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5.

asked the Minister of Finance and Personnel what measures are in place to ensure an equitable allocation of European funding across all sections of the community.

(AQO 1168/01)

The European Union operational programmes, which include the building sustainable prosperity and Peace II programmes, were drawn up after extensive consultation and were informed by equality impact assessments. The programmes are governed by principles and actions to promote equality of opportunity, including access across all sectors of the community as defined by section 75 of the Northern Ireland Act 1998. I wish to emphasise that project selection procedures take equality issues into account.

What mechanism can the Department use to ensure that a balance is struck in the community divide, the urban/rural split and the geographical spread of allocations?

Three horizontal principles govern how the operational programmes will be implemented. These are: balanced intervention or, in our language, equality of opportunity; new TSN; and publicity or transparency. The programmes' monitoring committees have a formal role to review progress made towards the achievement of the objectives of the programmes and the achievement of their targets, including performance against those horizontal principles.

The programmes' managing authorities - the Department of Finance and Personnel and the Special EU Programmes Body - will be required to take any necessary corrective actions agreed by the monitoring committees in the light of the evaluations that they make.

Go raibh maith agat, a LeasCheann Comhairle. According to the Noble and Robson indices, projects in high TSN areas such as West Belfast, Lenadoon and the Foyle constituency, as well as projects such as the Inner City Trust, have been refused funding. Will the Minister assure the voluntary and community sectors in those areas that his measures are equitable?

All the practical procedures that flow from the principles that I have just stated are intended to ensure equity of treatment in evaluating all projects that are submitted for funding. I do not have the details - and I am not sure that it would be appropriate to comment on particular projects even if I did - but if the Member seeks further information I shall write to her.

Given the weak infrastructure in the Unionist community and the complexity of the EU application forms, and given the inequality that was experienced during Peace I, is the Minister satisfied that the arrangements will enable equality of opportunity and application? Will there be an equality of applications so that the opportunities will also be equal? If not, what action does he propose to take? When will there be an assessment of the interest expressed to date? Should the Department of Finance and Personnel be more proactive, just as other Departments were in encouraging applications to another community during Peace I?

I do not accept that there was any inequity in the treatment of applications from either community during Peace I. I assure the Member that all Departments that have a role to play in encouraging groups and organisations to come forward with projects, in assessing those projects and in determining any allocations that they are deemed worthy to receive, are concerned about ensuring that projects are proposed by all sections of our community. They wish to ensure that all the areas to which the programmes apply receive as balanced a set of applications as possible. The Special EU Programmes Body, the local strategy partnerships and the intermediate funding bodies have a role to promote information and to assist in the preparation and submission of applications. Local strategy partnerships have been very proactive in organising information events on projects that they wish to see promoted. They have also been proactive on measures used to finance in their areas. The monitoring to which I referred will take place, and I would be concerned if there were any evidence to suggest inequity of treatment. However, we have taken sufficient steps to put all the appropriate checks and balances in place in order to achieve a fair and equitable outcome.

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6.

asked the Minister of Finance and Personnel, pursuant to AQW 2707/01, how he will address the extra demands on the Executive Budget if aggregates tax is introduced.

(AQO 1171/01)

We return to an issue that raises considerable concern. The extraction of virgin aggregates for commercial purposes has been, as I am sure most Members are aware, subject to the aggregates tax since 1 April 2002. I hasten to add that the tax is not imposed by our Executive. Initial costs arising from the tax on virgin aggregates during 2002-03 are being met in the usual way from the Executive Budget. However, the pre-Budget report of November 2001 gave a partial temporary derogation to Northern Ireland for aggregate used in processing. Therefore processed materials will be exempt from the tax in 2002-03 and phased in until full implementation is reached by 2007-08. This measure remains subject to EU state aid approval, but the Treasury remains confident of a successful outcome within the next few weeks. A commitment has been given by the Treasury that the first year's exemption for aggregates used in processed products in Northern Ireland will be backdated to 1 April 2002.

Has the Minister commissioned research and costings to project the financial burden and predict job losses in the quarry industry, especially where competition is strong from neighbouring quarries in the Republic of Ireland? I am sure that he has considered the financial burden that the aggregates tax will put on the construction of roadways, and I believe about £1·7 million of aggregates tax will be on the Toome bypass. This money will go straight back to the Treasury out of our Budget and will be of no benefit to Northern Ireland's people or the environment. Can the Minister assure the House that we are not poorer due to the aggregates tax, and has he discussed this dilemma with the Minister of the Environment and the Minister for Regional Development?

The Member will be aware of the deep concern that has been expressed in the Executive and by many Members since it was announced that an aggregates tax was to be imposed. My initial answer set out the facts, but that of course does not mean that I am satisfied with the situation that exists. The Member will be aware that a total derogation was the desired outcome of the Executive, but we recognised the difficulties in achieving this.

The Member and others, particularly from his own and neighbouring constituencies where the introduction of this tax is felt most acutely, will be aware that my officials are leading a cross-departmental group consulting with industry representatives to develop an alternative strategy, which will be consistent with European state aid regulations, that aims to secure a more favourable outcome than the current measure. In seeking an alternative to the aggregates tax, the Executive recognise the need to achieve the original environmental benefits of the tax through other means. Therefore what we are trying to achieve is a complete overturn of the imposition of this tax yet also achieve the objectives that lie behind it with respect to the environment. Thus we would remove the burden that the Member has underlined and which is being felt in many sections of the construction industry.

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7.

asked the Minister of Finance and Personnel, in relation to the launch of the investing for health strategy, what extra moneys are being allocated to ensure the success of this strategy.

(AQO 1188/01)

In addition to the Departments' statements about what they can achieve with their existing resources, almost £5 million has been secured from Executive programme funds principally for the establishment of local investing for health partnerships, in the context of the investing for health strategy. Any further actions by Departments will require dedicated bids for resources through the normal bidding processes.

Will the Minister clarify that he intends to ensure that extra money will continue to be made available?

Additional funds must be associated with specific bids. The Member will appreciate that the issue does not simply relate to the strategy his question refers to. The issue is about allocating additional funds when there is evidence to support a bid.

Ms Armitage is not in the Chamber to ask her question.

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10.

asked the Minister of Finance and Personnel how he intends to take forward the work on the review of the Senior Civil Service.

(AQO 1167/01)

On 15 March I received the report of the review of the appointment and promotion procedures for the Senior Civil Service of Northern Ireland from Lord Ouseley, the review chairperson. As I have said before, the procedure was that I would consider the report and make recommendations on it and its future handling to the Executive. That is planned for early May, at which time the Executive will agree the consultation arrangements and procedures, along with the timetable for implementation and the wider publication of the report.

If the Minister has any further information, I must ask him to put it in writing to the Member as the time for questions is up.

Impact of the Budget on Northern Ireland

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I have received notice from the Minister of Finance and Personnel that he wishes to make a statement on the impact of the Budget on Northern Ireland.

The Minister of Finance and Personnel (Dr Farren): With permission, I will make a statement on behalf of the Executive on the implications that the Chancellor's recent Budget statement will have for people in Northern Ireland.

First, I will focus on public expenditure and the implications for our Health Service. The Chancellor announced several new measures that will have implications for public expenditure in Northern Ireland. The most significant implication is that during the next five years, health spending in England will rise by 43% in real terms. It is worth remembering that the cost of providing health services is rising more rapidly than the measure of general inflation that the Treasury has used. Under the Barnett formula, the Executive will be provided with approximately an additional £2·7 billion over the next five years. In the next financial year, the amount will be £73 million, and the larger amounts relate to the more distant future, rising to £1,037 million in 2007-08. The figures are set out in the table attached to the copies of my statement that have been circulated to Members.

The Chancellor has confirmed two other small increases in our departmental expenditure limit. Barnett consequentials arise from the latest round of allocations from the Treasury's capital modernisation fund round, which provides an increase of £8·7 million in 2002-03. The final item is the sum of £500,000 in 2002-03 and 2003-04, which arises from an increase in funding by the Department for Education and Skills. It is for the Learning and Skills Council to provide support for small organisations to achieve the Investors in People standard.

I stress that these sums represent increases in our assigned departmental expenditure limit and, as such, they are not earmarked for any particular service. The Executive will have full discretion in allocating them to the priorities set by the Assembly. The additional sums available to us in 2002-03 will be added to those that remained unallocated after the February monitoring exercise, and we will be considering which services they should be allocated to shortly. The additions to our provision for 2003-04 will be considered in the context of the Budget 2002 exercise, which has recently started with the production of the departmental position reports.

The increases for the Health Service announced by the Chancellor have attracted considerable attention and interest. They are undoubtedly large increases and they are welcome - although in reality the growth in health spending that the Chancellor is providing is very similar to the pattern set in the Budget of March 2000. The increases are also necessary, given the particular problems we face here. Such difficulties have been aired in the Assembly on many occasions.

The allocation of funds, including these additional funds, falls entirely within the discretion of the Executive, and we have many public expenditure and revenue issues to address in the wider context of the spending review. We must ensure that we have a clear view of our priorities - as distinct from those of the Treasury - and what we are trying to achieve. Health has been well established as a priority by the Executive and the Assembly, and the health sector faces many acute difficulties. For that reason - notwithstanding concerns about the adequacy of the additional funding - it is entirely appropriate that we should allocate the additional funds that flow from the Chancellor's Budget to health, and I will be recommending that to my Executive Colleagues.

In making these allocations I want to be sure that the increased funding has a demonstrable impact on the delivery of health services. To that end, the Department of Finance and Personnel, the Economic Policy Unit and the Department of Health, Social Services and Public Safety are jointly carrying out a needs and effectiveness evaluation on health and social care. I will work with the Minister of Health, Social Services and Public Safety to ensure that the public benefits from this new allocation as much as possible. It is vital that we address these issues if we are to make real progress in building a Health Service fit for the twenty-first century.

The most important issue is that the Health Service must meet the needs of patients. Together with the Minister of Health, Social Services and Public Safety, I want to ensure that the additional funds result in a real difference in the care provided to the people of Northern Ireland. The Executive are committed to a major programme of reform of the public sector, and have begun to apply that in health and in other sectors. We must consider how best to apply in Northern Ireland the principles of reform that have been announced by the Chancellor and the Secretary of State for Health.

The new figures are significant. However, when we look below the headlines, what stands out is that Northern Ireland's share of the new expenditure will again fall short of what the Executive needs in order to match the growth in English spending on health. The first table and chart that I have attached to copies of my statement show that while English spending will rise by up to 10% per annum, Northern Ireland's allocation will allow growth of only 7·5% on average in the Health Service here. In real terms, growth - compared to the Chancellor's figure of 43% in England - is only 29% in Northern Ireland. Most of the supposed "real growth" is likely to be needed just to maintain services as they are now.

We are not party to the hype of last week, which overstated the benefit that the Budget will provide for the Health Service in Northern Ireland. The issue emphasises starkly our difficulties with the Barnett formula, which gives Northern Ireland less growth in spending than that of England. The Budget announcement has accelerated that trend. It means that if we were to add only the Barnett share to the health budget in Northern Ireland, the amount would be insufficient to meet the needs of the local Health Service. Indeed, objectively, if we allocate only the additional amounts that we receive under the Barnett formula, we will struggle to maintain the Health Service in its present highly unsatisfactory state. That is in contrast to the position in England, where the Chancellor has allocated enough to provide for real service improvements.

As things stand, if the Executive are simply to keep pace with the cash growth planned in England, without taking account of relative needs, over the next five years we will need more than £1 billion more than we have received in the Budget. The House will appreciate that the problem is not new. Since devolution the Assembly has given significant priority to health. Before this Budget, for the three financial years of 2001-02, 2002-03 and 2003-04, we received Barnett additions of £8·7 million from the Chancellor. However, we allocated just under £1 billion to the Department of Health, Social Services and Public Safety in that period - £192 million more than we had received.

It is worth pointing out a further important aspect of the Barnett formula that works against us. The arithmetic of the formula, on which I have focused so far, might perhaps be reasonable if we had higher standards of public services than in England. The important point is that the Barnett formula takes no account of our comparative levels of need. We have increasing evidence of greater need in relation to health than in England. An analysis of relative needs is part of the needs and effectiveness evaluation of health and social care that is currently being carried out by the Economic Policy Unit, the Department of Finance and Personnel and the Department of Health, Social Services and Public Safety. Before getting too far into the subject, it is important to stress that the comparisons with England are only one relevant factor in considering spending allocations. The Assembly has the right to set its own priorities, which may mean a different pattern of allocations than elsewhere.

The key issues for the spending review are whether we have a fair share of the Chancellor's total cake and whether we are drawing in an appropriate share of revenue for which we are also responsible. In a debate with the Treasury, it is impossible to address spending without looking at revenue.

Although work on comparative needs has not yet concluded, the results suggest that to provide services at a similar standard to that in England, we need about 17% more for each individual. Thus, for every £1 spent on health for each person in England, Northern Ireland needs £1·17 for each person. That is a conservative analysis, which excludes some factors that give rise to genuine additional costs here. Indeed, the research evidence could be interpreted as supporting a higher figure.

Despite the fact that more money has been allocated to health, the gap is increasing because of the Barnett squeeze. We have good evidence that, when need is taken into account, the Health Service needs an additional £300 million a year to match English standards of service. That will be significantly compounded if we, and the Treasury, do not address the divergence in amounts provided over the next five years. We cannot accept that situation. To provide effective public services across Departments, we must increase the amounts that we have to spend. Ways to achieve that include mounting an effective challenge to Barnett and closely examining our revenue sources.

Members will also be aware that we are moving ahead with an examination of how best to make private finance work to meet Northern Ireland's needs. I am already pressing the Treasury for more in the forthcoming spending review. Challenging Barnett is not something that can be undertaken lightly. As I have said before, it is not a no-risk option. It is not a matter of simply asking London for a peace dividend. We need a sound realistic strategy that recognises the realities of our position and argues our case strongly and responsibly.

My predecessor and I have made it clear that any challenge would open up the debate on sources of local revenue and lead to strong pressure from the Treasury that we should contribute more resources than at present. That would mean looking hard at the amounts that we raise locally.

At this stage, the key question is whether we are getting a fair share of the resources available to the Chancellor. Addressing that is a very complex and difficult task. One reason that Barnett has been accepted for so long is that it avoids that issue. The Executive have shown at Question Time and on other recent occasions that we are taking up that challenge.

While health spending is less well funded here than in England, particularly when need is taken into account, I must also sound a clear note of caution. For some programmes here, there is a much higher level of spending and less convincing evidence of need than in England. Nevertheless, the balance of evidence suggests that we have a strong case for something better than the Barnett formula can provide in this spending round.

However, that case is clearly and significantly undermined because we raise much less from local sources of revenue than England. The Treasury can be expected to look to us to address that issue as part of the examination of our case for a better share of public spending - hence the importance of the fundamental review of rating policy on which the Executive have embarked. We are preparing to launch a detailed consultation process, during which everyone will be invited to make comment.

I hope that all parties will fully engage in the consultation process, which will be comprehensive and will cover both the existing system and possible alternatives. I emphasise that no decisions have been taken and no directions have been recommended. Let me make it clear that I am neither imposing nor proposing any particular type of charges.

Public services in Northern Ireland suffer from a legacy of underinvestment. It is well known to Members on all sides of the House that many of our services, especially health, education, water and transport, currently require levels of capital investment far in excess of the resources available to us. At present, the sums required to solve the significant problems that we face are well in excess of the amounts that the Executive have to spend. That is the underlying fact which guides all thinking and action on the issues of resource allocation. As we begin the process of setting our spending plans for 2003-04 and beyond, we have to think very carefully and be prepared to face, and take, tough decisions on the core issue of how best to improve public services.

The latest estimates put the deficit between what our current budget can sustain and what we actually need to do in terms of capital investment at a minimum of £6 billion over the next 10 years. I stress that much of that investment is likely to be needed in the next five years. I have some sympathy with the sentiments expressed in the report of the Committee for Finance and Personnel that we need a strategic focus for our infrastructure programme and effective organisational arrangements to deliver the strategy.

I now turn to some other measures in the Chancellor's Budget. Apart from the headline news on new expenditure, the Chancellor has continued his long-term theme of reforming the tax regime for workers and companies. Some of those changes are particularly welcome here; others are not. The small firm sector is very important in Northern Ireland. The proposals to zero-rate the smallest firms for corporation tax and to reduce the basic rate for the rest will provide benefits for up to 12,000 businesses. Those firms will also welcome the significant reductions in the administrative burden of value added tax.

A few of our larger companies will also be able to benefit from the new research and development tax credit, but only a few. We have been pressing the Treasury for a regionally targeted research and development tax regime to target regions such as ours. That could improve our present performance. The research and development tax incentive should, nonetheless, encourage local businesses to invest for growth, and I trust that they will take advantage of it in that regard.

Unfortunately, the Budget was less helpful on other tax issues. The decision not to make any special arrangement on the duty on fuel does nothing to close the differential with the South, which has been an open incentive to smuggling and evasion. The failure to amend the air passenger duty regime in recognition of our heavy dependence on air links with GB was also very disappointing.

I welcome the simplification of the range of support for low-paid workers and those with children, the arrangements for which were announced in the Budget. Together with the new working tax credit and child tax credit, those arrangements will benefit an estimated 250,000 families in Northern Ireland.

I hope that my review of how the Chancellor's Budget will affect us here has been helpful to Members in outlining some of the issues that we face and what we seek to achieve. I am for public services and better investment in our infrastructure. I am determined to find effective and fair ways to deliver the services and facilities that our community needs.

I look forward to the continuing co-operation and support of my ministerial Colleagues. I trust that we can depend on the support of the Assembly and all those who are making the case for additional spending to pursue these goals. I will keep the Assembly and the Committee for Finance and Personnel up to date on how the issues develop.

Go raibh maith agat, a LeasCheann Comhairle. I thank the Minister for his statement and the accompanying figures giving more detail and explanation of how the Budget will affect us. I hope that this year's spending review and Budget process will bring about some change. Can the Minister give us details of the negotiations that have taken place with the Treasury on the spending review? What opportunities are there for additional funds to come from the review? Once again, I refer to the peace dividend. I accept the Minister's point that it is not simply a matter of asking for additional funding. However, to make a strong case for additional funding, it is important to be convinced that we need it.

The amount of taxation that is collected here must be shown on the balance sheet. I refer to the earlier question about the aggregates tax and the additional £1·60 per tonne that has been levied on gravel and aggregates. That will not affect the Assembly, but it means that its different schemes will cost more money. More money is going out, and the Assembly will not get any return. The Treasury does not have any qualms about imposing more taxes here. However, we need to get more resources.

Implicit in my comments on the Barnett formula and the spending review negotiations are the lines that the Executive are pursuing in their discussions with the Treasury. In answer to an earlier question, I explained that our case is strongly based on our analysis of our needs. As I said in my remarks on the Chancellor's Budget, we have to spend £1·17 here to match the level of investment and standards in England, particularly in health, for every pound spent there. Those fairly straightforward figures give a simple and direct indication of our assessment of the needs.

Given my attempts to reassure the House earlier, the Member should be confident that the Executive are pursuing a vigorous line. In our approach we have included the case for what my party has described as a normalisation dividend.

We must explore more than one possible source of finance; for example, additional funding under the Barnett formula, public-private partnerships and revenue sources over which we have direct control. In particular, we must consider their fairness and adequacy. All those sources pose challenges and provide partial answers.

The block grant allocation under the Barnett formula will always form the most significant slice of our public expenditure cake. However, all the additional sources of funding are being vigorously pursued. I assure my Assembly Colleagues that the Executive are not remiss in considering those sources. I hope that the process will have a fruitful outcome that will be apparent when the spending review allocations are announced in July.

I welcome the additional funds that will be made available for public services in Northern Ireland as a result of allocations under the Barnett formula. Given the community's health needs, I recognise that the funds should be directed to the Health Service, and I would support the Minister's decision to do so. However, we must also ensure that we maximise the uses and the outcomes of the net result of the increased spending on health. Is the Minister aware that there is concern that the significant increases in funding to date have not resulted in health improvements in our hospitals or communities? Does he think that there is merit in mirroring the Chancellor's Budget proposals for the independent auditing of health structures? Does he acknowledge that the current auditing of health trusts by the Department of Health, Social Services and Public Safety is neither transparent nor accountable? Would he support such a change so that the community can have confidence in how our money is spent?

It is important to acknowledge that a significant additional allocation to our Health Service is pending as a result of the consequential money that the Chancellor announced last week. An additional sum of £2·7 billion is significant and welcome.

The Minister of Health, Social Services and Public Safety would be better able to provide a detailed response on the need to ensure that additional and existing finance for the Health Service is spent effectively. Although the language may be slightly different, we should acknowledge that the needs and effectiveness evaluations that the Department of Health, Social Services and Public Safety and several other bodies are conducting will provide evidence to account for about 75% of our public expenditure.

As the title suggests, these exercises are intended to address how effectively we spend what we allocate. What return do the people of Northern Ireland get from the vast amount of public money invested in these services, which includes the Health Service? The Minister of Health, Social Services and Public Safety is aware of the need to assure the public about the effectiveness with which her budget is spent.

I welcome the Minister's announcement and also his determination to battle for resources to make up the difference in spending levels between here and England. Can the Minister outline the implications of not securing extra funds through the Barnett formula to make up the differential in the future?

In one sense the answer to that question can be put fairly simply - we would have much less to spend on all services. However, when we take into account the Minister for Regional Development's regional transport strategy, the need for significant improvements to our water services, the requirements that will undoubtedly follow from whatever recommendations and proposals come from the acute hospitals review, the proposals for investment that will come from any reorganisation of our educational services, and so on, we must acknowledge the deficit that would exist. I said in my statement that there would be a deficit of some £6 billion, and the investment that would be possible, were that to be available to us, would simply not take place.

That imposes a strong obligation on all Members - and they have the opportunity to do this in the various Committees on which they serve - to address the needs, to assess where the investment is likely to come from and to help to make the choices that will have to be made when we know what will be available to meet all those needs. Indeed, if we do not succeed in achieving all that we want to achieve from the investment available to us, Members should help to explain what choices have to be made - why certain choices will be made and others will not be made - with regard to all that we demand for the maintenance and development of our public services.

The Minister indicated in his statement that for every £1 spent on health in England, £1·17 would need to be spent to deliver a service of the same standard in Northern Ireland. Can he indicate what the comparative figure for transport is?

I do not have the precise detail that the Member requests. I would have thought that the most immediate source for the answer to that question should be the Minister for Regional Development. Nonetheless, I will commit myself to providing the evidence of the needs in transport services - in roads and all the services associated with transport.

I am aware of the considerable deficit in infrastructural needs and the considerable investment that is required in the whole of our transport sector and its infrastructure. I am also aware of the general plans that the Minister has put out for public consultation in his regional transport strategy. I will be meeting with the Minister in the near future. Undoubtedly, we will be addressing not only transport needs but also the needs that he has identified for the development of the Water Service. He has impressed on me the considerable investment needs that exist there. He said that we need to put all the options relating to sources of revenue that might help us to meet those investment needs fairly and squarely before the public.

I thank the Minister for the clarity with which he has put many of these important matters to the Assembly. I welcome the fact that the Minister has dissociated the Executive from the hype around the Budget announcement last week and, secondly, that he will recommend that all consequential moneys should go directly to the Department of Health, Social Services and Public Safety. I thank him for that announcement.

Given the focus on the Department of Health, Social Services and Public Safety and the lack of spending on health over many years, health will feature largely in this debate. In the light of that, will the Minister reassert the comments that he made in his statement that, notwithstanding the amount contained there, if we allocate only the additional amounts we will struggle to maintain the Health Service in its present highly unsatisfactory state? Does the Minister agree that that is a startling statement in its own right?

I am not sure what particular weight would be carried by the reiteration of what I have already stressed, directly or indirectly, several times. Given that I have been before the Assembly for almost an hour, I am sure that Members are tired of my voice, so I will spare them the reiteration. However, I reassure the Member that I believe what I said.

Does the Minister not share my alarm at the constant reference to pressure from the Treasury? Does he not agree that that pressure is tantamount to blackmail? Should the Treasury not be looking at the needs of the people of Northern Ireland, rather than bullying the Executive? Should the Executive not be fighting for the needs of the people of Northern Ireland, rather than allowing themselves to succumb to that pressure and blackmail?

Does the Minister not further agree that the reference to this Budget as a "Budget for enterprise" is rather contradicted by the 1% increase through the tax for jobs, as represented by the National Insurance contribution imposed on employers? Does the Minister agree, given that the backbone of Northern Ireland's economy is small and medium-sized enterprises, that this further tax on jobs will make it more difficult, if not impossible, to follow through with increases in rates, water rates and such other measures as the Minister has referred to?

I could join with the Member in saying that the increase in National Insurance contributions is unwelcome for the business community here. However, I have pointed out that there are other aspects of the Budget that will benefit businesses. To assess fully the Budget's impact on business, it must be looked at in its overall terms rather than focusing on specific items.

Mr Close made a point about pressure. He must appreciate that the pressure from the Treasury is matched by the pressure from here. Pressure is a way of describing how forcefully we put forward an argument - and we are putting forward a very strong argument on behalf of the people of Northern Ireland by demonstrating the scale of need. That is what it is all about. It is not a question of simply accepting the Barnett allocation without making our case in the strongest possible terms.

I doubt whether my predecessor and I could have been more forceful in presenting the approach that we are adopting to the House. If all the comments on this subject are checked in Hansard, it will be seen that we have been expressing the case based on need very forcibly; and we are bringing that case to the Treasury. The case is being vigorously pursued at political level and more regularly at official level.

The Member may doubt my words; he has the luxury of doubting them because he is not present when the negotiations are under way. However, I ask him to accept that I mean what I say when I say that we are pursuing the case very vigorously indeed.

The word "pressured" may be a way of describing the Treasury's response; for example, when we are asked to examine the sources of revenue that we control. The Member will know that we have undertaken preparation for public consultation of the rating system in a very concerted and detailed way. As a member of the Committee for Finance and Personnel, he knows that the issue has been going through a considerable gestation period, and that we are close, in terms of internal debate. The internal debate has involved all members of the Executive, including the Ministers who do not attend Executive meetings. They are fully aware of the issues that have to be addressed, and they believe that the issues need to be addressed vigorously.

The Minister for Regional Development has made it clear to me, in correspondence and in face-to-face discussion, that he agrees that we should address all those potential sources of revenue, and put the options fairly and squarely before the people so that they know what they are, the choices that have to be made, and the consequences of not making certain choices. [Interruption].

Yes, indeed, and before the Member pursues the issue too far, he might take it up with the Minister for Regional Development. Ask him precisely what he said to me in his written communications and what he has said to me in face-to-face discussions. I am not saying this in order to cast aspersions but to make clear the issues and the deep appreciation that exists.

Mr Paisley may think that it is a matter for some mirth, but delivering good, effective and efficient public services for the people of Northern Ireland is a very serious matter. That is what the Executive is about, and I am attempting, as Minister, to make clear to the public what is needed to achieve those objectives. I trust that he will have that detailed conversation with his Colleague, the Minister for Regional Development.

I welcome the Minister's statement and his efforts to acquire more finance for Northern Ireland.

In view of the deficit of confidence in the community, will the Minister ensure that the extra money will be directed through the Department of Health, Social Services and Public Safety to specific patient needs? Will spending be independently audited and improvements monitored?

The Minister mentioned the exploration of many possibilities in his statement. However, no mention was made of the possibility of savings on administration. Given that an extra layer of administration involving over 300 people has just been added, will there be any monitoring of the money spent in that area?

Has the Minister had discussions with the Minister for Regional Development on the scale of investment required in the Water Service and on any plans he has to meet that need?

I addressed part of the Member's question in my previous response. I have had correspondence and a detailed discussion with the Minister for Regional Development. That discussion was helpful. The issues to which the Member referred were addressed in a serious and detailed way. There was a realisation that the challenge for the Water Service, for example, will require significant investment. If I have correctly recalled the Minister for Regional Development's advice, about £3 billion will be needed in the next 10 to 15 years, much of which must be spent in the next five years. Therefore all the options must be addressed fully and frankly with the public so that we appreciate the kind of choices that are before us and the consequences of taking certain choices and not taking others.

We have an obligation to present all the possibilities to the public. It would be dishonest to do otherwise. Let the public debate, let MLAs debate, let the Committees debate, and let them all advise on the way forward. That applies not only to the Department that the Member highlighted, but to all Departments, some of which have significantly greater spending requirements. It is important that, as we move away from a society that was characterised politically by what I would describe as "demand" politics, we move to "responsibility" politics. We shall demand high-quality services and the best infrastructure, because that is what our people deserve. However, we must do so responsibly; we must be aware of the choices that have to be made and the resources that are required to meet those choices. We must not run away from the hard issues. That is not what the Executive are in business for. They are in business to point out our aims and objectives, and what is required to meet them.

My answer to the Member's comments on the Health Service is covered in my reference to the needs and evaluation exercises that are being undertaken so that we have the assurance that what is provided by way of investment, capital or otherwise, is done effectively and efficiently and to the highest possible standards.

The Minister said that since devolution more money has gone to health than the Barnett formula allowed. Will he elaborate on that? Does the Minister believe that the Minister of Health can now get on with managing the Health Service?

Approximately £190 million extra - over and above the Barnett allocation - has been made available to the Department of Health, Social Services and Public Safety over the past three Budgets. I am subject to correction on that.

It was £192 million.

Thank you. That is a significant additional amount. We have done that because we recognise that there has been serious underinvestment. We recognise the extent of existing needs. Those who visit our hospitals and those who work in the Health Service are also aware of the scale and location of pressing need. That is what we have done to demonstrate that health must remain a priority. Although the additional allocations lend scope for significant improvement over the next five years, they cannot meet our needs. We will continue to make that case because that is what the evidence tells us. At least there is now the prospect of a significant advance in delivering high-quality service that speedily meets the requirements of everyone in need, particularly in the Health Service.

I recognise and pay tribute to all those who are providing services in our hospitals and to the Health Service generally. More can be done with additional resources, and I want to believe that more will be done.

Does the Minister agree that this is probably the most serious statement that he will ever make from the Dispatch Box? He is saying that spending the money that is being allocated through the Budget now can only keep the Health Service at its current deplorable standard.

The abject reality is that if we allocate only the additional amounts that we receive under the Barnett formula, we will struggle to maintain the Health Service in its present highly unsatisfactory state. Every Member is aware of the unsatisfactory state of the Health Service. The amount of money that has been cheered on by Back-Benchers in the House of Commons may be seen when it is applied - if it is applied properly - to relieve the deplorable inconsistencies of the Health Service in England, but that will not meet the need in Northern Ireland. The Minister reckoned in his statement that if we took all this money and the extra that we would get in the Barnett domain and put it all together, we would not have sufficient funds to deal with the Health Service. We would have enough money only to maintain it in its current deplorable state.

Therefore, it is a serious statement.

Surely the Minister's representation must state that other public services in our country are not in a good state. The rest of the United Kingdom, and especially England, has trouble with transport, and we have trouble with transport. All the other Departments are also in serious trouble, not only in maintaining what they are doing but also in trying to remedy the tremendous and awful hole that they have dug. The Minister tells us that for every £1 spent on health in England, £1·17 is required here. He tells us that an additional £300 million a year is needed to match England's spending on health.

I am glad that the Minister has been honest with the House. I am glad that the bald facts are being set out plainly. I am glad that the Minister is telling the British Government that they are selling us cheap and trying to get away with fraud. We shall be unable to maintain an advantage for our Health Service; we shall be able to maintain it only in its current condition - and we all know the deplorable state of the Health Service. Other public services are also crying out for help. However, as the Minister has said, if one service cannot be cured properly, what is the point of putting money into it if it can be maintained only in its current state?

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