Devolution and Growth across Britain

Alasdair McDonnell Excerpts

Wednesday 3rd June 2015 Commons Chamber

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

I welcome the opportunity to make a small contribution to today’s Queen’s Speech debate on the topic of devolution and growth. I would like to put the emphasis on the growth.

We heard in the Queen’s Speech that there will be renewed focus on the Stormont House agreement, which we very much welcome. The SDLP, along with four other Northern Ireland parties, had useful meetings with the Secretary of State for Northern Ireland and the Irish Foreign Affairs Minister Charlie Flanagan yesterday afternoon. In that regard, we are all well aware of the current very difficult issues Northern Ireland is facing, particularly over the vexed issue of welfare reform. We are fully aware that other regions share the problem, but we believe that it will have a particularly harsh and devastating effect on those with disabilities, the vulnerable and those in the margins of our society.

For the benefit of the House, I would like to remove any doubt and reaffirm that the SDLP will continue to engage with the Secretary of State for Northern Ireland, the four other main parties in Northern Ireland and the Irish Government on all the challenges and issues linked to, and flowing from, the Stormont House agreement. We support devolution, and we constantly work to make Northern Ireland work within that devolution framework. The SDLP will continue to build on the strong elements of that Stormont House agreement and to improve the elements that are weak. That was our pledge when the agreement was made at Christmas on the conclusion of the talks, and it is our pledge today. We have remained true to that promise and will continue to propose progressive amendments and improvements to the current package of welfare reform in ways that we feel will best protect the vulnerable in Northern Ireland society.

The issue of welfare reform opens up a much wider debate on the current perilous, vulnerable and unsustainable economic state in which Northern Ireland survives. The need is for a radical economic agenda to address that problem. For me and my party, this is a problem that will not solve itself.

We are told that we in Northern Ireland generate tax revenues somewhere in the region of £14 billion a year, and we are said to consume almost £24 billion in public services. That is a deficit of £10 billion a year in subventions, and it is a deficit covered in part by the block grant and other subventions through the Barnett formula. We need that subvention, but we must also create some ambition and some parallel aspiration and hope for a better economic future for our children and our grandchildren.

My comments should not be taken in any way as accepting automatic reductions to the block grant or cuts, which can be avoided. Rather, I am advocating that something extra is needed—some sort of economic booster—if we are to achieve the decent economic balance that we deserve and hope for.

For many people, the situation is fiscally unsustainable, because the deficit is growing while the revenues remain flat. It is politically unsustainable, because the dynamic of political elements and developments here at Westminster are moving against us. It is socially unsustainable, because it does not encourage real political responsibility to counter the ever-present risk of social unrest in the streets. It is a problem, in short, that we all have to address. It first has to be honestly recognised and acknowledged.

[Sammy Wilson]

I hear all the hon. Gentleman’s fine words, but does he accept that the action that his party took, along with Sinn Féin, in blocking the Stormont House agreement has led to an increased deficit in the Northern Ireland budget this year? There is a hole of £600 million in the budget, which we must try to finance in the remaining nine months of the year.

[Dr McDonnell]

The hon. Gentleman has missed the thrust of what I am trying to say. There is an economic problem in Northern Ireland. We had a peace process, and a political process that flowed from it. The hon. Gentleman knows as well as I do that there was to be a peace dividend, which never quite arrived. We need to find ways and means of establishing that dividend. It is not enough to have welfare reforms without jobs for people to go to.

We must recognise the problem, and acknowledge that a problem exists. If we do not acknowledge that a problem exists, how can we tackle it? It is impossible to tackle a problem if we do not clearly understand its size and severity. We need a new consensus between the two sovereign Governments—the British and Irish Governments —all the parties in Northern Ireland, the business community and society at large on a meaningful programme for economic development. If that does not happen, we will end up with instability. We need everyone on board. In fact, in some respects we need a re-engineering of our whole economic outlook.

Our problem is compounded by the fact that only about 37% of the revenue produced in Northern Ireland is generated by what might be described as the private sector. Everything else is generated, in one way or another, by Government spending, and most people agree that that is not a sustainable position. The proportions are astounding. Almost the exact reverse of what is happening in Northern Ireland is happening in the Irish Republic, a few miles away. We are subsidised, and we have subsidy politics—which means that we have politics without much ambition, without much social development, and without much economics. We want a future, and our people want a future. They want a sustainable future for their children. That is why we in the SDLP are proposing a social transformation, perhaps on a par with the peace process—it could be described as a prosperity process—which will create a normal, sustainable economy.

This is not just about rebalancing the economy; it is about transforming the economy. Everyone pays lip service to the idea of transforming as well as rebalancing the economy. The Prime Minister himself paid a great deal of attention to it before the last election, but even he had to admit that it would take a generation to sort it out. Since then, little meaningful has happened except the cuts. A more balanced economy is something that cannot be wished into existence. It will not happen by accident, and it will not happen magically. We cannot make sense of cutting corporation tax and cutting higher education and training places at the same time. We cannot solve the problem by firing public sector workers. In fact, the problem is not in the public sector at all.