Northern Ireland Budget (No. 2) Bill
Monday 10th July 2023
(9 months, 3 weeks ago)
Commons ChamberRead Full debate Northern Ireland Budget (No. 2) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
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.
Peter Kyle (Hove) (Lab)
I am grateful to the Secretary of State for setting out the measures in the Bill. Northern Ireland Departments are in a challenging position, and this budget will at least give them some certainty to allow public services to remain functioning, but that should not take away from how this budget has been received in Northern Ireland. Civil servants, who have to make decisions based on it, are operating in the most difficult of circumstances. I pay tribute to them, as the Secretary of State did. They should not be in this position.
This Bill will not create new money, but will allow Departments and public bodies in Northern Ireland to spend within the limits the Secretary of State set out in the written ministerial statement in April. It confirmed that the Government will no longer require the £297 million overspend from the 2022-23 Budget to be repaid to the Treasury this year.
Before going into the allocations before us, it is worth reflecting on the situation in Northern Ireland and how power-sharing might be restored. On my recent trips to Northern Ireland, there has been a pervading sense that the Government have allowed things to drift since the celebrations for the 25th anniversary of the Good Friday agreement. We have a new agreement with the EU in the Windsor framework, but Stormont has not been restored. Indeed, the main purpose of the framework was supposed to be answering the concerns of the Democratic Unionist party so that Stormont could work again. When we passed the previous budget, there was a clear expectation that a new agreement would lead to the restoration of the Assembly and the Executive. Instead, Westminster has had to step in with the Northern Ireland (Interim Arrangements) Act 2023 and, now, this second budget Bill.
Mr Gregory Campbell (East Londonderry) (DUP)
Was the hon. Gentleman’s attention drawn to a report in The Daily Telegraph on Saturday, where a Marks & Spencer senior executive pointed out that some of the issues they were promised would be resolved through the Windsor framework and the green lane and the red lane are far from being resolved?
Peter Kyle
I am grateful for the hon. Member’s intervention. He will know my personal view, which is that the outstanding issues relating to the Windsor framework and the protocol could be resolved from within the Executive and the Assembly. However, there are clearly outstanding issues. I hope that the Government will help to resolve them. They have said in various forms that they are willing to engage with different measures from legislation through to other sets of negotiations. I hope that they will happen apace and that the hon. Member and members of his party and all parties in Northern Ireland are as involved as is physically possible so that there can be the engagement that I believe was lacking in previous negotiations.
As an Opposition, we always want to be constructive when it comes to Northern Ireland, and I am grateful for the Secretary of State’s acknowledgment of that. We are concerned, though, that the wrong lessons have been learned from the Windsor framework negotiations. On Wednesday 21 June—for the benefit of our friends in Hansard, who are working so hard, I refer to volume 734—the Secretary of State said:
“The one thing that I did learn from the Windsor framework negotiations is that confidentiality in modern-day British politics and western politics is key in trying to get anything over the line.”—[Official Report, 21 June 2023; Vol. 734, c. 779.]
I am not sure that that holds true in the present circumstances.
There is a strong argument that the secrecy of the Windsor framework, after months of secret talks, left it lacking local ownership and local legitimacy. I understand that the Secretary of State is not going to spell out every detail of what the Government are doing, but providing some basic information would reassure Parliament, the public and, above all, people in Northern Ireland and those who represent them here in Westminster and in Stormont. I would be grateful if the Secretary of State confirmed whether he intends to bring forward primary legislation to address the Windsor framework. Is that still on the cards? He has mentioned it several times. I noticed in his answers to recent oral questions that that is still open for debate. It would be really good to know whether the House will be getting primary legislation—it has been requested and he has hinted at it—and when we could expect it. Are the Government instead seeking a renegotiation with the EU?
There is also the question of whether the Irish Government have a part to play in this. I was interested to read that student nurses in Northern Ireland will now be funded by the Republic. Is the Secretary of State having discussions about other financial contributions in these extremely challenging times?
Another option available to the Secretary of State is calling an election, but I am sure he agrees that it is highly unlikely that that course of action would resolve the current impasse. We do need to know what the way forward will be and what the Secretary of State believes will see Stormont return to active service on behalf of the people of Northern Ireland.
Returning to the Budget before us, the Northern Ireland Affairs Committee inquiry into the funding and delivery of public services has been extremely informative. I join the Secretary of State in thanking those who serve on the Committee for the work they do. The Chair of the Committee, the hon. Member for North Dorset (Simon Hoare), has always said that we should decouple the issues surrounding the protocol from the public finances and restoration of Stormont. The evidence before his inquiry has been illuminating. Even before Stormont collapsed, the inquiry found that long-term pressures on public services were not being addressed.
I also pay tribute to the excellent work of the Northern Ireland Fiscal Council, which has moved the debate forward on the sustainability of public finances. It is impressive that such a new institution has already become such an authority. In its report on this budget, it says that
“the NI Civil Service believes that Departments may still need to find £800 million in cuts and additional revenues not to overspend again, given other budget pressures.”
That is a huge amount of savings to find when Northern Ireland is facing the same challenges as the rest of the country. We should put on the record the views of some of those who have already been most affected by those decisions. In particular, the challenges facing the Department of Education highlight the deficiencies in setting a budget from Westminster in the way we are today and as we have previously.
Following the intervention by the hon. Member for Worcester (Mr Walker), I will go into a little more detail on that. I hope that the Secretary of State or Minister of State will respond in winding up. These comments, by the Department of Education permanent secretary, Dr Mark Browne, come directly from an extraordinary press release on the Department’s very own website:
“The Department’s vision for all children is that they will be happy, learning and succeeding. Delivering on this is particularly challenging in the current budgetary context, especially in terms of addressing the needs of our most disadvantaged children and young people.”
In its assessment of the budget, the Department said that the 2023-24 allocations result in a non-ringfenced resource funding gap of £382 million, equivalent to 14.8% of the final budget allocation required for 2023-24. It states:
“Managing resource shortfalls of this magnitude will undoubtedly have a significant and adverse impact on the Department’s ability to deliver educational services in 2023-24.”
Paul Girvan (South Antrim) (DUP)
The hon. Member has highlighted an area in which I have serious concerns—the policies being put forward relating to our civil service, our Department of Health and the contracts that are costing not just Northern Ireland but the United Kingdom a fortune. We are tied in by that. The Departments depend so much upon monitoring round funding during the year to make up some of the shortfall. Our monster Department of Health has swallowed all that, and will continue to do so until we have major reform, not just in Northern Ireland but in the UK too, because the same contracts apply all over.
Peter Kyle
The hon. Gentleman highlights the chronic need for investment and reform in Northern Ireland. One in four people in Northern Ireland is on an NHS treatment waiting list. We have already examined in some detail the challenges in the education system. We really need to get things moving and modernised in Northern Ireland. In my view, that should come from a partnership between the Westminster Government and Stormont. We should all be working together to focus on the big issues, because people’s needs depend on it. That is why we must urgently get over the hurdles to restoring Stormont as quickly as we can, to focus on those primary issues, which are also the primary concerns of residents across Northern Ireland that Members here tonight represent.
To return to the quote from the Department, in practice that means the ending of a wide range of schemes meant to benefit children. So far, that has included Engage, Healthy Happy Minds, the school holiday food grant scheme and many more. However, significantly, a range of early years programmes will continue—thank goodness. That is after the Department produced an analysis of the impact that ending them would have on people’s lives. In the words of Dr Browne:
“In considering the scale and cumulative impact of the proposed cuts, which represent a major change to long standing Ministerial programmes and policies, I am of the view that such a decision should be taken by a Minister, not a Permanent Secretary.”
In effect, that is a senior civil servant saying that it might not be possible to work within the budget without a Minister taking decisions. That is not just an issue for the Department of Education. A recent report from BBC Northern Ireland said:
“DfI officials believe they lack the legal authority to take measures necessary to balance their budget.”
I will not take up much more time because I want to allow voices from Northern Ireland to have their say on what the Budget means for them and the residents they represent. The Minister needs to be clear with the House whether we will need more legislation to provide clarity on the decisions being made as a result of this budget. We will not oppose the budget, as Departments have been working to its allocations for months already, but the best solution remains the restoration of Stormont, so that local representatives can get on with the budget and political accountability there. I urge Government to get on with the measures that would make that a reality.
Robin Millar (Aberconwy) (Con)
Members will be aware of my keen interest in all things the Union. In truth, I had intended not to speak but to come, listen and learn from colleagues from across the House who in many ways are much more closely attached to these issues than me.
I will start, as my right hon. Friend the Secretary of State did, by thanking all those concerned for the amount of time and effort they have put into resolving these issues. They are tricky issues that have vexed minds finer than my own for many years in many different ways. In particular, in recent months I have noticed how much effort the Government have put into trying to resolve things. The Secretary of State has taken a very close personal interest in these matters, as has the Prime Minister through the efforts on the Windsor framework. I recognise and acknowledge that, as well as the involvement and effort of Opposition Members in the negotiations and ongoing discussions.
I want to tiptoe carefully into this debate by asking some questions around the context, in particular picking up on a couple of comments the Secretary of State made from the Dispatch Box. On the introduction of the Barnett formula to the discussion, while I understand the potential attraction of that kind of settlement, from a Welsh perspective I urge caution. I would not by any means describe the Barnett formula as a settled matter in Wales. I would urge caution about a move to a needs-based formula. In Wales, we have an economy—I say that word almost in quotation marks—that is largely public sector dominated. It is not a functioning economy in the way that we might think is vital, with the role of the private sector in driving, growing and sustaining the wider community, so the provisions are questionable.
The first point I want to speak to relates to institutions. The Secretary of State mentioned good governance and, several times, made points about the democratically elected representatives in Northern Ireland. That is really important, because we have elected Members in Northern Ireland, both in this place and in Stormont. As I understand it—I am happy to be corrected by any Member here—those Members have acted within the rules of that institution. The fact that Stormont is not sitting is a technique that has been used by others in previous years. It is not new; it is not original. It is a function of the arrangements we have in place.
Colum Eastwood (Foyle) (SDLP)
My grandmother once told me that two wrongs do not make a right. Is the hon. Gentleman making the argument that just because Sinn Féin brought the Executive down for three and a half years, it is okay for the Democratic Unionist party to do the same?
Robin Millar
I am not sure how the hon. Gentleman got there from what I said, but that is not where I am going. That is absolutely not where I am going. I simply made the observation that they had done it and that others were doing it, and that validated the existence of a mechanism in place which people have used. That is all I said.
The point I would make, though, is that if there is a democratically elected body and the mechanisms within that institution are being used, how is that not upholding the institution in place? If that is the case—the function of the institution and the rules that underpin it are being upheld—what is the good governance that the Secretary of State is seeking? Is he seeking something else? Is he seeking something outside the rules that are in place to uphold that institution?
Sir Jeffrey M. Donaldson
I thank the hon. Member and my friend for giving way, and for his interest in the Union. He is making a very important point. For some, it is convenient at times to talk up the need for cross-community consensus and to talk about the rules. It is less convenient for them at other times, when the rules are followed and people play by the rules. When things happen that undermine that cross-community consensus, then unfortunately the rules mean that our institutions do not work to the extent that we would like them to. Therefore, rather than howling at the moon, is it not better that we fix the problem and restore the consensus?
Robin Millar
I thank the right hon. Gentleman for his intervention. That is where I am heading with my next point.
As I said, I tiptoed into this. I am very conscious that others are much closer to these issues than myself. I offer my comments because I think, from the little I understand, these are important points of context for what is happening and what we are seeing.
Finally, the Secretary of State has made the astute point that money alone cannot solve this. I think it was the hon. Member for Strangford (Jim Shannon) who said that some extra £7 billion has been put into Northern Ireland. Somewhere along the line, the United Kingdom has moved from an understanding of a covenant among the different parts to one of a contract; we have become very transactional in our understanding of things. I would just make the observation that that does not fix things. It does not fix the relationship.
At the heart of the issue, as I understand it—the Minister may comment on this point in his summing up, if he sees fit—is a relationship and a covenant, not a contract. It is about identity and a place within the Union, as expressed through trading relationships. We have been brought to a point at which Stormont has not been sitting, which is why we have this item of business before us today. I will not keep the House any longer; I thank hon. Members for their forbearance in listening to my questions.
Richard Thomson (Gordon) (SNP)
May I begin by expressing my personal disappointment that once again we are here passing measures that should rightly be passed in Stormont? I will add a significant caveat: I had hoped that we might be able to get through today’s proceedings without some of the finger-wagging homilies that we have heard in the past from Members on the Government Benches about the need for Northern Ireland to get its public finances in order, as if the political position in which Northern Ireland finds itself had absolutely nothing to do with the choices of this Government or their predecessors. Some difficult political choices are absent from the measures that we are set to move on with today. The very reason that we are here having to pass them is the political chaos that the choices of this Government and previous Governments have inflicted on the body politic in Northern Ireland over Brexit, and through a Brexit that is still clearly not done.
The first thing to note about the Bill is that, although it might be called a budget Bill, it is quite clearly no budget in any meaningful sense. At any level of government, local or national, a budget is or should be a statement of the political and policy priorities of that government reflected in the allocation of resources. Instead, what we have here is a series of spending limits, absent any kind of reflection of current political priorities or choices that might be made. It is a kind of financial salami-slicing in the shape of the ghosts of ministerial policy decisions past.
In our debates on the Northern Ireland (Interim Arrangements) Act 2023, the right hon. Member for East Antrim (Sammy Wilson)—I hope I am quoting him substantially accurately—said that the return of an Executive would not remove the budget challenges that are currently being faced in Northern Ireland. That much is certainly true, but it is also true that in the absence of clear political choices it becomes much harder to meet those budget challenges through proactive, positive decision making—about cost-saving measures, yes, but also about potential cross-cutting efficiencies and, fundamentally, about what is to be valued and protected above all else when it comes to spending in the public realm.
That heaps the pressure unfairly on public sector management, civil servants and those on the frontline, but, as ever, those who stand to lose out the most are those who are most dependent on the public services facing those cuts: predominantly those who are least well-off and have the least opportunity to influence the political debate in Northern Ireland.
I think it fair to say that the dismay at some of the outcomes of the budget process across Northern Ireland is palpable. The trade union Unite has highlighted that cuts to the Department for Infrastructure threaten not just health, but public safety. The Northern Ireland Construction Group has warned that the cuts will affect every sector, citizen and visitor to Northern Ireland and even put people at risk of serious harm. The charity Children in Northern Ireland has warned that the cuts threaten to push community groups and charities
“to the brink of collapse”.
A joint report by Ulster University, Newcastle University, Queen’s University and Stranmillis University College has warned of an “unremittingly bleak” outlook for young people and education as a result of these measures, warning that they “are disproportionately impacting” the most disadvantaged children and young people in our communities. The report speaks of
“far-reaching and serious consequences of the cuts to the education budget”,
pointing out the disproportionate effect that the cuts have on pupils from disadvantaged backgrounds and stating that
“those children who are most disadvantaged will most acutely feel the pain of this budget laid down by the Secretary of State”.
It concludes that
“the cuts executed will have a devastating impact on those children most vulnerable and furthest from opportunity”.
I am sorry that the right hon. Member for Chipping Barnet (Theresa Villiers) is no longer in her place but, in her intervention on the Secretary of State, she asked how much additional resource currently comes from the UK Government to support policing in Northern Ireland. That figure is £32 million—a figure that I am pleased to say accords exactly with the figure given to me by the Secretary of State in answer to my question on the PSNI at Northern Ireland questions a few weeks ago. However, that £32 million pales into near insignificance in the context of the £141 million budget gap facing the PSNI. The chief constable has said that the budget gap can be met only by further reducing officer numbers, at a time when police officer numbers in the PSNI are at their lowest since 1978 and the PSNI is already some 1,000 officers below the recommended establishment figure from the beginning of the force’s life. Real consequences arise from this situation, not only for public services and the social settlement but for the security that people can expect in their community and, of course, for the broader security situation, which is still rated as severe by the Government’s security agencies.
I could go through any number of budget lines that are affected, but I do not think that would necessarily do us a huge amount of good at this stage, so I will begin to draw my remarks to a conclusion by referring to the September 2020 report published by the Equality Commission for Northern Ireland on the Department of Finance’s preparation for Northern Ireland’s 2019-20 budget. The report set out a number of findings and recommendations on the Department’s failure to comply with its own equality scheme commitments. In doing so, it outlined some key aspects of the Secretary of State’s role in the budget process.
Although the Secretary of State is not a designated public authority for the purposes of section 75 of the Northern Ireland Act 1998, his Department and the Department of Finance are. The report concluded:
“the Budget for Northern Ireland…is a policy and within scope of the Department’s equality scheme arrangements and commitments...
The decision maker on the policy was, on this occasion, the Secretary of State. The Secretary of State was responsible for not only deciding upon the Budget, but also discharging the statutory duties in Section 75 in relation to the Department’s functions, as well as for all the other government departments.”
Although the findings of the Equality Commission for Northern Ireland are clear that the Department of Finance was a focus of its investigations, the Secretary of State was and remains responsible not only for deciding the budget but for discharging the equality duties set out in section 75.
Will the Secretary of State, or the Minister of State, Northern Ireland Office, the hon. Member for Wycombe (Mr Baker), in his summing up, elucidate on what he understands his section 75 duties to be? How can he demonstrate in this process that he has complied with those duties? Does he have any plans, even at this stage, to produce and consult on an equality assessment of the overall budget measures before us today?
I conclude on a measure of agreement, as the Secretary of State, the shadow Secretary of State and I can all agree that the best people to take decisions of this kind are those who have been directly elected to the Northern Ireland Assembly. I well understand the reasons we are here now. I have certainly never been shy about offering my advice to this Government and their predecessors on how they might look to solve some of the self-inflicted difficulties they have created over Brexit. The Government have unaccountably shown a marked reluctance to take up my advice, no matter how well meant, but, given that the Windsor framework has clearly not landed as was hoped, I sincerely urge the Secretary of State and his ministerial team to redouble their efforts to bring about a political environment in which it might be possible to restore Stormont, and therefore restore local political decision making and accountability.
Sammy Wilson (East Antrim) (DUP)
As the Secretary of State has said, tonight’s debate and the Bill are simply to allocate money, which we have already decided on in previous debates, to various Departments. Although I made a promise to the Minister of State when we discussed this on Thursday that we would try to stick to the debate on the budget and try not to wander into the Windsor framework, Brexit and the Northern Ireland protocol, the issue of—
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.
Robin Millar
I do not want to interrupt the right hon. Gentleman’s flow, because I am fascinated by his argument. The point I made was that in Wales, for example, it is £1.20 for every £1 spent in England. However, as much as we are told by the Welsh Government that there is an older and sicker population in Wales, it does not account for the fact that, in terms of education, we have tumbled down the Pisa ratings. The point that I was making was that it is not just about the quantum. Has the right hon. Gentleman any suggestions as to how that money might be spent more effectively in order to achieve the better outcomes?
Sammy Wilson
I think the point that I made was an indication of that. It is not just about getting money so that we can spend it willy-nilly and not care about how it is spent. It must be spent in the best way possible. If we take education in Northern Ireland, for example, we have five different sectors, and in some cases a surplus of desks and, therefore, unnecessary schools that could be closed, amalgamated or whatever. The irony of this—this is where I take issue with some of the decisions by the Northern Ireland Executive—is that one of the last acts that the Assembly undertook was that, despite the surplus of places in existing schools in Northern Ireland, special provision had to be given to opening new schools that had “Integrated” above the door. This was despite the fact that there are stacks of schools that do not have “Integrated” above the door, but that are more integrated than some integrated schools. That will result in additional pressures on the education budget. I am not so sure that some of the decisions made by the Executive on how the money is spent are always the best.
There is one in the area of education and in the area of health as well. I know I am going to incur the ire of some of my own colleagues, and maybe some other hon. Members, by saying this, but in Belfast we have four major hospitals. Four major hospitals for a city of—what? Some 300,000 people? Are there really not better ways of spending that money to ensure proper health provision? Yet we spend it—[Interruption.] And that is exactly the debate that has to be had.
Claire Hanna
Does the right hon. Gentleman acknowledge that the Bengoa report outlined how we could tackle that reform and get ourselves to a more sustainable delivery, but that the Assembly has been collapsed for, I think, four of the six years since that that report was delivered, and that only way we can deliver those reforms, necessary as many of them may be, is in a restored Executive?
Sammy Wilson
That is the whole point. Ministers have had the Bengoa report, as the hon. Lady says, for years. They have never acted on it. Indeed, some of the health reforms that were acted on and some of the politically difficult changes that were made in Health were made by a DUP Minister. We have given the lead on trying to deal with some of the spending issues. However, even with those savings, there are still the issues of fairness, of whether the Budget is sustainable, and of why we are not implementing in Northern Ireland the kind of budget reallocations that are implemented in other parts of the United Kingdom.
We will find the issues arising from this budget coming back to the Floor of this House time and again, because Departments are not going to be able to work within the existing budgets. Furthermore, since the Minister indicates that the Barnett consequentials that should be coming through will not come through this year because of the overspend in previous years, when it comes to the payment of nurses, teachers and so on, there will be greater pressures on the budgets of various Departments across Northern Ireland. I do not know whether those are reflected in this budget. That is why it must be accepted that, until the Government are prepared to look at measures that create the grounds for the formation of the Executive again, this issue will rest with the Secretary of State and he will have to take responsibility for it.
Colum Eastwood (Foyle) (SDLP)
I think we are really through the looking-glass now. It is great to hear real unity from those on these Benches about the problems that exist in Northern Ireland’s public sector and the budgetary difficulties that we have. It would be a lot better if members of our political parties were saying it in a different Chamber that has responsibility for bringing in budgets for the Departments of Northern Ireland, for dealing with the health service, the education system, the police service and all those other areas of public policy that we need to deal with as a matter of urgency—but I will let that one hang.
It is interesting to listen to the Secretary of State, because he has let the cat out of the bag. It is absolutely clear that this Budget is a tactic to put pressure on the DUP, but actually he has swung, missed the DUP and instead hit the most vulnerable people in our society. Is it the responsibility of a child with special educational needs and disabilities in a school to get the DUP to go back to work? Is it the responsibility of an elderly patient waiting for a hip replacement—remember, one in four people in Northern Ireland are on hospital waiting lists—to get the Executive back up and running in Northern Ireland? No, it is not. This is a callous, cack-handed attempt at political positioning and it clearly is not working.
Not that long ago, I brought the Secretary of State to watch a football match in Derry. We did not get to watch the whole match because it was interrupted by a bomb scare, but he listened to me—he had no choice, because he was sitting right beside me for most of the match—talking about the difficulties in the city and the need for proper investment in drug and alcohol recovery. He was sitting in the Ryan McBride Brandywell stadium. Ryan McBride was a wonderful captain of Derry City who sadly died far too young. There is a foundation in his name—the Ryan McBride Foundation—which does fantastic cross-community work with schoolkids in all types of schools right across Derry and Strabane, but it has had its funding to deliver those projects cut.
We are nearly at the point where the Ryan McBride Foundation will not be able to exist if it does not get replacement funding. That is one thing that has resulted from cuts being made to our budgets. The Foyle cup will see thousands of young people coming to Derry next week to play football—people from all around the world—but it is now under pressure because of cuts from these decisions.
We are actually talking about cutting funding for university places. We should be trying to expand university places in Northern Ireland. I hear from the Secretary of State and everybody else that skills are the No. 1 issue for turning the economy around, but we are talking about cutting away at that as well. We are cutting Invest Northern Ireland—the people who are tasked with bringing jobs to regions of Northern Ireland.
Others, including the shadow Secretary of State, talked eloquently about the issues in our Education Department. We have cut the holiday hunger payment for the most vulnerable kids in our society—that is what we are doing. It is absolutely shameful. A number of weeks ago, I went to see Bunscoil Cholmcille, a school in my constituency. It is a great Irish-medium primary school. Those kids are being taught in huts with holes in the walls and damp in the cupboards—the place is falling apart. It will have its 40th anniversary next year. It is a wonderful school doing great work in our community, but we are teaching kids in huts that are falling apart, and rain is getting through the roof. We cannot even pay our teachers or classroom assistants the wages that they should be entitled to.
We have already talked about the massive issues in the PSNI, and although we are told that there is £32 million extra for it, there is a massive hole in that budget. A police officer was nearly killed a number of months ago because people in Northern Ireland are trying to kill police officers, and they would if they could get away with it. And we are telling them: “You have to find cuts in that budget as well.” The implementation of the domestic abuse, stalking and people-trafficking legislation cannot get done because of a lack of funding.
Our community sector is being absolutely decimated. Community groups, particularly in the most difficult and disadvantaged areas of Northern Ireland, have stepped into the void during decades of difficult times. They are stepping into the void where Departments are not dealing with the issues that they have to deal with, but we are going to decimate those groups as well.
We have talked about health. I hear all the time about transformation in health and the waiting lists that we have. We cannot do anything about those if we do not put money in up front. Yes, we absolutely have to take tough decisions, but health needs to be properly funded and resourced so that we can do that.
All the while, there is €500 million in the shared island unit to fund projects in Northern Ireland. The Irish Government are investing in Northern Ireland. Only two or three weeks ago, I was able to secure £38 million to expand the university at Magee in Derry. We have seen support from the Irish Government for the Narrow Water bridge. And lo and behold, the Department of Health in Dublin is funding 250 nursing and midwifery places at a cost of €10 million. That is only the start of the investment that the Irish Government are making in Northern Ireland.
Maybe we need to think about that. We do not even sit in Dáil Éireann and we are able to bring that kind of money into our communities in Northern Ireland. Imagine the impact that we would have if 20% of Teachtaí Dála in Dáil Éireann came from Northern Ireland. [Interruption.] I think some people sitting not too far away from me have done an awful lot for the cause of Irish unity, and I am very grateful to them for it.
We hear a lot about the Barnett formula, and it is useful that we discuss how the funding envelope is decided, but it is maybe also worth considering why we need so much underpinning from the British Government. Has the economic unit of Northern Ireland ever really worked to its full potential? I would argue that it has not. I think that is a discussion we will have in the coming years, and I look forward to having it in a respectful manner.
If the Secretary of State is serious about getting the DUP to go back to work in Stormont, I will be with him in that endeavour, but it is long past time that a time limit was put on this nonsense. Have the discussions, have the debates, work with the Government—I am all for all of that—but we need to be back in government, dealing with the people’s problems and the people’s concerns. If that does not happen, we cannot have this kind of direct rule by the back door, because the next step in that—people should listen to this—has to be greater involvement of the Irish Government in the affairs of Northern Ireland.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I share the disappointment that we are here today expressed by the Minister, my hon. Friend the Member for Hove (Peter Kyle), and the hon. Member for Gordon (Richard Thomson). We should not have to be here discussing this, although I appreciate that we have already made a decision about the budget and that this was absolutely necessary to enable Departments to spend.
I, too, pay tribute to the civil servants who are having to make very political decisions while labouring—I hope—under Managing Public Money and making sure that they are making proper financial decisions. Nevertheless, every decision they make on a budget of this nature will cause political repercussions. They have been put in an unenviable position.
I rise to speak about a specific element of this budget. I wrote to the Minister about this, so I hope that when he winds up, the Minister of State will address the matter directly. The Northern Ireland Audit Office is critical: with no Assembly sitting and no Executive, it is the only body able to scrutinise spending by public bodies in Northern Ireland; it audits 150 public bodies. Of course, without the Assembly sitting there is no Public Accounts Committee in Northern Ireland, so the NIAO is the only body that is able to do that work. It is critical that it does so.
We all know the importance of the National Audit Office here in the United Kingdom. It is a much bigger body, and as the Secretary of State, a former member of the Public Accounts Committee, knows, it does invaluable work, not only training Ministers to manage budgets but making sure on behalf of the British taxpayer, through Parliament, that those budgets are spent properly. Independent of the Executive and appointed independently of the Executive, the Comptroller and Auditor General has the powers to investigate, without fear or favour, every area of public spending in England and parts of the United Kingdom.
The Northern Ireland Audit Office is a much smaller operation, ably headed up by the Comptroller and Auditor General for Northern Ireland, Dorinnia Carville. She, like the UK Comptroller and Auditor General is totally independent of Ministers, of Government Departments and of all the public bodies that her office audits. The NIAO has 115 staff—it is a much smaller version of the UK NAO, which has over 950 staff—and an annual budget in the region of £9 million, so it is very small in the context of this budget. About 0.06% of the block grant goes to the Northern Ireland Audit Office, but as the Secretary of State knows, it has a significant impact.
The amount of money saved by the national audit bodies is significant in the grand scheme of things, so it is disappointing to me that the budget of the Northern Ireland Audit Office has been reduced by £515,000. I think that will store up problems for the future. Very disappointingly—I am particularly disappointed in the Secretary of State on this point—that reduction was made without any meaningful conversation or agreement with the Comptroller and Auditor General for Northern Ireland, which is a required position. That amount of money will have a substantial impact on the ability of the Northern Ireland Audit Office to deliver its work, and with the only scrutiny that is going on in Northern Ireland being through that audit office, it is really important that that work takes place.
I also worry greatly that if the Northern Ireland Audit Office is not able to do its work, the pressure on the UK Public Accounts Committee—which I have the privilege of chairing—will be immense. We have already had to examine the implementation of the energy support grant, which came directly through the then Department for Business, Energy and Industrial Strategy and was implemented in Northern Ireland through that route. Unusually, we found ourselves scrutinising direct spending in Northern Ireland. I was very grateful to the hon. Member for Belfast South (Claire Hanna), who was able to guest on our Committee—we felt very strongly that we needed at least a voice from Northern Ireland on the Committee to explain what the impact was there—but neither myself nor any members of the Public Accounts Committee desire to have a regular role in scrutinising the work and affairs of public bodies and Departments in Northern Ireland. That is rightfully the role of the Public Accounts Committee of Northern Ireland, which we hope will be up and running again, as we hope that the Assembly and the Executive will be up and running again.
I am concerned that the Comptroller and Auditor General for Northern Ireland had no engagement with the Secretary of State or the Northern Ireland Office when arriving at the Budget. Only a couple of weeks ago, she told the Northern Ireland Affairs Select Committee that her only conversation with the Secretary of State and the Northern Ireland Office was via the Department of Finance, and she only learned of her budget on its publication. She had modelled various options and put them forward to the Northern Ireland Department of Finance, but when they were in turn put forward to the Secretary of State, he put forward three options, none of which reflected what she had modelled. There had been no engagement with the Northern Ireland Audit Office.
That is a serious constitutional issue—in the middle of a much bigger constitutional issue, yes, but nevertheless it is very important. If we cannot have a strong and independent Comptroller and Auditor General with their own national audit body, properly funded and supported, that is a real concern, but the fact that the Northern Ireland Audit Office’s funding was not properly discussed with it is a really serious matter. It is through this Parliament and the Public Accounts Commission that we decide on the resources that are given to the United Kingdom’s National Audit Office. It is not at all appropriate that an Executive should control or direct an audit institution’s access to resources. I cannot get my head around why that could have happened, because it is absolutely vital that it does not. I hope the Minister will directly address that point.
I will finish by underlining the problems that can arise when audit gets weak. The Public Accounts Committee, which I chair, has looked repeatedly at the challenge of local government audit in England. We have seen a dearth of public auditors, which has contributed to late audit opinions: very many councils now have not had audit opinions, not just for one year but for two. That has left councillors, council tax payers, and certain officers of those councils blind as to the decisions they are making. A number of councils have serious financial problems, and for some, that is partly because of this issue. In the past, strong local audit in local government has helped to keep councils honest, straight and true. I have great respect for local councils and councillors— I myself was a councillor before entering this place—but we have seen a real, direct impact of that weakness in audit among English councils, and we are seeing that creeping tendency with hospitals in England, too.
We fiddle with this issue at our peril, and in the grand scheme of things, half a million pounds is a lot of money. The Northern Ireland Audit Office will not be able to carry out its work without that money, so I hope the Minister will address that point directly in his response. Perhaps he will even commit to going away and looking at what the impact will be. Could he or the Secretary of State please commit to having a face-to-face conversation with the Comptroller and Auditor General for 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.
Stephen Farry (North Down) (Alliance)
It is somewhat opportune to follow the hon. Member for Belfast East (Gavin Robinson), as before I talk about the role of the UK Government and the real budget crisis that we are facing, I have to say that, listening to him, the House would almost get the impression that the DUP was not an actor in the current debacle that we are facing and that it is a passive actor or a commentator on the sidelines. DUP Members talk about frustration, people sitting on their hands and nothing moving forward. I remind him that we are now more than four months on from the Windsor framework being concluded, and still we have no Executive and Assembly restored. Indeed, we are more than 16 months on from the Executive being brought down and still we have no progress being made.
I would be the first to recognise that an Executive would not be a silver bullet for our problems—there will still be a major budget crisis whenever an Executive is restored—but having an Executive is fundamental to providing some type of framework, a strategic approach, democratic accountability and transparency and proper scrutiny of what is happening. That allows us to plan ahead. It allows decisions to be taken on a cross-departmental basis. It allows us to protect areas that are crucial for the medium and long terms. Those are all things that an Executive can and should be doing.
In Northern Ireland, the frustration is not over the pace of what is happening and whatever fix awaits us around the Windsor framework; it is over the absence of an Executive. The business community—every single business organisation—trade unions, the community and voluntary sector, health professionals and education sector people are all saying that they need an Executive and an Assembly back, and the DUP is sitting in defiance of that strong message from those people at the coalface. Every time they say, “Here’s what the Children’s Law Centre are saying” or, “Here’s what the education sector are saying”, they are selectively quoting because all of them are saying, “Get back round the table and work together for the good of the people of Northern Ireland.”
There is a real danger here. The DUP, in its own terms, is out there to try to save the Union because it believes that the Windsor framework undermines it. That is not my opinion; that is the DUP’s analysis of the situation. In trying to save the Union, in its own terms, it is in danger of killing the Union. It is saying, “We need to restore devolution only when there is a solid foundation in place.” Through its boycott of the Assembly, it is shaking Northern Ireland’s very foundations to their core. It is in real danger of doing real long-term damage not just to its own cause of the Union, but to the social fabric of Northern Ireland—our ability to have a functioning economy, to have a proper functioning health service that delivers for people and to have a proper education system. That is what is at stake at present. I urge the DUP to reflect seriously on its current route.
I turn to the UK Government. It has to be said that there is a certain air of unreality to what we are discussing today and indeed to the Bill. I recognise that it has fallen to the Secretary of State to intervene with both the written ministerial statement and this legislation, but we are not on a viable and sustainable pathway in terms of our public services and economy, budget management or governance. Something has to give and give very soon. The cuts themselves are illogical and counterproductive and they will bring long-term damage. We need to see reform and investment, but what we see is a spiral of cuts and a burning platform.
Northern Ireland is falling behind on a range of indicators. Members regularly highlight problems in the health service across Great Britain, for example, problems with waiting lists, access to GPs and access to dentists. Northern Ireland is struggling on every one of those issues and not just a bit more—it is significantly worse. We are falling behind on educational attainment and productivity. Whenever we look at the context on the island of Ireland, the contrast is ever stark. Life expectancy in the Republic of Ireland is now two years ahead of Northern Ireland; 20 years ago, it was the other way round. Things like that are happening through this decline.
On budget management, we see a major mismatch between what the guidance under the Northern Ireland (Executive Formation etc) Act 2022 says and the expectations that the Government are placing on civil servants. It is limited and contradictory. The civil service cannot initiate new policy and cannot tackle areas that are statutory responsibilities. That means that non-statutory areas have been disproportionately targeted, with cuts on things such as early intervention and prevention: actions that are vital not just to address opportunities for people but to avoid much steeper costs downstream that will have to be picked up in due course. Those costs may be with us for many years to come thereafter.
The Departments cannot live within the current control expectations placed on them. The Northern Ireland Departments collectively are overspending to the tune of £100 million a month. So one of three things will have to happen over the next few months. We may see the status quo continuing, which will lead to a massive overspend by the end of the financial year, which will be kicked into next year or subsequent years and become an albatross around Northern Ireland’s neck for many years to come.
Alternatively, we may see the Government recognising that this is unsustainable and intervening through a more formal version of direct rule, trying to balance the budget over the remainder of the year. That will mean even deeper cuts because trying to manage cuts over a six-month window is much more difficult than over 12 months—and doing it over 12 months is bad enough. If they go down that route, that will bring major carnage. By far the most benign scenario involves the Government and Northern Ireland parties agreeing on some form of a national package linked to a restored Executive. Of course, that negotiation would be much better done from the place of a functioning Executive, but whether it is before, after or during that reformation process, that discussion has to happen. I dare say that, from the Government’s point of view, the prospect or reality of a restored Executive will be a precondition for anything moving in that regard.
I welcome what the Secretary of State has said about the Alliance party’s proposals. We are talking about a process of stabilisation, which can become a platform for wider transformation. We cannot make Northern Ireland sustainable from that burning platform. So we have to invest to save and we need a genuine, multi-year plan. A certain degree of discipline from all the Northern Ireland parties over many years will be required to ensure that they abide by a programme for Government, if that is to be delivered. I imagine that there will be a degree of conditionality in what the Government will say in that particular regard. My party is certainly up for those discussions over the next few weeks. We welcome what the Secretary of State has said today and look forward to engaging with him over the next few weeks in that respect.
We also have the governance crisis, which I already touched upon. We need the Executive and Assembly back to provide that coherent structure for managing the situation. With a functioning Executive, we will be in a much better position to have those discussions around not just the financial package but the Barnett formula and addressing that squeeze.
I welcome what the Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), said about the Northern Ireland Audit Office. What she said reflects the importance of respect for the independence of that body. I would add that the same points and logic extend to the Northern Ireland public service ombudsman. I concur with what the Scottish National party spokesperson, the hon. Member for Gordon (Richard Thomson), said about the Government’s response to clarify section 75 duties and exactly how they have been taken forward in relation to the Budget.
Although I have perhaps said a few harsh things, there is a positive future for Northern Ireland if we can get this right. Northern Ireland is a great place, but it needs a Government to deliver. With a coherent Government, and with parties genuinely committed to working together, we can push ahead with invest to save. We can see what opportunities lie on the island of Ireland for certain economies of scale. On a purely economic and social level, we can do things without entering into the wider political and constitutional debate. We can address the cost of division—the duplication that comes from running parallel services. We can potentially see the reform of the Barnett formula, which will give us a proper needs-based platform from which to proceed. We can invest in prevention and support our community and voluntary sector.
Over the next few weeks, there are important decisions to be made. If people do not step up and if we do not get this sorted, the future of Northern Ireland will be bleak. If we can get it right, the future is hopeful. I want to optimistic about that future.
Carla Lockhart (Upper Bann) (DUP)
It is deeply regrettable that we find ourselves in this situation once again. Sometimes, the Democratic Unionist party gets accused of not wanting to be in the Stormont and the Executive. To be clear to all Members across the House, we are a party of devolution and we want devolution restored in Northern Ireland. We want to take the decisions in the Stormont because budget decisions are best taken there. We know that, while our electorate want us to be back in the Stormont taking those decisions, they also clearly want us to ensure that cross-community consent is restored in that Assembly. That was the message on the doorsteps during the local government election. Although some will want to ignore that view, we will not.
Time is a precious commodity. Wasting time is not something I would indulge in—anyone who knows me will know that. There has been a criminal waste of time resolving issues with the protocol and the Windsor framework. Those issues could be quickly and easily resolved by the Government. Drift is not acceptable anymore. There was no drift when abortion laws were forced on the people of Northern Ireland. There was no drift just a few weeks ago when legislation on relationships and sexual education was forced on the people of Northern Ireland. There was no drift when Sinn Féin demands on Irish language legislation were introduced. When there is will from the Government to do something, they do it very quickly.
On a daily basis, economic harm is being caused to the people of Northern Ireland, with the continued placing of a border in the Irish sea resulting in Northern Ireland’s place in the UK being continually undermined. Businesses and industries are being impacted and competitiveness is being undermined, yet there is continued drift on the part of the Government. There is no urgency. Often, there is not even a recognition of the problems caused to businesses by the Windsor framework and the protocol. We hear much from colleagues about the idea that the Windsor framework has resolved all the issues.
I challenge all Members to speak not to the trade bodies, but to the businesses that are being impacted. Speak to the manufacturing industry, speak to the agriculture industry and speak to the horticulturalists in Northern Ireland who are still experiencing massive problems with the implementation of the protocol and, subsequently, the Windsor framework. What I want to see, on the back of this budget debate, is a change in attitude to addressing the most fundamental issues that are impacting Northern Ireland and keeping our Executive down.
Turning to the Bill, my first point is more general and has been made today several times. We welcome the Government’s commitment to look at this issue, but my hon. Friend the Member for Belfast East (Gavin Robinson) has been to the fore and most effective in pressing for a review of the Barnett formula. I believe that debate is gaining traction—it is becoming abundantly clear at our weekly Northern Ireland Affairs Committee meetings. I welcome the Secretary of State’s intervention today, but in truth we are again placing a sticking plaster over the financial needs of Northern Ireland, unlike our Welsh counterparts who enjoy a needs-based financial allocation. We can see clearly that this budget is about short-term financial decisions and is not based on the needs of the people of Northern Ireland, including the needs of the people in my constituency of Upper Bann. We want a restored Executive.
Robin Millar
The hon. Lady used the phrase “enjoying a needs-based allocation”. I would contest that. My concern is the risk that we end up in a spiral, with a kind of Top Trumps of deprivation. Who is the most deprived? They get the biggest sum. Does she not agree that there is a risk to attaching a purely needs-based assessment to allocations?
Carla Lockhart
The reality is that the Barnett formula across the United Kingdom, in all the different nations, is needs-based. It is important that we do not just give Northern Ireland an amount of money, but drill down to the actual needs. On whether that means tinkering around with what has worked and what has not worked in Wales, we are more than willing to enter into those conversations, and use the Welsh model as a baseline and improve on it. Hopefully, if we can make improvements in Northern Ireland, they can be transported to Wales as well.
Sammy Wilson
Does my hon. Friend agree that a financial allocation made on a purely needs basis would provide the resources to start addressing some of those needs? For example, if there were a high number of people claiming unemployment benefit because they had mental health problems, money could go into the health service to deal with those problems and get them into work, or for people unemployed because they did not have skills, the money could be used on technical education to give them the skills so that they could get back into work. The vicious circle that has been spoken about could be addressed by having the resources to deal with that.
Carla Lockhart
Absolutely. I thank my right hon. Friend for his intervention.
We want a restored Executive not only to have firm cross-community consensus, but to be able to transform and deliver services effectively. For that, we need financial equipping based on need. As my right hon. Friend has indicated, those needs are really to the fore. If I think of my constituency, I think of the educational underachievement and the health needs. Those are the things we need to drill down into and fund adequately; if we do not, Northern Ireland will continue to be short-changed.
The Northern Ireland Office has recently been seeking to provoke discussions around revenue-raising measures. There is no question but that we are up for those discussions, but we cannot escape the fact that the Treasury’s contribution to funding public services in Northern Ireland is going down rather than rising. Spending up to 2025, for example, will increase by 6% in England but only 3.6% in Northern Ireland.
I have a specific concern about the impact that the policing budget will have on communities. The right hon. Member for Chipping Barnet (Theresa Villiers) made a very helpful intervention on that subject: it was a stark reminder that the terrorist threat level in Northern Ireland is severe. In that context, we just cannot continue to ignore the concerns that the chief constable and the Police Federation have raised in relation to the capability of our police force.
Despite the commitments in New Decade, New Approach to grow our officer numbers to 7,500, the stark reality is that we are now on a trajectory towards 6,000, largely because of a failure to prioritise policing in our Province. The truth is that there is a risk of the headcount dropping further, unless the Government urgently deliver the financial firepower that local policing is crying out for. In an intervention on my right hon. Friend the Member for East Antrim (Sammy Wilson), the Secretary of State made the point that that is on the Executive, but I would put the ball back into his court: it was an agreement in NDNA. When there was a language issue in NDNA, this Government very quickly helped and intervened, yet on the policing issue they have not gone far enough. The NIO claims to support the excellent work that the PSNI does. It needs to back up that claim and actually financially support it.
Similar challenges exist for health, education and roads. Time does not permit me to list the challenges that I am seeing daily in my busy constituency office, so I will draw my remarks to a close on the time issue. The time for the Government to act on funding for Northern Ireland is now. The time to act to review the Barnett formula is now. The time to take the necessary steps to restore cross-community consensus for devolution is now. It would be wholly unacceptable and utterly reckless if time were allowed to pass and we found ourselves passing another budget Bill in this place, as opposed to in Stormont.
Claire Hanna (Belfast South) (SDLP)
For the past five years, any budget that we have had has been delivered—sometimes fairly chaotically—here, not in Stormont. For the past decade, we have limped along with one-year allocations and without a new programme for government. Public services are at a genuinely precarious point, as colleagues have indicated; I might touch on that point.
It has to be pointed out, as we look at the context of this budget, that those factors are the consequences of two specific pernicious features of our politics over the past decade. The first is the austerity politics that have been practised by successive Conservative Governments and are being foisted on the people of Northern Ireland with no visible care for public services, let alone for how we create a better and more sustainable economic future or tackle the chronic challenges that are contributing to the financial drain.
The second factor is boycott politics, which are being practised by the DUP right now and have been practised by others in the recent past with, clearly, no real regard for how that affects devolved government and public services, how it gradually wears people down, or how it gradually undermines the belief of the people of Northern Ireland that elections matter, devolution works and politics is the way to do things.
Sir Jeffrey M. Donaldson
At the risk of becoming a history lesson, may I remind the hon. Lady that between 1982 and 1986, following democratic elections, the SDLP refused to take its seats for a single day of the lifetime of that Assembly, at a time when people were dying on our streets in their thousands?
Claire Hanna
I am happy to correct the right hon. Gentleman’s history lesson. That was not a power-sharing Government, and I remind him that subsequently, in 1998, the overwhelming majority of the people of Northern Ireland made a different choice. They said, “We want to work together, in our substantial common interest, in devolved institutions that put power in the hands of our people from all backgrounds and traditions.” That is the choice before us, but unfortunately the Government are choosing austerity politics and the DUP is choosing boycott politics.
The thing that links those two toxic trends is Brexit. When the Government say there is not enough money to spend on public services, it is in large part because, as every forecaster suggested, Brexit has been economically disastrous. It is also a consequence of the disastrous Budget pushed by the previous Prime Minister. Brexit and the kamikaze Budget were the Government’s choices, and it is now their choice to inflict this budget on the people of Northern Ireland.
When the DUP says it cannot take responsibility for its share of governing Northern Ireland, it is because of the DUP’s choice for a bone-hard, bone-headed Brexit. Despite all the protestations we now hear about the lack of consensus and the DUP’s deeply held concerns not being listened to, for many years of the Brexit process the DUP refused to take on board the advice and pleading of many of us about the consequences of what we were being walked into.
Sir Jeffrey M. Donaldson
That is simply not true. One of the reasons why the DUP stated very clearly that it cannot support a hard border on the island as a result of Brexit was to take account of nationalist concerns. If only that had been reciprocated and nationalists had taken account of our concerns about an Irish sea border, we would not be in the situation we are in today.
Claire Hanna
I would be happy to give way in a moment if the right hon. Gentleman wants to tell me about any proposals or votes he made in this House with a view to achieving a solution that has the consent and consensus of all the communities. I was not a Member at the time, but I spoke at meetings in this House on a borderless solution being the only outcome without a sense of winners and losers.
As I say, this has been about choices. I do not doubt that the DUP’s concerns are sincerely held but, on the choice to boycott politics, not a single thing is advanced by having no Government. Not a single technical concern about the Northern Ireland protocol or the Windsor framework is addressed by not having a Government. It is a choice, and we want a different choice. We want devolved government based on the common good and Northern Ireland’s huge economic opportunities, and devolved government in which the SDLP can play a constructive role in opposition. To that end, we have already published our detailed triple-lock proposals to protect public services from these sharp, short-term cuts while creating a pathway to much better long-term governance.
If the DUP continues to immiserate our politics, and if the Government continue to press ahead with this budget, more fundamental choices will present themselves. The first choice is to reform Stormont’s Standing Orders to make sure that one party can no longer hold up the formation of a Government. And if the DUP insists on creating the sense that Northern Ireland, as a unit, cannot work, the second choice is to realise the potential of all our people in a new Ireland back in the European Union. Especially when people are told that devolution within the UK is no longer available, the SDLP will pursue that aim vigorously and with honour, based on reconciliation and the potential of all our people.
That is a big choice about our future, but there is also a here and now that this budget does not serve well. Colleagues from across the House have highlighted some of those impacts. On infrastructure, our ability to address climate change, let alone things such as road safety, is hampered. The PSNI is facing its numbers falling to their lowest level, at a time of not just security threat, but increasing complexity of the issues it deals with, particularly on mental health. Across the economy, regions that are doing well are doing well by leaning into their economic potential and their successes, but instead we are cutting things such as the arts sector and Northern Ireland Screen, and we are cutting the budgets of Tourism NI and of further and higher education. All of these cuts undermine all of the flagship strategies about our economic future, particularly 10X. I am not sure where we can start on health and education, and I hope to be able to explore those areas in more detail in a Westminster Hall debate next week.
Schools have not been on the pig’s back at any point that I can remember, but the projected shortfall of £200 million is catastrophic. One of the many things not being covered is a much-awaited pay deal for the most shamefully undervalued parts of the workforce, SEN classroom assistants. That could lead to further strike action, which literally hurts the most vulnerable children, including those at Glenveagh School in my constituency, who have already picked up much too much of the slack of the politics.
In health, we know that a standstill budget is, in essence, a cut and that we are doing nothing. We talked a lot in this House last week about a workforce plan, none of which reaches Northern Ireland. The Chairwoman of the Public Accounts Committee rightly highlighted cuts to the Northern Ireland Audit Office and NIPSO—the Northern Ireland public services ombudsman. Those are problematic in practice and in principle, because at many times in the past few years those bodies, particularly the NIAO, have provided some of the only scrutiny we have had. They have acted as an effective opposition in some cases to aspects of Government waste and failure to reform.
In practical terms, discretionary spending is all but gone. Even permanent secretaries, who, as we know, do not like to dabble too much in the politics, are asking the Secretary of State to resolve that tension for them and asking how they reconcile their statutory duties with the budget they have. I hope that one of the Ministers can clarify the position. If their section 75 duties are always followed, as they say they are, will they clarify whether those section 75 assessments are content with the scale and depth of these cuts? What steps have they taken to identify and mitigate the impact? Have they received any advice about an overarching equality assessment?
Will the Secretary of State also clarify whether the Government have taken into account the long-standing guidance as well as the Equality Commission’s investigation into failings in the preparation of the 2019-20 budget? What lessons were learned from that? Finally, the UK has been a signatory to the UN convention on the rights of the child for at least three decades, so will he clarify what regard they have given to the UN committee’s recommendation that this budget be withdrawn and replaced with something that protects the rights and needs of children?
The budget is unworkable and it is a false economy. It is storing up so many problems, both in terms of democratic grip in Northern Ireland and in public services. Devolution has never been more needed. People in Northern Ireland feel that they are part of a political game that they are not playing and that is being played on them. I urge all of those with the ability to make these choices to stop practising austerity politics and to stop practising boycott politics, and to do so as soon as possible.
Mr Deputy Speaker (Mr Nigel Evans)
In calling Jim Shannon, I just want to say: do not forget to leave some time for the wind-ups, Jim.
Jim Shannon (Strangford) (DUP)
May I say what a pleasure it is to speak in this debate? I am pleased to follow the right hon. and hon. Members who have already contributed. My colleagues have clearly set out the case so far: there is a problem with the Northern Ireland budget. With respect, the Secretary of State, assisting those who wish to force the DUP—the hon. Member for Foyle (Colum Eastwood) referred to this and the tactics of pushing the DUP—towards an unfit regional government, seeks to blame the lack of an Assembly on the difficulties facing Northern Ireland. However, the facts as outlined by my colleagues are abundantly clear: the Government are underfunding Northern Ireland.
We are committed to making the Northern Ireland Assembly work. That is not in any doubt; but what we are also committed to is making sure that we address the Windsor agreement and the Stormont brake, which sidelines Unionists. Hon. Members should not just take my word for that; they should listen to Bertie Ahern, who has indicated that we cannot sideline Unionists when it comes to finding an agreement, and Tony Blair, who has said likewise. If we want an agreement that moves forward, do not ignore Unionism; make Unionists part of the agreement. It seems logical to do that, but sometimes that seems to get lost.
I am a very straightforward man, and I always try to be honest and forthright in my dealings. I am someone who believes in speaking the truth. I try to biblically speak the truth in love, and sometimes I fail in that, because I am a human being, and that makes me fallible. Today is going to be another stretch, because the absolutely unfair treatment of Northern Ireland by this Government is difficult to remain calm about. Some examples of that would include how hard it is for a family in my constituency to look at their 66-year-old father, who should be looking forward to retirement but is crippled, awaiting a hip replacement for the last six years. His health is getting worse, and there is still no hip replacement for that gentleman, and there are many like him.
It is hard to look at the 41-year-old cancer sufferer who, because of funding concerns, is waiting to hear if her treatment plan will be passed, and even more difficult to look at her three young children, who do not understand that their mother’s treatment comes with a price tag—the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) referred to the financial issues and how they affect the Northern Ireland budget. It is hard to speak with young families who know that their child needs additional help to achieve their educational and vocational potential, and yet there is no funding for a classroom assistant to keep their child in mainstream education, or for their child to move to a special ability school.
We have energetic, hard-working and committed community groups, who do so much in my constituency of Strangford—and indeed in everybody’s constituency, to be fair. It is hard to see tremendous community programmes, which are making a difference in communities, torn apart by the troubles in Northern Ireland. We have had some focus on paramilitary activity in my constituency and that of the hon. Member for North Down (Stephen Farry) over the last period of time, so we know only too well what is happening. Those community groups are closing their doors, as funding stops.
It is hard to look at all this and know that my own Government understand it, yet are unwilling to do the right thing—the thing that they have rightly done by my Welsh counterparts and their constituents. It is hard to know that constituents in Wrexham and Glamorgan have their needs recognised through the Holtham formula, yet Strangford residents are second class. As has been made abundantly clear, the formula is a UK formula, and the UK Government have accepted it as such. If they rejected it now for Northern Ireland, they would have to reject it for Wales. Yet here we are, with an underfunded budget and a Northern Ireland Office that blames the DUP for this issue. The budget is set in this House, as is clear from today’s proceedings, and that budget is unacceptable, as many speakers—indeed, all of them—have established.
Forgive me if I am repeating what others have said, but the penny does not seem to have dropped in some quarters. Let me be clear, when the argument is made that the only way to sort out the Barnett formula is by returning to Stormont, that will not help by itself, because the funding problem is still there and still real. My hon. Friend the Member for Belfast East (Gavin Robinson) outlined the disparity in the Barnett formula, and indeed the Holtham formula. Wales had what should have been the hardest battle. It was the first country to be damaged by Barnett, and the Government knew that logically, in accepting the Holtham formula for Wales, they must also do so for Northern Ireland and Scotland. That is the argument of my hon. Friend the Member for Belfast East and my right hon. Friend the Member for East Antrim (Sammy Wilson), and it is my argument as well. Wales won the argument, and it necessarily won it for the rest of the Union. Going forward, it matters not who makes the point, because the Government have accepted the Holtham definition of need.
As my right hon. Friend said, if 0.7% of that was made available, there would be £322 million of extra money for the Province. Let us think what could be done with that in all our constituencies. Education in my constituency of Strangford could be greatly helped. We have been waiting for the college in Glastry for some time—the price is about £14 million, and the land has been set aside and already purchased by the education authority. That could be built if that £322 million was available. The schools across Strangford could have a wage increase for their teachers and their classroom assistants. Primary schools could have the renovations and repairs they need. West Winds primary school comes to mind as just one of those that has been waiting for some time to get necessary renovations and repairs.
When it comes to roads, I make this point honestly and clearly, with no disrespect to the manager of the road service in Newtownards, whose budget has not increased by the amount that it should have. There are roads across Ards that need urgent resurfacing but that cannot be carried out. If the £322 million mentioned in the briefing provided by the Northern Ireland Office was available, Mark Street, Mill Street, Beverley Heights and Beverley Road could be resurfaced, for example, and that money could make a difference.
I continue to represent the interests of the fishing fleet at Portavogie to the council and the Northern Ireland Assembly. The boats in that fleet are, on average, 40 years old. They are not energy efficient, although they could be. Grants could make the boats energy efficient or help the fishermen buy new boats, which seems to be happening in Scotland and parts of England and Wales. Again, that £322 million could make that difference.
I am minded to think about the police. I am a great believer in community policing, which is under pressure. I know the right hon. Member for Chipping Barnet (Theresa Villiers) will be introducing an Adjournment debate and referring to the importance of police stations. In my constituency and across Northern Ireland, the role of community police is critical. They are the eyes and ears of the police. They can make policing better and improve the methods that the workforce uses. When I look at what could make a difference to my constituency of Strangford, and the whole of Northern Ireland, I am clear that that £322 million that we should be getting, but are not, would make a difference and make lives better.
Facts are clear, and I will conclude with that point as I am conscious of the time you have given, Mr Deputy Speaker. The truth has been spoken and now we are looking for our Government to simply do the right thing by my Strangford constituents, as has been done in every other constituency. Stop punishing the elderly, the ill and our children, and do what has been done in the rest of this United Kingdom. Meet the needs of Northern Ireland as an integral part of this United Kingdom, as it is clear we still are. Actions mean more than words: speak clearly and plainly today. I look to the Minister for his response. On behalf of my constituents in Strangford, and those in the whole of Northern Ireland, speaking clearly and plainly today is my ask of the Northern Ireland Office.
Peter Kyle (Hove) (Lab)
I thank Members from the across the House for participating so fulsomely in the debate. As always in these debates, there have been contributions packed with erudition, with insight into the topic at hand and with frustration about the situation in which politics in Northern Ireland finds itself at this time.
We have also heard from people who have entered the debate for the first time, so I am grateful to the hon. Member for Aberconwy (Robin Millar) for, in his words, “tip-toeing” into a debate on Northern Ireland. He did so with aplomb, especially by mentioning an issue quite innocuously, from his perspective, but tumbling into a pointed debate afterwards. That marks a characteristic entrance into debates about Northern Ireland, and I wish him many more going forward.
It is clear that we cannot keep setting budgets in this way and that structural problems in Northern Ireland are getting worse, in the absence of an Executive. In particular, the health service in Northern Ireland is creaking and has the worst waiting lists in the United Kingdom. The former Northern Ireland Health Minister, Robin Swann, gave evidence to the covid inquiry last week. He highlighted the impact that the collapse of power sharing between 2017 and 2020 had on health care. According to the BBC:
“Mr Swann said that the health service suffered from a lack of reform, strategic direction and long-term planning during that political hiatus.”
In his view, that “hindered” the pandemic response in Northern Ireland.
There is an obvious need for a budget that allows longer-term planning than we are debating tonight.
The other essential service to which I wish to draw attention is the Police Service of Northern Ireland. Policing in Northern Ireland faces unique challenges. I wish to pay tribute to every officer who keeps communities safe. Last month, the PSNI gave evidence to the Northern Ireland Affairs Committee on the impact that the financial pressures will have on the service that it delivers. This was the subject of an intervention from the former Secretary of State, the right hon. Member for Chipping Barnet (Theresa Villiers), early on in this debate. It was also referenced in a speech by the hon. Member for Foyle (Colum Eastwood). On the headcount, the PSNI said:
“Last year, we reduced the officer headcount by 300 to 6,700. This year, a further reduction will take us to 6,300.”
If this trajectory is maintained, we will see the police service go to below 6,000 officers by March 2025. It is deeply concerning that the PSNI is very far off meeting the target of 7,500 officers as set out in New Decade, New Approach.
From the contributions that we have heard, I am hopeful that all parties are keen not only to restore Stormont, but to renew public services. We have heard passionate contributions, particularly around areas relating to education. The right hon. Member for East Antrim (Sammy Wilson) talked about special educational needs and the provision of school meals in his constituency. The hon. Member for Foyle mentioned Holiday Hunger, the scheme being cut that he gave voice to in this debate. The hon. Member for Belfast South (Claire Hanna) spoke about the impact on special educational needs and disabilities provision in her constituency. We also heard contributions related to other areas of public service that have been impacted by the current situation. The hon. Member for North Down (Stephen Farry) gave voice to business and the voluntary sector, which is something that has been excluded from the debate, and I am grateful to him for doing so. Moments ago, we heard the hon. Member for Strangford (Jim Shannon) giving voice to the elderly.
We also learned in this debate that the hon. Member for Foyle and the Secretary of State have been going to football together. That could be an innovation going forward, although I look forward to my invitation, too. Shadow Secretaries of State should surely not be excluded from such sporting events.
There was also an important contribution to this debate from the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier). She was most welcome here and we are all, I am sure, very grateful that she stayed this late into the evening to give voice to a really important issue—the lack of scrutiny and audit of Northern Ireland financing, particularly in periods when the budget is being set from Westminster. I am sure that the Secretary of State will respond accordingly, because she raised, in her words, “a serious constitutional issue”.
I welcome the update from the Minister on the revenue-raising measures that the Government have asked Northern Ireland Departments to explore. Has advice been received, and, if it has, how does the Secretary of State plan to act on it? There is clearly an appetite to put Northern Ireland’s finances on a more sustainable footing. At the same time, it is hard to see how that happens without an Executive. I urge the Government to make every effort to see power sharing restored, so that local representatives can agree a long-term plan with political accountability to their communities.
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).
Northern Ireland Budget (No. 2) Bill
Monday 4th September 2023
(7 months, 3 weeks ago)
Commons ChamberRead Full debate Northern Ireland Budget (No. 2) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 4 September 2023 - (4 Sep 2023)
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 First Deputy Chairman
With this it will be convenient to consider the following:
Clauses 2 to 9 stand part
The schedule.
I should point out that no amendments have been selected, so colleagues will need to speak very specifically to the clauses, should they wish to speak, but there will obviously be an opportunity for Members to contribute on Third Reading as well.
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.
Simon Hoare (North Dorset) (Con)
If I may, I will both put on record my thanks to the hon. Member for Hove (Peter Kyle) and my congratulations on his new job, and welcome the right hon. Member for Leeds Central (Hilary Benn) to his new position. I remember the speech the right hon. Gentleman gave in our debate on the anniversary of the Good Friday agreement, just before the Easter recess, which showed a depth of knowledge of, interest in and love for Northern Ireland. I am sure that the Secretary of State, the Minister of State and, indeed, the Northern Ireland Affairs Committee look forward to working with him in the weeks and months ahead.
While I understand that new clause 1, tabled in my name and that of my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), has not been selected for debate, I hope that the Minister will give some consideration to the merit that underpins the argument with regard to the maintenance of the Audit Committee, notwithstanding Stormont not being in place.
The hon. Member for Gower (Tonia Antoniazzi) is absolutely right. The delivery of public services in Northern Ireland is under huge pressure as a result of the covid backlog in health, as we know, and an increase in demand with a shrinking supply. The recent events with regards to the PSNI will clearly be putting additional pressures on other budgets as well.
The restoration of Stormont would not provide all the keys to unlock all the currently locked or semi-locked doors, but, by God, it would make a huge difference. The hon. Lady is right on that. I have said right from the start that one can understand the points and principles of the Democratic Unionist party with regard to the protocol and the Windsor framework, but I think the Government have made it clear that will not change; it just has to be made to work. The Minister in the other place has signified that there will be additional statutory instruments. My cri de coeur is one that I have made before—it has hitherto fallen on deaf ears. This is a situation affecting public services and those who are most reliant on them. Those people—protected to some extent by this necessary budget Bill—have no choice other than to use the services provided by the state and the public sector. They cannot go elsewhere. They are looking to local politicians with a depth of understanding to find the answers to these questions.
I appreciate that this is a slightly wider point, but this Bill is required—it is brought about not through the desire of Government but through necessity. That necessity could end, and it could end tomorrow. That would lead to better governance, better decision making and transformational approaches to the delivery of public services, getting more bang for the buck and a better uplift for the people of Northern Ireland. Those of us who are committed to public service should be seeking that. I therefore support the Bill, and will support the Government in any votes in Committee or on Third Reading, but it is a sad day when we have to pass such a Bill because of some who are resiling from the positions of trust to which they have been elected.
The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
I will call the right hon. and learned Gentleman, but I remind colleagues that there are Third Reading speeches and Committee speeches, and general discussion about the merits of the Bill is probably safer in Third Reading.
Sir Robert Buckland
Thank you Dame Rosie. I will trespass upon your good will by focusing on clause 1 and the necessity of what we have to pass today. I will not repeat the comments of my hon. Friend the Member for North Dorset (Simon Hoare), which I think are sadly axiomatic in a situation that is difficult and not in the long-term interests—or even the short-term interests—of the people of Northern Ireland. It is certainly not in the interests of sustainable public services.
On the Northern Ireland Affairs Committee, we hear time and again from interested groups from the voluntary sector and the third sector in Northern Ireland about the difficulties they face with the absence of long-term planning and multi-year budgets, and the effect on their ability to retain and hire people who can do the important work of providing and helping to support public services, whether in the field of health, education or disability, for example.
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.
Hilary Benn (Leeds Central) (Lab)
May I begin by expressing my thanks to my predecessor, my hon. Friend the Member for Hove (Peter Kyle), who has already been mentioned this evening, for the outstanding contribution he made in this role and to wish him well in his new job?
It is clear from the debates during the Bill’s passage that the current situation was not sustainable, hence the need for the Bill. Public services are under strain. Indeed, the Minister has just said that the pressures are acute and I agree with him. It is noticeable that the Bill has been widely perceived as a budget that does not take account of those needs and those pressures. It is clear that we cannot keep setting budgets in this way and that the structural problems in Northern Ireland are getting worse in the absence of an Executive. It is not fair or right to ask civil servants to make decisions which politicians should be making. The political vacuum in Northern Ireland is having serious consequences. The crisis facing the police service is all too evident—we discussed that earlier today in the urgent question—and the Secretary of State heard many references to the financial pressures it is already facing, never mind the costs that may arise from responding to the data breach. But there are concerns about other Departments, too. NHS waiting lists for Northern Ireland are the worst in our country. There are reports that Northern Ireland schools are only now being surveyed for structural weaknesses caused by reinforced concrete. If that finds that costs are required to be met to repair or replace those roofs, will that money have to come out of the budget set by the Bill? I understand that the Secretary of State has received advice from civil servants about possible revenue-raising measures. How does he plan to use them? Will they be published?
Those and other challenges are the stuff of Government. It is what we are elected to deal with wherever it is that we sit, but that is not happening in Northern Ireland at the moment and it needs to in the interests of its citizens, a point made very clearly by the hon. Member for North Dorset (Simon Hoare), who chairs the Northern Ireland Affairs Committee. On Second Reading before the recess, the Secretary of State said:
“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.”—[Official Report, 10 July 2023; Vol. 736, c. 101.]
Now, we would all wish that that had happened but, as my hon. Friend the Member for Gower (Tonia Antoniazzi) pointed out, it is not entirely clear what was done over the summer by the Government to try to bring the Northern Ireland parties together. We know that the Prime Minister was very happy to visit Northern Ireland after the Windsor framework—a great achievement, but it was meant to restore power sharing—but his absence since has been noticeable. And it is not clear, to be honest, what the Government’s plan is now to regain trust, including by responding to the continuing concerns expressed by the Unionist community in Northern Ireland to enable the institutions to get up and running again.
The Labour party does not oppose the Bill as to do so would cause deeper instability, but, as I think everybody who has contributed so far tonight has said, the best and only way forward is the restoration of Stormont so that local representatives can get to grips with the budget and be accountable to the people who elected them, the people of Northern Ireland, for the decisions they make. Frankly, that day cannot come soon enough.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the Scottish National party spokesperson.
Richard Thomson (Gordon) (SNP)
I, too, welcome the right hon. Member for Leeds Central (Hilary Benn) to his new position, and I look forward to working alongside him as we discharge our respective roles in opposition to the Government.
I will begin with the now customary bromide that we all wish we were not here to discuss this, and that all the relevant decisions should be made in Stormont, which should be up and running again, scrutinising a functioning Executive—but the fact is that we are back here, and, as I said on Second Reading and as other Members have also said, this is not a budget in any meaningful sense. It is about the allocation of money and what it can be spent on, but it is devoid of any political steer for the emerging priorities and challenges facing communities in Northern Ireland. It is a hospital pass given to the civil servants who have been left to administer, effectively, a salami-slicing exercise with little more than the guidance that they
“must control and manage expenditure within the limits of the appropriations set out in Budget Acts”.
Even within that total, however, the budget has reduced the overall amount available to departmental budgets in Northern Ireland, which means that funding is heading in the opposite direction not only to the pressures of inflation, but to demand for public services and the pressing need—in a cost of living crisis—to negotiate a fair set of settlements across the public sector. Overall, even with the spending decisions that can lawfully be taken at the moment, Northern Ireland is heading for a budget overspend of about £500 million. Expressed like that, it just sounds like a big number, but it is a big number with enormous consequences, and, as ever, those who will be affected are the most vulnerable groups in society, the least well off, and those who are most dependent on public services.
It is not my intention to go through every line of the budget and all the programmes that will be cut, the services that will be reduced and the areas in which people will simply have to do with less in the absence of decision making. However, it is plain that ministerial decisions are urgently needed for the setting of a budget with the necessary strategic direction, which can provide the clarity that will enable the civil service to work with it and deliver not just sustainable public finances, but sustainable public services.
Let me suggest to Ministers, as gently as I can, that standing back and watching Northern Ireland’s public services suffer with less money, and observing the consequences in communities, is a tactic that will have limited effect if the intention is to drive people back to negotiations. The solution to a non-functioning and non-sitting Stormont clearly lies elsewhere. I do not underestimate the challenge that will eventually face an Executive when one can return, but nevertheless this is not the way to bring about the set of circumstances that we all wish to see. The solution that will enable Stormont to sit once again, and enable an Executive to be formed and to function, self-evidently lies elsewhere, and I urge Ministers to continue to do all that they can—to do more, in fact—to help to bring that about.
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.
Claire Hanna (Belfast South) (SDLP)
I start by thanking the hon. Member for Hove (Peter Kyle) for his service as Opposition spokesman. He was an enthusiastic and frequent visitor to Northern Ireland, and that was always appreciated. I warmly welcome the right hon. Member for Leeds Central (Hilary Benn). His is a widely welcomed appointment; he is a very substantial person and I just hope he is not regretting his life choice having watched this evening’s debate.
I will not rehearse all that we and others said on Second Reading, except to say that this is, unfortunately, another milestone of failure, delivering this budget in this place. It is another blow to public services and to public faith in politics in Northern Ireland. As we said before the summer, this is about choices. Every budget that everybody has to make faces choices, some of which are difficult and will not be popular with everybody. However, the choice to withhold government is one rejected by the overwhelming number of people in Northern Ireland, of various different backgrounds, most of whom, whatever our differences, want to choose devolved government, hard work, partnership and compromise, as my party is doing. Yes, that includes compromise on constitutional issues, which many of us do every day of our lives when our identity does not match up exactly in every way with the Government we have. However, we work at it and we work on the common ground, in the interests of all the people.
In the interests of protecting those services, on Second Reading we put forward our detailed triple lock proposals, which were a way to protect services from the short-term sharp cuts and to create a pathway to longer-term reform that the public services need. As Members will know, at this stage of this budget we have also tabled a proposal to design an informal consultative role for the Irish Government on these budgetary decisions.
Plan A is a reformed Stormont, where everybody makes decisions together. Plan B is changing the rules to allow those who want to work to do so, but we are registering the principle that hanging around for month after month, doing nothing about the challenges facing Northern Ireland, drifting into the cosiness, for some, of direct rule is just not good enough. The rest of us get to have views and opinions, and good governance as well.
This is not a proposal for joint authority, but Democratic Unionist party Members should be aware that the longer they insist that Northern Ireland cannot work, the wider, deeper and louder the conversation about our changed constitutional future will be. There are big choices ahead about our future, but also about the here and now; it is the here and now that this Budget impacts so substantially. As we outlined before, it has a catastrophic impact on health, education, climate resilience and economic opportunity.
At the weekend, the Secretary of State said that there would be no sticking plasters, but the allocations do not even allow for any healing. For example, next week Northern Ireland will host an investment conference. We will seek investment not only against the backdrop of the governance black hole but with over 100 areas of Northern Ireland that cannot be developed at the moment because of a serious lack of wastewater infrastructure. However, this Budget means that the Government—the 100% shareholder—will not invest in that infrastructure or follow the proposals made by the utilities regulator. That is literally, in a very direct way, impacting not just the environment but our economic future.
The think-tank Pivotal has produced a sobering report, which I hope every Member here will read and absorb, called “Governing Northern Ireland without an Executive”. It details the impact of the neglect and the long tail of the damage that these periods of desertion have on everybody in Northern Ireland. We have a shortfall of about £800 million and the most vulnerable have a bleak year ahead. People in Northern Ireland feel that a global game is being played with them and around them. I say to those people who manipulate the public and leave the public hanging, and then try to get them to go along with their proposals and have faith in them about the constitutional future: it is not going to work.
Gavin Robinson (Belfast East) (DUP)
It is a pleasure, as always, to follow the hon. Member for Belfast South (Claire Hanna), my constituency neighbour, but the content of my speech will be slightly different from hers.
I will not delve into the Committee stage, amendments that were tabled but not brought forward, or amendments that were needlessly provocative and stepped far away from the principles that the party that tabled them purport to stand for, but I want to talk about the Northern Ireland Budget (No. 2) Bill, which is the second such budget Bill that has been before this House this year.
When we discussed the original Bill, it was just called the budget Bill, rather than No. 1 or No. 2. We were dealing with last year’s financial position and, at that stage, Members from my party introduced the discussion around need. We challenged the Government about their understanding of need, and we were patronised at that time. We were told, without any sense of irony, shame or knowledge of the facts, that in Northern Ireland we are over-funded and get £1.21 for every £1 that is spent in England.
But still we tried to bring the conversation back to assessed need and the similar process that Wales had to go through over five years with the Holtham Commission. However, there was no sense that the position that we were outlining, identified by the Northern Ireland Fiscal Council in September last year, was a position that recognised that while our Budget may grow by 3.6%, public spending in England was going to grow by 6%, or a recognition that by the end of this financial cycle households in Northern Ireland would each be £2,000 less well-off than their counterparts in the rest of the United Kingdom, and therefore there was a budgetary problem. It has taken from January of this year to now for that seed to start germinating.
When there is a recognition in public discourse that this is a punishment budget before us this evening—this has been described as a punishment budget, which has been ignored by those in power—and no decision is taken to change it meaningfully or beneficially for the people of Northern Ireland, it will hurt us economically. We cannot systemically assess Northern Ireland public finances and know that what Northern Ireland gets is less than what it needs and not recognise that that has a material impact on the delivery of public services. Yet that is exactly what we are discussing this evening. The Fiscal Council has now published and what it says is recognised. I remember the back and forth with the Chairman of the Northern Ireland Affairs Committee. I was grateful that he took on my request to carry out an inquiry on this issue. He has been on a journey and now recognises that when the Fiscal Council says what we need to deliver effective public services with £1.24, we are getting less than what we need. When that is done year on year, there is a compounding negative impact. It means that every year we are starting with less and that this budget simply has a recurring feature of making sure that public services in Northern Ireland are denied the money that they need to be operated effectively.
I know that repetition is not sinful in this place, but it is worth reiterating time and again that, until the Government embrace this discussion meaningfully and properly, Northern Ireland public services will not be able to flourish. Drastic decisions that are being taken and have been taken will continue to be taken.
Simon Hoare
What the hon. Gentleman is saying is undoubtedly true, but does he also accept—I think the Select Committee has been hearing this during our inquiry—that there is a real sense of frustration among many of the professional practitioners about the absence of the delivery of transformational change: delivering public services in a different way; or getting more bang for the buck, to put it more crudely. A functioning Executive in Stormont would lead to some big, bold and brave decisions. I understand that would be difficult for parties across the piece, but trying to deliver public services in the same old way in the absence of transformational change, given budgetary pressures across the public purse in respect of whichever party in the UK, is an opportunity that is missed and is to the detriment of people across the whole of Northern Ireland.
Gavin Robinson
The best that can be hoped for in this scenario is that a return to devolved Government means that locally elected representatives and Ministers in an Executive can make the choices based on the information put before them. The hon. Gentleman cannot—nor can I—dictate what those choices should be. The choices have been there for previous Executives, yet I may argue that the wrong decisions have been made. But what I am suggesting in the here and now is what we can control. Not only are we continuing to finance less than what we need, but we are continuing to break parity between the delivery of public services in Northern Ireland and England, Scotland and Wales.
The former Secretary of State, the right hon. Member for Skipton and Ripon (Julian Smith), who is in his place, will remember the pay award parity issue that abounded whenever he was embarking on the New Decade, New Approach discussions in 2019, culminating in a deal in 2020. The first nursing strike ever in any part of the United Kingdom was based on that pay parity issue alone. And here we are, just three years later, and parity has broken again. Here we are from the last financial year and we recognise that there is not only a £500 million projected overspend this year, but a £575 million public pay pressure. When we add on the overspend from last year, which was £297 million but now seems to be £254 million, the figure, whatever it is, takes us close to a deficit of £1.3 billion.
I agree with the Secretary of State when he said—I am sure with much thought—that Northern Ireland does not need the sticking plaster of a one-off financial package. Let me be very clear that not one person from my party, or anyone sensible from Northern Ireland, has suggested that what we need is a one-off, one-year sticking plaster to fix a problem that is of this Government’s making. We are asking for a pragmatic and mature reflection on how much it costs to deliver Northern Ireland’s public services, and to get on with recalibrating the Barnett formula to ensure that we can do so. That is what we need. That is not yet what we have. The choices will be there for a new Executive.
The second most drastic thing that I think the Government have introduced into the debate is the notional view that we just need to get on and raise revenue. You have heard it, Madam Deputy Speaker. The Minister mentioned it this evening: a £27 billion budget for the forthcoming year. Take household rates, the biggest household contribution to the public finances that individuals make outside of tax and national insurance, with £1.7 billion raised each year. Can we honestly imagine indicating in a cost of living crisis to our public, businesses and wider society that they should double their domestic and non-domestic contributions to household rates? Doubling them would allow us to get close to where we need to be. No problem. By 2025, we will have £2,000 less than every household in England, but add another £2,000 on, please, to stand still. Get real. Transformation? I have an idea: let us raise money by increasing tuition fees.
That brings me back to when I replied to the hon. Member for North Dorset about the choices that an Executive will have. We cannot determine those, but in the past whenever people were saying that there should be an increase in tuition fees it was for a beneficial outcome. Increase tuition fees and we can get rid of the maximum student numbers cap. Increase tuition fees and we will be able to fund more places so that our best and brightest will no longer have to leave Northern Ireland to be educated in England, Scotland and Wales, or anywhere else in the world. Those were positive benefits from an increase in tuition fees, yet it was never politically acceptable. Now what is on offer is just raising the cost to stand still, or to provide public services when we know that what we get is not sufficient to match the need.
Nobody is asking for a sticking plaster. Nobody can say what the choices shall be. I did not intend to speak for as long as I have, and I want to let other people contribute, but here we are again, with the second budget Bill of the year and the same challenges. It is progress at least that on 5 July the Deputy Prime Minister accepted for the first time, in response to a question from my right hon. Friend the Member for Lagan Valley (Sir Jeffrey M. Donaldson), our party leader, that finances in Northern Ireland need to be predicated on need. That was the first time that we had heard that. Having been dismissed and ignored in January, we had acceptance of it in July. Yet the challenge is there for the rest of the financial year.
The punishment budget that has been outlined and is being advanced this evening will continue to cripple the effective delivery of public services in Northern Ireland. I have heard nothing from the Northern Ireland Office, or from anyone else around Government, to suggest that they are in the space of turning that around within this financial year. We are halfway through it. We want to see political progress, but the idea that we get political progress only for an incoming Executive to falter because they cannot deliver for the people would be the biggest crime of all.
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.
Gavin Robinson
I think it is helpful to emphasise at this point that, although the Minister indicated that this budget is exactly what an Executive would have been allocated were they in place, last year it was £322 million less than what an Executive would have needed, this year it is £431 million less than what an Executive would have needed, and the projection for next year is £458 million less. So in saying what he said, has the Minister not confirmed the real problem at the heart of this?
Stephen Farry
Indeed. I think we are talking to two separate points in that regard. Yes, the block grant would have been based on the current policy approach from the Government towards the Barnett formula and the assessment of need in Northern Ireland, but what we on these Benches are all saying is that we need to reassess the whole basis of how that is reflected. That is a conversation to be had. I would also take the point a bit further by saying that, if we had had an Executive in place, or indeed if we get an Executive in place shortly, that would be the form by which we could make this case much better to address both the fiscal squeeze and the negotiations on a financial package for Northern Ireland.
To give a human flavour to the scale of the crisis facing our society, I will close with one example of an area of crisis in Northern Ireland: special educational needs. There is a real crisis happening in that regard: the funding available is not meeting the levels of need. As I think all Members appreciate, this is one of the most sensitive areas, and one where Government has a duty to invest in children and ensure that their rights are properly protected. As we meet this evening, that is simply not the case in Northern Ireland. There are multiple failures to provide for children; the academic year has now started, but scores of young people still have not been allocated suitable special educational needs places. That has a major toll on parents and families—mental health issues and financial and career pressures—and on the children themselves, particularly a lack of opportunity, health and safety issues, a risk of regression and a lack of social inclusion. I appeal to Members, from whatever perspective we look at this—the Government in terms of setting the financial parameters, and also those who are still holding out for an Executive—that we need to get back to addressing those types of issues. That is what the coalface is like, and that is what we should be prioritising.
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.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The hour is late so I will cut to the chase, but I think it is worth underlining the views outlined by those from the Front Bench on both sides that the best way to resolve the issues and debates around the Northern Ireland budget will be if the Executive is meeting. It is a terrible shame that we are still debating and setting the budget here. That is not something the Secretary of State for Northern Ireland should be doing and I am very concerned that the situation continues.
I rise because of my particular interest as Chair of the Public Accounts Committee in the UK in the oversight and investigations of the Northern Ireland Audit Office in making sure the money allocated to the Northern Ireland Office and Departments in Northern Ireland is properly scrutinised. I appreciate the Minister taking time to meet me to discuss this because, without the Executive and Assembly in place, there is no real scrutiny of these budgets and it is the Northern Ireland Audit Office that has that particular role. It is important, therefore, and I remain disappointed that its funding is not where it should be.
I know that the amendment was not selected, but the Minister is talking to the right hon. and learned Member for South Swindon (Sir Robert Buckland), and the Chair of the Select Committee, the hon. Member for North Dorset (Simon Hoare), about the proposal that the Northern Ireland Assembly Audit Committee may continue to exercise its power even without an Executive. If that is something the Government are willing to discuss, I will be interested in being involved in those discussions. I can see a number of constitutional challenges on this, even within the context of Northern Ireland, let alone across the UK, but we need further scrutiny if we are going to live through this limbo.
I reflect the points of my right hon. Friend the Member for Leeds Central (Hilary Benn), who I am delighted to see on the Front Bench in the shadow Secretary of State role, that the Government need a better plan. Within this limbo, we have this inadequate position with the Secretary of State. However brilliant any Secretary of State is, they should not be making these decisions directly, and I am pretty sure that the Secretary of State agrees with me on that, yet we do not have any plan or pathway to getting the Executive back. It is down to the parties here present and not present ultimately to do that, but the Secretary of State needs to consider that.
I am concerned about the trajectory for support for audit in Northern Ireland, and I hope that the Northern Ireland Audit Office can do the best it can with the money it has and perhaps prove its worth to the Secretary of State for future budget settlements. I hope we are not here in a year’s time and that we have an Executive up and running that will be making these decisions for themselves.
Carla Lockhart (Upper Bann) (DUP)
I add my comments about the outgoing shadow Secretary of State, the hon. Member for Hove (Peter Kyle), and congratulate the incoming shadow Secretary of State, the right hon. Member for Leeds Central (Hilary Benn). I wish him all the best; he would be most welcome in the Upper Bann constituency—the premier constituency in Northern Ireland—in the coming weeks and months.
The stark reality of the debate tonight is that the budget given to Northern Ireland Departments is not enough for the effective delivery of services in Northern Ireland. Some £297 million is scheduled to be taken from our allocation this year and next. That is a huge chunk of the cake being taken away, from a cake that is already too small to satisfy the appetite or demands of our public services. I am being continually contacted, as I know are colleagues on these Benches, by constituents who are feeling the full effects of this harsh budget and the realities of our underfunded services: of health service waiting lists, crumbling school estates and scrapped road plans. While the physical infrastructure needs of our services are vast, so too is the even greater need of an even greater asset: our public sector workers. They ask for equality in pay, yet this Government refuse to give it. Some £575 million for public sector pay awards is needed, yet the cake is being cut and not made bigger to award people what they deserve.
The line that the Government cannot step in to deal with this matter does not wash with me or the public in Northern Ireland. If the Government want to do something, we see that they go and do it; we only have to look at the track record around the implementation of abortion in Northern Ireland against the will of the vast majority of people in Northern Ireland, or the relationships and sex education guidelines that have been foisted on the people of Northern Ireland without any consultation. Frankly, they are out of step with the values that the vast majority of parents want to instil in their children. The Government should not come at us with this line that “the Government cannot act”, when they can on other issues where there is very clear opposition in Northern Ireland.
When and if the Government want to do something, they do it, yet we see a lack of enthusiasm to deal with the issues that are keeping the doors of Stormont locked. We hear much from the Government that, if Stormont was back up and running, we could deal with the issues, yet they peddle false hope to those awaiting healthcare interventions and raise expectations among our public sector workforce about their deserved pay rises when there simply is not enough money to deliver such increases.
Our party leader, my right hon. Friend the Member for Lagan Valley (Sir Jeffrey M. Donaldson), has said time and again that this party deals in realities. Those are the political and constitutional reality created by the protocol and Windsor framework, the economic reality created by the same, and the public reality that Unionist people have withdrawn their consent for the devolved institutions until their concerns are dealt with and our place within our Union is restored. Sadly, there are those who seek to lay blame for all ills at my party’s feet, yet it is they who are exacerbating the situation by refusing to address the genuine concerns of the Unionist community and, indeed, the continued difficulties faced by many businesses as a result of the Windsor framework and the protocol.
We want a solution that brings a firm foundation for the restoration of Stormont. We want a solution that brings firm political and financial foundations, which will be the key to the impact that any new Executive will have. Underfunding cannot continue. We need transformational moneys and moneys based on the needs of our changing society. Next year—I will reiterate the figures that we have already heard—public spending in Northern Ireland will increase by 3.6%, but in England it will increase by 6%. How is that fair on my constituents in Upper Bann?
My hon. Friend the Member for Belfast East (Gavin Robinson) made a significant contribution on the budget needs and the transformation of the Barnett formula to a needs-based formula. It is time for the Government to act. The people of Northern Ireland—people of this United Kingdom—deserve it. We in Northern Ireland deserve as much as those in England are getting. I implore the Government to do what is right and get a political and financial solution that will allow Stormont to be restored and got up and running, with decisions made in Stormont.
Mary Kelly Foy (City of Durham) (Lab)
I welcome my right hon. Friend the Member for Leeds Central (Hilary Benn) to his new role. It should be the concern of the whole House that a Secretary of State for Northern Ireland, rather than a Minister of Finance in Stormont, is delivering yet another budget for Northern Ireland. This has been happening for far too long. It should concern us, because it reflects a peace process that has become increasingly precarious.
I am a member of the Northern Ireland Affairs Committee, which since February has been inquiring into the funding and delivery of public services in the north of Ireland. We have received evidence from a wide range of stakeholders throughout Northern Ireland. We have focused on the financial situation in areas such as education and health, and how the lack of a functioning Executive in Stormont is affecting those public services. To be clear, these are my views and not those of the Committee as a whole. My personal view is that the absence of an Executive in the north of Ireland, coupled with an austerity budget from Westminster, is a toxic mix, both politically and socially. For instance, we heard from the British Medical Association in Northern Ireland that health services are operating in “crisis mode”, which has taken its toll both on patients and on workers. Underlying that is a
“crumbling estate, with spiralling maintenance costs”.
The Royal College of Nursing argues:
“The health and social care system…is now beyond the point of crisis and is…visibly collapsing.”
It argues that that is due to “years of systematic under-funding”, compounded by the absence of accountability and leadership in Stormont. In addition, the Royal College of Surgeons has stated that one in four people in Northern Ireland are on a waiting list, either for a first-time appointment with a consultant or for surgery or treatment. The health and social care system needs stability, much like it does in Britain. Prevention is always better than cure. In one evidence session, I asked health professionals whether a significant cash injection now would reduce costs down the line. Austerity is never the cheaper option; it always leads to higher costs. I just wish the Government would realise that.
I want to touch on the impact on education, where, as with health, it is unacceptable that cuts are being made. A report in June entitled “The Consequences of the Cuts to Education for Children and Young People in Northern Ireland” argues that
“cuts will increase poverty, widen existing educational achievement gaps”
and “further exacerbate” the mental health crisis in Northern Ireland. Like the healthcare system, as we have heard, special educational needs provision is beyond the brink.
There is also a constitutional issue. My colleagues in the Social Democratic and Labour party have called on the British Government to consult the Irish Government on provisions for this budget as a plan B. That is a very sensible argument, although it is quite surprising that the British Government have not already attempted it. We cannot forget the vital role that the Irish Government played in the peace process. We should not forgo their advice, assistance, guidance and institutional knowledge.
In addition, the pressure on civil servants in Northern Ireland must be commented on. They are working in an extremely difficult environment, and we must recognise that there are unintended consequences. Civil servants are between a rock and hard place. The guidance states that some decisions should not be taken by civil servants, but without an Executive, those decisions must be made. As PCS Northern Ireland has argued, how can civil servants do their jobs effectively when they are worrying about putting food on the table for their families?
Underlying all this is a lack of democratic accountability. At the risk of making an obvious point, it was political parties who were elected in the May elections, not civil servants. If there is no Executive, who will fill those leadership roles in the community? We have heard in the Northern Ireland Affairs Committee that, sadly, some of those roles are already being filled by criminal gangs and paramilitaries. Those gangs are preying on vulnerable people, especially women in deprived communities. They know that there is an absence of statutory childcare, which is a huge barrier to women attaining employment. Those gangs are exploiting poverty. When people have not been able to pay their loans, for instance, they have been forced into transporting drugs and prostitution.
It is a case of austerity affecting services, and a deadlock affecting leadership, leading to cracks in civil society that demand our attention right now. We need the Executive back. To that extent, I must say to the Democratic Unionist party to honour the first word of its name. This boycott is doing real harm. Everyone can see it. I suspect it is not what their constituents want to see. Nothing can be achieved in this deadlock; it only wears people down. But we can achieve something working together. I will never forget the demonstration of cross-party unity that brought peace to an island that means so much to me, my family and so many people in my constituency and beyond. It would be a tragedy if that the spirit of co-operation was consigned to the history books.
Jim Shannon (Strangford) (DUP)
Thank you, Mr Speaker. It is good to see that you and I are the Duracell batteries of Westminster; we keep going when others are starting to lag.
What a pleasure it is to speak on this issue today. Yet again, I come to the House to ask for fairness and equitable treatment for Northern Ireland. I ask for it to be treated and funded the way that Wales is, for the sake of my constituents and all other constituents in Northern Ireland. I ask for our schools to be able to pay for their teachers’ pay rise and for toiletries in school facilities. I ask for a budget that can address the waiting list for hip replacements, and for vital roadworks to be carried out, to provide the bare minimum standard of infrastructure and connectivity. I ask the Secretary of State respectfully to advocate working with us and for the betterment of everyone in Northern Ireland. I believe we can do that together if we all commit to that process.
The people of Ballynahinch and the surrounding areas in my constituency of Strangford have been waiting my entire tenure—I have been an MP since 2010—and long before that for the promised Ballynahinch bypass, which has been deferred yet again. Along with my MLA colleagues Michelle McIlveen and Harry Harvey, I hope to meet the Department for Infrastructure on 6 October to discuss that very issue. It has been on the books for 45 years. And should the hon. Member for South Down (Chris Hazzard) ever decide to take his seat in this place and do his job here, he would be advocating for the same thing: for the funding to be allocated for this vital piece of work. Not to be blunt, but any claim that work can be carried out in whatever way the Department sees fit does not cut it when the current budget does not cover the cost for roads to be resurfaced, never mind major capital projects. Let us be truthful here: the budget allocation for roads is inadequate.
On a slightly more positive note, I highlight Ardglass harbour as a Northern Ireland fishing industry success story. However, the fact is that if we are to build on that success and accommodate the next generation of fishing boats, the harbour needs to be deepened. Kilkeel is also well placed to be a hub for the offshore energy industry. Investment there will see Northern Ireland capitalise on our growing blue economy. The fishing and seafood development programme of the Department of Agriculture, Environment and Rural Affairs recommends investment in all three harbours, and that takes funding. I am delighted to report that funding has been secured for both an enhanced training centre and an improved slipway in Portavogie in my constituency of Strangford. We can build on that and do more. We should have aspirations to grow a powerhouse of a blue economy. Portavogie, Ardglass and Kilkeel give us the building blocks, and the FSDP recommendations give us the tools. What we now need is to add a further budget that has the appetite and ambition to match that of our coastal communities, and that empowers them to meet the next generation of opportunities in the Irish sea and beyond.
We need funding for schools to deal with the substantial rise in special needs assessment and support. The hon. Member for North Down (Stephen Farry) referred to that and he is absolutely right. Every one of us in this House knows that special needs education is under incredible pressure. Funding is needed to create sensory rooms, whose enhancements will give children the opportunity to excel. I have met them in many of the schools in my constituency, and I recognise that that is something we should all sign up to. I sign up to the vision for schools that is operating on the mainland, but I would like our children to be treated the same way as children here and to have the same options. That is not the case because while spending per head is more, so is cost and so is need.
Policies that impact on how our children are taught about religion and sexual issues should not be implemented without a mechanism and space to consult boards of governors or without the opportunity to implement normal practices. Let me be clear: parents and teachers do not consent or comply, and that will be made clear in the days to come. There was a rally where a large group of people came together with some of their elected representatives to make that point.
I conclude with this, because I am very conscious of the long hour. I say this to the Secretary of State and the Minister of State: please, in the interest of fairness and equity, work with us to make changes to the framework that allow us to do what we want to do, which is to take our seats and for our colleagues to be in a working Assembly, with a fit-for-purpose budget and changes in place. That is not only in our hands; it is in the hands of the Government, the Secretary of State, the Minister of State, the Brexit Minister and the Prime Minister. Do the right thing and start to take that action, so we can move forward together in a positive fashion.
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.
Northern Ireland Budget (No. 2) Bill
Tuesday 5th September 2023
(7 months, 3 weeks ago)
Lords ChamberRead Full debate Northern Ireland Budget (No. 2) Act 2023 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 4 September 2023 - (4 Sep 2023)
Northern Ireland Budget (No. 2) Bill
Thursday 14th September 2023
(7 months, 2 weeks ago)
Lords ChamberRead Full debate Northern Ireland Budget (No. 2) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 4 September 2023 - (4 Sep 2023)
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.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I thank the Minister for his detailed explanation of the various clauses. Obviously, this legislation should be debated in the Northern Ireland Assembly and agreed by the Northern Ireland Executive and all the Ministers. Unfortunately, we do not have those institutions, but that is where the debate should be taken. Decisions should be made by local MLAs and local Ministers.
We are also debating this in the aftermath of a very successful—if I may say so—economic conference organised in Belfast by the Northern Ireland Office, the Department for Business and Trade and Invest NI. Significant announcements about job creation were made, and I hope that this will be sustained and that the conference, and the interaction with the United States and other countries, will lead to further job investment. That is what this is about: bringing people together, creating jobs and opportunities and galvanising the local talent in Northern Ireland for the betterment of all the people, irrespective of what those industries may be, whether they are in the manufacturing, digital or communications sectors.
I refer to the fact that Northern Ireland does not have political institutions. To the Members from the DUP in your Lordships’ House, I gently say that the people of Northern Ireland should no longer be placed on the altar of DUP political expediency. We need to move forward and show how we can exploit the economic and political opportunities from being able to trade in the two markets—the UK internal market and the EU single market. We need to galvanise the benefits of the Windsor Framework. Yes, there are some burdens, but, by and large, from what I can see and the evidence we have taken in our protocol committee, there has been a delay in publishing the guidance and then in the SIs, which are to be debated next week and which deal with the implementation framework. Therefore, I urge the Government to expedite that as much as possible. The bottom line is that we need to be able to develop those east-west and north-south opportunities from an economic perspective. To do that, we need the restoration of the political institutions to fuel and drive our economy and health service for the betterment of all.
It would perhaps be helpful if, in the Minister’s wind-up to this important piece of legislation, he could advise the House of progress in discussions with the DUP and when restoration is likely to take place. I note that talks are with only one party, but, as I have said before in this House, I believe that all-party talks should have taken place and priority should be placed on talks reconvening. In this respect, I refer to the comments made earlier this week by the Minister of State at the Northern Ireland Office, Steve Baker.
In the last couple of weeks, there have been some informed documents and, only this morning, the Irish Congress of Trade Unions published a press statement, which I am sure the Minister is aware of. It asks for the overspend to be written off, for a review of the Barnett formula—others are suggesting that as well—and for a special transformation fund to be established to deal with an infrastructure fund.
Last week, on 4 September, a think tank called Pivotal, based in Belfast, stated that Northern Ireland suffers from a “governance gap”, with the absence of proper decision-making amid a budget crisis leaving public services to deteriorate. Its report states that a lack of strategic planning means that services are stuck in a
“vicious cycle, where problems are growing and our ability to tackle those problems is shrinking”.
Pivotal stated:
“Immediate challenges are not being met and neither is there a clear focus on long-term strategy … issues—like childcare, infrastructure and climate change—remain unaddressed”.
I refer to one of the environmental time bombs, shall we say, that the Minister will be aware of: the Lough Neagh blue algae problem. Lough Neagh is the biggest source of fresh water in perhaps the whole of the UK and Ireland.
Civil servants—the Minister has already referred to this—have been in charge of running government departments for 10 months, but their powers are limited, and we have already dealt with that legislation in this House. They are unable to make any major or significant changes, so are constrained in how they can tailor public services to ongoing challenges. Funding is extremely tight and this is made worse by the inability to get the most out of the cash available, another point raised by the Pivotal report. Examples include growing health waiting lists. Health has seen its funding allocation rise, but we must remember that it is the biggest government department, taking around 46% of the Northern Ireland block grant, yet it faces a shortfall of £732 million, while a lack of progress in the Bengoa-style transformation means that costs continue to rise. Trolley waits of several days in A&E are the norm and the length of time waiting for care packages results in bed blocking in hospitals.
Somebody raised with me an interesting point about the funding of health and social care in Northern Ireland: there is one funding pot, while here in Britain there are two different funding pots. In that respect, there are those who ask for a Barnett change to allow health funding passing to Northern Ireland to reflect this unique funding arrangement for health and social care. An important point to emphasise is that additional money supplied to health is siphoned off other government departments that can ill afford to allow that money to go to health. Education has cancelled programmes such as Engage, holiday hunger schemes and Healthy Happy Minds. Those are all early intervention or prevention programmes valued by vulnerable children in particular, but this is still £382 million over budget, with impacts on the most vulnerable children. Then there is the impact of RAAC, which is probably not yet costed and will need to be factored in in the Northern Ireland situation.
Policing accounts for around 60% of the Department of Justice budget, yet the former chief constable indicated some months ago that balancing the budget may be difficult with the reduction to that department’s budget. Imagine now the added costs of the data breach and a possible fine from the Information Commissioner. The state of our infrastructure system requires investment. Increasing depletion of our roads infrastructure is another common feature.
I simply highlight those issues to suggest that while this budget has already been allocated and we are simply giving legislative effect to it for this financial year, it will be utterly constrained and unable to deal with the pressing needs of Northern Ireland. I ask the Minister to provide an update on ongoing discussions with the head of the Civil Service in Northern Ireland on revenue raising measures and the preparation for the new programme for government if there is restoration.
It is interesting to note that the Pivotal report made recommendations including the need for departments to work together to consider the cumulative impact of cuts, particularly on the most vulnerable groups. Early intervention and prevention schemes should be prioritised rather than seen as optional, and an appropriate amount of additional funding will be needed to stabilise public services. Any new funding would need to be sustained for three or more years. If such a package coincided with a re-established Executive, it must come alongside firm commitments to reform to ensure that real change takes place.
I accept the budget as presented by the Minister because government departments are already working on it and with it in very constrained circumstances. I do not accept the levels of financial allocations and think that they need to be urgently looked at. Most of all, the UK and Irish Governments need to recommit to an active role in ensuring the restoration and maintenance of the Good Friday agreement institutions, and measures must be put in place to prevent further falls of the Executive—as a former Assembly Member, I like others in this Chamber was a victim of such falls; they have happened over several years of the Executive. Obviously, that will mean reform of some of the mechanisms. I look forward to the Minister’s response. I hope there is restoration, but I also hope that in having restoration, we have an Assembly holding the Executive to account to ensure that we have significant funding allocations to allow our economy to grow and develop and to avail of the many economic opportunities from the Windsor Framework and other measures currently at play.
Lord Alderdice (LD)
My Lords, like the noble Baroness, Lady Ritchie, I thank the Minister for presenting to us the context for the Bill and for the technical elements of it. I would not dispute with him any of the technical aspects he described: they are fairly straightforwardly part of such a budget Bill. However, in opening the Second Reading debate on the Bill in the other place, the Secretary of State for Northern Ireland, Chris Heaton-Harris, said something that I do disagree with:
“The Government have brought forward this Bill because the Northern Ireland parties have been unable to form an Executive and subsequently set a budget”.—[Official Report, Commons, 10/7/23; col. 101.]
That is not true. It is not that they were “unable” but that the DUP was unwilling to form an Executive. The DUP’s Paul Givan resigned as First Minister following its objections to the Northern Ireland protocol.
It is entirely justifiable to protest against policies you do not agree with, complain about them, argue about them, debate them, but it is not justifiable to bring down a whole form of government as a protest, to bring down the Assembly and the Executive. It is quite true that Sinn Féin did the same thing: it was unwilling to form an Executive with the DUP previously, and that too was unacceptable. But there is a difference: Sinn Féin had a serious dispute with its partners in government and was protesting against them. As I say, it was not justifiable, but the difference is that the DUP on this occasion does not have a dispute with Sinn Féin—at least, not on this issue—but with the UK Government. The dispute is with the Government fulfilling a policy of Brexit that the DUP itself had urged upon them and supported, even though these consequences were emphasised to them by many of us. Brexit is a policy that most people in the United Kingdom now regard as a failed policy, and the majority of people in Northern Ireland never voted for it or supported it in the first place.
I entirely accept that if the Executive and the Assembly were restored tomorrow it would not resolve the problems that are described in the budget Bill. The abnegation of responsibility has worsened the financial situation, but it would not be resolved if there was devolution immediately. There is a huge deficit, as the Minister said—a black hole of at least £660 million and it may well be more. The consequences for all public services, and indeed the private sector too, in Northern Ireland are enormous. The education system is in chaos and the health service, which is the part of the public sector I know best, is dissolving before our very eyes. It is not just a question of increasing waiting lists and there not being enough money; it is now becoming clear that many of those who, like me, were consultants in the National Health Service in Northern Ireland are leaving. Some of them are taking early retirement; some are going across the border, and some are leaving Northern Ireland altogether. Many young people are choosing not to come in and, if they do, not to take up positions as partners in general practice or as consultants in the NHS. These are not matters that will be resolved overnight or even by the provision of money. There is a fundamental, deep disruption and disturbance in the way Northern Ireland works.
Trying to deal with this is not going to be at all easy. On the question of funding, does the Minister truly believe that the amount of money being made available by His Majesty’s Treasury is enough for Northern Ireland? Is it the case that, if all these other issues we are talking about, such as devolution and better co-ordination, were to be dealt with, there would be enough money? I am not sure that there is enough money to provide for the kinds of services the people of Northern Ireland ought to be able to expect as part of the United Kingdom.
We mentioned the question of the governance problem. Let us not forget that this is not the first time that the DUP has chosen to make Northern Ireland a difficult place to run. After the Anglo-Irish agreement, the slogan used was to make Northern Ireland “ungovernable”. That is different thing, and of course it was the case at that time that there was a Government here in Westminster who were determined to make sure that the rule of law prevailed and that Northern Ireland was properly governed. There was a police service that insisted on ensuring the rule of law. My colleagues in the Alliance Party used the law to ensure that people were made to go back to work in governance.
What is happening now is not about Northern Ireland not being governable. It is about Northern Ireland being no longer workable as an entity, and that is a different thing. It is entirely possible for people to make Northern Ireland unworkable, but what sort of an outcome is there going to be when you bring down the house around you? Does that serve the best interests of the inhabitants? We are in a very serious place whenever Northern Ireland becomes an unworkable place, and that is what is happening now.
So what should we do? First, we must understand that the UK Government are the responsible Government. In the absence of devolution, and even in its presence, the UK Government retain the responsibility for governing Northern Ireland, and therefore they have to take responsibility for the shambles that Northern Ireland is now in. I have been warning for years that this was what was happening and what it was leading to. The longer the Government keep postponing addressing this, the worse the situation gets.
So how should the Government address this? They tried to persuade the DUP to go into government with Sinn Féin; the DUP said no. They are trying now to persuade the Government to take responsibility for the financial consequences and they have pointed out what a difficult problem that is going to be. In fairness to the DUP politicians, when they were in a position of responsibility for both raising and spending the money, for example when Peter Robinson was leading Castlereagh council, of course I disagreed with them on many things, as did my colleagues, but he did act responsibly both in raising and in using the necessary funds, and keeping the books balanced. That is not happening now.
We have to think seriously how we deal with this. There is a question as to whether politicians have to continually have a veto over how things are run. Maybe the Government need to engage more and more directly with those in the business community, because they are the only ones who are going to keep things going. They are not going to argue about the constitution. They are going to say, “Let’s see how we can keep business going and make the money that is necessary for the wheels to go round”.
It is also important that, if strand 1 and strand 2 cannot operate, the British Government co-operate with the Irish Government to try to make things work as well as possible. If they do not, it is the people of Northern Ireland who will suffer ultimately. Northern Ireland’s position in the United Kingdom will become less and less viable as a proposition. Some people in Northern Ireland would welcome that, but it is certainly not something that pro-union and unionist people want to see. The question is whether the Government are prepared to go beyond the rigidity and resistance of some of Northern Ireland’s politicians or whether there will be continued drift and, ultimately, disaster.
Lord Browne of Belmont (DUP)
My Lords, I thank the Minister for his detailed explanation of the budget. However, it is a matter of regret that once again we have been tasked with considering a budget for the people of Northern Ireland. As with the previous budget discussed in your Lordships’ House, one would have much preferred the budget to be discussed in its rightful place: the Northern Ireland Assembly. Decisions about spending priorities for Northern Ireland should be made at Stormont, not here or in the other place. But, unfortunately, this is not possible right now.
We know why this is the case. We find ourselves in this all too familiar situation because Northern Ireland remains a place apart. Within the context of the United Kingdom, rules are being imposed exclusively on Northern Ireland over which we have no say. As things stand, there is no accountability or scrutiny over those laws. Unfortunately, these barriers remain an impediment to the restoration of the Assembly.
In terms of the Budget, the cost of living is affecting every person across the United Kingdom, and in Northern Ireland in particular this pain is being felt. Unless there is a fundamental change in how Northern Ireland is funded, the situation will only get worse. With or without a Northern Ireland Executive, and with or without the Northern Ireland protocol or Windsor Framework, the reality of the Barnett formula will continue to lead to budgetary uncertainties and continued year on year pressures in Northern Ireland.
It is abundantly clear that spending in Northern Ireland is already clearly below need. Northern Ireland is the only part of the United Kingdom where spending has now fallen below the Government’s definition of need. The problem has been exacerbated by the fact that the Northern Ireland Office requires the Executive to repay a £279 million overspend for 2022-2023—which, interestingly, is a similar amount to the additional sum of £322 million that the Executive should have received in 2022-2023 had it been funded to the UK Government’s level of need. The decision not to base the budget for Northern Ireland on need is causing many of the issues we see today, and pressure will continue to grow on public services.
The overall budget for Northern Ireland this year has fallen by 3.2%, whereas the budget in the rest of the United Kingdom went up by 1.7% in real terms. As I have stated, one of the major reasons for this glaring disparity is the simple fact that the formula used for the rest of the United Kingdom—one based on need—has not been applied to Northern Ireland. Like budgets before it, this budget will leave the Northern Ireland education system, for example, facing a future funding crisis that will impact many children and young people. Spending on education has gone up by 6% in the rest of the United Kingdom, but it has fallen considerably again in Northern Ireland. According to analysis from the Institute for Fiscal Studies in the United Kingdom, spending per pupil has fallen consistently in Northern Ireland every year since 2010. In 2022, spending per pupil was estimated to be £6,400 in Northern Ireland, and that again is much less than elsewhere in the United Kingdom. With the recent additional pressures on an already stretched education system, schools in Northern Ireland cannot cope with further underinvestment.
Turning to policing, the Police Service in Northern Ireland was facing an incredibly serious situation long before recent events. The PSNI was already operating with roughly 1,000 officers below the levels stated in the New Decade, New Approach arrangements. With the consequences of the recent serious data breach and the knock-on impact on police officers and their families, and the mitigation measures that have had to be taken to protect officers, an already stretched policing budget will be stretched yet further. With morale low, the police service is in the middle of a very difficult period. The most recent cuts to the Northern Ireland Department of Justice do little to help the current mood among officers and staff. Can the Minister say whether additional funds can be made available to assist in relation to policing?
There are many areas where this budget underwhelms and underdelivers. I am sure that my noble friends who follow me will be able to give the finer details of the budget. The budget situation in Northern Ireland is very complex and uncertain. Indeed, it requires political leadership and co-operation to find a sustainable solution, particularly around the protocol and the Windsor Framework. I think we all want to see Northern Ireland prospering with a growing economy, attracting inward investment. I want to be able to stand in your Lordships’ House and, once again, laud an uninterrupted period of stable devolved governance. I think we all want to see institutions back up and running, and Northern Ireland in a position to set its own budget.
Lord Hay of Ballyore (DUP)
My Lords, first, I thank the Minister for explaining the detail of the Bill to the House this afternoon. It is our desire to see an Assembly and a functioning Executive back up and running at Stormont again but we know also that the elephant in the room is the Windsor Framework. It is disappointing that we are in a situation where we are discussing a Bill that should be debated at Stormont with locally elected representatives and Ministers in a functioning Executive.
This debate is about the budget for Northern Ireland. Most debates relating to Northern Ireland are overshadowed by the Northern Ireland protocol and the issues that still need to be addressed in the Windsor Framework. Regrettably, we have been here too many times before; it is true to say that key decisions on health, housing, education and infrastructure have been put on hold in recent months and years because of uncertainty over funding for Northern Ireland. We have had the Secretary of State for Northern Ireland in the other House tell us that the budget was an appropriate settlement for Northern Ireland departments. I am not surprised that this particular Secretary of State would say that.
The stark reality of this debate is that the budget given to Northern Ireland departments is very much a punishing one. This budget is simply not enough for the effective delivery of vital services across Northern Ireland. We have a growing health service waiting list, a crumbling school estate and infrastructure plans that have been long postponed. It is clear that, on health, infrastructure and, in particular, education, the budget is very bad news. While it is true to say that there is no magic money tree, such punishing cuts as those we are discussing today will be felt by pupils, hospital staff and many of the front-line workers that we all rely on in Northern Ireland.
The budget will hurt economically and will have an impact on the delivery of public services. That has already been alluded to, with the £297 million that is scheduled to be taken from Northern Ireland’s allocation this year and next—a huge sum of money that will impact on many services across Northern Ireland. The Department of Health received more than half the total budget and by far the largest percentage cash increase of all departments. Despite significant savings, a funding gap of £732 million remains. For example, the Department of Education has a funding gap of £382 million. Many of the schools and principals we have spoken to have had to cut many of their schools’ outside activities across Northern Ireland, which is sad in itself. At the Department of Justice, there is a funding gap of £141 million. As has been alluded to, a former chief constable has said that he may not be able to operate policing in the budget that has been handed to him. We are short of 1,000 police officers in Northern Ireland. The list goes on.
When we last addressed a budget in your Lordships’ House, I said then that I hoped that it was the last time we would deliver a budget for Northern Ireland. Unfortunately, we are here again. We want to see a solution that brings long-term, firm foundations for the restoration of political institutions in Northern Ireland; that is what my desire would be. I want to see a solution that brings firm political and financial foundations, which are key to the future of a working Executive. Chronic underfunding in Northern Ireland should not continue. To get Stormont up and running and to begin this process, we must see the remaining issues in the Windsor Framework be resolved as soon as possible.
Viscount Brookeborough (CB)
My Lords, I, too, thank the Minister for presenting this budget. I feel rather sympathetic towards him in that he cannot come here for happy debates. One day, I hope that he will be able to do so. Luckily, much of what I was going to say has been said but, in particular, I would like to say that the noble Lord, Lord Alderdice, looked at this from an objective point of view and gave one or two extremely appropriate conclusions. I think we get too bogged down in the details of what is going on when we must look at how it really might all collapse.
Of course, our biggest problem is that we have a lack of local democratic accountability, with the absence of an Executive currently as a result of the protocol. Therefore, at present, there is only one democratically accountable legislature: here. Of course, we have heard how the civil service is currently unable, because the Government dictates this, to take many of the actions we would like to see. We have this void, or crevasse, between the refusal of the DUP to take part in the Executive and the refusal of the Westminster Government to interfere with theoretically devolved issues—although there have been cases where they have done so, so it is not an impossibility. Abortion may well have been one of them. They can do it if they wish but they do not wish to do it; of course, they have their reasons for that.
However, it is the 1.9 million people in the Province who suffer the long-term hardship—hardly the politicians or the Government. They suffer the damage to civil society without this democratic accountability and they do not have a say in here. We keep hearing that the position of the Government and the EU is that the protocol, after the Windsor Framework, works okay. I am not totally against it but, to a certain extent, I am fed up with hearing that it is okay because big businesses say that it is. Big businesses can afford to have a back office with half a dozen people scribbling out to cover the regulations but Northern Ireland is not a country of big businesses; there are very few of them. There are thousands of micro-businesses and small SMEs. I know of a haulier whose company, A1 Transport in Fermanagh, employs 85 people. Since this started, he has had to produce 70,000 documents to move his lorries back and forth across the border and to this country. He literally has not got the room to store them. This goes on and there will be even more documents as this business gets tighter.
The DUP has continued, rightly or wrongly, to make a stand against the protocol and the Windsor Framework. I do not like to admit it but the big problem is that so many things that this Government have done have made the average person so very angry in Northern Ireland that they have gone to the extremes. I dare say that the support for the DUP comes largely because people are so unsatisfied with what the Government have done. Legacy was one thing the other day. It has really had a big effect on people; there is a lot of discontent.
However, they are the UK Government and, as the noble Lord, Lord Alderdice, said, they are responsible for the United Kingdom, regardless of devolution or anything else. We, the people in the Province, are caught between two immovable rocks: the DUP and the Government. They are the only people who can ultimately solve this challenge. What we need is real leadership, but we are not getting it. It needs to come from outside those two groups—perhaps from the Prime Minister; we have not seen him involved very much. I am hesitant about the Taoiseach after the things he has said in the last few days; that does not help things either. If we have a compromise or fudge, this problem will return; without a shadow of a doubt, we would be in this position again in no time.
We have major decisions on infrastructure to be made, such as on roads, education and, as we have heard, health. The noble Lord, Lord Alderdice, talked about the disintegration of health, and I will highlight one particular example, without going through all the different parts. South West Acute Hospital in Enniskillen was a state-of-the-art new build opened by the late Queen in 2012. Believe it or not, it has hundreds of single rooms—no wards—clean air technology in the theatres and everything else. It has served a population of 83,000 people. The Western Health and Social Care Trust has suspended the acute services at the hospital due to financial difficulties and other reasons, such as the absence of direction from a democratic authority telling it to get on with the job. I am aware that the decision is statistical and due to a problem with recruitment—that may be so.
I was once on a hospital board in Belfast. It is a medical requirement for most important hospital interventions, such as childbirth, accidents, disease and whatever else to have acute services somewhere in case things go wrong—the noble Lord, Lord Alderdice, knows that better than anybody. Therefore, those somewhat straightforward interventions now have to go somewhere else, in case the patients need acute help. They have to go to Altnagelvin Hospital in Derry. That means that 83,000 people—if they need treatment; obviously not all at once—have to travel for 60 minutes or more. Of those, 68,000 will have to travel for 90 minutes or more, and 25,000 will have to travel for two hours. That is travel time, let alone the acquisition of an ambulance, which is a totally different subject.
In this country we have a universal postal service, as well as the equivalent in education, although we do not call it that, and health—the right of our citizens to access a service, whatever it is. We know that it costs more to post a letter to, or to run a school in, the outer isles—that is what the universal service is about. The removal of services from such a large number of people in Fermanagh and South Tyrone should be considered unacceptable behaviour on the part of an unaccountable body. But it does not have to be unaccountable if the Government make provision for interfering where things are quite clearly wrong. The health status of 83,000 people is being compromised in a manner that is incomparable anywhere else in the United Kingdom.
It has long been NHS policy to take account of the geographical situation and to compensate where necessary. According to the NHS Technical Guide to Allocation Formulae and Pace of Change for 2019-20 to 2023-24:
“Travel time to the next nearest hospital is an indicator of whether or not consolidation of services onto fewer sites is feasible”—
it is not feasible. We used to have a measure called the golden hour; what has happened to that? Believe it or not, the Western Health and Social Care Trust has said that things have changed and the golden hour is no longer the mantra. But what has not changed is the need; it is identical. The road accidents, childbirth issues and diseases are the same, so what has changed? All that has changed is its decision to not go by the golden hour.
There was a consultation and one of the documents was signed by 30,000 people—30% of the population. It was treated by the trust as one entity. It did not like it at all and virtually disregarded it. I know about consultations; we did one for an inquiry here into bank closures. Every major bank that came to us said, “We’re consulting; don’t worry”. We never saw one bank that failed to close or was turned around as a result of any consultation, so I think that the definition in the dictionary ought to be slightly different.
Will the Government live up to what they should be responsible for: ensuring equal treatment and opportunities throughout our nation, regardless of whether the devolved system is in place and working? That says a great deal about levelling up in our nation, does it not?
Lord Lexden (Con)
My Lords, I owe a great deal to the personal kindness of the Brookeborough family over many years, including the current noble Viscount, his father and his grandfather. I am particularly glad to follow the noble Viscount, who has given such service to Northern Ireland, particularly when the security situation was at its most difficult. I listened with great enjoyment to his vigorous contribution to the debate.
I speak, as always, as an unwavering supporter of Northern Ireland’s role in our country, which is of such importance to us all. Exactly a century ago, a new unionist Prime Minister took office in Westminster. In May 1923, Andrew Bonar Law was forced to resign because of the cancer that was to kill him the following October; Stanley Baldwin was the new unionist premier. Bonar Law, the only British Prime Minister with an Ulster family background, had devoted himself to protecting the interests of the newly created Northern Ireland; Baldwin was no less diligent.
Bonar Law had ensured that Northern Ireland had the resources and support that it needed to defeat the murderous assault that the IRA mounted against it in 1922. Baldwin helped to safeguard Northern Ireland’s territorial integrity when an independent commission considered whether its boundaries should be revised.
Unionism is more important than Conservatism. I rather wish the party had retained the name that it used proudly a century ago, instead of elevating its Conservative element. As the Unionist Party, it would have retained at its very heart an absolutely overriding sense of responsibility for the varied interests of all parts of our union. I think it is unlikely that Mr Boris Johnson would have become leader of an organisation called the Unionist Party, since he cared nothing for the union, as he showed with his infamous betrayal of Northern Ireland four years ago—the immediate cause of the discontents and difficulties that have assailed our fellow country men and women in Northern Ireland ever since.
It is evident that the Government do not believe that the difficulties and discontents can be brought to an end simply through the restoration of the devolved Assembly and Executive—it will represent just the beginnings of their resolution. Acute financial problems, highlighted in the legislation before us today and mentioned so frequently in the debate, will have to be overcome if Northern Ireland is to have the fully functioning Executive to which reference is so often made—fully functioning in the sense that it works efficiently and successfully.
Speaking in the Second Reading debate on this Bill in the Commons, the Secretary of State for Northern Ireland said:
“Successive former Executives have failed to make the strategic decisions required to put the public finances on a sustainable basis”.—[Official Report, Commons, 10/7/23; col. 101.]
It is of course the duty of our national leaders to ensure that the public finances of Northern Ireland gain the stability that good government within the union requires. The task is formidable indeed.
Earlier this year, we were helped to understand why by the noble Baroness, Lady Foster, a personal friend from long ago when I was closely involved in an organisation called the Friends of the Union. Speaking on 7 February, the noble Baroness, Lady Foster, told us that
“no Sinn Féin Minister of Finance has ever succeeded in presenting a Budget which other parties could support … Finance Ministers have to look for support and consensus on the Budget that they bring forward. Every other coalition Finance Minister was able to achieve that, but no Sinn Féin Minister was able to”.—[Official Report, 7/2/23; col. 1183.]
Has Sinn Féin turned over a new leaf since then? Has it undertaken to observe the financial disciplines that are essential for good government? I sometimes think that in this House, we give insufficient attention to the stresses and strains that the involvement of Sinn Féin creates in the administration of Northern Ireland. It is not a conventional political party at all: it is part of a movement dedicated to achieving, by one means or another, the dismemberment of our union, our country. The successful administration of Northern Ireland’s public affairs is unlikely to hold much appeal to Sinn Féin: it is dedicated to the destruction of Northern Ireland.
Every unionist will always insist that Northern Ireland must enjoy all the benefits of being part of our union. I listened the other day to our Health Minister, my noble friend Lord Markham, who touched on the importance of change within the NHS. He said:
“Without a doubt, we have to make productivity improvements and look to technology, AI and all the things we can do to improve output”.—[Official Report, 12/9/23; col. 780.]
I thought to myself that Northern Ireland must have these things, too—in fact, there is no part of our country where they are needed more than in Northern Ireland, where the health service has suffered so seriously in recent years, as we heard from the noble Lord, Lord Alderdice, in his boisterous contribution, and from others. It is tragic to think that health and the other great public services immediately cease to have democratic oversight when devolution falters. Elsewhere in the union, these services form part of local government. In Northern Ireland alone, they have been merged with devolved institutions.
It is axiomatic among unionists that Northern Ireland should enjoy good relations with the Republic of Ireland, in the interests of both of them. But it is crucial, if good relations are to be maintained, that the union is given proper respect at all times by Irish politicians. That is surely incompatible with the suggestion made recently that the Irish Government should be given an enhanced role in the affairs of Northern Ireland, including consultation over its budget. Perhaps this extraordinary suggestion reflects Mr Varadkar’s belief that Ireland is on the path to unification. That republican delusion is nothing new, but its repetition at a time when great efforts are being made to restore the devolved institutions in Northern Ireland jeopardises the good relations which unionists want.
Lord Morrow (DUP)
My Lords, things do not seem to have changed or moved since we debated my amendment to the Finance Bill in May. For reasons that I hope to explain, they have since deteriorated. In order to understand the implications of the Bill before us today, we need to have regard to two key co-ordinates. The first is the UK Government’s definition of need. This is provided by the Holtham formula—an adjustment to the Barnett formula—which the UK Government embraced between 2012 and 2016. It is important to remember that the purpose of adjusting the Barnett formula through the Holtham formula was not to make sure that each part of the United Kingdom received identical funding per head of the population, which is arbitrary and meaningless. Rather, it was to ensure that each part of the United Kingdom receives the funding per head that it needs, mindful of the challenges it faces in order that we all enjoy comparable public services.
This provision of comparable public services underpins the reality of our common community. We recognise that, to be part of a common community underpinned by a common citizenship, we must have the same effective rights, including in relation to public services. In this context, it is no more appropriate to suggest that all parts of the United Kingdom receive identical levels of funding, regardless of need, than it would be to say that some parts of the United Kingdom are worthy of better public services than others. The common body politic of our union cannot make these distinctions. The political community that we enjoy is predicated on a common citizenship wherein the equal value of all citizens is testified to by the provision of comparable public services.
In the words of the Holtham Commission, its purpose was to
“set out our proposal for aligning relative funding with relative needs in a way which we believe is workable, simple to operate and fair to all parts of the UK”.
Crucially, although it was commissioned by the Welsh Government, it was to generate not a Wales needs-based formula but a UK needs-based formula. We can all be grateful to the Welsh Government for performing an important task for every part of the United Kingdom.
The result has been a sophisticated formula that demonstrates that spending per head in Wales must be £115 for every £100 spent in England for there to be comparable service provision. Spending per head in Scotland must be £105 for every £100 spent in England for there to be comparable service provision. For there to be comparable service provision in Northern Ireland, spending per head must be £121 for every £100 spent in England. The UK Government formally adopted this definition of need in 2012. In that year, it indicated a willingness to intervene to align spending in Wales to the definition of the Holtham formula because the Barnett squeeze was such that it would inevitably happen.
In 2016, this commitment was brought into more direct effect through the agreement between the Welsh Government and the United Kingdom Government on the former’s fiscal framework. This consisted of two elements. First, a 5% budget uplift was applied for the purpose of slowing down the Barnett squeeze and thus the point in time when spending per head would reach need. Secondly, a Holtham floor was set at the level of need to ensure that, notwithstanding what the Barnett squeeze might otherwise have done, spend could not fall below need as defined by the Holtham formula. This has been in place ever since. Because spend in Wales has not fallen below need, it has benefited from millions of additional pounds of taxpayers’ money to slow down the Barnett squeeze. Consequently, the level of spend in Wales remains slightly above need.
Although the Holtham formula has not changed, it became necessary to recalculate the Northern Ireland definition of need using that formula because the Holtham calculations were made before the devolution of justice. Earlier this year, the Northern Ireland Fiscal Council used the Holtham formula to update the Northern Ireland figure so that it was fully cognisant of the breadth of current devolution. The outcome of this project was the publication on 2 May of a seminal Fiscal Council document demonstrating that the current Northern Ireland definition of need is £124. This is our first co-ordinate.
The second co-ordinate is the UK Government’s definition of spend for the current spending review period, set out in the Treasury’s block grant transparency document. When aspects of this document are updated, as in July this year, the basic definition of relative need between Wales, England, Scotland and Northern Ireland is calculated only by the block grant transparency document at the start of each spending review period.
This is because the task of coming up with fair, comparable figures, mindful of administrative and other difficulties within the UK, is resource-intensive. As such, the block grant transparency measure of spend provides the only robust comparable measure of spend across England, Wales, Scotland and Northern Ireland for the three-year spending review period. It is on this basis that decisions are made for the period about what needs to happen in Wales to ensure that its funding does not fall below the definition of need provided by the Holtham formula.
The Treasury defines relative spend between England, Wales, Scotland and Northern Ireland as relative funding per head averaged over the SR21 period 2022-23 to 2024-25. This is found in table 4C of Block Grant Transparency: December 2021. In dealing with the current spending review period of 2022 to 2025 in Wales, decisions protecting the Holtham floor definition of need and the 5% uplift are made for the spending review period on the basis of this block grant transparency average measure of relative spend for the three years—and not any other definition.
This does not mean that other figures will not emerge but, crucially, to be treated consistently and fairly, decisions about requisite interventions in Northern Ireland with respect to protecting spending to the Holtham definition of need—and an uplift in the event that our spend was still slightly above need—must be based on the definition of spend in Block Grant Transparency: December 2021. In Wales, the definition of spend in the document for the spending review period is £120, while in Northern Ireland it is £121. That means that in Wales, spending for the spending review period has been deemed to be £5 above need, so it has not been necessary to apply a spending floor at the Wales level of need of £115, but Wales benefits throughout from the provision of the 5% uplift, which slows down the Barnett squeeze and involves spending taxpayers’ money to keep spending in Wales above need.
By contrast, Northern Ireland’s situation has deteriorated such that we have missed out on uplift because spending has not fallen to need but to £3 below need. This is a hugely disruptive change, visited on us very suddenly since 1 April 2022. It means that, in this spending review period, in 2022-23 we were underfunded by £322 million. In this year, 2023-24, we are underfunded by £341 million and in 2024-25, we will be underfunded by £458 million. This injustice is greatly compounded by our being required to pay back £297 million across this and the next financial year.
When we confront the scale of the underfunding, the fact that Northern Ireland is currently in the midst of an acute funding crisis—and there is a need for funding cuts in the round—is no surprise at all. It is affecting all aspects of life, from SEN funding to childcare provision, which a recent report by the campaign group Melted Parents NI shows is more expensive in Northern Ireland than any other part of the United Kingdom.
I thank the Minister for bringing this budget to your Lordships’ House. I wish it would go to Stormont. Maybe one day things will dictate that it goes that way. Until then, this is the only way and the Government have a responsibility. When things crank up, the Government have to do some heavy lifting. They are refusing to do it at this time but I thank the Minister for this report today.
Lord Weir of Ballyholme (DUP)
My Lords, I join others in thanking the Minister for bringing this forward. If I am critical of the Government, I hasten to add that it is nothing personal. To paraphrase “The Godfather”, “It was only business—tell Lord Caine that I like him”. Where I make criticisms of the Government, it is not to detract from the Minister’s contribution today. The level of disappointment here—irrespective of whether we have a devolved settlement—is to do with the inadequacy of funding provided for public sector services in Northern Ireland by this budget. As the previous speaker, my noble friend Lord Morrow, highlighted, this reinforces the position in 2022.
As anyone who has been involved with any government department will know, that department often has a wish list of things that it would like to do—desires, if you like. But this is not about desires for public service expenditure; this is about public service expenditure needs. Since the beginning of 2022, for possibly the first time—certainly since 2015, when the Holtham formula was largely adopted by the Government—we see a region of the United Kingdom funded below its objective needs. As highlighted by my noble friend Lord Morrow, the figures were produced by the Northern Ireland Fiscal Council, in addition to other bodies. It should be noted that the Northern Ireland Fiscal Council is a government body, not a think tank or a lobby group. It identified the shortfall last year as £322 million; this year it is £431 million. That is £0.75 billion over two years, exacerbated by the money that has had to be paid back over the past two years because of last year’s overspend, which would not have arisen in the first place had there been proper levels of funding.
That needs to be seriously addressed. In the long run there is a need to look at the Barnett formula in great detail. The Barnett consequential squeeze has meant that since 2019, on average, UK expenditure has gone up by about 6% per annum; in Northern Ireland it is 3.6%, with the result of where we are today. That indicates why there is a longer-term need to look at Barnett. As indicated, the Holtham formula can produce a solution, at least in the short term. It probably took about seven years of discussions between the Welsh Government and the UK Government to get adoption—I expect the noble Lord, Lord Murphy, will be more familiar with this—but when it was adopted it was meant to be a UK-wide formula so that it could be applied to Northern Ireland to provide a level of support.
I am the first to acknowledge that there is a need for reform in public sector provision, as there is throughout the United Kingdom. This is good because we should always be looking at how we can get the best value from our public services for the expenditure put in place. However, I add at least three caveats. First, any form of public sector reform often requires initial investment to produce savings. It is not something that will produce an instantaneous result. Secondly, in my experience, whatever the value of public sector reform, in and of itself it is not enough to fill the gap: we need additional expenditure. Specifically in Northern Ireland, do we believe that, even in a restored situation, Sinn Féin in particular, given its track record on public sector reform, will embrace it or even just tolerate it? In the past it has moved to block and veto any reform and we would be deluding ourselves if we think that will be an easy route.
As for the current budgets, the department with which I am most familiar is the Department of Education, where the permanent secretary has identified a shortfall of over £300 million on current activities. That needs to be contextualised because it is simply doing what it is already committed to. It does not take into account the fact that, for the last two or three years, we have not had an agreement between the teaching unions and the management side, so teachers’ pay in Northern Ireland is considerably less than in the rest of the United Kingdom. If there was an agreement tomorrow, there simply would not be the money to pay that level of uplift.
The fact is that we are unable to progress childcare. Again, the level of provision and entitlement for parents is the least of anywhere in the United Kingdom. More than 80% of the education budget goes directly in salaries to front-line workers. Much of the remainder falls under a situation in which parents have a statutory right to access various things as legal requirements. The headroom within the Department of Education to meet that shortfall is extremely limited.
That means that, like some of the cuts already made, any of the pressures in the Department of Education will have to be met by targeting the most vulnerable in our society. For example, the report A Fair Start identified that the interventions required to tackle educational underachievement, particularly among the economically disadvantaged, will not be able to progress in the way that they are meant to. It means that SEN pupils, particularly those identified, will not have the resources and support that they need. It means that, because some of the programmes designed to try to boost those who have issues around educational underachievement and the socially disadvantaged are not statutory, they are the first that any department will cut. That is the crisis we face in education.
I conclude by mentioning another subject that should have been a good news story from a financial point of view but has been handled in a deeply dismaying way. Earlier this week, we saw the announcement of a package of support, spanning a number of years, through the PEACE PLUS programme. This is designed to support Northern Ireland and the border counties in the Republic of Ireland. The source of more than 85% of its funding came from the British Government and I commend them for it. However, the presentation of the announcement by the Taoiseach, Leo Varadkar, made it look largely like this was an intervention by the Irish Government. I have to say that both his recent comments on a united Ireland and the overreach from the Irish Government on PEACE PLUS are deeply unhelpful. When the Minister is winding up, I would be grateful if he could address the situation with PEACE PLUS and the presentation of its funding sources.
Lord Bruce of Bennachie (LD)
I am grateful, as we are all, for the Minister’s presentation of this budget. We all recognise the need for it and agree to process it rapidly, because services in Northern Ireland depend on it. It is fair to say, however, that every speaker has identified that, in reality, it represents a shortfall.
As mentioned, there was a debate in the other House about how this almost looks like a punishment. The Secretary of State has denied that. We know, partly because of the financial mismanagement of government, that there is no money across the piece but, in this situation, why is Northern Ireland being squeezed harder than anywhere else, given the circumstances? Could the Minister explain why this is quite so tight, if it is not part of the pressure to get the Assembly back up and running?
The implications of this are, for example, that the other devolved bodies, Scotland and Wales, can negotiate pay agreements that do not appear possible in Northern Ireland, because the money is not there to fund them. This means that public sector workers in Northern Ireland will be disadvantaged relative to those in other parts of the United Kingdom if this settlement is not supplemented. Basic cash affordability needs to be addressed.
Looking at the summary of all the departments, with the exception of health and infrastructure, every single one is facing a cash cut. The real-terms cut across the piece averages 16%. The issue there is the expectation of problems for health and education. I am told that it means that no new school building programme will be followed. Although it is a very small department and the amount of money is small, the Authority for Utility Regulation is being cut by 40%, yet utility regulation is quite important. Could the Minister suggest why that is and what the implications are?
The contributions we have received have been interesting. The noble Baroness, Lady Ritchie, went through all these points in detail and made a very clear case for why the pressures in Northern Ireland need to be addressed and, of course, why we need an Assembly up and running.
It slightly took my breath away when the noble Lord, Lord Browne, opened his speech by saying that he wished this budget was being presented to the Northern Ireland Assembly. He implied that it was almost anybody’s fault that that was not happening other than the DUP’s. I am hopeful because every single DUP contribution has said that the DUP wants this to happen. That is, perhaps, an early indication that we are getting to the point where it might happen and this will never happen again. I can look cheerfully across and say that if that is the implication, I welcome it and look forward to hearing it because this cannot continue.
On a more serious point, the argument for why an agreement cannot happen is to do with the protocol and the Windsor Framework. I think the way it is put is that a foreign power makes rules binding on Northern Ireland, on which Northern Ireland has no say. We used to have a say, because we used to be part of that foreign power and we were able to make decisions and representations through elected representatives. The DUP campaigned to end that and these are the consequences.
It is worth noting that this week Apple has introduced its new iPhone. It will have a new connection—no longer a lightning connector but a USB-C connector, in conformity with the rules adopted by the European Union. Apple is an American company. Apple and the American Government have absolutely no say in the formulation of those rules, but Apple—the biggest company in the world—has had to conform to them. That is the reality when you trade; you negotiate terms but you also have to accept terms.
The problems that I acknowledge still exist within the Windsor Framework need to be addressed; we had a debate about that earlier this week. A very good committee report suggested how they might be addressed, but I suggest that they do not justify the continued dysfunction of the Assembly. There are issues that need to be addressed but I contend that they should be addressed from inside, not outside, if they are to be resolved.
The noble Viscount, Lord Brookeborough, basically said that the people of Northern Ireland are caught between the DUP and the Government. That is, I suppose, a practical fact. The challenge to the Minister—not the Minister here; to be fair, my challenge goes to other Ministers—concerns the initiatives that the Government are prepared to take to try to break the deadlock. They share some degree of blame for the impasse. It is not all the DUP’s fault; the Government have some responsibility for that and some responsibility for trying to resolve it. I think that was the point that the noble Viscount, Lord Brookeborough, wanted to make.
The noble Lord, Lord Morrow, gave us a very detailed exposé of the Holtham formula. Speaking from a Scottish perspective, the problem with that formula is that it represents—I know what he will say—a significant cut in the per capita allocation that Scotland currently enjoys. It is something that the SNP is unwilling to acknowledge but it is a fact. On the other hand, it probably genuinely addresses the need, as the noble Lord, Lord Weir, pointed out, not the desires. Northern Ireland needs more than it is being given just to stand still, never mind to catch up with the serious situation it faces. So I think we have to accept that we will pass this budget today—
Lord Weir of Ballyholme (DUP)
My Lords, I appreciate the point that the noble Lord has made in relation to the Scottish situation, but one advantage of the Holtham formula is that it is meant to provide a floor rather than a ceiling. From that point of view, it would not obviate a level of cutting funding for Scotland but ensure that areas such as Wales and Northern Ireland do not fall below a minimum.
Lord Bruce of Bennachie (LD)
I accept that. It is a perfectly fair point. For a long time, Wales has argued that the Barnett formula has not worked well for it, and it has not worked for Northern Ireland. The issue has not been the Barnett formula but historic spending. I speak not as a nationalist but in terms of Scottish representation. Any suggestion that the formula should cut back in Scotland would be politically unacceptable and pretty disruptive. I accept that what it offers is a framework for Wales and Northern Ireland to get fairer allocation than has been the case. Again, that is a responsibility for the UK Government to address. The devolved Administrations can ask for it, but it is up to the UK Government to determine whether they will do anything about it. But it has real validity.
As I said, we will pass this budget, and it will provide the immediate funds that are necessary, but it will leave Northern Ireland in a powerless situation where all the issues affecting the United Kingdom are significantly worse in Northern Ireland across the whole spectrum—every aspect of the public service, whether waiting lists or the general problem across infrastructure. I therefore ask the Minister: at what point, assuming there is a point, will the Government recognise that this needs to be addressed? As I said at the beginning, if it is not a punishment, is there nevertheless a reward at some point that can be secured? There needs to be.
My final point is the obvious plea for the Assembly and the Executive to be re-established, because it is just not acceptable that the people of Northern Ireland’s elected representatives are not meeting to debate these issues, make these recommendations, draw up their own budgets and, yes, make collective representation to the UK Government if they feel the overall funding level is not adequate. We are all weary of saying to the DUP to get back to the table and get back in, but we must say to them that this cannot go on and, if it does for very much longer, then, as the noble Baroness, Lady Ritchie says, the demand for reform will come louder and louder. I suggest that such reform would not be entirely comfortable to members of the DUP. I am trying to make a rational appeal, as it is in the DUP’s real interest. They have a better chance of having their concerns—which I accept are legitimate from their perspective in many cases—addressed if they address the democratic deficit than by sitting and making the sort of speeches that they have made: “We all wish there was an Assembly, but there is not, and it is somebody else’s fault”. That is not good enough. The DUP have it in their hands to get it right. If they do, then they can start to negotiate with other parties and the Government to say, “This budget is not enough; Northern Ireland deserves better”, and, collectively, they will get it. I hope the Minister will acknowledge that, at some point or other, if that happens, there is space to negotiate.
Lord Murphy of Torfaen (Lab)
My Lords, it has been said by nearly everybody who has taken part in this debate that we should not be having it and that this should be decided by the representatives of the people of Northern Ireland at Stormont. But we are where we are, so we clearly need to support the Government so that Northern Ireland can have some money. Without the Bill, its public services will not function. The debate today—this is a money Bill, so ultimately this is a matter for the Commons—is about whether in fact there is sufficient money and whether things would be different if there were a restored Executive.
On the first part, it is not as simple as saying that Northern Ireland is the same as everywhere else in the UK. It obviously and clearly is not. I was looking at English counties and which ones might be comparable to Northern Ireland in geography and population. One that I looked at was Hampshire, which has a population of just under 2 million people—the same as Northern Ireland. Hampshire County Council has doubtless grumbled and complained over the last number of years about the level of rate support grant that it gets from the Government, in the same way that Northern Ireland would complain that there simply has not been sufficient public funding for public services in the whole of the United Kingdom. There is a difference, however, between Hampshire and Northern Ireland. A lot of my time in the two years that was the Finance Minister for Northern Ireland was spent persuading my Treasury colleagues in particular that there was a difference, and that they had to make sure that the part of our country that had come out of 30 years of conflict was treated differently financially from anywhere else. Although it is a quarter of a century since the Good Friday agreement, the impact of those 30 years remains.
The other issue is that the basis for getting income in Northern Ireland is very different from Hampshire, in that Hampshire is much more prosperous than Northern Ireland. The level of resourcing—if you look at the different sorts of local taxation—does not actually bring in an awful lot of money in Northern Ireland. When we were discussing the strand 1 negotiations before the Good Friday agreement, I remember that we came to a day devoted to finance for Northern Ireland. We spent one hour on it, on the basis that there simply was not sufficient money for a special income tax, for example, to come from the people and the businesses of Northern Ireland. However, I am sure that that does not mean that we cannot look—or that the Assembly could not look in later years—at issues like water rates, which are paid everywhere else in the United Kingdom but not in Northern Ireland, although it will be argued that, in Northern Ireland, the rates form part of that. There are possibilities, but that is not the answer.
What is certain is that there is the combination of difficult financial circumstances in Northern Ireland and the fact that there is no Government. There is a county council in Hampshire which is elected and has to take the decisions; nothing is elected in Northern Ireland to take those sorts of decisions. They are not even really taken by direct rule Ministers. Although we are producing a budget here, we are not saying how to spend that budget. So, what do the Government do? We agreed with the Government on allowing civil servants to take decisions on budgets, but how far can they go? They cannot take decisions on policy, they cannot take decisions on programmes and they cannot take decisions on spending commitments. In other words, all they can do is oversee the ticking over of the budgets in departments.
That combination, where no meaningful decisions can be made on those issues, means that nearly every department in Northern Ireland is paralysed in terms of its spending. I will not go through it, because Members of your Lordships’ House have gone through, in detail, the effect on the health service, the education services, the police—particularly the result of the leak—and the criminal justice system and so on. They are all in serious trouble, because of not just a lack of funding but a lack of decision-making.
That combination is lethal, so how do we overcome it? There is one obvious way, but there are others too. The Treasury itself should be made to realise that Northern Ireland is different. The Treasury is not known for backing a long-term strategy and long-term issues. It is a very short-termist department—it always has been and I suspect always will be. It is therefore up to the Prime Minister and the other members of the Cabinet to persuade the Treasury that things are different in Northern Ireland.
That also applies to the point made by several speakers, including very effectively by the noble Lord, Lord Morrow, with regard to the Barnett formula. Yes, that formula was introduced by a Member of this House many years ago, but he disowned it eventually and indicated that an element of need had to be taken into account when exercising formulae for spending in Scotland, Wales and Northern Ireland. As has rightly been said, the Welsh Government looked very carefully at the issue with the Holtham commission and came up with a formula which means that the amount of money now going to Wales is based on proper need. I cannot see for one second why the Government cannot look at that formula in relation to Northern Ireland. Northern Ireland is obviously in great need, and those people who are most deprived in Northern Ireland are suffering most because of the absence of an Assembly and the absence of adequate funding.
The other perhaps small issue that could be looked at is that, apparently, every month in Northern Ireland the government departments issue communiqués about what they have done. It might be useful if they issued communiqués about what they cannot do: “We can’t do this, because there is no Assembly” or “We can’t do that, because there are no Ministers”. That might indicate how significant this is.
My final point is that this can be resolved only when you have a democratic system running government in Northern Ireland. We need the restoration of the Assembly and the Executive and the restoration of strand two on north-south issues—all those must be resolved ultimately and soon—for the issue of finance to be resolved. It is a huge issue. I am hoping that, in the next few months, the Minister can come to the Dispatch Box and tell us what is exactly is happening with those negotiations and that soon there will be a restored Assembly and Executive for all of the people of Northern Ireland.
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.
Royal Assent
Monday 18th September 2023
(7 months, 1 week ago)
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