Northern Ireland Budget Bill

Steve Baker Excerpts

2nd reading
Monday 23rd January 2023 Commons Chamber

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

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

I begin by asking the leave of the House to take all stages of the Bill. The Secretary of State sends his apologies; I am pleased to say that he is enjoying a trip to the United States where he is representing Northern Ireland as he seeks to drum up business for local people.

Once again, I stand here with a strong sense of disappointment.  On Second Reading of the Northern Ireland (Executive Formation etc) Act 2022, my right hon. Friend the Secretary of State said:

“No Northern Ireland Secretary would want to introduce a Bill of this nature.”—[Official Report, 29 November 2022; Vol. 723, c. 820.]

That sentiment very much applies again today.

The Government are bringing forward this legislation because the Northern Ireland parties have been unable to form an Executive and subsequently, therefore, to set a Budget. In the absence of an Executive, the Government stepped in to set a Budget, which the Secretary of State put before the House on 24 November last year. We are legislating for that Budget today.

Setting the Budget was not an easy task. Northern Ireland departmental Ministers were in post until 28 October, which meant we could take over only from that point. They had not been operating with confirmed spending limits and had not implemented plans to deal with their looming overspends.

Of course, pressures on Northern Ireland’s finances did not happen overnight. Successive former Executives also failed to put finances on a sustainable footing. As a result, the Government inherited a Budget halfway through the year with an overspend of some £660 million. That is unacceptable, and the unsustainability of Northern Ireland’s finances cannot continue.

Spending per head in Northern Ireland is already at the highest level of any region in the UK. Northern Ireland receives 21% more funding per head than the UK average and has received record levels of financial support. The difficulties that Northern Ireland Departments now face are the result of tough decisions not being taken by elected representatives in Northern Ireland, not just this year but in successive years before that.

Funding alone will not solve those issues. They need strong and responsible leadership by a stable, devolved Government.

[Ian Paisley (North Antrim) (DUP)]

I thank the Minister for giving way, but I know that he will go down the predictable line that all this would be sorted out if we had an Executive. How does he juxtapose that with his comments on 23 October, when he made it clear that

“we will not have devolved government in Northern Ireland”

until Unionist demands are met and the jurisdiction of EU Law comes to an end? Does he admit that the idea that the Executive will be a magic wand is a fallacy?

[Mr Baker]

There is no question of admitting any kind of fallacy. What I was saying with the quote the hon. Gentleman referred to was really a reflection of the DUP’s position. In a sense, I am grateful for his party’s clarity about what it requires to go back into government. From my engagement with its voters in Northern Ireland, I think they know that a price is being paid by not having the Executive up. It would be churlish of me not to admit that those voters—it was a small section—wanted to pay that price, but others will be devastated by the consequences of not having the Executive up. It is only fair that I, as a Government Minister, reflect the full spectrum of opinion, and people in Northern Ireland very much want the Executive back and dealing with the issues before it.

As for a magic wand, I would be the first to admit that government is difficult, whoever is in power. All these decisions are difficult—they are difficult decisions in difficult times—and there is no question of a magic wand. However, everyone in this House is aware of the devolution settlement, and I am sure everyone here would want Northern Ireland Ministers to be taking decisions in an accountable way locally. However, there’s no question of a magic wand, and I would be the first to be realistic about the conditions the hon. Gentleman and his party have set out for going back into the Assembly.

[Sammy Wilson (East Antrim) (DUP)]

rose—

[Simon Hoare (North Dorset) (Con)]

rose—

[Mr Baker]

I will give to the right hon. Member for East Antrim (Sammy Wilson) and then to my hon. Friend the Member for North Dorset (Simon Hoare), but then I will try to make a bit of progress on the principles.

[Sammy Wilson]

I am glad the Minister accepts that there is no magic wand, but does he also accept that, given the nature of the Executive, which is a mandatory coalition, we have had a Sinn Féin Finance Minister, and no Sinn Féin Finance Minister has, I think, ever succeeded in presenting a Budget that other parties could support? That is one reason why we face the deficit that we have at the moment. Indeed, the restoration of the Executive would make things difficult, given that some Ministers do not even attempt to reflect the spending wishes of the other parties in the Executive.

[Mr Baker]

The right hon. Gentleman makes some legitimate points. The particular point about mandatory coalition is of course an important part of the Belfast/Good Friday agreement strand 1, which we completely respect. We are open to hearing suggestions for institutional reform that will deliver more stable government. Members on the Opposition Benches will know the difficulties in reforming the institutions. The Government are clear that any conversation would need to be led by the political parties of Northern Ireland and would need, in the end, to enjoy cross-community consent to be viable.

[Simon Hoare]

My hon. Friend will probably know that the Select Committee was in Northern Ireland last week. I think this endorses and underscores the point he was making a moment or so ago, as he might know about this. The elections were some while ago—an analogue time for a digital age, if you will—and we were hearing from both traditions and both communities a growing sense of worry and anxiety about the impact on the quality of life and on outcomes in health, education and housing for ordinary people in Northern Ireland, who look to their political leaders of all persuasions to deliver for them. There is a growing sense of real anxiety and disappointment that they are being let down yet again.

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[Mr Baker]

My hon. Friend is spot on in what he says. If the situation in Northern Ireland presented itself in Wycombe or anywhere else in Great Britain, there would be outrage. There is 21% higher spending per head than in the rest of the UK—that is not something I wish to repeat too often, in case it is noticed by my electors—with dreadful public services, as he points out, and a Budget that is not balanced, because of a failure to take important strategic decisions. As I will come on to, we are a number of years on from the Bengoa report, which said that there needed to be transformation to maximise the quality and quantity of Northern Ireland’s health services, and that transformation has not happened. The public are suffering the consequences today. Having said that, I will press forward.

The Budget position set out on 24 November was a difficult one, not unlike the Chancellor’s autumn statement in the weeks preceding it, but it is a fair outcome. We are acutely aware of the difficult decisions that now have to be taken in relation to health, education and right across the spectrum in Northern Ireland to live within the Budget.

In setting the Budget we are legislating for today, it is clear that action needs to be taken to get Northern Ireland’s finances under control and to deliver the much-needed and long-promised transformation of public services to which I referred earlier. Six years on from the Bengoa report, we are yet to see the Executive deliver the changes that are necessary. That work needs to happen now, but it requires leadership and strategic decisions that should rightly be taken by locally elected politicians in a new and functioning devolved Government. However, in the absence of that, this Government will take those steps necessary to maintain the delivery of vital public services and to protect Northern Ireland’s finances. Clearly, consideration will need to be given to a sustainable and strategic Budget for the financial year 2023-24.

[Paul Girvan (South Antrim) (DUP)]

There are many aspects of Bengoa that could be implemented, but there is seemingly a reluctance to do so. Whether that be political within the Department or whatever, I would say that it is not just down to having no Ministers; aspects of Bengoa could be implemented through good management, which people have the authority to do, to move forward on some of the savings that can be made.

[Mr Baker]

The Northern Ireland (Executive Formation etc) Act 2022, which we put through, gives civil servants the clarity they need to make certain decisions. We have put those officials in a difficult position to take those decisions, and I put on record now, since the hon. Gentleman gives me the opportunity, my thanks to them for rising to the challenge and bearing with this difficult situation. I am grateful indeed that permanent secretaries and others are rising to the challenge of taking the decisions that need to be made, but it is obviously not desirable that we should be in this position. Ministers should be in post in Northern Ireland doing what needs to be done.

If the Executive are restored in time to set a Budget for next year, the UK Government will of course continue to work constructively with Executive Ministers on a sustainable Budget that delivers for the people of Northern Ireland and supports economic growth.

[Stephen Farry (North Down) (Alliance)]

Will the Minister give way?

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[Mr Baker]

I will, but I will then be determined to make progress.

[Stephen Farry]

I thank the Minister for giving way. He will appreciate that in other circumstances the Executive would normally now be considering the Budget for the coming financial year and that it is important to have certainty ahead of the start of a financial year so that decisions can be made, particularly in tough times. If the Executive are not restored very soon, in order to give some degree of certainty to Departments and related agencies, can the Minister give an assurance that the Government will act in the near future to put in place a framework not just for this year’s Budget legislation but for next year’s?

[Mr Baker]

I expect the hon. Gentleman knows that clauses 8 and 9 put in place a vote on account for next year. I will come to that as it is in my notes; if memory serves it covers 65% of the spending, but I will confirm that when I reach that section. That puts in place the spending for next year, but of course we would like the Executive to return to set the Budget for next year. If they do not return, we will have to do the job, and it will be tricky; there is no getting away from that. Without Northern Ireland Executive Ministers in place, it has not been possible to take the difficult political decisions necessary to balance the Budget at this very late stage in the year, and that of course compounds the problem for next year. It is with great sobriety that I stand here and acknowledge that it is going to be very difficult. I for one would be up for the challenge of doing it, but it is not the Government’s position that we as UK Government Ministers do that; we would like the Northern Ireland parties to step up to that duty.

If the Executive are not restored on time, we will continue to work with the Northern Ireland civil service to prepare for next year’s Budget. The Government’s priority for that Budget will be to deliver a fair outcome for all taxpayers and citizens in Northern Ireland. We will work to put Northern Ireland’s finances on a sustainable long-term footing, which means appropriate consideration of a wide range of options including revenue-raising measures, as well as reviewing all spending.

[Jim Shannon (Strangford) (DUP)]

Will the Minister give way?

[Mr Baker]

I will give way once more but then will give a Bill overview in the hope of making progress.

[Jim Shannon]

I thank the Minister for giving way and respectfully say to him that I have a suggestion for saving money in the Department of Health. We all know that agency costs for employing nurses are sometimes 25% to 30% higher than the costs within the NHS system; the obvious solution is to employ more nurses in the NHS system in Northern Ireland. Does the Minister agree that in order to make savings we should reinstate nurses who want to work and do away with agency staff whose costs are higher?

[Mr Baker]

I thank the hon. Gentleman for raising that point, but I hope he will not mind my saying that today’s Bill is a technical Bill to put on a legal basis the written ministerial statement laid before the House last year, and I am reluctant to get into particular decisions. However, I think every Member of this House will know that agency staff are very expensive and it would be much more preferable to avoid their use.

I do not propose to waste the House’s time by going through every detail of every clause on Second Reading—I will come back to that in Committee—but in summarising the Bill I want first to thank Opposition Members, in particular those on the Front Benches, for the approach that they take to these matters. I know they do not hesitate to hold the Secretary of State and me to account, but equally when necessary measures need to be taken, they are constructive, for which I am grateful because this Bill is about making sure that public services can be provided in Northern Ireland.

The Bill will place the Budget that the Secretary of State outlined to the House in his written ministerial statement on 24 November 2022 on a legal footing. It will also allow Departments and other listed public bodies to continue to deliver public services into the first half of the 2023-24 financial year through a vote on account. I do not propose to repeat the contents of that written ministerial statement, which set out the respective allocations reflected in this Bill; what I will say is that those Budget allocations were developed as a result of extensive and sustained engagement with the Northern Ireland civil service. I want to thank again the Northern Ireland civil service, and indeed our own officials in the Northern Ireland Office, for working with great passion and at great pace to work through this Budget; it was inspirational to see and I am particularly grateful to our senior leadership team for the way it rose to the occasion.

The Secretary of State has met Sir Robert Chote, the chair of the Northern Ireland Fiscal Council, and has received a range of representations from public groups and individuals. We have prioritised spending in health and education, with an overarching objective of protecting the most vulnerable: this Budget increases education spending by just under £300 million and delivers a £786 million increase in non-covid-related health spending.

The challenges that all Departments now face are due to the repeated failure of previous Northern Ireland Executives to take strategic decisions to reform public services and deliver sustainable finances. When Ministers left office in October, the Department of Education, the Department of Health and several other Departments were set to overspend significantly, with no plan in place to address that. The best solution for Northern Ireland’s health, education and other public services is a functional and effective devolved Government taking much-needed decisions to place those public services on a sustainable footing.

[Karin Smyth (Bristol South) (Lab)]

Like many Members of this House, I will be immediately affected, through immediate family, by the Bill’s provisions on education and on health, with the collapse of a care contract in my family this year because of the lack of budgets in the voluntary sector. I am afraid that the Minister is speaking as if none of this were the Government’s fault. Although of course it is up to devolved Members to create an Assembly, over the past six years they have been unable to function as they would in Wycombe or Bristol because of the situation with Brexit, the discussions on the protocol and so on.

This afternoon’s debate is like living in some kind of fantasy land. That is not acceptable from the Government. The very least that they could do is advise us how quickly they will act to resolve the issues around the protocol so that the parties can get back around the table, because the two things are not separable.

[Mr Baker]

I am grateful that the hon. Lady finished with an encouragement to resolve the issues in the protocol. I have to tell her that I think the sense among all parties at the moment—including the Government of Ireland, the parties represented here in the House, Ministers and the European Union—is that we all want a deal. We want to move on. We want a deal that respects the legitimate interests of Unionism, that keeps the whole UK together and out of the European Union, that respects the Acts of Union and so on. My sense is that through much-improved constructive relations between the UK and Ireland and the European Union, we may well be able to get a deal, but I have to say to people watching this debate that right now there is no deal on the table. There is a large gap to be bridged, and we are working intensively to do just that.

With respect to the hon. Lady’s earlier remarks, she knows as well as I do what the devolution settlement is. I can tell her that the responsibility that we bear certainly sits heavily on the shoulders not only of Ministers in the Northern Ireland Office, but of our officials. She will know that our officials often have friends and family in Northern Ireland or who come from Northern Ireland; I am grateful that she acknowledges that. All those people, I dare say, will feel as acutely as she does the implications of the situations that she has set out. She will know that it is very difficult today to see a Government moving into direct rule. In the absence of direct rule, we simply must make progress on the protocol.

As we approach the anniversary of the Belfast/Good Friday agreement, I really hope that this exchange will be heard in the European Union, because we all want to be able to celebrate that agreement and 25 years of peace—and to celebrate it with the Executive up and running. DUP Members have made it very clear what is on the table, and I think that it is a moment of considerable gravity for us all. But in terms of the real effects on everyday people in Northern Ireland: yes, I am acutely aware.

In conclusion, the Bill is essential to deliver spending for Northern Ireland Departments within the Budget limits that have been set. It will not be an easy task; it will take place in difficult circumstances. People in Northern Ireland rightly expect to see decisions being taken in Stormont, and I agree. Once again, I must state my continued disappointment that it is necessary for the Government to step in and legislate for this Budget, and once again I urge the Northern Ireland parties to find a way back to forming a Government. However, until a functioning Executive returns, 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.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Secretary of State.

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[Sammy Wilson]

I do not want to get into history, but I would point out that in the first year I was Finance Minister, we had a 5% cut in the Budget in the middle of the financial year as a result of decisions made here, and we agreed a Budget. Furthermore, we agreed a Budget not just for one year but for three years, so it is possible for the Assembly to make decisions. All I am saying is that, in its current form and with the current party holding the Department of Finance, that has not been possible. The point I am trying to make is that rather than lay the blame at the feet of the DUP for not operating an Executive—in which its views were excluded anyway—we should lay the blame for this situation at the feet of those who could not make an operable Budget even when the Executive was functioning.

Moving on to my second point, the Minister has made great play today of the fact that Northern Ireland gets treated more generously than the rest of the United Kingdom. I accept that, but so do Scotland and Wales. One of the important things about being part of the Union is that there are fiscal transfers from those parts of the country that have geographical, economic and infrastructure advantages that other parts do not have. I do not believe that it shows a begging-bowl mentality when people in Wales, Scotland or Northern Ireland—or indeed the north of England—say, “Look, there are parts of the country that are richer, but one of the benefits of being part of the Union is that those parts help the areas that are in difficulty.” Indeed, the Government’s own philosophy at the moment is what? To level up, and to accept that there is a responsibility to transfer resources to those areas that, for whatever reason, face disadvantages.

I would point out to the Minister that the increase in the money we have had to receive is partly due to the protocol, which his Government signed up to. There is nearly £500 million a year in the trader support scheme, as well as the resources behind the extra sanitary and phytosanitary checks—the people who have had to be employed, the computers that have had to be installed and the buildings that we now find are going to be built, but not as a result of a decision made by Ministers in the Northern Ireland Executive, because of course there could not be agreement on that.

Ministers at Westminster have now taken over the power to deliver at least a £47 million investment in border posts within our own country. There are questions—not for today, but at some other stage—about who authorised civil servants to start the work on those before Ministers in Westminster took responsibility, even though it was controversial. The Minister has talked about the difficulty of civil servants taking decisions, but it seems that when they want to, they can even make controversial decisions—decisions that split the United Kingdom and put border posts between Northern Ireland and the rest of the United Kingdom. Nothing can be more controversial than that, yet civil servants seem to have been able to take those decisions.

The Bill allows Departments to spend until the end of this financial year, and then into the middle—I think it is June—of the next financial year. That is not unusual. Indeed, if the Assembly had been functioning, that power would have to have been given to give the Departments the ability to spend that money on account until the Budget was finally agreed—it usually was agreed, but it was not agreed in some cases—in the Assembly in June of this year.

There are aspects of the Budget that are particularly difficult: one, which has already been mentioned in interventions, is the expenditure on education. Once education and health are taken out of the Northern Ireland Budget, we do not have a great deal left, because they account for over 60% of spending between them. However, education has been specifically targeted by Ministers to face a reduction, even though education spending in Northern Ireland is at the lowest level per head in all parts of the United Kingdom. The difference between Northern Ireland and Scotland, for example, is £1,200 per pupil. I know that these things are not always solved by money: although Scotland has the highest level of expenditure per head when it comes to education spending on pupils, its outcomes are actually falling, so let us not imagine that there is a direct correlation all the time between spending money and getting outcomes.

I am sure the Minister will make the point that that is why it is important for Government Departments to make decisions about performance, efficiencies, productivity and so on. Some of the decisions that the Assembly has made have not been helpful in that regard. The Integrated Education Act (Northern Ireland) 2022, which was passed just before the Assembly collapsed, gives preference to one particular sector of the education system. I think that Act is going to make it much more difficult to rationalise education and, therefore, to ensure that money is better spent. While I do not want to go into the detail of the Act today, that is what the other sectors of education believe as well—that it is going to make that whole process of efficiency and spending in education more difficult than it is at present. Again, that is an example of where just having a devolved Administration, which should know local needs, does not always ensure that the most efficient decisions will be made.

On health, leaving aside the money that is spent directly from Westminster—annually managed expenditure —we are now spending nearly 45% of the total Budget that the Executive has to spend on health, yet outcomes are falling and waiting lists are increasing. I get letters from constituents and angry letters from doctors all the time, saying, “We need to spend more on health. We are under- resourced; we are underfunded.” I do not know how much of the Budget we can continue to take out and give to one particular sector—there are other areas, as Members have mentioned, including policing, infrastructure, education, universities, training, agriculture and industrial promotion. All those things are in competition, and we cannot simply say, “Here is one part of the Budget that we will keep pouring money into.”

Of course, as I mentioned, some money could be released for the trader support service and the other expenditure around the protocol—nearly half a billion pounds every year. As the Government now accept, the reason why that money is spent is that the protocol is such a big disadvantage and a burden on business that they need to help those businesses overcome the bureaucracy, and the barriers and impediments to trade between GB—our biggest market—and Northern Ireland.

The other point I wish to make on the Budget this afternoon is that when it comes to looking at priorities, even in the absence of devolution Ministers could do more to look at where we need to spend the money and direct civil servants. Despite what the Minister has said, civil servants now have the power to have greater flexibility in how money is spent. I know it is difficult for them and that some of those decisions are political, but there have already been political decisions made about the priorities that the previous Executive and the Assembly wanted. Surely those things should be guides to civil servants in making decisions about how money could be more effectively spent. As I have said, they make some controversial decisions in relation to the protocol, so there is no reason why we should not have tweaking of the Budget.

The last point I wish to—

[Mr Steve Baker]

The right hon. Gentleman has mentioned this a couple of times and I mean to come to it as I close the debate. We have to insist that it is Ministers who decide, and officials who advise. He will know that the protocol is the responsibility of the Foreign Office. I am highly confident that Foreign Office Ministers will have taken a decision and taken responsibility for it. Of course, it is not Northern Ireland civil servants who are responsible on the protocol, but the Foreign Office. I want us to respect the fact that the Foreign Office is taking this matter very seriously.

[Sammy Wilson]

The point I was making—the Minister knows this, because we have raised it here on a number of occasions—is that the responsibility did lie with the Northern Ireland Executive. The Foreign Office did not like the decisions that Democratic Unionist party Ministers in the Executive made on the protocol infrastructure and only recently have taken over the responsibility to implement that. Even before that happened, civil servants—I do not know whether they did this at the prompting of officials or Ministers in the Foreign Office—were already making decisions about clearing sites in my constituency to build border posts.

The last point I would—

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[Gavin Robinson (Belfast East) (DUP)]

As you know, Madam Deputy Speaker, it is customary to say that it is a great pleasure to follow the previous speaker—in this case the hon. Member for Foyle (Colum Eastwood)—so may I thank him for the comments that he made about Dáithí’s law, which makes that convention easier to abide by? I agree with him wholeheartedly, and I thank him for his sincere remarks about our former colleague Alex Easton, the independent Assembly Member for North Down. In such harrowing and tragic circumstances, those remarks will be appreciated by him and by all those around him.

I do not think that there is any need to delve into some of the squabbling of the past 10 minutes, but I place on record my appreciation for the comments of the shadow Secretary of State, the hon. Member for Hove (Peter Kyle). He rightly identified the huge failure on the part of the Government to deal with or grasp the issues presented to them in the six months following the September 2021 speech at La Mon in which my right hon. Friend the Member for Lagan Valley (Sir Jeffrey M. Donaldson) outlined clearly, in intelligible terms that anyone could understand, how the protocol was fraying the strands of the Belfast agreement. The more those strands fray, the more likely it is that they will snap.

We should not need a history lesson in this Chamber to know that in New Decade, New Approach an agreement was struck that dealt not only with police officer numbers, but with the fact that Northern Ireland had been removed from the United Kingdom’s internal market. A commitment was given to restore Northern Ireland’s place within the United Kingdom’s internal market. If that commitment had been delivered, we would not be where we are today. If the warning that the shadow Secretary of State has highlighted had been heeded at that stage, steps would have been taken to ensure that we did not end up where we are today.

I had to smile when the Chairman of the Northern Ireland Affairs Committee, the hon. Member for North Dorset (Simon Hoare), said that we get fed up with him. He then had more to say, but I agreed too early, so I apologise for that. However, he has stood at the vanguard of those who have dismissed and demeaned the legitimate political concerns that have been raised—not post the Northern Ireland protocol, but during its passage through this House and in all the tumultuous years that led up to that point. It was clear as day: we did not support it in October and November 2019, and we did not support it when we came back in January and February 2020.

It is clear as day that when Northern Ireland is removed from its integral place within the United Kingdom, without the consent of people in Northern Ireland; when a situation is created in which Northern Ireland Assembly Members are no longer able to vote, speak or shape laws that attach to trade; when a huge cost is placed on consumers across Northern Ireland and product choice and availability is removed; when there is an attempt to subvent that at a cost of £358 million over the past two years, or some £460,000 a day, for the trader support service in order to ameliorate the bureaucratic requirements associated with the protocol, with grace periods in place; and when people have the temerity to talk about a cost of living crisis, without recognising the huge costs placed on consumers and businesses in Northern Ireland because of decisions taken by this House, there is a problem.

I am extraordinarily sorry to say that this is the second time that as Members of Parliament here we are having to set a Budget for the people of Northern Ireland. That should not be the case. The issues should have been grappled with much earlier. The Chairman of the Northern Ireland Affairs Committee indicated that civil servants cannot make decisions, but we passed the Northern Ireland (Executive Formation etc) Act 2022 in this House last year. Section 3 of that Act makes it very clear that civil servants are empowered to make a decision even when it has not been put to the Executive, if

“it is in the public interest”.

Am I suggesting that that is an ideal situation? No. Am I suggesting that it could not be better? No. Would we like to be in Stormont, shaping our own destiny? Absolutely we would, but we should not suggest, as has been suggested, that decisions of public importance on life-and-death issues—decisions that are in the public interest—should not or cannot be taken. They can.

That is why I have raised with the Minister of State, on a number of occasions, an issue around Grenfell cladding, as but one example. The hon. Member for Belfast South (Claire Hanna) will know that she benefited from Grenfell moneys in her constituency because a building there had an ACM cladding system. In my constituency, buildings have non-ACM cladding, for which the Executive have not yet created a scheme. I am not talking about money that the Executive need to get from Whitehall—they already have it. In March 2020, I got letter from the Finance Minister saying that the money had been reallocated because we did not have a scheme, and yet in one complex alone in my constituency there are 474 apartment owners who know that their building is made from materials that need to be remediated. They also know that, two years ago, the Executive got money from Whitehall to remediate that building. They cannot sell their properties. They cannot get an EWS1 form. They cannot borrow against their properties. They are stuck until the scheme is delivered. We are talking about remediating cladding that is a fire safety issue.

[Mr Steve Baker]

The hon. Member makes his point with great force on behalf of his many constituents. Since last week, when we met and discussed the subject and I wrote to him, my officials have confirmed with Northern Ireland civil servants that a scheme is under development. I know that he will continue to champion his constituents on this issue and I will continue to be in touch with the Northern Ireland civil service on this point. Obviously, we do need to see progress on that.

[Gavin Robinson]

I thank the Minister. I appreciated the correspondence, which he copied to colleagues as well, and I appreciate him looking at this. The scheme that was referred to his officials has been under development for well over 12 months now. The scheme envisages a Whitehall Department—it will remain nameless—which is already administering the scheme in England, administering the scheme on our behalf in Northern Ireland as well. Yet, even though we passed legislation in the Northern Ireland (Executive Formation etc) Act 2022 last autumn, officials are still suggesting that, when the scheme is developed, they cannot do anything because they need the Executive to agree it. I was grateful for the clarity in that legislation last autumn that that is not the case and that it need not be the case. It is in the public interest that officials should advance that in the absence of functioning institutions at Stormont.

I raise that as just one discrete issue to highlight how things must move on. Policies must progress. When money has been attributed by Westminster to Northern Ireland for that specific purpose, when the Executive have accepted that there needs to be a scheme, and when there is a blatant need for people who are trapped in their homes or for fear of fire safety issues, it needs to happen.

I mentioned that this is the second time that we have considered a Budget Bill in this place. I want us to cast our minds back to the last process. In that, the Treasury started off with the new regional rate for Northern Ireland at something extraordinarily ridiculous like 18%. I see that one official who was scarred by that process has returned for a second go. However, 18% was absurd. We had to engage significantly with the Treasury on that. In those discussions with the then right hon. Member for Runnymede and Weybridge, now Lord Hammond, it was clear—this is the importance for this debate—that we cannot just keep on with the same funding system for Northern Ireland. I invite the Chair of the Northern Ireland Affairs Committee to have an inquiry on that specific point.

There is absolutely no point in either today setting a Budget and thinking things will get better tomorrow or establishing an Executive and believing that it will all be okay. The Northern Ireland funding system does not work. The Northern Ireland funding system will only get worse. The Minister enjoyed saying that Northern Ireland gets a 21% premium above his constituents in Wycombe, but if we are honest about the figures, his constituents are outbid by a 30% premium for households in London, 20% for those in the north-east of England and 20% for those in the north-west of England. All those individuals do better in funding per household than the affluent south-east of England.

Northern Ireland has a disproportionately larger public sector, even though it has a smaller population, because there needs to be a critical mass to provide services. We have higher levels of deprivation; the hon. Member for Foyle mentioned it, and parts of my constituency, west Belfast and other urban environments are in exactly the same position. Rural deprivation is also disproportionately higher than in other parts of the United Kingdom. That all goes back to the Barnett formula from 1979; the Northern Ireland Affairs Committee should grasp the issue. When we engaged with the then Chancellor of the Exchequer, there was a recognition of that, but if someone were to ask the Treasury today whether there is a problem with how Northern Ireland is funded, it does not seem to have any legacy knowledge of that discussion.

Importantly, it was agreed in New Decade, New Approach that a Northern Ireland Fiscal Council would be established to consider how Northern Ireland is funded and the sustainability of our funding system. That has been established and it has published incisive reports that are ignored. If they are not ignored, they are picked up only because people are interested in newsworthy items about Brexit or about the potential for water charges. People are missing the core element of those reports, which is the recognition that, if we do not systematically change how Northern Ireland is funded, the situation will only get worse.

In January 2023, the Northern Ireland Fiscal Council considered the long-term projections for the Northern Ireland block grant. It was 29% of the premium that we received in the 1970s and it has fallen sharply since.

--- Later in debate ---

[Mr Steve Baker]

With the leave of the House, I am glad to respond to the debate.

First and foremost, I join other hon. Members in offering condolences to Alex Easton, whose parents Alec and Ann tragically died in a fire in Bangor earlier today. I know the whole House will want to put on record our shared sorrow at this news, and to thank the emergency services who attended. At the same time, I am delighted to congratulate Doug Beattie on the birth of his granddaughter Skyler. I am sure we will be able to find a couple of copies of Hansard to send on to the families.

I am grateful to the Opposition for their comments; When opening the debate the hon. Member for Hove (Peter Kyle) said that we were right to prioritise restoring power, and I am grateful to him for that. He asked for an update on the negotiation, which I will give in a moment. We are all agreed that Stormont should be restored—I think that has been a universal theme. The Secretary of State and I have met a wide range of stakeholders and, though of course we are in an undesirable position, we are confident that we have listened to a range of views as we have participated in reaching these decisions with Northern Ireland’s civil service.

Turning to the protocol, as hon. Members know, it has always been our preference to resolve the issues through talks. The Foreign Secretary and Vice-President Maroš Šefčovič speak regularly and Government officials have technical talks. The Foreign Secretary and Vice-President Šefčovič spoke on Monday 16 January and have agreed that rapid scoping work should continue, which we are very pleased about.

We welcome the agreement reached recently on the EU’s access to UK IT systems that provide live information about what goods are moving across from Great Britain to Northern Ireland. That agreement has provided a new basis for further constructive discussions with the EU to come to a negotiated solution on the protocol. We are of course proceeding with legislation, but I would like to take a moment to elaborate on the situation we face.

It is sometimes impressed upon me by some of the harder-line Unionist commentators that we should simply tear up the protocol. I am not sure what political world they think we operate in—I am not talking about Members of this House, but some individuals outside it. The world is rather more complicated than that. Ministers do not have unfettered power to tear up treaties, nor should they. That is why we proceed with the Northern Ireland Protocol Bill.

On the point about border posts, the reality is that we are in the happy position where legitimate interests on both sides are now being recognised: the legitimate interests of the EU and Ireland to have their market protected—that is what the border posts are for, even in the circumstances that the Protocol Bill has to become an Act and be used—and the legitimate interests of Unionism and Unionists. I put on record my heartfelt thanks to the present Taoiseach, Mr Varadkar; I know I will not be thanked by some Unionists for that, but he has had the statesmanship to move his position and recognise the legitimate interests of Unionism. I am grateful to see Opposition Members nodding; it is very good news.

Given the position we are in, where we are very willing to recognise the legitimate concerns of the EU and Ireland and they are increasingly willing to recognise the legitimate concerns of Unionism, this is a moment when we ought not to goad one another. I have fought hard enough in this place over Brexit, but we are tantalisingly close to recognising that we are friends and partners and that we can look after one another’s interests and go forward in the spirit of goodwill.

I encourage everyone, rather than rehearsing the arguments and grievances of the past, to look to a future that is tantalisingly close to being very positive, with a deal that we can all accept. With that in mind, I want to say gently to those of us who fought for Brexit, those of us who are Unionists, that when a deal comes—I do believe it is when, but there is a lot to be done—if that deal is acceptable to the Eurosceptic cause and to Unionism, we are all going to have to sell it to people. It will be no good to just denounce border infrastructure, which is there for the red lane, to protect the interests of the EU. Denouncing what has been done, when we have the green lane and arrangements for unfettered access within the UK, will not be enough. I mean that most sincerely, because if one thing has come home hard, even now—I think I have always known it, given when I joined the Royal Air Force—it is that even after 25 years of the Belfast/Good Friday agreement giving us some welcome peace, the politics of Northern Ireland, as hon. Members from Northern Ireland know better than me, is not to be taken for granted.

The politics of Northern Ireland is a grave thing; too many graves. That has been realised across the European Union. People realise that it is a post-conflict society with, as we have heard, an enforced coalition between the two poles of debate on the pre-eminent constitutional question that caused the conflict, so things are not to be taken lightly. That is why I am happy to put on record my admiration for the current Taoiseach and his predecessor, Mr Martin, with whom I get on well. I look forward to meeting Mr Varadkar. On the protocol, we are tantalisingly close to a success of which we can all be proud and then move on. Let none of us do anything to spoil the prospects of that success.

I turn to the overall points made about spending. Notwithstanding what was said about the Barnett formula and so on, which we support, it must be said that per head public spending in Northern Ireland is the highest of any region of the UK at 21% per head more than the UK average. The Northern Ireland block grant is at record levels, averaging some £15 billion a year over the next three years. On top of that, if we look at the new deal for Northern Ireland at £400 million, city deals at £617 million, the New Decade, New Approach financial package at £2 billion and the forthcoming Peace Plus at £730 million, that adds up to about £3.5 billion of extra funding. That is reflective of Northern Ireland’s special status. But it cannot really be said that Northern Ireland is in any sense neglected.

I will make three points about the process by which we came to the Budget. First, it has been drawn up as a result of intensive engagement between our officials and the Northern Ireland civil service. We are grateful to officials on all sides. The Government have also taken on board many representations that we received in correspondence and in person.

Secondly, I stress again that we believe this overall Budget is a fair and appropriate settlement that reflects the key pressures facing Northern Ireland. I mentioned per-head spending, and I will not repeat myself. Thirdly, it has been said on many occasions that the Bill does not preclude a functioning Executive from making changes to the Budget allocations, should one return. Of course, we are beyond the point at which it is possible to restore the Executive without an election so we would have to legislate. We all fervently hope that the Executive could be restored without an election, and the Secretary of State is considering all his options.

I turn to the important point about the PSNI made by the leader of the DUP, the right hon. Member for Lagan Valley (Sir Jeffrey M. Donaldson). As the right hon. Member will know, its main budget is allocated by the Northern Ireland Department of Justice. The Budget gives the Department of Justice a 3.1% uplift on its 2021-22 budget. In addition to the block grant, the UK Government provide the PSNI with the additional security funding that it needs to tackle the substantial threat that we face from Northern Ireland-related terrorism. The UK Government contribution for 2022-23 will be £32 million

[Sir Jeffrey M. Donaldson]

I do not dispute the Minister’s figures—my point was not about those figures and I was not challenging them—I was simply pointing out that, in relation to New Decade, New Approach, there was an agreement to recruit additional police officers to bring us up to the level that was agreed way back when the Police Service of Northern Ireland was formed. It was clear that the Treasury would provide the additional funding required to ensure that those extra officers were recruited. My point is simply this: that has not happened.

[Mr Baker]

I am extremely grateful to the right hon. Member for clarifying that point. I will write to him on that. The PSNI is close to my heart, and I am extremely grateful to all the people who work for the PSNI for everything that they do to keep us all safe.

The Opposition spokesman the hon. Member for Hove, the right hon. Member for East Antrim (Sammy Wilson) and the hon. Member for Foyle (Colum Eastwood) all talked about education funding. According to information published by the Treasury, identifiable public spending on education stood at £1,759 per head in Northern Ireland for the 2020-21 financial year. That compared to £1,428 per head for the UK as a whole over the same period. That was 23% higher than the UK average. That reflects our commitment to Northern Ireland and to education.

The Department of Education projected significant levels of overspend, but this Budget has actually delivered an increase in education spending of just under £300 million. We recognise that pressures above that level of increase will require difficult decisions to be taken, but we believe that those decisions are deliverable within the legal framework that we have set out in the Northern Ireland (Executive Formation etc) Act 2022 and the accompanying guidance.

I was grateful to the hon. Member for North Down (Stephen Farry) for his point about efficiency savings that could be made in education. My goodness, yes there are some. Again, that integrated education could even be a question in the 21st century is extraordinary to me. There are certainly savings to be made. That level of additional funding represents around a 12% increase on the previous year, excluding the additional funding allocated for covid. That really is as much as could be afforded in the light of the £660-million black hole that we were facing. Overall, that demonstrates just how unsustainable Northern Ireland finances have become and the need for reform.

The hon. Member for Gower (Tonia Antoniazzi) mentioned women’s healthcare, particularly the misery of endometriosis. Once again, this is a shocking situation to be in. The hon. Member for Belfast South (Claire Hanna) talked about the lack of collective shame. In this day and age, we should be ashamed of the state of public services in Northern Ireland. For far too long we have been just grateful for peace and have not done enough to highlight across the whole of the UK what needs to be done to serve the people of Northern Ireland because, my goodness, they deserve good services.

This Budget provides £7.28 billion in funding for the Department of Health. That is an increase of £228 million on 2021-22 spending, which included significant covid-19 funding. It is an increase of £786 million compared with last year’s funding, excluding the one-off covid uplift. As with education, there will be difficult decisions to take on health. Decisions on the reform of healthcare will be difficult. The Bengoa report, as we have discussed, should be carried forward. Too many years—six—have gone by without progress. We need to see Executive return as soon as possible.

I will make one more point before I conclude. I responded to the hon. Member for Foyle in an earlier debate on the addiction rehabilitation centre. I can tell him that the Government stand ready to respond to a proposal submitted by the Executive. I know it is frustrating; I am frustrated because I want to give him the answer he wants. We are waiting on that Northern Ireland Department of Health business case.

[Colum Eastwood]

I am extremely frustrated, as the Minister knows, because this has been going on since the New Decade, New Approach and beyond. We have people dying every single day of addiction-related conditions. Can I press him on one issue that was raised by me and other colleagues, which has a total support across political parties in the Northern Ireland? It is Dáithí’s law on organ donation. Will the Government do something to address that wrong, and to follow through on what had already begun when we had an Assembly and an Executive?

[Mr Baker]

The Secretary of State is reflecting on that very thing right now. I believe he is meeting the parents, although I cannot confirm when. The point is well made. The Secretary of State will certainly reflect on it. I will no doubt be party to those decisions.

[Carla Lockhart]

I associate myself with the remarks about Dáithí’s law and trying to ensure that that proceeds. The Minister noted that he was on his final point: can he first bring some clarity around the abortion issue that I raised? What services would he advocate being cut for abortion services to be provided in Northern Ireland? Will there be new money made available from the Treasury to facilitate the abortion services that have been forced on the people of Northern Ireland?

[Mr Baker]

As the hon. Member well knows and does not like, we were forced under law to bring forward abortion services because this House legislated. She may recall that I was in the Lobby with her voting no. That was because I did not want to see the devolution settlement trespassed upon. It is my belief that women in Northern Ireland should have access to abortion services. That is because I think that the law as it stands for my constituents in Wycombe and in England is about right, leaving as it does room for conscience in the earlier stages of pregnancy.

What I would say to the hon. Member is that the law required us to move forward. I know she does not like it, but money has been allocated as set out in the Budget, and the memorandum is available. We just have to move on. I am well aware that people will find that challenging, but the Secretary of State has done the right thing in complying with the law.

I will finish by saying that there has been a great deal of unity across the House on the pressing need for the Budget and the pressing need to transform and improve public services for the people of Northern Ireland. The hon. Member for North Down mentioned managed decline in his remarks. I am clear, as I know he is, that managed decline is not good enough for the people of Northern Ireland. As we approach the 25th anniversary of the Belfast/Good Friday agreement, and as we approach hopefully getting a deal on the protocol and therefore restoring the Executive, it is incumbent on all of us in our different and respective positions to work out how to better serve the people of Northern Ireland and deliver a Budget that not only works for them, but that transforms public services so that Northern Ireland can be a real beacon for the whole UK.

Question put and agreed to.

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