PARLIAMENTARY DEBATES

HOUSE OF COMMONS

OFFICIAL REPORT

Second Standing Committee on Statutory Instruments, &c.

DRAFT NORTHERN IRELAND (LOANS) (INCREASE OF LIMIT) ORDER 1995

Wednesday 1 February 1995

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The Committee consisted of the following Members:

Chairman: Mr. Patrick Thompson

Barnes, Mr. Harry (Derbyshire, North-East)

Corbyn, Mr. Jeremy (Islington, North)

Duncan Smith, Mr. Iain (Chingford)

Fishburn, Mr. Dudley (Kensington)

Fowler, Sir Norman (Sutton Coldfield)

Galloway, Mr. George (Glasgow, Hillhead)

Knapman, Mr. Roger (Stroud)

Lester, Mr. Jim (Broxtowe)

Livingstone, Mr Ken (Brent, East)

MacKay, Mr. Andrew (Lords Commissioner to the Treasury)

McNair-Wilson, Sir Patrick (New Forest)

Murphy, Mr. Paul (Torfaen)

Ross, Mr. William (Londonderry, East)

Spellar, Mr. John (Warley West)

Spring, Mr. Richard (Bury St. Edmunds)

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

Wilkinson, Mr. John (Ruislip-Northwood)

Winnick, Mr. David (Walsall, North)

Mr. M. Hennessy, Committee Clerk

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3 Second Standing Committee on Statutory Instruments, &c. Wednesday 1 February 1995

[MR. PATRICK THOMPSON in the Chair]

Draft Northern Ireland (Loans) (Increase of Limit) Order 1995

4.30 pm

The Minister of State, Northern Ireland Office (Sir John Wheeler): I beg to move, That the Committee has considered the draft Northern Ireland (Loans) (Increase of Limit) Order 1995. As in Great Britain, certain public bodies in Northern Ireland have a statutory right to borrow from central Government funds for capital purposes. In Great Britain, bodies borrow from the national loans from the Public Works Loan Board, while for Northern Ireland the loans are channelled through the Northern Ireland Consolidated Fund. The main borrowers are the Northern Ireland Executive, local authorities and schools. The order will extend by £300 million the statutory limit on the amount that the Northern Ireland Consolidated Fund may borrow from the national loans fund for on-lending to bodies that have statutory authority to borrow. The existing statutory limit on advances that the Secretary of State may, with the approval of the Treasury, make to the Consolidated Fund of Northern Ireland by way of loans for capital expenditure, is £1,700 million. That was set in 1985 the Secretary of State may, by order and on not more than one occasion, increase the limit by a sum not exceeding £300 million. As we are at present within £100 million of the existing limit it would be prudent to act now to extend the limit prescribed by the legislation. The order does not prescribe the amount allocated for loans in any given financial year, nor does it in any way abrogate public expenditure allocations, which are set, as in the rest of the United Kingdom, by the public expenditure survey.

4.32 pm

Mr. William Ross (Londonderry, East): It is an interesting order. No doubt the Minister has profitably spent a few minutes considering it and half an hour or so reading the two previous debates on the subject, which took place in 1984 and 1985. The matter was then dealt with on behalf of the Ulster Unionist party by Enoch Powell—much more adequately and in much greater depth than I could hope to achieve. The Order is interesting in that, in our view, the concept is unnecessary and could easily be swept away. However, as the Minister's predecessor told the House in one of the debates that I have mentioned, it is necessary to maintain the Northern Ireland Consolidated Fund to achieve devolved structure in Northern Ireland. It is also interesting that the two previous debates were held not in Committee, but on the floor of the House. Presumably we shall be told why it has been decided to make a change on this occasion. The debates took place on 28 November 1984 and on 27 November 1985, a date that 4 should cause some folk to reflect, as it was the day on which the debate on the disgraceful Anglo-Irish agreement terminated. I hope that the Minister will understand that, although it is completely by chance, it is somewhat surprising that we are meeting to debate the same subject today, when similar concerns are being raised about the constitutional position of Northern Ireland because the order is part of the constitutional arrangements between Northern Ireland and the rest of the United Kingdom. If the Minister has not read those debates I hope that he will accept some good advice and that, when the sitting is over, he will go back, take them out and read them very carefully. As the Minister said, the principal beneficiaries of the loans fund today are the Northern Ireland Housing Executive, the district councils and voluntary schools. In the 1984 and 1985 debates we were told that the Northern Ireland electricity service was one of the principal beneficiaries, but it is no longer funded by Government. We were also told in those debates and elsewhere that the Northern Ireland loans fund exists to fund some capital spend. Some is the operative word. The rest of the capital spend is presumably funded from the Consolidated Fund directly. Since some of the capital spend is funded from different quarters perhaps the Minister will tell us what the dividing line is between those areas of local government expenditure and loan which must be funded from this money and those which are funded from the Consolidated Fund directly by loans. What is the reason for the two different sources? We can see no good reason why the whole thing should not be amalgamated into the Consolidated Fund. It would make no difference to the sums that become available to Northern Ireland in any shape or form. The whole concept of capital funding, current spend and capital spend was swept away many years ago. After all, the concept of taxation and revenue raising for a specific purpose is now so archaic that it is no longer even considered within the confines of Government funding in this place. Why do we have this myth that some of the money is different from the rest of taxation and the rest of spend? We all know that the issue of revenue, expenditure, borrowing capital and recurrent spending is one seamless web that cannot easily be separated into different little neat compartments. There is perhaps some surprise in some quarters and a question must be answered. The Minister made a statement on 27 November 1985 to the effect that there would be a loans increase in every Parliament. That has not been adhered to. One must therefore assume that any of the funding needed in the intervening period over the past nine years has come into the funding of Northern Ireland's needs by some other route—it must have come directly through the Consolidated Fund. There is no need for this purely technical order. It can be disposed with and the funding for Northern Ireland should all come through the Consolidated Fund which we can then debate under the various appropriation orders every year. We were told at column 998 of the Official Report of 27 November 1985 that the Consolidated Fund of itself—thereby, by implication, the loans fund—would be kept to make the return of a devolved parliamentary structure in Northern Ireland easier. I hope that the Minister of State understands—even if other Ministers in the Northern Ireland Office and in Government do not—that what was 5 leaked to The Irish Times on Monday and was in The Times today means that the chances of a devolved parliamentary structure returning to Northern Ireland in the political lifetime of any of us are somewhat less than nil. Therefore, the sooner the Consolidated Fund for the United Kingdom applies to the entire United Kingdom, without any of the mythical divisions that currently exist, the better it will be for all of us.

4.40 pm

Mr. John Spellar (Warley, West): The hon. Member for Londonderry, East (Mr. Ross) referred to the debate on 27 November 1985. When the then Minister of State, the right hon. Member for Brent, North (Sir R. Boyson), introduced the Northern Ireland Loans Bill, he said that the initial time limit in the Bill was expected to last until mid-1990 and, if the House consented to that, he expected the further limit to last until 1992. The right hon. Gentleman also said, quite rightly, that the Bill—now the Northern Ireland (Loans) Act 1985—did not authorise expenditure, it merely enabled funds to be made available for capital expenditure which was approved by other routes. The limit on loans from the national loans fund was set at £1,700 million, which would be worth £2,650 million today. However, the order increases it to only £2,000 million and shows some of the slippage that has occurred. The Government's proposals to increase the limit are welcome. We hope that it is an indication that they are prepared to invest in the future of Northern Ireland and its people, especially in housing. But why has the original expected timetable slipped so substantially, from 1990 to 1995—more than five years from the original estimated date? We accept that part of this may be due, as the hon. Member for Londonderry, East said, to the transfer from the public to the private sector of one of the major recipients—the Northern Ireland electricity service. However, other sectors also draw on the fund, and we must question whether part of the slippage has arisen because of other dogmatically dictated decisions, particularly in housing. One reason why the Government have not had to come back before now must be the continuous decline in the public sector housing programme. Total completions from the Northern Ireland Housing Executive and the housing associations have fallen from 4,572 in 1983 to 1,473 in 1993. That is not because there is no need for such housing in Northern Ireland. On the contrary, the Housing Executive's figures show that the number of those on the waiting list who are in urgent need has been rising steadily over the past five years and, at the last count, stood at 10,579. The total number of people currently on the housing waiting list was given to me in a parliamentary answer. They number 22,740, and more than 7,000 of them are in the Belfast area alone. At the current rate of progress, it will surely take a very long time to clear that backlog. Furthermore, as has been the case with all housing authorities, a consequence of the right-to-buy policy has meant a substantial reduction, in the number of houses and overall dwellings that are available. The past 15 years have seen a reduction of about 40,000 in the overall level of stock. That affects not only those on the housing waiting list, but those waiting to transfer from high rise and other blocks of flats. As I said earlier, in response to this serious 6 demand, completions for the Housing Executive and housing associations in the last year for which figures are available was only 1,473. That decline in expenditure has not only meant long years of miserable waiting for those on the list, it has kept on the dole queue thousands of construction workers who could have been making a contribution by building those properties. In addition, the companies for which they could have potentially worked have seen their work load undermined. That becomes even more relevant in the current context of the peace process because of the welcome decline in work associated with repairs to terrorist damage and with insurance. As a result, as I am sure that the Minister is aware, many companies in the construction industry, are fearful of the gap in their work programme that is looming up before the welcome onset of new investment from many of the inward investment companies newly announced by the Government. Unfortunately, by the nature of their work, building companies cannot wait for a year or 18 months for their work load to pick up. They live on a month-to-month basis and are facing a severe gap in their projected work load as a result of the downturn. Therefore, an injection of money into the housing construction market would be an enormously welcome use of the fund. The Minister could make a welcome move to reassure the building industry by announcing that the house-building programme will be stepped up to take account of those factors. The order gives him the means to do so, but he must tell us whether he has the will to achieve those ends.

4.46 pm

Sir John Wheeler: I am grateful to have the opportunity to listen to the remarks of the hon. Member for Londonderry, East. What he has to say is always listened to with great care by my colleagues in the Northern Ireland Office. The hon. Gentleman referred to the debate in 1985, which will certainly by worthy of the closest scrutiny, not least because Mr. Enoch Powell was a contributor to them and he is remembered with great regard by all Members of Parliament for his skills and knowledge of procedure. The hon. Member for Londonderry, East asked me to comment on the dividing line between the Consolidated Fund and loans. I assure the hon. Gentleman that all the borrowing that has been referred to this afternoon comes from the Northern Ireland Consolidated Fund, which, in turn, borrows from the national loans fund. The fund's limit for lending is £2.4 billion, so there has been no shortage of funds for borrowing and the order merely increases the amount that the Consolidated Fund can borrow from the national loans fund. The hon. Gentleman also questions whether it is appropriate to continue with the procedure and the order. It would be most welcome to everyone in the Committee, not least myself, were it possible to dispose of the order in its entirety and to deal with these financial questions through a single mechanism, the Consolidated Fund. I will certainly consider whether we can achieve that. I hope, therefore, that I may be addressing the Committee on the subject of the loans order for the last time. The hon. Gentleman also asked why we were dealing with the matter in Committee and not on the Floor of the House. That is a matter for the management of 7 parliamentary business, in which the hon. Gentleman himself my participate and try to persuade others of the desirability of using the Floor of the House. The hon. Member for Warley, West (Mr. Spellar) referred to the construction industry. I cannot discuss in the Committee today the activities of the building industry in Northern Ireland, but I assure the hon. Gentleman that my ministerial colleague is actively in discussion with the industry to talk about the enormous potential that exists today and will continue to exist if the peace process continues. We all pray that the events of today, as discussed on the Floor of the House, will not put that important prospect in jeopardy. When the hon. Gentleman has the opportunity to visit Northern Ireland and to travel around as I do, he will find that there is hardly a nook or cranny of the Province where there is not extensive building activity. I glory at people's ability to erect new accommodation of such a high standard. Many members of the Committee might wish that it was taking place in their constituencies. We take seriously the problems faced by some in the construction industry whose business has been primarily, but not exclusively, concerned with police and Army facilities. They have particular problems which will be considered with sympathy and understanding.

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Mr. William Ross: Will the right hon. Gentleman draw to the attention of the Minister with responsibility for housing in Northern Ireland what the hon. Member for Warley, West said about housing? Will he also draw to his hon. Friend's attention the fact that the Housing Executive seems to be taking a year or more to approve a grant to improve a dwelling? He will agree with me that that is an outrageously long time to take to accomplish such work.

Sir John Wheeler: I am grateful to the hon. Gentleman for bringing that matter to my attention. It goes beyond the scope of the order, but I willingly undertake to draw the hon. Gentleman's remarks to the attention of my ministerial colleague, who will respond to the hon. Gentleman.

Question put and agreed to.

Resolved, That the Committee has considered the draft Northern Ireland (Loans) (Increase of Limit) Order 1995.

Committee rose at nine minutes to Five o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

Thompson, Mr. Patrick(Chairman)

Duncan-Smith, Mr.

Fishburn, Mr.

Fowler, Sir Norman

Knapman, Mr.

Lester, Mr.

MacKay, Mr.

McNair-Wilson, Sir Patrick

Ross, Mr. William

Spellar, Mr.

Spring, Mr.

Wheeler, Sir John