Northern Ireland Economy

HC Deb 13 May 1996 vol 277 cc644-88 3.38 pm

Sir James Molyneaux (Lagan Valley)

I beg to move, That this House takes note of the Northern Ireland Economic Council's Report No. 118, February 1996. The report named in our motion is an assessment of the implications of the 1995 Budget on Northern Ireland. Lest anyone should assume that I am going to plead a special case for our part of the United Kingdom or, worse still, advocate a separate tax regime for the Province, let me make it clear that my party accepts some responsibility for that Budget. During the debate on the Queen's Speech on 22 November 1995, I ventured to tender advice to the Chancellor of the Exchequer, who was then reaching his firm and final decisions on the contents of his Budget. My subsequent support during the Budget debate for the Chancellor's proposals was in line with my party's consistent policy since it was forced to become a separate party in Parliament.

We are in the happy position of finding ourselves broadly in alignment with the Treasury team in reducing the national debt, reducing the public sector borrowing requirement, maintaining the Government's excellent record on low inflation and avoiding a fixed exchange rate. On that final issue, my party's policy pre-dates the debate on a common currency. Our policy is based on a firm conviction that although a common currency can work within a nation—an example was given recently by the right hon. Member for Wokingham (Mr. Redwood), who observed that the economies of London and Liverpool are vastly different, with the former giving assistance to the latter—a uniform currency for sovereign nations flies in the face of common sense. As a party, my colleagues and I derive reassurance from the convergence of the Government and the Opposition on most of the principles to which I have referred, and economic policies.

I have sketched in the national background to our financial structures so that we can examine the position of one part of the nation, which in this instance is the Northern Ireland component. In examining budgetary effects on Northern Ireland, we must look beyond the current year to the decade ahead. One Budget is little more than a blip; it represents a modest shift in balance which has a limited effect, in the long term, on the nation or any part thereof. That is not to say, however, that we should ignore the fact that even a tilt of a few degrees can seriously damage any one of the regions of the United Kingdom.

It is in that sense that the report of the Northern Ireland Economic Council reveals an unnoticed and probably unintentional disadvantage to the Province. The report observes that while newsworthy proposals such as duties on petrol, cigarettes and alcohol are highlighted, the distributional impact on incomes is rarely discussed.

There is an assumption that the Northern Ireland economy is a microcosm of the United Kingdom economy. The report renders a service in illustrating the fallacy of that assumption. Incomes in Northern Ireland are lower than those in the rest of the United Kingdom. For a variety of reasons, the social security system is a more significant source of income than it is elsewhere in the United Kingdom.

Sir George Quigley, the chairman of the economic council, has stated: Given that the changes announced in the Budget tend to favour high earners and that the level of household income is on average lower in Northern Ireland than in the United Kingdom, it is not altogether surprising that Northern Ireland households benefit less from the tax and benefit changes contained in the 1995 Budget than their United Kingdom counterparts. I am not advocating split-level taxation. However, given Sir George's assessment, which points to a loss to the Northern Ireland economy in total, there is a case for taking the factor into account when the Chief Secretary to the Treasury embarks on his consultations before setting out his public expenditure proposals, and especially the Northern Ireland allocation.

It might be appropriate to note the concern expressed over public expenditure plans for the next three years. Whatever Government are in power, the closing years of the century will see a tightening of resources. If the undesirable effects of that are to be avoided and if the targeting of social needs is to achieve its objectives, we must embark on a concerted drive to achieve lasting long-term expansion of the Ulster economy.

Given the inevitability of continual reduction in public finances throughout the years to come, greater use must be made of the public finance initiative. We have already seen examples of capital projects launched well in advance of the date when public finance would be available. I accept that the move from being a service provider to being a purchaser of services places the Government in a position in which they may be replacing a short-term capital commitment with a long-term revenue commitment, but I have great faith in the private sector—particularly in Northern Ireland—and I do not think that it is beyond the capacity of that sector to design measures to avoid that very trap. For the Government, the great bonus is the easing of the pressure on the public sector borrowing requirement, on which we are all broadly agreed in the House.

In a recent study, our party proposed a merging of the various agencies that deal with indigenous business. We suggested that the Industrial Development Board should be encouraged and assisted in its role of attracting inward investment. When I use the words "encouraged and assisted", I am thinking particularly of the back-up structure that has been considered by Northern Ireland Ministers during past months, in the shape of an all-party council based in both Houses of Parliament. We would strongly support such a system, which would have enormous influence abroad and would put Northern Ireland's industrial capacity in the front rank. Nearer to home, there is much scope for co-operation. Without prejudice to England and Wales, we are planning to step up links with Scotland, our nearest neighbour—so near, indeed, as to be visible across the narrow sea.

Let me interrupt my train of thought at this point, and mention another hobby horse of mine—the enterprise investment scheme that was introduced in the 1993 Budget. The object of the scheme was, and still is, to encourage small investors to support small companies. It has great potential in Northern Ireland, but there should and could be a much greater take-up. Perhaps it could be facilitated by a degree of security for investors. I know that that kind of step may prove difficult, but it should not be impossible. If it proves difficult, perhaps more attractive tax concessions would have the desired effect—throughout the United Kingdom, that is.

For the benefit of the hon. Member for Greenock and Port Glasgow (Dr. Godman), let me return to the subject of Scotland. My hon. Friend the Member for East Londonderry (Mr. Ross) returned yesterday from a duty visit to Glasgow, and I was privileged to engage in discussions there during two weekends in April. Never was the Scottish dimension as real as it has been in recent weeks, with Scottish and Ulster farmers making common cause in the beef crisis. On behalf of my colleagues, let me pay tribute to the hon. Member for Banff and Buchan (Mr. Salmond), who has worked closely with my hon. Friend the Member for East Antrim (Mr. Beggs) in taking steps to ease the plight of beef farmers on both sides of the Irish sea.

The Scottish dimension is based on a common sense of values, on mutual understanding and on hard-headed business expertise and experience. There is no need for cross-channel structures; no clamour to find a solution. Ulster's relationship with Scotland provides a perfect example of two peoples united, not divided, by the sea, and existing in an atmosphere of trust and friendship. We hope that, sooner or later, we can develop the same relationship with the nation on our southern frontier.

Dr. Norman A. Godman (Greenock and Port Glasgow)

The right hon. Gentleman has spoken of the relationship between Northern Ireland and Scotland. What does his party think of the idea of a ferry service linking Ballycastle with Campbeltown and the Mull of Kintyre? The town and the Mull of Kintyre would definitely benefit economically from such a link.

Sir James Molyneaux

We have always supported that project and I think that that applies to my colleagues on the Benches in front of me. We will do anything that we can, again in co-operation with our friends in Scotland, to bring it about because we take the view that the more numerous, effective and efficient the links are between Scotland and Northern Ireland, and thereby between Great Britain and Northern Ireland, the better it will be for both our countries.

We hope that, sooner or later, we can develop the same relationship with the nation on our southern frontier, which left the United Kingdom earlier this century. Some day, the path of reunification of the British Isles may become a reality—and, if it does, we really will have a common currency that would work—but that course may become realistic later this year, when the latest initiative, misnamed the "peace process", has run its course.

That is not to suggest that those of us without ringside seats at that circus should stand around with bated breath. Far from it—we have a continuing duty to co-operate with the Government, the Opposition and the other parties in this Parliament to ensure that the work of the Queen's Government continues before and after a general election. It is that continuing certainty that will, more than anything else, create stability and settled conditions, which in turn will vastly improve the economic prospects for Northern Ireland and the United Kingdom, to which the greater number of Protestants, Roman Catholics, people of other faiths and of none wish simply to belong.

3.51 pm

The Minister of State, Northern Ireland Office (Sir John Wheeler)

I congratulate the right hon. Member for Lagan Valley (Sir J. Molyneaux) on the way in which he introduced the debate. I listened with interest to what he said and I look forward to the contributions that will follow. The Government share the view that the matters discussed in the Northern Ireland Economic Council report are of great importance to all the people of Northern Ireland. It is therefore a subject worthy of careful debate.

I welcome the right hon. Gentleman's remarks about low taxation and inflation. I am not sure, however, whether this afternoon's events will confirm his belief that there is a complete convergence between Her Majesty's Opposition and the Government on the economy's management, but that will perhaps be revealed to the House later.

I should like to take this opportunity to express the Government's appreciation of the council's work—not only the report under consideration, but the wider body of reports that it has produced over the years. The council was established by Government as an independent advisory body in 1977. Over the years, it has exercised its independent role effectively and it continues to be a valuable source of external comment and advice. The Government find its contributions a useful and thought-provoking stimulus to the process of policy formulation and review, although, naturally, we do not always agree with all its analyses and recommendations.

On 31 March, I wrote to Sir George Quigley, the council's chairman, to express our thanks for the report on the 1995 Budget and its implications for Northern Ireland. In doing so, I was pleased to acknowledge that the report provides useful summaries of the background to the Budget, as seen from both the national and regional perspectives, and of the economic characteristics of Northern Ireland households, to which the right hon. Gentleman has referred.

I was encouraged to note the council's overall conclusion in paragraph 6.8 of the report that the net effect of the expenditure and tax changes in the Budget is likely to be "slightly expansionist" in terms of the Northern Ireland economy and that that should "enhance growth opportunities". Right hon. and hon. Members will doubtless wish to comment on a number of points in the report, and it is worth reminding ourselves of the background.

Recent trends in the Northern Ireland economy have been extremely positive. Unemployment has fallen over an extended period and employment is at is highest ever level, although those are not the only encouraging signs. The council's report recognises that the Northern Ireland economy has performed better than the United Kingdom economy as a whole on a number of important indicators. Given the relative positions that have obtained in the past, this is to be warmly welcomed.

It is a statement of the obvious, but no less relevant for that, that the restoration of the Provisional IRA ceasefire and progress towards political development would have immensely beneficial effects on the Northern Ireland economy. No one can be unaware that violence has had an appallingly destructive effect on the Province's economic development over the past 25 years. That is why we continue to do all that we can to encourage political progress, and it is why the whole community looks to all parties and interests to create the peace and stability which are the essential prerequisites for economic growth. I am sure that my right hon. Friend the Minister of State will say more about this when he responds to the debate.

I have a particular interest, because of my responsibility for the Department of Finance and Personnel, in what the council's report says about public expenditure. The background to its comments on public spending is well known, but they bear repetition. Northern Ireland's needs have been and continue to be higher than the rest of the United Kingdom's, and that is recognised in the higher levels of public expenditure in the region. The comparisons are not always straightforward and need to be treated with some caution, as the report acknowledges, but identifiable public expenditure in Northern Ireland was some 32 per cent. higher in 1994–95, the last year for which the comparison is currently available, than the UK average.

That is a very broad comparison, but it none the less confirms that there is a substantial, although I believe justifiable, differential in recognition of the region's particular circumstances. There are, for instance, proportionately very high levels of expenditure on law and order and industrial development, as one would expect, given the events of the past 25 years.

The report refers to the fact that the Northern Ireland allocation for the current year, 1996–97, is over £8 billion. That is a substantial allocation in the context of the need for tight control over public finances. The report also notes that planned savings in the law and order budget resulting from the paramilitary ceasefires—totalling some £286 million over the period 1995–96 to 1998–99—have been reallocated within the Northern Ireland bloc rather than subtracted from it.

Dr. Godman

The Minister mentions the reallocation of funds. Does he support the idea of a ferry service between Ballycastle and Campbeltown? Naturally, I would prefer such a service to link with Greenock, but in the meantime I would happily settle for a service between the Mull of Kintyre and Northern Ireland.

Sir John Wheeler

The principle of such a service is interesting and it is almost certainly desirable. The question of how it would be funded would have to be carefully considered. I am, of course, aware of the degree of concern there is among the residents of Rathlin island and of Ballycastle about their ferry service. Those matters have to be looked at in the round and with very great care as to the implications for public expenditure.

The amount of money redeployed as a result of the terrorist ceasefires is some £286 million, which is a substantial demonstration of the practical effect of the Prime Minister's undertaking in October 1994. The Government will take full account of Northern Ireland's special needs in setting levels of public spending for the Province.

The tragedy is that those reallocations, which the report refers to as the public expenditure element of the peace dividend, are at risk because of the breakdown of the Provisional IRA ceasefire. My right hon. and learned Friend the Secretary of State made it clear, in announcing the outcome of the 1994 and 1995 public expenditure surveys, that the reallocations to economic and social programmes were necessarily contingent on the working assumption of peace.

The reallocations would, self-evidently, have to be reversed if expenditure on police overtime and compensation were to rise towards their previous levels. If that were to happen, those responsible for terrorist violence would effectively destroy jobs as well as depriving the health service, the education service and all other programmes of resources that could be applied to the benefit of the whole community. The people of Northern Ireland would not forgive them for that.

Sir George Quigley's foreword makes it clear that the report was completed before the breakdown of the PIRA ceasefire. He rightly observed that the economy was beginning to reap significant benefits from the prospect of a permanent and durable peace", and emphasised the need to search for a solution that will consolidate and enhance the gains made during the period of the ceasefire. I endorse those sentiments and re-emphasise the Government's commitment to that search.

The report also suggested that there should be a debate about public expenditure priorities in the context of peace and stability. I earnestly hope that the situation will develop in ways which make that debate relevant, and I am sure that the Government will play their part in it. My right hon. Friend the Minister of State, Northern Ireland Office may say more about the report's comments on targeting social need when he speaks later.

The right hon. Member for Lagan Valley also spoke about such targeting. I entirely agree with his remarks about taking full advantage of the private finance initiative, and I can assure him that the Government are actively examining the possible use of PFI projects in sectors including water and sewerage, health, education, roads, transport and information technology.

On the broader focus of the council's report, it is indisputable that the economic well-being of Northern Ireland is intimately linked to the performance of the United Kingdom economy. The 1995 Budget was a carefully balanced package designed to protect and promote growth in the UK economy. It included a reduction in the basic rate of income tax, lower tax on savings income, an increase in the lower-rate band well ahead of inflation and continued tight control of public expenditure.

The Budget was designed to put money back into the pockets of ordinary taxpayers—to let them keep more of what they earn and what they save. That was as welcome to taxpayers in Northern Ireland as to taxpayers in Great Britain. It was also designed to keep inflation under control, as that is a key to protecting the economic interests of the entire population.

Sir James Molyneaux

Does the Minister realise that I was, in a sense, throwing him a lifeline when I suggested that it should be drawn to the attention of the Chief Secretary to the Treasury that the United Kingdom and Great Britain have many more high earners per 1,000 of the population than we have in Northern Ireland and that the benefits accruing to the economy on the bigger island are therefore much greater? It is a rather delicate suggestion but perhaps it might be of some help to him when he is bargaining, not for an enhanced slice of the cake but for a fair share of the cake when it comes to the carve-up in the autumn.

Sir John Wheeler

I was especially grateful to the right hon. Gentleman for the courteous and careful way in which he threw the lifeline and assure him that his fine words will be enthusiastically deployed along the line that he suggests in the coming debates at the Treasury.

I emphasise the fact that we have continued to sustain Northern Ireland public expenditure at levels which take account of the region's unemployment and other problems. This manifests itself in a number of ways. We continue to commit substantial resources to industrial development including inward investment; we have large training and employment programmes and have been piloting a scheme for the long-term unemployed; and the social security programme is running at some £3.1 billion in the current year. Our policies therefore address the whole community, not only those in work.

The report refers to the council's intention to stimulate a debate on the degree of fiscal autonomy that regional governments might have. Clearly, this is a legitimate area of public discussion and the Government will follow the debate with interest. I must point out, however, that the unified taxation system has served Northern Ireland well over the years, and the report itself acknowledges that the Province continues to benefit from substantial fiscal transfers within the United Kingdom system.

I would therefore argue that Northern Ireland's interests need to be judged in the light of all the relevant factors, and in the round, rather than on a piecemeal, measure-by-measure basis. If that broader assessment is made, I believe that it is clear that the Province is treated fairly while still being subject to the same disciplines and constraints that apply throughout the United Kingdom.

To sum up, the Northern Ireland economy has performed well in recent years. There have been a number of welcome successes on the industrial development front over the past year, and we have recently seen substantial private sector investment in new hotels. I am sure that all contributors to this debate will share our wish to see those trends continued, and I look forward to a constructive debate on the important issues raised by the council report.

4.7 pm

Mr. John Hume (Foyle)

I should like to express my deep appreciation to the right hon. Member for Lagan Valley (Sir J. Molyneaux) for putting this matter on the agenda as it deserves a great deal of discussion at this particular time, given that there is substantial common ground among the various parties in Northern Ireland. I wish to deal first with a subject which the right hon. Gentleman mentioned and which is causing a serious economic crisis in our community, but which has not received sufficient attention: bovine spongiform encephalopathy.

BSE has created one of the worst economic crises in the lifetime of our citizens. Unlike in other regions of Britain, agriculture is our largest industry, and the community as a whole, but especially rural towns and villages, is heavily dependent on it and on the beef industry. We believe that we have a special case and that the problem in Northern Ireland is very different from that in Britain. For example, the incidence of BSE in Northern Ireland is less than one tenth of that in Great Britain. The rate of incidence of BSE in Northern Ireland has been declining rapidly, and international observers have agreed that measures taken to control it have been extremely effective. The farm quality assurance scheme in Northern Ireland provides an effective guarantee that beef that is given that assurance is free from BSE and from BSE-free herds.

The computerised tracing system that operates in Northern Ireland is regarded as one of the most advanced in the world. It ensures that every animal can be traced from birth to slaughter. That enables the strictest possible control to be exercised over cattle. Other regions have much to learn from the forward thinking of people in Northern Ireland's agriculture and beef industries.

There is a powerful case for special status for Northern Ireland, to be put to the Council of Ministers and the European Commission, given our dependence on the industry and the special relationship that I have just described. I appeal to the Minister—as he knows, my party and the Ulster Unionist party have put this request to him before—to reconsider putting that case directly to the Council of Ministers.

With regard to the broader political scene, I agree totally with the Minister that peace on our streets has an enormous role to play in developing our economy, given what we have lost over the past 25 years because of the violence and troubles. The 18 months of peace demonstrated the mood that has developed and the opportunities to translate the massive international good will, which has clearly emerged in Europe and the United States, into real benefits at an economic level for our people. There is a major opportunity to do that and I hope that there will soon be a restoration of the ceasefire so that, in that totally peaceful atmosphere, all our energies can be harnessed to aid economic development.

As I said, there is substantial common ground among the different parties in Northern Ireland on the economy. Indeed, when the right hon. Member for Lagan Valley was leader of the Ulster Unionist party, we met, and our parties met, and we began a process to discuss matters of common interest. I certainly hope that, as the peace process and the talks process continue—we all recognise the difficulties in the political arena—we shall work closely together on the economy to develop the trust that will help us in the more difficult political field.

In working together on the economy, we have an enormous amount of international good will on which to call to help us build economic success. As we know, the European Union has designated a special programme of development for Northern Ireland. Through its President and at every level, right across its communities, the United States has expressed its enormous willingness to help us on the economic front.

There are two major areas in which we can take advantage of that enormous good will of the United States—marketing the products of our indigenous small companies and seeking inward investment. I have some experience of both of them in my constituency, because we set up a local body, whose members are drawn from both sections of the community, to market the products of our small companies in America, using our contacts there, and to seek inward investment.

As the Minister knows, there has been substantial recent success. We have attracted 2,500 jobs into my constituency from the American investment, and using that international good will over the past few years, initial orders from the 200 small companies from all sections of Northern Ireland that I have taken to the United States to market their products, have been worth £42 million. That underlines the enormous opportunity that is now out there for us, to harness the massive international good will and sympathy for our situation in Northern Ireland. A ceasefire is, of course, an essential element in greatly strengthening that good will and sympathy, so that real benefits for our people are created through the marketing of our small companies' products and inward investment.

As we know, the European Union has designated a special programme for us. When the peace process started and United States representatives and the late Secretary of Commerce were offering us economic assistance, my party and I suggested that, as other countries have it as part of peace processes in other parts of the world, they recognised Northern Ireland and the border counties as a duty-free zone for imports into the United States. I understand that that proposal is being seriously considered and I know, from my personal contacts, that there is substantial support for it in Washington. That would give Northern Ireland an enormous boost.

Other regions might think that Northern Ireland is getting an advantage. However, we are trying to cure the disadvantage that we have had over the past 25 years. If we can persuade the American Senate and Congress to give us that duty-free status—as a result, products made in our area would be imported duty free into the United States—it will be an enormous boost to our industrial development. We have the potential to achieve that status if the Government support us in our request to the United States—I hope that they do.

As I said previously, I hope that we shall work together on common ground in relation to our economic future, both in Europe and in the United States, to bring the economic benefits to both sections of our community and to break down the barriers of prejudice and distrust that stand between us in the more difficult political arena.

4.15 pm

Mr. A. Cecil Walker (Belfast, North)

As one who was born and brought up in Belfast, I am proud that it is again defining fresh frontiers of industrial, economic and social achievement. Towards the close of the previous century, Belfast was the source and centre of a high-volume flow of new technologies and materials. It transferred goods to the furthest corners of the globe. Its first factories were the largest and most advanced spinning and weaving mills of the time, using the finest cloths and linens.

Commodities and people were exported abroad on ships that were built in Harland and Wolff. The fastest and most luxurious ocean liners were first thought of, and subsequently designed and constructed here. The city became a location for entrepreneurs who managed, manufactured and marketed their ideas, their products and their talents to Europe, to the far east and to America. Many of them became part of the great wave of emigrants who left for the shores of the United States in the 19th century.

Today is a new time, with new opportunities. Once again, Belfast is resuming its place as a driver of economic regeneration and growth. Ambitious projects for the transformation of established areas within the city—such as the Gasworks, Springvale and Laganside developments—are providing imaginative investment opportunities. Schemes such as the development of Lagan weir and Clarendon dock are being undertaken by Laganside Corporation and are ensuring that the river's significance is not posthumous, but progressive; not former, but future.

That physical development is another sign of the city's increase in capacity and of its confidence in itself. Laganbank is a superb example. It is an entirely new development, which will cost approximately £130 million and which will be completed, appropriately, in 2000. The main elements include a 2,250-seat conference and concert hall, signifying the close relations between commerce and culture in the city; a 1,350-space multi-storey car park; a 200-bedroom four-star hotel; 500,000 sq ft of office space; and 70,000 sq ft of speciality and festival shopping.

Another example of Belfast engineering at its finest is the imposing £65 million cross-harbour bridge, named after William Dargan, who built the first rail bridge in Ireland. The Dargan bridge is a clear demonstration of the city's commitment to maintaining and developing the kind of up-to-the-minute transportation and communications network essential for companies seeking access to or seeking further to consolidate their position in the international fast lane of modern industrial economies.

Belfast is a city that is constantly reinventing itself in terms of its workplaces and work forces. Companies such as Ford, whose commitment to Belfast spans many years, have been joined by investors from Britain, Europe, North America and the Pacific and Asian countries, who realise the benefits of a flexible, well-educated and motivated population of 300,000 people from which to recruit their personnel.

Belfast is the nexus for a transport and communications infrastructure unrivalled by any European city of equivalent size. A major freight port with a brand new terminal and a roll-on/roll-off facilities, Belfast is also connected by an excellent motorway and trunk road system to every other port in Northern Ireland. The main railway station integrates the whole of Northern Ireland, and there are two major airports with links to Great Britain, Europe and America. Passengers and products can easily be transported to any of those areas.

Belfast is a young city on an ancient site, and its local and global importance has always been linked to its position as a centre of communications and capital. Many of its past industries were linked to the transport of goods, of ideas and of technologies. Shipbuilding is the first and most obvious example, ropemaking a related second and the design and construction of light aircraft a more recent third. The manufacture of linen, which consolidated Belfast's significance as a major city in the 19th and 20th century, would have been unimaginable without the port and harbour that link it to world markets.

Times have changed. The industrial revolution, which laid the foundation for Belfast's sphere of influence, shaped its architectural profile and created the wealth of many of its citizens, has been superseded by a new information age.

Ironically, Belfast has figured once again as a centre of public communications networks, for the past 25 years have put it firmly in the spotlight of international media attention. Nevertheless, during much of that period there has been a relentless, if understandable, decline in investment activity, industrial growth and stability of employment.

Identifying problems is one way of helping to eradicate them. Although the legacy of problems confronting Belfast is by no means likely to disappear overnight, there is no reason to suppose that they are any more difficult than those of any other major European city.

In its key document, "Opportunities for All", Belfast city council outlined an economic development strategy for the years 1995 to 2000, in which it pinpointed information as the lodestone of a new gateway to and prosperity for its citizens. It was felt that Belfast was in a position to promote itself once again as an urban and national business for a global network of public and business intelligence and information systems.

Obviously, the term "information" is the site for many competing definitions and applications. What do we mean when we speak of Belfast as a city of information? To start with, Belfast has an established and worldwide reputation for the accuracy, low-cost production and high integrity of its software development industries. They have evolved so rapidly in the past decade that they provide employment for 10,000 people, and trends suggest that they have the potential to increase that figure substantially.

One of the side effects of having access to the idioms and technology of software development is an increasing dispersal of expertise and energy into the associated fields of interest, with the result that Belfast has become a centre of excellence for the generation of information networks, which helps business concerns to compete and operate more cost-effectively.

Telematics is another area of research and production in which Belfast has specialised recently. Defined as the integration of telecommunications and computers in a way that suits business requirements, telematics merges the practicalities of software development with the latest advances in computing intelligence, to facilitate the free exchange of information between computers on a local and wide area network. The development and production of the means of enabling extensive electronic links situates Belfast firmly on the frontiers of the new planetary map of information science and industry. We are building on the extensive computer training programmes put in place by the Government.

Mr. William Ross (East Londonderry)

Does my hon. Friend agree that one of the best features of the telecommunications and computer industries is the fact that they employ many new graduates? For far too long, we have exported our best graduates and our best brains and now, for the first time in many years, many of them are able to find jobs at home. That can only be good for Northern Ireland in the long term.

Mr. Walker

I thank my hon. Friend for those remarks. He is absolutely right about graduates, but other training programmes are training people who are less well educated for work in the telecommunications industry. Those programmes are off the ground in Belfast and they are working well.

Belfast city council, with support from BT, has lent its support to two major training initiatives—we call them EDITRAIN initiatives—in west and in east Belfast, which are areas of very high unemployment. Anticipating an increased demand for skilled operators in that field—this is relevant to my hon. Friend's earlier remarks about training—the council has approved a procedure whereby individuals receive training up to national vocational qualification standard level 4. That enables them to install and to supervise the smooth running of network information systems as an integral part of a larger corporate team. There are several and substantial markets for such specialist graduates as most companies, large and small, require their services and expertise. Almost all the major banks and insurance companies are part of extensive network systems, which are usually headquartered in London.

Belfast is an information city that has transformed its past into a strategy for the future. That strategy has given its citizens a clear sense of continuity, a coherent set of objectives and a growing confidence in the common goal of a better life for us all. For the business man and woman, the promotion and implementation of the strategy in the form of specialised training, consultative bodies and a climate of information literacy and technological competence, represents new frontiers of economic opportunity. There is already a talented and motivated work force. Low-cost accommodation and telecommunications, combined with the development of both satellite and terrestrial broad-band services, will assist the economy dramatically.

One of Belfast's most striking features is the number and range of organisations that are active in the field of economic development. In the past 15 years, a complex network of agencies has developed across the statutory, community and private sectors. That reflects in part the changing economic climate and the change in Government policy that promoted enterprise as a means of tackling unemployment, while reflecting also the communities' desire to take some action to create work.

Within the statutory sector, the Department of Economic Development family—the Local Enterprise Development Unit, the Industrial Development Board and the Training and Employment Agency—has invested heavily in infrastructure, training and business support in order to promote a positive environment and to encourage business information and growth. Parallel with that, the Department of the Environment and its agents, the Belfast Development Office and Making Belfast Work, have invested heavily—with MBW particularly prominent through the efforts of the Belfast action team. Complementing that, development at community level is evident through the establishment of local and enterprise agencies, community employment regeneration schemes and development organisations. The International Fund for Ireland was a prime mover in that. Further activity is generated by organisations that are more closely aligned to the voluntary and community sector, where youth, women's enterprise and community economic development initiatives can readily be found.

A case in point was the recent conference held at the Balmoral conference centre and sponsored by the Northern Ireland Council for Voluntary Action. More than 175 participants discussed economic and social regeneration involving local people. It was a positive, constructive and bridge-building exercise that was worthy of support as it addressed specific employment problems, using the imaginative Donnison report, which will be published shortly, as an agenda for action.

Belfast continues to be the centre of economic activity for much of Northern Ireland. Although it has only 18 per cent. of the total population of the Province, it has 30 per cent. of Northern Ireland's manufacturing companies and 21 per cent. of its retail activity.

In the past decade, Belfast has enjoyed massive infrastructure investment that is estimated at approximately £800 million. Projects range from new housing to commercial offices and shopping arcades. Considerable capital has also gone into bolstering the internal and external transport infrastructure, which now ranks with the best in Europe. As I said, the road and rail networks in the Province meet the most advanced national and international standards, but the weak links are the west link junctions, which cause serious traffic and environmental pollution problems, particularly in respect of cross-border containers using Belfast harbour port.

Unemployment continues to be a major problem, and in some wards half the work force is out of a job. The problem is far worse among men, and in some neighbourhoods as many as six out of 10 are unemployed. Although unemployment in Belfast is not as severe as in other parts of the Province, it fares worse than most comparable cities in the United Kingdom. Despite a fall in the population of the city between 1981 and 1991, current trends reveal that the rising youth population entering the labour market is imposing further pressure on jobs.

Within the broad scheme of community economic development, the city council's emphasis clearly will be focused on promoting sustainable employment. At community level, that will be reflected in support for training, capacity building and the promotion of new models of economic activity and employment. In respect of priority groups, emphasis will be placed on programmes and initiatives that encourage and support enterprise and access to employment and improve employability.

On that theme, the city council has set out the following aims: to encourage wealth creation by supporting economic development at community level; to identify and work with priority groups to promote and encourage greater access to employment and enterprise; to promote the spread of good practice and the sharing of experience at community level; and to promote the potential opportunities presented by information technology in providing sustainable jobs at community level. To achieve those aims, Belfast city council will seek to undertake and support programmes in partnership with interested parties, for which full support will be required from the Government and their respective agencies.

4.33 pm

Mr. Eddie McGrady (South Down)

The subject of today's debate is the report on the background and implications for Northern Ireland of the 1995 United Kingdom Budget. It is important to draw the attention of the House to the broad conclusions of that report which have not been mentioned so far this afternoon. The conclusion of part I of the report states, at paragraph 3.28: Incomes in Northern Ireland are lower than in the UK. Moreover benefits as a source of income are much more important in Northern Ireland. Consequently a budget which aims to finance tax reductions through reductions in benefit expenditure will have a disproportionate impact on Northern Ireland, particularly if the targets for cuts are unemployment or sick and disabled benefits. The same theme is found in part II: If Budget changes were assessed in terms of the Government of Northern Ireland public policy priority TSN"— tackling social need— then serious concerns would have to be voiced. Those that gain the most are the better off, while households that are in the lower income deciles actually experience a fall in their income". The conclusions also indicate that, in Northern Ireland, the richest 10 per cent. of households will gain from the Budget, but that 50 per cent. of households will suffer losses. That may not have come across clearly this afternoon. I want to dwell, for a moment, on that deprivation.

The report's conclusions hide reality and additional deprivation—the deep disparities in areas of extremely long-term unemployment that have existed for not just one, but two, decades. Those areas have also been deprived for more than two decades of the infrastructure necessary to enable them to take advantage of any industrial revival that may occur as a result of inward investment.

Certain areas of Northern Ireland do exceptionally well; others continue to do exceptionally badly. If the Government have a genuine policy of targeting social need, they must address that problem. If there is a loss of 200 to 300 jobs in place A, an emergency team is sent there to see how the area can be revitalised and to attract new investment. In areas of endemic long-term unemployment, no such task force is contemplated. Perhaps it is thought, "They are used to it, so they will not gripe about it," or, "They do not deserve it."

The report also hides the concept of a low-wage economy, which we should not accept. The Northern Ireland economy should be based on maximum efficiency in which the producers of wealth—capital and labour—share equally in the benefits. It should not be low wages that attract inward investment, but a quality work force, quality management and a quality product. Northern Ireland does not want a far east economy that attracts European and north American investment simply to exploit low wages. There is a tendency to sell Northern Ireland as a low-wage economy. We should sell its other attractions, and the wage earner should share in the prosperity that results from inward investment.

The Minister spoke about the peace dividend. I am not qualified to follow the intricacies of the public accounts system, but there is some disappointment in the north of Ireland that the substantial savings made in respect of Northern Ireland's security requirements have not been funnelled into other areas of expenditure. If, as the Minister says, funds were channelled into other areas of expenditure—God help us! If there had been no peace dividend, our education and health systems would have collapsed around us. The Minister who is to reply to this debate knows that we are already running a £100 million deficit in what is called the educational estate—the fabric of the education system. If, as he suggests, money has gone into the system from the peace dividend, that implies that the deficit would have been much greater.

The Minister responsible for health and social services issued his public expenditure statement on 24 February last, claiming an increase of £54 million in his budget; but he failed to take it into account that £42 million of that was already tied up in required additional expenditure under new legislation—especially that to do with child support and certain renal health requirements. He correctly stated that a 3 per cent. cut was wanted, of which 1.5 per cent. would come from cash and 1.5 per cent. from services. I can tell Ministers that those cuts in services are already being made, and will get worse as time passes.

The Economic Council report states that there is more ill health in Northern Ireland than elsewhere. If this 3 per cent. cut is to be implemented next year, and possibly the year after, there is no doubt in anyone's mind—from consultant to patient—that the system will collapse.

The problem of perception remains: either the peace dividend was not used or, if it was, budgets have been much more severely cut than has hitherto been admitted publicly.

Job creation and inward investment are essential factors in the equation. The Industrial Development Board and, to a lesser extent, the Local Enterprise Development Unit, have done a reasonable job. I have been one of their major critics in the past, not because they are not doing their job but because they do not distribute jobs fairly around Northern Ireland. We hear much in Northern Ireland about fair employment, but it would be better implemented if employment were also located more equitably. Between 1990 and 1995, 43 new enterprises were brought to Northern Ireland—according to the IDB. Sixteen district councils benefited from them, but the three district councils in my constituency received no benefit whatever as far as I can tell and, of the 315 inward investment first-time visitations during the fiscal year 1994–95, only eight came to the south-east, to South Down. That is not an equitable distribution of jobs in an area of deprivation, long-term unemployment and health difficulties. In addition, ours is a rural community that has to cope with the advent of BSE and the onslaught on our fishing industry.

None of this, however, has prompted the IDB, LEDU or the Government to do anything special for my area. The Governments of other countries seem to manage successfully to apportion varying amounts of grant aid; it is even done elsewhere in the United Kingdom. Why cannot the same be done in parts of Northern Ireland?

As for the policy of decentralisation, there appears to be a steady tendency to draw jobs into central Belfast—it seems to act like a magnet—but such jobs are urgently required to sustain rural communities. Moreover, the agency externalisation process, now under way in all Government Departments, is slowly but surely drawing jobs into the centre and away from the periphery. That applies all over Northern Ireland, not just in my area. That, too, needs to be considered in the context of the targeting of areas of social need.

It may be difficult to attract industrial inward development to an area such as mine, but there should be no difficulty about drawing in tourists to the rural areas of Northern Ireland, in the west and the south-east. I am puzzled by the fact that the Northern Ireland tourist board appears to lack the money to implement the policies that it would like to put into effect. Last year—1995–96—the board's budget went mainly on building big hotels. But the average tourist does not want a big hotel, or its prices. He wants a small family-run guest house or bed and breakfast; he cannot afford a posh five-star hotel.

I am talking about our bread-and-butter tourists, not about the flashy conference tourists who never come back. The kind to whom I am referring will return time and again, bringing their families with them. In the year to 31 March, no grant aid was available for small guest houses. Many in my constituency applied, but the door was slammed in their face. Something must urgently be done about the shortfall of accommodation for tourists in our area. Last summer, there was not a spare bed to be had, and we had to send people across the border. That is criminal.

Industrial inward investment, tourism and indigenous expansion are the three pillars on which we hope to build a better future. As far as the first goes, we must do something about the cost of energy. The Northern Ireland Committee looked into the problem in some detail last year and issued a report, but we seem to be hidebound by rules and regulations and by contracts entered into up to 2010. The officer who controls prices must therefore take immediate action to make inward investment in Northern Ireland much more attractive.

I shall end by renewing my plea not to turn Northern Ireland into a low-wage economy. We need an economy based on a standard quality of production and greater efficiency. That is the best way to attract inward investment.

4.48 pm

Mr. Eric Illsley (Barnsley, Central)

Right hon. and hon. Members on both sides of the House have agreed today that progress in the peace process in Northern Ireland will be greatly assisted by progress in economic development in the Province. Unemployment, although now falling, has been at high levels and long-term and youth unemployment need to be addressed as they are still problematic. Training for work is another area in which progress must be made. Post-16 academic achievement in Northern Ireland is among the highest in the United Kingdom, but a substantial number of 16-year-olds leave school without any qualifications whatever. Training and education are especially important to counter any drift into violence or into the black economy.

As we have heard already, much progress has been made recently. Inward investment has brought new jobs to Northern Ireland, especially that by the companies Seagate and Daewoo, and in 1994–95 the Industrial Development Board successfully negotiated 10 inward investment projects, which promise to provide almost 2,000 jobs. The Local Enterprise Development Unit helped with about 13 new businesses and another 2,500 new jobs. I shall expand on some of the issues that I have just mentioned, especially training, education and unemployment, and suggest some of the Labour party's policy options to deal with them. I shall also refer to one or two other major problem areas, which have been touched on, including the beef industry and electricity prices in the Province.

Some 97 per cent. of businesses in Northern Ireland have fewer than 50 employees, so the small business sector is extremely important. Encouraging small businesses to start up, to expand and to take on new employees is a key factor in generating growth in jobs and income. The Labour party has been examining ways in which to assist small businesses, including the establishment of a network of commercially managed business development agencies for small businesses, which would raise private finance for long-term investment in small and medium-sized businesses, and a moratorium law, which would give small firms in financial difficulty the time to develop a rescue package and avoid unnecessary bankruptcy. We have also been examining ways in which small businesses can be saved from the dangers of late payment, together with measures to promote prompt payment and greater accountability on the part of public and private sector bodies. It is apparent that the Deputy Prime Minister does not share that attitude. Raising the VAT threshold for small businesses, if they take on a young, unemployed person, is another issue that the Labour party has been examining.

The latest figures from the Department of Economic Development show that, although some 29,000 people currently attend training schemes run by the Training and Employment Agency, more than 8,000 places on training schemes have not been filled. Why are those places remaining unfilled? Are the Government providing the training courses that business and industry actually require? In Northern Ireland, as in the rest of the United Kingdom, people are the country's greatest asset. Labour believes that the skills and abilities of the work force—a well-motivated, well-trained and well-qualified work force—will determine the Northern Ireland economy's ability to compete in the modern world.

It has been said in the past that nothing short of a skills revolution is required in Northern Ireland. That skills revolution requires that education and training move to the centre of economic policy. Northern Ireland needs an education and training system that enables all workers to retrain continually throughout their working lives. That will require a great expansion in education and training measures. The Government's approach—of leaving training to be developed by market forces—has, to a large extent, failed.

Labour's proposals on training will include new opportunities for retraining for people in work by ensuring that companies invest in upgrading the skills of their work force. Companies that fail to train to a certain standard will face a training levy. That factor has been highlighted recently by the problems experienced by Shorts following the collapse of Fokker. The economy in Belfast and Northern Ireland is likely to lose a number of skilled workers unless those who are made redundant from Shorts are retrained and their skills saved.

We propose a Northern Ireland skills audit that will be compared with information available for the whole island of Ireland to identify the skills that are in short supply so that training resources can be targeted on removing bottlenecks and providing the skills that are most likely to lead to employment. We propose to encourage public-private co-operation in training schemes, which would involve formulating methods to encourage high investment in training by private employers and ensuring that public bodies contract out to private companies that are willing to train employees.

We would bring together research in economic development, education, further education, European funding and the skills of the work force in Northern Ireland to create a clear and extensive training policy. We would study potential and actual inward investment in Northern Ireland to establish a clearer picture of the forms of training that are needed to continue to secure investment.

As I have mentioned, we believe that the way to sustain economic success is through education, training, improved technology and investment. Through education and training, the Government can assist inward investors by providing the skilled and qualified work force they require. That also applies to other areas of the United Kingdom and, in particular, my area in Barnsley and south Yorkshire. We suffer from similarly high unemployment and we do not, as yet, have the skills necessary to attract inward investment to an area that has been decimated by colliery closures during the past few years. Both employers and Government have a shared responsibility to sustain an active and participatory work force, with adequate working conditions and a reasonable wage.

Productivity is increased by a well-motivated and reasonably secure work force, whereas employees who are riddled with job insecurity, fearful of the future and low in morale will lack commitment and cling cautiously to the status quo and resist change, which is the high road to efficiency. Indeed, a recent study by the Northern Ireland Association of Citizens Advice Bureaux documents a rise in employee anxiety and insecurity in Northern Ireland.

In 1994–95, the citizens advice bureaux in Northern Ireland dealt with almost 14,000 queries about employment. They found that employees were unaware of their rights and that many were not involved in trade unions. Employees claimed that employers were changing conditions suddenly and without warning. Many lived in fear of dismissal and, for that reason, felt obliged to accept deteriorating conditions of work.

In addition, workers in Northern Ireland earn less than their British counterparts—they receive 89 per cent. of the average United Kingdom wage. They have some of the lowest wages in the country, second only to certain areas of the north of England. Some 1 per cent. of employees earn less than £2 an hour, and there are still female manual workers in Northern Ireland who earn less than £1.70 an hour.

As well as providing the best possible work force, the Government have a role in securing adequate working conditions for employees. Low wage levels have been found to be counter-productive, as low earnings reduce employees' spending power, which has implications for the housing market and for the consumer confidence that is essential to building an economic recovery.

Mr. Gary Streeter (Plymouth, Sutton)

What will Labour do about low wages?

Mr. Illsley

Low wages and poor conditions can lead to higher employee turnover and more absenteeism. That has been a particular problem in the clothing industry in Northern Ireland. Employers who have constantly to recruit and retrain incur additional costs. Indeed, a report published this week draws attention to the fact that employee turnover in industry is leading many employers to employ older employees.

Labour is committed to a minimum wage and will set up a low pay commission to set a rate that will not damage employment, prices or wage structures. Perhaps that answers the point that the hon. Member for Plymouth, Sutton (Mr. Streeter) made from a sedentary position a moment ago. I shall repeat it for him. Labour is committed to a minimum wage. We believe that people are entitled to fair wage. Paid work, at a fair wage, is the most effective way in which to tackle poverty. By that means, people will be lifted out of benefit dependency and their dignity will be restored. Pay differences between men and women will be reduced. The differences remain noticeable in Northern Ireland in every area of work. For example, a man in clerical work earns an average of £225 a week; his female counterpart earns only £199. Workers will be better motivated and, therefore, more productive. Staff turnover will be lower, thus reducing employers' recruitment and training costs. Public resources will be freed from subsidising those on low pay and be available for other purposes, such as improving health and education and creating work for the unemployed.

Labour will sign the social chapter. Northern Ireland will never be competitive on the back of a deregulated labour market with low wages and poor conditions. Those factors will not attract sustained long-term investment in Northern Ireland.

Mr. James Cran (Beverley)

Keep a straight face.

Mr. Illsley

I have a perfectly straight face when I say that Labour will sign the social chapter.

It is clear that someone will always do the job for less; there will always be an employer who wants to pay less. In China, there are 1 billion people who will work for a few pence an hour. The way to achieve real competitiveness is not to cut costs by cutting pay, but by doing the job better than anyone else and concentrating on quality. If that is to be achieved, business will need a well-qualified, skilled and trained work force. That is what Labour will work to provide.

The proposals that I have outlined are part of Labour's aim of abolishing youth unemployment in Northern Ireland, which still remains a problem. We know that one in four of the registered unemployed in Northern Ireland is under 25 years of age. Labour is considering specific proposals to tackle youth unemployment, including the development of an environmental task force. We are considering lifting the 16-hour rule, which prevents young people from claiming benefit—if they are studying for more than 16 hours a week to improve their skills.

My attention was recently drawn to the problems faced by young people who are trying to improve their skills by studying at local colleges, but who are being targeted by the Department for Eduction and Employment, which is threatening to withdraw benefits unless they discontinue their courses. I have sought to raise the matter with the Secretary of State.

Labour will encourage all young people to continue in mainstream education and training. There is a new deal for the under-25s, which involves employers, the voluntary sector, education and the environmental task force, all of which would combine work and help to develop talent. We are examining how our proposals will work with Northern Ireland's existing training schemes, business and industry, recognising the problems of the interface between education and training systems and the world of work.

Achieving increased competitiveness and growth through investment, innovation and skills is economically necessary and socially responsible. Growth itself, however, does not lead to the creation of jobs at a rate that will seriously tackle Northern Ireland's acute unemployment problem, especially long-term unemployment. Although Northern Ireland's level of unemployment is at its lowest for some years, it is worrying that the number of those who suffer long-term unemployment is still quite high. As I have said, 40 per cent. of those in that position are under 25 years of age.

Long-term unemployment remains much higher in Northern Ireland than in the rest of the United Kingdom. It is also higher than the levels that prevail in the rest of Europe. About half of Northern Ireland's unemployed have been out of a job for longer than three years. The comparable figure for the rest of the United Kingdom is about a third. About 53,000 people are unemployed in Northern Ireland.

The United Kingdom opted out of the social chapter in 1992, at Maastricht. The Government claimed that the social chapter would ruin economic competitiveness and destroy jobs. It appears that that view is not backed by industry as a whole. The chair of Northern Foods, Christopher Haskins, has said that the aspirations of the European Union's Social Chapter hold no fears for any responsible British company and the government should sign it. Increasingly, companies such as Coats Viyella and United Biscuits are implementing the terms of the social chapter voluntarily.

The Minister of State, Northern Ireland Office (Mr. Michael Ancram)

I have listened to the hon. Gentleman with great care and attention. He appears to have embarked on quoting distinguished industrialists and manufacturers. As we are debating the economy of Northern Ireland, will he quote a Northern Ireland industrialist who supports the social chapter?

Mr. Illsley

I cannot produce the quotation that the Minister desires. I am sure, however, that, as with industrialists in the rest of the United Kingdom, there will be those in Northern Ireland, business men and industrialists, who support such a view of the social chapter.

Labour believes that we have nothing to fear for work, and everything to gain for workers, in the social chapter. In the past, we have taken our lead on the improvement of conditions for working people from Europe. In 1981, we accepted the Transfer of Undertakings (Protection of Employment) Regulations. European directives gave us the following additional safeguards at work: protecting the terms and conditions of workers when businesses change hands, equal retirement ages for men and women, the extension of sex discrimination legislation to cover enterprises that employ fewer than six people, equalising the upper age limit for redundancy for men and women, and the provision of 14 weeks' statutory maternity leave for women.

Those provisions, and those in the social chapter, are not inhibitors of productivity. On the contrary, productivity is increased by a well-motivated and reasonably secure work force. Employees who are riddled with job insecurity, fear of the future and low morale will lack commitment. A lack of commitment to employment standards brings with it the risk of turning Britain into the sweatshop of Europe.

The ACE programme—Action for Community Employment—was a desperately needed project that has been extremely successful. It gives the long-term unemployed up to a year's training in projects that will benefit the community. The scheme has become a unique part of local community infrastructure. It has served to support some of the most vulnerable people in society, such as the elderly, pre-school children and the unemployed, and about 40 per cent. of participants have gone on to full-time employment or further education. That percentage compares well with what has been achieved by training and enterprise councils by means of training-for-work programmes.

Last year, in the light of ACE's success, the Government chose to reduce their funding of the project by about 25 per cent. As a result of the way in which cuts were administered, many groups faced a 40 per cent. reduction in funding and having to reduce the amount of vital work that they do.

There was an extensive response from all the groups involved in the ACE programme, as well as from hon. Members representing Northern Ireland constituencies. All opposed the 25 per cent. cut. Most were not warned or consulted. As a result of the protest, £2 million-worth of transitional help has been identified by the Government. We have not been told, however, where that money has come from. In any event, it will not go far enough when set against the ACE scheme. Many full-time employees who are funded through the scheme will still be made redundant after cuts have been implemented.

The Government claim that the cuts are the result of a rapidly changing economic situation. They say that the community work programme will take the place of lost training provisions. They know, however, that the CWP is barely up and running. Far fewer people are being trained under it than was planned. The ACE cuts are economically and socially short sighted.

I give the example of Dungannon, which takes fifth place in the list of unemployment black spots in Northern Ireland. Of the job vacancies in Northern Ireland at present, only 3 per cent. are in the Dungannon area, yet the Dungannon development association alone is losing 40 to 50 jobs as a result of cuts to the ACE programme.

The pilot scheme of community work was launched in May 1995. The aim behind it is to target the long-term unemployed and provide them with meaningful paid work. The scheme, which is targeted in Fermanagh, Strabane and west Belfast, is designed to assist 1,000 people. I understand that, as yet, only 250 of the 1,000 places have been filled.

I shall deal now with two issues that I mentioned earlier—the problems of Northern Ireland's beef industry and electricity prices. As has been well documented, electricity prices in Northern Ireland are still some 20 per cent. higher than the average in Great Britain, and that is affecting the Northern Ireland economy. It is obvious that those who are considering inward investment will look closely at electricity prices when comparing the advantages of relocation in Northern Ireland and elsewhere in the UK. Many food processing concerns that are already in Northern Ireland have profit margins of about 2 to 3 per cent., which will be affected by any large increase in electricity prices.

There have been a number of reports on Northern Ireland electricity prices. Perhaps the best known is that of the Select Committee on Northern Ireland Affairs, which drew attention to the problems caused by privatisation. The basis of those problems is the awarding of long-term contracts to the generators that require Northern Ireland Electricity to take all the electricity produced by those generators. Some 60 per cent. of final electricity charges in Northern Ireland results from payments to the generators; the remaining 40 per cent. relates to transmission and other costs, and produces substantial profits for Northern Ireland Electricity. I urge the Government to look closely both at power purchase agreements and at NIE's profitability.

The regulator of NIE, Douglas McIldoon, has issued a consultation document in which he makes suggestions and asks for ideas about how the problem might be addressed. It is clear, however, that the only way in which to address it is to examine the power purchase agreements—the contracts with the generators, some of which will last well into the next century. The lack of regulation of those contracts, and the lack of any requirement for the generators to pass efficiency gains to the transmission companies, have caused the high electricity prices. I hope that, as a result of the regulator's consultation document, the contracts can be referred to the Monopolies and Mergers Commission, or can be renegotiated.

Agriculture is one of the largest sectors of the Northern Ireland economy, if not the largest, and within that sector the beef industry is extremely important. A quick glance at some statistics shows just how important it is. The beef export trade is worth up to £500 million a year, and about 80 per cent. of beef from Northern Ireland is exported, much of it to Europe. More than 16,000 farms in Northern Ireland rely to some extent on cattle for the beef industry, and as many as 10,000 have herds of 10 or more. There are more than 3,000 jobs in beef processing in the Province.

Despite all that, Northern Ireland has a very low incidence of bovine spongiform encephalopathy: about 1 per cent. of the incidence in the United Kingdom. The European ban on beef products, however, has had a devastating effect on the Northern Ireland economy. Because of the importance of agriculture to the economy, that effect has been far more marked in the small area of the Province than in the rest of the United Kingdom. As I have said, many Northern Ireland companies sell directly to Europe. There has also been a knock-on effect in the meat processing industry, in which jobs have been threatened. Those, too, are skilled jobs.

The Labour party believes that the controls now in place in relation to specified offals are such that the European ban on British beef should be lifted. We urge the Government to redouble their efforts in the European Council to achieve the lifting of that ban. We cannot agree, however, that Northern Ireland should be treated as an entity separate from the United Kingdom in relation to beef products.

I congratulate the Ulster Unionists on their choice of subject. It has allowed us to highlight the possibilities and opportunities that are available to Northern Ireland, particularly if the forthcoming elections and negotiations are successful.

5.14 pm

Mr. Andrew Hunter (Basingstoke)

My response to the greater part of the thesis propounded by the hon. Member for Barnsley, Central (Mr. Illsley) is that he must not be surprised if Conservative Members shudder with horror at the realisation that Labour economic policy would be as disastrous for the Province as it would be for the rest of the United Kingdom. The virtues that the hon. Gentleman sought to extol would have quite the opposite effect. We would witness job losses, increased costs for businesses, the stifling of economic growth through regulation and lower productivity and profitability; and, following the introduction of the social chapter—which would be wholly disadvantageous—we would discover that it was neither wanted nor needed.

Originally, Madam Deputy Speaker, I had no intention of trying to catch your eye. I believed that it would be best to leave Northern Ireland Members to speak in the debate. There is a little time to go, however, and I welcome this opportunity to make one or two selective observations. I believe that any accurate overview of the general state of the Northern Ireland economy must, on the whole, present an encouraging and satisfactory picture. The essential issue—the essential good news—is measured in the simple statistic that the Province enjoys greater economic growth than the rest of the United Kingdom. Growth last year amounted to some 3.5 per cent., compared with only 2.6 per cent. on the mainland.

I note, however, that the report that forms the basis of today's debate includes a word of caution. The Northern Ireland Economic Council recognises that there is less slack in the local economy than in the national economy, and warns that a significant relaxation of fiscal or monetary policy could have undesirable effects. It postulates that firms might simply come up against shortages—especially in the short term—which could feed through into inflation. Obviously, that would not be in the interests of Northern Ireland. I wonder whether the Government accept the council's thesis, and whether they acknowledge that a significant relaxation of fiscal or monetary policy could have adverse impacts. If so, I hope that that potential danger will remain firmly in their sights.

A number of hon. Members have referred to the relevance, and the supreme importance, of a permanent ceasefire to economic prospects in Northern Ireland. That is self-evident, and I shall add little to what has already been said. It is obvious that Northern Ireland's economy would receive an immediate and permanent boost if there were a permanent ceasefire—a point that Sir George Quigley makes in his report: The economy was beginning to reap significant benefits from the prospect of a permanent and durable peace and it is important for future economic growth that no effort is spared in the search for a solution which will consolidate and enhance the gains of the past seventeen months". Sir George was writing in February, shortly before the resumption of violence. It is equally clear that inward investment and business confidence were dealt a severe blow by that resumption of violence.

There was a more direct implication. The paramilitary ceasefires had enabled the Government to plan for a reduction of nearly £300 million in expenditure on law and order in the years leading up to 1999. Given the uncertainty of the security position, that poses questions about the organising of priorities.

Employment was the subject of the first inquiry and report of the Select Committee on Northern Ireland Affairs. During their deliberations, its members became aware of the complexity and depth of the problems and that there are no simple, short-term solutions. During the Committee's work, I postulated a heresy: the argument that there might be mileage in considering turning the Northern Ireland economy into a tax haven to promote greater economic growth than in the rest of the United Kingdom. My arguments were not accepted. It was suggested that they were too inherently inflationary, but there is a point to make that lightening, wherever possible, the burden of direct and indirect taxation on businesses in the Province should be an objective.

The unemployment statistics are encouraging. As we have heard, unemployment in Northern Ireland is at its lowest level since May 1981 and has fallen in nine of the past 12 months. It is pleasing to note that short-term unemployment in Northern Ireland is rapidly approaching the national average. There is less reason for satisfaction with regard to long-term unemployment, which is clearly a significant problem and, I fear, will continue to exist, it seems, for some time. It must remain firmly in the Government's sight that long-term unemployment problems should receive all possible attention.

The Government rightly draw attention to the fact that, since September 1994, there have been 17 new cases of inward investment. Those are worth some £360 million and have the potential to create, over a short period, some 5,000 new jobs. I wonder, however, whether the various projects that are being established can be attributed to the investment conference in Belfast, which was held, if I recall correctly, in February last year—perhaps it was at the end of the previous year—and to the similar conference in the United States of America in March last year. Are those initiatives resulting in a return on investment and in an increase in inward investment in Northern Ireland?

I note with interest the favourable increase in exports from the Province—some 25 per cent. from 1991 to 1994. That, one presumes, is an accurate reflection of, among other things, Northern Ireland businesses' increasing competitiveness. Do the Government have a view on the sustainability of that level of increase? If it can be sustained, it is encouraging news.

On another more general point—the concept of targeting social needs—the Government have rightly made a priority of seeking to tackle disadvantage and of promoting equality of opportunity and treatment for everyone in Northern Ireland. The social needs programme is targeting resources on regions and individuals who are deemed to be in most need. I hope that it will result in a reduction in social and economic differences.

When he replies to the debate, will my right hon. Friend the Minister find an opportunity to make an assessment of the effectiveness of the three major schemes of which I am aware: Making Belfast Work, the Londonderry initiative and the rural development programme? Does he believe that sufficient and acceptable progress is being made in those initiatives?

With regard to the report, I shall be ultra-selective and, if I may, focus attention on paragraphs 2.19 to 2.24 on pages 15 to 18, which deal with public expenditure. Paragraph 2.19 caught my attention in particular. It states: The control of public spending is crucial to the Government's ability to meet public finance objectives and allow room for tax reductions. I received that favourably. It continues: From Northern Ireland's viewpoint the Chancellor's decision on the future path of public spending is crucial. This reflects the fact that public expenditure is much more important for Northern Ireland than the UK". The remainder of the paragraph, however, contains an alarming statement. We are reminded: In public spending matters, however, the reality of expenditure outturns can sometimes differ from the rhetoric. For example, the planned 1.3 per cent real cut for the Control Total…spending in 1994–95 turned into a 1.4 per cent rise in real spending. It is alarming and disturbing that what was intended to be a real terms reduction in public expenditure should result in a real terms increase. Has that point caught in particular the attention of my right hon. Friend the Minister? What measures does he believe can be taken to ensure that, in future, expenditure is more in line with Government planning?

Paragraph 2.20 on page 16 illustrates a dilemma facing the Government. It states: The Secretary of State for Northern Ireland has identified three public expenditure priorities—'defeating terrorism, strengthening the NI economy and targeting social need'". The paragraph continues: Since the ceasefires in late 1994 these priorities have been reordered". Strengthening the Northern Ireland economy became the first priority, targeting social need the second and providing whatever level of resources is necessary for the preservation of law and order in Northern Ireland became the third. With the current uncertainty, where do we stand now in relation to Government priorities? With violence resumed on the mainland, what priorities can the Government select when the level of resources that may need to be devoted to security matters is unknown? Clearly, such circumstances make tight Government planning of economic matters difficult.

Paragraph 2.21 refers to the so-called peace dividend and contains the attractive and appealing speculation that the value of the annual dividend under conditions of peace and political stability varied between a maximum estimate of £601m and 12,277 positions to a minimum of £427m and 8,168 positions". Presumably, such reasoning must now be put into abeyance. At present, we simply cannot speak or plan in terms of an effective peace dividend.

The following paragraph makes the vital and central point on the need to deliver public services in an efficient and effective manner: the reallocation of these funds should not deflect attention from the need to deliver public services in an efficient and effective manner. It continues by focusing attention on the Department of Health and Social Services draft regional plan. Will my right hon. Friend give reassurances that the Government bear in mind the need for public funds to be spent in the most and efficient and effective manner possible, not least in the vital sector of health and social services spending?

My last substantive, point on paragraph 2.24, is that we are again faced with the dilemma of setting public expenditure priorities in the present uncertainty about security. Perhaps in his reply the Minister will address that issue because the fundamental problem facing the Government is that when they do not know what resources need to be allocated to security matters, it is difficult for them to plan public expenditure. Any overview of the Province's economy is favourable and encouraging, and it is good that economic recovery and growth are advancing. The report shows that we can have confidence in the Government's handling of the situation.

5.30 pm

Dr. Norman A. Godman (Greenock and Port Glasgow)

I compliment the members of the Ulster Unionist party for choosing this subject for debate. I say to the hon. Member for Basingstoke (Mr. Hunter) that I would be happy to argue the case for the social chapter and a minimum wage and for a Scottish Parliament and a tartan tax. However, that would take me outwith the framework of the debate. In my brief speech I wish to put several questions to the Minister about the Northern Ireland fishing industry, the Action for Community Employment—or ACE—programme, the community work programme and sea ferry and air services between Northern Ireland and Scotland.

The Northern Ireland fishing industry employs more than 2,000 people and is important to small fishing communities, as is the case in and around the Firth of Clyde. In 1994, fish landings were worth £18 million. My questions are prompted by paragraph 5.42 on page 64 of the document called "Northern Ireland Expenditure Plans and Priorities". The paragraph refers to the European Union's multi-action guidance programme, which states that by the end of this year the United Kingdom's fishing fleet will have to be reduced by about 19 per cent. The paragraph states: A decommissioning scheme was introduced in 1993–94 and in 1995–96 a further 13 Northern Ireland applications were successful under the scheme at a cost of £1.5 million. This brings the total of successful applications in Northern Ireland to 55 at a total cost of £4.5 million and equates to a 20 per cent. reduction in the gross registered tonnage of the Northern Ireland fleet. The position is monitored so that action can be taken if effort by the remaining vessels should increase. As the son of a fisherman and a fishergirl or, as she would have been known in those days a fish house lass, throughout my adult life I have argued that there are too many fishermen pursuing too few fish around our coasts. The document seems to show that the Northern Ireland fishing fleet has met the obligation that was placed upon the United Kingdom by the European Union to reduce the gross registered tonnage, because it has reduced its fleet by 20 per cent. and the requirement is 19 per cent. Will the Government assist with modernising that reduced fleet?

In Northern Ireland, as in the west of Scotland from Ullapool to Girvan and beyond, there is an aging fleet. That does not make sense for the safety of fishermen or for making life less difficult for the men who pursue the most hazardous occupation in the United Kingdom. How many vessels have been ordered by the owners of vessels in Northern Ireland? How many conversions to increase engine capacity have been encouraged by the Northern Ireland Office for EU funding? Does the Northern Ireland fleet, like those of the Western Isles and the Clyde Fishermen's Association, suffer because up to now the United Kingdom has failed to meet the requirements of the multi-action guidance programme?

Does the Minister agree that there should be grants to replace aging vessels that may become less and less efficient and perhaps more and more hazardous in heavy weather? I readily acknowledge that fishing power must be constrained by the need to maintain healthy stocks. If any fishermen are to be banned, they should be the Spanish. I hope that the Minister will forgive my ethnocentricity. [Interruption.] A common fisheries policy should be based upon regional preferences and management because in fragile fishing communities there are few options for other forms of employment. That holds just as strongly for Northern Ireland and, indeed, for some of the smaller fishing communities south of the border, as it does for Scotland.

Bearing in mind the need to constrain fishing effort to the total allowable catches and the need to maintain viable stocks, a reduced fleet must be modern. I should welcome the Minister's response to the concerns that I have expressed—dare I say it—on behalf of the fishermen of Northern Ireland and Scotland. Fishing is important because, as I have said, more than 2,000 people in Northern Ireland are directly employed in it. Table 5.19 of the Government's report is entitled "Fisheries sector performance indicators". What is the employment ratio for the catching sector of the Northern Ireland fishing industry?

I shall now deal with ACE and the community work programme. The last time that I was in Northern Ireland, some representatives of voluntary organisations, one of whom was Quintin Oliver, who I think is the chief executive of the Northern Ireland Council for Voluntary Action, expressed concern about the decision savagely to reduce the ACE programme. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) said that the reduction was about 25 per cent. Representatives from community and voluntary organisations expressed deep anger and serious concern about this ill-judged decision.

In paragraph 5.16 of the Northern Ireland Economic Council's report, the authors state: Within the overall Industry, Trade and Employment (ITE) programme an important announcement was the decision by the Training and Employment Agency (T&EA) to cut the Action for Community Employment (ACE) budget by 25 per cent., thereby reducing the number of placements by 1,800. The authors go on to state that the programme was attractive for those receiving no or relatively low benefit and has attracted high levels of part-time jobs". The hon. Member for Basingstoke said that he was highly selective in his remarks about such documents. I should point out that this document goes on to state: It is, of course, precisely in this area where much new job growth has taken place. However, the authors then comment: As yet, with the Community Work Programme not fully operational there do not appear to be any alternatives in place to accommodate 'discouraged workers' most affected by the scheme. I should like to ask the Minister what will happen to the community work programme—which, two months ago, a ministerial colleague of his suggested would, by and large, take the place of much of the ACE programme.

Paragraph 6.159 of "Northern Ireland Expenditure Plans and Priorities" states that the community work programme was introduced in April 1995 on a two year pilot basis and will provide up to 1,000 places. Its aim is to assist local communities to break the cycle of long-term unemployment in their areas by assessing and developing the skills of long-term unemployed adults as a resource to effect local improvements. The three areas of Fermanagh, Strabane and west Belfast are then mentioned.

What is to happen to that community work programme? Has the Northern Ireland Office now had a chance to assess the implications of the 25 per cent. cut in the ACE programme? Will that lead to job losses? Will those job losses be more than recompensed by the jobs created by the community work programme? Those are important questions for people living in badly deprived areas in many communities in Northern Ireland. Those people—particularly those associated with voluntary community organisations—have a right to know the answers to those questions.

At the weekend there was mention in the Scottish press of a ferry service between Northern Ireland and Scotland. Some have argued that such a service between Ballycastle and Campbeltown could do much to revive the economy of the Mull of Kintyre, which has recently suffered severely from job losses. If such a service were to link Ballycastle, Campbeltown and, for example, Wemyss bay, rather than Greenock, and if it were to be extended to Moville in county Donegal, would that allow those concerned to obtain more easily funding from the European Union, as it would involve ferry links between two countries, as well as Northern Ireland and Scotland in the United Kingdom?

The best case might be for the creation by Caledonian MacBrayne, for example, of a service between Ballycastle and Campeltown in the first instance, and we could then see how that service develops, particularly in the tourist season.

I should like, finally, to ask a question about air services between Northern Ireland and Scotland, as it has been brought to my attention that there has been a reduction in such services. I find that the service between Glasgow airport—that superb airport, which is just a few minutes from my constituency—and Belfast, for example, is very useful. I should be most pleased if the Minister were able to refute the complaint that those services have been reduced. It would be a shame if such a reduction has taken place because of its effect on the development of air services and sea ferries.

If the Minister cannot answer all my questions in his reply—especially those on the multi-action guidance programme—I shall be happy to await a letter from him.

5.44 pm

Mr. Harry Barnes (North-East Derbyshire)

It is a pleasure to follow my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman), who takes a serious interest in Northern Ireland affairs. Like me, he is an associate member of the British-Irish interparliamentary body—a body that we wish Ulster Unionists would pay attention to because it is able to discuss such matters as the economic development of the island of Ireland, and the very important role played by the Northern Ireland economy.

I cannot follow my hon. Friend the Member for Greenock and Port Glasgow on subjects related to fishing or to ferry services, partly because the constituency that I represent is entirely land-locked, and I tend not to have any knowledge on those topics.

I was interested in the points that my hon. Friend the Member for Greenock and Port Glasgow raised about the cuts in the Action for Community Employment programme in Northern Ireland. In fact, the sections of the report that he quoted to us were the ones that I had marked in the report. I therefore do not need to develop those points, except to say that paragraph 5.16 goes on to state: The withdrawal of ACE is likely to cause funding difficulties for a number of voluntary and community organisations. There is a plethora of voluntary and community organisations in Northern Ireland. The possibility of voluntary organisations being established in Northern Ireland is considerably aided because politics in Northern Ireland have their own peculiarities and because political parties there are not part of government. Many of those organisations operate on a cross-community basis, and little could be more important than developing that type of work and building such links and connections. Therefore, cuts in the ACE programme that affect those programmes is a very serious matter, and would be additional to equivalent action taken in Britain.

Mr. William Ross

Does the hon. Gentleman care to consider my thesis that one of the reasons why there are so many of those bodies is the powerlessness of local government? There are so many things that local government could and should be doing, but which it is not doing.

Mr. Barnes

It is certainly an encouragement to voluntary organisations when local government is not active or achieving what it should be achieving, or when it is prevented from operating in the manner it is in Northern Ireland. I am a great advocate of establishing the equivalent of parish councils in urban areas—what are called neighbourhood councils. I think that such councils should act as pressure groups on behalf of their communities. Like voluntary organisations, they should get together and enact plans in their areas to pressurise those with administrative responsibility in wider local government, in the Province and in Westminster.

I thought that the speech of my hon. Friend the Member for Barnsley, Central (Mr. Illsley) was excellent. Anyone from Northern Ireland who listens to his contribution—as they will do—will be very impressed with the relevance of Labour's policies to Northern Ireland in such matters as training, education, jobs, provision for small business, the minimum wage, the social chapter, electricity prices in Northern Ireland, beef, specific provisions on Northern Ireland and Labour's promise on the Northern Ireland skills audit. All these are of tremendous relevance to the people of Northern Ireland.

The great pity is that, however much attention is paid in Northern Ireland to my Front-Bench colleague's views, Labour does not run candidates in Northern Ireland so the people of Northern Ireland cannot take up his valuable ideas. Labour organisation in Northern Ireland, tying in with our policies, needs to be taken on board to make those views a reality. Unless other political parties in Northern Ireland are willing to pick up some of our ideas, offer them to the electorate and do so in a way that cuts across community divisions, Labour is in a very good position to do it. I am afraid that that is a bit of a back-handed compliment to my hon. Friend the Member for Barnsley, Central but it is sincere.

It is great that we are debating the Northern Ireland economy, which is important not only in general terms but in developing the peace process. An improved economy and growing prosperity are good in themselves but can also be very important in tackling the problems of violence and intimidation.

Michael Barratt-Brown wrote an excellent pamphlet on the tragedy in Yugoslavia. It points out that some of the major problems that caused its conflict arose because economic factors divided the people. On a smaller scale, Northern Ireland has been behind Britain in terms of economics—for example, it has had higher unemployment rates. This has meant that it has been possible for extremists to develop sectarian policies and get paramilitary support—they find it easier to do so in adverse economic circumstances. We should all be very aware of the links between economics, divisions and violence.

There is a problem in talking about growth in Northern Ireland. There is a sense in which growth and improved prosperity undermine violence, but an agreement to end violence would allow economic growth to develop. Economic growth and the end of violence are not in separate compartments. We cannot say that the start of one will lead to the other—they are interlinked.

We have opportunities to debate Northern Ireland economic matters but we sometimes fail to make full use of them. Twice a year we have appropriation debates. I have always said that they are the nearest thing to Budget debates for Northern Ireland. We should take care to develop them into serious discussions such as that which we are having today. It is often the case—again, this might be natural given the position of local government in Northern Ireland—that Northern Ireland Members attend appropriation debates and use them as opportunities to stress constituency problems and their case loads because no other avenues are available to them. Sometimes, however, it would be good to change that and have a debate like today's so that we can determine the different political stances.

I congratulate the Ulster Unionist party on providing this opportunity to discuss the Northern Ireland Economic Council's report and on producing its own document entitled "Economic Prosperity for All". It is dated May 1996 so I presume that it is linked with this debate. I am not saying that I go along with all the ideas expressed in it, but it is important that the party has produced it. I would encourage other political parties in Northern Ireland to develop their own approaches and strategies.

The leader of the Social and Democratic Labour party said that there were common interests between his party and what the right hon. Member for Lagan Valley (Sir J. Molyneaux) said, but if we look back to the previous election, it is clear that there were some differences in the two parties' manifestos. In a sense, the SDLP manifesto contains economic values that I would warm to more readily than I could warm to the contents of the other manifestos. It said things such as: We believe that efficient and effective public services are essential to our well-being and development as a community", and that it is concerned that moves from direct to indirect taxation are at the expense of those on lower incomes". It states that a shift to a more general indirect taxation should not proceed unless accompanied by relevant compensation measures for people in lower income groups". It also mentions reform of the common agricultural policy and the refocusing of investment strategies and appeals for inward investment. That is also part of the UUP's position, although it is given a different flavour.

Given the indications of agreement from the leader of the SDLP, I wonder whether what we had in 1992 was a traditional Social Democratic and Labour party agenda and that what is now developing is new Social Democratic and Labour party provisions which, as long as they are in line with what was said by members of our Front Bench, might be entirely acceptable but might not have developed as clearly in some areas as they had in the past.

One problem with the economic structure of Northern Ireland within the United Kingdom is that Northern Ireland has only about 3 per cent. of the UK population and is therefore not seen as being a major influence in determining policy. The Northern Ireland Office often seems to run up against the general stance adopted by the Conservative party and is sometimes obliged to pick up some nonsense such as the privatisation of electricity, the hands-off state and agency provisions, which operate elsewhere. It is felt that such agendas can be plonked on Northern Ireland, but the Government should pay attention to the economic and social circumstances of Northern Ireland. Even if the Government do not believe that policies of a more collective nature are appropriate for Britain, they should consider their relevance to Northern Ireland.

As the council's report shows, dependence on benefits is considerably greater in Northern Ireland than in Britain, so cuts in benefits have a disproportionately greater effect in Northern Ireland unless they are made good by improved job opportunities. In addition, because of the poverty trap, disincentives to take work will be even greater in Northern Ireland than in Britain. The minimum wage, which was stressed by my hon. Friend the Member for Barnsley, Central, is therefore of great relevance to Northern Ireland. Employment opportunities would lead not to the same degree of poverty trap provision, but would allow improved earnings to enter the family budget.

It has been pointed out that Northern Ireland's housing market has experienced some buoyancy. Growth in the Northern Ireland economy might therefore be hindered in ways that it is not elsewhere. Economic growth and development, especially the sort in which I believe, has often been associated with house building. The emergence from the problems of the 1930s, at the end of the depression before the war started, was very much associated with council house building. All sorts of benefits accrue as a result of house building because people in new houses want new furniture, new curtains and new wallpaper, which gives a Keynesian-type boost to the economy. There might be less scope for that to occur in Northern Ireland due to the slightly more buoyant housing market of recent years and some of the roles played by the Housing Executive, although the Government have been trying to interfere with it.

Economic performance was relatively good in Northern Ireland in 1995. As in housing, that means that there is less slack to pull in. The Government should consider that seriously when they work out which policies they feel are relevant to Northern Ireland. We should examine reports of the Select Committee on Northern Ireland Affairs and consider the work of the British-Irish interparliamentary body, which often discusses economic relationships in the European Union.

Such matters are the stuff of politics. Hon. Members rush into the Chamber to discuss Northern Ireland concerns about bombs, the constitution and high politics, but, as is obvious from today's debate, they do not do that for the bread-and-butter concerns of the people of Northern Ireland. Yet the Northern Ireland people want us to address exactly those matters. Indeed, in doing so, we sometimes discover different combinations of alliances. Perhaps we should have more solid argument and some good ding-dongs in the House about Northern Ireland's economic direction among all its politicians rather than ding-dongs about constitutional developments and community divisions. That is the direction that the House needs to take.

The Northern Ireland Economic Council's report contains much of considerable interest. It certainly does not just peddle Government prejudices for certain policies. It was unfortunate that the hon. Member for Basingstoke (Mr. Hunter), who has now left the Chamber, suggested that there should be cut after cut to facilitate income tax reductions. That might be a big debate affecting British politics, but in Northern Ireland, it could have a serious effect on the possibilities of achieving improvement and growth.

The report makes a number of suggestions on page 68. It calls for greater partnership between the public and private sectors, which is certainly the language of new Labour, and should therefore be carefully considered. It also says that there is the need to ensure that economic opportunities provided by the paramilitary ceasefires are built upon". At the moment, the ending of the paramilitary ceasefires is directed more towards London than Northern Ireland. In the near future, there might be a restoration of a ceasefire and opportunities might begin to flow from it. I hope that when that occurs, we do not consider it a great chance to take various financial resources away from Northern Ireland. Such a ceasefire should be an opportunity to encourage developments in Northern Ireland and take action on an economic and social front that will take the ground away from the paramilitaries. I have always been insistent that we should do that.

I greatly support the bipartisan policy in Northern Ireland which allows debates such as these. But I differed from the line taken by my hon. Friend the Member for Barnsley, Central, the Front-Bench spokesman, on the prevention of terrorism Act because I thought that precisely such a line could give ground to the paramilitaries that they could use and argue to recruit people. We need to stop the recruitment of paramilitaries, and nothing would stop it more effectively than people having more money in their pockets, being able to travel, mix with people, build a life for the future and have security. We should be working together to establish the exact formula by which such economic change can be achieved, regardless of how difficult ding-dong debates on economic ideas may be.

6.5 pm

Mr. William Ross (East Londonderry)

A number of hon. Members have begun their speeches by expressing thanks to members of the Ulster Unionist party for tabling the motion on this half Supply day that falls to us each year. I express my thanks to the hon. Member for Greenock and Port Glasgow (Dr. Godman) for covering the fishing industry. It certainly saves me any trouble in that direction. He referred to some very important issues to which I hope we shall return before we are very much older. The industry is of concern to many people in Northern Ireland as well as far further afield. The number of fish in the sea, what harvests we can reap, and the number of people who can make a living from the industry are problems that will not be easily resolved or simply go away.

I express my thanks to the hon. Member for Foyle (Mr. Hume), who has left the Chamber, for raising the ceasefire, or the possible re-ceasefire of the IRA. I must confess that anyone who watched Jonathan Dimbleby interview one of Sinn Fein-IRA's leading members yesterday will not have been terribly encouraged by the responses that Mr. Dimbleby received. One of my friends said that they wished that the pair were put on again, which was an interesting departure from the point of view one normally hears whenever such spokesmen appear on our screens.

I say to those who will be speaking to the hon. Member for Foyle that I hope that he and the IRA-Sinn Fein understand that the sort of ceasefire that we had is not good enough to attract anyone. It must go far beyond that; there must be a real ceasefire and a real cessation of violence against those who oppose the gunman in any shape or form. We have seen what has happened over the past 20 months or more and it is just not acceptable that such behaviour continued—even after a ceasefire was announced. It must be for real.

I should like to turn to the Northern Ireland meat industry, which is of course bound up in the destiny of the United Kingdom beef industry at the moment. As has already been pointed out, the situation is comparatively more serious in Northern Ireland than elsewhere in the United Kingdom because Northern Ireland exports a much greater proportion of its beef production than England or Wales. I shall leave Scotland out of this discussion for the moment—it also exports a large amount of beef and it has its own peculiar problems.

I shall illustrate the importance of the beef industry to Northern Ireland by pointing out that the United Kingdom exported some 246,000 tonnes of beef in 1994. It is difficult to quantify the number of cattle that were exported because some of it was on the bone and some was boned beef. Of that 246,000 tonnes, 57,400 tonnes came from Northern Ireland alone—that is approximately 28 per cent. of the United Kingdom's beef exports. That puts the importance of Northern Ireland's beef industry into perspective. When one combines Scotland's beef exports with Northern Ireland's beef exports, one sees that about half the exports come from those two areas of the United Kingdom.

A few days after the beef export ban was imposed, I attended a meeting of farmers at the Balmoral centre in Belfast. A spokesman for the transport organisations informed the meeting that 104 specialised lorries have nothing to do. That is a critical situation: the lorries are important economic assets that are doing nothing and that is costing a lot of money. Jobs will be lost if the lorries sit idle. This is only one tiny facet of the problems of the beef industry with which the Government have to grapple.

The lack of confidence in that sector was exposed by a report of the PA Consulting Group dated 7 May. The report pointed out that investment in the beef industry has reduced by exactly 100 per cent. compared with one year ago. In other words, people have decided not to invest in the beef industry in Northern Ireland. This is a serious situation and there are all sorts of nuances. We shall have ample opportunity to discuss and explore this entire issue in Committee this week and on the Floor of the House.

I recognise that the whole of the United Kingdom's beef industry sinks or swims together, but I contend that with the traceability capacity that we have in Northern Ireland, with the quality assurance that we have in Northern Ireland and with the improving situation in Scotland and elsewhere in the United Kingdom regarding traceability, we can guarantee the beef. We should supply this beef and use it as a crowbar to reopen the overseas market and to break the ban. We could begin this process with the Northern Ireland product.

I understand all the arguments about treating everyone the same, but the situation is not the same everywhere. We could use this key to unlock the door to Europe once more.

There is a problem in relation to bull beef and what we will do about it. We cannot open the door and put those animals out to grass—and everyone knows that. That is part and parcel of the economic difficulty facing the whole farming industry. It is like a row of dominoes—when one is pushed, they all fall. The key is the European market; the key is opening up the world market for our beef. We need to get our population-20 million to 30 million people—to have their Sunday roast again, which would be a great help.

The report of the PA Consulting Group showed that, compared with a year ago, orders are down, output is expected to rise slightly over the next 12 months and investment overall is up by 13 per cent. Given that there was no investment in meat processing, other sectors in Northern Ireland have had an increased level of investment, which is to be welcomed. The figures should be viewed in a positive light in the medium to long term so far as the Northern Ireland economy is concerned. However, there are some worries in the manufacturing sector.

I am sure that over the weekend hon. Members listened, with a fair degree of jealousy, to the possibility of a large investment going to south Wales—we all hoped that it would come to our areas. The hon. Member for Greenock and Port Glasgow is smiling—no doubt he would have been happy to have had that investment in Port Glasgow. Any part of the United Kingdom would be happy to have that sort of investment. We welcome the fact that investment is coming into the United Kingdom, and we hope that similar investments will be made in the future.

We hope that when investors come here they will be encouraged to increase their uptake of local graduates and that they will to do more research and development in the United Kingdom, particularly in Northern Ireland. My hon. Friend the Member for Belfast, North (Mr. Walker) agreed with me when I pointed out that electronics firms are employing a large number of graduates—and we want to see more of that. We want our young people to stay at home, and we want to see research and development structures at home. That is how we will get more home-grown firms. They will provide a lot of employment in the future and we need to grab a piece of the action. We have to get our best trained young people to work at home, rather than export them to America and elsewhere.

I refer to factories in my constituency—Benelux, which appears to be experiencing some job losses; and AVX in Coleraine which laid off 78 people last weekend. In relation to AVX, I hope that there will be further reinvestment, that there will be retooling, that it will get back its market share, and that the jobs will be restored. These are areas of high unemployment and we need to keep all the jobs that currently exist.

Interesting figures are starting to emerge about the general unemployment rate in Northern Ireland, in that there is a big difference between the level of male and female unemployment. The female unemployment rate is currently 6 per cent. or less and the male unemployment rate is three times that figure. This is worrying. We would like the male unemployment rate to drop. One firm that is engaged in textiles had to put its factory in Newry rather than Strabane because it could not get workers in Strabane—which has more than 30 per cent. unemployment, so there is something wrong somewhere. Perhaps it is the wrong sort of work; perhaps there are not enough people unemployed as opposed to the high percentage. It is worrying that factories are saying that they cannot get enough workers in areas of high unemployment. There were 800 jobs involved in that case.

If the Government have not done research as to why this is so, it is long overdue. We need to find out why female unemployment is down to a reasonable level when compared with the rest of the United Kingdom—and could become lower with a bit of hard work—and why male unemployment is at an atrociously high level. I hope that the Minister will carefully consider the reasons for that and target the problem of male unemployment, as opposed to that of female unemployment, which is largely resolved.

The Minister will recall that Baroness Denton visited the Coleraine area on Friday 3 May. I accompanied her on visits that I had arranged to three manufacturing firms.

The first firm was a very small, high-precision engineering concern, operating from a farmyard. The second manufactured heavy truck bodies, fitted them into trucks and exported them. Interestingly, we had some Danish visitors with us, and when we went into that works the first truck body that they saw was labelled "Denmark", so the exports had got that far. The Danish visitors were even more pleased to discover that the brochures were printed in their own language—a detail that so many people never seem to think about. The third firm was a very small organisation in one of our enterprise parks in Coleraine, which manufactured a range of medical equipment, now being exported far and wide.

The interesting thing about all those small, healthy organisations was that each was home grown. All were started by local people. One of those people had started the business more than 60 years ago and built up a fairly large organisation by Northern Ireland standards. The other two firms are much more recent, and tiny, and do high-quality work very well.

What more do the Government propose to do to encourage such enterprises? They are home grown. These folks will not uproot and leave at the first chill wind of economic change. There may be a fluctuation in the number of employees if things get really difficult, but they will remain there and will not go away. Those small firms need more encouragement, and more overseas investment, because many of them operate by supplying larger organisations, some of which are created by overseas investment and some of which are home grown.

What positive results have emerged from the visit of our American friends to Belfast and the visit of so many people from Northern Ireland to Washington? It was a great jamboree. We all enjoyed it, but we did not go for the beer; we went for jobs. I should like to think that some good investment had begun to appear as a result. I have not been told of very much yet. It is time that we saw some results.

As has been said, inward investment will not be encouraged by energy prices in Northern Ireland. You will recall, Mr. Deputy Speaker, that Ulster Unionist Members were not at all happy about the way in which Northern Ireland Electricity was privatised. It was sold off with long-term high profits built into the scheme. There is little hope of an early review of that long-term payment system, which will force prices up and up.

The fuel used for generation—oil and so on—is cheaper than it was at the start of the privatisation period, yet the people of Northern Ireland find the cost of electricity still increasing. They are not happy, we are not happy, and the large industrial users, who find that about 80 per cent. of the final cost of electricity consumed is taken up by generation, are very unhappy, to put it mildly.

Those generation costs will increase considerably as a result of the long-term agreements entered into when Northern Ireland Electricity was privatised. I wonder whether the Government support package of about £60 million will solve the problem. Perhaps we should seek a way to revamp those agreements, for conditions have changed so much in even the short time since our electricity was privatised. Whatever money there is must be used to control generating costs. Will the Government give a commitment in that regard?

Several other measures could and should be considered in that regard. We still have the problem of the cost of heavy oil and the VAT charged on it. We still have the problem of the gas pipeline, which is tied to British Gas purchasing the Ballylumford station. I understand that the price of that gas is likely to be roughly double the current price of gas in Great Britain. We also want to know how much of that gas will go for domestic consumption and for consumption by industry other than electricity generation.

The subject is all the more topical because we all woke up this morning to hear on the radio that the gas industry over here was being lambasted right, left and centre for unconscionably high profits, and that massive reductions—I believe up to 20 per cent.—are demanded.

If the gas price charged to people in Great Britain steadily decreases, will the gas price charged to people in Northern Ireland remain at its existing unrealistically, scandalously high level for the generation of electricity? If so, British Gas would add to its profits, not only from the gas, but from the electricity that it produces and sells from that gas. That would not be tenable.

I understand that British Gas is involved in explorations for gas in the Irish sea. If it finds gas there, what will be the price regime in relation to that, and what will the Government do about it? If the cost of electricity and gas for all industrial, commercial and household purposes in Northern Ireland is twice that in Great Britain, not many users of energy or gas will build factories in Northern Ireland. Right hon. and hon. Members who represent constituencies in south and west Scotland may be happy about that, because if those people want to remain close to the island of Ireland, that is where they will build a factory.

We must do something on a large scale and for the longer term about energy generation in Northern Ireland. That must be reflected, not only in this first contract period for gas and electricity prices, but in all succeeding contracts in succeeding years.

The Conservative party is always willing to push competition, and I am all in favour of competition, but we must get away from the present position. We seem to have replaced a public monopoly in energy with private ownership that is concentrated in so few hands that there is no real competition. We still have a managed market, in that the only person who is able to put pressure on companies to force down prices, to make them appear more realistic, is the regulator.

We must go beyond that. We must open up the market if we are to receive the benefits that we expect to flow from privatisation—greater efficiency and lower prices. That includes, in the medium term, moves toward generation in Northern Ireland from our native lignite sources. I know that there are all sorts of connected problems, but the lignite is there—a home-grown source of electricity—and we should push on with it, not hang back.

If we are building a conductor across the north channel to import electricity, we can use it to export electricity. We should be in the happy position where we could import and export electricity from and to the British and the European grid, and eventually from and to the Irish Republic. That should bring down the cost of the spinning reserve in electricity—I put the same arguments in the early 1970s—and, in turn, reduce electricity overheads. If those points had been considered when Northern Ireland Electricity was being sold off, we would not be in such a mess today. I hope that the Government will address them now.

Reference was made to transportation to and from Northern Ireland—the hon. Member for Greenock and Port Glasgow has always been very supportive of Northern Ireland in that regard. I hope not only that there will be an extra link to Campbeltown from Ballycastle but that something will be done about the roads in Scotland. Northern Ireland's economic problems do not begin and end at Larne—some extend far beyond that. I urge the Minister to speak to his right hon. Friend in the Scottish Office about improving those roads. Another problem is the fact that grant aid to ports differs according to whether they are in private or public ownership. I hope that the Minister recognises that anomaly and will ensure that the grants are equalised so that all ports are on a level playing field.

Hon. Members referred briefly to the tourist industry. As the hon. Member for South Down (Mr. McGrady) pointed out, much of the investment has been in luxury hotels and we face real difficulties with the provision of other accommodation. One constituent who lives on the north coast told me that in one afternoon last year she received 70 calls from people seeking accommodation. However, she had accepted the first caller and her accommodation was full. Heaven only knows where the other people stayed—I suspect that many did not stay in Northern Ireland as accommodation is scarce. We have reached a situation where Northern Ireland has nearly as many tourists as residents. We need a lot of accommodation—particularly medium-quality accommodation which ordinary men and women can afford—and a high-speed link to Scotland and elsewhere.

The speeches of my right hon. Friend the Member for Lagan Valley (Sir J. Molyneaux) and of the hon. Member for Foyle, the leader of the SDLP, underlined yet again the fact that the people of Northern Ireland can work together for the common economic good. I hope that that belief will be reflected in political and constitutional measures before too many weeks have passed.

6.32 pm

The Minister of State, Northern Ireland Office (Mr. Michael Ancram)

This has been a very useful debate, which was launched in an admirable manner by the right hon. Member for Lagan Valley (Sir J. Molyneaux). As the hon. Member for North-East Derbyshire (Mr. Barnes) pointed out, it is interesting that hon. Members talked, by and large, about the economy and did not drift into an appropriation order debate—although the hon. Member for East Londonderry (Mr. Ross) echoed a debate of that sort as he listed the points that he would like answered. Nevertheless, we have had a constructive debate to which I hope to respond positively.

The hon. Member for North-East Derbyshire—who unfortunately has had to leave the Chamber—gave his Front Bench a little grief about whether Labour should organise itself in Northern Ireland. I do not wish to interfere in that argument. However, he surprised me by suddenly heaping praise upon the hon. Member for Barnsley, Central (Mr. Illsley), whose speech took the rest of us by surprise. I think that he was trying to enunciate Labour's new policy for Northern Ireland and, in fairness to him, I shall study his remarks carefully.

The hon. Gentleman referred to issues such as training and education and the like, but he did not offer anything tangible. That may have been a deliberate strategy, because the last time that he spoke in such a debate, he told us what Labour intended to do in office. When I asked him what its policies would cost, he said that that was an unfair question. I then asked what services would be sacrificed in order to pay for them and he said that that question was even more unfair. Therefore, I suspect that he deliberately avoided giving any details today—but one day, the people of Northern Ireland will want to know what part of the Northern Ireland budget will pay for new Labour's policies.

The hon. Gentleman called for the unqualified application of the social chapter in Northern Ireland. I may be wrong, but I thought that—although it intends to get rid of qualified majority voting—new Labour intended to pick and choose what it wanted from the social chapter. However, the truth came out today, when the hon. Gentleman foreshadowed that the Labour party would implement the social chapter in full. I admire the hon. Gentleman for almost managing—but not quite—to keep a straight face. I am reminded of the remark of a Labour Member who said that in the Labour party one must learn to defend the indefensible. I think that the hon. Gentleman did that pretty well tonight.

We have had an instructive and wide-ranging debate. Obviously, I do not agree with all that has been said, but we have identified a number of important points regarding the Northern Ireland economy. Several hon. Members referred to employment and unemployment in Northern Ireland—issues that are central to any economic debate about any part of the United Kingdom. In a perspicacious speech, my hon. Friend the Member for Basingstoke (Mr. Hunter) made several good points. For example, he pointed to the fact that unemployment in Northern Ireland is now at its lowest level since May 1981.

It is worth registering that unemployment in Northern Ireland has fallen by 20,000 since 1993. It is encouraging to note that some of the biggest falls in unemployment were recorded in areas that were badly affected by violence in the past. For example, in the past year the Belfast, West parliamentary constituency has seen a fall of 14 per cent., which is almost three times the Northern Ireland average. Those figures are particularly relevant in the light of what has been said about the importance of peace to the Northern Ireland economy.

A similar case can be made in terms of employment. The latest available employment figures for December 1995 are 8,550 more than for December 1995 and, encouragingly, they are 6,260 more than for September 1995. The main increase in employment was in the services sector, but employment in manufacturing increased also. Employment in Northern Ireland has risen faster than in the United Kingdom throughout the 1990s. We often identify what is wrong with Northern Ireland, but tonight hon. Members on both sides sounded the trumpet for Northern Ireland. It is right that we should show the world how well Northern Ireland is doing.

Hon. Members referred also to inward investment projects. I have no doubt that the conferences held by my right hon. Friend the Prime Minister in November 1994 and by President Clinton in Washington in May last year contributed to the momentum for investment. It is important to note that, since September 1994, shortly after the IRA ceasefire, there have been 17 new Industrial Development Board-backed inward investment projects involving £360 million in investment and promoting almost 5,000 new jobs. The hon. Member for East Londonderry inquired about inward investment and about what action had flowed from the conferences. It is worth pointing out that there have been significant successes in that period.

The position with regard to output remains encouraging. Since 1991, Northern Ireland manufacturing output has risen by 15 per cent., which is almost twice the United Kingdom average. My hon. Friend the Member for Basingstoke mentioned exports, and I can give him some later and better figures. Since 1991–92, Northern Ireland's exports have risen by 48 per cent., compared with 30 per cent. for the United Kingdom as a whole. That is a welcome sign that Northern Ireland is becoming increasingly competitive and outward looking.

The hon. Members for East Londonderry and for South Down (Mr. McGrady) mentioned the tourist sector. Visitor numbers in 1995 broke all records, with the total number of visitors topping 1.5 million. The number of holiday visitors increased by 67 per cent. to 460,000. Tourism is obviously sensitive to the security situation, but it is encouraging to note that major hotel chains have made two investments worth £26 million since Canary wharf on 9 February. Clearly, the confidence remains to invest, and I urge hon. Members not to mock investments simply because they are large. Any investment in tourism that demonstrates confidence in Northern Ireland at this time should be widely welcomed.

A vast number of points were raised and I shall try to deal with some of them. The hon. Member for Foyle (Mr. Hume) and others, including the hon. Member for East Londonderry, raised the issue of beef and BSE. He spoke eloquently about a serious problem and I agree with much of what he said.

We are all concerned about the effect of the BSE crisis on Northern Ireland, not least because of the importance of the beef industry to the Northern Ireland economy and the number of jobs that depend on it. We see the European Union export ban impacting more severely on Northern Ireland than on Great Britain because of its greater reliance on exports. The Government's priority is to get the ban lifted and to restore confidence in British beef.

As the hon. Member for East Londonderry pointed out, there will be several opportunities to debate the matter over the next few days, so I shall not spend too much time on it this evening. However, I should refer to the fact that the hon. Member for Foyle argued for separate BSE status from the rest of Great Britain because Northern Ireland has a substantially lower incidence of BSE. He also mentioned the unique computer system that enables its movements to be traced.

There is considerable force in the hon. Gentleman's arguments, but to pursue a separate status for Northern Ireland at this time would be counter-productive to the United Kingdom's principal objective of having the unjustified and illegal ban on the entire United Kingdom beef industry removed. I can assure the House that the Government are committed to continuing and renewing our efforts towards that crucial objective. I was grateful to the hon. Member for East Londonderry for accepting that it has to be achieved on an United Kingdom-wide basis.

The hon. Member for Foyle also asked whether Northern Ireland and the border counties could become a duty-free zone for goods from Northern Ireland to the United States. That is an interesting and somewhat novel concept, but it would involve considerable difficulties that I am sure he would wish to consider. Trade agreements for members of the European Union are made by the European Union on behalf of all member states. Single states cannot make arrangements on their own behalf, still less for parts of member states, as the project would suggest. Therefore, I do not believe that legal powers exist to negotiate separate agreements of that kind.

There would be severe practical problems even if the legal issues could be overcome, which in my view would be highly improbable. The European Union is a customs union with free movement of goods within its borders. Therefore, it would be impossible to distinguish between goods originating in Northern Ireland and the border counties and goods moving through those areas, but originating in other parts of the European Union. In other words, the free trade zone could not be policed and goods from elsewhere would be drawn through Northern Ireland and the border counties and could cause great distortions of trade. It is an interesting concept, but in practical terms it would fail on the basis of a number of those tests.

The hon. Member for Belfast, North (Mr. Walker) made an important speech promoting the city of Belfast. During my three years as a Northern Ireland Minister, I have sometimes thought that Belfast was sitting there waiting to be promoted, but it does not happen often. Tonight the hon. Gentleman made a powerful speech, in which he drew attention to the important developments that have taken place in Belfast and why it is a good place in which to live and invest. I congratulate him on his remarks.

The hon. Gentleman raised a number of significant points, including the importance of concentrating on new technology. As Minister responsible for education in Northern Ireland, I know of the immensely good work within the two universities, which are producing high-quality graduates and, as was also pointed out, are doing so at a lower level of education through the NVQ system. We are now moving towards producing skilled people with a good qualification, who can take up the challenge of new technologies.

The hon. Gentleman referred to Belfast as the city of information, and I am sure that it will not let him down in that respect. Belfast will very much welcome his speech, which I hope will be heard by a wider audience than just the hon. Members present in the Chamber tonight.

The hon. Member for South Down also raised several points. He was worried that he had not seen the peace dividend. That concerns me. When we announced certain adjustments to budgets last year as a result of the onset of relative peace, we made it clear that they were the peace dividend and that if peace were to fail, those programmes would be at risk. We said that deliberately, because it is important to establish that a peace dividend depends on communities underpinning the peace that enables those resources to be made available.

In education, I concentrated on two specific projects. One was the initiative aimed at raising schools' standards, an important initiative that was well targeted towards schools that had faced problems in the past. The second provided assistance for primary 1 classes. Those two clear, distinct policies were made possible by the peace dividend and would not have been possible otherwise. My colleagues did the same in respect of other budgets, and about £286 million was reallocated in that way. I hope that the hon. Gentleman will appreciate not only that those resources were allocated in a specific way, but that he and the rest of the community on all sides in Northern Ireland must be fully aware that, if violence is resumed, those programmes will certainly be placed at severe risk.

Mr. McGrady

I thank the Minister for his additional information. Is he saying categorically that the peace funds were additional to those that would have been required and provided in the budget had peace not broken out?

Mr. Ancram

In respect of those that I control—and I understand that it was the same for my colleagues—it was made clear to us that they were additional funds and that we should find projects on which they could be spent with that in mind. If they were put into mainstream projects, those mainstream projects could be at severe risk if the security position changed. I hope that the hon. Gentleman will pass the message back to the community that peace has a dividend and that the ending of peace has a down side.

Several hon. Members mentioned electricity, including the hon. Member for South Down. We share electricity consumers' disappointment that at present, for a variety of reasons, tariffs are higher in Northern Ireland than in other regions of the United Kingdom. The Government no longer have a role in determining or approving electricity tariffs. The regulation of the privately owned industry is now the responsibility of the independent Director General of Electricity Supply for Northern Ireland.

Action is being taken on a number of fronts to address the problem of higher Northern Ireland electricity prices. In particular, I remind the House—as I have spoken about it in a previous debate—of the announcement on 12 March of £15 million in Government support for electricity consumers. That has enabled the average increase in electricity prices for the current year to be reduced by 3 per cent., to what, in effect, is below the rate of inflation. I hope that hon. Members will realise that that demonstrates the Government's concern.

The hon. Member for South Down made another assertion that requires a brief comment from me. He thought that the Industrial Development Board and the Local Enterprise Development Unit were not providing equity in the distribution of employment-creating projects throughout Northern Ireland. I have heard that before. The IDB now has a target of locating 75 per cent. of all new inward investment in areas of social need. It can give higher rates of grant to companies that go to those areas. The same is true of LEDU, which is making special efforts to concentrate resources and the effort and time of officials in those areas. Those are important signs of our determination to ensure that people in all parts of Northern Ireland benefit from the opportunities that we hope will continue to develop in an atmosphere of peace.

I should point out that, of 17 inward investment announcements made by the IDB since September 1994, three have been in Londonderry, two in Enniskillen, two in west Belfast and one in Newry. Those are all areas of special need. That demonstrates the importance that we place on meeting those particular needs.

The hon. Member for Barnsley, Central mentioned the thorny question of Action for Community Employment. I understand the concerns expressed about the reductions in that programme, which was introduced when unemployment was rising rapidly. Although I do not deny for a moment that unemployment remains a major problem, there are signs of improvement—I gave the House the figures. Unfilled vacancies are at record levels, with more than 7,000 on the books of the Employment Service. Our response was to refocus the use of resources, and that is the reason for the decisions that were taken. As the hon. Gentleman mentioned, my noble Friend Lady Denton announced a £2 million package of transitional measures, to allow the schemes to manage the reduction in their activities.

The hon. Member for Greenock and Port Glasgow (Dr. Godman) went slightly beyond the terms of the motion in mentioning a number of matters, including UK fishing vessel decommissioning schemes. Detailed answers can be made available to the hon. Gentleman, and I shall make sure that that is done. My noble Friend recently welcomed the continuation of the decommissioning scheme, which will operate this year in the same way as last year, although the eligibility criteria have been widened by comparison with the scheme in the United Kingdom in 1995. Among the changes are that nephrops are now eligible, and the scheme will be open to more vessels by the lowering of the number of eligible days fished from 100 to 75 and the removal of the current restriction on licence type.

The hon. Gentleman made a special plea on ferries. I believe that his concern was directed more at Campbeltown and that part of Argyll than at Northern Ireland, but I shall draw that matter to the attention of my noble Friend Lady Denton and of my hon. Friend the Minister for Railways and Roads. I shall not reply in this debate.

Mr. Hume

May I reiterate, in support of the hon. Member for Greenock and Port Glasgow (Dr. Godman), that a ferry between Scotland and Northern Ireland is the subject of widespread interest in Northern Ireland?

Mr. Ancram

I am not sure whether the right hon. Gentleman was present when the hon. Member for Greenock and Port Glasgow was speaking, but he was honest to say that a ferry would be of great assistance to that part of Argyll.

The hon. Member for East Londonderry raised the question of Benelux in his constituency. I appreciate the concern that exists as a result of what has happened to that company. The IDB has been maintaining close contact with Benelux here and in Hong Kong, and the board has also made contact with a number of potential purchasers. Some have expressed interest, but none has yet entered substantive discussions. The IDB will continue to maintain those contacts.

I hope that I have dealt with most of the points that were raised. If not, I shall as usual write to hon. Members with full answers.

I shall finish with a point that was raised by my right hon. Friend the Minister of State in replying to the opening remarks of the right hon. Member for Lagan Valley, when he spoke about the importance of peace and political stability to the future well-being of Northern Ireland. We all understand that, whatever else we talk about in terms of the quality of life, prosperity and opportunity, at the end of the day those will be underpinned only by political stability and peace. There is not simply the risk that peace dividend reallocations will have to be recovered from the economic and social programmes and restored to the law and order budget. Peace and political progress are critical to the confidence that is the key to industrial and commercial investment and to the growth of industries in Northern Ireland—not least tourism. I cannot over-emphasise the importance of their achievement.

Anyone who claims to have any regard for the economic and social well-being of the people in Northern Ireland, particularly those who have suffered far too long from unemployment, is under the most compelling obligation to bring violence to an end, and for good. Anything else is hypocrisy and a cynical and cruel disservice to the community. Now is the time for dialogue to displace violence and threats of violence. No one can credibly claim that the opportunity for dialogue is being unreasonably withheld. There is a challenge to all politicians in Northern Ireland and to the Government. We are willing to undertake that challenge on behalf of the people of Northern Ireland. I look to the politicians of Northern Ireland to follow us in that.

Question put and agreed to.

Resolved, That this House takes note of the Northern Ireland Economic Council's Report No. 118, February 1996.