|Office of the Speaker||Official Report||Assembly Home|
NORTHERN IRELAND ASSEMBLY
Monday 3 March 2008
Oral Answers to Questions:
Executive Committee Business:
Private Members’ Business:
The Assembly met at 12.00 noon (Mr Deputy Speaker [Mr McClarty] in the Chair).
Members observed two minutes’ silence.
February Monitoring Outcome
Mr Deputy Speaker: I have received notice from the Minister of Finance and Personnel that he wishes to make a statement on the February monitoring outcome.
The Minister of Finance and Personnel (Mr P Robinson): With permission, I wish to make a statement about the Executive’s decisions on the February monitoring round. This is the fourth and final monitoring round of the 2007-08 financial year, and Members will be aware that the role and purpose of the in-year process is to help the Executive to make the most of the resources at their disposal. At the Executive’s meeting on 28 February 2008, they decided on some reallocations of expenditure for the short time remaining in the current financial year.
It is also important to note that this monitoring round follows the departmental spring Supplementary Estimates, which were debated in the Assembly on 12 February 2008. Departments are constrained by the spring Supplementary Estimates and associated Budget Bill position, because no allocation can be made in the February monitoring round above the position for which legislative authority has been sought. The first stage in each monitoring round is the identification by Departments of resources allocated in previous Budget processes that, for a variety of reasons, will not be spent in this financial year.
In overview terms, reduced requirements declared by Departments in this monitoring round amount to £51·7 million in respect of current expenditure and £61·7 million in respect of capital investment. The level of reduced requirements declared in this round is much greater than the levels that were identified at the corresponding time in previous years. That continues the trend from the previous monitoring round, with the result that the amount declared for this financial year is some 41% greater than the reduced requirements that were declared last year.
Although I commended Departments for the significant level of reduced requirements identified as part of the December monitoring round, the context for the February monitoring round is quite different, because there is significantly less scope to utilise the resources that become available in the February round than in earlier ones. I, therefore, urge Departments to redouble their efforts, as we move into the 2008-09 financial year, to declare reduced requirements as early as possible in the year so that the opportunity to redeploy funds into priority areas is not missed.
Statutory Committees will have a key role to play by regularly monitoring the financial performance of their respective Departments and identifying, as early as possible in each year, those areas where less spending is expected to take place than had been planned for.
I recognise that a primary focus of Departments is to spend as much of the moneys that have been allocated in the Budget process as possible at the first stage in order to deliver the associated improvements in public services. However, where that is not possible, there is an equal responsibility to ensure that any resources not needed by a particular business area can be redeployed.
Although there is an issue that significant levels of reduced requirements reflect poor planning at the Budget stage, it is much better that Departments and Committees identify reduced requirements earlier rather than later in the financial year or, indeed, allow them to fall as end-of-year underspend. Details of all the reduced requirements declared by Departments are set out in table 1 of my statement, which is available to Members.
The largest reduced requirement in current expenditure — £8·7 million — has been declared by the Department of Health, Social Services and Public Safety (DHSSPS), following on from the delay in the decision on the review of public administration (RPA). The Department for Social Development (DSD) has declared a £22 million reduced requirement in capital expenditure from additional land sales, and the Department for Regional Development (DRD) has identified a £10 million slippage in the funding required to Northern Ireland Water for this financial year.
The December monitoring round concluded with some £57 million unallocated capital resources, which included anticipated access to our end-year flexibility stock in the 2007-08 block. In the context of such significant sums being available for allocation, but with no corresponding pressures expected, a prudent approach was adopted to minimise underspend and hence facilitate future discussions with the Treasury regarding access to end-year flexibility stock.
Overall, therefore, £69 million was available for allocation in this monitoring round for capital expenditure, and £39 million could reasonably have been allocated for resource spend. Against that level of resources available for allocation, Departments have submitted current expenditure bids in the amount of £1·6 million and capital investment bids amounting to £63·4 million.
Turning first to the position as regards current expenditure, in light of the late stage of the financial year, only two bids were put forward, both by the Department of Culture, Arts and Leisure (DCAL). The Executive have agreed that £0·9 million should be allocated for the purchase of additional book stock to assist library boards in meeting published targets, and a further £0·7 million has been allocated to provide for the winding-up of the Northern Ireland Events Company.
With regard to capital investment, the Executive have agreed to allocate £58·9 million to Departments. That includes £6·9 million to the Department for Regional Development to meet a pressure resulting from delay in planned receipts from asset sales as well as additional cost from a change in accounting treatment for insurance costs associated with the first design, build, finance and operate (DBFO) roads capital programme.
The most significant capital pressure, however, has arisen with respect to DSD because of lower than expected capital receipts from house sales as a result of the more constrained credit environment, and the sale of land at Ballee in Ballymena is not now expected to be finalised until 2008-09.
Although DSD has taken measures to ameliorate the revenue shortfall, the Executive have agreed to meet the net capital pressure of £52 million. That follows on from the £50 million allocated in the December monitoring round to the Department for Social Development for a range of social housing initiatives, including co-ownership; the warm homes scheme; and the social housing development programme.
The consequence of the level of reduced requirements and bids met is that for current expenditure, the level of planned overcommitment is now £13·3 million. This is significantly below our target of £50 million at the conclusion of the February monitoring round and highlights once again the need for Departments to declare all reduced requirements as early in the year as possible. In terms of capital investment, we now have unallocated resources of some £10 million. However, all underspend resource will continue to be available to be carried forward for use by the Executive in the future.
Looking forward, 2008-09 will be the first time in a stable political environment that Northern Ireland Departments will be implementing the spending plans that have been developed by local politicians as opposed to direct rule Ministers. Although the main indicator of success will be improved services, a key milestone will be that resources are used for the purpose intended and in the timescales envisaged.
In conclusion, I recognise the progress that has been made during 2007-08 to improve financial management and hence ensure a more effective allocation of resources. This work will need to accelerate next year in light of the more challenging fiscal environment faced by the Northern Ireland Executive.
I commend the February monitoring position to the Assembly.
The Deputy Chairperson of the Committee for Finance and Personnel (Mr Storey): I thank the Minister for his statement to the House. The Minister plans to reduce overcommitment, year on year, over the Budget period to £100 million in 2008-09; to £80 million in 2009-2010; and to £60 million by 2010-11. The high levels of reduced requirements declared by the Departments at this stage have been managed by overcommitment provision. Will the Minister comment on how underspend will be managed in the future if this pattern of returning resources late in the financial year continues, especially given the plan to reduce overcommitment?
In addition to the important role of each Assembly Statutory Committee in scrutinising its Department’s monitoring round returns, to improve the accuracy and effectiveness of financial forecasting processes, is there also a need for the Department of Finance and Personnel (DFP) to challenge Departments more robustly on the reasons for return of resources and on the timing of those returns? Also, in a statement on the June monitoring round with regard to underspend, the Minister stated that the optimum would be to reduce current underspends close to 1%. Given that today’s statement marks the last monitoring round of the financial year, will the Minister comment further on the way forward to reduce current resource and capital underspend?
Mr P Robinson: I thank the Deputy Chairman of the Committee for his questions. I wish that it were possible to give clear answers to them all.
Mr Storey is right to say that there is a pattern: Departments are leaving their underspend declarations to late — almost too late — in the year. Unfortunately, that is where the patterns seem to end. As I indicated in my statement, the amount of underspend this year is significantly greater than it was in previous years. One can only judge the future by the past and present, and therefore DFP, in looking at the degree of overcommitment, looks at it in terms of what has been the previous pattern. That puts the Department in a difficult position if the pattern changes, because it has set the amount of overcommitment to eat up in the various monitoring rounds on the basis of previous patterns. If this year’s pattern were to be followed in future years, there might in the June monitoring round be more of an effort to spend some of the additional funds than was the case in June of this year, when we committed nothing.
We need to watch the patterns very carefully. The Deputy Chairperson is right to say that there is a role for all the Committees — not just the Finance and Personnel Committee, although it has the key role — in monitoring the spend of their Departments to ensure that money is spent on time for the purposes that have been set out, and that any likely underspend is declared as early as possible. In that way, we can make the best use of our funds and have them reallocated for the proper purpose.
Mr F McCann: Is the Minister aware that the Housing Executive has, for a number of weeks, been suspending repairs until the new financial year? Will he tell us whether this monitoring outcome can be used to ensure that Housing Executive tenants have their repairs carried out, especially new-tenant repairs, without which people cannot move into houses?
Mr P Robinson: The Member will know from my statement that we met all the bids that were made. If there had been an additional bid from the Housing Executive, it would have been looked at very seriously. The difficulty that the Housing Executive — and the Minister for Social Development — will have is that there is a very short period in which to spend this money. That is why it is important that underspending be identified earlier, so that programmes can be put in place, whether it be planned maintenance or whatever else. The only caveat that has to be entered at this stage is whether the Housing Executive could have spent the money, had it been allocated as a result of today’s monitoring round. With only a month left to spend the money, it is too late in the year. Also, the Assembly has already accepted the spring Supplementary Estimates.
Mr Beggs: Does the Minister agree that, in an ideal world, there would not be under-expenditure on the part of Departments? Regrettably, that has happened. Given this continuing issue, there may be a need to review the amount of funding that is held back for over-expenditure, so that we can be certain that the money that is allocated to Northern Ireland is put to good use here.
I am particularly interested in funding for children and young people. Why was £3·8 million returned unspent at this late stage?
Mr P Robinson: Unfortunately, we do not live in an ideal world. No matter how well a Department might plan for the incoming year, there will always be legal issues, planning issues or other regulatory issues that will mean that plans do not go forward as quickly as expected. There will be pressures on Departments from various areas for more funding. One can never contemplate, a year — or, in many cases, three years — out, exactly how each Department will spend money. There will always be a level of underspend. What is important is that we have the best management systems, in order to identify as early as possible what underspend there is, so that we can reallocate the funds to priority purposes. I suspect that there is not one Government Department that, if notified back in June that funds were going to be available, could not have identified some worthy purpose, whether it be children and young people or some other issue.
The money, however, is not lost. While it does go back, on paper at least, to the Treasury, we can, of course, negotiate with the Treasury in order to get access to it. I will be doing that. As far as this CSR period is concerned, we successfully negotiated to have all the end-year flexibility stock that is available to the Executive allocated within those three years.
I assume that I will have to go back to the Treasury at the end of the financial year to argue for the inclusion of the money that will be underspent this year.
Mr O’Loan: I thank the Minister for his statement. I welcome the fact that any money not spent during this financial year will be carried forward for use by the Executive. I welcome also the allocation of new money to the Department for Social Development, given that the Ballee land sale is not expected to go ahead during this financial year.
As has been said, these are large releases of money at this time of the year, and that is to be regretted. The low level of bids, particularly on the resource side, indicates that Departments were not confident that they could spend the money during this financial year, and I welcome the indication that steps are being taken to improve the management of that aspect. What confidence can the Minister give us that receiving Departments will be able to spend the money during this financial year? It will not look well for the Assembly, after a Budget round in which there was a great deal of clamour for money and public concern in certain areas, if we declare a significant underspend at the end of the financial year. That will create a situation that the public will not understand.
Mr P Robinson: The Member makes the point well. It is not just the public who will not understand that situation; I am the one who has sore ribs and a sore arm, having had it twisted up my back over the past few months by Ministers. They told me that they did not have half enough money in their budgets and that they needed more, and then I find that that they are handing money back to me during two monitoring rounds. It may be a bit difficult to understand, but, ultimately, it is down to financial management.
It is essential that the Committees play a significant role: we did not have the benefit of them during the direct rule period. We are developing a template for Committees to enable them to examine departmental spending throughout the year, so that it is not left until the tail end of the year to find out that money that could have been used in a Department is not going to be used. The Committee for Finance and Personnel is co-ordinating that work.
We will be in complete control of our Budget during the incoming financial year, having set it ourselves and having the opportunity to implement it ourselves, and we want to improve on the current end-year underspend.
As regards the contemplated asset sale at Ballee, in many ways, we could welcome that situation because if the sale had gone ahead, it would have left more end-year flexibility to be dealt with. The present situation means that the money is likely to be available during the next financial year. Therefore, we will have to look carefully, with the Department, to see where to make the best use of those additional resources.
Dr Farry: I return to the subject of patterns that was raised by Mr Storey. What investigation is the Minister carrying out into the pattern of some Departments regularly declaring large underspends and others regularly receiving additional moneys from those underspends? What consideration is he giving to ensuring that services could be funded in a more strategic way rather than their living, essentially, on scraps from someone else’s table? I have in mind the current situation in which quite a lot of Northern Ireland appears to be coned off due to roadworks. The public’s perception is that Roads Service is not only spending its own money but that of other Departments by carrying out roadworks at the end of each financial year.
Mr P Robinson: I do not agree that £50-odd million could be said to be scraps. If we had a lot of such “scraps” we could do quite well. The Committee for Finance and Personnel will want to work with all the other Committees to ensure that underspends are identified as early as possible. I do not believe that Departments wilfully allow money to be underspent at the end of the financial year; I believe that they are over-optimistic about being able to spend the money and, therefore, do not want to return it to the centre in case another Department gets hold of it.
However, from where I sit, looking across all the Departments, I would clearly rather that another Department used the funds than send them back to HM Treasury. That would mean that we would have to fight to get the money in a future financial year.
Some Departments find it much easier to spend money quickly. DHSSPS and DRD are two such Departments. For example, money can be spent on road maintenance in a relatively short time — that is probably why the Member has encountered some difficulties when driving around Northern Ireland.
However, I would not like to see what our end-year underspend would be if we did not have our present monitoring round mechanisms, particularly given our Health Service and health boards and the activities of DRD and its Roads Service. We should use funding wherever we can, and Northern Ireland plc would benefit from any improvements in those Departments.
We will be interested to see what will happen as a result of the new treatment that is being granted to the Department of Health, Social Services and Public Safety. That will be very much a learning curve for all of us, given that that Department will be able to use and identify its own underspend earlier without fear of having to return the funds to the centre. Consequently, those funds can be used for other purposes, either because of pressures in other areas or, indeed, because the Department wants to develop new programmes. It will be interesting to see how that works over the year; indeed, it may provide a model that we can adopt in other areas.
Mr Weir: How will the special dispensation that has been afforded to the Department of Health affect next year’s monitoring process?
Mr P Robinson: Where the Health Service is concerned, the first point is that half of Northern Ireland’s Budget will not be part of the monitoring process. Obviously, monitoring will continue, but the benefits or losses in the Department of Health that might result from underspend or additional pressures will be borne by that Department. As I said to the Member’s North Down colleague, it is an interesting experiment, and it will be worthwhile examining its results. The Department need not be concerned that some other Department will walk off with any of its early declared underspend; it will be able to use those funds for its own pressures or to develop new programmes. That is a massive gain for the Department, and it will be interesting to see how that experiment works out through the year.
Mrs McGill: Go raibh maith agat, a LeasCheann Comhairle. I am like other Members in that, when I hear of an underspend of so many millions of pounds, I wonder what is wrong with the system. I was heartened to hear some Members who know more about finance than I do say that they did not understand the process. I was also heartened to hear the Minister of Finance and Personnel agree with Mr O’Loan that it is difficult to understand.
Given that Office of the First Minister and deputy First Minister (OFMDFM) has set tackling poverty as a priority, is there any opportunity for the Executive to earmark any of the underspend — which goes across several Departments — in order that poverty specifically can be tackled? Go raibh maith agat.
Mr P Robinson: The money is at the disposal of the Executive until the end of the financial year, when it goes back to the Treasury and we have to bid for it again.
I share the Member’s view: when faced with constituents proposing various community schemes that require Government funding, I find it difficult to explain the situation. Through Departments, the Government will indicate to those people that they do not have the resources in this financial year to assist the proposed schemes. However, those people will then read in their newspapers or see on television that there is a massive underspend in the very Department from which they were seeking funding. In those circumstances, it is difficult to explain to people why their proposed scheme has not been given the go-ahead.
Departments have a massive fear of overspending, but I criticise them if they underspend, as do the general public. However, so far as the Treasury is concerned, overspending is the unpardonable sin: the wrath of the Treasury will be poured on Departments if they overspend. Therefore, there is always an attempt to err towards underspend than overspend, but that should be confined to much smaller amounts than is currently the case, and I believe that underspend to that extent comes down to poor financial management.
If underspend were identified at an earlier stage, programmes such as those that the Member mentioned could have been funded at that early stage. However, now that the spring Supplementary Estimates have been dealt with and there is only one month left in the financial year, it will be difficult for Departments to spend in that constrained time frame.
Mr Hamilton: I welcome the Minister’s statement. I note that, at this late stage in the financial year, there is a significant number of reduced requirements, and Departments will have grave difficulty in spending the results of that in the available time limit. I also note that that difficulty is much greater than it has been in the corresponding period of previous years. What action will the Minister take to ensure that future reduced requirements are declared much earlier in the year?
Mr P Robinson: Committees will have a key role in ensuring that that happens. As I understand it, my officials are already working with the Committee for Finance and Personnel to develop a template that will allow each Committee to track how resources are working through the system. The Committees will be able not only to do that, but they will be able to question their Minister and departmental officials as to why spending is falling behind. In areas for which there has been no expenditure, each Minister and his or her officials must give commitments that the moneys will be used within the required time frame. The present financial year began under direct rule, with the result that Committees have not yet had that essential role to play.
The Chairperson of the Committee for Culture, Arts and Leisure (Mr McElduff): Go raibh maith agat, a LeasCheann Comhairle. First, I note with considerable interest the £1·6 million — which is essentially for two projects — that has been allocated to the Department of Culture, Arts and Leisure. Will the Minister tell the House whether the £0·9 million that has been allocated for the purchase of additional books to assist the education and library boards is a recognition that, with the establishment of the single library authority, not enough money has been made available for books and for the delivery of front-line services? The Committee is hearing that message from all the education and library boards, and I hope that the Minister can confirm that there is an acceptance in the Executive that that has been the case.
Secondly, following on from Claire McGill’s question, is the Minister concerned about the so-called culture of underspend in Departments? If so, what is he doing to turn that around?
Mr P Robinson: The Executive have met the only two bids that were made for resource expenditure, both of which came from DCAL. My understanding is that the amount that was allocated to DCAL enables it to meet its book stock targets. As Chairperson of the Committee for Culture, Arts and Leisure, the Member will have considerable influence on future targets. However, that allocation has meant that the current target has now been met.
I repeat: a process is being established to allow the Member and his Committee — and all other Committee members — to have a greater role in keeping their Departments to account and to ensure that they are meeting the spending targets that were allocated in the Budget. Departments fought for more money, they helped their Ministers to get the funds that are available to them, and now it is their duty to make sure that their Ministers spend the money within the set time frame.
Mr Ross: I, too, thank the Minister for his statement. Several Members have mentioned the significant sums of money that various Departments are handing back. What actions will the Minister take to ensure that, in future years, there is access to the 2007-08 underspend funds?
Mr P Robinson: The process is not automatic. The Treasury recognises and identifies a stock of end-year flexibility, and, in order to receive the underspend for a given financial year, the case must be argued with the Chief Secretary to the Treasury. However, such end-year flexibility stocks are counted as ours.
We reached agreement with the Treasury concerning the significant underspends that had built up; those funds will be allocated over the three years of the comprehensive spending review. Therefore, all underspend that has been identified to date has been allocated to the next three financial years. In addition, this financial year’s underspend will be added to our end-year flexibility stock, and I will have to negotiate separately its allocation over following years.
Mr Boylan: Go raibh maith agat, a LeasCheann Comhairle. Will the Minister confirm that discussions concerning the purchase of the former Forkhill military base are ongoing with Department of Agriculture and Rural Development (DARD) officials, and that no final decision has been taken? Go raibh maith agat.
Mr P Robinson: Sufficient underspend funding was available to have covered what the Minister sought for the Forkhill site. However, before reaching that stage, a business case must be submitted and approved by Department of Finance and Personnel officials. That is a highly technical matter — I have not the slightest idea about how the figures are produced. However, I have met the Minister of Agriculture and Rural Development, who has been informed about the business plan’s failings, particularly about how costs might be reduced by additional funding from other sources and/or by reducing the amount of bells and whistles on the proposal. My officials will consider any resubmitted proposal. Of course, should a business plan be approved, funding is available for the Department.
Mr McCausland: Will the Minister provide an assessment of this financial year’s underspend?
Mr P Robinson: The Member’s question invites me to put my head on the block. I can tell him what the Departments have told me the year-end underspends will be, although, in the past, those Departments gave me figures that would not have led to the underspend available for this monitoring round. Therefore, I emphasise caution. However, the figures indicate that there will be £104 million in current expenditure and £49 million in capital expenditure. Both figures are considerably less than those for the previous year; however, I will wait until the end of the financial year to ascertain whether the Departments meet the figures that have been submitted. In addition, Committees should question their Departments about likely underspends for this financial year in order that, at the end of the year, they can compare those with the targets set.
Mr O’Dowd: Go raibh maith agat, a LeasCheann Comhairle. If I may have the liberty to raise a couple of issues, I would first like to further explore the matter raised by my colleague from West Belfast Mr McCann. The Housing Executive has apparently run out of money for remedial work. The Minister did give a full answer, but I would like to know whether, in the past two monitoring rounds, the Minister for Social Development told the Finance Minister that the Housing Executive was in danger of running out of money for repairs. Housing Executive houses are sitting empty because the Housing Executive does not have enough money to repair them.
In addition, what measures will the Department of Finance put in place to ensure that the public purse will get value for money from the land sale at Ballee, Ballymena?
Mr P Robinson: Very often, I am criticised for control freakery and micromanaging Departments; yet there are times when people ask why I allow a Department to do one thing, when it should be doing something else. We cannot have it both ways.
On the Housing Executive issue, all I can tell the Member is that, as he knows, every bid received from the Department for Social Development in relation to that matter has been met. If further moneys are required, it is up to DSD, in its discussions with the Housing Executive, to make a bid for those. I cannot second-guess what the discussions were in the Department. Those questions are more appropriately asked of the DSD Minister.
As far as the more general issue is concerned, I again emphasise that I can allocate resources to Departments, but it requires them to put in bids. Departments will put in bids only if they are sure that they can spend that money during the course of the financial year. Therefore, the earlier that an underspend is recognised by a Department, the earlier we can reallocate that funding and make it available for the use of other Departments. I cannot spell it out enough: early identification is down to the Departments. I cannot do it myself — it must be done by the Departments.
The Ballee land issue is a matter for the Department for Social Development. The funds will be available in the next financial year. That gives a longer opportunity for officials to look at how to spend that money, because it was expected that that money would be available in this financial year, rather than in the next. I hope that some financial-management benefits will arise from that.
Mr Savage: As a member of the Agriculture Committee, I ask the Minister to explain the underspend of 5·9%, which amounts to £13·9 million, and the forecast for capital investment, which amounts to 25·4%. That is sad news for the agriculture industry. Will he explain how he arrived at those figures?
Mr P Robinson: I did not arrive at those figures — they were provided by the Department of Agriculture and Rural Development. Throughout the monitoring rounds, we have been able to meet bids — with the exception of the Forkhill bid, for the reasons that I stated earlier. If there are specific issues that the Member wants to raise about the way that the Department of Agriculture has dealt with matters, I suggest, as diplomatically as possible, that he raises them with the Minister for that Department.
Rates (Regional Rates) Order (Northern Ireland) 2008
The Minister of Finance and Personnel (Mr P Robinson): I beg to move
That this Assembly approves the Rates (Regional Rates) Order (Northern Ireland) 2008.
The Order today is not simply about setting the level of rates for the next financial year; it is about setting a new approach to how we address financial issues in Northern Ireland. The days of asking the people of Northern Ireland to make an ever-increasing financial contribution to efficient public services are over. Now it is time for Government to deliver.
The Rates (Regional Rates) Order (Northern Ireland) is a vital part of the annual financial cycle. The form of devolution that we have in Northern Ireland means that most tax-raising powers remain with the national Parliament at Westminster. Therefore, this Order provides the Assembly with its only mechanism to raise additional resources to fund key areas of central expenditure.
As I indicated previously, devolution is about making a difference to the lives of people in Northern Ireland, and there is no clearer signal of that than our approach to the regional rate. The days of increases in the regional rate compounding to 62% over five years are long gone. Instead, we are steering a new direction for the future, which will benefit every household and business in Northern Ireland. For the first time in many years, instead of the householder being asked to bear the burden, our key focus is to ensure that the public sector delivers.
In my speech to the Institute of Revenues, Rating and Valuation (IRRV) in Belfast in 2007, I stated that one of my priorities was to control the level of the regional rate in Northern Ireland. The Department of Finance and Personnel has delivered on that commitment.
Northern Ireland faces major challenges, none more so than in our public spending plans, which must reflect reality and the fact that we will have to manage our finances within a framework that has, at its foundation, a commitment to delivery, innovation and efficiency.
During the draft Budget debate, I highlighted that, in the last three years of direct rule, Northern Ireland had regional rate increases of 9%, 19% and 6% respectively, with more planned for the years to come. During the Budget debate on 12 February, I emphasised that a 60% increase in the regional rate over five years was unacceptable. In that context, and with the pending introduction of water charges in 2009, I announced that the domestic regional rate should be frozen for the next three years.
The business regional rate increases have been more modest, averaging about 3·3% over the past five years. However, businesses will also be faced with water charges. Therefore, in the draft Budget, I announced an average increase in those rates of 2·7% a year for the next three years. That is in line with the expected rate of inflation and, therefore, in real terms, amounts to a freeze.
That level of regional rate is expected to generate revenue of £530 million. At the same time, we must continue to consider our methods. There is a real challenge to address head-on the efficiencies that we need to make so that more resources can be redirected to the front-line services that need them.
I want to see how we can achieve even greater efficiencies beyond the 3% a year targets that have already been set. Members are aware of how much emphasis I want to be placed on that matter. The new performance and efficiency delivery unit will be in the front line of the battle to strip out waste and identify where we can achieve significant savings of public money.
Some Members have argued that, notwithstanding the 60% increase over the past five years and the introduction of water charges, householders should contribute even more to public expenditure. I disagree, not simply as a matter of political philosophy but because of the relatively modest contribution that such an increase would make to public expenditure.
The regional rate contributes less than 6% of all funding available to the Executive each year. Therefore, if I had sought a 1% increase in the rate, that would have raised about £2·7 million of additional revenue. Similarly, some have suggested that the Department should maintain the domestic rates in real terms. To do that at the current inflation rate of 2·7% would raise only £5·86 million. Therefore, generating significant extra revenues through the regional rate would require increases in rate levels that no one would consider acceptable. The modest sums that could be raised through rate increases can be compared with the resources that will be released through efficiency savings made by Departments. Departments plan to deliver £790 million in efficiency gains by 2010-11.
I now turn to the detail of the Order, and I shall briefly describe each article.
This short statutory rule specifies the regional rate poundages for the financial year 2008-09. Article 1 provides the title of the Order and gives the operational date as the day after it is affirmed by the Assembly.
Article 2 provides for the duration of the Order, and it will apply until 31 March 2009. Article 3 specifies 29·89 pence in the pound as the commercial regional rate poundage and 0·3608 pence in the pound as the domestic regional rate poundage. Today, we are not only setting the rates for Northern Ireland for the next year but, more fundamentally, charting a new direction for the people of Northern Ireland with our approach to Government. The Rates (Regional Rates) Order (Northern Ireland) 2008 not only gives the Northern Ireland householder a well-deserved break from large increases but it lays out a challenge for Departments to deliver a more efficient form of Government. I, therefore, commend the Order to the Assembly.
The Deputy Chairperson of the Committee for Finance and Personnel (Mr Storey): I welcome the Minister’s statement, and I thank him for his opening remarks. The purpose of the statutory rule is to fix the amount of the regional rates for the year ending 31 March 2009. Members will be aware that, as part of the draft Budget announcement of 25 October 2007, regional rates for domestic properties were frozen for the next three years, and the rate for non-domestic properties was increased only in line with inflation.
When the Minister announced the draft Budget, he mentioned that the past three years have seen regional rate increases of 9%, 19% and 6% respectively, and that the average regional rates bill had increased by 62% since 2002. The Committee for Finance and Personnel’s report on the Executive’s draft Budget welcomed the proposals not to increase the regional domestic rate, especially given the significant increase in that element of the rates during the recent period of direct rule. The Committee also acknowledged the proposal to hold the increase in the non-domestic sector in line with inflation and, therefore, minimise the burden on business. That is in line with the Executive’s wider priority of promoting economic growth.
On 6 February, officials from the Department of Finance and Personnel briefed the Committee on the proposals contained in the statutory rule. The Committee formally considered the rule at its meeting on 20 February, at which a motion to recommend that the rule be affirmed by the Assembly was approved by a majority vote. I, therefore, support today’s motion.
Mr Beggs: I wish to put on record that I am content that the rates should continue at the levels indicated.
Mr O’Loan: I support the motion.
Dr Farry: I shall not be as brief as the two Members who spoke before me. The Alliance Party is opposed to this statutory rule.
Mr S Wilson: The Alliance Party says no again.
Dr Farry: The Alliance Party says yes to proper public services in Northern Ireland and to taking a responsible and realistic approach on issues regarding taxation and expenditure. As the opposition in the Chamber, it would be easy for the party, on the one hand, to point out all the deficiencies about public spending and investment in sustainable public services and rebalancing the economy, and, on the other hand, simply buy in to decisions being taken on households and other taxation. However, that would be opportunistic and irresponsible.
The Alliance Party has not provided a fully costed alternative to the Budget. It does not have access to the resources and the information to conduct such an exercise. If and when the Alliance Party is in Government, it will be up to the party to make its own choices about how it will balance income and resources. However, party members want to highlight, with a greater sense of realism, the choices that have to be made and the potential consequences of the choices that those in Government are making.
I want to stress two important points. First, the Alliance Party is opposed to the regional rate. It would replace it with an alternative measure that is based on ability to pay, such as local income tax. Property values are not an accurate assessment of ability to pay. We are all aware of those people who are asset rich and income poor.
Secondly, like everyone else, the Alliance Party wants —
Mr S Wilson: Given that the Member has identified an issue here — that some people are asset rich and income poor — surely that is an even more compelling argument to support this Order in that it is designed to help people to avoid huge rate increases?
Dr Farry: If one is talking about an increase in the rates at the level of inflation, which is probably the most sensible way forward, then that would amount to 25p to 30p in the pound per week for the average household. That is quite a small amount. It is also worth recognising that not every household in Northern Ireland pays rates. Therefore, this benefit from the Executive will assist only some people. The people who do not pay rates tend to be those who are most dependent on public services, and the Alliance Party is concerned about the level at which public services have been funded.
Mr Weir: The Member has indicated that he is concerned that ratepayers will be paying while others will not: is he advocating the introduction of the poll tax here? [Laughter.]
Dr Farry: The Member is well aware of the Alliance Party’s proposals in this regard. My point is that some people will not benefit from what is, in effect, a cut in the level of the regional rate. However, there are some who very much depend on public services, in particular the Health Service, and who will suffer as a consequence of the underfunding of the Health Service.
Mr Hamilton: Will the Member give way?
Dr Farry: Just a moment, Simon. It is important that Members bear what I have said in mind, not least when MLAs from all parties are commenting on the lack of funding in the Health Service.
Mr Hamilton: That was a good lead-in as the Member mentioned lack of funding. Precisely how much additional investment, on top of the many hundreds of millions of pounds of additional money that has already been poured in, does the Alliance Party want to pump into public services?
Dr Farry: I have already addressed that point in my opening remarks, and the Member can look at previous Hansard Reports. It is interesting to note that Members from all parties are raising concerns about the amount of funding available to the Health Service. In the North Down constituency, a DUP councillor has been extremely vocal in pointing out the difficulties that the local health trust is having in dealing with so-called efficiency savings and is saying that they amount to cuts. He is calling for additional investment in the Health Service. Therefore, it is important to recognise that all parties seem to be concerned with the issue, although some seem to be a bit straighter with the people about the choices that are being advocated for Northern Ireland.
In the past, the Alliance Party has criticised rates increases of between 8% and 19% and has voted against them in this Chamber. They are a huge burden on people, and we join with the Minister in recognising that. However, the Minister of Finance and Personnel, along with all his Executive colleagues and their parties, has now gone to the other extreme, with a freeze on the regional rate for the next three years. In practice, that amounts to a cut.
Mr Beggs: Will the Member not acknowledge that although rating levels are being held for this year, that reflects the large increases of previous years? Does he not recognise that huge burdens will be placed on householders in the next two years with the introduction of water rates? Does he want higher household rates on top of water charging? Does he not recognise that that would be extremely burdensome and would cause particular hurt to the working poor — those who are just above the threshold for receiving rates relief? People who have to work and have to pay their full rates would accept that continuing to increase rates will adversely affect the working poor.
Dr Farry: We are all conscious in this House of the ticking time bomb of water charges — an issue which, in many respects, puts this debate into context. However, there are fundamental reasons why we need to take a responsible approach to the level of the regional rates. On the one hand, going for large increases is irresponsible; however, at the same time, going for what is, in effect, a cut is also irresponsible in light of the pressing need for investment in public services. There is also the issue of the other financial consequences it will have in our dealings with the Treasury.
Mr S Wilson: The Member has given way a number of times, and I appreciate his doing so again. I am trying to understand his logic. An 8% increase in the rates was such a huge burden that the Alliance Party, and, indeed, the then Member for Lagan Valley Seamus Close opposed it vehemently during a previous mandate. However, Dr Farry is now arguing that a freeze in the rates, which, as he said, would save about 25p a week, should be opposed. The 8% increase represented a weekly increase of 75p — which was a huge burden that the Alliance Party was totally opposed to — but a saving of 25p per week is being dismissed. Will the Member explain the logic of that?
Dr Farry: We want to avoid a situation in which we are swinging from one extreme to the other. A planned strategic approach should be taken on issues such as the regional rate. The regional rate is one element of public service funding in Northern Ireland, and it is important that it is addressed in a balanced and sustainable manner.
The extremes of having major hikes and unrealistic freezes in the regional rate are unfair and will, potentially, have to be addressed. Planning for an increase in the regional rate of around the rate of inflation is the responsible approach and will fund public services. The people of Northern Ireland are intelligent: they realise what is happening.
Northern Ireland faces a difficult financial starting point. Public expenditure here is already heavily skewed because of the distortions that result from trying to manage a divided society. It is worth putting on record that the Alliance Party will be meeting the Minister of Finance and Personnel next week to discuss how the cost of division in Northern Ireland can be addressed.
Unnecessary duplication of services carries opportunity costs for the possibility of providing quality public services for the whole community. Sadly, the Executive are not yet prepared to face up to the challenge of creating a shared future despite the clear social, economic and financial imperatives for doing so. A shared future is a marginal theme in the Programme for Government and the Budget.
The British Government have produced a tight comprehensive spending review (CSR) settlement for Northern Ireland — the Barnett formula gradually works against the interests of Northern Ireland also. The regional rate is supposed to reflect the differences between the sources of service delivery in Northern Ireland and Great Britain. In Britain much more is delivered by local authorities. The regional rate, therefore, is a vital component in the funding of local services. However, the Minister of Finance and Personnel and the Executive, through their decisions on tax, have made a tight financial settlement even tighter. Rather than investing in public services, or rebalancing the regional economy, they have used available resources as a tax giveaway.
The Alliance Party has criticised the Budget for its shortcomings on investment in a number of service areas. Health is the major area of concern. By 2011, Northern Ireland will be £200 million behind where it needs to be to keep up with service provision levels in the rest of the UK.
The Department of Health, Social Services and Public Safety is now getting the lion’s share of the Budget. Nonetheless, we are flatlining compared to those in the rest of the UK. People here will pick up on that point when they see the quality of the health services that are available to them.
I have pointed out that the South Eastern Health and Social Care Trust is wrestling with the need to deliver the so-called efficiency savings. I am sure that other health trusts are in a similar position. Such efficiency savings appear awfully like cuts to services.
In due course a lot of political parties and Members from different constituencies will be pointing out the problems in local health provision and will be making claims for additional resources or the retention of service levels. When that situation arises, I will say to them that they have made their beds and must lie in them.
The Alliance Party has also highlighted mental-health provision. In Northern Ireland only 8% of the overall health budget is spent on mental-health provision. In the rest of the UK the figure is 12%. Everyone across the political spectrum is conscious of the need for additional investment in mental-health services in Northern Ireland. However, yet again, there is a reluctance to match rhetoric with actions where finance is concerned.
I could highlight others issues including environmental protection; arts funding; public transport; transport infrastructure in general; and investing in the economy. The list of public services that are being underfunded is substantial.
It is worth noting once again that several organisations, including the Economic Research Institute of Northern Ireland (ERINI), the Confederation of British Industry (CBI) and Northern Ireland Council for Voluntary Action (NICVA), have challenged the approach that has been taken in the Budget to household taxation. I appreciate that the Minister has outlined recently his reasons for disagreeing with those organisations’ analysis; he is perfectly entitled to do so, and, no doubt, I will also disagree with their analysis in some respects. However, it is worth recognising that important, credible organisations in our society believe that we have taken a populist, rather than an evidence-based, approach to local taxation.
For different reasons, those organisations recognise that additional resources should be reinvested in either first, rebalancing the economy — the belief of the CBI and ERINI — or secondly, in addressing social problems — the belief of NICVA. The Alliance Party does not want to see the tax burden here become any more arduous than it currently is, but serious questions must be asked about an approach to local taxation that is based on populism rather than evidence.
Clearly, the Alliance Party’s proposals would not be able to cover all areas of investment, but they would make more of a start than the Executive have done to date. To clarify the Alliance Party’s position on income issues, it would involve a focus on three areas. First, the cost of segregation would have to be addressed and funds for reinvestment elsewhere should be released, thus potentially reducing taxation in the long run. Secondly, the Alliance Party would also pursue efficiency savings, although in that regard a subtle distinction should be made — for the Alliance Party, efficiency savings do not involve merely doing the same with fewer resources, but rather ensuring that resources are transferred from inefficient old priorities to more efficient new priorities and to meeting new demands. Thirdly, we would follow an evidence-based approach to local taxation. Rather than going from one extreme that comprises rates hikes to the other, effectively cutting rates, we would take a balanced approach, striving to keep rates in and around at the level of inflation.
Another consequence of the policy that has been adopted is that the parity principle may be under threat. For almost 60 years, Northern Ireland has matched the levels of social security provision in Great Britain. However, an assumption that the tax burden should be standardised as far as possible throughout the United Kingdom is behind part of the bargain that the Executive wish to make. How will the Treasury react to the approach that has been taken on local taxation?
Furthermore, how will this — or any future — Executive be able to argue credibly for favourable funding, given that the resources that we receive are used for a populist approach to taxation, rather than for further investment in sustainable public services? That is a strange approach for unionists to take, to say the least. I am also concerned about the message that the Executive are sending out to wider society: they are creating unrealistic expectations regarding local taxation issues. The Executive may be placing themselves in a financial straitjacket. There will be a time when the Executive will need to raise funds from the regional rate to pay for local services, and I fear that they are making things more difficult for themselves in the long run. A rise in rates in or around the rate of inflation would be more sustainable and would be a way to avoid those difficulties. Above all, this argument is academic, given the debacle concerning Northern Ireland Water and the very steep charges that people in Northern Ireland may now be facing.
The Executive have agreed what is effectively a right-wing Budget, and I congratulate the Minister’s success in getting the other three Executive parties to sign up to it. They have all made their choices in that regard. However, I remind the members of all the political parties that are in the Executive that they must be careful about how they argue for things over the months and years to come. They have all made their choices to sign up to the Budget, and, by implication, to the approach that has been taken to the regional rate. In so doing, they have no credibility when they raise issues regarding the underfunding of health, education or transport. People cannot have it both ways when they are in Government. I note that all the Executive parties have made that point in the past: we cannot have it both ways.
The Alliance Party’s approach is the reasonable and realistic one, and I think that the people of Northern Ireland appreciate and understand it. My colleagues and I are hearing on doorsteps and in our constituency offices about people’s concerns for the future of the public services in Northern Ireland, particularly the Health Service. People need to be realistic when they consider the parties in this Assembly and the decisions that they are making. They must ask themselves whether those decisions add up.
Mr Hamilton: Dr Farry’s contribution was longer than the two that preceded it. My contribution may be slightly longer than those of Mr O’Loan and Mr Beggs, but it will not be as lengthy as that of the Member for North Down. That will be another relief for the ratepayers of Northern Ireland.
Mr S Wilson: It took that long for the Alliance Party to explain its position.
Mr Hamilton: The Member is absolutely right.
Lest there be any doubt, I welcome the introduction of the Order. It is my rule of thumb that if rates are to be frozen, it is a good idea to vote for and support that. One reason that I became involved in politics was to help, in whatever small way I can, to ease the burden faced by ratepayers, particularly hard-pressed working families, who have endured phenomenal rate rises in recent years.
The rise in the regional rate of over 60% has been mentioned, and in one year there was an increase of almost 20%. In its own small way, and within the limited scope that it has, the Assembly is helping to ease that burden. When the Minister of Finance and Personnel announced the proposal in his Budget statement towards the end of last year, I thought that all parties would support it.
However, much to my surprise and that of many others, the Alliance Party has consistently opposed the proposal. At meetings of the Committee for Finance and Personnel, the Alliance Party was joined by the PUP in voting against the Order and by the SDLP in voting against the cap on industrial rates that will be discussed later. If such a cap were introduced, businesses would not pay any higher rates than they do now.
Many Members view the Alliance Party’s conversion to old-style tax-and-spend socialism as somewhat curious. It is a strange switch, and it has resulted in some DUP Members branding the Alliance Party’s spokesman on finance “Fidel” Farry. However, given the winds of change that are sweeping through Cuba, that is perhaps no longer an appropriate name.
Even though this is a serious subject, the Alliance Party’s contributions have resulted in it taking on a comic quality, to the extent that a more appropriate title would be “Bruce Forsyth” Farry. Dr Farry takes every opportunity in the Assembly, at meetings of the Committee for Finance and Personnel or when addressing the general public to say “Higher, higher.” He wants people’s rates bills to be even higher than they are now. However, perhaps “Bruce Forsyth” Farry is not an appropriate name either, because not too many people will say “Good game, good game” or “Didn’t he do well?” to him when he talks to them on their doorsteps during the run-up to the next election.
The Alliance Party states that it merely seeks a rise in the regional rate that is based on the rate of inflation, which, it argues would be a more measured option. However, when Members of the Alliance Party are pressed on how much the rise should be, they do not come up with an answer. Dr Farry repeatedly referred to health, and the Alliance Party subscribes to the claptrap that there is an annual £200 million shortfall in funding for health over the period of the Budget, totalling £600 million over the three years. To raise that money through a rise in the regional rate would require an increase of over 200%.
Dr Farry: The figure of a £200 million shortfall in funding came from the Economic Research Institute of Northern Ireland: was it talking claptrap?
Mr Hamilton: The amount of money that has consistently been allocated to the health budget over the years has resulted in the current situation in which, compared with the start of the decade, its budget has doubled. The money involved is not a small amount: it has doubled from £2 billion to over £4 billion. There are massive inefficiencies in the Health Service.
Mr S Wilson: Does the Member accept that the Member for North Down said that the Alliance Party was perfectly justified and right in opposing an 8% increase in the regional rate during the Assembly’s previous mandate because it meant a 75p increase a week per household? Now, however, Dr Farry advocates that a further £200 million be raised through an increase in the regional rate. That would mean an increase well in excess of 8% in rate bills, but during the current mandate he can justify that.
Mr Hamilton: Mr Wilson is correct. An increase based on inflation would raise a paltry figure relative to the massive increase in spending that the Alliance Party seeks. It would not even scratch the surface of the amount that their spending plans require. Even to raise the £200 million to meet the shortfall over the three-year period would require an increase of over 200% in the regional rate. The average bill would increase by £920 from the current figure of just over £400. The Alliance Party wants to inflict that burden on people.
Dr Farry: I understand that the Member studied accountancy at Queen’s at the same time that I read political philosophy, so I will perhaps challenge his point about socialism and communism later. He said that the Northern Ireland regional rate raises some £590 million per annum, and yet he referred to an increase of £200 million as a doubling of the regional rate. Surely £200 million is merely a fraction of £590 million, rather than a multiple? That is not to say, of course, that the Alliance Party advocates the funding of that gap from the regional rate. However, given that he has an accountancy degree, can the Member explain how he does his sums?
Mr Hamilton: I thank the Member for his intervention. It is not, of course, a blanket total of £200 million that has been asked for; rather, the figure is £200 million per year, totalling £600 million over the period. When I heard of that demand coming from the Alliance Party, and from other Benches, I asked the Department of Finance and Personnel by how much that would increase the regional rate. The answer was that the regional rate would have to increase by 228% to £920. That is how much it would cost; that would be the burden on the taxpayer. Indeed, that is only a fraction of the burden that would be incurred if Alliance Members’ wishes were granted. They want a litany of things, from environmental protection to the arts, and everything in between. They want more and more —
Mr S Wilson: Tractor farms.
Mr Hamilton: Tractor farms in the Urals. [Laughter.]
Mr S Wilson: Gulags for — [Laughter.]
Mr Hamilton: Yes, maybe they could break down the cost of division with an integrated gulag.
That £600 million, and the doubling or even trebling of the regional rate, would only be the start of the Alliance Party’s plans. Those of us who listened for years to the Alliance Party crying out for devolution under any circumstances, so that a difference could be made from the direct rule state of affairs, are bewildered by the latest nonsense coming from their Benches.
This is a difference from direct rule. If direct rule had been in place today, the people of Northern Ireland would have faced a massive increase in their regional rate, on top of what they have already paid over the years. Businesses too would, undoubtedly, already be facing the prospect of 50% industrial rates, rising to 100% in a few years. That is the difference that this Assembly is making; that is the difference that devolution is making. I warmly welcome the introduction of this Order, and give it my wholehearted support.
Mr Deputy Speaker: Mr Hamilton, thank you for the insight into your level of television viewing.
Mr Shannon: I am glad of the opportunity to question the Minister on this subject. I welcome his report and the opportunity for local involvement, at Assembly level, on the issue of regional rates. Some time ago, I brought the matter of regional rates for properties with agricultural occupancy clauses to the Minister’s attention, and there was discussion between us and with other bodies about it. Estate agents have opined that the value of properties with such clauses is 40% to 50% less than it would otherwise be.
Is the Minister now in a position to tell the Assembly whether he has addressed that anomaly in the rating system? It has already had, and will continue to have, a great effect on a number of people in my constituency of Strangford, and, indeed, on people throughout the Province. I am not sure exactly how many people are affected, but it impacts on anyone who has a property with an agricultural occupancy clause.
Mrs Long: I welcome a couple of things in what the Finance Minister said. He said that this was about setting out a new approach to the regional rate so as to avoid the massive increases that we have had in the last number of years, and to ensure that the public sector delivers. I do not believe that there is an elected representative in this Chamber who would wish that we did otherwise.
However, he also talked about controlling the level of the regional rate.
Although the sentiment is admirable, my party’s concern is not about the current level of the regional rate but about the creation of a boom-and-bust cycle in which huge hikes for several years will be followed by a complete freeze that will then force another couple of huge hikes. The Alliance Party does not believe that that way forward is sustainable. My party’s concern is that, for the public’s sake, rates bills are properly managed.
My party also welcomes efficiency savings. No one who sits in the Chamber believes that there is no room for efficiency savings in the public sector — no one is arguing otherwise. However, the Assembly must carefully consider areas in the public sector where the problem is underfunding, not lack of efficiency, and must confront that wherever it exists. No one argues against efficiency savings, because everyone wants to have efficient public services. However, to achieve efficiency, the Assembly must control spending and must not get into a negative cycle in which it freezes rates while knowing that doing so will put it under pressure later. It is a matter of long-term planning.
Several Members asked valid questions during the debate. However, I disagree with them in interpretation. For example, everyone agrees that some of the rates hikes that occurred during direct rule were excessive. There is no question about that, and a particular political point was being made. Dr Farry made a significant point when he highlighted the fact that the Government, which still retains control of the Treasury and the allocations that the Assembly receives from that quarter, are the same Government who believe that the contribution level from local householders in Northern Ireland must be increased.
The Assembly is now in control and cannot be forced to raise those funds through rates in the sort of measure that the Government have during the past three years. However, it will not go unnoticed if the Assembly freezes rates and then goes to the Treasury to ask for additional resources. The Assembly must be careful to ensure that when it approaches the Treasury, it does so with a rational and reasonable argument and can defend its position.
Roy Beggs Jnr mentioned poverty and the working poor. It is right that those matters be raised. Part of my concern is that people who fall into the category of the working poor will be those most damaged by the unpredictability of their future finances; the boom-and-bust cycle in which rates are fine for two years and then become outrageously expensive at the next top-up.
When those issues were debated in Belfast City Hall, colleagues who sit to my left in the Chamber made the point repeatedly that the problem was the lack of a measured approach towards rates — 19% increases and so forth — which damages people because they cannot plan for their future effectively. Therefore, for the sake of the working poor, there must be some predictability about what rates increases are likely to be — not only during the next year or three years, but in the long term.
Simon Hamilton quite rightly identified the fact that it would be easy to support the argument for no rates increase. Of course, it would be easier to tell the public that the Assembly will not be asking them for any more money. If the Assembly stopped at that point, it would be incredibly easy. However, the Alliance Party believes that the Assembly must be responsible and must tell the public that rates must be managed in a regular and measured way in order that it can deliver public services. Dr Farry clearly explained the consequences of not raising the required amount of money.
It would be easy and popular for the Assembly to simply back the notion of having no rates increase. It would be easy to put one’s hand up in favour of such a move. However, what is difficult to do is to articulate a constructive argument as to why rates must be managed differently. The Alliance Party has been accused of saying no again — in fact, that is not true. My party does not want to be destructive and negative: it wants to put forward constructive, alternative arguments, which is the opposition’s role in this place.
My party has also been accused of wanting to spend a huge amount of money. Frankly, that makes me want to laugh. If one examines the manifestoes of every party in the Chamber, it is clear that all of them made considerable commitments to the public. The difference is that the Alliance Party thought through the consequences of the commitments that it made and was aware of what must be done differently in order to meet those commitments.
Realistically, all parties must be serious when they write their manifestos and make their promises, because — since devolution — private Members’ motions have consistently called for more money for this, more money for that and more investment in the other. Those motions have come from all the parties, and the majority of them have not come from the Alliance Party — that is a false statement. Members constantly call for extra money, and I look forward to future private Members’ motions that explain from where the money will be taken.
That is the challenge that has been put to those of us in opposition, and I put it back to those in Government.
Mr P Robinson: Believe it or not, I am grateful to all the Members who contributed to the debate.
As I said earlier, the Order provides the Administration with a vital tool to raise much-needed additional revenue to fund public expenditure on key services and provisions. Therefore, it is imperative that we use it wisely and get the correct balance between what is reasonable to levy on households and commercial premises, while raising sufficient funds to meet our spending requirements. We have that balance right this year and in the years of the CSR period; the public will see an Administration that makes a difference to their lives by delivering on its promises and being in touch with what is required to improve our services.
As custodians of the money raised through the regional rate, it is our job to ensure that that money is used to its maximum potential. That way, we will be able to realise a more vibrant economy and better quality services for all our people.
The main arguments on the amount set in the Order have been covered in previous debates on the Budget. Dr Farry used the same speech that he used on two or three occasions — it does not improve the more that one hears it. He stated, correctly, that parties cannot have it both ways. However, while he was saying that he was attempting to have it both ways. We must have an open, transparent and honest debate on the issue.
Dr Farry deliberately does not say how much additional revenue is required to meet his aspirations for health, transport and education. Every now and again, he makes inaccurate quips about the amount of underfund. People in Northern Ireland have 7% more money a head spent on them in health than people in Great Britain — not less. If Dr Farry is going to enter the debate, he should at least do so with accurate figures.
Dr Farry: Will the Minister give way?
Mr P Robinson: I will give way in a moment. However, the Member might want to wait for a while because, as I continue there will be a few more questions for him to answer.
I agreed with one thing that Dr Farry said. The public are intelligent and able to see what politicians are up to. We have seen what the Alliance Party is up to — they try to show that they can meet their requirements for health, education and transport with an inflation-based increase in the regional rate for householders in Northern Ireland. In my statement, I said that — taking inflation at 2·7% — an inflation-based increase would realise £5·86 million. Will Dr Farry tell me how the £5·86 million, which — as he says he wants — would be raised by an inflation-based increase in the regional rate, will pay for the £200 million that he wants to spend in health, not to mention the millions he wants to spend in education or transport? His shopping list may be even longer than that. The Member must be straight with the people of Northern Ireland — if he asks for large sums of money for those worthy causes, the cost of which he would add onto the rates, he must tell people that he will treble their rates, rather than double them.
The answer to the question that he put to my colleague is that the £590 million is not the amount of money from the regional rate from households but from households and non-domestic properties. Therefore, my friend is right to say that the £200 million would have doubled the regional rate. That is what the Alliance Party wants. Not content with a 62% increase over the past five years, it wants to more than double the regional rate for the next few years.
Dr Farry: I have two points to make. First, I freely recognise that more money is spent per capita on health provision in Northern Ireland than is spent elsewhere in the United Kingdom. The reason for that is, sadly, that we have greater health need per capita in Northern Ireland, and, therefore, the Budget allocations reflect that need. The Alliance Party’s point is that, as a result of the current Budget, our inability to keep up with healthcare standards in the rest of the UK has led to our falling behind. We are flatlining.
Secondly, I made it clear that the Alliance Party does not have the resources or access to the detailed information that is needed to provide a fully costed Budget. However, I have sought to highlight three areas to do with income: first, the costs of a having a divided society must be dealt with, and no doubt we shall return to that point in our meeting with the Minister next week; secondly, possible efficiency savings must be highlighted; and, thirdly, a more responsible approach to the regional rate must be sought.
The Alliance Party has not sought, at this stage, to address how it would fund the underfunding of our public services. However, the several different income strands that we have set out for Northern Ireland can be dealt with.
Mr P Robinson: The Member has no shame whatsoever. He tells us that he does not possess the resources to garner together an argument, yet he states his approach as if it were fact. He has admitted that he does not have the resources at his disposal to realise what the real financial position is. Perhaps he should use Assembly facilities — Committee and Library resources — to obtain the facts so that he might return with answers. However, I suspect that to do so would scuttle his argument.
The Member accuses me of adopting a popular rather than an evidence-based approach. Let me give him that evidence. The increases under direct rule have been significantly higher than anybody in Northern Ireland should have been asked to bear. A 62% increase over the past five years is unacceptable, but the Member evidently does not think so. If we are to redress the balance, we are right to do what we have done — freeze rates. I would have thought that, after his recent radio broadcast, the Member would have recognised that people do not support his stance. I do not know what doors he has been knocking on, but people to whom I have spoken welcome the fact that they are to experience some relief from the massive rates hikes of previous years.
I listened to the contribution from the deputy leader of the Alliance Party. She should have listened to the old saying that one never refers to rope in the house of a hanged man. It was unwise for her to start to refer to manifestos. She has obviously forgotten that the Alliance Party’s manifesto for the local government and Assembly elections stated that there should be rates reductions. Her party advised people to watch out for the parties that would be in Government, because they would attempt to hike the rates in Northern Ireland. The exact opposite has now happened; the parties in Government want to freeze the rates in Northern Ireland. The Alliance Party has torn the page out of its election manifesto and now wants to hike the rates in Northern Ireland.
I will take no lectures from her about the need to show consistency on the issue. She argues that to have a hike one day and a freeze the next day leads to a hike in the future.
She should know — if she does not, she should speak to her husband, who will tell her — that Castlereagh Borough Council has dealt with precisely those issues. That is why Castlereagh Borough Council has the lowest rates in Northern Ireland and the lowest increases. The council consistently gives the best value to its ratepayers through precisely the same programme that the Assembly is adopting. We cannot simply pull more money out of the pockets of the people of Northern Ireland.
Mrs Long: Will the Minister give way?
Mr P Robinson: I will be happy to give way to the Member in one second.
We will get the additional required resources by making efficiencies in the system. We will save £790 million through efficiencies. That is the way to do it, rather than asking for more money from people before we remove the waste from the system. People will welcome that policy.
Mrs Long: The Minister has drawn a parallel between his budgetary approaches for Castlereagh Borough Council and Northern Ireland. Will he concede that the difference is that, unlike in Castlereagh, where people can hop on a bus and go to Belfast to use the services that are provided there, people in Northern Ireland will not have the option to go elsewhere when times become difficult and service provision is low, as it has been in Castlereagh?
Mr P Robinson: If the Member knew a bit more about the subject, she would know that more people hop on buses to go to facilities in Castlereagh than the other way around. Recreation facilities in Castlereagh make money for the council, whereas facilities in Belfast lose money. The Member might wish to take some lessons from Castlereagh in that respect. The Member for East Antrim Mr Wilson found it so difficult to pay the rates in Belfast that he decided to move to Larne, so Mrs Long should not try to egg him on to intervene in the debate.
Mrs Long raised the issue of unpredictability. How can she talk about the unpredictability of future rating when — for the first time ever — a Minister has given predictability to the business sector and to householders in Northern Ireland? We have told people what the regional rate will be for the next three years. That is total predictability until the end of the mandate of this Assembly. No previous Minister has offered householders or the business sector that degree of predictability so that they can plan their finances in the longer term. I would have thought that, instead of criticising that, the Member would have thanked the Executive for providing people with a longer run-in time in which to assess their finances for the next three years.
The Member for Strangford Mr Shannon mentioned what I will describe as a “horticulture allowance”, which would be an extension of the existing farmhouse allowance. The Member came to see me with one of his constituents, and he made a strong case. He pointed out the similarities between the horticulture and farming sectors. My officials have been tasked with assessing how widespread that issue is and examining ways in which we might best address it. Addressing the matter in the way in which the Member has suggested will probably require primary legislation. Therefore, my Department is gathering evidence, and officials have written to the Department of the Environment’s Planning Service about the number of houses that have user restrictions imposed by the planning system for horticultural reasons.
I have covered the issues that were raised during the debate, and I hope that I have at least covered Members’ substantive points. If, on reading Hansard, I discover some issue that I have not covered, I will write to the Member concerned.
Mr Deputy Speaker: I remind Members that the motion requires cross-community support.
The Assembly divided: Ayes 79; Noes 8.
Mr Attwood, Mr Boylan, Mr D Bradley, Mrs M Bradley, Mr P J Bradley, Mr Brady, Mr Brolly, Mr Burns, Mr Butler, Mr W Clarke, Mr Dallat, Mr Doherty, Mr Gallagher, Ms Gildernew, Mrs D Kelly, Mr G Kelly, Mr A Maginness, Mr P Maskey, Mr F McCann, Mr McCartney, Dr McDonnell, Mr McElduff, Mrs McGill, Mr McGlone, Mr Molloy, Ms Ní Chuilín, Mr O’Dowd, Mr O’Loan, Mrs O’Neill, Ms Ritchie, Ms Ruane.
Mr Armstrong, Mr Beggs, Mr Bresland, Lord Browne, Mr Buchanan, Mr Burnside, Mr Campbell, Mr T Clarke, Mr Cobain, Mr Craig, Mr Cree, Mr Dodds, Mr Donaldson, Mr Easton, Mr Elliott, Sir Reg Empey, Mrs Foster, Mr Gardiner, Mr Hamilton, Mr Irwin, Mr Kennedy, Mr McCallister, Mr McCausland, Mr B McCrea, Mr I McCrea, Mr McFarland, Mr McGimpsey, Miss McIlveen, Mr McNarry, Lord Morrow, Mr Moutray, Mr Newton, Mr Paisley Jnr, Rev Dr Ian Paisley, Mr Poots, Mr G Robinson, Mrs I Robinson, Mr K Robinson, Mr P Robinson, Mr Ross, Mr Savage, Mr Shannon, Mr Simpson, Mr Spratt, Mr Storey, Mr Weir, Mr Wells, Mr S Wilson.
Tellers for the Ayes: Mr Bresland and Mr Storey.
Dr Farry, Ms Lo, Mrs Long, Mr Lunn, Mr McCarthy, Mr Neeson, Mr B Wilson.
Tellers for the Noes: Dr Farry and Mr McCarthy.
Total Votes 87 Total Ayes 79 [90.8%]
Nationalist Votes 31 Nationalist Ayes 31 [100.0%]
Unionist Votes 49 Unionist Ayes 48 [98.0%]
Other Votes 7 Other Ayes 0 [0.0%]
Question accordingly agreed to.
Resolved (with cross-community support):
That this Assembly approves the Rates (Regional Rates) Order (Northern Ireland) 2008.
The Minister of Finance and Personnel (Mr P Robinson): I beg to move
That this Assembly approves the Rates (Industrial Hereditaments) (Amendment) Order (Northern Ireland) 2008.
The Order will enable us to hold the rates for commercial premises at 30% for the next three years. It is a short but important Order that marks a significant break with the direct rule policy. The Order is a sign that devolution is delivering for the people of Northern Ireland. There are some who have said that devolution is no different than direct rule and that we may as well be governed from Westminster. However, those who wanted to see a continuation of direct rule, and the Labour Party setting policy in the Province, were playing a part in punishing the manufacturing sector and costing Northern Ireland much-needed jobs.
The agenda of this Administration is not the same as that of the direct rule Labour Government. Those who oppose devolution are supporting the return of a failed Labour Party policy in Northern Ireland. That agenda was to increase taxes on business: our agenda is to ensure better delivery from the public sector.
Making the economy the Executive’s top priority is not only about words, but actions. Therefore, the Rates (Industrial Hereditaments) (Amendment) Order (Northern Ireland) 2008 is not only important for the much-needed relief for the manufacturing sector but for the message that it sends from the Administration to those who want to do business in Northern Ireland.
The policy of industrial derating dates back to 1929. The decision to phase out that relief was announced in April 2003 by direct rule Ministers who wished to phase it out entirely. That process began on 1 April 2005, with full rates on industrial property due on 1 April 2011.
Members will be aware that, since then, there has been concern that the measure will have a detrimental effect on business. As a result, the Department of Finance and Personnel commissioned a review by the Economic Research Institute of Northern Ireland, which was published in early November 2007. I am grateful to the institute for its work, but, as its report emphasised, the decision on the level of industrial rates must lie with democratically elected politicians.
During the debate on the draft Budget, I announced that we should hold the current level of industrial rates at 30%. The Order will facilitate that until 2011, and changes will have to be made to primary legislation to deal with the issue beyond that date.
I have already stated that the Administration have set economic growth as a top priority. We must demonstrate that to our manufacturing sector, and, by approving the Order, we will do precisely that. In making my decision in October, I was confident that the Assembly would support such a move, because I had read carefully the views expressed by all the parties during the June 2006 debate on freezing industrial rates, when the motion was passed unanimously.
I see that the Member for North Down is getting a little cautious — and so he should be, in case he takes the same line as he took in the Committee and hears quoted back to him some of the things that the Alliance Party and others said during that debate in June 2007.
Furthermore, I am grateful to the Committee for Finance and Personnel and to the Executive, who have endorsed my position on both the policy and the draft legislation that I present to the House. Although it is not a perfect solution, few ways remain open to us to support local industry, given the extent to which our hands are tied by the European Union. In fact, EU state aid rules do not allow us to return to 100% derating.
With regard to the longer term, I hope to bring before the Assembly an amendment to the primary rating Order to deal with the situation after 2011 and to hold the level of industrial rates at 30% for the longer term. Our current provision is, to quote the ERINI report, a “blunt instrument”. Were we starting from scratch, we might not introduce such a provision; nevertheless, in providing relief to our manufacturing sector on an annual fixed cost, this Order will give industry some confidence in financial planning. We must give a positive signal at this time.
The ERINI study included a survey of manufacturing firms, which revealed what a significant number said they would do in the event of future rate increases. Approximately 25% thought that they would transfer production to locations outside Northern Ireland. Other consequences included abandoning or scaling down future expansion plans, as well as pay freezes or reducing employment. Most firms who responded said that full implementation of industrial rates would have adverse effects on employment, with a freeze on replacing employees who leave and restrictions on recruitment.
Given the tough time our manufacturing sector is experiencing, we cannot ignore the comments of those in the front line who, in partnership with Government, are creating wealth and revitalising our economy. Equally, when there are serious issues of political and administrative bureaucracy to address, we should not ask the business sector to pay for such inefficiency.
I shall briefly describe each of the articles of the Order. Article 1 provides the title of the Order and gives its operational date as the day following that of its affirmation by this Assembly. Article 2 amends the current provision in schedule 7 to the Rates (Northern Ireland) Order 1977, which provides the level of industrial rates for the next three financial years. The level will be 30% of the net annual value of for each of those years. The current levels set out in the legislation are 50% for the year beginning 1 April 2008, and 75% for the years beginning 1 April 2009 and 1 April 2010.
I commend the Order to the Assembly.
The Deputy Chairperson of the Committee for Finance and Personnel (Mr Storey): I thank the Minister for bringing the motion to the House. The purpose of the statutory rule is to determine that the non-domestic rates on an industrial property will be assessed on 30% of its net annual value over the next three financial years from April 2008. Members will be aware that, when devolution returned, the Minister of Finance and Personnel decided to await the outcome of ERINI’s review of industrial derating before taking any decision on the issue.
Having studied ERINI’s preliminary report, and in light of ERINI’s assessment that to phase out derating would indeed pose a risk to some of our manufacturing firms, the Minister announced as part of his draft Budget statement that the current level of rates would be held at 30% over the next three years.
Following the Minister’s announcement, both DFP officials and ERINI briefed the Committee on 14 November 2007 as part of the Committee’s consideration of the draft Budget. The Committee considered the proposal carefully and concluded in its report as follows:
“The proposal to freeze industrial rate liability at 30% across the Budget period is in keeping with the increased focus on the economy. However, [...] the ERINI report found little evidence to suggest that full industrial rating would lead to a collapse in manufacturing with substantial loss of output and jobs beyond existing trends in the sector. [...] ERINI also suggested that proceeding to a 50% liability would incur only a relatively small risk to industry as a whole.”
The Committee, therefore, noted in its report on the draft Budget:
“scope exists for a future review of the 30% liability.”
However, it supported the Minister in proposing the retention of the 30% manufacturing liability for the time being.
The Committee emphasised in its report that, though mindful that industrial derating represents one of the few fiscal tools at the Executive’s disposal, it considered this policy to be:
“outdated and a blunt instrument in terms of promoting economic development and sustainability in the long term.”
The Committee therefore formally recommended that DFP further consider:
“the scope for modifying the industrial derating scheme in the longer term to encourage increased business activity in areas which would lead to higher productivity”
such as research and development and exporting marketing.
In the event that the scheme could not be modified without contravening EC state aid rules, the Committee further agreed to support ERINI’s suggestion that the Executive take:
“the opportunity afforded by the review of industrial derating to build a new concordat between industry and Government which will specify what each can expect from the other in obligation and support.”
DFP’s response to the Committee’s report on the draft Budget is being presented to the Committee on 12 March. Members will look forward to what is being proposed in relation to this recommendation.
In relation to the provisions in the statutory rule, DFP officials briefed the Committee on the proposals on 6 February and the Committee formally considered the rule on 20 February. At that meeting, a motion to recommend that the rule be affirmed by the Assembly was approved by a majority vote of the Committee. As the Deputy Chairperson of the Committee, I therefore support the motion.
Mr Beggs: The Ulster Unionist Party and I support the retention of industrial rating at 30% and oppose the escalator that had been implemented in the direct rule Ministers’ legislation. In the last couple of years I have visited a number of industrial sites, and I have learned that the increased cost of rates for industrial manufacturing companies would result in a reduction of R&D and put at risk future investment in sizeable plants, and even smaller ones. Ultimately, it would reduce employment. This is a real issue; it is not a theoretical question as to whether it would have an effect or not. Anyone who speaks to most of the companies in Northern Ireland will understand that they have to make profits in order to spend money on R&D and make investments in the future. In Committee, the Alliance Party opposed the freeze at 30%. I warn the public, and Alliance voters, that the implementation of that policy would be unfortunate. I support the retention of rating at 30%.
There are a limited number of things that this Assembly can do, with immediate effect, to improve the prospects of local companies. The Varney Review II is under way, and we all hope that it will identify some tax changes to assist the local economy. This matter is within our remit and control, and so I urge the Assembly, particularly in the run-up to the investment conference in May, to give a clear direction that it wishes to encourage private business. That will mean real jobs in the economy. For that reason, I support the motion.
Mr O’Loan: I agree with the Minister that our manufacturing industry requires support. Although this measure is a blunt instrument, it is one of the few available to the Minister. Manufacturing requires long-term assurances, and the ERINI report recommended that, whatever the level struck, industrial rates should be held for several years. Therefore, I support the Minister when he refers to considering the long term.
My only one concern, which I expressed in the Committee, is that an issue raised in the ERINI report has not been adequately addressed. It is not my intention to allow that to cause a Division; on the contrary, I support the Order’s intention to freeze industrial rates at 30%.
I mentioned that point during the Budget debate, and I quoted from the ERINI report. In essence, when gathering industry evidence, ERNI’s experience, particularly with the manufacturing industry, was that the relationship between industry and Government was poor and that industry was not understood and supported. I therefore welcome the emphasis on that matter from the Deputy Chairperson of the Finance and Personnel Committee, Mr Storey. The Committee’s ‘Report on the Executive’s Draft Budget 2008-2011’ states:
“The Committee recommends that DFP considers further the scope for modifying the industrial derating scheme in the longer term to encourage increased business activity in areas which lead to higher productivity (e.g. research & development, export marketing). In the event that the scheme cannot be modified directly without contravening EC state aid rules, the Committee would support the approach, suggested in the Economic Research Institute of Northern Ireland (ERINI) report, of the Executive taking the opportunity of the review of industrial derating to build a new concordat between industry and government, which will specify what each can expect from the other in obligation and support.”
To that end, I call for action from the Assembly, and, given that ERINI’s report came first to the Department of Finance and Personnel and that the Committee has expressed its desire for the Department to play a role, it clearly must do so. In addition, the Department of Enterprise, Trade and Investment (DETI) and the Department for Employment and Learning (DEL) are also fundamentally involved. All those Departments must acknowledge that a real need exists and begin to put in place measures that might create such a concordat. Forming a new relationship between industry and Government is not just a task for Government; the manufacturing industry also has a responsibility.
The Northern Ireland Manufacturing Focus Group campaigned powerfully on industrial derating, and it now has an opportunity, and a challenge, to do a much more interesting and, in the long term, significant job, which will be to work alongside the Government here in order to put the manufacturing industry in a better position to compete in the global marketplace.
Dr Farry: It always strikes me as a paradox that we debate Private Members’ Business for hours, with many Members contributing, whereas, when it comes to discussing formal legislation and making it a reality, the debates are rather limited. I recognise that both the Ulster Unionist Party and the SDLP have contributed a little more to this debate than they did to the last; however, I note that Sinn Féin members have still to speak, and I hope that that will be addressed later. It is important that these matters are not only debated by the Alliance Party and the DUP and that other parties nail their colours to the mast.
The Alliance Party has major concerns about this statutory rule, and there is neither a sound economic nor financial rationale behind the policy articulated by the Minister.
In his introductory remarks, he articulated a very selective reading of the ERINI report. It is worth noting that the report suggested that it was safe to raise the level to 50% and that the risks would be minimal. It pointed out that not doing so would lead to opportunity costs for the public purse and for wider economic policy. ERINI also raised concerns about the nature of the survey that it conducted with the manufacturers.
Industrial derating is an old-fashioned and outmoded form of industrial support, as the Deputy Chairperson of the Finance Committee recognised in his opening remarks. It was introduced on a UK-wide level in 1929, the year of the Great Depression — although I am not sure whether there is a direct link between those two events. The practice was phased out in England in 1963 and in Scotland in 1995, and few other modern economies deploy it. Thus it is an old-fashioned form of support. It is too much of a blunt instrument to be effective. It is not about creating a modern economy; frankly, it is about preserving what we have rather than trying to rebalance the economy and engage with the new global realities.
There have been comments on the Varney Review’s very sound analysis of the situation in Northern Ireland — although its recommendations were not overly sound. It is worth noting that it does not view industrial derating as a major advantage to the Northern Ireland economy. I am concerned about remarks that have been made about this policy being critical as we look towards the investment conference. Frankly, industrial derating is not a major issue for investors. They want to see a modern-looking, forward-thinking economic policy, not one that is designed to hold back the tide of international trends.
Mr Beggs: The Member has said that he believes that the policy is not critical. Does he accept that as well as determining whether there will be new investment from foreign direct investors, this policy can impact on where existing companies invest? Many Northern Ireland companies are linked to sister companies in other parts of the United Kingdom or in the Republic of Ireland. Whether those companies decide to invest will be determined by a range of factors. Regrettably, our energy and transports costs are generally slightly higher than the costs in the rest of the United Kingdom. Does the Member accept that, in order to ensure that there will be continued investment in R&D and plant — thereby making our economy efficient — it is important to encourage existing local companies that operate in Northern Ireland?
Dr Farry: I would encourage the Member to read the ERINI report. It sets out that the major cost issues facing manufacturing in Northern Ireland are labour, transport and energy. Property is quite far down the list. The analysis from ERINI — and also in the regional forecasts — pointed out that the level of risk was quite minimal in that respect. If the argument is being made that this policy should be in place as some sort of counter-subsidy for our energy, transportation and labour costs, the answer is to address those problems rather than allow this policy to create a further problem.
As regards the investment conference, rather than look backwards, it is important to look to the future competitiveness of Northern Ireland and how well it sells itself. The policy is not an effective way of attracting foreign direct investment or of engaging with the global economy.
It is also worth reflecting that industrial derating applies to some sectors of the economy but not others. Some commercial activities benefit, while others do not. That in itself is not fair, but it also begs the question as to whether the correct sectors are being subsidised. Indeed, while manufacturing contributes a considerable amount of gross value added (GVA) to the Northern Ireland economy, it is worth noting that many of the potentially higher GVA-producing activities would not be covered by the industrial derating policy. In that respect, it does not help to rebalance the economy and to encourage those GVA conversions that the Executive are rightly talking about.
The EU market rules mean that industrial derating would be classified as a form of state aid. Industrial derating is permitted only as a legacy policy that predates the UK’s accession to the European Union.
Mr Hamilton was handing out quite a lot of labels this morning, particularly in my direction. The DUP and the other parties that have been vocal in supporting that policy are effectively defending an industrial policy that is old fashioned and that has an element of statism about it. The Alliance Party is articulating a pro-market and liberal approach. When I was speaking during the previous debate, I was also reflecting a liberal approach to economics.
Mr B McCrea: Will the Member tell the House what industrial experience any member of the Alliance Party has? I have rarely heard such an amount of drivel from people who do not know what they are talking about. Dr Farry has rehashed issues that have been gone over and over again.
Had he talked to people, he would understand the challenges that the manufacturing industry is faced with. He simply does not understand what he is talking about when he refers to sunset industries and so on.
The key challenge facing Northern Ireland is productivity. The only area that enhances productivity is manufacturing. The GVA is £49,000 per employee. Dr Farry is completely wrong. Will he please tell Members what he bases his arguments on?
Dr Farry: It was a relief that towards the end of his intervention Mr McCrea got round to some points of actual substance, as opposed to simply engaging in abuse. The Member should read the ERINI report, which was commissioned by the Department of Finance and Personnel.
Although I have stated that the manufacturing industry makes a considerable contribution to GVA, the Member is ignorant in making the comment that only manufacturing contributes to productivity. That statement is patently false. If the Member had any understanding of the nature of the UK economy —
Mr B McCrea: On a point of order, Mr Deputy Speaker. I think that there is a misunderstanding, and I ask that the Member withdraws his remarks. I actually talked about productivity increases. I did not say that manufacturing was the only contributor to productivity. Perhaps the Member should listen more carefully.
Mr Deputy Speaker: The Hansard report can be read to clarify that.
Dr Farry: That was more of a point of information under the guise of a point of order.
The biggest increase in GVA in the UK economy over the past 10 years has come in the areas of financial services, which have become the main driver of productivity across the UK. Although some aspects of the service sector produce low GVA, other aspects produce high GVA.
Therefore, I am suggesting that although it is important that Northern Ireland continues to have a strong manufacturing presence, it is also important that the economy is further balanced by appealing to a wider range of activities.
It is important to consider the differences between the Northern Ireland economy and that of the Republic of Ireland and the nature of economic activity in both jurisdictions. Radical changes have occurred in the Republic of Ireland over the past 20 years. Unfortunately, few changes have taken place in Northern Ireland during the same period.
The arguments for the retention of the policy are weak, and that was highlighted in Mr Storey’s opening remarks. The ERINI report stated that:
“if Northern Ireland was starting from a clean sheet and could choose what form of support to provide for industry there is not the slightest possibility that we would suggest adopting a policy of industrial derating”.
That is an important point.
The main argument for retention is essentially about the alleged damage that could otherwise be caused to the economy. Of course manufacturing is still an important element of the local economy. The fear is that an increase in industrial rating will have a negative impact on employment and output. Although that may be the case in some areas, the analysis from ERINI and Regional Forecasts Ltd suggests that those dangers are significantly overstated; they are perceptions rather than realities.
It is forecast that, at a rating of 50%, no more than 10% of companies would face rates bills that equate to more than 15% of their profits. Labour, transportation and energy costs are bigger issues for industry. Some may argue that although, under EU state rules, industrial derating cannot be introduced, it is permitted as a legacy policy. Therefore, if Northern Ireland were to reduce the level of subsidy to manufacturing, it could not return to the current policy.
The biggest risk lies in not changing policies. The more responsible approach is to seek to rebalance the economy — not to preserve the status quo. There is a risk involved in not taking the opportunity to do so using the available resources.
Industrial derating of 30% produces £22 million per annum, and full derating would produce approximately £70 million per annum. The Alliance Party proposes a level of 50%, as suggested by ERINI, as the more responsible approach. That would produce a further £13 million per annum for the local economy, which equates to approximately £40 million over the period of the incoming Budget.
The critical economic argument is that the lost resources and income could be better invested in economic drivers for the general good of the economy, including manufacturing. I am not a fan of selective financial assistance, but the ERINI report makes it clear that investing resources in that way would be a more effective means of providing financial support to the economy.
At a more general level, the central issue in relation to business taxation is corporation tax. Members often talk about foreign direct investment. An adjustment in the rate of corporation tax would greatly transform the economy. The Alliance Party remains concerned by the lack of fiscal and tax-varying powers that could be used wisely to modernise and rebalance the local economy and address the regional disparities in the UK economy and the economic imbalances on the island of Ireland.
It is worth nothing that the Executive seem to have given up the fight when it comes to corporation tax. No statement has been made to the Assembly either by the Executive or the Minister of Finance and Personnel.
Mr Deputy Speaker: Order. Members are aware that Question Time begins at 2.30 pm and nothing — not even Dr Farry — will get in the way of that. Dr Farry, you may continue your contribution after Question Time, when you will be called to speak again. Members, please take your ease until 2.30 pm, when Question Time will begin with questions to the First Minister and deputy First Minister.
The debate stood suspended.
On resuming (Mr Speaker in the Chair)
office of the first minister and deputy first minister
Lifetime Opportunities Strategy
1. Mr McCartney asked the Office of the First Minister and deputy First Minister to detail when a decision will be made in relation to the lifetime opportunities strategy. (AQO 2374/08)
The First Minister (Rev Dr Ian Paisley): The Executive’s commitment to tackling poverty is clearly outlined in public service agreement (PSA) 7 in the Programme for Government entitled ‘Making People’s Lives Better’. The PSA includes challenging commitments to work towards a 50% reduction in child poverty in Northern Ireland by 2010 and its elimination by 2020.
In line with its statutory obligation under section 16 of the Northern Ireland (St Andrews Agreement) Act 2006, the Executive Committee will soon receive proposals for the adoption of a strategy to tackle poverty, social exclusion and patterns of deprivation in Northern Ireland based on objective need. First, however, the adoption proposals will be presented to the OFMDFM Committee in advance of the Executive Committee’s considerations.
Mr McCartney: Go raibh maith agat, a Chéad-Aire, as an fhreagra sin. Did the Office of the First Minister and deputy First Minister take into account the recommendations of the all-party Preparation for Government Committee when devising the strategy?
The First Minister: Our ears are open to all. All suggestions that are fed into OFMDFM will be considered seriously, as they need to be. We hope to produce a plan that is acceptable and that is capable of achieving the objectives.
Mr McClarty: The lifetime opportunities strategy was introduced in 2006 against a background in which 327,000 people live in poverty, of whom 102,000 are children and 54,000 are pensioners. With those sobering figures in mind, will the First Minister explain what he will do to offset the effect of his new water tax and rates increases on the life opportunities of the poorest people in the community, while some of his millionaire friends have their rates capped at £400,000?
The First Minister: I must point out that I have introduced no new water tax. I do not know where the Member got the idea that I have produced some new water tax. I wish that I had a bucket of cold water to pour over him so that he might make sensible remarks in the House. All that I can say to him is that the Assembly cannot heal the sore of poverty overnight. There must be a proper plan and the ability to put that plan into operation in order to achieve everyone’s goal.
Ms Lo: Many of the policy strategies that were adopted under direct rule have been shelved or abandoned. Would it not be better to review and amend those policies rather than simply abandon them?
The First Minister: I assure the Member that she can bring any such amendments before the House and we will listen to what she has to say.
2. Mr Hamilton asked the Office of the First Minister and deputy First Minister to detail the progress made in ensuring that Northern Ireland is effectively engaged in relevant European bodies and committees, in order to maximise available financial benefits. (AQO 2327/08)
The First Minister: From its inception, President Barroso’s task force has presented a considerable opportunity to enhance Northern Ireland’s participation in European Union initiatives, both financial and non-financial. Tremendous support and co-operation has been shown to the Assembly by the European institutions, in particular the Commission. The task force’s work is well advanced.
Ministers have visited Brussels to keep the interest of key decision-makers, influential people and the European Commission. We are also using those contacts to ramp up our European engagement, and that is not just about financial benefits; it is about building networks, participating in programmes and enhancing the exchange of experience and expertise.
The Office of the Northern Ireland Executive in Brussels builds and strengthens contacts with a wide range of Brussels-based organisations, member-state representatives and other regional offices. It also raises our positive profile at major events in Brussels such as the Open Days initiative, whereby organisations across all sectors are informed of the opportunity to work with partnership organisations throughout the European Union.
Mr Hamilton: I thank the First Minister for his answer and his efforts that secured the support of the European Commission for the task force and its work. Will he inform the House when the task force will publish its findings?
The First Minister: I hope to receive the task force’s draft report soon. Following a technical assessment of its recommendations, the European Commission will engage with Ministers in the spring to discuss our response. Junior Ministers will oversee that work, including the preparation of our formal response to the report’s findings and recommendations. The monitoring of actions plans and reporting against targets will be ongoing.
The Executive have a key role in ensuring that all Departments play a full part in Northern Ireland’s constructive and beneficial engagement with Europe.
Mr Kennedy: I am grateful to the First Minister for his reply. I welcome the junior Minister to his first Question Time — he is, of course, a former colleague of mine.
Since May 2007, what steps has the First Minister taken to engage Northern Ireland as a region within Europe and create direct links with the EU, as opposed to national links through Whitehall, which have not always served Northern Ireland well?
The First Minister: I remind the Member that we have spoken to people at the highest level, such as the European commissioners, and successfully got a representative from Northern Ireland onto one of the main bodies in Europe — Northern Ireland will now have a direct input into that body. We are doing our best to build every bridge to Europe that we can, and we trust that it will not be a one-way street and that member states will start to bring some of their good things to Northern Ireland.
Mr P J Bradley: I also welcome Mr Donaldson, as a former resident of south Down, in his new role.
What arrangements does OFMDFM have for working with the MEPs from Northern Ireland?
The First Minister: The Northern Ireland MEPs are entitled to be heard; however, I wish that some of them were heard in Europe and not in Northern Ireland.
3. Mr Neeson asked the Office of the First Minister and deputy First Minister to detail the discussions it has had with the Northern Ireland Office in relation to ending the automatic 50% remission for prisoners. (AQO 2293/08)
The First Minister: The ending of automatic 50% remission for prisoners is a reserved matter. That, therefore, is a decision for the Secretary of State for Northern Ireland to make.
I wish that I had the power to make the decision on the matter, but unfortunately, I do not. However, the Member will be aware that last November the Northern Ireland Office published for consultation the draft Criminal Justice (Northern Ireland) Order 2008. Among the proposals in the draft Order is that to end automatic 50% remission on custodial sentences. Earlier last month, we advised the Secretary of State for Northern Ireland of our support for that proposal.
Mr Neeson: Does the First Minister agree that there is widespread concern and alarm throughout the whole community in Northern Ireland about automatic 50% remission? Does he agree that changes to legislation should be introduced sooner rather than later, particularly where violent crime is concerned?
The First Minister: I agree with the Member. However, we do not have the power to change the legislation. Nevertheless, we can make representations to the Secretary of State, and, as I have said, we have already done so, and we will continue to do so.
Mr McNarry: Given that the First Minister has stated that automatic 50% remission is a reserved matter, he should note that in December 2006, the then Minister with responsibility for criminal justice, David Hanson, announced that in future the courts would determine the period that is spent in custody. That time must be completed in full and without remission before the offender is released under licence. Some 15 months later, it would be good to know whether that new situation applies in Northern Ireland. If it does not, can the First Minister find out why?
The First Minister: That subject has been discussed with the Secretary of State. I will write to the honourable Member as to the current position on that.
Mr Storey: The devolution of policing and justice has caught the public imagination recently. Given the many calls, demands and threats that have been made about that issue, can the First Minister assure the House that it will not be addressed until there is confidence in the community?
The First Minister: There will be no devolution of policing and justice until there is sufficient community confidence. That has been stated clearly to the Secretary of State and to the Prime Minister. The Member is aware of the triple lock that the British Government put on that matter. He is also aware that at no time did my party say at St Andrews — or anywhere else — that it would move quickly on that matter. Many issues have yet to be completed to give confidence to the entire community that the time has come to devolve policing and justice.
PSA Targets for Children
4. Mrs O’Neill asked the Office of the First Minister and deputy First Minister to detail the recent changes made to PSA targets for children, as a result of the funding allocation for children and young people’s priorities. (AQO 2378/08)
The First Minister: All our children will reap the benefits when we achieve our overarching Programme for Government aim of building:
“a peaceful, fair, and prosperous society in Northern Ireland, with respect for the rule of law and where everyone can enjoy a better quality of life”.
We do not underestimate the importance of the public service agreements that have been set in all Departments in order to work towards that aim. Our Department, through the junior Ministers, has a role in co-ordinating policy for children and young people. Changes have been made in some Departments’ targets. There are several such changes, and, rather than take up time now, I will arrange for their details to be forwarded to the Member.
Those challenging targets relate to key departmental priorities and must be funded appropriately from the Budget allocations.
The three Departments most closely involved in providing services for children and young people, and which have received additional funding allocations in the Budget, are the Department of Health, Social Services and Public Safety; the Department of Education; and the Department of Culture, Arts and Leisure.
Mrs O’Neill: Go raibh maith agat. I thank the Minister for his answer. I look forward to receiving that information in writing. That was what I was going to ask in my supplementary question.
The First Minister: I will just say to the honourable lady that ensuring that children are cared for, live in safety, are protected from abuse and receive the support that they need to achieve their full potential becomes our aim, and we will work towards achieving those ends.
Mr Gardiner: What action is being taken by the Office of the First Minister and deputy First Minister to ensure that all Ministers make timely decisions on the allocation of resources for children and young people’s priorities? Will the First Minister explain why his Department was found guilty of an underspend of £3·8 million, which was returned in the February monitoring round due to being unallocated from the children and young people’s fund?
The First Minister: Junior Ministers have been given special responsibility for the co-ordination of policy and the promotion of the rights and needs of children and young people. They are driving forward children’s issues; they are taking the lead in reviewing the 10-year strategy, and they will chair the newly reformed ministerial subcommittee. Junior Ministers have also had a series of engagements with several voluntary-sector organisations; they liaise with the Commissioner for Children and Young People, and they will take part in a series of direct engagements with children and young people.
Junior Ministers will shortly submit a detailed work plan, outlining their proposed actions for the next 12 months. I will write to the honourable Member about his specific enquiry.
Mrs D Kelly: Will the First Minister confirm that, although there was additional money, there was no new money for children and young people in the Budget? Will he provide details about how Departments will be compelled to ring-fence money for children and young people’s funding?
The First Minister: That is not a question for me, but for my friend the Rt Hon Peter Robinson, who is sitting beside me. I am sure that he will be glad to answer that question for the lady at any time.
Commissioner for Victims and Survivors
5. Mr Hilditch asked the Office of the First Minister and deputy First Minister to detail the planned working relationship between the Department and the Commissioner for Victims and Survivors. (AQO 2323/08)
The First Minister: We recently announced our decision to appoint four commissioners designate and to introduce legislation to establish a commission for victims and survivors. The commission will be independent of Government in its day-to-day operation. Our Department will sponsor the commission, and it is intended that a work programme, which will give a strategic context to their work, will be agreed with the commissioners.
Mr Hilditch: Will the First Minister inform the House of the position of the legislation that is required to establish the new victims’ commission?
The First Minister: All I can say is that that matter is under consideration, and we hope that we will soon be in a position to sponsor the legislation in the House that will be necessary to carry out the objectives that we have in mind.
Mrs Long: In the same vein as the previous question, will the First Minister tell the House what planned working relationships within the commission for victims and survivors are envisaged by his Department? Will he give the House some indication about the status of the current victims’ commissioners designate, who been appointed but who do not have a legislative framework in which to work? What limitations, if any, does that place on their activities?
The First Minister: The legislation will deal with the matters that the honourable lady mentioned, and they need to be dealt with.
I regret that there is a hold-up, and I hope that it will be overcome as quickly as possible, so that the needs of those victims can be dealt with.
Mr Burnside: Will the First Minister corporately, on behalf of the Office of the First Minister and deputy First Minister, confirm that it is the opinion of that unitary office, that those who took part as members of proscribed, illegal, terrorist organisations — whether republican or loyalist — in the Troubles of the last 35 years will not be defined as victims or relatives, or receive taxpayers’ money, and that the concentration of taxpayers’ money that might be devoted to that purpose, will be for the innocent victims of terrorism and members of the security forces and their families?
The First Minister: I hope that the honourable Member will believe me this time. I have already answered that question, and I answered it as I have always done. We are talking about victims, and not about those who made them victims. It is the victims that we will look after.
6. Mr Campbell asked the Office of the First Minister and deputy First Minister to detail the steps being taken to ensure that all sections of the community are sufficiently resourced and informed to avail of future European funding. (AQO 2312/08)
The First Minister: Equality of opportunity is an important issue for the Executive and for our society in Northern Ireland. The Special EU Programmes Body (SEUPB), as managing authority for Peace II, is responsible for allocating EU Peace funding to eligible programmes, and for maintaining a high level of public awareness, among all sections of the community, of Peace II finding. To that end, the Special EU Programmes Body will, again, strongly encourage funding applications from all sections of the community, through the delivery of awareness seminars and the provision of advice and guidance to prospective applicants. For the INTERREG IIIA programme, the Special EU Programmes Body will play a similar role, promoting the available funding opportunities.
Mr Campbell: It is pleasing to know that that will be done. The First Minister is aware of the problems that beset previous European funding applications, particularly for the unionist community, that may or may not have been due to the overtly political nature of the funding regime. Can he outline further steps that can be taken to ensure that all sections of the community benefit from European funding?
The First Minister: I agree that there have been difficulties in the past, and those must be solved. All sections of society must be safeguarded. When I was in the European Parliament, I advocated that a line should be drawn on that matter, so that all sections of the community got their share of the money. We must now take steps to see that that arrangement can be put into operation for everyone, so that all can share in what comes from Europe.
Mr O’Loan: I am sure that the First Minister will join me in commending the Special EU Programmes Body for its successful efforts to ensure that all sections of the community have the capacity to apply for European funding. Will he confirm that programmes will be designed and allocations made solely on the basis of objective need?
The First Minister: I give the Member that assurance. The Minister of Finance and Personnel has had talks with Mr Cowen from Dublin on those matters, as far as they concern both parts of this island.
Rev Dr Robert Coulter: I thank the First Minister for the content of his answer. Will he look at the possibility of developing rural EU networks, with a view to using EU funding to enhance rural development and to help address the social, employment and educational disadvantage created by remoteness?
The First Minister: Yes. I would like to receive further correspondence from the Member on that matter so that we can take it up and push on with it as quickly as possible.
Lisanelly Site, Omagh
7. Mr McElduff asked the Office of the First Minister and deputy First Minister to detail the efforts it is making to secure the transfer to the Executive of the Lisanelly Ministry of Defence military site in Omagh. (AQO 2383/08)
The First Minister: OFMDFM continues to press the British Government strongly about the transfer of Lisanelly and other military sites to the Executive. We are waiting for a response from the Chief Secretary to the Treasury. We recently met the Secretary of State to discuss that important issue, and we clearly set out our view that an MOD requirement for the Executive to purchase such sites at market value is a retraction from the joint declaration position. Furthermore, we pointed out the substantial impact that such an approach will have on our investment capacity, and we asked for the Secretary of State’s urgent personal intervention and support. Clearly, we want to see whether the Secretary of State is able to persuade his colleagues that the sites can be purchased at market value. The availability of funding for Government to deliver any development proposals at redundant military bases is a major difficulty. We will press the issue again shortly — directly with the Prime Minister if need be.
Mr McElduff: I welcome the First Minister’s answer, and I acknowledge that he and his office are taking the matter seriously. I want to ensure that OFMDFM continues to intervene in that way because considerable influence must be exerted in respect of the project.
Will the First Minister join me in applauding the efforts of educationalists, the local government sector in Omagh, and the MP for West Tyrone, who are centrally involved in trying to make that project a reality?
The First Minister: I was going to ask the Member what the MLA for West Tyrone was doing about that matter. [Laughter.]
OFMDFM is of the mind that this is an urgent matter and that the promises that were made by the then Chancellor — who is now the Prime Minister — that we would benefit from the sale of those properties must be kept. The time for keeping promises has come, and we intend to push with all our might to get what we were promised.
Mr D Bradley: Go raibh míle maith agat, a Cheann Comhairle. Ba mhaith liom a fhiafraí den Chéad-Aire cá huair a dhéanfar cinneadh i dtaobh athnuachan láithreán macasamhail na Ceise Faide agus bheairic Foircille.
Can the First Minister be more specific and tell the House when a decision will be made on the regeneration of such sites, including the Maze/Long Kesh site and Forkhill barracks?
The First Minister: I cannot give the Member dates in respect of those matters. The principle must first be established that we will benefit, and we must put our hearts and minds to that. The promise that was made by the British Government must be fulfilled, and the people of Northern Ireland must benefit from what happens to those sites.
1. Mr G Robinson asked the Minister of Agriculture and Rural Development to detail the number of cases of bluetongue recorded in the East Derry/Londonderry constituency. (AQO 2284/08)
11. Mr Kennedy asked the Minister of Agriculture and Rural Development to detail the restrictions in place for the importation of live animals from bluetongue-infected areas. (AQO 2353/08)
The Minister of Agriculture and Rural Development (Ms Gildernew): Go raibh maith agat, a Cheann Comhairle. With your permission, Mr Speaker, I will answer question 1 and question 11 together.
I can confirm that there have been no cases of bluetongue in the East Derry constituency. Members are aware of the animal that was imported to a north Antrim farm, which, on post-import testing, gave a positive reaction to a polymerase chain reaction (PCR) test, indicating the presence of the virus. A total of 30 animals have been culled as a consequence.
Preliminary scientific evidence from that case suggests that trans-placental transmission of the bluetongue virus may play a part in the spread of the disease. The findings of the Veterinary Service and AFBI have been supported by the community reference laboratory at Pirbright.
The evidence for vertical and/or oral virus transmission was presented to a European Commission bluetongue expert working group on 27 February. As a result of discussions at that meeting, Commission authorities will now consider introducing proposals on controls, in addition to those in the EU Bluetongue Regulation (EC No 1266/2007), at the Standing Committee on the Food Chain and Animal Health (SCoFCAH) meeting tomorrow. The emerging signs indicate that it is necessary to strengthen the controls in regulation 1266. However, the Commission will not introduce any additional controls ahead of tomorrow’s meeting. In view of that, and in order to protect our cattle herd and sheep flock from the introduction of the bluetongue virus, I signed a declaration last week to temporarily suspend the import of female cattle over 12 months and female sheep over six months from bluetongue restriction zones. That preliminary action is pending the outcome of the SCoFCAH meeting and further evaluation of the scientific findings.
The suspension of imports came into effect at 6.00 pm on Saturday 1 March. The decision was taken by the Executive, and it will be reviewed this week. The suspension, which is in line with action taken in the South, does not include animals intended for direct slaughter. All other cattle and sheep imported for breeding and production from outside the island of Ireland are restricted on farms and tested at 10 and 30 days after arrival, as a matter of routine. Restrictions on subsequent movement are lifted only after receipt of clear test results.
Mr G Robinson: Will the Minister outline what steps her Department is taking, and what steps farmers may be able to take, in the fight against the spread of bluetongue?
Ms Gildernew: My Department has been proactive in the surveillance and monitoring of the situation as it has unfolded. The most decisive action that the Department could have taken was the recommendation to the Executive that we ban imports. Thankfully, that decision mirrors what the industry is doing. Some farming groups have already called on the industry to impose a voluntary ban on imports from bluetongue restriction areas. That is a good example of how we have worked together to try to protect the industry from this awful disease for as long as we can.
Mr Kennedy: I thank the Minister for her initial response. Will she confirm that she has had discussions with the Department for Environment, Food and Rural Affairs (DEFRA) about banning live animals from bluetongue-infected areas? Will she confirm that the action taken by the Executive last week — and recommended by her and her Department — is legal? If Northern Ireland were to suffer an outbreak of bluetongue and other countries in the EU banned Northern Ireland exports, what would the legal implications be?
Ms Gildernew: It is not helpful to deal with hypothetical questions, so at this stage we will deal with what we actually know. With regard to my discussions with DEFRA, we have been working at official level and I spoke to Ministers Hilary Benn and Jonathan Shaw last Thursday afternoon and told them the action that I was planning to take to the Executive that day. I discussed the issue with them, and we will keep in close contact with ministerial colleagues.
In taking the action that I took last week to suspend the importation of certain animals, I have given due regard to the fact that the EU Bluetongue Regulation (EC No 1266/2007) was introduced when vectors were perceived as the sole route of virus transmission. That science is now changing. The EU experts’ group has considered the evidence from the north Antrim case, and the Commission will put a recommendation to SCoFCAH tomorrow to amend regulation 1266. Therefore, following a decision by the Executive last Thursday, I have invoked powers in domestic legislation to suspend imports of female cattle over 12 months and sheep over six months. The Executive will review the position after the meeting tomorrow. I trust and hope that this will only be a temporary, precautionary measure. My action, therefore, anticipates appropriate tightening of the EU rules.
It is also a proportionate response to the unfolding situation. The decision was made after the bluetongue expert working group meeting, because we awaited the outcome of that meeting before acting. We have, therefore, been measured and proportionate in our response, but we have acted decisively to protect the industry.
Mr P J Bradley: If it is decided that vaccination against bluetongue becomes the only option to stem the virus, will the Minister confirm that arrangements are in place to ensure that there is an adequate supply of vaccine available to meet local demand; that there will not be any delay in issuing a supply to our farms; and that some herd and flock sizes and location will not be prioritised at the expense of others?
Ms Gildernew: We are working with DEFRA and officials in the Department of Agriculture, Fisheries and Forestry (DAFF) to ascertain how best to respond to the situation, and we are talking about what to do if an outbreak is confirmed. That is hypothetical at this stage. However, we must keep the situation under review and act decisively.
As I said during the debate on 19 February, vaccination is permitted only when a disease is confirmed to be circulating in a country, and it may be administered in the protection and surveillance zones only. Thankfully, we are not in that position.
We are working closely with our counterparts in England, Scotland, Wales and the South to develop a vaccination strategy that will be appropriate to vaccinate against the spread of disease if the need arises. We are also continuing to monitor the situation carefully, and we will order vaccine if we consider that necessary. Vaccine has a limited shelf life. It is not available currently, and we want to be prudent and proportionate with regard to its purchase. However, we are keeping everything under constant review and acting accordingly.
Mr Elliott: I thank the Minister for that information. Will the Minister outline the details of compensation — or lack thereof — that will be paid to farmers who have bluetongue-infected animals, including those that were imported and those that are based locally?
Ms Gildernew: The Department of Agriculture and Rural Development is under no obligation to pay compensation for imported animals that have been affected by, or exposed to, the bluetongue virus, in accordance with The Diseases of Animals (Northern Ireland) Order 1981. That position has been made abundantly clear to the agriculture industry more times than I can remember, and it is supported by industry leaders.
If an infected animal was not imported from another country, compensation will be payable if the Department requires it to be slaughtered. Compensation for such affected animals is paid at 50% of the value of the animal, and compensation at 100% of the animal’s value is paid on unaffected animals.
Northern Ireland Forest Service
2. Ms Lo asked the Minister of Agriculture and Rural Development what her assessment is of the current policy of the Northern Ireland Forest Service in relation to recreation at sites under its management. (AQO 2291/08)
Ms Gildernew: The new forestry strategy that was published in March 2006 recognises the importance of forests in providing public access, quiet enjoyment and recreation opportunities for local people and visitors. The strategy provides the policy framework for the Forest Service to make forests available to as many people as possible and to achieve that by working with partners who have similar interests.
There are up to two million visits per year to forests that fall within the remit of the Forest Service. The Forest Service operates six forest parks and many forests, all of which provide open public access and which are well used by walkers. Many of those forests also host events organised by local mountain biking and motor sports clubs, for example. The forest parks provide car-parking facilities and a range of activities, including graded and way-marked walking trails and family cycle trails. Furthermore, Castlewellan, Tollymore and Gosford offer pony trekking, camping and caravanning facilities. There are also scenic drives at Ballypatrick, Slieve Gullion and Lough Navar.
The Forest Service employs a number of forest guides to facilitate educational trips by schools and other groups. At Castlewellan Forest Park, the Forest Service has leased facilities to the Bluelough Adventure Centre — an outdoors adventure company that provides a range of activities, including water sports.
I want to see further development in the social use of forests, and, in that context, the Forest Service plans to publish a recreation strategy during the next business year, which will set out a policy on recreation in forests and a framework within which recreation provision can be taken forward.
Ms Lo: I thank the Minister for her response. Given that the Forest Service appears to be keen to promote the use of forest parks, can the Minister explain why it has started to charge mountain-bike clubs £500 a day for running events? Those charges could wipe out the sport, as clubs cannot afford the fees.
Ms Gildernew: Forest Service imposes charges in order to maintain facilities such as paths and toilet blocks. It is hoped that we will be able to consider charging in the context of the recreation strategy and take the matter further. If the Member would like, I can come back to her with more detail about that part of the strategy.
Forests need to be used more broadly, and I would like them to be utilised fully. We are aware of the changing demands for and expectations of recreation, specifically the requirement to cater for more high-activity pursuits. The recreation strategy will take account of those demands and expectations, and we are working with other partnership arrangements on the matter. Proper maintenance must be provided in order to ensure a safe environment for the people who use those facilities, and such provision may result in Forest Service’s imposing a cost. As I said, we will consider the matter carefully, and I can provide the Member with more details.
Mr Hamilton: I have raised the issue of motor-home facilities in our forest parks with the Minister in the past. I am sure that she is aware that a growing number of motor homes is being registered in Northern Ireland and that a vast number of people with motor homes visits Northern Ireland from across the water and elsewhere. I am aware that the Department is presently reviewing recreational provision, including facilities for motor homes. Will the Minister state what progress is being made on that review, and will she give any indication of what its likely conclusions will be?
Ms Gildernew: Obviously, we are working through the review. Officials are meeting with several like-minded groups in order to implement its recommendations, but it would probably be pre-emptive to comment further at this stage. I am happy to come back to the Assembly with the proposals at a later date when they have been better fleshed out.
Mr Gallagher: Is the Minister aware that some of the participants in the Department’s forestry scheme have not received their annual payments? If so, can she tell us roughly when they can expect to receive them?
Ms Gildernew: The Member knows that that supplementary question does not relate in any way to the original question; however, I applaud his creativity.
In answer to his question, there have been administrative difficulties in getting those payments through, and we are hopeful that they can be made in the not-too-distant future.
Given that I answered the question, I congratulate the Member for using his imagination.
3. Mr Brolly asked the Minister of Agriculture and Rural Development to detail the improvements that have been made in relation to rural childcare. (AQO 2330/08)
Ms Gildernew: Go raibh maith agat. Under the 2001-06 rural development programme, 57 childcare projects received funding, with the result that a total of 170 jobs were created or safeguarded. Some 54 projects were supported under various projects, including Building Sustainable Prosperity (BSP), LEADER+, Peace II, and Peace II extension measures, with a total allocation of just over £1·9 million. In addition, three cross-border projects received funds amounting to €15,000 under Peace II measure 5.6a. Childcare initiatives will also be eligible for funds under the new rural development programme for 2007–13.
However, I am conscious that women living in rural areas still face a barrier to accessing proper childcare. For that reason, I set up a stakeholder group to examine the key issues that relate to rural childcare provision. That group is chaired by the chief executive of NIPPA, which is the early years organisation, and the remainder of the group is made up of representatives from various organisations with an interest in, or knowledge of, rural childcare issues.
Importantly, the group also includes representatives from other relevant Departments, such as OFMDFM and the Department of Education, to ensure that other relevant strategies are taken into account. The group has been examining circumstances in rural areas that affect childcare, such as accessibility and transport difficulties, childcare models that are already working in rural areas, and the cost of childcare.
One of the group’s most important emerging findings is the isolation of some rural communities regarding access to facilities that others take for granted, such as affordable and accessible childcare, and transport to and from school for children. I have received the group’s draft report, I am considering its recommendations on how current and future provision can be improved, and I expect the final report to be available within a few weeks. I will want to discuss those recommendations with other Departments and with Executive colleagues to ensure that a joined-up approach is taken to overcome some of the childcare difficulties that people in rural areas face. That approach will, in turn, make a huge difference to families who live in rural areas.
Mr Brolly: Will the Minister tell us why her Department is responsible for childcare in rural areas?
Ms Gildernew: Access to proper childcare facilities is a must for all parents. One of my roles as Minister of Agriculture and Rural Development is to be a champion for rural areas and to ensure that rural dwellers have equitable access to facilities. Rural childcare is also a priority for me, because it underpins economic and social sustainability in rural areas. The Rural Stakeholders Forum was established to examine current rural childcare provision and to suggest possible solutions to highlighted difficulties.
Of course, childcare is not solely my responsibility. Other Departments have strategies and actions in place that deal with childcare issues, but my focus, and the focus of the report and any subsequent DARD action, is on rural childcare and on ensuring that those in need in rural areas have the same opportunities that are afforded to those in urban areas. I shall be working with other Departments that have responsibilities in that area to ensure that rural issues are included in their policies and strategies, and to ensure that — collectively — we work to improve childcare in rural areas.
Mr Shannon: I thank the Minister for her detailed response to the first question. Although I welcome the figures that she outlined clearly for us, it would seem, from what she said, that the need for improvements has not been totally met. She is well aware that one of the priorities of the Executive and Assembly is to tackle child poverty. The lack of rural childcare is one problem that leads to child poverty. Has the Minister set aside enough finance to assist rural childcare opportunities, especially since the Executive have set that priority but also because need exists?
Ms Gildernew: DARD has received an allocation of £10 million to tackle poverty and social exclusion in rural areas over the next CSR period. That will provide us with the opportunity to work with others inside and outside Government to deal with a range of issues that affect rural areas, including rural childcare.
I agree that if we enable people to return to work or to get back into training or education, they can improve their economic status. The two go together, and I am very pleased that we have £10 million with which to tackle poverty in rural areas. Of course, we would love to have more, but £10 million well spent will make a real difference.
Mr McFarland: Most of Northern Ireland is considered to be rural, so will the Minister more clearly define “rural childcare”? Can she tell us which children qualify as being “rural”?
Ms Gildernew: Has the Member got all day? A great deal is contained in that question. Four out of 10 people live in rural areas. That figure means that four out of 10 children also live in rural areas. For children who live near towns, where there is a critical mass, childcare facilities can be made available where there are enough children to make them worthwhile. Difficulties in rural areas include isolation, lack of registered childminders, and people not having access to childcare voucher schemes.
Although I have the draft report only at this stage, it contains a number of recommendations on how to tackle rural childcare. People who live in Derrygonnelly, Aghyarn or Rathfriland need access to quality, affordable childcare. Discussions are ongoing with the Department for Social Development, which believes that populations under 4,500 are defined as rural. That accounts for a significant section of the population. An emphasis must be placed on rural issues and on how we facilitate services, and service providers, in rural areas to ensure that people have the same access to services as those who live in towns.
4. Mrs McGill asked the Minister of Agriculture and Rural Development to give a timescale within which the group, established by her Department and the Department of the Environment to reduce bureaucracy, will report; and to detail any progress to date. (AQO 2362/08)
Ms Gildernew: Go raibh maith agat. The review panel, as a result of a number of meetings that it has held with stakeholders and departmental officials, now has a measure of its task. A questionnaire has been issued to stakeholders that seeks evidence of over-regulation and their assessment of which regulations that DARD and the Department of the Environment are placing on the agrifood industry are unnecessarily burdensome. Once the responses to the questionnaire have been analysed, the review panel proposes to conduct workshops — bringing together stakeholders, policy-makers and inspectors — to explore the issues raised and to identify where there is scope to reduce the administrative burden on the industry. Those workshops will be conducted at the beginning of April.
The panel anticipates that it will be able to complete that stage of the work by the end of May 2008 and will spend June drafting its final report, which it expects to publish by the middle of July 2008. As I told the House previously, the targets that have been set are 25% by 2013 and an interim target of 15% by 2011.
Mrs McGill: Go raibh maith agat, a Cheann Comhairle. Given that 2011 and 2013 are a long way off, what is the Minister doing in the short term to reduce red tape and bureaucracy? Go raibh maith agat.
Ms Gildernew: The review will result in a plan that will make recommendations for the simplification of administrative processes, aimed at maintaining policy effectiveness and public accountability and identifying areas where the associated administrative burdens can be reduced. The Department of Agriculture and Rural Development and the Department of the Environment will then develop action plans to implement the recommendations outlined in the simplification plan. I anticipate that some recommendations can be implemented reasonably quickly but that others will take longer. Every effort will be made to deliver the benefits as quickly as possible, and farmers will see the benefits long before 2013.
Mr Buchanan: Why has it taken the Minister so long to identify bureaucracy savings in her Department when overstaffing and bureaucratic inefficiency is so apparent? Does the Minister really believe that it is not possible to identify savings in a system that needs up to nine officials, and takes nine months, to process a single farm payment application?
Ms Gildernew: The Member will agree that farmers find it difficult to deal with the fact that many of the Department’s regulations come from Europe. The Department needs to consider how it can reduce bureaucracy and the administrative burden on farmers, and it is discussing ways to achieve that with EU officials. One of the first things that the Department did as a result of the Ulster Farmers’ Union’s (UFU) Cut it Out campaign was to address bureaucracy. Although the Department took some time to agree the composition of the panel with the Department of the Environment, it is now working, and we will soon see positive results. However, we cannot solve all problems immediately.
Mr Burns: The reduction of paperwork is one of the five basic recommendations outlined in the UFU’s ‘Five Steps to a Better Future’ to cut down on red tape in the farming industry. Can the Minister tell us how many of the five recommendations she has implemented to date?
Ms Gildernew: Work on four of the five recommendations is ongoing, and they are works in progress. I examined, and consulted widely on, the Agricultural Wages Board, and I decided that I would not progress that recommendation.
Communications Courses at Loughry College and Students Studying at Agricultural Colleges
5. Mrs O’Neill asked the Minister of Agriculture and Rural Development to detail the reasons for her Department’s plans to withdraw the Master of Science communications course at Loughry College; and what plans it has to hold discussions with the Department for Employment and Learning in order to retain this course in the Cookstown/Tyrone area. (AQO 2365/08)
6. Mr Bresland asked the Minister of Agriculture and Rural Development to outline the number of full-time students who are currently studying at agricultural colleges. (AQO 2260/08)
13. Mr I McCrea asked the Minister of Agriculture and Rural Development to detail the reasons for ending all undergraduate and postgraduate communications courses at Loughry College. (AQO 2360/08)
Ms Gildernew: With your permission, Mr Speaker, I will take questions 5, 6 and 13 together. To put the issue in context and in response to question 6, the College of Agriculture, Food and Rural Enterprise (CAFRE) enrolled 1,561 students in October 2007 across its three campuses at Enniskillen, Loughry and Greenmount. Of those students, 641 are full-time and 920 are part-time.
In response to questions 5 and 13, no decision has been taken to end any of CAFRE’s courses. A proposal has been made to withdraw the undergraduate and postgraduate communications courses at the Loughry campus. That proposal reflects the budgetary pressures that my Department and other Departments face under the new Programme for Government. The proposal to cease the communications courses has raised several queries from Members as well as CAFRE students. I have received an invitation to meet students, and I hope to do so on Wednesday 5 March. My officials attended a Committee for Agriculture and Rural Development meeting to discuss the issue, and I subsequently asked them to consult the key stakeholders. I will take on board the views of CAFRE students and other key stakeholders in making my decision.
Over the next year, my Department will be implementing an ambitious work programme, which will include the roll-out of the new rural development programme and a series of anti-poverty measures. All of that must take place on top of our existing workload, and, at the same time, we must accommodate major efficiency savings of £6 million, £12 million and £18 million across the next three years. Although the future of the communication course programmes might not lie in DARD given the current priorities, I have written to the Minister for Employment and Learning, Sir Reg Empey, to seek a meeting with him as they might fit better in the mainstream provision that is provided by the Department for Employment and Learning.
Mrs O’Neill: Go raibh maith agat. I welcome the fact that the Minister has plans to meet with students in the coming week. If the decision were taken to withdraw the communication course programmes, where would that leave Loughry College?
Ms Gildernew: Loughry campus will continue to offer a range of education and training programmes focused on meeting the needs of the local food industry. Graduates from the campus have good employment prospects and I encourage any young person who is interested in a career in the food industry to consider Loughry as their place of study. The Member and I live quite close to Loughry and we know the type of work that the college does. Loughry’s position in mid-Ulster is no coincidence: there are many high-profile food companies in the area, and Loughry provides a range of well-trained graduates who are eminently capable of working in the industry. Loughry is a huge benefit to the Department and I have every confidence in the college.
Mr Bresland: There is considerable concern in the farming community about the future of the agricultural colleges. Will the Minister confirm whether her Department has a long-term strategy for the provision of full-time agriculture courses in Northern Ireland?
Ms Gildernew: Absolutely: yes. Agriculture courses, particularly the third-level education element, should be in my Department’s remit. We have an unshakeable commitment to deliver courses that will help to support our agrifood and agriculture industries.
Mr I McCrea: I am concerned that the communication course programmes are being removed from the Loughry campus, especially as the college has helped to fashion a generation of agrifood leaders and advisers in the agriculture industry. We would have been better served had the Minister first consulted the local community on whether the course needed to close, rather than act first and talk later.
Mr Speaker: Will the Member ask his question?
Mr I McCrea: Given that the Minister is going to meet the students, will she give an assurance that she will consider their views and, if need be, reinstate the course?
Ms Gildernew: First, the decision on the course has not yet been taken. To implement the ambitious programme of work that is planned for my Department, which includes the ‘Northern Ireland Rural Development Programme 2007-2013’, significant planning is required, and on that my officials are engaged. Discussions on the proposal to withdraw the communication course programmes are ongoing, including with the trade union side. Officials met the Committee for Agriculture and Rural Development, and I have asked them to consult widely with key stakeholders. I am meeting students later in the week. Firm decisions will be taken only when their full implications have been assessed, including consideration of equality implications. If — and at this stage it is an “if” — the proposals are adopted, anyone at present on a communications course will be finishing their study. This is not something that is happening today, or next week, or next month. We are looking at the issue but everyone who is on that course will get the chance to finish it.
Navigational Authority on Lough Neagh
1. Mr I McCrea asked the Minister of Culture, Arts and Leisure whether or not consideration is being given to establishing a navigational authority on Lough Neagh. (AQO 2265/08)
The Minister of Culture, Arts and Leisure (Mr Poots): My Department is finalising the terms of reference for commissioning an economic appraisal to assess the viability of establishing some form of navigation authority on Lough Neagh and the rivers Blackwater and Upper Bann.
Mr I McCrea: Obviously this issue has huge potential for recreation and tourism.
What is the estimated cost of establishing a navigation authority for Lough Neagh?
Mr Poots: A feasibility study in 2004 envisaged a cost of £13·2 million for a two-stage development plan to establish a navigation authority. In addition, there would have been an annual maintenance cost of £776,000. Subsequently, a number of capital infrastructure projects or commitments, primarily sponsored by local authorities, Lough Neagh Partnership and DCAL, have significantly reduced those proposed costs. Examples of such projects include the provision of a replacement navigable bridge at Maghery Cut and improved jetty moorings at Kinnego, Ballyronan, Sandy Bay, Cranfield, Ram’s Island and Antrim. Until an economic appraisal is carried out, I cannot say what the revised cost will be. However, ISNI II includes provision of £11·7 million in year 6 for this purpose.
Mr Molloy: My question has already been answered.
Mr Gardiner: Has the Minister taken any action to acquire ownership of the bed of Lough Neagh from the Shaftesbury estate, and will he consider the possibility of creating a Lough Neagh authority, charged with the development of the tourist and business potential of the lough and its surrounding region?
Mr Poots: No action has been taken to acquire the bed of Lough Neagh.
2. Mr Neeson asked the Minister of Culture, Arts and Leisure to detail his plans for the future of the Titanic Quarter. (AQO 2295/08)
Mr Poots: The Titanic Quarter belongs to the Belfast Harbour Commissioners; any plans for the future of the area would in the first instance be a matter for them.
Mr Neeson: I thank the Minister for his very brief answer. He is well aware of my interest in maritime heritage, which I have previously declared in this House. Will the Minister tell me, and the House, whether he is satisfied with the involvement of DCAL in the development of the Titanic signature project? Secondly, as the Minister knows, there is no Department in Northern Ireland with responsibility for maritime heritage as such. Can he assure me that he and his colleagues will try to resolve this matter as soon as possible?
Mr Poots: The Titanic signature project is being led by DETI and is the responsibility of that Department.
I have consulted the Northern Ireland Museums Council with a view to what could potentially be achieved with regard to the maritime heritage of Northern Ireland. Maritime heritage is something that is synonymous with Northern Ireland. It stretches as far back as the plantation of Ulster — much of the purpose of which was to produce timber to make ships — and the early Presbyterians, who left from the Ulster Scots areas to travel to the United States and make that country what it has become, right through to the building of the Titanic and the role of Northern Ireland in the First and Second World Wars. There is a huge maritime history in Northern Ireland that we have failed to reflect, and that is something that I should like to see changed in the future.
Mr Newton: Does the Minister agree that the industrial heritage of Northern Ireland, including the linen, shipbuilding, rope-making and aircraft industries, and the stories of the people involved, are worth preserving? Has he any plans to create museums or display facilities in the Titanic Quarter in association with the site owners?
Mr Poots: I recently attended an exhibition on the building of the Titanic at W5, and I recommend it. It includes some excellent photographs of the people who were involved in the building of that great ship. In 2002-03, National Museums and Galleries of Northern Ireland commissioned a feasibility study on the development of a “museum of sea and sky” in the Titanic Quarter. Discussions have taken place with National Museums on the possibility of revisiting its proposals for the interpretation of Belfast’s maritime and industrial heritage in the context of the current plans for the regeneration of the Titanic Quarter.
Mr A Maginness: I agree with Mr Neeson that there is great value in maritime heritage; it is something that we should be very proud of.
Given the high level of public and private investment, there is a unique opportunity for the encouragement of public art in the Titanic Quarter — it would add tremendously to the overall development of that area. Does the Minister have any plans for the promotion of public art?
Mr Poots: I have held early exploratory talks about public art with people from the development sector of the business community. It has been suggested that when a significant development is undertaken, developers should contribute 1% of the cost of that development to public art in the area. I do not believe that there is a statutory means of enforcing such a scheme, but we will discuss further the possibility of implementing it on a voluntary basis.
Community Festivals Fund
3. Mr Moutray asked the Minister of Culture, Arts and Leisure to detail the discussions he has had with local councils regarding the future delivery of the community festivals fund. (AQO 2298/08)
18. Ms Ní Chuilín asked the Minister of Culture, Arts and Leisure to outline the nature of responses his Department received from local councils in relation to the funding of festivals. (AQO 2359/08)
Mr Poots: With permission, Mr Speaker, I shall answer question 3 and question 18 together. Following my statement on 4 December 2007, departmental officials wrote to the chief executive of each local council to outline plans to transfer the administration of the community festivals fund to those councils from 1 April 2008. Since then, my officials have been working closely with the Northern Ireland Local Government Association to facilitate that transfer. The responses received to date — from a number of councils — indicate broad support for the new arrangements. Belfast City Council has sought further clarification and information on various elements of the plan.
Mr Moutray: I thank the Minister for his response. Applications to the community festivals fund from the Orange and unionist community have been under-represented in the past. Therefore, will the Minister encourage local councils to proactively engage with individuals and groups from a unionist background to ensure greater fairness?
Mr Poots: Absolutely. In the last round of funding, approximately £450,000 was available to be distributed. Of that sum, only £40,000 was claimed by people from a unionist-identity group. That was clearly dissatisfactory. That issue must be addressed — and I trust it will be — by local authorities when they are allocating funds to the various groups this time around.
Ms Ní Chuilín: Go raibh maith agat, a Cheann Comhairle. Does the Minister acknowledge that not every local council, including Belfast City Council, is happy with the proposals? Will he also admit that local festivals, particularly community festivals, increasingly have to rely on private funding?
Mr Poots: The indications are that the vast majority of councils are satisfied to proceed with the proposals. Funding for local community festivals has not been reduced, so the reliance on private sources should not be any greater. Community festivals that have worked well in the past should be better able to attract private-sector funding, therefore allowing other community festivals to thrive. Indeed, the system that we have introduced will double the amount of money allocated to the community festival fund, since it is to be match-funded by the councils.
The Member apparently claims that Belfast City Council does not support the idea because they do not want to match-fund the Government grant, but I am not sure that that is true. The new arrangement means that more money — not less — will be provided for community festivals.
Mr K Robinson: Will the Minister indicate how much has been spent in the last three years on the community festivals fund? What audit has been carried out on the expenditure of those funds, in respect of both value for money and measurable impact?
Mr Poots: I cannot tell the Member the spending for three years because the system has only been in operation for two. The expenditure on the community festivals fund has been £450,000 per annum for the last two years.
Mr Burns: Does the Minister agree that community festivals have been dramatically beneficial in reducing conflict and antisocial behaviour? Can he say what moneys are available from the central Government to support community festivals?
Mr Poots: I have allocated £450,000 of central Government money to local authorities for distribution to community festivals through match-funding mechanisms. In addition, groups such as the Arts Council might sponsor events that enhance the arts, and other areas that are the responsibility of other Departments might be offered funding. Nevertheless, money is clearly coming from central Government to community festivals.
Capital Stadium Development for Football Clubs
4. Mrs D Kelly asked the Minister of Culture, Arts and Leisure to outline the money available for capital stadium development for football clubs. (AQO 2315/08)
16. Mr T Burns asked the Minister of Culture, Arts and Leisure to outline the capital grants that are available for stadium development in relation to (i) rugby; (ii) gaelic games; and (iii) soccer, in this year’s budget. (AQO 2317/08)
20. Mr D O’Loan asked the Minister of Culture, Arts and Leisure to detail (i) the grants available under capital stadium development for senior soccer clubs; and (ii) the maximum grant available. (AQO 2315/08)
Mr Poots: With permission, Mr Speaker, I will deal with questions 4, 16 and 20 together. The recently announced capital budget for sport is £31·2 million for 2008-09, £36·4 million for 2009-2010, and £44 million for 2010-11. Sport NI is responsible for the development of sport, including the distribution of funding, and is currently considering how those funds might be allocated throughout sport. As part of that process, Sport NI is working closely with sports’ governing bodies — including those from soccer, rugby and Gaelic games — on stadium-development needs. When that process is completed, Sport NI will take decisions about grants for stadium development, including maximum grants.
From its budget this year, Sport NI has introduced several capital-grant programmes — such as stadia safety, Gaelic-games modernisation and soccer-strategy programmes — that are designed to assist rugby, Gaelic games and soccer in developing their stadia.
Mrs D Kelly: I thank the Minister for his response. He referred to stadium safety, but there is a belief that there is a shortfall in the budget for stadium-safety work. Will the Minister outline the likely impact of health and safety rules on stadium capacity in Northern Ireland’s various sports venues?
Mr Poots: When the new rules are introduced, stadia will have to close if measures are not taken to improve them. Therefore, in the coming years, without significant upgrades, certain stadia will come under a lot of pressure. Money, which will, hopefully, offset some of those pressures, will go to various sports in order to enhance the stadia that currently exist.
Mr Burns: What measures has the Minister put in place to encourage grant uptake? Does the Minister have a plan to ensure that every penny of that money is allocated to sports clubs that need it, and what will he do with any money that is not distributed this year?
Mr Poots: Sport NI is responsible for the distribution of such funding, significant funds have already been distributed, and the IFA’s recent decision will ensure that that continues to be the case.
Mr Spratt: Given that the IFA has reduced its executive board from 18 to 11 members; will the remaining £4 million be allocated to it?
Mr Poots: Yes. We can now move ahead and release the soccer-strategy money. There are some minor issues, but they will be quickly resolved and, thereafter, that money will be on the ground as quickly as possible.
Mr McElduff: Go raibh maith agat, a Cheann Comhairle. Is there any prospect of additional moneys being secured to allow Sport NI to open up a new round of sports capital-funding applications from community-level clubs? People in constituencies are telling us that they want to develop boxing or football clubs, but there is still a freeze on applications for sports capital grants? Has the Minister considered that matter?
Mr Poots: We recently discovered that we are able to use Exchequer funding in order to support applications that would previously have been supported by lottery funding. In the new year, when we consider sports spending, depending on the available resources, that is something to which we will give consideration.
Mr Kennedy: In light of the Minister of the Environment’s stated preference for small rural communities or clachans consisting of about 14 houses, will the Minister indicate whether the provision of 2,500 houses as the price of building a stadium at the Maze is acceptable?
Mr Poots: I am not sure where Mr Kennedy is coming from.
Mr McNarry: Should he repeat the question, Mr Speaker?
Mr Poots: I do not need the question repeated. The site that was being talked about was identified as a strategic development site; not the crossroads development that Mr Kennedy may be referring to.
Ministerial Meetings with Republic of Ireland Counterpart
5. Mr McCarthy asked the Minister of Culture, Arts and Leisure to outline the meetings he has held with his counterpart in the Republic of Ireland. (AQO 2287/08)
Mr Poots: I attended two NSMC sectoral meetings with Éamon Ó Cuiv, the Minister for Community, Rural and Gaeltacht affairs. Those were the NSMC language sectoral meeting of 26 October 2007 that was held in Altnaveigh House in Newry, and the NSMC inland waterways sectoral meeting of 17 October 2007 that was held in the Slieve Russell Hotel Golf and Country Club in Cavan.
On a visit to Dublin on 28 November 2007, I had separate meetings with Éamon Ó Cuiv, and Séamus Brennan, the Minister for Arts, Sports and Tourism, at which I was accompanied by the British Ambassador. I also met them both at the two NSMC plenary meetings, which took place on 17 July 2007 in the Armagh City Hotel and on 7 February 2008 in the Dundalk Institute of Technology.
Mr McCarthy: I thank the Minister for his answer. He is obviously very busy in that regard. Given that the Minister’s counterpart in the South has contributed to cultural associations in Northern Ireland, will the Minister try to close the gap in the disparity of funding for arts in Northern Ireland compared to that in the South of Ireland?
Mr Poots: The Member may not realise it, but the Budget signalled for the first time that that gap was beginning to close. Work is being done on that issue. The gap on spending on the arts in Northern Ireland compared to the rest of the UK is also beginning to close as a consequence of the Budget.
Lord Browne: During the meeting with his counterpart in the Republic of Ireland, did the Minister express the deep anger that is felt by the majority of Northern Ireland soccer fans regarding the Football Association of Ireland’s claim on players who were born in this part of the United Kingdom?
Mr Poots: That particular issue was not being driven by the Minister for Arts, Sports and Tourism; it was the Minister for Foreign Affairs, Dermot Ahern, who had been pushing it.
Football bodies have made it clear that they do not want political interference in football, which is the appropriate line to take. I urge my counterparts in the Irish Republic, or elsewhere, to allow the football authorities to devise their own strategies on that issue.
The current rules are clear: a person can play only for the country that they, their parents or their grandparents were born in. Therefore, a person who was born in Northern Ireland and whose parents and grandparents were born in Northern Ireland should be playing football for Northern Ireland and no other country.
Some Members: Hear, hear.
Mrs M Bradley: Has the Minister raised the possibility of additional funding from the Irish Exchequer for joint centres of excellence for the Olympic Games, or for any other sports facilities or services that can be shared on a cross-border basis? That includes the judo centre of excellence and the Derry City Football Club centre of excellence.
Mr Poots: I am well aware that the Member’s colleague Mr Ramsey has paid at least one visit to Dublin to discuss the future of a new stadium at the Brandywell. I have discussed that issue with Séamus Brennan.
If the Government of the Republic of Ireland want to contribute to a club that plays in the Football Association of Ireland’s league, that is a matter for them.
Mr Brolly: Ceist uimhir a sé.
Mr Speaker: I call the Minister.
Mr Poots: I was waiting for the English translation.
Mr Brolly: Question No 6.
Employment Opportunites for Local Actors
6. Mr Brolly asked the Minister of Culture, Arts and Leisure to outline his Department’s plans to provide full-time employment opportunities for local actors. (AQO 2344/08)
Mr Poots: DCAL does not have a direct role in providing employment for actors, but support is provided through the Arts Council of Northern Ireland and Northern Ireland Screen. Local actors may apply to the Arts Council for support for individual artist programmes. The council offers grants of up to £5,000 for project assistance, travel grants and residencies, and so on. The Arts Council also supports local theatre companies and venues through revenue and project grants and has made drama an art-form priority in its current strategic plan.
Northern Ireland Screen encourages the use of local actors in the productions that it supports. Recent films such as ‘Closing the Ring’ and ‘Middletown’ and Irish-language drama ‘Seacht’ all had a large cast of local actors. The Department for Employment and Learning has advised that it does not tailor its programmes and services to any particular sector, such as the acting profession. Its services are used by a wide range of jobseekers and employers alike. Those services include a job centre and an online facility through which employers advertise their vacancies and jobseekers identify potential job opportunities.
Mr Brolly: In view of the fact that actors, like boxers, tend to come up through the amateur ranks, is the Minister disappointed that the Arts Council has told us that it does not have a full and exhaustive list of amateur drama groups?
Mr Poots: Some would say that there is a fair bit of support going to actors already — there are 108 MLAs here, and a few of them would perhaps fall into that category. Perhaps I hear some of them trying to get in on the act here right now.
The numbers involved in amateur dramatics are such that it would be exceedingly difficulty for the Arts Council to garner them all together.
Mr Hamilton: Does the Minister share my view that an insufficient amount of locally produced drama is being broadcast on the BBC and other channels? What is being done to increase the amount of such drama from Northern Ireland?
Mr Poots: It has been somewhat disappointing that, in spite of the fact that we have made great progress in the film industry, the BBC and ITV have not made the same investment. In fact, part of the BBC charter would indicate that a greater investment should be made in the regions. People perceive that dramas such as ‘Murphy’s Law’ are made in Belfast, yet the only thing that relates to Northern Ireland in ‘Murphy’s Law’ is Jimmy Nesbitt. Clearly the BBC has a role to play; we have raised the issue of the resources that should be put into the industry in Northern Ireland with the BBC at a local level, and we will also raise it at a national level with its director general Mark Thompson.
Rev Dr Robert Coulter: I thank the Minister for his answers. In 2006, cultural tourism contributed £324 million to Belfast’s economy, an increase of 14% on the previous year. That supports nearly 16,000 full-time jobs and has triggered over £300 million of investment with additional hotels, restaurants and venues. Scotland also sees that the arts are big business. Does the Minister appreciate that connection, and does he understand that one has to invest to accumulate? What portion of the Minister’s budget is spent on drama and art in schools?
Mr Poots: The Member raises an interesting point about how the arts help the economy, and, in particular, the economy of our capital city. He raised this matter at a very relevant time — one would nearly think I had primed this question because the Department has set aside a considerable amount of money for the development of the metropolitan arts centre. The centre will cost about £17 million, and just under £3 million has currently been raised. A request has been placed with Belfast City Council for support for that venue. Given the figures that Dr Coulter has outlined, I would like to believe that a very large cheque from Belfast City Council will be coming our way to ensure that work on that venue proceeds.
Mr Speaker: Mr Burnside, who is next on the list to ask a question, is not in the Chamber. Questions No 8, 9 and 10 have been withdrawn. Mr Ford does not wish to publish question 11.
Eel Fishing in Lough Neagh
12. Mr W Clarke asked the Minister of Culture, Arts and Leisure to confirm whether he will meet directly with the Lough Neagh Fishermen’s Co-operative in order to discuss the needs of the eel-fishing industry. (AQO 2339/08)
Mr Poots: I shall visit the Lough Neagh Fishermen’s Co-operative in the near future to discuss the eel-fishing industry’s needs.
Mr W Clarke: Go raibh maith agat, a Cheann Comhairle. Given the shortage of elvers in Lough Neagh, is the Minister concerned for the eel-fishing industry?
Mr Poots: The co-operative buys a considerable number of elvers each year for Lough Neagh, and its members are pressing the Department for greater financial support towards the cost. Later this year, I shall meet co-operative members to discuss the matter further. I shall investigate whether there is a way in which to assist the co-operative, and I want to see what its members do for themselves. I shall assess whether those who benefit from eel fishing in Lough Neagh are reinvesting sufficient resources.
Mr Speaker: Mr Simpson and Mr O’Dowd are not in the Chamber, so we move on to question 15.
Northern Ireland Football
15. Mr Shannon asked the Minister of Culture, Arts and Leisure what consideration he has given to marking the fiftieth anniversary of the Northern Ireland World Cup football team; and to recognising the heroic actions of Mr Harry Gregg during the Munich disaster. (AQO 2281/08)
Mr Poots: As all Members know, Harry Gregg is a former member of the Northern Ireland football team, and, during an outstanding career, he played in goal for Manchester United from 1957 to 1967. Harry pulled some of his Manchester United teammates, including Bobby Charlton, Jackie Blanchflower and Dennis Viollet, from a burning plane during the Munich air disaster in 1958. Harry received the MBE in 1995, and I am sure that the Assembly will join me in praising his heroic actions and in recognising his outstanding contribution to football and to Northern Ireland.
I intend to host a reception for the surviving members of the 1958 Northern Ireland World Cup football team, including Harry Gregg, as soon as that can be arranged. Officials in my Department are making the necessary arrangements.
Mr Shannon: I thank the Minister for his warm and positive reply, which demonstrates that the Assembly is responsive to public opinion. I also congratulate the Minister on reaching question 15, which is probably a record for the Chamber. I just happened to be present for my question.
Mr Weir: It does not look as though the Minister will get to question 16. [Laughter.]
Mr Shannon: He definitely will not. Does the Minister agree that the 1958 World Cup team marked the start of a positive era for Northern Ireland football? To invite the team, including Billy Bingham, to the Assembly would make for a special event.
It is often said that the term “hero” is overused, but Harry Gregg is a hero to many people in Northern Ireland. He saved many lives on that afternoon in Munich, and it would be good not only to recognise his heroism but to present him with a gift, if that were in order.
Mr Poots: I thank the Member for his question. The 1958 football team made a significant contribution to Northern Ireland. It also paved the way for the success of the Northern Ireland teams that reached the World Cup finals of 1982 and 1986. I want to pay tribute to the 1958 team while its players are still around — I understand that seven or eight of the team are still alive. I want to arrange a significant event to recognise them and their heroics during that World Cup, and to pay particular tribute to Harry Gregg, who demonstrated extreme bravery during the Munich air disaster and great humility in its aftermath.
Mr Speaker: Neither Trevor Lunn nor Pat Ramsey is in the Chamber, so that ends questions to the Minister of Culture, Arts and Leisure.
Mrs D Kelly: On a point of order, Mr Speaker. The first questions today were to the Office of the First Minister and deputy First Minister. Under the terms of the Good Friday Agreement and the St Andrews legislation, the Office of the First Minister and deputy First Minister is a joint office. Will you clarify that that is the case? Further to that, will you examine the answers to the questions on the date for the devolution of policing and justice and on the definition of victims? Did the answers given reflect the view of both the First Minister and the deputy First Minister?
Mr Speaker: I take the Member’s point, but that is not a matter for the Speaker. Everyone in the House should know that OFMDFM is a joint office. That is all that I can say to the Member. The Speaker is certainly not responsible for anything beyond that.
Rates (Industrial Hereditaments) (Amendment) Order (Northern Ireland) 2008
Debate resumed on motion:
That this Assembly approves the Rates (Industrial Hereditaments) (Amendment) Order (Northern Ireland) 2008.
Dr Farry: Thank you, Mr Speaker, for the opportunity to conclude my remarks. I will avoid the temptation to repeat my earlier comments for the benefit of those who missed them.
As I was stressing, the key issue with regard to business taxation must be the pursuit of a differential rate of corporation tax. I am disappointed that the Executive seem to have given up the fight and that the Assembly has not received a statement from the Minister or any of his colleagues that sets out the Executive’s response to the Varney Review and how matters are to be taken forward. A lot may be happening behind the scenes. However, it is important that the Assembly have the opportunity to question Ministers and to pass judgement on those issues. It is also important that the Assembly consider how industrial derating will play a role in the future regional economic strategy and what effect it will have on the Varney Review II, which is well under way.
(Mr Deputy Speaker [Mr Molloy] in the Chair)
I have reflected long and hard on the position that I have articulated with respect to industrial derating. I appreciate that there have been quite a few Assembly debates on the issue. I have paid particular attention to the ERINI report. It is a substantive piece of work to which the Assembly must give proper consideration and due regard. Any journey that the Alliance Party may have made on the issue pales into insignificance compared with the journeys that several parties have made in recent years. The Alliance Party accepts ERINI’s recommendation to set industrial rating at 50% rather than the 30% that is proposed by this statutory rule. I will conclude by putting on the record some comments from the ERINI report:
“Industrial derating is important because rates are now a full part of the resources available to the Executive. Derating, therefore, has a genuine opportunity cost in terms of public services foregone … There is little evidence that rates would cause a collapse in manufacturing with substantial loss of output and jobs beyond existing trends in the sector. Nor is there much of an argument to support returning derating as a means of attracting new investment … Based on the analysis undertaken by ERINI the Executive has a range of choices over the degree of further implementation it undertakes. Given the quality of information available to analyse this issue ERINI suggest proceeding cautiously. At 50% implementation no more than an estimated 10% of companies are likely to face rate bills much more than 15% of their profits. Proceeding to this point would incur a relatively small risk to industry as a whole … Proceeding no further than this degree of implementation is the position we favour.”
The Alliance Party concurs with ERINI that setting industrial rating at 50% is the cautious approach to take. Although Members may believe that moving it from 30% to 50% is risky, I caution them that the Assembly faces the biggest risk of all if it does not seek to modernise and rebalance the economy.
Mr B McCrea: The Member has talked extensively about ERINI’s analysis. How does he feel about the DTZ Pieda report that has informed previous Assembly debates? It says that the imposition of industrial rates would have a negligible effect. At the time, did he believe that report to be flawed? There seems to be some contradiction.
Has he also considered ‘The Future of Manufacturing in Northern Ireland’, prepared for the Department of Enterprise, Trade and Investment by PricewaterhouseCoopers, which forecasts 40,000 job losses if there is no investment in the manufacturing sector? Has he considered any research over and above that single ERINI report?
Dr Farry: The reports to which the Member refers deal with manufacturing in general, rather than the specific issue of industrial derating. It is important that the Assembly avoid mixing analyses in its discussion. Clearly, there is a problem in manufacturing.
However, there is also a need to invest across the economy. It is more efficient and effective to invest the revenue that would be gained from moving to 50% rating in the drivers of our economy, which would provide benefit across the spectrum — the service sector, the manufacturing sector and all other sectors. That would be a better way to improve our productivity and economy, maintain full employment and become a prosperous and sustainable region within the United Kingdom.
Mr Newton: I support the Minister in his endeavours. Although the Order is rather short and is being introduced in a relatively low-key manner, it is vitally important to the well-being of the various sectors of our industry.
Unlike Dr Farry, I have spent my life either working in industry; working in an advisory capacity to industry, or working as a consultant — particularly to the manufacturing industry. The Order is particularly vital to the well-being of the manufacturing sector, the 90,000 employees in that sector — which was the figure the last time I checked — and the prosperity of that sector and the Northern Ireland economy.
Members are aware of the high-profile campaign that was mounted by the Northern Ireland Manufacturing Focus Group (NIMFG), which comprises people who do not come together unless they feel that their backs are against the wall. In his remarks, the Minister quoted how industrialists would feel if there were 100% rates. It was stated that the result would be the potential for reduced investment in plants, job losses, and that, if there were 100% rates, moving across the border would be a more attractive option.
My experience of industrialists is that they are men and women who say what they mean and mean what they say. When they come together to speak with one voice in a campaign, they must be listened to because they mean what they say. They do not embark on such campaigns lightly — they embark on them because they believe in the position that they have taken. The NIMFG campaign involved employees from the smallest to the largest employers in Northern Ireland and were from across the manufacturing industry.
It has already been stated that the removal of industrial rating dates back to 1929. It was a helpful tool for the various Ministers of the economy in Northern Ireland when they were embarking on trips to attract industry to Northern Ireland. There were precious few tools in their toolbox to help attract industrialists to Northern Ireland.
It certainly was of help and value in the development of indigenous manufacturing organisations. Businesses find starting up difficult, and the incentive of having no rates to pay is invaluable.
In April 2003, direct rule Ministers announced the phasing out that benefit. That announcement was met with absolute horror by the manufacturing sector, which would have been due to start paying those full rates by April 2001 had there not been a devolved Assembly.
Members have already said that the manufacturing sector is under pressure in various areas — it is contending with increasing energy costs, additional costs in the transport of goods, and it daily faces minimum-wage levels from manufacturers in the Far East. Dr Farry referred to the textiles sector. There are probably fewer than 5,000 people working in that sector today, as opposed to around 25,000 people five or six years ago. Industrial derating was not the only contributing factor, but it was a factor, and continues to be.
I welcome the fact that the Minister has said that he will hold the industrial rating level at 30%. When this issue was debated in the House, the Gallery was almost full of people with a vested interest in the matter, who wanted to hear the Assembly’s views. The decision to hold the rate at 30% will allow industrialists to set their budgets, and to plan and determine their investments until 2011. There are few ways in which we can directly support the sector, but that is one way.
The Rates (Industrial Hereditaments) (Amendment) Order (Northern Ireland) 2008 supports the Assembly’s Programme for Government, which identifies economic growth as a priority. It sends out the clear message that we value those who are prepared to get their hands dirty, work and invest in the manufacturing sector, and those who are prepared to risk investing their money and employing staff.
The Order also sends out a message to those who are employed in the manufacturing sector that the Assembly is prepared to do what it can to ensure that the maintenance of the declining numbers will be arrested, and that there may be some growth.
Dr Farry’s attitude reminds me of the story of the parents who went to watch their son as he marched in a parade, and noticed that everyone was out of step except their little boy. A different system may be developed, and certainly could be developed, to support industry. However, we are where we are. Employers said that there was the potential to lose industrial jobs if we did not arrest the rate at 30%. In the longer term, we may be able to arrive at a different system, but the matter needed to be addressed in a practical manner.
The naysayers of the Assembly, and those who argue that they would prefer direct rule to continue rather than to have the Assembly in its present format, need to talk to the manufacturing sector and the business community about such matters.
The business sector and those who are employed therein have a great appreciation of that particular matter as well as of other activities.
Mr B McCrea: At the outset, I wish to declare an interest. I have previously informed the House of my association with the Northern Ireland Manufacturing Group. That has been noted in the Register of Members’ Interests, although I am no longer connected to the group.
I was not going to speak on this topic because:
“Success has many fathers, but failure is an orphan”.
However, rarely have I heard such hypocrisy and cant from those in the Benches to my right. That is opposition for opposition’s sake. It is based on spurious arguments, weak analyses and poor research.
“Cant” is the operative word, because that is all I can hear — “You can’t do this, that, or the other.” Time and again we are lectured and told that it is time for the Assembly to start to deal with the things over which it has control. Dealing with industrial rating is a significant step forward.
As Members will know, I have been involved with that issue for a considerable time. I have tried to explain it to all concerned, but it appears that I have failed to explain it to Dr Farry. I stand to be corrected, but I note that he did not attend any of the council briefings; he did not join us at the Waterfront Hall; and he did not visit any firms’ premises to find out anything about the situation. I have some nice photographs of a Northern Ireland Manufacturing Group event at the Waterfront Hall that Mr Hamilton will recognise, because he was there.
Mr S Wilson: We were there too.
Mr B McCrea: Yes. A few Strangford Members were there, but not Mr McCarthy. Perhaps he knows a lot about the value of property and does not need to go to such events — at least, not to events about office space.
Mr Neeson stood up in front of nearly 2,000 people at the Waterfront Hall and said:
“We are calling for industrial rates payments to be capped at 25%, where they are now, so that we can be clear about precisely what effect they have on investment and start-ups.”
The Alliance Party has clearly undertaken some sort of voyage of exploration.
Let me make the case simple. We live and work in a global environment. Every year manufacturing costs increase, whether for transport, engineering or labour. However, our ability to pass on costs is negligible, because we operate in a global market. The only way in which we can compete is through constant innovation and investment. That is the real problem. Dr Farry talks about rates affecting only 15% of profits. However, that 15% is used to make investment. Without investment, firms have no long-term future.
Some Members have suggested — although I have not risen to the bait before — that industrial derating is a blunt instrument. Whether that is the case, the analysis of the figures shows that 80% of the industrial rates are paid by 20% of the companies. Our biggest and best companies, which employ the most people, are carrying the burden. It is not difficult to imagine that the intervention will be effective.
It may be the case, as other Members have suggested, that we will find another way round the problem. I was particularly pleased to hear the Minister of Finance and Personnel say — if I heard him correctly — that we will examine what will happen in 2011. At this stage, all that we can do is change the phasing in. If we do nothing, the figure will go straight to 100% in 2011. Perhaps the Minister will clarify that at some stage.
Make no mistake: if we put up rates, we will lose manufacturing companies and jobs.
Mr Farry talked about sunset industries, and how we should take money away from this sector and put it somewhere else. Let us consider Northern Ireland plc: where is there growth at the moment? Transport and transportation equipment is one of our big growth sectors, dominated by two companies: Wrightbus and Bombardier. The next is rubber and chemicals, and I know that Mr Newton is well involved in those sorts of things. The firm that leads is Dupont. When we come to that exciting, big-profit earner for Northern Ireland, non-ferous mineral products, that turns out to be the manufacture of concrete blocks. What do all of those companies have in common? They need space — and that, Mr Farry, is the big difference between manufacturers and retailers. Manufacturers need a lot of space because they employ many people; however, they have the freedom to move. If they move, we lose not only the rates, but the national insurance, tax and VAT. We cannot afford to let our big companies leave.
There is another reason that Northern Ireland must maintain this intervention. We have a porous land border with one of the fastest-growing economies in the world. No other part of the world faces such an economic challenge. Furthermore, there is a stretch of water that is very expensive to cross between us and our primary market, Great Britain. Those factors have to be overcome. Manufacturing needs this intervention. Otherwise, if I heard him correctly, Mr Farry is telling the 90,000 people who work in manufacturing that: their jobs are not valuable, that we do not want manufacturing and that we want something else. Did you ever hear the like of it?
Mr Farry took some exception to the analysis of gross value added (GVA). The GVA estimate for Northern Ireland is roughly £22,000 million. That represents a GVA per capita of £12,971, which is 81% of the UK average. In Northern Ireland, manufacturing accounts for 16% of that GVA: that is higher than the UK average which is 14%, and it is certainly much higher than the proportion accounted for by farming and agriculture, which is only 1%. Manufacturers, particularly big manufacturers, drive most of our private sector.
The average figure of GVA per head in the region for Northern Ireland is £14,000: in manufacturing, however, the average GVA is £49,000. The problem for our economy is that we shed highly-paid workers, who deliver high value-added to the economy, and replace them with part-time workers in leisure, hospitality and retail — a sector in which GVA is only £8,000 per annum on average.
For that reason our productivity is falling. There is nothing more important than raising productivity. We are fully employed, but we get less for it. The only way to deal with that — though, perhaps Mr Farry or someone else has a better idea — is by investment. That is what a tax on industrial derating is: it is a tax on investment.
Mr Farry questioned the Minister of Finance and Personnel about being selective in the way that he read the report from ERINI. The Minister can comment on that; however, other reports were not commented on, which indicates the weakness of Mr Farry’s research and the flaws in his arguments. The report by DTZ Pieda Consulting suggested that:
“while there would be specific cases where the removal of industrial de-rating would lead to adverse effects, the overall effect on the level of economic activity in the medium term would be negligible.”
That report suggested that, even if 100% of rates were applied, the cost would amount to only 2·7% of profits, not the 15% that Mr Farry talked about. That showed, once and for all, that the DTZ report was complete and utter drivel.
What about the previous ERINI report, that of 2005, ‘Measurement and Benchmarking of Competitiveness — The Cost of Doing business in Northern Ireland’? That concluded that Northern Ireland was a pretty good place to do business. It said that there are more expensive energy, transport and environmental costs, but labour and property are cheap.
Dr Farry has taken that headline figure. The problem is that the next page of the report says that that does not apply to manufacturing. Cheaper labour for manufacturing is available in the Republic of Ireland, but when the report refers to savings in property, it means office not manufacturing space. In fact, six regions of the United Kingdom have cheaper manufacturing space than this place. By 2009, the Republic of Ireland will be uncompetitive to us. More attention to detail might help.
A report entitled ‘The Future of Manufacturing in Northern Ireland’ was prepared for the Department of Enterprise, Trade and Investment by PricewaterhouseCoopers. It forecasts 40,000 job losses if we do not get investment. More research can be added to that. What did Moy Park Ltd, Wrightbus Ltd, the CBI and the Ulster Farmers’ Union say to the Programme for Government? They all said repeatedly that an end to industrial derating is not the right way to go. The Alliance Party’s position is spurious nonsense and an attempt to gain short-term party political advantage. It is a disgrace.
There have been differences of opinion on whether we have won this battle. Some Members present supported the meeting at the Waterfront Hall, which was a great day. We spoke to Mr Hain, who told us that we were wasting our time.
Mr S Wilson: That was not a great day.
Mr B McCrea: That was not a great day, as Mr Wilson knows.
The Northern Ireland Manufacturing Focus Group received a letter saying that the Government had heard what we had to say but that the answer was no. We had to call upon some friends. I pay tribute to those from the union Amicus who sorted out a meeting with Mr Hain in Westminster. It was slightly unfortunate that that meeting was scheduled for 12 July, but we attended on that date. Forty-eight hours later, a change of policy was made. On 30 January 2007, David Hanson said:
“I announced on 23 November 2006 that the level of rate liability for manufacturers in 2007/2008 would be 30% rather than 35%. I can now confirm that the legislation to bring this into operation from 1 April 2007 has been laid at Westminster.”
Does Dr Farry not understand that there were arguments to be put? The Government did not agree to a freeze simply because we asked them; we had to fight not only the Ministers, but the Treasury. We had to fight people who told us that there was no chance of making any progress on the issue, that the Assembly had considered it not once but twice and that there were reports from ERINI, DTZ Pieda and elsewhere. Those reports are from people who know the price of everything and the value of nothing. In my intervention I challenged Dr Farry to say whether anyone in the Alliance Party had any idea of what it is like to run a business in a competitive world. Businesses need our help, not our platitudes and admonishments.
Manufacturing is based in our rural areas. Few Members have not seen manufacturing plants close and move across the border or elsewhere. Once they are gone, they are gone. People in Strabane know what happened when Adria went, with the building of houses. The big companies will call in the professionals. The biggest argument that we made to direct rule Ministers was that increasing industrial rating will not increase the rates tax, because businesses will find ways of dealing with it. They will either downsize or bring their sites together. Moy Park, for example, went to a single site; eventually, those single sites will move to Normandy or somewhere else. The ending of industrial derating is a flawed policy. There must be derating, and I accept the argument that in an imperfect world one must use whatever tools are available. This tool is available, and it is right that we should use it. If it had been up to me, I would have capped industrial rates at a lower value than 30%. A line can be drawn in the sand, and I hope that all Members will not only keep it at 30% for the lifetime of this Assembly, but in future Assemblies.
If the Alliance Party wants to consider opposition, its members should read some reports on the issue.
Mr S Wilson: I almost feel sorry for Dr Farry — the emphasis being on the word “almost” — as he has rightly been the butt of attacks from all sides of the House, during this and previous debates on the matter. Those of us who have listened to the hard-pressed taxpayers and industrialists in Northern Ireland know that the Finance Minister’s decisions were made in response to genuine calls from people who say that they do not want to have more taxes heaped on them and that we must find a way of ensuring competitiveness for industry. However, Dr Farry has ensured that the Alliance Party will be for ever known as the fiscal Fegans of the Assembly. It picks people’s pockets at every opportunity, and if it can get its hand in as well, it will do so — as deeply as possible. In fact, it might also try to get its arm in.
I also feel sorry for Dr Farry because I suspect that he thought that he was not alone in opposing the Order. Indeed, he has been led up the garden path by the SDLP. During the Committee meetings on the matter, the SDLP gave the impression that it would back the Alliance Party in opposing the Finance Minister’s measure. However, I suspect that some time between that meeting when the vote was taken and this morning, Mr O’Loan had an opportunity to read the Official Report of 12 June 2007. When he realised what he and his colleague for Newry and Armagh Dominic Bradley said, he began to realise —
Mr O’Loan: I hope that the Member listened to me earlier when I repeated what I said at the Committee meeting in question: my only concern about the matter was the fact that the Assembly and the Departments have still not addressed the important issue that was highlighted in the ERINI report and that the Committee presented in its report to the Minister of Finance and Personnel, which is that we need to work out a new relationship between the manufacturing sector and the Assembly and its Departments. I made that point only, and I made it clearly today. If the Member thinks about that, he might realise that he is ploughing a furrow that does not need to be ploughed and that will not yield any grain — to refer to the next debate.
Mr S Wilson: I suspect that Mr O’Loan may have to retract what he has said if I plough that furrow a little deeper. From what I gather — and he can correct me if I am wrong — he did not merely express concern about the Order at the Committee meeting, but he voted to reject it. If he wishes to correct me, I am happy to be corrected. On that basis alone, the poor unsuspecting members of the Alliance Party thought that they had an ally. At least we will not take all the —
Dr Farry: I assure the Member that the comments that members of the Alliance Party make are, indeed, the thoughts of the Alliance Party. We are happy to be here as sole voices of sanity in the midst of all the chaos on the issue. If people wish to support us, that is fine: if they do not, that is also fine. My position is not influenced one bit by whether other parties wish to support us today. However, I am confident that there are people in society, including those in the Economic Research Institute of Northern Ireland, which produced the report, who will concur with our remarks.
Mr S Wilson: I thank the Member for that intervention. I am glad that at least Mr O’Loan was given an opportunity to eat his words before he eats his dinner. He should have availed himself of that opportunity.
Not only does the Alliance Party have fiscal Fagans in its membership, it has fiscal Fagans who suffer from schizophrenia. Alliance Party Members have spoken on industrial rates twice in the Chamber: once during the Hain Assembly in 2006; and on 12 June 2007. I suppose a person is allowed to change his or her mind between 2006 and 2008, but to change it between 12 June 2007 and now is pushing it a wee bit.
I will remind Members of the Alliance Party’s position on industrial rating. In June 2007, the Ulster Unionist Party moved a motion calling for the Finance Minister to implement the recommendation that rates be frozen at 25%. The DUP tabled an amendment to the motion and proposed that the Assembly call
“upon the Executive to consider the resolution made by the ‘Hain’ Assembly on 6 June 2006, concerning industrial rates, in light of the impact of rating on manufacturing in Northern Ireland and in the context of other priorities in the Comprehensive Spending Review, having considered the independent assessment presently being carried out into the matter by the Economic Research Institute of Northern Ireland (ERINI).” — [Official Report, Bound Volume 22, p442, col 2].
The Alliance Party to a man — and a woman — voted in favour of that amendment. Dr Farry said that:
“The Alliance Party leans towards supporting the DUP amendment”. — [Official Report, Bound Volume 22, p449, col 1].
“I understand why the manufacturing sector wants to retain industrial derating, and in the absence of any other mechanism, that retention is particularly important. In the absence of any wider package, it is important that the Assembly lobbies for some form of industrial derating to address the problems that the manufacturing sector is encountering.” — [Official Report, Bound Volume 22, p449, col 2].
He also said that:
“the proposal is worthy of consideration, but it needs to be addressed within the comprehensive spending review as part of an overall package.” — [Official Report, Bound Volume 22, p449, col 2].
He finished by saying that:
“It is important that we do not let the issue of industrial derating fall off the table.” — [Official Report, Bound Volume 22, p450, col 1].
He made that stirring remark to the cheers of the Galleries and, no doubt, to manufacturers all over Northern Ireland. They had a champion who would not let the issue of industrial derating fall off the table.
Dr Farry: The ERINI report states that it is safe to move from 30% industrial rating to 50% — a move that I would support. There would still be considerable industrial derating, and it would be better to use the resources that the Executive would receive to invest across the whole economy. I do not see an inconsistency in our approach; it is an evolution based on the facts in the ERINI report, the comprehensive spending review and the Budget.
Mr S Wilson: That would have provided at least a semi-plausible explanation for the Alliance Party’s turnaround, had it been the only condition set by the Member on 12 June; however, he laid down other conditions relating to the comprehensive spending review, for instance. The comprehensive spending review has taken place, and Members know what the situation will be. The Minister of Finance and Personnel has made his decisions on the basis of that comprehensive spending review and the availability of resources.
Dr Farry also said that industrial derating should be retained only in the absence of an alternative package. Therefore he said that industrial derating should be looked at in the context of the comprehensive spending review, which we have had; in the context of other packages, which are not in place; and in the context of the ERINI report.
I do not claim to be on top of such issues, but, as the Member for Lagan Valley said — and he knows more about such things — other reports have rubbished that idea. However, even if that were to be the case, and whether one considers the ERINI report or the Minister’s announcement, the principle has been established that some form of industrial rates relief is important in order to protect profits and investments and to make industry competitive.
If we are now quibbling about 30% or 50% industrial rates relief, that is not the Member for North Down’s argument. Although I do not have shorthand, I have noted it down. He said that the arguments are weak: if we were starting with a clean sheet of paper, we would not do that, and, in any case, transportation, energy and labour costs are more important. He said that that was not very important — but it was important in June 2007. It was so important that, in the absence of a package and in the context of the comprehensive spending review — which we now have — it was insisted that we should not let it fall off the table. However, not only has it now been knocked off the table but it has been put into the dustbin.
The only conclusion that I can come to is that the Alliance Party — in its important role as the Assembly’s official opposition — does not care what proposal comes from the Minister, how well thought out or argued it is, or even what its members have said about the subject in the past; its members must vote against it. Although the point has already been made, that is not what opposition is about.
I am not worried about the Alliance Party, but it does no credit to a party simply to oppose, because, when a situation arises in which real opposition might be important, opposition from such a party will lack credibility.
Let us consider some of the Member’s other arguments. He said that more emphasis should be placed on a change to the economy’s balance, which is exactly what the Minister of Finance and Personnel was attempting to achieve in his Budget — a change in the economy’s balance from a public-sector-dominated economy to one with a greater emphasis on the private sector.
If we assume that that is the shift of balance that the Alliance Party wants, what did Dr Farry suggest? He wants to make it more difficult for the private sector to earn profits and to invest. Between now and 2012, his suggestions would mean that £144 million — and £50 million a year after that — would be taken from the private sector, which is some way to change the balance. Dr Farry said that he is a doctor of political philosophy; however, if he thinks that that is a good way to change the balance of Northern Ireland’s economy, economics cannot have featured much on his course. He wants to move the balance towards the private sector, but he gives that sector’s costs and profits a good kicking.
We have had this debate two or three times before in the Assembly, and, as one would expect under devolution, the Minister has responded to the concerns raised — in this instance, by the manufacturing industry — by arguing why the previous Secretary of State was taking us in the wrong direction.
Rather than simply voting against the motion to show that it is the opposition party, perhaps it would be better if the Alliance Party had second thoughts, just like the SDLP has had over the last week. Instead of eating their words, its members could back up their previous words with action and vote for the motion.
The Minister of Finance and Personnel (Mr P Robinson): I thank all the Members who have contributed to the debate. Collectively, we have considerably outperformed the expectations of the Business Committee, which allocated 15 minutes for the debate. It should have been finished before lunch, but we are still at it — although I will not delay the House too long now.
The Order is short, but, nevertheless, it represents a significant move for the manufacturing sector, which has experienced a steady loss of employment as well as a continuous decline in output. Everyone is aware of the all-too-familiar announcements in recent years of redundancies and closures that have been brought about by external factors, particularly competition from the lower-cost economies in the Far East. I trust that the pegging of the rates burden at 30% will encourage companies to compete more effectively and to diversify and prosper. In meetings that I have had with people in the manufacturing sector, I have been encouraged to hear that that decision has provided them with the motivation that they need to proceed with plans for expansion.
Most of the points that were raised today are not new to us; we have heard them in other debates. However, if Members felt that they were worth repeating, then I am quite happy to repeat the responses to them. I thank the Deputy Chairperson of the Finance and Personnel Committee, and I very much welcome the Committee’s support. Mr Beggs also expressed his support as a Committee member.
Declan O’Loan confined his disquiet to one element of the ERINI report, though quite what element of the report required him to vote against this piece of legislation is not clear. His voting in Committee should have been on the issue that was being discussed by the Committee — this piece of legislation, not the ERINI report. I trust that his more measured tones today were a sign that the SDLP will support the legislation.
However, I will touch on an issue that he raised both in Committee and in the House: a concordat between Government and industry. I said during the Budget debate on 12 February that the communication channels between the wider industry and Government were in place. We are already creating a much better atmosphere and relationship with the business sector. Of course, in the first instance, that matter would be one for my colleague Nigel Dodds, the ETI Minister, to consider. However, I will do everything that I can to contribute towards that goal.
Mr Basil McCrea asked if he had heard me right when I remarked on what would happen after the CSR period. I put it on record that the current primary legislation permits changes to be made to the percentage liability only until the year ending March 2011. After that dates, rates will revert to 100% liability. That is why I said that I would be seeking to amend the primary legislation as soon as practicable; that will allow us to ensure that we do not move to 100% liability. If the Member looks again at my speech, he will see what my mind is as regards the outcome, although I suspect that the legislation itself would allow the decisions to be taken by some subordinate legislation.
The Member for North Down Dr Farry raised a number of issues and also asked some questions. If liability were kept at 30% instead of being increased to 50%, the estimated revenue loss for the year would be approximately £7 million from the regional rate. Therefore, the Member should include in his calculations whether the risk to the manufacturing sector is worth £7 million. Most people will conclude that the income is too small for such a risk to be taken.
Perhaps I should not be hurt by Dr Farry’s remarks. To a large extent, his criticisms are synthetic. I am convinced that, had I proposed an industrial rate level of 50%, he would have proposed an amendment to reduce it to 30% or perhaps even to 25%.
Alliance Party members are on record on the issue, and the Member for Lagan Valley Mr Basil McCrea quoted their position on other public issues. My colleague the Member for East Antrim Sammy Wilson indicated what Members from that party said during a debate in 2007.
However, the House was unanimous on the issue of industrial rating on 6 June 2006. During that debate, Mr Sean Neeson expressed the views of the Alliance Party in no uncertain terms. I note that he is not present this afternoon. I am sure that there is no connection between his absence and his disquiet at the Alliance Party’s position. During that debate, he stated:
“We cannot underestimate the importance of the surviving manufacturing base in Northern Ireland. However, as I have said in previous debates, we face many challenges, particularly from the global economy. We have seen the damage that has been done to the textile sector, which has almost disappeared. The discussions that we have had with NIMFG have shown that jobs are at risk in Northern Ireland. It is not, as other Members stated, a ‘Wolf, wolf!’ situation.” — [Official Report, Bound Volume 19, p64, col 1].
Therefore, he was contending for the manufacturing industry back in 2006. Mr Neeson went on to say:
“The parties represented in the Chamber are agreed on the issue and have met the Secretary of State. He put the ball in our court and said that if we want to deal with the issue — he does not have a problem with us doing that”. — [Official Report, Bound Volume 19, p64, col 1].
Today’s proposal is to keep the industrial rate at 30%. As that quotation shows, the Alliance Party supported keeping industrial rating at 25%, and its Members suggested that devolution would enable us to do so. Now that we have devolution and can deal with that issue ourselves, they want the rate doubled to 50%.
In the earlier debate, Dr Farry lectured us on what he described as selective quotations — I think that that was the term that he used. When he intervened during Mr Sammy Wilson’s contribution, he said that the ERINI report said that it was safe to move to 50%. The ERINI report does not say that. To put words into the mouths of the ERINI reporting team is worse than selective reporting.
The report indicated that there was a relatively small risk. Therefore, it was Dr Farry who mischievously used selective quotations. I will read the quotation to Members, who can check it when they get their copy of Hansard tomorrow. When quoting from the ERINI report, he said:
“At 50% implementation no more than an estimated 10% of companies are likely to face rate bills much more than 15% of their profits. Proceeding to this point would incur a relatively small risk to industry as a whole”.
He then jumped, not telling anybody that he had done so, to say:
“Proceeding no further than this degree of implementation is the position we favour.”
The bit of the ERINI report that he left out because it did not suit his case, was:
“though the decline of marginal sectors such as Textiles would be accelerated.”
He deliberately left that section out. I will now read the whole sentence from the ERINI report:
“Proceeding to this point would incur a relatively small risk to industry as a whole, though the decline of marginal sectors such as Textiles would be accelerated.”
It does not say “safe”; it says “a relatively small risk”.
Dr Farry might like to go to Portadown and tell Ulster Carpets that they can have that increase, even though it will accelerate their decline. He might like to go to Banbridge, and tell it to Ulster Weavers, or to his own constituency in North Down and tell it to Regency Carpets, or to some of the other small manufacturing concerns in the textile sector whose demise he is going to accelerate.
It is abundantly clear that there is selective quotation of the ERINI report from the Alliance Party on this issue. Alliance Party members are trying to disguise the fact that the ERINI report did not say that it was safe, but that there was a relatively small risk. As a Government who put economic growth in Northern Ireland as their number one priority, we are not prepared to take a relatively small risk with people’s jobs.
When the manufacturers themselves were faced with the question of what they would do if rates were increased as proposed, their answers were clear: in some cases they would move outside Northern Ireland; some would not expand their businesses; some would lay off employees; and in some cases employees would not get any further wage increases. That was the prospect that we faced. That is why, in the ERINI report, the recommendation was not simply to increase to 50%. The Member needs to look at that report more closely, as it says:
“In our view this points to the movement towards a maximum 50%”.
I repeat: “the movement towards”. But, of course, Alliance Party members are way out ahead — they want it at 50% straight away; they want it upfront; they want it doubled from the 25% that they were asking for and that they agreed with everybody just a few years ago.
Alliance Party members are going to have a difficult task explaining to manufacturing companies in each of their constituencies why they want to accelerate those companies’ demise, stop them from expanding, push them out of Northern Ireland, have them dismiss employees in their area, or ensure that their wages are held down.
For our part, when we stated in the Programme for Government that we believe that our priority should be economic growth, that is what we meant. It would have been wholly inconsistent for the Government to say that we want to drive towards economic growth, expect to have better productivity, and expect to improve our gross value added (GVA), and, at the same time, create a more difficult situation for the sector that can contribute towards increasing our GVA, better productivity, and growth in our economy.
I trust that the Assembly will support the motion. I hope that I have managed to cover all the substantive points that have been raised by Members — if I have not, I will write to the Members concerned when I read Hansard.
Mr Deputy Speaker: Before we proceed to the Question, I remind Members that the motion requires cross-community support.
Question put and agreed to.
Resolved (with cross-community support):
That this Assembly approves the Rates (Industrial Hereditaments) (Amendment) Order (Northern Ireland) 2008.
Mr Deputy Speaker: The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer of the motion will have 10 minutes to propose and 10 minutes for the winding-up speech. All other Members will have five minutes to speak.
One amendment has been selected and published in the Marshalled List. The proposer of the amendment will have 10 minutes to propose and five minutes for the winding-up speech.
Mr Savage: I beg to move
That this Assembly notes with concern the scarcity of grain within Europe, which is having a detrimental effect on the profits of the production sector, as a result of higher grain prices; and calls on the Minister of Agriculture and Rural Development to provide intervention support to the intensive production sector that relies upon grain.
I thank the Minister for her attendance at this debate, amid many pressures and concerns at the present time, including bluetongue. It is most appreciated.
I do not have a problem with the tabled amendment, although others may have different opinions.
Before I continue, I declare an interest as a farmer myself. I have first-hand experience of feeling the pinch as a result of the grain price rises.
‘The Guardian’ put the situation perfectly on 26 February 2008, when it said:
“In the last year, however, creeping rises quickened to a canter — and then a gallop.”
This issue would make an excellent case study for students of economics. Thankfully, the Members for East Antrim Mr Sammy Wilson and Mr Roy Beggs are in the Chamber today, and may correct me if I make any mistakes. We agree that the definition of value is how much someone is prepared to pay for something. The rise in grain prices is caused by more demand than there is supply, at the current time. The value of the required commodity will keep rising.
According to the International Grains Council, global wheat inventories have fallen to their lowest levels since 1979. That is because sowing in the northern hemisphere is down, particularly in Canada, due to the poor weather having an adverse effect on the crop. In the southern hemisphere, the main supplier, Australia, has slashed its forecasts from its usual 20 to 25 million tons to 12·1 million tons, owing to extreme drought across the country. That drought also reduced Australia’s dairy output by 15%. Furthermore, according to the BBC news on 26 February 2008, a drought in northern China, where most of the country’s wheat is grown, is pushing the prices higher.
‘The Economist’ on 23 February 2008 said:
“America’s Department of Agriculture believes global demand for wheat will continue to exceed supply this year. That will push America’s wheat stocks to their lowest level since 1948.”
We have all felt the pinch because of the lack of grain, and I am sure that all Members have noticed that the price of a loaf of bread has risen considerably over the past six months. Food industry executives expect the prices of meat, poultry and dairy products to rise, as farmers and processors pass on the higher costs to consumers.
That scarcity of grain causes difficulty at the farm gate. To put it simply, the farmer is no better off. Any rise in the milk cheque or the price of a kilogram of beef is offset by the rise in the cost of feed. That will only cause the industry to stagnate, and we cannot allow that to happen. According to volume 71, number 6 of the ‘Northern Ireland Agricultural Market Report’, prices of wheat and barley have risen steeply over the last year. Wheat costs 71% more, and barley is 60% more expensive.
That in turn leads to a cost impact for the farmer, as it takes roughly 10 kg of feed to produce 1 kg of beef. According to the Northern Ireland Grain Trade Association (NIGTA), feed material costs have risen by £80 per metric ton.
That rise in the cost of grain will result in the following additional costs to the farmer: an extra 30p per kilogram for pig production; an increase of 25% in the production costs of poultry; the cost of producing a dozen eggs will rise by 20p; intensive beef farming will cost an extra 40p per kilogram, and the cost of producing a litre of milk from an average dairy cow will rise by 3p.
Given the increase in the cost of grain, sooner or later farmers will have no option but to seek cheaper alternatives for animal feed. The farming industry does not want to go in that direction. I am not sure that it would be good for consumer confidence in the products, never mind the industry.
On 4 September 2007, the ‘Financial Times’ quoted the stark warning of several analysts:
“the world community is approaching a food crisis in 2008 unless usage of agricultural products for biofuels is curbed or ideal weather conditions and sharply higher crop yields are achieved in 2008”.
The problem is that the United States devoted several million tons of grain to the production of ethanol. President Bush’s target of producing 35 billion gallons of ethanol by 2017 requires — and Members must listen to the figure — 342 million tons of corn. Prices of corn and wheat in the United States have doubled in the past 12 months. It has 109 ethanol plants, and a further 53 are being built. Yet the supply of grain is at an all-time low. A report in the ‘Financial Times’ on 17 February 2008 quoted the vice-president for government relations of the American Bakers Association. She said that grain:
“is currently at a very low one-month level, which is extremely concerning.”
On 26 February 2008, the ‘Guardian’ reported:
“subsidies to biofuels, particularly in the US, are distorting global farming. The 60m tonnes of American maize being burned each year represents more than twice the UK’s entire cereal crop.”
Ethanol is one such biofuel that is being subsidised.
Mr S Wilson: Does the Member find it ironic that the environmentalists, who argue that there should be a move towards the increased use of biofuels, are encouraging a development that results in people starving throughout the world? In any case, biofuels are not even environmentally friendly.
Mr Savage: I thank the Member for his intervention: that was exactly the point that I was about to make.
Before outlining what I want the Minister to do to help the farming community, here is a sobering analysis by the Northern Ireland Grain Trade Association:
“Feed prices will increase by 50% on farms; farmgate prices need to go up by 25% to keep pace, and the retail price must move by 5% to 10% for the industry to survive.”
On 10 September 2007, the Minister of Agriculture and Rural Development said in the House:
“they [the farmers] cannot be expected to continue to make losses against the massive, and increasing, input cost.” — [Official Report, Bound Volume 23, p233, col 1].
Every Member will agree with that statement. Several options are open to the Minister to enable her to provide badly needed assistance to the industry. Although I do not expect that an offer of financial assistance is on the table, never mind forthcoming, I ask her to consider other options. It is possible to lobby local retailers and supermarkets to ensure that farmers and producers receive a fair and reasonable price for their products. She must ensure that local retailers and supermarkets source only local products and that they label them to advertise the fact to consumers, who, I hope, will want to buy locally sourced products. I ask the Minister to consider those available options.
Finally, and most importantly, will the Minister do everything in her power to ensure that Northern Ireland farmers have a steady and more than adequate supply of grain to keep the agriculture industry alive in Northern Ireland?
The motion has forewarned of the food shortages that could happen in the near future. I do not want to raise fears or expectations that there will be a food scarcity, but if action is not taken, such a difficult situation could arise. In moving the motion, I trust that the House will rally round and give its overwhelming support to the industry, which provides for the entire community on a daily basis.
Mr Bresland: I beg to move the following amendment: After “grain” insert
“, and to lobby the European Union on the approval of new biotech varieties”.
Mr Speaker, thank you for giving me the opportunity to speak in the debate. I congratulate the Members who tabled the motion, and I say at the outset that the amendment does not aim to take away from the motion; rather, it aims to add to it.
Even if the Minister were to announce to the Assembly that she could intervene, such involvement would not be a long-term solution and would not tackle any of the factors that have pushed up the price of grain. It is vital that the Minister uses whatever influence she has to help to reduce the price that farmers are forced to pay for grain.
Northern Ireland’s livestock sector has been under considerable pressure for several years. It faces challenges from the nitrates directive feed costs, fertiliser costs, and the power of the large supermarkets to drive down prices. Members understand that a local Minister cannot solve many of those problems, which exist on a global scale. However, it is important that she uses any influence that she has to change matters that could affect local farmers.
The amendment asks that the Minister lobby the European Commission on the approval of new grain varieties. The debate is not about whether genetically modified (GM) crops should be grown here; it is about the import of grain and the speed at which varieties are approved for import, particularly from countries such as America. Genetically modified varieties are already imported into Europe and will eventually end up being approved.
In the United States, the process for the approval of genetically modified varieties takes around 12 months. However, that process takes around 36 months in Europe. Although the Minister obviously does not have the power to solve that problem herself, she could give the Assembly her commitment that she will lobby the European Commission in order to speed up the approval process. The fact that it takes so long for those new varieties to be approved simply means that less grain is available for use by local farmers. If the approval process were speeded up, that could directly affect farmers in Northern Ireland. Solving that problem would also directly affect the price of grain and would come at no cost to the European Union or to DARD. Most importantly, it would save farmers money.
The power of the large supermarkets to drive prices down is another area of concern. Although the price of beef and lamb has improved recently, there is still a considerable distance to go before farmers can make a sustainable profit. Part of that is due to the fact that there is constant pressure from supermarkets to drive down prices. When the public are being sold chickens that cost £1.99, there is no way that the farmer can make any profit. Every time that supermarkets reduce their prices, they demand that farmers receive less for their products.
Even when the prices on supermarkets shelves have been increased, as they have in recent months, the extra money is never passed down to the farmer. Members need only look at the profits that are made by supermarkets and compare them to those of many farmers, who do not make any money for their labour. Tesco has announced profits of nearly £2 billion from its own sales. Although those are the profits of just one supermarket chain, they are probably far in excess of the combined profits of every farmer throughout the UK.
I am sure that everyone in the House supports the farmers in their plight. It is important that the Minister does whatever possible to improve the conditions under which they struggle. I hope that Members will support the call for action to be taken in areas that will directly affect farmers.
DARD should also look at ways to develop skills in the farming community so that farmers can react to the challenge of growing cereals. Although that may have a limited impact, many Northern Ireland farmers are interested in growing cereals but have a limited knowledge of the subject.
I support the amendment. The issues that it raises could benefit our farmers. I hope that Members support the amendment because it seeks to add to the original motion.
Mr W Clarke: Go raibh maith agat, a LeasCheann Comhairle. Sinn Féin is opposed to GM crops being grown in Ireland.
According to the Confederation of the Food and Drink Industries of the European Union, prices for wheat, dairy products and sunflower oil in the EU rose by 35%, 50% and 25% respectively in 2007. As a result, the price of food products made directly from those commodities, such as bread, pasta and other dietary basics, and those made indirectly, such as pork, poultry, beef, milk and eggs, is on the rise. There are three main reasons for the drastic rise in price: the increasing use of crops for bio-energy, particularly in the USA; an increase in the demand for meat and milk products in the developing world, particularly in China and India — as the economies of those countries flourish, so does the lifestyle and diet of the people there; and poor harvests around the world after droughts and floods, particularly in Australia.
The effects of climate change cannot be ignored. We are merely paying lip service to sustainability. Our farming community requires support so that it can be sustainable in every aspect of its business.
Mr Allan Bresland outlined the crux of the issue — the stranglehold on the agriculture industry. That appears to benefit only the supermarkets, which have still managed large increases in profit margins since the price increases began. The ultimate challenge is to find a way to loosen the grip of the supermarkets on an already overburdened industry. Finding other adequate outlets for marketing food products without such an expensive middleman is vital. We must ensure that our farmers receive a substantial return for their produce, as well as encouraging and developing co-operatives.
Bakery firms are also under pressure to raise customer prices to combat high commodity prices, which, they say, is a necessary strategy to maintain profitability. Prices are rising at almost unprecedented levels, so passing on cost is a business strategy that bakers can no longer ignore, even if it risks angering consumers.
Other industries are under pressure, including microbreweries. While those industries face pressures, consumers face a massive increase in their food bills, along with drastic rises in their fuel bills. That puts immense pressure on the most vulnerable in our society. Young families and pensioners find it very hard to make ends meet.
In respect of global demand, the world’s population is expected to exceed nine billion by 2050. The Food and Agriculture Organization of the United Nations predicts that food demand will have grown by 55% between 1998 and 2030. The increased use of biofuels will also make demands on crops. The consensus is that the area of land cultivated globally is not likely to increase much in the shorter term.
Water shortages, particularly in Asia, are another threat to increasing the production of agricultural commodities to meet increased demand.
A report by independent research organisation Chatham House states that, since 1980, the rate of new oil discoveries has not kept pace with growth in demand. Rising oil prices have impacted on fertiliser production.
The report states that there is a consensus that commodity prices will remain high over the medium term, partly because of the predicted demand-supply imbalance. It speculates that the EU may be forced into acceptance of supply-boosting GM commodities.
Some 85% of the Chatham House project participants who were interviewed said that they believed that a different food supply dynamic is in prospect.
The report concludes that, in the long term, global supply may not be able to meet demand unless there is sustainable management of global resources, with constraints on the supply of land, water and oil demanding particular attention. Any imbalance is likely to be felt through further inflationary effects and increased competition to secure global supplies.
Industry commentary underlines the scarcity:
“World grain prices have increased dramatically on three occasions since World War II, each time as the result of weather-reduced harvests. But now it is a matter of demand simply outpacing supply. In seven of the last eight years world grain production has fallen short of consumption. These annual shortfalls have been covered by drawing down grain stocks, but the carryover stocks — the amount in the bin when the new harvest begins — have now dropped to 54 days of world consumption, the lowest on record … As grain prices climb, a politics of food scarcity is emerging, as exporting countries restrict exports to limit the rise in domestic food prices. At the end of January, Russia — one of the top five wheat exporters — will impose a 40 per cent export tax on wheat, effectively banning exports.”
Mr Deputy Speaker: The Member’s time is up.
Mr W Clarke: In conclusion —
Mr Deputy Speaker: We are very tight for time.
Mr P J Bradley: I had better watch my time.
At the beginning of the debate, Sammy Wilson said that farmers are now living in a world driven by environmentalists. In the previous two decades, farmers have been regularly forced to deal with Government edicts totally contrary to what farming was, and is, all about.
Many farmers saw the writing on the wall when the UK Government dropped “agriculture” from the title of the Department responsible for the farming industry. The agriculture industry in the United Kingdom, which current political arrangements make it impossible for us to escape from, or, should I say, to which we are inextricably linked — I have heard that before — means that turning to the Department for Environment, Food and Rural Affairs for assistance in a European context would be a pointless exercise.
Farmers have always been conscientious custodians of the countryside, and were never the threat to the environment or wildlife that some bureaucrats would have us believe. The plethora of anti-farming measures has resulted in the decline of real farming activity. Many hundreds of acres of the best land in Europe are now gradually in decline, and that can be seen in each of the Six Counties. There is now stagnation where once there was activity. Prime production land is no longer used to grow grain, potatoes or root crops. In some areas there is now nothing but gorse, bracken, briars and broom where there once was lush grass.
I know that this is quite demanding, but I call on the Minister to provide intervention support to the sector so heavily dependent on grain — as the motion requests — and to devise a plan that would see a return to crop-growing activity on family farms. What is the long-term future of farming? Does it have a long-term future?
If the grain predicament continues, should the millers and feed suppliers be permitted to introduce genetically modified grain to our shores? That is an easy question to ask, but less easy to answer. The world is greatly divided on the issue of genetically modified crops, and when the subject is debated, those for and against the argument usually break down on a 50:50 basis. We must continue to side with those who know and have authentic concerns about genetically modified products. By the same token, we must not be influenced by the utterances of single-issue groups that express opposition simply for opposition’s sake, without any backup for their argument.
I stand open to correction, but I believe that all political parties in the Assembly are opposed to the growing of genetically modified crops in Ireland. The SDLP’s policy is to remain opposed to that. However, I accept that one day the findings of scientists might suggest that we rethink our stance, but only a rigorous scientific and ethical process of verification will command attention. Research into GM agriculture must continue, however, and should be given the necessary finances by Government to permit the research needed into what is undeniably the fastest growing agricultural technology in the history of farming. It should be noted that 250 million acres of genetically modified crops were grown around the world in 2006, and there have been no reports of ill effects on the people who consumed those crops.
Given the present grain situation, I understand the reason for the amendment, although I will not be supporting it. However, I have concerns about the uncertainty that surrounds genetically modified products. My party could have supported the original motion, but I understand that we will not be given an opportunity to do that.
I have every sympathy for the Minister, as it seems that some new crisis comes her way every week. I wish her well on this matter, as it is the key to the survival of many farmers. However, I have no suggestion as to where she will find the money or what she will do.
Mr Neeson: Grain scarcity is a worldwide problem, and its causes lie well outside Northern Ireland and, indeed, Europe. Although there were poor harvests in parts of Europe last year; grain producers in many parts of the world are recording bumper crops. MPs in Australia are worried that some of this year’s record harvest will be left in the fields. After years of declining production levels, Chinese grain production reached its highest level for almost a decade in 2007.
The International Grains Council estimates that world grain production was 1·66 billion tons in 2007 — the largest crop on record. However, the price of grain on the world market has hit another record. Record prices are being driven by two factors, both of which are well outside the control of the Assembly. First, there is the growing prosperity of many people in Asia and Latin America. In 1985, the average person in China ate 20 kg of meat a year. Today, that figure is 50 kg. The pigs and chickens that are eaten by Chinese and Brazilian consumers must be reared on grain. People in the developing world have every right to demand the same standard of living that we take for granted. Secondly, there is ethanol production. ‘The Economist’ reckons that one third of the American corn harvest goes to ethanol production. Given concern over global warming, that is another driver of high prices that is not going to change.
Agricultural support policies are supposed to minimise the impact of cycles of boom and bust on producers and consumers. The high price of grain is not the result of a short-term economic cycle; it is the result of long-term changes in the global economy.
The high price of grain affects us all. Not only is the intensive agricultural producer affected by high prices, the shopper who pays more for a loaf of bread is affected equally, as is the employer who must pay higher wages as food prices drive up inflation. Economically, it is not rational to try to subsidise one’s way out of a long-term problem. That only encourages wasteful, subsidy-driven production, which is a problem that we have seen demonstrated repeatedly over three decades thanks to the common agricultural policy. Favouring one section of the economy in dealing with a problem that affects everyone adds even more distortions to the economy. It is a classic example of robbing Peter to pay Paul.
The only people who benefit from high prices are grain producers, so why do we not encourage farmers to use more land for grain production. With modern farming techniques, it is feasible to grow corn in more areas than ever before, and barley-growing is an option on all but the most marginal land. That is how the Northern Ireland economy can benefit from high grain prices.
The proposal contained in the motion is economically wasteful, and it is probably illegal under European law anyway — that point must be taken into consideration. I am sure that the Minister understands that, under EU regulations, difficulties would be put in her way if she were to try to implement the suggestions that are being brought before the Assembly today.
It is vitally important that supermarkets give food producers and livestock farmers the prices they deserve, taking into consideration the extra costs they now face. Although I agree with the sentiment behind the motion, the reality is somewhat different.
Mr T Clarke: I welcome the opportunity to contribute to this important debate. The Agriculture Committee has heard evidence from groups such as the Ulster Pork and Bacon Forum, the Ulster Farmers’ Union and also from the wider rural community of the problems that they face. It is vital that we take what action we can to help. High grain prices have various causes, many of them global and beyond our control; however, it is important that the Minister use what influence she has to make an impact where she can.
I draw the Assembly’s attention to the approval of new crops for import into the European Union. The issue is important: it has a direct impact on the grain prices paid by local farmers. However, it may be misunderstood by Members and by the wider public.
As my colleague Mr Bresland said, the debate is not about whether we support the growing of GM crops in Northern Ireland; that may be a debate worth having, but it is not one for today. This is simply about the import of GM varieties, particularly from countries such as America. GM varieties are already imported into Europe, although in relatively small quantities, so the principle has already been accepted that they are safe to import and, therefore, safe to use.
It takes the EU three times as long as the US to approve crops for use. It is not that Europe will never approve those crops: it just takes far too long. Because the pace of development is so fast and new varieties are approved so quickly in other parts of the world, Europe’s slowness creates a self-imposed grain shortage for our farmers. More and more of the new varieties are grown and demand across the world increases rapidly, particularly in developing countries. Imports into the EU are limited by the non-approval of crops. Increasing world demand, combined with a shortage of supply to Europe, will mean higher prices.
It is also worth thinking about what happens when we do not approve crops. The EU is quick to stop the import of crops, but it has no problem in importing cheap beef or chicken that is fed on those crops and produced with animal welfare standards that would be illegal in the EU. Our farmers want a level playing field; they should not have to struggle with a self-imposed stranglehold.
I hope that all Members understand the real issue in the debate, make no knee-jerk reaction to the mention of GM crops and support the amendment. I hope that the Minister does all in her power to help our hard-pressed farmers and makes a commitment to lobby the European Commission on the approval of those varieties. Our farmers are suffering and lose money daily.
I support the amendment.
Mr Armstrong: I welcome the debate and the opportunity to speak on it.
I declare an interest as a farmer — not as a grain farmer, but as a farmer all the same. As a beef farmer, I have first-hand experience of the problems caused by rising grain prices.
Some may believe that the issue is unimportant or that it affects only farmers. They could not be more wrong. An increase in beef prices has a knock-on effect on all related food groups, as farmers see their profit margins evaporate, yet they have still to pay high prices for livestock feed. Supermarkets will seek to pass on any increase to the consumer; that means more expensive food in shopping baskets. That will raise inflation generally and turn a farming problem into a political one.
It is estimated that, for the past 15 years, there has been a decline in the cost of food in the UK and Europe. That is what consumers want, and they have come to expect their politicians to deliver it. However, in recent months consumers have begun to experience an increase in the cost of food, and if that trend continues, there will be political consequences. One of the main problems is that the price of bread, one of our staple foods, will be affected by the increase in the price of grain.
On 28 February this year, the ‘Belfast Telegraph’ predicted that there would be an increase of £18 per week in the average family shopping basket. The Northern Ireland Food and Drink Association is also concerned that the cost of groceries could increase by 20% in 2008.
That will impact on us all, but it will especially hit people on low and fixed incomes, who are already struggling to make ends meet. If difficult times lie ahead for consumers, difficult times are already with the pig industry. For some time, I and others have been warning about the crisis in the local pig industry, and the situation has shown no improvement.
On 17 February, ‘The Observer’ estimated that pig farmers across the UK are in crisis because huge increases in grain prices mean that they are losing up to £20 for every animal that they produce. Experts warn that the industry faces an end unless the price of pork and bacon rises, but such a move has so far been rejected by supermarkets. ‘The Observer’ reported that global wheat prices have doubled in a year to £180 a ton, owing to soaring demand for grain in India and China. The decision by an increasing number of farmers to switch from wheat to maize for biofuels is also being blamed. As feed comprises 50% of pig farmers’ costs, the rise in the price of wheat is proving disastrous for them — even though bacon is the country’s most frequently eaten meat, with the average household getting through 50 bacon sandwiches a year. It is little wonder that a spokesman for the British Pig Executive said:
“The industry is close to meltdown; it has had its share of difficulties in the past but never anything on this scale and this suddenly”.
Increased grain prices have consequences far beyond the obvious, and, if unchecked, they have the potential to cause problems for farmers, consumers and even the Government, due to increased food prices and inflationary pressures in the economy. The Government must not ignore the situation and must intervene to stabilise grain prices, prevent food prices from increasing any further and prevent a bad situation from getting worse.
Mr S Wilson: I am not a livestock farmer, a grain farmer or a “farmer all the same”, whatever that means. However, as Members can see, I do help to contribute to the consumption of those 50 bacon sandwiches a year. In fact, I am well above the average for bacon sandwich consumption. I do my bit for the rural part of my constituency with great gusto.
Like Sean Neeson, I have concerns about any call to distort the market by asking the Minister to consider further subsidies for the farming industry. That cannot be sustained in the long run. Although there may be a case for short-term intervention, the flavour of the DUP amendment is to take away from the subsidy aspect of the issue. The amendment is designed to look towards the long term and see how we can exploit our climate, and research into new crops, to try to address the problem that we currently face.
Mr Armstrong: We farmers do not want subsidies.
Mr S Wilson: I am referring to the motion, which calls for “intervention”. I accept that that intervention might only be short-term.
As other Members have said, one of the reasons why we must be careful is that the industry faces international pressures. Regardless of what the Minister does, those cannot be resisted. There is increased demand for food in China and India, and we have no control over changing weather conditions.
As the Assembly may be aware, I won an award from the Green Party last year, and this is the start of my bid to win it again in 2008. The Green Party circulates cards saying that because of global warming we must find new ways to generate fuel and suggests that we grow crops to convert to ethanol. Despite calls made in the House today, if we use agricultural land to grow crops to turn into fuel, the impact will be that supply will not keep up with demand.
Members are aware of the increases in prices, and I do not have time to go over that again. However, the amount of grain required to be converted to ethanol to fill up my car fortnightly would, in a year, amount to enough to feed an entire African village. That is the impact of following the green lobby’s route. Europe is now setting us targets that state that, by 2020, biofuels must account for 10% of fuel used for transport. If we meet that target, 40% of agricultural land in Europe will be used to grow crops — not to eat, but to power cars and lorries. Globally, there will be huge shortages. We must be aware of those consequences before blindly following the green lobby, which seems to have captivated everyone.
Biofuels are not environmentally friendly anyway, because producing them means cutting down forests, and in doing so, it becomes more difficult to absorb CO2 emissions. Ethanol produces about 70% of the CO2 emissions of ordinary petrol, so that measure will not lead to a significant reduction in emissions. If the Minister must intervene in the short term to deal with grain shortages, then so be it. However, if there is any point to this debate, the House must remember that when it makes choices, those measures that appear innocuous at the time will have greater consequences and will lead to the kind of problems that have been highlighted.
Mr Deputy Speaker: The Member’s time is up.
Mr Burns: I share the concerns expressed by most other Members. This is a unique situation; oil prices in the world market are going through the roof, and the price of heating oil is unsustainable. We will have to use our agricultural land to produce fuel for heating.
Those of us on the Committee for Agriculture and Rural Development know that the red meat industry is going through a difficult period. Farming is based on economics, and we cannot expect farmers to produce food for no money. If farmers discover that huge profits can be made by growing grain, they will cease to keep cattle and sheep, and the sight that we traditionally associate with the countryside — farm animals in fields — will disappear, because farmers will simply grow crops for the biofuel industry. That would be a very sad road for our agricultural industry to take. Instead of a food-production industry, it would, in essence, become a biofuel industry that produces fuel for home heating, and to power cars and public transport.
It would be a great waste if the grain that could be produced and that should be milled for bread to feed people went instead into some form of fuel. That would be a great waste of the land.
However, our Minister has no control whatsoever over the price of oil. Does she have any control over what farmers decide to do with their land? Perhaps it is the case that a big business bank manager comes to talk to the farmer after he has lost so much money, to suggest that there is more money in growing crops, and offering a loan for growing crops but no more money for animals.
This is a serious situation in which the entire agriculture industry finds itself. Also, it is not just a problem facing us here: it is worldwide. I am keen to hear suggestions as to how the Minister and the Assembly are going to tackle the problem. I support the motion.
Mrs I Robinson: This topic is of huge importance to everyone in this country but it is one that may not, perhaps, be as immediately obvious to consumers as to the farmers and food producers of Northern Ireland. In fact, were you to go into any high street across Northern Ireland and ask the average shopper what they thought of the crisis in grain provision, they would probably just give you a blank stare. The truth is that producers and consumers across Northern Ireland are going to pay — quite literally — for the current shortage in grain supply.
In the past, a rise of £20 per ton over a year was considered high. We now have a situation whereby prices have risen by £20 in one day. Those costs are now being filtered down to the consumer, who will see the price of food increase substantially in the next year. One major concern about the provision of grain is the effort being made in many countries to provide incentives for farmers to diversify into the field of biofuels. At a time when grain prices were low and biofuels were being trumpeted as a sustainable and environmentally-friendly alternative to fossil fuels, the associated incentives proved very successful, not least in the USA. Thus a situation developed whereby grain that was once produced for the agriculture industry is now going into the fuel industry. As Americans say; the grain is no longer going into bullocks but into Buicks.
The clincher in all this is that scientific studies into the use of biofuels have proved that they are not really any better than fossil fuels. Biofuels have therefore little or no positive environmental impact; and, the drive to divert grain for this use has contributed to the current global shortage of grain, forcing prices up and increasing the pressure on farm businesses that are already struggling to remain financially viable.
The EU has targets for the production of grain for biofuels, aiming for between one sixth and one quarter of all arable land to be used for the production of biofuels by 2020. There has even been talk of that figure being doubled to between one third and one half of all land. At present, we are not even close to meeting the initial target yet we are faced with huge problems in the supply of grain to the agriculture industry. Just imagine what it would be like if the EU got its way.
There has been talk of issuing incentives for farmers to produce as much grain as possible to meet world demand. The EU tried that strategy before and created all sorts of problems — butter mountains and suchlike. Before adopting a similar initiative, we would need to be sure that it would be implemented in such a way so as to address the problems without creating new ones. Inevitably, there would be a negative impact on the environment, with extra land having to be used for grain production. In recent years, when the industry has been under huge pressure, many farmers have taken advantage of Government grants to transform land into areas of conservation.
The prices of grain are so high that the only reason that a farmer would persist with conservation measures would be out of the goodness of his heart. That would mean working at a loss, and it would be a difficult decision for any businessman.
Another option to consider is the use of new biotech varieties of grain, which could be used to maximise output from available land. The bottom line is that the agrifood industry is worth some £2·5 billion a year to the Northern Ireland economy and employs around 80,000 people — 15% of the workforce. Those issues must be addressed, and I look forward to hearing the Minister’s response.
Mr Shannon: All Members are aware of the importance of grain not only in food but in alcohol production; those of us who have a whisky will be aware of its use in alcohol production, and we are also aware of its use as vehicle fuel. Consequently, the current severe grain shortage in Europe will affect not only farmers seeking to feed their livestock — and issue to which Members have referred — but every person in the Province as supermarket prices rise on bread and meat products, and other items that they may not even have considered. Feed grains have risen in price faster than petrol and, like fossil fuels, are set to redefine their supply chains.
Farmers, meat processors, enzyme makers and even fossil fuel companies will have their world redefined by trends that are now reshaping the feed grain sector. There is a variety of factors behind those trends, such as the heatwave of 2003 during which Europe bore the brunt of rising temperatures. That record-breaking heatwave claimed 35,000 lives in eight countries and withered grain harvests in almost every European country, from France in the west to Ukraine in the east. The resulting reduction of some 30 million tons in Europe’s grain production was equal to half the entire US wheat harvest. That reduction, coupled with the fact that fewer farmers are growing grain, means that Europe has gone from being a major grain exporter to being an importer. Anyone in that business knows that when need rises, the price rises with it.
That is the situation in which farmers in the Province currently find themselves. For that reason, I support the amendment and ask the Department and the Minister to step in to put support mechanisms in place that will head off the crisis. This issue affects not only my constituency of Strangford but all constituencies across the Province. The agriculture sector is the biggest employer in Strangford — and, indeed, in the Province — and I ask for something more than mere scratchings of heads and wringing of hands for people in that sector. A huge number of people depend on the Minister and the Department to respond positively.
I have a meat-supply business and I have grass-roots — excuse the pun — experience of the adverse effects that are already being felt Province-wide. I have spoken to butchers and farmers who have expressed their concerns over the price of grain and the fact that they cannot keep up with it. Last week, some farmers told me that they are not feeding any grain at all to their cattle, sheep or lambs. They are putting their animals out in the grass early, and we all know there is not much growth in the grass. What effect will that have on the businesses of those farmers? They are caught between a rock and a hard place.
Some people suggest that the USA is controlling grain exportation throughout North and South America purposely, and that that has a tangible effect on Europe. However, it is beyond my powers to fight that battle, and I will leave it to the Minister of Agriculture and Rural Development to respond to that issue. A spokesman for the US Grains Council has said that Europe has a real problem with grain supplies. We are hearing that:
“importers in Europe were indicating that they will need 17 to 18 million metric tons of feed grains in 2008.”
That is an indication of how bad the situation is.
If the problem is recognised in the US, undoubtedly the issue will have been flagged up long before now. I put it to the Minister that it is time for something to be done. She is held in high esteem because of her positive response to the recent outbreak of bluetongue, and today I exhort her to respond to the problems facing the grain industry and those farmers who depend on grain to feed their cattle, sheep and lambs. The lifting of EU import duties and tariffs is not enough to offset the problem, and bigger steps must be taken quickly before things get out of hand.
Farmers are in dire need of support, and it is vitally important that the Assembly provides that support across the Province. The Minister of Agriculture and Rural Development must show that she is doing all she can to help farmers buy grain at a reasonable price — one that will not boost the price to the meat supplier, who will then boost the price to the butcher, who will, in turn, boost the price to the consumer.
Grain products are not luxuries; they are necessities. It is not an offer of optional Government assistance that is needed; it is an obligation by the Department of Agriculture and Rural Development, which it must fulfil while it can, to improve the lives of the people — and that includes everyone in this House — who depend on the agriculture sector. I support the amendment.
Mr Deputy Speaker: The business on the Order Paper will not be disposed of by 6.00 pm. Therefore, in accordance with Standing Order 10(3), I will allow business to continue until it is completed or until 7.00 pm.
The Minister of Agriculture and Rural Development (Ms Gildernew): Go raibh maith agat, a LeasCheann Comhairle. I thank Mr Savage and Mr Elliott for raising this issue today. I also want to put on record my appreciation of Mr Savage’s opening remarks. The matter merits debate since it is clearly very important for people involved in agriculture, especially in the intensive sectors, who rely on grain. I share the concerns raised by Mr Savage, and other Members. Before dealing with the specific points that have been raised, I will set out some of the background to the current grain scarcity and the issues relating to support in the intensive production sector.
We have heard how, globally, agriculture has experienced a rapidly growing demand for grain and a significant rise in prices. That has been driven by growing demand for biofuels; expanding demand in the world economy, and falling stocks of most types of grain. I share the view of other Members that bio-ethanol is not the solution to all of our problems. If further money were spent on developing wind and wave energy, those sources would provide a more sustainable way of meeting our energy needs.
The droughts in Australia and the States coupled with poor growing conditions in Europe have resulted in world grain reserves reaching a record low; and over the last three years, there has been a 159% rise in the price of wheat. The difficulties being encountered by the intensive sector are as a direct consequence of the global rise in cereal and protein prices.
I am very mindful, too, of the challenges facing the pig sector. The average market price for finished clean pigs over the 2007 calendar year fluctuated between 101·35p and 96·17p per kg dead weight, while the feed cost per finished clean pig rose from £57·22 to £73·84. Those figures indicate clearly that this is a difficult time for the pig sector. My Department is providing substantial resources at farm level to aid compliance with the environmental restrictions, thus demonstrating our commitment to the future of a sustainable pig industry. Support is also being provided to producers under integrated pollution prevention and control legislation.
The poultry sector in the North has also been affected by the rising costs of feedstuff. Feed costs amount to 66% of the total production costs for broiler chickens, and about 60% of egg production costs. That has created significant challenges for the sector, in addition to the pressures that have been created by importing from countries whose agriculture sectors operate under different standards and circumstances.
However, many primary producers have been shielded from the market due to the vertical integration model that is widely used in poultry businesses. Due to the nature of contracts between poultry producers and processors, and the forward-buying policies employed by them, the impact of increased feed costs on primary producers has been less significant. It is encouraging, though, to note that egg prices have risen in the past few months to take account of those higher input costs. Through innovation and new product development, the poultry processing sector works hard to add value and stay ahead of the competition in what is a very aggressive market.
I am pleased to say that the dairy sector, which has experienced a 28% rise in milk prices, is in a relatively strong position to deal with the cereals crisis. Although the dairy sector uses concentrates as a feeding supplement, it is a grass-based enterprise, and the rise in milk prices has helped to cushion the effects of increasing concentrate prices.
Although the dairy sector is doing well, we have already heard from a number of Members that the red meat sector is facing significant challenges. The decoupling of subsidies has started to bring home the sector’s unprofitability at current market prices. In an unprecedented step, key stakeholders from the sector worked with the Government to establish the Red Meat Industry Task Force; with the objective of assessing the industry’s position and developing options for the future. That work resulted, as Members will know, in the Red Meat Industry Task Force report, which was published in October 2007. It clearly indicates the serious challenges facing the beef and lamb sectors.
Action to address those challenges is now under way, and I assure Members that DARD, in partnership with the industry, will play a full part in that process. The report points out a range of challenges to which the industry must respond positively.
Although prices have risen slightly over the past couple of months, there do not appear to be any major price rises around the corner. I have no influence over retail prices; however, in my opinion, production cost increases cannot be borne by the primary producer. The rest of the supply chain, including the consumer, must also bear part of that burden. The feed price and cost imbalance throughout the industry cannot persist, and, when European production falls in response to those pressures, there will be an EU-wide adjustment in intensive production sector prices. That represents the only long-term and sustainable solution to the problem of higher feed-input costs, which seems destined to persist. In the meantime, Mr Clarke’s suggestion about using co-operatives and collective buying power whenever possible in order to keep prices down is certainly of value.
In support of the local industry, in recent months, I have personally engaged in several initiatives. I met with Ministers Ruane and McGimpsey in order to consider developing and expanding local food-sourcing initiatives in the education and health sectors. In addition, I have also discussed with my colleagues the matter of increased public procurement of local produce, and I am working with the UFU in an attempt to get through the current difficulties.
Given the rising cost of feed prices, I wrote to every supermarket expressing my concern about producer level returns, and I am aware there has been a subsequent rise in some retail prices. Hopefully, those increased returns will work back through the supply chain to improve the farmgate price.
I am also pleased by the supermarkets’ positive response to the industry’s collective initiative to identify and promote locally produced food through the Good Food is in Our Nature campaign. Although he is not here, I hope that Sammy Wilson is taking cognisance of that; if he buys locally produced bacon, his 50 bacon sandwiches a week will certainly help.[Laughter.]
Concerning support for the pig sector, following a meeting with representatives of that sector, including some from the Ulster Farmers’ Union, I wrote to the Secretary of State for Environment, Food and Rural Affairs in order to urge support for the reintroduction of pig-sector export refunds. I also wrote to Mary Coughlan TD about that matter.
Although the European Commission is extremely reluctant to use export refunds — and it takes a great deal of pressure from EU member states to persuade it to act — under such pressure, export refunds were introduced. Therefore, further export refund increases would be difficult to achieve. Nevertheless, the Department, through Agri-Food and Biosciences Institute (AFBI), continues to support research and development work, which provides an important science and expertise base.
The recently established Pig ReGen Ltd is an additional resource to help to improve the production and quality of pigs here.
Concerning the red-meat sector, my Department is publicly committed to working with those people who want to stay in the industry and secure a more viable future, and we will also help people who wish to seek other opportunities. In addition, we will encourage producers to develop their businesses through training, benchmarking and adopting the latest technology. I am fully engaged in the taskforce’s work to develop constructive relationships across the supply chain, and I will personally continue to engage with all parts of that chain.
The Department is also considering options that support farmers who choose to diversify or seek other opportunities. Such options will be supported by the rural development programme, which I announced in summer 2007. Options include a bespoke programme for farming families in the red-meat sector, involving intense and targeted training, mentoring and information sessions, all of which are designed to assist farmers in making the right choice in a difficult situation.
My Department continues to support the intensive production sector in every way possible. The College of Agriculture, Food and Rural Enterprise (CAFRE) provides a comprehensive range of education and training programmes for producers and processors, and DARD’s supply chain development branch helps groups of farmers to work together with industry partners in order to improve returns and, if diversification is the desired course of action, to consider potential options. My Department also provides support through its new entrants scheme, which can subsidise loans in order to facilitate restructuring or investment.
EU funding will be available in order to develop and expand profitable and sustainable markets and to encourage better co-operation and communication between all food-industry sectors. That funding will be delivered under axis 1 of the rural development programme, specifically the agricultural and forestry processing and marketing grant scheme and the supply chain development programme.
The agricultural marketing development grant scheme is scheduled to open in the summer and will assist with developing marketing capabilities. Although the provision of further financial support through the state aid route is worth considering, the problem with state aid is that, in the short time frame, it would not provide immediate relief to producers. It is more likely that a rebalancing of the market would have taken place before such a measure could achieve any significant impact.
I am aware that France has been able to provide financial support to producers using de minimis state aid, which has recently been increased to allow a payment of up to €7,500 per producer over a three-year period without the need to secure state aid approval. However, that de minimis aid, which comes in the form of subsidised loans, is permitted only if the gross grant equivalent has been calculated on the basis of market interest rates prevailing at the time of the grant. I have concerns about encouraging producers to get into increased debt, using borrowed money at a reduced rate to subsidise continued production. Members will appreciate — and many have noted today — that I am not in a position to provide further direct financial support without EU Commission approval.
The current global grain market situation and reforms to the CAP mean that there are limited policy tools available to the commission to influence the world, or, indeed EU, grain price. Current intervention stocks are very small, and those have all been committed for sale. However, set-aside has been reduced to zero, and very early indications would suggest that EU grain production will increase this year, although I appreciate that that will take some time to have an impact and that weather conditions will be crucial to the level of future production. I must point out that the provision for intervention support operates at EU level and is not in the power of the Assembly.
Moving on to the amendment, I am aware of the long delays in Brussels in the authorisation of genetically modified food and feed varieties for import growing and processing in the EC. I know that grain exporters and importers have been reluctant to bring feed supplies into Europe since it is unlawful to import an unauthorised GM variety into the EC — even if it is in tiny traces of accidental contamination in a large consignment of grain. Although the authorisation, in October 2007, for the import of Herculex and two other types of GM maize and a type of sugar beet has helped supply, there remains a backlog of applications with the EC. The problems of those delays, which many Members have mentioned, will not be easily resolved.
As regards the Commission speeding up approval for GM products, it is also important that the Commission carefully considers each application as it must take into account human health concerns. I will continue to watch developments carefully in that area. It is for the industry to decide whether it chooses to use GM products that are currently available in the EU. To date, very few in the industry have chosen to do so, due to the dangers of cross-contamination and a consumer desire for products not fed on GM produce. Therefore a speeded-up process at the Commission may not solve that problem. Furthermore, a number of retailers, such as Tesco and Sainsbury’s, have made a commitment to use non-GM products in their own-brand products. So there is a desire, driven by consumers, to exclude GM varieties from food.
Locally, the Food Standards Agency leads on the aspects of GM, and DOE is involved where there are environmental considerations. I have met senior executives from the major supermarkets and encouraged them to take into account the rising input costs faced by producers and processors, and to increase the amount of produce sourced here. I am very concerned about the current situation facing the intensive-production sectors. I would like to take the action necessary to influence the cereals or the intensive-production markets, but we are a very small regional player in a very large EU market, and, as such, cannot significantly influence the markets at EU level. Although I cannot provide any additional funding, my Department will assist in whatever way it can to help producers develop new production systems for the intensive-production sector, with a view to satisfying the demands of, or need for, new market opportunities.
In conclusion, further subsidy, even in the short term, will not be practical or realistic; however, I will certainly consider any suggestions the intensive-production sectors, or my colleagues, have to offer that might ease the situation facing the pig, meat and poultry sectors. Go raibh míle maith agat.
Mr Irwin: I thank Members for bringing the matter to the House today, and I declare an interest as a farmer.
Grain scarcity is fast becoming a major problem for an already struggling agricultural industry. The intensive-production sector is hit hardest, which is an issue that has been flagged up to me in recent times by beef, pork and poultry producers. On each occasion the message is the same: farmers cannot continue to produce the product if production costs outweigh the farm-gate prices.
Not enough grain is produced in Northern Ireland, mainland Britain and the Republic of Ireland to satisfy domestic demands. We all rely heavily on imports. It is a vicious circle. For a country the size of the United Kingdom, the grain-scarcity issue is worrying.
On a world scale, with the West trying to find alternative sources for fuel, the major fuel producers are taking a keener interest in the use of industrial corn for the production of ethanol. Replacing the millions of hectares normally used for the production of edible corn had devastating consequences in Mexico, as the people witnessed a 400% increase in the price of corn-related foodstuffs.
Grain producers such as Kazakhstan, Russia, Argentina and Mexico have curbed exports as a result of internal political pressure. The people in those countries could not afford the food that was derived from the grain that they produced, as domestic supply was so tight. Such issues have contributed to the massive drop in the worldwide availability of grain.
Europe used to be a major grain exporter, but it is now reported as requiring 18 million tons of grain this year. Changing from a net exporter to a net importer has further reduced the list of countries that can be relied upon to supply the rest of the world with grain. That, coupled with unfavourable weather conditions that restricted supply in Australia and Canada — two major exporters — will result in a crisis. That is a far cry from farmers having to put a percentage of their land into set-aside to curb production.
Although in Northern Ireland we have little control over the grain prices and supply, the effects are extremely serious. Intervention measures could be taken to help our industry cope in the short term. Such measures would be welcomed; ultimately, however, they will not address the underlying issues that have led to grain shortages and soaring prices.
The agreement of the EU to import a larger range of biotech crops intended for animal feeds would be a positive step forward that would immediately help farmers. Such crops are being grown on an increasing scale in America, and would go some way to addressing the grain shortage.
Although the importation of many of those crops into Europe is not permitted, meat is allowed to be imported from countries that use biotech crops in meat production. Such meat imports are cheaper than the meat that our farmers can produce; therefore, they undercut and further destabilise our own industry. That is a disgraceful situation, and it is a total contradiction by the decision-makers in Europe.
The grain shortage has led to a rise in the prices of food in supermarkets. However, the rise in prices on the shelf is not reflected in the price that farmers receive. Farmers bear the brunt of increasing production costs. That situation cannot continue indefinitely.
An increase in the price that farmers receive for their product would go some way in lessening the burden on our industry. The EU must realise that approving cheap-meat imports is badly crippling our industry. Our farmers are being undercut by countries such as Thailand and Brazil, where production standards and costs are much lower.
The serious situation that faces the pig industry will be highlighted tomorrow when the National Pig Association converges on Downing Street to hand in a petition, signed by 10,000 people, that calls for producers to receive a fair amount for their products, or face the consequences — the collapse of the industry. The Minister would do well to add her voice to that protest.
I ask the Minister to take those matters seriously and to work to help our industry cope in what is a worrying time. Action that will sustain the industry in the longer term is required.
I call on the House to support the motion as amended.
Mr Elliott: I place on record my thanks to all those who participated in the debate on this serious issue. I am particularly grateful to the Minister for her response. The Ulster Unionist Party is acutely aware of the limitations on what can be done.
The two main issues received significant mention during the debate. The first issue is the grain shortage and how much that costs. Members have talked at great length, and I will not rehash the arguments about how much land has been converted from producing grain for food to producing biofuel. That has led to the shortage of grain to which Members referred.
Everyone knows that the US has always kept a three-month supply of grain in storage, but it now has only one month at the most. Were something to happen to grain production, within that time it would cause a shortage of grain in most areas of the world. The world relies heavily on the production of grain in the US and South America.
The Assembly may be able to have some impact on the second issue, which is the cost of the farmers’ end product. I must declare an interest, as I am a farmer and a livestock producer. The days of cheap food in Northern Ireland are over, and people must get their heads round the new situation. For years, cheap food has been produced in, or imported into, Northern Ireland. Those days, or at least the days when such cheap food was also a quality product, are over.
People may still be able to buy cheap imported products from countries whose standards are not the same as those in Northern Ireland. Farmers are fed up with having to adhere to the high standards of food production in Northern Ireland. If meeting those standards gave their products a distinct and significant advantage over others on supermarket shelves, they would not mind.
Mr Shannon: Is the Member aware that, over the past month or six weeks, the price of beef in the shops has increased by 60p a kilogram? Surely that increase should be passed on to farmers.
Mr Elliott: I agree with the Member for Strangford that farmers should receive that increase, but they do not — or certainly not all of it. Farmers have been highlighting that problem for years. There is much too high a discrepancy between the price that consumers pay in supermarkets, the amount that the processor gets and how much the primary producer — the farmer — receives.
I am not sure whether legislation, or authority from Europe, would be required, but I ask the Minister to act on food labelling. If imported products are not up to the same standard as those produced in Northern Ireland, the consumer must be informed. The difficulty is that they are not and, therefore, a proper labelling regime is required. Otherwise, the situation will not be sustainable for local farmers. Too many are going out of business: in a few years, no local produce will even be available. That is the main basis of my argument.
I will go through a few issues that Members raised. Many Members highlighted similar issues. I thank my colleague, the proposer of the motion, George Savage, who described at length and in graphic detail the severe worldwide shortage of grain. He illustrated the shortage with specific evidence and highlighted the problems.
There was an intervention from Sammy Wilson, who talked about environmentalists who want to provide alternative fuels but who are having the opposite effect on the environment, whereby there will probably be an increase in food miles and a reduction in overall food production.
The proposer of the amendment, Allan Bresland, highlighted how the large supermarkets drive down the price of products.
He indicated that the amendment is designed to enhance the motion.
Willie Clarke of Sinn Féin put out his stall at the start of his contribution by explaining that his party is opposed to the growing of genetically modified products in Northern Ireland. I am not aware that any genetically modified products are being grown in Northern Ireland, or that there is the intention to do so in the near future. Mr Clarke also highlighted the global demands for food, specifically for grain products.
P J Bradley pointed out that farmers live in a world of environmentalists and that environmentalist pressure is being put on every Government throughout the world. He also touched on the thorny issue of genetically modified food. Sean Neeson mentioned that grain producers have recorded the highest production for years; perhaps the highest production that some regions have ever seen, which almost — excuse the pun — goes against the grain of the debate.
Trevor Clarke highlighted the amendment and the slow procedure that exists in the EU for the approval of new varieties of crops from the United States and, indeed, elsewhere. Billy Armstrong suggested some options to the Minister. He also mentioned the 50 bacon sandwiches that are consumed by each household every year. I wonder how much of that which is consumed is locally produced. That is a serious point, because that is one of the current downfalls. I assume that quite a lot of that product is imported.
I regret that Sammy Wilson is not in the Chamber at present. He discussed the intervention that is suggested in the motion. I want to assure Sammy and others in the Chamber that the motion does not call for subsidies or for further direct payments. It aims for a fair balance. Action can be taken that does not involve direct payments being made to farmers, a few of which I have highlighted: labelling; better supermarket prices; and some type of ombudsman. A report that was published just two weeks ago suggested that the food industry should have an ombudsman to ensure that a fair price for products is realised, from retailers right back to primary producers. Such an ombudsman is required. If that were in place, it would certainly improve the situation.
Thomas Burns indicated that the problem exists worldwide — which all Members accept. The problem is not local to Northern Ireland, but exists throughout the world. Mrs Iris Robinson talked about the EU targets for biofuels. She indicated that Northern Ireland is nowhere near meeting those targets. That is quite clear. Therefore, the Assembly must strike a balance between growing biofuels and growing crops for food.
Jim Shannon highlighted the amount of grain that is used in the production of whisky. However, as he did not declare an interest, I do not know where he stands on that matter. [Laughter.]
The Minister, quite rightly, referred to feed costs in the intensive production sector, particularly that of pigs and poultry, in Northern Ireland. Clearly, the Assembly must get a handle on the situation. She also referred to the Red Meat Industry Task Force. I am pleased that the Committee for Agriculture and Rural Development has organised and will host a seminar next week that will include a range of people from throughout the entire industry, such as retailers, consumers, supermarkets, processors and farmers.
William Irwin discussed the authorisation of grain from Europe, and the amendment. I hope that my understanding of the amendment is correct — that it does not seek to enforce the manufacture of genetically modified products in Northern Ireland. Those products are coming in anyway, folks. The motion and amendment simply aim to speed up the approval process. They call on the EU to speed up the process and to allow Northern Ireland the same opportunities as the rest of the world.
Question, That the amendment be made, put and agreed to.
Main Question, as amended, put and agreed to.
That this Assembly notes with concern the scarcity of grain within Europe, which is having a detrimental effect on the profits of the production sector, as a result of higher grain prices; and calls on the Minister of Agriculture and Rural Development to provide intervention support to the intensive production sector that relies upon grain, and to lobby the European Union on the approval of new biotech varieties.
That the Assembly do now adjourn. — [Mr Deputy Speaker]
Traffic Pollution in Dungiven
Mr Deputy Speaker: I remind Members that the proposer of the debate will have 10 minutes to speak. All other Members who wish to speak will have three minutes.
Mr Dallat: I am conscious of the time constraints, so I will try to deliver my speech a lot faster than the traffic goes through Dungiven.
Members know that for many years money that was intended for the development of infrastructure — whether road or rail — was diverted to security and compensation claims. Hopefully, that is now part of history. However, what is not part of history is the legacy of neglect that has been left behind and the difficulties in dealing with that. The pieces must be picked up — that is the expectation of the people who supported the peace package.
One of the most shameful examples of neglect is the situation that the people of Dungiven find themselves in. How would anyone like to live in what is, officially, the most polluted town on these islands? That pollution is being caused by the huge volume of traffic, much of which consists of heavy-goods vehicles, that goes through the town each day because there is no bypass and no hope of one in the immediate future. In the short term, it seems that there is no money to carry out the work that is required to free the people — particularly the young and elderly — from the health hazards being created by carbon dioxide and the other harmful pollutants that are emitted by the daily-increasing traffic.
The Programme for Government is offering the people of Dungiven no hope for a solution during the lifetime of this mandate and, according to the Minister for Regional Development, they will have to wait for years to get what is rightfully theirs.
Members must acknowledge the injustices and neglect of the past, and begin from there. A decent, modern road from Derry to Belfast is required — one that does not ruin people’s health. Professionals have measured and quantified the pollution and have stated that it is ruining the health of local people.
Since December 1997, each local authority in the UK has carried out a review and assessment of air quality in its area. That involves measuring air pollution and trying to predict how it will change in the next few years. The aim of the review is to ensure that national air-quality objectives are achieved. Therefore, if a local authority finds an area in which the objectives are not likely to be achieved, it must declare it an air-quality management area. It could be an area comprising one or two streets or greater. The local authority will then put together a local air-quality action plan.
The problem for the people of Dungiven and Limavady Borough Council is that they have no control over the causes of the build-up of nitrogen dioxide in the town, particularly at its lower end. The dogs in the street know that the only solution is to take the traffic away from the town centre, where a large number of families, young, not so young and elderly are living.
There are no alternative routes for the traffic that goes through Dungiven. Any changes in traffic management will have little or no impact on the traffic problems in the town. The Department for Regional Development is responsible for the traffic problem, and has known about it for a considerable number of years — long before the current Minister, I concede — and is aware that it has not gone away.
Four years ago, Limavady Borough Council met direct rule Minister, John Spellar, who accepted all the arguments in favour for a bypass for Dungiven and said that the only reason for the delay was — of course — money. He accepted that Dungiven was the only town on the route between Belfast and Derry where pollution problems, congestion problems, parking problems and road-safety difficulties made action imperative.
Motions and references have been made at Limavady Borough Council for 20 — some would say 30 — years. The council agreed that after the Limavady bypass, the Dungiven and Ballykelly bypasses were urgent priorities. When that decision was taken in 2006, the number of vehicles going through the town each day was approximately 14,000 — and, as we all know, that number is rising dramatically. Congestion is bad most of the time, but particularly on Friday afternoons. Pedestrian safety is being compromised by the traffic.
In situations such as this, there is a tendency to blame past failures, which is understandable: some people might say that Willie Ross was MP for the area and was more interested in bypassing Dungiven than actually getting a bypass for the town. Perhaps that is unfair because he is no longer an elected representative.
There were many flamboyant direct rule Ministers, who loved the power and glory of presiding over important events but did precious little to put infrastructure on the ground. In the long years of direct rule, I doubt if any British Minister spent time in Dungiven — maybe someone will correct me.
They may have, but they did not stay long enough to breathe in the nitrogen dioxide or experience the noise of the heavy vehicles.
In fairness, we got the Toome and Limavady bypasses during the two and a half years of the previous Assembly, and it was assumed that the Dungiven bypass would be next. Given the continuous deterioration of air quality over recent years, it seemed inevitable that the force-feeding of pollution would be brought to a snappy end, but, unfortunately, that has not happened. The old adage, “live horse and you will get grass”, comes to mind.
A report drawn up by consultants in October 2004 made particular reference to noise levels, vibration and poisonous gases in Dungiven. The report stated that noise levels were significantly higher as a direct result of uneven speeds or — I dare suggest — no speed at all. Members may be interested to know that noise nuisance is described by the World Health Organization as:
“a feeling of displeasure evoked by noise.”
Vibration is described as:
“slow frequency disturbance producing physical movements in buildings or occupants.”
Members will not be surprised to hear that all three of those environmental problems — pollution, noise and vibration — are present in Dungiven, and all are offensive to the people who have put up with them day and daily. Those problems must be managed. A bypass, now and not later, is the only way in which that can be done successfully.
Several environmental health reports over the past three years have highlighted Dungiven as having a serious problem with nitrogen dioxide. A special study carried out between July and December 2004 indicated clearly that the risk to health was at an elevated level in Main Street. It is hard to understand why that did not alert the Department for Regional Development to get its finger out and begin serious discussions about funding a bypass. Surely the Minister of Finance and Personnel, Peter Robinson, was aware that there was a special problem in the north-west, which was cutting around eight months off the lives of the residents in at least 317 properties in the town. Let us hope that the Minister for Regional Development was not shafted by the Finance Minister when it comes to the money to build the all-important bypass. There is a growing impatience and a feeling of rejection in Dungiven that its problem has not been taken seriously enough to include the capital cost of the bypass.
As far back as 2003, the then Minister John Spellar MP — clearly under pressure — referred to the Dungiven bypass. He said:
“I want to reflect carefully on the scope for including the Dungiven bypass in the 10-year Forward Planning Schedule for strategic road improvement schemes”.
That is quite a phrase.
That, of course, effectively condemned the people of Dungiven to another decade of forced poisoning. After the dust settled, most people accepted that they had been sold a pup. The Minister went further in his con job by suggesting that the bypass:
“could be achieved by extending slightly the period of the plan to 2014.”
Since then, we have heard various dates mentioned but, sadly, none of them fall within the lifetime of this Assembly. That is regrettable, unacceptable, and grossly unfair, because it is playing with people’s lives.
As I see it, future plans are like pieces of elastic — they can be stretched ever further, but they will snap eventually. The patience of the people of Dungiven is at snapping point. They want action from the Assembly, not promises that can be broken by any future Assembly, and they want it now. They are crying out for the support of the Assembly and are grateful for the cross-community support that the Adjournment debate has attracted. Gregory Campbell has apologised for being unable to attend the debate.
Mr G Robinson: I am pleased to speak in the debate. I have raised the issue of the urgent need for a bypass in Dungiven with the Minister in a question for written answer, I have spoken to community representatives from the town, and I have sought to hasten the process of providing a resolution to the current problems. However, as a fellow member of the Committee for Regional Development and representative for East Londonderry, Mr Dallat and I are aware of the statutory processes that are required before a project of that nature can begin.
I want to see the construction of a bypass begin tomorrow morning. That would alleviate the severe congestion and parking problems in the town and, without doubt, greatly reduce the health consequences to the people of Dungiven. However, everyone understands that quick fixes will not be available or be of any genuine benefit. As a short-term measure, there have been suggestions to divert traffic past Dungiven on to the A37 to ease the problems until the proposed bypass is built.
The Minister for Regional Development will be aware that I have pointed out, on numerous occasions, the problems that exist on the A37 due to the lack of progress on the Gortcorbies climbing lane. A judgement must be made on the benefit of such a diversion or even whether it would be followed by all motorists.
I am fully aware that feelings run high on the issue, and I take this opportunity to inform the Assembly and remind the Minister of the constant pressure that is being brought to bear on the matter by Limavady Borough Council, which is due to meet the Minister soon. However, I note that the Sinn Féin Member who lives in the area has been so interested in the bypass that he has tabled only one question to his party colleague on the matter since devolution.
The serious traffic pollution in Dungiven has implications for health. A report by the World Health Organization in 2003, entitled ‘Health Aspects of Air Pollution with Particulate Matter, Ozone and Nitrogen Dioxide’, states that:
“Long-term exposure to current ambient PM concentrations may lead to a marked reduction in life expectancy.”
If that does not bring home to us the dangers of the traffic in Dungiven and its resultant air pollution, I do not know what will. Is the Assembly prepared to let the problem continue? I sincerely hope not.
We cannot tolerate a situation in which chest and heart problems have been, are being, and will continue to be, caused by traffic congestion in Dungiven. The health issues carry the most weight with me, and I regard them as the most important reasons for reducing traffic pollution in Dungiven. We cannot tolerate a situation in which people’s health has suffered due to the Department for Regional Development’s inactivity under previous Administrations. The people wanted, voted for and got their own Government in the shape of this Assembly. Therefore it is up to us, as elected representatives, to do the best that we can. Dungiven needs a bypass — no argument.
I was dismayed that the Minister’s written answer to a question that Mr Durkan asked recently showed that that urgently needed project has been pushed back for a further three years. Six months ago, the Minister told me that the project was due to be completed in the latter part of the regional strategic transport network transport plan, which ends in 2015. In his answer to Mr Durkan, he said that it will be delivered in the lifetime of the proposed investment strategy for 2008-18.
The need for a bypass is not in question. If the Minister keeps putting it on the long finger, he will condemn more people to chest and heart problems.
Mr Deputy Speaker: The Member’s time is up.
Mr G Robinson: I call on the Minister to address the issue.
Mr Brolly: Go raibh maith agat, a LeasCheann Comhairle. I thank my friend and colleague John Dallat for bringing this topic to the House. I assure him that when the internal combustion engine arrives in Kilrea, I will stand shoulder to shoulder with him.
I thank Mr George Robinson for his support. If he had bothered Conor Murphy about the Dungiven bypass as much as I have during the past eight months, Conor would have hidden under the table when he saw George coming.
I would like to give the House some impression of the frustration experienced by people who live in Dungiven. I have a particular interest in this topic as I am the only person in the Chamber who comes from Dungiven. Two members of my family live very close to the most-affected area in the town —Lower Main Street.
The move to bypass Dungiven began in 1965 under the old Limavady Rural District Council, which George will remember, which, together with the urban council, became Limavady Borough Council. When the council decided that Dungiven should have a bypass there were objections, one of which came from Mr Billy Ross because the bypass would be close to his dwelling. That was an important aspect, although he had good reasons for objecting, as the area was of historic interest. I hope that the issue can be worked out.
Between 1965 and the 1980s there was pressure for a bypass for Dungiven. Some residents disagreed about whether it would be a good thing or not. If we were to ask them now, they would definitely be in favour of a bypass.
In the late 1980s, Paddy O’Loughlin had his house knocked down in preparation for work that was about to begin on the bypass. When, in 2001, I joined George Robinson on Limavady Borough Council, we spoke continually, not only about the bypass but about the general conditions of roads around Limavady. Everyone from that part of the north-west travels to Belfast by way of Dungiven.
Whereas we had been promised a bypass for so many years, a bypass was built at Toome. Toome had what Dungiven had not: a facility for helping congestion, which was used successfully for a good while. The Toome bypass was to be spectacular, with a bridge and all that. I suppose that the direct rule Minister was keen on making spectacular improvements before he went off home again. We all knew that, when it was finished, the Toome bypass would move all the traffic to Dungiven, which would become the next bottleneck. Toome was freed up and Dungiven became totally congested. It was worse than congested, because we had no alternative but to endure traffic travelling up and down Main Street.
A Limavady bypass was also built at that time. George will probably agree with me that it was ill-conceived, because Ballykelly was not bypassed at the same time. Ballykelly is, by a long way, the worst part of the Limavady to Coleraine route. Therefore, the Limavady bypass was not of any great consequence, except that it was a blessing to those who lived in Linenhall Street, which is a narrow street that would have suffered the same level of pollution as we now suffer in Dungiven.
Soon after devolution, I wrote to Conor Murphy for the first time — in that instance about congestion in Dungiven. I asked that the proposed dualling not have any bearing on whether there should be a bypass at Dungiven; that the bypass be considered a separate project; and that the dualling eventually dovetail the bypass. However, Roads Service and its civil engineers reported that that was not viable.
Mr Deputy Speaker: Mr Brolly, your time is up.
Mr McClarty: I thank Mr John Dallat for securing this important debate. The issue greatly concerns me, as it does all Members who have spoken. For that reason, I regret that Mr Robinson became involved in scoring cheap, party political points: that does this cause no good at all.
Dungiven’s requirement for a bypass is now critical. As has been mentioned on a number of occasions, the volume of traffic through the town is extremely worrying. It has resulted in Dungiven’s becoming perhaps the most polluted town in the Province — an unwanted title.
It is completely unacceptable, in this day and age, that the people of that County Londonderry town should be forced to put up with dangerously high levels of pollution, as a result of vehicle emissions. The health risks are immense.
In a recent study, Limavady Borough Council’s environmental health department recorded pollution levels in Main Street in Dungiven at 68 micrograms per cubic metre of nitrogen dioxide. Since monitoring began in 2006, the average level has risen to 50 micrograms per cubic metre. Experts in the field advise that a reading of 40 is “hazardous”. Therefore, how much worse is a reading of 68? The situation is extremely worrying. The Assembly cannot continue to tolerate the fact that people live and work in a town in this Province that is an unsafe and unhealthy environment for them.
As recently as last month, the Minister for Regional Development corresponded with Limavady Borough Council, when he announced the next stage of the upgrade of the A6 road from Londonderry to Dungiven, including the Dungiven bypass. Civil engineers have been appointed to examine options to enable a preferred route to be selected.
The route corridor for the scheme has already been selected. Consultants are examining a variety of options in that corridor, and they plan to consult on them before summer 2008. After further detailed appraisal, the Department plans to announce the preferred route for the new dual carriageway in the spring of 2009.
Although I welcome those moves to tackle the matter, the people of Dungiven should not have to endure the dangerous threat of traffic pollution for another year.
Immediate action is needed to deal with this problem. The issue cannot be put on the long finger; it must be acted on immediately, and not at some notional date in the future. During the course of the previous Assembly, a bypass was provided for Limavady. That was greatly needed, and it was hoped that one would be provided for Dungiven in due course. Unfortunately, that did not happen, but the talking and the pondering continued.
The time for talking is over. Years have been wasted on deliberations and debate on this issue. Now that devolution has been restored to Northern Ireland, a functioning Executive can and should tackle such problems head on. I urge the Minister to act now to ensure that the people of Dungiven and the surrounding area do not have to endure such an unacceptable situation for much longer.
Mrs M Bradley: Last Friday, I attended a meeting in Derry at which two of my colleagues, Mr Brolly and Mr McClarty, were also present. The first question that we were asked was from a community activist from the Dungiven area about the bypass, and when it was happening. The community activist highlighted the fact that the people of Dungiven have great concerns about the pollution in the area, which is affecting people’s health. I ask the Minister how people can be expected to live with such a problem on a daily basis, perhaps for another seven years, particularly as the pollution is well above safety levels.
It is not only people in Dungiven who would welcome a bypass; the whole of the north-west awaits the day when that happens. As a Member who drives through that town every day, I see the problems that people face. They cannot open their windows. When I went into a shop one day, a lady took time to tell me about her problems — she cannot keep the front of her shop clean. The people of Dungiven cannot keep their homes clean. It is most unfair that those people live in such a beautiful small town, yet they live with pollution that is above safety levels. During Question Time on 25 February 2008, I asked the Minister to expedite progress on this matter. I was told that he could not do that, but I ask him to, please, find some way of finding the finances to give the people of Dungiven what they deserve — a bypass by their town.
The Minister for Regional Development (Mr Murphy): Go raibh maith agat, a LeasCheann Comhairle. I thank John Dallat for bringing the debate before the House. I welcome the opportunity to discuss the issue of traffic pollution and the situation in Dungiven in particular. I have asked my officials to take note of the Hansard report so that if any points are not picked up, we can write to Members after the debate.
I can appreciate the frustration that Members have expressed about the length of time and the added pressure of the pollution factor. I appreciate that there is frustration in a great many places across the North. I speak as someone who has experienced frustration over the years while waiting for bypasses in my own part of the world. I fully accept that there is an added issue in Dungiven.
This is not an issue of money, as some Members, including John Dallat, suggested. I wish that more work had been done under the direct rule and devolved Administrations before I took office, so that it would be at a more advanced stage than it is now. When planning a major road scheme such as a bypass, one must go through a series of processes. If those processes are not followed, one might end up in court in a judicial review.
Sufficient time must be spent on examining the route options and narrowing down to a specific preferred option. Such a project would affect hundreds of landowners from Derry right through to the Dungiven area. Those people must be given the opportunity to comment on that and try to seek some means of offsetting the impact that a major road project would have on their land. If proper procurement procedures were not followed, the Department might end up in front of the Public Accounts Committee — of which Mr Dallat is a member — to answer for that.
Those processes take a frustratingly long time. As I said, I appreciate that people have been frustrated by waiting for a bypass. I also appreciate that there is an added fear factor because of the pollution in the town.
Francie Brolly, George Robinson, Mary Bradley and others have raised the issue with me, and I am conscious of the urgency around it. However, demands for immediate action or fast-tracking are simply not possible, as there are certain procedures that must be followed. If I had come into office when all the statutory procedures had been followed and the route options and procurement had been completed, I could announce that work on the bypass could begin. However, I have come in at the beginning of a lengthy but necessary process, and that is frustrating. Therefore, I share some of the frustration that people feel.
I accept that traffic pollution is a real problem. No one can underestimate the scale of the challenge for all of us as we deal with pollution and with the related threat of climate change. Congestion has a negative impact on our towns and cities, both environmentally and economically, and those points were made during the debate. Congestion slows down business, causes annoyance and frustration to drivers and pedestrians and affects the air quality of those who live and work in towns and cities everywhere. Therefore, we are investing in public transport and introducing measures to manage our road network more effectively to improve traffic flows. However, even as we do that, congestion is set to grow with increasing demands for travel. We face the real threat of increased congestion in the future if we do not invest sufficiently in effective measures now.
Turning to traffic pollution in Dungiven, a statutory framework for improving air quality has been firmly established under the 2002 Environment Order, which provides a statutory framework within which air quality is managed by district councils in the North. The framework requires district councils to review and assess a range of air pollutants against the objectives set out in the UK air quality strategy, using a range of monitoring and modelling observations and corresponding analysis. Councils are required to declare locations where objectives are not met as air quality management areas and to develop action plans to ensure that the necessary improvements are delivered within an appropriate timescale.
Relevant stakeholders, such as my Department’s Roads Service, have a responsibility to contribute to any action plan relating to areas over which we have control or influence. I appreciate John Dallat’s point about councils not having complete responsibility for contributing to an action plan, but other agencies with such a responsibility have an obligation to contribute to those plans.
Nitrogen dioxide is predominantly a traffic-related pollutant, with emissions generally highest in urban areas. Levels can vary significantly throughout the day, with peaks generally occurring twice daily as a consequence of rush-hour traffic. The contribution of road traffic to nitrogen dioxide has declined significantly in recent years due to the introduction of tighter vehicle emission standards. Further reductions are expected to be achieved in the future as vehicle technology improves.
Following a detailed review and assessment of air quality in its area of responsibility, Limavady Borough Council has declared a section of Dungiven Main Street between the River Roe and numbers 89 to 106 Main Street an air quality management area for nitrogen dioxide. As required under the legislation, an air quality action plan has been prepared by the council and other relevant authorities. Roads Service has had input into that action plan, which was submitted to the Department of the Environment for appraisal during September 2007.
In developing the action plan, Limavady Borough Council held consultations with Roads Service and various traffic management options were considered, such as traffic calming, traffic signals, one-way systems and traffic regulations. Initial considerations suggest that, for several reasons, the location does not readily lend itself to developing traffic management measures as potential solutions to air-quality issues. When the plan is finally accepted, the Department of the Environment will monitor progress on the achievement of actions identified in Limavady Borough Council’s action plan to ensure that the necessary air-quality improvements are achieved.
Roads Service places a high priority on upgrading the north-west key transport corridor, which includes the proposed bypass. The construction of a bypass around Dungiven would be expected to improve air quality in the town, although local traffic would continue to use Main Street. On 3 July 2007, I announced the next stage of the process for procurement of the A6 Derry to Dungiven dual carriageway. The study of alternative routes will be carried out to examine the scheme options, which, in turn, will enable selection of the preferred route.
Several options will be considered, and one preferred route will be selected. That route will be announced in 2009. Development of the scheme will include a comprehensive consultation process. A timescale for a bypass is very much dependent on the progress of the overall A6 dualling scheme from Dungiven to Derry. As with all major road schemes, the timing of the construction will depend on the availability of finance. Roads Service intends to take the complete scheme through all the statutory processes as an entity, although Francie Brolly made the point that this is a single scheme, and I accept that.
Members have suggested that the scheme be taken in stages, with the Dungiven bypass advanced as an early part of that scheme, and I will discuss that with the Roads Service. When I came to office, I inherited the process as a single scheme that was to be taken forward as an entity before commencing the procurement cycle, and that will, unfortunately, be time-consuming.
A LeasCheann Comhairle, I have been in Dungiven and driven through it many times. I appreciate the frustration of the community and of those who travel from Derry to Belfast and vice versa daily. I assure the House that this scheme will not be put on the long finger. I will continue to try to examine ways of achieving the project in the shortest possible time frame, not only for the sake of road users and the journey time from Derry to Belfast, but, more importantly, for the people who live on Main Street in Dungiven and who have to put up with the unacceptable levels of pollution. It is a priority for my Department to deal with that, and to do so in the shortest possible time. Go raibh maith agat.
Adjourned at 6.56 pm.
< previous / next >