Northern Ireland Budget (No. 2) Bill

Stephen Farry Excerpts

Committee of the whole House
Monday 4th September 2023 Commons Chamber

[Stephen Farry (North Down) (Alliance)]

At the outset, may I join in paying tribute to the outgoing shadow Secretary of State, the hon. Member for Hove (Peter Kyle), and in welcoming to his new role the right hon. Member for Leeds Central (Hilary Benn)? We are going to miss him on the UK Trade and Business Commission, on which he has had a very keen interest in recent years in Northern Ireland and the fallout on it from Brexit, which has had major ripple effects through our politics—not least, as we can hear this evening, on the subject of this debate.

It is six weeks on from Second Reading and it is fair to say that the situation in our politics has not improved. There is no sign of any return to devolution; indeed, the response from the right hon. Member for East Antrim (Sammy Wilson) to the Minister of State illustrates the lack of realism about the choices that face us collectively in Northern Ireland, and the choices that face Unionism in ensuring that Northern Ireland works for everyone. That is in everyone’s interest, not least the interest of Unionists.

With the public finances, I would argue that the situation is indeed much worse than it was six weeks ago, because the Northern Ireland budget is on an unsustainable trajectory. The budget that was set, as others have said, was not sufficient—it was inadequate—but there is a second layer to this, because the guidance to civil servants in the Northern Ireland (Executive Formation etc) Act 2022 does not allow them to take the decisions necessary to live within the measly budget that has been granted.

As the hon. Member for Belfast East (Gavin Robinson) has said, we already have a situation where it is projected that Northern Ireland will overspend by at least £500 million, which is greater than the overspend from the last financial year. That is more than £500 million of public pay pressures before Northern Ireland can even have parity with the settlements that have taken place elsewhere in the United Kingdom. Something is going to have to give. Either an Executive come in with a financial package and can begin to address some of those pressures, or the Government are essentially going to take it on the chin and accept that Northern Ireland will overspend.

That begs the question of what will happen with that overspend in future years. Will it be an albatross around our neck for years to come? Will people be expected to make cuts, or will the Government make cuts in-year to try to balance the budget? I would suggest that trying to do that in-year is now impossible, not least because so much of our budget is linked to salaries. We would lose people, and even if we did we would have to have redundancy payments for them. The only way anyone could possibly balance the budget at this stage is through stopping services completely, which is utterly inconceivable and untenable.

The point has been made that the budget situation is bad and will always be bad, and that having an Executive does not make any difference in that regard. I am not suggesting for one minute that a restored Executive will be a silver bullet, but I suggest to my colleagues who perhaps are dismissing the relevance of devolution at this point that every single stakeholder, when they are asked to comment on the budget crisis, stands up and says, “We want to see an Executive in place.” Whether we are talking about healthcare professionals or people who work in the education sector, the business community or the voluntary community sector, all of them are saying with one voice, “While it is no magic solution, we do want to see the Executive back in place.”

That reference to a restored Executive leads me on neatly to the point I really want to stress regarding a financial package: we need to see a twin-pronged approach to addressing Northern Ireland’s financial needs. Of course we need to address the lack of financial parity and the fact that Northern Ireland is not funded based on need. There is a structural problem of underfunding there, so things are not more generous in Northern Ireland than elsewhere.

I want to pick up on the comments made by the Secretary of State at the weekend to the British-Irish Association in Oxford. The conference is held under Chatham House rules, but I want to comment on what is in the public domain, as released by the Northern Ireland Office itself. In that speech, the Secretary of State was very negative about the concept of a financial package. He talked about money being thrown at Northern Ireland and Executives having squandered financial packages in the past—and there might be an element of truth to that. He said that the Executive need to stand on their own two feet—and, again, that is a worthy aspiration. But I stress that the notion that Northern Ireland can run a balanced budget, invest in public services and drive the economy from a burning platform will never happen. We will see more cuts flowing from budget cuts, and we will end up with decline and more decline. We will end up in a downward spiral in which Northern Ireland becomes ever more dependent, and we will see activity stop and more and more young people leave. That is not the future that I hear the Government articulating in their vision for a prosperous society in Northern Ireland, but what they are doing in terms of the budget belies their very worthy aspiration.

I ask the Minister of State or the Secretary of State to clarify in winding up that something will potentially be on offer when we seek a financial package. I appreciate that that is something that the Government may wish to do solely in the context of a restored Executive rather than up front, but it is important for any financial package to be based around transformation, a proper strategic plan and a programme for government for a restored Executive. That Executive must have clear targets and milestones, and a very clear idea as to how investment can turn Northern Ireland around. That is something on which a restored Executive can work in partnership.

[Mr Steve Baker]

The hon. Gentleman has just hit the nail on the head: a restored Executive could work in partnership with the Government. But I just emphasise to him that the sum available in this budget is the same as would have been provided were an Executive in place. Just to take further his point about reform and so on, he will know that since 2014, we have put £7 billion into Northern Ireland on top of the block grant. Various commitments to reform have been given in different agreements over the years on various fronts, including education, but it has not happened. I think we are all now getting to a point where we are terribly frustrated on all those fronts. He has hit the nail on the head: we need a restored Executive and then to work in a positive way together to make Northern Ireland function for its people, and that is what we are very willing to do.

[Stephen Farry]

I am very grateful to the Minister of State for his comments. I largely agree with him, but I will point to a certain disagreement on some aspects. I fully recognise that there have been past financial packages and problems with reform not being fully realised, particularly around integrated education, which is a clear example. We have to do better in that respect. From where we are, I do not see any alternative to trying to do that once again and learning the lessons from what happened in the past. I recognise that we have seen additional funding packages from the UK Government—obviously, we had a major uplift in support to deal with covid and its side effects on the economy, and that support was very welcome—but the fact is, as other Members have said, that our expenditure per head is not based on our need, and that fundamental point has to be recognised.

[Gavin Robinson]

I think it is helpful to emphasise at this point that, although the Minister indicated that this budget is exactly what an Executive would have been allocated were they in place, last year it was £322 million less than what an Executive would have needed, this year it is £431 million less than what an Executive would have needed, and the projection for next year is £458 million less. So in saying what he said, has the Minister not confirmed the real problem at the heart of this?

[Stephen Farry]

Indeed. I think we are talking to two separate points in that regard. Yes, the block grant would have been based on the current policy approach from the Government towards the Barnett formula and the assessment of need in Northern Ireland, but what we on these Benches are all saying is that we need to reassess the whole basis of how that is reflected. That is a conversation to be had. I would also take the point a bit further by saying that, if we had had an Executive in place, or indeed if we get an Executive in place shortly, that would be the form by which we could make this case much better to address both the fiscal squeeze and the negotiations on a financial package for Northern Ireland.

To give a human flavour to the scale of the crisis facing our society, I will close with one example of an area of crisis in Northern Ireland: special educational needs. There is a real crisis happening in that regard: the funding available is not meeting the levels of need. As I think all Members appreciate, this is one of the most sensitive areas, and one where Government has a duty to invest in children and ensure that their rights are properly protected. As we meet this evening, that is simply not the case in Northern Ireland. There are multiple failures to provide for children; the academic year has now started, but scores of young people still have not been allocated suitable special educational needs places. That has a major toll on parents and families—mental health issues and financial and career pressures—and on the children themselves, particularly a lack of opportunity, health and safety issues, a risk of regression and a lack of social inclusion. I appeal to Members, from whatever perspective we look at this—the Government in terms of setting the financial parameters, and also those who are still holding out for an Executive—that we need to get back to addressing those types of issues. That is what the coalface is like, and that is what we should be prioritising.