24 October 2002 A Modern Economy Requires Modern Government - Ian Pearson's Pledge
Public sector reform will continue to play a major part in the Government’s priorities for Northern Ireland, the Parliamentary Under Secretary of State with responsibility for Finance and Personnel, Ian Pearson, MP, told a conference in Newcastle, Co Down today. Such reform, and new approaches to public sector finance, are central to securing a competitive base for the Northern Ireland economy.
The new Minister was the keynote speaker at the annual conference of the Chartered Institute of Public Finance and Accountancy.
Its theme was “Devolution; Delivering the Difference”, and Ian Pearson, ‘set out his stall’ for delegates by outlining the achievements of devolution and government intends to build on the progress made so far.
The Re-investment & Reform Initiative would be pursued with vigour, he said, as the most appropriate means of investment in the best quality services Government can deliver. A key by-product of this must be to secure the right economic infrastructure and the best competitive environment for business to prosper, as mapped out in the Executive’s own Programme for Government. Such infrastructure is the bedrock of a dynamic and competitive economy.
“It has been made very clear to me, in my short time here, that there is a need to deliver real improvements to the local economic infrastructure. I will belooking very carefully at all aspects of this over the coming weeks and months. But it is obvious that if you are to compete in a changing, in an increasingly knowledge based global market place you need a modern infrastructure,”he said.
“Roads must be of a standard capable of producing reduced and reliable journey times and public transport networks need to be safe, reliable and accessible to help business and to minimize social exclusion. The telecommunications, technological and energy infrastructure too must be of a standard capable of supporting a competitive economy and it must be conducive to the promotion of innovation, new thinking, and new technology.
“The social infrastructure must also be fit for a 21st century society if we are to retain and attract the brightest and best. Northern Ireland’s schools and hospitals must, as an absolute minimum, be the equal of our economic competitors if we are to achieve high and stable levels of economic growth. Our environment must also be clean and safe and that reinforces the need, urgently, to address the ageing water and sewerage infrastructure.”
The Minister emphasised the need for early choices to be made on the raising of capital to pay for infrastructure investment in Northern Ireland’s schools, hospitals, roads, transport, and water services. Reform and modernisation remain the key factors, he said, while indicating that other measures are needed to secure funding.
Ian Pearson explained that the use of appropriate, yet innovative, public private partnerships, while important, does not rule out the need to look at raising local revenue through the rating system, in order to take advantage of the borrowing offer from Treasury.
“It was one of the Executive’s achievements that they were able to negotiate this borrowing facility with HM Treasury,”he said.
“It opens up the prospect of very significant growth in investment in infrastructure in Northern Ireland.”
The Minister praised Executive Ministers for their strategic approach in drawing up future economic policy, working through the Economic Development Forum. The net effect of consultation by the Executive had indicated an appetite in the public and private sectors for trying new ways and shouldering new responsibilities in the drive to modernise Northern Ireland and improve its economic base.
Announcing the publication of a First Findings Report, which has emerged from the public consultation on the Review of Rating Policy, Ian Pearson said that while more analysis is needed, particular aspects for reform of the system are coming through:
“I am sure these initial findings will stimulate more debate as the Review moves into its next stages. And it will involve presenting some difficult choices for consideration and decision. These are decisions with major long-term consequences, and it is right that we take the time to work our way through them.
“Fortunately, there are some aspects of rating policy on which quick decisions are feasible because, while they are capable of providing some necessary levels of additional revenue, they do not prejudice or pre-empt decisions on longer term policy. And they are feasible because they are aspects on which, in broad terms, a degree of consensus has started to emerge.
“I am thinking here of two issues in particular. One is around vacant property rating; the second is industrial de-rating.”
The Minister said many respondents to the Review favoured the rating of vacant properties as a useful incentive against buildings falling into dereliction. The majority of respondents supporting this step favoured the policy used in Great Britain where a fee less than full rating is levied, following an initial exemption period.
“I believe it is right in principle that vacant property should be rated,”he said.
“I have asked that further work be carried out on the mechanics and timescale for the removal of the exemption of vacant property from the rating system in Northern Ireland.
“This will include options for initial exemption periods and for discounts against full rateable charges. We will want to look further at all of these issues and at the precise scope of the policy. We will consult further on these points before we implement any changes.”
Turning to Industrial de-rating, the Minister said the findings pointed to a system that was not achieving its objectives:
“Perhaps the main argument against it is that it is a blanket measure. It is not targeted in any strategic way. It is not in any way related to need. The largest and most profitable enterprises benefit greatly from it. But they get the benefit whether they need it or not. That cannot be right.
“Overall there has been very limited support expressed for continuing the current regime of industrial de-rating. Even those who argued for its short-term retention acknowledged that it could eventually be phased out. In the Assembly, both the Committees of Finance & Personnel and Enterprise, Trade and Investment concluded that blanket industrial de-rating should be phased out, provided targeted relief measures are available to avoid hardship.
“I want to talk first to the business community, and plan to meet shortly with the CBI, the Northern Ireland Chamber of Commerce and the Small Business Federation. I have to say that I strongly believe that industrial de-rating is not sustainable as a long-term policy. We now need to face the challenge of change and to plan accordingly. In simple terms, using the resource for industrial de-rating does not provide Northern Ireland and its economy with the best return. If we work with business I believe that we can find better ways.”
The Minister said that timing and phasing were the key issues. Targeted relief measures for the business sector would have to be looked at, such as small business relief:
“I have asked that further work be done on this option, drawing upon the experience of current proposals to introduce small business relief schemes in England, Scotland and Wales. Again we will consult fully on all of these details before we actually make any changes.
“Equally important is that we use the opportunities for investment in our social and economic infrastructure to give us better returns as regards competitiveness and growth. That is a key agenda and one on which I will be engaging with business in the coming weeks.
“A modern economy needs a modern government. In a competitive world, in a world of new technology, of new markets, of new competitors, business has to adapt and develop. It can only do that in partnership with modern government,”the Minister added.
