We have to deal with the issue of the Barnett formula and related matters very cautiously. We are opening up a Pandora's box, so we need to be very careful. We have benefited significantly from substantial public expenditure over the years. We are fortunate that throughout the first three years of devolution we have benefited, and will continue to benefit, from a background of real increases in public expenditure - not simply cash increases, but increases in real terms, after adjustment for inflation. That is a background that we did not think we would have. I know that Mark Durkan, the First Minister and the Deputy First Minister are looking very closely at that issue and that research is being carried out. The alternative to the Barnett formula is a needs-based formula in which you have to prove the needs.

I have little doubt that we can all think of examples, such as in health or education, where our need is greater. There may be other areas where we do better than other UK regions. However, do not assume that we will have a smooth passage from the Treasury. I can assure you that that will not be the case. Some Members have referred to the single development agency - Mr Neeson was one of them. We are making progress on that. It is a very complicated exercise, but its time has come. The agencies were developed over 30 years; things have now moved on, and it is only right and proper that at this stage we implement our decision to create a new agency. I hope that that work will result in legislation being brought to the House at some stage in the latter part of next month, but clearly it will have to carry over into the autumn before its passage is completed.

Mr McClarty focused very strongly on tourism - an industry that has been growing steadily. As has been indicated by a number of Members, it has huge potential. It could very well be our second fastest growing industry, if not our fastest. There is great potential in Northern Ireland for tourism, and it is very sad that we have been crippled so far this year by the unfortunate circumstances of the foot-and-mouth outbreak.

Dr McDonnell made the point that the 'Strategy 2010' document was valuable and was a major milestone. That is probably true - it was the first document of its type under direct rule. It involved a wide range of people. However, as Dr McDonnell rightly pointed out, it is the quality of the intervention, rather that the quantity, that is important. That is a lesson that we have learnt.

Dr Birnie referred to the grant mentality that we used to have. Indeed, we are at the top of a European League table. If one examines the amount of money that is given by agencies now and analyses what it is given for, one can see that LEDU has almost done away with capital grants. Technically it still has got the power to give them, but very rarely does so.

I have closely examined the major investment decisions on projects costing over £1 million, which require my approval, and very few of these involve capital expenditure. Such expenditure is rarely a significant part of any package. Far more emphasis, from LEDU's point of view, is placed on what is described as "soft assistance", but I think that is the wrong term. The assistance is often based on advice and marketing, but in many agencies it is focused on individuals by means of employment grants, assistance with premises and other matters. Capital grant aid is not the significant force that it once was. The Department is working towards rebalancing this package as part of a long-term process.

It is great to stand up here and to debate this issue, but we all know that if problems hit an area or a company in a Member's own constituency, the economic theory is thrown out of the window, and it is more a case of Members saying "We have got to bail this boy out". We are all politicians, and we have to admit that these things happen. If it happens in our own back yard, we will go out to save the operation as best we can.

It is easy to uphold the theory, and Members might reject the concept of capital grants by saying "We are not going to subsidise inefficiency, we are just going to let that company close". However, when such a closure actually takes place, few people will come out of the trenches. When companies get into difficulties, I receive phone calls and letters. Members also ask me "Can I bring so-and-so to see you?" We are all the same; I am no different. The theory is fine, but its implementation is another matter. Nobody wants to see enterprises failing or closing, but we must develop the strong trend away from the grant mentality, towards different forms of finance.

I agree entirely with Mr Neeson's suggestion that we examine the procedures of America's small business administration. It is a totally different system, but it seems to have been very successful, therefore there might be some potential in that. However, while the Treasury continues to treat guarantees as money spent in total, we will have serious problems, and I think that the Member knows that.

I have already mentioned Mr Carrick's point. Ms Morrice said that this is a gigantic task, and I fully acknowledge that. She also stated that wealth should not be measured in terms of GNP alone, but on the basis of quality of life. That is a very good point, and Northern Ireland could do very well in this regard, because it is possible to enjoy a very good quality of life here, provided that one is given peace to get on with it. One of the things that we like to tell visitors is that we have a very high quality of life in Northern Ireland.

Dr Birnie also referred to the consultation with professional economists, and he made a rather colourful analogy drawn from naval architecture. One can think of others, but "re-engineering" 'Strategy 2010', as he referred to it, is probably an appropriate phrase because it was never intended to be set in concrete. I have never said that I accept every recommendation, because I have never done that. I have no doubt that we will "re-engineer" this report in due course.

Mr McGrady referred to the new agency. He also - as is often the case from his correspondence - referred to tourism in his area. I know that he feels strongly about these matters. He mentioned removing the local government cap on local economic development expenditure. I do not have a problem with that. The vast majority of local authorities do not spend to the 5p limit. Some councils have stuck with the 2p limit that they have been used to while one or two have raised their limit. However, it is a matter for the Minister of the Environment and I have made my views known to him.

Mark Robinson talked about massive changes and said that we must embrace such changes. He referred to a number of education issues such as general national vocational qualifications (GNVQs) being scorned. I understand his point. It is a problem of perceptions, and Sean Farren is very focused on that.

Mr Robinson also referred to the 8% rise in business rates. It is not an 8% rise in business rates - the rise is 3·3% after Mr Durkan compared how we are faring with GB. People must understand that the Treasury take a very jaundiced view of our policy on rates for properties and businesses. It consistently argues that in many cases our rates are not more than 40% of what people in GB would be paying. It argues that there is a significant financial gap. I am pleased that it has been possible to retain the increase to 3·3% for businesses, and that will include businesses in the Member's constituency.

Mrs Carson, and a number of Members, referred to the section of the report dealing with the clean, green economy. She also referred to biomass and other products in her area. There is potential for all of these, and if we can get the technology right, it is an area that agriculture could move into, particular after the recent trauma that there has been in that sector.

Mrs Courtney referred to tax exemption for creative industries. There has been a very strong group formed on creative industries. We are pushing them very hard because we see big advantages there. It is an issue that the Chancellor is going to have to address. I would be happy to add that topic to the list of tax issues that Mr Durkan is looking at. I would ask my officials to remind me to write to him about that. It could be a way of giving people a chance to get started. There may be some measures that have been introduced, but perhaps they could be more adventurous.

Mr Shannon referred to the role of local government. He is speaking to the converted because I spent a long time in local government. I agree with him that there are many things that local authorities can do. When the reform of local government takes place - and I made this clear to the forum that we held in Antrim a couple of weeks ago for all local authorities - I want to see them having a more defined role. The problem at the moment is that some local authorities are so small that they do not have enough of a financial base to give them the opportunity to provide adequate services.

I referred to Mr Wells and the assault course that he has embarked on. He seems to be thriving on it. He is obviously anxious for more, and, undoubtedly, our Department will have picked that up and will be very happy to provide him with more activity.

We now have one of the positive products of devolution. It takes time to change policy; it is like an oil tanker - it takes time to turn around. We are moving to a stage where mature discussions and debates can take place.

While it is for the Business Committee to organise debates, much activity has been crammed into one day - all of it on issues that we feel strongly about. I hope that the Assembly authorities can take this point on board. By this time a number of Members may be beginning to run out of steam. This is an issue that we should be spending more time debating.

I thank the Chairman, the Deputy Chairman and the members of the Committee. My Department is taking the report very seriously; all our senior officials are in the Chamber to hear the debate. We will be responding comprehensively when we get the reports from the other Departments. I acknowledge the report, but at this stage I am unable to do justice to all the recommendations by giving responses off the top of my head.

I will respond to the Committee in detail, recommendation by recommendation, early next month. When we get through that process and have agreement between the Committee and the Department, we may find that it is necessary to amend the policies in the Programme for Government. If so, we can go forward jointly with the amendments when the review of that process comes up at the end of this year.

Go raibh maith agat, LeasCheann Comhairle. I thank the Minister and all the Members who participated in the debate. I am greatly encouraged by the support of the Minister, and I understand the parameters within which he has to work.

There is agreement that urgent measures need to be undertaken to develop sound economic policies that will ultimately provide a better standard of living for us all. I will respond briefly to some of the comments.

Sean Neeson made a very telling comment that was reflected in the Minister's speech - 'Strategy 2010' is not written in tablets of stone. It is a developing document. Mr Neeson focused on fiscal policy and, cautiously, on the Barnett formula. He also focused on the need to support small businesses to such an extent that they become the backbone of our economy. I support him.

David McClarty spoke of the importance of tourism, saying that it could develop to such an extent that it would become the second most important industry in Ireland. I recognise that. He talked about the need to market the island of Ireland as a whole so that we can all move forward and focus in on this industry. He said that events tourism is the way forward, giving the North West 200 as an example.

Alasdair McDonnell focused - as he did in Committee - on globalisation. Globalisation is the name of the game and has been for the last 10 years. We need to accept that, along with all its problems. He also said that the single development agency needed to have teeth and real talent in order to produce inward investment. He said that we must penetrate new technology to create new, better-paid jobs, and he made that point continuously throughout our deliberations.

Mervyn Carrick said that it was two years since 'Strategy 2010' was first produced and that it had moved on. He also said that we needed to focus on education and training and to gear them to the skills required in industry.

Jane Morrice said that economic and social development must always go hand in hand. She said that we needed to move out of the mentality of the fear of failure, as that was crippling us, and that we should learn from the way that the Americans took risks and developed. She also focused on the needs and demands of women in the workplace, the single European currency that we can no longer ignore and the value of the social economy, which is something that we are all recognising.

Esmond Birnie said that the economy urgently needed entrepreneurs and managers. I was aware of all of his comments and have taken note of his three areas of concern. We had a separate dialogue - in fact, it was probably the first dialogue between Committee Chairpersons. We were both aware that, in many ways, our report touched on areas of concern to his Committee. Very early on in our final submissions we agreed to extract all the facets of our report that were of relevance to his report. It was a good exercise for us, and I appreciate very much his comments on the report.

Eddie McGrady spoke about the need to focus on regional disparities in relation to the long-term unemployed. We did that quite thoroughly, but he focused on one aspect of the IT skills. He also mentioned that tourism needed to be driven, financed and given specific targets, which was a very good comment.

Mark Robinson said that we needed to market ourselves as a first-class destination for inward investment, and that the GNVQ should be valued as a qualification. Those are very good recommendations.

Joan Carson talked about the lower corporation tax in the South and how that was having an effect on us. She also said that we, as an Assembly, now had an opportunity to address our problems rather than to depend on other people to do so.

Annie Courtney, another Committee Colleague, talked of the stronger links required between further education and industry and the need for tax exemptions for creative industries. Again, she focused on women in the work place.

Jim Shannon spoke on the need for extra zoning of industrial land. He also said that the role of local government needed clarification and that local government should have a role in reducing unemployment. These were well made points, and they are recognised.

Committee Colleague Jim Wells highlighted at the start of his contribution the fact that the three big industries of shipbuilding, textiles and agriculture were all in decline and that we needed to recognise that and focus on the new emerging IT and related industries to replace them. He highlighted the aggregates tax as a big problem and the fact that we have a land border with the South. With your permission, a Cheann Comhairle, I was almost going to say that I had a solution for him on that, but I will not develop it today given the time factors. He mentioned the way in which the banks take profit out of the state - that is well recognised, and we should support his position on that.

David Ford spoke of the major problems for the economy arising from poverty-related issues and long-term unemployment. He spoke very clearly on the need to tackle the issue of tax-varying powers. The Barnett formula was again mentioned. Even though there are problems - which the Minister highlighted - it is not simply an open chequebook that we will be seeking in renegotiating that. He also said that the regional rates are a fairly blunt and unfair way of raising tax.

In a conversation I had with the Minister some time ago, he reiterated the point that we, in a sense, had inherited 'Strategy 2010' from Adam Ingram and his committee. That is where the origins of the document lie. For him, and I suppose for us, it is an agenda for change. At one stage, perhaps not today, he said that the original document - and our criticism and evaluation of it - is actually a living document that is constantly developing. I think that that is true - we could be back here in a year's time developing it further. It is in that context that I take all his other points. He noted the benefits of globalisation and reiterated the commitments to New TSN.

I understand entirely that the Minister cannot give a definitive commitment today to the document because it covers eight other Departments and is a living and developing document. I appreciate his commitment to it and the praise he gave the work put in so far. He also said that he would respond in due course to all of the recommendations, which I also appreciate.

The aggregates tax, the fuel tax, the Barnett formula and the single development agency were also touched on essentially to culminate in the improved quality of life we are collectively trying to achieve as we move forward with joined-up government.

I accept that some of the recommendations can be introduced relatively easily and quickly. However, others are more long term and will involve a substantial cost. We do not underestimate the difficulties that lie ahead. It is crucial that all the Committees take a full interest in the issues that fall within their own Departments's responsibility. It is also crucial that all the Departments involved give a clear commitment to deliver those recommendations, which do much to highlight the impact that joined-up government can have.

In conclusion, I would like to thank all the Committee members, for this was an enormous task that we undertook - probably a much bigger task that we realised at the outset. Our Committee is made up of, as other Committees are, 11 members from six parties. It consists of three members of the SDLP, two members of the UUP, two members of Sinn Féin, two members of the DUP, one member of the Alliance Party and one member of the Women's Coalition.

The six parties worked together, even through the summer recess - something I will not inflict on them again this summer, unless the Committee Clerk, Cathie White, decides otherwise. I would like to thank every one of the Committee members - and also the new members who joined us for the work - for the collective way in which the work was approached. It is proof that when we focus on an issue we can deal with it and leave other issues outside the door. I would also like to thank the Committee staff, who did an enormous amount of work - we could not have had better staff.

Finally, I would like to thank the Minister and his entire Department for the way in which they related to us while we were dealing with the report. I thank the Minister for the open way that he gave us access to whatever we requested and for the openness with which his departmental officials dealt with us. That too is a recommendation of the way to move forward and on how to make joined-up government work. I commend the motion to the Assembly.

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