Northern Ireland Budget (No. 2) Bill

Lord Caine Excerpts

2nd reading & Committee negatived & 3rd reading
Thursday 14th September 2023 Lords Chamber

Moved by

[Lord Caine]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Caine) (Con)]

My Lords, before I begin my comments on the Bill itself, I once again place on record my gratitude to your Lordships for considering this important Bill on a heavily truncated timetable.

My right honourable friend the Secretary of State for Northern Ireland and I set out the budget allocations for each Northern Ireland department for 2023-24 in a Written Statement, which I placed before your Lordships’ House on 27 April. All this Bill does is put those allocations on a statutory footing; it does not change the numbers. I do not propose to repeat the contents of that Written Statement, which sets out the respective departmental allocations. Those budget allocations, as with the 2022-23 Northern Ireland budget, were developed as a result of extensive and sustained engagement with the Northern Ireland Civil Service.

The Bill will mean that Northern Ireland departments have a total available resource budget of £14.2 billion and a capital budget of £2.2 billion. This includes the Northern Ireland Executive block grant set at the spending review in 2021 and through the subsequent operation of the Barnett formula and income from regional rates. I emphasise that the sum available for this budget would have been the same provided to an Executive for 2023-24 if an Executive were in place.

Of course, it is the Government’s clear wish that these matters were being dealt with by a fully functioning Northern Ireland Executive and Assembly, operating in accordance with the 1998 Belfast agreement, and we are working tirelessly to bring that about. However, in the absence of an Executive, it is the responsibility of the Northern Ireland departments now to make the specific spending decisions to ensure that they live within the budget limits as set out in this Bill. I recognise that this is not easy and will require difficult decisions.

Noble Lords will remember that the UK Government inherited a significant prospective overspend in 2022-23, to the sum of £660 million, and a reserve claim of £297 million was provided to balance last year’s budget. With agreement from my right honourable friend the Chief Secretary to the Treasury, flexibility has been granted on the repayment of that reserve claim. This will provide some protection to front-line public services in Northern Ireland from having to take the most severe reductions.

With the leave of the House, I will speak to the clauses—I apologise that these are somewhat technical and legalistic in nature. Clauses 1 and 2 authorise the use of resources by Northern Ireland departments and other specified public bodies, amounting to £27,403,514,000 in the year ending 31 March 2024. In short, these clauses authorise the use of resources to that amount by departments and other specified public bodies for the purposes set out in Part 2 of the schedule estimate.

Clauses 3 and 4 authorise the Northern Ireland Department of Finance to issue out of the Consolidated Fund of Northern Ireland the sum of £22,790,893,000 for the year ending 31 March 2024, and the use of that sum to finance the expenditure that departments will need cash to fund. In short, these clauses allow the Department of Finance to allocate actual cash.

Clause 5 authorises the temporary borrowing by the Northern Ireland Department of Finance of £11,395,447,000—approximately half the sum covered by Clause 3. This is a normal safeguard against the possibility of a temporary deficiency arising in the Consolidated Fund of Northern Ireland, and any such borrowing is to be repaid by 31 March 2024.

Clause 6 authorises the use of income by Northern Ireland departments and other specified public bodies from the sources specified in Part 3 of the schedule estimate, for the purposes specified in Part 2 of the schedule estimate, in the year ending 31 March 2024.

Clause 7 provides for the authorisations and limits in the Bill to have the same effect as if they were contained in a budget Act of the Northern Ireland Assembly. It also modifies references in other pieces of legislation to the Northern Ireland estimates that would normally form part of the Assembly’s supply process.

Clauses 8 and 9 are self-explanatory, in that they deal with matters such as interpretation and the Short Title.

The schedule to the Bill sets out the estimates for each Northern Ireland department—that is, the amount of money authorised for use, the purposes for which it can be spent and other sources of income from which it can draw. For each department, Part 1 of the schedule estimate sets out the amount of resources authorised for use by each Northern Ireland department and other public bodies, and the sums of money granted to each Northern Ireland department and other bodies, for the year ending 31 March 2024. Part 2 of the schedule estimate sets out the purposes for which resources and money can be used by each Northern Ireland department and other bodies for the year ending 31 March 2024. Finally, Part 3 of the estimate sets out the sources from which income can be used by each Northern Ireland department and other body for the year ending 31 March 2024. I apologise again for the technical and legalistic nature of those clauses.

Before I conclude, I make a short statement on legislative consent. Clearly, we have been unable to secure a legislative consent Motion from the Northern Ireland Assembly, given that it is currently not sitting. Of course, if it were sitting, we would not have needed the Bill at all. However, the continued absence of the Assembly and the Executive means that we have been left with no other option but to take action here in the United Kingdom Parliament.

I hope I have provided your Lordships’ House with sufficient detail on the background to the Bill, the necessity for it and the intended effect of each provision within it. I commend it to the House. I beg to move.

--- Later in debate ---

[Lord Caine (Con)]

My Lords, I am very grateful, as ever, to all noble Lords who have contributed to this important debate on the budget. In particular, I acknowledge the kind words of the noble Lord, Lord Weir of Ballyholme. To continue his “The Godfather” analogy, I set out the budget provisions today and made the DUP an offer that it certainly has refused.

At the outset, picking up on the words of the noble Lord, Lord Murphy of Torfaen—for whom, as I have said many times, I have a huge respect—and the noble Lord, Lord Bruce of Bennachie, and others who have spoken about the restoration of the Stormont institutions, there is nothing I would like more than to stand at this Dispatch Box and announce the restoration of the institutions and a fully functioning Executive and Assembly. I am a firm supporter of the 1998 agreement, as are His Majesty’s Government. As I said at the outset, we are working tirelessly to try to bring about that situation. I am not in a position, as noble Lords will understand, to give a commentary on progress. My right honourable friend said earlier in the week that some significant progress has been made. Noble Lords behind me have pointed out the issues around the Windsor Framework that still need to be resolved before they feel confident to go back into an Executive. Just to be clear, His Majesty’s Government never felt that they were justified in pulling out of the institutions in the first place—and before any of them stand up, my comments would apply equally to the actions of Sinn Féin between 2017 and 2020. We believe the right place for the Northern Ireland parties is within the Executive running local services for the benefit of the people of Northern Ireland.

My right honourable friend has made some progress. In response to the comments of the noble Baroness, Lady Ritchie of Downpatrick, I can assure her that we are not talking to just one political party in Northern Ireland. Shortly before the Summer Recess, I spent a day with all five major parties in Northern Ireland, and my right honourable friend is in discussions with all of them constantly and will continue to be so. However, she will understand that one party is having difficulty going back into the institutions, and therefore it is right that we seek to look at and address its concerns.

I will not go into the details on the Windsor Framework, as many noble Lords here were present for the very long debate held in Grand Committee on Monday, where my noble friend Lord Ahmad of Wimbledon set out extensively and clearly the Government’s position. To reiterate briefly, we believe that the Windsor Framework provides the basis for the restoration of the institutions, but we will continue to work through these issues with the hope of an early resolution.

In the absence of that, a number of noble Lords raised the role of the United Kingdom Government, including the noble Lords, Lord Alderdice and Lord Bruce of Bennachie, and the noble Viscount, Lord Brookeborough. As the noble Lord, Lord Murphy, pointed out, we have given powers to civil servants to take certain decisions in the public interest in Northern Ireland essentially to keep public services moving. As I said when I introduced the legislation—the Northern Ireland (Executive Formation etc) Act and the Northern Ireland (Interim Arrangements) Act—this is not intended for the long term. These are not sustainable measures for the government of Northern Ireland. The priority has to be to get the institutions back. In the event that that is not possible, we will obviously have to look at what further interventions might need to take place from the United Kingdom Government consistent with our position as the sovereign Government within Northern Ireland. So we do not rule that out, but our priority has to be to work to get the institutions up and running.

A number of noble Lords referred to the allocation of funding in the budget. I am the first to acknowledge to your Lordships that this is a difficult situation and a difficult budget, as noble Lords have pointed out. Unfortunately, it is a reflection of the reality in which we find ourselves, or which the Government found themselves in in October last year when Northern Ireland Ministers vacated their departments under the rules. They left office, and we had to start working with the Northern Ireland Civil Service on the figures and initially uncovered a £660 million black hole in the finances. So we have been working very closely and in tandem with the Northern Ireland Civil Service in order to address that situation. I am the first to admit that it is challenging, and I pay tribute to the head of the Northern Ireland Civil Service and the heads of the Northern Ireland departments for the work that they have done with my officials in the Northern Ireland Office to try to establish a basis for putting Northern Ireland’s finances on a sustainable and longer-term footing.

A number of noble Lords referred to individual departments and programmes within individual departments. I am happy to write to noble Lords on that. I do not intend to go into the details of each programme, not least because of time but also because, while the Government have set out the allocations within the budget, within each department it is then for the Permanent Secretaries and officials, absent of political direction from Ministers, to determine the individual allocations internally. The Government have, under the current legislation, no powers to direct or control civil servants within departments on the spending of money and the allocations for individual programmes. However, I will just pick up briefly on the points made by the noble Viscount, Lord Brookeborough, who made a very good and powerful pitch for his local hospital in Fermanagh. I am aware of the difficulties, of course, but it is for the Department of Health to allocate funding from its budget of £7.3 billion. We have no powers to direct it, but I acknowledge that he makes a very powerful case.

What I would challenge is the assertion made by a number of noble Lords on the DUP and Opposition Benches that Northern Ireland has suffered from chronic underfunding over a number of years. I remind the House that public spending per capita in Northern Ireland is some 20% higher than the UK average. The settlement in the 2021 spending review was the most generous since the restoration of devolution in 1998-99.

There have been numerous occasions, to which I can testify, when—to follow the noble Lord, Lord Murphy of Torfaen—the Treasury has recognised the exceptional circumstances of Northern Ireland. In the 2014 Stormont House agreement, with which I was involved, there was an additional £2 billion of extra spending power for the Northern Ireland Executive. There was an extra half a billion in the fresh start agreement in 2015, an extra £1 billion in the confidence and supply agreement, and more money—I think over £2 billion—in New Decade, New Approach. The Government have recognised the unique circumstances of Northern Ireland and I reject the assertion that it has somehow been starved of cash since 2010.

However, I listened with interest, as always, to the noble Lords on the DUP Benches—echoed, to some extent, by the noble Lord, Lord Murphy—about the reform of the Barnett funding formula. Following our last budget debate some months ago, the noble Lord, Lord Morrow, and his colleague the noble Lord, Lord McCrea of Magherafelt and Cookstown, came to see me. We are, as a Government, open to sensible suggestions and discussions around funding. However, I would point out, as noble Lords have, that in respect of the funding reforms in Wales following the Holtham commission, that was a conversation between the United Kingdom Government and the Welsh Government—not a conversation between the UK Government and just one party in Northern Ireland.

These matters are, as has been acknowledged, principally for His Majesty’s Treasury. They would normally take place from Government to devolved Administration. As other noble Lords have pointed out, the negotiations over the Holtham commission took some seven years to resolve. Even if there were a case for reform, and that reform were agreed, it would not necessarily be an overnight fix for the problems or issues we are dealing with in the budget today.

The noble Baroness, Lady Ritchie of Downpatrick, and the noble Lord, Lord Murphy of Torfaen, referred to revenue raising. I point out that it was his noble friend Lord Hain who was the first, I think, to put water charges on the table back in 2006-7, before the restoration of the Executive in 2007 following the St Andrews agreement. The position is that the Government have taken the power and directed the Northern Ireland departments to look at revenue raising or potential revenue raising measures. Those departments reported to the Government some weeks ago. We are now looking, in the absence of an Executive, at directing the departments to consult on some of the options they have presented to us. However, we are not in a position to implement any of those recommendations; we do not have the powers. The purpose of the exercise is to present a range of options for an incoming Executive to examine once devolution has been restored. It is clear that, if the Northern Ireland budget is to be put on a sustainable footing, there will have to be a combination—obviously—of difficult spending decisions and some revenue raising.

I am conscious of time. I listened, as always, with enormous interest and respect to my mentor on many of these matters, my noble friend Lord Lexden, who reminded me of the role of two heroes of mine: Bonar Law and Stanley Baldwin in the 1920s in respect of Northern Ireland. I am tempted to add a third great unionist Prime Minister, Sir James Craig, who was instrumental in the 1920s and 1930s in establishing the funding settlement for Northern Ireland, which has lasted many decades. My noble friend said he regrets the fact that the word “unionist” is no longer used in my party’s name as much as it was. I can assure him that I have always made it clear that I regard the term “unionist” as being as important, if not more so, in our party’s name as “Conservative”—but that is probably a personal view.

My noble friend and the noble Lord, Lord Weir of Ballyholme, raised the role of the Irish Government. I assure both of them that, of course, matters regarding the budget are entirely strand 1 issues and internal Northern Ireland and United Kingdom matters. Of course we discuss many issues with the Irish Government, but, in the absence of an Executive looking at the budget, it remains that decisions over the budget are entirely for the United Kingdom Government. There is no formal role for the Irish in that, and rightly so.

My noble friend also referred to the words of the Taoiseach earlier this week in respect of a united Ireland. I echo my right honourable friend the Secretary of State’s comments that they were not necessarily the most helpful in the current context. Noble Lords will know that the constitutional position of Northern Ireland is clearly set out in the Belfast agreement, based on the principle of consent. There is no indication whatever that there is anything but a substantial majority for the union and Northern Ireland’s continuing position within it, and I warmly welcome that. This Government’s view is clear: there is no inevitability about a united Ireland, nor is it desirable. The best future for Northern Ireland is within a strong and stable United Kingdom.

I have tried to answer as many points as possible, and I have probably been speaking for slightly longer than I anticipated. If there are any other issues, I am of course happy to take them up outside the Chamber in meetings and correspondence with noble Lords.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.