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We know why that situation came about. During negotiations and debates, primarily between the Social Democratic and Labour party and the Ulster Unionist party, there was a view that we should create many seats
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around the Cabinet table and elsewhere, to accommodate parties. People need to move on from that and ask, “What is in the best interests of the people of Northern Ireland? What delivers the best value for money?” As regards the duplication of Departments—on that issue alone, before we get down to the issue of cutting the number of Assembly Members and other areas of expenditure that could be looked at—we calculate that we could save the people of Northern Ireland, and the Northern Ireland budget, between £40 and £50 million per annum. That is a significant saving in the context of the Northern Ireland budget. We have to look into that seriously, and I hope that parties in Northern Ireland will do so in the forthcoming period.

Mr. Gregory Campbell (East Londonderry) (DUP): My hon. Friend is outlining a range of options that could come before the Northern Ireland Assembly to bring about reductions, and a number of cost-effective steps that could be taken. Does he agree that we are more likely to achieve such aims in a mood of political consensus if all parties commit themselves to adopting such measures? People across Northern Ireland and the UK would think that very wise, and would say, “This is a cost-effective way of ensuring that government works even better in Northern Ireland than it did.”

Mr. Dodds: I agree. The greater the political consensus that we can achieve on such approaches to saving money and on making Government work in a leaner, more effective way, and the more that we can devote that money to front-line services—health, education, training, skills and so on—the better.

On the issue of diverting money, through efficiencies, to front-line services, I want to come on to the public expenditure position arising from the Budget. There was a lot of discussion in earlier parts of the debate on the Budget resolutions on the question of cuts versus efficiencies. There has been a lot of argument about what is a cut, and what is an efficiency. When it comes down to it, it depends on which side of the House one is on, whose cut or efficiency one is talking about, and how it is categorised. I think that all of us agree that efficiencies should be implemented where possible, and where money can be released for front-line services. I do not think that there is any doubt that we should be as efficient as we can be in the delivery of Government and public services.

In Northern Ireland, the Executive and the Assembly are committed to 3 per cent. efficiency savings, year on year, over the three-year period of the budget. That is on the basis that the moneys saved will be used for front-line services in Northern Ireland. When devolution was set up, the Province was given repeated commitments from the Prime Minister and the then Chancellor that all efficiency savings made over the comprehensive spending review period would be retained by the Executive to allow devolution to bed in. It was on that basis that the Northern Ireland Executive agreed to match the efficiency savings targets for Whitehall Departments. It is therefore deeply regrettable that in the Budget, some £122 million-worth of so-called efficiency savings were announced. That was at the lower end of expectations.

I welcome the fact that over the next two-year period of the budget, some £116 million will be given to the Northern Ireland Executive’s Department for Employment
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and Learning as a consequence of budget allocations to Whitehall Departments under the Barnett consequentials. However, I seek an assurance from the Chief Secretary to the Treasury that those additional allocations will continue beyond 2010-11, instead of being subject to the same form of smash-and-grab seen after the 2007 CSR. A measure is only truly an efficiency saving if the money is released and spent elsewhere in Northern Ireland. That £122 million is being taken out of Northern Ireland and back to Whitehall.

When we had a debate about efficiencies or cuts on 27 April, I was interested to note that the Financial Secretary to the Treasury, when challenging Conservative Front Benchers on their proposal for £5 billion of efficiencies in 2009-10, referred to the measures as cuts. He said:

If he defines the efficiencies called for by Opposition spokesmen as cuts, the same must apply to the efficiency savings in 2010-11. We are not against efficiency savings: we are prepared to make whatever efficiency savings can be made, but we must deliver those savings to front-line services. Taking that money back to Whitehall is a raid on the Northern Ireland block and the Northern Ireland budget.

There are a number of UK-wide measures that I welcome, including the decision to retain the increase in the winter fuel allowance for 2009-10. The increase in the child tax credit from 2010 will offer a real benefit to people, and I welcome the improvements to statutory redundancy arrangements. As for local business, I have outlined some of the measures that we have taken in Northern Ireland to help business, and there will be automatic rate relief for businesses in the Province. Parties in Northern Ireland agree that there is still a strong case for a reduction in corporation tax in Northern Ireland in recognition of our unique circumstances, given the land border with the Irish Republic. I accept, however, that the measure to help firms with cash-flow problems will help businesses to survive the downturn, while the enhanced capital allowance for 2009-10 will encourage firms to prepare for recovery.

The Government have announced a £750 million strategic investment fund to support advanced industrial projects, with a third of the funding earmarked for low-carbon projects. It is important to encourage Northern Ireland firms to apply to that fund, and hopefully they will be considered fairly for support. As I said, people will look back at this year’s Budget as a holding Budget, with the significant decisions that will affect the national and local situation in the Province being made in the Budget that follows the next election.

8.12 pm

Mark Durkan (Foyle) (SDLP): I fully agree with the hon. Member for Belfast, North (Mr. Dodds) about the significance of the Budget. I certainly felt a chill in my spine last week as the Chancellor announced the figures. Yes, the figures had been canvassed in the media and elsewhere, but to hear the projected high borrowing figures expressed in the Chamber struck me very deeply indeed.

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We have to contemplate the implications of that scale of borrowing for future Budget exercises and for future public expenditure—the Chancellor has already indicated some of the adjustments that would be required and the squeezes in public expenditure in years to come. Equally, there are implications for projected revenue. Other hon. Members, particularly the hon. Member for Twickenham (Dr. Cable), have spoken about the serious gap between projected revenue over the next few years and projected expenditure, and people have questions about the projections in the Budget.

We can ask questions about the implications of that scale of borrowing and how we manage it down in years to come, but we must also ask ourselves what the implications for all of us and the future of the economy would be if the Government had not resorted to that scale of borrowing and had not sought to manage the range of interventions with which they have had to deal. In all our assessments of the Budget, we must be mindful of all the issues that are in play.

Over the past couple of years, as the hon. Member for Belfast, North said, there has been a transformation in the assumptions, presumptions and projections for the Budget and the economy. We have seen a virtual meltdown in parts of the banking sector, both nationally and internationally. People’s confidence in financial services has been fundamentally shaken. It is not just public expenditure that has been affected; private investments and pensions have also been deeply affected. That has changed the order of what people expect from politics and from Government, not least in the Budget debate. People want to hear politicians, business and banking leaders tell them as it is—good, bad or uncertain. We need more of that in this debate. I have heard it in some parts of the debates to which I have been able to listen, but inevitably a degree of partisanship has crept in.

I am not sure that this is particularly a time for dwelling on the records of all sorts of Governments in the past. As an MP for Northern Ireland, whenever I refer to issues in our past that are still current, I get a bit fed up of hearing a lot of English MPs say, “Oh, forget about that—that was 10,15 or 20 years ago. Don’t dwell on the past.” I have heard an awful lot about the past, however, and the record of previous Governments in the Budget debate, but we very much need to look at the present and the future. Similarly, the Opposition have strayed beyond their legitimate role of talking down the Government’s performance to talking down the economy. People should not be so irresponsible as to short-sell the economy with an eye to their own immediate, partisan profit, but there have been undertones of that in what we have heard from some Opposition Members.

Stephen Hammond: I have just heard the hon. Gentleman accuse the Opposition of talking down the economy. The Red Book explicitly says that this will be the longest and deepest recession since the second world war, so I do not think that we can be accused of talking down the economy.

Mark Durkan: I accept fully what the hon. Gentleman said about the Red Book, but as I have said, people expect and want the Government and politicians to tell them as it is—good, bad or uncertain. If things are uncertain, they should be told, which is why I join others in questioning how optimistic some of the projections
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are. Equally, I recognise that in other respects, the Chancellor has been pretty direct. We must all recognise the enormity of what we are facing—not just what the Government are facing, but what we as a Parliament are facing.

In the course of the debate a number of Members have raised issues about the degree of parliamentary scrutiny or oversight of some of these matters, which we as a Parliament need to consider. In respect of the current intervention in banking, the bail-out and the high degree of public ownership of a number of banks, we cannot credibly leave it to the Treasury Committee, on top of all the other huge structural issues that it is dealing with in relation to the Budget and other matters, adequately to discharge the legitimate interest of the House in how those matters are handled. We need a special dedicated Committee to deal with that.

Dr. William McCrea (South Antrim) (DUP): Does the hon. Gentleman accept that many business throughout the UK feel themselves short-changed by the banks that have been bailed out? A great deal of pressure is put on business because the banks will not lend them money, even though the businesses are fundamentally sound?

Mark Durkan: I fully accept the point that the hon. Gentleman makes. Indeed, I made a similar point in an intervention in the debate last week. Some of the banks in Northern Ireland—I previously named the Ulster bank, for instance—are, according to some of the business customers whom I have been talking to, are engaged in bondage banking practices. They are trapping and binding people with ever higher rates and charging them very high re-arrangement fees for that purpose. It is not only the Ulster bank that is doing that.

Banks are operating in the current situation not just to try to extract more money from some businesses but, I believe, to price some businesses off their books and to force firms that are otherwise sound and that are good medium to long-term investments into liquidating and possibly aborting their sound business prospects. We have heard that from all parties in all corners of the House when they refer to banks in their areas and how they are treating businesses.

That is why we cannot rely on Treasury Ministers to receive the monthly reports that are meant to come via the lending panel. That is no credible scrutiny or oversight. It is no credible way of guaranteeing that the commitments made by the banks, we are told, towards business lending and other lending areas will be honoured in practice. A bank in Northern Ireland has large banners up with the message, “Lending isn’t ending”, but that is not the message that customers get when they speak to the bank.

We need to examine our procedures as a Parliament in respect of the special and hopefully temporary intervention in the banks, which will obviously take some time to manage. There are aspects of the Budgetary process that the House should consider. Because of the scale of the issues with which the Government are contending, they could use parliamentary scrutiny to assist in the better proofing and control of expenditure. In his contribution the hon. Member for Belfast, North referred to the Chancellor’s projection of efficiency savings later in the Budget cycle, and he spoke of the implications of those for Northern Ireland.

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The fact that the Chancellor is able to project those efficiency savings right down to the impact that they will have on the Northern Ireland block in a couple of years is interesting, but should be set against the fact that there is still no move to curb expenditure or cut out altogether some of the prestige follies that other hon. Members have mentioned. I refer to ID cards and the huge expenditure that there will be on those. There will be a huge outlay on replacing Trident—a huge prestige folly that might have something to do with people’s idea of status, but has very little to do with serious modern defence strategy. Other prestige follies include massive, expensive and very questionable databases in the health service and elsewhere. The announcement of some pullback in the telecommunications database was welcome.

If the Government are serious, and if we as a Parliament are to be serious about trying to rebalance the Budget, which the hon. Member for Gainsborough (Mr. Leigh) spoke about, we must ask how we in Parliament play our role in that. I believe that in some cases Parliament is better than Government at controlling expenditure on such prestige follies, precisely because of the “Yes, Minister” syndrome that the hon. Gentleman mentioned. Such projects become big status issues and big totemic demands within Government. Nobody out there in the country particularly wants them, but Government have a huge need for them and Government know best. There is also a false belief that Government can spend and buy better. More parliamentary control of those big ticket items would be a great help in the future. We need to consider structural reform of the way that we manage Budgets in the House.

There were significant measures in the Budget, not just the high borrowing figures and the implications for future spending. Because of all the other details in the Budget, perhaps we have lost sight of the Budget’s significance in terms of carbon budgeting. It is the first big step towards that. Many people say cynically that the Government have produced a Budget for the short term, with a view to the election, but we should appreciate the enormity and the significance of the carbon budgeting measures. Some hon. Members might disagree with the value of that measure in the present context, but it proves the sincerity of the Government’s commitment. The exigencies of the current circumstances are not being used as an excuse to pull back from those principles and targets.

In the context of the commitment to carbon budgeting and the Budget’s positive interventions, there is the £750 million strategic investment fund and the high profile that has been accorded to the low-carbon economy to ensure that we have a green recovery from the recession. I, like the hon. Member for Belfast, North, hope to see Northern Ireland companies avail themselves of that fund and flex their innovatory muscles to make the most of it.

There are other interventions in respect of business, including some on taxation, so that people can offset losses this year against previous tax. That is very welcome in the circumstances. The measures on payroll shelter and short-work schemes are very important, and I and others will want them reflected in Northern Ireland, using our devolved capacity. We have argued for such measures.

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Given the range of measures that different parts of the manufacturing sector require, we must ask the Government to create a proper framework for intervention. Many different measures have been announced for the short term, and some in the Budget are projected for the short term, but the method whereby different measures are announced by Lord Mandelson in one meeting and then announced somewhere else does not convey the sense of a coherent framework of intervention, and we need one.

We must ensure also that Europe plays its role in properly allowing creative intervention nationally and regionally. The First Minister and Deputy First Minister of Northern Ireland were in Brussels recently, and the President of the Commission encouraged them to use public spending innovatively. Sometimes, concern about EU state aid rules gets in the way of the innovative use of public expenditure, and EU state aid rules can be called on and used against positive intervention measures. Although the EU says that it is trying to relax those rules, there is no clear framework for what is and is not relaxed, so, when people speculate on possible proposals to help particular sectors and industries, they are not quite sure where things will stand with regard to state-aid. We therefore need to press Europe for a clear regime, so that, nationally and at a devolved regional level, we all know our discretion to intervene to support our competitive businesses, and they are not counted out under those rules.

We must recognise that, through some of the Budget’s other measures, the Government have shown a continuing commitment on child poverty, including the provisions on child tax credits. I also strongly welcome the measures for pensioners to extend the enhanced winter fuel allowance and, on pension credit, to relax the rules on savings limits.

This has been a mixed Budget in very difficult circumstances. We need to recognise that we are in an unprecedented matrix of uncertainty, and, in that situation, we cannot rely on all the projections. I fully accept that some of the Budget’s projections are on the optimistic side, but I am glad that it includes, first, commitments that show the Government’s determination to try to protect businesses and people in the front-line economy just as much as they tried to protect the banks, which the Government did not do just because the banks wanted it, but to try to ensure that we, ourselves, had a basis for economic stability; and, secondly, measures to try to offset the impact of unemployment and reverse its pattern where it takes hold, so that it does not just hit and, then, drill down and pervade the economy. Such interventions are welcome, but they will have to be developed, and I hope that the Government listen to Members of this House as we come forward with more schemes and ideas as to how best we can do that.

8.30 pm

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