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Northern Ireland (Interim Arrangements) Bill

Volume 830: debated on Tuesday 23 May 2023

Committee (and remaining stages)

Clause 1 agreed.

Clause 2: Advice and information on options for raising public revenue

Amendment 1

Moved by

1: Clause 2, page 2, line 15, at end insert “such as providing advice in relation to the Northern Ireland Fiscal Council 2023 Report ‘Updated estimate of the relative need for public spending in Northern Ireland’ in the light of the precedent arising from the December 2016 ‘Agreement between the Welsh Government and the United Kingdom Government on the Welsh Government’s fiscal framework’”

My Lords, Amendment 1 is in my name and that of my noble friend Lord Dodds of Duncairn.

Clause 2 of the Bill is concerned with:

“Advice and information on options for raising public revenue”.

My amendment requires that the advice should be expressly required to cover the Northern Ireland Fiscal Council report, Updated Estimate of the Relative Need for Public Spending in Northern Ireland, published on 2 May this year, and the precedent arising from the December 2016 agreement between the Welsh Government and the United Kingdom Government on the Welsh Government’s fiscal framework.

Some might suggest that all relevant things can and should be taken into account and it is not necessary to specify these two documents. However, they are of such central importance to the situation in which Northern Ireland finds itself that it would be a dereliction of duty not to put them front and centre of advice and information on options for raising public finance. I will consider both, starting with the agreement with the Welsh Government.

In 2007, the new Welsh Government’s programme for government identified the need to address the problems relating to the Barnett squeeze on the funding available for services for UK citizens living in Wales. To understand this, it is important to remember that before 1979, when the Barnett formula was introduced, the union was treated as a unit and funding allocations were made within that unit on a basis that was alive to need. The reason for considering a change in the funding formula at that time was devolution, which the then Government hoped would be delivered by referendum that year.

The initial proposal was that the funding formula should be needs-based. Treating England as 100, the Treasury claimed that on the basis of need, Northern Ireland should be rated at 131, Scotland at 116 and Wales at 109. However, a decision was made to delay the introduction of this new system and to use instead a simple interim model that allocated monies to Scotland, Wales and Northern Ireland based on their relative populations as a proportion of that of England. This temporary formula came to be known as the Barnett formula. Here we are 44 years later, and it remains in place, notwithstanding the 2009 report of the House of Lords Select Committee on the Barnett Formula, which called for its replacement with a needs-based formula, and a number of robust exhortations to the same end from your Lordships’ Constitution Committee.

When the Barnett formula was first applied, it was to a pre-existing level of spend that had been cognisant of need and thus with more money per head going to Northern Ireland, Scotland and Wales than to England. However, the challenge remains that all subsequent increments in funding from the introduction of the Barnett formula have not been based on need in Wales, Scotland and Northern Ireland, but have simply been the appropriate and proportionate fair share of what had been spent in England. Mindful of the populations of Wales, Scotland and Northern Ireland, that means that although incomes keep increasing, funding does not increase as much as it would if monies were allocated from the centre on the basis of need—as if the UK operated on a UK-wide rather than just an England-wide notion of need.

The spending differential between Northern Ireland, Scotland and Wales, on the one hand, and England, on the other, has reduced, and in the absence of correction, there would ultimately come a time of convergence, when spend per head in Wales, Scotland and Northern Ireland would be far below need. This downward pressure towards convergence is called the “Barnett squeeze”.

The first part of the UK to really feel the Barnett squeeze was Wales. As a result of the 2007 Welsh Government coalition agreement, Professor Gerald Holtham and other experts were appointed to form the Holtham commission to examine the impact of the Barnett squeeze on Wales and to make recommendations. The Holtham commission performed two critical tasks: first, it showed the clear negative impact of the Barnett squeeze on Welsh funding from the advent of devolution in 1999 until the time of this research in 2009; secondly, the Holtham commission devised a means of assessing how much money per head of the population Wales should receive in order for needs to be met to the same standard as in England.

The findings demonstrated that spending per head of the population in Wales actually fell below need in the financial year 2009-10. The commission made two key observations: first, this meant that Wales was being underfunded and that the UK Government should intervene to restore the level of spend, so that it would secure the same level of services afforded to England on a comparable basis—namely, £115 per head; secondly, the impact of the Barnett squeeze was such that, if spending patterns continued as they had in the 1990s, the problem would become progressively more acute over time, as Welsh spend per head of population fell further relative to that of England. The commission recommended the introduction of what it called the “Barnett floor”—a spending floor of £115 per head of population, below which spending should not be allowed to fall, so funding could never be below need. The UK Government responded positively.

In the 2011 Budget, the UK Government stated that they were

“committed to fair and accountable funding for Wales, including taking forward discussions on all aspects of the final Holtham report”.

The 2015 spending review accepted the Holtham formula’s definition of need, stating:

“The government is introducing a floor in the level of relative funding provided to the Welsh Government at 115% of comparable spending per head in England.”

This was followed by the Agreement between the Welsh Government and the United Kingdom Government on the Welsh Government’s Fiscal Framework, cited in my amendment. I have a copy of that agreement with me and it contains two key Barnett components: first, the provision of a transitory uplift for the purpose of slowing the Barnett squeeze; and, secondly, at the point at which spend per head falls to the nearest 0.1% below 115.05%, the provision of a full needs adjustment so that spend per head never falls below need.

At present, the block grant transparency document shows that Welsh spend per head is £120, compared to the Holtham formula definition of need at £115, so spending per head is above need now. In this context, Wales benefits from the 5% needs adjustment that is designed to slow down the journey of spend per head to £115, from which place the full £115 needs adjustment takes over.

This is hugely important for Northern Ireland because, on 2 May this year, the Northern Ireland Fiscal Council published a report that used the Holtham formula to assess needs for Northern Ireland on exactly the same basis that was applied to Wales. This is the other critical report cited by my amendment, the Updated Estimate of the Relative Need for Public Spending in NI. Again, I have a copy of it with me. The document demonstrates how the application of the Holtham formula to Northern Ireland results in a need figure of £124 per head. This is hugely consequential, because the block grant transparency document shows that spending per head in Northern Ireland for the current spending review, 2022-25, is just £121 per head.

To put this in context, the crisis that Wales faced, which resulted in the UK Government agreeing to intervene to ensure spend per head could never again fall below need, involved going £2 per head below need in 2009-10, £113 rather than £115. By contrast, in Northern Ireland, we were £3 below need last year, are £3 below need this year and will be £3 below need next year. If the Barnett crisis that Wales faced merited government intervention to ensure spend per head never again fell below need in the aftermath of it having fallen below need for one year by £2, how much more so Northern Ireland which has already experienced one year of funding that was £3 per head below need, is now experiencing the same this year and will on the basis of current spending commitments do the same next year?

It is therefore no surprise that Northern Ireland is currently in the midst of a very serious funding crisis with Stormont departments having to make cuts left, right and centre. Today, Northern Ireland is the only part of the UK to be in receipt of below-need funding. In this context, it is extraordinary for the Northern Ireland Office to be asking, through this Bill, how it can raise additional local taxes in Northern Ireland. The UK Government never did that to Wales when it briefly went £2 below need. It is quite extraordinary that the Secretary of State should have contemplated doing this. The reason why Northern Ireland is facing a funding crisis is structure, and it is a problem for not the Stormont Executive but the Treasury, which receives Northern Ireland’s tax receipts. In this context, the key question to ask is not one for Stormont but for the UK Government, Downing Street, the Treasury and the NIO. It is quite simply: what are the UK Government going to do to fix the funding crisis in Northern Ireland resulting from the block grant dysfunction arising from the Barnett squeeze?

If the Government had not responded to Wales in the manner that they did, the Minister’s response to my Second Reading speech would have been a little easier to understand, but in that context it was unsustainable. It cannot be the policy of a unionist Government to favour one part of the union with a special intervention to ensure that its funding per head never falls below need while they insist that funding for another part of the union goes below need. The current situation is quite simply completely indefensible.

The Government must stop trying to put the blame on our rates system. That is a simple distraction. As the Fiscal Council observes, Northern Ireland average rates are well below council tax levels for some parts of England and even if one were to increase them by 107% this would yield only a 5% increase in the overall budget. The real problem is the impact of the Barnett squeeze on the block grant.

In this context, there is now an argument for the need to intervene to provide the requisite needs adjustment, backdating it to the beginning of 2022-23 when our level of spend fell below need. The cost of that needs adjustment over the three years of the spending review is, according to the Fiscal Council, a little over £1.2 billion. Put another way, Northern Ireland is currently being asked to function at £1.2 billion below need. This cannot continue a moment longer. I beg to move.

My Lords, first, I apologise to your Lordships’ House for not being present last Thursday at Second Reading of this Bill; I was otherwise engaged in Northern Ireland at the local government elections.

The Bill deals with interim funding arrangements for Northern Ireland during the absence of an Executive and Assembly. In many ways it continues indirect rule and, I suppose, it gives civil servants limited powers. Before we move to the amendment itself, I want to ask the Minister whether the Bill itself might not be a recipe for judicial review and legal quagmires, centred on the issue of political power versus the extent of the authority of civil servants. Where does that power and control begin for civil servants and where does it end? In what circumstances can they act, and has Clause 2 of the Bill been tested for legal resilience in this respect?

Notwithstanding that, I have sympathy with the amendment brought forward by the noble Lords, Lord Morrow and Lord Dodds, because I believe that the Barnett formula should be based on the principle of need. We have already seen what has happened in Wales. The recent work of Holtham and the Northern Ireland Fiscal Council highlighted that, in Wales, funding is £124 per head of population while in Northern Ireland it is £121.

We know about the funding crisis in the Department of Health and in education and infrastructure; and only today, we learned about the shortage of special educational needs places. Earlier today, I met the chief executive of Women’s Aid in Northern Ireland and her chief operating officer. They are facing a funding crisis. At the end of the day, they need financial assistance to help women who have been impacted by abuse—abuse that has been persistent and prevalent for many years.

I do not disagree with the amendment and I have sympathy with it, but I honestly feel that the best place for this debate, and for action, is in a restored Northern Ireland Executive and Assembly where local MLAs and Ministers who are best placed to identify the needs of the local population in Northern Ireland can specify and outline those needs. They could then prepare a report and seek a delegation meeting with the Secretary of State for Northern Ireland, the Chancellor of the Exchequer and the Treasury ministerial team to make a case for a review of the Barnett formula and the necessity of a needs-based assessment.

If anything, we need our own local government in Northern Ireland. We need all the institutions of the Good Friday agreement to be restored as quickly as possible.

My Lords, I rise to support the amendment in the name of my noble friends Lord Dodds and Lord Morrow. Reflecting on the comments of the noble Baroness, Lady Ritchie, we absolutely do need to see our Executive up and running again on a sustainable and fair basis. Of course, that was also the case in 2017, when Sinn Féin collapsed the Executive for not one, not two, but three years.

During those three years, which should have been spent reforming our National Health Service after a very expensive report was brought forward in the name of Rafael Bengoa, that report sat on the shelf, because the then Health Minister Michelle O’Neill, along with her colleagues, decided to come out of government. As a result of that, we have seen the sustainability issues in Northern Ireland get worse over time. I say that as, along with my noble friend Lord Dodds, a former Finance Minister in Northern Ireland.

The reason why I strongly support the amendment is that, as the Minister will know, the Government strongly desired to see the Fiscal Council happen because they had concerns about the sustainability and greater transparency of Northern Ireland’s public finances—and so they should, because during the time when Sinn Féin held the finance portfolio, not once did we have a budget, and they held it for a number of years. We did not have a budget in 2017, nor before the Executive collapsed in 2022.

So it is right that the Fiscal Council was put in place after New Decade, New Approach came forward. We should therefore listen carefully to what that council has to say. It was put there for a reason, and its latest report is very instructive in relation to the public finances of Northern Ireland. I hope the Minister will address the issues of the Barnett floor, which our colleagues in Wales have done, as well as the issue of the Fiscal Council. It was put in place for a reason.

I accept what the noble Baroness, Lady Ritchie, says about having the Executive to deal with these issues. Regrettably, when the Executive was in place, the issues were not dealt with because, as I have indicated, the Finance Ministers of the day did not bring forward budgets. So it is important to listen to the independent voice in Northern Ireland, and that is the Fiscal Council. I hope the Minister will take that on board in his response.

My Lords, I strongly support this amendment in the names of the noble Lords, Lord Morrow and Lord Dodds. I agree very much with what has been said by everyone who has spoken so far, although obviously I disagree with the noble Baroness, Lady Ritchie, that somehow the only way in which this can be dealt with is by getting the Executive back. There is no reason for that, given that the Fiscal Council said what it did, and the Minister knows that Northern Ireland is not being fully funded because the Barnett squeeze is getting greater. Surely if the Government know that that is happening to a part of the UK, they should be able to act without waiting for an Assembly or an Executive, which, given what has been said, is very unlikely to come back in the near future. I urge the Minister not to treat this as some kind of bargaining point with politicians in Northern Ireland; that is not the way to deal with this serious financial situation.

It is important that the point about consultation be included in the Bill. Being realistic, there are things in Northern Ireland that—forgetting the whole issue of the Barnett formula and the overall funding—could raise more money. That has always been difficult because controversial decisions are very difficult to take between the two mainstream political parties and the two factions —or perhaps three factions—in Northern Ireland. There are some things that are not the same as in the rest of the UK but should be. No doubt I would be slated by the media in Northern Ireland for saying this, but I genuinely think we should be looking at prescription costs. There is a huge amount of waste due to the fact that prescriptions are free for everyone in Northern Ireland. That is just one small thing, but I am certain that, if the public were properly consulted on it, talked about it and understood it, there would be support in many areas for that way of raising extra funds.

There are other such issues but I will not go into any of those. I know the Minister is particularly knowledgeable about and supportive of Northern Ireland, but he may not have a Secretary of State who is necessarily quite so knowledgeable and supportive, so it is important that the Secretary of State listens to what people who understand Northern Ireland are saying.

As we are on finance, I will ask the Minister about policing in Northern Ireland, which is in a particularly difficult situation over its funding. Morale among the Police Federation there is very low. Are the United Kingdom Government giving extra money to the police to make up for the huge amount that it cost to have the very short visit of President Biden and all the other dignitaries who flew in and flew out again as quickly as possible, having joined in the commemoration of the Belfast/Good Friday agreement? It cost a huge amount of money to bring over police officers from Great Britain. Have the Government given any extra money for that? If not, why not?

We had a wide-ranging debate at Second Reading, so there is no point going over all the arguments again; we cannot in a debate on an amendment anyway. But let us not forget that we are here discussing the Bill only because we have no Executive, and we have no Executive because this Government—our Government—have decided that Northern Ireland is to be treated differently. We are being left under EU trading rules, which have set us apart and will set us further apart as time goes on. That is the really important issue that noble Lords need to remember.

My Lords, I too am sorry that I was not able to be present, along with other noble Lords and noble Baronesses who have spoken, for the Second Reading of the Bill last Thursday because of other commitments in Northern Ireland. I put it on record that it was somewhat strange that the Second Reading was scheduled for the day of the local government elections in Northern Ireland. If nobody in the Government realised that, it tells us a lot about competence; if they did realise it and scheduled it anyway, it tells you a lot about their regard for Northern Ireland. I would like to know what actually happened that such a thing should be scheduled in that way.

I am glad that we have the opportunity to debate the amendment in the names of my noble friend Lord Morrow and me. It raises an important issue because, despite what is constantly said about the restoration of the Executive and the Assembly, if they were back tomorrow that would not make the slightest difference to the underfunding of Northern Ireland. In fact, Ministers—newly installed Ministers—would have to go about the business of slashing public services in health, education, policing and so on to an unprecedented degree. I do not agree with the idea that we should wait for the Executive and the Assembly to be restored. The need is here and now. The underfunding is taking place as a result of decisions taken here, in Whitehall and Westminster, by the Treasury.

It used to be the case over many years that the Northern Ireland Office was the advocate for Northern Ireland vis-à-vis central government and the Treasury, but it now appears that the current Secretary of State’s position is to become an advocate for the Treasury against the interests of Northern Ireland. He came on the other day to say that there would be no problem finding £100 million for a sports stadium. That is somewhat controversial in Northern Ireland but he was saying, “No problem at all—we’ll find the money if the bid’s successful”. But he cannot find an extra penny piece to deal with extraordinarily long waiting lists in the health service, education underfunding, police underfunding and the rest.

That sort of glib response to the crisis in Northern Ireland by the current Secretary of State, married to the refusal in this Bill to bring forward powers to give direction to civil servants, is an absolute abdication of responsibility by government Ministers who will no doubt respond and say, “Well, you should get into the Executive”. But they themselves are responsible for the current position in Northern Ireland by their refusal to restore the power of the Northern Ireland Assembly to make laws over 300 areas. Right across the economy of Northern Ireland, there are powers that do not reside in Belfast or here at Westminster or in Whitehall; they reside in Brussels with the European Commission—unaccountable and unanswerable. The Government need to recognise the current situation as it exists.

My noble friend Lord Morrow has very ably and in considerable detail set out the arguments behind our amendment. The Government may respond by saying that for many years they have funded Northern Ireland considerably well; the Minister referred to this at Second Reading. But whatever the past, what we are dealing with is now. As a result of government decisions taken by the Treasury, Northern Ireland is more below need on a funding-per-head basis than has ever been the case in any constituent part of the United Kingdom in the last 40 years. That is unacceptable and should not continue a moment longer. They cannot justify underfunding today on the basis of past settlements. Today’s budgetary position in Northern Ireland means social, economic and political dislocation. That is agreed and assented to by all the political parties in Northern Ireland across the board. It cannot be justified by looking backwards to previous financial settlements.

We will no doubt be told that Northern Ireland receives 20% per head more than the UK average spend. But, as we have heard, the true measure is spending against need. In Wales, steps were taken despite spending per head there being above the UK average. This is a question of asking not for favours or a privileged position but that the funding is structured so that services for the people of Northern Ireland meet the level of need, as is the case elsewhere in the United Kingdom. It is a quest not for privilege but for a level playing field. It is not a question of comparing Northern Ireland spending per head against England; it is about comparing Northern Ireland spending against need.

Of course, many people in Northern Ireland suspect the real game that the Northern Ireland Office is playing. I do not include in this the Minister answering on the Front Bench today, who has displayed time and again a willingness to fight Northern Ireland’s corner and stand up for the union. There are people within the NIO who no doubt believe that, by imposing this kind of budget and underfunding Northern Ireland both in the short term and going back some years, we will fix all this or come forward with a package if only the Executive and Assembly are restored and unionists operate the Northern Ireland protocol/Windsor Framework. That would entail operating measures that are injurious to the union and breach the Belfast agreement, the Acts of Union and the New Decade, New Approach document—the basis on which Northern Ireland devolution was restored in January 2020.

We have to face the reality that the failure of the Government to restore Northern Ireland’s place within the United Kingdom—subjecting it to arrangements that undermine democracy and are a breach of the agreements—is the fundamental problem we are grappling with. Unless that issue is tackled, we will continue to have a lack of devolved government in Northern Ireland. We have to accept the fundamental reasons why we are in the present position. Of course we do not want to see legislation having to be passed in this place to deal with the situation and would far rather have the Executive and the Assembly restored, but we have to have it back on the basis that we have powers to make the laws that affect and govern the economy of Northern Ireland. That cannot be avoided, and the fact is that the restoration of devolution lies in the Government’s hands.

The DUP stood on a manifesto in which we made it clear that the Northern Ireland protocol—the Windsor Framework—needs replacing

“with an arrangement that passes our seven tests”,

including getting rid of the Irish Sea border. It means restoring democracy and giving us the power to formulate and pass laws over our own economy, which seems very simple, straightforward and basic in terms of equal citizenship for all citizens of the United Kingdom. We are asking for something that would be seen as a matter of fact and common sense in every other part of the United Kingdom. Indeed, those who advocate different arrangements would never accept it for one minute for their own constituency, region or country in the United Kingdom.

If the Government refuse to negotiate the restoration of democracy in Northern Ireland with the European Union, or they refuse to legislate to do that, the responsibility for the current situation will be on their own head. Rather than leaving civil servants to try to run the place in Northern Ireland—they have been placed in an incredibly invidious position—Ministers, whether in Northern Ireland or here, should be the ones who take those decisions.

My Lords, I too support the amendment in the name of my noble friends Lord Dodds and Lord Morrow. I also apologise for not being able to be present at Second Reading last Thursday. I am sure that it does not escape the notice of noble Lords that there was a council election on that day. Everyone knew about it, including the Government, yet they had a Second Reading debate on a Northern Ireland Bill in this House.

Like the Minister when he spoke on that occasion, I too regret the fact that we are debating the legislation in the absence of an Executive at Stormont, but the Government have known for over 13 months that a functioning Northern Ireland Assembly and Executive could not continue until the genuine concerns expressed by the unionist elected representatives were adequately addressed. One can bury one’s head in the sand or face reality. We have found out in recent days that burying one’s head in the sand does not do anything; therefore, you have to face reality.

The Northern Ireland protocol and the Windsor Framework were forced on the Northern Ireland people without consent. We all know that the Belfast agreement was built on the very foundation of cross-community consent, but, sadly, the constitutional position of Northern Ireland within the United Kingdom was compromised to appease Europe during the withdrawal arrangements and at the behest of the Irish Republic.

In last week’s debate, the Minister stated that the 25th anniversary of the Belfast agreement is

“an opportunity for all of us to recommit to building an even brighter future for Northern Ireland. Now is the time to decide how we want to move forward together, to create a better future for and deliver on the priorities of the people of Northern Ireland. That includes a more prosperous economy and better, more sustainable public finances and services”.—[Official Report, 18/5/23; col. 381.]

No one could disagree with the sentiments so ably expressed by the Minister, who I think genuinely believed in them. But, in reality, that is all that they were: sentiments.

As we all know, since we last met in the House to discuss Northern Ireland business, there has been an election. Over recent months, the people of Northern Ireland, especially unionist voters, have been bombarded with endless anti-DUP propaganda, much to the delight of some and the dismay of others—so there has been a process of brainwashing the public. Not only was that fuelled by political opponents within republicanism or nationalism but so-called independent observers and commentators—cheered, aided and abetted by the so-called great and good in society—joined in to blame every ill in society on the DUP, including the smallest pothole in some back laneway and the serious, long and grievous waiting lists in the health service.

Of course, none of that happened and those accusations were not made when Sinn Féin boycotted the other place, and Stormont and the Northern Ireland Executive for three years. In fact, I remember debates in this very House when we were told that we were all to grow up and do something to get us out of the situation. In actual fact, it was Sinn Féin that had stepped aside from the Executive and from Stormont, but Members of this House did not have the courage to name Sinn Féin. No: everyone was to blame. We were supposed to be to blame for the actions of Sinn Féin. They pointed the finger and chided us, telling us to return to the Northern Ireland Executive. So here we are today.

After all the brainwashing, the unionist community took a principled stand, as did its elected representatives, on our constitutional rights and demanded to be treated as equal citizens within the United Kingdom. Of course, we are now told that the answer to every ill will be to return to Stormont. Many in this House hoped that, with all the brainwashing process in operation, they would witness the demise, or least the humiliation, of the DUP in the election and the elevation of the Alliance Party as the up-and-coming, as they saw it, central bloc to challenge the DUP. That did not happen. Indeed, Members of this House must face the reality that we have not gone away, you know.

There has been a lot of talk since the election about Sinn Féin’s political tsunami at the election. In reality, the DUP faced a political tsunami of criticism and bile before the election but, through the ballot box, we now know that the unionist people expect their politicians, at a critical moment, to honour their election manifesto pledges, no matter how hard the road will be, and we will.

It is true that Sinn Féin has increased its representation and become the largest party within local government by practically wiping out the SDLP, but was the political tsunami as it has been told to us? In actual fact, Members have perhaps not realised that Sinn Féin went down 20,000 votes in the council elections from the last test one year ago, the Assembly election. The Alliance Party went down by 17,000 votes, the Ulster Unionists by 15,000 votes and the SDLP by 13,000 votes. The party that went down least in votes since that last test was the DUP. I know that this is very hard for some to swallow. Indeed, commentators nearly choked admitting it, and the media outlets found it extremely hard to acknowledge that the DUP did not lose one seat at the Northern Ireland council elections.

So we faced political brainwashing, which failed, but we now face and confront what is, in my book, political blackmail. Part of the Bill’s provisions relate to decision-making for the Northern Ireland Civil Service. Recently, the Government set a budget and, according to the Northern Ireland Fiscal Council, civil servants will be expected to find £800 million in cuts and revenue-raising measures. The cuts demanded are harsher than any facing other Whitehall departments, but it is hoped that, when they begin to hit the community, the DUP will be blamed again.

Civil servants now want to meet the political parties in Northern Ireland to guide them where to make the cuts and to slash services. That is what the new Executive are supposed to do. Because of this budget, we are told that 300 fewer nurses will be trained this year while the health service is already understaffed. To pay the nurses a proper wage, as negotiated on the mainland, more cuts will have to come. That is at a time when the Government here in London boast that they plan to train thousands more nurses and doctors.

Under New Decade, New Approach, we were promised that police numbers would be 7,500, but while in England the Government boast of recruiting 20,000 new police officers, our chief constable tells us that we are to reduce our numbers of police officers, which are now down to 6,500.

My noble friend Lord Morrow outlined that, compared to Scotland and Wales, our budget has been underfunded by £1.2 billion. In my honest opinion, this underfunding and unfair budget for Northern Ireland is not by chance but by design. Those in authority know well that these cuts, when they come, will hurt the sick, children, the vulnerable, the elderly and the weakest in society, but they believe that this would be a price worth paying to force the Assembly and the Executive to get up and running.

The Government have already told us that the black hole in our finances was because of the Executive and that Assembly decisions and the crisis in the health service, infrastructure and education happened under the stewardship of this Executive. What can the Executive do to alleviate the problems facing society when they are told that they will have to make cuts, and more cuts? I am reminded of when I was in the other place and the Labour Government were leaving office, and a certain Minister wrote a famous note that said, “There’s no money left”. We are told that there have to be cuts, but we all know that this is to be used to endeavour to blackmail the DUP to get back into the Executive, with a nod and a wink that money will follow if they do—in other words, the money tree will magically blossom again. But that would be at the cost of tramping over every genuine promise made to the unionist electorate that we would stand firm until the Government granted us equal rights within the United Kingdom. Some will say, “Isn’t that what most parties do—break their promises?”

As I conclude, I have no doubt that the Government, facing the reality posed by recent elections, will seek to cobble something together, hoping to satisfy some with meaningless words, but that will not do. Unionists as well as nationalists have faced difficult days because of the 30 years of the IRA campaign but, with resolve and belief in the right of our cause, we must prevail. I trust that the party in government, which prides itself on being named the Conservative and Unionist Party, will honour the pledge it made to the people of Northern Ireland to respect all parts of this United Kingdom, and thereby rid us of the undemocratic protocol and Windsor Framework and allocate the necessary funds to make life more comfortable for the less well-off. I support the amendment.

My Lords, I will endeavour to be fairly brief. I have quite a lot of sympathy with the DUP amendment. Indeed, I raised similar points at Second Reading last week, and it is similar to an amendment tabled in the House of Commons by my friend Stephen Farry MP.

There is no doubt that Northern Ireland faces an extremely challenging situation as regards future public financing, but I am afraid that I completely agree with the noble Baroness, Lady Ritchie: surely the place for this to be debated is the Northern Ireland Assembly. I am under no illusions that a fully functioning Assembly and Executive would immediately be able to resolve these complex issues, but they would provide one strong voice to lobby the Treasury—a voice that is much closer to the people affected by these issues.

I have to say to the noble Lord, Lord McCrea, that I am a democrat—a Liberal Democrat—and someone who believes in the union and believes strongly in democracy. Both the House of Lords and the House of Commons have overwhelmingly supported the Windsor Framework agreement. I hear what noble Lords have said; I understand there is still a strong feeling about this issue. I sincerely hope the Assembly and Executive will be fully functioning as soon as possible but, listening to the debate this afternoon, I am perhaps less optimistic than I was before the debate. Can the Minister say, if it is not fully functioning again, how these issues will be dealt with in terms of parliamentary oversight? I presume, as ever, he will consult and involve all the political parties on this, as a Bill has to come forward, but this is just a plea to the Minister to make sure that all parties are consulted. Could he say a few words about how parliamentary oversight could be properly achieved? I plea, one more time, to the noble Lords opposite: surely a fully functioning Assembly and Executive is the best way forward, to have their voice heard loud and clear.

My Lords, here we are. I have been either asking or answering questions on the Barnett formula for something like 32 years. It started off as a formula, and then you add a floor, and now you have a Barnett squeeze. Some of your Lordships may remember that Lord Joel Barnett, himself, who invented this, towards the end of his life completely denounced it and said that it was not suitable any more. Indeed, it probably is not. We lived with it for the last 20 or 30 years because there was no real alternative, but the world has changed since then, certainly in terms of Wales, Scotland and Northern Ireland.

The noble Lord, Lord Morrow, put a convincing case for a very serious look at the situation at the moment. I can tell him and Members of your Lordships’ House that, when I was the Secretary of State for Wales, I did not persuade my colleagues in the Treasury that there was a need for a change. I tried, but when you are a territorial Secretary of State, you are always battling with the Treasury, the Chancellor of the Exchequer and the Chief Secretary to the Treasury. You are in the same team. Sometimes you win, and sometimes you lose. But the key to the success of what happened in Wales, with the Holtham commission, was that it was in fact conceived by the Assembly, set up by the Government of Wales, and had cross-party support when the commission reported. That meant that there was a seriousness about that report which impressed the Treasury. It was convinced, after all this discussion and all these commissions, that things had to change, but I could not do it on my own. It had to be done with the Assembly, the Welsh Government and Holtham and his commission, which spread over a couple of years. That is how it was achieved.

The same thing is going to happen in Northern Ireland. There has to be a concerted effort by all political parties in Northern Ireland to be able to persuade the Government that there is a serious case for equating Wales and Northern Ireland—I leave Scotland out at the moment, as that is an even more complicated case. But that is only reasonably sure of success if it is not simply left to the Secretary of State for Northern Ireland. There has to be this pressure internally, from those who have been elected and thus are there in that Assembly, elected by the people of Northern Ireland to take issues like this up.

I know there is a meeting in the next week or two with the head of the Northern Ireland Civil Service. She has quite rightly asked political parties for some guidance as to what to do. A budget is not simply adding up and taking away figures; a budget is about priorities of government. What do you put first? What do you put last? Where do you put this money and that money? You do that on the basis of proper consultation, not only with Members of the Assembly but with all the political parties. That can best be done only in the context of a democratic Assembly and government.

There is no question that there is some merit in discussing these issues in your Lordships’ House, but we are not here to run Northern Ireland; we have not been elected to do that—we have not been elected to do anything but certainly not to do that. When that meeting is held in the next week or two, I hope that the parties in Northern Ireland will impress upon the head of the Northern Ireland Civil Service the importance of trying to work out what those priorities would be and how to do it. Rather her than me—it is a terribly difficult thing to do if you are not an elected politician. The decisions are so tough and so harsh, and in some ways so impossible, that they can be made only by people who are answerable in a democracy to the electorate. That is not the case at the moment.

Yes, there is a very strong case for looking at change, and a strong case for asking officials to do what they did in Wales, but that can best be achieved only if the Assembly and the Executive are both restored.

My Lords, before replying to the debate that we have just had, I would like to make a very brief statement on legislative consent. Clearly, the reason we are here is that there is neither a functioning Executive nor a functioning Assembly in Northern Ireland. It has therefore not been possible to seek a legislative consent Motion.

I thank the Committee for the constructive debate that we have had this afternoon. I am very grateful to all noble Lords who have spoken to the amendment. I thank the noble Lords, Lord Morrow and Lord McCrea, for their time this morning, coming in to discuss this issue with me in the Northern Ireland Office.

Amendment 1, tabled in the names of the noble Lords, Lord Morrow and Lord Dodds, provides an example of the advice or information that the Secretary of State could request from the Northern Ireland Civil Service under Clause 2 of the Bill. Specifically, the amendment references the Northern Ireland Fiscal Council’s 2023 report—referred to by a number of noble Lords this afternoon—entitled Updated Estimate of the Relative Need for Public Spending in Northern Ireland. I join noble Lords in thanking the Northern Ireland Fiscal Council for its work, and have noted its report on the updated estimate of the relative need for public spending in Northern Ireland. The noble Baroness, the former First Minister of Northern Ireland, was right to refer to His Majesty’s Government’s role in the establishment of the Northern Ireland Fiscal Council, following both the fresh start agreement in 2015 and New Decade, New Approach in 2020. The Secretary of State, my right honourable friend Chris Heaton-Harris, met the chair of the council, Robert Chote, two weeks ago to go through the report’s findings. I assure the Committee that we will have further such meetings with him.

As noble Lords will be aware, there are clearly many different ways to assess need, as the Northern Ireland Fiscal Council itself acknowledges in its report. However, the report indicates that funding is currently broadly in line with relative need, through a combination of the Barnett-based block grant, locally generated revenue and additional UK Government funding packages. In that context, I refer noble Lords to the penultimate bullet point on page 3 of the report and the penultimate paragraph on page 21 of the report.

I should add that the report also makes clear that locally accountable leadership—to echo the comments of a number of noble Lords this afternoon—is urgently required to ensure that Northern Ireland has a stable and flourishing economy.

For many years, the Government have recognised the unique challenges that Northern Ireland faces. The argument that it has been systematically underfunded by the Government simply does not hold water, in my view. In the 2021 spending review, the Government announced that the block grant for Northern Ireland would be £15 billion per year, on average, over the next three years, representing the largest settlement since the restoration of devolution in 1998-99. We have provided around £7 billion in additional funding to Northern Ireland since 2014, on top of the Barnett-based block grant. As a number of noble Lords pointed out, the Northern Ireland budget per person is around 20% higher than the equivalent UK government spending in other parts of the United Kingdom, and it is set to rise to around 25% by 2024-25.

In 2013, shortly before we brought the G8 summit to Northern Ireland, we made available £300 million in additional borrowing power and funding top-ups through the building a prosperous and united community package. We made available almost £2 billion in additional spending power for Northern Ireland as a result of the Stormont House agreement in 2014, a further £500 million through the fresh start agreement in 2015, and £2.5 billion of financial support and flexibility through the confidence and supply agreement in 2017.

In more recent years, we have invested over £3.5 billion in Northern Ireland through the £400 million new deal for Northern Ireland, £617 million for four city and growth deals covering all of Northern Ireland, £730 million through PEACE PLUS, and £2 billion in funding and a Barnett investment guarantee in the New Decade, New Approach financial package, following the restoration of the Executive in January 2020. Noble Lords will recall that the priorities committed to by the Northern Ireland Executive within New Decade, New Approach specifically included £245 million earmarked for the transformation of the health service and wider public sector. The UK Government are also investing over £250 million in Northern Ireland through the levelling up fund, the UK shared prosperity fund and the community ownership fund.

Despite these significant levels of investment from the UK Government, over and above the Barnett-based block grant, the Northern Ireland Executive have consistently been unable to allocate this funding to deliver the much-needed transformation of public services. In that context, I acknowledge the comments made by the noble Baroness, the former First Minister, regarding the period from 2017 to 2020. Consequently, the £200 million health transformation funding provided through the confidence and supply agreement, and the £245 million of funding for public service transformation allocated through New Decade, New Approach, have primarily been used for short-term funding pressures, not to deliver genuine reform.

I gently echo the point made by the noble Lord, Lord Murphy of Torfaen, at Second Reading—and to some extent repeated this afternoon—when making comparisons with Wales on this issue. It is important to underline that that arrangement was negotiated between the Welsh Government, the Welsh Assembly and the Treasury. As the noble Lord, Lord Murphy, reminded us, the Holtham commission was established in 2008 and negotiations took place over the next seven years. That seven-year period is crucial to today’s debate because it underlines that this is not an issue that could be solved overnight, even with the best will in the world.

As was pointed out by a number of noble Lords, particularly the noble Baroness, Lady Suttie, and the noble Lord, Lord Murphy of Torfaen, it would be far more powerful if the case made by noble Lords on the Benches behind me were made from a functioning Stormont. It will not surprise anyone in this Committee to hear me say that this is an issue best addressed in the context of a restored Executive and Assembly in Northern Ireland, in discussions with the Treasury. I agree entirely with the noble Baroness and the noble Lord on those points.

More broadly, in the absence of an Executive the UK Government will be able to commission advice from the Northern Ireland Civil Service—I mentioned this at the outset—on how current funding can be used more efficiently to the benefit of the people of Northern Ireland. However, it would not be right for me to commit the Secretary of State to exploring certain defined options—that would be the effect of this amendment—in advance of commissioning Northern Ireland departments for advice on options for budget sustainability.

The noble Baroness, Lady Suttie, asked about parliamentary oversight. She and other noble Lords will be aware that, in the continuing absence of an Executive, we will need to bring forward a budget Bill, which will be debated in your Lordships’ House.

I am of course willing to continue to engage with noble Lords, particularly those who brought this amendment —as I referred to earlier, I did so this morning—on these important issues. In that spirit, I invite the noble Lord to withdraw the amendment.

My Lords, I thank everyone who has contributed to the debate. If there is one striking note, it is that I did not hear anyone say they oppose what we are trying to do, so I will take that as a positive and welcome it. Some, of course, have said, “If we had an Executive” or if we had this or that, but I have always found in life that you are better off moving from where you are, rather than where you would like to be. That is the only way we are going to move forward. If, one day, there is an Executive—I can say with some degree of confidence that it is not going to be tomorrow—they will no doubt deal with those issues.

I was struck by one thing the Minister said when he summed up. He said that we extended additional powers for borrowing some £300 million. In my experience, any time I borrowed money I always had to repay it and sometimes, the pain of repaying it was nearly as great as the pain of asking for it. Incidentally, I never had to borrow £300 million; that just would not have happened. The Members who spoke highlighted different issues; for example, that our health service is where it is, and that we have monumental waiting lists. However, we had those when we had the Executive. There are three of us here—the noble Baroness, Lady Foster, my noble friend Lord Dodds and I—who have at different times served in that Executive. I nearly forgot—how could I?—the noble Baroness, Lady Ritchie, also served in it. We are not antagonistic to devolution. We know there are merits in it but, for goodness’ sake, can those who see our salvation entirely in a restored Executive please take on board that that will not happen at present because we do not have a level playing field? When we get to that stage, we will all be enthusiastic and break down the gates of Stormont to get in, but that is not where we are, so I ask noble Lords to take cognisance of that.

What happens when devolution is not functioning? Is it not the responsibility of government to step in and accept responsibility, as a government, and keep things moving forward? That, surely, has to be right. I do not doubt for a moment the Minister’s sincerity— no one has—but we say to the Government, “You have responsibility; let’s get on with it.” The noble Lord, Lord Murphy, quickly corrected himself and reminded us that none of us here is elected, but the other place is elected. Is that not their responsibility, or do they just throw up their hands and say, “Oh well, we can’t do anything here”? They cannot do that. Let no one underestimate the difficulties there will always be in keeping devolution afloat. Those will always be there, but the Government have a responsibility to ensure that when things break down back home, they do not shirk their responsibility to do some of the heavy lifting here to encourage the people of Northern Ireland and ensure that they do not suffer.

My Lords, I will stop there. I beg leave to withdraw my amendment, which was intended more as a probing amendment.

Amendment 1 withdrawn.

Clause 2 agreed.

Clauses 3 to 7 agreed.

House resumed. Bill reported without amendment. Report and Third Reading agreed without debate. Bill passed.