25 Oct 07 New Era New Focus: Record £11 billion budget targets Economic growth
NEW ERA, NEW FOCUS: RECORD £11 BILLION BUDGET TARGETS ECONOMIC GROWTH AND FREEZES RATES
The new Executive’s first draft Budget was unveiled today. At a new high of almost £11 billion by 2010-2011, it will put in place the building blocks for a strong economy and reduced Government costs.
Finance Minister, Rt Hon Peter Robinson MP, MLA told a special sitting of the Assembly that this year’s Budget represented ‘a clear break with the past and a new direction for the future’. He said: “The days of Direct Rule Budgets with Labour Party priorities are over. This Budget comes with the proud stamp: ‘Made in Northern Ireland’.”
The Minister said that from now on the primary focus of the administration will be economic growth. And recognising that the spending pattern over the past decade has shown a steady rise, he pledged to continue to boost public services, while ensuring that the taxpayer gets value for money.
A surprise boost for householders lay in his announcement that regional rates are to be pegged for the next three years while Government sets about the work of phasing in new water contributions. He pointed out that the average Regional Rate bill has increased by 62% since 2002. He said: “The cushion of above inflation Regional Rate increases allowed Government to avoid tackling waste and bureaucracy. Now it is time to remove that comfort blanket and demand that after years of the ratepayer taking the strain that Government shares it too.
“We have given a commitment that households will see the benefit of the contribution they already make to the cost of water through their regional rates payments – an average of £160 per Rate bill. But I believe that we need to go further.
“We need to ensure that each household sees the full benefit of this in their rates bills over the next three years as we introduce the new arrangements for increased contributions towards the cost of water. If we also were to introduce parallel increases to regional rates bills, no matter how small, at the same time as we are phasing in the new water arrangements, we would be seen as giving with one hand and taking away with the other.
“Therefore, in addition to the reduction of an average of £160 per Rate Bill from 2009-2010, I propose that we should freeze the domestic regional rate for the next three years. This represents a cut in real terms for the Regional Rate and offers much-needed relief to every rate payer.
“Devolution is about making a difference and in the area of local taxation, the average householder will be £1,000 better off than would have been the case if Direct Rule had continued and their proposals implemented.”
The Minister also brought comfort to manufacturing industry in Northern Ireland by announcing that Industrial de-rating will be capped at its current 30% level over the Comprehensive Spending Review period. There was no point in putting economic development at the top of the Government’s agenda and then potentially making life more difficult for some of Northern Ireland’s key businesses, he said.
Although he had significantly more money to allocate to Departments, Mr Robinson said that the pressures on Government resources remain considerable. He said that Budget funds could be boosted further if Government took action to cut out waste and drive down administration costs.
He revealed that by so doing Departments and public bodies will be expected to raise an additional £790 million by 2010-2011. This will be achieved through cash releasing savings of 3% each year, including a 5% annual reduction in administration costs: “I want to serve notice to this Assembly and to the wider community that I am determined to take the drive for greater efficiency in public services to a new level,” he said.
“I am simply not prepared to stand back and leave unchallenged the countless instances, large and small, across all our public bodies where taxpayers’ money is being wasted on over-staffing, absenteeism, poor working practices and a resistance to radical change in the way we go about delivering services.
“We owe this, not just to those who use and need our public services, but also to the many public servants who want to see change and improvements in the way they do their jobs.”
The Minister reminded MLAs that tied in to the efficiency drive will be the activities of a new Performance & Efficiency Delivery Unit, the composition of which has yet to be announced. And he said that even more will be expected in the battle to drive down costs: “I believe that we can go further than this in finding ways to free up more resources for reinvestment in public services. In the period between now and my announcement of the final Budget in January, I want to finalise and then publish details of how Departments will deliver on their efficiency programmes.
“I will also want to examine the scope for delivering even higher levels of efficiency beyond the 3% a year targets already set, and I will announce new targets for reductions in the size of the Civil Service over the next three years.”
Gross capital expenditure
In his opening remarks Mr Robinson told the Assembly that his public spending plans are more than 28% higher in real terms than in the December 2001 Budget announcement, when a local Finance Minister last stood at the despatch box:
“The spending proposals I am announcing today will total almost
£10 billion next year and will grow to nearly £11 billion by 2010-2011. These figures reflect the substantial growth in the overall level of public spending that has occurred in recent years. For capital investment the increase has been even more dramatic, with a real terms increase of more than 60% in annual public investment in new infrastructure by 2010-2011 compared with the position seven years ago.”
Boosting the economy
Mr Robinson said that regenerating the Northern Ireland economy will be a cornerstone of Government policy:
“The Executive is committed to delivering the Economic Vision of an innovative, entrepreneurial, wealth-generating, export-oriented economy. To achieve this we need to ensure that policies are in place which will encourage private sector growth and expansion. For too long the local private sector has been constrained by the influence of the Northern Ireland public sector. Now is an opportune time to change the focus of economic policy.”
He said that despite the lowest unemployment rate of all UK regions and employment growth at unparalleled levels, there has been no material improvement in Northern Ireland’s relative prosperity. This was confirmation that a new approach was needed in regard to economic development policy:
“The focus should now be on creating better jobs, not just more jobs. We need to encourage private sector growth in sectors that deliver high value employment. While Invest NI and the Department of Enterprise, Trade & Investment (DETI) will have a key role to play in this transformation it will require co-ordinated input from many other stakeholders.
“We need to ensure that we deliver the required infrastructure and skills conducive to raising regional productivity. The overriding imperative will be to stimulate the private sector economic activity. A regional economy that has public sector activity equivalent to two thirds of total GVA is not sustainable.”
The Minister said that, accordingly, the reductions experienced by DETI in recent years will be reversed, with average growth of 4.8% in the available spend over the new Budget period.
Health remains the top recipient from the Budget, with an additional £450 million by 2010-2011 enabling DHSSPS to meet its very substantial cost pressures. Mr Robinson pointed out that this will be the largest amount of money ever invested in the Health Service here, reflecting the importance attached by the Executive to this important service.
The proposed allocation for Education will see that Department’s budget increase by 4.3% per annum over the period to 2010-2011. This will enable more than 100 schools projects to be taken forward along with 18 Public Private Partnerships, including eight special needs schools.
Note to Editors:
The Minister’s statement on the draft Budget and full details of the financial allocations for Departments can be accessed at: www.pfgbugetni.gov.uk
