§ 7.41 p.m.
§ Lord Lyell
My Lords, I hope that there are no misprints in the title of this order. I beg to move that the Draft Financial Provisions (Northern Ireland) Order 1986, which was laid before your Lordships on 21st July, be approved.
This is the latest in a series of such orders which have been presented at intervals of approximately two years to deal with various routine financial matters. The most recent previous order in the series was the Financial Provisions (Northern Ireland) Order 1984.
The main purpose of this series of orders—and particularly this order—is to increase, as necessary, statutory limits imposed by Northern Ireland legislation on certain financial transactions and to deal with other matters with a financial content. The orders do not approve any additional public expenditure. I shall deal briefly with the substance of each of the main articles.
Article 3 deals with issues which may be made from the Northern Ireland Consolidated Fund to fund capital expenditure by the Northern Ireland Housing Executive. The present statutory limit on issues stands at £1,600 million and it is anticipated that this limit will be reached by mid-1988. The proposed new limit of £1,700 million should accommodate estimated expenditure until 1989. I cannot be more precise than that, but we hope it will give some leeway.
Articles 4 to 7 provide for the abolition of various obsolete funds and the transfer of their assets and liabilities to the Northern Ireland Consolidated Fund. The purpose underlying these proposals is merely to simplify and rationalise central government accounting procedures. I shall deal with each in turn.
Article 4 provides for the abolition of the Exchequer Accrued Interest Fund and the transfer of its assets and liabilities to the Northern Ireland Consolidated Fund. The fund, which we are referring to as the Exchequer Accrued Interest Fund, was created to provide the machinery for building up the accrued interest liability on Ulster savings certificates and the estimated liability for interest accrued in respect of other borrowings. It has been topped up, as necessary, each year by allocations from the Northern Ireland Consolidated Fund and, in practice, has been used exclusively to meet interest payments due on encashment of Ulster savings certificates. Since legislative provision already exists enabling payments of interest on Ulster savings certificates or other borrowings to be met direct from the Northern Ireland Consolidated Fund, there is no necessity to retain the Exchequer Accrued Interest Fund. 973 Article 5 provides for the abolition of the Ulster Savings Certificates (Redemption) Fund and the transfer of its assets to the Northern Ireland Consolidated Fund. The fund was created to provide cover for a United Kingdom Government guarantee in respect of principal and interest payable on encashment of first and second issues of Ulster savings certificates. Since legislative provision to meet repayments of principal and payments of interest on any Ulster savings certificates already exists and since, in any event, the guarantee lapsed in the financial year 1976–77, the Ulster Savings Certificates (Redemption) Fund is now obsolete.
Article 6 provides for the abolition of the reserve fund and the transfer of its assets to the Northern Ireland Consolidated Fund. The reserve fund was, in the true sense of the word, a "reserve" against problems which might have arisen in balancing the Northern Ireland Consolidated Fund under the 1921 arrangements for financing devolved government. Under the current arrangements, where any revenue deficit of the Northern Ireland Consolidated Fund is met by grant-in-aid (under Section 16 of the Northern Ireland Constitution Act 1973) and any capital deficit by borrowing from the National Loans Fund, the reserve fund has ceased to serve any useful purpose. This would still be the case if devolution proved possible under the current legislative framework.
Article 7 provides for something rather more quaint but is the same as the three previous articles I have mentioned. It provides for the abolition of the Terminable Revenues Sinking Fund and the transfer of its assets, again to the Northern Ireland Consolidated Fund. The fund, an amalgamation of two sinking funds created in the early 1920s, provides for revenues in perpetuity in lieu of land purchase annuities and Church temporalities both of which would cease to provide income to government early in the next century. It is another "reserve" fund—as in Article 6—the income of which is paid over annually to the Northern Ireland Consolidated Fund. I must again stress that no practical purpose is served by retaining it as a separate entity.
Article 8—under the heading "Miscellaneous" —deals with registration fees payable by catering establishments and outside caterers to the Northern Ireland Tourist Board. The article doubles the sum and percentage used in the calculation of such fees, changes the period covered by the fees from a financial year to a calendar year and also empowers the Department of Economic Development to vary the sum or percentage used in the calculation of the fees by means of regulations. These fees have not changed since 1977 and I think your Lordships will agree that the increase is fully justified.
Article 9 removes the requirement that the Northern Ireland Consolidated Fund must be in credit on the last banking day of the month and provides for this requirement to be retained in relation to the last banking day of the financial year only. The removal of this requirement will enable the Department of Finance and Personnel to reduce the overall bank balances maintained at the end of each month and will thereby contribute to more efficient management of central government money.
974 Article 10 extends the investment powers of the Northern Ireland Consolidated Fund by enabling it to invest moneys in any manner which the Department of Finance and Personnel may determine. I hope that your Lordships will agree with me that this is not liable to give rise to anything rash, nor depart from the normal prudence that is shown by that department.
This particular article will enable the fund once again to make more effective use of the overnight money market when surplus cash balances are available in the central government accounts. because any interest which is earned by such investment forms part of the revenue of the Northern Ireland Consolidated Fund and of course if this is followed on, it would have the effect of reducing the grant-in-aid.
I hope that I do not need to apologise, but as your Lordships will see on studying this particular order, it is slightly esoteric. I think it is very necessary and we hope that it will lead to more effective financial management, assist the Department of Finance and Personnel, and, above all, assist the administration of the Northern Ireland Consolidated Fund. With those remarks I commend the order to your Lordships and beg to move.
Moved, That the draft order laid before the House on 21st July be approved.—(Lord Lyell.)
§ Lord Graham of Edmonton
My Lords, we certainly give our support to the order from the Benches on this side of the House. I wonder whether the Minister can help me on one or two points. Reference was made to Article 3 and the increase in the Consolidated Fund as regards the Department of the Environment from £1,600 million to £1,700 million. Is this increase of £100 million simply in order to keep the fund topped up or does it represent specific capital expenditure requirements? How much of the total amount in the fund is currently in use? I understand that the nature of a Consolidated Fund is to be all-embracing, comprehensive and always turning over, and of course there is a limit to the moneys in use. Can the Minister tell us a little more about the kind of use to which the money will be put? I understand that it concerns housing, but is it in response to a demand from the housing executive?
As regards Article 8, relating to catering establishments and tourist boards, the amount there is a miserable sum. It is an increase from £23,000 to £43,000—if I have not got the figures wrong. This is all done for £20,000, which is small even in terms of Northern Ireland expenditure, which in total is modest in comparision with the others. Yet there is an increase in fees which must be paid. I appreciate that it is 10 years since fees were increased, but what does this figure—an increase of £100 from £100 to £200—signify? An increase of £100 may very well seem substantial to some businesses that exist on the margin for which the extra burden of an on-cost of £100 could have a major bearing. I think that we all recognise that tourism is an industry that is more important for Northern Ireland than for other parts of the British Isles. I should be grateful if the Minister can help me on this point, but if he cannot reply immediately, perhaps he will write to me. In the meantime I give full support to the order.
§ Lord Hampton
My Lords, this is a fairly technical order which I think there is no reason for us to oppose. I should like, however, to ask for further clarification about Article 7. I am not quite clear about the significance of "Terminable revenues sinking fund". Can the noble Lord help me on that point?
§ Lord Lyell
My Lords, I hope that I shall be able to assist the noble Lord, Lord Hampton. Perhaps I may briefly try to answer first the two queries raised by the noble Lord, Lord Graham of Edmonton. I think he was interested in Article 8 and the fees. I understand that Article 8 covers the provisions which relate to fees for the registration of catering establishments and outside caterers. The percentage used in the calculation of registration fees which are payable by these establishments is paid to the Northern Ireland Tourist Board because the Northern Ireland Tourist Board issue registration certificates. They have legislative backing under Section 12 of the Development of Tourist Traffic Act (Northern Ireland) 1948. The increase is 1 per cent. of the net annual value of the premises to which the certificate relates. The figure is 1 per cent. to 2 per cent. and the minimum amount would be £10 rising to a maximum of £200. I agree with the noble Lord and, indeed, I ask: who would pay this particular sum?
It was indicated to me that the only institution or hotel which might pay this sum would be an establishment with a rateable value in the region of £10,000. I was given to understand that such an establishment would be a very large hotel or enterprise that might not find this figure to be quite such a burden. The noble Lord had the figures quite correct. The cost of the registration service provided by the Northern Ireland Tourist Board is running at approximately £43,000 a year, while the fees that we collect at the moment amount in total to around only £23,000. So the noble Lord was quite correct in the figures that he gave. It is this gap that we are seeking to close.
I have a note which reminds me that I asked: What do the hotels and other similar establishments receive for the payments? I was given two answers to that question which I think are reasonable and with which your Lordships might agree. The first is that every establishment which pays this fee has a guarantee that its name and premises will be known in the master work for Northern Ireland tourism. I understand that this master work is the Bible (if one may call it that) which circulates in all the tourist operations in the world—the travel agents and tourist bureaux. So this is a definitive form of publicity. Indeed, it is perhaps in the nature of advertising. Secondly, of course, such registration ensures that the premises are registered in a major reference work on Northern Ireland tourism. I hope that the noble Lord will accept that these figures are reasonable.
The noble Lord also had a query about the housing executive. The housing executive borrows from the Consolidated Fund to finance the balance of its capital expenditure on new buildings, rehabilitation and improvement, land acquisition, home loans and office accommodation, after applying receipts which mainly come from the sale of dwellings. As regards the second part of the noble Lord's query, I understand that decisions about future levels of capital expenditure on 976 housing will be made in the course of the public expenditure survey. The revised borrowing limit which we have been discussing this evening has been framed with regard to the physical programmes which are planned in the current housing programme which is agreed between the Government and the Northern Ireland Housing Executive. So it is indeed an increase, but we think that it is particularly necessary, and I hope that the explanation that I have tried to give the noble Lord will be of some assistance.
I wonder whether I may write to the noble Lord, Lord Hampton. I could repeat much of what I have already said this evening, but I should like to give him a full briefing. I think that your Lordships, including the noble Lord, Lord Graham, and perhaps even the noble Lord, Lord Fitt, might bless me for sparing you a lengthy dissertation this evening, if I write to the noble Lord. I hope I have covered the points raised by the noble Lord, Lord Graham, and I am very grateful for the attention that has been paid to the order.
On Question, Motion agreed to.
My Lords, I beg to move that the House do now adjourn during pleasure until 8.25 p.m.
Moved accordingly, and, on Question, Motion agreed to.
§ [The Sitting was suspended from 8 to 8.25 p.m.]