Session 2006/2007 Fourth Report COMMITTEE ON THE PROGRAMME FOR GOVERNMENT Report on Comprehensive Spending Review and Programme for Government; Rates Charges; and Water Reform TOGETHER WITH THE MINUTES OF PROCEEDINGS, OFFICIAL REPORT AND PAPERS RELATING TO THE WORK OF THE SUB-GROUP AND COMMITTEE Ordered by the Committee on the Programme for Government to be printed 23 January 2007 Report: 4/06R (Committee on the Programme for Government) £40.00 Committee on the Programme for Government On 24 November 2006, following a direction from the Secretary of State for Northern Ireland, the Rt Hon Peter Hain MP, the Business Committee established a Committee on the Programme for Government to agree priorities for a restored Executive and to make preparations for restoration. The Secretary of State directed that the Committee should, initially, be chaired by the deputy presiding officers, Mr Jim Wells and Mr Francie Molloy. Membership The Committee has ten members with a quorum of six, with at least one representative present from each party on the Committee. The membership of the Committee since its establishment on 24 November 2006 is as follows – Gerry Adams MP Jeffrey Donaldson MP Mark Durkan MP Sir Reg Empey Michelle Gildernew MP Martin McGuinness MP David McClarty Ian Paisley Jnr Margaret Ritchie Peter Robinson MP At its meeting on 27 November 2006, the Committee agreed that deputies could attend if members of the Committee were unable to do so. The Committee met on nine occasions between November 2006 and 23 January 2007. At the first meeting on 27 November 2006, the Committee noted the direction from the Secretary of State dated 23 November 2006 that a Committee on the Programme for Government should be established to agree priorities for a restored Executive and to make preparations for restoration. (A copy of the direction issued by the Secretary of State is attached at Appendix 5). The Committee agreed to consider the Ministerial Code, Victims and Survivors issues and the Lifetime Opportunities strategy and to set up sub-groups to consider and report back on – Economic Issues Workplace 2010 and Public Sector Job Location Policing and Justice Issues Report on the Comprehensve Spendng Revew and Programme for Government; Rates Charges; and Water Reform Schools Admissions Policy Review of Public Administration and Rural Planning Comprehensive Spending Review; Programme for Government; Rates Charges and Water Reform Sub-group on Comprehensive Spending Review and Programme for Government; Rates Charges and Water Reform The Committee agreed the sub-group’s terms of reference on 4 December 2006. The sub-group submitted its report on 18 January 2007. The Committee considered the report on 23 January 2007 and agreed that it should be printed. The sub-group has six members with a quorum of four, with at least one Member from each of the four parties represented on the Committee on the Programme for Government. The membership of the sub-group, established on 27 November 2006, is as follows: Mr Leslie Cree Mr Mark Durkan MP Mr Raymond McCartney Mr Mitchel McLaughlin Mr Jim Shannon Mr Peter Weir Mr Jim Wells chaired the meeting of the sub-group held on Wednesday 6 December 2006 and Mr David McNarry chaired the meeting held on Wednesday 13 December 2006. The Committee on the Programme for Government agreed at its meeting on 11 December 2006 that the sub-group on the Comprehensive Spending Review and Programme for Government; Rates Charges; and Water Reform would be chaired by a Member from the Ulster Unionist Party. Dr Esmond Birnie was nominated as Chairperson by the party. Mr McNarry substituted for Dr Birnie on two further occasions. The Committee on the Programme for Government agreed that deputies could attend if members of the sub-group were unable to do so. The following Members attended at various times – Mr Wilson Clyde Mr Paul Girvan Mr Alex Maskey Mr John O’Dowd Ms Margaret Ritchie Ms Kathy Stanton Terms of reference (1) The Comprehensive Spending Review and Programme for Government To consider – the current position of CSR 2007; the views of the NI departments on (1) major financial pressures during the 3-year period; (2) efficiency savings; (3) longer-term investment needs; and (4) issues which should feature as priorities in a draft Programme for Government; and the major areas where additional new investment might be allocated as part of an agreed economic package. (2) Rates Charges To consider, in a comprehensive manner, all aspects of rating reform including the work and any proposals developed - to cap domestic and industrial rate charges; and to increase the relief available to senior citizens and low income households including those on specified benefits; and To report on the views of the sub-group on an appropriate capping mechanism and level. (3) Water Reform To consider – the arrangements for water reform set out in the draft Water and Sewerage Services (Northern Ireland) Order 2006; the strategic business plan, governance of the GoCo and the issue of licence; and the arrangements for the billing and collection of the water charges. To report to the Committee on the Programme for Government on these three issues by 18 January 2007. Report on the Comprehensve Spendng Revew and Programme for Government; Rates Charges; and Water Reform v Contents Executive Summary 1 Recommendations Comprehensive Spending Review and Programme for Government 3 Rates Charges 4 Water Reform 5 Introduction 7 Consideration of Issues 8 Section 1 – Comprehensive Spending Review and Programme for Government 8 Background 8 Summary of Concerns raised with sub-group 8 Consideration of Issues: Priorities for a Draft Programme for Government 10 Addressing Restricted Growth in Public Expenditure 11 Early Consideration and Consultation on Priorities & Budget 12 Achieving Resource Releasing Efficiencies 12 Making Better Use of Existing Resources 13 Investing in Northern Ireland’s Growth and Development 14 Mainstreaming of Equality Provisions and the new Anti-Poverty Strategy 15 Use of an Agreed Economic Package 15 v Section 2 – Rates Charges Background 16 Summary of Concerns Raised with sub-group 16 Consideration of Issues 18 Section 3 – Water Reform Background 23 Summary of Concerns Raised with sub-group 23 Consideration of Issues 24 Annex A - Summary of Likely Spending Priorities Identified by Departments over CSR Period 29 List of - witnesses who gave oral evidence Comprehensive Spending Review and Programme for Government 30 Rates Charges 30 Water Reform 30 written submissions Comprehensive Spending Review and Programme for Government 31 Rates Charges 31 Water Reform 31 other evidence considered by the sub-group Comprehensive Spending Review and Programme for Government 32 Rates Charges 32 Water Reform 32 Appendix 1 - Written Submissions 35 Appendix 2 - Other Evidence considered by the sub-group 259 Appendix 3 - Official Report 413 Appendix 4 - Minutes of Proceedings 555 Appendix 5 - Direction Issued by the Secretary of State 581 v Report Executive Summary The sub-group on the Comprehensive Spending Review (CSR) and Programme for Government; Water Reform and Rates Charges makes 35 recommendations in this report on the 3 issues referred to it in the terms of reference set by the Committee on the Programme for Government (PfG Committee). The sub-group took oral and written evidence from a wide range of organisations and government departments on the three substantive issues of the CSR, water reform and rates charges. The sub-group worked closely with the Economic Issues sub-group on areas of common interest in respect of water charges and the investment priorities that should underpin the case for an economic package from the Chancellor. The sub-group was firmly opposed to water charges and has fully supported the recommendations made in the Economic Issues sub-group’s recent report to the PfG Committee on the deferment of water charges, on a reduction in the capital valuation and on a reduced rate of return set by Government, which directly impact on the level of charges placed on consumers. The sub-group also supports the analysis of the Chancellor’s economic package and the alternative economic package proposals in the Economic Issues sub-group’s report. The sub-group has reached consensus on the conclusions and recommendations in the report and considers that these are firmly rooted in the evidence submitted. The sub-group was alarmed at the evidence provided by the Consumer Council which suggested that, notwithstanding the best efforts of the Council, there had been a serious breakdown in its relationship with the Department for Regional Development on the water reform agenda. The strength of this relationship is central to the quality and effectiveness of the protection measures for consumers and it is the view of the sub-group that the evident distrust that has been allowed to develop must be a cause for serious concern. The report contains recommendations for a restored Executive’s consideration on the identification and delivery of efficiency savings, their impact on frontline services, resources available from asset disposal and the priorities for future investment. Substantive recommendations on rates charges focus on the negative impact of non-domestic rates on the manufacturing sector and the impact of the change in domestic rates on pensioners, people with disabilities and people on benefits. The report calls for a detailed study into the cost and impact of introducing a cap on domestic rates and finding alternative ways of providing assistance for the ‘asset rich/cash poor’. On water reform the report develops the work of the Economic Issues sub-group and makes recommendations including the need for a restored Executive to fully review the water reform process and to consider again all the potential alternative models for reform. The sub-group calls for increased enforcement powers for the Regulator on setting charges and disposing of assets and expresses concern about the impact that water charges will have on vulnerable people falling below the poverty line.