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Northern Ireland Budget (No. 2) Bill

Volume 832: debated on Thursday 14 September 2023

Second Reading (and remaining stages)

Moved by

My Lords, before I begin my comments on the Bill itself, I once again place on record my gratitude to your Lordships for considering this important Bill on a heavily truncated timetable.

My right honourable friend the Secretary of State for Northern Ireland and I set out the budget allocations for each Northern Ireland department for 2023-24 in a Written Statement, which I placed before your Lordships’ House on 27 April. All this Bill does is put those allocations on a statutory footing; it does not change the numbers. I do not propose to repeat the contents of that Written Statement, which sets out the respective departmental allocations. Those budget allocations, as with the 2022-23 Northern Ireland budget, were developed as a result of extensive and sustained engagement with the Northern Ireland Civil Service.

The Bill will mean that Northern Ireland departments have a total available resource budget of £14.2 billion and a capital budget of £2.2 billion. This includes the Northern Ireland Executive block grant set at the spending review in 2021 and through the subsequent operation of the Barnett formula and income from regional rates. I emphasise that the sum available for this budget would have been the same provided to an Executive for 2023-24 if an Executive were in place.

Of course, it is the Government’s clear wish that these matters were being dealt with by a fully functioning Northern Ireland Executive and Assembly, operating in accordance with the 1998 Belfast agreement, and we are working tirelessly to bring that about. However, in the absence of an Executive, it is the responsibility of the Northern Ireland departments now to make the specific spending decisions to ensure that they live within the budget limits as set out in this Bill. I recognise that this is not easy and will require difficult decisions.

Noble Lords will remember that the UK Government inherited a significant prospective overspend in 2022-23, to the sum of £660 million, and a reserve claim of £297 million was provided to balance last year’s budget. With agreement from my right honourable friend the Chief Secretary to the Treasury, flexibility has been granted on the repayment of that reserve claim. This will provide some protection to front-line public services in Northern Ireland from having to take the most severe reductions.

With the leave of the House, I will speak to the clauses—I apologise that these are somewhat technical and legalistic in nature. Clauses 1 and 2 authorise the use of resources by Northern Ireland departments and other specified public bodies, amounting to £27,403,514,000 in the year ending 31 March 2024. In short, these clauses authorise the use of resources to that amount by departments and other specified public bodies for the purposes set out in Part 2 of the schedule estimate.

Clauses 3 and 4 authorise the Northern Ireland Department of Finance to issue out of the Consolidated Fund of Northern Ireland the sum of £22,790,893,000 for the year ending 31 March 2024, and the use of that sum to finance the expenditure that departments will need cash to fund. In short, these clauses allow the Department of Finance to allocate actual cash.

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

Clause 6 authorises the use of income by Northern Ireland departments and other specified public bodies from the sources specified in Part 3 of the schedule estimate, for the purposes specified in Part 2 of the schedule estimate, in the year ending 31 March 2024.

Clause 7 provides for the authorisations and limits in the Bill to have the same effect as if they were contained in a budget Act of the Northern Ireland Assembly. It also modifies references in other pieces of legislation to the Northern Ireland estimates that would normally form part of the Assembly’s supply process.

Clauses 8 and 9 are self-explanatory, in that they deal with matters such as interpretation and the Short Title.

The schedule to the Bill sets out the estimates for each Northern Ireland department—that is, the amount of money authorised for use, the purposes for which it can be spent and other sources of income from which it can draw. For each department, Part 1 of the schedule estimate sets out the amount of resources authorised for use by each Northern Ireland department and other public bodies, and the sums of money granted to each Northern Ireland department and other bodies, for the year ending 31 March 2024. Part 2 of the schedule estimate sets out the purposes for which resources and money can be used by each Northern Ireland department and other bodies for the year ending 31 March 2024. Finally, Part 3 of the estimate sets out the sources from which income can be used by each Northern Ireland department and other body for the year ending 31 March 2024. I apologise again for the technical and legalistic nature of those clauses.

Before I conclude, I make a short statement on legislative consent. Clearly, we have been unable to secure a legislative consent Motion from the Northern Ireland Assembly, given that it is currently not sitting. Of course, if it were sitting, we would not have needed the Bill at all. However, the continued absence of the Assembly and the Executive means that we have been left with no other option but to take action here in the United Kingdom Parliament.

I hope I have provided your Lordships’ House with sufficient detail on the background to the Bill, the necessity for it and the intended effect of each provision within it. I commend it to the House. I beg to move.

My Lords, I thank the Minister for his detailed explanation of the various clauses. Obviously, this legislation should be debated in the Northern Ireland Assembly and agreed by the Northern Ireland Executive and all the Ministers. Unfortunately, we do not have those institutions, but that is where the debate should be taken. Decisions should be made by local MLAs and local Ministers.

We are also debating this in the aftermath of a very successful—if I may say so—economic conference organised in Belfast by the Northern Ireland Office, the Department for Business and Trade and Invest NI. Significant announcements about job creation were made, and I hope that this will be sustained and that the conference, and the interaction with the United States and other countries, will lead to further job investment. That is what this is about: bringing people together, creating jobs and opportunities and galvanising the local talent in Northern Ireland for the betterment of all the people, irrespective of what those industries may be, whether they are in the manufacturing, digital or communications sectors.

I refer to the fact that Northern Ireland does not have political institutions. To the Members from the DUP in your Lordships’ House, I gently say that the people of Northern Ireland should no longer be placed on the altar of DUP political expediency. We need to move forward and show how we can exploit the economic and political opportunities from being able to trade in the two markets—the UK internal market and the EU single market. We need to galvanise the benefits of the Windsor Framework. Yes, there are some burdens, but, by and large, from what I can see and the evidence we have taken in our protocol committee, there has been a delay in publishing the guidance and then in the SIs, which are to be debated next week and which deal with the implementation framework. Therefore, I urge the Government to expedite that as much as possible. The bottom line is that we need to be able to develop those east-west and north-south opportunities from an economic perspective. To do that, we need the restoration of the political institutions to fuel and drive our economy and health service for the betterment of all.

It would perhaps be helpful if, in the Minister’s wind-up to this important piece of legislation, he could advise the House of progress in discussions with the DUP and when restoration is likely to take place. I note that talks are with only one party, but, as I have said before in this House, I believe that all-party talks should have taken place and priority should be placed on talks reconvening. In this respect, I refer to the comments made earlier this week by the Minister of State at the Northern Ireland Office, Steve Baker.

In the last couple of weeks, there have been some informed documents and, only this morning, the Irish Congress of Trade Unions published a press statement, which I am sure the Minister is aware of. It asks for the overspend to be written off, for a review of the Barnett formula—others are suggesting that as well—and for a special transformation fund to be established to deal with an infrastructure fund.

Last week, on 4 September, a think tank called Pivotal, based in Belfast, stated that Northern Ireland suffers from a “governance gap”, with the absence of proper decision-making amid a budget crisis leaving public services to deteriorate. Its report states that a lack of strategic planning means that services are stuck in a

“vicious cycle, where problems are growing and our ability to tackle those problems is shrinking”.

Pivotal stated:

“Immediate challenges are not being met and neither is there a clear focus on long-term strategy … issues—like childcare, infrastructure and climate change—remain unaddressed”.

I refer to one of the environmental time bombs, shall we say, that the Minister will be aware of: the Lough Neagh blue algae problem. Lough Neagh is the biggest source of fresh water in perhaps the whole of the UK and Ireland.

Civil servants—the Minister has already referred to this—have been in charge of running government departments for 10 months, but their powers are limited, and we have already dealt with that legislation in this House. They are unable to make any major or significant changes, so are constrained in how they can tailor public services to ongoing challenges. Funding is extremely tight and this is made worse by the inability to get the most out of the cash available, another point raised by the Pivotal report. Examples include growing health waiting lists. Health has seen its funding allocation rise, but we must remember that it is the biggest government department, taking around 46% of the Northern Ireland block grant, yet it faces a shortfall of £732 million, while a lack of progress in the Bengoa-style transformation means that costs continue to rise. Trolley waits of several days in A&E are the norm and the length of time waiting for care packages results in bed blocking in hospitals.

Somebody raised with me an interesting point about the funding of health and social care in Northern Ireland: there is one funding pot, while here in Britain there are two different funding pots. In that respect, there are those who ask for a Barnett change to allow health funding passing to Northern Ireland to reflect this unique funding arrangement for health and social care. An important point to emphasise is that additional money supplied to health is siphoned off other government departments that can ill afford to allow that money to go to health. Education has cancelled programmes such as Engage, holiday hunger schemes and Healthy Happy Minds. Those are all early intervention or prevention programmes valued by vulnerable children in particular, but this is still £382 million over budget, with impacts on the most vulnerable children. Then there is the impact of RAAC, which is probably not yet costed and will need to be factored in in the Northern Ireland situation.

Policing accounts for around 60% of the Department of Justice budget, yet the former chief constable indicated some months ago that balancing the budget may be difficult with the reduction to that department’s budget. Imagine now the added costs of the data breach and a possible fine from the Information Commissioner. The state of our infrastructure system requires investment. Increasing depletion of our roads infrastructure is another common feature.

I simply highlight those issues to suggest that while this budget has already been allocated and we are simply giving legislative effect to it for this financial year, it will be utterly constrained and unable to deal with the pressing needs of Northern Ireland. I ask the Minister to provide an update on ongoing discussions with the head of the Civil Service in Northern Ireland on revenue raising measures and the preparation for the new programme for government if there is restoration.

It is interesting to note that the Pivotal report made recommendations including the need for departments to work together to consider the cumulative impact of cuts, particularly on the most vulnerable groups. Early intervention and prevention schemes should be prioritised rather than seen as optional, and an appropriate amount of additional funding will be needed to stabilise public services. Any new funding would need to be sustained for three or more years. If such a package coincided with a re-established Executive, it must come alongside firm commitments to reform to ensure that real change takes place.

I accept the budget as presented by the Minister because government departments are already working on it and with it in very constrained circumstances. I do not accept the levels of financial allocations and think that they need to be urgently looked at. Most of all, the UK and Irish Governments need to recommit to an active role in ensuring the restoration and maintenance of the Good Friday agreement institutions, and measures must be put in place to prevent further falls of the Executive—as a former Assembly Member, I like others in this Chamber was a victim of such falls; they have happened over several years of the Executive. Obviously, that will mean reform of some of the mechanisms. I look forward to the Minister’s response. I hope there is restoration, but I also hope that in having restoration, we have an Assembly holding the Executive to account to ensure that we have significant funding allocations to allow our economy to grow and develop and to avail of the many economic opportunities from the Windsor Framework and other measures currently at play.

My Lords, like the noble Baroness, Lady Ritchie, I thank the Minister for presenting to us the context for the Bill and for the technical elements of it. I would not dispute with him any of the technical aspects he described: they are fairly straightforwardly part of such a budget Bill. However, in opening the Second Reading debate on the Bill in the other place, the Secretary of State for Northern Ireland, Chris Heaton-Harris, said something that I do disagree with:

“The Government have brought forward this Bill because the Northern Ireland parties have been unable to form an Executive and subsequently set a budget”.—[Official Report, Commons, 10/7/23; col. 101.]

That is not true. It is not that they were “unable” but that the DUP was unwilling to form an Executive. The DUP’s Paul Givan resigned as First Minister following its objections to the Northern Ireland protocol.

It is entirely justifiable to protest against policies you do not agree with, complain about them, argue about them, debate them, but it is not justifiable to bring down a whole form of government as a protest, to bring down the Assembly and the Executive. It is quite true that Sinn Féin did the same thing: it was unwilling to form an Executive with the DUP previously, and that too was unacceptable. But there is a difference: Sinn Féin had a serious dispute with its partners in government and was protesting against them. As I say, it was not justifiable, but the difference is that the DUP on this occasion does not have a dispute with Sinn Féin—at least, not on this issue—but with the UK Government. The dispute is with the Government fulfilling a policy of Brexit that the DUP itself had urged upon them and supported, even though these consequences were emphasised to them by many of us. Brexit is a policy that most people in the United Kingdom now regard as a failed policy, and the majority of people in Northern Ireland never voted for it or supported it in the first place.

I entirely accept that if the Executive and the Assembly were restored tomorrow it would not resolve the problems that are described in the budget Bill. The abnegation of responsibility has worsened the financial situation, but it would not be resolved if there was devolution immediately. There is a huge deficit, as the Minister said—a black hole of at least £660 million and it may well be more. The consequences for all public services, and indeed the private sector too, in Northern Ireland are enormous. The education system is in chaos and the health service, which is the part of the public sector I know best, is dissolving before our very eyes. It is not just a question of increasing waiting lists and there not being enough money; it is now becoming clear that many of those who, like me, were consultants in the National Health Service in Northern Ireland are leaving. Some of them are taking early retirement; some are going across the border, and some are leaving Northern Ireland altogether. Many young people are choosing not to come in and, if they do, not to take up positions as partners in general practice or as consultants in the NHS. These are not matters that will be resolved overnight or even by the provision of money. There is a fundamental, deep disruption and disturbance in the way Northern Ireland works.

Trying to deal with this is not going to be at all easy. On the question of funding, does the Minister truly believe that the amount of money being made available by His Majesty’s Treasury is enough for Northern Ireland? Is it the case that, if all these other issues we are talking about, such as devolution and better co-ordination, were to be dealt with, there would be enough money? I am not sure that there is enough money to provide for the kinds of services the people of Northern Ireland ought to be able to expect as part of the United Kingdom.

We mentioned the question of the governance problem. Let us not forget that this is not the first time that the DUP has chosen to make Northern Ireland a difficult place to run. After the Anglo-Irish agreement, the slogan used was to make Northern Ireland “ungovernable”. That is different thing, and of course it was the case at that time that there was a Government here in Westminster who were determined to make sure that the rule of law prevailed and that Northern Ireland was properly governed. There was a police service that insisted on ensuring the rule of law. My colleagues in the Alliance Party used the law to ensure that people were made to go back to work in governance.

What is happening now is not about Northern Ireland not being governable. It is about Northern Ireland being no longer workable as an entity, and that is a different thing. It is entirely possible for people to make Northern Ireland unworkable, but what sort of an outcome is there going to be when you bring down the house around you? Does that serve the best interests of the inhabitants? We are in a very serious place whenever Northern Ireland becomes an unworkable place, and that is what is happening now.

So what should we do? First, we must understand that the UK Government are the responsible Government. In the absence of devolution, and even in its presence, the UK Government retain the responsibility for governing Northern Ireland, and therefore they have to take responsibility for the shambles that Northern Ireland is now in. I have been warning for years that this was what was happening and what it was leading to. The longer the Government keep postponing addressing this, the worse the situation gets.

So how should the Government address this? They tried to persuade the DUP to go into government with Sinn Féin; the DUP said no. They are trying now to persuade the Government to take responsibility for the financial consequences and they have pointed out what a difficult problem that is going to be. In fairness to the DUP politicians, when they were in a position of responsibility for both raising and spending the money, for example when Peter Robinson was leading Castlereagh council, of course I disagreed with them on many things, as did my colleagues, but he did act responsibly both in raising and in using the necessary funds, and keeping the books balanced. That is not happening now.

We have to think seriously how we deal with this. There is a question as to whether politicians have to continually have a veto over how things are run. Maybe the Government need to engage more and more directly with those in the business community, because they are the only ones who are going to keep things going. They are not going to argue about the constitution. They are going to say, “Let’s see how we can keep business going and make the money that is necessary for the wheels to go round”.

It is also important that, if strand 1 and strand 2 cannot operate, the British Government co-operate with the Irish Government to try to make things work as well as possible. If they do not, it is the people of Northern Ireland who will suffer ultimately. Northern Ireland’s position in the United Kingdom will become less and less viable as a proposition. Some people in Northern Ireland would welcome that, but it is certainly not something that pro-union and unionist people want to see. The question is whether the Government are prepared to go beyond the rigidity and resistance of some of Northern Ireland’s politicians or whether there will be continued drift and, ultimately, disaster.

My Lords, I thank the Minister for his detailed explanation of the budget. However, it is a matter of regret that once again we have been tasked with considering a budget for the people of Northern Ireland. As with the previous budget discussed in your Lordships’ House, one would have much preferred the budget to be discussed in its rightful place: the Northern Ireland Assembly. Decisions about spending priorities for Northern Ireland should be made at Stormont, not here or in the other place. But, unfortunately, this is not possible right now.

We know why this is the case. We find ourselves in this all too familiar situation because Northern Ireland remains a place apart. Within the context of the United Kingdom, rules are being imposed exclusively on Northern Ireland over which we have no say. As things stand, there is no accountability or scrutiny over those laws. Unfortunately, these barriers remain an impediment to the restoration of the Assembly.

In terms of the Budget, the cost of living is affecting every person across the United Kingdom, and in Northern Ireland in particular this pain is being felt. Unless there is a fundamental change in how Northern Ireland is funded, the situation will only get worse. With or without a Northern Ireland Executive, and with or without the Northern Ireland protocol or Windsor Framework, the reality of the Barnett formula will continue to lead to budgetary uncertainties and continued year on year pressures in Northern Ireland.

It is abundantly clear that spending in Northern Ireland is already clearly below need. Northern Ireland is the only part of the United Kingdom where spending has now fallen below the Government’s definition of need. The problem has been exacerbated by the fact that the Northern Ireland Office requires the Executive to repay a £279 million overspend for 2022-2023—which, interestingly, is a similar amount to the additional sum of £322 million that the Executive should have received in 2022-2023 had it been funded to the UK Government’s level of need. The decision not to base the budget for Northern Ireland on need is causing many of the issues we see today, and pressure will continue to grow on public services.

The overall budget for Northern Ireland this year has fallen by 3.2%, whereas the budget in the rest of the United Kingdom went up by 1.7% in real terms. As I have stated, one of the major reasons for this glaring disparity is the simple fact that the formula used for the rest of the United Kingdom—one based on need—has not been applied to Northern Ireland. Like budgets before it, this budget will leave the Northern Ireland education system, for example, facing a future funding crisis that will impact many children and young people. Spending on education has gone up by 6% in the rest of the United Kingdom, but it has fallen considerably again in Northern Ireland. According to analysis from the Institute for Fiscal Studies in the United Kingdom, spending per pupil has fallen consistently in Northern Ireland every year since 2010. In 2022, spending per pupil was estimated to be £6,400 in Northern Ireland, and that again is much less than elsewhere in the United Kingdom. With the recent additional pressures on an already stretched education system, schools in Northern Ireland cannot cope with further underinvestment.

Turning to policing, the Police Service in Northern Ireland was facing an incredibly serious situation long before recent events. The PSNI was already operating with roughly 1,000 officers below the levels stated in the New Decade, New Approach arrangements. With the consequences of the recent serious data breach and the knock-on impact on police officers and their families, and the mitigation measures that have had to be taken to protect officers, an already stretched policing budget will be stretched yet further. With morale low, the police service is in the middle of a very difficult period. The most recent cuts to the Northern Ireland Department of Justice do little to help the current mood among officers and staff. Can the Minister say whether additional funds can be made available to assist in relation to policing?

There are many areas where this budget underwhelms and underdelivers. I am sure that my noble friends who follow me will be able to give the finer details of the budget. The budget situation in Northern Ireland is very complex and uncertain. Indeed, it requires political leadership and co-operation to find a sustainable solution, particularly around the protocol and the Windsor Framework. I think we all want to see Northern Ireland prospering with a growing economy, attracting inward investment. I want to be able to stand in your Lordships’ House and, once again, laud an uninterrupted period of stable devolved governance. I think we all want to see institutions back up and running, and Northern Ireland in a position to set its own budget.

My Lords, first, I thank the Minister for explaining the detail of the Bill to the House this afternoon. It is our desire to see an Assembly and a functioning Executive back up and running at Stormont again but we know also that the elephant in the room is the Windsor Framework. It is disappointing that we are in a situation where we are discussing a Bill that should be debated at Stormont with locally elected representatives and Ministers in a functioning Executive.

This debate is about the budget for Northern Ireland. Most debates relating to Northern Ireland are overshadowed by the Northern Ireland protocol and the issues that still need to be addressed in the Windsor Framework. Regrettably, we have been here too many times before; it is true to say that key decisions on health, housing, education and infrastructure have been put on hold in recent months and years because of uncertainty over funding for Northern Ireland. We have had the Secretary of State for Northern Ireland in the other House tell us that the budget was an appropriate settlement for Northern Ireland departments. I am not surprised that this particular Secretary of State would say that.

The stark reality of this debate is that the budget given to Northern Ireland departments is very much a punishing one. This budget is simply not enough for the effective delivery of vital services across Northern Ireland. We have a growing health service waiting list, a crumbling school estate and infrastructure plans that have been long postponed. It is clear that, on health, infrastructure and, in particular, education, the budget is very bad news. While it is true to say that there is no magic money tree, such punishing cuts as those we are discussing today will be felt by pupils, hospital staff and many of the front-line workers that we all rely on in Northern Ireland.

The budget will hurt economically and will have an impact on the delivery of public services. That has already been alluded to, with the £297 million that is scheduled to be taken from Northern Ireland’s allocation this year and next—a huge sum of money that will impact on many services across Northern Ireland. The Department of Health received more than half the total budget and by far the largest percentage cash increase of all departments. Despite significant savings, a funding gap of £732 million remains. For example, the Department of Education has a funding gap of £382 million. Many of the schools and principals we have spoken to have had to cut many of their schools’ outside activities across Northern Ireland, which is sad in itself. At the Department of Justice, there is a funding gap of £141 million. As has been alluded to, a former chief constable has said that he may not be able to operate policing in the budget that has been handed to him. We are short of 1,000 police officers in Northern Ireland. The list goes on.

When we last addressed a budget in your Lordships’ House, I said then that I hoped that it was the last time we would deliver a budget for Northern Ireland. Unfortunately, we are here again. We want to see a solution that brings long-term, firm foundations for the restoration of political institutions in Northern Ireland; that is what my desire would be. I want to see a solution that brings firm political and financial foundations, which are key to the future of a working Executive. Chronic underfunding in Northern Ireland should not continue. To get Stormont up and running and to begin this process, we must see the remaining issues in the Windsor Framework be resolved as soon as possible.

My Lords, I, too, thank the Minister for presenting this budget. I feel rather sympathetic towards him in that he cannot come here for happy debates. One day, I hope that he will be able to do so. Luckily, much of what I was going to say has been said but, in particular, I would like to say that the noble Lord, Lord Alderdice, looked at this from an objective point of view and gave one or two extremely appropriate conclusions. I think we get too bogged down in the details of what is going on when we must look at how it really might all collapse.

Of course, our biggest problem is that we have a lack of local democratic accountability, with the absence of an Executive currently as a result of the protocol. Therefore, at present, there is only one democratically accountable legislature: here. Of course, we have heard how the civil service is currently unable, because the Government dictates this, to take many of the actions we would like to see. We have this void, or crevasse, between the refusal of the DUP to take part in the Executive and the refusal of the Westminster Government to interfere with theoretically devolved issues—although there have been cases where they have done so, so it is not an impossibility. Abortion may well have been one of them. They can do it if they wish but they do not wish to do it; of course, they have their reasons for that.

However, it is the 1.9 million people in the Province who suffer the long-term hardship—hardly the politicians or the Government. They suffer the damage to civil society without this democratic accountability and they do not have a say in here. We keep hearing that the position of the Government and the EU is that the protocol, after the Windsor Framework, works okay. I am not totally against it but, to a certain extent, I am fed up with hearing that it is okay because big businesses say that it is. Big businesses can afford to have a back office with half a dozen people scribbling out to cover the regulations but Northern Ireland is not a country of big businesses; there are very few of them. There are thousands of micro-businesses and small SMEs. I know of a haulier whose company, A1 Transport in Fermanagh, employs 85 people. Since this started, he has had to produce 70,000 documents to move his lorries back and forth across the border and to this country. He literally has not got the room to store them. This goes on and there will be even more documents as this business gets tighter.

The DUP has continued, rightly or wrongly, to make a stand against the protocol and the Windsor Framework. I do not like to admit it but the big problem is that so many things that this Government have done have made the average person so very angry in Northern Ireland that they have gone to the extremes. I dare say that the support for the DUP comes largely because people are so unsatisfied with what the Government have done. Legacy was one thing the other day. It has really had a big effect on people; there is a lot of discontent.

However, they are the UK Government and, as the noble Lord, Lord Alderdice, said, they are responsible for the United Kingdom, regardless of devolution or anything else. We, the people in the Province, are caught between two immovable rocks: the DUP and the Government. They are the only people who can ultimately solve this challenge. What we need is real leadership, but we are not getting it. It needs to come from outside those two groups—perhaps from the Prime Minister; we have not seen him involved very much. I am hesitant about the Taoiseach after the things he has said in the last few days; that does not help things either. If we have a compromise or fudge, this problem will return; without a shadow of a doubt, we would be in this position again in no time.

We have major decisions on infrastructure to be made, such as on roads, education and, as we have heard, health. The noble Lord, Lord Alderdice, talked about the disintegration of health, and I will highlight one particular example, without going through all the different parts. South West Acute Hospital in Enniskillen was a state-of-the-art new build opened by the late Queen in 2012. Believe it or not, it has hundreds of single rooms—no wards—clean air technology in the theatres and everything else. It has served a population of 83,000 people. The Western Health and Social Care Trust has suspended the acute services at the hospital due to financial difficulties and other reasons, such as the absence of direction from a democratic authority telling it to get on with the job. I am aware that the decision is statistical and due to a problem with recruitment—that may be so.

I was once on a hospital board in Belfast. It is a medical requirement for most important hospital interventions, such as childbirth, accidents, disease and whatever else to have acute services somewhere in case things go wrong—the noble Lord, Lord Alderdice, knows that better than anybody. Therefore, those somewhat straightforward interventions now have to go somewhere else, in case the patients need acute help. They have to go to Altnagelvin Hospital in Derry. That means that 83,000 people—if they need treatment; obviously not all at once—have to travel for 60 minutes or more. Of those, 68,000 will have to travel for 90 minutes or more, and 25,000 will have to travel for two hours. That is travel time, let alone the acquisition of an ambulance, which is a totally different subject.

In this country we have a universal postal service, as well as the equivalent in education, although we do not call it that, and health—the right of our citizens to access a service, whatever it is. We know that it costs more to post a letter to, or to run a school in, the outer isles—that is what the universal service is about. The removal of services from such a large number of people in Fermanagh and South Tyrone should be considered unacceptable behaviour on the part of an unaccountable body. But it does not have to be unaccountable if the Government make provision for interfering where things are quite clearly wrong. The health status of 83,000 people is being compromised in a manner that is incomparable anywhere else in the United Kingdom.

It has long been NHS policy to take account of the geographical situation and to compensate where necessary. According to the NHS Technical Guide to Allocation Formulae and Pace of Change for 2019-20 to 2023-24:

“Travel time to the next nearest hospital is an indicator of whether or not consolidation of services onto fewer sites is feasible”—

it is not feasible. We used to have a measure called the golden hour; what has happened to that? Believe it or not, the Western Health and Social Care Trust has said that things have changed and the golden hour is no longer the mantra. But what has not changed is the need; it is identical. The road accidents, childbirth issues and diseases are the same, so what has changed? All that has changed is its decision to not go by the golden hour.

There was a consultation and one of the documents was signed by 30,000 people—30% of the population. It was treated by the trust as one entity. It did not like it at all and virtually disregarded it. I know about consultations; we did one for an inquiry here into bank closures. Every major bank that came to us said, “We’re consulting; don’t worry”. We never saw one bank that failed to close or was turned around as a result of any consultation, so I think that the definition in the dictionary ought to be slightly different.

Will the Government live up to what they should be responsible for: ensuring equal treatment and opportunities throughout our nation, regardless of whether the devolved system is in place and working? That says a great deal about levelling up in our nation, does it not?

My Lords, I owe a great deal to the personal kindness of the Brookeborough family over many years, including the current noble Viscount, his father and his grandfather. I am particularly glad to follow the noble Viscount, who has given such service to Northern Ireland, particularly when the security situation was at its most difficult. I listened with great enjoyment to his vigorous contribution to the debate.

I speak, as always, as an unwavering supporter of Northern Ireland’s role in our country, which is of such importance to us all. Exactly a century ago, a new unionist Prime Minister took office in Westminster. In May 1923, Andrew Bonar Law was forced to resign because of the cancer that was to kill him the following October; Stanley Baldwin was the new unionist premier. Bonar Law, the only British Prime Minister with an Ulster family background, had devoted himself to protecting the interests of the newly created Northern Ireland; Baldwin was no less diligent.

Bonar Law had ensured that Northern Ireland had the resources and support that it needed to defeat the murderous assault that the IRA mounted against it in 1922. Baldwin helped to safeguard Northern Ireland’s territorial integrity when an independent commission considered whether its boundaries should be revised.

Unionism is more important than Conservatism. I rather wish the party had retained the name that it used proudly a century ago, instead of elevating its Conservative element. As the Unionist Party, it would have retained at its very heart an absolutely overriding sense of responsibility for the varied interests of all parts of our union. I think it is unlikely that Mr Boris Johnson would have become leader of an organisation called the Unionist Party, since he cared nothing for the union, as he showed with his infamous betrayal of Northern Ireland four years ago—the immediate cause of the discontents and difficulties that have assailed our fellow country men and women in Northern Ireland ever since.

It is evident that the Government do not believe that the difficulties and discontents can be brought to an end simply through the restoration of the devolved Assembly and Executive—it will represent just the beginnings of their resolution. Acute financial problems, highlighted in the legislation before us today and mentioned so frequently in the debate, will have to be overcome if Northern Ireland is to have the fully functioning Executive to which reference is so often made—fully functioning in the sense that it works efficiently and successfully.

Speaking in the Second Reading debate on this Bill in the Commons, the Secretary of State for Northern Ireland said:

“Successive former Executives have failed to make the strategic decisions required to put the public finances on a sustainable basis”.—[Official Report, Commons, 10/7/23; col. 101.]

It is of course the duty of our national leaders to ensure that the public finances of Northern Ireland gain the stability that good government within the union requires. The task is formidable indeed.

Earlier this year, we were helped to understand why by the noble Baroness, Lady Foster, a personal friend from long ago when I was closely involved in an organisation called the Friends of the Union. Speaking on 7 February, the noble Baroness, Lady Foster, told us that

“no Sinn Féin Minister of Finance has ever succeeded in presenting a Budget which other parties could support … Finance Ministers have to look for support and consensus on the Budget that they bring forward. Every other coalition Finance Minister was able to achieve that, but no Sinn Féin Minister was able to”.—[Official Report, 7/2/23; col. 1183.]

Has Sinn Féin turned over a new leaf since then? Has it undertaken to observe the financial disciplines that are essential for good government? I sometimes think that in this House, we give insufficient attention to the stresses and strains that the involvement of Sinn Féin creates in the administration of Northern Ireland. It is not a conventional political party at all: it is part of a movement dedicated to achieving, by one means or another, the dismemberment of our union, our country. The successful administration of Northern Ireland’s public affairs is unlikely to hold much appeal to Sinn Féin: it is dedicated to the destruction of Northern Ireland.

Every unionist will always insist that Northern Ireland must enjoy all the benefits of being part of our union. I listened the other day to our Health Minister, my noble friend Lord Markham, who touched on the importance of change within the NHS. He said:

“Without a doubt, we have to make productivity improvements and look to technology, AI and all the things we can do to improve output”.—[Official Report, 12/9/23; col. 780.]

I thought to myself that Northern Ireland must have these things, too—in fact, there is no part of our country where they are needed more than in Northern Ireland, where the health service has suffered so seriously in recent years, as we heard from the noble Lord, Lord Alderdice, in his boisterous contribution, and from others. It is tragic to think that health and the other great public services immediately cease to have democratic oversight when devolution falters. Elsewhere in the union, these services form part of local government. In Northern Ireland alone, they have been merged with devolved institutions.

It is axiomatic among unionists that Northern Ireland should enjoy good relations with the Republic of Ireland, in the interests of both of them. But it is crucial, if good relations are to be maintained, that the union is given proper respect at all times by Irish politicians. That is surely incompatible with the suggestion made recently that the Irish Government should be given an enhanced role in the affairs of Northern Ireland, including consultation over its budget. Perhaps this extraordinary suggestion reflects Mr Varadkar’s belief that Ireland is on the path to unification. That republican delusion is nothing new, but its repetition at a time when great efforts are being made to restore the devolved institutions in Northern Ireland jeopardises the good relations which unionists want.

My Lords, things do not seem to have changed or moved since we debated my amendment to the Finance Bill in May. For reasons that I hope to explain, they have since deteriorated. In order to understand the implications of the Bill before us today, we need to have regard to two key co-ordinates. The first is the UK Government’s definition of need. This is provided by the Holtham formula—an adjustment to the Barnett formula—which the UK Government embraced between 2012 and 2016. It is important to remember that the purpose of adjusting the Barnett formula through the Holtham formula was not to make sure that each part of the United Kingdom received identical funding per head of the population, which is arbitrary and meaningless. Rather, it was to ensure that each part of the United Kingdom receives the funding per head that it needs, mindful of the challenges it faces in order that we all enjoy comparable public services.

This provision of comparable public services underpins the reality of our common community. We recognise that, to be part of a common community underpinned by a common citizenship, we must have the same effective rights, including in relation to public services. In this context, it is no more appropriate to suggest that all parts of the United Kingdom receive identical levels of funding, regardless of need, than it would be to say that some parts of the United Kingdom are worthy of better public services than others. The common body politic of our union cannot make these distinctions. The political community that we enjoy is predicated on a common citizenship wherein the equal value of all citizens is testified to by the provision of comparable public services.

In the words of the Holtham Commission, its purpose was to

“set out our proposal for aligning relative funding with relative needs in a way which we believe is workable, simple to operate and fair to all parts of the UK”.

Crucially, although it was commissioned by the Welsh Government, it was to generate not a Wales needs-based formula but a UK needs-based formula. We can all be grateful to the Welsh Government for performing an important task for every part of the United Kingdom.

The result has been a sophisticated formula that demonstrates that spending per head in Wales must be £115 for every £100 spent in England for there to be comparable service provision. Spending per head in Scotland must be £105 for every £100 spent in England for there to be comparable service provision. For there to be comparable service provision in Northern Ireland, spending per head must be £121 for every £100 spent in England. The UK Government formally adopted this definition of need in 2012. In that year, it indicated a willingness to intervene to align spending in Wales to the definition of the Holtham formula because the Barnett squeeze was such that it would inevitably happen.

In 2016, this commitment was brought into more direct effect through the agreement between the Welsh Government and the United Kingdom Government on the former’s fiscal framework. This consisted of two elements. First, a 5% budget uplift was applied for the purpose of slowing down the Barnett squeeze and thus the point in time when spending per head would reach need. Secondly, a Holtham floor was set at the level of need to ensure that, notwithstanding what the Barnett squeeze might otherwise have done, spend could not fall below need as defined by the Holtham formula. This has been in place ever since. Because spend in Wales has not fallen below need, it has benefited from millions of additional pounds of taxpayers’ money to slow down the Barnett squeeze. Consequently, the level of spend in Wales remains slightly above need.

Although the Holtham formula has not changed, it became necessary to recalculate the Northern Ireland definition of need using that formula because the Holtham calculations were made before the devolution of justice. Earlier this year, the Northern Ireland Fiscal Council used the Holtham formula to update the Northern Ireland figure so that it was fully cognisant of the breadth of current devolution. The outcome of this project was the publication on 2 May of a seminal Fiscal Council document demonstrating that the current Northern Ireland definition of need is £124. This is our first co-ordinate.

The second co-ordinate is the UK Government’s definition of spend for the current spending review period, set out in the Treasury’s block grant transparency document. When aspects of this document are updated, as in July this year, the basic definition of relative need between Wales, England, Scotland and Northern Ireland is calculated only by the block grant transparency document at the start of each spending review period.

This is because the task of coming up with fair, comparable figures, mindful of administrative and other difficulties within the UK, is resource-intensive. As such, the block grant transparency measure of spend provides the only robust comparable measure of spend across England, Wales, Scotland and Northern Ireland for the three-year spending review period. It is on this basis that decisions are made for the period about what needs to happen in Wales to ensure that its funding does not fall below the definition of need provided by the Holtham formula.

The Treasury defines relative spend between England, Wales, Scotland and Northern Ireland as relative funding per head averaged over the SR21 period 2022-23 to 2024-25. This is found in table 4C of Block Grant Transparency: December 2021. In dealing with the current spending review period of 2022 to 2025 in Wales, decisions protecting the Holtham floor definition of need and the 5% uplift are made for the spending review period on the basis of this block grant transparency average measure of relative spend for the three years—and not any other definition.

This does not mean that other figures will not emerge but, crucially, to be treated consistently and fairly, decisions about requisite interventions in Northern Ireland with respect to protecting spending to the Holtham definition of need—and an uplift in the event that our spend was still slightly above need—must be based on the definition of spend in Block Grant Transparency: December 2021. In Wales, the definition of spend in the document for the spending review period is £120, while in Northern Ireland it is £121. That means that in Wales, spending for the spending review period has been deemed to be £5 above need, so it has not been necessary to apply a spending floor at the Wales level of need of £115, but Wales benefits throughout from the provision of the 5% uplift, which slows down the Barnett squeeze and involves spending taxpayers’ money to keep spending in Wales above need.

By contrast, Northern Ireland’s situation has deteriorated such that we have missed out on uplift because spending has not fallen to need but to £3 below need. This is a hugely disruptive change, visited on us very suddenly since 1 April 2022. It means that, in this spending review period, in 2022-23 we were underfunded by £322 million. In this year, 2023-24, we are underfunded by £341 million and in 2024-25, we will be underfunded by £458 million. This injustice is greatly compounded by our being required to pay back £297 million across this and the next financial year.

When we confront the scale of the underfunding, the fact that Northern Ireland is currently in the midst of an acute funding crisis—and there is a need for funding cuts in the round—is no surprise at all. It is affecting all aspects of life, from SEN funding to childcare provision, which a recent report by the campaign group Melted Parents NI shows is more expensive in Northern Ireland than any other part of the United Kingdom.

I thank the Minister for bringing this budget to your Lordships’ House. I wish it would go to Stormont. Maybe one day things will dictate that it goes that way. Until then, this is the only way and the Government have a responsibility. When things crank up, the Government have to do some heavy lifting. They are refusing to do it at this time but I thank the Minister for this report today.

My Lords, I join others in thanking the Minister for bringing this forward. If I am critical of the Government, I hasten to add that it is nothing personal. To paraphrase “The Godfather”, “It was only business—tell Lord Caine that I like him”. Where I make criticisms of the Government, it is not to detract from the Minister’s contribution today. The level of disappointment here—irrespective of whether we have a devolved settlement—is to do with the inadequacy of funding provided for public sector services in Northern Ireland by this budget. As the previous speaker, my noble friend Lord Morrow, highlighted, this reinforces the position in 2022.

As anyone who has been involved with any government department will know, that department often has a wish list of things that it would like to do—desires, if you like. But this is not about desires for public service expenditure; this is about public service expenditure needs. Since the beginning of 2022, for possibly the first time—certainly since 2015, when the Holtham formula was largely adopted by the Government—we see a region of the United Kingdom funded below its objective needs. As highlighted by my noble friend Lord Morrow, the figures were produced by the Northern Ireland Fiscal Council, in addition to other bodies. It should be noted that the Northern Ireland Fiscal Council is a government body, not a think tank or a lobby group. It identified the shortfall last year as £322 million; this year it is £431 million. That is £0.75 billion over two years, exacerbated by the money that has had to be paid back over the past two years because of last year’s overspend, which would not have arisen in the first place had there been proper levels of funding.

That needs to be seriously addressed. In the long run there is a need to look at the Barnett formula in great detail. The Barnett consequential squeeze has meant that since 2019, on average, UK expenditure has gone up by about 6% per annum; in Northern Ireland it is 3.6%, with the result of where we are today. That indicates why there is a longer-term need to look at Barnett. As indicated, the Holtham formula can produce a solution, at least in the short term. It probably took about seven years of discussions between the Welsh Government and the UK Government to get adoption—I expect the noble Lord, Lord Murphy, will be more familiar with this—but when it was adopted it was meant to be a UK-wide formula so that it could be applied to Northern Ireland to provide a level of support.

I am the first to acknowledge that there is a need for reform in public sector provision, as there is throughout the United Kingdom. This is good because we should always be looking at how we can get the best value from our public services for the expenditure put in place. However, I add at least three caveats. First, any form of public sector reform often requires initial investment to produce savings. It is not something that will produce an instantaneous result. Secondly, in my experience, whatever the value of public sector reform, in and of itself it is not enough to fill the gap: we need additional expenditure. Specifically in Northern Ireland, do we believe that, even in a restored situation, Sinn Féin in particular, given its track record on public sector reform, will embrace it or even just tolerate it? In the past it has moved to block and veto any reform and we would be deluding ourselves if we think that will be an easy route.

As for the current budgets, the department with which I am most familiar is the Department of Education, where the permanent secretary has identified a shortfall of over £300 million on current activities. That needs to be contextualised because it is simply doing what it is already committed to. It does not take into account the fact that, for the last two or three years, we have not had an agreement between the teaching unions and the management side, so teachers’ pay in Northern Ireland is considerably less than in the rest of the United Kingdom. If there was an agreement tomorrow, there simply would not be the money to pay that level of uplift.

The fact is that we are unable to progress childcare. Again, the level of provision and entitlement for parents is the least of anywhere in the United Kingdom. More than 80% of the education budget goes directly in salaries to front-line workers. Much of the remainder falls under a situation in which parents have a statutory right to access various things as legal requirements. The headroom within the Department of Education to meet that shortfall is extremely limited.

That means that, like some of the cuts already made, any of the pressures in the Department of Education will have to be met by targeting the most vulnerable in our society. For example, the report A Fair Start identified that the interventions required to tackle educational underachievement, particularly among the economically disadvantaged, will not be able to progress in the way that they are meant to. It means that SEN pupils, particularly those identified, will not have the resources and support that they need. It means that, because some of the programmes designed to try to boost those who have issues around educational underachievement and the socially disadvantaged are not statutory, they are the first that any department will cut. That is the crisis we face in education.

I conclude by mentioning another subject that should have been a good news story from a financial point of view but has been handled in a deeply dismaying way. Earlier this week, we saw the announcement of a package of support, spanning a number of years, through the PEACE PLUS programme. This is designed to support Northern Ireland and the border counties in the Republic of Ireland. The source of more than 85% of its funding came from the British Government and I commend them for it. However, the presentation of the announcement by the Taoiseach, Leo Varadkar, made it look largely like this was an intervention by the Irish Government. I have to say that both his recent comments on a united Ireland and the overreach from the Irish Government on PEACE PLUS are deeply unhelpful. When the Minister is winding up, I would be grateful if he could address the situation with PEACE PLUS and the presentation of its funding sources.

I am grateful, as we are all, for the Minister’s presentation of this budget. We all recognise the need for it and agree to process it rapidly, because services in Northern Ireland depend on it. It is fair to say, however, that every speaker has identified that, in reality, it represents a shortfall.

As mentioned, there was a debate in the other House about how this almost looks like a punishment. The Secretary of State has denied that. We know, partly because of the financial mismanagement of government, that there is no money across the piece but, in this situation, why is Northern Ireland being squeezed harder than anywhere else, given the circumstances? Could the Minister explain why this is quite so tight, if it is not part of the pressure to get the Assembly back up and running?

The implications of this are, for example, that the other devolved bodies, Scotland and Wales, can negotiate pay agreements that do not appear possible in Northern Ireland, because the money is not there to fund them. This means that public sector workers in Northern Ireland will be disadvantaged relative to those in other parts of the United Kingdom if this settlement is not supplemented. Basic cash affordability needs to be addressed.

Looking at the summary of all the departments, with the exception of health and infrastructure, every single one is facing a cash cut. The real-terms cut across the piece averages 16%. The issue there is the expectation of problems for health and education. I am told that it means that no new school building programme will be followed. Although it is a very small department and the amount of money is small, the Authority for Utility Regulation is being cut by 40%, yet utility regulation is quite important. Could the Minister suggest why that is and what the implications are?

The contributions we have received have been interesting. The noble Baroness, Lady Ritchie, went through all these points in detail and made a very clear case for why the pressures in Northern Ireland need to be addressed and, of course, why we need an Assembly up and running.

It slightly took my breath away when the noble Lord, Lord Browne, opened his speech by saying that he wished this budget was being presented to the Northern Ireland Assembly. He implied that it was almost anybody’s fault that that was not happening other than the DUP’s. I am hopeful because every single DUP contribution has said that the DUP wants this to happen. That is, perhaps, an early indication that we are getting to the point where it might happen and this will never happen again. I can look cheerfully across and say that if that is the implication, I welcome it and look forward to hearing it because this cannot continue.

On a more serious point, the argument for why an agreement cannot happen is to do with the protocol and the Windsor Framework. I think the way it is put is that a foreign power makes rules binding on Northern Ireland, on which Northern Ireland has no say. We used to have a say, because we used to be part of that foreign power and we were able to make decisions and representations through elected representatives. The DUP campaigned to end that and these are the consequences.

It is worth noting that this week Apple has introduced its new iPhone. It will have a new connection—no longer a lightning connector but a USB-C connector, in conformity with the rules adopted by the European Union. Apple is an American company. Apple and the American Government have absolutely no say in the formulation of those rules, but Apple—the biggest company in the world—has had to conform to them. That is the reality when you trade; you negotiate terms but you also have to accept terms.

The problems that I acknowledge still exist within the Windsor Framework need to be addressed; we had a debate about that earlier this week. A very good committee report suggested how they might be addressed, but I suggest that they do not justify the continued dysfunction of the Assembly. There are issues that need to be addressed but I contend that they should be addressed from inside, not outside, if they are to be resolved.

The noble Viscount, Lord Brookeborough, basically said that the people of Northern Ireland are caught between the DUP and the Government. That is, I suppose, a practical fact. The challenge to the Minister—not the Minister here; to be fair, my challenge goes to other Ministers—concerns the initiatives that the Government are prepared to take to try to break the deadlock. They share some degree of blame for the impasse. It is not all the DUP’s fault; the Government have some responsibility for that and some responsibility for trying to resolve it. I think that was the point that the noble Viscount, Lord Brookeborough, wanted to make.

The noble Lord, Lord Morrow, gave us a very detailed exposé of the Holtham formula. Speaking from a Scottish perspective, the problem with that formula is that it represents—I know what he will say—a significant cut in the per capita allocation that Scotland currently enjoys. It is something that the SNP is unwilling to acknowledge but it is a fact. On the other hand, it probably genuinely addresses the need, as the noble Lord, Lord Weir, pointed out, not the desires. Northern Ireland needs more than it is being given just to stand still, never mind to catch up with the serious situation it faces. So I think we have to accept that we will pass this budget today—

My Lords, I appreciate the point that the noble Lord has made in relation to the Scottish situation, but one advantage of the Holtham formula is that it is meant to provide a floor rather than a ceiling. From that point of view, it would not obviate a level of cutting funding for Scotland but ensure that areas such as Wales and Northern Ireland do not fall below a minimum.

I accept that. It is a perfectly fair point. For a long time, Wales has argued that the Barnett formula has not worked well for it, and it has not worked for Northern Ireland. The issue has not been the Barnett formula but historic spending. I speak not as a nationalist but in terms of Scottish representation. Any suggestion that the formula should cut back in Scotland would be politically unacceptable and pretty disruptive. I accept that what it offers is a framework for Wales and Northern Ireland to get fairer allocation than has been the case. Again, that is a responsibility for the UK Government to address. The devolved Administrations can ask for it, but it is up to the UK Government to determine whether they will do anything about it. But it has real validity.

As I said, we will pass this budget, and it will provide the immediate funds that are necessary, but it will leave Northern Ireland in a powerless situation where all the issues affecting the United Kingdom are significantly worse in Northern Ireland across the whole spectrum—every aspect of the public service, whether waiting lists or the general problem across infrastructure. I therefore ask the Minister: at what point, assuming there is a point, will the Government recognise that this needs to be addressed? As I said at the beginning, if it is not a punishment, is there nevertheless a reward at some point that can be secured? There needs to be.

My final point is the obvious plea for the Assembly and the Executive to be re-established, because it is just not acceptable that the people of Northern Ireland’s elected representatives are not meeting to debate these issues, make these recommendations, draw up their own budgets and, yes, make collective representation to the UK Government if they feel the overall funding level is not adequate. We are all weary of saying to the DUP to get back to the table and get back in, but we must say to them that this cannot go on and, if it does for very much longer, then, as the noble Baroness, Lady Ritchie says, the demand for reform will come louder and louder. I suggest that such reform would not be entirely comfortable to members of the DUP. I am trying to make a rational appeal, as it is in the DUP’s real interest. They have a better chance of having their concerns—which I accept are legitimate from their perspective in many cases—addressed if they address the democratic deficit than by sitting and making the sort of speeches that they have made: “We all wish there was an Assembly, but there is not, and it is somebody else’s fault”. That is not good enough. The DUP have it in their hands to get it right. If they do, then they can start to negotiate with other parties and the Government to say, “This budget is not enough; Northern Ireland deserves better”, and, collectively, they will get it. I hope the Minister will acknowledge that, at some point or other, if that happens, there is space to negotiate.

My Lords, it has been said by nearly everybody who has taken part in this debate that we should not be having it and that this should be decided by the representatives of the people of Northern Ireland at Stormont. But we are where we are, so we clearly need to support the Government so that Northern Ireland can have some money. Without the Bill, its public services will not function. The debate today—this is a money Bill, so ultimately this is a matter for the Commons—is about whether in fact there is sufficient money and whether things would be different if there were a restored Executive.

On the first part, it is not as simple as saying that Northern Ireland is the same as everywhere else in the UK. It obviously and clearly is not. I was looking at English counties and which ones might be comparable to Northern Ireland in geography and population. One that I looked at was Hampshire, which has a population of just under 2 million people—the same as Northern Ireland. Hampshire County Council has doubtless grumbled and complained over the last number of years about the level of rate support grant that it gets from the Government, in the same way that Northern Ireland would complain that there simply has not been sufficient public funding for public services in the whole of the United Kingdom. There is a difference, however, between Hampshire and Northern Ireland. A lot of my time in the two years that was the Finance Minister for Northern Ireland was spent persuading my Treasury colleagues in particular that there was a difference, and that they had to make sure that the part of our country that had come out of 30 years of conflict was treated differently financially from anywhere else. Although it is a quarter of a century since the Good Friday agreement, the impact of those 30 years remains.

The other issue is that the basis for getting income in Northern Ireland is very different from Hampshire, in that Hampshire is much more prosperous than Northern Ireland. The level of resourcing—if you look at the different sorts of local taxation—does not actually bring in an awful lot of money in Northern Ireland. When we were discussing the strand 1 negotiations before the Good Friday agreement, I remember that we came to a day devoted to finance for Northern Ireland. We spent one hour on it, on the basis that there simply was not sufficient money for a special income tax, for example, to come from the people and the businesses of Northern Ireland. However, I am sure that that does not mean that we cannot look—or that the Assembly could not look in later years—at issues like water rates, which are paid everywhere else in the United Kingdom but not in Northern Ireland, although it will be argued that, in Northern Ireland, the rates form part of that. There are possibilities, but that is not the answer.

What is certain is that there is the combination of difficult financial circumstances in Northern Ireland and the fact that there is no Government. There is a county council in Hampshire which is elected and has to take the decisions; nothing is elected in Northern Ireland to take those sorts of decisions. They are not even really taken by direct rule Ministers. Although we are producing a budget here, we are not saying how to spend that budget. So, what do the Government do? We agreed with the Government on allowing civil servants to take decisions on budgets, but how far can they go? They cannot take decisions on policy, they cannot take decisions on programmes and they cannot take decisions on spending commitments. In other words, all they can do is oversee the ticking over of the budgets in departments.

That combination, where no meaningful decisions can be made on those issues, means that nearly every department in Northern Ireland is paralysed in terms of its spending. I will not go through it, because Members of your Lordships’ House have gone through, in detail, the effect on the health service, the education services, the police—particularly the result of the leak—and the criminal justice system and so on. They are all in serious trouble, because of not just a lack of funding but a lack of decision-making.

That combination is lethal, so how do we overcome it? There is one obvious way, but there are others too. The Treasury itself should be made to realise that Northern Ireland is different. The Treasury is not known for backing a long-term strategy and long-term issues. It is a very short-termist department—it always has been and I suspect always will be. It is therefore up to the Prime Minister and the other members of the Cabinet to persuade the Treasury that things are different in Northern Ireland.

That also applies to the point made by several speakers, including very effectively by the noble Lord, Lord Morrow, with regard to the Barnett formula. Yes, that formula was introduced by a Member of this House many years ago, but he disowned it eventually and indicated that an element of need had to be taken into account when exercising formulae for spending in Scotland, Wales and Northern Ireland. As has rightly been said, the Welsh Government looked very carefully at the issue with the Holtham commission and came up with a formula which means that the amount of money now going to Wales is based on proper need. I cannot see for one second why the Government cannot look at that formula in relation to Northern Ireland. Northern Ireland is obviously in great need, and those people who are most deprived in Northern Ireland are suffering most because of the absence of an Assembly and the absence of adequate funding.

The other perhaps small issue that could be looked at is that, apparently, every month in Northern Ireland the government departments issue communiqués about what they have done. It might be useful if they issued communiqués about what they cannot do: “We can’t do this, because there is no Assembly” or “We can’t do that, because there are no Ministers”. That might indicate how significant this is.

My final point is that this can be resolved only when you have a democratic system running government in Northern Ireland. We need the restoration of the Assembly and the Executive and the restoration of strand two on north-south issues—all those must be resolved ultimately and soon—for the issue of finance to be resolved. It is a huge issue. I am hoping that, in the next few months, the Minister can come to the Dispatch Box and tell us what is exactly is happening with those negotiations and that soon there will be a restored Assembly and Executive for all of the people of Northern Ireland.

My Lords, I am very grateful, as ever, to all noble Lords who have contributed to this important debate on the budget. In particular, I acknowledge the kind words of the noble Lord, Lord Weir of Ballyholme. To continue his “The Godfather” analogy, I set out the budget provisions today and made the DUP an offer that it certainly has refused.

At the outset, picking up on the words of the noble Lord, Lord Murphy of Torfaen—for whom, as I have said many times, I have a huge respect—and the noble Lord, Lord Bruce of Bennachie, and others who have spoken about the restoration of the Stormont institutions, there is nothing I would like more than to stand at this Dispatch Box and announce the restoration of the institutions and a fully functioning Executive and Assembly. I am a firm supporter of the 1998 agreement, as are His Majesty’s Government. As I said at the outset, we are working tirelessly to try to bring about that situation. I am not in a position, as noble Lords will understand, to give a commentary on progress. My right honourable friend said earlier in the week that some significant progress has been made. Noble Lords behind me have pointed out the issues around the Windsor Framework that still need to be resolved before they feel confident to go back into an Executive. Just to be clear, His Majesty’s Government never felt that they were justified in pulling out of the institutions in the first place—and before any of them stand up, my comments would apply equally to the actions of Sinn Féin between 2017 and 2020. We believe the right place for the Northern Ireland parties is within the Executive running local services for the benefit of the people of Northern Ireland.

My right honourable friend has made some progress. In response to the comments of the noble Baroness, Lady Ritchie of Downpatrick, I can assure her that we are not talking to just one political party in Northern Ireland. Shortly before the Summer Recess, I spent a day with all five major parties in Northern Ireland, and my right honourable friend is in discussions with all of them constantly and will continue to be so. However, she will understand that one party is having difficulty going back into the institutions, and therefore it is right that we seek to look at and address its concerns.

I will not go into the details on the Windsor Framework, as many noble Lords here were present for the very long debate held in Grand Committee on Monday, where my noble friend Lord Ahmad of Wimbledon set out extensively and clearly the Government’s position. To reiterate briefly, we believe that the Windsor Framework provides the basis for the restoration of the institutions, but we will continue to work through these issues with the hope of an early resolution.

In the absence of that, a number of noble Lords raised the role of the United Kingdom Government, including the noble Lords, Lord Alderdice and Lord Bruce of Bennachie, and the noble Viscount, Lord Brookeborough. As the noble Lord, Lord Murphy, pointed out, we have given powers to civil servants to take certain decisions in the public interest in Northern Ireland essentially to keep public services moving. As I said when I introduced the legislation—the Northern Ireland (Executive Formation etc) Act and the Northern Ireland (Interim Arrangements) Act—this is not intended for the long term. These are not sustainable measures for the government of Northern Ireland. The priority has to be to get the institutions back. In the event that that is not possible, we will obviously have to look at what further interventions might need to take place from the United Kingdom Government consistent with our position as the sovereign Government within Northern Ireland. So we do not rule that out, but our priority has to be to work to get the institutions up and running.

A number of noble Lords referred to the allocation of funding in the budget. I am the first to acknowledge to your Lordships that this is a difficult situation and a difficult budget, as noble Lords have pointed out. Unfortunately, it is a reflection of the reality in which we find ourselves, or which the Government found themselves in in October last year when Northern Ireland Ministers vacated their departments under the rules. They left office, and we had to start working with the Northern Ireland Civil Service on the figures and initially uncovered a £660 million black hole in the finances. So we have been working very closely and in tandem with the Northern Ireland Civil Service in order to address that situation. I am the first to admit that it is challenging, and I pay tribute to the head of the Northern Ireland Civil Service and the heads of the Northern Ireland departments for the work that they have done with my officials in the Northern Ireland Office to try to establish a basis for putting Northern Ireland’s finances on a sustainable and longer-term footing.

A number of noble Lords referred to individual departments and programmes within individual departments. I am happy to write to noble Lords on that. I do not intend to go into the details of each programme, not least because of time but also because, while the Government have set out the allocations within the budget, within each department it is then for the Permanent Secretaries and officials, absent of political direction from Ministers, to determine the individual allocations internally. The Government have, under the current legislation, no powers to direct or control civil servants within departments on the spending of money and the allocations for individual programmes. However, I will just pick up briefly on the points made by the noble Viscount, Lord Brookeborough, who made a very good and powerful pitch for his local hospital in Fermanagh. I am aware of the difficulties, of course, but it is for the Department of Health to allocate funding from its budget of £7.3 billion. We have no powers to direct it, but I acknowledge that he makes a very powerful case.

What I would challenge is the assertion made by a number of noble Lords on the DUP and Opposition Benches that Northern Ireland has suffered from chronic underfunding over a number of years. I remind the House that public spending per capita in Northern Ireland is some 20% higher than the UK average. The settlement in the 2021 spending review was the most generous since the restoration of devolution in 1998-99.

There have been numerous occasions, to which I can testify, when—to follow the noble Lord, Lord Murphy of Torfaen—the Treasury has recognised the exceptional circumstances of Northern Ireland. In the 2014 Stormont House agreement, with which I was involved, there was an additional £2 billion of extra spending power for the Northern Ireland Executive. There was an extra half a billion in the fresh start agreement in 2015, an extra £1 billion in the confidence and supply agreement, and more money—I think over £2 billion—in New Decade, New Approach. The Government have recognised the unique circumstances of Northern Ireland and I reject the assertion that it has somehow been starved of cash since 2010.

However, I listened with interest, as always, to the noble Lords on the DUP Benches—echoed, to some extent, by the noble Lord, Lord Murphy—about the reform of the Barnett funding formula. Following our last budget debate some months ago, the noble Lord, Lord Morrow, and his colleague the noble Lord, Lord McCrea of Magherafelt and Cookstown, came to see me. We are, as a Government, open to sensible suggestions and discussions around funding. However, I would point out, as noble Lords have, that in respect of the funding reforms in Wales following the Holtham commission, that was a conversation between the United Kingdom Government and the Welsh Government—not a conversation between the UK Government and just one party in Northern Ireland.

These matters are, as has been acknowledged, principally for His Majesty’s Treasury. They would normally take place from Government to devolved Administration. As other noble Lords have pointed out, the negotiations over the Holtham commission took some seven years to resolve. Even if there were a case for reform, and that reform were agreed, it would not necessarily be an overnight fix for the problems or issues we are dealing with in the budget today.

The noble Baroness, Lady Ritchie of Downpatrick, and the noble Lord, Lord Murphy of Torfaen, referred to revenue raising. I point out that it was his noble friend Lord Hain who was the first, I think, to put water charges on the table back in 2006-7, before the restoration of the Executive in 2007 following the St Andrews agreement. The position is that the Government have taken the power and directed the Northern Ireland departments to look at revenue raising or potential revenue raising measures. Those departments reported to the Government some weeks ago. We are now looking, in the absence of an Executive, at directing the departments to consult on some of the options they have presented to us. However, we are not in a position to implement any of those recommendations; we do not have the powers. The purpose of the exercise is to present a range of options for an incoming Executive to examine once devolution has been restored. It is clear that, if the Northern Ireland budget is to be put on a sustainable footing, there will have to be a combination—obviously—of difficult spending decisions and some revenue raising.

I am conscious of time. I listened, as always, with enormous interest and respect to my mentor on many of these matters, my noble friend Lord Lexden, who reminded me of the role of two heroes of mine: Bonar Law and Stanley Baldwin in the 1920s in respect of Northern Ireland. I am tempted to add a third great unionist Prime Minister, Sir James Craig, who was instrumental in the 1920s and 1930s in establishing the funding settlement for Northern Ireland, which has lasted many decades. My noble friend said he regrets the fact that the word “unionist” is no longer used in my party’s name as much as it was. I can assure him that I have always made it clear that I regard the term “unionist” as being as important, if not more so, in our party’s name as “Conservative”—but that is probably a personal view.

My noble friend and the noble Lord, Lord Weir of Ballyholme, raised the role of the Irish Government. I assure both of them that, of course, matters regarding the budget are entirely strand 1 issues and internal Northern Ireland and United Kingdom matters. Of course we discuss many issues with the Irish Government, but, in the absence of an Executive looking at the budget, it remains that decisions over the budget are entirely for the United Kingdom Government. There is no formal role for the Irish in that, and rightly so.

My noble friend also referred to the words of the Taoiseach earlier this week in respect of a united Ireland. I echo my right honourable friend the Secretary of State’s comments that they were not necessarily the most helpful in the current context. Noble Lords will know that the constitutional position of Northern Ireland is clearly set out in the Belfast agreement, based on the principle of consent. There is no indication whatever that there is anything but a substantial majority for the union and Northern Ireland’s continuing position within it, and I warmly welcome that. This Government’s view is clear: there is no inevitability about a united Ireland, nor is it desirable. The best future for Northern Ireland is within a strong and stable United Kingdom.

I have tried to answer as many points as possible, and I have probably been speaking for slightly longer than I anticipated. If there are any other issues, I am of course happy to take them up outside the Chamber in meetings and correspondence with noble Lords.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.