I am grateful for the opportunity to update the House on the cross-party talks which have been taking place in Stormont over the past nine weeks.
In September the Government concluded that the time was right for a fresh round of political discussions to be convened with the parties in the Northern Ireland Executive. The Irish Government reached the same conclusion and co-ordinated statements were issued. The aim was to address some key issues which are hindering the effectiveness and credibility of devolution and the Stormont Executive. These included: welfare reform and the Executive’s budget; the so-called legacy issues of flags, parading and the past; and reform of the political institutions.
The talks began at Stormont house on 16 October. As a signatory to the Belfast agreement, the Irish Government have been fully involved in all those matters where they too have responsibilities, consistent with the three-stranded approach, which means that the internal arrangements for Northern Ireland are a matter for the UK Government and the parties. I would like to take this opportunity to put on record my thanks for the positive and constructive role played throughout by the Irish Minister for Foreign Affairs, Charlie Flanagan TD, and his team of officials. In addition, I am very grateful for the support and wise counsel of the Under-Secretary of State for Northern Ireland, my hon. Friend the Member for South West Wiltshire (Dr Murrison). The US Government have also been supportive and closely engaged with this process, in particular through Secretary of State Kerry’s representative, Senator Gary Hart.
So far, around 90 hours of the formal talks have taken place. My right hon. Friend the Prime Minister and An Taoiseach, Enda Kenny TD, have been closely following the whole nine-week process and on Thursday they joined the discussions directly. They conducted an intensive round of talks with the Executive parties and I would like to thank both of them for their support, perseverance and ongoing commitment to this process. Despite their efforts, by early Friday morning they made a realistic assessment that there was still insufficient consensus across the parties for a broadly based agreement to be reached. Shortly afterwards, all five Executive parties declared their firm intention to continue to strive for a deal. They asked me and Minister Flanagan to take part in a resumption of discussions on Friday afternoon, which we duly did.
Let me briefly set out to the House the outline of the deal put on the table on Thursday. A draft heads of agreement was tabled including, first, a fresh approach to the past which puts the needs of victims and survivors at its heart; secondly, devolved arrangements for adjudicating on parades that would see the Parades Commission replaced by a new authority; and thirdly, reforms to the institutions such as support for those parties that might want to form a formal Opposition within the Assembly. The draft also sought a commitment from the Executive to press ahead with welfare reform, although with a number of flexibilities to reflect Northern Ireland’s circumstances, and to implement a serious efficiency programme to make long-term savings in the cost of government. This draft heads of agreement was the result of the work of both the UK and Irish Governments, again respecting the three-stranded approach, and we believe it represents a balanced package and a sound basis for cross-party agreement.
During the evening, the Prime Minister also set out proposals to provide further financial assistance from the UK Government. This included flexibilities which would have given the Executive nearly £1 billion of extra spending power to help them through their current difficulties and support their most important priorities. It would also allow the devolution of corporation tax to go ahead. A change which just a few years ago seemed inconceivable and undeliverable is now within the grasp of Northern Ireland’s leaders, if they choose to take it.
The talks resume this week and the stakes are high. All parties agree that if there is no agreement before Christmas, we will not get this close again for months or even years. In particular, failure to agree a balanced budget would leave the Executive increasingly unable to conduct even ordinary day-to-day business effectively. So this week is crucial. We all have a responsibility to do whatever we can in the few days left to us.
The UK Government have shown that they can compromise, even over hugely sensitive and difficult issues regarding Northern Ireland’s past and even when resources are constrained by the pressing need to deal with the deficit. We will continue to do all we can to deliver agreement within the financial constraints in which we are operating, but the UK and Irish Governments can do only so much. Ultimately, whether an overall agreement is reached will be down to Northern Ireland’s political leaders. They have the chance to show that, once again, they can move Northern Ireland forward towards a better future in which politics works, the economy grows and society is stronger and more united. That is the prize on offer, and I know that all the participants in the talks will have the support and good will of this House in our attempts to seize it.
I thank the Secretary of State for her answer. Christmas is meant to be the season of good will, but for a second consecutive year in Northern Ireland there is a real risk that it will be a season of entrenched mistrust and political failure. The people of Northern Ireland want progress. They yearn for politicians who offer hope that the journey to a shared future, while not easy, is irreversible and who accept that a shared obligation and a shared commitment to a better future require compromise and mutual respect.
Of course, the UK and Irish Governments have responsibilities too. Three years of relative disengagement by the UK Government have damaged trust and weakened mutual understanding. It also has to be recognised that Northern Ireland faces unique challenges related to the past. A properly resourced, comprehensive framework should be part of any agreement, but fairness also means that there can be no blank cheques or exemption from tough choices. Northern Ireland has the right not to implement aspects of Tory-Lib Dem welfare cuts, but a refusal to implement any welfare reform is neither affordable nor credible.
I have some questions for the Secretary of State. Will she spell out how the £1 billion of extra spending power offered by the Prime Minister is broken down? Where is the money going to come from? How quickly will the loan element have to be repaid, and at what rate of interest? What is the Government’s estimate of the overall annual cost to Northern Ireland’s budget of the current instruments to deal with the past and of those envisaged under new arrangements? Finally, Prime Ministers usually attend political negotiations either to announce an agreement or to roll their sleeves up and stick around to make an agreement possible. As the Prime Minister did neither, can the Secretary of State explain the strategy underpinning his flying visit to Belfast last week? Does she expect him to engage further in the talks before Christmas?
I thank the shadow Secretary of State for his questions. I agree that people in Northern Ireland want to see progress and confirmation that their leaders are striving towards building a genuinely shared future, and that they are prepared to see their political leaders accept compromise and make difficult decisions.
It is most emphatically not true that the UK Government have been disengaged over recent years. We have followed all these matters closely and we pressed for the establishment of the Haass talks in the first place. Also, the economic pact has seen our two Administrations in Belfast and London working more closely than ever before. The devolution of air passenger duty took place in double-quick time to save Northern Ireland’s transatlantic flights, for example, and the G8—a huge opportunity for Northern Ireland—was brought to Northern Ireland personally by the Prime Minister. I agree that, in this situation, there can be no blank cheques for the Executive. We all have to live within the constraints of the need to deal with the deficit.
On the financial package, the Prime Minister outlined a contribution of £10 million a year towards the running of the Historical Enquiries Unit, which is proposed in the draft heads of agreement. The Government would also approve the use of Northern Ireland’s existing allocation of £200 million of the re-investment and reform initiative borrowing for 2015-16 to implement an exit scheme for the Northern Ireland public sector, to be used in that financial year. That includes the £100 million already sought by the Executive as part of their draft 2015-16 Budget. The Government would also agree that the Executive may use a further £100 million of their RRI borrowing power in each of the five subsequent years, beginning in 2016-17, for the same purpose. The Prime Minister also set out plans to support the establishment of the peace and investment fund proposed by Northern Ireland’s leaders, including allowing the Northern Ireland Executive to keep additional funds generated from asset sales in the financial year 2015-16, after the achievement of a balanced budget. I assure the shadow Secretary of State that the Prime Minister did indeed roll up his sleeves and engage in intensive negotiations, because he, like all of us here, is determined to reach a successful outcome.
I congratulate the Secretary of State on her perseverance, working with the local parties on matters that we know are of intense interest and concern to them. Does she think they have really got the message that the devolution of corporation tax, bringing economic benefits which have so dramatically helped the Republic of Ireland, would be of enormous significance and would in many ways measure up to the level of the agreement years ago, and that we really are in the final hours? As I understand it, a Bill is ready to be laid, but it has to be laid this week. If the local parties blow this opportunity, they deserve to have the obloquy of future generations descend upon them—they must not fluff this opportunity.
I agree that one of the most urgent matters at stake is the devolution of corporation tax, and the clock really is ticking on that. If we are to pass legislation within this Parliament, we need to introduce it as soon as possible, not least because the Opposition Front-Bench team has not yet been prepared to give its support to the potential devolution of corporation tax.
May I offer a critical observation, not for some partisan motive, but out of experience of negotiating at such summits alongside Tony Blair, when he was Prime Minister? I was both troubled and astonished that the current Prime Minister left the summit prematurely in the way that he did. My experience is that any Prime Minister has to coax and progress the discussions and negotiations, and there is a chemistry about those and a momentum that it is possible to develop. Walking away as he did leaves a kind of political paralysis which I suspect and fear may continue. That is extremely damaging and I am extremely worried about the situation.
I can provide the right hon. Gentleman with reassurance that the Prime Minister has not walked away; he continues to follow these matters with the greatest of attention, because he cares about Northern Ireland and wishes to see a successful conclusion to this process. The reality is that both he and the Taoiseach made a realistic assessment on Friday morning that the parties were still far apart on a number of issues, and there was an indication that on some key issues some parties were simply not prepared to move. In particular, it was very difficult to see that Sinn Fein was prepared to move on matters relating to welfare reform.
Is not one of the deeper and wider problems in Northern Ireland the fact that the Assembly and the Executive were set up in the way they were, although for the very laudable reason of bringing about peace and bringing people together? Does the Secretary of State agree that that model is not a good one for effective and efficient decision making? Is she discussing with the parties of Northern Ireland ways in which changes might be proposed by them that might move us towards a more efficient system?
I have had those discussions at great length, including discussions about how to amend the petition of concern process. The Chairman of the Select Committee is right to acknowledge that the institutions set up to secure a peace settlement can often find it difficult to take difficult decisions, but they are capable of it; adaptations can be made. However, improving the way the institutions work will be an important part of an overall agreement.
Of course these matters do not just affect the Northern Ireland parties; national issues and national security issues are at stake in the discussions on the past. On parades, we are still awaiting the Secretary of State’s announcement about what she is going to do on north Belfast and the Ligoniel parade. That could unlock the way for progress being made, so it is important that the UK Government—our Government—play their part in moving things forward as well. Although I welcome what the Opposition spokesman has said, I remind him that part of the reason for the mistrust at the moment is the previous Government’s actions in relation to on-the-runs.
I can assure the right hon. Gentleman that the north Belfast panel will be constituted shortly. I agree that national security matters are at stake, not least because the current dispute over welfare reform and budgets means that the Police Service of Northern Ireland is facing significant funding cuts. Those cuts could impact on its ability to deliver community policing, which is an important part of our counter-terrorism strategy as a means of building support for policing within the community.
Will the Secretary of State be slightly more specific about what is holding up the talks? In particular, she mentioned Sinn Fein’s opposition to reform of welfare. She will know that Sinn Fein wishes to see the destruction of the Northern Ireland entity, which is not exactly the position that most other people take. Is it a fact that we may have to impose a solution—I am not entirely clear about how that can be done—to ensure that things move forward?
I shall be as brief as possible. There remain significant differences of view on a number of matters. There is no sign as yet that Sinn Fein will move its position on welfare reform. Further progress is needed on a specific plan for efficiencies within the Northern Ireland Executive. On the past, issues around thematic work and inquests will be quite difficult to resolve. On parading, the discussions that took place in the summer under the party leaders’ talks indicate that the criteria for adjudicating parades and the sanctions to be attached to a code of conduct remain the main sticking points.
How on earth can the Prime Minister come to the conclusion, after 24 hours, that there is no realistic way of reaching a consensus? Over the years, both with the Good Friday agreement and the St Andrew’s agreement, the Prime Minister actively tries to ensure that there is a consensus. The Secretary of State should go to Downing street and persuade the Prime Minister to do that again—and quickly.
May I agree with the Secretary of State’s earlier sentiment that the solution to every problem in Northern Ireland cannot be more money from the English taxpayer? Will she now confirm that there will be no bigger offer than the £1 billion that was talked about last week to get this deal over the line?
As I have said many times, the solution to these problems cannot be a big cheque from the UK Government. That is partly because it would not solve the problems, and partly because there is no more money. We have made it clear that we are not prepared to subsidise a more expansive welfare system for Northern Ireland. We are certainly prepared to continue to discuss the funding of matters such as new institutions on the past.
Does the Secretary of State recognise that £700 million of an existing borrowing power that we originally negotiated for strategic capital investment to be used for voluntary exit schemes does not seem to people to be new money or a big attractive offer? Is she not concerned that she has informed the House that the issue of inquests will be difficult? The two Governments propose that the families who have fought for inquests and had new inquests opened will now be told that, no, they will not now have an inquest. There is to be a new arrangement as part of the historical investigations unit that may not work in respect of the inquest and also damage the working prospects for other key aspects of the HIU’s work.
I assure the hon. Gentleman that the flexibilities offered in relation to borrowing powers would be of significant assistance to the Northern Ireland Executive in delivering the voluntary exit scheme for which they are calling. It was a significant and serious offer, but one that accepts the realities of the financial constraints we are under. I fully appreciate the difficulties concerning inquests. The Government are in listening mode, and we will continue to discuss the matter with the parties over the next couple of days. Whatever the outcome, it is vital that the cases be dealt with within a framework that is fully compliant with our obligations under article 2 of the European convention on human rights.
The Prime Minister’s failure to broker a deal last week caused considerable disappointment in Northern Ireland, although I have to say that I do not think it caused much surprise, since he did not stay there very long trying to bring about success. However, it is the season of good will, so could the Secretary of State provide us with some reasons to be cheerful about the likelihood of success in the near future in these talks? That would be very welcome.
I think that the reasons to be cheerful are that all the Northern Ireland parties accept that we need to find a deal and that everyone accepts that going into the next financial year with an unresolved budget would lead to increasing chaos and make it increasingly difficult for the Executive to perform even their ordinary, day-to-day functions. No one wants that. I think everyone accepts that that would be bad for every party that is a member of the Executive. I think there is that willingness to make progress. We are relatively close on matters, for example on how we set up new structures to help deal with the past in a way that better meets the needs of victims and survivors.
The Secretary of State has said that she wants to see a fresh approach to the past. Does she realise that that will be very difficult while there is still so much secrecy about the on-the-runs? The Northern Ireland Affairs Committee is facing increasing difficulty in getting the ex-Prime Minister Tony Blair to give evidence for its inquiry—we have had to summons him and he has not come yet. There are people from the Northern Ireland Office whom the Secretary of State seems to want to prevent coming to speak to us. We have to get the inquiry finished and we have to get the past looked at very differently, but we need some openness and transparency from the ex-Prime Minister.
One of the advantages of setting up new structures on the past is that it allows us to reflect upon and respond to mistakes made in the past so that whatever we set up is transparent, balanced, fair and properly accountable. I very much welcome the work that the Select Committee has done on the matter. It is for the Committee to negotiate with former Prime Minister Blair. I certainly hope he will accept the invitation to give evidence. In relation to junior civil servants, the Government’s approach is consistent with that taken by previous Governments: we do not generally put forward junior civil servants to answer in Select Committees.
Is it not entirely predictable that many people in Northern Ireland, having observed the operation of the welfare cap in England and Wales, look with great trepidation at deepening poverty, increasing homelessness and all the problems that have been associated with that policy here?
I cannot agree with the hon. Gentleman on the benefit cap—I think that is what he means, rather than a welfare cap. The reality is that setting a cap on out-of-work benefits at £26,000 a year puts it somewhere in excess of average earnings in Northern Ireland. I think that most people would agree that it is entirely fair to restrict the benefits that an out-of-work family can receive to levels that are equivalent to or below the average that a working family can bring home by going out to work.
I would like the Secretary of State to clarify the maths on this. Some £1.5 billion has been cut from the Northern Ireland budget since 2011 to assist the UK Government in reducing borrowing and tackling the deficit, yet the solution now being put forward is to ask Northern Ireland to increase its borrowing by £500 million. Is that not simply inflicting a high burden of cost on the residents of Northern Ireland?
I am afraid that I do not agree with the hon. Gentleman’s figures on the Northern Ireland block grant, which has actually gone up in cash terms. In real terms there has been a reduction, but it has been around only 1% for every year of the spending review. The reality is that the Northern Ireland Executive have a larger budget now than they did when they set their programme for government, because of Barnett consequentials. Those figures compare favourably with policing and the Home Office, for example, which have had to take a significant cut in England, and English local government, where the reductions have also been very significant.
I pay tribute to the Secretary of State, the Prime Minister and the Taoiseach for the work they did, and not just over recent weeks but in the run-up and on Thursday and Friday. Does she agree that there is a distinct difference between all parties recognising that an agreement is necessary and all parties having the will to deliver it? Does she agree that all parties recognised the need for an agreement even before Richard Haass and his team arrived 18 months ago, yet we are in practice no closer to such an agreement? Far from further devolution of corporation tax and other matters being at stake, what is actually at stake if there is no serious agreement in the next few days is the existing devolution that we have in Northern Ireland, because without a budget the Assembly simply cannot function.
I agree that the credibility of the institutions is on the line. If the Assembly cannot get its budget right, it is very difficult for it to perform its basic functions, and it would be in for significant criticism if it cannot resolve these matters. As to the hon. Lady’s comment that the parties recognise the importance of delivery, and her question about whether they have the will to do it, I hope they do and I believe they do. Time is running out. It is crucial that we seize this opportunity because we will not get another one for months, if not years, to come.
The main reason that the talks failed this week was Sinn Fein’s deluded belief that Northern Ireland should be totally exempt from the implications of UK budgetary policy and welfare reform. Will the Secretary of State confirm and put it on the record for those head-in-the-sand ostrich economists who advise Sinn Fein that if Northern Ireland wishes to deviate from the welfare reform package which is available in the rest of the United Kingdom, that money must be found from the Northern Ireland block grant and there is no additional money available?
The leader of the Minister’s sister party in Northern Ireland said last week that the Government were trying to bribe the people with their own money. The truth is that they are trying to bribe the people to accept an agenda that the people there do not want. It is disgraceful that this involves things as important as identity and the past and the future of the place. Does this not show that because we have a Prime Minister with the attention span of a gnat, exactly as my right hon. Friend the Member for Neath (Mr Hain) said, he has left a vacuum—the worst thing one can do in Northern Ireland—which proves that he is not up to the job?
That is nonsense. The Prime Minister made a realistic offer. Remember, what the Prime Minister can put on the table by way of financial assistance is severely constrained by the huge mess that Labour made of the economy in the years when it was in government.
We will be doing everything we can to break the logjam over the coming days. We have thrown everything we can at the process, including stretching ourselves on the past, and taking forward proposals for corporation tax devolution, despite a degree of lack of enthusiasm from our coalition partners. We are doing everything we can to do the right thing for Northern Ireland, but ultimately this process will not succeed unless Northern Ireland’s political leaders are prepared to make the compromises necessary for an agreement.