical part in negotiating and delivering the results of consultation on budget rounds and EPF bidding rounds.

The Committee welcomed the allocation and recognised that the increased resources for CFG should enhance DFP’s strategic role as the financial manager and co-ordinator of the Budget and financial processes. This would ensure that:

The Committee was concerned that any additional resources committed to internal administration should reap measurable or recognisable benefits. The Committee therefore intends to undertake in due course an examination of the effectiveness and value for money achieved by the Department in its management of the financial and budgetary process.

FRANCIE MOLLOY
Chairman

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WRITTEN SUBMISSION BY:
COMMITTEE FOR HEALTH, SOCIAL SERVICES AND PUBLIC SAFETY

Introduction

1. The HSSPS Committee welcomes the opportunity to comment on the draft budget for 2002 03. It has had an opportunity to discuss with departmental officials the implications of not being successful in achieving all of the bids put forward. The Department has only received £31m from bids of £122m.

2. In its response to the Executive’s Position Report to the Assembly on Developing the Programme for Government and the Budget for 2002-03, the Committee stated " The morale of both patients and staff in the health service is at an all-time low. Waiting lists are growing, the unacceptable practice of patients being placed on trolleys continues, and the availability of services fails to meet the demand in many areas". Unfortunately the position has got worse since this statement was made in July 2001.

3. Committee Members have recently visited the A&E and Intensive Care Departments of the Ulster Hospital and were, quite frankly, appalled by what they saw and heard. Patients lying on trolleys, and sitting in chairs, because there are no more trolleys available, is a daily occurrence. The staff members are under so much pressure they can not deal adequately with patients. The position is the same in most A&E Departments throughout Northern Ireland. If extra funding is not found then the closure of A&E departments for periods of time, is a distinct possibility in the future.

4. Elective surgery is being routinely cancelled in many hospitals because of the shortage of beds. There is also a chronic shortage of specialist theatre nurses in areas such as orthopaedics and neurology with the resulting cancellation of theatre lists. Cancer patients are regularly inconvenienced by the breakdown of old equipment at Belvoir Park Hospital and the funding has not yet been identified for the planned Regional Cancer Centre at the Belfast City Hospital. The saga of the planned Regional Maternity Hospital continues even though the Jubilee has been closed and demolished some time ago.

5. The Committee is greatly concerned that the annual percentage increases in health spending over the next two years is over 2% less than that in England in each year i.e. 7.2% as opposed to 9.3% in 2002-03 and 5.4% as opposed to 8.0% in 2003-04. The great bulk of costs are driven by developments in England e.g. pay, drugs, clinical and other standards and unless there is matched funding there will be a continuing deterioration in the levels of service compared to England. None of the figures take into account the higher levels of need and demand in Northern Ireland as compared to England. The increase of 7.2% is bad enough but the increase of 5.4% for 2003-04 will result in dramatic cutbacks in an already inadequate health service.

Draft Budget 2002-03

6. The Committee fully supported the Minister in her bid for an extra £122.6m and it is greatly concerned that only £31.6m was allocated. Although it was hoped that this latter figure would have covered essential expenditure it now turns out that the costs for junior doctors pay will be £3.5m above what was estimated and the care costs for people with learning disabilities will be an extra £2m. The total inescapable bids are therefore £37.1m i.e. £5m short of what has been allocated. The remaining £91m was to be for developments to help the Health Service to only stand still.

7. It has been noted by the Committee that the overall spending for 2002-03 is proportionately on a par with the current year. There has not, therefore, been a proportionate increase in the health share of the Northern Ireland Block despite the ever increasing demands.

8. In his draft budget speech to the Assembly on 25 September 2001, the Minister for Finance and Personnel stated " we (i.e. the Executive) came to the view that health, education and roads were among the services facing the most acute difficulties, and would have to be given a degree priority". The Committee would contend that not sufficient priority has been given to health in the draft budget and that much more needs to be done to prevent the service declining further.

9. The Committee is concerned that the draft budget will do nothing to reverse the increase in the waiting lists. It is alarmed to note that the recent draft Programme for Government has a target by March 2003 to maintain the waiting lists at the March 2002 level. As no one knows what the latter figure will be it is not possible for the Committee to accept such a target. The trend is upwards with the latest figure at 54,000. The first Programme for Government, published earlier this year, had a figure of 48,000 that was to be reduced to 39,000 by March 2004. This target will not be met bearing in mind the current spending proposals for the next two years.

10. The 2002-03 budget will not help solve the bed-blocking problem. There is no extra money to provide sufficient community-care packages. With an average stay per patient, other than those requiring community-care packages, in our hospitals of around 7 days, it is estimated that the waiting lists could be reduced by at least 7,500 each year if this problem could be solved.

11. The Committee is deeply concerned that there does not appear to be any provision for the funding of the Regional Cancer Centre at the Belfast City Hospital. The facilities at Belvoir Park Hospital are totally unacceptable. The uncertainty about when the new regional centre will be available is causing great concern among both patients and staff. It is understood that it will be a minimum of three years before it is provided once a decision is made and the funding is found. Cancer patients cannot wait.

12. The Committee believes that free personal care for the elderly should be made available. It is most concerned, therefore, to note that not only is this service not to be provided but that free nursing care is to be deferred. With the prospect of even less resources being available in 2003-04 it would appear that free nursing care could be a long way off.

13. There is a great need to find funding for many facilities and services including the estimated £1.1b for the implementation of the Acute Hospitals Review Group recommendations, the funding of primary care, the Regional Cancer Centre, the Regional Maternity Unit, care for the elderly, the ambulance service, new drugs, children’s’ services, necessary increases in numbers of medical and ancillary staff and winter pressures. The Committee is most concerned that there does not appear to be a plan to identify how these needs will be met.

Conclusion

14. Even if the Department’s budget bid of £122.6m had been fully met, the standard of service for the people of Northern Ireland would be less than that to be provided in Scotland and England. With only £31.6m being provided for 2002-03 the service must fall even further behind.

15. The Committee is concerned that whenever extra funding for health is announced in England, the Northern Ireland share does not go directly to the health service here. It is redistributed through the Northern Ireland Block and invariably the full amount is not allocated to health. This will result in Northern Ireland falling further and further behind in the levels and standards of service.

16. The Committee is most disappointed at the proposals for health in the draft budget and calls on the Executive to declare the Health Service the number one priority and provide the necessary funding.

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WRITTEN SUBMISSION BY:
COMMITTEE FOR REGIONAL DEVELOPMENT

10 October 2001

Mr Leslie’s letter of 25 September refers.

The Regional Development Committee has now had an opportunity to consider the draft budget 2002–03. The Committee wishes to register its gratitude to the DRD officials for their co-operation and assistance throughout the Committee’s deliberations on both the draft budget and the Programme for Government.

Overall, the Committee welcomes the increase in DRD’s budget of £42 million, representing an 8% increase from 2001-02. It is noted that there are significant increases for roads and transport, which should help address the backlog in roads maintenance, as well as providing for the purchase of new train sets.

As much as this additional funding is welcome, there still exists an approximate £100 million backlog in road maintenance while Water Service also requires major capital investment to update water pipelines and sewerage systems. Outbreaks of cryptosporidium and the inability of the sewage system to cope with heavy periods of rainfall over the past few years, has highlighted the need for major investment in the water infrastructure.

The lack of investment in roads, water and public transport has also had repercussions for the economy, the environment, health and public safety. Indeed, the draft Programme for Government states that "major public services such as public transport, roads, water and sewerage is essential for the social and economic well being of the region". The Regional Development Committee believes that this must be a key priority for government. In many ways this investment is about "spending to save" given the long term benefits that it could bring to the economy, tourism, environment, health and social inclusion.

The Committee welcomes the announcement by the acting First Minister that an additional £40 million will be made available for the A8 road from Larne to Belfast, the Newry-Dundalk road, plus a significant contribution to the upgrading of the Westlink. The Committee is seeking reassurance that this expenditure will be additional to DRD’s current roads allocation and no other road schemes will be delayed as a consequence. Ideally, such funding should be made available through the Executive Programme Funds.

The Committee welcomes the provision of £48 million in 2002-03 for the purchase of new train sets. Similar to roads and water, investment in the public transport system is in a catch-up situation, after many years of under investment. New train sets will undoubtedly make train travel more appealing and the proposed Railway Safety Bill will help ensure high standards of rail travel safety. The Committee believes however, that there is still a lot more to be done if rail travel is to become a major form of commuter transport. Considerable more money will have to be invested, not only in train sets, but also in improving access and facilities.

The Regional Development Committee, being conscious of funding pressures right across the Northern Ireland block, believes that new approaches to funding should be considered. Given the cost of train sets the possibility of leasing should be revisited. The Committee is aware that leasing arrangements are in place in GB. If leasing was introduced it would release funds for investment on other infrastructure improvements.

A similar situation also exists with the age and standard of Northern Ireland’s buses. The Committee believes that additional funding should be made available to reduce the average age of Northern Ireland’s bus fleet. A shift in commuter attitude to using the bus service will only be achieved by major upfront investment to provide a quality, efficient bus service. By encouraging commuters out of their cars into both trains and buses, will alleviate congestion, particularly in the Belfast Metropolitan Area, as well as making a positive contribution to the economy and the environment.

Indeed, a reliable and efficient bus network, particularly in rural areas, where up to 30% of households do not have access to a car, also makes a positive contribution to promoting social inclusion, a key government priority. There are genuine growing concerns that rural bus services may be significantly reduced if private operators continue to target the more profitable routes, forcing Ulsterbus in turn, to reduce services on the less profitable rural routes. Consequently, the Regional Development Committee would encourage government to provide additional funding for improving the Northern Ireland bus fleet and aim to set targets for reducing the average age of buses in line with the GB target.

On a presentational point, the Committee would welcome in the table outlined on Page 44 of the draft budget, a more detailed breakdown of each spending area within the main objectives. If this information is to be covered within the Service Delivery Agreements (SDAs) it is important that these are made available as soon as possible.

The Regional Development Committee would also find it useful if budget expenditure could be monitored on a quarterly basis. This could coincide with the monitoring rounds. The Committee is grateful to the Department for Regional Development for agreeing to set up such a system.

I am copying this letter to the Department for Regional Development.

ALBAN MAGINNESS
Chairman
Regional Development Committee

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WRITTEN SUBMISSION BY:
COMMITTEE FOR SOCIAL DEVELOPMENT

12 October 2001

DRAFT BUDGET 2002–03

I refer to James Leslie’s letter of 25 September in which he invited Committees to submit responses on the draft Budget for 2002-2003 to the Finance and Personnel Committee by 26 October.

The Social Development Committee met with the Minister on 4 October to discuss the draft Programme for Government (PFG) and the associated draft Budget. As a result of those discussions, and further consideration by the Committee, I am writing to let you have the views of the Social Development Committee. This response should be read in conjunction with comments the Committee has submitted to OFMDFM on the draft PFG. These comments are contained in my letter of today’s date to OFMDFM, a copy of which is enclosed.

At the outset I want to place on record the Committee’s appreciation for the improvements made to the Budget timetable which enabled it to look critically at the draft Budget. The Committee is also grateful to the Minister for Social Development for responding positively to its call for him to attend the meeting on 4 October.

The Committee also wishes to acknowledge the useful work done by officials over the summer, and more recently, in unravelling some of the mysteries of the budget for Social Development.

You will see from our comments on the draft PFG that we are reasonably content with the broad direction proposed to "together tackle disadvantage and build communities". Our concerns relate to the urgency and ways in which the Department might fulfil its aim.

Objective 1

The Committee recognises the resource intensive nature of the front-line services provided by the Social Security Agency and the Child Support Agency and the fact that the commitments are "inescapable". The Committee welcomes the targets which are stated, clearly, in the draft PFG. The Committee is satisfied that both Agencies recognise the virtue of efficiency, reducing fraud and improving the accuracy of payments and welcomes the efforts being made by the Agencies in these areas. However, the Committee is concerned that investments in systems aimed at improving efficiency have failed to prevent substantial increases in ‘running costs’. The Committee considers there is absolutely no room for complacency in this regard and has urged the Department to ensure that it redoubles its efforts in this area.

Objective 2

The Committee has specific concerns about the funding available to tackle fuel poverty and housing needs.

In a recent debate in the Assembly, it was evident that the eradication of fuel poverty enjoys widespread, and cross-party, support. This Committee has been pressing the Minister to extend the Warm Homes scheme and the arguments for doing so are rehearsed in our response to the draft PFG.

This scheme involves a ‘one-off’ capital cost with no recurring implications. Ultimately it will improve the health and well being of those affected by fuel poverty and, indeed, there are likely to be consequential savings in the health budget. The Committee strongly endorses the bid made by the Minister for additional funds and is extremely disappointed to find that it has not been met. Given the high level of demand for the scheme, the Committee understands that the Department may find it necessary to divert resources from private sector grants. The Committee is concerned about the consequences of such a re-ordering of priorities but accepts that it may offer a partial solution. However, the Committee would appreciate it if the Minister for Finance was to look again at possibility of releasing further funding for this scheme.

The Committee is also very supportive of the Social Development Minister’s bids for additional funding for increased activity in terms of kitchen replacement work and an acceleration of the programme to replace Economy Seven and Roomheaters. The Committee is concerned that, because of undoubted and very welcome investment in housing programmes in previous years, the Minister for Finance and the Executive may consider that it is no longer worthy of priority status. It is the Committee’s view that such an approach is at odds with the philosophy for greater social inclusion and the commitment to provide help for those who are most disadvantaged. It is those who are socially excluded and most disadvantaged who tend to suffer from poor housing conditions.

The Committee also considers that a period of under investment is short sighted and will have serious repercussions in terms of people having to wait longer for improvements and the potential for remedial costs continuing to rise. The Committee does not consider that this is the sort of message which the Assembly should be sending out.

Much has been made of the North Belfast Housing Strategy; indeed it enjoys the whole-hearted support of the Social Development Committee. However, the Committee is concerned that it appears that work is not likely to start in places like Glenbryn and Mountcollyer until late next year amidst doubts that funding for the strategy are far from secured. The Committee is also concerned that bids submitted by the Department for funding site acquisition to enable the North Belfast housing programme to proceed have not been met - casting further doubt over the extent of the political commitment to the strategy.

Objective 3

The Committee notes that funding in this area will only become clear after decisions on Peace II have been made. The plight of groups in the voluntary and community sectors is already well known and the Committee would welcome any pressure the Finance and Personnel Committee can bring to bear to ensure a positive and early outcome to this matter.

General

Finally, you may wish to note that the Committee was concerned to discover that, at a time of falling interest rates, the Department is having to make additional provision to repay loan charges. It has asked for a fuller explanation from the Department, but at the time of issuing this letter, a reply is still awaited.

I have copied this letter to the Minister for Social Development.

FRED COBAIN
Chairman

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WRITTEN SUBMISSION BY:
COMMITTEE OF THE CENTRE

11 October 2001

The Committee has asked me to write to you setting out its views on the Draft Budget for 2002-03 following the discussion with junior Ministers at the Committee meeting on 3 October. During the meeting, members raised a number of concerns about the Draft Budget, and the approach to the budgetary process that has been adopted by the Office of the First Minister and Deputy First Minister.

The Draft Budget provides for departmental expenditure for OFMDFM totalling £31.9m in 2002-03, including allocations from the first round of the Executive Programme Funds. This represents an increase of £0.8m or 2.7% over the provision for 2001-02. When expenditure supported by the EU Peace Programme is included the budget rises to £33.5m compared to £33.1m for 2001-02. This reduces the percentage change from 2.7% to 1.3%.

The Committee notes that according to the document presented to the Assembly on 25 September,

"the Draft Budget has been developed in the context of supporting the priorities and principles of the Programme for Government".

Despite the reassurances that the Committee received from the junior Ministers that the outcome for OFMDFM was reasonable, the Committee remains concerned that there will be difficulties in taking forward work in a number of high priority, high profile areas given the level of funding.

The junior Ministers advised that much of the work of OFMDFM is of a central, cross-cutting nature dealing with many sensitive areas. The Committee endorses this assessment and in light of it, considers that a more vigorous bidding process should have been pursued to secure, at the least, baseline funding for work on the appointment of the Children’s Commissioner, the Review of Public Administration and the implementation of the cross-departmental strategy for the promotion of community relations. The Committee is not reassured that funding for these important areas should be left to be considered during the in-year monitoring rounds or as bids for expenditure from the Executive Programme Funds.

The Committee notes that the Draft Budget makes provision for increases in expenditure in 5 areas ie work on the Single Equality Bill (£300k); the Civic Forum (£200k); the NI Bureau in Washington (£200k); new TSN research and valuation (£100k) and the Strategic Issues unit (£100k). Members question whether the correct balance has been struck between the high priority areas such as the Economic Policy Unit, the allocation of the additional funding and the benefits this might deliver.

Specifically the Committee considers that the absence of funding in the following areas calls in to question the ability of OFMDFM to deliver on a number of the commitments set out in the draft Programme for Government (PfG) –

The Committee had previously been advised that this may cost between £1m and £2m per annum. The target date in the draft PfG for the Commissioner to be in place is June 2002. The junior Ministers advised that it had only been possible to lodge a marker bid as it was not possible to provide an accurate estimate of the cost at this stage. The Committee is not convinced.

The Committee had been told this may cost £2m. According to the draft PfG it is due to start in Spring 2002. Funding of £100k has been included in the Draft Budget for the Strategic Issues Unit. The Committee was advised that this Unit may have responsibility for taking the review forward. The target date for the commencement of this high priority, cross-cutting review has already slipped from the first Programme for Government. Given the importance of this review, the Committee considers that OFMDFM should have lodged this as a high priority bid for the Draft Budget 2002-03 and should have argued strenuously for adequate funding for it.

The Committee was advised that only a marker bid for the implementation of the cross-departmental strategy had been lodged. The Committee questions whether this is the correct approach given the sensitive and high profile nature of this work.

Provision for increase in running costs

The junior Ministers informed the Committee that the Draft Budget did not contain any provision for an increase in running costs and that this would have to be met from within existing resources. The Committee wishes to be advised of how this may be contained; what options are available for re-prioritising expenditure or cutting services to meet pressures in other areas and which have been considered. The Committee also wishes to be up-dated on the staffing reviews due to be completed by the end of the current financial year.

The Committee noted that it had not been sent a detailed breakdown of the Draft Budget of £33.5m showing how it will be allocated between the different functions and programmes and considers that such detailed information should automatically be sent to the Committee when it is considering budgetary issues. I should therefore be grateful if you cold send me this information so that I can pass it to the members.

A copy of this letter goes to the Committee for Finance and Personnel.

DEBBIE PRITCHARD
Principal Clerk
Committee of the Centre

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Appendix 7

Minutes of Evidence

MINUTES OF EVIDENCE

Tuesday 25 September 2001

Members present:

Mr Leslie (Deputy Chairperson)

Mr Attwood

Mr B Bell

Mr Close

Mr Dodds

Ms Lewsley

Mr Maskey

Mr Weir

Witnesses:

Mr M Durkan )

Mr M Daly )

Dr A McCormick ) Department of Finance

Mr D Sterling ) and Personnel

Ms P Gibson )

1.

The Deputy Chairperson: I welcome the Minister and his officials here today. We may have to break for a Division in the House in about 20 minutes.

2.

Mr Dodds: If a petition of concern is put forward, that vote will be postponed.

3.

The Deputy Chairperson: That will make things easier for the Committee. As we have already explained to the Minister, the session will be divided into three chunks, of which the first deals with strategic objectives, and the relationship between the Programme for Government and the Budget.

4.

The Minister of Finance and Personnel (Mr Durkan): The draft Budget sets out what the Executive have agreed on how resources should be targeted to deliver on the priorities and actions that were contained in the Programme for Government. Obviously, the Committee will want to study both documents and I doubt that it will take my word on the matter. We look forward to reading the results of its study.

5.

The spending plans are clearly aimed at enabling the Departments to deliver on the priorities, actions and targets that are set out in the Programme for Government, and in the public service agreements contained therein. The Programme for Government and the Budget are interwoven: one is written in the light of the ongoing work on the other. However, it is not the case that only live considerations for inclusion and expression in the Programme for Government are admissible in a Budget- planning context, because Departments have long-standing pressures and obligations that are as relevant to their budget needs as is their new policy development and service improvement ambitions.

6.

The Programme for Government does not determine our total resources. Our resources are determined by the spending review, which provided for a rise of about 3% above the general rate of inflation. That is in addition to a 5·5% increase above the rate of inflation this year. We must address all the priorities in the Programme for Government as we bring forward the draft Budget. I hope that the Committee can use both documents to develop its own views on the service issues that we face and the type of proposals that we are making in both draft documents.

7.

With regard to the draft Budget, we have tried to focus spending where the best advantage can be obtained, or where needs are most acute and pressures are unavoidable. The Committee will know from the position report that was published earlier in the summer that we face many pressures throughout the public services. If we had simply confirmed the indicative allocations from last year, there would only be small amounts of money to allocate: £19·3 million from the Chancellor’s March Budget, and £23·5 million in reduced requirement money that had been declared by Departments. Thirteen million pounds of that is taken up by the reduced revenue from rates that resulted from a decision last February, and the rolling-forward increases are 7% and 3·3% for next year. That shows that we would have had little additional room to manoeuvre.

8.

We cannot exceed the departmental expenditure limit, but we can make an intelligent anticipation that there will be some carry-over into 2002-03. Therefore, we have safely anticipated £48 million of spending power that we can carry forward into next year, with the addition of £1·8 million.

9.

I will not go into the regional rate. However, we were able to find almost £80 million to deal with spending pressures. We are better off than we predicted we would be in the position report. We have had to make some hard choices. In my statement this morning I said that some Programme for Government commitments would have to be deferred. Free nursing care for the elderly is one of those commitments. I stressed that if any additional money becomes available, deferred Programme for Government commitments should have priority.

10.

I would like to give you an update on the statement I made this morning, and I would be grateful if the Committee could pass on the information to the Committee for Health, Social Services and Public Safety. At the last Executive meeting, where the Budget was agreed, the option of redeployment from primary care of planned administrative savings following the abolition of fundholding was identified for consideration in order to avoid harmful cuts to existing services. In paragraph 62 of my statement I spoke of that clear understanding, and made the point about the implications for free nursing care. I have subsequently been advised that the Minister of Health, Social Services and Public Safety hopes to avoid harmful service reductions without taking the redeployment option. I would appreciate it if the Committee could communicate that update to the Committee for Health, Social Services and Public Safety.

11.

Mr Weir: One of the aims of the Executive programme funds was to have a fresh look at cross- cutting issues. Last year it was disappointing that very little money was allocated to cross-departmental projects. Will greater priority be given to these issues, rather than Departments having a second bite of the cherry? You advised that £50 million is unallocated. When will allocations be made?

12.

Mr Durkan: Last year the bids reflected a hangover element from the Budget round, which was to be expected in the first tranche. Many Committees backed and endorsed bids because of the problems that Departments were facing. The Executive have made it clear that they want to see more cross-cutting bids and allocations. That does not mean that there will be free novelty expenditure that is cross-cutting. We want cross- cutting spending that delivers on Programme for Government commitments which are relevant to the Executive programme funds because they help to achieve those commitments.

13.

We projected £52 million for Executive programme funds for 2002-03 and would expect to take £17 million of that in a tranche this autumn. The tranche for the children’s fund will not be due until the next calendar year. Consultation on that issue is currently under way and it would be wrong to take a second tranche where only Departments were bidding. We are trying to create circumstances in which the community and voluntary sector can make bids. In the immediate cycle we are not due to make allocations to take bids for the infrastructure fund either.

14.

Mr Dodds: I would like to apologise to the Committee and to the Minister in advance because I have to leave soon to propose an amendment to a motion being tabled in the Chamber.

15.

Will the Minister give us an idea of the range of matters deferred from the Programme for Government and the amount of money needed to meet those deferred commitments? The Minister spoke about money becoming available.

16.

Also, will the Minister advise what the overall increase is in relation to Executive programme funds and also for each specific fund? Putting the money into those funds is bound to have had some effect on departmental expenditure limits. Can the Minister advise on that?

17.

Mr Durkan: There is no change to the amounts being set aside in the Executive programme funds. They remain as previously published. The Department is endeavouring to work on the previous timetable for allocations as agreed by the Executive, which means that £17 million will be taken in the next tranche. Details of the Executive programme funds can be found on page 58 in the Budget document.

18.

Regarding the deferrals of Programme for Government commitments, I mentioned the most significant, free nursing care, in my statement this morning. A sum of £6·6 million was provided for free nursing care in previous plans. Originally £3·3 million was provided in this year’s Budget for the beginning of October. However, due to legislative and other factors, that could not happen. That then rolled forward to be £6·6 million in the plans for next year. For that to go ahead, another £2·4 million would have been needed, due to the scale of the issue and other pressures. Therefore free nursing care required a total of £9 million; £6·6 million is already in the baseline. That £6·6 million has not been subtracted from the Department of Health, Social Services and Public Safety baseline. Due to the other pressures involved, we have not been able to make good the additional £2·4 million and protect the £6·6 million already there from having to meet those other pressures on the basis of pre-existing service levels and demand expectations.

19.

Our exchanges with other Ministers and Departments indicate that the sort of allocations that would be available to Departments would mean that they will have to look again at their Programme for Government commitments, and they might have to revise the timescale for delivery. We will not be able to deliver some of those developments as soon as we had expected, and therefore there will be deferrals. When I have more information from other Ministers about the fuller implications, I will inform the Committee and the Member.

Mr Close: I want to follow up on how you decide on your priorities. I was pleased to read in your statement at paragraph 31: "We can and should break further away from the patterns we have inherited."

20.

It strikes me that we are still slavishly following patterns that have been inherited. Take health as the example — the critical number one priority — I do not need to rehearse the dreadful state of the Health Service, where it is no exaggeration to say that people are dying due to the lack of money. If you are running a business and you have a cash flow problem, you cut out the non- essentials — the luxuries — and deal with the absolute essentials, the priorities. We are in a cash crisis, but money is being spent on items that verge on being luxuries and peripherals. For example, a fortune must have been spent on consultation and glossy brochures. That is just one issue. There are issues throughout each programme. If you look at them and analyse them, and ask which one of them is worth a life, many things could be cut out while still maintaining the essentials for running Departments. Even after a cursory glance through the draft Budget, I would see more than £100 million being made available.

21.

Within the Executive programme funds, £52 million of public money has not been allocated. It sits there, while people are waiting for coronary care. A new cancer unit is being delayed for a further two years, and cancer patients think that that is disgraceful. These issues need to be addressed. We have to reprioritise how we deal with public expenditure, otherwise we are just slavishly following inherited practices. That is a fundamental issue, and it requires radical thinking. We have not yet grasped the notion of radical thinking.

22.

The pressures on the Health Service will increase. And all we are saying is that we are sorry, the money is not there, and we have to spread the butter thinly. Unless we grasp that nettle, we will continue to put sticking plasters on the major problem of people’s health.

23.

Mr Durkan: I hope that Members will recognise that in my statement this morning I did not try to put a gloss on the allocation to the Department of Health, Social Services and Public Safety. The 8·1% increase, if account is taken of the technical adjustment, is only 7·3%, so we are not trying to sell anything higher. I recognise that 7% or 8% is what is needed to maintain services and it is not enough to be able to do much more and show innovation.

24.

The starting point for the draft Budget were the indicative allocations that were agreed last December by the Executive, published and reflected in the position report. The biggest changes and the most positive adjustments are in the Health Service, schools and roads. Those are the three priority areas for additional available moneys.

25.

Unfortunately, other Departments and programmes have their own pressures; that is reflected by a number of Committees. The Finance and Personnel Committee produced a report that reflected the considerations and pressures right across Committees. I am happy if, in the future, the Finance and Personnel Committee edits out certain things or clarifies the areas it does not regard as priorities. I would be happy if the Committee wants to articulate those priorities, just as I share with ministerial Colleagues my belief that the three programmes most in need of additional attention beyond the indicative allocations last year were the Health Service, schools and roads.

26.

Obviously, we must agree on a Budget. We have a system that requires consensus not only in the Executive but also in the Assembly. That affects the balance of changes that we can make, just as it affects what revenue we raise to meet these pressing needs. Exactly the same criteria applies not only in comparing additional expenditure but also in foregoing possible revenue increases that we can get, albeit by unattractive and unpopular means.

27.

I agree with the Member that we must be more radical. A spending review is coming up next year. On the basis of that spending review we cannot work simply on the principle of what we have, we hold. Ministers, departmental Committees and Departments will have to get beyond the psychology of "Does my Budget look big in this?" and decide that that is not the be-all and end-all of Budget-making. We must clearly reflect the pressing priorities. I make no secret of my recognition that the Health Service could easily, properly and valuably use more money. I make no pretence about that to this Committee or to the Assembly.

28.

The Deputy Chairperson: In your statement you referred to the problem that if something is going up, something else must be brought down. Nobody wants to volunteer to be the one that goes down. The Committee has concerns about how well these large amounts of money are being spent. Perhaps better scrutiny mechanisms are required.

29.

Mr Maskey: I am pleased that the Minister addressed the question of health this morning. Without repeating this morning’s comments, the Minister and the Executive have done a good job in squaring that circle. Health is clearly one of the more emotive and pressing difficulties. I am trying to project a few years ahead. We are being told that the current increases in the health budget, welcome though they are, were preferred in the Programme for Government, but are being deferred. In a sense we are running fast really to stand still.

30.

This is not an indictment of any particular Minister. But how can we break through this cycle? It is getting worse rather than better under the current levels of expenditure. Dramatic change is needed, which is why I am concentrating on the Barnett formula and the rates review. The rates review is not only unpopular and unattractive, it is unfair. Many people have acknowledged that. What practical steps are the Executive taking to break through the problem of Barnett?

31.

I know the arguments. If we raise this revenue, or do this or that, we will distract their hand. Those arguments may not be true. At what point can we decide that from 1 March our arguments will be marshalled and there will be a campaign to change the Barnett formula? When do we settle on the arguments? I am trying to be constructive as you were in your statement this morning, Minister, by saying that this is a collective issue. I use health as an example, because there is a new horror story in the media every day.

32.

The Deputy Chairperson: It is a long question, Minister. May I invite you to give a brief answer.

33.

Mr Durkan: I cannot counter the observations that have been made. I counsel casually that there is undue alarm in Mr Maskey’s thinking. All of us need to get real about the issues and pressures that we face. Comments are made that the huge scale of the health budget means many savings can be made. I hear pejorative references to juggernaut Departments and budgets. The scale of pressures is immense. That needs to be recognised in our Budget considerations, and when we deal with discrete issues in the Department of Health, Social Services and Public Safety’s budget and programme decisions.

34.

The Barnett formula will be relevant in the context of next year’s spending review. However, we cannot approach next year’s spending review as if Barnett is the only issue. We do not live in an over- the-rainbow world. The Treasury is not waiting for us to ask the right question, and then hand out the money. They will have hard questions for us.

35.

There will not just be bilaterals between the Treasury and the Department of Finance and Personnel. Other interests will be involved. People beyond this room have different views of our spending position. People can point to higher per capita expenditure, or isolate much higher levels of comparative spending on certain programmes. We want to emphasise that in certain programmes such as health, we are moving into a situation where our comparable per capita expenditure will be lower than across the water. The issue becomes more intense when account is taken of our relatively higher overheads due to a smaller population and rural spread.

36.

We must look at our own priorities and spending plans to ensure that we give due priority to specific issues that we want the Treasury to address. We must also ensure that we are in the best position to defend our case robustly, because the more that we can do within our own discretion, the better. We must look at other issues, for example the rates question and the rating policy review. I accept that it is not simply a matter of raising more money where we can get it. We must ensure that the whole system is fairer and more equitable.

37.

There are other things that we must do. We must ensure that we are running the tightest public procurement schemes to release more money into services, rather than handing money out to contractors. We must also look at issues such as our assets and whether we could release more money from assets that we do not particularly need to provide investment into services. We must look at those issues for there is no guarantee that we will win the case on the Barnett formula. If we do not do look at other things, we will not get very far in any negotiations on Barnett.

38.

Ms Lewsley: Minister, you know that the Committee on the Administration of Justice (CAJ) is concerned about the Department’s equality schemes. The CAJ and your departmental officials will be appearing before this Committee on 2 October. Can you explain how and whether the two new bids for Executive programme funds will go towards meeting the CAJ’s concerns on the need to tackle equality issues that have become endemic and self-perpetuating in certain communities?

39.

The Deputy Chairperson: We have moved on to the second section. Can you comment on that section, and perhaps deal with Ms Lewsley’s question at the same time?

40.

Mr Durkan: Today’s meeting follows the publication of the spending plans and the statement in the Assembly, and has therefore been a cursory exchange. I look forward to the more considered views of this Committee and of other Committees on those issues, such as whether we have been able to give, and properly reflect, sufficient priority to everything. Going back to Mr Close’s point, where a given priority is stated in the Programme for Government and is reflected in the Budget, it should be remembered that there are other pressures that we have no other choice but to meet. We cannot ignore the other real pressures that are on Departments.

41.

Mr Close mentioned the amount of money that is spent on glossy documents for consultation exercises. It should be remembered that Departments have particular obligations as far as consultation is concerned. Consultation exercises cannot be avoided. That, in turn, means that we cannot avoid producing paper or running particular events. As other instances have shown, Departments have appeared in court over whether sufficient consultation was held or if due regard was paid to issues that came forward. Irrespective of whether people value the costs of those exercises, there are obligations that Departments cannot avoid.

42.

There are certain inescapable pressures that must be provided for in the Budget, regardless of the other priorities that we want to meet, particularly in our own Budget — for example, doing more to target social need and to ensure that there are better equality impact assessments.

43.

The Department of Finance and Personnel cannot be held responsible for policing and second-guessing everything in other departmental spending plans for equality and targeting social need, any more than it can be held responsible for vetting every pound that a Department spends.

44.

The bids for Executive programme funds are aimed at making sure that our systems are better informed. They ensure that we are in a better position to provide up-to-date insights for other Departments — not least through the work of the Northern Ireland Statistics and Research Agency — and that we not only achieve best practice but also improve and develop it both for ourselves and for other Departments.

45.

However, some people fundamentally misunderstand the role of the Department of Finance and Personnel. It is there to help the Executive to come to determinations by making recommendations. The other Departments have their own responsibilities such as the statutory duties for equality. They must follow their own equality schemes and live up to those. Some people seem to think that that falls to the Department of Finance and Personnel.

46.

The Deputy Chairperson: Have you any other remarks.

47.

Mr Durkan: We were here in June. The Department of Finance and Personnel’s allocation is £0·5 million above the indicative amount. Therefore it does not provide the Department with a comfortable position compared with increases that it has achieved for other Departments. It should help us to comply with the Disability Discrimination Act 1995 for Civil Service accommodation, with the further development of the role of the Special EU Programmes Body and to complete the work on the non-domestic rate revaluation. There are also the Valuation and Lands Agency’s computer replacements, which was discussed previously. Some Executive programme funds are included in that for the integrated database of the General Register Office.

48.

Mr B Bell: As Chairperson of the Public Accounts Committee, I am aware of some glaring examples of bad practice across all the Departments. These have resulted in huge losses to the taxpayer, and they represent bad value for money. The Department of Finance and Personnel is responsible for policing the other Departments, and I was glad that you referred to that in your statement. How does the Department of Finance and Personnel intend to improve its ability to measure and evaluate value for money across the various expenditure areas? I know that you are not responsible for the losses, but I just wonder what you will do about them.

49.

Mr Durkan: We can all say that we are not responsible for the losses, but we should not take them lightly because it is wasted money. There is no shortage of better things on which we could spend it. The Department of Finance and Personnel works with the Economic Policy Unit to promote the tightest standards possible for value for money. We also need to ensure that we are all clear that the appraisals that Departments conduct are as hard-headed as they need to be.

50.

One of the things that goes with our more democratic system is that there can be impulses and pressures to see things through that otherwise would not pass. People’s thinking with regard to value for money can be conditioned by other things. For that reason we must ensure that in the Government we have a stimulus that holds to value for money.

51.

That is not irrelevant, for instance, to the consultation that will take place on audit and accountability. Just as we talk a lot about joined-up government, the Assembly can do more for joined-up scrutiny. That is why I made that reference this morning, and when departmental Committees look at their Departments’ budgets they should ensure that they are informed by previous findings of the Public Accounts Committee and that they follow through some of those observations and findings. That is part of joined-up scrutiny and is compatible and consistent with the sorts of considerations that the Department of Finance and Personnel and the Economic Policy Unit try to ensure that all Departments have regard to.

52.

The Deputy Chairperson: You mentioned assets. A departmental assets register is being drawn up, and you know of my interest in that. That is great, but an unanswered question asks about identifying assets that we do not need. If we sold those, could we retain the money and buy a hospital, or would the money go back to the Treasury? Can you enlighten us?

53.

Mr Durkan: I stated this morning in the Assembly that our budgeting position can be improved if we release assets that are not needed for any service pressures. Members will recall some of the issues that we discussed when the Government Resources and Accounts Bill was scrutinised. Capital charges and appreciation costs, that are part of resource accounting and budgeting, will fall to the departmental expenditure limit after next year. That expenditure is annually managed expenditure at present.

54.

As well as trying to release more moneys for investment in services that need them, there are other reasons why we need to look again at our position on assets. Returning to Mr Maskey’s point, the fact that we have a wider assets base in the public sector than across the water creates problems with regard to Barnett.

55.

We should look at the overall position of assets. We would retain the value of asset sales except in large-scale affairs such as a version of privatisation — for example, the Belfast port proceeds, albeit that that was the result of a particular dispensation that was offered through the Chancellor’s initiative. Something of that scale would normally fall to the Treasury. We need to look at many of the assets held by Departments and non-departmental public bodies right across the North that could be sold to benefit our spending position. We must look at those issues.

56.

Following the very good job that the Committee did in relation to public-private partnership there could be issues for the Committee to explore in this area.

57.

Mr Weir: We have heard recently about the problems facing Land Registers — lack of staff and backlog of work — which are giving rise to problems in my profession. Given these problems, could you comment on why, in the Budget allocation for the Department of Finance and Personnel, Land Registers is actually getting a reduction in resources?

58.

Mr Durkan: The agency is in the process of identifying proposals for addressing the backlog that has been highlighted by the Law Society, both directly to myself and to the Committee, and there will be a full response to the Committee’s letter on this issue. With regard to a September monitoring bid, which is one of the suggestions that has arisen, we need to remember that finance, as such, is not the issue here. The agency runs under a net running cost regime. Therefore it covers the cost of its operation through charges. The resourcing difficulty in operationally meeting the demand is a result of delays in recruiting staff to the vacant posts. The agency is trying to employ a number of measures to address this, and I will be replying further in writing to the letter from the Committee. I have met the agency to discuss these points following the representations from the Law Society and the concerns of the law searchers.

59.

The Deputy Chairperson: We will now go through the process that leads to the final Budget in December. Following today’s meeting, this Committee will write to the Chairpersons of the other Committees inviting them to get cracking and then report to us. You have outlined a timetable for this, but we have not yet put a date for the last few legs of this in our letter, particularly the take-note motion. Could you clarify how you see the timing between now and the beginning of December?

60.

Mr Durkan: Before I answer that I will clarify a point raised by Mr Weir. He has identified a mistake in the table for the Department of Finance and Personnel — a sign is wrong. The "-8·9" that appears as the percentage change for Land Registers should not be a minus; it should read "8·9". There is a minus showing across the columns, but it should not appear in the percentage change column. However, as I said, this agency is a net running cost regime.

61.

In response to your main question, I reflected this morning that I believe it would be useful for the Executive, the Assembly and the Committees to have a focus on reprioritisation in the coming period. We are clearly trying to ensure that the revised Budget is as sharp and as well targeted as we can make it, rather than just indulging in wishing our budgetary situation to be easier.

62.

Committees are free to take their own course on this, but the Executive look to this Committee to promote and facilitate debate and to lead that debate in the Chamber. I hope that the other Committees will offer their views so that they can be co-ordinated and collated. However, this Committee is free to offer its own consideration and reach its own conclusions.

63.

The Committee needs enough time to summarise those conclusions and to enable the Executive to take them into account when preparing the revised Budget. The date in the timetable for taking final decisions on the revised Budget is 26 November. In order to take all views fully into account a report should be ready by 9 November, or no more than a week later, although that would miss the Executive’s first consideration, which is scheduled for 15 November.

64.

The Deputy Chairperson: Who scrutinises the Executive programme funds? They are quite important, and it is fair for Departments to look at them. Departments have to make bids, and we have an amount of money, some of it unallocated. It is probably a significant pool of money, given that it is the most discretionary money that there is. It is not naturally in our remit, and I do not know whether it is in yours.

65.

Mr Durkan: They are discretionary in the sense that the Executive have set amounts aside out of the overall Budget in order to take decisions based on bids received. The Committee for Finance and Personnel has previously dealt with programme funds and scrutinised the bids received.

66.

The Executive programme funds are easily identified. They are the discretionary element that appears not to be pre-committed at present. However, we should remember that there is a considerable discretionary amount of money that Departments can allocate in their programmes, so Executive programme funds are not the only area in the Budget in which more precise allocation decisions have to be taken. Executive programme funds allocations may also be brought to this Committee for consideration.

67.

Mr Close: What mechanism would the Executive require, for example, to arrive — via Committees and other advice — at a decision to release £52 million of unallocated funding in the Executive programme funds to ease the crisis in the Health Service in 2002-03? Is that impossible? If funds are not allocated, are they locked, or can the Executive’s decision release them?

68.

Mr Durkan: First, the Executive programme funds were established on foot of the approval of the Programme for Government and the Budget last year. I am not free to conspire against that. It must be clear that Programme for Government priorities, which have seen more money going to health, schools and transport, will determine and influence the Executive programme funds.

69.

One of the complaints that we had last year about Executive programme funds was that they went to meet standing departmental pressures that had been missed out in budgets rather than to new innovative measures. This year the criticism seems to be that we will be engaged in some sort of frivolous spend at the expense of acute pressures. Previously, for example, we used Executive programme funds to invest money in hospital capital. The money came from the infrastructure fund for health. Surely that is something that we need to do in the future? Money went into the development and better targeting of services. As far as health and social services are concerned, there is no reason why that sort of investment cannot be repeated from these allocations.

70.

Executive programme funds are not being saved up or held back from public expenditure. However, if we did not have a device such as the Executive programme funds to look at in this way, we would be more open to the sort of allegation made by Mr Close — that we were slavishly following the patterns and practices that we inherited.

71.

The Deputy Chairperson: Thank you, Minister.

MINUTES OF EVIDENCE

16 October 2001

Members present:

Mr Molloy (Chairperson)

Mr Leslie (Deputy Chairperson)

Mr B Bell

Mr Close

Mr Dodds

Ms Lewsley

Mr Weir

Witnesses:

Dr A McCormick: ) Department of Finance

Mr D Sterling: ) and Personnel

72.

The Chairperson: I would like to welcome to the Committee Dr Andrew McCormick and Mr David Sterling from the Department of Finance and Personnel. Perhaps you would give the Committee an overview of the Central Finance Group.

73.

Dr McCormick: The functions of the Central Finance Group should be fairly familiar to the Committee. I will list its functions under five broad headings. The first is the interface with the Treasury, which is regarded as the most important. The group works to achieve the best settlement with regard to public expenditure. The second function is the management of public expenditure, which we do in conjunction with the Economic Policy Unit of the Office of the First Minister and the Deputy First Minister. The Central Finance Group helps the Executive achieve the best distribution of resources within the departmental expenditure limit. The third function involves getting the best value for money from spending, and this is closely related to the distribution of resources. The Public Accounts Committee support function aims to ensure that procedures and systems operate effectively to protect value for money and that propriety and regularity are observed. The fourth function is concerned with European structural funds, and the fifth involves rating policy, which has been a more prominent and significant area since devolution for reasons that will be familiar to the Committee.

74.

The three supply divisions that deal with departmental issues handle budgeting and value-for-money issues — they have a dual role. The divisions work with central expenditure division and the strategic policy division to draw together Budget advice so that the draft Budget and the monitoring rounds are informed by detailed knowledge of what is going on in the Departments. The supply divisions are also responsible for considering and advising Departments on issues such as projects that require approval or policy casework issues such as the student support review report last year, or gas pipelines. The supply divisions deal with important casework issues with advice from economists in the strategic policy divisions.

75.

These are a coherent group of functions which are interdependent and which fall under the five broad headings. There are a few small areas that do not naturally fall under those headings, but the headings give a broad picture of why Central Finance Group exists. All of these areas have increased substantially since devolution. There are many more issues to deal with now. The processes concerning the scrutiny of Budget decision- making and value-for-money issues are more intense, and rightly so. The work of this Committee, the Public Accounts Committee and Mr Durkan’s statements to the Assembly all give rise to radically increased support functions. These support functions are there to help ensure that the best possible decisions are made; that the decisions are subject to proper scrutiny; and that evidence is there to support the decisions. In broad terms, that is what the Central Finance Group does. The Committee has the details we provided on staffing and financial issues, but I would be happy to deal with those in the course of questions.

76.

Mr Weir: As regards the Budget and the manpower resources available to the Central Finance Group for 2002-03 it is projected that there will be a leap in the levels of staffing and the budget provided. You mentioned additional pressures due to devolution. I would have expected that the Department would already have had those pressures. What additional responsibilities will the Central Finance Group be facing that will necessitate such increases in budget and staffing?

77.

Dr McCormick: The Central Finance Group will have one extra responsibility that I will come to later. However, the main reason for the change from 2001-02 to 2002-03 is that, whereas the group had staff vacancies in 2001-02, it is now filling those positions.

78.

Mr Weir: Has the group been working at less than full strength?

79.

Dr McCormick: Yes. The Central Finance Group had to look carefully at its structure and the staffing it required at devolution.

80.

Our workload has more than doubled since the end of direct rule. The build-up of staffing to meet that increased workload has been gradual. As the result of an Executive decision a support function has needed to be moved from the Department for Social Development to the Department of Finance and Personnel. A unit of staff is moving directly across and that is showing up in full for the first time in 2002-03. The main point is that there has been a workload increase to meet the responsibilities of devolution and a gradual build-up of staffing during the year to match that.

81.

Mr Close: You are under strength. How has that been demonstrated? What has not been done?

82.

Dr McCormick: There are several things. One way to demonstrate this is by looking at our working hours. We are probably the exception to the Northern Ireland Civil Service’s wonderful reputation for having the best work/life balance, alongside the Nationwide Building Society and others. That has not normally been the case in the Central Finance Group up to now. Many people have been working long hours. That has been part of the reason why the essentials have been delivered. Quality has suffered. We have had to give less than the best as regards detailed analysis supporting Budget recommendations. That needs to improve; and it is a major issue we are working on.

83.

For example, it was clear in last year’s spending review that there was a lot of pressure for increased spending on health. However, other people were asking if the case had been proven. They asked about issues involving Health Service structures and the mechanisms of spending and were there not difficulties about how things were organised. People wanted to know if the extra money put into health from 1998 was giving a return. We were able to answer those questions to a degree. However, to take on the issue properly, we have been working with the Economic Policy Unit (EPU) on a major needs and effectiveness evaluation exercise. That is a big extra piece of work involving economists and statisticians from Central Finance Group, the Northern Ireland Statistics and Research Agency (NISRA), the Department of Health, Social Services and Public Safety and the EPU, with the objective of having by early next year a much more definitive analysis.

84.

We are trying to raise radically the quality of what we produce and, therefore, give a better answer to, for example, the question you asked about putting more money into health. There is a very strong case for that, but the Executive and the Assembly require evidence of the need for further spending on health in order to form judgements. Decisions need to be strongly evidenced- based. We have always had some evidence, but a radical improvement is needed.

85.

Mr Close: Am I cruel in saying that there has been a degree of waffle in what we previously got?

86.

Dr McCormick: I agree.

87.

Mr Close: I understand part of the staffing issue. Was there a large overtime bill?

88.

Dr McCormick: The majority of people who worked long hours were at grades that are not eligible for overtime.

89.

Mr Dodds: I was interested in Dr McCormick’s reply that much of what has gone before has contained a large degree of waffle.

90.

Dr McCormick: I agreed it was a cruel comment.

91.

Mr Dodds: The directorate has a central role in Government administration and supply of money. To what degree can you disagree with a Department’s plans to switch money from A to B in accordance with Programme for Government aims? To what extent can you prevent the Department going ahead?

92.

Dr McCormick: We cannot stop it. However, we can bring the issue to the attention of the Executive. Departments do not have discretion to move money around within a fixed allocation. They do not all receive a block allocation as an English Department would. Procedurally, we are out of line with England, which has moved towards a delegated system. That is not the case here, partly because of the novelty of our arrangements and because we have several new Departments. It is not that the Department of Finance and Personnel asserts a role arbitrarily, it is that the systems and procedures are there to ensure that the Executive have an opportunity to consider the issues. If a saving is emerging on a particular programme that comes back for consideration by the Executive.

93.

That is one way of doing things — it is not the only one. It would be possible to have fixed limits. Departments could be given an allocation for three years and be told that decisions on managing and prioritising would be theirs. That approach was not thought to be appropriate in the search for further cross-cutting work between Departments to keep the links clear between the different services. Northern Ireland is in a new situation. The Executive have the flexibility to move money around, and that system ensures that there is scope for the Executive to identify where savings could be made — to free money that is no longer required for a particular purpose.

94.

Mr Sterling referred earlier to the scope for changing policy. It is possible for the Executive to take a different view from that of a previous Administration, but that would require good analysis before we could support it. No one likes budgets to come down. However, sometimes it is proper to channel money into higher priorities. The Department of Finance and Personnel is there to serve a process, not to impose arbitrary constraints on the basis of a departmental fiat. Evidence-based advice is given so that options can be considered.

95.

The Chairperson: If the Executive programme funds are designed to be a pool of money to be used in new, innovative ways, is there a role for the Executive, the Central Finance Group or the Economic Policy Unit to decide a strategy other than that of rehashing previous bids?

96.

Dr McCormick: Good progress depends on several things. The Executive decide what the funds are, how much should be in them and what items are allocated from them. Departments come up with ideas that match the criteria, and they must identify issues that concern the community and deliver good public services. It is up to Departments to recognise good options and to ascertain areas where the focus is not sufficiently on the beneficiary, but is limited by departmental silos.

97.

Mr Sterling identified this phenomenon last year when we worked on the social inclusion fund. Departments were coming forward with ideas based on their policy agenda, rather than asking who the socially excluded target groups were and building their bids and priorities around them. That might involve looking at a project for a group that could be achieved through joint working between the Department of Education and the Department for Employment and Learning, or between the Department of Health, Social Services and Public Safety and the Department of Culture, Arts and Leisure — getting cross-cutting ideas that are client orientated.

98.

The Chairperson: Who drives that?

99.

Dr McCormick: It is up to Departments to come to us with ideas. Sometimes we can say, "Have you thought of these things?" The responsibility for getting things right lies with Departments. Ministers ought to signal what they view as the priorities, which is the necessary drumbeat that allows others to join in and say, "Here are the things that we are trying to achieve."

100.

The five Executive programme funds are an expression of that idea to an extent. It can be refined and developed as Ministers develop the Programme for Government and consider how effective it is, and what is making the difference. Ministerial priorities, which are expressed to officials through instruction and direction, are key to that. On the other hand, there is scope for officials to advise Ministers. Officials should also listen to what is being said in these Committees and in the wider community, so that ideas and opportunities can be identified.

101.

Mr Close: Could the Executive, as a collective body, decide that, out of £42 million allocated for Executive programme funds for next year, it is essential to spend £20 million, £30 million or £40 million now on health, for example? Subdividing that, could one of the 10 Ministers decide to release £10 million from his draft allocation to cover the amount that is required for free nursing care, for example?

102.

Dr McCormick: A Minister could propose that to the Executive. However, the Executive must make a collective decision. In theory, it is possible.

103.

Mr Close: To be clear about that; a Minister could propose such funding out of his allocation, but the Executive must agree it?

104.

Dr McCormick: Yes.

105.

Mr Close: Would that require a majority decision?

106.

Dr McCormick: I do not want to comment on how the Executive make decisions. What matters is that decisions emerge.

107.

The Chairperson: We are talking about cross- cutting measures, looking at bids and issues that overlap. However, there does not seem to be any innovative ideas on cross-cutting, as each Department appears to look after its own. As such, is there any means of co- ordinating Departments so that they have to co-operate on projects that will be of benefit to the entire community?

108.

Dr McCormick: We are still considering the current round of Executive programme fund bids, and there will be another round in the new year. The scope for cross-cutting work is still being explored and I would not give up on it at this stage. There is room for further deliberations between the Department of Finance and Personnel, the Economic Policy Unit (EPU) and Ministers before decisions are taken on the current round. The scope for cross-cutting projects must be pursued. It does not come naturally to the system, and it needs further work.

109.

Mr Dodds: Regarding European Division, from time-to-time we hear suggestions about the possibilities of getting European money. If proposals were put to Europe, the country could avail of funding for areas such as agriculture. What is European Division’s role in maximising the take from Europe and looking at imaginative ways in which that money could be drawn down?

110.

Dr McCormick: There are three broad categories of European funding: the mainstream structural funds; funding for the agricultural sector; and small budget framework programmes that are controlled by the directorates general to implement innovative measures across a range of small scale programmes. European Division of the Department of Finance and Personnel is mainly responsible for the structural funds. There are two governing constraints. The first is the decisions of the Berlin Council in March 2000, which set a clear envelope for total support for the region. Those decisions are fixed and final, with no scope for change. The second control is the Treasury’s additionality policy. European Division undertook that piece of work before devolution because it contributed to the arguments that were taken forward by the then First Minister Designate and the then Deputy First Minister Designate to secure additionality for the peace programme. That is one way to maximise the benefit.

111.

European Division also pushes to see whether there is scope to get the small amounts — anything in the framework programmes that could be tapped into. That tends to be more of an opportunity for individual Departments, but European division has some awareness of what is going on.

112.

Pursuance of funding for agricultural measures is the responsibility of the Department Agriculture and Rural Development, with European Division keeping a close eye on it. At times, it needs to engage the Treasury because the reason for drawing on those funds might be a UK policy issue, which would be between the Department of the Environment, Food and Rural Affairs and the Treasury. It might be important for an intervention to be made. Sometimes they have to say to Treasury that something may be a UK policy, for UK reasons, but here is the Northern Ireland perspective, but this has not been terribly productive on many occasions.

113.

The Chairperson: It is difficult to monitor departmental budgets and how they should be dealt with. How does your division do that, and how does it monitor the effectiveness of new TSN and its outcomes?

114.

Dr McCormick: The general monitoring process depends on an exception reporting system from Departments, which is followed up by more detailed scrutiny in particular studies. Departments report their own view of pressures, changes and easements as the year goes on. That is supported by a detailed financial information system that follows through with detailed figure work. If it turns out, towards the year-end, that a Department is surrendering more than expected, Central Finance Group would ask it several questions such as why it did not declare the excess money earlier, because it could have been reused. There is a continuous process of expenditure monitoring between the supply divisions and Departments to look at what is happening. There is a need to significantly increase the profile and detail of what Central Finance Group does to monitor the outward measures, and that is carried out in conjunction with the Economic Policy Unit. Together they assess whether we have the right information on the outputs that are achieved. In many cases that is longer term; some indicators are not monitored on a monthly basis — some of the results are only meaningful on either a two or a three yearly basis. Therefore, it is a longer term, more strategic process.

115.

How Central Finance Group measures and identifies the impact, on a TSN basis, is a form of output monitoring that requires more detailed information on what will be achieved. It relies more on financial indicators. Identifying how money is skewed is quite difficult, and we must build up, as part of the public service agreement (PSA) process, better information and better signals as to what is and what is not making a difference to that dimension.

116.

The Chairperson: Thank you. There are no other questions, but we will return to this subject.