That window is gradually closing. It was conspicuous that last week when the Treasury went to the market for £500 million, it was on 25-year maturity. In fact, today I dug out from the Government web site the plan for the current financial year. They plan to issue around £5 billion of the £13 billion they need to borrow - so well over a third will be in long maturity, in the 20-year area. Clearly the Government have spotted the opportunity to generate money. Gradually one will find that there is more paper available in that area and that therefore, the yields will rise.

It has been asserted that bonds are a cheap way of borrowing money. However, one must be very cautious about that statement. The Government can borrow money reasonably cheaply by issuing bonds because Government are regarded as undoubted. They will definitely pay the interest and definitely redeem the bond on time and therefore get privilege for that certainty - they pay a lower rate of interest than the public sector. Whether a bond is cheap or expensive is, more than anything else, a function of the rate of inflation and the anticipated rate of inflation. If one invested now in a bond issued by the Government yielding 4·75%, you would, if you were the market, knock off the expected rate of inflation of about 2·3% and say that that is worth 2·4% real, or 2·4% over inflation. The tradition, certainly in the training that was drummed into me, was that when the real interest rate was more than 2·5% that was getting expensive. On the other hand, lending at a rate of interest that was more than 2·5% real was pretty good - one was getting good money. That is why the interest rate on index-linked yields is usually 2·5% real. That is regarded as the rate that the market needs when it thinks it has got good value.

Much has been made of the buyout of the Welsh Water services by Glas Cymru. I consulted my friend Ian Adamson to find out how to pronounce this company's name - I trust that he is right. We must be cautious about that particular example, for that was the deal from heaven. The company was being asset-stripped - it did not want the Welsh Water bit because it would not make it much money; nor did it want the £1·8 billion debt. When somebody made an offer for it, a deal could be done. We must be clear that just over half of the bonds issued there were at a very high credit rating. The market thinks that they are good and has attached a pretty low yield to them. Typically, the yield on those bonds is about 1% more than an equivalent Government bond - 5·75% is roughly the yield on those bonds at present. They are 28-year bonds, which mature in 2028. That is the triple-A-rated part of the financing of that buyout - £1 billion worth.

The other £800 million, however, was not nearly so tasty as far as the market was concerned. It carried a much higher degree of risk with it. The single A bonds yield 154 basis points over the equivalent Treasury bond. They yield about 6·2% or 6·25%. The triple-B-rated bond, which is the lowest grade of bond, is 250 basis points over the Treasury's, which means that it is yielding well over 7%. In other words, the market thinks there is substantial risk attached to that bond and therefore wants quite a high rate of interest if it is going to buy it. Compare this with the equivalent bond issued by Severn Trent or Anglian Water, which is yielding about 6·4%. With regard to Glas Cymru and the bonds it issued to finance its buyout of Welsh Water, it is borrowing £1 billion of the £1·8 billion it needs at fairly fine rates of interest. However, the £800 million is becoming expensive.

The notion that all that money is cheap is simply not true. There is a considerable difference between high-graded paper and the lower graded. Moderately well rated corporate paper is yielding approximately 6.4% at the moment, and that is reasonably expensive borrowing. If one regards inflation as being about 2.3%, that is about 4% real.

Often a company takes the view that a bond is issued only when money cannot be obtained in any other way. A cheaper way of raising money is to tap the shareholders through a rights issue and get it through equity. Another is to borrow it from a bank, and that might be the better option if interest rates are likely to go down. The advantage in a bond lies in the certainty, and that applies to the borrower and lender. Each knows how much interest will be paid each year for the specified number of years and when the date of repayment is.

If finance for Northern Ireland's infrastructure is to be raised by issuing bonds, the interest payments and repayment of the money must be addressed, and it is unlikely that the asset will be sold. For example, the water industry must borrow £2 billion over the next two years, so repayment of the £2 billion and the interest - and interest of 4% or 6% on £2 billion is quite a lot of money - must be considered. I know that the £2 billion does not have to be spent all at once - this is a 20-year scheme. However, we must be realistic about where the money comes from, and it can only come from two sources.

One source is the Government, and they spend tomorrow's money today by borrowing money from themselves and paying it back later. Another source is the consumer: for example, charging for water, as is done with electricity, or subsidising it, or a mixture of the two. A good example here is Scottish Rail, a private company that the Government subsidise by more than £20 million a year. Scottish Rail offers a fantastic service. It might be easier to sell and subsidise a railway service than run it, having defined the quality of service in advance. Those are the areas that should be considered when looking at alternative means of financing Government services.

We must be realistic about deciding what we are prepared to pay for and who ought to pay, given that money will not drop out of the sky. However, I do not dismiss the notion that we should look at ways of accelerating the rate at which we make progress by finding ways to harness either the private sector or private-sector financing.

The Minister will deal with that much better, but Treasury rules will make it difficult, if not impossible, for the Executive to issue bonds. There are devices that can be used to spin the assets into a certain company that is still controlled by the Government, but I will leave that matter to the Minister because I am sure that he will get it absolutely right.

We are spending tomorrow's money today, and we must be careful about how much of tomorrow's money we have hocked up in advance. Nonetheless, looking at those alternative approaches, one may conclude that one could generate enough revenue by improving the quality of the service. One may also conclude that the problem of repaying the debt that one incurred would not be as great as the current problem - that practically nobody wants to use, for example, the rail service. Raising revenue by improving services might be a lot cheaper.

As I keep saying, we cannot escape the fact that somehow we will have to pay for this. The questions are: who pays; what is the timing; and what is regarded as a reasonable risk to take on when managing our infrastructure development in these ways?

I am conscious that I have been speaking for some time, and others will no doubt want to speak. I trust that this is an issue - and the matters relating to it such as PFI and PPP - with which the Assembly and particularly the Executive will continue to wrestle. Indeed, I think that the ball is with the Executive at the moment. I certainly would not like to claim that I know the answers. There are horses for courses in this area. Experience in PFI is still fairly short, and better solutions will gradually be devised over time. Depending on the particular service that is involved, the answer will be different. It is crucial that we are having a debate and an active investigation into this matter. For that reason, while I am concerned about some of the logic driving Mr Molloy's motion, I nonetheless believe that the sentiment is entirely correct and therefore give it my support.

All the available resources under the Barnett formula are insufficient to meet the needs of our society. It would be desirable to have all of our public services funded from public resources, but unfortunately that is not possible, so we must look at all innovative means by which we can make up the shortfall.

We in the SDLP are not in support of privateers seeking to make money out of those projects. We stand for the development of best practice, good value for money and good client services. Our social democratic principles must be tempered with the realism that we must use when promoting the need for value for money. I welcome Mark Durkan's commitment to examining PFI and PPP as a means of addressing the £3 billion plus legacy of underfunding that resulted from direct rule, a system that the detractors of the Good Friday Agreement wish to return to. It is essential that every aspect of PFI and PPP be examined as we attempt to address this matter. But neither PFI nor PPP is a mature science. We are still learning about them. We must look at models of best practice from everywhere to enable us to develop a model with, what I would call, a Northern Ireland accent.

We must increase the educational provision for children, create better roads, build a stronger economy and increase and improve the care of our sick, elderly and the most vulnerable in our communities. These ambitions drive us forward and spur us to action, but if we are to achieve our goals, we must back them up with a clearly thought out financial strategy. I make no apologies for wanting a strong public service, and central to this thinking is the development of models without bankrupting the Exchequer. As we do not have full financial control of the departmental expenditure limits, we must look further afield to develop a strategy that reflects the needs of our society and seriously tackles social disadvantage.

The report that was put before the House on the inquiry by the Committee for Finance and Personnel on PPP and PFI has already been mentioned by several Members. The recommendations of the Committee include a co-ordinated programme of strategic projects and methods of finance that will address the infrastructure deficit through a sustainable programme of investment. It also recommends further research by the Economic Policy Unit with assistance from the Department of Finance and Personnel on financing mechanisms that can reconcile decisions made on the value for money of schemes against future revenue planning and budgeting for public services.

It also recommends that the support of all key players, including the private and voluntary sectors and local communities, be gained by means of a social partnership approach.

When we utilise the instruments of PFI or PPP, we need to ensure that we evaluate their pertinence and impact. They must be consistent with our core commitment to social democratic objectives and the creation of equality of opportunity, targeting social need, and high quality public services.

There is an overall need to properly examine this complex area. I ask all Members to work intensively with the Minister of Finance and Personnel and to make a significant contribution to the debate. I welcome the Minister's announcement of a high-level task force, which met last week. It will be examining international experiences and proposing new initiatives to address the funding shortage here.

Finally, it is important that the Assembly look at many ways to build innovative partnerships throughout society that can achieve the development that we need, consistent with social democratic values.

As Members have said, this interesting debate has arisen because we do not have enough money from the Treasury to do what we need to do. There is a legacy of underfunding in key areas that will not be rectified overnight by means of an increase in the block grant. It is therefore necessary to look for other ways to finance urgently needed projects and programmes in Northern Ireland. Most of us are in agreement on that, but the exact way in which that is achieved will be the subject of this and further debates.

Too often in the past - especially on the mainland - much of the debate on the matter has centred on the conflict between two people's dogmas, political principles, and so on. However, proponents of the belief that the private sector does everything best, or that the public sector must do everything, seem at times to abound in roughly equal numbers. That sort of approach does not solve problems, build schools and hospitals, or help to alleviate our historic underfunding of transport, which alone requires investment of some £1 billion over the next 10 years. We need solutions, not sound bites; delivery, not doctrine.

This debate allows us to set out what we want to achieve. Ultimately, the key issue is not how we should do something, but what we should do. The method of delivery is only ever a means to an end. Often, those who castigate the role of PFIs or PPPs do not have a realistic alternative. It is easy to say what needs to be done; it is altogether more difficult to pay to get it done.

There are easy answers and there are realistic answers. Unfortunately, few easy answers are realistic. We need to look for alternatives that successfully answer the question, "Do they work?" We can examine a number of possibilities: we could press for a renegotiation of the Barnett formula and, on the basis of all sorts of reasons, seek to make the case for more funding for Northern Ireland. I agree with many Members who said that we have a very strong case to make. However, as the Minister of Finance and Personnel pointed out last week in his characteristic way,

Even a successful renegotiation of the Barnett formula, or a one-off payment from the Exchequer, would not be solutions in themselves. Other approaches will be necessary. In the past, we have attempted PFI projects in Northern Ireland with varying degrees of success. The role of the private sector, and the efficiencies that it brings, are to be welcomed. However, we must not lose sight of what is happening. We are in effect buying projects on hire purchase. In the long run, this may be a dearer alternative. The private sector may be financing the projects, but we should not forget that the public sector continues to fund them, and to fund the profits of the private enterprise as well.

There are long-term difficulties. Too often in the past, when the private sector entered into negotiation with the public sector, the public sector ended up coming off worst. It is notoriously difficult to estimate what will happen in future years in the more complex PFI projects. We need only look at the agreements reached with the electricity generating companies in the early 1990s to demonstrate that point. As a result, we are left today to face higher bills.

Let us be clear. I believe that there is a place for PFI projects, but we must be sure that there is a sufficient transfer of risk to the private sector to ensure that we are achieving value for money. We must be sure that we are actually achieving efficiencies in the private sector, and that we are getting a better deal than we could in the public sector by using the private sector to carry out aspects of work with carefully defined targets. If it is to deliver, PFI must serve the purpose of delivering projects today which otherwise could not be delivered for years ahead.

Enormous economic benefits flow from using private finance today to make progress today. However, we must not fall into the trap of paying huge fees to consultants to transact with the private sector in a way that will act as a drain on future generations. If there is a genuine transfer of risk, and we reduce costs for the public sector, then they are worthwhile. I fear that the jury is still out on that issue. We do not have the opportunity in this debate to examine in detail the merits of PFI schemes. It is clear, however, that they are not a panacea for our problems. They may be just the start of problems for future generations.

PFI is not the only possible option. There are other ways to make sure that we do things today that will serve us all in the future. Greater use of bonds has been mentioned. The Americans in particular use bonds to finance projects while retaining control in the public sector. It is an attractive option in many ways, although as has been pointed out, it is not free of difficulties. Bonds allow significant amounts of money to be raised at lower interest rates. Instead of the private sector dictating terms to the public sector, the roles are reversed, allowing the public sector to have a greater say in delivering efficiencies, and retaining control.

The Treasury is not keen to allow branches of Government to simply borrow money, run up the public sector borrowing requirement and know that if all goes wrong, the Treasury will pick up the tab. That is problematic. Bonds can be Government-backed, or revenue-backed, or, depending on the nature of the projects, backed by a mixture of revenues, grants and other sources. Instead of having to wait 25 years to get a project completed, the project can be delivered in the short term. While the public is benefiting from it, payment can be made for it. The key is to get approval from the Treasury to allow such borrowing not to be reflected in the public sector borrowing requirement. That is not an easy task, but neither are any of the alternatives.

The opportunity exists for us to make a special case for Northern Ireland. The last 30 years have left us with a legacy of under-investment, not least because of the amount of money that was distracted away from other vital areas of investment in the need to fight terrorism. We are seeing an illustration across the world today of the enormous sums of money that are going to have to be spent in the fight against terrorism. In Northern Ireland, unfortunately, we have been paying that price.

When I hear some Members of the House talk about a lack of investment from Westminster over the years, I just wonder how much more money could have been invested in public services if they had played a role in getting violence and terrorism stopped. This is, of course, a political question. It can be resolved with the necessary will, and it could be an answer to Northern Ireland's problems.

Our challenge should be to press for such an approach by the Treasury. It will not be easy, but if we can send out one clear message from the Assembly and make our case effectively, such an approach could be made given the exceptional circumstances of Northern Ireland. When the alternatives are either allowing our infrastructure to degenerate further or getting an increase in the amount of money the Treasury directly supplies to Northern Ireland, what I am saying may look like a more realistic approach. Our task in the short term must be to assess this option fully and at the very least keep it open as a possible way forward.

PFI and PPP schemes do have a role to play in Northern Ireland, but let us not be afraid to be innovative in the approach that we take to dealing with the problems that we have been left to tackle.

A LeasCheann Comhairle, I welcome this debate. I welcome the motion because it gives us an opportunity to debate a very important matter that can be ideological and doctrinaire. Coming from a trade union background and still being a trade union member, it would be easy for me to slip into a doctrinaire or ideological approach to PFI. It is an important issue, and one that has not received the debate that it deserves. There has been little public debate about PFI.

However, since PFI has been introduced, a number of concerns, including outright opposition, have been raised from a range of bodies. Since the election of the second Blair Government, trade unions in Britain have begun a concerted campaign against PFI, with some threatening strike action if its implementation is continued. In particular, the largest British trade union, Unison, remains vehemently opposed to PFI and has campaigned strongly for its abolition. Perhaps more surprisingly, the British Medical Association has added its voice to those opposing PFI. The British Medical Journal has described PFI as a perfidious financial idiocy that could destroy the NHS.

The Chartered Institute of Public Finance and Accountancy, the National Audit Office and the House of Commons Public Accounts and Health Committees have also raised public concerns about the operation and effects of PFI. So it is not only those people on the left of politics, either here, in the rest of Ireland or elsewhere, who are expressing concerns about PFI. Concerns are being expressed by those august bodies that I have just mentioned.

It is not in opposition to Mark Durkan that we are debating this motion, and it is not a way of getting at anyone. It is an attempt to open up a debate around how we should finance our essential public services - for example, health and education. It is about whether we should allow private finance to take control of those very important services and institutions, or whether public finance ought to keep the main handle on them.

The debate, therefore, on how we pay for public services, on how we protect those services and on the rights of the people who work in them is one we cannot sidestep. The state of our hospitals, schools, roads, railways and sewerage systems demands nothing less than a substantial increase in the money we invest in public services. We all agree on that.

The debate on the future of our public services must bring into focus the fact that we do not yet have economic sovereignty and are subject to the financial resources provided by the British Government. The current economic policy that has come to govern public spending and the interest in using private-sector finance and management are the results of the crisis in public borrowing and 20 years of British Conservative rule.

Those who advocate using private money to fund our public services argue that it generates money the public purse simply does not have. It transfers the risk of public- sector borrowing to the private sector. It brings private know-how into the public sector and, by implication, efficiency savings, and it accelerates investment. Those arguments are used by those who are in favour of PFI.

One may ask whether private finance through PFIs or the evolving PPPs - they are the same things - are the only, or even the best, ways forward. The costs of using private money must still be met from the public purse, and it is an expensive way to borrow money.

There are many indicators that the PFI projects entered into five or 10 years ago were not cheaper than they would have been if public money had been used. In some cases PFI projects have resulted in poor safety standards, lower levels of services, poor working conditions and no savings on running costs. But does that mean that PPPs or PFIs should be rejected? Several billion pounds still have to be found to invest in the public services.

Members must not forget that in the British Government's last comprehensive spending review, PFI accounted for about 14% of investment in the capital building programme. Given Tony Blair's total conversion to the merits of the private sector, one can expect that figure to increase. When our slice of the British budget is worked out by the flawed and unfair Barnett formula, we will have to fund an even greater portion of our public-sector capital building programme using PFI. In key areas such as health and education the Departments are not getting a fair share of funding from the Minister of Finance and Personnel. In many ways the Assembly has yet to live up to the commitments put forward in the Programme for Government.

If there was a greater level of economic sovereignty we would have more options. Public borrowing is always cheaper than private borrowing, and that is before we start to examine the British Treasury rules that block borrowing from the European Investment Bank - a route that is used to greater effect by other European countries. The Assembly ought to look at that.

Private-sector finance can help accelerate building and investment, but whatever means we use for increasing our investment in vital public services, they must remain under fully accountable public ownership. That is a reasonable objective of any party that calls itself democratic socialist or plain socialist. All Members have an obligation to ensure that those essential services remain under public control and are not given over to PFIs.

We will still pay for finance that is raised by PFI, so is PFI good value for money? There is a case to be made for identifying key public services that should not fall within the remit of PFI and where criteria other than that of profitability should be paramount. That is also essential in public services, and it is an argument put forward by Bob Kiley in his report on the London Underground in which he rejected part privatisation in favour of public bonds. Kiley favours the use of bonds to maximise the benefits of using private finance while services, delivery and management remain under public control and workforce rights are protected. It is essential that the rights of the workforce are protected and not handed over to what can become the ravages of a PFI.

There are a number of options to be examined. It may be difficult, but the unfair Barnett formula should be altered to increase our block grant allocation, and a peace dividend should be secured by transferring expenditure on the British war machine to rebuilding a society emerging from conflict. Greater investment should be made by the Irish Government to meet their financial responsibilities in the North - especially in border areas. Alternatives such as borrowing at preferential rates from such bodies as the European Investment Bank should be considered, and the use of public bonds should be examined. I would not dismiss the notion of public bonds.

Whatever the solution, without economic sovereignty we will be constrained by the British Exchequer. We have to take responsibility for some difficult decisions, and rhetoric will not help when we realise that we need to find billions of pounds to invest in restructuring our hospitals and railways.

A LeasCheann Comhairle, this is not an attempt to have a divisive, ideological or doctrinaire debate. It is an attempt to ask whether there are alternatives to PFI. We ought not to allow the areas critical to the well-being of our community - health and education - to escape the net of public service.

Money provides the sinews of Government, and therefore this is an important issue. It is a pity that so few Members are here to debate and consider those crucial matters. I congratulate the Chairman of the Finance and Personnel Committee on tabling the motion. It is appropriate to consider the full range of alternatives. I would not, however, necessarily agree with his comments on the alternatives to PFI and PPP.

My first point relates to the Barnett formula, a matter that is often raised in the House. It has become a litany on these occasions to say that the formula must be renegotiated. That demand is our local parallel to the phrase used by Margaret Thatcher in the 1980s with respect to the renegotiation of the UK's net contribution to the European Community: "Give us back our money".

I wish the Finance Minister and the Executive well in their dealings with the Treasury. While it is possible that they may succeed, it is equally possible that they will not. If needs throughout the UK are to be assessed on a regional basis, we do not yet know how our needs will compare, after careful research, with those of the south of Wales or the north of England, where social deprivation also exists. Perhaps our needs base will be shown to be the greatest in the UK, but it might also be shown to be equal to the needs of many other regions. We should not assume that by following this route a large increase in the Northern Ireland spending block would be granted. As is the case in many areas, the Northern Ireland Executive must hope for the best, but prepare also for the worst. We need a strategy of regional competitiveness and wealth generation, regardless of what happens as a result of a reassessment or recalculation of the Barnett formula and the Northern Ireland block of public spending funds.

My second point is on the matter of bonds, which Mr Leslie covered well. One of the many problems that might arise if this route is taken is that the institution of water charges would be required. Bonds were used to fund water services in Wales - unlike Mr Leslie, I will not attempt to pronounce the relevant Welsh name. Many Members will remember the discussion in the mid-1990s of the possibility of privatisation in Northern Ireland. The suggestion was supremely unpopular with much of the public.

My third point is that in the proposer's speech there is something of an enigma or conundrum. It is unclear what he meant by his reference to tax-varying powers. Did he mean tax-raising or tax-lowering powers? That matter will have to be pursued in the future, and quite rightly so. The proposer criticised the one piece of tax-varying power that the Executive have exercised, albeit that the increase has not been more rapid than in Great Britain - the increase in the regional rate. Other Members have made the same criticism in the past. Given that it is not clear what view is being taken on user charges, or so- called toll charges, is a regional income tax, or a regional variation around the national UK rate and levels of income tax, being hinted at?

The Scottish Parliament and Executive have the theoretical power to raise income tax above the UK base rate by up to three pence in the pound. However, it may be significant that to date the Scottish Parliament has not used that power. Some people think that it is extremely unlikely that the Scottish Parliament will use it in the foreseeable future. Even if it did use that power, the quantum of revenue raised might not be very large relative to the total base of revenue in Scotland. The same arguments apply even more forcibly in our region.

As someone who has tried to teach students about so-called regional economics, I know that there is a theoretical argument that when a devolved or federal assembly within a greater fiscal and monetary union varies its spending at the margin, it should also vary its tax at the margin. The argument is that that will help to make the politicians who take such decisions more responsible for those decisions. At the theoretical level, that argument carries some weight. If during debates about the Budget or PFI, we faced the prospect of having to take votes on raising a regional, Northern Ireland or Ulster rate of income tax, we would find that debates would be better attended.

I doubt if the House is ready to take on the responsibility of a regional income tax rate. What may happen in the medium-to-long term is a decision for the future. I support the motion because it is sensible to evaluate the full range of alternatives.

I support the motion. It is good to open up the debate on attempts to get finance for capital investment project needs that are so starkly visible in Northern Ireland. We all recognise that there has been a severe lack of capital investment in infrastructure projects for 30 years. However, we should not get hung up on the ideology of PPPs or PFIs. When Lord Keynes introduced the idea of deficit budgets many years ago, it was intended that a society could borrow money from the private sector to finance capital investment projects in particular.

The public sector borrowing requirement (PSBR) is no longer in vogue; it is now the net cash requirement. Governments can still borrow money, but they borrow it from the private sector. In a small region such as Northern Ireland we cannot get as much extra public finance as we would through the Barnett formula, and we cannot continue to labour the point about how we are suffering from its inadequacies. However, sooner or later, the region will have to get a better picture of its public finance position. As I said on 25 September in a question to the Minister of Finance and Personnel, the sooner we see Northern Ireland's revenue receipts the better. We will then have a better understanding of how public finances operate in Northern Ireland and how we are performing as a region.

Resource accounting is coming in. There is a massive notional charge being attributed to capital assets in each Department at the moment. If there is to be no direct public finance input into projects then there will be a charge and we should open up our minds to having value-for-money PPP projects. There have been some good projects in Northern Ireland - the Department of Education has endeavoured to lever in private funds for some projects that have not all been bad.

We must develop expertise in Government about how to manage the process of levering in private finance for particular capital investment projects; an area where there is a severe lack of knowledge in the British government system. This is the most important reason why trades unions and other established and respected bodies in the UK oppose PPP. Project management has not been good. There has been overcharging as far as some of the private finance levered in has been concerned.

Given our new dispensation we should open up our minds to levering in private finance. We should not get hung up about private finance being bad money. Virtually everyone who works has money tied up in a pension scheme. They are saving with assurance companies or in pension plans, and investment managers are looking for projects to invest money in. There is a large public sector in Northern Ireland and there are many people whose money is tied up in pension plans. Do we want that money to leave Northern Ireland and be invested in other places, or do we want it to be invested in capital investment needs and projects here?

We must accept the principle of using private finance in an efficient and effective way to rebuild the infrastructure that we need so badly. If we go on - in the same way that we have for the past 30 years - depending on the annual drip-feed subvention, we will slip further back and create even greater disadvantage.

I welcome the motion, but we should not close off any options at this stage. I hope that the Minister will put resources into an interdepartmental group that can look at alternative sources of finance that will help to regenerate and build our regional economy.

Go raibh maith agat, a LeasCheann Comhairle. Every Member and party agree that our public services are in crisis. It is not only our hospitals and schools; roads, railways and services across the board are in trouble. The Minister of Enterprise, Trade and Investment told the House today that the North of Ireland is heading into an economic crisis. Serious job losses were announced last week, and the Minister warned of more. We must break the cycle of depression and economic instability.

There is an onus on us to ask difficult questions and come up with big ideas. We must break the cycle of under-investment in public services that is a legacy of British involvement in our affairs. There are serious concerns about PFI. As Mr Byrne said, organisations and individuals across the board have reservations. The matter must be examined with regard to value for money, workers' rights and accountability. Clearly, such concerns are well founded.

The purpose of the motion is to urge the Executive to look at alternatives. However, we do not have economic sovereignty, and that fundamental issue must be examined. We are subject to the financial resources and policy planning set out by the British Government. To date, our influence over the amount of money that we have to invest in public services has been sadly lacking.

The Barnett formula was mentioned, and it is clear that in the House and among political parties there is great unhappiness about that system of funding. We have failed to exert the necessary political pressure not only on the Barnett formula, but on tax-raising and tax-varying powers. We have focused on tinkering with rates and have toyed with other forms of back-door taxation. We are now in a position of crisis management across our essential services. We do not have the resources to plan for the future, or to look at those issues with imagination and vision.

There is a legacy of underfunding, discrimination, and, as a result of partition, of peripherality. Our need is not reflected in the headcount of the Barnett formula; our society is emerging from conflict. Where is the peace dividend that we were promised? We must demand, for example, that the British military expenditure be diverted and used instead to build on peace, and, in a sense, to create a period of economic reconstruction. The Irish Government should also be approached to ensure that their responsibilities in the North of Ireland extend to economic support and incorporation into the national development plan.

It is necessary to examine ways to develop our economic sovereignty. We must be allowed to borrow from such bodies as the European Investment Bank whose preferential rates would be much more favourable to the public sector than to the private sector. We must build upon the foundations of peace and conflict resolution. At present, the rules of the British Treasury do not allow us to do that. In European terms, that is highly unusual. It is an unwarranted and extremely tight restriction on the rights and economy of public bodies. There is no legitimate economic basis for it. I urge the Executive to take the matter up with the British Exchequer and at EU level.

We must also consider public bonds. That matter has not been explored with any great urgency. If the Assembly were able to sell bonds to the public a steady stream of income would be guaranteed. A significant amount could be raised for investment. An example of such an initiative is the London Underground, and there are others in Boston and in New York. There is concern that that approach amounts to regressive taxation, and indirect privatisation, but if it is handled properly it does not have to be like that. Such a scheme would ensure that capital investment projects remain under public ownership and management, and lower interest charges would result.

Why do we not look at public interest companies and genuinely independent trusts, instead of the compromised examples that we now have?

In regard to tax varying, we do not have the limited powers of the Scottish Assembly. We have the power to set the regional rate. However, we must recognise that that is not significant when compared to overall public expenditure. It represents a form of taxation that hits people unfairly. The British Government must live up to their responsibilities. To support a society that is emerging from conflict, they must ensure that there is a real peace dividend by recognising our need.

We must make progress in establishing economic sovereignty. We must have real control over the setting of our objectives and goals for public service expenditure and investment. That is where the solutions lie. Fundamental to all that are the constraints an economic sovereignty. It is key to movement on the issue. Go raibh maith agat.

I was impressed by the fact that the Chairperson of the Finance and Personnel Committee had the initiative to start to look outside PFI. We must look at something new. We did it once. We took housing in Northern Ireland and sold it. Many people objected, and I am looking at people in the Chamber who in 1979 must have thought that it was a dreadful to sell a public asset to the private sector.

Northern Ireland was the first region in the United Kingdom to do such a thing. What was the result? Members can see the results all around them - housing is the one thing in Northern Ireland that is not controversial.

How was that achieved? It was achieved because people had a good, new idea. In fact, Mrs Thatcher had the idea originally, but it took her nearly two years to persuade the erstwhile Marxists, the soft socialists and the liberal do-not-change-anything people who were in Parliament then. However, she made it. We were lucky in that we had such an odd parliamentary system that we could go in one night to Westminster and say that we in Northern Ireland wanted to do that, and so for 18 months we had total freedom to sell the housing.

It meant that we had an asset that we could, through the excellence and initiative of the Minister then responsible for finance, make a case to the Treasury that was special and different for Northern Ireland. We were able to exhort the Treasury to pay some attention to the dreadful times that we had had with terrorism, the expenditure on security and the drain on all our functions and cash. The Treasury accepted that. Uniquely, Northern Ireland is the only place in the United Kingdom today that can sell its public housing and get all the money - not half in dribs and drabs - directly back. Councils are free to use the money.

PFI has happened once, so might it not be an idea to be a little bold and think of something new and different? It could happen if guns are given up, the Loyalists stop beating people up all night and the terrorism that ruins the country is given up for good. Imagine how the rest of the world would say "My God, that place is different and new. That is somewhere we should invest in." Instead of having to worry about whether public finances must be supplemented by private finances or vice versa, money would be flowing in. There is the challenge.

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