Northern Ireland Assembly Flax Flower Logo

Northern Ireland Assembly

Tuesday 7 May 2002


Carers and Direct Payments Bill: Royal Assent

Reinvestment and Reform Initiative

Local Government (Miscellaneous Provisions) Bill: First Stage

Children Leaving Care Bill: Committee Stage (Period Extension)

Draft Amendments to the Flags Regulations (NI) 2000

Good Friday Agreement

Oral Answers to Questions

Department of Enterprise, Trade and Investment

Department of Employment and Learning

Department of Social Development

The House-Buying Process

Closure of Limavady Courthouse

The Assembly met at 10.30 am (Mr Deputy Speaker [Mr McClelland] in the Chair).

Members observed two minutes’ silence.

Carers and Direct Payments Bill: Royal Assent


Mr Deputy Speaker:

I wish to inform Members that the Carers and Direct Payments Bill has received Royal Assent. The Carers and Direct Payments Act (Northern Ireland) 2002 became law on 2 May 2002.

Reinvestment and Reform Initiative


Mr Deputy Speaker:

I have received notice from the First Minister and the Deputy First Minister that they wish to make a statement regarding the reinvestment and reform initiative announced on 2 May 2002.

Ms Morrice:

On a point of order, Mr Deputy Speaker. The statement is not available outside the Chamber. Is it not normal practice for copies of a statement to be made available beforehand?

Mr Deputy Speaker:

The Member is quite right to point that out. Standing Order 18(1) states:

"A Member of the Executive Committee shall make statements to the Assembly on matters for which the Executive Committee is responsible. He/she shall where possible make a written copy available to Members as early as possible before delivering the statement in the Assembly. Where this has not been possible he/she should state to the Assembly the reason or reasons."

The First Minister (Mr Trimble):

With permission, the Deputy First Minister and I will make a statement. Regarding the point of order — [Interruption].

Mr Deputy Speaker:


The First Minister:

It is my understanding that the text is being made available as I speak. The delay arose simply because the text was not finalised until about 10 minutes ago.

Last Thursday, the Prime Minister and the Chancellor of the Exchequer visited Belfast. The Deputy First Minister and I will this morning provide the Assembly with details of the major new reinvestment and reform initiative that we negotiated on behalf of the Executive with the Prime Minister and the Chancellor, and explain its purpose.

Those negotiations have been undertaken over recent months but were only concluded last week. Members will appreciate that it was not possible to consult earlier. However, I assure the Assembly that as we take this work forward we will consult widely. That is essential, because this initiative opens a significant new stage in the development of our Administration, a new means to make a real difference to the people of Northern Ireland and, in particular, to turn around the major deficit in our infrastructure and modernise some of our key services.

Devolution hands responsibility for providing good government to Northern Ireland’s politicians and people. People want good services, fairly and efficiently administered, and they look to the Assembly to provide them. We will work together to deliver reform and reinvestment in public services. The Executive have placed that at the centre of their programme. We need a new debate about services and the necessary hard choices. We must all accept that good services must be paid for, planned and expertly managed. Resources and reform must go together.

The last time locally-elected representatives were able to debate and take decisions was some 30 years ago. Then there was a strategy for public investment. Since then, temporary arrangements and decisions by those with no organic connection with society here saw years of underinvestment, leaving huge infrastructure problems in water, health, transport and education. Now we must prioritise. We must decide how best to close the gap, what can be done now and what must wait. We must look strategically at our asset base, take stock and set a new direction. We must be open and explain those choices to the Assembly and to the people.

The five core elements of the initiative are £200 million available for investment over the next two years; a new borrowing power for the longer term; the transfer of some strategic military and security assets to the Executive; the creation of a new strategic investment body; and a major programme of public service reform to secure greater expertise and effectiveness.

It is clear that reinvestment and reform in our public services are essential. For decades investment in public service infrastructure fell well short of what was required to meet the needs of our community. Under direct rule, priority was given to allocating resources to security. That inevitably meant that, over time, capital investment for services was neglected. We see evidence of that plainly today. The scale of the problem can be seen in hospitals and schools and in the state of our roads and transport systems. Many, however, do not realise that our water and sewerage infrastructure, hidden from view, is also in a poor state and needs major work urgently.

It is calculated that £6 billion extra will be needed over the next two decades to address the deficit inherited by the Executive and the Assembly. With devolution we have the opportunity to do something about it. The Executive have explored possible ways of addressing the problem. In our first year, we established the infrastructure and capital renewal Executive programme fund to support strategic projects, such as rail, road, energy and telecommunications projects. That includes the use, where appropriate, of public-private partnerships (PPPs). We have so far allocated £79 million from that fund, topping up the resources allocated from mainstream Budgets.

Last year we also launched a major review of the opportunities for PPPs and other sources of funding. Our aim has been to identify whether, and how, we might make progress in improving our public services by drawing on other sources of capital and, equally importantly, other sources of managerial expertise. The PPP working group established by the Executive has completed its work, and the Executive will shortly seek views on its report.

Although we have made some progress, it is also clear that more radical ideas are needed to address the backlog of investment, given the pressing demands for resources. It was in that context that the Deputy First Minister and I set out to negotiate additional forms of support and finance. Many in the Assembly and outside have urged us to explore alternative sources of funding, and that we have done.

With assistance from the Prime Minister and the Chancellor, we now have a package that will accelerate the work that is so badly needed. Using it in conjunction with other sources of finance, we should be able to replace old assets with new. Indeed, we can now start to consider other opportunities for investment across our public services that previously we would not have had the resources to contemplate.

The key to the initiative is that we have been able to gain the Prime Minister’s and the Chancellor’s agreement to the Executive’s being able to avail of a new borrowing power. That will enable us, if the Executive and the Assembly so decide, to launch a multibillion pound programme to improve our assets. The Executive will be able to borrow from the Treasury at highly advantageous interest rates, going directly to the gilt market. Interestingly, access to such borrowing has been an issue that many, including the Committee for Finance and Personnel, have pressed on us. Therefore, I am pleased that we have achieved this breakthrough. It provides the opportunity to significantly increase the pace of investment in Northern Ireland.

We do not want to depend solely on the borrowing power. We must consider also how other sources of funding may be used to enhance it. The scale of the task means that we must consider too how we can lever in resources through public-private partnerships. However, we will ensure that, where that approach is taken, it represents the best way to serve the public interest. If used properly, public-private partnerships could be of real benefit. That is especially so because they can bring to bear expert management of contracts and assets to which the public sector has not previously had access, and the theme of expertise is one to which we will return.

The new borrowing power could be used to finance projects in all the public services for which we are responsible. In parallel with the proposed changes for local government finance in England and Wales, we must satisfy the requirements of the new Chartered Institute of Public Finance and Accountancy code. The borrowing will also be subject to a limit set by the Treasury.

As legislation at Westminster is required, the new borrowing regime will not be available until 2004-05 at the earliest. It will only proceed on the basis of funding priorities established by the Executive and the Assembly. However, as the Deputy First Minister will explain, we have also negotiated a short-term borrowing arrangement that can be put into effect now, without a change in legislation, to set in train a major programme of investment.

It is a fact of life for all of us who have mortgages or who take out loans that borrowing must be repaid. Since last week we have seen and heard ill-informed stories about huge hikes in rates to pay back the borrowing. There are several points that must be emphasised. The Executive have made it clear that they will not propose increases above the pattern of recent years unless the present rating system has been reviewed and we have an acceptable local revenue system. Any changes that arise from the review of rating policy must be phased in over several years so that we can avoid any sudden changes in the bills required of any sector, business or individual.

We have agreed a borrowing power with the Treasury. It will be up to the Executive and the Assembly to decide whether to borrow to pay for new assets and, if so, by how much. That provides a real opportunity to invest in our infrastructure, and the Executive have agreed that we should pursue the proposed new arrangements with the Treasury.

We must work within the Treasury’s strict rules on the control of public spending, which preclude the use of efficiency savings or asset sales to service debt. We will make fresh efforts to secure efficiency gains as part of the reform dimension of the initiative. We will also require a radical look at the assets held by Departments to free up any spare resources.

The issue of the revenues that we raise from the domestic sector was inevitably going to arise in the spending review. It has been said many times that it is impossible to expect the Treasury to accept our arguments for money to sustain the same standards of public services as in England if our revenue levels are much lower.

10.45 am

Without this initiative, we might have had to increase rates in the longer term to make ends meet for basic services. The reinvestment and reform initiative has given us an opportunity, and we can use additional revenue to lever in major investment in infrastructure.

As the title implies, the initiative is also about public service reform. We must increase resources, but we must not focus solely on the quantity of projects and the number of supporting staff. We must focus also on the quality of project implementation and subsequent service delivery. As an Executive, we are committed to improving delivery and value for money. We underlined the importance of modernising Government and of improving its efficiency and effectiveness in the Programme for Government. The introduction of resource budgeting, public service agreements and service delivery agreements means that much of the information necessary for that change is available. That should enable us to get better information about the true costs of services and about what is being achieved, and we have added to that by commissioning evaluations of the needs and effectiveness of major policy areas. Those cover approximately three quarters of the expenditure that we control.

With the work on a new procurement system that is taking place across Departments we should also see improvements. The major review of public administration in the coming months will examine all aspects of administration, including the quality of service, and it should provide a good opportunity for improvement. Likewise, the new investment body should be an important vehicle for helping to deliver public service reform. However, reform must go wider. We must focus more on delivering services and on placing customer service and the needs of front-line staff first. Technology can play a vital role in improving services and information, increasingly allowing the public to use services when it is convenient for them. Technology must become more significant in the Programme for Government, and integral to the work of all Departments.

We have already seen signs of significant development. The creation of Invest Northern Ireland and the joint development of our welfare and employment systems are examples of where new approaches that are aimed at better meeting the needs of the public have been developed. However, we must go further. I do not wish to see public service budgets increasing in future unless reform is a key condition. The public deserve that and need to know that the best management techniques are being used to provide a service, and that internal administration is using minimum resources. We all want improvement in the delivery of public services with the resources and the expertise that are available to help us. We must change how we do things rather than continue with previous practice. We believe that we have a better opportunity than ever to further that objective.

This reform package is the largest that we have had. With the strategic investment body and our ability to borrow, it has wide ramifications for the public services. It will change style and mindset and put new thinking and energy into the Government. We are eager and determined to have real change. We are taking seriously our responsibility to the public, and we are determined to transform the quality of services. We want our new democracy to deliver real benefits to the public.

The Deputy First Minister (Mr Durkan):

I join with the First Minister in apologising to the House that the continuing work on the statement meant that it was unavailable for Members before its delivery.

The initiative presents a challenge to us all. We must consider our priorities and, in particular, what should be addressed in the short term. We must consider whether there are new ways of delivering services. Much that was previously impossible should now be possible. The First Minister and I will work with the Minister of Finance and Personnel, and with all our ministerial Colleagues, to develop a programme that brings substantial benefits to the people.

I stress that because, although we will be setting up a new strategic investment body and must use the best quality expertise to assist with the implementation of that work, choosing the direction of the programme rests with the Executive working with the Assembly.

Through the Programme for Government, we will agree which areas of deficit will be addressed first. Those political decisions must be settled on the Floor of the Chamber.

The First Minister explained the opportunities to increase resources through longer-term borrowing and to revitalise public services. The other threads of the initiative are to take a more strategic approach to investment through a new body; to use former military and security assets; and to use the facility to borrow money in the short term.

The adoption of a more strategic approach to the infrastructure and public service investment is a key element of the initiative. In that way we will deliver the best investment programme for the region. Before the launch of the new institutions, infrastructure investment in public services and utilities, such as hospitals, schools, roads, transport, water and sewerage, was characterised by a piecemeal, departmentalised, non-strategic and largely reactive approach. Expertise and resources are currently spread across 11 Departments, each of which is responsible for delivering its own programme. The Programme for Government emphasises the importance of improving the way in which we work together across the Departments.

We have already consulted widely on how to improve public sector procurement generally. A new central body that will draw in the best private sector expertise is already planned. In responding to the need to improve the infrastructure, there is potential to improve co-ordination and to ensure that the available expertise will result in better service delivery. Therefore, we propose that a new organisation be created to work with, and on behalf of, the Executive and all Departments to deliver infrastructure programmes in a more strategic way.

The proposed new body would be able to use a mixture of sources of finance, including the new borrowing power, traditional public sector finance and public-private partnerships. The body would link the finance to the best procurement methods, whether those involve the public or private sectors, or a combination of both. Using those, it would produce much better solutions than would be possible if the resources were spread across all the services, with each Department left to develop its own expertise and deliver its own projects. Therefore, it should be possible to take a more strategic approach to public-private partnerships.

Many of our Departments are relatively small and would experience difficulties in developing and maintaining the expertise and drive required to make the projects work. Ministers will decide what projects, buildings, and so on, will be required, so there will be a clear political responsibility for prioritising and planning. However, delivery and financing will now be overseen on a strategic basis.

The strategic investment body represents a new and highly innovative approach. We wish to examine closely examples elsewhere, drawing on the best expertise. The initiative is about reinvestment and reform, but it is also a major step towards the normalisation of our society. During the troubles, the Ministry of Defence (MoD) and the Northern Ireland Office (NIO) made use of extensive assets. A process of normalisation should bring about a reduction in security requirements. Normally, the NIO and the MoD would sell their surplus assets, and the Departments would have the opportunity to purchase them. However, for several years, we have been arguing that the Government should take a more positive approach and accept that the resources should be used to strengthen the social and economic fabric.

In 2000, it was agreed that we would be consulted on the use of the sites as they became available for disposal. I am delighted that a significant part of the new initiative is the Government’s agreement to transfer to the Executive, at no charge, some of the exceptionally significant assets that are, or will shortly become, surplus to requirements. The sites, which the Chancellor mentioned at the Odyssey last Thursday, are: Ebrington Barracks; the Maze Prison, including the base adjacent to the prison; the bases at Magherafelt and Malone Road; and Crumlin Road Prison.

Those are significant assets, and should help support a major programme of economic and social renewal for the whole community — a community that has been through a long period of conflict.

We need to take the opportunities of a stable and peaceful society, and those sites present tremendous opportunities. It is particularly important that sites and assets that, up to now, have been associated with militarisation and conflict should be transformed into engines of peaceful economic and social regeneration. We are now considering how best their potential can be developed to fulfil the needs of the community.

The Government have also agreed that as further sites become available, it will be for the Executive to address how they may be used to promote economic and social regeneration on a strategic basis, although we cannot necessarily infer further transfers without charge.

The major programme of infrastructure investment will take some time to develop. The new borrowing power, on which that depends, will be subject to the passing of new legislation through Parliament. More importantly, as the First Minister has just stressed, we need to radically review the system of local revenue, and establish, as a first condition before increases can be considered, a system that is fair and acceptable.

However, we need to make an early start with the implementation of the initiative, and we have agreed with the Chancellor that the Executive will be able to borrow £125 million in the next two years. The Executive wish to maximise the impact of this new money, and they will be adding £75 million of resources that have become available from Departments, enabling a more strategic use of those resources than would otherwise have been possible.

When we were negotiating this shorter-term boost to investment, the new regional cancer centre was among the significant projects that we had in mind. We will also consider how the £200 million should be used in conjunction with the Executive programme funds to maximise the investment impact. We will be looking at renewal and purchasing of important new equipment, improving our roads, and other investments that we can pursue in the short term.

The £125 million borrowed from the Treasury will have to be repaid through existing revenue income, which will be available from the regional rate. There have been reports about major increases in the rates. The First Minister has explained the position in relation to the longer-term borrowing power. However, we should also be clear about the short-term borrowing arrangement. The £125 million loan will be repaid from revenue income currently planned, and will not require increases in the rates.

Much work now needs to be done to implement the initiative, and the First Minister, the Minister of Finance and Personnel and I will be working with our ministerial Colleagues in the coming weeks and months to realise the full potential of this important package. We will keep Members informed of developments, and I am sure that Members will wish to offer views and ideas on how the community could most benefit from the changes.

The establishment of the strategic investment body will be a major task, and we wish to start work on it right away. The parties on the Executive will be invited to nominate members to a project board, chaired by OFMDFM nominees, to develop the proposals for the new body. An Executive subcommittee is to be established to oversee the work. We wish to call on expertise from the Treasury, 10 Downing Street, the South and further afield to help develop our ideas. We also propose to fully involve the Assembly through the Committee of the Centre and the Committee for Finance and Personnel.

We have given details today of the initiative — an initiative that promises substantial additional resources for Northern Ireland through short- and longer-term borrowing, and from the transfer of exceptional security and military assets to the Executive. We believe that this initiative should help provide a welcome boost for our economy, and improved services for our community, for this and for future generations.

11.00 am

We also have other work to do. The Treasury spending review is under way and is due to be completed in the summer. Our agreement with the Treasury on the reinvestment and reform initiative is separate from our negotiation on the spending review. We and the Treasury are agreed; the two are not connected.

The recent Budget announcement of large increases for health funding brought home the difficulties of matching expenditure increases to comparable programmes in England while the Barnett formula continues to be applied. We will continue to press for a fairer system of allocations across the UK, which better recognises Northern Ireland’s higher needs. However, the Treasury will undoubtedly continue to focus on the level of local revenues in Northern Ireland relative to England. The Executive and the Assembly will need to consider this issue further, particularly in the context of the rating policy review. The Executive will not propose increases in rates above the patterns of recent years to the Assembly until we have had the opportunity to consider the outcome of the review.

Irrespective of the outcome of the UK spending review this year, we will not have all the resources we will need. Later this year, the Executive will need to consider priorities for spending across programmes, taking account of needs and effectiveness in the context of the Programme for Government. To initiate this process, the Executive intend to present their position report for this year’s development of the Programme for Government and Budget to the Assembly early next month.

When presenting their Programme for Government to the Assembly, the Executive said that it was about making a difference. The process is different: a local Administration is responsible for making decisions on local issues and for addressing local needs. We also want a different outcome: quality of services and quality of life for all people in Northern Ireland. That difference justifies all the work of the Executive and the Assembly. The reinvestment and reform initiative, which the First Minister and I have described, provides everyone with an additional opportunity to make a real difference.

The initiative is not a magic solution: there are no soft options. Political life is about hard choices — the ones that the public look to us to make. However, the initiative opens up new ways of dealing with those choices and new ways of drawing in expertise and better management. If we make the right choices, we will be helping to invest for the future, improve our public services and provide real benefits for local people. Everyone should work to realise the potential of the initiative. I commend it to the Assembly.

The Chairperson of the Committee of the Centre (Mr Poots):

I doubt that the wordsmiths of the First Minister and the Deputy First Minister had any opportunity to get away over the bank holiday, but given the amount of spin that has been put on the statement, they did not need to take their families to any waltzers.

I wish to comment on several matters that were raised. The First Minister said that rates will not rise more than they have over the past two years. The public must be aware that that is already four times the rate of inflation.

When will the current rating review be completed? Given that we cannot use the borrowing powers until 2004-05, the review should be completed by then, and the outcome should be put in place. Today’s promises that rates are not going to rise significantly seem to be somewhat hollow.

Can we be assured about the local government Exchequer grant? Will it be reduced over the next few years, or will it be done away with? Will the derating of industry, particularly manufacturing industry, cease? Are we going to stop derating charity shops?

With regard to the sites that are being allocated back to the devolved Administration —

Mr Deputy Speaker:

Mr Poots, please conclude your question.

Mr Poots:

— will the First Minister and the Deputy First Minister consult with local communities and public representatives in those areas and take full account of the proposals made by local people?

The First Minister:

I thank Mr Poots for emphasising that over the next couple of years the existing pattern of rates increases will continue without dramatic change. The existing pattern involves increases, but we do not intend to move sharply away from that pattern over the next two years.

The review of rating will be launched very soon, and we hope that it will be completed within a year. However, it could take longer than we would like, for we intend to consult fully. A whole range of local interest groups is keen to be involved in the rating review. We realise how sensitive the issue is, so there will be full consultation. Decisions will then have to be made. The review opens up the possibility of considering other ways of financing local government. While there is a focus on the rates, the door is not closed to people coming forward with fresh ideas about structures of local government finance.

Mr Poots raised several detailed questions about derating for charities, industry, and so on. All aspects of the rating system will be re-examined. When the review of rating is published, Members will see that those issues have been raised. We will see what views are put to us before coming back to the Executive and to the Assembly to find out how we should proceed.

Ideally, the review will be complete and implemented in time for the new arrangements that will kick in in 2004. Whether that ideal is realised is a matter for ourselves and for society as we proceed over the next two years.

Mr McClarty:

I congratulate the First Minister and the Deputy First Minister on securing this package for the benefit of the people of Northern Ireland. Can the Ministers confirm that the short-term package of £200 million will be available to the Executive without any additional burden being placed on the ratepayer?

The Deputy First Minister:

I am happy to give the Member that assurance. The £200 million package comprises a loan of £125 million from the Treasury, and that borrowing can be covered from existing rate revenues. We do not have to add to the patterns of increase that we have projected to fund that short-term borrowing power. The other element of the package is £75 million of our own resources, using money available from Departments’ underspends and end-year flexibility. Applying the money in that way to create the £200 million spending boost represents the best value for money and the best strategic use of the money. The £200 million will be spent in a way that combines and complements the further spending that we have to undertake with regard to the Executive programme funds.

Mr Gallagher:

I welcome the statement and congratulate the First Minister and the Deputy First Minister on the negotiations that brought about the package. Members, myself included, have frequently and urgently called for additional resources for schools, colleges, hospitals and roads. The initiative gives us the opportunity to make positive choices for better quality services.

There has been a good deal of speculation about rates. Will the First Minister assure the House that decisions about rates, whether in the light of the package or as part of the rating review, will not be taken without fully consulting the Assembly?

The First Minister:

Full consultation with the Assembly will take place. Any decisions to be made will come through the Executive to the House. However, even before decisions are taken, there will be a full consultation on the question of local government revenue and forms of finance.

Choices must be made. It is an uncomfortable fact that revenue from rates in Northern Ireland runs below the level of revenue collected through council tax and other analogous methods across the water. It is difficult to draw exact comparisons. Some of the figures bandied about in the local press are unrecognisable. However, there is a difference. When arguing for additional money from the Treasury, the issues of equality and the taxpayer’s interest must be addressed. That matter arises irrespective of this exercise. The question of the comparability of local revenue will have to be addressed.

As long as we can show the Treasury that the Assembly can conduct its business in a responsible fashion, we shall be able to manage changes without making sudden increases. That is a general principle, regardless of the new initiative. The initiative presents the prospect of significant borrowing power, which will give us greater flexibility in the planning stages. In the course of life, people regularly borrow in order to handle major investments in a more convenient way. We can look at that issue over the next year or two before decisions have to be taken.

Mr Close:

I thank the Ministers for their statement. However, the Deputy First Minister said that

"The initiative presents a challenge to us all."

It certainly does when one has not had the opportunity to read it and to do it justice by asking the Ministers probing questions. I would have preferred that the statement be delayed until this afternoon to give us the chance to read it.

Will the assets — in the form of military establishments — that have been transferred to the Northern Ireland Executive attract an annual 6% charge under the resource accounting regime? If so, what impact will that have on our block grant and departmental expenditure limit?

I am delighted to have the categorical assurance of the First Minister and the Deputy First Minister that rates will not be doubled in the next four to five years. However, I welcome even more the fact that minds are now open to other ways of raising finance. I assume, therefore, that the First Minister and the Deputy First Minister now have an open mind on the concept of local income tax. Do they share with me the idea that that is a much fairer way to raise revenue than the current iniquitous rates system?

11.15 am

The Deputy First Minister:

I accept that Mr Close has not had time to read the statement. However, in my experience, regardless of what I say in a statement, or of how much time the Member has to read it, he pays little attention to it, and does not rely on it anyway. Perhaps the Member is making a new departure in that regard.

The assets will be transferred to the Executive; therefore, they must be accounted for in the same way as are other assets. When I was the Minister of Finance and Personnel, I emphasised that resource accounting and budgeting would involve a significant change in how assets are treated. In addition to controlling the flow of spending, the Assembly now controls the stock of assets, which we must account for and treat in the manner that Mr Close described. That is why it is imperative that we put the sites to best use, enable others to do so, and make the best decisions about those assets. We will be working to that end.

A review of rating policy began some time ago, and the first stage is now complete. The Minister of Finance and Personnel will soon issue a public consultation document based on the work that was carried out during the first stage of the review. That document will set out all the issues on rates. We do not need Members’ scare stories about the removal of relief from charity shops or a massive increase in business rates. I was criticised — [Interruption].

Mr Deputy Speaker:


The Deputy First Minister:

When I was the Minister of Finance and Personnel, I was criticised by several councils because I would not withdraw relief for charity shops. The matter will be included in the rating policy review for Members and the public to see, so that a fairer system of generating local revenue can be achieved. All the necessary facts will be included in the review; we do not need scare stories. We will examine the issues, make decisions on them and move forward. Anyone is free to argue that a local income tax would be better; however, that is not on the agenda of the rating policy review. There is no ulterior agenda; we need to consider honestly and hard-headedly the need to raise local revenue, and we must ensure that we do so fairly.

As regards scare stories about business rates, the Executive have increased business rates by 3·3% in the past few years, which was as close as possible to the rate of inflation. They did not increase it further, nor did they increase it at the same rate as domestic charges, because they recognised and emphasised that businesses in Northern Ireland already pay rates equivalent to those paid by businesses across the water. Neither the Treasury nor anyone else could argue that we have a gap to close in business rates — [Interruption].

Mr Deputy Speaker:

Order, Mr Poots.

Ms Morrice:

I welcome the new strategic approach. The ability to overcome the departmental bottlenecks that have blocked progress for so long is important and long overdue. However, the package from the Chancellor should bear a large bright label that reads "handle with care", because much small print must be read, and clarification is needed.

How much will it cost to borrow the £125 million that we have already agreed to accept? I do not want to know where it is coming from; I want to know how much it will cost. Secondly, how much will it cost us to borrow £1 billion, or other larger amounts? Has an interest rate been fixed?

Thirdly, the Chancellor and the Prime Minister made an announcement containing much spin about investing in future generations. Is it not rather the case that we are asking future generations to pay for our debt?

The First Minister:

I agree that we need to handle these things with care, and I wish that commentators would do so also. We see remarkable stories in the media about what this will mean. As was stated openly and clearly, this is a matter of taking on power, and the question arises of how and when it is to be used. In our lives we purchase major capital items such as cars and houses, and rather than save the cost from income, we usually borrow. The costs involved will depend on the rates available and how they are drawn down. Crucially, we can cover the cost of borrowing £125 million initially with existing departmental budgets.

Ms Morrice:

How much will it cost?

The First Minister:

The cost will depend on when it is drawn down. For example, if £1 billion is borrowed, the cost depends on the interest rates at the time. The rates available at the moment are around 5·25%, so that would mean expenditure of around £75 million, which is a competitive rate.

Ms Morrice:

Five per cent?

The First Minister:

Yes. The current rate is 5·25%, and it is better than floating a bond. The Member will note that we intend to create a strategic investment body. The body will maximise available public finance expertise and explore a range of possible sources of finance, which includes borrowing from the Treasury, using assets more effectively and raising funds through public-private partnerships.

One must not assume that the cost of all the investment infrastructure will be met by borrowing. There is the possibility of exploring public-private partnerships and using them to lever in more finance. Borrowing can provide funds, which can be used to bring in similar or greater funds. While we cannot use the proceeds of the disposal of assets to fund borrowing, we can use them to fund investment, so infrastructure investment can come from a number of sources. Those who see a need for several billion pounds to be spent on infrastructure and assume that it will all come from borrowing are wrong. Some of the figures that I have given are within our resources, even if we borrow. Our Budget is in excess of £5 billion, and it should be possible to find £30 million, £40 million, £50 million or maybe £75 million a year to fund substantial borrowing. However, that would be on the basis of our agreeing the detail with the Treasury, and we are still in discussion on how we should handle longer-term borrowing.

I did not give the Member a specific answer about the cost of borrowing £125 million in the short term. I understand that the loan is likely to cost less than £10 million a year, based on repayment over 25 years.

Mr Hay:

I suppose we will know soon enough whether Santa Claus has come early to Northern Ireland.

We must find out the finer details of the financial package, and how it stacks up economically. Will the Committees have opportunities to fully discuss the package and its financial implications?

I welcome the recent developments concerning Ebrington Barracks, which is in my constituency. High-level discussions have been taking place for some time to try to secure public ownership of the site. Will there be wide consultation in the Foyle constituency — particularly in the Waterside area — on the future use of the site? Many useful discussions have been held with various bodies in the city about that. However, now that the Executive have control of the site, many people in the community are worried about whether such consultation will continue.


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