PROCEEDINGS OF THE SUB-GROUP ON ECONOMIC ISSUES
Minutes of the meeting held on Thursday, 21 December 2006 in Room 144, Parliament Buildings.
In the Chair: Thomas O’Reilly
Present: Thomas Burns
George Dawson
Michelle Gildernew MP
Dr Alasdair McDonnell MP
Mitchel McLaughlin
David McNarry
In Attendance: Alan Patterson (Principal Clerk)
Shane McAteer (Clerk)
Colin Jones (Assistant Clerk)
Paul Stitt (Clerical Supervisor)
David Douglas (Clerical Officer)
Graham Gudgin (Economic Adviser)
Michael Smyth (Economic Adviser)
Victor Hewitt (Economic Research Institute of NI)
The meeting commenced at 10.15am in closed session.
1. Apologies
Michelle Gildernew MP (late arrival).
Peter Robinson MP.
2. Draft Minutes of the Meeting of 14 December 2006
Mr McNarry proposed that ‘the draft minutes should be amended to reflect the fact that the evidence from both Professor Fitz Gerald and HM Treasury officials had been recorded by Hansard.’
There was consensus and the proposal was agreed.
The minutes were agreed, as amended, for publication on the Assembly website.
3. Matters Arising
Members agreed that the minutes of today’s meeting could be forwarded to the Committee on the Programme for Government (PfG) as unapproved minutes.
Members noted that, as agreed last week, a request had issued to the Secretary of State in relation to a meeting with relevant Ministers on the Government’s response to previous reports agreed by the sub-group on the economic challenges facing Northern Ireland. It was noted that a response was not expected before 8 January 2007 and that this would be made available to Members on receipt.
Members noted that no response to the sub-group’s invitation to submit written views had been received from Alliance, PUP and UKUP in relation to the sub-group’s current terms of reference.
Members agreed that the finalised transcripts of evidence from DRD/DFP officials, Prof John Fitz Gerald and HM Treasury officials should be placed on the Assembly website.
Members noted further information from DRD on the risk of fines arising from infraction proceedings. It was also noted that DFP officials had been reminded of their undertaking to provide further information and that this would be appended to the sub-group’s report if received before PfG considered the report.
Mr McNarry asked for it to be recorded in the minutes that he considered the co-operation from Departments to have been lamentable and that they had gone out of their way to avoid sending sufficient information that would contribute to a satisfactory report. Mr. McNarry proposed that this view should be reflected in the report.
There was consensus and the proposal was agreed.
4. Consideration of Draft Report on the Chancellor’s Economic Package and on Alternative Proposals
Members considered the draft report paragraph by paragraph.
Terms of Reference and Membership were agreed.
Recommendations
In relation to Recommendation 5a, it was agreed to insert after ‘Government,’ ‘to take account of the opposition to water charges from all the Assembly parties.’
In relation to Recommendation 5c, it was agreed to delete everything after 3.5%.
Introduction
Paragraphs 1 – 4 were agreed.
Paragraph 5 was agreed.
Paragraph 6 was agreed, subject to an addition to reflect the sub-group’s intention to follow-up on responses to previous reports.
Paragraph 7 was agreed, subject to an addition to reflect the sub-group’s disappointment at the level of assistance and co-operation that Government departments had provided.
Paragraphs 8 – 12 were agreed.
Paragraph 13 was agreed, subject to minor amendment.
Paragraph 14 was agreed.
Consideration of Issues
Analysis of the Chancellor’s economic package
Paragraphs 15 – 17 were agreed.
Paragraph 18 was agreed, subject to an addition in relation to the simplification of R&D tax credits and the need for further clarification on what was being proposed by HM Treasury.
Paragraph 19 was agreed, subject to the addition of ‘and other possible fiscal measures’ at the end of the paragraph.
Paragraphs 20 – 23 were agreed.
Paragraph 24 was agreed, subject to the following amendment:
that the paragraph should end after ‘prospects of a new Executive.’
Alternative proposals to the Chancellor’s package
Paragraph 25 was agreed, subject to the following amendment:
that the first sentence be amended to read ‘The sub-group has considered the Chancellor’s economic package and concluded that, while providing initial certainty, the package fails to adequately address the serious economic challenges facing NI.’
Dr McDonnell left the meeting at 10.50am.
Mr Burns joined the meeting at 10.50am.
Paragraphs 26 – 28 were agreed.
Paragraph 29 was agreed, subject to the following amendments:
that, in the first sentence, ‘only reduced profits tax will,’ be replaced by ‘fiscal reform, particularly a competitive rate of corporation tax, is necessary to,’ and that ‘to the extent needed’ be removed;
and that the final sentence be amended to read, ‘A key factor, which has catapulted ROI into prosperity has been its competitive rate of corporation tax.’
Paragraphs 30 – 31 were agreed.
Paragraph 32 was agreed subject to the following amendments:
that, in the first sentence, ‘but considers these to be significantly less effective in,’ be replaced by, ‘as a means of;
and that the second sentence be amended to include ‘enhanced and simplified R&D tax credits’ and a ‘re-introduction of the First Year Capital Allowance Schemes,’
and that in the third sentence, ‘second best measures’ be replaced by ‘complementary measures.’
Paragraphs 33 – 34 were agreed.
Paragraph 35 was agreed, subject to an addition to reflect the ‘importance of other city hubs, including Derry/Londonderry as the North West regional hub.’
Paragraph 36 was agreed, subject to further consideration of a possible amendment following the sub-group’s consideration of the ‘Alternative Economic Package Costings’ detailed at Annex A.
Paragraph 37 was agreed, subject to further consideration of a possible amendment following the sub-group’s consideration of the ‘Amendments to the Funding Rules’ detailed at Annex B.
Paragraph 38 was agreed subject to an addition to reflect the importance of the development of new economic clusters and networks.
Paragraph 39 was agreed, subject to the fact that it may need to be amended following the sub-group’s consideration of Annexes A and B.
Corporation Tax – Further Considerations
Paragraph 40 was agreed, subject to the following amendment:
that ‘The introduction of a differential rate of corporation tax for NI,’ be replaced by ‘Fiscal reform, particularly a rate of corporation tax.’
Paragraph 41 was agreed.
Paragraph 42 was agreed, subject to minor amendment.
Paragraph 43 was agreed.
Paragraph 44 was agreed, subject to the following amendment:
that the sentence beginning, ‘Incorporation would in all cases….’ be deleted.
Paragraph 45 was agreed.
Paragraph 46 was agreed, subject to the following amendment:
that’ fiscal reform, particularly,’ should be inserted after ‘NI and the UK as a whole from.’
Paragraph 47 was agreed.
Paragraph 48 was agreed, subject to the following amendment:
that the final sentence should be amended to read, ‘The sub-group considers that it is possible to envisage a situation where the ECJ conditions could be met for a differential corporation tax for NI;
and that a paragraph should be added in relation to ‘a derogation from Article 87.
Paragraph 49 was agreed.
The meeting was suspended at 12.20pm.
The meeting resumed in closed session at 12.50pm.
Potential budget deficit from deferment of water reform
Paragraphs 50 – 53 were agreed.
Paragraph 54 was agreed, subject to the following amendment: that the final two sentences be deleted
Paragraph 55 was agreed.
It was agreed that paragraph 56 should be amended to reflect the amendments already agreed for recommendation 5 and that a further paragraph should be added, detailing the way forward.
Annex A: Alternative economic package
Roads
Agreed, subject to the following amendments:
that, in relation to the annual roads maintenance budget, the words, ‘to target the roads maintenance schemes identified in the Roads Service priority list,’ be added at the end of the paragraph; and that the final two paragraphs be deleted.
Mr McLaughlin left the meeting at 1.05pm.
Rail and Light Rail
Agreed, subject to the following amendments:
that, ‘between £700m and £850m for 4 guided bus/light rail routes,’ be amended to read, ‘£850m for 4 light rail routes.’
Business Support Measures
Agreed.
Mr Burns left the meeting at 1.20pm.
Dr McDonnell joined the meeting at 1.20pm.
Technology and Knowledge Transfer
Agreed, subject to the following amendment:
that, in relation to broadband capacity, ‘8 Mbps,’ be amended to read, ‘at least 8 Mbps.’
Expansion in University Places
Agreed, subject to the following amendments:
that the title be amended from ‘Expansion in University Places,’ to ‘Education,’ and that a further £20m per annum should be added for issues such as special needs education, early years development, educational underperformance and teacher training.
Tourism
Agreed, subject to the following amendment:
that an additional £10m over 5 years be added to provide ‘additional support for the sustainable development of areas of out standing natural beauty.
Agriculture
Agreed, subject to the following amendments:
that an additional £50m over 5 years be added to support an agri-environmental programme and restructuring programmes for the beef and diary sectors.
Annex B: Amendments to the Funding Rules
Proposal 1
It was agreed that this should be deleted.
Proposal 2
Agreed.
Proposal 3
Agreed.
Proposal 4
It was agreed that this should be deleted.
Proposal 5
Agreed, subject to the following amendments:
that, in the second paragraph, ‘the current way forward,’ be replaced by ‘is currently the proposed way forward;’ and that
in the third paragraph, the first two sentences be deleted and replaced by, ‘The final form of organisation for water and sewage services will be determined by a future NI Executive;’ and that
in the fourth paragraph, the final two sentences be deleted.
It was agreed that a further proposal should be added to reflect the assistance sought to meet short-term restructuring costs associated with the Reform programme in the NI public services, detailed previously in the sub-group’s counter proposals to the Chancellor’s economic package.
Annex C: Proposed letter from PfG Committee to the Chancellor of the Exchequer
this was agreed, subject to minor amendment and to the appendix being updated to reflect the amendments to the main body of the report already agreed.
Executive Summary
Recommendations
It was agreed that this section should be amended to reflect the changes already agreed to the recommendations contained in the main body of the report.
The Chairperson proposed that the draft report, as amended, be agreed as the sub-group’s second report to the Committee on the Programme for Government.
There was consensus and the proposal was agreed. The amended report would issue to PfG by the deadline of 22 December 2006.
5. Any Other Business
None.
6, Date, Time and Place of Next Meeting
Members would be informed of the next meeting of the sub-group, which would be dependent on a response from the Secretary of State in relation to ministerial availability.
The meeting adjourned at 2.14pm.