Like other Members, I welcome the debate and I am happy to support the motion's sentiments. I wish that more people had been present for the debate. I also wish that more people could have developed their points further, as I would have been interested to hear where some of their thoughts would have eventually led. Several Members said some intriguing things and provided key insights. Not all the points added up, but with limited time, not every point can be made or fully developed.

We have a fundamental need to identify alternative means and sources of funding in order to address the legacy of historical underfunding of the infrastructure of our public services, which was recognised in the debate. The deficit is estimated to reach at least £4 billion in the next 10 years, and it will probably be more. Many Members pointed out that that legacy of underfunding has meant some of our public services have required levels of capital investment far in excess of our available resources if we are to fund them in the traditional manner of public sector capital investment. That makes it important for the Executive and all Departments to explore new ways, such as public-private partnerships, to finance and to provide public services - I stress the words "public services". We can use new methods provided that they are affordable, deliver value for money, provide effective solutions to meet the public service needs, and add to the outcomes that we would otherwise have achieved.

It is also important that new methods are in accordance with the Executive's wider social and economic objectives, and I accept the point that many Members made. We need to examine all options carefully and objectively and develop a clear policy in those areas. It is for that reason that the Executive made a commitment in the Programme for Government to review the opportunities for the use of private finance in all major service provision and in all major infrastructure projects by March 2002. The aim is to increase investment and to provide innovative value-for-money solutions through public-private partnerships.

The high-level working group that Ms Lewsley and other Members referred to was established to carry out that review. It is jointly chaired by my Department and the Office of the First Minister and the Deputy First Minister. The group had its first meeting last Wednesday. I want to assure Mr Molloy that, in its deliberations, the working group will take into account evidence from many quarters on the benefits and the constraints of using PPP. That evidence will include that found in the Committee for Finance and Personnel's report. The report acknowledged that PPP can be a valuable tool and means of investment, while highlighting concerns about, and shortcomings of, aspects of certain PFI models. The members of the working group represent a wide range of interests and stakeholders from the public, private and voluntary sectors and, I hope, from the trade union sector also.

The Executive aim to ensure that policy in this area is developed using a social-partnership approach, and that was reflected in our invitations to a whole range of social partners to participate in the working group. We recognise that not everyone agrees with the concept of PPPs, and some people have particular concerns about their use. We will ensure that a broad cross-section of views is sought, and heard, during the course of this review through public consultation with all interested parties. Equally, we want to learn from the experience of others in this area - locally and internationally - so that we can be most effectively organised to develop policy and manage procurement of PPP's where their use is appropriate in the public interest.

One of the working group's first tasks has been to develop a working definition of PPP. I take issue with John Kelly's assertion that PPP is simply another name for PFI. We are talking about a model that can have a much wider scope, a much more varied form, and, hopefully, a more effective and beneficial impact than the standard PFI models we have seen before. It is significant that the group will be trying to develop a working definition of what PPP actually means for our purposes in this part of the world. It is not a matter of taking a "karaoke" policy from elsewhere and singing along to it. We intend to develop our own practices and our own approach.

The group has been considering what forms of partnership are right for our public services, drawing on national and international experience. The group is asking what will work best in the context of our local, social and economic environment, and what forms of partnership generating increased investment funding for our public services can fit within our existing public expenditure control regime.

Some issues are unique to us, especially the equality dimension that several Members have emphasised, and we must take these into account in developing policy. The Executive are committed to ensuring that the working group will address all the relevant social and economic issues surrounding any future use of PPPs.

The motion asks the Executive to investigate alternatives. If there any other viable alternatives to the use of PPPs or the traditional means of public capital expenditure, the Executive will certainly welcome hearing about them and will readily try to follow them up. At this stage I can assure Members that nothing is being excluded. I made it clear when talking to the working group last week that nothing can be excluded. No option should be deemed to be taboo, nor should any means of securing better investment levels for our public services be deemed old hat.

It is not, therefore, a question of our saying that everything now has to be done by PFI or through the broader notion of public-private partnerships. As some Members said, we are trying to make sure that we can meet investment needs across the range of our programmes. We have to do so in the context of the deficits that we have inherited, and in ways that add up to more investment and that secure more public services at the standard people here have the right to expect. If, for doctrinaire purposes, we are to rule out the option of using private finance, then we will deny ourselves that opportunity. We will limit the scale of our impact in relation to public investment, and we will limit our opportunities to provide services of a modern standard in the sort of facilities that people have every right to expect.

Several Members did recognise that our present public expenditure control regime places certain limits on the ways open to us to raise additional funds for investment. That regime, whether we like it or not, is determined by the Treasury and not by us. It operates primarily on the basis of departmental expenditure limits. As has been said, direct borrowing or issuing of bonds by publicly funded bodies cannot, in fact, lead to any increased expenditure within the Northern Ireland block total. The effect of the departmental expenditure limit is to limit what we can spend in departmental terms. As some of my officials say, it does exactly what it says on the tin. Within those particular constraints, raising money through bonds will not actually raise the amount of money that we can spend or invest. Yes, we can raise money through bonds, but it will not add to the sum total of our effective expenditure. It will not actually add more investment.

I am not recommending or defending those particular rules, but we cannot simply wish them away. We have to recognise that bonds are a form of borrowing - they have to be financed by someone. In our circumstance the rules are clear. If we borrow, the full amount is deducted from our public expenditure block - we do not get the additional expenditure. It is not entirely true to say, as Dara O'Hagan did, that there is absolutely no legitimate economic reason for that. The fact is that borrowing absorbs savings, and it can only proceed if interest rates are attractive. If you have higher borrowing, you have higher interest rates, and that in turn suppresses private investment elsewhere and potentially damages growth. It is not the case that there is absolutely no possible economic reason or insight that might inform the Treasury's view of those matters.

A lot of people in the House seem to think that it is just a case of our going and putting some of these ideas to the Treasury. They say "Just ask them, and when they say 'No', ask them whether they know who is asking and whether they know that we have had under-investment. Tell them that we are emerging from conflict." They think that the answer is suddenly going to change. We need a more persuasive case than that. That is why we have a working group to explore options and come up with models that can actually work - options that will allow us to talk to the Treasury, and others, about ways in which we can be more effective as we set about our business.

In focusing on PPPs we are trying to realise increased investment. Obviously, however, that has to be within the parameters of public expenditure limits.

I make no apologies as Finance Minister. I am in favour of public spending, and I do not try to reduce the amount of public expenditure or the Northern Ireland block. I want to find ways to increase investment and modernise our public services to meet the needs of the whole community.

That is why I agree with Members who want to try to improve on the Barnett formula. However, I caution Members to be realistic. It is not just there for the asking; we face difficult challenges as well. And let us remember, there are people elsewhere who want to change the Barnett formula, and not to Northern Ireland's advantage.

We need to look hard at the needs and effectiveness evaluation that is under way, and we have to be prepared to press the Treasury on the point in that evaluation which shows that we need added consideration and added expenditure if we are to meet our relatively greater needs. We have to be open so that we can accept that there may be areas in which our traditional spending is higher than the capital spending across the water. We may need to revise some of our spending tendencies downwards.

We have to be open to the possibility that some of the important investment in services in the recent past will allow us to put less emphasis on continued spending on them. It is possible to invest more heavily in programmes that are most under pressure, in particular health, schools, roads and transport.

The Executive is not interested in using PPPs to cut public services or public expenditure. We are trying to explore PPPs - possibly multi-sectoral partnerships. I discussed that with the high-level working group, because there are partnership models and experiences in Northern Ireland that we can recruit in order to expand and widen some notions of PPP. We have some cross- sectoral partnership experiences that go further than partnership experiences in other jurisdictions. Let us recruit those experiences to some of the financial public- private partnership experiences that we have elsewhere. That is one reason for having such a broadly based working group.

We do not wish to use public-private partnership as some form of privatisation. The aim is to ensure that we maximise our public investment. If we know that we need more infrastructure or investment in modern quality facilities to enable members of the public to avail themselves of better public services, we need more investment. If we want to start more projects but are limited in the number of starts we can make by the traditional route of public capital investment, we have to look at ways of marshalling private resources so that we can start more of those much-needed capital projects.

Some Members made reference to some old-style socialist tendencies that may lurk in some quarters in the Chamber. Northern Ireland does not have a command economy, but there are devices available to us with which we can marshall private finance and private- sector activity. We will never have well-developed public-private partnerships unless we use the capacity of the private sector to support public investment needs and the enhancement and provision of public services. We are talking about public services here.

We must remember that PPP transactions and workers' rights are governed by legislation, including EU legislation on the transfer of undertakings, and those obligations stand and apply in that instance. We must explore all the alternatives that we can, because as this debate has shown, there is no shortage of need. There is no shortage of good projects on which we can spend good money. We must ensure that we get good money as readily as possible.

If we had a fair wind with the Treasury and were able to change the allocation of funding through the Barnett formula, and if we were also able to secure a further dispensation from the Treasury allowing us to use some form of bond, we would still need to supplement the expenditure achievable through those means with PPP. We would still have to use our experience of good PFI in some of those projects where it is suitable.

I hope that Members' thoughts on this matter will converge. Some among us have argued that the problem in seeking alternatives is that we have not sought tax- varying powers. The unusual suggestion has been made that we access tax-varying powers but not tax-raising powers as a means of raising more money. In other words, not only are we to ask the Treasury to give us more money in circumstances where we would not ask for more money from our own households, but less tax is to be exacted at the same time. I do not care how persuasive or persistent anyone in the House is going to be; we are not going to get far on that basis with the Treasury.

If we indeed need investment that many Members have termed "vital", is it so vital that we will face the hard choice of trying to raise the money ourselves from within our regional resources through the means available to us? Will people believe that we are seeking tax- varying powers and that we are going to be hard-headed and realistic about the exercise of tax-varying powers, when we are afraid of the one tax instrument that we currently have - the regional rate? We are raising it very little compared to household contributions across the water. I do not mention that in order to threaten that we need to double household contributions through rates, but rather to simply introduce a reality check into our consideration.

We were given some examples of the use of bonds; I am not against bonds. We must work to develop a system that includes a bond facility workable within Treasury rules, which will have the attractions in broader market terms, locally and internationally, that Members have mentioned.

Many of those bonds that people cited as examples - those used in the London Underground and in some American cities - do not just allow us to raise money. Dr Dara O'Hagan said that if we had bonds, we could raise money. With bonds, we also must pay the money back. Payments must be made on those bonds. How are those payments to be funded? Where does the revenue come from? Will our public expenditure just go to pay back those bonds? That would propel us back into the hire purchase argument that people have used against PFI.

Many of the examples where bonds have either been used or proposed involve projects where user charges generate high revenue. The same people who seem to be advocating some of these models have told us that we are not allowed to go down the road of charges, just as we are not allowed to explore further increases on rates. I am all in favour of exploring alternatives. That is what we are about, and the working group has a wider remit than just trying to revamp PFI. That is why we want to involve our social partners.

Will the Minister bring his remarks to a close?

Let us remember that alternatives are not all going to be easy alternatives, and they are not going to be soft options for the Assembly. Equally, there will be no soft money from the Assembly - any more than there will be soft money from the private sector.

Go raibh maith agat, a LeasCheann Comhairle. I thank the Minister for attending the debate and for giving a very comprehensive reply. I will not deal with all of the issues he mentioned; there were so many. However, the debate has been successful in raising the issues and getting people to think about alternatives. I was glad to hear the Minister say that the working group is not just dealing with the implementation of PFI, but also looking at alternatives.

When it comes to tax-varying versus rates, it is about looking at alternatives and not about taxing households to the hilt. I will deal with a point raised by Esmond Birnie. I was not being specific with respect to a tax; I was saying that we should look at tax-varying and how we can have a fairer system of taxation. Simply increasing the rates is not the way to do it. I do not see tax-varying as a tax-raising power. We should not increase income tax or any other tax; we should look at taxation in general.

I remember listening to Esmond Birnie in Enniskillen some years ago, when he was saying that the South of Ireland was not economically viable and that it could not afford to be an all-Ireland republic. Esmond got it wrong that time and maybe he has got it wrong this time as well.

The debate is about PFI and alternatives. It is important that we look at all of the alternatives and rule none of them out. The Committee for Finance and Personnel held an inquiry into PFI, and proved that in some cases it was successful, but in others it was not. In some situations bonds may be successful. The difference between bonds and PFI is that bonds give you the finances, and you then decide how to use them. With PFI, you are giving someone a contract. There are benefits in some contracts if they are properly negotiated and carried out. The problem in the past has been that some contracts were not properly negotiated and carried out, and proper contract maintenance was not tied into them. We must look at that issue.

We should have alternatives so that our hands are not tied. If we are going to negotiate with the private sector as regards funding, and if we are saying at the same time that we do not have any alternative but to give them the contracts, then surely we are tying our hands in relation to those contracts. They can charge us whatever they want.

While there were not many Members in the Chamber, quite a few of those who were spoke on this issue. I am thankful that all parties discussed it. John Gorman spoke about housing. That is an important factor, and we recognise the impact that the Housing Executive has had in trying to alleviate homelessness and the problems associated with that. However, in dealing with the broader political scheme, he must recognise that the Housing Executive was set up because of discrimination in the past by the Unionist regime in Stormont. Control of housing had to be taken away from local councils and Stormont so that houses could be allocated fairly - something that had not happened in the past. Unionists are now proposing to bring the Assembly down because it is not the same as the old Assembly, or the old Stormont, and they are not getting their own way on every issue.

The Minister said very clearly that the Programme for Government, and the possibilities in that programme, are underpinned by PFI. A marker has been put down. Within the present context, and until the working group reports, no alternatives to PFI are being looked at. I am concerned that in agreeing PFI contracts we do not tie our hands for the future, or tie up funds.

I speak as a private Member in this debate, and not as Chairperson of the Committee for Finance and Personnel. When James Leslie raised the issue of the use of bonds, he spoke in the same capacity, and not as Deputy Chairperson of that Committee. We accept that, at the end of the day, the taxpayer will have to pay. There is no way to circumvent that. There is no way to build schools, hospitals et cetera unless somebody pays. How we pay, and the freedom that we are given to put the contracts together, may decide whether we choose PFI, bonds or other methods. We could use tax-varying powers, or we could borrow from the European bank or some other source. We do not have economic sovereignty at present; we are dependent both on what the Exchequer decides and on what comes out of the Barnett formula.

Ms Lewsley defended the Minister, which she is entitled to do. However, we have to look at the issue. I am not here to decry the role of the Minister. He has been very open in his discussions with the Committee and with Members. This is not a competition; one of the benefits of the debate is that all parties have come together to support movement on the matter.

I acknowledge the remarks made by Mr Dodds. He pointed to the fact that we should not tie our hands, but should be open to all alternatives. John Kelly mentioned trade union concerns. The Committee picked up on that in its inquiry. There was concern that people who had been guaranteed protection in their new employment under PFI did not receive that protection. Many people felt left out and worse off because of that.

The Minister said that PFI is not simply privatisation, which I accept. However, baggage from the past means that a danger remains that PFI may simply be seen to mean privatisation. We do not have to imitate what happened in the past. I welcome the fact that we now say that whatever is devised will be home-grown, it will suit the situation and we shall be responsible for it.

Mr Byrne raised the issue of pension funds. Many of the people who put those contracts together come from a pension-fund management background. We heard at the inquiry in England that housing associations and developers have put up money in various ways. We need to look at all the alternatives, and we can do that in our own way. There is unanimous agreement, as Dr O'Hagan said, that we do not have the public services that we require. A number of them are deficient, not just financially, but historically.

From today, we can progress and continue the discussion on the use of public-private finance. Last Monday, Sir Reg Empey and Séamus Mallon came to the House with a clear line on the Programme for Government and its aspirations. The next day, the Minister for Finance and Personnel told us what was feasible and what was not, and what could or could not be delivered.

I would prefer that the situation were made clear than that we should have a pie-in-the-sky Programme for Government that we know cannot be delivered. The Minister made clear what was required, and we can work in that context.

There is a simple argument about the legacy of past underfunding. We must look to the British Government to pay for that underfunding. Some people may dismiss that idea and say that we will not get such payment. However, if we do not set the marker high enough, we will get less than we deserve. We must emphasise to the British Government that, in recent years and even in the lifetime of this Assembly, other regions negotiated for - and received - allocations that were over and above their Barnett formula entitlement, while we did not get sufficient to meet our need. The Health Service is one example: England, Scotland and Wales received sizeable amounts of money, but we lost out because of the Barnett formula. The need here for resources for the Health Service is as great as - if not greater than - that in other areas. We must make that argument as strongly as possible.

I thank Members for their participation in the debate and ask them to continue to raise the issue in their Departments and Committees. All of us on the departmental Committees have a vital role to play in raising the issue and starting a debate about PFI and alternatives to it. Go raibh maith agat.

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