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5.14 pm
Mr. Andrew Hunter (Basingstoke): My response to the greater part of the thesis propounded by the hon. Member for Barnsley, Central (Mr. Illsley) is that he must
not be surprised if Conservative Members shudder with horror at the realisation that Labour economic policy would be as disastrous for the Province as it would be for the rest of the United Kingdom. The virtues that the hon. Gentleman sought to extol would have quite the opposite effect. We would witness job losses, increased costs for businesses, the stifling of economic growth through regulation and lower productivity and profitability; and, following the introduction of the social chapter--which would be wholly disadvantageous--we would discover that it was neither wanted nor needed.
Originally, Madam Deputy Speaker, I had no intention of trying to catch your eye. I believed that it would be best to leave Northern Ireland Members to speak in the debate. There is a little time to go, however, and I welcome this opportunity to make one or two selective observations. I believe that any accurate overview of the general state of the Northern Ireland economy must, on the whole, present an encouraging and satisfactory picture. The essential issue--the essential good news--is measured in the simple statistic that the Province enjoys greater economic growth than the rest of the United Kingdom. Growth last year amounted to some 3.5 per cent., compared with only 2.6 per cent. on the mainland.
I note, however, that the report that forms the basis of today's debate includes a word of caution. The Northern Ireland Economic Council recognises that there is less slack in the local economy than in the national economy, and warns that a significant relaxation of fiscal or monetary policy could have undesirable effects. It postulates that firms might simply come up against shortages--especially in the short term--which could feed through into inflation. Obviously, that would not be in the interests of Northern Ireland. I wonder whether the Government accept the council's thesis, and whether they acknowledge that a significant relaxation of fiscal or monetary policy could have adverse impacts. If so, I hope that that potential danger will remain firmly in their sights.
A number of hon. Members have referred to the relevance, and the supreme importance, of a permanent ceasefire to economic prospects in Northern Ireland. That is self-evident, and I shall add little to what has already been said. It is obvious that Northern Ireland's economy would receive an immediate and permanent boost if there were a permanent ceasefire--a point that Sir George Quigley makes in his report:
Sir George was writing in February, shortly before the resumption of violence. It is equally clear that inward investment and business confidence were dealt a severe blow by that resumption of violence.
There was a more direct implication. The paramilitary ceasefires had enabled the Government to plan for a reduction of nearly £300 million in expenditure on law and order in the years leading up to 1999. Given the uncertainty of the security position, that poses questions about the organising of priorities.
Employment was the subject of the first inquiry and report of the Select Committee on Northern Ireland Affairs. During their deliberations, its members became
aware of the complexity and depth of the problems and that there are no simple, short-term solutions. During the Committee's work, I postulated a heresy: the argument that there might be mileage in considering turning the Northern Ireland economy into a tax haven to promote greater economic growth than in the rest of the United Kingdom. My arguments were not accepted. It was suggested that they were too inherently inflationary, but there is a point to make that lightening, wherever possible, the burden of direct and indirect taxation on businesses in the Province should be an objective.
The unemployment statistics are encouraging. As we have heard, unemployment in Northern Ireland is at its lowest level since May 1981 and has fallen in nine of the past 12 months. It is pleasing to note that short-term unemployment in Northern Ireland is rapidly approaching the national average. There is less reason for satisfaction with regard to long-term unemployment, which is clearly a significant problem and, I fear, will continue to exist, it seems, for some time. It must remain firmly in the Government's sight that long-term unemployment problems should receive all possible attention.
The Government rightly draw attention to the fact that, since September 1994, there have been 17 new cases of inward investment. Those are worth some £360 million and have the potential to create, over a short period, some 5,000 new jobs. I wonder, however, whether the various projects that are being established can be attributed to the investment conference in Belfast, which was held, if I recall correctly, in February last year--perhaps it was at the end of the previous year--and to the similar conference in the United States of America in March last year. Are those initiatives resulting in a return on investment and in an increase in inward investment in Northern Ireland?
I note with interest the favourable increase in exports from the Province--some 25 per cent. from 1991 to 1994. That, one presumes, is an accurate reflection of, among other things, Northern Ireland businesses' increasing competitiveness. Do the Government have a view on the sustainability of that level of increase? If it can be sustained, it is encouraging news.
On another more general point--the concept of targeting social needs--the Government have rightly made a priority of seeking to tackle disadvantage and of promoting equality of opportunity and treatment for everyone in Northern Ireland. The social needs programme is targeting resources on regions and individuals who are deemed to be in most need. I hope that it will result in a reduction in social and economic differences.
When he replies to the debate, will my right hon. Friend the Minister find an opportunity to make an assessment of the effectiveness of the three major schemes of which I am aware: Making Belfast Work, the Londonderry initiative and the rural development programme? Does he believe that sufficient and acceptable progress is being made in those initiatives?
With regard to the report, I shall be ultra-selective and, if I may, focus attention on paragraphs 2.19 to 2.24 on pages 15 to 18, which deal with public expenditure. Paragraph 2.19 caught my attention in particular. It states:
I received that favourably. It continues:
The remainder of the paragraph, however, contains an alarming statement. We are reminded:
It is alarming and disturbing that what was intended to be a real terms reduction in public expenditure should result in a real terms increase. Has that point caught in particular the attention of my right hon. Friend the Minister? What measures does he believe can be taken to ensure that, in future, expenditure is more in line with Government planning?
Paragraph 2.20 on page 16 illustrates a dilemma facing the Government. It states:
The paragraph continues:
Strengthening the Northern Ireland economy became the first priority, targeting social need the second and providing
became the third. With the current uncertainty, where do we stand now in relation to Government priorities? With violence resumed on the mainland, what priorities can the Government select when the level of resources that may need to be devoted to security matters is unknown? Clearly, such circumstances make tight Government planning of economic matters difficult.
Paragraph 2.21 refers to the so-called peace dividend and contains the attractive and appealing speculation that the value of the annual dividend
Presumably, such reasoning must now be put into abeyance. At present, we simply cannot speak or plan in terms of an effective peace dividend.
The following paragraph makes the vital and central point on the need to deliver public services in an efficient and effective manner:
It continues by focusing attention on the Department of Health and Social Services draft regional plan. Will my right hon. Friend give reassurances that the Government bear in mind the need for public funds to be spent in the most and efficient and effective manner possible, not least in the vital sector of health and social services spending?
"The economy was beginning to reap significant benefits from the prospect of a permanent and durable peace and it is important for future economic growth that no effort is spared in the search for a solution which will consolidate and enhance the gains of the past seventeen months".
"The control of public spending is crucial to the Government's ability to meet public finance objectives and allow room for tax reductions."
13 May 1996 : Column 668
"From Northern Ireland's viewpoint the Chancellor's decision on the future path of public spending is crucial. This reflects the fact that public expenditure is much more important for Northern Ireland than the UK".
"In public spending matters, however, the reality of expenditure outturns can sometimes differ from the rhetoric. For example, the planned 1.3 per cent real cut for the Control Total . . . spending in 1994-95 turned into a 1.4 per cent rise in real spending."
"The Secretary of State for Northern Ireland has identified three public expenditure priorities--'defeating terrorism, strengthening the NI economy and targeting social need'".
"Since the ceasefires in late 1994 these priorities have been reordered".
"whatever level of resources is necessary for the preservation of law and order in Northern Ireland"
"under conditions of peace and political stability varied between a maximum estimate of £601m and 12,277 positions to a minimum of £427m and 8,168 positions".
"the reallocation of these funds should not deflect attention from the need to deliver public services in an efficient and effective manner."
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