Mr Paisley Jnr:

Does Mr Hussey accept that in paragraph 41, we not only have the statement of sovereignty, but also the implication of sovereignty? More power is going to go to Westminster, and there will be a greater role for Westminster because it is proposed that a Committee on Regional Affairs be established to scrutinise even further the powers that are now to be devolved to Northern Ireland, Scotland and Wales.

Mr Hussey:

I can only agree with Mr Paisley.

Sinn Fein's main concern was with the absence of a reference to the fact that the establishment of the Northern Ireland Assembly provides the opportunity to exercise power locally. Sinn Fein was determined that reference should be made there to the Belfast Agreement. After deliberation and adjournment it was agreed that a reference to the Belfast Agreement could be included, and then the goalposts were moved. I do not know why - I have my suspicions. Also, Sinn Fein did not vote against this addition. Why not? I would point out that on a word count 99.5% of this report is acceptable. That is a much higher rate of agreement than we have had on other things.

I commend the report to the Assembly.

Mr S Wilson:

I would like to thank the Chairman and Clerk of the Committee for the way in which they conducted the business of the committee and for steering us towards what I believe - despite what Mr McCartney, who is now absent, may have said - is a magnificent report. Magnificence can be measured in a number of ways but according to the dictionary it can be judged by the greatness of the achievement of a particular issue or document.

Using that criterion this is a magnificent report. To deal with complex issues in only 13 pages is quite an achievement. [Laughter]

12.00

It is magnificent in that it addresses all the questions that the Committee was asked to deal with. That would be quite an achievement for any politician. As my colleague Rev William McCrea has said, the report emphasises the primacy and the sovereignty of the United Kingdom Parliament. Item 8 of the minutes of the proceedings of the Committee of 30 October states

"The Chairman then proposed that the Committee accept the revised Report as the final Report of the Committee."

Although some Members absolutely oppose the word "Westminster" crossing their lips, the document says

"It was agreed unanimously."

I repeat that the report is magnificent.

The DUP approach was to set out clear objectives and, unlike Mr Foster, we did not lose our focus. One objective was to make sure that any change in procedures at Westminster as a result of devolution in Northern Ireland, did not diminish Northern Ireland's position within the United Kingdom. The report is permeated with the fact that Westminster retains sovereignty over Northern Ireland, and that has been agreed.

Sinn Fein realised rather late, when it had considered all aspects of the report, that the sovereignty of Westminster remains. I suspect that if target words that always trigger responses in the minds of Sinn Fein had been omitted, it might not have noticed that at all. When it saw the words in paragraph 9 -

"remain the preserve of the Parliament at Westminster, include such matters as sovereignty" -

dissension started to appear. However, as Mr Hussey has already said, the whole thrust of the paragraph before comment was that the Westminster Parliament is sovereign. It states

"The provisions of the Northern Ireland Bill explicitly emphasise that the United Kingdom Parliament retains the power to legislate on any subject throughout the United Kingdom."

It concludes

"Consequently, the establishment of the Northern Ireland Assembly provides the opportunity to exercise power locally through the Belfast Agreement within the context of the sovereignty of Parliament at Westminster".

The only part that Sinn Fein disagreed with was that little phrase, but when voting on the whole report it voted on it all. That is a magnificent achievement.

Mr McElduff had a bad weekend. He took on a Dutchman in Brussels. Irish Republicans should have learned that, whether it be 1690 or 1998, they should not take on the Dutch. He did not follow the party line but engaged in antisocial behaviour in Brussels, and I am amazed that he has not ended up in a wheelchair the same way as Martin McGuinness.

Let us look at the relationship between Westminster and the Assembly. There is the ability to question the role of Committees and our roles in finance and legislation. The report recognises that the Assembly will have the authority to deal with those matters, as one would expect with devolution, but overall power will still reside at Westminster.

There was no dissension about paragraph 17, which says

"A period for questions on Northern Ireland ought to be retained at Westminster".

Westminster will still have its finger on the pulse.

According to paragraph 13, while transferred matters will be dealt with primarily by the Assembly, there will still be provision for Questions to be asked in the House of Commons. Of course, as one would expect, the Questions will then be referred to the relevant Minister in Northern Ireland, and the answer made available to MPs at Westminster. Westminster's role in scrutinising and questioning what happens in Northern Ireland has not been diminished.

Paragraph 24 recommends that Committees should retain the ability to examine expenditure, administration and policy matters. However, an Assembly Committee dealing with a specific issue should not be duplicated in the House of Commons. That is a sensible recommendation.

We have said

"There should be a review of the Select Committee system to prevent duplication of the work of the devolved legislature."

But those Committees will still have the same role as they have had previously. With regard to finance. For example, paragraph 29 says

"Westminster should retain responsibility for oversight of the appropriation of funds into the Northern Ireland Office budget".

Of course, one would expect that. The scrutinising of individual matters could probably be dealt with in greater detail by an Assembly public accounts committee, but financial scrutiny will remain at Westminster.

In terms of legislation, paragraph 31 says

"the United Kingdom Parliament retains the power to legislate on any subject throughout the United Kingdom."

Paragraph 32 says

"Whilst it will remain possible for any Member at Westminster to propose a Private Member's Bill on any matter".

It will still be possible to do this, although it does say that past experience suggests that it is not likely that many such proposals will become law.

We have indeed produced a magnificent report and, as Mr McCartney has said, with the minimum of effort. I contend that it was produced at significantly less cost than his lawyer friends would have charged had they been asked to produce it.

Mr McElduff:

Go raibh maith agat as na focail deasa sin.

The Initial Presiding Officer:

Order.

Mr McElduff:

A Cheann Comhairle, nílimid ar aon intinn amháin, ní gá a rá. Caithfidh mise a rá nach bhfuilimid ar aon intinn amháin, go háirithe sa dóigh ina bhfuil na páirtithe éagsúla ar an taobh eile den Seomra ag iarraidh neamhaird a dhéanamh de Chomhaontú Aoine an Chéasta. Ach, sin mar atá.

I want to support Mr Alban Maginness's assertion that this is not an agreed report in that the substance of the report has not been agreed - there was an absence of consensus. I commend the Chairman and the Committee Clerk for the way they presided over the meetings, and I want to reiterate the point that it was difficult for many Members to focus on the precise remit.

I will keep my comments brief. I want to underline issues raised by Mrs Mary Nelis, our group spokesperson. We constantly and consistently objected to attempts by Unionist participants in the Ad Hoc Committee for comfort blankets to be extended to them - trying to have the umbilical cord of Westminster written in, line after line.

No Nationalist member of the Committee sought any such comfort blanket. When a vote was taken - and this is crucial - no Nationalist supported the report or its contents. I ask for a ruling from you, a Chathaoirligh, as to whether a vote on this report should be taken in the Assembly today. Sinn Fein's preference is that this report should be referred back to the Committee for further examination in the hope of arriving at consensus eventually. Clearly we have not got this as yet. Sin an méid atá le rá agamsa ar an ábhar sin. Go raibh míle maith agaibh.

The Initial Presiding Officer:

Let me say something about a request that has now come forward for a second time - initially from Assembly Member Mrs Mary Nelis and now from Assembly Member Mr Barry McElduff. The only procedural way to take matters back would be for the Chairman of the Committee, Mr McFarland, to withdraw the motion or for the Question not to be put.

It is not possible to ask for individual matters in the report to be taken back. I make this point because in other forums where Members operate - in local government, for example - this is often a practice, but there is no procedural means of doing that here at present.

In terms of any other motions in respect of particular matters being brought forward, it is now too late to put down any amendments. Therefore the only way in which the matter could be discussed by the Assembly is by leave of the House, which means by unanimous agreement of those who are present. These are the only ways in which the matter could be dealt with.

As to the question of there being a vote, of course there will be a vote. This is a motion, and there will be a vote. When the Question is put, it will become apparent whether a formal division is necessary, but this is a motion to accept the report, and therefore there will be an opportunity for the House to give its view.

Mr P Robinson:

The representative from the Women's Coalition, Ms Morrice, said that we should all understand what devolution was and then went on to display ignorance of what it was. She seems to have a misconception about power and authority, about dissolving - although I am not quite sure what she meant by that - or delegating authority. She took umbrage at my suggesting that devolution was about delegating authority, but that is precisely what devolution is about.

12.15 pm

The day after devolution happens, if it does, power will still reside, technically and legally, at Westminster - delegated authority may come here, but the power will still reside at Westminster.

First, it is important to deal with the split personalities in Sinn Fein. Sinn Fein Members were among those who applauded this report in the Committee. They agreed it, along with every other member of the Committee. The record is clear:

"The Chairman then proposed that the Committee accept the revised Report as the final Report of the Committee; it was agreed unanimously."

There appears to be some ineptitude on the part of those representing Sinn Fein on the Committee. They agreed to something that their betters outside the Committee do not agree to, and they are raising smoke to hide their embarrassment. They agreed the report, and it will be interesting to see if they have the support of other Sinn Fein Members when it comes to the vote, or whether they prove that some of them are "not fit to be allowed out on their own" - a phrase which, I think, was used on the BBC.

There are three issues that arise from the report. I come more from Mr McCartney's position - I do not think there is anything magnificent about the report. To say it is magnificent because it is 13 pages long, stretches the notion of magnificence.

Mr S Wilson:

Succinct.

Mr P Robinson:

On that basis it could have been even more magnificent. However, there are considerable improvements in this final report from an earlier edition. Colleagues in my own party, and in other parties, are to be congratulated on the clawback achieved in the later Committee stages.

I want to deal, in particular, with three issues - questions in the House of Commons, Committees dealing with Northern Ireland in the House of Commons, and financial accountability in the House of Commons. As far as Questions in the House are concerned, the report makes it very clear - and I want to put this interpretation on the record - that questions on transferred matters are primarily for the Northern Ireland Assembly.

The use of the word "primarily" indicates very clearly that it is not a matter exclusively for the Assembly and, therefore, Questions on transferred matters can, and should, properly be asked at Westminster. It may be that the Secretary of State will be restricted in what she, or a future he, may say on the issue, referring it to the appropriate Minister in Northern Ireland and tabling, for the record, the response given.

That is not any different from what happens when questions are asked on the activities of the various agencies. The response is tabled in the Library and, on some occasions, included in Hansard. The issue of questions is, therefore, dealt with adequately in the report and indicates an ongoing role for the House of Commons.

I am sure that the Ulster Unionists will be delighted with this ongoing role. All the SDLP Members of Parliament are in this Chamber and, therefore, entitled to ask questions; all the Democratic Unionist Members of Parliament are in this Chamber and entitled to ask Questions; the United Kingdom Unionist Member of Parliament is in this Chamber and entitled to ask questions; and the two loyal Members of Her Majesty's Opposition from Sinn Fein, although they have not taken the oath as yet, are also in the Chamber.

Of course, two Members of the Ulster Unionist Party are in the Chamber as well. They are entitled to ask questions, and I am sure that they will be rooting for the six Ulster Unionist Members of Parliament who are not in this Chamber. They would want to give them a full role in scrutinising what is happening in Northern Ireland and also give them the opportunity to ask questions of the Ministers who will be responsible for the various Departments.

The report quite properly suggests that the role of the Northern Ireland Grand Committee will be considerably reduced, and that some consideration will have to be given to its future life. Unlike the Select Committees, the Northern Ireland Grand Committee does not have any real scrutiny role, and it may become redundant.

A Select Committee is very different. I am glad to see that the report makes it clear that the only restriction that would be considered in relation to the Select Committee's role is on duplication. I assume that means that if the Assembly were considering roads issues in some committee, a Commons Select Committee would not consider those same issues at the same time. Such duplication would be quite unnecessary. If bodies are looking into various aspects of Northern Ireland life, the Select Committee will stay away from those issues - at least until reports have been issued. Therefore I do not think that there will be such duplication.

There is a need for a good relationship to be built up between the Assembly and the Select Committee so that each will know what the other is scrutinising and examining. Here again, the Committee has made a good fist of its recommendation in relation to the Commons Committees. I have some difficulty in relation to the financial scrutiny arrangements. I remind Ms Morrice that there is a difference between delegating authority and exercising the authority that has been delegated, and the right of Parliament to scrutinise what has gone on. Delegated authority can be fully exercised, but that must be subject to scrutiny.

Scrutiny is especially important in the context of the kind of governmental arrangements in the Assembly, where effectively there is either no Opposition or a fairly limited one, because most of the parties enjoy some governmental authority. In the absence of a full-blown, full-time Opposition, there is an excellent scrutiny role for the Select Committee at Westminster.

Mr McCartney:

Does the Member consider that last week's revelations by the Audit Commission in relation to the Industrial Development Board and the misinformation that was being provided to the public to aid the political progress of the Northern Ireland Office are typical examples of what he is concerned about?

Mr P Robinson:

Yes. It is hard to predict what might happen after devolution. The Opposition might consist of the Back-Benchers from all parties. They may scrutinise what ministerial teams are doing or they may not. They may refrain from going too far in case that makes life difficult for a colleague. Continuous scrutiny of finances is essential, and that is the one area on which there is a slight weakness in the report.

Mr Molloy:

I wish to speak about this word that has been raised once again today - permanent. I want to draw attention to Mr McCartney's assertion that sovereignty remains permanently at Westminster. He will be aware that in the Good Friday Agreement there is provision for a referendum the outcome of which would decide the future constitutional position of this country. It is up to the people of Ireland alone, and without outside impediment, to decide upon the future relationships and independence of the people of Ireland. Sovereignty is no longer permanently based at Westminster - that all changed as a result of the agreement reached in Belfast on Good Friday.

Mr Maginness made the point that the notion of the sovereignty of Westminster is outdated, and I agree that it is, and that is a good reason for not including the issue in this document. Mr Maginness will know, as he is a lawyer, that should we include sovereignty as an issue in this document, reference will be made in the future to the fact that we put it there. This is the basis of Sinn Fein's objection.

Not only is sovereignty an outdated issue but it must be borne in mind that sovereignty no longer rests totally with Westminster. Sovereignty is now shared with Dublin with the cross-community support of the Assembly.

Unionists are confused and have been for some time. They have no confidence in themselves and want to rely completely on Westminster to oversee and to look after them. They have no confidence in making decisions here and standing over them as they have done in the past.

Mr Wilson referred to the issue of scrutiny. We have learnt from the past - prior to 1968 there was no scrutiny of the old Stormont. We have to ensure that there is scrutiny in order to help prevent the danger of slipping back into the old Stormont and the bad old days that we all remember - fifty years of Unionist misrule in this very Chamber.

We Nationalists also remember that Westminster did not do its job - it did not scrutinise properly - and so Sinn Fein wants to ensure that Dublin has a role in scrutinising the Assembly and making sure that it operates as set out in the Good Friday Agreement. Also, we see the European Community having scrutiny - through human-rights legislation - to ensure there is no discrimination against the Nationalist people in the way there was before.

Unionists should not delude themselves any longer that sovereignty from Westminster is permanent. Once Scotland gets independence, once Wales goes for independence and once England returns to its pre-colonial position, as it will, we know exactly what we are going to be faced with - the break-up of the Union.

The Union is no longer safe, and that will become quite clear with the advent of devolution. Unionists should catch themselves on and come to the Assembly with confidence in their own arguments. If they have not got confidence, they should debate matters outside in order to build confidence. Let them come here and ensure that devolution will see the break up of the Union as we presently know it. We will see this come about within the terms of the Good Friday Agreement, and Sinn Fein is here to debate with them.

Mr McGrady:

I thank the Member for giving way. Much has been said and a very esoteric debate has taken place about the issue of sovereignty. Much profound wisdom has been extolled but, at the end of the day, does the Assembly Member recognise that we are voting on the recommendations of the report rather than debating the wording of the paragraphs and inscriptions. Under the heading 'The Key Principles' the Committee recommends that

"Following devolution, transferred matters ought to become essentially the preserve of the Northern Ireland Assembly."

Will the Member confirm that that recommendation is acceptable to him?

Mr Molloy:

I thank Mr McGrady for his intervention. Sinn Fein's point is that this is not an agreed document. We are asking that it be referred back to enable us to come to total agreement. We should go back to the drawing board to see if we can produce a document which can be agreed by all Members.

12.30 pm

Mr P Robinson:

On a point of order, Mr Initial Presiding Officer. Does the motion not say that we approved the report in its entirety, not just its recommendations?

The Initial Presiding Officer:

It is the report.

Mr Molloy:

I again return to Mr McGrady's point. Many changes have been made to the report, and the wording of the document will come back to haunt us. That is why it is important that we agree its wording before forwarding it as an agreed report, which it is presently not.

The Initial Presiding Officer:

The Chairman of the Ad Hoc Committee indicated that he had written to me on a number of matters which the Committee discussed but viewed as outside its remit. As requested by the Committee, through its Chairman, I have agreed to take appropriate steps to try to ensure that these matters are properly dealt with by the Assembly through its procedures.

Mr McFarland:

All those Members who harbour a secret desire to be a Committee Chairman when the Assembly gets running, will have had a flavour today of what lies ahead of them.

I thank Members for their good wishes and, in particular, for the unaccustomed pat on the back from Mr McCartney, and his good grace on this occasion. I am not used to these things, as Members will appreciate.

A couple of matters need clarification, and they are concerned with the way in which the Committee operated. For example, Mr McCrea raised the question of draft changing. I would argue that this is what committees are about. A committee deliberates on different drafts brought before it, makes a decision and changes wording. That is fair and valid. To portray it as removing things that were awkward is not a fair reflection of what happened.

The second matter is the question, which Mrs Nelis raised, of things changing. The Committee had a number of meetings, and it was taking a lot of time because there were 18 members and many wished to speak. We were not progressing towards our deadline as fast as we wished and, therefore, it was decided that I, as Chairman, would hold a series of bilaterals to try to encapsulate the essentials of the report. This meant that at our last meeting we would only have to deal with those areas requiring a final decision.

As a result of these bilateral meetings, a sentence was included - and it has been raised today - at the end of paragraph 9. In my view, this was valid because the parties had raised it. It was equally valid for Sinn Fein or, indeed, any other party, to object to this. We had a very lengthy debate on it on Friday week ago. We tried all sorts of methods to come to an agreed form of wording, and in the end we could not do that. It had to go to a vote, which was carried. Sinn Fein abstained, and the SDLP felt that it could not support the report. I think, in its defence, that it did not object to the wording, but sought an agreed wording.

My recollection, which is reflected in the minutes, is that I sought confirmation that the Committee wished the report to go forward as an agreed report, with the caveat in paragraph 9 that the decision had gone to a vote. As I recall, all the members there said "Yes". There was no dissension or question of revisiting the matter. It would bode ill for the Assembly's Committee system in the future to keep going back to things when there is disagreement with words here and there. If Members want to go through Committee work word by word, it will mean several years of work.

The secret of operating a good Committee is that the Clerk and the Chairman do all the hard work and that the members have it presented and make the decisions. In our Clerk's defence, I do not think he would agree with Mr McCartney that no hard work was done.

With my Committee hat off momentarily - I hope that this will not have the effect that Mr Adams's saying "Well done, David" had on my party - I would like to commend in particular Mr S Wilson for shedding the light of reason amidst the Democratic Unionist Party.

I commend this magnificent report to the Assembly.

The Initial Presiding Officer:

I hesitate to bring this to the attention of the House again, but could I request that those Members in possession of incontinent pagers and telephones please try to do something to keep them in order. It is most off-putting, particularly when Members are speaking, and discourteous. I would ask you to leave them outside, put them on vibrate mode or put them off, but please do not disturb the Assembly.

Mr McCartney:

On a point of order, Mr Presiding Officer. May I suggest that it is not put in the form of a request but that there is a positive ruling that these telephones are not permitted inside the Chamber, otherwise you are always going to be prone to some Member forgetting to turn it off or deliberating leaving it on. They should not be allowed inside the Chamber or, indeed, inside the working Committee rooms.

The Initial Presiding Officer:

Actually, Mr McCartney, there is already a ruling in that regard. It makes it very clear that they are not to have them in here switched on. The difficulty is that when Members transgress they usually, when it is drawn to their attention by the sounding of their device, quickly leave the Chamber, so I am not even in the position to send them out.

Dr McDonnell:

Mr Presiding Officer, on a point of order. Would it be possible for you to impose a small fine on those who offend? I suggest £10, which could go towards the medical students upstairs.

The Initial Presiding Officer:

I am grateful to a fellow County Antrim man for coming up with what one might expect from someone from that part of the world. This is really a matter for the Standing Orders Committee, but if intrusion persists I will have to take some measures. If fines are imposed I shall have to decide where the money should go.

No petition of concern having being tabled under Initial Standing Order 12.5, the decision of the Assembly will be judged under Standing Order 12(1) - that is to say by simple majority.

Question put and agreed to.

Resolved:

That the Assembly approves the report prepared by the Ad Hoc Committee on the Procedural Consequences of Devolution and agrees to forward it to the Procedure Committee of the House of Commons.

The sitting was suspended at 12.40 pm.

 

On resuming -

Comprehensive Spending Review

TOP

2.00 pm

The Initial Presiding Officer:

Members will have received a paper on the comprehensive spending review and will have had an opportunity to peruse it. After the Minister presents his proposals arising from the review to the House, Members will have an opportunity to put questions to him. Members should restrict their questions to the subject matter of the presentation. They will only be able to ask one question, and that should be as brief as possible. Members should not make speeches or extensive statements - we want to give as many Members as possible the opportunity to put questions to the Minister.

The Minister of State (Mr P Murphy):

Mr Initial Presiding Officer, Members of the Assembly and friends, I would like, first of all, to say that if I am seen to take out from beneath this podium a glass containing a transparent liquid, it should not be assumed that it contains gin and tonic, as it might do for the Chancellor of the Exchequer - it contains Northern Irish water. By the end of this afternoon's session, I may need refreshment of another kind!

I am delighted to have the opportunity to talk to you this afternoon about the comprehensive spending review, and about what will eventually be the Assembly's own budget. It is a measure of the distance we have travelled that the Assembly was no more than an idea when the comprehensive spending review was launched last year. Today, the Assembly is a reality, and, next year, it will have responsibility for much of the expenditure which we will be discussing this afternoon. As the elected representatives of all the men and women - and children - of Northern Ireland, Members of the Assembly will be responsible for, perhaps, some £8 billion.

As many Members will recall, I had the responsibility of chairing the final negotiations which led to strand one of the Agreement - namely, the arrangements for the establishment of the Assembly. So it is a great personal pleasure for me to be addressing the elected representatives of the people of Northern Ireland, and I wish them all well in their future deliberations. There will, of course, next year, be elected Assemblies for Scotland and for my own country, Wales, and I hope also, eventually, for the English regions. This great adventure in democracy, where people are represented by those who live amongst them, represents a tremendous advance.

Perhaps one of the most significant issues with which the Assembly will have to deal in the coming years is the question of expenditure. That budget of £8 billion represents a huge responsibility for the Assembly, just as it currently represents a huge responsibility for the Secretary of State and myself and our Ministerial colleagues. The significance of that cannot be overstated.

Aneurin Bevan, a fellow countryman and a great hero of mine, said, this applies to all political philosophies and certainly to government, that the language of socialism - or, one could say, the language of government - is the language of priorities. The comprehensive spending review, an exercise that was started by the Chancellor of the Exchequer, represents, not just in Northern Ireland but in the country as a whole, the priorities that the Government should have. That is precisely what will exercise your minds and attentions in the years ahead.

What priorities, as elected representatives, should you have? It is important to recognise that when people take the trouble to put a cross against your name, or, in the case of the Assembly, a number against your name, they are supporting you as an individual or as a party, and so there is a heavy responsibility on us to represent them to the best of our ability. The £8 billion which you will have to control when the Assembly is fully established will touch upon all aspects of life in Northern Ireland - health, education, local government, the environment and roads, among other things.

As a result of the comprehensive spending review in the country as a whole, the Secretary of State asked the people of Northern Ireland through their political parties, voluntary organisations, the trade union movement, through businesses and the local authorities what priorities they felt should be dealt with in the coming years. So the consultation on the comprehensive spending review by no means began in the Assembly, but it will end here because the Assembly to which you all belong, has been asked what those priorities might be.

The Government produced a paper, which most of you received in Brussels last week, in which details of their spending proposals are set out. As I said, the comprehensive spending review was the most detailed public examination ever undertaken in the United Kingdom, and Northern Ireland has participated in that. The Secretary of State, my other ministerial colleagues and I have reached a view on how best to allocate the available resources.

In reaching this view, we have also taken into account the funding made available by the Chancellor's economic initiative which was announced in May, the resources that we received from the New Deal, from the Welfare to Work programme and money from Europe, in particular the European peace and reconciliation programmes. There are additional resources earmarked for specific purposes including assisting the unemployed and helping to cement the process of reconciliation.

Government is about priorities, and we have concluded that in Northern Ireland the priorities that we were elected on are essentially no different from the priorities on the mainland - with the exception of the money spent on security, about which I will say something later - which are health and education.

We have come to the conclusion that what matters to people is the quality of life, in particular, how their children are educated, the quality of that education, together with the universality, the significance, the great ability of the Health Service to be able to deal with people's health from the cradle to the grave. That is of vital significance to every man, woman and child in Northern Ireland.

That, if you have examined the papers in detail, illustrates where our priorities lie. You will see that the greatest increases by way of cash, or indeed by way of percentage, are in the health programme, specifically geared to reducing the waiting lists and in schools, specifically geared to lowering class sizes.

Those, coupled with the very significant and important aspect of ensuring that the security of people in Northern Ireland is dealt with properly, lie at the basis of those priorities. That does not mean that the services which are not covered by the health and education budgets are insignificant. Of course, they are not.

When I go round - as I have had the opportunity to do, though less so than my colleagues - and talk to people of all political persuasions in local authorities and elsewhere, they tell me that they also have important local priorities, whether roads, the environment, economic development, or whatever. We have chosen to concentrate on schools and hospitals in allocating the additional money.

There is a difficult question to answer - one which you will be charged with, as, indeed, will the local authorities - and that is "How do you pitch your rate?" There is, unique to Northern Ireland, a regional rate. The rating system has been abolished in Great Britain and replaced by the council tax although there is still a business rate there. You, of course, as an Assembly, when you are up and running, will be in a position to strike that rate in order to raise money to spend upon services for the benefit of the people of Northern Ireland.

We have assumed, as you will have read in the comprehensive spending review, a specific increase of 8% in the domestic regional rate, which we want to gear towards the huge and difficult problem that all of us jointly face, specifically in water and sewerage. You might think that that is a fairly unglamorous subject to discuss.

This morning my ministerial colleague Lord Dubs introduced his consultation paper on the future of the water and sewerage service. The sewerage system in Northern Ireland needs enormous capital, and one way of overcoming that problem without having to eat into your expenditure on other services is to ensure that the rate is struck at an appropriate level to deal with this particular problem.

The choice, ultimately, is yours. You may decide to increase the rate even more if you want to bring in more money to spend on services which you believe are significant or you may decide to reduce it. If you do reduce it, because there is a ceiling on the amount of money that we are allowed under the block, you will have to find money from elsewhere. However, at the moment we are assuming an increase of 8% on the domestic regional rate and 5·5% on non-domestic rate.

May I briefly touch upon one or two of the issues that I dealt with. When we discuss these matters later, we can go into more detail.

The people of Northern Ireland are entitled to the very best health service that we can afford. The Health Service was born a few miles away from where I live and represent. It is probably one of the dearest things to me as a politician and, I am sure, to you as well. It affects the lives of everybody in Northern Ireland.

Public representatives and people throughout Northern Ireland have indicated that they do not want to see a reduction in the quality of the service offered by the Health Service. You will see, in the figures that you have been presented with, an increase in the amount planned to be spent on the Health Service. That amount does not include the £6 million plus which, last week, the Chancellor of the Exchequer gave to Northern Ireland to deal with the problems of community care.

This is a major commitment to this key service. It will allow hospital waiting lists to be reduced below the level inherited from the last Government. There is an extra £74 million for community-care packages and another £30 million for childcare to safeguard the well-being of children at risk.

2.15 pm

We have completed an exhaustive consultation on the future organisation of the Health Service, and it will fall to you to shape the Service for the health and the social-care challenges of the future. There may be difficult decisions to take, but that is what government is about and what representation is. Nevertheless, health is right up at the top of the agenda, as is education. It is one of my Government's priorities and one of the priorities of those who represent the people of Northern Ireland. These extra resources will improve standards in schools, reduce class sizes, and, very significantly, expand pre-school education which is of vital importance in the mental and educational development of very young children, and can have a significant impact on their educational future.

We have proposed additions for further education, higher education, life-long learning and the Springvale initiative. We have given extra cash for arts, museums, youth and sport and the Odyssey Millennium project.

If we have priorities, other things will not be on the same level. The package contains some reductions on the economic development side. I hasten to add that if this package is approved, £165 million will be spent in that area next year, but it has to be viewed in the context of other things: the Chancellor's initiative, which is vital to the economic development of Northern Ireland, and the welfare-to-work programme, which is a very significant programme in terms of improving the training opportunities for young - and not so young - people. It all adds up to a significant economic development package for the people of Northern Ireland. There is still much to be done, but this is of great significance to the people here and to Members.

Over the next three years we shall put an extra £84 million into the water and sewerage infrastructure to help to address European Union directives on water qualities.

There will also be some reduction in housing expenditure so that additional resources can be released for schools and hospitals. We expect the Housing Association Movement to act in partnership with the Government to bring greater amounts of private finance here. Similarly, a number of capital receipts have come in on housing, and that has helped.

We recognise that the agricultural industry has experienced major difficulties in recent times. Significant additions to the agricultural programme have been proposed to respond to pressures on animal health, food safety, food processing, and marketing - as promised by the Prime Minister earlier this year - as well as to improve the services provided by the agricultural colleges and increase the protection against flooding. It was evident in Brussels last week how important agriculture is to Northern Ireland's economy - the biggest single industry - and it is very important that we bend our minds to ensure that, as we go into the next century, as much as possible is done to improve and facilitate the agricultural industry here. The figures support that.

Of considerable interest to all Members is the expenditure relating to the Assembly. Here, in Cardiff and in Edinburgh, the two Assemblies and the Parliament must have money to exist. Provision has been made for various costs relating to the Assembly, the Office of the Executive, the North/South Ministerial Council and other costs associated with the Belfast Agreement.

They are not insignificant sums. This year we expect to have to find about £9.5 million for the Assembly alone, and thereafter approximately £14 million to £15 million each year. Those sums will have to be found from the fixed totals in the Northern Ireland block in the same way as for Wales and Scotland.

The targeting social need and policy appraisal and fair treatment schemes are relevant to public spending allocations. Earlier this year the Government relaunched the TSN initiative as new TSN - New Labour, New TSN - with a particular focus on the needs of the unemployed. A review of TSN in each Department is currently being carried out by external consultants. In putting together the spending proposals, we have taken account of the potential targeting social need and PAFT implications. Our policies on higher education and on Springvale, Odyssey and many other areas, such as welfare to work, strongly support TSN.

In the consultation paper we have tried to strike a balance between providing sufficient detail for meaningful consultations and a not too voluminous document. The question is whether the Assembly agrees with the overall shape of the priorities that we have provisionally decided. The overall spending totals are fixed, so any suggestions for changes have to identify gainers or losers. This is an unprecedented consultation on spending plans. It represents the Assembly's first opportunity to consider public spending allocations to programmes. It gives the Assembly an indication of what it will face in the future.

It will be for the Assembly to decide how to respond to what I have said. It may decide that the debate is sufficient, or Members may write to me individually or collectively. We need to complete the process in the next couple of weeks to begin finalising that programme.

I thank the Assembly for the opportunity to deal with the huge problems of prioritisation. In view of all the problems that Northern Ireland has faced over the years and will face in future, it is a heavy responsibility on me, but it will be a heavier one on Members of the Assembly. That process applies particularly here.

I am not elected by people in Northern Ireland, but Members will be accountable to the electorate here for their decisions. That is what democracy is about. Spending priorities are the core of representing people in a democratic society. I am privileged and proud to have had the opportunity to see democracy in Northern Ireland for the first time in many years.

The Initial Presiding Officer:

Many Members want to ask questions. I repeat that each will have one opportunity. There must be no extensive statements, and it will not be appropriate to intervene when the Minister is replying. Questions will be taken in batches of six. I shall allow as many as possible.

Mr Nesbitt:

My question is about the regional rate. The Minister mentioned an 8 per cent increase. That is about £83 million extra to be paid to be paid by ratepayers from a base level of £200 million.

That is an astronomical increase for a particular phase of the water and sewerage system. However, I accept that the expenditure is necessary. Given that we are moving towards resource accounting - costs are allocated over the useful life of an asset - does the Minister think it is fair to charge ratepayers for something which will only be of benefit many years hence? Could we not be more imaginative?

Mr McGrady:

I welcome the Minister as the first guest to address the Assembly. Like all Members, I welcome the additional finance for health and education.

Let me draw the Minister's attention to the Chancellor's economic package, announced last May. This was understood to be additional to existing resources, yet in paragraph 8 and in other places he says that there is ring-fencing for £130 million. Can he confirm that up to £100 million of this so-called additional money will come from the privatisation of the Belfast harbour - that, as it were, the family silver is being sold off? Will the Assembly be able to express a view on this privatisation? I understand that it is to be rushed through before Christmas. That is a total disgrace.

Mr Gibson:

I congratulate the Minister on his presentation.

Does he know how welcome the Chancellor's initiative and the £12·5 million of ring-fenced money for the A5 road are? Is he aware that, prior to that announcement, a backlog of work to the tune of £55 million had built up in the western region? Recently, in the House of Lords, the Duke of Abercorn highlighted the sentiments of everyone in West Tyrone when he pointed out that the region has no ports, harbours or airports. Its lifeline is the A5 - the Londonderry-Ballygawley road - which has suffered from a massive £35 million underspend.

Will the Minister assure the Assembly that the West will no longer suffer financial hardship, that there will be equality of treatment and that the lifeline for West Tyrone will be brought up to the standards necessary for modern commercial, tourist and agricultural activity?

Ms O'Hagan:

Go raibh maith agat a Chathaoirligh.

Sinn Fein welcomes the opportunity to discuss the comprehensive spending review with Mr Murphy. We have a number of concerns that will be raised in the course of the debate.

The entire document is extremely vague because of its failure to identify current and capital account expenditure. This is especially so in relation to the Law and Order budget which will remain largely unchanged over the next three years. Where is the indication of the clear shift from conflict-related expenditure towards more socially useful expenditure in the light of the different political situation? I ask the Minister to produce for the Assembly a public-expenditure statement that sets out capital and current account expenditure, and includes estimates of tax revenue from all sources.

2.30 pm

Will the Minister confirm that, contrary to media reports, the prison at Long Kesh is to be refurbished, with building work due to start in the next two to three weeks? Will he inform the Assembly about the outcome of the tendering competition for that work? Go raibh maith agat.

The Initial Presiding Officer:

I said that each Member should ask one question only. However, the ingenuity of Members sometimes ensures that there is more than one route to their question. I appeal to Members to restrict themselves to one question each.

Mr Close:

I welcome the Minister to what has been called a consultation exercise. I trust that it will indeed be consultation and not purely a cosmetic exercise.

I am perturbed at the proposal to increase the regional rate by 8%. Does the Minister agree that we all have a duty to try to achieve open and accountable government, and that any fiscal measures that are used to provide for an increase in public expenditure should be seen by the electorate to be open and transparent?

I have been involved in local government for 25 years, and I can tell the House that every local authority in Northern Ireland abhors the regional rate. It is a totally nebulous tax, based on assumption, and it is impossible to understand how it is calculated. It is disgraceful to use it as the vehicle for increasing public expenditure and to restrict this House in such a way. If we are to have open and accountable government, it would be much more satisfactory to have tax-varying or tax-raising powers that are also open and accountable to the electorate.

The Minister said that when he returned home he did not want anyone ringing him up. We will still be here and accountable to the people, and they will wish to know how their money is being spent.

The Initial Presiding Officer:

Please bring your remarks to a close.

Mr Close:

The water and sewerage systems are in their present state because of the neglect of previous Governments. A more accountable measure should be used to raise the necessary funding.

Mr Roche:

I welcome the increase in expenditure on education. How will that money be used to address problems in education?

Northern Ireland has record achievements in GCSE and A-level examinations, but, at the other end of the spectrum, significant numbers of people leave education without any qualifications. That means that those people were either insufficiently intelligent or that the schools they attended failed totally in their responsibilities.

Can Members be assured that some of this increased expenditure on education will be used to address that problem?

No matter how the education system develops, we need to retain the excellence of our grammar schools. There is a problem at tertiary level.

The Initial Presiding Officer:

Please bring your questions to a conclusion.

Mr Roche:

Northern Ireland has two reasonably performing universities, but they do not have a high status either in the league table of universities or internationally. Therefore they have not attracted the top Northern Ireland students, and that has led to a significant brain drain over the past 30 years. I hope that the increase in expenditure will be directed towards those problems.

Mr P Murphy:

I am grateful for all the comments that have been made. I will make one or two general points about some of the questions that have been asked. I have noted those Members who asked questions involving constituency details or more technical aspects. I will write to them individually in more detail. Although I am the Minister responsible for finance, I am not the Minister responsible for education and health et cetera. There are policies about which Members need further information and they may rest assured that they will get information back from the Government on those issues.

However, I will do my best on the questions that have been raised.

I will take Mr Nesbitt's question with Mr Close's because they both refer to the regional rate and to the eight per cent increase to which I referred. Let me repeat that this increase is, as the Government suggest the best compromise we can have to get proper spending on those matters to which I referred - water and sewerage. It is not the only way, however. You cannot, for example, choose to spend less on something else and then spend it on water and sewerage.

You can, of course, choose to spend the rate increase on something else. But no one wants to pay rates. For 10 years I had to get up in my local authority chamber in Torfaen, South Wales, as Chairman of the Finance Committee and present a budget. I always ended by saying that as a consequence of the budget, rates would never decrease. The rates were increased to pay for this and for that.

But it is the second point that is significant. If you tell people that rates are to be used to improve the infrastructure, promote jobs and industry and enhance the quality of their lives, they understand, but they will still not want to pay.

Mr Nesbitt asked if there should be spending now on water and sewerage as the results of such spending will only be seen much later. Capital spending is about the future. We must think of that future. The problem that we are facing, after so many years of neglect, is that the water and sewerage system needs special attention. It is, in many ways, the least glamorous, the least political thing, that you can think about. But it is vital to the infrastructure of society.

Mr Close was saying that the method of taxation which the Government have chosen is flawed. In a sense I agree. The rating system is a flawed system. There are all sorts of difficulties attached to it. The actual amount, however, that is paid by people in Northern Ireland compared to the amount the people in Great Britain pay by way of local taxation is less. It is important that if you have a regional rate, you should determine its value.

In Wales there would be no such rate. There is no income possibility for the Welsh Assembly. In Scotland there will be a tax-varying power. I am not giving an opinion on whether the Assembly should have a tax-raising power. It was not part of the Agreement and in discussions afterwards, there was no enthusiasm for such a power. Thus there is none.

There is the regional rate - the only method by which the Assembly has an opportunity to raise income. Indeed, were the Assembly to be given the opportunity to raise funds by local income tax - some would regard that as fairer; others would have doubts - such a tax would be imposed in any event, and probably for the same purpose, namely the water and sewerage systems.

It is a flawed systems method, but Members will have to decide, if they do not want to put that rate up, where they will take the money from, if the issue of the water and sewerage system is to be addressed.

On Mr Nesbitt's point about accounting, Government accounting, at present, means that the capital has to be scored up front, and the necessary expenditure has to be funded. He asked about consultation. Lord Dubs will consult the Assembly on the future of water and sewerage facilities in Northern Ireland.

Mr McGrady referred to the Chancellor's economic package and to the fact that it is additional. He was worried about the sale of Belfast harbour. I can confirm, and the Chancellor has also made it clear, that part of this package depends upon the results of the sale of Belfast harbour.

It is unique for the Chancellor to retain the receipts from such a sale; normally such receipts go into a pool and are swallowed up by the budgetary process in Whitehall. That is not the case on this occasion. The receipts are to be ring-fenced and used in Northern Ireland for the infrastructure and the other works referred to. However, it is not true that the harbour will be privatised by December, and it is true that Lord Dubs will consult the Assembly for its views on such a course of action.

Mr Gibson referred to the problems of the west and the difficulties with transport. He welcomed the A5 improvements, but indicated, like many people who represent Tyrone and the west of Northern Ireland, that there is much more to be done. He also indicated that the lifeline of that part of the province depends very much upon a proper road-transport system. He, and others, made that point to me when I visited Omagh Council in the summer, and I understand its significance. I am sure that when the Assembly decides upon packages for transport and roads, that point will be borne in mind. Some of the Chancellor's package will be going to those areas.

Ms O'Hagan referred to a number of issues, some of which I will write to her about, but I will explain the Northern Ireland Office budget in relation to law and order. One of the reasons why that budget has not been reduced in the coming year is that compensation for Omagh and other places has to be paid for out of it.

We also do not know what the outcome of the Patten Commission will be regarding the restructuring of the police force. We do not know what the Criminal Justice Commission will ask us to do - time will tell. I will just make two points.

First, if the security situation in Northern Ireland improves month by month and year by year, inevitably it could be argued that there will be savings. However, Members will know as well as I do that such savings are most likely to occur in manpower. Redundancy payments and payments related to early retirement will have to be paid for, so it is not so simple. Secondly, the Northern Ireland budget and the budget that the Assembly will eventually deal with, which combined come to some £9 billion, will, after devolution, be separated.

2.45 pm

The Assembly will not, for example, have to pay for compensation. That will fall upon the Northern Ireland Office budget. It will not come out of the budget for housing or education or whatever. Where there will have to be some very difficult negotiations will be with the Treasury, and with the Government centrally, in London on where the division of an overall amount would be made, between the Northern Ireland block on the one hand and the Assembly block on the other.

But Northern Ireland will not be on its own in that because the Welsh and the Scottish will have to undergo a similar negotiation - I was going to call it a battle - as well. Of course, the Northern Ireland budget, by virtue of the security input, is much higher than the budget in Wales and, to a lesser extent, in Scotland.

Mr Roche raised the important question of standards in schools and, of course, it is a huge budget. I dealt with the education brief as a shadow Minister, and for the six months or so that I held that brief, I was deeply impressed by the quality and standards of education in Northern Ireland. At the same time I was unimpressed by the fact that there is clearly more work to be done in many schools in Northern Ireland, whether it be in terms of the school buildings or the equipment they need, the computers that have to go in, and we have already tackled this to a certain extent, the class-size issue. As a former teacher myself, I can say that what is most significant and leads to success in the classroom is the number of children in it: the bigger the class, the less chance a child has. That may be a truism, but it has been forgotten for a long time, and that is why, in my view, the most significant thing that can be done to improve a child's education is to ensure that the class size is smaller.

The future of grammar schools and the education system itself is something that you are going to have to debate in the months and years ahead. We have put into the budget a very large amount of money for the programme to support the schools in areas of social need, for training for primary teachers and for training for principals of schools, which is very important - when I was young, principals were not trained to manage. We were trained to teach; that is what attracted us in the first place. Now they have to do both, and sometimes no teaching at all. That is a mistake; all principals should teach now and again, as all head teachers should, just to make sure that they understand what is going on. It is very important that principals of schools get the opportunity for such training.

In addition to that, we are looking at a strategy for promoting good behaviour in schools, a development planning process and a host of other things as well. The idea behind all of this is to improve standards in schools so that no matter where your home is, no matter how poor or deprived you may be, the opportunity you get as a young boy or girl is not squandered because of the system and you can develop your potential. That is why everybody, no matter what community or place he comes from in Northern Ireland, believes in the value of education.

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