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Mr. Pearson: As the hon. Gentleman is aware, my right hon. Friend the Minister of State, Northern Ireland Office, is actively considering that matter. It is clear that the use of paramilitary activity to fund political activity is completely unacceptable. Nobody in this Committee would say anything to the contrary. If evidence can be brought before the courts, we will seek to do that. As I said in a very short answer to the hon. Member for Aylesbury (Mr. Lidington), there are no limits. No one is off-limit in a police investigation, and that applies equally to political parties that may get funding from illegitimate means. Mr. Nigel Dodds (Belfast, North) (DUP): In the light of the known amounts that are raised by each of the organisations through illegal criminal activities, how does the Minister explain the discrepancies between the amounts frozen and recovered for republican organisations and for loyalist organisations? Why is there such a discrepancy? Mr. Pearson: Some of the discrepancy is due to the fact that cases have to be referred to the Assets Recovery Agency, and to date more cases from the loyalist side of the community have been referred than from the republican side. Cases are referred on the basis that criminal prosecution is not feasible but civil recovery is, but I assure the hon. Gentleman that we are trying to achieve civil confiscation of assets from the proceeds of crime, whether from republican or loyalist sources. There is no bar—we are not treating one side any differently from the other. Some cases will inevitably take longer to reach a successful conclusion than others, but the agency has established a track record during its two years of existence. I should like, and would expect in time, more balance between the amount of assets seized from the republican and loyalist sides— The Chairman: Order. Column Number: 12 Ulster Hospital 5. Mrs. Iris Robinson (Strangford) (DUP): What funding has been allocated to the Ulster hospital for 2004–05. The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Barry Gardiner): Some £190,694,000 has been allocated to date to the Ulster Community and Hospitals Health and Social Services Trust for 2004–05. Mrs. Robinson: I thank the Minister for that response. Will he comment on the impact that he expects the proposed new Province-wide capitation formula to have on future resources, particularly for the Ulster hospital? Mr. Gardiner: I am grateful to the hon. Lady for raising that issue, which she constantly brings before Ministers and the Department. At the moment, the budget represents an increase of £26,624,000. That is an increase of 16.2 per cent. on what was spent in 2003–04. I know that the Department has been working closely with the trust to develop plans for the entire Ulster hospital site. Those plans are at an advanced stage and are being considered for approval. The overall site development plan proposes investment of about £342 million in the next 13 years. Lady Hermon (North Down) (UUP): The Minister outlined the capital investment in improving the buildings at the Ulster hospital. How much funding will be spent on improving the low staff morale at that hospital, especially in the accident and emergency department? Mr. Gardiner: The hon. Lady has a history of being concerned about that issue, as does the hon. Member for Strangford (Mrs. Robinson). In 2004–05, £8 million was allocated to address increased demands on the service, especially during the winter months. For the Ulster hospital, that enabled enhanced community and primary care services and increased capacity, with the opening of a 12-bed clinical decisions support unit. That eased the bottleneck behind the accident and emergency department. It was with a view to addressing waiting times in accident and emergency that that £8 million was made available. Draft Budget (Northern Ireland) Order 2005The Chairman: I hope that my advice will be followed during this debate, which I remind the Committee may continue for up to two and a half hours. I have no power to impose a time limit on speeches, but brief contributions will enable me to call as many Members as possible. 3.1 pmThe Parliamentary Under-Secretary of State for Northern Ireland (Mr. Ian Pearson): I beg to move,
Column Number: 13 It will probably be a pleasure to serve under your chairmanship this afternoon, Mr. Amess. As the debate continues, I am sure I will find out. The draft order was laid before the House on 9 February. While we would all prefer a situation in which decisions on public expenditure in Northern Ireland were taken by locally elected representatives, the continued suspension of the Northern Ireland Assembly means that we must once again seek Parliament’s approval for the resource, and associated cash, requirements of Northern Ireland Departments. I remind the Committee that the draft budget order does not cover expenditure by the Northern Ireland Office on law and order and other services. The draft order has two purposes. The first is to authorise revised amounts of resources and cash for 2004–05. The total revised amount of resources for 2004–05 is £11.764 billion and the total revised amount of cash from the Consolidated Fund of Northern Ireland is £10.278 billion. That represents an increase in resources of £477.6 million and an increase in cash of £390 million from the position authorised by Parliament in the main estimates for the current financial year. The second purpose of the draft order is to organise a vote on account to allow funds to continue to flow to public services in the early months of the next financial year until the main estimates for 2005–06 can be prepared and considered. To do that, the draft order seeks Parliament’s authorisation to use resources amounting to £5.498 billion and for the issue of cash from the Consolidated Fund of Northern Ireland to the amount of £4.656 billion. In general, the resource and cash amounts required on account for the next financial year have been calculated as 45 per cent. of the total voted provision for this year. The vote on account is not intended to seek final approval of the allocations for 2005–06. Instead, it seeks sufficient resources and cash to allow services to continue until detailed work on the main estimates for next year is completed in the early summer. At that stage, there will be an opportunity to deal with the details of the spending plans for 2005–06. Rev. Martin Smyth (Belfast, South) (UUP): Will the Minister explain how he expects the different Departments to set their budgets if they are not yet sure what they will get? How much qualification has been allowed in the increased amounts for increased salaries? It seems to me that we are marking time rather than dealing with the problems. Mr. Pearson: I assure the hon. Gentleman that Departments are aware of the amount that is being allocated to them in the coming financial year. Those decisions were announced when I made the final budget decisions in early January, so Departments are aware of them. The other issues are part and parcel of that decision, so there is no lack of clarity. Today, we are discussing the parliamentary process by which estimates and votes on account are considered and approved. What we are doing in Northern Ireland is in line with what we do for other Whitehall Departments, so I hope that explanation clarifies matters for him. Column Number: 14 Details of the sums sought are given in the spring supplementary estimates and the vote on account, copies of which have been circulated to members of the Committee and placed in the parliamentary Libraries. Turning first to 2004–05, the Secretary of State approved the Northern Ireland budget for that year in January 2004, and main estimates reflecting that position were presented in June last year. Since then, however, changes have been made to the original plans. Those changes reflect the refinement of assumptions that underpinned the formulation of the original budget, the allocation of end-year flexibility from earlier years and other issues that emerged only in the course of the year. All such changes were considered in the routine monitoring rounds, and as with allocations contained in the initial budget, statutory authority is now required. That is the purpose of the supplementary estimates and that aspect of the draft budget order. Within the monitoring rounds of 2004–05, approximately £456 million has been allocated to or reallocated within Departments. That amount comes from two main sources: resources carried forward from previous financial years under the end-year flexibility scheme and reallocations within Departments arising mainly through the identification of reduced spending requirements or increased receipts, as compared with the original plans. You will be pleased to know, Mr. Amess, that I do not propose to go through all the changes line by line, because the introduction in the supplementary estimates booklet to each departmental estimate sets out the main changes for which approval is now sought. Mr. Andrew Hunter (Basingstoke) (DUP): Before the Minister goes any further, may I return him to one point? He will know that voted expenditure by Departments was measured on a cash basis until about three or four years ago, and that that was changed to a resource-based system, although an overall cash limit was maintained. On the assumption that there is a significant difference between those two measures of accounting, what have been the benefits to the Departments? Mr. Pearson: There have been substantial general benefits from the introduction of resource accounting. For a long time, people in the private sector were amazed that the Government used to operate on a cash accounting system. The move to resource accounting brings us into line with modern accounting practices. It gives financial managers and senior managers in organisations a far better grasp of the actuality of their budgets, because in the real world we do not operate on a cash basis only. When the hon. Gentleman examines the detailed figures, he will see that there are differences between cash and resource amounts. The figures are laid out clearly in the documentation that we are being asked to approve. The move to resource accounting offers significant financial management benefits. Column Number: 15 Turning to 2005–06, the resource and cash amounts for which approval is sought represent a vote on account pending the bringing forward of main estimates in early summer. A vote on account at this point in the financial year, prior to the year in which the cash or resources will be used, is a normal feature of government financial management. The vote on account reflects the allocation of cash to Departments and the allocation—up to a limit—for the use of resources. The vote on account will fund Departments in the interim to implement the ongoing programmes and services for which they are responsible. The focus for 2005–06 and beyond reflects the high priority that the Government have placed on investing for our future—investing in high-quality public services, the skills of our work force and our public sector infrastructure to create a solid platform for long-term economic prosperity and growth. The budget allocations I announced on 20 December last year provide for total spending on public services in Northern Ireland to rise by about 18 per cent. over the planning period, and will exceed £9 billion in 2007–08. Within that, current expenditure on health will increase by more than 23 per cent., bringing the annual total to £3.8 billion in 2007–08. We must ensure that the major increases in funding for the health and social care sectors that have taken place since 1997 deliver the best possible care and treatment and improve the overall health of the population. That is why in December I announced an independent review of health and social care provision in Northern Ireland to be led by Professor John Appleby from the widely respected King’s Fund. A high-quality education system remains a top priority for the Government. Current expenditure on education will rise by more than 11 per cent. across the budget period, while capital investment will rise by 62 per cent. These increases will allow us to take forward a programme of major education reform that will change and improve substantially what our children learn, how they learn and the environment within which they learn. A key Government focus is to deliver more efficient and effective public services, bearing down on the costs of administration and ensuring that staff and resources are directed to priority front-line services. Our plans include targets for the public sector to deliver efficiency gains of 2.5 per cent. a year over the next three years. The administration costs of civil service Departments will be held constant over this period, and civil service numbers will reduce by 2,300 across all Departments. The results of this efficiency programme mean that more money will be made available for investment in public services. That means that an extra £110 million, £213 million and £334 million have been made available over the next three years for investment in public services. There will also be improvements in the quality and effectiveness of those services to deliver best value for money for the taxpayer. Column Number: 16 Lady Hermon (North Down) (UUP): Can the Minister identify exactly where the Government will find such a number of civil servants who are to be made redundant? Will they be in the back room or in front-line service? The civil service in Northern Ireland is very small, but essential. It does an enormous amount of good work. Mr. Pearson: I strongly agree with the hon. Lady that the civil service in Northern Ireland performs an extremely important function, although there might be others who have views different from hers on its size. The document we issued at the same time as the draft budget, “Fit for Purpose”, which sets out a vision for the future of the civil service, showed how we would create a structure fit for the purpose and the tasks that lie ahead of the civil service. In the efficiency technical notes that we are publishing for each Department, we set out in some detail how we will achieve the efficiency savings. If the hon. Lady looks at the Government’s website, she will be able to find full details of that. I am sure it will provide all the answers she needs. Let me be clear about why we are doing this: not a penny of the efficiency savings is being lost to Northern Ireland and the purpose of being more efficient is to enable us to deliver better services for our people in Northern Ireland in a better way. The main purpose is to refocus resources on priority front-line services, which is what we plan to do over the three-year budget period. Rev. Martin Smyth: I appreciate what the Minister is trying to do and where the Government are to focus their services, but are the children of Northern Ireland not covered by a front-line service? If we are to save so much money in the public sector through reduced salaries for civil servants, why is it reckoned that some £27 million will be taken away from the children’s fund between 2005 and 2008? Barnardo’s alone, for example, will lose at least £1 million. Mr. Pearson: In any budgetary process, a number of decisions are taken. We took one decision, which was not to have a separate executive programme fund with regard to children’s services, but to mainstream resources instead. I do not know the details in respect of Barnardo’s, which the hon. Gentleman has referred to, but the Government support a wide range of children’s services in Northern Ireland and will continue to do so. The budget also includes plans for unprecedented growth in capital investment in our public service infrastructure, with that investment planned to grow to about £1.2 billion in each of the next three financial years. Looking further ahead, the recently published investment strategy for Northern Ireland anticipates the delivery of some £16 billion of investment in key infrastructure by 2015, subject, of course, to confirmation of future spending plans. That will radically improve the quality of public services in Northern Ireland and provide the strong foundation for long-term economic prosperity and growth that we are all committed to achieving for the Province. Column Number: 17 Among the key areas that the strategy addresses are an accelerated investment programme that will upgrade the schools estate to meet future education needs; development of primary and community care infrastructure that will transform access to health and social care services; continued implementation of the regional transportation strategy and additional investment in high-calibre carriageways, providing rapid access to major population areas; achieving compliance with European Union directives on water and waste water quality; and extending investments that contribute to the cultural well-being of our community. This is the first time that such a comprehensive and far-sighted view of Northern Ireland’s investment needs has been prepared. It is ambitious. It is something that not even the Chancellor has done so far in terms of looking that far forward in setting out a comprehensive investment programme for consultation with the community. It is vital that we do this to address the infrastructure deficit that we all believe exists in Northern Ireland. Rev. Ian Paisley (North Antrim) (DUP): But the people of Northern Ireland cannot accept what the Minister is saying. To pick out just one example, what about the cruel and drastic cutback in library services? A whole board is mutinying against what the Government say they are going to do. Surely libraries are part of our culture, and they make a brilliant contribution to it, yet in many places they will be closed down altogether. Mr. Pearson: Let me say two things to the hon. Gentleman in response to the points that he makes. First, it is the responsibility of the education and library boards to manage their budgets and to assess what library provision is required for the future, within the financial resources they have available to them. Secondly, we all recognise that the need for libraries and the range of services provided through them are evolving, in England and Wales and in Northern Ireland. With more people using the internet, libraries having a wider range of resources and people having different access requirements, it is important that we consider the pattern of library provision in an area in respect of the modern demands for a library service. As part of that, we need to recognise that things need to change and that the way in which libraries have existed for the past 100 or 150 years is not necessarily how they should exist for even the next five or 10. Things will inevitably change, but it is important that local people are fully consulted and agree with the decisions taken on how library services can be reconfigured. Mr. Gregory Campbell (East Londonderry) (DUP): Does the Minister agree that it is vital that in rural areas where there is a threat to small libraries that are an essential part of the community—such as the one he is aware of in the North Eastern education and library board area—there should be an in-depth consultation and that the views of users and potential users of the library should be taken into account before any decision is made? Column Number: 18 3.19 pmSitting suspended for Divisions in the House. 3.44 pmOn resuming— Mr. Pearson: I agree with the hon. Member for East Londonderry (Mr. Campbell) that there needs to be consultation on any proposals for the rationalisation of library services. As he is aware, the education and library boards are carrying out a fundamental review of their library services and estates to improve and modernise service provision. No decisions have been taken as yet, and I am sure that there will be the fullest possible consultation on the proposals as they develop. However, I do not want hon. Members to think that this is a cuts exercise, because it is not. The resource budget for libraries will increase by £2.3 million in 2005–06 and by £2 million in each of the following years. That represents an increase of 10 per cent. from 2004–05. So, more money is going into our libraries. It is right that the ELBs consider how that money can be most effectively spent for the benefit of the users of those services. Mr. Hunter: Before the Minister answered interventions on libraries, he was talking about capital expenditure and investment. May I take him back to those? Is he entirely satisfied with the workings of the 2002 deal with the Treasury on borrowing? Would renegotiating that arrangement provide a boost to capital expenditure and investment in the Province? Mr. Pearson: The 2002 deal negotiated with the Treasury under devolution is, I believe, good for Northern Ireland. It allows Northern Ireland to access borrowing on favourable terms from the Treasury, provided it meets the criteria. It also helps to fund the £16 billion draft investment strategy for Northern Ireland, thereby addressing the issue of the infrastructure deficit, which we all know exists. Therefore, it is important that that deal continues. Of course, it is always possible to conceive of different ways to get things out of the Treasury; people like to do that on a regular basis. The reality is that what is there at the moment is good and sensible, and it allows prudential borrowing to take place. It is more important that a 10-year draft investment strategy for Northern Ireland is out for consultation. If implemented, it will introduce real improvements in schools, hospitals, primary care, transport, water and waste water. It will also contribute to the cultural well-being of Northern Ireland. That strategy is needed. Lady Hermon: On the treatment of waste water and the improvement of our water supply, will the Minister say how close infraction proceedings are? What steps have the Government taken to head them off? Mr. Pearson: The answer to that question is not straightforward, because infraction proceedings would relate to different parts of Northern Ireland. The issue is complicated. What is clear, however, is that it is being addressed through the investment programme that is taking place. The hon. Lady has
The funds provided in the vote on account will allow Departments to begin to plan and implement the substantial programmes of investment and reform that I alluded to. There will be opportunity for further and fuller debate on the detail of the main estimates early in the summer. In the meantime, I commend the budget order to the Committee and look forward to what will, I hope, be an interesting debate. 3.49 pmMr. David Lidington (Aylesbury) (Con): The financial allocations laid out in the order reflect the priorities and declarations of policy that the Minister published in his statement of 20 December 2004. There is much in the language of the document that I am happy to welcome: the commitment to enterprise, the desire to improve the quality of front-line services, and the intention to reduce the administrative costs of Government and improve efficiency. I want to probe whether the Government’s intentions are matched by the actions to which they have committed themselves. I have questions about the proposed efficiency savings and the possible impact on front-line services of some of the measures concealed in the small print of their documentation. First, however, I shall make a couple of points about overall strategy. I welcome all that the Minister said about the need for the Government to support enterprise and innovation in the Northern Ireland economy, but it is important that we bear in mind the worrying conclusion reached by the Northern Ireland Business Alliance—in which the Northern Ireland Chamber of Commerce and Industry has been prominent—that it is difficult to see how the current structure of the economy in Northern Ireland will sustain real economic growth if there is a slowdown or decline in public expenditure. The alliance concluded that that reinforced the view that Northern Ireland depended on disproportionately high levels of public expenditure and that it needed a strategy to shift economic dependence away from public sector dominance to one that is private sector led. There is an imbalance in the Northern Ireland economy. Roughly 60 per cent. of GDP and about 30 per cent. of employment is in the public sector. It should be a clear strategic objective of the Government to reduce the role of the state and the public sector and to allow the private sector a greater share in delivering growth and prosperity, because that is a sustainable future course for the economy. Of course, whenever we talk about efficiency—or job cuts, as the hon. Member for North Down (Lady Hermon) reminded us—there is a risk that we get drawn into appearing to criticise civil servants as individuals or as a sector of the work force. That is
The Government have made great play of their intention to reduce administrative costs and they said in their budget document that they intend to peg the administrative costs of Northern Ireland Departments to the level predicted for 2005–06. Why has that target been chosen? The Government’s document on civil service reform, “Fit for Purpose”, states on page 13 that numbers in the Northern Ireland civil service rose by 3,400 in the years in 2000 to 2004, but the Government’s target is to reduce that new total by 2,300 by 2007–08. Their aim appears to be that by 2008, the numbers of the Northern Ireland civil service will be back to 1,100 above what they were in 2000. I have not yet seen any clear explanation from Ministers about why that approach has been chosen. I welcome the figures contained in the supplementary estimates, which suggest that for most Departments at least, the administrative costs in the current financial year are estimated to be less than forecast in the original provision published in last year’s main estimates. Again, however, one or two cautionary notes ought to be sounded. In all but three Departments, the revised estimate is still higher than the level of administrative costs for 2003–04. I know that the figures for those administrative costs differ somewhat from those published as an annexe to the Government’s budget document, but on the basis of the figures published in the supplementary estimates, we are still looking in 2004–05 at overall administrative costs for the Northern Ireland Departments and Assembly of £893 million, compared with £760.5 million at the beginning of the current Parliament in 2001–02. That is a significant increase over that period, and I am not clear that the Government are determined to reduce those costs to previous levels. That leads me on to one or two specific points about how the Government plan to improve efficiency and value for money in Northern Ireland. The Minister will know that a report from the Public Accounts Committee earlier this year criticised levels of absenteeism and sickness absence in the Roads Service and Water Service. In written answers to me last year, Ministers showed that overall levels of absenteeism and sickness absence within the public sector in Northern Ireland ran at a level that could not be justified, even taking account of the special circumstances that pertain in the Province. From memory, for example, the average annual sick leave taken by people working for the Child Support Agency in Northern Ireland was more than 20 working days a year. To be fair, Ministers have acknowledged that a grip needed to be taken on those patterns of conduct,
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