Northern Ireland (Interim Arrangements) Bill

Stephen Farry Excerpts

2nd reading
Wednesday 10th May 2023 Commons Chamber

[Mr Baker]

The right hon. Gentleman is absolutely right, and I apologise to him and to Northern Ireland Members. I had it in my head to say “privileged access to the EU”, but seeing him sitting there, I wanted to mention the UK first. It was a mistake. He is absolutely right that Northern Ireland’s right to trade unhampered into the UK is one that, as we explained at oral questions earlier, we continue to stand by and preserve, and which, under the Windsor framework, we have permanently guaranteed. I am grateful to him for clarifying that point. I will press on.

Before I provide an overview of the Bill, I should say a few words on Northern Ireland’s public finances. As the Bill’s provisions indicate, we are acutely concerned about the long-term sustainability of public finances in Northern Ireland. It was with considerable disappointment that my right hon. Friend the Secretary of State found it necessary once again to step in and set a budget for Northern Ireland for 2023-24 in the absence of a Northern Ireland Executive and Assembly. As the Secretary of State has made clear on multiple occasions, the extent of the budget pressures facing Northern Ireland Departments is extremely challenging. Departments are facing difficult and unavoidable decisions in the current difficult and frustrating circumstances.

The Government recognise that we need an Executive in place to take some of those difficult decisions and make the choices on budget priorities—choices that officials should not have to face without Ministers. We stand ready to work with a restored Executive on that, but in the meantime, we the Government of the UK have a responsibility to ensure that public services and the management of public funds can continue in their absence, so we will in due course take forward legislation to put the budget on a legal footing. Members of this House will have the opportunity to debate those allocations in detail at that time, if and when we come to it.

[Stephen Farry (North Down) (Alliance)]

There is concern about the nature of the current civil service guidance. The Government believe that the civil service has the capacity to take decisions; civil servants do not believe that they have the vires to take decisions, particularly in relation to statutory functions. Does the Minister recognise that we are at somewhat of an impasse in the current status quo, and that there is a danger that we end up either with difficult decisions being deferred, which makes them more painful, or with a managed overspend, which is another very undesirable situation?

[Mr Baker]

I do recognise those aspects. We have published today revised guidance and those relatively small changes are now available on gov.uk. We will certainly be interested in the hon. Gentleman’s views, and those of all relevant parties, on that guidance. In a nutshell, I agree with him that the best way forward is to restore the institutions. I am trying not to hector, but we are all very frustrated. As I have repeatedly said, I recognise that the Democratic Unionist party and Unionism more broadly face a very difficult compromise, but I am committed, as I know the hon. Gentleman is, to saying that devolved government in Northern Ireland is the best way forward.

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[Gavin Robinson (Belfast East) (DUP)]

I appreciate being called earlier than I had anticipated, Mr Deputy Speaker. We had a brief conversation earlier, and despite what you said, the prospect of another four and a half hours of debate is probably too tantalising to ignore. Although normally I do not speak for long, I may take the opportunity to speak a little longer this afternoon. [Interruption.] I jest.

Like others, I lament the fact that we are debating this Bill this afternoon and dealing with a Northern Ireland Office that, yet again, I am sorry to say, is missing a crucial opportunity. It is a Northern Ireland Office that has lost any sense of strategic direction; it has lost the ability to engage, understand and resolve some of the pressures that we have in Northern Ireland. I lament the fact that the relationships from which we benefited over the last few decades no longer exist, and I lament, more than anything else, the fact that, while the Bill has been described this afternoon as legislation that closes a constitutional gap—or continues a governance gap—that opportunity has been 100% missed.

It did not need to be this way. The Northern Ireland Office had been actively engaged with the Northern Ireland civil service over the last three or four months, and had drafted provisions for the Bill that would have given the Secretary of State step-in powers and the opportunity to assist with some of the difficult decisions that are facing our Northern Ireland public service Departments. However, the NIO actively chose to leave those provisions out of the Bill. I know that this is not a Committee stage, but because new clause 5 has not been selected, I will say now that we tabled it to highlight the point that the choices that now rest with permanent secretaries in Northern Ireland are unfathomable. The opportunity was there for political direction on the taking of decisions when political direction was required, but those in the Northern Ireland Office have chosen not to take it. They will continue to say what they have said over the last few months—“It is not for us to make political choices”—but that is a political choice that they have made.

When the Government raised the rates in Northern Ireland this year, while still talking about revenue raising and the need for more finance to come from Northern Ireland, they made a political choice. They increased the burden on homeowners, domestic ratepayers, by 6%, and excluded businesses by freezing their regional rate. They made a political choice. When they talk about revenue raising, they know that some £1.5 billion to £1.7 billion a year is raised from revenue. If every domestic and non-domestic ratepayer in Northern Ireland paid 50% on top of their bills that are due next week, that would still not cover the shortfall that faces Northern Ireland Departments as a result of the budget given to them by the NIO.

When that budget was delivered last week, it was delivered in the explicit knowledge of the decisions that permanent secretaries would have to make, but cannot make. Everyone in the Chamber is aware of the legislative preclusions that prevent them from making those decisions. Members know the impact of the Buick and JR80 judgments. They know that the permanent secretaries cannot do that. They had indicated in advance to the Northern Ireland Office—to the Secretary of State and the Minister of State—that the budget that they were handed would mean they would have to take decisions that would conflict fundamentally with the statutory obligations and duties that they have to undertake. They cannot do it.

While the flexibility on the £279 million is useful in one sense, it is hugely dangerous in another, given the damage that it will do through the breach of parity in public pay awards between Northern Ireland and the rest of the United Kingdom. Anything that is agreed in the forthcoming weeks and months in England will benefit public workers in England but not those in Northern Ireland, and that gap will grow. The flexibility is useful, but given the direct knowledge of the underspend and the challenging decisions that will have to be taken, it is outrageous that that is the sort of offer that our Departments have received.

[Stephen Farry (North Down) (Alliance)]

I agree with much of what the hon. Member is saying about the failure of the Northern Ireland Office to address the governance gap, but does he not think it is a little bit difficult for people to hear him say such things when his party has the power to address all the concerns he has been raising if they return to the Executive? While he is right to criticise the Government, surely he should also exercise some self-reflection on the role of his own party, because all those ills could be cured by him and his colleagues tomorrow.

[Gavin Robinson]

I find it amazing that the hon. Gentleman has made that point. He knows it is the biggest falsehood that is being peddled today, and it was addressed earlier by my right hon. Friend the Member for East Antrim (Sammy Wilson). If the Executive were up and running tomorrow, the fundamental damage being caused by the budget and the fundamental choices having to be made would still be there, but the resource would not. Departments are saying today that there is an £800 million shortfall in their ability to deliver, and that they will now have to take decisions that conflict with their statutory obligations, and that same choice will be there tomorrow unless the Government say that they will reflect on the systematic and systemic underfunding of the Northern Ireland budget, and will recognise that the Barnett formula must be assessed on the basis of need. Unless that happens, the choices that are there today will be the choices that are there tomorrow.

Let me spell it out. What do we know from the Department of Justice? It is hundreds of millions of pounds short of what it needs. The police alone do not have enough money to cover last year’s shortfall, let alone an additional £35 million shortfall this year. Where can they make the cuts? They can make them through headcount and non-pay. On headcount, we know that devolution was restored in 2020 under the New Decade, New Approach agreement, which recognised that policing numbers needed to reach 7,500. In March this year the figure was 6,700, and it is projected to be 6,400 in March next year. That is the sort of choice that is available today to a permanent secretary, and would be available tomorrow to a restored Government.

Earlier today, the Minister of State was answering questions about the cost of living crisis, but yesterday we heard from the Department for Communities about the extent of its shortfall. A third of the social homes that were planned to be built this year cannot be built: 2,000 were projected, and 1,400 will be delivered. No money is available for the new health assessments associated with benefits, and there is not enough money to progress the assessment of benefit applications. That is what has been delivered by the NIO: choices that are there today and would still be there tomorrow if there were a return to devolution.

Then there is the enormous shortfall in the Department for Infrastructure, where the permanent secretary is highlighting her statutory obligations and the money she does not have in order to meet them. So what are her choices? To stop gritting the roads? To stop treating waste water? How often do we hear about the importance of climate issues and looking after our environment? But that is one of the choices available to the permanent secretary in the Department for Infrastructure. Another is to turn off the street lights. I do not think that the Secretary of State or the Minister of State or the NIO is interested in streetlights. The only thing in which they seem to be interested at present is gaslights, because the politics of all this has been about gaslighting people in Northern Ireland. What is psychologically questioning our understanding of how finances work, and telling us that we are overfunded when we know that we are structurally underfunded—standing in this Chamber and saying, “Oh, but Northern Ireland gets 121% of what people in England get”, when we know that that is less than what Northern Ireland needs—if it is not gaslighting? That is the diet that we have had over the past number of months, and it seems certain that that is the diet that we are going to continue to get.

The Northern Ireland Fiscal Council has been explicit. When I talked about the Northern Ireland Fiscal Council in this Chamber in January and last year, whoosh, it went straight over people’s heads. It meant nothing. I know that sometimes the figures in these documents are boring, but they are crucially important in terms of the ability to deliver public services for everyone in Northern Ireland.

I represent a constituency that has some incredibly affluent areas, but it also has some incredibly deprived areas where social deprivation is a real thing. Wards in my constituency feature in the top 10 most deprived wards in Northern Ireland. In the Mount ward, at the bottom of my constituency, just off the Newtownards Road, 25% of children are leaving primary school without basic literacy and numeracy skills. Forget the 11-plus—they are going on to secondary school without the basic ability to read, write and count. What has this budget delivered? It has delivered an end to the extended schools programme and an end to free books for babies. Just a few months ago, the Northern Ireland Affairs Committee visited EastSide Learning in my constituency. The chairman cheekily asked, “I see those books—the spines haven’t been broken. Does anyone read them?” He was informed that they were brand new books, but the Department of Education is not going to be able to give brand new books to children in my constituency any more. It is outrageous.

The Pathway funding, which is about ensuring the social, emotional and cognitive development of young children before they get to nursery and primary school, is not going to be there. The Department of Education has said that from June there is no money available for such vital developmental early years intervention. Whether it is the Dee Street and the Ballymacarrett youth centre or the Bloomfield Community Association youth centre, all of these interventions matter. The public services that are delivered in Northern Ireland matter, and this budget fundamentally constrains the opportunity to provide for the needs of those children and our constituents right across Northern Ireland. The opportunity was there, and it should be there, to make a difference.

I want to make this point with as much power as I can: we can debate and talk every day of the week about the pressures that exist with the Northern Ireland protocol, the Windsor framework and the impediments to the return to devolution. Whether people agree with me on those issues or they ignore those issues, that is fine; we will continue to work for resolution. But the point needs to be understood that we cannot and will not have sustainable government in Northern Ireland if we do not have sustainable finances alongside a return to devolution.

The idea that any elected representative is going to stand up in government to stand over the dismal budget that has been provided is for the birds; it is not going to happen. I want to see Northern Ireland work. I want to see Northern Ireland as a place where all communities within our Province are at peace with one another and enjoy the benefits of the country that we have the privilege to live in. These issues need to be resolved and that can happen only when the finance is there to deliver positively for those people.

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[Stephen Farry (North Down) (Alliance)]

It is a pleasure to follow my neighbour, the hon. Member for Belfast East (Gavin Robinson). This debate is happening in something of a twilight zone, in the sense that we have a twin budget and governance crisis. Frankly, neither is being adequately addressed today.

The Northern Ireland Office is operating in hope, and possibly expectation, that at some point the DUP will return to the Executive of the Assembly. Indeed, there is an overwhelming logic to that. If people want to make Northern Ireland work, then the Assembly and the Executive have to work, and that has to be seen as the overarching issue. Any notion of a democratic deficit that may happen elsewhere pales into insignificance compared to the current democratic deficit that we are facing.

As much as I agree with parts of the analysis given by my neighbour, the hon. Member for Belfast East, around the fact that the Northern Ireland Office is not stepping in on governance, others are not stepping in on governance either. I appreciate that the overall context is difficult—that may not change—but governance is core to solving this issue. We are in a frankly intolerable situation in that regard.

If my colleagues in the DUP are genuine about returning to the Assembly—some optimistic voices expect them to reach that conclusion in the next weeks or months—the longer they leave it, the more damage is going to be done to Northern Ireland. My message to them is, if they are going back, they should tell us they are going back and let us get on with it. If they are not going back, then they should say so and let us put in place alternative governance arrangements. The drift is killing us, both metaphorically and literally.

In terms of governance, the guidance is insufficient and in some ways contradictory. The Government may think it is perfect clearly, but it is evident that the Northern Ireland civil service does not think that. For example, we have a situation where our guidance is telling civil servants to act in the public interest, not to undermine statutory services or commitments, not to take major public sector decisions and to avoid long-term damage. It is hard to see how taking cuts is consistent with any of those criteria, but that is what they are now being expected to do.

I fear we are, yet again, at something of an impasse. That will lead to two potential outcomes: first, we will see certain decisions being deferred till later in the financial year. If decisions on cuts are taken even later in the year, the pain and impact becomes even sharper than it would be today. Alternatively, we will see a situation where it is impossible for them to live within the spending envelope that has been allocated, and we will see yet another overspend at the end of this financial year, with all the associated complications for planning that will flow from that.

The current situation we are facing is contributing to lengthening waiting lists and will reinforce educational underachievement, block the skills pipeline and compromise our ability to tackle economic inactivity. To date, the civil service approach has been to focus almost entirely on the very narrow ground of what are viewed as non-statutory activities—discretionary spending, in other language—but that is often some of the most effective spending, as it is often aimed at early intervention or prevention, which goes a long way to addressing steeper cost pressures that may emerge elsewhere in the public sector later in the process. For instance, if we do not address mental health in the community, we end up with more people having to be admitted to secondary care, which is more costly, and the same goes for skills and educational underachievement.

I recognise that this is a genuine dilemma for the Government and that we do not want a drift to formal direct rule because of all the implications that flow from that, but I must say to them that the current status quo is unsustainable and something must give. This is not the same context as that between 2017 and 2020, when there was a much more stable financial environment. I appreciate that direct rule is not palatable, and if it does have to happen, there will have to be an Irish dimension to it—people will have to face up to that. I clarify, however, that that is not joint authority, which I consider to be a different concept outside the context of the principle of consent. However, a consultative role for the Irish Government in direct rule has been established going back to the Anglo-Irish agreement, and, again, if people are uncomfortable with that reality, they know the options open to them to stop that happening.

On the finances, I recognise there are major structural problems in Northern Ireland’s public sector and expenditure profile. Some of that has been self-inflicted: the roof has not been mended while the sun was shining in previous years. A lot of decisions around reform have been ducked and opportunities have been missed by previous Executives. At the same time, however, we must recognise that there is a wider context. I do not want to labour this point today, but our current crisis in Northern Ireland is happening in the context of the UK public finances, which took a major hit towards the end of last year, and that has had a ripple effect throughout UK public spending, including the Northern Ireland block grant. We also, of course, have the Barnett squeeze, which I will discuss later.

Given all I have said, it is true that this year’s budget allocation will more or less be along the lines set out, regardless of whether an Executive were in place. It is, however, utterly disingenuous to say that the presence of an Executive is irrelevant in that regard. The governance gap fundamentally matters: without an Executive there is not a process for managing the pressures as efficiently and effectively as possible. That matters much more in the context of a crisis than when there is a surplus. It is like when a business is falling apart and running out of options and all the finance directors and the managing director have left their posts and others are trying to make do as the situation develops. The impact of cuts will be sharper without an Executive, because there cannot be early decision making on difficult decisions—I have made that point in relation to the civil service guidance. Some decisions cannot be taken because the governance structure is not sufficient, while other decisions will be deferred, and there will be a lack of strategic approach. Also, early intervention and prevention in particular are being targeted for cuts given the absence of a wider programme for government and a strategic framework. We will be storing up even greater problems in our public sector for subsequent years; the legacy of what is happening at present may be with us for a generation unless we swiftly get a handle on it.

We have long since lost the opportunity of a three-year multi-year budget, where we could have had planning from one year to the next and had some degree of stability and certainty in finances, allowing some long-term decision making. Crucially, with an Executive in place we would be in a much better place to go to the Treasury and ask for a financial package, and indeed make the case in relation to the Barnett squeeze. But in the context of a vacuum, all we will be looking at is cuts after cuts and decline and more decline, lost economic opportunities and damage to our public services.

In terms of our economy, this comes at a time when people want to do business with Northern Ireland. We have had the Good Friday agreement 25th anniversary, and I commend the Northern Ireland Office on its contribution to that, alongside many others, but people are now talking about a prosperity decade lying ahead, and the Government have welcomed that. We are having a trade conference in Northern Ireland in September, and Joe Kennedy III, the US economic envoy, has offered to bring a trade mission to Northern Ireland. All that is sitting there for us, but unless we have political stability and are investing in our skills, infrastructure and research and development, we are not going to be able to take advantage of those opportunities. They will not last indefinitely: there is a sweet spot at the moment and we must seize this opportunity. Instead we are seeing some of the key economic drivers being cut and undermined and, rather than taking opportunities, we are going in the opposite direction, and things are going to be getting even worse.

We must look to ways in which we can break this cycle, and all of this requires an Executive to be in place, but for us there are three ways in which this can be done. First, we must look for an invest-to-save transformation package for Northern Ireland. Most people recognise that we need to transform our public services to invest in our economy. There will be a lot of scepticism around this, and I have heard, for example, the comments of the hon. Member for North Dorset (Simon Hoare), Chair of the Northern Ireland Affairs Committee, about previous packages. We will have to learn the lessons from previous interventions and we will have to accept a lot of conditionality if that were to come. But unless we escape the cycle of cuts and the platform we are on, we are not going to transform our public services and invest in our economy. So we need to have that conversation. My party has put forward some proposals to the Government and I hear other Members talking in similar terms. We need to come together as political parties, ideally with a devolved Executive, to make this case. If that is to happen, it will need to be tied to a plan, which we have in place, including reform, that we stick to over multiple years.

The second area is inefficiency in our economy. That includes the cost of managing intervention in society and looking to other areas such as what we are doing on the health service. There are counterproductive, knee-jerk reactions to the budget crisis. For instance, the more we use agency workers, the more expensive that becomes, rather than investing in long-term staff, which is much more cost effective—that is counterproductive in terms of costs. Domiciliary care is necessary to take people out of hospital beds, which are more expensive, but, again, that will be sacrificed in a difficult budget setting—so, again, it is very counterproductive. In education, there is duplication between what happens in post-16 school settings and in further education. That is not sufficiently streamlined. We estimate that there is potentially £70 million in duplication there, which could be addressed with a proper 14-to-19 plan.

Finally, there is the Barnett squeeze issue. There must be an assessment in the work of the Fiscal Commission; much more work needs to be done on that, but we need an Executive to be batting for us with the Treasury to make that case for a different approach.

For me, the budget crisis is by far the biggest political issue facing Northern Ireland. With respect to my colleagues, it is a far bigger issue than the Windsor framework. I regard the Windsor framework as now being a done deal, and I welcome it: it is a progression from the original version of the protocol. There are issues to clarify on the margins, with more detailed guidance, but the fundamental structure is in place and we need to move on. To some, the issues being debated are relatively abstract and pale into insignificance compared with the impact on people’s everyday lives in terms of health and education.

Again, I say to Unionist colleagues: the best way to secure the Union is not through a narrower and narrower circle, based on defending an abstract notion of sovereignty; it is by making Northern Ireland work. The Union is based on the principle of consent. That lies in people seeing Northern Ireland working, and without an effective Executive and Assembly, they are getting the message that Northern Ireland is not working. From their perspective, that narrative needs to be turned around very quickly, rather than continuing the stand-off on the increasingly narrow ground of the Windsor framework.

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[Mr Baker]

I absolutely do. Since the right hon. Gentleman mentions my constituents, I am happy to tell him that we are a grammar system in Wycombe and that the Highcrest Academy has built what it calls an “all ability” school there, which I regard as a comprehensive. Strangely enough, I helped it against the forces of the hard left, which were trying to avoid building an all ability school under the grammar system, and I rather approve of its ability to bring back choice for parents.

We have a co-operative school in my constituency, which I support, and a Catholic school—by the way, Muslim parents, and there are many in Wycombe, choose freely to send their children to the Catholic school. I am all in favour of school choice for my constituents and for the right hon. Gentleman’s constituents, but the question is at what cost. That question is one that he and his colleague Members of the Legislative Assembly need to answer in a re-formed Executive.

However, when I go over to Northern Ireland as a Minister and meet young people who say to me, “I was 16 before I met my first Catholic”, or “I was 18 before I met my first Unionist”, there is so much wrong with that. I find myself amazed that that is even a conversation in the 21st century. Yes to choice, but at what cost?

[Stephen Farry]

I welcome what the Minister says in relation to integrated schools, but I have two points for him. First, I want to reinforce that there is significant demand for integrated schools right across the community in Northern Ireland. Secondly, and most relevant to this debate, does he recognise that moving from a split system to more of a shared, integrated system involves some degree of investment? The problem is that the Department of Education cannot do that at present, in a context of declining budgets where it is trying to protect what it has.

[Mr Baker]

The hon. Gentleman’s point is very well made; he knows that I hear it now and have heard it in the past.

We are clear that finances in Northern Ireland are not sustainable, but we are also clear that it is for an Executive to act on it. In the absence of an Executive, the Government through this Bill will ensure that time is not lost in starting to think about and work on that. We will commission advice from the Northern Ireland civil service on the options for budget sustainability in Northern Ireland, and we are happy to engage with any Member of the House in more detail about what we commission.

I heard what the hon. Member for Foyle (Colum Eastwood) said, and I am particularly interested in engaging with him and the universities. I also recognise the point he makes about places in Derry. He is right that Northern Ireland will never be a laissez-faire paradise, and it will be necessary for policy to embrace the point he makes about rebalancing towards Derry/Londonderry.

We are happy to engage with hon. Members, although I do not wish to pre-empt any particular piece of advice we might commission. We are absolutely clear that it is for locally accountable leadership to take these difficult decisions, but we are clear that those decisions will endure.

Questions were asked about future strategy, but the Government are clear about our strategy for Northern Ireland: devolution, moving forward with the Windsor framework and making the most of our new, constructive relationship with the EU and Ireland to improve that framework in a collaborative way when problems arise, as they inevitably will. Since this point came up earlier, we will then also work towards the review of the trade and co-operation agreement and try to improve our overall position.

While we are doing that—because, as has been said, we can do more than one thing at once—we will do everything we can to cheerlead for Northern Ireland. It is an amazing place, loved by people all over the world and full of talented people with an incredible capacity for innovation and development. They deserve investment, and I for one want to see that they get it.

Finally, I join in the lament about the gap that has opened up between the Government and Unionists. Once again, this has been a painful debate for me to listen to. Sometimes hon. Friends in the DUP have directed their remarks at me, but I would say to them that I do not wish to be hard on them. I must say to my right hon. Friend the Member for East Antrim (Sammy Wilson) that I do not regret having given voice to people in Fermanagh who said, “Get on with it.”. That is what people want in Northern Ireland. There was no chanting—it was just a cry of “Get on with it”, and I am not sorry that I gave voice to that sentiment.

Hon. Members will have noticed that I have tried to be as emollient as possible in recent days—I really have. I have put on record that this is a difficult compromise for me too. I know that it is an even more difficult compromise for them to go back into the Executive with the Windsor framework, but I just say again that we have to choose from available futures.

Everybody here knows that it is not enough just to say what you want; you have to know how you will get it. I am clear, as we go forward with the Bill, that we do not want to be here again with Bills of this nature. We want to celebrate a return of devolved government, and yes, by all means, continue a conversation about the detail of the Windsor framework and what we can do to support the Union and Unionism. But, my goodness, I want us to get to the point, beyond this Bill, where we are celebrating the return of devolved government to solve the real problems that we face, and celebrating a Northern Ireland that has a much better and brighter future.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).