Northern Ireland Budget (No. 2) Bill

2nd reading
Monday 10th July 2023 Commons Chamber

Second Reading

[Relevant documents: Oral evidence taken before the Northern Ireland Affairs Committee on 3 May, 24 May, 21 June and 4 July 2023, on the funding and delivery of public services, HC 1165.]

20:06

[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.

20:26

[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.

20:38

[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.

20:45

[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.

20:54

[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—

[Claire Hanna (Belfast South) (SDLP)]

Another promise broken.

[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.

21:17

[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.

21:26

[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?

21:34

[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.

[Chris Heaton-Harris]

indicated dissent.

[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.

21:47

[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.

21:57

[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.

22:08

[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.

22:18

[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.

22:27

[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.

23:07

[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]

Will the Minister give way?

[Mr Baker]

I will, as I referred to the hon. Gentleman.

[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]

At the risk of sounding like a stuck record, the best way to get those questions answered is to get the Executive back and the Executive making these decisions—

[Richard Thomson]

And in its absence?

[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).