Northern Ireland Assembly
Tuesday 24 September 2002
The Assembly met at 10.30 am (Mr Speaker in the Chair).
Members observed two minutes' silence.
I have received notice from the Minister of Finance and Personnel that he wishes to make a statement on the draft Budget for 2003-04.
The Minister of Finance and Personnel (Dr Farren):
With permission, Mr Speaker, I wish to make a statement on the Executive's public spending plans for the next three financial years. For the first time, the Executive have agreed spending allocations that will take forward our distinctive priorities for the next three years, with some radical changes from the pattern that existed prior to the agreement and devolution.
The theme of the draft Budget, which I am presenting on behalf of the Executive, is reform. Our intention is that the plans, alongside the reinvestment and reform initiative, should set a new and better basis for the development of effective public services. The draft Budget includes provision for the substantial cost pressures affecting the Health Service, which is the agreed priority of the Assembly, and for some vital improvements in its services. It provides for important new developments in education, sport and agriculture. We have developed a new way to ensure that Invest Northern Ireland (INI) has the resources needed for industrial development. The Budget also addresses the problem of underspend, and it will provide a better basis for the stable planning of public services.
However, that is not the entire story of all the opportunities that the Executive are creating. Later in the autumn there will be new plans, under the reinvestment and reform initiative, to address the infrastructure deficit. Those will be developed more in the light of our consideration of the points emerging from the review on rating policy and the "Financing Our Future" consultation exercise, which are concluding. This will be the main means of enhancing the remaining priority programme of roads and transport and the wider issue of infrastructure, which includes essential provision for water and sewerage services.
I will start by placing my statement in the formal context of the approach to planning that is set out in the agreement. The proposals are made on behalf of the Executive. We have had detailed and, at times, difficult discussions about them. Each Minister who has attended the Executive has participated in thoughtful and constructive discussion on the public services that we oversee. I also had helpful bilateral discussions with the Minister for Regional Development and the Minister for Social Development. The fundamental assumptions that underlie the proposals, and especially the approach that we are taking to the infrastructure issue, have been fully discussed with all Ministers.
In accordance with paragraph 20 of strand one of the agreement, the Executive agreed a draft Programme for Government, incorporating an agreed Budget, at their meeting on 19 September 2002. The spending plans have been designed to deliver the priorities and actions in the draft Programme for Government that was presented to the Assembly yesterday by the First Minister and the Deputy First Minster and which will be subject to debate later today. The programme has set the context for our budgetary decisions.
In line with section 64 of the Northern Ireland Act 1998, I am today laying the Budget for 2003-04 before the Assembly on behalf of the Executive, for scrutiny and approval after examination and debate in the Committees and in the Chamber. The draft Budget sets out spending plans for the three years from 2003-04 and shows how we propose to use the funding that is now available following the Chancellor of the Exchequer's announcement about the outcome of the spending review in July 2002.
Obviously, we cannot bind the next Assembly. As required by the 1998 Act, specific Budget proposals for the year ahead will continue to be brought forward each year. However, we hope that the three-year plans announced today will set a more stable framework for planning that will help Departments and other public bodies to make the best possible use of the resources that are available to them - subject to the process between now and December. The plans can, of course, be refined and amended in the light of changing circumstances.
As ever, we have had to live within the resources that are available to us. That means that we are not able to take forward all the areas of work that we would wish to. All Departments face serious pressures in meeting the demands and expectations of the public, and the Assembly, for high standards of public services. However, the choices that we have made will, I believe, provide a good basis for the future.
It is clear from the way that we have worked together on important issues over recent weeks that the institutions work, with strong commitment shown by all Ministers to the services for which they are responsible, including their Departments and the North/South bodies. The draft Budget shows that the agreement and devolution can work, and that means that we can ensure that the decisions that matter most to the people of Northern Ireland are taken in the Assembly and in the North/South Ministerial Council. The Executive have taken a major step forward with the preparation of the three-year plans, the publication of which is a visible demonstration of collective working by a unique Administration. We must act radically to ensure that public services are being delivered as effectively as possible. Reform is a major theme in the draft Programme for Government published yesterday. It is at the heart of the Executive's draft Budget proposals.
The Assembly has enormous responsibilities to ensure that there are real changes in the way in which services are delivered. The agreement sets out some guiding principles that we must promote, such as real equality of opportunity for all in our community. We have to celebrate and sustain the dedication of the public sector and ensure that the contribution that we draw from the private sector is appropriate and that it is accountable. Our view of partnership includes working with the voluntary and community sectors to promote real benefits at local level in social and economic development. Every sector has expertise and commitment to contribute. We need to find ways of working that draw the best from all who can play a part, and motivate them to serve the public interest.
The reform agenda includes looking hard at the scope to cut out waste and reduce bureaucracy. Resources are never sufficient to meet the needs and aspirations of our people. We must manage programmes so that taxpayers can see that they are getting value for money. We need to pay attention to what the Public Accounts Committee says about the delivery of services. The Executive are zealous for action to be taken to improve and reform administration. A key part of the reform agenda will be the review of public administration, which will ensure that we act to modernise our structures and management of public services. That, alongside radical change within the 11 Departments, can and must streamline our ways of working. That is why every proposal in the draft Budget is subject to the preparation of satisfactory reform plans by all Departments by the end of October.
Let me be clear: the allocations for any programme could change upwards or downwards as a result of that further work. That includes the general testing for best value for money that always applies to any spending allocation - through the appropriate use of appraisals and business cases - to ensure that we make the most effective use of all the resources available. We recognise that Departments are already pursuing ideas and practices, but a step change is also needed. Preparing those plans will not be a problem when actions are being developed and pursued. Far from requiring a new bureaucratic exercise, I see that as a combination of new actions as well as a compilation of innovative and creative actions already under way - not least, action to make public service agreements more effective tools to focus management on what the Executive and the Assembly want to see achieved.
I have my own ideas on how to promote the efficient and effective delivery of public services, and I will discuss those with Executive Colleagues in the near future. The approach to reform should include a better and more open definition of how services will be delivered to the highest possible standard by a better focus on outputs and outcomes. To emphasise the links, the targets in the public service agreements are set out in the draft Budget document for the first time.
The reform plans will have to include clear evidence that the problem of rising administrative costs is being addressed. Substantial increases were necessary, given the fundamental changes in the system with the creation of the new institutions and the major workload increases that resulted. We also need to recognise that substantial costs arise as a result of the demands of the Assembly and that some increases are vital as part of how we implement the services that we provide to the public. However, that needs to be examined rigorously, and I have set out clear plans for challenges to Departments on that front.
I, therefore, propose that we take a new approach. We need to differentiate between costs that arise, mainly in agencies, from providing services to the public or in support of those functions and the central functions within Departments that are about the conduct of policy, planning and accountability to Ministers, the Assembly and its Committees, and related support services.
In the case of agencies, we shall require all Departments to show what has been done to ensure that those business areas have become more efficient over the last three years and what is planned for the future, expressed in the form of clear targets. The Executive expect those to show improvements of at least 2% a year on an appropriate measure of efficiency, or significantly more in some cases. In some cases, however, there may be workload increases where savings are reinvested in service delivery.
For departmental cores, we must ensure that there are real improvements in the way we do business, without exacerbating the very real demands that have been placed on the system. The Executive have, therefore, on my recommendation, decided to ask Departments to examine the implications of a 1% reduction in the running costs of departmental cores.
The Executive have decided to take forward positively the opportunities presented by the reinvestment and reform initiative. Projects to the value of £270 million, using the initial funding available, have already been announced, and it is vital to continue the momentum. This draft Budget is the first time that there has been a real choice in how to address the infrastructure issue. There can be no doubt that a way must be found to resolve the serious deficits that we have inherited. The sewerage system is simply inadequate for a developing society. The changes necessary in the health sector include major hospital developments. The regional transportation strategy sets out a major programme of investment, elements of which are essential to underpin the development of the economy, and too many schools remain in poor and decaying premises. Those are real problems that impact on the people we serve.
We looked hard at the cuts in recurrent services that would be necessary to start a substantial investment programme using only the spending power of the departmental expenditure limit (DEL), without borrowing under the reinvestment and reform initiative or the use of public-private partnerships (PPPs). It became very clear that such an approach was not realistic.
That alternative looked superficially attractive to the Department for Regional Development, in that the DEL would have been skewed significantly towards that Department, which has the largest infrastructure backlogs. It is clear, however, that substantially more could be done for transport and water with the reinvestment and reform initiative than without it.
It is a delusion to believe that we can solve those problems without the use of the reinvestment and reform initiative. Even if we achieve - as we must - substantial improvements in efficiency and delivery of services, and manage public assets much more effectively, the DEL on its own will not suffice.
Thus, a vital foundation for the draft Budget is that the necessary increase in infrastructure investment will come from the borrowing power available through the reinvestment and reform initiative and/or public-private partnerships. The Executive will consider shortly how PPPs, as one - but only one - possible means, can contribute to the solution, assuming that an acceptable policy framework can be set. Such a framework must also take account of the genuinely held concerns about the rights of transferred workers. The outcome of consultation must be considered before that can be taken any further. I am determined that we do not simply operate a hand-me-down PPP approach from London. Moreover, any decision must be based on a very careful consideration of the resources necessary to service PPPs.
Borrowing under the reinvestment and reform initiative will depend on generating sufficient revenue to provide the income stream to service the necessary finance. If the Executive and the Assembly decide to follow the route provided by that initiative, we must meet the Treasury's condition that there must be some change in our level of revenue. It would not, however, be fair to pursue that change through the existing domestic rating system, and, therefore, I reassure Members that the regional rate will not be increased above the pattern of recent years unless, and until, a fairer system is in place. For 2004-05 and 2005-06, we must reflect carefully on the comments on the review of rating policy and determine a fair and appropriate means of securing access to borrowing to ensure that a realistic capital programme can be established.
It is not possible, therefore, to set definitive targets now for the levels of borrowing or for the use of public-private partnerships. Too many important issues of policy and practice need to be considered first. Hence, the draft Budget covers only part of our spending plans, albeit the largest part. Later in the autumn, with the assistance of the strategic investment body, and building on proposals from the Committee for Finance and Personnel, we will follow it up with a fuller Executive investment strategy that will draw upon the outcomes of the review of rating policy and "Financing our Future" consultation exercises.
Thus, the provision in the draft Budget for infrastructure for 2004-05 and 2005-06 is not sufficient or satisfactory, and the allocations shown in the draft Budget document should be seen in that light. More is needed for the capital programmes for roads, hospitals, water and sewerage, schools, further and higher education and economic infrastructure. However, more funds will be made available through the new opportunities created by the reinvestment and reform initiative.
(Mr Deputy Speaker [Mr McClelland] in the Chair)
Reform is also at the heart of the infrastructure programme. The First Minister and the Deputy First Minister will introduce legislation soon to create a strategic investment board. The board will secure innovation and expertise in the development and financing of capital programmes to support and sustain the Executive's most urgent strategic projects and priorities.
The draft Budget represents an important stage, because our foundation for setting priorities is much better than before. Two years ago, it was more difficult to break away from previous patterns, partly because we did not have the necessary analysis of the spending programmes. Last year, we began to chart our own course, and we carved out £125 million from the indicative allocations for 2003-04 to ensure that this year we would retain the maximum scope to set our own distinctive priorities.
Over the past months, the Executive have carried out a series of needs and effectiveness evaluations, covering health and social care; education; financial assistance to industry; housing; and vocational education and training. The relevant Assembly Committees have assessed the findings, and a further study is progressing on culture, arts and leisure. The studies were important in helping the Executive to judge the effectiveness of the delivery of our public services. They have also helped us to determine the extent to which the Barnett formula is meeting our needs and have pointed to areas where there is scope for improving the way in which we deliver services.
Inevitably, there is a tendency to focus on the findings that emerge from these studies on how spending here compares to that in England, and we will provide updated figures on that shortly. However, I urge everyone to look at the other findings just as carefully, especially those that deal with effectiveness issues, and to remember that we have no intention of simply replicating English patterns of public service resourcing.
The needs and effectiveness evaluations help us to judge priorities and ascertain what must be done to improve effectiveness, and they will strengthen our work on reform. In the light of all the evidence, we have agreed that we should continue to prioritise health, education and transport, and we must also take full account of the urgent need to address the funding of water and sewerage services.
The settlement that we have received for the next three years is based on the Barnett formula. Our concerns about that are well known, and we presented a strong case to the Treasury during the spending review. Our case for reforming the Barnett formula rests on the fact that it does not give us sufficient resources to match the level of development of public services that is happening in England, especially in the present period of rapid growth.
However, we should not underestimate the importance of Barnett to the Treasury. We must be aware that many in England see it as far too favourable to Northern Ireland. Their argument is that our spending is the highest of any region, and the revenue raised is well below the English average. Our figures suggest that we will only fall behind English resource levels, when need is taken into account, over the years ahead. Given that, it is wrong to assume that making the case against Barnett is easy. Discussions are, of course, continuing, and I met the Chief Secretary to the Treasury, Paul Boateng, again last week during his visit to Belfast. I have also written to him, with the Executive's agreement, to press for further work to be done on some matters between now and the next spending review.
The spending power that is available for services here was largely determined in the Chancellor's spending review announcement of July. That announcement included additions through the Barnett formula of £127 million in 2003-04 for resources, rising to £809 million in 2005-06. There were also capital additions of £22 million in 2003-04, rising to £122 million in 2005-06. Those are the first spending plans to be set on the full basis of resource budgeting, with the opportunity cost of capital and depreciation included in the departmental expenditure limit.
The spending review outcome has provided for 5·9% annual average growth for the Northern Ireland Executive's departmental expenditure limit. While many of the costs that affect public services are rising at a faster rate than general inflation, that builds on the allocation of 5·8% in 2002-03, or around 3% above general inflation, and the 5·5% real-terms increase in 2001-02.
We must leave no room for doubt that we are making the best of the resources that we have available. I have already explained our intentions for reform and review of administration costs. However, we can also act to make better use of assets and address the problem of underspending.
Departments and other public bodies have substantial asset holdings. We are working to bring together improved information about those to ensure that asset management is improved.
The strategic investment board will have a key part to play, and its work must begin without delay. The task will include preparing a useable summary of the asset holdings of Departments to provide a clear picture of all assets that could be recycled or used in different ways. With the assistance of the board, exacting targets will be set to ensure that surplus assets are sold and that Departments and their public bodies retain only those assets that are essential to their core business.
While that work lays the ground for a detailed examination of our asset holdings, action must now be taken to ensure that the scope to recycle assets sales is maximised in the shorter term. It has been agreed that targets for assets sales will be included in the draft Budget, amounting to £9 million in 2003-04, £10 million in 2004-05 and £12 million in 2005-06. Targets will be set for specific Departments in the revised Budget.
The problem of underspending must also be addressed. It has proved useful to have in-year savings to help address new pressures as they arise, such as winter pressures in the Health Service, or an outbreak of foot-and-mouth disease. However, the present pattern means that resources are being drip-fed rather than spent on a planned longer-term basis and thus cannot be used as effectively.
The draft Budget sets out a radical approach to the problem. First, the right priorities must be set to ensure stable plans. That has been achieved in the draft Budget this year, due to the improved foundations available from the needs and effectiveness evaluations. I previously placed before the Assembly the key actions the Department will be taking on underspending, which will include a tougher challenge to sectors where high percentage underspends recur.
A further key step is to recognise that a degree of underspending is inevitable. The Executive have, therefore, assumed that that will continue to some extent and have decided, when making allocations to programmes, to anticipate an underspend of at least £80 million in 2003-04 and £75 million in each of the following two years. Spending plans will be set at a level that exceeds the spending power available through the departmental expenditure limits, in the knowledge that Departments will undershoot by at least those amounts. I have weighed this approach carefully and am satisfied that it is prudent.
We expect to have less room to manoeuvre in monitoring rounds, and there will be less end-year flexibility from now on. All Departments must, therefore, manage the resources that emerge from the Budget process on the basis that each allocation is a limit and that resources must be managed so as to avoid any risk of exceeding that limit. The positive effect is that priority programmes will have a better, more stable basis for planning and will not have to rely on a drip feed of resources via monitoring and end-year flexibility.
Before considering the proposals for each Department, I will say a little about the Executive programme funds, which are a key element of the Executive's determined strategy to ensure that spending plans are adjusted from previous patterns and that money is spent in line with the Executive's strategic priorities, as set out in the Programme for Government. The Executive programme funds are designed to promote cross-cutting work to enable proposals and initiatives to be brought forward for consideration by an appropriate group of Ministers, working together. The special allocations from those funds, managed and approved at Executive level, have made a real difference from previous patterns of expenditure.
In the draft Budget, we have decided that some key policy initiatives and developments should be funded from the Executive programme funds, ahead of the routine round of bids currently under consideration. Those include the vision group strategy for agriculture, new action on student support, some key interventions in the Health Service, and the Department of Culture, Arts and Leisure's sports strategy. We also agreed that some actions funded originally from Executive programme funds should continue to receive funds from that source in 2004-05 and 2005-06. Although that would leave less money for new proposals, we would seek to restore the Executive programme funds totals if new resources become available.
I now turn to the main features of the departmental allocations. The proposed allocations are driven fundamentally by the priorities that the Executive set, which were agreed by the Assembly, and by our essential responsibilities. The available resources fall short of Departments' bids and of the growth rate of expenditure in England. Although there is substantial growth in the departmental expenditure limit, the extra money is largely required to sustain basic services.
I shall keep my comments on each Department's position brief. More comprehensive details can be found in the departmental sections of the draft Budget document, which Members have received, and Ministers will provide further details in due course.
The proposed allocation to the Department of Agriculture and Rural Development represents an increase of 13% for 2003-04 on the allocations for 2002-03. The Executive decided to allocate amounts from the innovation and modernisation Executive programme fund, rising from £6 million in 2003-04 to £18·3 million in 2005-06 for the implementation of the vision group report. My Executive Colleagues and I are firmly committed to funding adequately the implementation of that significant strategic report. The Executive will consider further the precise details of the action plan for the vision group report later in the autumn, ahead of a fuller announcement by the Minister of Agriculture and Rural Development. The aim is to develop a secure, well-trained workforce and a focused agrifood sector that would enable the industry to compete more effectively. The proposals would also provide the Department with a more realistic baseline for its animal health responsibilities.
The Department of Culture, Arts and Leisure would receive £96·6 million in 2003-04 - an increase of 9·9%. The draft Budget would enable that Department to develop several key initiatives, including the implementation of its sports strategy, which is important to many in the Assembly. The strategy includes action on safety at sports grounds, measures to increase participation, and a new soccer strategy aimed at developing the game in Northern Ireland.
The proposed allocations for the Department of Education would see expenditure rise to £1528·6 million in 2003-04, an increase of 6·6% on the allocations for 2002-03. That figure includes allocations announced previously from the Executive programme funds and the reinvestment and reform initiative. The allocation would rise further to £1597·5 million by 2005-06. Given that the school population is falling significantly, that allocation shows that we continue to treat school budgets as a key priority.
Further support will be provided to improve the capacity of schools to achieve further improvements in pupil performance, and for the implementation of revisions to the Northern Ireland curriculum.
Recently announced allocations from the reinvestment and reform initiative will help address the backlog in schools' infrastructure needs. Indeed, our schools estate is expected to be a major beneficiary of future funding by the reinvestment and reform initiative.
The draft Budget would provide the Department for Employment and Learning with £669·8 million for 2003-04, representing an increase of 6·2% since 2002-03, and projected to rise to £714·7 million for 2005-06. The allocation would enable the Department to maintain existing commitments to higher and further education and student support, and employment programmes would be broadly maintained. It includes allocations from the Executive programme funds to meet the cost of the student support review, beyond 2003-04, at the levels agreed by the Executive in 2000. The allocation would also provide for improved student support arrangements, to widen access to third level education for students from lower income families through changes to income thresholds and increases in the level of grants. This shows the Executive's commitment to improving equality of opportunity and to targeting social need as our key priority for higher education. We are also providing for further investment in the essential skills strategy, to tackle literacy and numeracy problems as identified in the work of the employability task force.
The Minister of Enterprise, Trade and Investment suggested a radical approach to the planning of resources for his Department, which we have adopted to reflect the reality that it is difficult to predict in advance its needs and opportunities for industrial development support. Instead of setting a single fixed budget for each year, the plans are expressed as a range.
The approach makes allowance for the fact that much of the selective/financial assistance business of Invest Northern Ireland is subject to volatility, which makes it difficult to fix precise budgetary allocations at the planning stage. This approach is intended to confirm that resources are, and will be, available if projects emerge for which financial assistance would be effective and beneficial, while removing the need to tie up resources that the Department of Enterprise, Trade and Investment may not ultimately require - that would have limited the scope to allocate adequate budgets to other priorities.
The range between the minimum and maximum figures will be £40 million in 2003-04 and £50 million in each of the two later years. For 2003-04, the high end of the range is higher than the budget for 2002-03, and is probably the maximum that could be required in the present economic climate. This commitment would be underpinned by the Department of Enterprise, Trade and Investment having a guaranteed first call on funding in-year up to the high end of the range, to support investment projects offering value for money that would not be otherwise affordable within the minimum Invest Northern Ireland budget. We are adopting a similar approach to the jobskills and New Deal budgets for the Department of Employment and Learning.
The budget for my own Department would provide funding of £165 million for 2003-04, rising to £184·6 million for 2005-06. This would enable the Department of Finance and Personnel to maintain service levels to the public and other Departments, meet inescapable increases in rent, rates and fuel costs, and maintain the overall office estate. It would also provide the resources necessary to ensure the continued effectiveness of key systems to meet the objectives of the Executive for modern public services and ensure fair and efficient systems for raising local revenues.
The largest single programme within our departmental expenditure limit is, of course, the Department of Health, Social Services and Public Safety. The draft Budget would see expenditure by that Department rise by 13.6% since 2002-03 to £3,060·9 million in 2003-04.
That includes allocations announced previously from the Executive programme funds and the reinvestment and reform initiative. This is undoubtedly the lion's share of the Budget and shows clearly the priority we have given to the Health Service. The year-on-year increase for health in England for 2003-04 is 10%, so we have acted to close the gap. This has meant adding very substantially to the resources read across from the Health Service in England via Barnett - by amounts rising from around £70 million in 2003-04 to over £100 million in 2005-06. This shows both the problem with Barnett and the extent of our commitment to health as a priority. With less, we have done more.
In 2003-04, this would provide an additional £365·4 million - [Interruption].
Mr Deputy Speaker:
Order. Mr McCartney, if you wish to indulge in a prolonged conversation, please do so outside and not in the Chamber.
Go away -
Mr Deputy Speaker:
Mr McCartney, I will not speak to you again.
In 2003-04, this would provide an additional £365·4 million in resources compared to 2002-03. That is a significant increase, most of which is needed to meet the particular cost pressures facing the Health Service in the coming year. The proposals would enable the Department not only to maintain its services, at an additional cost of £284 million, but also to invest in some key service enhancements, including major capital projects such as the building of the new regional cancer centre. In the future we expect that the Department will be able to make major inroads into tackling the historical infrastructure deficit throughout the health and personal social services and the Fire Authority estate through the reinvestment and reform initiative.
The plans earmark resources to tackle the problem of waiting lists and to invest more in intermediate care and primary care. That would help free up acute hospital beds, easing the pressure in the acute sector. Additional resources are being made available for the care of the elderly, for those with mental health problems and learning disabilities and for children's services. The message of the draft Budget is clear: The Executive are putting the Health Service very clearly at the top of their agenda.
As with other spending areas, the plans for health and personal social services will involve a major programme of reform. This will build on the recent policy and operational proposals discussed by the Executive, including changes in acute hospitals, primary care, the board/trust structures and health promotion.
The draft Budget would provide an increase of 10% in 2003-04 for the Department of the Environment above the 2002-03 allocation. That would enable the Department of the Environment to advance work on the implementation of EU Directives, including those on waste management, thus reducing the risk of infraction proceedings. Increases to the district council resource grant enable the level of support to district councils to be maintained, particularly for those with low revenue bases. That will allow them to maintain services without unacceptable rises in rates.
The draft Budget would provide the Department for Regional Development with £591·2 million for 2003-04, an increase of 4·3% over the 2002-03 allocation. That includes the allocation for that Department announced in July from the first round of decisions from the reinvestment and reform initiative. The proposals for 2004-05 and 2005-06 are affected by the fact that we have not settled precisely how we will continue the reinvestment and reform initiative investment programme for infrastructure projects beyond 2003-04. The draft Budget assumes that the increases in the Department for Regional Development's capital investment requirements for 2004-05 onwards would be met substantially through the reinvestment and reform initiative. That would begin to address many of the pressures on the Department for the improvement of the water and transportation infrastructures.
The proposed allocations would allow the Department for Regional Development to advance some transportation infrastructure improvements in 2003-04 in support of the regional transportation strategy. It would also allow the Roads Service to enhance its Programme for Government targets for structural maintenance and to commence some minor road projects.
The draft Budget proposals would allow the Water Service to improve water quality and waste water treatment to meet public service agreement compliance targets, to construct a cryptosporidium barrier and to reduce water leakage. In the future, the reinvestment and reform initiative should enable significant extra resources to be made available for infrastructure, and I look forward to the outcome of the Minister for Regional Development's continuing study of the future needs and structure of the Water Service.
The Department for Social Development would be provided with resources in 2003-04 of £569·5 million, an increase of 4·2%, rising to £616·3 million by 2005-06. That substantial increase would enable the Social Security Agency and the Child Support Agency to proceed in parity with GB and to deliver the welfare reform programme, which includes the introduction of the new "card at the post office" arrangements for the payment of social security benefits as part of the replacement of existing paper-based systems.
The Department for Social Development would be able to fulfil the requirement to augment its special needs management allowance budget to assist people who require support to live in their own homes. It would also be able to meet its target of new housing starts in the social sector and to make an in-depth study of how well the pilot group housing schemes meet the needs of travellers. There would be provision to help alleviate fuel poverty through the warm homes scheme, which is aimed at people in need in owner-occupied and private rented accommodation, in parallel with the similar initiative in the public sector that is already proceeding under the reinvestment and reform initiative.
For the Office of the First Minister and the Deputy First Minister, the draft Budget proposes departmental expenditure totalling £38·6 million in 2003-04, rising to £43·3 million in 2005-06. That would fund the review of public administration and enable the establishment of the office of the commissioner for children and young people with the roll-out of the 10-year strategy for children and young people.
It would enable the Office of the First Minister and the Deputy First Minister to meet the important Programme for Government commitment regarding the needs of victims and to take forward the single equality Bill and the additional duties imposed on the Equality Commission.
Some £3 million a year will be needed to take forward the emerging community relations strategy that deals with the acute problems currently faced in north Belfast. I am not proposing to set aside mainstream provision for that now, as many aspects must be clarified. However, I will be strongly recommending that the necessary resources should be provided from the Executive programme funds when they are required.
Finally, the Budget proposals include provision for the Northern Ireland Audit Office, the Assembly Ombudsman and Commissioner for Complaints and the Office for the Regulation of Electricity and Gas. Provision has also been made for the Assembly itself, though I have not as yet received a detailed breakdown of requirements across the three years. Accordingly, I recognise that some additional provision may need to be made for the Assembly within the revised Budget.
Those are the main features of the spending proposals. As well as the Treasury allocation for Northern Ireland, the plans are supported by the revenue from the regional rate.
This year the Executive agreed to keep increase levels in line with the pattern of recent years. Their proposed increases are 6% for the domestic regional rate and 3·3% for the non-domestic regional rate. That decision recognises that the cost of public services is rising much faster than general inflation. However, it is in line with our commitment not to increase the rates above the pattern of recent years until we have considered in detail the outcome of the rating policy review.
This morning we begin the most important stage of consultation on the spending plans for the next three years. Once again, in response to recommendations from the Committee for Finance and Personnel last December, the Executive have fulfilled their commitment to make Budget proposals straight after the summer recess to maximise the Assembly's opportunity to fulfil its scrutiny role as envisaged in the agreement and in section 64 of the Northern Ireland Act 1998.
The First Minister and the Deputy First Minister presented the Executive's position report to the Assembly on 5 June. The Executive sought views from the Assembly and the community about the key issues affecting public services. Although the timetable has been tight, we received many thoughtful contributions, which influenced our thinking as we constructed the Programme for Government and the draft Budget. I am especially grateful to the Committee for Finance and Personnel for the attention that it paid to those issues. Once again, the Committee's commentary on the position report has been particularly helpful, and other Committees have commented extensively.
I am grateful for the positive contributions that we have received from social partner organisations and other interested parties. We will reflect carefully on the suggestions and look forward to further responses on the draft Budget.
Last year we received valuable input during this phase, and I look forward to further informed discussion, debate, and, in particular, Committee scrutiny of our spending plans and proposals as set out in the draft Budget. The Committee for Finance and Personnel has a role in drawing together and facilitating the consultation. That process will include opportunities for debate in the Chamber on the Programme for Government today, and on the draft Budget in a few weeks' time.
Today's statement is also the start of a wider consultation process. The draft Programme for Government and Budget will be circulated widely to the Civic Forum and our social partners in business, the trade unions and the voluntary and community sector and will be made available to other interested individuals and groups.
The draft Budget marks an important step forward for our new institutions. Our previous Programmes for Government and Budgets marked the beginning of a move from pre-devolution patterns and priorities. This Budget, with its emphasis on reform, represents a radical departure.
In conclusion, I reiterate the four main characteristics of this Budget. First, it is reform-driven. Secondly, it represents a radical departure from previous spending plans to meet the priorities established by the Assembly. Thirdly, it is developmental. We are doing more than simply maintaining existing services; we are developing new services in key areas. Fourthly, the Budget recognises that we still have unmet needs and inadequate resources. I shall continue to make the case for a full and rigorous examination of the Barnett formula. Taken together, those four elements put in place a framework for our spending plans for the next three years and lay the foundations for the delivery of better services with resources directed where the needs are greatest.
We are determined to introduce and promote reform across Government. That will not be easy. It represents a real challenge, which we are pursuing with determination.
I commend the Budget proposals to the Assembly and invite Members to consider them carefully. I look forward to working with the Assembly to complete the process of settling the spending plans in December 2002. The proposals represent a major step forward for the Administration and are a clear manifestation of the benefits for local people that arise from the agreement.
The plans outlined in the draft Budget represent the outcome of the lengthy and intense process of discussion and negotiations that involve all ministerial Colleagues - those who do not attend Executive meetings as well as those who do. The process and the outcome stand in marked contrast to the negative rhetoric and pressure from anti-agreement forces in our society. The draft Budget offers a powerful challenge to negative forces in the House and to the paramilitaries and political wreckers on the outside.
Instead of flinching before both pressures, all pro-agreement parties should take confidence from what the Budget shows we can achieve together, and they should determine to build and develop partnerships that have brought us to this point. People on all sides are the beneficiaries of what we can achieve together. By working together, many thousands will benefit from improvements in the health and social services; children and their teachers will enjoy better accommodation and facilities in their schools; further and higher education students and trainees will have enhanced support to access educational and training opportunities; people of all ages will benefit from improved sporting and recreational facilities; and the farming and rural community will be offered new opportunities through the vision report.
On a point of order, Mr Deputy Speaker.
Mr Deputy Speaker:
I shall not take a point of order when the Minister is speaking, but I shall after he has spoken.
He has finished his statement.
I am entitled to comment on my statement. The travelling public will benefit from new and improved transport facilities and infrastructure; the homeless will benefit from better services and accommodation; and the unemployed will benefit from new job opportunities. To put all that at risk through a failure of nerve to persist with the Good Friday Agreement or through failing to meet obligations freely and willingly undertaken to rid our society of paramilitaries would be a profound betrayal of the hopes and aspirations that have been democratically expressed by the overwhelming majority of our people, who supported the Good Friday Agreement. I commend the draft Budget to the Assembly.
The Chairperson of the Committee for Finance and Personnel (Mr Molloy):
Go raibh maith agat, a LeasCheann Comhairle. I thank the Minister for his detailed statement on the draft Budget and for his explanation of his plans. I also commend him for the good working relationship that he has with the Committee, as shown during the preparation of the draft Budget. The Committee and the Minister have worked well together.
The draft Budget is one stage of the process, and it is important that each Department's Budget allocation be spread across every aspect of that Department. For example, the Department of Finance and Personnel has rural and urban considerations. It is important that investment be made west of the Bann to ensure that that area has proper facilities and services in future.
The Minister recognises that the draft Budget is not the complete picture. The reinvestment and reform initiative, the strategic investment body, departmental reforms and asset management still have to implemented. To what extent will those parts of the jigsaw be in place in time for the revised Budget?
What actions will continue to be funded from the Executive programme funds? Are they cross-departmental? The emphasis in the draft Budget is on reform, but to what extent have the findings of the needs and effectiveness evaluations informed and influenced the draft Budget? There must be a major injection of funding for water and sewerage services. In what way has the Chancellor been influenced by the high expenditure that was allocated to water and sewerage services in England, Scotland and Wales? Was that allocation made in here before privatisation in England, Scotland and Wales? If not, was an allocation made to the Water Service here before privatisation in England in 1989? If that money was not spent on water and sewerage services in Northern Ireland, how was it spent? Areas that have been neglected in the past -