Northern Ireland Budget (No. 2) Bill

Lord Weir of Ballyholme Excerpts

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

[Lord Weir of Ballyholme (DUP)]

My Lords, I join others in thanking the Minister for bringing this forward. If I am critical of the Government, I hasten to add that it is nothing personal. To paraphrase “The Godfather”, “It was only business—tell Lord Caine that I like him”. Where I make criticisms of the Government, it is not to detract from the Minister’s contribution today. The level of disappointment here—irrespective of whether we have a devolved settlement—is to do with the inadequacy of funding provided for public sector services in Northern Ireland by this budget. As the previous speaker, my noble friend Lord Morrow, highlighted, this reinforces the position in 2022.

As anyone who has been involved with any government department will know, that department often has a wish list of things that it would like to do—desires, if you like. But this is not about desires for public service expenditure; this is about public service expenditure needs. Since the beginning of 2022, for possibly the first time—certainly since 2015, when the Holtham formula was largely adopted by the Government—we see a region of the United Kingdom funded below its objective needs. As highlighted by my noble friend Lord Morrow, the figures were produced by the Northern Ireland Fiscal Council, in addition to other bodies. It should be noted that the Northern Ireland Fiscal Council is a government body, not a think tank or a lobby group. It identified the shortfall last year as £322 million; this year it is £431 million. That is £0.75 billion over two years, exacerbated by the money that has had to be paid back over the past two years because of last year’s overspend, which would not have arisen in the first place had there been proper levels of funding.

That needs to be seriously addressed. In the long run there is a need to look at the Barnett formula in great detail. The Barnett consequential squeeze has meant that since 2019, on average, UK expenditure has gone up by about 6% per annum; in Northern Ireland it is 3.6%, with the result of where we are today. That indicates why there is a longer-term need to look at Barnett. As indicated, the Holtham formula can produce a solution, at least in the short term. It probably took about seven years of discussions between the Welsh Government and the UK Government to get adoption—I expect the noble Lord, Lord Murphy, will be more familiar with this—but when it was adopted it was meant to be a UK-wide formula so that it could be applied to Northern Ireland to provide a level of support.

I am the first to acknowledge that there is a need for reform in public sector provision, as there is throughout the United Kingdom. This is good because we should always be looking at how we can get the best value from our public services for the expenditure put in place. However, I add at least three caveats. First, any form of public sector reform often requires initial investment to produce savings. It is not something that will produce an instantaneous result. Secondly, in my experience, whatever the value of public sector reform, in and of itself it is not enough to fill the gap: we need additional expenditure. Specifically in Northern Ireland, do we believe that, even in a restored situation, Sinn Féin in particular, given its track record on public sector reform, will embrace it or even just tolerate it? In the past it has moved to block and veto any reform and we would be deluding ourselves if we think that will be an easy route.

As for the current budgets, the department with which I am most familiar is the Department of Education, where the permanent secretary has identified a shortfall of over £300 million on current activities. That needs to be contextualised because it is simply doing what it is already committed to. It does not take into account the fact that, for the last two or three years, we have not had an agreement between the teaching unions and the management side, so teachers’ pay in Northern Ireland is considerably less than in the rest of the United Kingdom. If there was an agreement tomorrow, there simply would not be the money to pay that level of uplift.

The fact is that we are unable to progress childcare. Again, the level of provision and entitlement for parents is the least of anywhere in the United Kingdom. More than 80% of the education budget goes directly in salaries to front-line workers. Much of the remainder falls under a situation in which parents have a statutory right to access various things as legal requirements. The headroom within the Department of Education to meet that shortfall is extremely limited.

That means that, like some of the cuts already made, any of the pressures in the Department of Education will have to be met by targeting the most vulnerable in our society. For example, the report A Fair Start identified that the interventions required to tackle educational underachievement, particularly among the economically disadvantaged, will not be able to progress in the way that they are meant to. It means that SEN pupils, particularly those identified, will not have the resources and support that they need. It means that, because some of the programmes designed to try to boost those who have issues around educational underachievement and the socially disadvantaged are not statutory, they are the first that any department will cut. That is the crisis we face in education.

I conclude by mentioning another subject that should have been a good news story from a financial point of view but has been handled in a deeply dismaying way. Earlier this week, we saw the announcement of a package of support, spanning a number of years, through the PEACE PLUS programme. This is designed to support Northern Ireland and the border counties in the Republic of Ireland. The source of more than 85% of its funding came from the British Government and I commend them for it. However, the presentation of the announcement by the Taoiseach, Leo Varadkar, made it look largely like this was an intervention by the Irish Government. I have to say that both his recent comments on a united Ireland and the overreach from the Irish Government on PEACE PLUS are deeply unhelpful. When the Minister is winding up, I would be grateful if he could address the situation with PEACE PLUS and the presentation of its funding sources.

[Lord Bruce of Bennachie (LD)]

I am grateful, as we are all, for the Minister’s presentation of this budget. We all recognise the need for it and agree to process it rapidly, because services in Northern Ireland depend on it. It is fair to say, however, that every speaker has identified that, in reality, it represents a shortfall.

As mentioned, there was a debate in the other House about how this almost looks like a punishment. The Secretary of State has denied that. We know, partly because of the financial mismanagement of government, that there is no money across the piece but, in this situation, why is Northern Ireland being squeezed harder than anywhere else, given the circumstances? Could the Minister explain why this is quite so tight, if it is not part of the pressure to get the Assembly back up and running?

The implications of this are, for example, that the other devolved bodies, Scotland and Wales, can negotiate pay agreements that do not appear possible in Northern Ireland, because the money is not there to fund them. This means that public sector workers in Northern Ireland will be disadvantaged relative to those in other parts of the United Kingdom if this settlement is not supplemented. Basic cash affordability needs to be addressed.

Looking at the summary of all the departments, with the exception of health and infrastructure, every single one is facing a cash cut. The real-terms cut across the piece averages 16%. The issue there is the expectation of problems for health and education. I am told that it means that no new school building programme will be followed. Although it is a very small department and the amount of money is small, the Authority for Utility Regulation is being cut by 40%, yet utility regulation is quite important. Could the Minister suggest why that is and what the implications are?

The contributions we have received have been interesting. The noble Baroness, Lady Ritchie, went through all these points in detail and made a very clear case for why the pressures in Northern Ireland need to be addressed and, of course, why we need an Assembly up and running.

It slightly took my breath away when the noble Lord, Lord Browne, opened his speech by saying that he wished this budget was being presented to the Northern Ireland Assembly. He implied that it was almost anybody’s fault that that was not happening other than the DUP’s. I am hopeful because every single DUP contribution has said that the DUP wants this to happen. That is, perhaps, an early indication that we are getting to the point where it might happen and this will never happen again. I can look cheerfully across and say that if that is the implication, I welcome it and look forward to hearing it because this cannot continue.

On a more serious point, the argument for why an agreement cannot happen is to do with the protocol and the Windsor Framework. I think the way it is put is that a foreign power makes rules binding on Northern Ireland, on which Northern Ireland has no say. We used to have a say, because we used to be part of that foreign power and we were able to make decisions and representations through elected representatives. The DUP campaigned to end that and these are the consequences.

It is worth noting that this week Apple has introduced its new iPhone. It will have a new connection—no longer a lightning connector but a USB-C connector, in conformity with the rules adopted by the European Union. Apple is an American company. Apple and the American Government have absolutely no say in the formulation of those rules, but Apple—the biggest company in the world—has had to conform to them. That is the reality when you trade; you negotiate terms but you also have to accept terms.

The problems that I acknowledge still exist within the Windsor Framework need to be addressed; we had a debate about that earlier this week. A very good committee report suggested how they might be addressed, but I suggest that they do not justify the continued dysfunction of the Assembly. There are issues that need to be addressed but I contend that they should be addressed from inside, not outside, if they are to be resolved.

The noble Viscount, Lord Brookeborough, basically said that the people of Northern Ireland are caught between the DUP and the Government. That is, I suppose, a practical fact. The challenge to the Minister—not the Minister here; to be fair, my challenge goes to other Ministers—concerns the initiatives that the Government are prepared to take to try to break the deadlock. They share some degree of blame for the impasse. It is not all the DUP’s fault; the Government have some responsibility for that and some responsibility for trying to resolve it. I think that was the point that the noble Viscount, Lord Brookeborough, wanted to make.

The noble Lord, Lord Morrow, gave us a very detailed exposé of the Holtham formula. Speaking from a Scottish perspective, the problem with that formula is that it represents—I know what he will say—a significant cut in the per capita allocation that Scotland currently enjoys. It is something that the SNP is unwilling to acknowledge but it is a fact. On the other hand, it probably genuinely addresses the need, as the noble Lord, Lord Weir, pointed out, not the desires. Northern Ireland needs more than it is being given just to stand still, never mind to catch up with the serious situation it faces. So I think we have to accept that we will pass this budget today—

[Lord Weir of Ballyholme (DUP)]

My Lords, I appreciate the point that the noble Lord has made in relation to the Scottish situation, but one advantage of the Holtham formula is that it is meant to provide a floor rather than a ceiling. From that point of view, it would not obviate a level of cutting funding for Scotland but ensure that areas such as Wales and Northern Ireland do not fall below a minimum.

[Lord Bruce of Bennachie (LD)]

I accept that. It is a perfectly fair point. For a long time, Wales has argued that the Barnett formula has not worked well for it, and it has not worked for Northern Ireland. The issue has not been the Barnett formula but historic spending. I speak not as a nationalist but in terms of Scottish representation. Any suggestion that the formula should cut back in Scotland would be politically unacceptable and pretty disruptive. I accept that what it offers is a framework for Wales and Northern Ireland to get fairer allocation than has been the case. Again, that is a responsibility for the UK Government to address. The devolved Administrations can ask for it, but it is up to the UK Government to determine whether they will do anything about it. But it has real validity.

As I said, we will pass this budget, and it will provide the immediate funds that are necessary, but it will leave Northern Ireland in a powerless situation where all the issues affecting the United Kingdom are significantly worse in Northern Ireland across the whole spectrum—every aspect of the public service, whether waiting lists or the general problem across infrastructure. I therefore ask the Minister: at what point, assuming there is a point, will the Government recognise that this needs to be addressed? As I said at the beginning, if it is not a punishment, is there nevertheless a reward at some point that can be secured? There needs to be.

My final point is the obvious plea for the Assembly and the Executive to be re-established, because it is just not acceptable that the people of Northern Ireland’s elected representatives are not meeting to debate these issues, make these recommendations, draw up their own budgets and, yes, make collective representation to the UK Government if they feel the overall funding level is not adequate. We are all weary of saying to the DUP to get back to the table and get back in, but we must say to them that this cannot go on and, if it does for very much longer, then, as the noble Baroness, Lady Ritchie says, the demand for reform will come louder and louder. I suggest that such reform would not be entirely comfortable to members of the DUP. I am trying to make a rational appeal, as it is in the DUP’s real interest. They have a better chance of having their concerns—which I accept are legitimate from their perspective in many cases—addressed if they address the democratic deficit than by sitting and making the sort of speeches that they have made: “We all wish there was an Assembly, but there is not, and it is somebody else’s fault”. That is not good enough. The DUP have it in their hands to get it right. If they do, then they can start to negotiate with other parties and the Government to say, “This budget is not enough; Northern Ireland deserves better”, and, collectively, they will get it. I hope the Minister will acknowledge that, at some point or other, if that happens, there is space to negotiate.