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Northern Ireland Finances

Volume 789: debated on Tuesday 13 March 2018


My Lords, with leave of the House, I will now repeat a Statement made by my right honourable friend the Secretary of State for Northern Ireland in the other place. The Statement is as follows:

“With permission, I would like to make a Statement about Northern Ireland finances. Last week, I laid a Written Statement in which I explained that the pressures on public services meant that it was imperative for the Government to take steps to provide clarity to enable planning in Northern Ireland for 2018-19.

With great reluctance, and in spite of my strong preference for a new Executive to set a budget, I set out in this Statement the resource and capital allocations which I considered to be the most balanced and appropriate settlement for Northern Ireland departments. I did this following intensive engagement with the Northern Ireland Civil Service—NICS—and consultation with all of the main Northern Ireland parties.

In the continued absence of an Executive, I have an obligation to take these and any other measures that are necessary to keep Northern Ireland functioning. But I will only take such measures where they are essential and limited in nature, and are part of a clear and consistent approach by the Government. This approach is based on a number of principles. First, we remain steadfast in our commitment to the Belfast agreement. All that we do will be with the purpose of protecting and fulfilling the agreement. But, secondly, we will take those decisions which are necessary to provide good governance and political stability for Northern Ireland, consistent always with restoring the Executive and local decision-making at the earliest possible opportunity. Thirdly, we will continue to implement our obligations under the agreement and its successors where possible, always working for the good of the community as a whole. Finally, we will continue to work with all the Northern Ireland parties, and with the Irish Government as appropriate, to remove the barriers to restoring the Executive and a fully functioning Assembly.

The principles at the core of the agreement and the political institutions it establishes continue to have our full and unreserved support. That means that we will uphold the principle of consent, consistent with this Government’s support for Northern Ireland’s place within the union and with maintaining the constitutional integrity of the United Kingdom. We believe in devolution and the imperative for local decision-making by local politicians. We support power-sharing on a cross-community basis, based on mutual respect and recognition. We will continue to support and facilitate north/south co-operation, including as we leave the EU, while always preserving the economic integrity of the United Kingdom. We will continue to work closely with the Irish Government in full accordance with the three-stranded approach. We will continue to act fairly and govern in the interests of all parts of the community in Northern Ireland.

The necessary steps, which I have taken and will continue to take, are consistent with all of these commitments. In addition to the steps I set out last week, there are several associated measures required to further secure public finances which I will be taking forward. As well as cutting costs, securing efficiencies and beginning to take the steps to transform public services, it is right to look at how income can be increased to protect the public services on which the people of Northern Ireland depend. I will therefore introduce legislation to set a regional rate, which will increase domestic rates by 3% above inflation. This will make an important contribution to sustainable finances in the long run, with the additional funding addressing urgent pressures in health and education. I also intend to act to extend the cost-capping of the current renewable heat incentive scheme in Northern Ireland, which the Assembly had put in place over a year ago. It would not be acceptable to put finances at risk by simply allowing that cap to lapse. I therefore propose to extend it for a further year from 1 April, the minimal possible step to protect the public purse. I will also confirm the final spending totals for the Northern Ireland departments for the 2017-18 financial year in legislation to set supplementary estimates.

I also believe that the time is right to address the ongoing public concern about MLA pay in the absence of a functioning Assembly. I thank Trevor Reaney, who was instructed by my predecessor to produce an independent view and recommended a 27.5% reduction to MLA pay. I will seek to introduce legislation to take a power to vary MLA pay. Further to that, I am minded to reduce pay in line with the Reaney review recommendation, but I would welcome full and final representations from the Northern Ireland parties before I make a final decision.

These measures—which I take reluctantly, but which are necessary in the absence of a functioning Executive and Assembly—will deliver the stability and the decisions to enable forward planning for the financial year ahead. But I am clear that they cannot provide the local input and fundamental decisions which are needed to secure a more sustainable future for Northern Ireland. My powers as Secretary of State for Northern Ireland are limited. The scope of this House to pass legislation on the devolved issues which matter for Northern Ireland is limited. This rightly reflects the devolution settlement which is in place and to which this Government are committed. But it does mean that, in the continuing absence of an Executive, there are fundamental decisions in Northern Ireland which cannot be taken, scrutinised and implemented as they should be.

This has been the situation for 14 months already and, in the continued absence of an Executive, it would be irresponsible for us not to consider how we might provide for different arrangements until such time as the devolved institutions are back up and running. Alongside this I also continue to keep under review my statutory obligation to call an Assembly election.

I would welcome the views and proposals of the Northern Ireland parties and others on how such arrangements—providing for local decision-making and scrutiny on a cross-community basis—might be achieved in the continued absence of an Executive; and how any such arrangements might work alongside the other institutions of the agreement. Let me be clear that this in no way affects my commitment to the Belfast agreement, nor my commitment to continue to work to remove the barriers to the restoration of devolution. As the 20th anniversary of the Belfast agreement approaches, I am clearer than ever that Northern Ireland needs strong political leadership from a locally elected and accountable devolved Government. That remains my firm goal. I commend this Statement to the House”.

My Lords, I thank the Minister for the Statement, and agree with him on the need to restore the devolved institutions in Northern Ireland, especially as it is about four weeks away from the 20th anniversary of the signing of the Good Friday agreement. The commitment of the Government to the underlying principles of that agreement is very much to be welcomed.

I understand the need to set a budget and agree that it is wholly inadequate for civil servants, however good—and, indeed, they are all good—to decide the spending priorities in Northern Ireland. Can the Minister tell us a little bit more about the consultation process that has occurred with the political parties and others in Northern Ireland, specifically on the regional rate and on the allocation of resources to the different departments in Northern Ireland? In particular, will he tell us about the consultation on the Bengoa proposals on the health service in Northern Ireland, and where we are on that important matter?

The Minister raised the difficult—perhaps even controversial—issue of the salaries of Members of the Legislative Assembly. Does he envisage a time limit on the consultation with the political parties in Northern Ireland? During the course of his Statement, he mentioned that there would be a need for legislation to implement parts of the budget and to vary the salaries of the MLAs. Can he give the House an indication of when such legislation might be before us? Lastly, does he accept that this budget-setting exercise is not a road to direct rule, and that robust and meaningful talks on setting up the institutions in Northern Ireland will begin very shortly?

My Lords, I too thank the Minister for repeating yesterday’s Statement. However, there is a slightly wearying sense of déjà vu about it, and one cannot help but wonder at what point these sticking-plaster solutions will cease to be viable. Clearly, however, a return to direct rule is something that we all wish to avoid, and we continue to believe firmly that power-sharing devolution is vital to local democracy and representative decision-making. In that regard, the Secretary of State’s reassertion of the Government’s commitment to both the Good Friday Belfast agreement and to re-establishing functioning devolution in Northern Ireland is very much to be welcomed.

We on these Benches recognise the pressures on public services, meaning that these measures are essential to ensuring that the people of Northern Ireland do not suffer in the provision of vital services, and to ensuring that education and healthcare services can function and that peace and stability can be maintained by the PSNI. The Police Federation has warned that the 0.3% increase in the Ministry of Justice budget will inflict real damage on the PSNI. The PSNI is currently spending £125,000 a day on overtime to fill gaps in its workforce capacity. Can the Minister confirm that ensuring that the PSNI is able to carry out its work effectively remains a key priority for the Government? The Civil Service in Northern Ireland, as the noble Lord, Lord Murphy, has said, continues to do sterling service in keeping the system functioning but, without the direct input of Northern Ireland Ministers, much-needed long-term strategic planning for Northern Ireland becomes increasingly difficult.

In the Statement on 20 February, in reply to my question about the introduction of an independent mediator to chair the all-party talks and to attempt to bring new impetus to the drive to re-establish an Executive in Northern Ireland, the Minister said nothing was ruled out. Can he give an update on whether that is still an option that is being actively considered? Can he also outline what other initiatives are being actively considered to break the current impasse in the talks?

I note the ongoing discussions on MLA pay and the Reaney review. What representations has the Secretary of State had on this issue from political parties in Northern Ireland? In the Statement the Secretary of State says,

“it would be irresponsible for us not to consider how we might provide for different arrangements until such time as the devolved institutions are back up and running”.

Can the Minister confirm that this would involve options allowing Members of the Assembly to play an active role in ensuring that Northern Ireland’s voice is heard clearly in the Brexit negotiations?

I thank the noble Lord and the noble Baroness for their contributions. It is important for us to stress again at the outset that we are all united in our belief that the Belfast agreement itself must be the foundation upon which we build all our progress. I think we are all of the same view. I am aware that we are experiencing a recurring sense of déjà vu—we certainly are with some of my Statements—but it is our ambition to secure the reformation of a functional and sustainable Executive in Northern Ireland.

I think it is important for me to answer the questions directly as they have been raised. On the question from the noble Lord, Lord Murphy, on how we came to the figures within the overall budget, he is right to stress that we have put a great deal of pressure and stress upon the Northern Ireland Civil Service, but it has been very important in determining departmental needs. That has been the first building block. The second is that, as he will be aware, a budget briefing was published just before Christmas. The Northern Ireland Office has reflected very carefully upon the responses that were received in the light of that briefing from the main parties of Northern Ireland, and they have been borne in mind. In addition, my right hon. friend the Secretary of State for Northern Ireland has undertaken a fairly extensive engagement with individual stakeholders —teachers, doctors, nurses, and police officers—to understand the challenges faced on the ground. It is important to reflect on how important that is.

The figures we are talking about are substantial, and I believe they will make a substantial difference. We have £80 million of support for immediate health and education pressures, £30 million to support programmes to address issues of mental health and severe deprivation, £100 million for ongoing work to transform the health service in line with broad-based consensus fostered by the Bengoa report, and a £200 million allocation in capital spending for key infrastructure projects.

That gives a sense of the scale of the investment. There is also a recognition, as we build that budget—we have spoken of this before—of trying to plot a trajectory from the point at which the previous Executive fell, and then trying to plot across. We have had to take that as a basis and build on it, and that is why £4 million has been allocated to prepare the ground for transformation and £100 million set out for health transformation, recognising again that these are part of the critical elements that are identified by departmental heads in the Civil Service and the main political parties.

On the question of MLA pay, I stress again that my right honourable friend the Secretary of State for Northern Ireland would like the views of others to make sure that in her determination and deliberation she can deliver exactly what is required. I am mindful of the point made by the noble Baroness, Lady Suttie, about the potential roles for the MLAs themselves—even without being part of a functional Executive. As I said in a previous Statement on a not dissimilar topic, we have not ruled anything out, and would welcome the thoughts of the noble Baroness, Lady Suttie on that point, to help us in our thinking. As for when we can anticipate the legislation, if I may be slightly non-specific, we will bring forward necessary legislation imminently to deliver against the budget as we have set it out.

The noble Baroness, Lady Suttie, raised the PSNI. Again, I can be very clear and specific and say that it remains a key priority of the Government, and we will do all we can to preserve that and deliver against it.

As to the question of an independent mediator, noble Lords will be aware that we are in an interregnum—the talks have ended but are not over—and that period of reflection has given all of us an opportunity to work out what additional aspects of engagement should be brought to the table. I am becoming a little repetitive, but I will say again that we are ruling nothing out. Anything we can do to take this forward must form part of that.

We also hope that the parties involved in the talks will take advantage of this period to reflect not just on what they wish to deliver for the parties themselves but for the wider communities they represent. That will be essential. If the talks are to deliver an outcome that is sustainable, meaningful and restores local government to Northern Ireland, we need to be able to depend on them. There are too many important issues unfolding right now, not just in our House, but affecting everyone in Northern Ireland. It is time that we heard those voices in an Executive and an Assembly.

My Lords, I am grateful to the Minister for repeating the Statement, and particularly grateful for the hands-on methodology that he has adopted since he became Northern Ireland spokesman in this House. It is refreshing.

I have two issues. Is the Secretary of State aware of the barely disguised efforts of Taoiseach Varadkar and foreign spokesman Coveney to interfere directly in the internal affairs of Northern Ireland? This callous activity goes as far as encouraging Sinn Féin not to progress the current talks towards a solution or the implementation of an effective power-sharing Executive. I furnished the Minister with that report from the Irish Times previously.

On the need for an urgent interim methodology, if, when an aspect of direct rule is required—and many of us think that it is required—I would press that a considerable number of those who achieved the Belfast agreement sit in this House. There are others here who have, when the Executive was functioning, been effective and experienced there.

I suggest, having been ignored—I might even say boycotted—by previous Secretaries of State, that the current Secretary of State, Secretary Bradley, will not allow herself to be intimidated but will look to those who have years upon years of experience, from 1994 until now. They have 24 years’ experience and may just be able to give some common-sense guidance.

I thank the noble Lord, Lord Maginnis, very much for his trenchant intervention. The noble Lord is right to point out that, sitting in your Lordships’ House are a number of architects of the Belfast agreement, and that the knowledge contained within these four walls should be drawn on now as we begin to enter this phase of maximum danger, when we need to be able to deliver an outcome that works for the people of Northern Ireland.

I am reminded again of the remarks by the noble Lord, Lord Empey, on these issues the first time I stood here at the Dispatch Box. He said that it is very easy to walk down the steps of Stormont; it is very hard to walk back up. Of course, he was alluding to the challenge of direct rule.

We hope to—and we will do all we can to—bring a rapprochement, by whatever method we can, to the parties who are needful in delivering this particular serious outcome. In addition, I note that the noble Lord, Lord Maginnis, passed me information that I have taken away, and we will certainly look at that in greater detail. I may come back to that on a later occasion.

My Lords, I welcome the very definite commitment in this Statement again to the Belfast Agreement and to the principles that underpin it. It is worth reiterating that at every opportunity in view of some of the voices off, which I do not think have been particularly helpful. I ask the Minister to very much bear that in mind when it comes to the seemingly innocuous phrase:

“It would be irresponsible for us not to consider how we might provide for different arrangements until such times as the Executive is back”.

I am not opposed, nor would any Member of this House be opposed, to discussing how to move things forward, but I think, with the benefit of hindsight—some people, such as the noble Lord, Lord Empey, might say “with foresight”—that some of the changes we have made from time to time to the mechanics of the operations of the Executive have not always been conducive to encouraging the coherence and the spirit of the Good Friday agreement. There are risks and dangers in that innocuous phrase.

I thank the noble Lord, Lord Reid, very much for again bringing his knowledge to the discussion. He is absolutely right to speak of the voices off and the noises off. We have to turn them off; it is unhelpful right now. We need to focus on what we believe we require, which is securing again the Belfast agreement at the heart of the restored institutions in Northern Ireland. I am happy to emphasise that again whenever I am called on to do so.

Again, it is telling that the noble Lord is willing to reflect on his own time in office. It is rather like lifting the bonnet of a car. I have no idea what happens under there. You start tinkering at your own peril. It is amazing what harm you can do when you have less experience of what is under there. That is not to say that we need not be careful about how we move forward. None the less, we should be progressive. The reason my right honourable friend was very clear in her Statement is that we need to recognise that, at this time of challenge, we must have a means of securing those voices in the essential and ongoing discussions. Noble Lords will be aware that in the next few days we shall return to a number of the devolved elements of the withdrawal Bill. When we talk about these essential issues here in our House, I am again minded of the deafening silence from the Executive, which does not sit, and the Assembly, which cannot speak. I am mindful of the warning from the noble Lord but at this moment we need to find ways to secure progress. As I have said, I do not believe we can take anything off the table.

My Lords, I thank the Minister for repeating the Statement and thank him for the trenchant defence he has once again given this afternoon of the 1998 Belfast agreement. It is vital that he does so and that others recognise and listen to what he has to say.

I wish to press him on a point of detail in the Statement. I declare an interest as a former teacher in the two universities in Northern Ireland. The Secretary of State’s Written Statement of 8 March says that there is an increase in real terms in the education budget. However, on the current figures, there is no way of working out what is happening in that regard in the higher education sector as against the rest of the education sector. I do not wish to be churlish about this because this budget is tremendously important. The £10.4 billion is crucial to Northern Ireland and is a clear benefit of the union to the people of Northern Ireland. Tomorrow we will hear a lot about the European Union. I think its contribution is 1% of that, and that quite a lot of that 1% is recycled United Kingdom money.

I am grateful for this budget but we need a little more clarity on it, if possible. The Secretary of State’s Statement says that later in the year there will be more detail on it. I urge against the idea that giving us that kind of detail is a move towards what is now called in the lexicon “full-fat” direct rule. I think this could be done without raising these theoretical or ideological problems. I wish to press the Minister on this as there is great concern about it. For example, as regards higher education, there are many rumours in Northern Ireland that the Government are setting their face against postgraduate funding in the universities in Northern Ireland and envisage introducing major changes there. We cannot tell anything about that from the Secretary of State’s Written Statement. The noble Lord, Lord Murphy, also referred to issues on which the Government could give us a little more information. I hope they will do so later in the year.

I thank the noble Lord, Lord Bew, very much for his intervention. I am trying to avoid full-fat anything at the moment and am looking for the semi-skimmed approach as far as I can. The noble Lord made a legitimate and appropriate request. I believe we will be able to furnish him with the appropriate information very soon. It is absolutely essential that the people of Northern Ireland are able to see how the money is crafted and allocated. I would much prefer to be wholly scrutinised by an Executive founded and operating sustainably in Belfast but, in the absence of that, I believe your Lordships’ House also needs to be able to scrutinise this issue adequately. I believe information will imminently be provided that will allow us to do that very thing.

My Lords, I welcome the budget Statement. It enables the hard-pressed public services in Northern Ireland to continue to operate and gives the Stormont departments certainty for the next financial year. I particularly welcome the £410 million extra new money for Northern Ireland as part of the confidence and supply agreement with the Democratic Unionist Party. It will provide much-needed support for health, education and infrastructure and will benefit all the communities right across the Province.

While I welcome the Secretary of State’s willingness to look at arrangements to provide for local decision-making and scrutiny on a cross-community basis, does the Minister agree that it is vital that the Government intensify their efforts to restore devolved government to Northern Ireland so that decisions can be made by locally elected and locally accountable Ministers?

I thank the noble Lord for his intervention. The £410 million will do good across the communities. I believe that it will be spent wisely and will address a number of the challenges that have been experienced in Northern Ireland, which will be good to see. However, I want to be very clear that we need to be in a situation where these matters are addressed at a local level—not just in terms of the allocation but, more importantly, in terms of scrutiny. There must be full transparency and full confidence in the manner in which this money is constructed and allocated, and spending overseen. We must have great confidence in that; it will go some way to restoring confidence in governance in Northern Ireland, not just in what we are trying to do to bring about a stable and sustainable Executive.

My Lords, I will ask the Minister a brief question and a direct one: We welcome the extra money going into Northern Ireland, especially around health and education, but who will make the decision about where that money will go? Last year, in James Brokenshire’s Statement, £50 million of the confidence and supply money was given to mental health. To this day, not one penny of that £50 million has been spent, simply because there is no local Minister to sign it off. Will we be tied by the same regulations, for instance around the infrastructure money? Who will make up their mind who will get the money and where it will go? Will it come direct from Westminster? What is the position?

I thank the noble Baroness for her intervention. Money allocated and unspent does not do any good. It is as simple as that. We must be in a position to ensure that the money allocated is spent. We believe this is best achieved through the departmental structure that exists in Northern Ireland. The determination of the overall scale of spend has already been achieved through direct consultation with civil servants in Northern Ireland. They will be responsible also for the delivery of that money into the various, clearly set out projects. It will be necessary not only for the money to be spent but for it to be transparent and clear. The people of Northern Ireland must be able to see that and recognise what good the money is doing to meet challenges that are now well established and well recognised. The noble Baroness will be aware of several of these challenges in the areas of health and education. But I stress again that the money and responsibility will rest with the departments. We will ensure that it is spent in a transparent manner that will give confidence to those who see the money and, hopefully, see the good it will achieve.

My Lords, surely the Minister accepts that there is a need to do things differently. We have come to a series of Statements of this nature over the last 14 months and there is little or no prospect of any immediate resumption of devolution. In fact, people are now talking in terms of “post Brexit”. Members will know the effect of a vacuum in Northern Ireland and who is likely to fill that vacuum—and it is not going to be the good guys. The reality is that the principal parties of government—whatever the ebb and flow of the agreement that never was—have run the institutions into the ground. That is the fact. Mention has been made of confidence and supply money. Will the Minister tell us when this will be approved by Parliament? At the moment it is effectively an undated cheque, and the departments need to know when they will be able to take it into account.

A second point raised concerned the RHI cap. While that catastrophe has yet to completely unfold, a lot of people out there legitimately took the Government of Northern Ireland at their word and got these boilers installed, and some are now facing financial ruin. Their bankers were encouraged by ministerial letters from Mrs Foster to lend them money to get these boilers, and now the premiums they were getting on the original business plan have been slashed. So those people are in severe difficulty and I ask the Minister to bear that in mind.

I turn to the alternative arrangements, which I think we were all interested in. I thank the noble Lord, Lord Reid of Cardowan, who I think is the first senior politician even to hint that some tweaks and changes made over the years have not necessarily worked out as planned. Can the Minister tell us exactly to what extent the Government have an open mind on these matters? There are a lot of ideas around the House that could be fashioned and used, and I believe we are willing and able to help in working towards a constructive solution—but I repeat that a vacuum is the worst possible situation. It leaves the pitch open for players to come back on when we thought we had them suppressed. This is a golden opportunity for these people and we should all stand up against them.

The noble Lord, Lord Empey, has made three useful points. I note again that the noble Lord, Lord Maginnis, spoke about the fact that there are a number of architects of the Belfast agreement in your Lordships’ House—although in some respects they are not architects but mechanics. We have not built an edifice that just has to stand; it is an engine that has to work.

In response to the third point raised by the noble Lord, Lord Empey, we have an open mind and we need to think afresh about anything that can help us to move this matter forward. Of course, we recognise that we are facilitators of the dialogue. We cannot insist on or thrust forward what we wish to see happen—but we hope that, by providing a safe space in which to negotiate, we can bring it about.

In response to the noble Lord’s first question, the confidence and supply component of the budget will be dealt with as part of the overall allocation. As I said in response to the noble Lord, Lord Murphy, that is imminent—so I hope we will be in a position to discuss that seriously very soon.

With regard to the wider question of boilers and the RHI scheme, I stress again that my right honourable friend the Secretary of State for Northern Ireland is very aware of the challenges that it represents and will be very careful in taking the matter forward.

My Lords, perhaps I may ask a question about the policing or Department of Justice budget, which may be £36 million. How much of that will go to front-line policing, bearing in mind what the noble Lord, Lord Empey, said about the various problems with filling a void? There is another point. Policing is not just about crime that is being committed today and nor is it just about terrorism; it affects every community and every person. The fear of crime is a very big issue—but I do not mean simply that individuals are afraid of crime. It is the Government’s responsibility to protect the community. Without a doubt, the level of resources for policing has gone down and that adds to the feeling of hopelessness in the community: “We have not got an Executive—and sometimes local policing is not very effective”. We used to have a lot of community policing, which was all part of the Patten proposals—I declare an interest in that I was on the Northern Ireland Policing Board at the time—but we really do not have that now. We have mobile police stations, but that is not community policing. It is not keeping your finger on everything and it does not reassure the population. The lack of certainty from a government point of view has a very big effect on people’s outlook.

The noble Viscount, Lord Brookeborough, makes an almost philosophical point about the purpose of a police force and about the fear of crime. In many respects, the best possible police force is the one that you never see because you never need to, as it works so effectively that you are safe, secure and sound without ever seeing any intervention. I stress again that my right honourable friend the Secretary of State for Northern Ireland is very aware of this challenge. I do not know the answer to the noble Viscount’s specific question; if he will forgive me, I will write to him setting out the proportion of the police budget that is for front-line services.