HL Deb 09 March 1994 vol 552 cc1514-24

9.15 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 15th February be approved.

The noble Baroness said: My Lords, I beg to move. This is one in a series of financial orders covering Northern Ireland departments which come before the House each year. The draft order before us today authorises expenditure of £195.9 million for Northern Ireland departments for the current financial year. This is in addition to the £5,492 million voted by the House last July. The order also authorises the Vote-on-account of £2,533 million for 1994– 95 to enable the services of Northern Ireland departments to continue until the 1994– 95 main Estimates are brought before your Lordships later this year.

Before turning to the details of the Estimates, I should like to set them in the context of the recent performance of e Northern Ireland economy. It is widely accepted that the local economy has held up well in the face of adverse national and global economic conditions. Over the past five years the output of Northern Ireland's production industries grew by 18 per cent. The local economy as a whole continues to perform well. That is reflected in the figures for those in employment and those out of work. The number of people in employment over the two-year period to September 1993 increased slightly. Seasonally adjusted unemployment in January 1994 fell to its lowest level for two-and-a-half years. That is encouraging, as is the marked upturn in business confidence and the high levels of planned investment revealed in recent surveys of Northern Ireland business. While it is welcome news, we cannot afford to be complacent. Government will continue to assist local industry to improve its competitiveness and to maximise the opportunities offered by the eccnomic recovery now under way.

I now turn to the main items in the Estimates, starting with the Department of Agriculture. In Vote 1, a token increase of £1,000 is required to reflect changes in the Vote; some £7 million is required for milk quota compensation payments and £0.8 million for a number of capital schemes; £0.4 million is for expenditure under the 1992 crop potato support arrangements. The increases are offset by savings elsewhere in the Vote and by EC receipts.

In Vote 2, covering local support measures, some £5.3 million is sought. This includes £3.2 million to enhance the disease eradication programme and £2 million for the agricultural development operational programme, where uptake has been higher than predicted. A sum of £0.6 million will enable the department to develop its information technology programme. These increases are partially offset by reduced requirements in other areas of the Vote.

I turn now to the Department of Economic Development, where some £14 million is required, in Vote 1, for the provision of new factories for recent inward investment projects. That reflects the continuing success of the Industrial Development Board in attracting internationally competitive companies to Northern Ireland. Also in this Vote, £2.4 million is for assistance to the shipbuilding industry. The increases are offset by increased receipts and reduced requirements elsewhere.

A net increase of £3 million is sought in Vote 2. This includes £4.1 million for the Industrial Research and Technology Unit. That will enable the unit to increase its efforts to improve the competitiveness of local industry through increased industrial research and development, in innovation and technology transfer. Savings have been found elsewhere in the Vote.

In Vote 3, covering the Training and Employment Agency, some £0.7 million is sought. The sum of £1.6 million is to meet increased expenditure under the youth training programme, as a greater number of young people are pursuing higher level qualifications. One million pounds is for the job training programme, where an increasing number of trainees are undertaking programmes leading to a national vocational qualification at level 2 or above. Offsetting savings have been found elsewhere.

Vote 4 covers the expenses incurred in the privatisation of the electricity supply industry in Northern Ireland. These costs have been met from the proceeds of the sale.

I now turn to the Department of the Environment. Some £6.2 million is sought in Vote 1, covering expenditure on roads, transport and ports. That includes £2.5 million for maintenance of the road network and new road schemes. For street lighting £0.5 million is required and £1.7 million is for capital works in the Driver and Vehicle Testing Agency.

In Vote 2, covering housing, a token increase is sought. There are various reallocations within the Vote, resulting in a net increase of £3.6 million for the Northern Ireland Housing Executive, mainly for maintenance. Gross housing expenditure in Northern Ireland this year is now expected to be about £552 million, some £17 million more than in 1992– 93. Much has already been achieved in improving housing standards in Northern Ireland and this will enable further progress to be made.

Vote 3, which covers water and sewerage services, also shows a token increase. There are various adjustments in expenditure within the Vote, including an additional £4 million for capital expenditure on sewerage services.

In Vote 4, covering environmental and other services, an additional £2.2 million is for the Belfast action teams. There are nine teams based in areas of multiple deprivation, working with local people to improve employment prospects and promote community development. One million pounds is for urban regeneration grants, to stimulate private enterprise and investment activities in inner city areas of 13elfast and Londonderry. Our urban regeneration policy aims to achieve an overall public to private sector investment ratio of one to three. Those increases are offset by savings within the Vote and by increased receipts.

Turning now to the Department of Education, where a net increase of £9.2 million is sought in Vote 1, some £7 million is for grants to education and library boards, mainly for school transport, maintenance and equipment. A sum of £1.1 million is for voluntary schools and £1 million for grant maintained integrated schools. I know that this House takes a keen interest in the development of integrated education in Northern Ireland. There are now 21 integrated schools in operation, with over 4,000 pupils in attendance. It is planned to open three new such schools this year, while the additional expenditure in the Vote will enable the purchase of sites for two new grant maintained integrated schools. These are encouraging developments.

In Vote 2, an additional £8.5 million is sought. Some £8 million is for mandatory awards and student loans, reflecting increased demand. Some £0.6 million is for universities and £0.4 million for arts and museums. Increases are also required for the youth services and for departmental administration. There are reduced requirements elsewhere in the Vote.

I turn now to the Department of Health and Social Services, which seeks a net increase of £18 million in Vote 1. The main increase of £14.2 million is for expenditure on hospital, community health and personal social services; £3.4 million is for health and social services boards' capital expenditure. Net increases of £1.7 million are required for health and social services trusts and £6.1 million for family health services.

Moving to Vote 3, additional net provision of £4.3 million is required. That includes £7.9 million for the Social Security Agency. Increases are offset by reductions elsewhere, including an increase in receipts of £1.8 million from the National Insurance Fund.

In Vote 4, which covers social security, £121.1 million is sought. Demand for income support and disability benefits, in particular disability living allowance, has been greater than anticipated. That is offset by lower than anticipated claims in other areas.

Finally, £100,000 is sought in the Department of Finance and Personnel Vote 3 for increased expenditure on grants to community relations and reconciliation bodies. Together with expenditure by the Department of Education, that brings total spending on the community relations programme this year to £7.2 million.

I hope that that summary of the main components of the order has been helpful. I commend the order to the House.

Moved, That the draft order laid before the House on 15th February be approved. —(Baroness Denton of Wakefield.)

9.26 p.m.

Lord Holme of Cheltenham

My Lords, first, I thank the noble Baroness for her extremely clear and helpful exposition of the appropriation order. We should start by recognising that we are talking of massive sums of money and therefore, even though it is late at night and there are few noble Lords present, we should give the order the attention it deserves.

It is worthwhile reminding ourselves that we are discussing a subsidy of £200 a year from every household in mainland Britain to Northern Ireland. We should not begrudge that; we all know why it is needed. However, it means that we should look with some care at how the money is spent. As the noble Baroness said, we should begin by reminding ourselves of the economic realities of Northern Ireland.

It is true that Northern Ireland has coped relatively well with the recession compared with some other parts of the United Kingdom. But at the same time, we should remember the underlying structure of the Northern Ireland economy. We are looking at an area of the United Kingdom where private sector output per head is only 64 per cent. of that in Great Britain, whereas consumption is 82 per cent. That is why there has to be this level of subsidy of economic activity.

There is a fragile and faltering recovery beginning. But the Government may agree that we could see some damage to that due to the tax rises of approximately £10 per family per week that are in the pipeline. Meanwhile, of course,52 per cent. of the unemployed in Northern Ireland are long-term unemployed. That is higher than the proportion of long-term unemployed in Britain. A deep structural problem exists and I fear that many 17 and 18 year-olds who are currently in the second year of a youth training programme may leave when they find their benefits cut from £35 to £25 a week.

It is also worth reminding ourselves that the Northern Ireland economy is a fragmented one with only 20 firms with more than 1,000 employees. The noble Baroness spoke of inward investment. We on these Benches would support the efforts of the Government and all those concerned with attracting inward investment and there have been some successes. However, I am sure that the noble Baroness agrees that the Northern Ireland economy desperately needs a greater critical mass of economic activity and more larger employers. The most likely route to that is by inward investment as well as by organic growth.

I have one other observation to make on the economy as a whole and the trends in spending. In 1987– 88 social security amounted to 31 per cent. of the spend. It must be a matter of some dismay to the Government that, as a result of unemployment,33 per cent. of the total is now devoted to social security—I am talking here of the 1995 projections—whereas the proportion devoted to energy, industry, trade, employment initiatives, housing and spending has dropped dramatically over the same period. If we look at the total amount of subvention, more is going on social security and less is going on the areas which are crucial to the future of the Northern Ireland economy and society as a whole. Those are some general observations. Perhaps I may now ask the noble Baroness one or two specific questions on the order.

In another place on 7th March Mr. Peter Robinson said that he understood that there was now a moratorium on capital expenditure on schools. Would it be possible for the noble Baroness to let us know whether that is the case? It is of great importance that we should know that there is adequate investment in education in Northern Ireland since the high educational levels and the high skills of Northern Ireland are some of the great assets of the Province.

On page 4 of the order Vote 4 deals with the funds devoted to electricity privatisation. We understand that it was a manifesto commitment of the Government to privatise electricity. But if the point of electricity privatisation is economies, why was there a £228 million increase in appropriations in aid in order to privatise the industry? It seems perverse that in order to achieve long-term economy the Government should have to spend so much money making the industry attractive to private investors.

The noble Baroness referred in her introduction to the Department of Finance and Personnel. Within this vote an increasing amount of the overall budget appears to be devoted to financial administration and bureaucracy. What is to be £29 million in 1994–95 was only £10 million in 1987– 88. I would welcome her explanation of why the costs of administration have gone up so much in relation to what is a smaller overall budget. However, as she said, within this area the aspect which may be of most interest to the House is Vote 3 which is concerned with community projects. I understand that a number of community projects, including Extern and Relate Northern Ireland, are now being evaluated by Price Waterhouse for their general efficiency. I would like to be assured that what I know from personal experience to be the rather high fees of Price Waterhouse will not end up being squeezed out of the funding of these important agencies.

I move on to the question of funding from the European Union structural fund. I should like a little guidance from the noble Baroness on how the money from the fund is being allocated in Northern Ireland. Are the Government involved through consultation or do they tend to reduce: their spending in areas to which the structural fund is targeted. Considerable concern has been expressed in another place that the Republic is getting a relatively better deal from the structural fund than Northern Ireland. Are the. Government satisfied that Northern Ireland is getting all the funds it is entitled to from the structural fund as well as the regional development fund. On the regional development fund, will the principle Behind the City Challenge initiative, as regards which the President of the Board of Trade has been so active, and which seems to put depressed areas in competition for funds, be applied in Northern Ireland?

Finally, I give a warm welcome for one piece of news which the noble Baroness gave; namely, the increase in the scope of integrated education in Northern Ireland. I believe that all of us who care about the future of Northern Ireland recognise that this is indeed an important way forward. It is only achieved in the face of what is often guile considerable opposition from one sect or another. So to get an increase is a great achievement. I hope that the Government will maintain the priority of funding to see that this welcome sign of a new approach to inter-communal life grows and continues to develop. With those words, and looking forward to the answers of the noble Baroness, in general we support this order.

9.35 p.m.

Lord William of Mostyn

My Lords, I too am grateful for the care with which this order was introduced. I endorse immediately the observations made by the noble Lord, Lord Holme of Cheltenham, about integrated education.

A number of significant questions arise relating to expenditure of this magnitude. Unemployment in Northern Ireland is barely below 14 per cent. The questions which we ask are: what amelioration, if any, is looked for and on what timescale, arising out of the expenditure of these vast amounts of money? As the noble Lord, Lord Holme, rightly observed, more than half of the jobseekers in Northern Ireland have been out of work for more than a year. That is desperately gloomy news in financial and economic terms, but it has a far more corrosive effect in social terms.

What one does not find is any clear strategy designed to reduce either of those two gloomy figures. In particular, the industrial development budget has declined from £430 million in 1989– 90 to £141 million this year. It is further intended to decline to £115 million in 1995– 96.

There is an extremely useful report from Coopers Lybrand Deloitte issued as recently as January of this year, which puts the point admirably as we see it: Many of the long-term structural problems remain. GDP per head is still only about 80 per cent. of the UK average, easily the lowest of all UK regions. The problems of local labour markets remain with unemployment at 14 per cent. still well above the next worst UK region". Unfortunately, we see little evidence of a systematic tackling of these long-term problems. The same report states: Public expenditure is equivalent to two-thirds of GDP in Northern Ireland. The fiscal squeeze imposed in the two 1993 Budgets has potentially serious consequences for Northern Ireland". There is nothing in the deployment of these expenditures which gives me any confidence that that gloomy prognosis will not be borne out. What is required is long-term planning for full-time secure work. I know of the recent modest increase in employment of 2,200, but unfortunately most of that is for female, low-paid, part-time work in service industries. That offers no long-term solution at all.

The noble Lord, Lord Holme of Cheltenham, has pointed out the figure which leaps from the page—that is to say, £228,658,000 for expenditure in connection with the privatisation of the electricity industry and one wonders what for. Was it simply the old story of fattening up for sale public utility assets which historically have been undervalued so that there will be ultimately substantial bonanzas for the subscribers and not least for those who dealt with the sale of public utilities? That seems an enormously large figure and one for which I have been unable to detect any satisfactory explanation.

The imposition of VAT on fuel will hit the poorest hardest. Is the figure of £10 per week for the average family in Northern Ireland accurate? That is the figure that was given by the noble Lord, Lord Holme. If it is not accurate, I should be interested to know the Government's estimate of the extra tax payable per year in the case of a married man on average Northern Ireland earnings who has two children at school and a wife not working. Our belief is that it will be a very severe blow to living standards which are lower than in the rest of the United Kingdom.

I should like to raise a final particular matter, of which I have given the Minister notice. What is the present or future intention of the Government with regard to the future of the equivalent of the Criminal Injuries Compensation Board scheme in Northern Ireland? As is well known to your Lordships' House, the proposed amendments for the rest of the United Kingdom have recently been the subject of bitter and sustained criticism—minute and well-informed criticism, in my opinion. Is it suggested that part of the increased amounts by way of social security and other related payments is required to compensate those who are the victims of violent crime in Northern Ireland? Is part of the extra expenditure to make up for the loss of future earnings, the loss of damages for care arid attention?

I am pleased to be able to say that many who work in the public service in Northern Ireland have contacted me about this. Policemen and prison officers have expressed their deep anxieties about carrying out their public duties. Members of the public suffer extraordinary risks in their everyday lives. They are in fear of criminal attacks and their fears are often justified. Is the scheme in Northern Ireland for the victims of violent crime to be altered downwards in the same way as in the rest of the United Kingdom or is it to remain intact?

Those are very important questions which derive entirely from increased expenditure in other aspects of government spending. I hope that I shall not be faced with the reply that that does not derive from the draft appropriation order because, in my submission, it does. There is serious concern—I think that I could fairly describe it as bitter concern and serious anger—at the prospect that compensation for the victims of violent crime in Northern Ireland may be reduced. I should be grateful for reassurance and confirmation that that will not happen.

Those are fairly limited questions of which I have given notice. Generally, I adopt the remarks of the noble Lord, Lord Holme; namely, that the expenditure is unfortunately necessary and is a part of the price that the rest of the United Kingdom must be willing to pay.

9.42 p.m.

Baroness Denton of Wakefield

My Lords, I thank the noble Lords, Lord Holme of Cheltenham and Lord Williams of Mostyn, for their continuing and informed interest in Northern Ireland. It is much appreciated in the Province. As the noble Lord, Lord Holme, said, this is an important order, whatever the hour and whatever the extent of the empty Benches. I am grateful to both noble Lords for, as always, asking pertinent and searching questions which I know are based on interest and concern. If I cannot answer them on any specific area immediately, I shall make certain that I do so later in writing.

Turning to some of the areas that have been raised, we have reason to feel that the resurgence in the economy, although fragile, is moving in the right direction, and that despite the inevitable movements, it will work towards continuing to reduce unemployment. Seasonally adjusted unemployment at January 1994 was 13.5 per cent. of the workforce, which was a decrease on the previous month. The underlying trend is firmly downwards.

Employment levels in Northern Ireland have remained relatively stable. The number of employees in employment increased marginally on the previous year. Noble Lords were critical of the spend in working towards increasing employment. It is very much an individual company and a one-to-one effort in ensuring that jobs become available, in particular working towards easing long-term unemployment in areas which experience special difficulty.

With my experience as Minister for small firms in mind, I see small firms as the creators of future employment. I have great confidence in the large number of small firms in Northern Ireland. The noble Lord, Lord Williams of Mostyn, quoted the Coopers & Lybrand report. That report also stated that almost 60 per cent. of local firms are committed to expansion in 1994, and that industrial output is expected to grow by between 1 and 7 per cent. in 1994, with a growth of 4 per cent. reported as quite achievable.

The IDB work has targeted exceptionally well companies to invest in Northern Ireland. Previously it has targeted and identified in a specific manner. In working on the information that was obtained it will require less support. The noble Lord will appreciate that at this time less inward investment is available to the United Kingdom in general. Competition for that is extremely intensive. The skills that have been finely honed in the IDB will allow us to ensure that we are represented wherever the competition is keen.

The noble Lord asked about the criminal injuries compensation scheme. He was kind enough to notify me in advance that that was one of his anxieties. I join him in praising the work of the police and the security forces in Northern Ireland. I assure him that the Government recognise their high standards and complete commitment. The situation in Northern Ireland is that the Secretary of State has studied the Home Secretary's proposals for reform of the compensation scheme in Great Britain in order to see what that means for Northern Ireland. The consideration remains at a formative stage. Should my right honourable and learned friend decide to make changes to the compensation scheme in Northern Ireland, there would be a full public consultation exercise with all interested parties.

Noble Lords said that fuel bills being subject to VAT at 8 per cent. from April 1994 would be a hard burden for families in the Province. Resources have been extended to help not only people on benefit but pensioners. There is also input from the homes insulation and energy grant scheme. Individually, it depends on the nature of the house, and so forth; but much work is being done on that area to ensure that the people with needs are given the maximum assistance.

Anxiety was expressed about the cost of electricity privatisation. The total cost of the Northern Ireland Electricity privatisation, including trade sales of power stations and the flotation of NIE, will be announced in the next few weeks. That will give your Lordships much of the detail that is required. Privatised companies have been extremely successful in improving their services and the benefits which they provide to consumers. They have also protected jobs. Therefore, there can be no argument against the case for privatisation.

The noble Lord, Lord Holme, asked about EC structural funds. We believe that Northern Ireland has done well to retain its objective 1 status. Our 52 per cent. share of the UK allocation reflects the priority which Ministers attach to the very special needs of the Province. Overall, we should receive over £1 billion, and more is to come from Community initiatives such as a new cross-border interregnum programme. It is a constantly moving scene. I assure the noble Lord that all efforts are made to ensure that Northern Ireland's needs are represented and fought for in Brussels with the maximum effect.

It is not correct merely to make a comparison between how much the Republic of Ireland and Northern Ireland will receive from the structural fund for the next six years. Northern Ireland, as part of the United Kingdom, receives a considerable subvention each year from the Exchequer and the Republic of Ireland receives no equivalent subvention. The Commission obviously takes that into account in making its allocation.

The question of the growth of the Civil Service pay bill was raised. I should tell your Lordships that 80 per cent. of Civil I Service costs are pay related and much of that is due to pay inflation. The number of permanent staff in the Northern Ireland Civil Service has declined since 1988 and we are conscious that value for money must be obtained throughout. To be able to manage, it is necessary to be able to measure. We must make sure that the resources which we have, and which both noble Lords recognise that the Province needs, are well managed.

The matter of a moratorium on capital spending in education was raised. That point was answered in another place by my honourable friend responsible for education in Northern Ireland. He said that, given the nature of the block this year, he felt that it was important to concentrate available resources on classroom and teacher provision. The result is that a moratorium on capital spending was announced. It will not need to last long. It allows my honourable friend to match resources in terms of the budget which we set this year, but I hope that as a result of that we shall see only small delays rather than the stoppage of any particular project. I hope that that is reassuring.

The noble Lord asked also about the evaluation of community projects. Obviously we should expect to use the best available services to evaluate. Substantial sums are going into these areas and it is important that they are spent effectively for the benefit of the other voluntary activities in the Province. The audit is a key part of our programme. I assure the noble Lord that the programme remains a major part of our consideration.

I have been pleased to bring forward the order to the House this evening. It facilitates so much of the good and encouraging work which is taking place: more inward investment and more jobs, which are a key element of all that we wish to see improved; the improvement of kills at a high-tech level and among youngsters who are taking their first steps on the ladder; better housing standards, which are crucial for people's welfare; and a growth of committed local involvement in community health and social services.

However, as I said in my introduction to the order, there is far to go. We have much to do in Northern Ireland. The approval of the order will allow us to continue our intent to work towards ensuring the provision of the quality of life which the people of Northern Ireland deserve. I commend the order to the House.

Lord Williams of Mostyn

My Lords, before the Minister sits down, perhaps I may simply ask for clarification so that I may understand perfectly her response to my question on the criminal injuries compensation scheme. First, as I understand it, it is the position that no decision has been made whether the Northern Ireland scheme will be altered; and, secondly, it follows from that that the scheme in Northern Ireland may or may not be altered and, if altered, it will not necessarily be the same as the proposed amended scheme as discussed only recently in your Lordships' House. Can the Minister confirm that that is correct?

Finally, the Minister spoke of formative stages and said that if there were a preliminary decision to change the Northern Ireland scheme, there would be extensive and full public consultation. Can the Minister give an indication of when that preliminary decision is likely to be made? I do not expect the noble Baroness to give an answer by the week; but perhaps she could say something in terms of months. That would be helpful to those of us in the House who are interested in the operation of the scheme, both in Northern Ireland and in the rest of the United Kingdom.

Baroness Denton of Wakefield

My Lords, I am sorry if I did not make myself clear. However, on hearing the noble Lord's summary of what I said, I believe that he has accurately taken note of my response. The proposals of my right honourable friend the Home Secretary for Great Britain are being looked at in Northern Ireland to see whether there are any lessons to be learnt. However, that process is in its early stages. That means that I cannot at present give the noble Lord any guidance as to when the matter will be brought forward or an announcement made to the effect that there will be no changes. I can assure the noble Lord that any consideration will be full, and that, should there be any suggested changes, the same will apply to the consultations.

On Question, Motion agreed to.

House adjourned at three minutes before ten o'clock.