Northern Ireland Assembly
Monday 19 November 2001 (continued)
1.00 pm Dr Birnie: I apologise for not being present at the start of the debate. I support the motion for three reasons. First, it was said that those who opposed the motion wished to preserve devolved power. That power is not real; it is cosmetic, and it is a veil. Child benefit in Northern Ireland is administered at the same rate as in the rest of the United Kingdom, and it is inconceivable that we would wish that position to change in future. Therefore, it is a power without any great benefit. Secondly, those who attempt to take a principled stance to preserve that small part of devolved power are in grave danger of hurting the poor. That is a strange attitude for parties that claim to have a social, democratic or radical basis to take. A parity principle is in place; the levels of social services and benefits across the United Kingdom should be the same. That principle was established - at some cost and difficulty - by previous Administrations that operated from this House during the 1920s, and after 1945, when the Labour Government under Attlee developed the welfare state in the UK. Members should hesitate before they throw out the motion and threaten the long-established and beneficial practice of parity in social services and benefits in the United Kingdom. That is the longer-term danger should the motion be rejected. The more immediate danger, as has already been stated, is that an attempt to establish our own duplicate services for tax credits might incur costs. Those services would uselessly mirror the Inland Revenue in London. Finally, a consultation exercise on integrated child and employment tax credits ran from the summer to the autumn. I responded to that, and I wonder how many of the opponents of the motion took that opportunity to raise some of the issues that we have heard today. Mr J Kelly: Go raibh maith agat, a LeasCheann Comhairle. I oppose the motion. If we have devolved powers, we should not hand them back. It is Committees' role to scrutinise legislation. Why did the issue not go before the Committee for Social Development? Did its Chairperson, Mr Cobain, equivocate because the issue did not go before the Committee, or is he opposed to the power being returned to Westminster? That important distinction must be made. We heard that jobs will not be lost. However, if jobs are not to be lost, why would we transfer back the power? The issue must be teased out more thoroughly, and I support the SDLP's view that it should be either postponed or withdrawn. The Committees' role is to scrutinise, and I would like the Chairperson of the Committee for Social Development to clarify whether he is unsure about that, or whether he feels that the point is valid and that the motion should be scrutinised before any further action is taken. Mr Dodds: I have listened carefully to Members' points. Many raised important issues and concerns, and I hoped that I had dealt earlier with some of those; indeed, in my opening remarks I addressed some of the themes that were raised. However, I am happy to address those concerns again, and to deal with other issues that arose. I will try to explain why we are at this stage and why we are proceeding in this way. It is in the interests of the recipients of child benefit and the people of Northern Ireland. I have heard arguments about principles and parity; and there may need to be further debate in Committees and in the House about parity as it relates to the area of social security. People speak about having power over social security but, as Dr Birnie rightly reminded us, it is a power that is never exercised. Who in their right mind would want to exercise that power to the detriment of the people of Northern Ireland by creating a less favourable situation than exists in the rest of the UK? I will return to that theme, but we must concentrate on the matter before us, and on what impact the motion will have. Let us deal with issues such as devolution and principle, but let us not lose sight of the impact there will be on Northern Ireland - and the implications for the Northern Ireland block - if we do not proceed in this way. Mr Cobain, the Chairperson of the Committee for Social Development, Mr Hutchinson, Mr Gallagher and others raised the issue of the role of the Committee. There has been much talk about the role of the Assembly in relation to tax credits and tax credits legislation. The Inland Revenue is responsible for the Tax Credits Bill: the Assembly has no choice in the matter. Taxation is a reserved matter, whether we like it or not. The matter is being brought forward at Westminster, whether we like it or not. That is the reality. We could talk all day about this, but the Chancellor and the Government at Westminster have responsibility for the matter and are proceeding with it. The Government are going down this route, and we are merely being asked to consider the changes that will result from the establishment of tax credits. There seems to be a misunderstanding that we could have a role to play if we deferred the matter. The Bill is going ahead; all that the Assembly is being asked to do is to deal with the consequences. The choice is between maintaining the administration of child benefit using our own computer systems, administration, and the cost of doing that, and transferring that responsibility to the Inland Revenue following the changes under the tax credits legislation. This is not a situation where, if we do not go through with this, we can sit down and discuss the issue of tax credits. That is not the issue. Some Members have greatly misunderstood what we are being asked to do. The document that Dr Birnie referred to, 'New Tax Credits - Supporting Families, Making Work Pay, Tackling Poverty', was published in July. There was a 12-week consultation period that finished on 12 October. I presume that all Members who were so exercised about the issue responded during the consultation period. I will look carefully at the responses of Members who raised these issues to make sure that they did so to the relevant Government, which in this case is Westminster. A copy of the document was sent to each MLA - indeed it was sent wider afield. As I made clear to the House from the start, no significant concerns were raised - according to those who deal with the policy and practical aspect of these issues. I will deal with the staff employment issues shortly. As the Chairperson said, a letter providing details of tax credits, dated 20 September, was sent to the Committee for Social Development. We should remember that tax credits are not a devolved issue for Northern Ireland; they are an issue for Westminster. It was not possible to bring the matter before the Committee earlier due to the confidential nature of correspondence. Members often wax eloquent and lyrical about the agreement, the legislation, and so on. However, in keeping with the memorandum of understanding and the devolution guidance note 8, the Executive must respect the confidentiality of such exchanges between the mainland United Kingdom Government and the Assembly as a devolved institution. I shall examine ways to involve the Committee in such issues as early as possible. My record, and that of my predecessor, shows that we try to do that as much as is possible. However, we have to deal with a mechanism and a framework that sometimes circumscribe our ability to do that. It is not of our making, but we have to deal with it. I have already mentioned the limited response to the consultation process. However, I re-emphasise that responsibility for tax credits does not fall within the Assembly's remit. Billy Hutchinson mentioned the situation in Scotland. We have discussed devolution, and whether it is a real power. In regions of England, Scotland and Wales, the Scottish Parliament is held up as an example of the best and strongest form of devolution. However, the Scottish Parliament does not have responsibility for social security. Therefore, the idea that there is a massive point of principle involved in the benefits issue in Northern Ireland is misguided. The recipients of those benefits must be kept at the forefront of the debate. The Scottish Parliament would be consulted only about those areas within its control that are affected by tax credits - issues such as training. We must be clear about the real issues. Some Members, including Mr ONeill, have asked me to delay the motion. However, by so doing, we would lose the opportunity to have the consequential changes carried at Westminster. The Assembly cannot avoid the task, for the Westminster Bill is ready to go before Parliament, where responsibility for tax credits lies, and where decisions will be taken. I have also dealt with the costs issue. Members have spoken about a procedural matter of principle - it is more than that. A decision that is not in the best interest of the people of Northern Ireland will affect the Northern Ireland Budget and block. The estimated cost of procuring and operating a computer system to handle Northern Ireland-only child benefit claims and administration is likely to be some £5 million per annum. As a Member from this side of the House asked, what purpose does that serve if it is simply to duplicate what has already been done in Great Britain? The current charge is £215,000. Annual maintenance charges are likely to be much higher than that £215,000, given the need to maintain a similar service to that provided in Great Britain. That £5 million will supply only the basic, minimum system. It does not take account of future development costs of keeping the system in line with changes that may occur in Great Britain. This is not something that Members can vote on without there being an implication here - there are strong implications. 1.15 pm If the Assembly decides to retain this area of child benefit administration, it must be aware of the consequences. The reality is that Members will want to maintain child benefit at the same rate and under the same conditions as elsewhere. Regarding the talk about power and where it lies, is anyone seriously going to come before the Assembly and suggest that we should not have the same position as elsewhere? The increases are funded centrally, they are demand-led, and they do not come out of the Northern Ireland block. Of course, Members might suggest differences that will have to be met out of the Northern Ireland block - I would be interested to hear where that money is likely to come from. The reality is that the Assembly will want to maintain parity so that our people receive the same benefits as those elsewhere. If this motion is not passed today, we will need a system that will guarantee payment to Northern Ireland recipients. We will have to make provision for the introduction of new computer systems and the associated administrative costs. We cannot run away from this reality. The idea that the Inland Revenue will pick up the costs is simply pie-in-the-sky, fantasy nonsense. What compelling argument could be advanced to suggest that the Inland Revenue would be willing to finance a separate system when it is offering to include that as part of an overall UK-wide system? Clearly, the costs would have to be borne out of the Northern Ireland block - that is the reality. Mr Gallagher mentioned cross-border workers. We have been down this route before. Working families' tax credit already deals with such workers on a satisfactory basis. The problem was recognised when the system was established and measures built in. I hope that that takes care of the point Mr Gallagher and others made on that issue. Some Members referred to benefits for women and lone parents. Much of the benefit of the new integrated child credit will go to women, including lone parents. People with disabilities will continue to benefit from support as now. It has been concluded that there have been no identified negative differential impacts arising from a person's sexual orientation, political or religious beliefs. Of course, that situation will continue to be monitored, and a final equality impact assessment will be issued after the consultation period. What are the advantages? Some Members, including Mr Gallagher, asked who will benefit from this and expressed concern about access. I emphasise that child benefit will continue to be administered in Northern Ireland. People will continue to have access to the same staff on the same basis as at present - we have seen this happen already in the case of working families' tax credit. I would be interested to know of any Member's representations of dissatisfaction on that score - and I am talking here about access to staff, not to the system. Consultation with the union will continue. The transfer will not take place until 2003 and, as I said in my opening remarks, will affect some 150 staff in the Social Security Agency. Similar transfers have taken place before involving 229 staff - 106 from family credit and 123 from the contributions unit. Those transfers clearly suggest that terms and conditions of service are similar, and they have not proved contentious. Negotiations with NIPSA will continue as part of the overall consultation process. Some Members raised the issue of staff transfers and the number of staff that will be required. There will be no reduction in staff requirements, and staff will not be transferred out of Northern Ireland. The Inland Revenue had to recruit additional staff to administer the working families' tax credit. It is expected that additional staff will be needed to deal with the new children's tax credit. Mr Shannon raised the possibility of delays in manual payments. Delays will be likely only if the motion is not passed and if the Assembly breaks with the parity principle and the current system. The additional costs that would result from the failure to pass the motion would have to be met from elsewhere in the Northern Ireland block, as would the administrative costs. I have further long-term concerns regarding the issue of parity. The Treasury may raise concerns that funding for something that is classified as social security costs in Northern Ireland does not have a corresponding social security benefit in Great Britain. The Assembly must recognise that, and it may have to deal with the issue. We can discuss the issues with the Government at Westminster and lobby there. However, those issues must be decided at Westminster. As tax credits and child benefit become more closely aligned and developed by the Inland Revenue, it will become increasingly difficult for Northern Ireland to replicate those changes. The Assembly would have to decide how to legislate for the annual upgrading of those benefits, the amounts to be upgraded and the basis for the upgrading. Whether any increases would be in line with the increase in child benefit set by the Inland Revenue, or possibly determined by some other method is a further consideration. It is difficult to envisage circumstances in which the Assembly would not want to maintain parity. Considerable costs will be incurred by allowing the systems to diverge in the long term. Section 87 of the Northern Ireland Act 1998 - a piece of legislation that many Members have quoted as something that must be supported and reinforced - states that: "The Secretary of State and the Northern Ireland Minister having responsibility for social security ("the Northern Ireland Minister") shall from time to time consult one another with a view to securing that, to the extent agreed between them, the legislation to which this section applies provides single systems of social security, child support and pensions for the United Kingdom". They have agreed to continue to operate the existing parity system. The argument that such a motion, which is of benefit to the people of Northern Ireland and to the Northern Ireland block, is against devolution per se, is ludicrous and without foundation, particularly when compared to the situation in Scotland. The Assembly has a duty to bring that forward in the interest of the recipients of child benefit. The concept of parity means that people in Northern Ireland pay the same rate of income tax and national insurance contributions as elsewhere. In return they have access to the same range of benefits, both contributory and non-contributory, paid at the same rates and subject to the same rules and conditions. I would welcome a debate on the wider issues and principles; that could be beneficial. However, the accepted view is that parity works to the advantage of the Province. Contributory benefits, such as retirement pensions and incapacity benefit, are funded from national insurance contributions. The amount raised in Northern Ireland from those contributions is insufficient to meet the demands of those benefits. It has been so for a long time. The shortfall in the Northern Ireland national insurance fund is made up by a transfer from the fund in Great Britain. Similarly, in relation to non-contributory benefits financed from taxation revenue, expenditure is demand-led and outside the managed block. That is in the interests of the people of Northern Ireland. I hope that I have addressed most of the issues raised. When Hansard is printed, I will ensure that Members receive a written response to any matters that I may have omitted. I remind the Assembly that the main purpose of the debate is to give Members the opportunity to endorse the principle that in Northern Ireland all social security benefits should continue to operate in strict parity with Great Britain, and thus be fully funded by the Treasury. Agreeing to the transfer of the administration of child benefit to the Inland Revenue is the only way for Northern Ireland to maintain that position. 1.30 pm Question put. The Assembly divided: Ayes 43; Noes 32. Ayes Mr Armstrong, Mr Beggs, Mr B Bell, Mr Berry, Dr Birnie, Mr Campbell, Mr Carrick, Mr Clyde, Mr Cobain, Rev Robert Coulter, Mr Davis, Mr Dodds, Mr Douglas, Sir Reg Empey, Mr Foster, Mr Gibson, Sir John Gorman, Mr Hamilton, Mr Hay, Mr Hilditch, Mr Hussey, Mr B Hutchinson, Mr R Hutchinson, Mr Kane, Mr Kennedy, Mr Leslie, Mr McClarty, Mr McFarland, Mr McGimpsey, Mr Morrow, Mr Paisley Jnr, Mr Poots, Mrs I Robinson, Mr K Robinson, Mr M Robinson, Mr P Robinson, Mr Savage, Mr Shannon, Mr Trimble, Mr Watson, Mr Weir, Mr J Wilson, Mr S Wilson. Noes Mrs E Bell, Mr Bradley, Mr Byrne, Mrs Courtney, Mr Dallat, Mr A Doherty, Mr P Doherty, Mr Fee, Mr Ford, Mr Gallagher, Ms Gildernew, Dr Hendron, Mr G Kelly, Mr J Kelly, Ms Lewsley, Mr Maginness, Mr Maskey, Mr McCarthy, Dr McDonnell, Mr McElduff, Mr McHugh, Mr McLaughlin, Mr McMenamin, Mr Molloy, Mr C Murphy, Mr M Murphy, Mr Neeson, Mrs Nelis, Dr O'Hagan, Mr ONeill, Ms Ramsey, Mr Tierney. Question accordingly agreed to. Resolved: That this Assembly endorses the principle of including in the Tax Credits Bill provision for the transfer of responsibility for policy and administration of Child Benefit and Guardians' Allowance to the Inland Revenue and social security legislative changes consequential upon the establishment of new Tax Credits, and agrees that the Bill should be considered by the United Kingdom Government. Assembly: Ad Hoc Committee on the Proposal for a Draft Justice
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