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Volume 536: debated on Wednesday 30 November 2011

The Northern Ireland economy is over-dependent on public spending. The Government share a commitment with the Northern Ireland Executive to rebalance it over time by promoting investment and growing the private sector. There are many world-class Northern Ireland businesses. We need more of them.

Will the Minister confirm that last week the annual survey of hours and earnings showed that Northern Ireland earnings increased by 3.5%, compared with less than 1% on the mainland? Does he agree that rebalancing the economy and the creation of private sector jobs is the key to Northern Ireland’s recovery?

I entirely agree with my hon. Friend. One survey showed that public spending represents 77.6% of GDP in Northern Ireland. We know that that is wholly unsustainable, and we are committed to rebalancing the economy over time, working closely with the Executive.

One of the ways of rebalancing the economy towards the private sector is to ensure that there is a flow of funds from the banking sector to private firms. What steps will the Government take to ensure that the credit easing measures announced yesterday will apply effectively in Northern Ireland, given the lack of market penetration by UK mainland banks and the high dependence on Irish banks?

I am grateful for the opportunity to clarify that the national loan guarantee scheme, which the Chancellor announced yesterday, applies to Northern Ireland. That will be of great benefit to small businesses right across Northern Ireland.

I understand that the average private sector wage in Northern Ireland is £20,000 a year, compared with the average public sector wage of £29,000. What impact does my right hon. Friend believe that yesterday’s announcement from the Chancellor about the ability to set public sector wages locally will have on Northern Ireland?

My hon. Friend is right. There was a survey which showed a 41.5% difference between a public sector wage and a private sector wage. It shows the task we have in helping to revive the private sector and making it an attractive place for bright, enterprising young people in Northern Ireland to go into. That is very much what we would like to do.

Does the Secretary of State accept that the proposed changes to public sector pension contributions will have an even more severe impact in Northern Ireland because of the shape and balance of our economy?

First, I congratulate the hon. Member on having won the election for the leadership of his party. I look forward to working with him, as the leader, as I worked with him while in opposition, and in recent months since I have been Secretary of State.

I do not entirely agree with the hon. Gentleman’s question. This is basically a good news story. People are living 10 years longer, and that has put huge pressure on the cost of pensions, which is up to £32 billion across the United Kingdom—an increase of a third over 10 years. Lord Hutton, who used to sit on the Government Benches here, came up with a sensible report, and I appeal to all those in Northern Ireland who are in trade unions to continue discussions with the Government because our offer is extremely fair.

Given the importance of the Republic of Ireland to the Northern Irish economy, and the likelihood of a break-up of the eurozone, what discussions has my right hon. Friend had with the Chancellor of the Exchequer and the Northern Ireland Executive about how the Northern Ireland economy could best cope with such a crisis?

I thank my hon. Friend. As he knows, the Chancellor and the Treasury are looking at all contingencies, because reports yesterday showed that the crisis in the eurozone is having a real impact on our economy. I am in regular contact with the Government in Dublin and will continue discussions.

When thousands of public sector workers in Northern Ireland are worried about their pensions, with cuts to public services, and when growth figures have been so significantly downgraded, does the Secretary of State remember that, when commenting on the Budget of March 2011, he said:

“This is a Budget for growth across the whole UK in which Northern Ireland will share”?

Where did it all go wrong?

I am grateful to the hon. Gentleman for his question. He knows perfectly well where it went wrong. It went wrong when his colleagues landed us with the biggest deficit in Europe, and we are digging this country out.

There we go—the complacent answer of someone who has no answers at all.

What little faith the Secretary of State has in the ability of the people of Northern Ireland to do their sums. I may not have taught maths, but even I know that if you take away £4 billion and return £142 million, it definitely does not add up to a fair deal for Northern Ireland. Is it not time that this Secretary of State stood up for Northern Ireland and told the Chancellor to get a proper plan for jobs and growth?

What we have done for Northern Ireland, as one of my colleagues said earlier, is keep interest rates low. That is the biggest service we could deliver to Northern Ireland, and thanks to the disciplined and determined manner in which we are addressing the deficit, we now have the lowest interest rates in western Europe. That benefits every family with a mortgage, and every business with an overdraft, in Northern Ireland.