Financial Provisions (Northern Ireland) Order 1989 (Hansard, 9 June 1989)

§ The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell)
rose to move, That the draft order laid before the House on 17th May be approved.
The noble Lord said: My Lords, I beg to move that the draft Financial Provisions (Northern Ireland) Order 1989 which we have before us this afternoon be approved.
1113 The order is the latest in a series of such orders that have been presented to your Lordships at intervals of approximately two to three years to deal with various financial matters appertaining to Northern Ireland. The most recent previous order in this series was the Financial Provisions (Northern Ireland) Order 1986.
The main purpose of this series of orders is to increase as necessary the statutory limits imposed by Northern Ireland legislation on certain financial transactions as well as to deal with other matters with a financial content. I would stress to your Lordships that the orders do not provide for any additional public expenditure; I shall have to disappoint your Lordships this afternoon. However, perhaps I may briefly take noble Lords through what I see as the main articles of the order before us.
Article 3 will enable capital surplus in the Northern Ireland Consolidated Fund to be used in a way which will write off some of the loans made over the years to the Northern Ireland Housing Executive. This surplus came about because the 1986 Financial Provisions order abolished a number of obsolete funds. The largest of these was the Northern Ireland Reserve Fund. The 1986 order transferred their assets to the Northern Ireland Consolidated Fund. This process created a surplus of assets over liabilities in that fund of some £365 million. The legislation governing the operation of the Northern Ireland Consolidated Fund prevents us from using this surplus. Article 3 provides for a once and for all writing off of the entire surplus. The savings on interest charges on the loans that are written of will release public expenditure resources of some £50 million per year for alternative uses.
Article 4 provides for an increase in the statutory limit on the aggregate of loans and grants which may be made by the Department of Agriculture and the Department of the Environment for Northern Ireland to harbour authorities and other persons for the execution of various harbour works. We anticipate that the present ceiling will be reached some time within the next year and since we do not foresee another opportunity to revise the limit before the next financial provisions order—and this may well not be before another two or perhaps three years—we feel it prudent to introduce this measure now.
Article 5 is apparently fairly simple but will go further. It will increase from £4 million to £6 million the aggregate of the amount of principal which may be guaranteed by the Department of Finance and Personnel in respect of borrowing by the area health boards. This will enable loans to be made to general practitioners for the purpose of improving their practice premises. Over £3 million has been advanced to date and applications for more than £2 million have been received. Your Lordships will see from simple arithmetic that we would expect the present limit to be reached within the next few months.
Article 6 provides that a government loan to Northern Ireland Electricity will automatically be a statutory charge on the assets and revenues of that service. Under the present arrangements a mortgage 1114 deed is drawn up to secure each loan, which clearly is an expensive and time-consuming business requiring the involvement of administrative staff and lawyers on both sides. Article 6 removes the need for such mortgages and streamlines the whole procedure to the mutual benefit of the parties concerned. I believe that noble Lords will be happy to note that the electricity service itself supports the change. The new provision is similar to that which is already in place for securing government loans to Northern Ireland district councils, namely Section 63 of the Local Government Act (Northern Ireland) 1972.
Article 7 is quite long even for this order. It provides that where a government loan with a variable interest rate is in arrears, the Department of Finance and Personnel may charge additional interest at a variable rate on the overdue amount from the date that it becomes due until the date that it is paid. The legislation governing the issue of loans from the Northern Ireland Consolidated Fund already provides for additional interest on overdue amounts to be charged at a fixed rate, but while this may be appropriate in the case of fixed rate loans, it is less so whenever the underlying interest rate on the loan in question varies each month. The new provision will bring arrangements in Northern Ireland for making loans to public bodies fully into line with those operated by the Public Works Loans Board in Great Britain in relation to loans to local authorities.
Article 8 removes the obligation placed on Northern Ireland departments by Section 22 of the Exchequer and Audit Act (Northern Ireland) 1921 to prepare trading accounts for all the manufacturing, trading or commercial services they provide. Instead, the Department of Finance and Personnel will be empowered to direct departments whether or whenever to prepare formal trading accounts. The intention is for certain trading accounts to be replaced by the more informal memorandum trading accounts which need not, for example, contain a balance sheet. This process will introduce a measure of welcome flexibility to the procedures and once again bring Northern Ireland into line with Great Britain where departments prepare full trading accounts only on the direction of the Treasury. The Northern Ireland Comptroller and Auditor General has given his full support to this change and while the draft article gives full discretion to the department in deciding which accounts should continue to be audited in the traditional manner, in practice, the department will agree with the Northern Ireland Audit Office the specific accounts to which the article will apply. I hope your Lordships can see that this is no flighty measure but will carry on with the strict procedures which are already in operation.
Article 9 will enable new issues of Ulster savings certificates and amendments to existing issues to be brought to public attention simply by means of an announcement in the local press. As I mentioned in connection with previous articles, this is similar to the existing arrangements in Great Britain with respect to National Savings certificates and represents a considerable streamlining of the Northern Ireland procedure, which currently requires subordinate legislation to promote each new 1115 issue. In addition, and more welcome, it will be easier for the Department of Finance and Personnel to match the Department of National Savings on the timing of new issues but the draft article also preserves the regulation-making power of the department under Sections 15 and 16 of the Exchequer and Financial Provision Act (Northern Ireland) 1950 as it affects other aspects of Ulster Savings.
I hope that I have not wearied your Lordships unduly, but this is a somewhat complicated but nevertheless interesting order. With that, I commend it to the House.
Moved, That the draft order laid before the House on 17th May be approved.—(Lord Lyell.)

§ Lord Prys-Davies
My Lords, as the noble Lord, Lord Lyell, has explained, this is a technical order. There are no party differences over the order. We support it. Nevertheless although we have reached the order at the end of the week's business, I believe that it provides us with an opportunity to rub in just one or two messages which can be read if not heard.
We welcome the powers given by Article 8 to the Department of Finance and Personnel to require every Northern Ireland department to prepare statements of trading accounts in respect of any manufacturing, trading or commercial service operated by it. Such accounts shall be in a form to be prescribed by the DFP.
Having listened to the very full explanation which the noble Lord, Lord Lyell, gave of this order, I just wonder whether it goes far enough. We believe that Article 8 has great potential, at least if I correctly understand it. It has potential because it should eliminate inconsistencies in definitions and standards of performance and measurement. I believe that it should enable more valid comparisons to be made between the performance of units within a department and possibly between departments. Above all, it should also enable the DFP to play a more active and effective role in encouraging further development within all departments.
I mention those three objectives because those objectives are outlined in the report from the Comptroller and Auditor General for Northern Ireland which we have just received and which, in my view, deserves a debate all of its own. His report reviews the standard of internal audit in Northern Ireland departments. It starts on the bright side by acknowledging the improvements which have been made in recent years but it skilfully reminds us that there is another side. The comptroller also draws attention to the need for value-for-money audit. Of course, by now there is a much greater public awareness of value-for-money audit. I suppose that that is one achievement of this Government.
However, on the evidence of the report one is not entirely satisfied that all the Northern Ireland departments have yet to grasp the significance of such audit. If that is the correct finding, it suggests that there may be an underlying problem which needs to be resolved. It was against that picture which the Comptroller and Auditor General has painted that I approached Article 8. However, in the 1116 light of the very detailed and helpful explanation given by the noble Lord, Lord Lyell, I wonder whether one day the draughtsman will have to take this particular article back to the drawing board.
I should like to turn to Article 3 which was touched upon by the Minister. We have been told that its effect is to write off capital debt from the Housing Executive to the Northern Ireland Consolidated Fund. We welcome that article. Housing is one of the basic needs of any community and it is readily acknowledged that the Housing Executive is making a fine contribution to the wellbeing of the people of the Province.
However, many Members of your Lordships' House would be delighted if the Housing Executive could pay even more attention to the problems of single persons in the Province who are homeless. That is a matter to which we can come in a debate on an appropriation order and on which I should not expect the noble Lord to comment. However, we recall that just over a fortnight ago about 20 Members of your Lordships' House had tea on the Terrace with representatives of the Northern Ireland Simon Community. I believe that it is fair to say that we were all impressed by the case which they made out on behalf of single homeless persons in Northern Ireland. Therefore, I very much hope that the Simon Community will be successful in achieving its objective and that the necessary support from the Housing Executive and the department will be forthcoming.
Article 9 is about Ulster savings certificates. I should briefly like to canvass some support for the customers of Ulster Savings. In the light of what I have been told—and if that be correct—I suggest that it would be appropriate for Ulster Savings to consider with some degree of urgency how it can provide a more prompt service to its customers. Why should a customer in 1989 have to wait for up to a week for a reply to a straightforward request for simple information about the state of his account? Again, I do nt expect the noble Lord, Lord Lyell, to comment on that.
Before I conclude I should like to say that I am gratified and delighted that Northern Ireland will still have its Northern Ireland Consolidated Fund and its Comptroller and Auditor General. Those are the features of a devolved administration. Although the Province does not at present have the benefit of devolved government, the retention of these two important institutions holds out the hope of better days to come. With those few comments, I support the order.

§ Lord Lloyd of Kilgerran
My Lords, it would be quite inappropriate for me this afternoon to take the opportunity of rubbing in a few points—to use the happy phrase of the noble Lord, Lord Prys-Davies—but I congratulate the Minister on the clarity and the comprehensive way in which he introduced these provisions and I apologise to him for missing the first two minutes of his speech. It is clear that many of the provisions he has enunciated will apparently lead to the streamlining of many of 1117 the technical and necessary financial provisions of Northern Ireland.

§ Lord Lyell
My Lords, I thank the two noble Lords who have attended so patiently until I could move the order now before us. The noble Lord, Lord Prys-Davies, has carefully scrutinised this order and has clearly carried out some research. As far as I can understand, he has received one or two comments about which I may have something to say in a moment.
The noble Lord first drew attention to Article 8 and the accounts aspect of the order. I wrote down the word "inconsistency". I hope there is nothing inconsistent in the order today that I am setting forth; and if it is put in legislation that practice shall be carried out in Great Britain. I, too, was curious about memorandum trading accounts and I have a fairly long and detailed explanation with which I certainly do not want to burden the noble Lord, Lord Lloyd of Kilgerran, this afternoon. These trading accounts are simple statements for internal consumption. They are extremely useful.
However, I hasten to assure the House that the regulations as set out in Article 8 have been proposed by the Comptroller and Auditor General and the audit department in Northern Ireland. As I pointed out in my opening remarks, the Comptroller and Auditor General and his department will have the final say at all times on which accounts may be treated under the more informal memorandum trading accounts procedure or which accounts should be presented. I am sure your Lordships agree that that is a matter which we can leave to the Comptroller and Auditor General in Northern Ireland because for many of these memorandum 1118 trading accounts there is little if any appreciable movement which would excite anyone other than the most esoteric financial student. I assure your Lordships that the audit department keeps a vigilant eye on all the departments in Northern Ireland.
The noble Lord, Lord Prys-Davies, also referred to homeless single people. I listened with close attention to what he said. I hope that we will soon have an opportunity for the noble Lord to raise the point in more detail and that I will then be able to give him a good reply. As regards Article 9 and savings certificates, I have noted the noble Lord's comments and I suggest that possibly Ulster savings certificates themselves and their administration will also respond. I do not know whether they will get in touch with the noble Lord and I shall leave that matter to them. I shall ensure that they receive the comments of the noble Lord.
As regards the noble Lord, Lord Lloyd, I am very grateful that he stayed this afternoon. I am sorry if he missed the first minute or so of my speech. I hope it was not as occurred in another memorable case which was described as "What a loss!". I hasten to assure the noble Lord that if he missed any of my remarks he will find them in the Official Report. I am very grateful to the noble Lord for attending because this order before us is somewhat detailed. It is particularly necessary that in Northern Ireland and in the Department of Finance and Personnel we keep our audit and guidance procedures in line with what is necessary and also that we keep in step with Great Britain. I commend the order to the House.
On Question, Motion agreed to.
House adjourned at four minutes before three o'clock.