Devolution and Growth across Britain

Sammy Wilson Excerpts

Wednesday 3rd June 2015 Commons Chamber

[Mr Umunna]

Perhaps I will help the hon. Gentleman shortly, because I am coming straight on to Wales.

We are told that the Wales Bill will deliver a clearer, more stable devolution settlement for Wales and devolve important new powers to the National Assembly for Wales and the Welsh Government. We understand that a funding floor is to be introduced to protect Welsh relative funding and provide certainty for the Welsh Government in planning for the future. We support measures to put Welsh devolution on a stronger statutory basis, as is the case with Scotland. We agree with taking forward proposals from the Silk commission and extending the power that the people of Wales have over their transport, elections and energy.

To come to the point made by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), let me be clear that Wales must not be unfairly disadvantaged by the Barnett formula. The Conservative-led coalition cut the Welsh budget by £1.5 billion. This Conservative Government must ensure that there is a fair funding settlement for Wales by introducing a funding floor. That funding floor should not be contingent on an income tax referendum.

The Queen’s Speech refers to legislation to implement the Stormont House agreement in Northern Ireland. This issue was raised in Prime Minister’s questions. The legislation will provide the architecture to deal with the past, institutional reform at Stormont and certain economic measures, including the devolution of corporation tax. In view of the concerning escalation of the dispute over welfare reform, we urge the Government to do all in their power to work with the Northern Ireland parties and, where appropriate, the Irish Government to avert this serious threat to political and economic stability in Northern Ireland.

[Sammy Wilson (East Antrim) (DUP)]

Does the hon. Gentleman accept that if the impasse is not resolved and the hole in the Northern Ireland budget of 6% for the remainder of this year is left unresolved, the only answer is for the Government to take over the welfare reform powers from the Northern Ireland Executive, because some parties have clearly shown themselves to be incapable of dealing with them?

[Mr Umunna]

Without wanting to fuel the dispute, I would say that the important thing is that it does not get that far. It is important that all the parties manage to find a resolution to the dispute. I know that the talks are ongoing today.

I have talked a lot about growth, but before I conclude, I want to turn to the specific growth measures in the Queen’s Speech. I sincerely hope that this Government have more success than the last one in the delivery of their policies on regional growth. In the last Parliament, having hastily and mistakenly abolished the regional development agencies that we established, the Government asked local enterprise partnerships to do basically the same things as the regional development agencies, but without the powers or the resources. Local enterprise partnerships have had mixed success. We want this Government to resource them properly and give them the support that they need to do the job that is being asked of them.

The last Government’s flagship regional growth fund was mired in chaos and delay from the start. Eventually, it managed to get moneys to successful bidders, although I suspect that a substantial amount is still gathering dust in Treasury coffers. We wait to see what further measures there will be in that respect in the Budget.

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[Sammy Wilson]

Central to the Stormont House agreement was the implementation of welfare reform. If that proves to be impossible because of the intransigence of both the Social Democratic and Labour party and Sinn Féin, who agree to the Stormont House agreement, will the Government take on responsibility for introducing welfare reform in Northern Ireland?

[Sajid Javid]

I am aware that there is a very delicate situation in the Northern Ireland Assembly at the moment, but we remain committed to introducing the Stormont House agreement.

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[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.

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[Sammy Wilson (East Antrim) (DUP)]

I welcome this commitment in the Queen’s Speech:

“To bring different parts of our country together, my Government will…bring about a balanced economic recovery.”

That is, first of all, essential economically, because, if we are to avoid certain parts of the economy overheating while resources lie idle in others, we will need to take that balanced approach. Secondly, as a Unionist, I believe it is essential politically, because nationalist parties in Northern Ireland, Scotland and Wales are good at exploiting economic grievances—or perceived economic grievances. Therefore, it is very important that together we have an economy that is growing.

Unfortunately, the Government’s record over the previous five years has not been one of promoting a balanced economy. Yes, there have been successes—we have seen economic growth and an upturn in the economy—but it has not been universal across the United Kingdom. There are still parts where unemployment is high, where there is huge dependency on welfare and where there is still very little economic growth. It will be interesting, therefore, to see how that promise is put into practice.

Devolution is one of the ways it can be done. In Northern Ireland we have been working at coalition government with five parties—which makes the coalition Government here in Westminster look like a love-in, because we have been dealing with people who are, quite frankly, almost impossible to work with. Despite that, with the powers we have had we have kept unemployment in Northern Ireland at this stage of the economic cycle at a level that would not have been experienced in the past. We have promoted the best inward investment of any region in the United Kingdom, and we have built more social and affordable housing, despite the cuts in capital budgets, by using resources and selling assets.

[Jim Shannon (Strangford) (DUP)]

All that is threatened by the abstentionist policy of Sinn Féin, who do not take their seats here, and by the SDLP, who do. They object to the welfare reform proposals that have been introduced. Does our economic course in Northern Ireland depend on the settlement of that process in Northern Ireland?

[Sammy Wilson]

It is jeopardised by some actions of the coalition partners, and I want to get a commitment from the Government on that issue.

In my experience over the past five years, when a case has been made for additional powers for devolved government, the Government have responded. We have seen the limited devolution of air passenger duty to the Northern Ireland Executive; the promised devolution of corporation tax, which my hon. Friend says is now being put in jeopardy; the exemption from the carbon price floor because of the structure of our energy market; flexibility over budget spending; and carry-forward powers. All those things have been good, positive ways in which the Government have responded in the past. I look forward to working with them, given the commitment shown in the Queen’s Speech.

During the election, we presented our Northern Ireland economic plan. It includes a range of measures, some of which require additional spending, changes in legislation and co-operation between central Government and the devolved Government, but they are all designed to help Northern Ireland reduce its dependency on the public sector, grow the local economy and increase the private sector. I look forward to working with the Government in implementing those plans and testing their commitment to using devolution to promote uniform growth across the United Kingdom.

Although some central Government policies might make sense in the wider UK context, they have a disproportionate impact on parts of the economy that, because of our structural differences, the historical difficulties we have experienced and our geographical disadvantage, are not robust or that are different and therefore require different treatment.

I am interested in the promise in the Gracious Speech to introduce legislation to give effect to the Stormont House agreement in Northern Ireland. It is a very important agreement because it is about not just implementing welfare reform, but devolving corporation tax and giving the Northern Ireland Executive the power to borrow in order to effect structural changes in the public sector. It is also about getting additional funding for infrastructure developments and the ability to pay off previous loans by having flexibility in our spending arrangements.

A lot is at stake with the Stormont House agreement, and yet it has been put in jeopardy by the refusal of the Social Democratic and Labour party and Sinn Féin to implement one important aspect of it, namely welfare reform. Despite the fact that, in an Assembly vote, the vast majority of Members voted to put through the agreement and welfare reform part of it, because of our constitutional arrangements in Northern Ireland and the requirement for a cross-community vote, it has been blocked. As a result, not only have many of the important things that would have been available to the devolved Government been stopped, but we have a hole in this year’s budget of more than £600 million—or 6% of the budget—which is fiscally impossible to repair at this time.

If the situation persists, there is one power that the Government must bring back to this House. It will disadvantage the people of Northern Ireland because the concessions will be lost, but we cannot afford for welfare reform to be a blockage to all the other changes. Although we are talking about devolving more powers, if parties persistently refuse to implement the welfare reform package—which I suspect most Members of this House would be jealous of because of the concessions Northern Ireland has been given—I appeal to the Government to take that power back.

[Several hon. Members]

rose—