Northern Ireland Assembly Flax Flower Logo

Northern Ireland Assembly

Monday 20 May 2002


Visit of Her Majesty The Queen

Suspension of Standing Orders

Harland & Wolff Lands Issue

Open-Ended Investment Companies Bill: First Stage

Local Government (Miscellaneous Provisions) Bill: Second Stage

Belfast Harbour Order (Northern Ireland) 2002

Warrenpoint Harbour Authority Order (Northern Ireland) 2002

Oral Answers to Questions

Department of Education

Health, Social Services and Public Safety

Department of Finance and Personnel

Warrenpoint Harbour Authority Order (Northern Ireland) 2002

Londonderry Harbour Order (Northern Ireland) 2002

Social Security Statutory Rules Subject to Confirmatory Resolution

Committee for Employment and Learning: Change of Membership

Committee for Education: Change of Membership

Report by the Committee for Agriculture and Rural Development

The Assembly met at noon (Mr Speaker in the Chair).

Members observed two minutes’ silence.


Visit of Her Majesty The Queen


Mr J Wilson:

On a point of order, Mr Speaker. Criticism has recently been levelled at the Assembly concerning the facilities that were made available to the media during Her Majesty The Queen’s visit to Parliament Buildings last week. Was that criticism justified?

Mr Speaker:

I have noticed criticism in the press, and I have received correspondence from Ulster Television (UTV) about the matter. I am writing to request an apology from UTV for some of the statements that were made. I am not surprised that UTV were embarrassed by the poor quality of the coverage of the event, especially since they were providing it not only for their own viewers but for those of other broadcasting organisations and, indeed, the Assembly. To obviate their embarrassment, they have sought to blame Assembly staff and have made several quite untrue claims.

They claim that it was to do with security arrangements, but it was not. Our staff gave full assistance as to the best place to take shots and discussed where they might have difficulties. They took their own advice, and discovered too late that they were mistaken. The only thing that they requested but did not receive was the right to place a camera in the middle of the floor of the Great Hall, where Her Majesty and all would have had to parade around it.

Assembly staff thought that that was inappropriate. However, UTV staff were permitted to place a camera on a riser at the back of the Great Hall, and they pronounced themselves totally satisfied with all the arrangements — until they saw the outcome. At that stage they sought to make a complaint, and to put blame on the Assembly staff who had co-operated fully with them.

That was not the only blunder on the part of the press. For example, a member of broadcasting staff was speaking so loudly upstairs in the Gallery during one of the speeches that it was thought initially that an intruder was trying to disrupt the proceedings.

Our own contracted staff have provided very competent and helpful broadcasting for almost four years. They are familiar with how to conduct things, and an obvious solution for future circumstances would be to have our own staff provide a pooled feed that the broadcasters could then take.

The stills photographer, who was offered the same facilities, managed to take excellent photographs that have been used widely and appreciated widely. I trust that that addresses the Member’s concern.

Mr P Robinson:

On a further point of order, Mr Speaker. Members were notified of the intention to carry out searches before Her Majesty’s visit — as one would expect. Many Members made the necessary arrangements for desks, filing cabinets and rooms to be left open. However, there is an indication that not everyone did so. Can you investigate whether, in cases where people left desks, filing cabinets or rooms locked, they were penetrated in all cases, and can you report to the Assembly Commission on that?

Mr Speaker:

I have made initial enquiries on that issue. A few desks and filing cabinets were not opened. The security forces were entirely satisfied that these were well away from any areas where they had any concerns. In all the cases concerned, Members had not been around for some time, and that was why some desks and filing cabinets were not left open. I cannot comment more fully on it, save to say that beforehand, and subsequently when I checked, I was advised that the security services were wholly happy with the substantial co-operation that they received from all sides in the Assembly. As the Member has raised the matter, I will enquire further about it.

Mr Morrow:

Further to the earlier point of order, Mr Speaker. You said that you are entering into correspondence with UTV. Is it your intention to report to the Assembly on that correspondence?

Mr Speaker:

That would not normally be how I would proceed. It would generally be a matter for the Commission. If Members raise questions, I try to be helpful, but I am simply responding to the question raised. I received a letter from UTV that contained several scurrilous suggestions, and I have no option but to reply to it. The terms in which I will reply are the terms in which I have responded to the point of order this morning.

I will draw the matter to the attention of the Commission, which is the responsible body.

Mr Davis:

On a further point of order, Mr Speaker. We should thank those members of the Assembly staff and Members’ staff who stayed behind for some time to help with the security search.

Mr Speaker:

I am grateful to the Member for raising that matter. The Assembly staff, and the staff of all the parties, were extremely co-operative, and some people put themselves out substantially both before, during and after the visit. It would also be fair for the Assembly to record its appreciation of the substantial efforts made by Assembly staff to ensure that an important event passed in what I understand was described as "clockwork order" by some commentators who viewed it.

Suspension of Standing Orders


Resolved (with cross-community support):

That this Assembly suspends Standing Order 10(2) and Standing Order 10(6) for Monday 20 May 2002. — [The Minister for Regional Development (Mr P Robinson).]

Harland & Wolff Lands Issue


Mr Speaker:

I have received notice from the Minister for Regional Development that he wishes to make a statement on the Harland & Wolff lands issue.

The Minister for Regional Development (Mr P Robinson):

I am grateful for the opportunity to make a statement to the Assembly on my decision regarding the Harland & Wolff lands issue.

Last week, in reply to a question for written answer tabled by Mr Peter Weir, I said that I expected to be in a position soon to respond to the Belfast Harbour Commissioners’ application to my Department for approval to enter into an agreement with Titanic Quarter Ltd for the development of some 80 acres of land in the harbour estate that is no longer required for shipbuilding purposes.

Sir David Fell, chairman of Harland & Wolff, first briefed Sir Reg Empey and me on 25 February 2002 about the company’s difficulties and advanced the proposal that it might conclude a land deal with the Belfast Harbour Commissioners — the company’s landlord — aimed at financing a new business plan.

From the outset, my principal concern has been to safeguard the public interest. As Minister for Regional Development, I was also keen to ensure that those lands identified by the company as being no longer needed for shipbuilding were developed in the best interests of Northern Ireland. Under the terms of the memorandum of understanding between the Belfast Harbour Commissioners and my Department, the commissioners are required to consult with my Department and seek its approval for any proposed disposal or change of use of any harbour lands. The Belfast Harbour Commissioners’ proposal to my Department envisaged a partnership with Titanic Quarter Ltd, a sister company of Harland & Wolff Heavy Industries Ltd, for the purpose of development of the site. As part of that arrangement, it was envisaged that the covenants in the existing lease, which restricted use of the land to shipbuilding, ship repair and engineering, would be removed to facilitate the commercial development of the site.

On the back of that arrangement, it was proposed that Harland & Wolff’s parent company, Fred Olsen Energy, would invest £15 million in Harland & Wolff Heavy Industries Ltd, which was based on 50% of the market value of the site. That cash injection is intended to finance the company’s new business plan.

My Department’s consideration of the proposal has entailed careful examination of several matters including the market value of the lands involved, the legal documentation relating to the proposed agreement and any state aid implications. Having completed my examination of the proposal put to my Department under the terms of the memorandum of understanding with Belfast Harbour Commissioners, I am able to announce to the Assembly that I have decided to approve the proposal.

I have several reasons to believe that my decision is in the best interests of Northern Ireland plc. It will facilitate the regeneration of a substantial area of the harbour estate, a prime site close to the city centre, which, if left undeveloped, would rapidly become an eyesore. Development of the land offers fresh job opportunities. Both Harland & Wolff and the Belfast Harbour Commissioners accept that the site lends itself to development, at least in part, for light industrial use.

After protracted negotiations, the public interest represented by the Belfast Harbour Commissioners will share capital costs and revenue benefits fifty-fifty. That is the same share for the Harland & Wolff interest, on a lease that expires in 2114, as it is for the Titanic Quarter deal, the lease for which expires in 2019. Taken together with the adjoining Titanic Quarter site and the new science park, the lands promise to become a dynamic new development area of more than 180 acres.

Finally, both the Belfast Harbour Commissioners and Titanic Quarter Ltd have undertaken to bear the on-site infrastructure costs and their share of the external infrastructure costs of the development of the site.

12.15 pm

Those reasons alone mean that it is a strong deal that would, on a stand-alone basis, merit approval. There are also additional benefits of which I am aware, but which I could not allow to colour my judgement. They relate more to the responsibilities of Sir Reg Empey, as Minister of Enterprise, Trade and Investment, with whom I have worked closely throughout the process. Those are: Harland & Wolff will be given the opportunity to finance and implement its new business plan, and so ensure the survival of shipbuilding operations in Belfast for the immediate future; it will retain jobs and also allow the two roll-on roll-off vessels under construction to be completed; it will give the company the opportunity to improve the yard’s prospects in the longer term by making it more compact and efficient; and it will allow the company to develop new market opportunities in the construction of a renewables plant.

In considering those matters, Sir Reg Empey and I acknowledged that no public moneys would be involved in implementing the proposed development agreement or in financing Harland & Wolff’s new business plan. Fred Olsen Energy will be required to bear the commercial risk involved with regard to the latter. Sir Reg Empey and I consulted widely on those issues, because we were keen to secure the maximum political engagement and public support.

The consultation has extended to include Belfast City Council, the Regional Development Committee, the Enterprise, Trade and Investment Committee, the Department for Employment and Learning, the Office of the First Minister and the Deputy First Minister, the Executive Committee and the trade unions. The process has worked well, and it has demonstrated openness, transparency and public accountability. It has also proved to be a good test of the memorandum of understanding with the Belfast Harbour Commissioners. The public interest will be safeguarded in various ways in implementing the decision.

The injection of funds into Harland & Wolff Heavy Industries Ltd will be monitored by a committee of officials drawn from the Department for Regional Development, the Department of Enterprise, Trade and Investment and the Department of Finance and Personnel. The committee will also monitor the implementation of the company’s business plan and will be supported by PricewaterhouseCoopers. The Department for Regional Development will be involved in the master-planning process, and the development proposals which emerge from that will be the subject of the full rigour of the statutory planning process. I commend those arrangements to the House and to the Northern Ireland public.

The Chairperson of the Committee for Regional Development (Mr A Maginness):

The Regional Development Committee has monitored this situation for some time, and it is generally supportive of the Minister’s statement. Some members of the Committee are rather doubtful about the long-term viability of the restructured company, but we wish it well. However, we are concerned about the protection of the public interest with regard to the surplus lands that will result from the restructuring of Harland & Wolff. The Regional Development Committee believes strongly that the lands are public assets and should be developed in the public interest. I hope that the plan that is being proposed today will protect the public interest. I note that the development costs will be shared fifty-fifty between the Belfast Harbour Commissioners and Fred Olsen Energy. The Committee believes that that is important.

Will the Minister reassure the House that no public funding will go into the development of these lands and that the Belfast Harbour Commissioners and Fred Olsen Energy will develop them jointly?

Mr P Robinson:

I thank the Committee for the role that it played in examining the many issues involved. The Committee was able to profile the issues in a way that illuminated public understanding of this complex case.

Alban Maginness is correct that there is no assurance of a long-term future for Harland & Wolff on the basis of the injection of funds as a consequence of the land deal. Members hope that it will be the case. Nonetheless, the Minister of Enterprise, Trade and Investment can say that only the injection of funds into the company will make it theoretically possible to meet its business plan. The success of the business plan depends entirely on whether the company can secure orders. That is why I have emphasised that we have examined this issue on a stand-alone basis, and we have concluded that it makes sense.

Mr Maginness is correct in saying that the key issue has been the protection of the public interest, and that has been done in several ways. Harland & Wolff, through its Titanic Quarter deal, will be a partner with the Belfast Harbour Commissioners, who have considerable experience of development. That secures the public end of the arrangement in an accountable way. I hope that, later today, there will be approval for new harbour Orders that will increase the public accountability of the Belfast Harbour Commissioners.

The moneys that will meet the requirements of Harland & Wolff’s business plan come from the injection of funds into Harland & Wolff Heavy Industries Ltd by Fred Olsen Energy as a result of the land deal, and also from a further loan from Fred Olsen, because there was a gap that had to be filled. The only public funds involved relate to the Department for Employment and Learning, which is deferring a loan — although not writing it off — so that it meets the business plan requirements. It is for the Department for Employment and Learning to make any statement on that. It seems to be a common-sense decision, because if the Department did not agree to that — and the deal fell as a result — it would not have had the money anyway, because it is an unsecured loan.

Dr Adamson:

I declare an interest as a Belfast City Council appointee to the Greater East Belfast Partnership Board, which has an interest in this issue, and also as chairman of the community enterprise scheme, Heirskip Village. I commend the Minister on his work and his report, and also Sir Reg Empey. Does the Minister think that there is concern in the local community that this is part of an eventual withdrawal of Harland & Wolff from the site? Methinks there may be Vikings about. Can he reassure us by elaborating on the monitoring board that will be established?

(Mr Deputy Speaker [Mr McClelland] in the Chair)

Mr P Robinson:

I am grateful to my Colleague from East Belfast for raising declarations of interest, as it gives me the opportunity to say that I do not have an interest, although the Register of Members’ Interests might suggest otherwise. Although my interest was minimal, I donated it to a local charity — of which the Member would approve — before decisions were made on the matter.

I am not sure that any Vikings gave orders to inject funds into Northern Ireland companies. Those who question Fred Olsen’s motives must recognise that, if he or any of his companies were interested only in asset-stripping, it is unlikely that they would have reinvested the moneys that were secured from that in Harland & Wolff Heavy Industries Ltd.

I am aware of the hon Gentleman’s interest in the Greater East Belfast Partnership Board. I hope that we can proceed with the issue relating to the board and the lands known as the Esso lands. I am happy to work with the Member and his Colleague, the Minister of Enterprise, Trade and Investment, to secure the matter.

Although people may question the motives, the proposals make sense as they stand. I too have concerns about the future of shipbuilding in Northen Ireland. However, the deal offers shipbuilding a chance, without which it has no future.

The Deputy Chairperson of the Committee for Enterprise, Trade and Investment (Mr Neeson): The Enterprise, Trade and Investment Committee has been considering this matter for some time, and before devolution the Assembly established an Ad Hoc Committee to deal with the harbour lands. Modern shipbuilding does not require the huge tracts of land that were needed in the last century.

Does the Minister agree that the lands are not only a Belfast city asset but a Northern Ireland asset and should be treated as such? What input will his Department and other Departments have in drawing up the brief that will lead to the development plan for this site and for the Titanic Quarter? I welcome the fact that the Belfast Harbour Commissioners and Harland & Wolff will provide the necessary infrastructure.

Mr P Robinson:

I remember the days of the Ad Hoc Committee and its work. The question enables me to return to the question that Dr Adamson asked about the monitoring committee, to which I did not respond. The committee will comprise representatives from the Department of Enterprise, Trade and Investment, the Department of Finance and Personnel and the Department for Regional Development, which have been involved in the project and which will continue to have an interest in the development of the land and in monitoring the injection of funds and subsequent matters.

The Member for East Antrim, Mr Neeson, is right to emphasise the fact that this is not solely an east Belfast, in its narrowest focus, or a Belfast issue. The development of the site has implications for the whole of Northern Ireland. It is one of the most attractive development sites in the Province, particularly because of its proximity to Belfast city centre. It must, therefore, be tackled strategically and carefully.

I asked the official in charge of regional planning to leave all his other work aside and concentrate on the preparation of a draft plan to show how the site and the Titanic Quarter might be developed.

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It is important that they are developed as one site.

A reputable Northern Ireland company is representing Fred Olsen Energy, and it is working on development proposals. That company has agreed to work in a body with the Department for Regional Development, and the work will be fed through to the monitoring group. However, the Planning Service will always have the final say, and proposals will be subject to all of its usual rigours.

Therefore, there is a series of "protections" as regards how the site is developed — not least of which is the fact that the partnership between private and public interests is fifty-fifty — which should help to secure public confidence. The public interest will be represented by the Belfast Harbour Commissioners, which, under their memorandum of understanding, have worked closely with my Department throughout the process. I expect that to continue through to the end of the process because there is a good relationship between the Department and Belfast Harbour Commissioners.

Mr McNamee:

I welcome the positive aspects of the Minister’s statement — the positive effect that the deal will have on employment at Harland & Wolff in the short term and the opportunity it provides for the company to improve its prospects.

The deal, however, involves £15 million being invested in Harland & Wolff Heavy Industries Ltd, and the Minister has said that there is no guarantee that the business plan will be successful in the long term. The House is aware of competition in the shipbuilding industry that Harland & Wolff faces from Asian countries. Will the Minister elaborate on the business plan and explain why a decision has been taken to invest £15 million in it? Will he state how confident he is about the possible success of the plan?

Mr P Robinson:

It would be inappropriate for me to comment on the business plan. That is a Department of Enterprise, Trade and Investment issue, and it says that the figures add up. The future of the company will depend on its ability to secure work on the open market. That will be the test.

The Assembly would want to concentrate on why investment should be made if public money were being put into the company. In this case, however, the question must be put to Fred Olsen Energy. It is making the investment, and I welcome that. The alternative is for Fred Olsen Energy to put the money in its back pocket. I would much rather see it being invested in a Northern Ireland company and giving it a chance to survive.

The Department recognises that there is much competition from the Pacific basin. Harland & Wolff must look to contracts that have added value. However, the company will become more competitive by reducing its overheads and contracting the site. It will increase its ability to compete by bringing in modules for areas of activity that it claims are more costly. It will have a better chance if it looks to the niche market that is not covered by Pacific basin countries. However, the odds are no higher than that, and this is a matter for the company. I know that the House will wish the company well in implementing its business plan.

The Deputy Chairperson of the Committee for Regional Development (Mr McFarland): Does the Minister agree that the existence of Ministers, Committees and the Assembly was vital to the construction of the plan and that had Harland & Wolff’s problems occurred before devolution the outcome in relation to protecting the public interest might have been different?

Mr P Robinson: As someone who believes in devolution, I find it easy to answer the Member’s question. I have always believed that people who have an intimate knowledge of the issues will make better decisions that those who are not directly accountable to the Northern Ireland people. It is important that the process has been transparent, as it has been the subject of much criticism in the past. The public are aware of the issues involved in a way that they were not before.

The memorandum of understanding agreed between the Belfast Harbour Commissioners and my Department has worked well and, when it is enshrined in the new harbour Orders, will work well in future. Even if no benefits were to be gained by Harland & Wolff Heavy Industries Ltd, the arrangement would still be in the interests of Northern Ireland plc. It makes sense to develop the site.

As well as being a Minister, I also represent East Belfast. If no agreement on the land had been reached, I could not contemplate the blight and the loss of potential that would result from leaving the site, so close to Belfast city centre, derelict and overgrown with weeds. All the employment potential would be lost not only for East Belfast, but for the wider area.

Mr Byrne:

The issue has been around for several years, and the Minister’s definitive statement is to be welcomed. Is £15 million a true reflection of the market value of the 80 acres of land that is to be released for development? Will more land be released for development in future? Is the Minister satisfied that there will be a proper mix of development use? Only light industrial use has been mentioned.

Mr P Robinson:

The £15 million is gauged to be only half the value of the land because only half the land belongs to Fred Olsen companies; the other half is held in the public interest by the Belfast Harbour Commissioners. I know from working as an estate agent in the early part of my adult life that the value of any property is only worth what a willing purchaser will pay on the open market. Therefore, one can never know the true value of a property until it is sold.

Reputable companies conducted four valuations of the land. The lowest and highest valuations were disregarded, and an average of the remaining two was taken. The Department had the average considered by the Valuation and Lands Agency, which agreed that the average was within its appropriate tolerance level. The experts consider the figure to be reasonable. Of course, as soon as money is invested to improve the infrastructure of the area, the development potential will increase. However, the developers will have to speculate to accumulate on that.

The Member also raised the issue of more land being released for development. In many ways, I hope that no more land is released because that will inevitably mean that Harland & Wolff’s business plan has failed. We would have to reconsider the issue if that happened. Taken together with the original Titanic Quarter land, the development is sizeable and will probably take 10 to 15 years to fully evolve.

The land will be developed for mixed use. Ultimately, its use will be a matter for the Department of the Environment’s Planning Service. However, the land stretches from the Odyssey to what will be the new, contracted Harland & Wolff site, and it would seem natural to soften the land’s use as it draws closer to the Odyssey. The Minister of Enterprise, Trade and Investment highlighted his priority that the land be used for light industry, and he and I have pressed for such a use of a significant portion of the land. However, it will be a mixed-use development.

Open-Ended Investment Companies Bill:
First Stage


The Minister of Enterprise, Trade and Investment (Sir Reg Empey):

I beg leave to lay before the Assembly a Bill [NIA 10/01] to make provision for facilitating the carrying on of collective investment by means of open-ended investment companies and for regulating such companies.

Bill passed First Stage and ordered to be printed.

Mr Deputy Speaker:

The Bill will be put on the list of pending business until a date for its Second Stage is determined.

Normally, I would move on to the next item of business, the Second Stage of the Local Government (Miscellaneous Provision) Bill, but I do not see Mr Dermot Nesbitt in the Chamber. For that reason I will, by leave of the House, suspend the sitting for five minutes. We will then continue with the next item on the Order Paper.

The sitting was suspended at 12.42 pm.

On resuming (Mr Deputy Speaker [Mr McClelland] in the Chair) —

Mr Ford:

On a point of order, Mr Deputy Speaker. Last week, a motion stood in my name on the Order Paper and, because I arrived in the Chamber one minute after the previous business collapsed, the motion fell, and there was no opportunity for reconsideration. Also last week, Dr McDonnell tabled a private Member’s motion, and the House was suspended to give him time to arrive. This morning the House suspended to allow the Minister of the Environment to arrive. In my case, the motion could be taken only on that day last week. Dr McDonnell’s private Member’s motion, and the Second Stage of the Local Government (Miscellaneous Provisions) Bill could have been taken at any time. Given that inconsistency, will you consult with the Speaker and your Colleagues and make a firm ruling on what business collapses and what business can be suspended?

Mr Deputy Speaker:

I shall raise the issue with the Speaker and, of course, the issue may be raised at the Business Committee. It was with great reluctance that I suspended business today but, on balance, it was the best course of action.

Local Government (Miscellaneous Provisions) Bill: 
Second Stage


The Minister of the Environment (Mr Nesbitt): Thank you, Mr Deputy Speaker, for your forbearance.

I beg to move

That the Second Stage of the Local Government (Miscellaneous Provisions) Bill (NIA 7/01) be agreed.

The main purpose of the Bill is to introduce a new methodology for the distribution of the resources element of the general grant that is payable to district councils. The existing statutory formula is complex and results frequently in wide variations each year, which makes effective long-term financial planning difficult for councils. The methodology aims to address the complexities of the current formula and to provide for regular payments to facilitate good financial planning. In accordance with TSN principles, it will incorporate factors to take account of the relative socio-economic disadvantage of districts.

The Bill will also be used to amend the economic development powers of district councils. The changes were contained in a proposal for a draft Order in Council that the former Department of the Environment for Northern Ireland prepared. The new provisions remove the financial limit on economic development expenditure and extend the existing powers of district councils to promote the economic development of their areas. That will allow them to engage in more diverse activities, such as providing sites for economic development.

In addition, the Bill provides for district councils to engage, if they so wish, in community safety activity through partnerships, which would be established as part of a community safety strategy devised by the Secretary of State.

By way of background to the Bill, article 3 of the Local Government &c. (Northern Ireland) Order 1972 provides for the payment of a general grant to district councils. The grant comprises an element to compensate district councils for a loss of rate income due to the statutory derating of certain properties and a resources element to provide additional finance to district councils whose rateable value per capita of the population falls below a standard that the Department determined.

The Bill will consolidate and replace existing provisions that relate to the general grant. It will introduce a new formula for the distribution of the resources element of the grant to district councils, to take effect from 1 April 2003. The new methodology is aimed at assisting the councils with the greatest need and ensuring a more equitable distribution of the available moneys. The formula is designed to measure a council’s wealth against its estimated needs. Wealth is determined according to the gross penny rate product of a district council, and needs are measured according to a council’s adjustment population. If a council’s wealth base is greater than its estimated needs, it does not qualify for a grant. However, if a council’s wealth base is lower than its needs, it will be eligible for a share of the grant in proportion to the total shortfall. The proposed methodology should be easier to understand than the existing formula.

The consultation exercises focused on underlying issues. Two consultation papers, which dealt with proposals for a new formula for the distribution of the resources element of the general grant, were issued. The first paper outlined a suggested new methodology for the distribution of the grant. Many of the responses to the paper were taken on board, and preliminary proposals were adjusted. On completion of an equality impact assessment, a second consultation paper was circulated widely to fulfil the Department’s statutory requirements under section 75 of the Northern Ireland Act 1998.

In addition to those formal consultation procedures, presentations were made to the Committee for the Environment and the National Association of Councillors. A presentation and two workshop sessions were conducted for local government finance officers. Meetings with individuals to clarify the proposals were also arranged. Four of the Bill’s clauses were discussed at the most recent presentation to the Committee for the Environment on 9 May 2002. I am grateful to the Committee for raising those points, and I will deal with its concerns when I address the details of the Bill.

The initial consultation with district councils and other interested parties resulted in 22 responses to the paper. Although there was broad support for the proposed methodology, valid points were made about the data and the waiting factors to be applied, many of which have since been addressed.

We received 21 responses to the second consultation exercise. The proposal was generally accepted as a major improvement on the present arrangement. It was recognised that adjustments made to base population figures reflected additional needs relating to deprivation and the influx of population. However, some reservations were expressed about the measures for addressing the problem of sparsity. Those were re-examined, and further adjustments have been made. The Department has noted other suggestions relating to the application of up-to-date data as it becomes available. The Department may revise periodically any of the detail of the formula, as this will be contained in subordinate legislation.

Overall, it was recognised that the proposed formula involves a simpler calculation. It allows for better financial planning by district councils. It was generally accepted that the proposed method meets the objectives of the resources element of the general grant.

Consultation on the amendment of district councils’ economic development powers took place when the Regeneration and Development (Northern Ireland) Order was drafted. District councils have been aware of the proposed amendments for some time, and their responses indicated overwhelming support for the proposed extension of economic development powers.

The Northern Ireland Office undertook consultation on community safety in the context of the Criminal Justice Review implementation plan. District councils and other interests were given an opportunity to comment. Several councils responded positively to the NIO proposals, and the Society of Local Authority Chief Executives (SOLACE) sought statutory powers to engage in community safety activity on behalf of all councils. No objections were made to the Northern Ireland Office proposals. The detailed community safety strategy devised by the Northern Ireland Office is undergoing an extensive consultation process.

The Bill contains 11 clauses, and I will now briefly outline the key aspects of the principal clauses 1 to 7, and cover issues raised recently in presentations by my officials.

Clause 1 makes provision for the general grant. Subsection (1) empowers the Department of the Environment to make payments of general grant to district councils each year. Subsection (2) sets out the two distinct elements of the grant: the resources element which is payable only to those district councils whose needs exceed their wealth base; and the derating element which compensates district councils for loss of rate income due to the statutory derating of certain properties. Subsection (3) empowers my Department to determine the timing of grant payments. Payments are made every quarter. However, district councils have indicated that they would like to receive monthly payments, and the Department of the Environment will accommodate that with effect from April 2003.

Clause 2 deals with the determination of the resources element of the general grant. Subsection (1) provides for the method for allocations to be determined by Regulations. Subordinate legislation is now being drafted. A new formula has been devised that aims to achieve a fairer distribution of the available funds. The purpose of subsections (2)(a) and (2)(b) is to put in place a formula that will measure the wealth of a council against its estimated needs. Wealth is determined by the gross penny rate product of a district council, relative to that for Northern Ireland. Needs are measured by population of a district council, relative to the total for Northern Ireland. To take account of councils’ specific needs — which have been identified as deprivation, the influx of population and sparsity — population data has been refined: base population data has been replaced with adjusted population figures. Only those councils whose needs exceed their wealth are entitled to a share of the grant.

Subsection (3) clarifies the fact that not all district councils will qualify for the resources element of the grant. Subsection (4) allows the Department of the Environment to amend the subordinate legislation that will contain the detail of the formula. This is to ensure that measures and weightings, such as the Noble index, may be reviewed and updated at any time.

1.00 pm

Subsection (5) provides for supplementary provisions or necessary refinement of the Regulations that may be required after the new arrangements come into operation.

Subsection (6) puts into place arrangements to amend the Regulations and lay them in draft before the Assembly. These Regulations are subject to affirmative resolution.

Clause 3 deals with the determination of the derating element of the general grant. I have already explained the nature of the derating element, which is defined in clause 1. Rating/derating policy is a matter for the Department of Finance and Personnel. However, the calculation and payment of the derating element of the grant is handled by my Department. The formula for calculating the derating element, which is unchanged, is contained in part II of schedule I to the Local Government &c. (Northern Ireland) Order 1972. This clause is included in the Bill in order that the formulae for the resources and derating elements remain together. The wording of the clause is as before.

I should make it clear that, although the Department of Finance and Personnel has sole responsibility for the rating/derating policy, my Department, like all others, would be consulted on any changes in that policy.

Clause 4 deals with reductions in general grant. This clause enables my Department, in particular circumstances, to make deductions from the amount of general grant payable to a district council.

Subsections (1) and (2) empower the Department to take action in cases where a district council has failed to achieve and maintain a standard of economy, efficiency and effectiveness in the discharging of its functions. This might relate to, for example, such failings as: the misappropriation of funds; excessive expenditure; or non-submission of annual accounts. My Department would prepare a written report that would include any concerns raised by the local government auditor and the justification for the amount of grant reduced. The full report would be laid before the Assembly. This provision is currently contained in article 4(1)(a) of the 1972 Order. In the past 30 years, my Department has never exercised this power.

Subsections (3) and (4) provide the Department with the power to make payments to certain bodies on behalf of district councils for services rendered. To recover this expenditure, an adjustment is made to an instalment of general grant in the same financial year. The organisations and bodies to which this arrangement relates are listed in the Local Government (Specified Bodies) Regulations (Northern Ireland) 2001. If any change to this list is proposed, district councils and other interested parties must be consulted before these Regulations are amended. The power to defray and recover district council expenditure is currently contained in article 4(3) of the 1972 Order.

Clause 5 deals with other grants to councils. This clause provides my Department with a general power to pay grants to district councils. That applies to any grant connected with a function of a council, other than general grant. The Department currently makes payments to district councils in respect of food safety, construction products and energy efficiency. The power to pay these grants is currently contained in article 5A of the 1972 Order.

Clause 6 relaxes the present restrictions on district councils in relation to the promotion of economic development. It also enables them to engage in a broader range of activities such as the provision of sites for economic development purposes.

Clause 7 deals with the community safety powers of district councils. The community safety initiative is driven by the Northern Ireland Office in consultation with Departments, district councils and other bodies. The powers provided in clause 7 are in response to the wish of district councils to have statutory cover when engaging in community safety activity. Subsection (1) empowers them to engage, if they so wish, in community safety activity in a relevant community safety partnership, as defined in subsection (4). Subsection (2) empowers my Department to confer or impose on district councils any functions aimed at enhancing community safety, which would be additional to, or complement, any community safety strategy devised by the Secretary of State.

The term "impose" is used here as it may be the will of the Assembly in the future to make these provisions obligatory rather than discretionary under the provisions in subsection (1).

Subsection (3) stipulates that no Order can be made under subsection (2) unless a draft has been laid before, and approved by resolution of, the Assembly. Subsection (4) defines "community safety partnership" and the terms "enhancement of community safety" and "relevant community safety partnership".

I want to emphasise that in the Programme for Government my Department is committed to reviewing the existing statutory formula for distributing the resources element of general grant payable to district councils to take account of relative socio-economic disadvantage. There are many difficulties with the existing formula for distributing this element. The main problem relates to the complexity of the method, the uncertainty of grant allocations each year and the fact that distribution takes no account of New TSN; the Bill addresses those issues. It provides a framework for a new method of distributing the resources element of general grant, and that will meet my Department’s commitment.

In addition, the Bill will extend the existing power of district councils to promote economic development in their areas and enable them to engage, if they wish, in community safety activity through community safety partnerships. Most importantly, the Bill will ensure that the legitimate needs of ratepayers and residents are met, and I commend it to the Assembly.

The Chairperson of the Committee for the Environment (Rev Dr William McCrea):

I am sure that the Minister and his officials will apologise to the Assembly for holding up the proceedings. I am happy that we have been able to have this important debate, and I thank the Deputy Speaker for his intervention, which ensured that it happened. Other Members will want to raise matters that they think are important.

In January 2002 the Committee for the Environment considered a consultation document issued by the Department of the Environment on proposals for a new formula for distributing the resources element of the general Exchequer grant. This grant has two elements: a derating element and a resources element. There have been problems with the existing complex formula used for the resources grant, and it is widely accepted that there is need for change.

The consultation exercise related solely to the resources element, and this is the only part of the Bill that has been considered by the Committee. It received a detailed presentation from officials on the proposed new formula, and members were able to question them on some specific points.

The Committee wrote to the Department on 17 January 2002 giving a general welcome to the introduction of a revised formula. However, some representatives in the east of the Province have requested an explanation as to how the Department will deal with the equality impact assessment outlined in paragraph 33 of the explanatory and financial memorandum.

Members may not be aware that the Bill was to have been called the local government (finance) Bill or something similar. However, the title had to be changed to reflect several additions.

As Members have already heard the Minister say, the first major change will involve the introduction of new powers to district councils in relation to what is termed "economic development". At first glance, it would seem that all councils should welcome that as it seemingly allows them to engage in activities from which they were previously barred. It is important that we have meaningful consultation on the detail.

The second major change involves the inclusion of new powers to enable councils to engage in community safety partnerships. It was hoped that those powers could be included in the Criminal Justice Bill earlier this year, but for some reason that did not happen. Therefore, they are being included in this Bill.

The Minister appeared before the Committee in March 2002, and there was discussion about a proactive approach towards co-operating with him in dealing with five Bills that would be introduced by his Department over several months. The Committee agreed to co-operate fully with the Department subject to being fully satisfied with the specific terms of the Bill. The Committee has already been working closely with departmental officials on the Bill and hopes to continue to do so during Committee Stage.

The Bill is not straightforward. Even if it had related solely to the formula for the resource element of the general Exchequer grant, undoubtedly the Committee would have had questions and concerns to be clarified. However, the addition of two clauses relating to issues that will have a significant impact on every district council in Northern Ireland will add considerably to the Committee's scrutiny remit.

The Committee is already pursuing officials on several concerns, questions and specifics in the Bill and will continue with its scrutiny at Thursday's meeting. I appreciate that it would not be appropriate to raise those specific points during this debate. However, I assure the Minister that the Committee will be diligent and thorough - as he would expect - in examining the detail of the Bill and it will, if necessary, suggest amendments at Consideration Stage.


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