Peter Cheney discusses the idea with the NIO Minister.

Instead of a cover for cuts, Hugo Swire sees the Big Society as a kind of confession. The NIO Minister, who leads on the subject in the province, describes it as an admission that “big government can’t always do it, shouldn’t always do it and when it does things, it doesn’t always do it very well.”

He sums up David Cameron’s concept as a transfer of power from the state to local people so they have more of a say in how their lives are run. The fundamental belief is that “the people who do things best for their communities are those people who live in those communities themselves.”

The Minister earlier addressed the UK Association of Preservation Trusts’ national conference at the Crescent Arts Centre. The Big Society, he told delegates, had three pillars:

1. decreasing the power of Whitehall and bringing decisions much closer to people;

2. reforming and opening up public services; and

3. encouraging social action.

Ministers have been keen to stress that the Big Society already exists and they want to make it ‘bigger’.

The UK Government’s plans will have the most impact in England, where Westminster has a free hand. Elsewhere, it has financial levers but otherwise has to persuade devolved administrations. Some voluntary sector groups are supportive, others sceptical.

Cameron launched the name Big Society through the Guardian’s Hugo Young lecture, in November 2009, but has emphasised the same theme since his leadership election speech in October 2005: “We know we have a shared responsibility, that we’re all in this together, that there is such a thing as society; it’s just not the same thing as the state.”

That contrasted with Margaret Thatcher’s 1987 comment: “And who is society? There is no such thing.” Swire points interviewers to the full quote, which continues: “There are individual men and women and there are families and no government can do anything except through people and people look to themselves first.”

Transferring power from government, he thinks, is “rather radical” and not unique to Conservatives. Many of his party members in East Devon are involved in charities, churches and fundraising. So too are people from other political backgrounds: “We want to recognise those people. We want to support those people. We want to encourage those people and we want there to be more of those people.”

Critiques

“Our critics have to say something,” he says when rejecting Ed Miliband’s view of the Big Society as “a cloak for the small state”. Swire adds: “As a Conservative, I actually believe personally that it is the individuals who should be empowered against the state. If that’s radical, so be it.”

From the right wing, Adam Smith Institute Director Eamonn Butler says the idea is a ‘brand’ and any ‘good’ government policy will be called the Big Society. “I think that what that’s missing is the very clear things that we’re doing,” Swire responds, pointing to Big Society Capital and National Citizen Service.

“It’s actually a sort of philosophical change. It’s a mindset. It actually represents a very fundamental shift in thinking and I think, ultimately, will come to define David Cameron’s premiership.”

Charities, social enterprises, private companies and co-operatives (including those owned by public sector workers) will compete to run public services, at least in England.

The proposed Big Society Bank has been renamed Big Society Capital to distinguish it from high street banks and is due to operate from April 2012.

Big Society Capital will not make direct grants but will instead act as a wholesaler of capital, attracting funding from foundations, institutional investors, companies and private individuals, to invest in intermediary organisations. Applicants, from all parts of the UK, could approach the intermediary organisations and access capital at a more competitive rate than through a normal bank. Independent of government, the organisation will initially receive an estimated £400 million from dormant bank accounts and £200 million from HSBC, RBS, Lloyds and Barclays (so-called Merlin money).

Swire was most passionate about the National Citizen Service as, after the English riots, “if there was ever a time to give teenagers a sense of belonging and purpose, it is now.”

The service, piloted in England last summer, brings together 16-year olds from different social backgrounds for a residential trip. Similarly to the Duke of Edinburgh Awards, young people take part in outdoor pursuits, design a community project and carry out 30 hours of part-time social action. Ten thousand young people took part and the UK Government is discussing a Northern Ireland version with the Executive.

Whether or not that goes ahead, Swire notes that the province’s Big Society is “alive and well in myriad different forms”. Indeed, he brought David Cameron to see the ARC healthy living centre in Irvinestown back in June, a high profile illustration of Britain learning from Northern Ireland’s experience.

Down to specifics

The Big Society is often written off as woolly and waffly but detailed policies are now taking shape. The National Citizen Service and the Big Society Capital Group are the two highest profile examples to date. In May, the Cabinet Office released its giving white paper, which highlights the following UK-wide schemes:

• Cutting inheritance tax from 40 to 36 per cent where 10 per cent or more of an estate goes to charity (takes effect from April 2012);

• Charitable giving through ATMs, being explored by banks, building societies and cash machine operators (operational later this year);

• JustTextGiving launched by the mobile phone industry (in May) after a challenge from government;

• The Do Some Good app for iPhones;

• The independent Philanthropy UK service encouraging more giving from wealthy individuals

(to receive £700,000 from government to develop its work).

Innovative pilots include the Round Pound scheme, allowing shoppers to round up their bills to the nearest pound and donate the difference to charity, and the Spice initiative (pioneered in south Wales) which thanks volunteers with a small gift e.g. off-peak swimming, spare theatre seats.

Community and voluntary groups across the UK can also apply for Big Society Awards. Winners receive a signed certificate from the Prime Minister and are invited to a networking event and 10 Downing Street reception.

The British Empire Medal (see page 7 in this edition) is being reintroduced to reward volunteering.

All UK Government ministers have pledged to volunteer for a day in the community. Swire had an army of NIO “weeders, sweepers, painters and cleaners” and was open to suggestions for projects.

More info: www.cabinetoffice.gov.uk/big-society

Northern Ireland is to receive an extra £142 million (including £134 million for capital projects) up to 2015 following the Chancellor’s autumn statement but may lose £150 million in current expenditure. Those reductions are expected in Barnett consequentials i.e. cuts in UK Government departments being matched by the Executive.

The whole UK is expected to experience lower growth in 2012 (0.7 per cent) with the Government borrowing an extra £111 billion over the next five years.

Critically, the Office for Budget Responsibility predicts 710,000 public sector job losses by 2017, up from its last estimate of 400,000. Public sector pay rises will be capped at 1 per cent after the freeze ends in April 2013. A review of regional pay could result in salary reductions and spending cuts will continue to 2017.

However, several announcements will benefit the Northern Ireland economy.

Fuel duty is frozen until next August (when a 3p rise is due). Local businesses can apply for the National Loan Guarantee Scheme, support from the Business Finance Partnership, and the national insurance exemption (which continues up to April 2013). Belfast is one of four cities to share the £100 million urban broadband fund, designed to achieve 80-100 MBps. Six others will be selected in a UK-wide competition.

Sammy Wilson claimed that there would be no compulsory redundancies but said he did not know how many voluntary redundancies would eventually be made. Wilson expected more invest-to-save decisions by ministers and said these had to be looked at “fairly quickly”.

Conor Murphy repeated Sinn Féin’s view that Northern Ireland had to break its dependency by taking on “maximum fiscal powers” and building a strong all-Ireland economy.

Alliance’s Naomi Long asked the Chancellor for action on air passenger duty on regional flights but was referred to the forthcoming UK aviation strategy. Long had wanted to see reduced VAT on renovations, to help the construction sector, but welcomed the moves to release credit to small businesses. However, she said there was “no serious effort” on pay restraint in company and bank board rooms.

The UUP was supportive and called for realism, but SDLP leader Alasdair McDonnell said that “squeezing” public sector workers “will simply cause pain and hardship for hardworking families and will have a negative impact on businesses here.”

Owen Paterson reiterated his defence of deficit reduction, which was “keeping interest rates lower for longer”. He claimed that the only alternative was “more borrowing and more spending … precisely the something for nothing economics that got our country into this mess in the first place.”

A wider divide opened up between the business and trade union responses.

CBI Director-General John Cridland said the statement “works with the realities of today and provides an imaginative framework”. The CBI in Northern Ireland wants changes in British employment law, including ‘protected conversations’ with older employees, extended to the province.

ICTU Assistant General Secretary Peter Bunting told striking workers that the public sector was “being sacrificed in the name of an ideology which favours the 1 per cent.”

Whatever you think of its estimates, the Office for Budget Responsibility has established its independence as a professional forecaster, according to Robert Chote. agendaNi spoke to him at the Northern Ireland Economic Conference on the first anniversary of his appointment.

“The key thing we needed to do on arrival,” he stated, “was to establish the reputation of the OBR as a source of rigorous, well-explained coherent analysis that people may well disagree with but at least they know it’s not politically-motivated wishful thinking.”

That independence, he comments, has been respected by the Treasury. The office also discloses all meetings with ministers and special advisors online, as well as its forecast timetable.

While many people are “very focused” on the short-term outlook, the medium-term outlook “matters more than anything” to the OBR. Its key task, when looking at the short-term trend, is to work out whether it is “temporarily bad news that we’ll bounce back from” or if it says something about medium-term prospects: “And that’s one of the tricky judgements we have to make.”

Asked to assess the euro zone’s performance, he quipped: “The days when I was a professional commentator on the merits of broadly based currency areas are long behind me.” Again, the key question for the OBR is the impact on the UK’s medium-term outlook, bearing in mind that the euro zone has an impact through export markets, interest rates for government borrowing, and general economic confidence.

More locally, corporation tax is the central policy objective of Northern Ireland’s business organisations and the Secretary of State, although the political will at Stormont is increasingly in doubt.

Chote was pressed for his view on whether corporation tax would be devolved, but replied that it was “not a decision for us to make” and “not for us to say whether this is a good idea or not.”

If the decision went ahead, the OBR’s task would be “relatively limited” i.e. producing forecasts and assessments. “Interestingly,” he added, “we’re having a similar role and similar challenges in Scotland because of the fact that from the Budget of next year, we’ll have to start forecasting Scottish income tax receipts and other areas.”

Scotland is to receive its new income tax powers by 2015 with the first changes taking effect a year later.

“One issue with corporation tax is that, of course, it is one of the more volatile streams of tax revenue,” Chote noted. “It goes up and down more than taxes on income or taxes on spending. It doesn’t make the task of forecasting receipts from it any easier.”

In the absence of lower corporation tax, Northern Ireland will continue to rely heavily on its subvention from Westminster. It was put to him that this dependence increasingly reflects badly on Northern Ireland, as a UK region, but he replied: “I wouldn’t say so.”

Chote continued: “It’s not our job to look in regional areas but I mean, clearly, if you think that we’re engaged in a fiscal consolidation at the moment and significant cuts in public expenditure, then those parts of the economy that are more dependent on the public sector are going to see more of a direct effect from there.”

A region in that situation will “need to be thinking about policies that will allow the public sector to rebalance” but he concluded: “It’s not unique to Northern Ireland and it’s a challenge for everybody.”

While still keeping the economy as first priority, the draft Programme for Government offers few radical solutions for the province’s problems.

As expected, the economy is described as the Executive’s first priority but its aims are considerably less ambitious than before. This reflects the recession but also the risk-averse influence of the Civil Service.

Closing the productivity gap with Great Britain (a major goal for decades) is not set as a firm target. The previous programme aimed to halve the difference with the UK average (excluding South East England) by 2015. Instead, the draft Economic Strategy calls for private sector GVA growth to exceed the UK average.

As of June 2011, almost a third of employees (31.3 per cent) worked for government. The public sector workforce stood at 218,000 while the private sector employed 481,910 staff (with both figures seasonally adjusted). This compares to 221,980 and 487,790 respectively in June 2010.

Northern Ireland’s unemployment rate stood at 7.3 per cent of the workforce (63,000 people) between July and September. A further 51,000 economically inactive people want a job but fall outside the official definition, which in practice brings the unemployment total up to 114,000.

The programme claims that the same number of benefit claimants will be moved into employment by 2014 through welfare reform. No estimate of the inevitable decrease in public sector jobs is included.

Against that, the Executive promises to “support the promotion” of over 25,000 new jobs (5,900 from foreign direct investment) by 2015. Promoted jobs are those expected to be created by Invest NI-supported projects. A total of 15,565 jobs were promoted between 2007 and 2010, although statistics do not show how many still exist.

A call for the “timely and affordable” devolution of corporation tax is contradicted by Sammy Wilson’s prediction that no cut will happen before 2015. Separately, the Executive will lobby the European Commission for the “best possible outcome” for regional aid after 2013.

The regional rate is pegged to inflation. Industry will be encouraged to achieve 20 per cent of electricity consumption from renewables, which depends on adequate grid reinforcement.

Irish Government A5 funding was cut just before the draft Investment Strategy was published. Its specific goals include Belfast rapid transit (construction due from 2012 onwards), the Lisanelly campus, the Desertcreat training college, electronic prescribing in hospitals and a regional library.

Ministers expect tourist numbers to reach 3.6 million by 2013 (generating £625 million), with the help of the Titanic centenary and Derry’s status as UK City of Culture. The 2009 totals, for comparison, were 3.29 million visitors (1.92 million from outside Northern Ireland) and £529 million in revenue.

The SME liquidity scheme was publicised as a £50 million loan fund, although the maximum in this Assembly term will be £30 million.

Ninety per cent of large scale investment planning decisions should be made in six months by 2015. However, 100 per cent was promised immediately in 2008. The modest interim target is 60 per cent in 2012-2013 and 57 per cent was achieved in 2010-2011.

The value of manufacturing exports (currently £5.1 billion) is to be increased by 15 per cent over the next four years. Exports fell by 0.6 per cent in 2010-2011.

DCAL’s creative industries innovation fund would support 200 projects. DEL plans to fund an extra 540 places on STEM courses. The creation of a new food strategy board recognises farming’s strong economic contribution.

Living standards

Two overlapping chapters cover quality of life, officially termed “Creating Opportunities, Tackling Disadvantage and Improving Health and Wellbeing” and “Protecting Our People, the Environment and Creating Safer Communities”.

Practically, this would involve building 8,000 social and affordable homes and the full double glazing of Housing Executive stock. The house-building total is to be expected given that 2,104 were started by housing associations in 2010-2011.

The SDLP and UUP contend that the £80 million Social Investment Fund could go to community groups linked to the DUP and Sinn Féin, a charge denied by both parties. A separate Social Protection Fund, similar to the December 2008 hardship payment, will receive

£20 million per annum. Child poverty is to be reduced, using both funds.

The promise of one year’s pre-school education (from 2013) does not guarantee a nursery school place. Around 90 per cent of children currently have places and the Department of Education already aims to provide one-year places to all parents.

Forty-nine per cent of young people from disadvantaged backgrounds should achieve five GCSEs A*-C by 2015, including in maths and English. The 2009-2010 figure was 31.3 per cent and that target is in keeping with the current annual increases. The same percentage for all young people should increase to 70 per cent, up from 59 per cent in 2009-2010.

Legislation to ban age discrimination in goods, facilities and services is to be drafted next year but only enacted in 2014-2015. To deal with the legacy of the Troubles, OFMDFM also promises to launch a dedicated ‘victims and survivors service’ in 2012-2013.

More chronic condition patients should be able to take up programmes to help them manage their own conditions from 2014-2015. The Health and Social Care Board will co-ordinate existing programmes and roll these out across the province. £7.2 million is set aside to tackle the growing obesity problem.

Environmental commitments include the plastic bag levy, a 35 per cent cut in greenhouse gas emissions over 1990-2025 (compared to 42 per cent by 2020 in Scotland) and 45 per cent of household waste being recycled by 2015.

For criminal justice, a 3 per cent reduction in violent crime is set as a target. PwC Chief Economist Esmond Birnie commented that the draft programme was “aspirational but lacks substance as well as the necessary milestones and stretching targets.”

He added: “Transformation to a new, prosperous, internationally competitive and socially inclusive Northern Ireland can’t even begin till we’ve defined what it might look like.” Consultees, Birnie said, should not miss the opportunity to become persuaders for a more radical document.

Draft Investment Strategy breakdown (£ million)

*includes the Assembly and minor government organisations

Progress is promised on reforming education and local government after long delays.

Apart from health and libraries, the last Assembly term was largely a missed opportunity for “Delivering High Quality and Efficient Public Services”. The draft Programme for Government’s reform plans, under that title, will be judged on whether education and local government are streamlined.

Social clauses are due to be the first achievement of reform, introduced in 2012-2013.

The most tangible benefit should be better access to life-enhancing drugs. Patients with rheumatoid arthritis, cancer, inflammatory bowel disease and psoriasis (a skin condition) are prioritised. DHSSPS officials have previously delayed their dispensing, citing financial reasons, resulting in more hardship for Northern Ireland patients.

Executive parties plan to agree the post-2015 structures of government in 2012 (as the UUP suggested) despite a previous commitment to review that by 2011. Major changes will also depend on amending the Northern Ireland Act 1998 at Westminster.

OFMDFM cannot confirm whether the public will be consulted. Members of the public, though, can lobby MLAs on the Assembly and Executive Review Committee at any stage.

Peter Hain’s seven-council model, unveiled in November 2005, was due to take shape in May 2009. Executive ministers compromised on 11 councils and rescheduled elections for May 2011, although plans fell apart over boundaries and costings. Under the new plan, those elections are expected in June 2014, with the new councillors taking office in May 2015.

The 11-council commitment was passed by the DUP, Sinn Féin and Alliance. The SDLP and UUP still aim for 15, claiming that these would be more local, mean less gerrymandering and save money. Eleven councils appear cheaper but would mean more severance payments for senior officials.

The education and skills authority (ESA) was also announced in November 2005, with an April 2008 deadline, and then put back to April 2009 by the new Executive. Its future became embroiled in the education dispute between Sinn Féin and the DUP, and fears that the main Protestant churches (transferors) would lose their influence.

Eight bodies will be merged into the new authority: the four education and library boards, their staff commission, the Council for Catholic Maintained Schools (CCMS) and the Youth Council. The futures of the Council for the Curriculum, Examinations and Assessment, and the Education and Training Inspectorate are still to be decided. Most other education bodies will see little change.

Its 20-member board will have eight seats for political representatives (allocated by d’Hondt), eight for the main churches and four filled by Education Minister appointees. The Chair will also be appointed by the Minister.

Sectoral support bodies will be set up for the controlled sector (a first) and Catholic maintained sector (replicating CCMS) to protect their ethos. Legislation is due to be completed by July 2012, with aim of setting up the ESA in April 2013.

An increase in online services will build on the NI Direct website and also ensure continuity as public sector jobs are cut. The DUP says that car tax renewal, all public sector job adverts and all benefit applications should be available online, and (along with the UUP) suggests a pilot for broadcasting court cases.

Ministers suggest action on ‘peace walls’ and shared education but language and the past are two major obstacles.

The Executive claims that “much progress has been made” in creating a shared and better future and it “remains as committed as ever” to achieving that. However, the first step of its “Building a Strong and Shared Community” chapter relies on three separate sports stadia projects, rather than the single one proposed under direct rule in 2006. The whole community can unite around the World Police and Fire Games in Belfast (1-10 August 2013) and plans for a major golf tournament in 2013-2014.

On dismantling interface barriers, the Executive will take action (starting in 2013-2014) if local communities agree to bring them down.

There are currently 59 interface barriers. David Ford’s preference is to invest funds into good relations work instead of extending walls. When asked how it would reduce paramilitary influence, the Department of Justice said that an ‘inter-agency’ group would deal with interface problems (with PSNI involvement).

Prison reform, a legacy of the peace process, should be “ready to launch” in 2012-2013 and swift action is demanded. Thirty-six of the 40 prison review recommendations are to be achieved by 2015. At present, 79.4 per cent of prison officers are from a Protestant background and 10 per cent from a Catholic background; the remaining 10.6 per cent are “undetermined”.

As expected, the Troubles are not mentioned. The Assembly has separately passed an Alliance proposal for cross-party talks on dealing with the past and the Secretary of State has written to party leaders to ask for their views on the way forward.

Irish language and Ulster Scots strategies, promised five years ago in the St Andrews Agreement, have been held up by DUP-Sinn Féin disagreements.

Culture Minister Carál Ní Chuilín said her officials were “working to determine the scope” of a draft Irish Language Bill, which unionists view as unnecessary. Ní Chuilín wants Irish to be protected in law (similarly to Scots Gaelic and Welsh) but concedes that promoting the language is “not simply about a piece of legislation”.

DCAL officials started a ‘scoping exercise’ last month, which is due to finish by 31 January 2012. A “suggested timetable for consultation and publication” will then be provided to the Minister.

The ministerial advisory group on shared education (due to report in 2012-2013) could encourage a more detailed and rational debate. Shared education programmes and facilities can bring pupils together for certain classes, but fall short of permanently shared schools.

In 2010-2011, 6.5 per cent of pupils (21,051) attended integrated sector schools. This figure increases to 10.5 per cent and 33,629 pupils when other forms of mixing (e.g. Catholic pupils in controlled schools) are included. Northern Ireland Life and Times Survey results over the last Assembly term indicated that 62-70 per cent of parents would prefer to send their children to a “mixed-religion” school.

Those plans should be underpinned by a cohesion, sharing and integration (CSI) strategy. OFMDFM admits that the June 2010 draft was seen as a “politically negotiated document” which did not reflect what most of society wanted.

agendaNi understands that the cross-party working group on CSI has been meeting weekly since September. However, the draft Programme for Government says that this would only be finalised in 2012-2013. The Community Relations Council is continuing with its work in the meantime.

Utility Regulator Shane Lynch talks to Owen McQuade about the challenges in regulating the electricity and gas sectors and how the 20 per cent renewable electricity target can be met.

The Utility Regulator’s office has “evolved” to now regulate three utilities: electricity, gas and water.

“There are two ends of the spectrum in terms of how we regulate. One is promoting competition where appropriate and the other is monopoly regulation”, observes Shane Lynch. “There are degrees along that spectrum and, where you land is a judgement call depending on circumstances.”

Lynch believes that even the parts of the energy supply chain where competition can prevail still require a significant amount of regulation on the island “simply because of market size and dominance, in both the wholesale and retail markets and this requires a combination of regulation and promoting competition.”

Price controls

The three utilities are at different stages of evolution, with electricity the most advanced and water the least. In electricity, the market has evolved to the stage where there are a number of competitors in the wholesale market and the retail market and there are now also a number of network operators.

Although there is only one network provider, NIE, there are four other price controls for the sector: SONI (the network operator), SEMO (the Single Electricity Market operator), the Power Procurement Business and, on the supply side, the incumbent supplier Power NI. For the two parts of the supply chain that lend themselves to competition i.e. retail and wholesale, there are still four price controls. “There’s still a fair amount of regulation going on there”, adds Lynch.

In the natural gas sector there are five price controls. There are four gas network companies in Northern Ireland: Mutual Energy (which has no price control). BGE UK (which owns part of the transmission network to the north west); Firmus (which owns the distribution network in the 11 towns) and Phoenix Natural Gas Ltd (which owns the distribution network in Belfast). In the supply part of the supply chain, there is a price control for Phoenix Supply Ltd in Belfast.

Reflecting on the number of price control mechanisms for the energy utilities, Lynch asks the question: “This is where we have evolved to [but] would you have done it this way with a blank sheet of paper?

“For a place the size of Northern Ireland, why do we have three network companies? In the South we just have BGE. Even within those network companies, there are different regulatory models; the mutualisation model for transmission assets but BGE has a debt-equity model for their transition assets.

When asked if he sees scope for rationalisation, he replies: “The assets, apart from Mutual Energy (MEL), are in private ownership. They have property rights to those assets. It’s hard to see how you could do it other than on a voluntary basis.

Having said that, some rationalisation has already happened. The transmission pipeline to Belfast used to be debt-equity financed and in 2006 that was transferred to MEL.

Lynch continues: “What is quite interesting, as we think about the extension of the gas network to the west, is which model should we go with? As we think about those questions with DETI, it’s important to consider the big picture: what do you think this should look like in 10-20 years time?

“If I was to sit down and draw this from scratch, bearing in mind gas is a relatively new market in Northern Ireland, I’m not sure I would have done it this way.” But Lynch acknowledges that “we are where we are and people have property rights and entitlements to those assets.”

Price controls

The Phoenix Natural Gas price control that is out for consultation is a draft determination and a final determination will be made shortly.

In the draft, the Utility Regulator proposed a fairly significant adjustment to the company’s regulatory asset base and it is still reviewing the consultation responses.

“The whole basis of the Phoenix model is it’s a start-up model. There’s quite a bit of capital needed for new business but the build-up of their volume lags. What you have to do is profile their recovery towards the back end, otherwise unit costs would be way too high,” he comments.

In 2006, Phoenix was not meeting the volumes it needed and was allowed to extend the recovery period over a much longer period. It continued to get 7.5 per cent pre-tax real return “which is significantly higher than gas distribution networks in Great Britain, although the gas distribution networks in GB are more mature.”

Phoenix’s actual cost of debt is a bit higher than distribution companies, but not to the same extent that they are allowed WACC (weighted average cost of capital) so the allowed return on equity here is significantly higher in Northern Ireland than in Great Britain.

These issues arise in relation to a gas pipeline to the west: “How do you remunerate an investor for a start-up business?”

When asked whether it is difficult to manage complex discussions with the industry on issues such as WACC and communicate with public stakeholders, he replies: “The regulator’s job is to protect consumers and the legislation gives the regulator quite a bit of judgement. Legislation sets out a number of things we have to have regard to as we go about protecting consumers: security of supply, sustainability, vulnerable customers, etc.”

“I think the legislation is right as it is not entirely prescriptive and leaves an element of judgement based on expertise and experience,” he emphasises.

“Protecting consumers in the long run also means protecting investors. If investors don’t get a reasonable rate of return consummate with the risk they are taking, then they won’t invest. If they don’t invest, then consumers are in trouble. It’s important however that we don’t let investors get excessive rates of return that are inappropriate for the risk they are taking.”

Lynch says he comes across consumers and consumer representatives that will say to him that investors are doing too well: “I’ve heard the expression: ‘The risk is allocated too heavily towards consumers and more risk should be allocated towards investors.’

“If wholesale prices go up, it’s always the consumer that has to bear that and investors seem to be somehow protected. We can allocate more risk to investors but they will then require a higher rate of return and will argue successfully for a higher rate of return.

“The consumer either takes the risk or pays someone else to take the risk.”

An example Lynch gives is the Mutual Energy model where the consumer takes all of the risk and therefore the investors (which in this case are 100 per cent debt investors) get a very low rate of return, because they are taking next to no risk.

“We currently have the Moyle interconnector out of service. The consumer is taking the entire risk on that; the consequential cost of the outage on wholesale prices and the cost of repair. If that was a “merchant” generating business, they currently would be losing market revenues,” he explains.

“The difference comes down to: what risks do consumers wish to take or should they take? Our job is to ensure that we create a stable regulatory environment that is predictable.”

The Utility Regulator has published a draft policy paper on network price controls as Lynch thought it was necessary “because we have expanded and our policies are not necessarily the same across all three utilities.”

Lynch adds: “Ultimately, the key objective is to be clear to industry and investors so they know where we stand and that delivers more transparency and predictability.”

Draft Programme for Government

The draft Programme for Government is committed to having 20 per cent of electricity from renewable energy by the end of 2015. The Strategic Energy Framework had a target of 40 per cent by 2020.

“The regulator’s role in contributing to meeting that target is quite significant and so is DETI’s,” he notes.

Lynch sees the target being met by a combination of market response to incentives and regulatory and policy action. “DETI will set certain incentives or subsides and the market will either respond to that or not.”

What matters to a developer is the certainty of their revenue stream. One aspect is the subsidies and the other is what they can get for their energy. All investors on the SEM are realising that the sector is heading towards a regional electricity market.

In relation to wind generation, which requires network development, the Regulator facilitates through their approvals for network development and connection policy.

The network development proposals are put to the Utility Regulator by NIE as part of a price control submission. The Regulator asks three questions:

• Why do you want to do this investment? What do consumers get for the money?
• Is the price you are proposing value for money? How does it benchmark with other distribution companies?
• How is the risk being allocated?

The risks are performance risk (e.g. we may not be able to connect as much wind as we thought for this level of reinforcement of the network), schedule risk (will we get it done in the timeline that company is proposing?), and cost risk (will the project cost more than the company has suggested and, if so, who pays?)

“As a project developer at one point in my career, those are the questions a board would have asked me if I had put a proposal in front of them. And, like most developers, eight out of 10 of your proposals were rejected,” he reflects.

“Regulators act as a surrogate for competition in monopoly investments so we have to ask the same questions that a board would ask in a competitive market.”

Lynch adds that to get to 20 per cent renewable on wind only, NIE is proposing that that can be done with a modest level of investment, perhaps less than £100 million,” and by “beefing up the existing assets.” That does not include new build on the 275 kV transmission network.

He predicts: “On the face of it, that seems achievable at a reasonable cost. It is a challenge but we would be quite optimistic that the 20 per cent target can be met. After that, there are bigger questions. To get us from 20 to 40 per cent on wind, you are talking about [almost] another billion.

“The regulator will see it as a much bigger question to sign off on because of the scale of the investment and the impact that would have on tariffs.”

The renewable scene is constantly developing and he expects that by that time offshore may have developed further. In conclusion Lynch remarks: “We would want to see the competing options: what other ways are there to skin that cat?”

Hot on the heels of the ROC re-banding consultations in Great Britain, the recently published Department of Enterprise, Trade and Investment (DETI) ROC banding consultation has met with a broadly positive response in the local market.
Whilst the document is still only consultative at the time of writing this article, it does provide specific insights into a transitional regime for UK renewables, starting in April 2012 and ending in March 2017. During this period the multiples of ROCs, or bands which producers benefit from, have been tweaked.

For the majority of technologies, DETI proposes to remain consistent with the proposals in Great Britain.

The few instances where Northern Ireland proposes to differ from the rest of the United Kingdom include continued support for landfill gas at 1 ROC/MWh to 2015 and, in the absence of a feed-in-tariff for small-scale projects in Northern Ireland (up to 5 MW), continued enhanced support for small-scale technologies including onshore wind, anaerobic digestion and solar under the NIRO.

The key changes to the ROC system are that onshore wind will drop from 1 to 0.9 ROCs while offshore wind is going to have a phased drop of 0.1 ROCs per annum from April 2015, down to 1.9 ROCs for 2015-16 and 1.8 in 2016-17. Not the 0.5 slash to incentives feared.

Marine energy has received a big boost with wave energy receiving a hike from 2 ROCs to 5 ROCs for projects up to a 30 MW cap, while for facilities above that cap it will be 2 ROCs.

Tidal – which is currently 2 ROCs for all technologies – has a range of options with tidal stream having the same incentives in place as has been proposed for wave energy.

Across the board for different technologies, there is a slight drop in ROCs for waste-related and solar energy (above 5 MW) alongside broadly continued support for biomass. 

Gary Connolly, Chairman of the Northern Ireland Renewables Industry Group (NIRIG), says: “The measures to support wave and tidal energy are particularly welcome and will help build a domestic market big enough to drive innovation and lower cost.
“Onshore wind is already the least expensive form of renewable energy on a mass scale and is currently providing the largest share of renewable electricity. These measures must not put its future deployment in doubt.”

The mood in the market is fairly positive with most saying that they had expected onshore wind to be more heavily impacted than by the loss of just 0.1 ROC. As to offshore wind, the consensus seems to be that the fall in the number of ROCs over the coming years matches what industry believes will be the fall in capex as the sector matures.

As to the marine energy sector, B9 Offshore Developments – which is developing the Thetis tidal scheme at Torr Head in Northern Ireland – Managing Director Michael Harper welcomed the news as a great boost for the local industry.

Harper says: “By proposing to move the ROC banding in Northern Ireland into line with the current level of 5 ROCs for wave in Scotland, DETI has given a positive signal which will incentivise inward investment in what has the potential to be a world-leading, high growth success story for Northern Ireland.”

For more information on the new banding levels proposed for Northern Ireland, please visit our website to access a recent market briefing: www.mcgrigors.com/e-bulletin/energy/eb-2011-10-31.html or contact Richard Murphy (Director, Head of Energy Group in Belfast) on
+44 (0) 28 9089 4844 or by Email at richard.murphy@mcgrigors.com

Northern Ireland’s population is set to age, with an 18.6 per cent increase in over 65s between 2011 and 2020 and a 42 per cent increase by 2025. The population of children (under 16) will increase by 4.3 per cent and every working age person will have the equivalent of three children or four pension age dependants from now until 2020.

These trends, from NISRA’s statistics, will have implications for all health policies, especially residential care planning and care for the elderly in hospitals. Provision of childcare in the face of an increasing elderly population will be an ongoing challenge.

Budget cuts have already resulted in nursing home closures and only those assessed with having the highest levels of need receiving a care package. With the working-age population, which generates the money for the health and pension systems, not growing as quickly as the elderly population, policy-makers are faced with decisions as to where to place money to anticipate future demand.

Meanwhile, the region’s health is getting worse, with more older people suffering from long-term illnesses and a rise in chronic conditions such as obesity and cancer, often resulting from smoking, alcohol and drug use and a sedentary lifestyle.

Thirty six per cent of 4,085 respondents to the 2010-2011 DHSSPS’ health survey were overweight, while 23 per cent were obese (8 per cent were children aged between two and 15.) A weight-loss specialist has warned that Northern Ireland is facing an obesity “tsunami” in the next five to ten years.

Northern Ireland is facing a shorter life expectancy and health inequalities mean that people from deprived areas will not live as long as those in more affluent areas. The Troubles had a lasting impact on the physical and mental health of the population and this has to be factored into future care planning.

The draft Programme for Government includes plans to enrol people who have a long-term condition in a dedicated chronic condition management programme and to spend £7.2 million on tackling obesity.

John Compton’s review will shape health and care services for the next generation. Health Minister Edwin Poots has said that there is a need to encourage “greater personal responsibility among members of the public for their own health and well-being.” This will require “a sustained and growing investment in public health, early diagnosis and early intervention services,” he insisted.

A 2009 EU policy brief (on how health systems can respond to ageing) recommends better co-ordination of care across health and social services and across different levels of health care, ensuring more treatments are done outside of hospitals (to reduce inappropriate hospital stays), reducing the risk of disease through health promotion and disease prevention programmes, and funding programmes that keep elderly people active and get them out and about.

A report commissioned from PwC by Independent Health and Care Providers, and supported by Age NI found that some older people face nursing home bills of up to £500 per week which they cannot afford.

Esmond Birnie, PwC’s Chief Economist, commented that while approximately 10 per cent of the DHSSPS £4.4 billion budget in 2009-2010 was spent on the social care system for older people, “demand is rising fast, [and] the provision of care, both in terms of funding and care homes, is falling behind.” He said that “this situation cannot continue and, in a period of severe financial constraint, a comprehensive reform of social care delivery and funding is now appropriate.”

This is an unprecedented time for Northern Ireland’s health and care sector. The McKinsey report warned the province’s Health Service will run out of money in four years unless fundamental reforms take place. Its recommendations (including intensive rehabilitation before assessing someone for social care, ending non-essential treatments like aesthetic ENT surgery and increasing the use of generic drugs) are to be treated as “an à-la-carte menu” by Poots. A UN report on ageing highlighted the gravity of the situation, saying: “We are in a situation without parallel in the history of humanity.”

Overall population: projected increase (thousands)	% Increase in population 2010-2020

Demographic groups (thousand people)

	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Children	383	384	385	387	388	391	394	397	399	400
Pension age	308	310	312	314	316	318	320	322	324	327

]]> http://www.agendani.com/overview-2/feed 0 http://www.agendani.com/adoption-reform http://www.agendani.com/adoption-reform#comments Wed, 21 Dec 2011 15:10:00 +0000 Agenda NI http://www.agendani.com/adoption-reform Adoption legislation must be updated to provide more children with a family. Meanwhile, alternatives are being considered to reduce the number of children in care. Meadhbh Monahan reports.

An Adoption (and Children) Bill is expected to be brought to the Assembly in 2013 aiming to speed up the process of placing children in care with a permanent family. It currently takes approximately three years and six months for a child to be adopted from care in Northern Ireland, while in England children wait an average of two years and seven months.

The Adoption (Northern Ireland) Order was passed in 1987 and is to be updated to recognise that it is no longer illegitimate babies, but often children from difficult or neglected backgrounds who need a home. An attempt to update the legislation failed in the last Assembly term.

agendaNi asked the DHSSPS why the new Bill will not be introduced for another year and it cited the primary legislation process which includes instructing counsel, ministerial clearance and public consultation.

Under direct rule, the 2006 ‘Adopting the Future’ draft strategy made 21 recommendations to improve adoption, including that unmarried and same sex couples be allowed to adopt. Of the 1,066 consultation responses, 1,025 (96 per cent) opposed same sex or unmarried couples adopting. Former Health Minister Michael McGimpsey took a previous Adoption and Children Bill (which didn’t contain that proposal) off the legislative table in October 2010. When asked why that Bill was delayed, considering the last Assembly’s four-year term, the department reiterated that the Bill hadn’t made it through clearance in time.

Unnecessary delays in care planning and court proceedings, a lack of adoptive families and poor post-adoption support have been identified as problems.

Potential adopters are made aware from the outset that there are very few new born babies available for adoption. Only two babies under one were adopted from April 2010 to April 2011. The average age of the children waiting to be placed is four years and eight months. They have generally been in and out of care and have suffered neglect or trauma.

When challenged on the low average adoption rate (2 per cent) a DHSSPS spokeswoman said that adoption is not the only option for children in care. She added that the department is currently considering special guardianship which is used in England and Wales; this gives legal parental responsibility to a guardian until a child is 18 but does not totally remove parental responsibility from the birth parent.

Barriers

Belfast’s Family Care Society Chief Officer Rosemary Hurl says more adopters are needed and that legislation must be “child centred”.

“The current process of freeing children for adoption can be a long and protracted one,” Hurl tells agendaNi. An average wait of 3½ years from entering care to being freed for adoption “is a huge amount of time for a young child” who needs stability.

Placement orders should be included in the Bill, Hurl proposes. This involves the court authorising a trust to place the child for adoption with prospective adopters (with or without consent from the birth parent). They replaced freeing orders in England and Wales in 2002.

Adoption practices across the five trusts must be standardised and adoption agencies need balanced information on the child. In addition, the trusts should have to adhere to a statutory timeframe, she suggested.

Stephen McVey, the Northern Ireland Development Manager of Adoption UK, adds: “While adoption is the last link in a child’s care plan and every effort must be made to try to return them to their birth parent, once a decision has been taken that adoption is in their best interest, then that should be done as quickly as possible.”

Post-adoption support is essential because adoptive children are likely to have behavioural problems stemming from their instable childhood. “A dedicated adoption budget would help because post-adoption services are practically non-existent or are piecemeal and dependant on where you live,” McVey contends.

Same sex and unmarried adoption has been allowed in the rest of the UK since the 2007 Equality Act but the average adoption rates have remained around 13 per cent for England, 3 per cent for Scotland and 4 per cent for Wales. The adoption rate in the Republic is lower, at around 1 per cent, with most families adopting from abroad.

It is unclear whether the new Bill will provide for unmarried and same sex adoption. However, it is unlikely that the DUP would support it (given its opposition in its 2007 Assembly manifesto).

The department will be bound by the outcome of a judicial review brought to the High Court by the Human Rights Commission, which is backed by a lesbian woman who wants her partner to be allowed to adopt her biological son.

DUP Health Spokesman Jim Wells said that it is difficult enough for married couples to adopt without “throwing the net wider” to include unmarried and same sex couples. He said many couples are put off by the “bureaucracy” and cited examples from his church of couples who have adopted Russian and Ecuadorian children.

However, Hurl and McVey point out that inter-country adoption incurs a cost and adopters must adhere to local legislation as well as that country’s relevant law.

Sinn Féin, the SDLP and Alliance support same sex and unmarried adoption. The SDLP wants an Adoption Bill to provide more support for post-adoption contact and look at the financial entitlements for adoptive and birth parents.

The UUP’s Health Spokesman, John McCallister, said the needs of the child must be paramount but regretted that reform will be delayed until the ongoing judicial challenge is resolved.

Placing children is “an onerous task for an adoption agency because it’s a choice for life,” but it does produce positive results, Rosemary Hurl reflects. Stephen McVey agrees: “When you speak to an adoptive family, they will tell you it has enriched their lives.”

Source: DHSSPS Community Information Branch