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Appropriation (No. 2) (Northern Ireland) Order 1996

1.2 p.m.

The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield) rose to move, That the draft order laid before the House on 5th June be approved.

The noble Baroness said: My Lords, I beg to move that the draft Appropriation (No. 2) (Northern Ireland) Order 1996, laid before the House on 5th June, be approved.

The draft order before us today authorises expenditure of £3,617 million for Northern Ireland departments in the current financial year. This is in addition to the sum of £2,821 million voted on account in March, and brings

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total estimates provision for Northern Ireland departments to £6,438 million, an increase of 6.2 per cent. on 1995-96.

I know that your Lordships continue to take a close interest in the prospects for economic development in Northern Ireland and I should like to say a few words about the local economic situation before turning to the contents of the estimates. Both official data and survey evidence show that there is a marked improvement in the recent performance of the Northern Ireland economy and that future prospects are now brighter than for many years.

The latest data for the main economic indicators presents a positive picture. The output of manufacturing and production industries continues to rise at a rate well above that achieved at national level. Over the past five years, Northern Ireland's manufacturing sector has increased output by just under 12 per cent. compared to a 3.1 per cent. rise nationally. Over a similar timescale there has been a significant improvement in the Province's gross domestic product relative to the United Kingdom, with GDP per head rising from 77 per cent. of the national average in 1989 to around 82 per cent. by 1994. Between 1991-92 and 1994-95, exports by Northern Ireland companies (to countries outside the United Kingdom) increased by 48 per cent., significantly outperforming growth in exports in the United Kingdom of 30 per cent. On inward investment, recent survey evidence shows that the value of potential planned investment in Northern Ireland from overseas companies already operating in Northern Ireland is in excess of £270 million, with 73 per cent. of firms planning further investment in Northern Ireland. That is an enormous tribute to the workforce of Northern Ireland.

1995 saw the seventh consecutive rise in visitor numbers, with a record 1.5 million people coming to Northern Ireland, a 20 per cent. increase on 1994 and, spectacularly, a 67 per cent. increase in holiday visitors. Visitors to Northern Ireland spent £214 million in 1995, an increase of 17 per cent. on the previous year. Combined with recent survey evidence, that suggests a very favourable outlook for the future.

At March 1996 the number of employees in employment in the province stood at 573,880, the highest March figure on record. In addition, the seasonally adjusted unemployment rate has fallen for eight of the past 12 months to reach 11.1 per cent. of the workforce.

All that is very welcome news for the people of Northern Ireland and I am confident that the performance of the economy will continue to be sustained. But a brighter economic future will, without doubt, be put at risk if violence were to continue.

I now turn to the main items of expenditure covered by the order as detailed in the estimates booklet; all the figures are, of course, in pounds sterling. I shall start with the Department of Agriculture. The net provision in the two agriculture Votes amounts to some £164 million. In Vote 1, some £20 million is to fund EU and national agriculture and fishery support measures. The net provision covers the pre-funded

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market support measures under the common agricultural policy which total £135 million. The Vote includes some £6 million for various capital environmental and other grants to assist structural improvements. Some £14 million is for the hill livestock compensatory allowance scheme to provide support for farming in special areas, while £6 million is in respect of processing and marketing of fishing.

Vote 2, includes £144 million for regional services and support measures. That includes £60 million for the development of the agriculture and agricultural products industries and for scientific and veterinary services. Some £27 million is for farm support, enhancement of the countryside, and fisheries and forestry services. There is £24 million for central administration, including information technology and specialist accommodation services; and £5 million is for the rural development programme. Some £18.4 million is for watercourse management. This Vote also contains net provision of £9.3 million in respect of the EU peace and reconciliation programme which incorporates agricultural, rural and water based projects.

In the Department of Economic Development's Vote 1, some £134 million is for the Industrial Development Board. This will enable the board to continue to attract and support industrial development in Northern Ireland, mainly through the provision of factory buildings and selective financial assistance to both new and existing companies. In 1995-96 the board supported some 35 inward investment projects offering almost 5,000 jobs.

In Vote 2, £32 million is for the Local Enterprise Development Unit, Northern Ireland's small business agency. This will allow the agency to maintain its excellent track record in developing, strengthening and improving the competitiveness of the important small firms sector in Northern Ireland. Some £15.5 million is for the Industrial Research and Technology Unit, primarily to promote the competitiveness of local companies through encouraging innovation, industrially relevant research and development and by technology transfer. That underlines the importance the Government attach to helping Northern Ireland industry to grasp the technological opportunities which underpin successful economic development. Finally, in this Vote, £14.6 million is for the Northern Ireland Tourist Board.

In Vote 3, £212 million is for the Training and Employment Agency. This includes £73 million to fund 16,000 training places under the Jobskills training programme. Some £46 million is for the action for community employment and community work programmes, which will provide some 8,000 places for long-term unemployed adults in projects of community benefit. Some £24 million is to assist companies to improve their competitiveness by developing the skills of their workforce and providing training for management careers in industry.

I now turn to the estimates for the Department of the Environment. In Vote 1, £180 million is for roads, transport and ports. This includes some £147 million for the development, operation and maintenance of Northern Ireland's public road system. Maintenance of the road system remains a priority with some £72 million being spent this year.

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Vote 2 covers the important area of housing. Some £210 million will provide assistance, mainly to the Northern Ireland Housing Executive and to the voluntary housing movement. When net borrowing and the Housing Executive's rents and capital receipts are taken into account, the total resources available for housing will be some £607 million. This is some £5 million more than in the previous year and will enable the Housing Executive to start some 900 new houses while housing associations will start some 1,250 new dwellings.

In Vote 3, gross expenditure on water and sewerage services is estimated at £181 million. Some £75 million is for capital expenditure and £106 million is for operational and maintenance purposes, as well as for administration costs.

In Vote 4, some £200 million is for environmental and other services. This includes provision for the environment and heritage service, planning service, construction service and land registers of Northern Ireland, which all achieved agency status in April 1996. Some £37 million is for urban regeneration measures, which continue to be targeted at areas of social, economic and environmental need. These measures provide a catalyst for higher overall investment through partnerships with the private sector. Some £25 million has also been made available under the EU peace and reconciliation programme, of which some £18.5 million is being funded from EU receipts.

The estimates for the Department of Education seek a total of £1,422 million, an increase of 2.5 per cent. over last year. Vote 1, which now incorporates the provision previously provided in Vote 2, includes £877 million for recurrent expenditure by education and library boards, an increase of £34 million over 1995-96. This includes £829 million for schools and colleges of further education. Also included is some £48 million for libraries, youth services and administration and £39 million for the boards' capital projects. The sum of £134 million is for recurrent expenditure by voluntary and integrated schools, while £35 million is for capital projects in voluntary and integrated schools. These amounts include £24 million for integrated schools, which is an increase of £9 million over 1995-96.

Vote 1 also includes £116 million for universities, £125 million for mandatory student support, £17 million for arts and museums and some £3 million for community relations.

In the Department of Health and Social Services, Vote 1 includes £1,432 million for expenditure on hospitals, community health, personal social services, health and social services trusts, family health services and certain other services, which is an increase of 2.5 per cent. on last year.

In Vote 3, £26.5 million is for expenditure on certain miscellaneous health and personal social services. Costs of the services now borne on this vote were previously provided for in Vote 3 administration and miscellaneous services. The provision sought is 12.1 per cent. higher than last year's final net provision.

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The sum of £150 million in Vote 4 is for the department's administration and other miscellaneous costs. This includes £99 million for the Social Security Agency, £7.5 million for the Northern Ireland Child Support Agency; £9 million for the Health and Social Services Executive and £4 million for the Health Estates Agency.

In Vote 5, £1,628 million is for social security benefit expenditure administered by the Social Security Agency. This represents an increase of 9.2 per cent. on last year. An amount of £370 million in Vote 6 is to cover expenditure on the independent living funds, housing benefits, the social fund and payments into the Northern Ireland national insurance fund.

Finally, I turn to the Department of Finance and Personnel where, in Vote 3, some £5.8 million is sought for the community relations programme. In addition, some £3 million has also been available through funding from EU receipts under the EU peace and reconciliation programme. This, I hope, illustrates the importance which the Government continue to attach to this important area in Northern Ireland.

I hope that this necessarily short summary of the main components of the estimates is helpful. I commend the order to your Lordships.

Moved, That the draft order laid before the House on 5th June be approved.--(Baroness Denton of Wakefield.)

1.15 p.m.

Lord Williams of Mostyn: My Lords, I thank the Minister for her exposition and introduction. It is heartening to hear of the marked improvement she speaks of. I am sure that everyone present in your Lordships' House welcomes it, in particular her references to housing and tourism. I congratulate the Minister specifically on her work which was successful in obtaining 300 new jobs in Cookstown in the mid-Ulster constituency. Obviously, everyone is extremely pleased to hear of that.

We have to bear in mind that local scrutiny in Northern Ireland is not possible. Speaking for myself, I am always conscious that we do very little by way of detailed scrutiny on these occasions. We have to bear in mind that in many areas of Northern Ireland wage levels are unacceptably low.

Perhaps I may ask one or two specific questions. The first relates to our old friend the Criminal Injuries Compensation Board. I have been asking the same question for some years now. The Minister always smiles charmingly and says that the Government are thinking about it. I wonder whether the thought will end at some stage and action ensue, because the Northern Ireland scheme is different to that in the rest of the United Kingdom. I urge the Minister to maintain the more generous scheme in Northern Ireland. It cannot be left in limbo forever.

I turn specifically to the question of BSE, which has had a devastating effect in Northern Ireland. I believe it to be the case that 80 per cent. of Northern Ireland beef production is exported, mainly to Europe. There are no

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fewer than 16,000 farms dependent to some extent on that trade. There is widespread concern, perhaps despair, as to whether the levels of compensation are going to be fair and adequate. With so many farmers--that means families--dependent on the beef trade and forced, through no fault of their own, to sell their animals at a price which inevitably means that their annual income will be severely attacked, if not wiped out, is the Minister able to give any word of comfort and reassurance in respect of the levels of compensation?

It would be helpful also to have words of assurance about the backlog which, I understand, is increasing and causing great concern to farmers who have to maintain their stock at great expense. I know that the Minister is well aware of these concerns because, on an earlier occasion, she mentioned that traceability is much easier and more advanced in Northern Ireland. Ninety per cent. of herds are grass fed and there is a very low incidence of BSE. Is the Minister able to say something specific about what is contemplated as regards the staged scheme which the Prime Minister mentioned in another place on his return from Florence? Is it anticipated, bearing in mind the positive advantages of the Northern Ireland beef herd, that an early removal of the ban can be looked to there, even though its removal in stages may take place later in England and Wales where there are different problems. Can the Minister say what the likely cost of the ban will be? Her colleague in another place gave the figure of £2.5 billion. May I ask how much of that will be attributable to Northern Ireland--that is, if it is possible to make a distinct calculation?

Electricity is another serious problem in Northern Ireland. I know that the most favoured words in the English language are "I told you so"--but I did. At the time of the electricity privatisation--it was not this Minister who was answering questions on Northern Ireland--I ventured the widely held view that the privatisation of the electricity supply industry in Northern Ireland would lead to high prices and unconscionable profits. Last year, Northern Ireland Electricity paid £500 million for electricity and made a profit of £150 million. Those profit figures are simply not acceptable. I should be grateful for a word or two from the Minister about what is suggested. It is no answer to say that the Government provide help to the consumer when the real point is that those profit levels are unreasonably and unsustainably high.

The Minister mentioned the health Vote. Is it a fact that the Royal Victoria Hospital is to close operating theatres for five weeks this summer? I would not regard it as an acceptable response to say that it happens every year unless the Minister can say that it is a common occurrence throughout other surgical institutes in the rest of the United Kingdom.

I turn finally to quangos. During our last discussion the Minister was helpfully able to say that the Government were well aware of the fact that more representatives of constituents were needed on quangos as that would mean that consultation would be more widely spread. I wonder whether she can say something about the progress made.

I repeat how grateful I am for the care, courtesy and clarity with which the Minister discharges her work.

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1.21 p.m.

Lord McNally: My Lords, this is my first contribution in this House on Northern Ireland matters. It gives me great pleasure to speak when the noble Baroness, Lady Denton, is to respond. When I lost my seat in the other place and found my earnings in the public relations profession, the noble Baroness was already a doyenne of that industry before being tempted into public service.

What has struck me over the past 20 years as I have observed Northern Ireland Ministers going about their business--this was evident in the Minister's introduction also--is that whatever the background and whatever locality of Britain from which Ministers for Northern Ireland come they quickly acquire a dedication and a commitment to the success of the Province which does them great credit. That has been true of Labour Ministers as well as Conservative Ministers. The story which the noble Baroness reported of the upturn in investment in Northern Ireland is a great tribute to the continuing efforts of her department.

I suspect that the upturn in tourism reflects something else--the outpouring of goodwill for the people of Northern Ireland and our good wishes for the success of the peace process and the ceasefire. It is a tragedy that the ceasefire has broken down here on the mainland. One hopes that it does not damage either tourism or investment in Northern Ireland. When I was a Member of the other place I served on the Select Committee on Trade and Industry which carried out a study of inward investment into Northern Ireland. We noticed that the industries and nationalities that came to Northern Ireland liked what they found. They were sometimes surprised by what they found, but they quickly asked for more in terms of expansion or were followed there by other industries from their own country. Northern Ireland has a good story to tell about inward investment and the department is to be congratulated on its continuing good work in that area.

There are three small and specific points on which I should be grateful for some ministerial comment. First, I refer to the Action for Community Employment schemes. I understand that the budgets of those schemes have been cut and that their future has been severely curtailed. There is no dispute about the fact that the schemes perform an extremely valuable function for the local economy and the local communities of Northern Ireland. Will the Minister consider providing more funds for those valuable schemes?

My second point has already been raised by the noble Lord, Lord Williams of Mostyn, but I should like to associate myself with his remarks about seeking clarification from the Minister on how she and her department estimate that the BSE crisis has affected Northern Ireland and its beef farmers. The beef industry is particularly important in Northern Ireland and some clarification of what the Government are doing for beef farmers there would be most welcome.

My third specific point relates to integrated education, something that my party and its sister party in Northern Ireland, the Alliance Party, have been keen to advocate. Some 5,000 pupils currently benefit from

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integrated education in Northern Ireland. We believe that it is a very good investment and one that is well worth making. I should be interested to hear the Minister's comments on the future of integrated education.

I have now made my specific points, but with those specifics go my enormous good wishes and my hope that the Minister and her department will continue to carry out for as long as it is needed the task which in very difficult circumstances attracts the admiration of us all.

1.27 p.m.

Lord Cooke of Islandreagh: My Lords, it was a real pleasure to listen to the Minister describe--accurately, I thought--the improvement in the economy and the many different events that we have seen in the past year which show how the economy of Northern Ireland is improving. Investment is increasing. The IDB has done very well this year and business life generally is positive and moving forward. The Minister omitted to mention her part in that. The noble Baroness is the Minister responsible for the economy of Northern Ireland and she has been leading its industrial and commercial development from the front. It is obvious that she works tirelessly; she gets around; she listens and she visits many firms to see for herself just what is going on. On behalf of many of us in business, I cannot thank her too warmly for the work that she is doing.

One can question and discuss many things under this Appropriation (No. 2) Order, but I shall confine my remarks to one subject which may take some time. I know that I can reasonably expect the noble Viscount, Lord Brookeborough, to deal with other important matters. I should say first that we are fortunate in Northern Ireland that the size of the total Vote is large enough to do all that has to be done. Our comments relate more to administration and how the money is spent than to the total sum, which is handsome.

Energy costs are very important to domestic and industrial users in Northern Ireland and for many years we enjoyed electricity prices similar to those in Great Britain. However, since privatisation the cost of electricity has increased each year while there have been reductions in Great Britain. Numerous comparisons have been made between manufacturers in Northern Ireland and those in Great Britain with similar load patterns and they show a 20 per cent. disadvantage to Northern Ireland--that is after taking into account £50 million government assistance this year, which amounts to around 3 per cent. of the cost.

In November of this year the nuclear levy will be removed in Great Britain--that amounts to 6.3 per cent.--and without that government assistance the adverse difference will amount to approximately 29 per cent. If the existing contracts with the generators are not amended in any way, Northern Ireland costs will increase in line with inflation whereas Great Britain costs are expected to be lower than inflation, so that by 2010 when the contracts with the generators expire it is not unreasonable to suggest that Northern Ireland industry could be paying 40 per cent. more than industry in Great Britain.

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The present government assistance totalling £60 million is most welcome and this year enables a reduction of approximately 3 per cent. in charges. However, the Department of Economic Development has not yet said how that assistance will be applied in the remaining three years. Power-users hope that it will be applied to reduce the bulk supply tariff, thus helping all users, and it will be helpful if the Minister can say that next year and in the following years the £15 million will be applied to the bulk supply tariff.

The elements in the high costs of electricity in Northern Ireland are more clearly understood now than a year or two ago. Northern Ireland Electricity is responsible for distribution and sales of power purchased from the generating stations, which are owned by three companies. NIE has done and is doing much to improve its own productivity and to improve the distribution system, which was out of date. Its efforts are to be commended and the regulator is now looking at NIE's cost and profits and has power to regulate its prices. If the regulator regards NIE prices to be excessive he has powers to alter those, and we await the regulator's report in the autumn. I expect that his report will be fair to both parties. However, for large customers, NIE costs are only 20 per cent. of the total price.

The most adverse cost element derives from availability payments to the generators in accordance with long-term contracts offered to generators by the Government.

The regulator has no powers to interfere but he is requesting that NIE enter discussions in the next few months in an effort to see what can be negotiated to reduce costs. It is hoped that some easements can be negotiated but I have no doubt that government involvement will be required at some stage in order to ensure that the generator's charges relate much more closely to those current in Great Britain. This is a vital matter of great importance to industry in Northern Ireland and I know that the Industrial Development Board, which is doing an excellent job in attracting new industry, finds the high cost of electrical power to be a considerable disadvantage which, if action is not taken, may well be a critical disadvantage by the end of the century.

Can the Minister undertake to keep closely in touch with these discussions and, if necessary, become involved if the long-term contracts prevent a satisfactory outcome? It is also important that, when the first generator contract expires next year, the Minister should permit NIE to seek competitive tenders for power from interested generators.

In Northern Ireland, consumers have to pay for the consequences of environmental legislation, whereas in Great Britain the generators pay. The conversion to gas in Ballylumford and the future flue gas desulphurisation, (FGD), will each add 4 per cent. to future electricity prices. At Ballylumford the price to be charged for gas was fixed before privatisation and is more than twice the current gas price on the mainland. It will provide a quite unplanned-for profit to British Gas. I hope the

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Minister will be able to oversee an amendment to the contract which will ensure transparent open market pricing of gas, pending which the station at Ballylumford should be licensed to burn oil when it is economically beneficial.

There is already agreement to delay FGD at Kilroot for two years. That was a voluntary arrangement whereby part of the Great Britain bubble has been transferred to Northern Ireland. In the meantime, the emissions bubble allocation to Northern Ireland should be examined, as Great Britain has space in the emissions bubble due to the low emissions from combined cycle gas stations.

The Industrial Pollution Control Order in Northern Ireland is presently being revised. Can the Minister ensure that that legislation will not include any new specific constraint on existing plant? Energy costs can of course be reduced by energy-saving measures and the Minister's department is promoting the efficient use of energy in a variety of schemes. Building heating costs, both domestic and industrial, are a high proportion of total spend on energy. It happens that new building regulations are presently out for consultation in Northern Ireland and those are close to the English regulations. They will make a 20 per cent. to 25 per cent. reduction in heating costs but this is an opportunity to go beyond the English regulations. Why not aim for a 50 per cent. reduction in heating costs? That is not difficult and would add perhaps 3 per cent. to building costs, which of course would be recovered by fuel savings many times in the life of the building. I urge the Department of the Environment in Northern Ireland to have courage and take a real step forward, and perhaps move closer to the standards that have existed for many years in Denmark. If it does, it will be forever thanked for the greater comfort and lower heating costs throughout the life of new buildings.

To indicate what is practicable, I work in a traditional-looking office where the energy requirement is around one-third that of an office built under the current regulations. I must declare an interest in insulation but that is far from being the only element in energy saving.

Gas is about to come to Northern Ireland. It is an exciting new power source which will be landed at the end of this year. If gas can be supplied throughout the Province at prices comparable to those in Great Britain it will revolutionise the energy scene. Indications of gas prices so far are extremely high and there is great absence in transparency. It will be helpful if the Minister could say what European Union grant was provided for the undersea gas main from Moffett in Scotland to Ballylumford. It would also be interesting to know if grants are available for the high pressure line which will shortly be laid from Ballylumford to Carrickfergus. Every encouragement should be given to companies undertaking to develop the distribution system throughout the Province.

I make no apology for speaking in detail on energy matters. Energy costs are an important element in the economic prosperity of every country or area.

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