Arlene Foster
Fermanagh and South Tyrone · Ulster Unionist Party · Northern Ireland
“Yet, like too many projects, it has been tied up in legal wrangles. Too many infrastructure projects are being swallowed up in the courts. We need to improve the expertise in infrastructure delivery. We need better infrastructure for the next generation, but key projects being delayed by 10-plus years is unsustainable.”
“Any agreement involves compromises but NDNA had two central pillars that, I believe, remain important: ambition for devolution and a new cultural deal. The breadth and depth of issues that NDNA set us all to deliver on would have been enough to fill an entire term or perhaps more, let alone two years of government.”
“That confidence-and-supply agreement will leave a legacy but also highlights our challenges. Some £150 million has been rolled out via Project Stratum to bring broadband to rural areas and leave Northern Ireland as the best-connected region in Europe. When it is completed, the project will be transformational to our economy.”
“However, such short-term advantage comes at the cost of long-term harm to relationships. It is not a real partnership. Imbalance and instability are built in that will fester and deteriorate. If Brussels continues to think that the protocol is enough, it is in denial.”
“Colleagues inside and outside the House know very well that all periods of leadership must come to an end. That is why, when we are privileged and, indeed, honoured to hold such a position, we must not waste a moment in frivolous brinkmanship but forge ahead on behalf of those whom we represent.”
“The recommendations of the Commission on Flags, Identity, Culture and Tradition (FICT) are to be taken forward as well. I encourage all of you to do all of it, to take it forward in its totality and to speak of and implement it as one complete, independent package: a new cultural deal for Northern Ireland's new century.”
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“More than that, it identifies the actions that will deliver on that vision. That includes, of course, the lowering of corporation tax to spur investment, and we are closer to delivering on that commitment than we have been at any time before. We cannot miss that opportunity. I reflected on the comment that someone made yesterday that that is the one trick that we have, and of course it is not the one trick that we have. That sits in the context of everything else that we have been doing, including our economic inactivity strategy, which has just been launched and deals with all the issues.”
“<BR /> <BR />I also fear that the other side of this argument is missing and that we are in danger of missing this important point. The reason why I entered politics was fundamentally to change the picture of need here. In the years to come — if, indeed, I am here — I do not want to be in the position of having to go to the Treasury arguing that we are the most deprived part of the United Kingdom. That is not a position that anyone in here should aspire to. We should be moving to a position where we are one of the fastest-growing regions of the United Kingdom. That is certainly where I want to be. <BR /> <BR />We need to change the game. How do we do that? The route is mapped out in our economic strategy. It paints a vision of an economy and a society that is characterised by growing employment opportunities and prosperity for all.”
“Of course, we have had to deal with the global downturn over the past number of years, but I think that there is a real issue that we need to get to the heart of with productivity. <BR /> <BR />I accept that the Barnett formula could lead us towards convergence with England on relative public spending, but that will take time and will require a growth in public expenditure, which, from where we are now, looks a long way away. While I understand why the Committee’s report recommends a re-examination of the needs-based approach, it needs to be appreciated that this is not straightforward, agreement would be difficult to reach, and, fundamentally, there is no guarantee that it would lead to an improved or even sufficient outcome for Northern Ireland.”
“The Committee report rightly highlights the significant need for public expenditure in Northern Ireland on many measures, which is greater than any part of the UK. They are a reflection of our poorer relative position on deprivation, ill health and economic weaknesses, which come from years of violence and the Troubles in Northern Ireland. It is not hard to find examples of that deprivation. Our levels of output per head, a measure that economists often use to assess regional prosperity, are more than 20% lower than the United Kingdom as a whole, and our inactivity rate is higher than any UK region. We are taking steps to deal with those issues, particularly through the economic inactivity strategy, which Stephen Farry and I developed when I was in my previous role.”
“That process will provide a very clear scrutiny and approval role for the Committee and, ultimately, the Assembly. We work towards that point, and I will seek to ensure that that work is as transparent as possible. We are obviously not yet in a position in which we can have the devolution of corporation tax, because it is all part of the Stormont House Agreement, and we will have more discussion on that when I speak on the Budget Bill tomorrow. It is important to recognise that the process will be as transparent as possible and that I will work with the Committee on that.”
“Clearly, the objective in relation to the devolution of corporation tax is to get a fair outcome for us in Northern Ireland in terms of the cost, and we continue to work with the Treasury on that. Of course, the European Commission will also need to be worked upon and kept in the loop in relation to everything that we do. <BR /> <BR />I appreciate the Committee's concerns about the need for effective scrutiny at Stormont, but the reality is that much of the work is ongoing and we are not really in a position to present the detail of that to the House as it has not been agreed. We continue to talk to the Treasury. Once the UK Government have turned on the power, via the commencement clause, it will be for the Assembly to agree a Northern Ireland rate and implementation timescale following a recommendation from me as Finance Minister.”
“Secondly, a deduction will be applied to the Barnett-based block grant to reflect the corporation tax revenues that are foregone by the UK Government as a result of devolution — that, of course, is to abide by the Azores ruling — and, thirdly, the tax revenues generated by the Northern Ireland corporation tax regime will be retained by the Executive and added to the Barnett-based block grant. <BR /> <BR />Estimates have been developed that suggest that the net cost would ramp up to £325 million three years after implementation if a 12·5% rate were applied. The precise costs to be incurred have yet to be agreed with Her Majesty's Treasury, and my Department continues to engage with it on that.”
“Whilst the more routine adjustments of the Budget are clear, the report highlights an issue with the lack of clarity when it comes to significant block grant adjustments, such as the one that will be required as part of the devolution of corporation tax powers. Let me assure the House that my Department and others have been working with the Treasury on the devolution of those powers and that significant progress has been made. <BR /> <BR />The broad principles upon which it will go ahead were set out in a letter from David Gauke from the Treasury on the Corporation Tax Bill back in February. First, the Barnett formula will continue to operate.”
“Both involved financial adjustments to the block grant, which, it has to be said, were to the advantage of Northern Ireland and took place outside the formal mechanisms. Those worked well for us. <BR /> <BR />More broadly, I want to assure Members that I am very mindful of the ongoing constitutional reform that was referred to by Mr McCallister and the implications that that could have. In the near term, it is anticipated that Her Majesty's Treasury will update the statement of funding policy in advance of the United Kingdom spending review this autumn. That will reflect the new fiscal arrangements that will be in place for Scotland at that time. <BR /> <BR />I want to briefly mention corporation tax, because there has been a lot of mention of that over the past number of days.”
“I understand that the Scottish Government have been briefed by experts on a possible independent commission to agree the statement of funding policy. I will certainly analyse carefully any proposal that is forthcoming from Holyrood in that regard and look forward to discussing that with my counterpart there. <BR /> <BR />Work is also under way on a review of the memorandum of understanding between the United Kingdom Government and the devolved Administrations, and that, again, is being led by the Joint Ministerial Committee. I welcome any improvements to intergovernmental machinery, but I remind the House that significant business with Her Majesty's Treasury is conducted bilaterally and that that has worked well for Northern Ireland in the past. Members will be aware of the St Andrews Agreement and the Stormont House Agreement.”
“I cannot envisage a scenario in which they relinquish that control, because, at the end of the day, we are devolved, which means that power remains at Westminster. We act as a devolved Administration under the ultimate power of Westminster. There are processes in place, such as the Joint Ministerial Committee, which can be used if we are of the opinion that amendments to the statement of funding policy are unfair, but we have not yet had the necessity to call on those.”
“Mr Bradley referred to the black arts of the Treasury and suggested that we did not have data. We do receive data, and it is certainly enough for us to make sure that the Barnett formula is correctly applied. <BR /> <BR />Secondly, the Committee suggested that the statement of funding policy be subject to approval by the devolved Administrations. It is currently, by convention, agreed by the Secretaries of State for the devolved regions in consultation with the devolved Governments. I, on behalf of the Executive, will engage with Treasury on the statement of funding policy at each review, but ultimately, going back to the constitutional issue, it will be for the UK Government to decide how they fund the devolved regions.”
“As I indicated to the Committee last week, my job as Finance Minister is to do what is best for Northern Ireland. The Scottish and Welsh may have different priorities when it comes to what they need to look for. <BR /> <BR />I will take each of the report's suggested improvements in turn. First, any publication of data by Treasury that provides greater clarity on how UK public spending is calculated and agreed is to be welcomed, and I would support a joint call by the devolved Administrations on that. Publication of that data, however, is a matter for Treasury. Treasury does provide my Department with high-level figure work for the Barnett formula calculations, and that is sufficient for officials to ensure that it is being correctly and consistently applied.”
“The Treasury and the other Administrations could well take a different view from us, which, if that analysis were to prevail, would lead to an inferior outcome for Northern Ireland, recognising, of course, that we are the smallest Administration in the UK. <BR /> <BR />The Committee's report also suggests that we engage with our Scottish and Welsh counterparts, with a view to presenting jointly agreed proposals for improvements to Barnett and wider funding arrangements. Looking further forward, the report suggests that we develop a longer-term view of funding arrangements that would best suit us in Northern Ireland. Both are laudable suggestions. The concept of producing a joint set of proposals from the devolved Administrations is very attractive, but, in practice, that may prove difficult, as each of us will have different priorities.”
“We therefore need to exercise caution before pressing for any review. Based on experience, a needs-based system is not likely to be any less complex than the Barnett formula — in fact, it would probably be more complex — nor is it certain to produce a more advantageous funding settlement for Northern Ireland. That is my main concern, and I am not alone, because Dr Gudgin, in his evidence to the Committee, cautioned against the assumption that a needs assessment will lead to us having higher levels of public expenditure. <BR /> <BR />Professors Birrell and Cairney pointed to the disputes that could arise over how need might be identified.”
“<BR /> <BR />The Committee suggested that consideration be given to a needs assessment. In principle, the suggestion that funding be based on need is not one that can be argued with. Significant work was undertaken in that regard locally back in 2001-02, and various approaches to measuring different aspects of need were developed, based on demographics and on health and economic indicators. Indeed, that was not the first time that that had been done, with the methodology building on previous research, going back to the 1970s. <BR /> <BR />However, the Calman commission highlighted a key concern, which I share, relating to the difficulties in agreeing on a fair measure of need. The key concern is the subjective nature of any needs assessment designed to replace the current Barnett funding mechanism.”
“There are a couple of points worth mentioning in that regard. First, it is important to recognise that those are relativities. Actual spend has increased significantly over this period. For example, our identifiable expenditure increased by almost 50% in cash terms over the 10-year period from 2003-04 to 2013-14. <BR /> <BR />Secondly, it is important to emphasise a point that the report makes; namely, that, in times of decreasing public spend, the Barnett formula works to our advantage. It is important that Northern Ireland receive the best deal from any funding mechanism. Should the Treasury indicate that the Barnett formula is to be reviewed, we have always been clear that we need to have a detailed analysis of the impact of any change, including on the issue of convergence.”
“The report draws on the evidence provided to the Committee, sets out the extent to which convergence has taken place in public expenditure per head, standing at 124% of the UK average. The report suggests that that is down from around 135% back in the early 1990s.”
“I wonder if those same Members genuinely believe that, with their renewed mandate in Westminster, the Government will agree to a new settlement for Northern Ireland that is better than the one we have at present. I think that Members should be careful what they wish for. <BR /> <BR />That said, I want to touch on some of the individual conclusions and recommendations in the report. First, to touch on convergence, there has been much discussion about how the Barnett formula leads to convergence in per capita spending. The Committee has called on the Department to examine the extent of convergence to date and the outlook going forward to assess the risk for Northern Ireland being significantly underfunded in the future.”
“<BR /> <BR />I will deal with the report's conclusions and recommendations in a moment, but, before I do, I strongly caution that those present today who believe that an alternative approach is guaranteed to yield a better outcome for Northern Ireland should tread carefully. There is a risk that seeking to fundamentally reopen or renegotiate the basis on which we are funded could result in less funding, not more, for Northern Ireland. That would be disastrous and would mean that we would be less equipped than we are at present to respond to and address the greater level of need that exists in Northern Ireland. Indeed, many in this House have expressed grave concern about the Conservative Government's determination to press ahead with its so-called austerity agenda.”
“Mrs Cochrane made the point that it really was to do with where we started in relation to baselines. That is why Wales is not in as good a position as we are in Northern Ireland. Therefore, we need to acknowledge that and look at the fact that our position, with the higher level of expenditure available to us, is one that the Westminster Government are very quick to remind us of when we are arguing for more funding from Westminster. That is a very natural thing to do. When we are pushing for more money, they will point out the fact that we have a high level of spending here.”
“It is important to talk about the fact that the Government in Westminster have respect for the devolved Administrations and respect the fact that we are elected to our different devolved institutions to deal with issues in front of us. So, we had a good discussion around that, and I hope that it is something that we can develop at our next meeting. <BR /> <BR />The Committee's report raised, as have Members, a number of very familiar issues and concerns about how Northern Ireland is funded. I am not going to stand before you today and argue that the Barnett formula is perfect. However, Members need to recognise that, as it stands — and this is a point that was made by Mr McCallister and Mrs Cochrane — Northern Ireland, on a per capita basis, has the highest level of public expenditure of any of the devolved Administrations.”
“As Finance Minister, it is I who must develop a Budget that balances the many competing needs of our public services and responds to the many pressures that we face. So, I would certainly welcome more money coming to Northern Ireland. <BR /> <BR />Where there are discussions to be had with Treasury or with colleagues in other devolved Administrations, I will be there to ensure that the best interests of Northern Ireland are served. I note Mr Ó Muilleoir's offer to hold my hand at those meetings, to help me fly the flag — to use his phraseology from yesterday — for Northern Ireland, but let me assure him that if there are hard questions to be asked, I am quite capable of asking them. <BR /> <BR />When I was with Her Majesty's Chief Secretary to the Treasury just last week, we had a brief conversation about the respect agenda.”
“That is a matter for the SDLP. <BR /> <BR />I very much welcome the debate. I thank the Committee for producing the report that we have before us. I think that the debate yesterday on the Budget (No. 2) Bill shows the sort of tough choices that can no longer be avoided if we are to put our finances on a sustainable footing. Therefore, it is important to look at how the block grant is allocated to Northern Ireland. I think that it is a very timely debate. <BR /> <BR />From the very outset of this debate, let me assure the House and the few Members here, for the avoidance of any doubt whatsoever, that I am totally committed to ensuring that we have available to Northern Ireland the maximum resources possible.”
“I can only imagine that the SDLP is not at the debate because there is obviously a leaving party for Mr McDonnell that none of us have been invited to.”
“You will have to give way. You have to give way on that.”
“If the Member is going to throw out figures, he has to put them in the context of when we will have to take the hit.”
“The original timetable referred to April 2017, which may have slipped now. I am not sure what the current thinking is with Sinn Féin on that. It raised some issues recently, although that was on the mistaken belief that the cost would come out of the block grant immediately. The full amount of corporation tax comes out in year 3, and, by that stage, we will already be bringing money back into the economy and, therefore, growing the economy. The full impact does not happen until 2020 or even 2021 on the earliest estimates, and the Office for Budget Responsibility states that the Budget for the whole of the UK will be in a surplus position by that stage. We will be in a changed circumstance when we talk about a corporation tax reduction for Northern Ireland.”
“The Member talks about corporation tax. It is so difficult to listen to somebody who does not have an aspiration for economic growth for this country and who has no vision for Northern Ireland moving into the future but would rather keep people on welfare benefits. That is the vision of the Green Party that we are hearing tonight. We are not hearing anything about productivity or moving forward; we are hearing about keeping people on welfare benefits. I hope that the Northern Ireland public hear that, but, of course, they will not, because it is 9.45 pm, and very few people are listening to the debate. <BR /> <BR />I made a point earlier about corporation tax. The full impact of corporation tax on the block grant does not take effect until three years after its introduction.”
“The Member has made comments about DSD figures not adding up, and I am sure that the Minister for Social Development will have his own commentary on that. Does he accept that, already, we have lost around £200 million to the block grant in Northern Ireland in penalties? We lost some £87 million last year and £114 million this year. That rises next year again, and that is before any further welfare reforms are put through at Westminster, which will make that gap even bigger. So how does he propose to deal with those penalties in the context of what he is advocating tonight?”
“The Member has asked a question. We need to deal with the elephant in the room. We need to get some credibility. We need to have a Budget. I would have thought that that was perfectly obvious.”
“I actually wrote to the Chief Secretary to the Treasury today to invite him to Belfast for the next quadrilateral so that he can see what is happening in Belfast and wider Northern Ireland and is aware of the innovation that is going on and the economy here. The way to do it is to bring all the other Administrations here. I have been to see the Chief Secretary to the Treasury. As I said, I am going to Wales on Friday, and I am looking forward to going to Scotland as well. I am then inviting them all here.”
“I say again that that is mischievous on that issue.”
“Infamy, infamy, they've all got it in for me. Let me say to the Member that he, like some members of Sinn Féin, is mixing up what happens after 8 July and what happens here in relation to our Budget for 2015-16. The two things are entirely separate. We, as a party, have never said that we are not up for having negotiations and talks. Indeed, I am meeting my Welsh counterpart, Jane Hutt, this Friday. I look forward to meeting John Swinney in August; unfortunately, that is the earliest date that we can meet. It is a nonsense to say that we are not going to work together. We are going to work together, but, unlike Scotland and Wales, we do not have a Budget and we do not have welfare reform. Both those Administrations have dealt with those issues. It is wrong to put the two things together. It is just mischievous.”
“This is just incredible stuff. The national development plan and the road that he is speaking about came about at a time when the finances of the Republic of Ireland were in a completely different place to where they have been over these past couple of years. Need I remind him of the A5 — and the A8, actually, as well? <BR /> <BR />So, as for all this talk about going and looking for money to the Republic of Ireland, let me assure the Member that we will be looking for our fair share, as Dr Paisley always used to say, out of Europe to make sure that we do get some money back out of Europe given the amount that the United Kingdom Government put into Europe. We will be looking for our fair share out of Europe, but that is nothing to do with this Budget that is in front of the House today.”
“The Member is being very mischievous, if you do not mind me saying so, because he knows full well that, when he was asked the question, it was referring to the Final Stage of the Welfare Reform Bill when proposals were put forward very clearly and the First Minister indicated that he was ready, willing and wanting to deal with any amendments that came forward that were within the financial envelope of the Stormont House Agreement, legally doable and operationally within the remit of the Department for Social Development. Those are the amendments that, as I understand it, my friend is referring to.”
“I recognise what the Member has said about the current Conservative Government and I do recognise that, I think, around 36% of people in the United Kingdom voted for that Government, but does he acknowledge that, given the comments that were made by the shadow Secretary of State for Northern Ireland, the current welfare position that we find ourselves in would not change fundamentally even if there were a Labour Administration?”
“That is not exactly what I said. If he looks at Hansard, the Member will see that I said that we were doomed if we do not implement the Stormont House Agreement and welfare reform, as it currently stands and not what is coming in the future.”
“Before the intervention, the Member made comments about corporation tax. Can he indicate whether the SDLP position on corporation tax has changed? The full cut in the block grant for corporation tax comes only in year 3 of the operation of corporation tax. Given that we have not yet set a date for the devolution of corporation tax, that will be beyond 2020-21. Is the Member saying that the SDLP has changed its position on the devolution of corporation tax?”
“Without an agreed Budget Bill, Departments would not have the legal authority to incur expenditure in the delivery of key public services. That is what makes this legislation absolutely essential.”
“The Public Accounts Committee has considered the circumstances of these Excess Votes and has recommended that the Assembly approves the additional resources that are now recommended in the Bill. <BR /> <BR />The figures included in the Budget Bill are substantial. I am sure that Members will agree that it is not always easy to translate them into the delivery of public services on the ground. Nevertheless, the Budget Bill underpins all the public services that Ministers and Departments are tasked with delivering. Whether it be the construction of a new road, hospital or school or the salaries of police officers, nurses, doctors and teachers, this legislation is critical to allow those services to operate and public investment to proceed.”
“It is important to stress that that facility does not provide for additional cash out of the Consolidated Fund or convey additional spending power; it is simply required to allow the Department flexibility to manage cash flows effectively and to minimise drawdown of the Northern Ireland block grant on a daily basis. It is therefore a very important provision to allow cash to flow effectively between the Consolidated Fund and our Departments. <BR /> <BR />Clause 5 authorises additional resources totalling some £7·4 million for the Department of Health, Social Services and Public Safety and the Department of Education for the 2013-14 financial year, when those Departments registered an Excess Vote.”
“Those amounts reflect the Executive’s 2015-16 Budget, which was approved by the Assembly earlier this year. Also incorporated into the total figures is the demand-led annually managed expenditure (AME) required by our Departments to support public services and to pay benefits and pensions. <BR /> <BR />As I have already made clear to the Assembly, the Executive’s 2015-16 Budget was predicated on agreement to implement welfare reform and the Budget flexibilities secured as part of the Stormont House Agreement. Without those flexibilities, there will need to be significant adjustments to the existing Budget position this year. The issue therefore needs to be dealt with as a matter of urgency. <BR /> <BR />Turning now to the other aspects of the Bill, clause 2 authorises my Department to borrow up to £4·2 billion in this financial year.”
“There is also provision for Departments to utilise £2·4 billion of accruing resources, which are basically resource and capital receipts. When the amount in the Vote on Account of £7·1 billion is included, the total cash provided for in the 2015-16 financial year is £15·4 billion. Likewise, the total amount of resources will be more than £16·7 billion, including the Vote on Account of £7·7 billion. On top of that, as I have said, the Departments will also be authorised to utilise £2·4 billion of accruing resources, taking the total amount of resources available in this financial year to some £19·1 billion. <BR /> <BR />Those are significant amounts of cash and resources, and we need to ensure that we deliver the best value for the people of Northern Ireland.”
“I am grateful to the Committee for its work in agreeing accelerated passage. That was possible only due to the work of the Committee leading up to agreement of the 2015-16 Budget earlier this year. <BR /> <BR />The Committee carries out much work on scrutinising the Executive’s draft Budget proposals and also plays an important role in coordinating scrutiny across Committees on budgetary matters. I thank the Committee for its ongoing work in that respect and welcome its continuing support in discharging that important role. <BR /> <BR />I now turn to the Bill itself. The main purpose of the Bill is to provide a further balance of cash and resources in addition to the amounts already authorised through the Vote on Account in February. That balance amounts to over £8·3 billion of cash and more than £9 billion of resources.”
“The Second Stage of the Budget Bill follows the Assembly’s approval of the Supply resolutions this time last week. That endorsed the departmental spending plans set out in the 2015-16 Main Estimates. <BR /> <BR />As Members will be aware, accelerated passage of the Bill is critically important to ensure Royal Assent before the end of July. I said last week that I would attend the Finance and Personnel Committee meeting on 17 June to seek the Committee’s agreement. Following that meeting, I am pleased to report that the Committee has now endorsed accelerated passage. The critical issue in arriving at that decision is that the Committee for Finance and Personnel is satisfied that there has been appropriate consultation with it on the public expenditure proposals in the Bill.”
“I very much welcome the acknowledgment of those of us who live in rural areas and the needs we have, which may not necessarily be the same for those who live in urban areas. There is always a need to realise that, identify those issues and deal with them in the most appropriate way.”
“The Minister of Agriculture and Rural Development has a paper in front of the Executive in relation to statutory rural proofing, and I understand that that is coming before the Executive in the very near future.”
“There will be a number of bids made in relation to a number of sectors and a number of groups. All those bids need to be seen in the context of where we are with the Budget and the non-agreement of welfare reform, because if we do not have welfare reform agreement we will have a £600 million hole in the Budget. Therefore, the Budget in front of this House, and that will come to the Floor again this afternoon, is predicated on welfare reform. I hope that he and others will join me in saying that we need to deal with welfare reform. Then, we can get around to dealing with groups from Omagh and everywhere else.”
“Of course, like many other support groups across Northern Ireland, the support groups that exist to support ethnic minorities are a critical part of the infrastructure — the ecosystem, as it were — to help those who are from an ethnic minority. So, I very much value, as does the Office of the First Minister and deputy First Minister, the work of a number of those groups.”