Monday 10th July 2023
(10 months ago)
Commons ChamberNorthern Ireland Budget (No. 2) Act 2023 Read Hansard Text Watch Debate
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland Budget (No. 2) Act 2023 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Secretary of State for Northern Ireland (Chris Heaton-Harris)
I beg to move, That the Bill be now read a Second time.
In doing so, I once again speak with a strong sense of disappointment. At multiple junctures since becoming Secretary of State last year, I have stood at this Dispatch Box when realistically I should not have been doing so. That sentiment very much applies today, because I believe these decisions should be taken by locally elected politicians.
The Government have brought forward this Bill because the Northern Ireland parties have been unable to form an Executive and subsequently set a budget for this financial year. The Government have therefore been compelled to step in again and set another budget. I set out the headline departmental budget allocations via a written ministerial statement to Parliament on 27 April this year, and this Bill puts those allocations on a statutory footing. We have also published more detailed information in respect of each of the Northern Ireland Departments’ spending plans through the main estimates, which I laid as a Command Paper on 3 July.
Today’s debate is only the Second Reading of this legislation, with the remaining stages due to take place after the summer recess. The summer therefore presents an opportunity for the Northern Ireland parties to come together as a restored Executive and take their own budget legislation through the Assembly, making the remaining stages of the Bill in this place superfluous.
It is no secret that the pressures on Northern Ireland’s public finances are acute. As with the 2022-23 budget, setting this budget was not an easy task, but it was necessary to deliver a balanced budget and provide the Northern Ireland Departments with budget clarity to help get their spending under control. As far as possible, we have aimed to protect frontline public services. In recognition of the pressure on the health service, over half of the total budget is to be spent on health.
Of course, these pressures on Northern Ireland’s finances did not appear overnight. Successive former Executives have failed to make the strategic decisions required to put the public finances on a sustainable footing and make public services affordable. The unsustainability of Northern Ireland’s finances cannot continue. It is fundamentally the responsibility of the Northern Ireland Executive to run a balanced budget, and until they do, the outcomes for citizens will not improve. That is why the Government stand ready to work with a restored Executive on budget sustainability, including the implementation of revenue-raising measures.
Jim Shannon (Strangford) (DUP)
Very quickly, in relation to the budget, my hon. Friend the Member for Belfast East (Gavin Robinson) has always referred to the time for the Barnett consequentials to be looked at, and the population of Northern Ireland is up some 200,000 in 10 years, and 100,000 in five years. Does the Secretary of State not agree that it is time to look at the whole budget for Northern Ireland because of the extra population increase and the diverse community we now have? There has to be money in place, but that money has to reflect the demands of our population in Northern Ireland.
Chris Heaton-Harris
I thank the hon. Gentleman for his point, and we could consider introducing a needs-based factor into the Barnett formula for Northern Ireland—it would be a similar mechanism to that implemented in Wales—to put Northern Ireland’s public finances on a more sustainable footing. However, the absence of a functioning Executive has an impact on what can be done to address the systemic issues that Northern Ireland faces. Locally accountable leadership is urgently required to ensure that Northern Ireland has a stable and flourishing economy, and to advocate for reform of Northern Ireland’s public finances. To completely answer the hon. Gentleman’s point, negotiations between the Welsh Government and the Treasury on a fiscal framework and Barnett formula adjustments took over seven years. This is not an issue that could be solved overnight, even with the best will in the world.
Gavin Robinson (Belfast East) (DUP)
I am very grateful to the Secretary of State for that confirmation that he is at least willing to discuss considering public finances on the basis of need. Of course, the reason why the Holtham Commission process took so long was that it was the first example of the Government having to get their head around need—they had to understand it, and recognise that the public finances should respond to need. Now that the principle is clear, surely he does not believe that it would take as long this time around.
Chris Heaton-Harris
I very much hope that no discussion with a future Executive would take seven years to come to any conclusion. In the meantime, we have a responsibility to ensure that public services and the management of public funds can continue. That is why I have commissioned a range of information and advice from the Northern Ireland civil service on potential measures for raising more public revenue and otherwise improving the sustainability of public finances in Northern Ireland that an incoming Executive could consider. That is the UK Government’s first step in supporting the development of revenue-raising measures in Northern Ireland. It will allow us to better understand the challenges of taking this work forward, and support the Northern Ireland civil service in delivering it. The Government have for many years recognised the unique challenges that Northern Ireland faces. We have provided around £7 billion in extra funding to Northern Ireland since 2014, on top of the Barnett-based block grant.
I am grateful to officials in the Northern Ireland civil service for keeping public services running until an Executive are in place. The Government will continue to support the Northern Ireland civil service where we can, but it is important to note that responsibility for the difficult spending decisions flowing from this budget will ultimately continue to rest with the Northern Ireland Departments in the absence of an Executive. I do not want that to happen, and I encourage the people of Northern Ireland to urge their locally elected politicians to return to Stormont, so that decisions can be taken by those who were democratically elected to do that. As I say, the difficulties that Northern Ireland Departments face are a result of tough decisions not having been taken by elected representatives in Northern Ireland, not just this year, but over successive years. Funding alone will not solve the issues; that will require strong, responsible leadership, backed by a stable, devolved Government. We need the Executive back, so that they can progress much-needed and long-promised public service transformation.
Like others, I welcome the parties’ ongoing discussions with the head of the Northern Ireland civil service. There is a great deal of work going on behind the scenes about what a plan for government, and a budget for government, would look like, and how critical issues will be addressed when the Executive come back—issues such as budget sustainability and better, more efficient public services, which should be everyone’s priority. However, the head of the Northern Ireland civil service has written to me to say that things now need to become more political. In a way, I agree, but if that is to happen, all the parties must confront hard choices and ensure stability, rather than regular political crisis.
We must restore confidence in the institutions and show the people of Northern Ireland and the world what good devolved government looks like. I look forward to speaking with all the party leaders in the coming weeks, and receiving their proposals for the budget and a programme for government.
Sir Jeffrey M. Donaldson (Lagan Valley) (DUP)
As one of those leaders, may I be absolutely clear? My objective is to ensure that we get solid foundations for the restoration of our devolved Government, and that we do not meet another crisis in six months’ time, or a year’s time. That is why I will continue to work with the Government to get this right, and to put in place the measures that are necessary to safeguard Northern Ireland’s ability to trade within its own country—within the United Kingdom—and its internal market. That is essential to building the stability of which the Secretary of State speaks.
Chris Heaton-Harris
I thank the right hon. Gentleman for his point. He and his party representatives, and indeed all the political parties in Northern Ireland, have been working extremely hard behind the scenes—and in front of the camera, after each occasion—to develop what will, hopefully, be a plan for government, and proposals for the budget. As I say, it is time to bring those proposals forward into more political discussions. I know that each of the political parties will require a little time to develop those plans within their political committees and what have you. I should acknowledge, though, that I have already received budget proposals from the Alliance party, and I would welcome similar engagement from all the other parties.
Before I briefly summarise the intention behind the Bill, I should express my sincere thanks to the Opposition for their continued co-operation with the Government as we seek to bring the Bill forward at the requisite pace. I am particularly grateful to the shadow Northern Ireland Secretary, the hon. Member for Hove (Peter Kyle), who, as always, has been constructive. I also thank others on the Opposition Front Bench for the way that they have approached the Bill, and my hon. Friend the Member for North Dorset (Simon Hoare), who is Chair of the Northern Ireland Affairs Committee, and the Committee members, for their interest in the Bill.
The Bill will place on a legal footing the budget allocations that I outlined to the House via written ministerial statement on 27 April. I am conscious that the hour is already relatively late, and lots of hon. and right hon. Members want to contribute. I therefore do not propose repeating the contents of that written ministerial statement, which sets out the departmental allocations reflected in the Bill.
Mr Robin Walker (Worcester) (Con)
I am very cognisant of the difficulties that the Secretary of State faces with the Bill, and his frustration at having to deliver it at all. It is clear, though, that the budget for education in Northern Ireland is going down, even though the budget for education in England is going up quite substantially this year. Given the pressures faced in education, and what the Education Committee has heard about those pressures, can he at least confirm to the House what per-pupil spending in Northern Ireland will be after these budget changes? How will it compare with per-pupil spending elsewhere in the UK? Or perhaps the Minister of State, Northern Ireland Office, my hon. Friend the Member for Wycombe (Mr Baker), can give those figures in his concluding speech.
Chris Heaton-Harris
I thank my hon. Friend for his question, and acknowledge his long-standing interest in this area. He does great work on the Select Committee. I know that he has read the Institute for Fiscal Studies report published on 21 April, which stated that Northern Ireland spent similar amounts to England and Wales per pupil in 2022-23. Spending per pupil in Northern Ireland grew by 11% in real terms between 2018-19 and 2022-23, after having fallen for almost a decade. I will try to get him the exact details; if I cannot do that by the end of this debate, I shall write to him with them, but we have been following this issue, and he has been prodding us along all the way.
I was talking about the budget’s departmental allocations. As in the 2022-23 Northern Ireland budget, the allocations were developed after extensive, sustained engagement with the Northern Ireland civil service. The Bill will mean that Northern Ireland Departments have a total resource budget available of £14.2 billion, and a capital budget of £2.2 billion. That includes the Northern Ireland Executive block grant, set at the 2021 spending review and through the subsequent operation of the Barnett Formula, and income from regional rates.
I emphasise—I will no doubt state this a number of times, in this debate and elsewhere—that the sum available for this budget would have been the same sum provided to the Executive for 2023-24, if they were in place.
I recognise that the Northern Ireland Departments, in the absence of elected Ministers, will face difficult decisions, but it is necessary to deliver a balanced budget. These decisions rest with the Northern Ireland civil service, but I will continue to work with them to protect frontline services in Northern Ireland.
Stephen Farry (North Down) (Alliance)
I fully concur with the Secretary of State about the importance of the Executive being restored. The other point he was making was about ensuring that the Budget is balanced. Does he recognise that there is a certain disjoint between the current guidance that the civil service has and the expectations placed on it in balancing the Budget? They cannot touch the statutory areas, which means that the non-statutory areas are being overly targeted. Also, the Departments are overspending because they cannot live within the budget controls. Unless some action is taken over the remainder of this year, we will see a massive overspend, which will create a bigger hole and a bigger challenge down the line and lead to deeper cuts.
Chris Heaton-Harris
The hon. Gentleman makes a wise point, and I know he follows this issue closely. We are working closely with the Northern Ireland civil service on this matter. As he alluded to, when the UK Government took over the responsibility overall, we inherited an overspend for 2022-23. A reserve claim of £297 million was provided to balance last year’s Budget. Despite projections of an overspend throughout the year and the UK’s agreement to the reserve claim, the final budget figures from 2022-23 show a slight underspend of £40 billion, so it came in at £257 million. I know that those big sums of money will still cause great concern over the budgetary issues in Northern Ireland, but it does demonstrate how monitoring rounds and monitoring spending bring about amazing behaviours for budgetary purposes. I would like to think we can work together in this space in the future. However, the one thing I do know—it has been demonstrated time and time again—is that that work would be better done by a locally elected Executive, with Ministers accountable to the people who elected them.
As I mentioned, with agreement from the Chief Secretary to the Treasury, my right hon. Friend the Member for Salisbury (John Glen), flexibility has been granted on the repayment of this reserve claim, which moves the repayment into the next financial year, not this one. Before I conclude, I will briefly run through the Bill clause by clause.
Theresa Villiers (Chipping Barnet) (Con)
Can the Secretary of State confirm that the UK Government still provide additional funding to the Police Service of Northern Ireland to reflect the lethal terrorist threat to which Northern Ireland is still subjected?
Chris Heaton-Harris
Indeed, we do provide that funding. It is to the value of £32 million a year this year and next year for sure, and then the future is the future.
Clauses 1 and 2 authorise the use of resources by Northern Ireland Departments and other specified public bodies, amounting to—I love figures like this—£27,403,000,514 in the year ending 31 March 2024, for the purposes specified in part 2 of schedule 1 and subject to the limits set out in subsections (4) to (7) of clause 2.
Clauses 3 and 4 authorise the Northern Ireland Department of Finance to issue out of the Consolidated Fund for Northern Ireland the sum of £22,790,893,000 for the purposes set out in part 2 of schedule 1.
Clause 5 authorises the temporary borrowing by the Northern Ireland Department of Finance of £11,395,447,000—approximately half the sum covered by clause 3. That is a normal safeguard against the possibility of a temporary deficiency arriving in the Consolidated Fund for Northern Ireland, and any such borrowing is to be repaid by 31 March 2024.
Clause 6 authorises the use of income by Northern Ireland Departments and other specified public bodies from the sources specified in part 2 of the schedule for the purposes specified in part 2 of the schedule in the year ending 31 March 2024.
Clause 7 provides for the authorisations and limits in the Bill to have the same effect as if they were contained in a budget Act of the Northern Ireland Assembly. It also modifies references in other pieces of legislation to Northern Ireland estimates, which would normally form part of the Assembly’s supply process.
Clauses 8 and 9 are self-explanatory and deal with “Interpretation” and “Short title”.
Finally, the schedule to the Bill sets out the amount of money authorised for use for each Northern Ireland Department, the purposes for which it can be spent and the other sources of income from which the Departments can draw.
Before I sit down, I express my sincere thanks for the ongoing hard work of the civil servants in Northern Ireland. With this Bill, I am only setting out the available total resource and capital budget for the Northern Ireland Departments of £14.2 billion and £2.2 billion respectively. I make it clear that in the absence of an Executive, it is now the responsibility of the Northern Ireland Departments to make the specific spending decisions to ensure that they live within the Budget limits as set out in the Bill. I recognise that is not an easy task and requires difficult decisions, but people in Northern Ireland rightly expect to see those decisions taken in Stormont, and I wholeheartedly agree with them. However, until a functioning Executive returns, this Bill will allow public services to continue functioning and will help to protect the public finances in Northern Ireland. I therefore commend this Bill to the House.
Sammy Wilson
The promise actually was broken by the Secretary of State. It was a two-sided promise: that would not be raised by Ministers, who would be sensitive to the issue, knowing what our answer to these issues are and, in turn, we would stick to the budget debate. That promise has not been kept, so it would be remiss of me not to make it clear, as has been made clear by my party leader in an intervention, that we want to see the Executive up and running, but there are rules for the working of the Executive. There are important safeguards for the Executive to work: the views of both communities have to be respected, accepted and reflected in the decisions made in the Executive and in the decisions made by the Executive.
As things stand, with the protocol and the framework, there will still be a requirement for foreign law to be imposed in Northern Ireland and for Ministers of a Unionist disposition to operate that system—a system that the Government, even in the Windsor framework discussions, indicated would lead to divergence between Northern Ireland and the rest of the UK. A paltry safeguard of the Stormont brake was put in but, even if it worked, it still would not stop Northern Ireland becoming further away from the rest of the UK because of decisions made in this House about laws that would affect the United Kingdom, excluding Northern Ireland.
I have to say to the Secretary of State that, while that situation pertains, he cannot ignore the requirements of the law in Northern Ireland. The views of both communities must be reflected, accepted and implemented in the Executive and the Assembly. If that does not happen, they cannot function because we do not have the basis for agreement and for decisions being made.
It is debatable, of course, but we can talk about the Executive, up and running, being able to decide and resolve some of the issues that have been talked about here today. As I go through my speech, I point out that the Executive, its implementation and existence is not essential to deal with some of the fundamental issues that have given rise to the budget problems that Northern Ireland is facing.
I wish to make two points, the first of which is about the impact of the budget on services in Northern Ireland. Like the SNP spokesperson, the hon. Member for Gordon (Richard Thomson), I do not want to go through every Department but, as this has been raised by two or three speakers already, one of the starkest indications of the budget problem we have in Northern Ireland is to be found in education. There will be a 2.8% reduction in education spending in Northern Ireland, while in England there will be a 6.5% increase. That will affect the aggregated schools budget: the amount of money that goes to individual schools. It will particularly affect youngsters with special educational needs because, of course, as has been said, the easiest things to cut are things like classroom assistants. Of course, spending on classroom assistants and support for people with special educational needs is to be cut by 50%. There are already 11,000 children diagnosed with special educational needs who will be affected, and there is a waiting list of 400 children who have not even been placed, so we can see the ongoing problem and the problems we will build up over the years because of the cuts in the education budget. I could also talk about aspects of the education budget that are designed to help youngsters from deprived backgrounds, such as measures on school meals that were introduced by the Minister from my party. They will have to be reduced as well, which again tends to affect children from the most disadvantaged areas.
Let us take the other example, which has also been mentioned. I served for some time on the Northern Ireland Policing Board. Policing is important for any community, and it is particularly important in Northern Ireland because of the ongoing terrorist threat, the problem of paramilitaries and the terror gangs and criminal gangs associated with them, and the impact that has on communities. New Decade, New Approach made a commitment to have 7,500 officers, yet the figure is set to fall to about 5,700 officers. In the next two years, 850 officers are going to retire. The money is available to recruit only 204, so the situation will get worse and worse in terms of police officer numbers, which will fall below the commitment made on how many are required in Northern Ireland.
Chris Heaton-Harris
We have just had a debate about making sure that we are factually correct in this place. I am quite sure that what the right hon. Gentleman is saying is absolutely factually correct. However, does he not recognise that the commitment to increase police numbers to 7,500 that he is talking about was a commitment by the Executive? Would the choices that he has outlined not be better served by an Executive functioning and an Assembly scrutinising?
Sammy Wilson
I know that the Secretary of State was not personally responsible, but he cannot wash his hands of the New Decade, New Approach agreement, which was between the parties in Northern Ireland and the then Secretary of State, the right hon. Member for Skipton and Ripon (Julian Smith). The Executive did not pull this out of the air and say, “We’re going to do this”; it was part of the agreement that was made. Indeed, I have heard Ministers in this place saying time and again, “You’ve got to get back to the New Decade, New Approach promises and the commitments that were made,” yet this is one of those very commitments, and it is one that will not be met because the money is not there.
The argument that we have heard tonight is: “Well, that’s partly the responsibility of the Executive. If the Executive were up and running, then you could spend the money better.” I have no difficulty with that. Only a fool would say there were no savings to be made in a resource budget of £14 billion, or that it could not be spent better. Anybody who looks at their own personal budget will find ways of saving money and allocating it better to meet their priorities, so of course the potential is there. Indeed, I know from my time in the Executive that we were able to find 3% savings across Departments, and I am not against what the Minister said—that there are ways we could spend money better.
We have dodged reforms over the years because some of them require difficult decisions. That is the responsibility of the Executive, if they were up and running. I could bore the House with lots of examples, but in the past our Ministers have shown how we have used money in order to use resources better. Indeed, we have even looked at co-operation with the Republic of Ireland, when it has come to spending money, and at how we could share resources to deal with those kinds of issues and make better use of money.
Our party believes in low taxation and the proper use of the public resources we have, so we are not going to ignore that. But the fact of the matter is that the Executive are not up and running. Even if they were up and running, the issues and the problems of public spending in Northern Ireland are so big that the Executive would struggle to make some of the necessary reforms. Do not forget some of those reforms require money to be spent to make the reforms, so there is a vicious circle.
The Budget is inadequate—that is the first thing we need to look at. The holes in the Budget are so big and the issues around it so difficult that even if we had a performing Executive tomorrow, they would not be able to get past those issues. The building of public sector housing has fallen by 25% because of capital costs.
There are also difficulties, when it comes to the Executive, of pure caution. I know the Minister will talk about how much money has been given to Northern Ireland, but do not forget that we have given back £471 million in financial transactions capital, because the rules tied around that required a degree of innovation by civil servants and the Northern Ireland Office that was not always possible. The main outlet for it was housing, and there is only so much that it could absorb. So when it comes to taking money off the Executive, let us not forget that where money could not be spent, it was returned to the Exchequer. Sometimes it was frustrating to find that money had been given that could not be spent because we were not being innovative enough.
That brings me to the second issue. I know the Minister will say how much money is given to Northern Ireland and how some constituents in the south of England would envy the amount of money that comes to Northern Ireland, but there is a mechanism for allocating money within the United Kingdom. At present, the Barnett mechanism works by simply giving Northern Ireland a percentage—3%. If there are Barnett consequentials for Government spending for the whole of the United Kingdom, we get 3%.
However, it was always recognised that across the United Kingdom the circumstances are different. It was first raised in Wales and, as has been pointed out, there is a greater need in some parts of the United Kingdom, because of a whole lot of factors that I will go into in a minute, and therefore the 3% given on a per head basis is not adequate. It needs to be topped up on a well-established needs basis. Because of needs in Northern Ireland, it was reckoned that for every £100 spent in England, £125 would need to be spent in Northern Ireland. In other words, it was a 25% uplift.
For example, if the Barnett formula showed that Northern Ireland should get 3%, on the basis that Northern Ireland has 3% of the UK population, then there should be a 25% addition—a 0.75% addition to the 3%—to that. That has not been happening. The Northern Ireland Fiscal Council has worked out that had that additional needs element been put in this year, then we would have had another £323 million. Incidentally, that would have plugged the gap in public spending.
If that were happening right across the United Kingdom and people were saying that they were not applying it in Scotland or Wales, then, I suppose, those in Northern Ireland would have no cause for complaint. The truth of the matter is that it is being applied in every other part of the United Kingdom, apart from in Northern Ireland. This is the only budget that is being brought forward where the need is recognised but not reflected in the moneys allocated.
The Secretary of State has argued that if the Assembly were up and running, we could make the case, but we do not need to make the case; it has already been agreed that the formula for Northern Ireland should be another £25 on top of every £100 spent in England. We do not need to fight over the definition of need, because it has already been established. The Holtham Commission made that quite clear. I take the point that was made earlier: I do not want Northern Ireland to become some sort of public sector-dominated economy, which makes us totally reliant. I want to see Northern Ireland becoming self-reliant. I want to see a growing economy; an economy that is generating taxes, income and revenue, and that does not need to be reliant on having a fight with the Treasury every year about the budget and whether we are getting the proper Barnett consequentials.
The definition of need is already well established. It is based on demographic figures—the number of people—and deprivation and cost measures, such as the under-16 dependency ratio, the retired persons dependency ratio, the percentage of population claiming income-related benefits, the percentage of population with long-term illness, the proportion of people outside settlements of 10,000 people, and so on and so forth. We do not need to fight about how much Northern Ireland is entitled to. We do not need to fight about the measure that determines that need. All we need is a decision that the need should be reflected in the budget allocation in Northern Ireland, just as it is in Scotland and Wales.
The Secretary of State argues that, if the Executive were up and running, we could make those arguments, but the arguments are made. The question is how long do we have to wait for what happens in other parts of the United Kingdom to be applied to Northern Ireland.
Gavin Robinson (Belfast East) (DUP)
It is a pleasure to follow the Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) because, in fairness, she has added a new and useful level to the debate. Hers was a very worthwhile contribution, so I thank her for participating and hope that she shows a renewed and continued vigorous interest in the issues of Northern Ireland.
There have been a number of very useful contributions so far in this debate, if we set aside that from the honourable Healy-Rae from Foyle—the hon. Member for Foyle (Colum Eastwood). We enjoy the hon. Member oscillating from a year and a half ago, when he was spending his time cajoling, provoking, ridiculing and mocking my leader and my party at a time when we were raising serious issues, to today, when he is poking, prodding, encouraging and saying, “Just get back to work”, again ignoring serious issues and not recognising the sincerity with which we have sought to highlight and the aspiration to address the issues that are frustrating the proper operation of devolution.
We have heard from my right hon. Friend the Member for East Antrim (Sammy Wilson), who talked about the imbalance between what was attempted to address the deficiency in democratic accountability on issues agreed in Europe and the lack of provision and the danger associated with divergence on Bills brought forward through this place. This week and last, for example, the Postal Packets (Miscellaneous Amendments) Regulations 2023 has been but one issue that jars entirely with what the Prime Minister said when the Windsor Framework was published.
We can see clearly how that will treat parcels coming to and from Northern Ireland as foreign parcels, and we can see clearly how it up-ends the commitments given to the people of Northern Ireland during the Windsor framework process—lest we forget—when the majority of parties in Northern Ireland said that there were no problems with the withdrawal agreement and that it should be rigorously implemented on the people of Northern Ireland. When the Windsor framework was published, they said it was a wonderful solution, yet here we are even today, and we can see that the issues left unresolved will continue to plague and cause difficulty for the shared aspiration of restoring devolution. I say that at the outset, because it is important to consider again the context of why we are considering this Bill.
When we have debates such as this, Members will hear criticism, and I will not shy away from that. From my perspective, touching on the principle of this Bill and the reason why we are here today, the Northern Ireland Office has not done enough, the Government have not given enough and the people have had just about enough. When I say that they have not done enough, we should listen to the hon. Member for Gordon (Richard Thomson). He and I do not share the same political perspective on these things, but he highlights accurately that here we are debating a Bill that has not had any pre-legislative scrutiny and that has not been before the Northern Ireland Affairs Committee.
We are implementing and allocating resource to a budget that has not been section 75 screened, and it is having huge and undetermined consequences for the public sector in Northern Ireland and the voluntary sector in Northern Ireland. Even if Members are willing, and I am not, to forget about them, it is affecting the ability of our Government Departments to fulfil their statutory functions—to educate children, to care for the elderly, to heal the sick. It is not me saying that, but every permanent secretary who has sought to engage with the Northern Ireland Office and has highlighted how difficult this process would be.
When the Children’s Law Centre, in the most non-party political way possible, writes to me and every other Member of Parliament to highlight just how deficient this process has been, it is amazing to see in the explanatory notes that the Bill is being rushed through because it is urgent. The written ministerial statement was issued on 27 April, and yet there has been nothing in between, knowing that the allocation on 27 April was not sufficient, and knowing at the time that permanent secretaries were saying they could provide their statutory and core functions, never mind extras such as extended schools or support for the most vulnerable members of our society. Let us not forget that that was a choice that the Northern Ireland Office made.
The explanatory notes say that there was no pre-legislative scrutiny, no consultation, and no equalities screening because the Bill had to be rushed, but when will Committee stage be? We do not know. Such a rush, but the Committee has not been scheduled. We hear that we are getting to the stage when things are becoming political. We also hear that there will need to be another Northern Ireland Bill—a Bill that gives the Secretary of State the ability to make decisions on behalf of permanent secretaries.
For the last two months, since the written ministerial statement about the allocation, there has been nothing. There has been no consultation on or scrutiny of the Bill, because it has to be rushed, but we do not know when its remaining stages will be. We now hear that there is need for a third Bill—by the way, a Bill specifically to provide the powers that the Northern Ireland civil service asked for, but that the Secretary of State chose not to include, in the Northern Ireland Budget Bill that received Royal Assent on 8 February. The Northern Ireland civil service provided draft provisions to the Northern Ireland Office, which refused to advance them. Now we hear that there is need of a third Bill, but we all know that there are very few weeks of parliamentary time left before this Session concludes. There will be recess in the summer. There are a couple of sitting weeks in September, but there are precious few weeks left. The Government are playing at this, and the NIO has not given enough.
I remember the debates that we had back in January about the Northern Ireland Budget Bill, and I remember the Minister of State responding, “Northern Ireland gets £1.20 where my constituents get just £1.” I remember crying out in the wilderness back in January about the Northern Ireland Fiscal Council, and the difference between what we are allocated and what we need. The only difference now is that more people seem to engage with that argument. The Fiscal Council has revised downwards its figure of how much spending Northern Ireland needs to England’s £1, from £1.28 to £1.24. Year on year, financial cycle after financial cycle, there is a deficit in the resources that we get. There is a compounding negative impact on the ability to deliver public services in Northern Ireland.
New Decade, New Approach was mentioned. That, and some of the industrial relation issues that arose at the time, were about pay parity. Pay for public sector workers in Northern Ireland was not keeping up with that for their counterparts in England, Scotland and Wales. Parity was achieved in 2020, yet the rates in Northern Ireland are now growing ever faster apart from those in England, Scotland and Wales.
Gavin Robinson
The Secretary of State shakes his head, but he knows the figures. In the next financial year, public spending in Northern Ireland will increase by 3.6%; public spending in England will increase by 6%. The disparity between what we get and what we need, and between what we get and what other parts of the United Kingdom get, continues to grow. That compounds the difficulties.
Some £297 million is scheduled to be taken out of our allocation this year and next. We are supposed to be grateful for the fact that it will not be taken out this year, and that the cut will be spread over two years. There is a projected overspend this year of £500 million, and a deficit of £575 million from public pay awards. That is £1.4 billion before we even start. I do not say that to be boring or over-detailed. Do I even care whether the Government agree with those figures? Not really, but people who should share our aspiration for a positive return to devolution when the circumstances are right need to recognise that there is nothing positive about the consequences of this budget—nothing positive at all. I am not an Assembly Member, but I suspect precious few will wish to take responsibility for the austerity and cuts that this Government have provided. That is why I say that people have just about had enough. They are not unfamiliar in Northern Ireland, despite how frustrating it is, with political discord. They understand the challenges in devolved Government. It is not lost on people, when we have just celebrated 25 years of the Good Friday agreement, that, for 40% of those 25 years, devolution did not operate. In fact, the majority of the time that it did operate was when the DUP and Sinn Féin were leading it, but the people of Northern Ireland are not unfamiliar with the frustrating circumstances that we find ourselves in. However, they want to hear a bit of realism.
When the Chairman of the Northern Ireland Affairs Committee, the hon. Member for North Dorset (Simon Hoare), who is not with us today, was batting back and forth with me in January on need and the Northern Ireland Fiscal Council, he dismissed those points. In fairness to him, we corresponded thereafter—it is not often I praise him, by the way—and he took my initiative. He talked to his colleagues and got Committee agreement to hold an inquiry on these financial issues. The evidence sessions have been useful, highly illuminating and will be in our best interests. That is why I say people want to see realism. They want to see us working together.
Yes, we will disagree about different methods and different ways of doing things, but we should recognise that, when there is a core problem, we need to work on the core solution. When there is a deficiency in how we are funded in Northern Ireland, we need to work to address that. When we need more resource simply to stand still—not to provide luxuries, but to provide essential services that people need and rely upon in Northern Ireland—we will do that collectively if needs be, but the Government should not sit back and wait for some collective ask. They know the facts and they have ignored the facts for month after month.
I am delighted to hear the Secretary of State say that they will now engage in the discussion on need. That is a departure from what the Northern Ireland Office has been saying for months. It is not a departure for Government in policy terms, given what has gone through in Wales previously, and it should not all be one-size-fits-all. We need to ensure that we invest not only in the financial aspects of how we deliver for people in Northern Ireland, but in Northern Ireland itself.
The Minister of State, Northern Ireland Office (Mr Steve Baker)
I am likewise most grateful to hon. and right hon. Members for their contributions this evening. I am most grateful, too, that the House again recognises that a Bill such as this is a responsible, but regrettable, step that we need to take as the UK Government to ensure that the delivery of public services can continue in Northern Ireland.
There are no easy decisions in the budget for anyone—not for us as the UK Government, not for Northern Ireland civil servants and not for a future Executive. We recognise that and we know that those decisions will not be going anywhere when an Executive returns.
It has become apparent to me that I and my right hon. Friend the Secretary of State may have been misunderstood on this point, so I want to be perfectly clear: on their return, an Executive will face this stark budget and the difficult decisions that follow from it. But we are also perfectly clear that the right people to be taking those tough decisions are locally elected Northern Ireland Executive Ministers. It should not be the UK Government or civil servants plugging the decision-making gap. It is only through the return of Ministers in Northern Ireland that the vital reforms that so many hon. Members have referred to can begin to take place to put public services on a much more effective, efficient and sustainable basis, fit for the demands and opportunities, and indeed the previous advancements in technology, particularly in medicine, of the 21st century.
Let no one mistake what is needed: reform to the health system, to make the most of decades of improvements in healthcare through specialisation; reform to drive down the waste that comes from a divided education system, perpetuating divisions that would be unlawful once children moved from education into work; and reform to foreshorten the shocking delays in Northern Ireland’s justice system and its appalling cost to taxpayers at turn after turn. Only through reforms and more will the public have the services they need and deserve.
What is the prize? In this debate, if I may say so, we have heard two competing visions for Northern Ireland: a vision of Northern Ireland standing with its hand out to the Republic of Ireland for subsidy, and a vision of Northern Ireland standing with its hand out to Great Britain for subsidy. This Government have a better vision than that. We have a vision for a strong and confident Northern Ireland standing on its own two feet, with a balanced budget, underpinning sound public services that have been reformed and are effective, and—yes—are properly audited.
We want to focus on the great, rich tradition and heritage of Northern Ireland’s industrial spirit, on the great commerce of Northern Ireland and on Belfast, one of the great industrial cities of this great United Kingdom. We want private capital flooding into Northern Ireland. We know that the great people of Northern Ireland are entrepreneurs who care about place and community. We know that there is goodwill all around this world for people to invest in Northern Ireland, but they are put off investing by the absence of an Executive.
Stephen Farry
I very much share the vision that the Minister is setting out, but, leaving aside the language around handouts and subsidies, will he at least recognise that to get from A to B the restored Executive will need a partnership with the UK Government to ensure that we can take forward those reforms?
Mr Baker
The hon. Gentleman makes a good point, and I shall come on to it in a moment, but I want there to be no mistake about this, either: as far as I can see from my vantage point, there is a pretty close correlation between poverty and paramilitarism in Northern Ireland. Leaving a primary school surrounded by razor wire in Shankill, I was struck by some of the murals I saw in that housing estate, commemorating and celebrating people who ought not to be celebrated. If I go to other areas of Belfast and elsewhere, there will be murals celebrating the other side.
It is time for Northern Ireland to be moving on. It is time to lift people out of poverty so that they have a better hope than the commemoration of a past that should never have taken place. No more looking back to a past that never was; it is time to look forward to a better future, founded on prosperity and sound public finances. Call me old school, Mr Speaker, but I like a balanced budget. Let us move forward.
Capital investment for a safe return from investors around the world, the rule of law, good government—the conditions are set. We have an entrepreneurial population, great skills, comparative advantage in financial services, cyber-security, advanced manufacturing and more. Crucially, we also have an institutional arrangement that, if people would only see it, is unique in all of the world: access to the UK as of right and to the EU as a privilege, UK services law and access to the UK’s free trade agreements. That is a unique set of institutional arrangements to promote Northern Ireland’s prosperity for the long run and deliver just the transformation that is needed.
It is true, as hon. Members have indicated in relation to the Windsor framework, that that comes at the price of a difficult compromise, with some EU law still in place. I confess it is a difficult compromise for me, as I have said in the past. However, we have to choose from available futures. At the moment, Northern Ireland’s future looks bleak indeed unless we get behind the reforms that are needed to balance the budget for the long run. I believe that if we do that, if we come together in unity for our good purposes for Northern Ireland, we can achieve great things.
On the quantum that is available, the hon. Members for Foyle (Colum Eastwood) and for Belfast East (Gavin Robinson) seem to be united in the idea that the budget is some sort of punishment. The hon. Member for Foyle suggested it was a tactic. I say to him that that is categorically not true. This spending envelope is the spending envelope that the Northern Ireland Executive would have faced had they not collapsed. It is not the case that we would be punishing people in the way that has been set out. To listen to the debate—
Colum Eastwood
It was not me who suggested that that was a tactic. The Secretary of State outlined the tactic in his own speech: he said that the next stages of the Bill will not be introduced until after the summer, and that that would give us all time to work together to get to government. It is clearly a tactic, although it is not going to work as a tactic. There are better tactics in my view, and I have laid some of them out to the Minister before, but it is a bit disingenuous to pretend that this is anything but a pressure point for the DUP that is clearly not working.
Mr Baker
I say to the hon. Gentleman that the simple fact is that the reason we are not doing all stages today is that summer recess approaches and we would trigger the Parliament Act inadvertently—[Interruption.] My right hon. Friend the Secretary of State does not accept that this is a tactic. The reality is, as we have said, that this is the spending envelope that would have been faced by a returning Executive.
I have to say that, listening to the debate, one would think that the spending envelope in Northern Ireland was at the discretion of my right hon. Friend, but of course, as Members know, nothing could be further from the truth. Long, dreary documents on how spending works are available for the public to read. I am sure that the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) knows very well the documents to which I refer—I have given them a go. These things are fixed by our right hon. and hon. Friends in the Treasury; it is not at the discretion of me and my right hon. Friend to decide how much is spent. This is the envelope that the Executive would have faced.
The hon. Member for Foyle mentioned the shared island initiative, but that large sum of money was agreed, I believe, through the North South Ministerial Council and comes with a number of caveats. However, he reminds me that there are a number of super-tankers at sea here that have evolved through a number of political agreements. I think that we all need to be working with a restored Executive to rationalise how that spending goes forward. That can be done only with a restored Executive.
A review for the Barnett formula was touched on. My right hon. Friend said earlier that we recognise that introducing a needs-based factor in the application of the Barnett formula for Northern Ireland according to a mechanism similar to that implemented in Wales is an option that could be considered to put Northern Ireland’s public finances on a sustainable footing. However, it took a number of years for the Welsh Government and the Treasury to agree a formula, and my hon. Friend the Member for Aberconwy (Robin Millar) wisely cautioned us that that matter is not settled. He also cautioned us about the dominance of the public sector. That is why I am so firm that Northern Ireland must be founded on a revitalisation of its vibrant private sector.
Let me turn to the funding premium and the comparison between the percentage of funding for Northern Ireland and the equivalent spending for the rest of the UK. Let me be really clear because, in listening to the debate, one could misunderstand the position. Funding for Northern Ireland will increase from 20% to 25% extra in 2024-25. Insofar as that funding premium is forecast to fall below 20%, it is by the early 2030s but not immediately.
I am grateful to the hon. Member for Hove (Peter Kyle) for mentioning revenue-raising measures. We will have full advice by the end of this month. He referred to the remarks made by the permanent secretary at the Department of Education. We are very well aware that, to live with its budget, the Department of Education has already taken significant steps to reduce expenditure. I am aware that, despite that, there is a funding gap. Our Department continues to engage with the Department of Education and the Department of Finance to address that. A previous political agreement such as NDNA recognised the structural inefficiencies in Northern Ireland’s educational system, about which Members may perhaps see that I feel passionately, and recommended a review to address them with reform. I welcome the recent completion of the review into special educational needs provision, and I look forward to the outcome of the review of education provision for 14 to 19-year-olds.
There has been a great deal of interest in the particular details of per-pupil funding. I propose to write to my hon. Friend the Member for Worcester (Mr Walker) in detail on education funding. I shall place a copy of that letter in the Library for all Members who have expressed an interest.
The hon. Member for Gordon (Richard Thomson) in particular raised section 75 duties and whether they are carried out by us and so on. As the ones taking the decisions, Northern Ireland Departments completed indicative section 75 assessments that were considered by the Secretary of State when he set the overall budget allocations. In light of those budget totals, Departments are now completing final assessments.
Richard Thomson
I am grateful for that clarification, but however good the intentions are, it seems to fall short of full compliance with what is expected under the section 75 procedure. Could those indicative assessments be put in the public domain, so that we can start to foster that wider political debate about the budget choices that are now being made?
Mr Baker
That brings me on to a point I wanted to make. My right hon. Friend the Secretary of State and I sat here throughout the debate listening to a number of Members imploring us to take one action or another, which would amount to going down the road toward direct rule. We have no plans to go toward direct rule. We have been asked what we will do if this situation continues. In the event that we need to take further steps, we will announce them, if the need arises and when the time is right, but we have no plans to go to direct rule, and no amount of pressing us on one issue or another will cause us to take up direct rule.
Regarding the Windsor framework, yes, there are some technical matters that we might deal with in order to fulfil the policy intent clearly agreed by both sides. Where there are technical issues we need to move forward on, please, let us take them up as technical issues and deal with them in the Joint Committee. Let us not again raise such matters up to levels that require the attention of the great statesmen and women of Europe. It is better to deal with these things in a low-key way.
Sir Jeffrey M. Donaldson
With great respect to the Minister, the matters that we want to be addressed are not matters for the European Union; they are matters for His Majesty’s Government. They relate to the internal market of the United Kingdom and its workings. Either the UK Government are in charge of that, or they are not. When I see the UK Government introducing new statutory instruments to impose customs arrangements on parcels being sent from one part of the UK to another, I begin to wonder if the UK Government actually get our concern about the workings of the internal market.
Mr Baker
We certainly do. The right hon. Gentleman and I have walked a long way together over the last seven years. As he well knows, I regret that we have had to part ways somewhat at this point, but we are clearly aware of his concerns, which he articulates with great clarity and force. I hope he will not mind if, at this late hour, I say that I will leave this to my boss, the Secretary of State, and the other parties to work through.
Finally, I think, I turn to the issue of the Northern Ireland Audit Office, which the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) set out in some detail. Of course we appreciate the important role played by the NIAO and other independent bodies that hold the devolved Government to account, and ensure that public finances are spent properly and efforts are made to improve public services. However, when the Secretary of State considered budget allocations, he needed to take account of the challenging budget context and reductions faced by other Northern Ireland Departments. In such challenging circumstances, we believe it is only right that we ask the non-ministerial Departments and independent bodies to find savings in the same spirit as the rest of the Northern Ireland Departments.
Dame Meg Hillier
My concern is that it is a disproportionately large cut to a very small budget. It means that the Comptroller and Auditor General for Northern Ireland cannot complete her work programme for this year, and there is nobody else—no Executive, no Public Accounts Committee, no Assembly—that can do that job.
Mr Baker
Let me just check my notes to make sure I answer the hon. Lady properly on this point.
What we have done is roll forward the budget. The recommendations of the Assembly’s Audit Committee were made in a different economic and budget context. We maintain that, by rolling forward the 2022-23 budget allocation to the Northern Ireland Audit Office and other non-ministerial Departments, we have reached a fair outcome. I would be glad to meet the hon. Lady to discuss this matter further, but I think it better that we meet face to face in the first instance.
I hope right hon. and hon. Members agree that I have tried to respond to some of the main points made in the debate. We will write the letter on education funding. We do have a vision for Northern Ireland, which is one of Northern Ireland standing on its own two feet, with a balanced budget and reformed, effective and affordable public services; a Northern Ireland that is prosperous, happy and free, and is not always standing with its hand out to one party or another.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).
Monday 4th September 2023
(8 months, 1 week ago)
Commons ChamberNorthern Ireland Budget (No. 2) Act 2023 Read Hansard Text Watch Debate Amendment Paper: Committee of the whole House Amendments as at 4 September 2023 - (4 Sep 2023)
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland Budget (No. 2) Act 2023 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
We now come to—
The Minister of State, Northern Ireland Office (Mr Steve Baker)
On a point of order, Madam Deputy Speaker. I think the Mace is in the wrong place.
The First Deputy Chairman
Very well spotted—it will be moved. Thank you.
Clause 1
Use of resources
Question proposed, That the clause stand part of the Bill.
The Minister of State, Northern Ireland Office (Mr Steve Baker)
Thank you, Dame Rosie, and I am delighted to serve with you in the Chair today as we go through Committee stage of this vital Bill.
In the absence of a functioning Executive, this Bill will allow public services to continue functioning and help to protect public finances in Northern Ireland. I propose to go through the clauses now, and then with the permission of the Committee, respond at the end of the debate to points raised.
Clauses 1 and 2 authorise the use of resources by Northern Ireland Departments and other specified public bodies amounting to £27,403,514,000 in the year ending 31 March 2024 for the purposes specified in part 2 of schedule 1 and subject to the limits set out in subsections (4) to (7) of clause 2. I should remind the Committee that this Bill only sets out the available total resource and capital budget for Northern Ireland Departments of £14.2 billion and £2.2 billion respectively. In the absence of an Executive, it is the responsibility of the Northern Ireland Departments now to make the specific spending decisions to ensure that they live within the budget limits set out in this Bill. The Government recognise that this is not easy and requires difficult decisions.
Clauses 3 and 4 authorise the Northern Ireland Department of Finance to issue out of the Consolidated Fund of Northern Ireland the sum of £22,790,893,000 for the purposes set out in part 2 of schedule 1.
Clause 5 authorises the temporary borrowing by the Northern Ireland Department of Finance of £11,395,447,000, approximately half the sum covered by clause 3. This is a normal safeguard against the possibility of a temporary deficiency arising in the Consolidated Fund of Northern Ireland, and any such borrowing is to be repaid by 31 March 2024.
Clause 6 authorises the use of income by Northern Ireland Departments and other specified public bodies from the sources specified in part 3 of the schedule for the purposes specified in part 2 of the schedule in the year ending 31 March 2024. Clause 7 provides for the authorisations and limits in the Bill to have the same effect as if they were contained in a Budget Act of the Northern Ireland Assembly. It also modifies references in other pieces of legislation to the Northern Ireland estimates, which would normally form part of the Assembly’s supply process. Clauses 8 and 9 are self-explanatory, in that they deal with such matters as interpretation and the short title.
Finally, the schedule to the Bill sets out for each Northern Ireland Department the amount of money authorised for use, the purposes for which it can be spent and other sources of income from which it can draw. Part 1 of the schedule sets out the amount of resources authorised for use by each Northern Ireland Department and other public bodies in clauses 1 and 2 and the sums of money granted to each Northern Ireland Department and other bodies in clauses 3 and 4 for the year ending 31 March 2024.
Part 2 of the schedule sets out the purposes for which resources under clause 2 and money under clause 4 can be used by each Northern Ireland Department and other bodies for the year ending 31 March 2024. Finally, part 3 of the schedule sets out the sources from which income can be used by each Northern Ireland Department and other bodies for the year ending 31 March 2024.
I hope I have provided the Committee with sufficient detail on the intended effect of each provision in the Bill. We have also published more detailed information in respect of each of the Northern Ireland Department’s spending plans through the main estimates, which the Secretary of State laid as a Command Paper on 3 July. I look forward to hearing Members’ views on the Bill and their contributions, and with the leave of the House I will later endeavour to respond to as many points as possible when I wind up.
Tonia Antoniazzi (Gower) (Lab)
It is an honour to serve under your chairship, Dame Rosie, in this Committee. I will keep my remarks brief to allow us to hear from the Northern Ireland parties on Third Reading.
Once again we come together to debate legislation that should be dealt with in Stormont. We still have civil servants running Departments with restricted powers, trying to plug a gap of £800 million and unable to consult with Cabinet Ministers. Stormont is the right and proper place for scrutiny to take place. In this place, we cannot simply provide the level of consideration and scrutiny that this budget deserves.
To quote today’s report from Pivotal,
“managing this situation has been extremely challenging, if not impossible, thanks to two interlocked problems: no political leadership for decision-making and impossibly tight budgets.”
On the first problem, sadly I have seen no sign over the recess that indicates the restoration of the Northern Ireland Executive is any nearer. I would welcome hearing from the Secretary of State what discussions he has had over the summer with parties in Northern Ireland, as the situation is now beyond breaking point.
On the second problem—the budget—we do not oppose the Bill, as services are in desperate need of funding, but the fact is that this budget is not enough to address the problems facing public services in Northern Ireland. A real-terms funding fall of 3.3% means that existing services simply cannot continue to function as normal. The people of Northern Ireland have been left facing cuts to support and increases in charges for everyday necessities during the cost of living crisis. While we appreciate the need to explore avenues to raise revenue, the measures put forward so far may cause more societal damage than the monetary gain is worth. As I have mentioned, we are missing a vital level of scrutiny and accountability for these measures.
We, the Labour party, agree with the principle that local decisions should be made by local politicians, but the situation is now extreme. While there continues to be no functioning Executive, I ask the Secretary of State to consider what he can do within his power to help the people of Northern Ireland. This is a critical state of affairs, and the full impact may not yet be realised, as any overspends will inevitably lead to further cuts the next year. The only viable way forward for Northern Ireland is the restoration of the Executive, and I implore the Secretary of State, the Minister and the main parties in Northern Ireland to ensure that happens sooner rather than later.
Mr Steve Baker
My right hon. and learned Friend makes a very good case. I am conscious that his amendment was not selected, but if he would do me the honour, I would be glad to meet him and hear his opinions on this further. He makes some very good points.
Sir Robert Buckland
I am extremely grateful to my hon. Friend, and I would commend him for any discussions he might have with the Audit Committee and its members who have given evidence to the Northern Ireland Affairs Committee here in Westminster.
On that note I will close my remarks. It is safe to say that it is sad but a reality at the moment that we have to legislate in this way for the affairs of a part of our United Kingdom that has been given the power of devolution but, for reasons that are all too apparent, is not in a position to exercise that power. It must do so soon, not in the self-interest of the politicians who sit in that place but for the people they are supposed to serve.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 to 9 ordered to stand part of the Bill.
Schedule agreed to.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
Third Reading.
Mr Steve Baker
I beg to move, That the Bill be now read the Third time.
I would like to place on record my thanks to all those involved in the passage of the Bill through the House. In particular, I thank the Labour Front Benchers for their constructive approach to the Bill and its necessity. I take this opportunity to welcome the shadow Secretary of State, the right hon. Member for Leeds Central (Hilary Benn), to his place; I know he will hold us to account with great skill, but will seek to pursue the best interests for the people of Northern Ireland. I heard him say “peace, prosperity and progress”. That is what we all want.
I thank Diggory Bailey in the Office of the Parliamentary Counsel for the expert fashion in which he and colleagues drafted the Bill with Northern Ireland counterparts in the Office of Legislative Counsel and the officials in the Department of Finance who assisted greatly in our preparation for this Bill’s passage.
It is no secret that the pressures on Northern Ireland’s public finances are acute. As with the 2022-23 budget, setting the budget was not an easy task but it was necessary to deliver a balanced budget and provide the Northern Ireland Departments with budget clarity to help to get spending under control. As far as possible, we have aimed to protect frontline public services. In recognition of the pressure on the health service, over half the total budget is earmarked for health.
As I have said many times from this Dispatch Box, and as the Secretary of State for Northern Ireland has said many times, people in Northern Ireland rightly expect to see these decisions taken in Stormont and not in Westminster. We agree with them. However, until that happens, the Bill will allow public services to continue functioning and help to protect public finances in Northern Ireland. I therefore commend it to the House.
Sammy Wilson (East Antrim) (DUP)
The hour is late, so I will make just a couple of points about the budget. The first is that, of course, political parties in Northern Ireland have elected representatives. We have our own priorities. We have things that we want to see done, and things that we believe should not have money spent on them. Of course we would love to be in a situation where we had a restored Assembly, but I think that the new shadow Secretary of State—whom I congratulate on his appointment—hit the nail on the head when he said that Government had a responsibility to regain the trust of the parties of Northern Ireland, and this Government have singularly failed to do so. One only has to look at the way in which they have handled affairs since the Windsor framework was introduced. They took Members off Committees because they suddenly realised that the arguments being put forward for legislation were not even going to wear in their own party, so at the last minute we had half the Committee replaced. Over the summer period we have had regulations introduced without any chance of public scrutiny. That enabling legislation will have an impact on trade between Northern Ireland and the rest of the United Kingdom. Now we are heading towards the autumn, when the border operating model will see checks on goods coming from GB into Northern Ireland, as well as Northern Ireland manufacturers and producers finding themselves subject to checks when they try to sell into the GB market. The Government say that they want to restore trust and give us an assurance that we are part of the United Kingdom and a fully integral part of the United Kingdom market, but there is no evidence of that.
Quite honestly, no Government can expect Unionist representatives who have fought to maintain the Union to go back into Stormont to implement policies that will drive a further wedge between Northern Ireland and the rest of the United Kingdom, and where they will be obliged to accept EU legislation, which even the Windsor framework indicated would be the cause of divergence between Northern Ireland and the rest of the United Kingdom.
If the Government really want politicians in Northern Ireland to play a role in deciding budgets and how they are spent, they first of all have to accept that Unionists cannot and should not be expected to participate in the demise of the Union by having to sit in an Assembly that would be forced to implement the very policies that they believe are detrimental to the Union. It would be hypocritical for DUP Ministers and Unionist Ministers to sit in the Assembly and by law—because the courts have ruled on it—have to implement something that their colleagues could be standing here in this place condemning and saying was detrimental to the Union. There is an onus on the Government to recognise that the Windsor framework has not sorted out the issues and that it has made them worse. I think that October will show that it has made them worse, and if we want devolution restored, it has to be on the basis of—
Mr Baker
I am listening carefully, and I appreciate the tone in which the right hon. Gentleman is delivering his remarks, but I have stood here at least twice and said that we recognise that this is a hard compromise for Unionists and Eurosceptics. I think it has to be said that the European Union has its own stakeholders. Personally, I was among those who said for a long time that we could have administrative and technical solutions to deal with the issues of Northern Ireland. I worked on that before the referendum and subsequently I saw to it that papers were produced after I resigned from the Government in 2018.
This is a subject extremely close to my heart, but since the right hon. Gentleman raises it again, I would say to him and to all Unionists, of whatever strength of opinion, that one has to choose from the available futures. He knows that; he is a more experienced politician than me. One has to choose from the available futures. The EU has its own stakeholders. We have managed to reset the relationship with Ireland and with the European Union, and that offers the hope of a better future for all of us in western Europe.
On the budget, the surest way to harm the Union now is to allow Northern Ireland to fail, because people vote for change when the world is not working for them. When I look at the available futures for Northern Ireland, I see that the one that is going to work best and best preserve the Union is to get on and get Northern Ireland working. I know that the right hon. Gentleman is frustrated. I am frustrated, too, and I would like to have done better on the Windsor framework, but now we have to choose from the best of the available futures.
Sammy Wilson
That is the kind of answer that worries me as a Unionist, and it should worry many people in the Minister’s party if they listen carefully.
The Minister seems to be taking the view that, because stakeholders in the European Union demand certain things, the Government should respond. This Government have an obligation, first of all, to the country they govern, and that obligation is to make sure the country is not broken up. That should be the main consideration, not what stakeholders in Europe think and not re-establishing relations with the European Union and the Government in Ireland, if that means breaking off and destroying relations with the people of part of the country to which we belong. If that is the approach, I do not think we will get very far. This surrender approach is not a compromise that Unionists can accept. The Minister may find it acceptable, but we do not find it acceptable.
Mr Steve Baker
I know this is a debate on the budget, so I will try to be very brief. I know the right hon. Gentleman does not need me to give him a lecture on the Belfast/Good Friday agreement, but Northern Ireland has had particular problems and a particular status that do not exist in my constituency or anywhere else in Great Britain. We have to face up to the reality of where we are. This Government believe in the Union, but we also respect the Belfast/Good Friday agreement in all its dimensions, and that includes devolution. I implore him to make the Union work.
Sammy Wilson
Of course, the important thing in the Belfast agreement was that the status of Northern Ireland is guaranteed, and that no change would be made to Northern Ireland’s status unless it is decided by the people in Northern Ireland. The people in Northern Ireland did not agree to this change of status, which makes it a vassal state of the European Union.
I do not want to labour the point—I understand that you are being very good in allowing me to emphasise this point, Madam Deputy Speaker—but if the Government wish to see Northern Ireland politicians make decisions on this, they have to respect that there is a Unionist tradition and a nationalist tradition in Northern Ireland. They cannot ignore the Unionist community’s concerns, worries, fears and opposition to the arrangements that are currently in place. Far, far worse, they cannot expect Unionists to co-operate in facilitating the implementation of those arrangements.
On the budget, the Minister has accepted that there is pressure on public services and spending in Northern Ireland. Nearly everyone who has spoken has said that it would be much better for politicians in Northern Ireland to make these decisions. The truth of the matter is that, even if the Assembly were up and running, it could not deliver the basic services that are expected in Northern Ireland and that are funded in the rest of the United Kingdom, because the Government have done two things.
First, since 1922—and the Fiscal Council has made this clear—expenditure on public services in the rest of the United Kingdom has been based on need, but the Government have ignored their own criteria and the basis on which they decide spending in the rest of the United Kingdom. The Holtham formula has not been applied in Northern Ireland. Indeed, the Fiscal Council has estimated that, as a result of need not being considered, we probably have about £322 million less expenditure available than we would have had if we had been treated on the same basis as England, Scotland and Wales.
I do not believe the Assembly’s decisions have always been good, and I do not believe there has always been the wisest use of money, but the problem has not primarily been caused by the Assembly. The Government’s decision not to base this budget on need is causing some of the issues.
Let me give an example. Education spending has gone up by 6% in the rest of the United Kingdom, but it has fallen in Northern Ireland. The overall budget for Northern Ireland this year has fallen by 3.2% in real terms, whereas the budgets for the rest of the United Kingdom went up by 1.7% in real terms. That is partly a result of the fact that the formula used for the rest of the United Kingdom, which is based on need, has not been applied in Northern Ireland. Of course, the situation has been exacerbated by the Government’s decision to claw back the overspend by the Assembly in the last year in which it was sitting, which amounts to about £287 million. So the pressure on public services, which the Minister has lamented, is partly caused by the decisions that have been made here; they will affect the amount of money we have to spend in Northern Ireland.
I could go through the consequences for each Department, but I am not going to do so at this time of the evening. However, in education we have a real-terms cut, and in policing we are already about 1,000 officers below what the New Decade, New Approach and the Patten arrangements said we should have. That situation is going to get worse. Of course, we also now face the expenditure that is going to be necessary because of the problems in schools and the massive expenditure that will result from the data breach in the Police Service of Northern Ireland. So far, no clear indication has been given that the payment for those things will come from anything other than this overstretched budget. It would be useful for the Minister to indicate to us at the end of the debate whether the money that has to be spent on making schools good as a result of the problems with the concrete that was used, and the massive spending that there will be on fines from the Information Commissioner, the relocation of officers and the mitigation measures that have to be taken to protect officers, will still come from the overstretched budget or whether there will be an in-year consequence for that. Alternatively, will it be treated simply the same as the Barnett consequentials? Will the future Barnett consequentials be treated and ignored?
I hope that the Minister fully understands our position. We are not being truculent. We are not piqued because we have not got our way. We are simply making it clear that the ask that is being made, on the political compromises on the Union and on the financial difficulties that this budget would cause, makes it impossible for the Assembly to be up and running again.
Stephen Farry (North Down) (Alliance)
At the outset, may I join in paying tribute to the outgoing shadow Secretary of State, the hon. Member for Hove (Peter Kyle), and in welcoming to his new role the right hon. Member for Leeds Central (Hilary Benn)? We are going to miss him on the UK Trade and Business Commission, on which he has had a very keen interest in recent years in Northern Ireland and the fallout on it from Brexit, which has had major ripple effects through our politics—not least, as we can hear this evening, on the subject of this debate.
It is six weeks on from Second Reading and it is fair to say that the situation in our politics has not improved. There is no sign of any return to devolution; indeed, the response from the right hon. Member for East Antrim (Sammy Wilson) to the Minister of State illustrates the lack of realism about the choices that face us collectively in Northern Ireland, and the choices that face Unionism in ensuring that Northern Ireland works for everyone. That is in everyone’s interest, not least the interest of Unionists.
With the public finances, I would argue that the situation is indeed much worse than it was six weeks ago, because the Northern Ireland budget is on an unsustainable trajectory. The budget that was set, as others have said, was not sufficient—it was inadequate—but there is a second layer to this, because the guidance to civil servants in the Northern Ireland (Executive Formation etc) Act 2022 does not allow them to take the decisions necessary to live within the measly budget that has been granted.
As the hon. Member for Belfast East (Gavin Robinson) has said, we already have a situation where it is projected that Northern Ireland will overspend by at least £500 million, which is greater than the overspend from the last financial year. That is more than £500 million of public pay pressures before Northern Ireland can even have parity with the settlements that have taken place elsewhere in the United Kingdom. Something is going to have to give. Either an Executive come in with a financial package and can begin to address some of those pressures, or the Government are essentially going to take it on the chin and accept that Northern Ireland will overspend.
That begs the question of what will happen with that overspend in future years. Will it be an albatross around our neck for years to come? Will people be expected to make cuts, or will the Government make cuts in-year to try to balance the budget? I would suggest that trying to do that in-year is now impossible, not least because so much of our budget is linked to salaries. We would lose people, and even if we did we would have to have redundancy payments for them. The only way anyone could possibly balance the budget at this stage is through stopping services completely, which is utterly inconceivable and untenable.
The point has been made that the budget situation is bad and will always be bad, and that having an Executive does not make any difference in that regard. I am not suggesting for one minute that a restored Executive will be a silver bullet, but I suggest to my colleagues who perhaps are dismissing the relevance of devolution at this point that every single stakeholder, when they are asked to comment on the budget crisis, stands up and says, “We want to see an Executive in place.” Whether we are talking about healthcare professionals or people who work in the education sector, the business community or the voluntary community sector, all of them are saying with one voice, “While it is no magic solution, we do want to see the Executive back in place.”
That reference to a restored Executive leads me on neatly to the point I really want to stress regarding a financial package: we need to see a twin-pronged approach to addressing Northern Ireland’s financial needs. Of course we need to address the lack of financial parity and the fact that Northern Ireland is not funded based on need. There is a structural problem of underfunding there, so things are not more generous in Northern Ireland than elsewhere.
I want to pick up on the comments made by the Secretary of State at the weekend to the British-Irish Association in Oxford. The conference is held under Chatham House rules, but I want to comment on what is in the public domain, as released by the Northern Ireland Office itself. In that speech, the Secretary of State was very negative about the concept of a financial package. He talked about money being thrown at Northern Ireland and Executives having squandered financial packages in the past—and there might be an element of truth to that. He said that the Executive need to stand on their own two feet—and, again, that is a worthy aspiration. But I stress that the notion that Northern Ireland can run a balanced budget, invest in public services and drive the economy from a burning platform will never happen. We will see more cuts flowing from budget cuts, and we will end up with decline and more decline. We will end up in a downward spiral in which Northern Ireland becomes ever more dependent, and we will see activity stop and more and more young people leave. That is not the future that I hear the Government articulating in their vision for a prosperous society in Northern Ireland, but what they are doing in terms of the budget belies their very worthy aspiration.
I ask the Minister of State or the Secretary of State to clarify in winding up that something will potentially be on offer when we seek a financial package. I appreciate that that is something that the Government may wish to do solely in the context of a restored Executive rather than up front, but it is important for any financial package to be based around transformation, a proper strategic plan and a programme for government for a restored Executive. That Executive must have clear targets and milestones, and a very clear idea as to how investment can turn Northern Ireland around. That is something on which a restored Executive can work in partnership.
Mr Steve Baker
The hon. Gentleman has just hit the nail on the head: a restored Executive could work in partnership with the Government. But I just emphasise to him that the sum available in this budget is the same as would have been provided were an Executive in place. Just to take further his point about reform and so on, he will know that since 2014, we have put £7 billion into Northern Ireland on top of the block grant. Various commitments to reform have been given in different agreements over the years on various fronts, including education, but it has not happened. I think we are all now getting to a point where we are terribly frustrated on all those fronts. He has hit the nail on the head: we need a restored Executive and then to work in a positive way together to make Northern Ireland function for its people, and that is what we are very willing to do.
Stephen Farry
I am very grateful to the Minister of State for his comments. I largely agree with him, but I will point to a certain disagreement on some aspects. I fully recognise that there have been past financial packages and problems with reform not being fully realised, particularly around integrated education, which is a clear example. We have to do better in that respect. From where we are, I do not see any alternative to trying to do that once again and learning the lessons from what happened in the past. I recognise that we have seen additional funding packages from the UK Government—obviously, we had a major uplift in support to deal with covid and its side effects on the economy, and that support was very welcome—but the fact is, as other Members have said, that our expenditure per head is not based on our need, and that fundamental point has to be recognised.
Ian Paisley (North Antrim) (DUP)
We are approaching tomorrow, so I will try not to detain the House too long with the comments I wish to make on this important Bill. At the outset I want to pay tribute, as others have, to the hon. Member for Hove (Peter Kyle), the former shadow Secretary of State, who has now moved on to another post. He visited my constituency on more than one occasion and spent time with businesspeople and community leaders there, which was much appreciated. It was very clear that he wanted to learn as much as he possibly could about Northern Ireland, and he used that information wisely and, on many occasions, powerfully in this House. I hope he continues to maintain that interest, particularly in the hydrogen technologies that he looked at in Northern Ireland, in his new role. I wish him all the very best.
I also welcome the right hon. Member for Leeds Central (Hilary Benn) to his new post. He brings a level of gravity to the post, which is very important, and I wish him all the very best as well. I hope that, as a supporter of Leeds United, that brings us closer to at least some extent.
When the Minister of State opened the debate this evening, he made it clear that he was putting a budget in place—I think I quote him correctly—that would allow Northern Ireland Departments to continue to function. That was its purpose. Of course, at some level those Departments will continue to function, but they will function on the most stingy budget Bill ever brought forward: a Bill that is a crisis point. Whether there is direct rule, the current formation that we have, or a devolved Assembly operating, the current budget is inadequate. It is a disaster for many of the Departments in Northern Ireland, and it will not allow government to function, or to function normally. Many of those Departments have been cut to the bare bone with regard to what they will be expected to deliver.
What lies at the heart of this budget Bill? Of course, it is a fundamental unfairness. It is unfair in terms of the budget allocation; the formula, or the definition of need, that has been used in relation to Northern Ireland; and the outcome that it will have for the people of Northern Ireland, irrespective of their political or other identity. This is a grossly unfair budget, and it will impact harshly on the people of Northern Ireland. It has been described as a “punishment budget”, and I say frankly to the Secretary of State, his Minister and his team that I think it is designed to be a punishment budget—to punish Northern Ireland because of political circumstances.
If the Government are making an argument tonight that they want an Assembly back, this is a very strange way to go about it, because they are basically saying to the political class in Northern Ireland, “If you go into the Assembly and you try to run it on this pinching, stingy budget, you will deliver to the people of Northern Ireland a disastrous arrangement.” It is no encouragement whatsoever to politicians to go into the Assembly on that one narrow point of the budget. Of course, my right hon. Friend the Member for East Antrim (Sammy Wilson) has outlined much more detailed reasons as to why Unionists would not go back into the Assembly on the current arrangements until issues around the Windsor framework and the protocol are resolved.
If ever we needed leadership from the Government that led to decisive outcomes, it would not be this stunt budget that has been pulled in Northern Ireland. It is a pathetic excuse for a budget, and it will damage the opportunity to try to build better relationships not only within this House, but across Northern Ireland. The Government would not dare bring forward these sorts of arrangements for any other part of the United Kingdom—they simply would not dare and they would not have the affront to do it—and it is appalling that they are doing that for this part of the kingdom, Northern Ireland.
The hon. Member for North Down (Stephen Farry) rightly identified that, if we are going to raise more revenue opportunities and invest in the public service, we need resources to do that. I notice that, in our newspapers every day, there are threats that the Northern Ireland Secretary is going to introduce water charges. I have heard this before. When I speak to the head of Northern Ireland Water, she tells me that, to get us back to an even keel in Northern Ireland with regards to the infrastructure of our water service, we need to invest about £2 billion. That is just to get it back to a level playing field and to a state where we could charge people for the water service. Are the Government proposing to put that sort of investment into the process, or are they just saying, “No, we’ll bring in water charges”? It is impossible to bring in water charges and well the Secretary of State knows it.
Just look at the cuts that are being proposed. The shadow Secretary of State rightly identified the problems to do with the concrete in schools across Northern Ireland, yet the education budget is being given the single largest kicking by the Government. Its budget is going to be down by 2.7%. If there is a crisis identified in the schools’ structure—another crisis in the schools’ structure—they just will not have the resources or the capability to resolve that, and we are going to see a major funding crisis there. Justice funding is down by 1.5%; I will come to some more points about that in a moment. Of course, the Department for the Economy funding is down by nearly 1% and this comes in the jaws of the great economic conference the Government are holding in a matter of seven or eight days in Northern Ireland. They are going to invite investors from all over the world and to say, “Come and invest in Northern Ireland—by the way, we have decided to cut the budget of the Department for the Economy, and we have decided to cut the budget for education and for other parts of Northern Ireland”. What sort of a message is that going to send to potential investors? If the Secretary of State has to try to sell these issues to outside investors whenever they decide to cut the budget, I certainly would not want to be a Northern Ireland-based devolved Minister trying to make that point.
Mr Steve Baker
Thankfully, the hon. Gentleman is not writing the speeches for the investment conference next week because, if he were, it would not be very successful. What he knows and I know—and any of us in this House know who knows Northern Ireland—is that it has an amazing, vibrant private sector with terrific entrepreneurs, who are incredibly well grounded in place, care about their communities, and care about making a profit justly while taking care of the environment. They are amazing, inspiring people who can succeed if they are provided with the right capital. If anything, what we are trying to do here, on the point he makes, is to make sure that the very poor quality politics of Northern Ireland ends up matching the very high quality of the private sector. If we could pull that off, Northern Ireland would soar.
Ian Paisley
I thank the Minister, but I was once told, “If you throw a stone among a pack of dogs, the one that yells the loudest has been hit the hardest.” I think that point maybe hit the Minister just a little bit this evening in that he knows that to say to investors, “By the way, we’ve cut the budget”, is not actually a good look for the Minister.
I want to turn to the issue of the cut to the Department of Justice funding; it is down by 1.5%. We all know that the morale of the police is at an all-time low. The issue of police pay for probationers has been raised in this House. It is very difficult to encourage young and newly qualified police officers that what they are doing is worth while. That is because the Department of Justice is going to be faced with another cut.
We have had the drama in recent weeks of the data breach. Police on the database have, shockingly, been given advice that they should remove themselves from the electoral register. That is one of the ways in which they can now protect themselves, undermining the democratic process for them and their families. The integrity of the MI5 officers who work in Northern Ireland has been undermined. That has a massive cost not just economically and politically, but to our security. Of course today there has been the loss of the Chief Constable, who decided to make decisions at the behest of Sinn Féin; rightly, he has had to resign. Who can calculate at this point what the cost of this will be, not just economically but to policing and to resolving that problem? I am disappointed that today the Secretary of State hedged his bets on who will pay the costs of the data breach; compensation will run into tens of millions of pounds. With Department of Justice funding cut by 1.5%, it is impossible to take that level of cost from that Department. The Secretary of State knows that he must do better, that this is not a good budget and that it will hit some of the Departments in Northern Ireland that mean the most the hardest.
Northern Ireland’s biggest industry and single largest employer still today is agrifood, making good-quality, tasty food. It does so not just for the people of Northern Ireland: the 30,000 or so farms in Northern Ireland make food and feed about 17 million people here in the rest of the United Kingdom. That sector of our economy is facing problems because that industry is about to have its veterinary medicines violated by this Government. Under the Windsor framework, the problems facing our farms are coming at them at 100 mph. Over 50% of our medicines for that sector are going to be denied and the UK Government say, “We are in discussions to resolve this issue.” The fact of the matter is that Europe has made it very clear that those discussions are over, yet the Government still think they can solve that. That crisis is coming too and the Government will need to resolve it and do so very soon. I hope that they do. I hope that they actually listen to these points, instead of getting tetchy about them, and recognise that the threat they have caused to the people of Northern Ireland by such a stingy, nasty budget, in such a procrastinating manner, is not serving the purpose of getting Government back into Northern Ireland, but is putting us further into the doldrums.
Mr Baker
With the leave of the House, Mr Speaker, given that I made a number of interventions during the debate, and given the late hour and a desire not to repeat arguments that we advanced on Second Reading, I think I should just say, “I beg to move.”
Question put and agreed to.
Bill accordingly read the Third time and passed.
Thursday 14th September 2023
(7 months, 3 weeks ago)
Lords ChamberNorthern Ireland Budget (No. 2) Act 2023 Read Hansard Text Watch Debate Amendment Paper: Committee of the whole House Amendments as at 4 September 2023 - (4 Sep 2023)
This text is a record of ministerial contributions to a debate held as part of the Northern Ireland Budget (No. 2) Act 2023 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Caine) (Con)
My Lords, before I begin my comments on the Bill itself, I once again place on record my gratitude to your Lordships for considering this important Bill on a heavily truncated timetable.
My right honourable friend the Secretary of State for Northern Ireland and I set out the budget allocations for each Northern Ireland department for 2023-24 in a Written Statement, which I placed before your Lordships’ House on 27 April. All this Bill does is put those allocations on a statutory footing; it does not change the numbers. I do not propose to repeat the contents of that Written Statement, which sets out the respective departmental allocations. Those budget allocations, as with the 2022-23 Northern Ireland budget, were developed as a result of extensive and sustained engagement with the Northern Ireland Civil Service.
The Bill will mean that Northern Ireland departments have a total available resource budget of £14.2 billion and a capital budget of £2.2 billion. This includes the Northern Ireland Executive block grant set at the spending review in 2021 and through the subsequent operation of the Barnett formula and income from regional rates. I emphasise that the sum available for this budget would have been the same provided to an Executive for 2023-24 if an Executive were in place.
Of course, it is the Government’s clear wish that these matters were being dealt with by a fully functioning Northern Ireland Executive and Assembly, operating in accordance with the 1998 Belfast agreement, and we are working tirelessly to bring that about. However, in the absence of an Executive, it is the responsibility of the Northern Ireland departments now to make the specific spending decisions to ensure that they live within the budget limits as set out in this Bill. I recognise that this is not easy and will require difficult decisions.
Noble Lords will remember that the UK Government inherited a significant prospective overspend in 2022-23, to the sum of £660 million, and a reserve claim of £297 million was provided to balance last year’s budget. With agreement from my right honourable friend the Chief Secretary to the Treasury, flexibility has been granted on the repayment of that reserve claim. This will provide some protection to front-line public services in Northern Ireland from having to take the most severe reductions.
With the leave of the House, I will speak to the clauses—I apologise that these are somewhat technical and legalistic in nature. Clauses 1 and 2 authorise the use of resources by Northern Ireland departments and other specified public bodies, amounting to £27,403,514,000 in the year ending 31 March 2024. In short, these clauses authorise the use of resources to that amount by departments and other specified public bodies for the purposes set out in Part 2 of the schedule estimate.
Clauses 3 and 4 authorise the Northern Ireland Department of Finance to issue out of the Consolidated Fund of Northern Ireland the sum of £22,790,893,000 for the year ending 31 March 2024, and the use of that sum to finance the expenditure that departments will need cash to fund. In short, these clauses allow the Department of Finance to allocate actual cash.
Clause 5 authorises the temporary borrowing by the Northern Ireland Department of Finance of £11,395,447,000—approximately half the sum covered by Clause 3. This is a normal safeguard against the possibility of a temporary deficiency arising in the Consolidated Fund of Northern Ireland, and any such borrowing is to be repaid by 31 March 2024.
Clause 6 authorises the use of income by Northern Ireland departments and other specified public bodies from the sources specified in Part 3 of the schedule estimate, for the purposes specified in Part 2 of the schedule estimate, in the year ending 31 March 2024.
Clause 7 provides for the authorisations and limits in the Bill to have the same effect as if they were contained in a budget Act of the Northern Ireland Assembly. It also modifies references in other pieces of legislation to the Northern Ireland estimates that would normally form part of the Assembly’s supply process.
Clauses 8 and 9 are self-explanatory, in that they deal with matters such as interpretation and the Short Title.
The schedule to the Bill sets out the estimates for each Northern Ireland department—that is, the amount of money authorised for use, the purposes for which it can be spent and other sources of income from which it can draw. For each department, Part 1 of the schedule estimate sets out the amount of resources authorised for use by each Northern Ireland department and other public bodies, and the sums of money granted to each Northern Ireland department and other bodies, for the year ending 31 March 2024. Part 2 of the schedule estimate sets out the purposes for which resources and money can be used by each Northern Ireland department and other bodies for the year ending 31 March 2024. Finally, Part 3 of the estimate sets out the sources from which income can be used by each Northern Ireland department and other body for the year ending 31 March 2024. I apologise again for the technical and legalistic nature of those clauses.
Before I conclude, I make a short statement on legislative consent. Clearly, we have been unable to secure a legislative consent Motion from the Northern Ireland Assembly, given that it is currently not sitting. Of course, if it were sitting, we would not have needed the Bill at all. However, the continued absence of the Assembly and the Executive means that we have been left with no other option but to take action here in the United Kingdom Parliament.
I hope I have provided your Lordships’ House with sufficient detail on the background to the Bill, the necessity for it and the intended effect of each provision within it. I commend it to the House. I beg to move.
Lord Caine (Con)
My Lords, I am very grateful, as ever, to all noble Lords who have contributed to this important debate on the budget. In particular, I acknowledge the kind words of the noble Lord, Lord Weir of Ballyholme. To continue his “The Godfather” analogy, I set out the budget provisions today and made the DUP an offer that it certainly has refused.
At the outset, picking up on the words of the noble Lord, Lord Murphy of Torfaen—for whom, as I have said many times, I have a huge respect—and the noble Lord, Lord Bruce of Bennachie, and others who have spoken about the restoration of the Stormont institutions, there is nothing I would like more than to stand at this Dispatch Box and announce the restoration of the institutions and a fully functioning Executive and Assembly. I am a firm supporter of the 1998 agreement, as are His Majesty’s Government. As I said at the outset, we are working tirelessly to try to bring about that situation. I am not in a position, as noble Lords will understand, to give a commentary on progress. My right honourable friend said earlier in the week that some significant progress has been made. Noble Lords behind me have pointed out the issues around the Windsor Framework that still need to be resolved before they feel confident to go back into an Executive. Just to be clear, His Majesty’s Government never felt that they were justified in pulling out of the institutions in the first place—and before any of them stand up, my comments would apply equally to the actions of Sinn Féin between 2017 and 2020. We believe the right place for the Northern Ireland parties is within the Executive running local services for the benefit of the people of Northern Ireland.
My right honourable friend has made some progress. In response to the comments of the noble Baroness, Lady Ritchie of Downpatrick, I can assure her that we are not talking to just one political party in Northern Ireland. Shortly before the Summer Recess, I spent a day with all five major parties in Northern Ireland, and my right honourable friend is in discussions with all of them constantly and will continue to be so. However, she will understand that one party is having difficulty going back into the institutions, and therefore it is right that we seek to look at and address its concerns.
I will not go into the details on the Windsor Framework, as many noble Lords here were present for the very long debate held in Grand Committee on Monday, where my noble friend Lord Ahmad of Wimbledon set out extensively and clearly the Government’s position. To reiterate briefly, we believe that the Windsor Framework provides the basis for the restoration of the institutions, but we will continue to work through these issues with the hope of an early resolution.
In the absence of that, a number of noble Lords raised the role of the United Kingdom Government, including the noble Lords, Lord Alderdice and Lord Bruce of Bennachie, and the noble Viscount, Lord Brookeborough. As the noble Lord, Lord Murphy, pointed out, we have given powers to civil servants to take certain decisions in the public interest in Northern Ireland essentially to keep public services moving. As I said when I introduced the legislation—the Northern Ireland (Executive Formation etc) Act and the Northern Ireland (Interim Arrangements) Act—this is not intended for the long term. These are not sustainable measures for the government of Northern Ireland. The priority has to be to get the institutions back. In the event that that is not possible, we will obviously have to look at what further interventions might need to take place from the United Kingdom Government consistent with our position as the sovereign Government within Northern Ireland. So we do not rule that out, but our priority has to be to work to get the institutions up and running.
A number of noble Lords referred to the allocation of funding in the budget. I am the first to acknowledge to your Lordships that this is a difficult situation and a difficult budget, as noble Lords have pointed out. Unfortunately, it is a reflection of the reality in which we find ourselves, or which the Government found themselves in in October last year when Northern Ireland Ministers vacated their departments under the rules. They left office, and we had to start working with the Northern Ireland Civil Service on the figures and initially uncovered a £660 million black hole in the finances. So we have been working very closely and in tandem with the Northern Ireland Civil Service in order to address that situation. I am the first to admit that it is challenging, and I pay tribute to the head of the Northern Ireland Civil Service and the heads of the Northern Ireland departments for the work that they have done with my officials in the Northern Ireland Office to try to establish a basis for putting Northern Ireland’s finances on a sustainable and longer-term footing.
A number of noble Lords referred to individual departments and programmes within individual departments. I am happy to write to noble Lords on that. I do not intend to go into the details of each programme, not least because of time but also because, while the Government have set out the allocations within the budget, within each department it is then for the Permanent Secretaries and officials, absent of political direction from Ministers, to determine the individual allocations internally. The Government have, under the current legislation, no powers to direct or control civil servants within departments on the spending of money and the allocations for individual programmes. However, I will just pick up briefly on the points made by the noble Viscount, Lord Brookeborough, who made a very good and powerful pitch for his local hospital in Fermanagh. I am aware of the difficulties, of course, but it is for the Department of Health to allocate funding from its budget of £7.3 billion. We have no powers to direct it, but I acknowledge that he makes a very powerful case.
What I would challenge is the assertion made by a number of noble Lords on the DUP and Opposition Benches that Northern Ireland has suffered from chronic underfunding over a number of years. I remind the House that public spending per capita in Northern Ireland is some 20% higher than the UK average. The settlement in the 2021 spending review was the most generous since the restoration of devolution in 1998-99.
There have been numerous occasions, to which I can testify, when—to follow the noble Lord, Lord Murphy of Torfaen—the Treasury has recognised the exceptional circumstances of Northern Ireland. In the 2014 Stormont House agreement, with which I was involved, there was an additional £2 billion of extra spending power for the Northern Ireland Executive. There was an extra half a billion in the fresh start agreement in 2015, an extra £1 billion in the confidence and supply agreement, and more money—I think over £2 billion—in New Decade, New Approach. The Government have recognised the unique circumstances of Northern Ireland and I reject the assertion that it has somehow been starved of cash since 2010.
However, I listened with interest, as always, to the noble Lords on the DUP Benches—echoed, to some extent, by the noble Lord, Lord Murphy—about the reform of the Barnett funding formula. Following our last budget debate some months ago, the noble Lord, Lord Morrow, and his colleague the noble Lord, Lord McCrea of Magherafelt and Cookstown, came to see me. We are, as a Government, open to sensible suggestions and discussions around funding. However, I would point out, as noble Lords have, that in respect of the funding reforms in Wales following the Holtham commission, that was a conversation between the United Kingdom Government and the Welsh Government—not a conversation between the UK Government and just one party in Northern Ireland.
These matters are, as has been acknowledged, principally for His Majesty’s Treasury. They would normally take place from Government to devolved Administration. As other noble Lords have pointed out, the negotiations over the Holtham commission took some seven years to resolve. Even if there were a case for reform, and that reform were agreed, it would not necessarily be an overnight fix for the problems or issues we are dealing with in the budget today.
The noble Baroness, Lady Ritchie of Downpatrick, and the noble Lord, Lord Murphy of Torfaen, referred to revenue raising. I point out that it was his noble friend Lord Hain who was the first, I think, to put water charges on the table back in 2006-7, before the restoration of the Executive in 2007 following the St Andrews agreement. The position is that the Government have taken the power and directed the Northern Ireland departments to look at revenue raising or potential revenue raising measures. Those departments reported to the Government some weeks ago. We are now looking, in the absence of an Executive, at directing the departments to consult on some of the options they have presented to us. However, we are not in a position to implement any of those recommendations; we do not have the powers. The purpose of the exercise is to present a range of options for an incoming Executive to examine once devolution has been restored. It is clear that, if the Northern Ireland budget is to be put on a sustainable footing, there will have to be a combination—obviously—of difficult spending decisions and some revenue raising.
I am conscious of time. I listened, as always, with enormous interest and respect to my mentor on many of these matters, my noble friend Lord Lexden, who reminded me of the role of two heroes of mine: Bonar Law and Stanley Baldwin in the 1920s in respect of Northern Ireland. I am tempted to add a third great unionist Prime Minister, Sir James Craig, who was instrumental in the 1920s and 1930s in establishing the funding settlement for Northern Ireland, which has lasted many decades. My noble friend said he regrets the fact that the word “unionist” is no longer used in my party’s name as much as it was. I can assure him that I have always made it clear that I regard the term “unionist” as being as important, if not more so, in our party’s name as “Conservative”—but that is probably a personal view.
My noble friend and the noble Lord, Lord Weir of Ballyholme, raised the role of the Irish Government. I assure both of them that, of course, matters regarding the budget are entirely strand 1 issues and internal Northern Ireland and United Kingdom matters. Of course we discuss many issues with the Irish Government, but, in the absence of an Executive looking at the budget, it remains that decisions over the budget are entirely for the United Kingdom Government. There is no formal role for the Irish in that, and rightly so.
My noble friend also referred to the words of the Taoiseach earlier this week in respect of a united Ireland. I echo my right honourable friend the Secretary of State’s comments that they were not necessarily the most helpful in the current context. Noble Lords will know that the constitutional position of Northern Ireland is clearly set out in the Belfast agreement, based on the principle of consent. There is no indication whatever that there is anything but a substantial majority for the union and Northern Ireland’s continuing position within it, and I warmly welcome that. This Government’s view is clear: there is no inevitability about a united Ireland, nor is it desirable. The best future for Northern Ireland is within a strong and stable United Kingdom.
I have tried to answer as many points as possible, and I have probably been speaking for slightly longer than I anticipated. If there are any other issues, I am of course happy to take them up outside the Chamber in meetings and correspondence with noble Lords.