Northern Ireland (Interim Arrangements) Bill

(Limited Text - Ministerial Extracts only)

3rd reading & Committee stage
Tuesday 23rd May 2023 Lords Chamber

[Lord Murphy of Torfaen (Lab)]

My Lords, here we are. I have been either asking or answering questions on the Barnett formula for something like 32 years. It started off as a formula, and then you add a floor, and now you have a Barnett squeeze. Some of your Lordships may remember that Lord Joel Barnett, himself, who invented this, towards the end of his life completely denounced it and said that it was not suitable any more. Indeed, it probably is not. We lived with it for the last 20 or 30 years because there was no real alternative, but the world has changed since then, certainly in terms of Wales, Scotland and Northern Ireland.

The noble Lord, Lord Morrow, put a convincing case for a very serious look at the situation at the moment. I can tell him and Members of your Lordships’ House that, when I was the Secretary of State for Wales, I did not persuade my colleagues in the Treasury that there was a need for a change. I tried, but when you are a territorial Secretary of State, you are always battling with the Treasury, the Chancellor of the Exchequer and the Chief Secretary to the Treasury. You are in the same team. Sometimes you win, and sometimes you lose. But the key to the success of what happened in Wales, with the Holtham commission, was that it was in fact conceived by the Assembly, set up by the Government of Wales, and had cross-party support when the commission reported. That meant that there was a seriousness about that report which impressed the Treasury. It was convinced, after all this discussion and all these commissions, that things had to change, but I could not do it on my own. It had to be done with the Assembly, the Welsh Government and Holtham and his commission, which spread over a couple of years. That is how it was achieved.

The same thing is going to happen in Northern Ireland. There has to be a concerted effort by all political parties in Northern Ireland to be able to persuade the Government that there is a serious case for equating Wales and Northern Ireland—I leave Scotland out at the moment, as that is an even more complicated case. But that is only reasonably sure of success if it is not simply left to the Secretary of State for Northern Ireland. There has to be this pressure internally, from those who have been elected and thus are there in that Assembly, elected by the people of Northern Ireland to take issues like this up.

I know there is a meeting in the next week or two with the head of the Northern Ireland Civil Service. She has quite rightly asked political parties for some guidance as to what to do. A budget is not simply adding up and taking away figures; a budget is about priorities of government. What do you put first? What do you put last? Where do you put this money and that money? You do that on the basis of proper consultation, not only with Members of the Assembly but with all the political parties. That can best be done only in the context of a democratic Assembly and government.

There is no question that there is some merit in discussing these issues in your Lordships’ House, but we are not here to run Northern Ireland; we have not been elected to do that—we have not been elected to do anything but certainly not to do that. When that meeting is held in the next week or two, I hope that the parties in Northern Ireland will impress upon the head of the Northern Ireland Civil Service the importance of trying to work out what those priorities would be and how to do it. Rather her than me—it is a terribly difficult thing to do if you are not an elected politician. The decisions are so tough and so harsh, and in some ways so impossible, that they can be made only by people who are answerable in a democracy to the electorate. That is not the case at the moment.

Yes, there is a very strong case for looking at change, and a strong case for asking officials to do what they did in Wales, but that can best be achieved only if the Assembly and the Executive are both restored.

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

My Lords, before replying to the debate that we have just had, I would like to make a very brief statement on legislative consent. Clearly, the reason we are here is that there is neither a functioning Executive nor a functioning Assembly in Northern Ireland. It has therefore not been possible to seek a legislative consent Motion.

I thank the Committee for the constructive debate that we have had this afternoon. I am very grateful to all noble Lords who have spoken to the amendment. I thank the noble Lords, Lord Morrow and Lord McCrea, for their time this morning, coming in to discuss this issue with me in the Northern Ireland Office.

Amendment 1, tabled in the names of the noble Lords, Lord Morrow and Lord Dodds, provides an example of the advice or information that the Secretary of State could request from the Northern Ireland Civil Service under Clause 2 of the Bill. Specifically, the amendment references the Northern Ireland Fiscal Council’s 2023 report—referred to by a number of noble Lords this afternoon—entitled Updated Estimate of the Relative Need for Public Spending in Northern Ireland. I join noble Lords in thanking the Northern Ireland Fiscal Council for its work, and have noted its report on the updated estimate of the relative need for public spending in Northern Ireland. The noble Baroness, the former First Minister of Northern Ireland, was right to refer to His Majesty’s Government’s role in the establishment of the Northern Ireland Fiscal Council, following both the fresh start agreement in 2015 and New Decade, New Approach in 2020. The Secretary of State, my right honourable friend Chris Heaton-Harris, met the chair of the council, Robert Chote, two weeks ago to go through the report’s findings. I assure the Committee that we will have further such meetings with him.

As noble Lords will be aware, there are clearly many different ways to assess need, as the Northern Ireland Fiscal Council itself acknowledges in its report. However, the report indicates that funding is currently broadly in line with relative need, through a combination of the Barnett-based block grant, locally generated revenue and additional UK Government funding packages. In that context, I refer noble Lords to the penultimate bullet point on page 3 of the report and the penultimate paragraph on page 21 of the report.

I should add that the report also makes clear that locally accountable leadership—to echo the comments of a number of noble Lords this afternoon—is urgently required to ensure that Northern Ireland has a stable and flourishing economy.

For many years, the Government have recognised the unique challenges that Northern Ireland faces. The argument that it has been systematically underfunded by the Government simply does not hold water, in my view. In the 2021 spending review, the Government announced that the block grant for Northern Ireland would be £15 billion per year, on average, over the next three years, representing the largest settlement since the restoration of devolution in 1998-99. We have provided around £7 billion in additional funding to Northern Ireland since 2014, on top of the Barnett-based block grant. As a number of noble Lords pointed out, the Northern Ireland budget per person is around 20% higher than the equivalent UK government spending in other parts of the United Kingdom, and it is set to rise to around 25% by 2024-25.

In 2013, shortly before we brought the G8 summit to Northern Ireland, we made available £300 million in additional borrowing power and funding top-ups through the building a prosperous and united community package. We made available almost £2 billion in additional spending power for Northern Ireland as a result of the Stormont House agreement in 2014, a further £500 million through the fresh start agreement in 2015, and £2.5 billion of financial support and flexibility through the confidence and supply agreement in 2017.

In more recent years, we have invested over £3.5 billion in Northern Ireland through the £400 million new deal for Northern Ireland, £617 million for four city and growth deals covering all of Northern Ireland, £730 million through PEACE PLUS, and £2 billion in funding and a Barnett investment guarantee in the New Decade, New Approach financial package, following the restoration of the Executive in January 2020. Noble Lords will recall that the priorities committed to by the Northern Ireland Executive within New Decade, New Approach specifically included £245 million earmarked for the transformation of the health service and wider public sector. The UK Government are also investing over £250 million in Northern Ireland through the levelling up fund, the UK shared prosperity fund and the community ownership fund.

Despite these significant levels of investment from the UK Government, over and above the Barnett-based block grant, the Northern Ireland Executive have consistently been unable to allocate this funding to deliver the much-needed transformation of public services. In that context, I acknowledge the comments made by the noble Baroness, the former First Minister, regarding the period from 2017 to 2020. Consequently, the £200 million health transformation funding provided through the confidence and supply agreement, and the £245 million of funding for public service transformation allocated through New Decade, New Approach, have primarily been used for short-term funding pressures, not to deliver genuine reform.

I gently echo the point made by the noble Lord, Lord Murphy of Torfaen, at Second Reading—and to some extent repeated this afternoon—when making comparisons with Wales on this issue. It is important to underline that that arrangement was negotiated between the Welsh Government, the Welsh Assembly and the Treasury. As the noble Lord, Lord Murphy, reminded us, the Holtham commission was established in 2008 and negotiations took place over the next seven years. That seven-year period is crucial to today’s debate because it underlines that this is not an issue that could be solved overnight, even with the best will in the world.

As was pointed out by a number of noble Lords, particularly the noble Baroness, Lady Suttie, and the noble Lord, Lord Murphy of Torfaen, it would be far more powerful if the case made by noble Lords on the Benches behind me were made from a functioning Stormont. It will not surprise anyone in this Committee to hear me say that this is an issue best addressed in the context of a restored Executive and Assembly in Northern Ireland, in discussions with the Treasury. I agree entirely with the noble Baroness and the noble Lord on those points.

More broadly, in the absence of an Executive the UK Government will be able to commission advice from the Northern Ireland Civil Service—I mentioned this at the outset—on how current funding can be used more efficiently to the benefit of the people of Northern Ireland. However, it would not be right for me to commit the Secretary of State to exploring certain defined options—that would be the effect of this amendment—in advance of commissioning Northern Ireland departments for advice on options for budget sustainability.

The noble Baroness, Lady Suttie, asked about parliamentary oversight. She and other noble Lords will be aware that, in the continuing absence of an Executive, we will need to bring forward a budget Bill, which will be debated in your Lordships’ House.

I am of course willing to continue to engage with noble Lords, particularly those who brought this amendment —as I referred to earlier, I did so this morning—on these important issues. In that spirit, I invite the noble Lord to withdraw the amendment.