Northern Ireland Budget Bill

Julian Smith Excerpts

2nd reading: House of Commons
Wednesday 30th October 2019 Commons Chamber

[The Secretary of State for Northern Ireland (Julian Smith)]

I beg to move, That the Bill be now read a Second time.

As the House well knows, Northern Ireland has now been without a functioning Executive for almost three years. Since May, the Northern Ireland parties have engaged in a series of cross-party talks focused on getting Stormont back up and running. It remains my assessment that the issues preventing the restoration of Stormont are few in number and soluble in substance, and I stand ready to facilitate further talks if and when political parties are willing to move forward. However, until such time as they are able to reach an agreement, the UK Government and this Parliament have a duty to ensure good and functional governance in Northern Ireland. We have a duty to ensure that public services can continue to be provided for all citizens of Northern Ireland. This Bill upholds that duty by placing the budget published in February 2019 by my predecessor on to a legal footing and enabling the Northern Ireland civil service to access the full funding for this financial year.

[Gavin Robinson (Belfast East) (DUP)]

I am grateful to the Secretary of State for allowing me to intervene so early in his speech, on the issues of public finance and the ability of our services to respond appropriately. I do so because I am mindful of the comments you have made, Madam Deputy Speaker, about the ability to table amendments. The Secretary of State knows that I have a keen interest in pursuing a legislative fix that would allow our Co-Ownership housing association in Northern Ireland to be able to avail financial transactions capital. The organisation would then be redefined so that it would not burden the public finances. Billions of pounds in housing association loans would not be on the public balance sheet. What commitments and assurances can the Secretary of State give that would assuage me from my desire to amend this Bill?

[Julian Smith]

The hon. Gentleman has been precipitous in his intervention, as he often is. I will address that point shortly.

Since January 2017, Parliament has legislated four times to secure the public finances of Northern Ireland. These were not interventions that the UK Government wanted to make, but they were necessary to ensure the continued provision of public services in the absence of an Executive.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am extremely grateful to the Secretary of State for giving way again. I had a stab at making this point earlier today during Northern Ireland questions, and I wonder whether he will indulge me just one more time.

I assume that the part of the budget that is covered by schedule 1, relating to the Department for Communities, covers welfare mitigation payments in Northern Ireland up until March 2020. In the September 2019 joint report of the Select Committee on Northern Ireland Affairs and the Select Committee on Work and Pensions, entitled “Welfare policy in Northern Ireland”, the Committees point out that ending the mitigation payments after March 2020 could make some 35,000 households in Northern Ireland worse off by hundreds of pounds a month. Is the Secretary of State aware of that?

The Department for Communities cannot extend these payments because, in the absence of the Assembly, that requires ministerial action. This is urgent because the Department is saying that it will need to start advising claimants by this autumn of significant cuts to their welfare payments next year, unless the Government act.

[Steve McCabe]

May I have just one second more? I am very grateful, Madam Deputy Speaker. I am sure the Secretary of State does not want an unintended consequence in Northern Ireland, so will he look at this issue and act now?

[Julian Smith]

The hon. Gentleman tackled me on this issue in the Tea Room earlier. I will refer to it, and my right hon. Friend the Minister of State, Northern Ireland Office, will also refer to it in Committee. We are aware of this welfare challenge. It is indeed a responsibility of the Northern Ireland civil service; civil servants do have a power that they can use with regard to the discretionary housing payments. However, I assure the hon. Gentleman that I will spend time on this issue over the coming days and weeks, because it is an important one.

[Frank Field (Birkenhead) (Ind)]

This is an immensely important issue for some of the very poorest people in Northern Ireland. Might the Secretary of State go back to the Department and ask his permanent secretary what powers he can draw the Secretary of State’s attention to that will allow him, before the week is out, to take action to prevent people from falling off the cliff into greater poverty?

[Julian Smith]

I am in the process of working through how we can move forward with this. It is a devolved matter, but I will be speaking to the Northern Ireland civil service over the coming days and weeks. As has been alluded to, these are funds and mitigations that help the most vulnerable citizens in Northern Ireland. I take these matters seriously, and I will come back to the hon. Gentleman and the right hon. Gentleman in due course.

[Frank Field]

Given that we do not have devolved government in Northern Ireland, surely there are powers somewhere that will allow the Secretary of State to act while we are waiting for ever and a day for devolved government.

[Julian Smith]

Indeed, the Northern Ireland civil service has a power, but if I can leave it there, I will come back to this House and come back to the hon. Gentlemen about this matter.

[Sammy Wilson (East Antrim) (DUP)]

Does the Secretary of State accept, however, that even with the powers that civil servants have, the cost of these mitigation measures is such that budgets will have to be rejigged—quite substantially rejigged—and that that can be done only if a Minister makes a decision? Is this not yet another example of the Secretary of State burying his head in the sand and pretending that the Executive will come back when he knows that they are not going to come back? This can be dealt with only if civil servants bring forward a report saying, “This is the money that is required and this is how we see it being reallocated.” Someone has to make a decision, and it will probably be a Minister here.

[Julian Smith]

The right hon. Gentleman makes an important point. However, I go back to the fact that it is, I think we all agree, in Northern Ireland’s best interests that the Executive are reformed and the Assembly gets back up and running. Any idea that it is a better solution to take powers here at Westminster is false, and we have to focus on that.

[Lady Hermon (North Down) (Ind)]

rose—

[Julian Smith]

I am going to make some progress.

I would like to pay tribute to the Northern Ireland civil service. It has the most dedicated civil servants who are continuing to deliver public services in the absence of political leadership and political decision making. Hon. Members from across the House have approached me today raising legitimate concerns about the future of public services. While today’s debate is not the place to tackle these issues—this Bill simply makes the necessary authorisations for expenditure for this year—those Members are right that they need to continue to be monitored carefully, and that is what we will be doing. However, we are up against a lack of a local decision making.

[Lady Hermon]

rose—

[Julian Smith]

Could I continue to make a little progress?

There are some significant challenges to reflect on, such as housing associations and welfare reform, but there are opportunities, too. The £163 million growth deal announcement to Northern Ireland shows what can be achieved when politicians of all backgrounds, local businesses and community leaders come together to shape the economic future for their local area and for Northern Ireland as a whole. That is why we want to see these issues taken forward by a restored Executive.

To my frustration, however, it is necessary once again for Westminster to intervene to provide the necessary authorisations for expenditure in Northern Ireland in the continuing absence of an Executive and of a functioning Assembly. The finances of Northern Ireland Departments are in a critical state. The legal authority for the Northern Ireland civil service to spend is currently capped at approximately 70% of the opening position of the previous financial year’s budget—a spending cap that was approved by this House in March 2019. The Northern Ireland Audit Office and the public services ombudsman have already reached their cash limits, and the Department of Finance has been forced to issue two Departments with contingency funding. This temporary financial measure can be used on a very short-term basis to manage the smaller Departments running out of cash, but it is just not tenable for a significant number of Departments.

[Lady Hermon]

I am grateful to the Secretary of State for allowing me to intervene. He reminded the House in his opening remarks that we have not had a functioning Assembly for almost three years. I am astonished and disappointed—and I am sure that the vast majority of the public in Northern Ireland will be extremely annoyed—that the Bill mentions the remuneration of MLAs yet again. I had a horrible feeling when the Secretary of State mentioned a review, when I challenged him about the continuation of MLAs’ salaries in Northern Ireland questions today. We have had a review. We had a review two years ago by Mr Reaney, who reported in December 2017. Two years on, we do not need more long grass dressed up and disguised as a review. Why does the Secretary of State hesitate in getting on and doing the right thing by the people of Northern Ireland, by cutting MLAs’ salaries? It is so obvious that he should be doing that.

[Julian Smith]

The hon. Lady raised that issue with me earlier today. I spoke to her three days ago about this review. I am on it, but as I said, I want to ensure that I balance the need to ensure that public expenditure is reduced with the fact that I want the Assembly up and running. I am not going to stand here and accept the premise that this Assembly and Executive cannot get up and running.

[David Simpson (Upper Bann) (DUP)]

As I mentioned in Northern Ireland questions today, many of our MLAs are doing a fantastic job through their offices. It is important that we keep that representation for the general public.

[Julian Smith]

It is indeed. There is so much more that they could do if they were in the Assembly, and we need to hang on to that over the coming weeks.

If Royal Assent is not granted by the end of October or as soon as possible thereafter, there is a risk that the Northern Ireland civil service will assess that the only way to continue to deliver public services in Northern Ireland is by exercising emergency powers under section 59 of the Northern Ireland Act 1998. Using those emergency powers would constrain the Northern Ireland civil service to spending 95% of the previous year’s budget, effectively delivering a significant real-terms cut to the funding of public services. Northern Ireland Departments would have to consider their current budget allocation against their identified priorities and their available cash, which could put at risk essential services such as those within the health service.

[James Brokenshire (Old Bexley and Sidcup) (Con)]

I know that my right hon. Friend will be taking these steps very reluctantly, as I remember doing when I was in his post. He has highlighted the deals and the investment in various parts of Northern Ireland. I am conscious of investment in the north-west and promoting economic activity and opportunity in that part of Northern Ireland. Can he comment on the plans for a graduate medical school at the Ulster University Magee campus in Derry/Londonderry, which could promote a sense of skill and opportunity and secure the positive outcome that we would like to see for the north-west?

[Julian Smith]

I thank my right hon. Friend for his intervention. He has worked hard to promote the merits of the Magee campus, as have others. I visited it only two weeks ago. I am extremely committed to making that work, as I know he is. I think that we are close to a position where we can move that forward. It is a devolved matter, but there are things we can do, and we will continue to do them.

The Bill upholds our commitment to good governance in Northern Ireland by preventing the Northern Ireland civil service from having to rely on emergency section 59 powers. It is a budget set by the UK Government, but one that the Northern Ireland civil service must plan and implement. If Stormont gets back up and running within the financial year, the new Executive will be able to adjust the budget as they see fit and amend the legislation at the end of the financial year. The Bill does not authorise any new money. In the absence of a functioning Executive and Assembly, it simply authorises spending money that has already been allocated by this Parliament in the UK estimates process, together with locally generated revenue.

[Paul Girvan (South Antrim) (DUP)]

I want to ask the Secretary of State about Barnett consequentials from money that has been ring-fenced for special projects. One example is the high streets fund, to help our town centres in the United Kingdom. We got our Barnett consequentials in Northern Ireland, but that money has been swallowed up by the Departments and used to plug holes in their budgets. We have not been able to ring-fence that money and ensure that money coming from the Exchequer is used for the intended purpose.

[Julian Smith]

My hon. Friend raises an important point. The Barnett consequentials, whether of the spending review or of other allocations from this place and from Whitehall, are very difficult to attribute due to the lack of an Executive. We are seeing a sort of constipation in the system, as we have cash arriving but no decision making to spend that cash.

I shall now briefly turn to the Bill’s contents, which largely rehearse what the former Secretary of State set out to this House in a written ministerial statement earlier this year. In short, the Bill authorises Northern Ireland Departments and certain other bodies to incur expenditure and use resources for the financial year ending on 31 March 2020.

Clause 1 will authorise the Northern Ireland Department of Finance to issue £5.3 billion out of the consolidated fund of Northern Ireland. The sums of money granted to Northern Ireland Departments and other bodies are set out in schedule 1, which also sets out the purposes for which the funds are to be used. The allocations in this budget reflect where the key pressures lie in Northern Ireland, building on discussions that the UK Government have had with the Northern Ireland civil service, the main parties in Northern Ireland and broader stakeholders, and, where possible, reflecting the previous Executive’s priorities.

Clause 2 will authorise the temporary borrowing by the Northern Ireland Department of Finance of about £2.6 billion to safeguard against the possibility of a temporary deficiency in the consolidated fund of Northern Ireland. If used, this money would be repaid by 31 March 2020.

Clause 3 will authorise Northern Ireland Departments and other specified public bodies to use resources amounting to about £6 billion in the year ending 31 March 2020 for the purposes specified in schedule 2.

Clause 4 will set limits on the accruing resources, including both operating and non-operating accruing resources, that may be used in the current financial year. The Bill would normally have been taken through the Assembly. Clause 5 therefore includes a series of adaptations that ensure that, once approved by both Houses in Westminster, the Bill will be treated as though it was an Assembly budget Act.

Alongside the Bill, I have laid before the House, as a Command Paper, a set of main estimates for the Departments and bodies covered by this budget Bill. These estimates, which have been prepared by the Northern Ireland Department of Finance, set out the breakdown of resource allocation in greater detail than the schedules to the Bill.

This is a fair and balanced budget that provides a secure basis for protecting and preserving public services, with a real-terms increase in health and education spending and protections for frontline Departments delivering key public services, but the budget is not an easy one. It requires savings and efficiencies to enable Departments to live within their means, and it will fall to the Northern Ireland Departments to plan and prepare to take decisions to do just that. As I hope right hon. and hon. Members will agree, this is very much a minimal step to ensure that public services can continue to be provided in Northern Ireland for the full financial year.

As I conclude, I will set out once again a point that I have made several times before to this House. The UK Government are steadfastly committed to the Belfast agreement. Legislating on Northern Ireland budgetary matters at Westminster is not a step that I or my ministerial colleagues want to take—nor is it one that I would wish to take again. I am determined to restore the political institutions set out in the 1998 agreement and its successors at the earliest possible opportunity. On 14 October, the people of Northern Ireland had gone without a power-sharing devolved Government for 1,000 days. The continued failure to restore the Executive will bring extremely difficult choices about how to ensure effective governance in Northern Ireland.