Q38 Mr. Dave Anderson: It is a pleasure to be where we are today, Secretary of State, given what we have overcome in the last few years. We met with some members of the Assembly yesterday and they were saying great, great disappointment about what they see as a major shortfall in the budget as a whole that is being put forward by the Chancellor. There is potentially as much as £3 million across the board that they believe it was short prior to the work we want to give them to do. In particular, in terms of water charges, we are trying to get from them exactly what the problem is. The problem is historical underfunding and infrastructure problems. My constituency is relatively rural compared to most of the North East. We do not have the situation, as they have in the north of Ireland, where 70 per cent of the houses are not on the main sewerage system, so, in terms of saying to them, "You need to do the same as the rest of the UK is doing" is not really a level playing field and there is a concern that there is more money being put in through the Republic than there is from our own government in terms of going forward? I know there has been a request from the economic subgroup, consulting the CSR and the local government, to see if they can defer the water reform charges for at least three or possibly five years. Is that not something you could look at and give them some support on?

Mr Hain: There are a number of issues here and I am grateful that you have raised them. First of all, on the overall position, the Northern Ireland Executive will have coming in, subject to any final negotiation which I cannot predict, a budget of £53 billion of revenue and capital, which is an absolutely extraordinary amount. Not only that, it has a settled budget, where it knows this can only go up not down, like no other part of the UK. In respect of water charges, I have legislated for them because I think it is in the interests of Northern Ireland sustainability and its economy that more finance is raised locally. For example, if you assume, as some argue in Northern Ireland, that water is already included in the rates bills, the property tax there - and that is arguable, but make that assumption - the average household water and property tax bill in Northern Ireland is around £600 a household. In England, Scotland and Wales, in all the constituencies the rest of us have, including yours and mine, it is £1400, so I do not think there can be an argument about inequity. In fact the contrary. You could argue that English council taxpayers and water charge payers are effectively subsidising Northern Ireland water and household finance. You could make that argument. There is certainly a massive gap of more than double the burden borne by English, Scottish and Welsh householders, so I do not think there is a question of unfairness. I think there is an argument in how this is phased in, how it is done, and we are providing the Executive with the breathing space of at least a year to make a different decision. But the revenue consequences of a different decision are quite serious. Even if you keep the £100 million the Chancellor has put aside of new money to allow for this to be addressed, if that is where you choose to spend it rather than on business support to address the competitive situation in the Republic, by the end of the three years that water charges will be phased in by, there is a £267 million revenue gap which would come from water charges. May I say finally on this point that there is more protection for low-income householders in Northern Ireland that I have introduced as part of this new procedure - which can be changed by the Executive if it wishes - than anywhere else in the UK, than my constituents get, so this is not being done in some heavy-handed, unjust fashion, it is being done in, I think, the proportionate fashion to say that it is sensible for a level playing field, at least in terms of water charges being financed locally in Northern Ireland.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

Promoted by Paul Foy on behalf of Dave Anderson, both of St Cuthbert's Church Hall, Shibdon Road, Blaydon, NE21 5PT