Northern Ireland Assembly

Go raibh maith agat, Mr Deputy Speaker. I welcome the statement, and the four proposals contained therein. It is quite remarkable that the proposals are possible. It is not because of the political context within which we are working, but in spite of it. It is remarkable that the First Minister has announced yet another timetable to collapse the institutions.

In paragraph 26 of his statement, the Minister states that he asked for further comparisons between the rates here and those, for example, in England. This matter was well aired over two or three months, particularly when I and others raised the point about the regional rate being increased too much above the level of inflation. I find it difficult to understand what information the Department - I do not mean the Minister, of course - did not have available to it when the deliberations were going on.

Comparisons are neither entirely easy nor straightforward, and many technical issues must be examined. However, one can conclude that businesses here would be paying similar rates to their counterparts across the water. Another relevant point is that we have a higher proportion of smaller businesses here. We were only able to consider using money to offset the expected higher rate increase after other outstanding issues were dealt with. Many of those who question why we were not able to go for this lower rate increase earlier are the same people who say that there should be significant additional expenditure on certain programmes.

The comparison with English rates has never been expressed to me before, but several Members expressed particular concerns about the effect of the rate increases on the non-domestic sector. Given that much of the argument on the domestic regional rate included references to the situation in England and the Treasury's likely angle on that, I made a point of confirming that those same concerns did not apply. I feel that I have been quite open and fair about this - I was not aware of any of this earlier. Officials, working in the background, found the information. This, combined with the fact that we had money available at the end of the December monitoring round, allowed us to take this measure, which I hope people will welcome.

I am sure that the Minister will be pleased to know that because of the illness of my Friend, Mr Close, he only has me to put up with today. I will probably be slightly gentler on him on some topics than Mr Close would have been. I am glad that the Minister of Health, Social Services and Public Safety is in her place. She has previously acknowledged the difficulties of funding different aspects of her work and the fact that the acute services sector has taken the lion's share of available money compared to children's services, community care and psychiatry.

Can the Minister indicate how he proposes to ensure that there will be a fair distribution of the additional resources allocated to Health Service trusts to ensure that the bigger acute hospitals do not, yet again, run off with the vast majority of the money?

I have no desire to interfere in the little spat between the DUP and the Minister on free travel. I welcome the extension of free-travel provision and, speaking on a constituency-level basis, I trust that this additional money will result in more resources for the Department for Regional Development to enable the Knockmore railway line to be preserved. I hope that the Minister will happily confirm this today.

Similarly, the proposals on gap funding must be welcomed. Can the Minister indicate more clearly how he is going to administer the inelegantly described "exit strategy" for those organisations which will no longer receive funding?

Finally, on the regional rate, the Minister will know that Members in this corner of the Chamber will welcome the reduction of the business rate. Will he assure us, on the basis of his statement, that any rises to this rate will be in keeping with rises in the rate of inflation and that it will not be increased as was originally planned? I agree that the Barnett formula is unjust and that it must be changed, but does he agree with me that to change it we must move to fair taxation as well as to a fair distribution of national funding - [Interruption]

On a point of order, Mr Deputy Speaker.

I am sorry. I am not taking a point of order.

And that must refer to income tax and not the rates.

Minister, I am sure that you may wish to answer one of those questions now. You may wish to respond to others in writing later.

In acknowledging several of the Member's points, I stress that I am not having a spat with the Minister for Regional Development. The emphasis in this important proposal should be on who gets the benefit, not on who gets the credit. We should work on that basis. Although we refer to joined-up government, perhaps grown-up government would be a better term - let us concentrate on that.

Although it does not matter who gets the credit, for the likes of rate increases, it is pretty clear who gets the blame - and I recognise the unfairness of that.

In response to the other question on gap funding, when the Peace I programme was undertaken, and before there was any mention of Peace II, there had to be provision for exit strategies. That may or may not have been made on a satisfactory basis. This is causing us further problems, but the issue must be addressed. We want Departments to work on that and to make best use of my announcement today by way of gap funding and by moving to make allocations from the next round of programmes. Further work also needs to be done to maximise the spending on Peace I.

Today's announcement bears no relation to the Knockmore railway line. That matter should be taken up with the Minister for Regional Development.

I welcome today's announcement, particularly in relation to free travel and the reduction in the regional rates. It is clear from many who have lobbied the Assembly that this is the kind of message they want to hear.

Last week UNISON, the trade union representing those in the community and voluntary sector, lobbied the Assembly. In its report 'Communities in Crisis' the union expresses its concern about the transitional nature of this funding and predicts that £3 million, not £2 million, is needed. What is more important, the report recommends that the Executive now take a serious look at mainstreaming these projects, many of which are examples of good practice, rather than wait for Peace II and leave it to the Health Service to pick up the psychiatric or social service costs.

The second point I want to make concerns the £18 million deficits that we are now picking up. I am concerned that proceeding with the Programme for Government requires a resolution to the problem of the deficits. Will this allow next year's trusts to say that they cannot do what is in the Programme for Government and then have their deficits picked up? How does the Minister intend to address that problem?

I am aware of the UNISON paper to which Ms McWilliams has referred. It says that £3 million is needed for gap funding. I refer the Member to the statement I have made. We are authorising Departments to make considered judgements now and on the basis of those to make advance allocations to projects they believe to be eligible under the Peace II criteria. The £2 million that is going into the social inclusion fund now is there effectively to cover Departments against any risk of allocating moneys to projects that do not end up being eligible for Peace II. It is there to cover the Departments and protect the Peace programme. We hope that the allocations which can now be enabled by this approach will involve more than the total of £2 million. I ask the Member to look again at the statement and at the nature of the proposal we are dealing with. We are making a gear change. This is not the way in which gap funding has previously been provided.

The Member referred also to mainstreaming. One of our reasons for changing the nature and scope of the Peace programme and for further embedding and developing the notion of partnerships so precisely is so that our arrangements will sustain themselves after the Peace II programme. That is the only way to mainstream these things seriously in the long term.

In answer to the trust deficit question, we made significant provision in the Budget, with some increases in Health Service spending. It would have been inappropriate and inconsistent with the goals we set out in the Programme for Government to have left some of that additional funding for paying off these deficits. In the statement I made the point that there will be a significant difference between this year and next year because of the change to resource accounting and budgeting. Trust spending will no longer be at one remove from departmental control.

We have agreed a joint consultancy exercise with the Economic Policy Unit, the Department of Health, Social Services and Public Safety and ourselves to look at both the causes and the consequences of trust deficits. The Minister of Health, Social Services and Public Safety and I recognise that a number of questions arise in this regard, and we want to address those seriously.

It would be churlish not to welcome the Minister's statement, particularly on such matters as free travel and the reduction in rates. Is the Minister aware that in the Chancellor of the Exchequer's coming Budget one of the incentives may be a substantial reduction in business rates? In Northern Ireland, however, while there is to be a reduction in the increase in business rates, there is nevertheless to be an increase. Is the Minister aware that the public at large are becoming a little concerned at the millions of pounds that can be found down the side of the sofa or at the back of the piano when it is necessary to address what is clearly an urgent problem?

I have taken up the issue of business rates with the Minister outside the Chamber. Increasing small business rates will put a substantial and significant number of hard-working, self-employed business people out of work, while simultaneously the Executive are pumping money into the IDB and LEDU in order to lay out huge capital sums to create new jobs. Is it not something of a paradox that on the one hand he is putting people out of business while on the other hand he is laying out large sums of money to encourage new jobs?

I thank the Member for his question and acknowledge that he has spoken to me about the non-domestic rate increases. Quoting averages can be dangerous in this context, and I have already stated that the change in the domestic rate will be from £16 a year to £14 a year. With business rates the increase will be reduced from £299 a year to £150 a year. I am not sure that the rate increase was going to have quite the adverse effect on individual businesses that some people have suggested, but I do recognise that the margins are significant, particularly when people are working in marginal circumstances.

We will look at what is happening elsewhere with rates. Across the water non-domestic rates are increasing at the rate of inflation, and we have been able to achieve the same rate for the non-domestic sector here. I cannot promise that that will be the case next year, because we will have to look at next year's funding requirements in the light of many circumstances and pressures. It would be irresponsible of me to make a blanket commitment.

We are sensitive to the impact of rate levels and are aware that several issues need to be examined. This also applies to rates in the commercial sector, and some commercial areas are affected and others are not. These issues can be best addressed in the wider review of rating policy which is to be undertaken and on which I will soon refer papers to the Finance and Personnel Committee.

I welcome the Minister's announcement of an additional £18 million to clear the health deficits. I hope that the Minister of Health, Social Services and Public Safety will ensure that there is equal distribution and that an unfair proportion does not go to the large hospitals. I wonder if the Minister has considered giving some money to those poor GP fundholders who through no fault of their own also have deficits.

The Executive's review of the Department of Health, Social Services and Public Safety is welcome; it should produce some clarity on health funding. Will the Minister encourage the review team to introduce a standardised system for tracking health funds so that we know where the allocations go and can be sure that the best value is being given to patients at the point of delivery?

We need to address the liability that the deficits represent, and not least the liability in service planning and management. Therefore, it is best that we resolve the historic or cumulative deficits as they stand. However, we need to go beyond that and look at many of the underlying questions raised, not least those referred to in relation to a management information system. That is important, not just for financial control but also because it would mean sound service planning geared to meeting need on an equitable basis. I recognise that the pattern and the nature of trust deficits raise serious equity questions about what is done to resolve them and to avoid them in the future. The consultancy study that has been undertaken on terms of reference agreed by the three Departments involved should be able to contribute positively to that.

I also welcome the Minister's statement and commend him for his actions, particularly on the gap funding and the £2 million now available. Can the Minister tell us what additional actions, if any, he would propose to the Departments to assist the community and voluntary sector further?

Several issues need to be addressed, but not all together. We cannot make progress on any one point without attending to all the others. However, gap funding is not simply allocated in the same way as before. We are now asking Departments to judge who is eligible and, on that basis, to make advance allocations against the funding programmes. Furthermore, we are asking them to do that in relation to Peace I funding because a considerable amount of money is still available there. We have engaged with the Special EU Programmes Body on this.

As Members will recollect, in what was a new departure in the Budget, we have created Executive programme funds. Some of those programme funds will be of particular interest to the community and voluntary sector, not least the children's fund, an arm of which would need to be accessible to applications directly from that sector. The social inclusion/community regeneration fund, by its scope and terms of reference, should allow Departments to continue their good work with the community and voluntary sector.

I would like to take the Minister back to the issue of the Department for Regional Development's proposal for free fares for the elderly. Is the Minister aware that a Department does not ultimately produce a scheme and deliver the goods? An operator does that, and the Minister and the Department for Regional Development have to negotiate with that operator. Can the Minister therefore inform the House why it was thought appropriate for the First Minister, the Deputy First Minister and himself to announce details of the amount of funding available prior to entering into negotiations with the operator? By doing so, they prejudiced the added benefits that could have been obtained had negotiations taken place beforehand.

Will he further tell the House why documents and information, which would have allowed him to enter into negotiations that would have produced improved services in rural areas, were withheld from the Minister for Regional Development?

First, on the circulation or availability of papers, that is not my responsibility, so I cannot comment on that. In relation to the earlier part of the question, once the Executive had taken a decision, there was going to be a decision presented here today. I do not think that many people would have liked me to leave part of the statement blank because certain matters were subject to negotiation. If anybody is taking issue with what the First Minister and the Deputy First Minister said on Thursday evening, I remind Members that the Minister for Regional Development referred on Thursday morning to a bid of between £5 million and £7 million that he said that his officials were making to the Department of Finance and Personnel.

On 'Good Morning Ulster' the Minister for Regional Development referred to a bid. He said:

He referred to a sum of between £5 million and £7 million. Mr Robinson cannot make an argument against the First Minister and the Deputy First Minister and not apply it equally to the Minister for Regional Development.

Once the Executive have taken decisions on these matters and have allocated figures, I have to present those decisions here so that they become public quickly. Members of the Finance and Personnel Committee would not like me to say to them that there are certain parts of this that we are keeping blank because of other negotiations. I would make the point that negotiations still have to be undertaken. An amount of money has been made available, but several details still have to be worked out, and they include negotiations with the transport providers. We are quite clear on that.

Go raibh maith agat, a LeasCheann Comhairle. Ba mhaith liom fáilte a chur roimh an ráiteas a rinne an tAire inniu. I welcome the Minister's statement. It is a good news statement in several regards, not least in the area of free travel for senior citizens, which brings us closer into line with the rest of Ireland.

My question is on the regional rate reductions, which is a step in the right direction. I draw attention to the commitment to look carefully at the wider impact of the rating system on business, individuals and households. I ask the Minister and his Department to embark on a comprehensive programme of public consultation. This should be aimed at listening to the views of the wider community, increasing public awareness on the procedure and methodology for arriving at the regional rate, and on the range and character of public services financed by the regional rate. This mirrors an approach taken by Omagh District Council, which held an open forum.

In my statement I referred to the wider review of rating policy, which will look at many of the business implications, including some of the points touched upon by Mr McCartney earlier and at the distribution of the domestic rate burden. I hope that the review will look at the whole question of rating in a root and branch way.

I do have to offer everyone a reality check. We do need to raise money from the rating system and we are not going to be able to come up with a rating system with such a menu of exemptions and reliefs that will exempt everyone from paying. People under that illusion are simply not living in reality. I remind those Members, who normally are very articulate in telling me how much public expenditure we actually need, and how much we need into services, that the margin of additional expenditure afforded to us by the rating system is significant. If we were to try to cut the moneys represented by the rates, we would soon be hearing strong protests from the expenditure areas immediately affected by such cuts.

I will forward papers to the Finance and Personnel Committee soon. These papers will outline the main phases of the review as we see it unfolding, consistent with the Programme for Government. That will include a strong public consultation phase.

Although I welcome aspects of this announcement, such as free travel for the elderly and the reduction in the increase of the non-domestic rate, I have to express concern at the somewhat meagre reduction of the increase in the domestic rate.

If the domestic rate were reduced from 7% to an inflation rate, what resources would be required to achieve that? As today's announcements have been funded from the £68 million resulting from the December monitoring round, will the Minister give the House a breakdown of where that money came from? How much of it came from departmental savings and easements? How much of it came from the money saved with the suspension of the Executive last year? How much has come from other sources?

With regard to where the money came from, we covered those points in the December monitoring round itself. I made the point that, with regard to the £68 million available, some items were clearly sizeable and exceptional. One was the fact of the change to the treatment of domestic rate rebate. That gave us a further £23 million - essentially, a windfall. There was a further £7 million, for instance, from the Department of Enterprise, Trade and Investment, which was money from returned shipbuilding loans that had been held against a possible claim from Harland & Wolff. There was also the £9 million which the Assembly, partly because of suspension and other phasing problems with plans, did not spend this year.

Those are three items accounting for £40 million that we had previously allocated. There were also the additional receipts, including those from housing and the Water Service, and other regular easements from Departments on a fairly routine basis.

It is a matter of providence that we had that room to manoeuvre in the December monitoring round. It is one of the reasons we should not confuse the providence that we now have with the need for prudence that we had up until that point. We could not have made provision for lower rate increases without knowing that we had the resources to do so and without knowing that we could meet our expenditure commitments. That is why these matters have taken time.

I have made the move to rates after we had looked at the other pressing issues such as the health trust deficits. There was a stage, a few weeks ago, where it looked as if the figure for health trust deficits would be £38 million. When we held £28 million over, we thought we could still be facing difficulties there.

Fortunately, with good work between the Department of Health, Social Services and Public Safety and the Department of Finance and Personnel, we have been able to come up with a clearer and a more helpful picture. That has now enabled us to move in other key directions that I hope all Members will welcome.

Does the Minister agree that there is an implied rap on the knuckles to management in the Health Service in the statement? It appears that it is now going to have to be given some kind of "management information" - to quote from the statement.

There are technical issues amounting to £20 million of a difference. What are they doing as managers within the system? We are told that there is an effort

Has this not been the case so far?

On the issue of free travel, I understood from Translink that the current system was costing in the region of £6 million a year on the 50% reduction. Can the Minister therefore confirm the figures in his statement? My understanding is that it should be in the region of £12 million.

On the issue of gap funding, the Minister referred to outstanding matters in Peace I. The Deputy First Minister has already agreed with me that the Protestant/Unionist community has yet to rise to comparable funding levels with the Nationalist community groupings. Will the funding ensure catch up through the proactive promotion of schemes in that part of the community where it is needed? Will the Minister assure the House that that will happen?

One final point - [Interruption]

I think that the Member has overstretched.

This is the final point. In his statement, the Minister, instead of using the term "rates", says

Will the Minister comment on the fact that households on the mainland also have to take water charges into account? Is it implied in the Minister's statement that households in Northern Ireland may be faced with such charges to bring them up to comparative levels on the mainland?

The Minister may wish to answer some of those questions in writing.

I will bear that helpful suggestion in mind.

First, it is wrong to characterise the consultancy study as a rap on the knuckles, just as it is wrong to characterise the money going into the deficits as a signal that people can accumulate deficits in the future. Both interpretations are wrong. We are trying to deal with, and recognise the measure and background of, the problem.

As for the December monitoring bid, which clearly reflected the problem in certain ways, the Department of Finance and Personnel and the Department of Health, Social Services and Public Safety have been able to bring the estimated deficit down to £18 million after examining the problem. That has been achieved through technical re-categorisation and an assessment of the impact of the allocations that were announced a couple of weeks ago in the December monitoring round.

The real issue now is to ensure that the trusts know that they can proceed on a positive, purposeful and sound management basis to plan services based on next year's Budget without worrying about the deficits. We also need to make a success of the consultancy exercise. The three Departments concerned, and Health Service management, need to make sure that we do not run into these problems in the future, not least by ensuring that the management information system - which is needed because of changes in budgetary arrangements - is put in place. Making that improvement and change for the future should not be viewed as a punitive or critical exercise.

With regard to the rates and examining what households pay here, the fact must be borne in mind that people across the water pay council tax and water charges. I make the point that we fund the Water Service here. There is no Barnett formula consequential for doing that. I remind Members that that is a relevant issue when one examines what resources we have. The Treasury provides no funding for the Water Service. Remember, therefore, that that is the only additional money that is raised to support the Budget, including funding for the Water Service. Money for the Water Service has to be found by stretching the Barnett allocation for other services or from the regional rate.

There are questions about how we fund services, and Barry McElduff touched upon this earlier. It was asked whether we should be hypothecating services that rates, or a portion of the rates, pay for. All these issues must be considered in the rating policy review. It would not be a comprehensive review if it were not open to such consideration.

I remind the Minister and Members of the time constraints.

The statement shows the Minister of Finance and Personnel's commitment to the Health Service, the business sector, householders, the elderly and the community sector. These announcements will be widely welcomed across society. The statement shows that this Minister of Finance and Personnel stands at the centre of joined-up government.

Will the Minister provide details on when the findings of the Health Service consultancy will be ready for implementation?

We hope to get the joint consultancy study under way shortly. We do not intend it to be a prolonged exercise. The Minister of Health, Social Services and Public Safety, the Economic Policy Unit and I recognise that this needs to happen sooner rather than later. We want to ensure that the results of that study give us good light under which to consider funding needs as they arise for the Health Service in the coming financial year and beyond. I hope that we will be able to work with the benefit of some conclusions and insights from this consultancy study within a few months.

I welcome this act of repentance by the Minister of Finance and Personnel on behalf of the pro-agreement parties in the Executive. It is nice to see that the pro-agreement parties have seen the error of their ways on the issues of free transport and the regional rate. Is this really an act of repentance for past misdeeds, or a bribe in relation to future elections? To use the Minister's own words, is it the Executive at work or "at its work"?

I am not clear that there was a question there.

Can I come to my question?

I would prefer you to ask the question.

Does the Minister accept that all the arguments that he put forward on 18 December in relation to his refusal to accept the amendment on the regional rate have been proved to be false? Will he tell the House when he found out that the valuation of domestic property gave him an extra £2 million?

When did he get the result of the more detailed work that showed that, contrary to what he said on 18 December, people in Northern Ireland do not pay more for non-domestic rates than is paid in England? Will he tell us when he was convinced that by not increasing the non-domestic rate by 8% he would not be putting in jeopardy any discussions on the Barnett formula?

Perhaps, having got his homework wrong last time, the Minister can now tell us, in answer to a previous question, how much it would cost to reduce the domestic rate to 3·3%. Will he now consider alleviating the burden on domestic householders by restricting the increase to 3·3%?

I did not mislead the House on 18 December. I never said that we were paying non-domestic rates at a proportion that was lagging well behind Great Britain. I always made that point in relation to domestic rates. I subsequently have made a point of trying to check out the position of non- domestic rates - not an argument that had been made to me. That information became available to me at the end of January. It was at around the same time that confirmation of the buoyancy of around £2 million came through.

At the stage of the draft Budget, and at other times, including in December, I made the point that if the figures showed a buoyancy that allowed us to raise the same amount of money with a lower rate increase, we would consider that. That now has happened.

I have a point to make to Members, especially to those who tell me that there are all sorts of things that we should be doing on Barnett: that we should be taking on the Treasury, and so on. In relation to what we are raising as a contribution from households in the domestic regional rate, we will be in a very weak position in making any case to the Treasury. The Treasury will be able to say "Here you go again; you want English taxpayers to pay more for services yet you will not do anything to raise from your own households even a larger fraction of the amount that is being raised in England and Wales". Therefore, Members need to remember that when we quote and when we rightly argue parity on many grounds, that case can be used against us.

It is only since the Executive have examined other spending issues and the money that was available in the December monitoring round - not all of which could have been reliably predicted in December - that they have been able to make these judgements. It is wrong for Members to suggest that the Executive should set a particular level of rate increase as a priority, ahead of public spending needs and the needs of certain services, and regardless of anything else. If that line had been taken I might have been unable to make some of today's welcome announcements. As was clear from my statement, if £2 million buoyancy means that the Executive can reduce the rate increase from 8% to 7%, each 1% will work out at £2 million.

Go raibh maith agat, a LeasCheann Comhairle. I congratulate the Minister on his comprehensive and socially meaningful statement with regard to health, free travel and - with reservations - rates.

I particularly welcome the joint review of the causes and consequences of the Health Service's trust deficits. At a recent meeting of the Health, Social Services and Public Safety Committee a Member suggested that the Executive had set up a hit squad to investigate deficits and monitoring procedures in the Health Service. I am glad to know that that will not be a punitive or hostile study. Does the Minister recognise that those deficits result from the historic years of underfunding? Will he assure the House that those deficits may not have accrued from carelessness but may have come about because people were targeting social or health needs in those trusts?

No age limit has been set for those wishing to avail of free travel. Women are pensionable at the age of 60. Will the Minister and his officials keep that in mind? Does the Minister accept that, on Thursday morning, Gregory Campbell made a pre-emptive strike on the free travel issue and was making no contribution to the debate?

That is a speech.

Mr McCrea, please sit down.

I am glad that John Kelly has found much to welcome in what I have said.

The people who will carry out the consultancy report into the trust deficits are not a hit squad. It is about trying to get on top of the problem and make sure that we understand it fully. There are several issues involved. I accept what Mr Kelly said about the service pressures and needs that trusts face and how those have a bearing on some of their spending patterns. However, the study will also examine other issues to try to ensure that deficits will not rise to the level that they previously have without effective recovery action being taken. The Executive must be fully aware of the extent of the trust deficits, particularly as we move into a different regime under resource accounting and budgeting. The point of the consultancy study is to ensure that the Executive - and the Assembly, as the public expenditure management - are in the position that they need to be, as well as making sure that the trusts, as far as possible, have adequate funding.

We have already dealt with the sequence of the statements. We need to focus on making the scheme for free travel for the elderly work. Several details still need to be worked out. Some of them will be addressed in the interdepartmental working group that the Executive established some time ago, and the Department for Regional Development will have to pursue many of the issues directly with transport providers. We need to get on with that work and achieve the outcome that we want, rather than arguing about the provenance of it.

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