PARLIAMENTARY DEBATES

HOUSE OF COMMONS

OFFICIAL REPORT

Second Standing Committee on Statutory Instruments, &c.

DRAFT FINANCIAL PROVISIONS (NORTHERN IRELAND) ORDER 1995

Wednesday 1 November 1995

LONDON: HMSO

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The Committee consisted of the following Members:

Chairman: MR. JAMES HILL

Coe, Mr. Sebastian (Falmouth and Camborne)

Coombs, Mr. Anthony (Wyre Forest)

Corbyn, Mr. Jeremy (Islington, North)

Deva, Mr. Nirj Joseph (Brentford and Isleworth)

Dowd, Mr. Jim (Lewisham, West)

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

Greenway, Mr. Harry (Ealing, North)

Jopling, Mr. Michael (Westmorland and Lonsdale)

Macdonald, Mr. Calum (Western Isles)

McNamara, Mr. Kevin (Kingston upon Hull, North)

Molyneaux, Mr. James (Lagan Valley)

O'Brien, Mr. William (Normanton)

Parry, Mr. Robert (Liverpool, Riverside)

Smith, Sir Dudley (Warwick and Leamington)

Sumberg, Mr. David (Bury, South)

Viggers, Mr. Peter (Gosport)

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

Wood, Mr. Timothy(Comptroller of Her Majesty's Household)

Mr. E. P. Silk, Committee Clerk

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Second Standing Committee on Statutory Instruments, &c.

Wednesday 1 November 1995

[MR. JAMES HILL in the Chair]

Draft Financial Provisions (Northern Ireland) Order 1995

4.33 pm

The Minister of State, Northern Ireland Office (Sir John Wheeler): I beg to move, That the Committee has considered the draft Financial Provisions (Northern Ireland) Order 1995. The draft order is the latest in a series of such orders that are required every two to three years. The main purpose of these orders is to adjust, as necessary, certain statutory financial limits and to deal with other routine financial matters, including the simplification and rationalisation of accounting procedures. It may be helpful if I describe briefly the purpose of the various articles in the order. Article 3 enables the Department of Finance and Personnel to remove the need for routine referrals to it for consent or approval that are no longer considered necessary. That is in line with a more strategic approach to financial control and it will help to ensure more efficient administrative arrangements. Articles 4 to 6 are of a technical nature. They amend the Financial Provisions (Northern Ireland) Order 1993 in relation to the reserves, public dividend capital and borrowing limits of trading funds. The overall effect will be to bring Northern Ireland into line with the position in Great Britain. Article 4 permits the net assets in a trading fund's opening balance sheet to be financed by accounting reserves, as well as be deemed debt and public dividend capital. When the 1993 legislation was enacted, all prospective trading funds were using cash accounts. It was, therefore, sensible to regard a trading fund as a new business in accounting terms. However, in future all prospective trading funds are likely to have accruals-based accounts, including balance sheets. Where that is so, it will be more realistic to treat a prospective trading fund as a continuing business. Article 5 extends the powers to issue public dividend capital so that it can be used to finance any expenditure undertaken by a trading fund. At present, it can be used only in respect of opening capital. This change will provide additional flexibility where, for example, a trading fund needs to finance a large capital expenditure programme, but could not do so in the short term without increasing its charges to levels inconsistent with its financial objectives. Article 6 makes changes to trading funds' borrowing limits. It brings public dividend capital, issued by virtue of the provisions of article 5, within the maximum borrowing limit that applies to an individual fund and the maximum amount of borrowing that may be undertaken by all trading funds. Article 7 extends the time limits for the preparation and audit of certain accounts. This change, which has been agreed with the Comptroller and Auditor-General for 4 Northern Ireland, relaxes various restrictive and unnecessary time limits on both the preparation and auditing of accounts. Article 8 removes the current requirements that a loan made to Enterprise Ulster must be repaid within the same financial year. That is an unnecessary constraint, and its removal should help Enterprise Ulster improve its operational efficiency. In summary, the proposals are designed to remove unnecessary constraints on various sectors of the public service and should ensure improved efficiency and effectiveness. I commend the order to the Committee.

Mr. Jim Dowd (Lewisham, West): I sincerely hope that I shall not detain the Committee long. I wish to deal with a few points and hear the Minister's response to them before we approve the order. As the Minister said, these are ostensibly technical measures. The last time that they were debated was on the Floor of the House on 20 April. I do not think that they are contentious, but, as with all technical measures, we need to assess not just the measures themselves, but their likely impact. I am slightly suspicious because I have not yet disposed of my habits as a Whip. When I looked at the membership of the Committee and noticed that the Government needed a majority of two as opposed to one, which I was used to in other circumstances, I suspected that there might be more to the matter than meets the eye, but I am sure that that is just unhealthy suspicion which I shall have to divest myself of. The paralleling of Great Britain regulations is generally to be welcomed and we all hope that in many other areas, with the successful unfolding of developments in Northern Ireland, it will become more prevalent. The Minister said that the measures were routine, but I want to spend a moment discussing them. Article 3(4) extends a considerable power to the Department of Finance and Personnel, which, in Great Britain terms, is akin to relaxing the need for Treasury consent. Where it has been done in other areas it has been done sparingly and specifically, but a general power seems to have been extended to the Department. Under 3(4) the power seems to be unrestricted. The wording does not seem to limit it only to financial matters or to impose any constraint. I wonder whether there are other intentions for the use of that power. Will the Minister explain how the process will work? Will the DFP decide the circumstances in which there will be a relaxation or would other Departments or statutory bodies be able to apply for a relaxation? Articles 4, 5 and 6 are consequential. I hope that they presage an expansion of activity under the trading accounts that have been instituted previously. Article 7 is also an extension. The relaxation seems to run counter to developments elsewhere—we have been calling for the earliest possible return of the accounts of public bodies. The Minister said that arrangements were unnecessarily restrictive in the past: have there been problems getting accounts in on time? The public should see the accounts of any public body as soon as possible. Although the relaxation is minor, it seems to run in the opposite direction. 5 Article 8 deals with Enterprise Ulster, which has a key role. Everyone will wish it well in its crucial task of underpinning the peace process and any subsequent settlement. I hope that the measure is a favourable portent of a welcome expansion of its valuable work. However, while the move from loans not needing to be repaid in the current year is reasonable, the relaxation is open-ended. I presume that there will still be an obligation to repay the loan at some stage, but there has been a move from a 12-month limit to virtually no limit. Although the measure does not deal with appropriations, I would appreciate any information on its likely effect on them.

4.38 pm

Mr. James Molyneaux (Lagan Valley): I think we are all agreed that articles 4, 5 and 6 appear to be technical. On the face of it, articles 7 and 8 would have the effect of introducing a degree of flexibility to certain timetables, particularly those affecting loans. Article 7, in the matter of audited accounts, would have that effect. Article 8 gives Enterprise Ulster more time to repay loans. One hopes—I say this rather facetiously—that that will have a knock-on effect on the attitude of banks and other lending institutions, which may bring relief to some of us. I may send a copy of the Committee Hansard to my bank manager. On article 3, which seems to be the important one, I am not certain whether I understood the Minister correctly when he said that this was included in those matters which are reviewed periodically. As the hon, Member for Lewisham, West (Mr. Dowd) has said, it seems to give the Department fairly sweeping powers. We are not jealous of those powers being granted to the Department, but we hope that they will be used sparingly. Article 3 must exercise the mind of parliamentarians who are conscious of their role, and the role of Parliament as the ultimate accounting body. The thorny issue of supply, after all, brought us here and evolved this democratic institution. We would like an assurance that article 3 will not erode that vital principle of accountability. I cannot help wondering whether beneficiaries in the shape of what the order refers to as any "Department or statutory body" could include those rare creatures which go under the cover name of agencies and appear to be increasing rapidly in number. Will they be included under Departments or statutory bodies? That would make one a little fearful because those bodies cannot be questioned in the House, although I dare say that Ministers have a degree of answerability in that they can invite the chairman of an agency to write to an hon. Member. However, that is not quite the same as being given a grilling, especially in a debate on the appropriation order. They could be brought before a Select Committee and examined at length, but that is not really a substitute for accountability, especially in one of the three appropriation order debates that we have in the House each year. I appreciate the desire of the Department of Finance to loosen the shackles somewhat on certain bodies. However, I trust that the Department will not be too free with its derogations, particularly with regard to what I call high spenders and empire builders.

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4.42 pm

Mr. William O'Brien (Normanton): The order refers to miscellaneous inclusions. I understand article 8, but require clarification from the Minister on article 7. The Minister said that the Comptroller and Auditor-General for Northern Ireland had agreed to the proposals. Will the extension of the time limit for the preparation of certain accounts apply to health trusts? Will it also apply to the part of local government that is involved in attracting tourists? There are a number of joint schemes in which money has to be raised over and above what the Northern Ireland Office allows local government. I should appreciate the Minister's clarification on how the order will apply to certain accounts and whether bodies such as health trusts and community trusts that care for the elderly and for children requiring special education will be included under this proposal. Some assurance or explanation from the Minister would be helpful because of the ambiguity surrounding the audit of certain accounts

Sir John Wheeler: I am grateful for the comments made by members of the Committee and I shall endeavour briefly to respond to the issues that have been raised. The hon. Member for Lewisham, West asked about examples of matters that might no longer be subject to approval by the Department of Finance and Personnel. The improvement is a minor one. It will include the payment of fees to members of tribunals, the appointment of adjudicating officers by the Department of Health and Social Security, and the appointment and pay of national insurance inspectors. Each case will be considered on its merits with a view to stopping automatic referrals of routine, non-controversial matters to the Department of Finance and Personnel. Other Departments, of course, can apply to the Department to remove the need for approval in certain cases. Such cases might include fairly minor matters such as ferry prices. The matters concerned are essentially administrative and routine. The hon. Member for Lewisham, West also referred to delays in preparing accounts. No problems have arisen in the preparation of accounts in Northern Ireland in the past, but I consider it important not to impose restrictive and unnecessary constraints on Government agencies, which may require some brief latitude in the preparation of accounting material. The concession proposed in the order is very minor. The right hon. Member for Lagan Valley (Mr. Molyneaux) and the hon. Member for Lewisham, West referred to article 8 of the proposed order. The aim of article 8 is to remove the requirement of paragraph 12(b) of schedule 1 of the Enterprise Ulster (Northern Ireland) Order 1973 that a loan made to Enterprise Ulster must be repaid within the financial year in which it was taken out. It removes an undesirable constraint on the efficient operations of Enterprise Ulster, allowing its management greater financial flexibility while maintaining the existing control mechanisms. Experience has shown, between 1973 and 1995, that that constraint of repayment within the financial year is unnecessarily restrictive. That does not mean that repayments are not to be made. The right hon. Member for Lagan Valley also referred to article 3. Its purpose is to remove the requirement for Departments and agencies to seek the consent of the Department of Finance and Personnel in certain 7 circumstances. Over the years, clauses requiring such consent or approval have routinely been inserted in legislation. Largely because of a more strategic approach to issues, the requirement for Departments and statutory bodies to obtain Department of Finance and Personnel approval in relation to various functions has lessened—something that is recognised by this article. The change includes agencies but will not affect their accountability to Parliament. I believe that the right hon. Gentleman was particularly concerned about that point. The hon. Member for Normanton (Mr. O'Brien) referred to article 7. That amends subsections 2(1) and 2(2) of the Exchequer and Financial Provisions Act (Northern Ireland) 1950, by extending the time limits for the preparation and audit of certain accounts. The documents affected are the annual account of public income and public expenditure in Northern Ireland, the balance in the Northern Ireland Consolidated Fund at year's end along with any contingent liabilities, and associated miscellaneous receipts and payments. It does not affect health trusts or bodies promoting tourism. I hope that that answer relieves the hon. Gentleman's concern.

Mr. Dowd: I do not want to have to speak after the Minister has finished his remarks, so if he would deal with the point that I want to make now, I should be grateful. He mentioned with regard to article 7 that there are no 8 problems with the provision at present and that it was being complied with in the relevant circumstances. Why does it need to be changed if it is causing no difficulty, particularly since the time limits due to be replaced appear to be preferable? Perhaps meeting those limits is considered to be an undue burden.

Sir John Wheeler: I am grateful to the hon. Gentleman for his courtesy in raising that point in an intervention. Our aim is to provide a tidying-up measure in the order and bring Northern Ireland into line with best practice in Great Britain. The measure does not betoken difficulties in Northern Ireland, it harmonises the procedures between Northern Ireland and Great Britain. On the personal relationships of the right hon. Member for Lagan Valley with his banking advisers, I hope that this afternoon's proceedings will encourage the banks in Northern Ireland to look on him with generosity in future.

Question put and agreed to.

Resolved, That the Committee has considered the draft Financial Provisions (Northern Ireland) Order 1995.

Committee rose at ten minutes to Five o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

Hill, Mr. James(Chairman)

Coombs, Mr. Anthony

Deva, Mr.

Dowd, Mr.

Godman, Dr.

Greenway, Mr. Harry

Jopling, Mr.

Macdonald, Mr.

Molyneaux, Mr.

O'Brien, Mr. William

Sumberg, Mr.

Viggers, Mr.

Wheeler, Sir John

Wood, Mr.