Northern Ireland Budget (No. 2) Bill

Steve Baker Excerpts

2nd reading
Monday 10th July 2023 Commons Chamber

[The Minister of State, Northern Ireland Office (Mr Steve Baker)]

I am likewise most grateful to hon. and right hon. Members for their contributions this evening. I am most grateful, too, that the House again recognises that a Bill such as this is a responsible, but regrettable, step that we need to take as the UK Government to ensure that the delivery of public services can continue in Northern Ireland.

There are no easy decisions in the budget for anyone—not for us as the UK Government, not for Northern Ireland civil servants and not for a future Executive. We recognise that and we know that those decisions will not be going anywhere when an Executive returns.

It has become apparent to me that I and my right hon. Friend the Secretary of State may have been misunderstood on this point, so I want to be perfectly clear: on their return, an Executive will face this stark budget and the difficult decisions that follow from it. But we are also perfectly clear that the right people to be taking those tough decisions are locally elected Northern Ireland Executive Ministers. It should not be the UK Government or civil servants plugging the decision-making gap. It is only through the return of Ministers in Northern Ireland that the vital reforms that so many hon. Members have referred to can begin to take place to put public services on a much more effective, efficient and sustainable basis, fit for the demands and opportunities, and indeed the previous advancements in technology, particularly in medicine, of the 21st century.

Let no one mistake what is needed: reform to the health system, to make the most of decades of improvements in healthcare through specialisation; reform to drive down the waste that comes from a divided education system, perpetuating divisions that would be unlawful once children moved from education into work; and reform to foreshorten the shocking delays in Northern Ireland’s justice system and its appalling cost to taxpayers at turn after turn. Only through reforms and more will the public have the services they need and deserve.

What is the prize? In this debate, if I may say so, we have heard two competing visions for Northern Ireland: a vision of Northern Ireland standing with its hand out to the Republic of Ireland for subsidy, and a vision of Northern Ireland standing with its hand out to Great Britain for subsidy. This Government have a better vision than that. We have a vision for a strong and confident Northern Ireland standing on its own two feet, with a balanced budget, underpinning sound public services that have been reformed and are effective, and—yes—are properly audited.

We want to focus on the great, rich tradition and heritage of Northern Ireland’s industrial spirit, on the great commerce of Northern Ireland and on Belfast, one of the great industrial cities of this great United Kingdom. We want private capital flooding into Northern Ireland. We know that the great people of Northern Ireland are entrepreneurs who care about place and community. We know that there is goodwill all around this world for people to invest in Northern Ireland, but they are put off investing by the absence of an Executive.

[Stephen Farry]

I very much share the vision that the Minister is setting out, but, leaving aside the language around handouts and subsidies, will he at least recognise that to get from A to B the restored Executive will need a partnership with the UK Government to ensure that we can take forward those reforms?

[Mr Baker]

The hon. Gentleman makes a good point, and I shall come on to it in a moment, but I want there to be no mistake about this, either: as far as I can see from my vantage point, there is a pretty close correlation between poverty and paramilitarism in Northern Ireland. Leaving a primary school surrounded by razor wire in Shankill, I was struck by some of the murals I saw in that housing estate, commemorating and celebrating people who ought not to be celebrated. If I go to other areas of Belfast and elsewhere, there will be murals celebrating the other side.

It is time for Northern Ireland to be moving on. It is time to lift people out of poverty so that they have a better hope than the commemoration of a past that should never have taken place. No more looking back to a past that never was; it is time to look forward to a better future, founded on prosperity and sound public finances. Call me old school, Mr Speaker, but I like a balanced budget. Let us move forward.

Capital investment for a safe return from investors around the world, the rule of law, good government—the conditions are set. We have an entrepreneurial population, great skills, comparative advantage in financial services, cyber-security, advanced manufacturing and more. Crucially, we also have an institutional arrangement that, if people would only see it, is unique in all of the world: access to the UK as of right and to the EU as a privilege, UK services law and access to the UK’s free trade agreements. That is a unique set of institutional arrangements to promote Northern Ireland’s prosperity for the long run and deliver just the transformation that is needed.

It is true, as hon. Members have indicated in relation to the Windsor framework, that that comes at the price of a difficult compromise, with some EU law still in place. I confess it is a difficult compromise for me, as I have said in the past. However, we have to choose from available futures. At the moment, Northern Ireland’s future looks bleak indeed unless we get behind the reforms that are needed to balance the budget for the long run. I believe that if we do that, if we come together in unity for our good purposes for Northern Ireland, we can achieve great things.

On the quantum that is available, the hon. Members for Foyle (Colum Eastwood) and for Belfast East (Gavin Robinson) seem to be united in the idea that the budget is some sort of punishment. The hon. Member for Foyle suggested it was a tactic. I say to him that that is categorically not true. This spending envelope is the spending envelope that the Northern Ireland Executive would have faced had they not collapsed. It is not the case that we would be punishing people in the way that has been set out. To listen to the debate—

[Colum Eastwood]

Will the Minister give way?

[Mr Baker]

I will, as I referred to the hon. Gentleman.

[Colum Eastwood]

It was not me who suggested that that was a tactic. The Secretary of State outlined the tactic in his own speech: he said that the next stages of the Bill will not be introduced until after the summer, and that that would give us all time to work together to get to government. It is clearly a tactic, although it is not going to work as a tactic. There are better tactics in my view, and I have laid some of them out to the Minister before, but it is a bit disingenuous to pretend that this is anything but a pressure point for the DUP that is clearly not working.

[Mr Baker]

I say to the hon. Gentleman that the simple fact is that the reason we are not doing all stages today is that summer recess approaches and we would trigger the Parliament Act inadvertently—[Interruption.] My right hon. Friend the Secretary of State does not accept that this is a tactic. The reality is, as we have said, that this is the spending envelope that would have been faced by a returning Executive.

I have to say that, listening to the debate, one would think that the spending envelope in Northern Ireland was at the discretion of my right hon. Friend, but of course, as Members know, nothing could be further from the truth. Long, dreary documents on how spending works are available for the public to read. I am sure that the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) knows very well the documents to which I refer—I have given them a go. These things are fixed by our right hon. and hon. Friends in the Treasury; it is not at the discretion of me and my right hon. Friend to decide how much is spent. This is the envelope that the Executive would have faced.

The hon. Member for Foyle mentioned the shared island initiative, but that large sum of money was agreed, I believe, through the North South Ministerial Council and comes with a number of caveats. However, he reminds me that there are a number of super-tankers at sea here that have evolved through a number of political agreements. I think that we all need to be working with a restored Executive to rationalise how that spending goes forward. That can be done only with a restored Executive.

A review for the Barnett formula was touched on. My right hon. Friend said earlier that we recognise that introducing a needs-based factor in the application of the Barnett formula for Northern Ireland according to a mechanism similar to that implemented in Wales is an option that could be considered to put Northern Ireland’s public finances on a sustainable footing. However, it took a number of years for the Welsh Government and the Treasury to agree a formula, and my hon. Friend the Member for Aberconwy (Robin Millar) wisely cautioned us that that matter is not settled. He also cautioned us about the dominance of the public sector. That is why I am so firm that Northern Ireland must be founded on a revitalisation of its vibrant private sector.

Let me turn to the funding premium and the comparison between the percentage of funding for Northern Ireland and the equivalent spending for the rest of the UK. Let me be really clear because, in listening to the debate, one could misunderstand the position. Funding for Northern Ireland will increase from 20% to 25% extra in 2024-25. Insofar as that funding premium is forecast to fall below 20%, it is by the early 2030s but not immediately.

I am grateful to the hon. Member for Hove (Peter Kyle) for mentioning revenue-raising measures. We will have full advice by the end of this month. He referred to the remarks made by the permanent secretary at the Department of Education. We are very well aware that, to live with its budget, the Department of Education has already taken significant steps to reduce expenditure. I am aware that, despite that, there is a funding gap. Our Department continues to engage with the Department of Education and the Department of Finance to address that. A previous political agreement such as NDNA recognised the structural inefficiencies in Northern Ireland’s educational system, about which Members may perhaps see that I feel passionately, and recommended a review to address them with reform. I welcome the recent completion of the review into special educational needs provision, and I look forward to the outcome of the review of education provision for 14 to 19-year-olds.

There has been a great deal of interest in the particular details of per-pupil funding. I propose to write to my hon. Friend the Member for Worcester (Mr Walker) in detail on education funding. I shall place a copy of that letter in the Library for all Members who have expressed an interest.

The hon. Member for Gordon (Richard Thomson) in particular raised section 75 duties and whether they are carried out by us and so on. As the ones taking the decisions, Northern Ireland Departments completed indicative section 75 assessments that were considered by the Secretary of State when he set the overall budget allocations. In light of those budget totals, Departments are now completing final assessments.

[Richard Thomson]

I am grateful for that clarification, but however good the intentions are, it seems to fall short of full compliance with what is expected under the section 75 procedure. Could those indicative assessments be put in the public domain, so that we can start to foster that wider political debate about the budget choices that are now being made?

[Mr Baker]

At the risk of sounding like a stuck record, the best way to get those questions answered is to get the Executive back and the Executive making these decisions—

[Richard Thomson]

And in its absence?

[Mr Baker]

That brings me on to a point I wanted to make. My right hon. Friend the Secretary of State and I sat here throughout the debate listening to a number of Members imploring us to take one action or another, which would amount to going down the road toward direct rule. We have no plans to go toward direct rule. We have been asked what we will do if this situation continues. In the event that we need to take further steps, we will announce them, if the need arises and when the time is right, but we have no plans to go to direct rule, and no amount of pressing us on one issue or another will cause us to take up direct rule.

Regarding the Windsor framework, yes, there are some technical matters that we might deal with in order to fulfil the policy intent clearly agreed by both sides. Where there are technical issues we need to move forward on, please, let us take them up as technical issues and deal with them in the Joint Committee. Let us not again raise such matters up to levels that require the attention of the great statesmen and women of Europe. It is better to deal with these things in a low-key way.

[Sir Jeffrey M. Donaldson]

With great respect to the Minister, the matters that we want to be addressed are not matters for the European Union; they are matters for His Majesty’s Government. They relate to the internal market of the United Kingdom and its workings. Either the UK Government are in charge of that, or they are not. When I see the UK Government introducing new statutory instruments to impose customs arrangements on parcels being sent from one part of the UK to another, I begin to wonder if the UK Government actually get our concern about the workings of the internal market.

[Mr Baker]

We certainly do. The right hon. Gentleman and I have walked a long way together over the last seven years. As he well knows, I regret that we have had to part ways somewhat at this point, but we are clearly aware of his concerns, which he articulates with great clarity and force. I hope he will not mind if, at this late hour, I say that I will leave this to my boss, the Secretary of State, and the other parties to work through.

Finally, I think, I turn to the issue of the Northern Ireland Audit Office, which the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) set out in some detail. Of course we appreciate the important role played by the NIAO and other independent bodies that hold the devolved Government to account, and ensure that public finances are spent properly and efforts are made to improve public services. However, when the Secretary of State considered budget allocations, he needed to take account of the challenging budget context and reductions faced by other Northern Ireland Departments. In such challenging circumstances, we believe it is only right that we ask the non-ministerial Departments and independent bodies to find savings in the same spirit as the rest of the Northern Ireland Departments.

[Dame Meg Hillier]

My concern is that it is a disproportionately large cut to a very small budget. It means that the Comptroller and Auditor General for Northern Ireland cannot complete her work programme for this year, and there is nobody else—no Executive, no Public Accounts Committee, no Assembly—that can do that job.

[Mr Baker]

Let me just check my notes to make sure I answer the hon. Lady properly on this point.

What we have done is roll forward the budget. The recommendations of the Assembly’s Audit Committee were made in a different economic and budget context. We maintain that, by rolling forward the 2022-23 budget allocation to the Northern Ireland Audit Office and other non-ministerial Departments, we have reached a fair outcome. I would be glad to meet the hon. Lady to discuss this matter further, but I think it better that we meet face to face in the first instance.

I hope right hon. and hon. Members agree that I have tried to respond to some of the main points made in the debate. We will write the letter on education funding. We do have a vision for Northern Ireland, which is one of Northern Ireland standing on its own two feet, with a balanced budget and reformed, effective and affordable public services; a Northern Ireland that is prosperous, happy and free, and is not always standing with its hand out to one party or another.

Question put and agreed to.

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

Northern Ireland Budget (No. 2) Bill

Steve Baker Excerpts

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

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

We now come to—

[The Minister of State, Northern Ireland Office (Mr Steve Baker)]

On a point of order, Madam Deputy Speaker. I think the Mace is in the wrong place.

[The First Deputy Chairman]

Very well spotted—it will be moved. Thank you.

Clause 1

Use of resources

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[The Minister of State, Northern Ireland Office (Mr Steve Baker)]

Thank you, Dame Rosie, and I am delighted to serve with you in the Chair today as we go through Committee stage of this vital Bill.

In the absence of a functioning Executive, this Bill will allow public services to continue functioning and help to protect public finances in Northern Ireland. I propose to go through the clauses now, and then with the permission of the Committee, respond at the end of the debate to points raised.

Clauses 1 and 2 authorise the use of resources by Northern Ireland Departments and other specified public bodies amounting to £27,403,514,000 in the year ending 31 March 2024 for the purposes specified in part 2 of schedule 1 and subject to the limits set out in subsections (4) to (7) of clause 2. I should remind the Committee that this Bill only sets out the available total resource and capital budget for Northern Ireland Departments of £14.2 billion and £2.2 billion respectively. In the absence of an Executive, it is the responsibility of the Northern Ireland Departments now to make the specific spending decisions to ensure that they live within the budget limits set out in this Bill. The Government recognise that this is not easy and requires difficult decisions.

Clauses 3 and 4 authorise the Northern Ireland Department of Finance to issue out of the Consolidated Fund of Northern Ireland the sum of £22,790,893,000 for the purposes set out in part 2 of schedule 1.

Clause 5 authorises the temporary borrowing by the Northern Ireland Department of Finance of £11,395,447,000, approximately half the sum covered by clause 3. This is a normal safeguard against the possibility of a temporary deficiency arising in the Consolidated Fund of Northern Ireland, and any such borrowing is to be repaid by 31 March 2024.

Clause 6 authorises the use of income by Northern Ireland Departments and other specified public bodies from the sources specified in part 3 of the schedule for the purposes specified in part 2 of the schedule in the year ending 31 March 2024. Clause 7 provides for the authorisations and limits in the Bill to have the same effect as if they were contained in a Budget Act of the Northern Ireland Assembly. It also modifies references in other pieces of legislation to the Northern Ireland estimates, which would normally form part of the Assembly’s supply process. Clauses 8 and 9 are self-explanatory, in that they deal with such matters as interpretation and the short title.

Finally, the schedule to the Bill sets out for each Northern Ireland Department the amount of money authorised for use, the purposes for which it can be spent and other sources of income from which it can draw. Part 1 of the schedule sets out the amount of resources authorised for use by each Northern Ireland Department and other public bodies in clauses 1 and 2 and the sums of money granted to each Northern Ireland Department and other bodies in clauses 3 and 4 for the year ending 31 March 2024.

Part 2 of the schedule sets out the purposes for which resources under clause 2 and money under clause 4 can be used by each Northern Ireland Department and other bodies for the year ending 31 March 2024. Finally, part 3 of the schedule sets out the sources from which income can be used by each Northern Ireland Department and other bodies for the year ending 31 March 2024.

I hope I have provided the Committee with sufficient detail on the intended effect of each provision in the Bill. We have also published more detailed information in respect of each of the Northern Ireland Department’s spending plans through the main estimates, which the Secretary of State laid as a Command Paper on 3 July. I look forward to hearing Members’ views on the Bill and their contributions, and with the leave of the House I will later endeavour to respond to as many points as possible when I wind up.

[Tonia Antoniazzi (Gower) (Lab)]

It is an honour to serve under your chairship, Dame Rosie, in this Committee. I will keep my remarks brief to allow us to hear from the Northern Ireland parties on Third Reading.

Once again we come together to debate legislation that should be dealt with in Stormont. We still have civil servants running Departments with restricted powers, trying to plug a gap of £800 million and unable to consult with Cabinet Ministers. Stormont is the right and proper place for scrutiny to take place. In this place, we cannot simply provide the level of consideration and scrutiny that this budget deserves.

To quote today’s report from Pivotal,

“managing this situation has been extremely challenging, if not impossible, thanks to two interlocked problems: no political leadership for decision-making and impossibly tight budgets.”

On the first problem, sadly I have seen no sign over the recess that indicates the restoration of the Northern Ireland Executive is any nearer. I would welcome hearing from the Secretary of State what discussions he has had over the summer with parties in Northern Ireland, as the situation is now beyond breaking point.

On the second problem—the budget—we do not oppose the Bill, as services are in desperate need of funding, but the fact is that this budget is not enough to address the problems facing public services in Northern Ireland. A real-terms funding fall of 3.3% means that existing services simply cannot continue to function as normal. The people of Northern Ireland have been left facing cuts to support and increases in charges for everyday necessities during the cost of living crisis. While we appreciate the need to explore avenues to raise revenue, the measures put forward so far may cause more societal damage than the monetary gain is worth. As I have mentioned, we are missing a vital level of scrutiny and accountability for these measures.

We, the Labour party, agree with the principle that local decisions should be made by local politicians, but the situation is now extreme. While there continues to be no functioning Executive, I ask the Secretary of State to consider what he can do within his power to help the people of Northern Ireland. This is a critical state of affairs, and the full impact may not yet be realised, as any overspends will inevitably lead to further cuts the next year. The only viable way forward for Northern Ireland is the restoration of the Executive, and I implore the Secretary of State, the Minister and the main parties in Northern Ireland to ensure that happens sooner rather than later.

--- Later in debate ---

I am sure that there are more public bodies of that nature, whose existence or continuance depends on the sitting of the Assembly, which could benefit from being free from those shackles, doing independent, non-partisan, non-party political work. This would be a very good place to start.

[Mr Steve Baker]

My right hon. and learned Friend makes a very good case. I am conscious that his amendment was not selected, but if he would do me the honour, I would be glad to meet him and hear his opinions on this further. He makes some very good points.

[Sir Robert Buckland]

I am extremely grateful to my hon. Friend, and I would commend him for any discussions he might have with the Audit Committee and its members who have given evidence to the Northern Ireland Affairs Committee here in Westminster.

On that note I will close my remarks. It is safe to say that it is sad but a reality at the moment that we have to legislate in this way for the affairs of a part of our United Kingdom that has been given the power of devolution but, for reasons that are all too apparent, is not in a position to exercise that power. It must do so soon, not in the self-interest of the politicians who sit in that place but for the people they are supposed to serve.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 9 ordered to stand part of the Bill.

Schedule agreed to.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Third Reading.

[Mr Steve Baker]

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

I would like to place on record my thanks to all those involved in the passage of the Bill through the House. In particular, I thank the Labour Front Benchers for their constructive approach to the Bill and its necessity. I take this opportunity to welcome the shadow Secretary of State, the right hon. Member for Leeds Central (Hilary Benn), to his place; I know he will hold us to account with great skill, but will seek to pursue the best interests for the people of Northern Ireland. I heard him say “peace, prosperity and progress”. That is what we all want.

I thank Diggory Bailey in the Office of the Parliamentary Counsel for the expert fashion in which he and colleagues drafted the Bill with Northern Ireland counterparts in the Office of Legislative Counsel and the officials in the Department of Finance who assisted greatly in our preparation for this Bill’s passage.

It is no secret that the pressures on Northern Ireland’s public finances are acute. As with the 2022-23 budget, setting the budget was not an easy task but it was necessary to deliver a balanced budget and provide the Northern Ireland Departments with budget clarity to help to get spending under control. As far as possible, we have aimed to protect frontline public services. In recognition of the pressure on the health service, over half the total budget is earmarked for health.

As I have said many times from this Dispatch Box, and as the Secretary of State for Northern Ireland has said many times, people in Northern Ireland rightly expect to see these decisions taken in Stormont and not in Westminster. We agree with them. However, until that happens, the Bill will allow public services to continue functioning and help to protect public finances in Northern Ireland. I therefore commend it to the House.

--- Later in debate ---

[Sammy Wilson (East Antrim) (DUP)]

The hour is late, so I will make just a couple of points about the budget. The first is that, of course, political parties in Northern Ireland have elected representatives. We have our own priorities. We have things that we want to see done, and things that we believe should not have money spent on them. Of course we would love to be in a situation where we had a restored Assembly, but I think that the new shadow Secretary of State—whom I congratulate on his appointment—hit the nail on the head when he said that Government had a responsibility to regain the trust of the parties of Northern Ireland, and this Government have singularly failed to do so. One only has to look at the way in which they have handled affairs since the Windsor framework was introduced. They took Members off Committees because they suddenly realised that the arguments being put forward for legislation were not even going to wear in their own party, so at the last minute we had half the Committee replaced. Over the summer period we have had regulations introduced without any chance of public scrutiny. That enabling legislation will have an impact on trade between Northern Ireland and the rest of the United Kingdom. Now we are heading towards the autumn, when the border operating model will see checks on goods coming from GB into Northern Ireland, as well as Northern Ireland manufacturers and producers finding themselves subject to checks when they try to sell into the GB market. The Government say that they want to restore trust and give us an assurance that we are part of the United Kingdom and a fully integral part of the United Kingdom market, but there is no evidence of that.

Quite honestly, no Government can expect Unionist representatives who have fought to maintain the Union to go back into Stormont to implement policies that will drive a further wedge between Northern Ireland and the rest of the United Kingdom, and where they will be obliged to accept EU legislation, which even the Windsor framework indicated would be the cause of divergence between Northern Ireland and the rest of the United Kingdom.

If the Government really want politicians in Northern Ireland to play a role in deciding budgets and how they are spent, they first of all have to accept that Unionists cannot and should not be expected to participate in the demise of the Union by having to sit in an Assembly that would be forced to implement the very policies that they believe are detrimental to the Union. It would be hypocritical for DUP Ministers and Unionist Ministers to sit in the Assembly and by law—because the courts have ruled on it—have to implement something that their colleagues could be standing here in this place condemning and saying was detrimental to the Union. There is an onus on the Government to recognise that the Windsor framework has not sorted out the issues and that it has made them worse. I think that October will show that it has made them worse, and if we want devolution restored, it has to be on the basis of—

[Mr Baker]

I am listening carefully, and I appreciate the tone in which the right hon. Gentleman is delivering his remarks, but I have stood here at least twice and said that we recognise that this is a hard compromise for Unionists and Eurosceptics. I think it has to be said that the European Union has its own stakeholders. Personally, I was among those who said for a long time that we could have administrative and technical solutions to deal with the issues of Northern Ireland. I worked on that before the referendum and subsequently I saw to it that papers were produced after I resigned from the Government in 2018.

This is a subject extremely close to my heart, but since the right hon. Gentleman raises it again, I would say to him and to all Unionists, of whatever strength of opinion, that one has to choose from the available futures. He knows that; he is a more experienced politician than me. One has to choose from the available futures. The EU has its own stakeholders. We have managed to reset the relationship with Ireland and with the European Union, and that offers the hope of a better future for all of us in western Europe.

On the budget, the surest way to harm the Union now is to allow Northern Ireland to fail, because people vote for change when the world is not working for them. When I look at the available futures for Northern Ireland, I see that the one that is going to work best and best preserve the Union is to get on and get Northern Ireland working. I know that the right hon. Gentleman is frustrated. I am frustrated, too, and I would like to have done better on the Windsor framework, but now we have to choose from the best of the available futures.

[Sammy Wilson]

That is the kind of answer that worries me as a Unionist, and it should worry many people in the Minister’s party if they listen carefully.

The Minister seems to be taking the view that, because stakeholders in the European Union demand certain things, the Government should respond. This Government have an obligation, first of all, to the country they govern, and that obligation is to make sure the country is not broken up. That should be the main consideration, not what stakeholders in Europe think and not re-establishing relations with the European Union and the Government in Ireland, if that means breaking off and destroying relations with the people of part of the country to which we belong. If that is the approach, I do not think we will get very far. This surrender approach is not a compromise that Unionists can accept. The Minister may find it acceptable, but we do not find it acceptable.

[Mr Steve Baker]

I know this is a debate on the budget, so I will try to be very brief. I know the right hon. Gentleman does not need me to give him a lecture on the Belfast/Good Friday agreement, but Northern Ireland has had particular problems and a particular status that do not exist in my constituency or anywhere else in Great Britain. We have to face up to the reality of where we are. This Government believe in the Union, but we also respect the Belfast/Good Friday agreement in all its dimensions, and that includes devolution. I implore him to make the Union work.

[Sammy Wilson]

Of course, the important thing in the Belfast agreement was that the status of Northern Ireland is guaranteed, and that no change would be made to Northern Ireland’s status unless it is decided by the people in Northern Ireland. The people in Northern Ireland did not agree to this change of status, which makes it a vassal state of the European Union.

I do not want to labour the point—I understand that you are being very good in allowing me to emphasise this point, Madam Deputy Speaker—but if the Government wish to see Northern Ireland politicians make decisions on this, they have to respect that there is a Unionist tradition and a nationalist tradition in Northern Ireland. They cannot ignore the Unionist community’s concerns, worries, fears and opposition to the arrangements that are currently in place. Far, far worse, they cannot expect Unionists to co-operate in facilitating the implementation of those arrangements.

On the budget, the Minister has accepted that there is pressure on public services and spending in Northern Ireland. Nearly everyone who has spoken has said that it would be much better for politicians in Northern Ireland to make these decisions. The truth of the matter is that, even if the Assembly were up and running, it could not deliver the basic services that are expected in Northern Ireland and that are funded in the rest of the United Kingdom, because the Government have done two things.

First, since 1922—and the Fiscal Council has made this clear—expenditure on public services in the rest of the United Kingdom has been based on need, but the Government have ignored their own criteria and the basis on which they decide spending in the rest of the United Kingdom. The Holtham formula has not been applied in Northern Ireland. Indeed, the Fiscal Council has estimated that, as a result of need not being considered, we probably have about £322 million less expenditure available than we would have had if we had been treated on the same basis as England, Scotland and Wales.

I do not believe the Assembly’s decisions have always been good, and I do not believe there has always been the wisest use of money, but the problem has not primarily been caused by the Assembly. The Government’s decision not to base this budget on need is causing some of the issues.

Let me give an example. Education spending has gone up by 6% in the rest of the United Kingdom, but it has fallen in Northern Ireland. The overall budget for Northern Ireland this year has fallen by 3.2% in real terms, whereas the budgets for the rest of the United Kingdom went up by 1.7% in real terms. That is partly a result of the fact that the formula used for the rest of the United Kingdom, which is based on need, has not been applied in Northern Ireland. Of course, the situation has been exacerbated by the Government’s decision to claw back the overspend by the Assembly in the last year in which it was sitting, which amounts to about £287 million. So the pressure on public services, which the Minister has lamented, is partly caused by the decisions that have been made here; they will affect the amount of money we have to spend in Northern Ireland.

I could go through the consequences for each Department, but I am not going to do so at this time of the evening. However, in education we have a real-terms cut, and in policing we are already about 1,000 officers below what the New Decade, New Approach and the Patten arrangements said we should have. That situation is going to get worse. Of course, we also now face the expenditure that is going to be necessary because of the problems in schools and the massive expenditure that will result from the data breach in the Police Service of Northern Ireland. So far, no clear indication has been given that the payment for those things will come from anything other than this overstretched budget. It would be useful for the Minister to indicate to us at the end of the debate whether the money that has to be spent on making schools good as a result of the problems with the concrete that was used, and the massive spending that there will be on fines from the Information Commissioner, the relocation of officers and the mitigation measures that have to be taken to protect officers, will still come from the overstretched budget or whether there will be an in-year consequence for that. Alternatively, will it be treated simply the same as the Barnett consequentials? Will the future Barnett consequentials be treated and ignored?

I hope that the Minister fully understands our position. We are not being truculent. We are not piqued because we have not got our way. We are simply making it clear that the ask that is being made, on the political compromises on the Union and on the financial difficulties that this budget would cause, makes it impossible for the Assembly to be up and running again.

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[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.

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[Ian Paisley (North Antrim) (DUP)]

We are approaching tomorrow, so I will try not to detain the House too long with the comments I wish to make on this important Bill. At the outset I want to pay tribute, as others have, to the hon. Member for Hove (Peter Kyle), the former shadow Secretary of State, who has now moved on to another post. He visited my constituency on more than one occasion and spent time with businesspeople and community leaders there, which was much appreciated. It was very clear that he wanted to learn as much as he possibly could about Northern Ireland, and he used that information wisely and, on many occasions, powerfully in this House. I hope he continues to maintain that interest, particularly in the hydrogen technologies that he looked at in Northern Ireland, in his new role. I wish him all the very best.

I also welcome the right hon. Member for Leeds Central (Hilary Benn) to his new post. He brings a level of gravity to the post, which is very important, and I wish him all the very best as well. I hope that, as a supporter of Leeds United, that brings us closer to at least some extent.

When the Minister of State opened the debate this evening, he made it clear that he was putting a budget in place—I think I quote him correctly—that would allow Northern Ireland Departments to continue to function. That was its purpose. Of course, at some level those Departments will continue to function, but they will function on the most stingy budget Bill ever brought forward: a Bill that is a crisis point. Whether there is direct rule, the current formation that we have, or a devolved Assembly operating, the current budget is inadequate. It is a disaster for many of the Departments in Northern Ireland, and it will not allow government to function, or to function normally. Many of those Departments have been cut to the bare bone with regard to what they will be expected to deliver.

What lies at the heart of this budget Bill? Of course, it is a fundamental unfairness. It is unfair in terms of the budget allocation; the formula, or the definition of need, that has been used in relation to Northern Ireland; and the outcome that it will have for the people of Northern Ireland, irrespective of their political or other identity. This is a grossly unfair budget, and it will impact harshly on the people of Northern Ireland. It has been described as a “punishment budget”, and I say frankly to the Secretary of State, his Minister and his team that I think it is designed to be a punishment budget—to punish Northern Ireland because of political circumstances.

If the Government are making an argument tonight that they want an Assembly back, this is a very strange way to go about it, because they are basically saying to the political class in Northern Ireland, “If you go into the Assembly and you try to run it on this pinching, stingy budget, you will deliver to the people of Northern Ireland a disastrous arrangement.” It is no encouragement whatsoever to politicians to go into the Assembly on that one narrow point of the budget. Of course, my right hon. Friend the Member for East Antrim (Sammy Wilson) has outlined much more detailed reasons as to why Unionists would not go back into the Assembly on the current arrangements until issues around the Windsor framework and the protocol are resolved.

If ever we needed leadership from the Government that led to decisive outcomes, it would not be this stunt budget that has been pulled in Northern Ireland. It is a pathetic excuse for a budget, and it will damage the opportunity to try to build better relationships not only within this House, but across Northern Ireland. The Government would not dare bring forward these sorts of arrangements for any other part of the United Kingdom—they simply would not dare and they would not have the affront to do it—and it is appalling that they are doing that for this part of the kingdom, Northern Ireland.

The hon. Member for North Down (Stephen Farry) rightly identified that, if we are going to raise more revenue opportunities and invest in the public service, we need resources to do that. I notice that, in our newspapers every day, there are threats that the Northern Ireland Secretary is going to introduce water charges. I have heard this before. When I speak to the head of Northern Ireland Water, she tells me that, to get us back to an even keel in Northern Ireland with regards to the infrastructure of our water service, we need to invest about £2 billion. That is just to get it back to a level playing field and to a state where we could charge people for the water service. Are the Government proposing to put that sort of investment into the process, or are they just saying, “No, we’ll bring in water charges”? It is impossible to bring in water charges and well the Secretary of State knows it.

Just look at the cuts that are being proposed. The shadow Secretary of State rightly identified the problems to do with the concrete in schools across Northern Ireland, yet the education budget is being given the single largest kicking by the Government. Its budget is going to be down by 2.7%. If there is a crisis identified in the schools’ structure—another crisis in the schools’ structure—they just will not have the resources or the capability to resolve that, and we are going to see a major funding crisis there. Justice funding is down by 1.5%; I will come to some more points about that in a moment. Of course, the Department for the Economy funding is down by nearly 1% and this comes in the jaws of the great economic conference the Government are holding in a matter of seven or eight days in Northern Ireland. They are going to invite investors from all over the world and to say, “Come and invest in Northern Ireland—by the way, we have decided to cut the budget of the Department for the Economy, and we have decided to cut the budget for education and for other parts of Northern Ireland”. What sort of a message is that going to send to potential investors? If the Secretary of State has to try to sell these issues to outside investors whenever they decide to cut the budget, I certainly would not want to be a Northern Ireland-based devolved Minister trying to make that point.

[Mr Steve Baker]

Thankfully, the hon. Gentleman is not writing the speeches for the investment conference next week because, if he were, it would not be very successful. What he knows and I know—and any of us in this House know who knows Northern Ireland—is that it has an amazing, vibrant private sector with terrific entrepreneurs, who are incredibly well grounded in place, care about their communities, and care about making a profit justly while taking care of the environment. They are amazing, inspiring people who can succeed if they are provided with the right capital. If anything, what we are trying to do here, on the point he makes, is to make sure that the very poor quality politics of Northern Ireland ends up matching the very high quality of the private sector. If we could pull that off, Northern Ireland would soar.

[Ian Paisley]

I thank the Minister, but I was once told, “If you throw a stone among a pack of dogs, the one that yells the loudest has been hit the hardest.” I think that point maybe hit the Minister just a little bit this evening in that he knows that to say to investors, “By the way, we’ve cut the budget”, is not actually a good look for the Minister.

I want to turn to the issue of the cut to the Department of Justice funding; it is down by 1.5%. We all know that the morale of the police is at an all-time low. The issue of police pay for probationers has been raised in this House. It is very difficult to encourage young and newly qualified police officers that what they are doing is worth while. That is because the Department of Justice is going to be faced with another cut.

We have had the drama in recent weeks of the data breach. Police on the database have, shockingly, been given advice that they should remove themselves from the electoral register. That is one of the ways in which they can now protect themselves, undermining the democratic process for them and their families. The integrity of the MI5 officers who work in Northern Ireland has been undermined. That has a massive cost not just economically and politically, but to our security. Of course today there has been the loss of the Chief Constable, who decided to make decisions at the behest of Sinn Féin; rightly, he has had to resign. Who can calculate at this point what the cost of this will be, not just economically but to policing and to resolving that problem? I am disappointed that today the Secretary of State hedged his bets on who will pay the costs of the data breach; compensation will run into tens of millions of pounds. With Department of Justice funding cut by 1.5%, it is impossible to take that level of cost from that Department. The Secretary of State knows that he must do better, that this is not a good budget and that it will hit some of the Departments in Northern Ireland that mean the most the hardest.

Northern Ireland’s biggest industry and single largest employer still today is agrifood, making good-quality, tasty food. It does so not just for the people of Northern Ireland: the 30,000 or so farms in Northern Ireland make food and feed about 17 million people here in the rest of the United Kingdom. That sector of our economy is facing problems because that industry is about to have its veterinary medicines violated by this Government. Under the Windsor framework, the problems facing our farms are coming at them at 100 mph. Over 50% of our medicines for that sector are going to be denied and the UK Government say, “We are in discussions to resolve this issue.” The fact of the matter is that Europe has made it very clear that those discussions are over, yet the Government still think they can solve that. That crisis is coming too and the Government will need to resolve it and do so very soon. I hope that they do. I hope that they actually listen to these points, instead of getting tetchy about them, and recognise that the threat they have caused to the people of Northern Ireland by such a stingy, nasty budget, in such a procrastinating manner, is not serving the purpose of getting Government back into Northern Ireland, but is putting us further into the doldrums.

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[Mr Speaker]

I call the Minister.

[Mr Baker]

With the leave of the House, Mr Speaker, given that I made a number of interventions during the debate, and given the late hour and a desire not to repeat arguments that we advanced on Second Reading, I think I should just say, “I beg to move.”

Question put and agreed to.

Bill accordingly read the Third time and passed.