Review of Opportunities for Public-Private 
Partnerships in Northern Ireland

Go raibh maith agat, a LeasCheann Comhairle. It was heartening to hear the First Minister say earlier that private finance initiatives (PFI) or public-private partnerships (PPP) are not a panacea and to hear other Members say that they are not the only horse or show in town. I was afraid that those of us who opposed PFI might be accused of being Luddites.

The Conservative British Government of John Major launched PFI in 1992, and the original motivation behind it was to reduce public expenditure in Britain at a time in the early 1990s when public borrowing was perceived to be out of control.

The British public sector budget had a surplus of £20 billion in 2001, but that did not inhibit the uncontrolled progression of PFI. One would expect that, with that huge surplus, the critical issue of public expenditure would be well under control. However, it seems that PFI has become a means of replacing public expenditure rather than adding to public services.

There are enormous questions around PFI that have not been studied, answered or resolved. Everyone seems to take the view that "if the money is there, why not use it?" However, they have not considered the serious consequences. The First Minister said that he had met school teachers and others who considered PFI to be praiseworthy, as it allowed them more time to run their schools rather than be concerned about replacing old buildings, about the fabric of the building, or about looking for new buildings.

However, the British Medical Association said that, apart from the evidence on beds and doctor numbers, PFI health provision has led to questioning every service provided. As a result, prolonged and expensive treatments have been withdrawn, and care is concentrated on patients who are broadly healthy rather than on the chronically sick. Expensive treatments such as maternity and accident and emergency treatments are reduced. Those who can afford to buy insurance get private treatment, while those who cannot must wait for services that may never materialise. The number of people who die while on waiting lists for cancer care is a case in point.

In effect, PFI acts to put profit before people. It therefore acts to undermine the very foundations of socialised medicine and social services. That is at the core of my objection to PFI. Trade unions and workers in Scotland have successfully campaigned on the basis of their objections to keep workers out of PFI contracts so that they cannot be transferred to the private sector against their will. In Wales, ancillary workers such as cleaners and meal workers have simply been classified as clinical staff, which enables them to remain in the public sector under existing rules.

Yet officials in the Northern Department of Education are reportedly still telling education and library boards that all PFI projects must include the transfer of employees, who are, once again, primarily cleaners and meal workers. The privatisation of workers is the greatest source of private profit in many PFI projects, and there must be a strong suspicion that those who favour PFI are concerned that their projects will not be attractive enough to the private sector unless workers are transferred or made redundant. The protection of public sector workers may be the most important immediate task of the campaign against PFI.

The unions here said:

Those unions are the most vocal against PFI. Seamus Close said that public money is cheaper, but public responsibility is a major factor in how we approach the notion of PFI. We are not against increased spending on public utilities such as schools, hospitals and roads. However, we question whether it is cheaper to do that through public funding or through PFI. I argue that the latter is certainly more expensive. The evidence so far will confirm the notion that privately financed projects are more expensive than those funded publicly.

The strategic investment body is, I believe, the driver behind PFI. Have the voluntary sector and the unions been consulted on the matter? There are issues of accountability and planning. Where PFI has been introduced, the planning of public services has effectively been carried out by private companies without there being adequate accountability. For example, hospital bed numbers are reduced to make plans affordable without any concern for the knock-on effects for other parts of the Health Service.

The British Medical Association has shown that the health trusts running the first 14 hospitals in Britain that were built under PFI will lose a total of 3,700 beds, and that, on average, bed numbers will decline by 31%. A study carried out by a consultancy company that works for the NHS trusts and the Department of Health found that every £200 million spent on privately financed hospitals would result in the loss of 1,000 doctors and nurses. In essence, PFI drains money away from areas that need it more, thus increasing health inequalities.

We must take a serious view of PFI. There must be more consultation, particularly with the unions involved. For example, the Irish National Teachers' Organisation (INTO) has opposed PFI throughout Ireland. The INTO has not been adequately consulted about the effects of PFI's introduction on its members. Nor has there been sufficient consultation with trade unions in services such as hospitals and the public sector bodies that we have mentioned.

The main conclusion is that PFI is one of the most important social and economic policy challenges that the Irish people face. Attempts by both the Dublin and British Governments to displace public spending on important social projects with private finance would have a damaging impact on the fabric of our society, both now and in the future.

Private finance holds out the politically attractive prospect of "free money" with which to provide popular projects now. That is an illusion, because the profit motive and the bargaining expertise of business, not to mention the possibility of corruption, mean that society will pay greater costs in the future for the "free money" that politicians seek today.

It will be difficult to explain to the people who seek and deserve new hospitals and schools that PFI is an unnecessary illusion, but the resources that are required to provide for social needs must be made available. The Government have those resources, or can get them through more equitable fiscal policies, such as fair taxation, or through alternative ways to raise money, such as the issue of bonds.

We should not be deluded by PFI or PPP into thinking that this so-called "free money" will solve all our problems. Until we have a proper and comprehensive consultation and a thorough examination of experiences elsewhere, we should exercise caution in coming to any definitive conclusions about the benefits of PFI.

The debate has been interesting, and there has been a degree of maturity in the Chamber on the subject of PPP, at least until Mr Kelly's speech. Most Members have refrained from simply opposing a proposition out of financial orthodoxy. We have refrained from applying a sort of financial fundamentalism to public administration and finance. However, listening to Mr Kelly's speech, I became confused as to whether he was a member of Sinn Féin or a member of some other party.

The reality is that the Sinn Féin Ministers are the most dedicated to PPP and PFI. They are the people who have most relied on PPP. It is a matter between Mr Kelly and his Colleagues in Sinn Féin as to whether those differences can be satisfactorily reconciled. Listening to his speech, I could not believe that they could possibly be reconciled. However, that is a political problem for Sinn Féin.

I do not know whether Mr Maginness has been listening. I was attempting to say that we must look at PPP and PFI more critically than we have done before. I am, and will continue to be, a member of Sinn Féin - [Interruption].

Order.

What I have said does not conflict with anything that the Sinn Féin Ministers have done so far. All we are saying is that we should have a critical look at PFI, and not accept it, as the First Minister said this morning, as some kind of panacea.

I am sure that Mr Martin McGuinness and Ms Bairbre de Brún are relieved that Mr Kelly is now in line with the Sinn Féin approach to PPP and PFI. Alarm bells may not be sounding in Sinn Féin over Mr Kelly's previous remarks, given that he has entered quite a strict qualification on his previous propositions to the House.

Members can check the record on that.

The SDLP's position on PPPs is not one of financial orthodoxy or financial fundamentalism. We accept that there is a need for PPPs, but it is qualified, not absolute. Strict conditions should be imposed. It is important that there is value for money. There is no point in having PPPs if they only serve to indulge the private sector and allow it to make excessive profits out of the system of public finance.

It is essential that there be enhanced value for the money used in PPPs. That money must be additional to public finances, rather than a substitute for them. The SDLP also believes that the benefits of efficiency and effectiveness should compensate the public for the outlay. Our goal is to see high quality public services that give value to everyone. If PPPs do not deliver that extra efficiency and effectiveness, they are a waste of time.

The SDLP also wants to see the protection of workers' rights in PPPs. We want transparency in how the Government decide on PPPs, undertake the selection process, and agree their contractual terms and conditions.

I share the reservations expressed by other Members in the debate, as does my party. I have reservations about the length, complexity and size of contracts. We want PPP contracts to be properly controlled; we cannot give the private sector contracts that allow it to evade proper responsibility.

The SDLP would like to see the Department of Finance and Personnel and the Executive explore the option of voluntary, or not-for-profit, bodies or companies for the public services. The Executive should also be exploring the use of bonds.

All types of enterprise involve some risk and some burden on our citizens, but there is nevertheless a variety of funding solutions for Northern Ireland.

As Chairperson of the Committee for Regional Development, I re-emphasise that there has been an enormous deficit in our road network, public transportation system and water service for the past 30 years. That deficit is grave and challenging, and both Members and Executive Ministers have a duty to address it. That duty includes exploring PPPs and PFIs to find out whether they can assist us in trying to remove that deficit so that we can rebuild public services in Northern Ireland. We need a cocktail of options, not only one source of public funding.

The SDLP also welcomes the creation of a strategic investment body, which will be useful in monitoring what is being done and in targeting what should be done. That body will be crucial in developing future public services.

The reinvestment and reform initiative, which was negotiated by the Deputy First Minister and the British Treasury, has been mentioned. Everyone welcomes that: it gives the Government greater flexibility as regards public finance. It will help us to rebuild public services and our physical infrastructure; however, it will not be the final solution to our problems. It will be of limited use because we need an income stream for it to be used effectively. It is essential that we do not overburden the ratepayer; that would be grossly unfair. Therefore, there is a limit to the reinvestment and reform initiative, and Members should bear that in mind. There are no easy options in relation to public finance. However, the SDLP believes that Members should explore as many aspects of public finance as possible.

We must explore PPPs and PFIs and apply them in the terms that I have outlined. In the Republic, PPPs and PFIs are used to rebuild the roads structure and transportation system. Some 1·2 billion euros, which is 20% of the road building programme, and 80 million euros, which is 13% of public transport, are PPP-based. Therefore, it is not only in Britain that PPPs are being used effectively. Our neighbours in the South also use them effectively, and we should explore that situation further. The Executive and the Minister of Finance and Personnel are right to come to the House to seek Members' views. We should give a guarded welcome to the report.

Go raibh maith agat, a LeasCheann Comhairle. It is a pity that a good debate was marred by cheap shots from Alban Maginness - I suppose that has more to do with the fact that Members are in election campaign mode than anything else. The Ministers are, unfortunately, working within financial constraints, and the British Treasury is pushing us down a particular road.

Sinn Féin is not alone in voicing concerns about the move towards reliance on private finance initiatives and public-private partnerships to finance public capital building programmes and the provision of public services. Sinn Féin, through the Chairperson of the Committee for Finance and Personnel, Mr Molloy, instigated an inquiry into PPPs and alternative ways to finance much-needed investment in public services, such as in hospitals, schools and infrastructure. That inquiry found that the best way to finance public services was through the public purse, using funds generated by general taxation, and, fundamentally, that public services should remain under public control.

Unfortunately, neither the review of opportunities for PPPs nor the Executive's consultation on 'Financing Our Future' have explored the full range of procurement and financial options. For example, the Irish Congress of Trade Unions (ICTU) statement to the review shows that the trade unions share that concern. It says:

We can look for explanations from around the world, and we can call the initiative PPP, PFI or anything we want, but it is privatisation of our public services to a greater or lesser degree. The Assembly is being pushed into accepting that option. We must remember the key point, which is that the public sector can borrow at a more favourable rate than the private sector. We must look seriously at alternatives. I shall suggest a few, but it is for the Executive to examine them.

The Member said that PPP was a form of privatisation, but it is an alternative form of public financing. It is really an alternative form of borrowing by the Government. Naturally, it has implications for workers and those involved in service delivery, but we must ask whether we would have the specialist cancer centre without PPP. If that centre is established in Belfast, will you regard it as a privatised cancer service?

I remind Members that they must put questions through the Chair.

We all recognise the difficulties and the constraints under which we must operate. Every Minister in the Executive is faced with the choice of whether to go down the road of PPP or PFI to provide essential services. My party and others argue that we should examine alternative means. We should not have to choose between PPP and nothing.

The people who carry out the review must look seriously at alternatives. For example, we should examine the possibility of the Assembly's borrowing from external bodies such as the European Investment Bank.

Of course, that should be subject to sensible economic calculations, such as expected changes in exchange rates. The problem is that British Treasury rules disallow all public bodies here from doing that. In European terms, that is highly unusual, and it is a tight restriction on the autonomy of public bodies, without any economic basis. If special provisions can be made for the North to borrow from the British Treasury, which the 2002 Brown/Blair initiative introduced, they should be extended to allow the Assembly to decide when, where and from whom to borrow.

Public bonds were also mentioned. Why should the Assembly not be able to sell bonds to the public at a guaranteed rate of return over several years? Public bonds have been suggested as a possible way to fund the London Underground, and they are regularly used by US cities to fund major projects. Crucially for our purposes, the British Treasury recently waived its opposition to bonds in order to allow Wales to modernise its water supply through that source of finance. Glas Cymru, a non-profit public company issued £2 billion worth of bonds to buy the utility that supplies water and sewerage services to Wales.

Will the Member give way?

I have already given way; I prefer to speak.

Public bonds are preferable to PFIs because lower rates of interest can be charged and public bodies can borrow at lower rates. Most importantly, capital investment projects such as hospitals and schools remain under full public ownership and management. In the case of Glas Cymru, bond funding was accompanied by an innovative management incentive scheme. The emphasis is on reducing the cost of provision by ploughing savings back into lower user fees, and managers are paid bonuses if they reduce costs to the public. That is the opposite of PFIs, which give incentives to managers to realise profits at the expense of the public and the workforce.

All parties here should campaign to persuade the British Treasury that we should have tax-raising and tax-varying powers to give the Assembly much more freedom to operate financially.

Does the Member agree with my earlier statement that, despite a surplus of £20 billion in 2001, the British Exchequer continued to use PFI to replace public expenditure instead of adding to it? Would she also agree, in case I am accused of being a Luddite by Alban Maginness, that professional associations, such as the British Medical Association, oppose PFI? It was described in the British Medical Journal as "perfidious financial idiocy" that could "destroy the NHS". The Chartered Institute of Public Finance Accountants, the National Audit Office and the House of Commons Committee of Public Accounts and the Health Committee have also criticised PFI in Britain.

I thank the Member for his intervention, and I agree with his comments.

I assume that tax-raising powers will involve taxing people's income or taxation in some other form. Does the Member suggest that taxes here should be increased - that the taxpayer here should pay more than in other places?

I am not suggesting any such thing. Tax-raising and tax-varying powers would give the Assembly much more financial freedom to operate.

Unfortunately, PFIs and PPPs are central to the British Government's plans for transforming the economy. They are inextricably linked to the Budget, the Barnett formula, the reinvestment and reform initiative, the strategic investment body, increases in rates, and the imminent introduction of water charges.

It is part of an effort by the British Treasury to tighten its control of our fiscal policy and to privatise public services. It is an agenda that is not being effectively resisted by an Executive dominated by the orthodox SDLP and UUP.

We do not have economic sovereignty; unfortunately it is subject to shrinking financial resources and unduly restrictive policy planning rules laid down by the British Government, which seriously compromise the capacity of the Northern Executive to meet local needs. The Assembly merely administers British Government policy within already set and extremely tight financial constraints and guidelines.

With regard to this report and 'Financing Our Future', I ask the Executive to go back to the drawing board, give us more alternatives, and let us try to be more imaginative in our approach.

I realise that the best funding that the Assembly can have is directly from the public sector. However, if I needed somewhere to live, but could not afford to pay for a house, I could rent one, take out a mortgage, or seek some sort of finance. There is a tremendous deficit in the overall infrastructure of Northern Ireland, which must be addressed. The Assembly must consider the current review of the possibility of PPPs and the different ways of using them.

I want to deal with four issues that arose during the debate. First, when the Committee for Finance and Personnel visited England, it saw that the Department of Health had a central unit that assisted health trusts to formulate contracts, including specifications, risk transfers, financial models, legal issues, and so on. It had a centre of excellence and expertise. We need to develop such a centre in Northern Ireland.

Many of our Departments have PPP units replicating costs, particularly for consultancy. Would it not be better to employ consultants to provide financial and legal expertise on a permanent in-house basis as in the Department of Health? The development of a centre of excellence, which could develop the necessary expertise, should be wholly cross-departmental.

Secondly, people have referred to the private sector gaining profit through PPPs. Naturally the private sector will not get involved in this for philanthropic reasons; it will seek to make a return on its investment. The private sector will make a profit regardless of whether we use conventional finance, the reinvestment and reform initiative or PPPs. However, we should not allow the private sector to lead the process or tell us when projects should commence. More especially, the private sector should not tell us which projects we should undertake. We must take the lead in all projects.

Thirdly, I want to deal with asset management. Mr Beggs and I have tabled questions about Northern Ireland's assets. The public sector has many various assets and, perhaps, we are not making the best use of them. Some might not be suitable for the purpose for which they are being utilised; others may be doing nothing for us. For instance, are our schools big enough, and will they be big enough in the future? What is the true condition of our water and sewerage systems? How much will it cost to bring them up to standard? There is now a cost to capital through resource accounting and budgeting. We need to know whether the concept that public finance is cheaper than private finance still applies, or how much difference there is. For example, what authority do the Executive have to sell off their assets and to use the receipts for future investments?

Members of the Committee for Finance and Personnel mentioned that little or nothing has happened since the publication of its report on PPPs. I tend to agree, but we must acknowledge what has happened. At departmental level, capital expenditure plans have been ongoing, and PPP plans have been developing. The weakness lies in the lack of a strategic approach at central level. That shows the long-term effects of short-term planning on resource manoeuvrability.

Some of the capital budgets allocated to Departments in the 2001-02 Budget have also featured in end-year flexibility. Would resources available in 2001-02 have been better spent at 2001-02 prices rather than being earmarked as rolling-on, end-year finance?

We need to have a strategic investment body up and running with a remit of examining current PPP and capital plans. The Committee made visits to see how other areas dealt with PPPs; we must learn from the mistakes and, indeed, the experience of others. I know of capital projects where the design, build and maintain concept has been a very effective way of ensuring a first-class product. It is a logical idea; the people who designed and built the project will also maintain it, so they will not do a sloppy job that will cost a fortune to maintain.

Some people are concerned that some projects undertaken in Northern Ireland may be too small. However, there is no reason why we cannot consider bundling projects; that is, bringing projects together to create a larger package that is attractive to the private sector.

I welcome the opportunities for public-private partnerships in Northern Ireland. The motion is particularly timely, as it comes at the end of the 'Financing Our Future' consultation and in the aftermath of the Report of the Review of Opportunities for Public Private Partnerships in Northern Ireland.

The consequences of years of underinvestment in public services can be seen today clearly. Although not the solution in themselves, public-private partnerships have great potential to dispel our huge investment deficit, which is projected to increase over the next decade.

A form of public-private partnership is already operating in the agricultural sector. Today's farmers do not have the same access to machinery or expertise as agricultural contractors do. A type of public-private partnership is formed whereby agricultural contractors employ farmers to do the job that they know best. People are taking the initiative to run a business. As my hon Friend mentioned, the people who erect buildings will maintain them and ensure that they are fit for their intended purpose.

Many European countries have seen a rise in the number of private finance mechanisms as opposed to traditional public procurement methods. However, it has been suggested that public-private partnerships are best suited to areas such as regional development to boost roads and general infrastructure, and for hospital development.

One concern about the use of public-private partnerships is the potential for unaccountability - partners could take on a mind of their own. The best way to prevent such unaccountability is for the public sector to maintain its monopoly of policy responsibility and control. However, the Government must co-operate with private bodies and work with those who often have excellent insight into what is needed.

Members are aware of the investment deficit in water and sewerage services. Problems have reached crisis point and can no longer be ignored. There have been many questions in the House on sewerage problems and the environment.

Mr Armstrong mentioned a crisis situation, suggesting that such crises are forcing us into forming PPPs. Interestingly, when we visited Dublin to explore this issue, one of the contributions was that PPPs were being approached there from a position of strength, with a strong economy. Rather than being forced into the situation, many of the capital projects that led them through to PPP/PFI were a matter of choice. I am sure that Mr Armstrong will agree that we must find a model that suits the system in Northern Ireland.

I agree that we have to explore all avenues and find a model that best suits the Northern Ireland economy. The crisis in our public services is highlighted by the Report of the Review of Opportunities for Public Private Partnerships in Northern Ireland. We must fully explore all alternative sources of financing. PPPs are seen as a more expensive option than conventional financing; however, they offer potential benefits. The working group noted that one advantage is that the contract mechanism ensures that the service is maintained to a specified standard during the lifetime of the contract. For example, penalties can be introduced for breach of contract.

No one solution, including PPPs, is likely to meet the many needs of Northern Ireland, which has higher levels of social disadvantage than the rest of the United Kingdom. I hope that this alternative source of finance for public services leads to the discovery of other such sources in Northern Ireland.

I found the debate valuable and interesting. I compliment Members on their contributions, whether they were supportive, critical or sceptical of PPPs.

Concerns were raised about the form of consultation. The 'Financing our Future' report was compiled by a representative group, which consisted of members of the trade union movement, the business community and the voluntary and community sectors. A very intense process of discussion and engagement took place, not just within the group, but with others. All aspects of the issue have been thoroughly considered by the working party. In that respect, all interested parties had the opportunity to have input to the report. Members who have read the report will note the reservations expressed by representatives of various sectors about it. Notwithstanding those reservations, however, the report has received broad support.

Since the report was presented to the Assembly in May, public consultation has proceeded. I chaired a public meeting in Belfast in June and found it stimulating and thought-provoking. It was well-attended and the discussion was very lively indeed. Several key issues were highlighted that must be borne in mind. Many were echoed by Members in this debate. In particular, our social partners, including trades unions, expressed concerns about public-private partnerships.

The meeting also provided an opportunity to clear up some of the misunderstandings about PPPs held by the public and other representative organisations. A panel of experts from the public, private and voluntary sectors and trades unions provided assistance. Other public meetings were similarly constructed. The junior Ministers represented the Office of the First Minister and the Deputy First Minister, and assistance was provided by the panel of experts, which was drawn from those who had helped to formulate the report.

The meeting was followed up by a meeting last week to hear the views of a delegation from the Northern Ireland Public Service Alliance, one of the largest trade unions to represent public sector workers. Some were critical of PPPs, and all views will be used to inform the policy-making process on their use.

Furthermore, I recently visited one of our operational school PPP projects to hear at first hand how it operates. It proved to be a valuable visit that allowed me to see the benefits to teachers and pupils of new accommodation with modern and well-maintained facilities. I learned how education is provided in the school and how its ancillary services are delivered.

That visit added to the experience that I gained with the Department for Employment and Learning, which uses PPPs to provide accommodation in the further education sector. Members who are familiar with the project in the North-West Institute of Further and Higher Education in Derry and the Belfast Institute of Further and Higher Education's recently opened Millfield campus, and who have kept an eye on projects to provide new accommodation in Omagh and Dungannon, will appreciate how such PPPs are being developed with the intense co-operation and involvement of the institutions and their representatives, as well as those who have brought the projects to fruition.

Despite our long experience of providing such facilities by the traditional route, we do not reflect on one striking feature of public-private partnerships: the close involvement of those who provide the facilities, buildings and services and those who use them. It is a partnership that potentially gives both sides greater influence and control over the project's development, not just until the doors open but also throughout the lifespan of the project. That contrasts with the traditional procurement route, whereby a facility would be handed over and, in a sense, that would be that. If the facilities were not up to scratch, clients might have to chase contractors for a long time to ensure that things were put right. By highlighting the problems with traditional procurement, I am not arguing that PPPs are always the correct choice. However, I ask Members to reflect on those experiences, to familiarise themselves with projects, especially those in their constituencies, and to learn from people's experiences.

Not everything has gone as well as was expected; however, that is also the case with traditional procurement. I hear frequently about bad experiences across the water from those who are more critical of PPPs. However, 25 projects have been delivered through PPPs in Northern Ireland, and none of the literature published by commentators in Northern Ireland that I have read contains detailed references to the local experience from which we could learn. I am not saying that we should not learn from experiences elsewhere. References were made to the South's experience. We were ahead of the South. In formulating its PPP policies, the South took advice from us and now it is ahead of us. We must take pride in the good elements of our experience and learn from those projects in which the experience was not so favourable.

PPPs have several key features. First, there is a need to standardise contracts. The approach to PPPs has been ad hoc, which is inevitable during the learning phase. However, in recent months, the Office of Government Commerce issued new standard contract documentation, on which Northern Ireland Departments and the other devolved regions were consulted, with the publication of a revised edition of the standardisation of PFI contracts, which is an update of original Treasury guidance. It is to be used throughout the UK and represents a significant step forward in establishing a standard approach to many of the issues that arise in private finance initiative projects. If we decide to make further use of the PPP route, the guidance will ensure that the process leading up to the signing of contracts is more expeditious.

As part of their consultation, the Executive will consider the adoption of the guidance, which is vital to speeding up the procurement process, spreading good practice and minimising development and bidding costs for Departments and the private sector. We must draw on the experience of projects awarded elsewhere, not just across the water but in other countries with extensive experience. Some people suggest that PFIs have been confined to Britain, Northern Ireland and the South. I invite Members to read the relevant literature that shows the widespread use of variations of PPP in many countries with different cultures and economic and social circumstances.

The phenomenon, therefore, is not peculiar to these islands.

The PPP review clarifies the scale of the deficit in infrastructure investment; almost every Member who contributed to the debate acknowledged that fact. That deficit amounts to £6 billion across all programmes. Innovation and creativity are required to find ways to bridge the gap in order to meet the future infrastructure needs of the region. The way in which we organise ourselves to meet that challenge is critical.

No single solution - be it the use of PPPs, borrowing or more traditional public expenditure - is likely to meet all our needs. In this major consultation on the report of the review of opportunities for PPPs, comments are invited on the full range of possible sources of funding and how those can best meet our needs. Some commentators believe that PPP funding is being promoted as "the only show in town", and to some extent that was reflected in the debate. However, that is far from being the case. If PPP were to fail to deliver best value and high-quality services, or if it were to put workers' rights at risk, I would not recommend it while I am responsible for the portfolio. PPP should be put into the context of the investment resources and possibilities that are now at our disposal.

The policy framework on the use of PPPs should take account of local needs and circumstances and ensure that continued use is made of the current capital budgets. Would that it could all be done through the current capital budgets. Members address this issue as though the current capital budgets can grow simply at the wave of a magic wand. However, when Members also suggest that we should have some fiscal autonomy such as additional forms of taxation at our disposal, they acknowledge that the only way to get additional money into the public purse is to ask the public to put it there. I trust that that is acknowledged fully when such points are being made.

It is recognised in the review that there are merits in the PPP approach to finding funding options to address some capital investment requirements. Other routes will be used for other aspects of capital requirement.

The Chairperson of the Committee for Finance and Personnel raised several issues, including a request for details about the reinvestment and reform initiative and the subsequent funding implications. The practical arrangements regarding the reinvestment and reform initiative are being developed, and the details of the borrowing must be settled with the Treasury. Borrowing to fund capital projects must be paid for from additional revenues.

When the reinvestment and reform initiative is advocated, it cannot be separated from the way in which that borrowing will be serviced. Mr Hussey illustrated that point well when he stated that when we make use of a borrowing facility to finance our homes, for example, we must be able to satisfy the lender that we have the capacity to service the borrowing. If we were to ask the Treasury to grant us a loan, we would be asking somebody else to help us to service that loan. That "somebody else" is the person on the street, whether he or she is in Belfast or elsewhere, or, as one of my ministerial Colleagues put it recently, is "the man in the Central Bar". I am not sure which bar he frequents, but he was referring to one of those kinds of establishments.

Borrowing to fund capital projects will have to be paid for from additional revenues. It would not be funded from the existing departmental expenditure limit, and the level of borrowing will, of course, need to be considered further by the Executive and the Assembly.

As has been mentioned by several Members, the relationship involving the strategic investment body, the procurement board, the Departments and the Department of Finance and Personnel, must be considered fully as we take forward work with the Assembly on the reinvestment and reform legislation and implement the initiative. It is vital that the various public bodies work constructively together to ensure that the infrastructure needs are met in the most effective and co-ordinated manner.

The idea of having a specific Minister with responsibility for leading on the investments was raised. No decisions have been taken on that matter, but Members should bear in mind that departmental Ministers have the responsibility of establishing priorities. We will be seeking advice from the strategic investment body as to the financing of the various projects. The House would not wish a single Minister or small group of Ministers to have the sole responsibility for driving forward a programme of investment that would take the prerogative of establishing priorities away from departmental Ministers. Therefore, teamwork is required, and that must be exercised in the Executive. Ideas will be brought forward when discussion takes place on the legislation associated with the establishment of the strategic investment body.

Mr Molloy asked about a strategy to embrace all the financing options. Some of the main funding issues, including the future of the rating system and the use of PPPs, are currently under public consultation. The Executive will consider the outcome of those consultations, and the work on the reinvestment and reform initiative, when setting their strategic plans.

The investment board will have a key role in advising on strategic planning of infrastructure investment, and we trust that its membership will provide the kind of experience and skills necessary to give the optimum advice to the Executive. In its membership, I expect the investment board also to reflect the interests of the social partners.

All PPP projects must demonstrate that they meet value for money criteria before being approved. The projects have long lives, and, as several Members mentioned, we must learn from experience and keep the projects under review to check that value for money is being delivered.

On the question, raised by Mr Molloy, of the capital resource held by Departments, the Executive are considering the level of capital spending as part of their work on the Budget.

As to the longer-term funding implications, which were also raised by Mr Molloy, the evidence from projects to date is that they are not an excessive charge, as they amount to less than 0·5% of the overall departmental expenditure limit resource Budget. Concerns were raised as to whether an inordinate level of debt might mount up, with the implication being that that would not be sustainable. That is a matter for the Executive, with the assistance of advice from the strategic investment board, to consider. It would be foolhardy of the Executive to simply extend borrowing beyond the capacity to service it. Indeed, if there were any attempt to do that, the Treasury would flash warning lights at a very early stage.

Mr Molloy and Mr Weir raised issues concerning the capacity of the construction industry, and deal flow, which are important points. One of the benefits of our strategic investment body is that it can engage with the construction industry when significant projects in which it is involved are being discussed to ensure that the deal flow can be managed. We do not want a situation to arise where we are signing up to projects that cannot be delivered. Members would be very critical if we were to do so.

Patricia Lewsley and Jane Morrice expressed concern about the potential of public-private partnerships to create a two-tier workforce. We are alert to that matter, and the working group dealt with it in some depth. It is important that we learn from our experience. No evidence of this phenomenon has emerged from our public-private partnerships. In our experience, no transferred workers have been made compulsorily redundant. The number of public-private partnerships is small, and -

Minister, you have only two minutes left to speak.

Many questions were raised, and if I do not touch on those in the time remaining, I assure Members that I will attempt to deal with them in writing.

Since the consultation on PPPs is the responsibility of the Office of the First Minister and the Deputy First Minister and of the Department of Finance and Personnel, I would like to thank Members for their views and comments on this important issue. We have had other opportunities to hear Members' comments, and I am sure that they will continue to make their views known to us as the consultation progresses. This debate will help the Executive to shape the policy on the use of public-private partnerships, and to deliver value for money and high-quality services. I was pleased to hear the importance of both emphasised strongly in several contributions.

The 'Financing our Future' consultation has helped to promote wide discussion on PPPs with social partners, the general public and the private sector on their potential roles in meeting our investment needs. People have genuine concerns about PPPs, as the working group and the consultation exercise have highlighted. We in the Office of the First Minister and the Deputy First Minister and Department of Finance and Personnel share those concerns, particularly those relating to employee and equality issues. We are determined that the policy that we finally adopt on the use of PPPs will address those fears. We want to achieve a policy framework for the use of PPPs that helps to deliver an investment strategy that will provide a much-needed public sector infrastructure that finds broad support among all stakeholders and social partners.

I thank Members for the debate.

Change of Committee Membership

Mr Deputy Speaker:

There are four motions on the Order Paper, in the names of Mr Bradley, Dr McDonnell and Dr Hendron. As these are business motions, no debate should ensue. Therefore, I propose, by leave of the House, to put the Questions on these motions en bloc.

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