As noble Lords will know, it is now nine months since there has been a properly functioning Executive and Assembly in Northern Ireland. Yet despite this Government’s efforts over the last 11 weeks, the parties have not yet reached an agreement that would enable a sustainable Executive to form. In bringing the
parties together for this most recent phase of the political talks, we have sought to help the DUP and Sinn Fein to bridge the gap on a small number of outstanding matters, including language and culture. In doing so, we have worked closely with the Irish Government in accordance with the well-established three-stranded approach. We remain prepared to bring forward legislation that would allow an Executive to be formed should the parties reach an agreement.
I share my right honourable friend the Secretary of State’s strong preference to see a restored Executive in Northern Ireland taking forward its own Budget. The Bill before us is one that we are taking forward with the utmost reluctance and only because there is no other choice available. We have been clear that the passage of legislation to set a Budget should not be a barrier to negotiations continuing, but the ongoing lack of agreement has had tangible consequences for people and public services in Northern Ireland. Without an Executive there has been no Budget, and without a Budget civil servants have been without political direction to take decisions on spending and public services in Northern Ireland.
I join the Secretary of State in paying tribute to the Northern Ireland Civil Service, which has demonstrated the utmost professionalism in protecting and preserving public services throughout these difficult times, but the powers it has been exercising have their limits. Under Section 59 of the Northern Ireland Act 1998, and Section 7 of the Government Resources and Accounts (Northern Ireland) Act 2001, they may issue cash and resources equal to only 95% of the totals authorised in the last financial year. These powers do not allow departments to use accruing resources, meaning that the resources available to departments are in reality significantly less than 95% of the previous year’s provision.
Noble Lords will recall that in Written Statements by my predecessors, the noble Lords, Lord Dunlop and Lord Bourne of Aberystwyth, in April and July, the Government set out an indicative Budget position and a set of departmental allocations based on the advice of the Northern Ireland Civil Service. The 19 July Statement said:
“The exercise of S59 powers cannot be sustained indefinitely”,
and warned that although we had not then reached that critical point, it was approaching. Those resource limits, in the absence of a Budget, are now fast approaching. Without further action there are manifest risks that the Northern Ireland Civil Service would simply begin to run out of resources by the end of this month. That would mean no funding available for public services, with all of the negative impacts that would accompany such a cliff edge. No Government could simply stand by and allow that to happen. That is why we need the Bill.
To be clear, this is a measure we have deferred for as long as possible. We wanted to see the parties reach an agreement and take a Budget through themselves. In the absence of agreement, the Bill is necessary to keep public services running in Northern Ireland and, while it is a government Bill, it is not a UK government Budget. It does not reflect the priorities or spending decisions of the Secretary of State for Northern Ireland
or any other UK government Minister. Rather, it sets out the departmental allocations and ambits that have been recommended by the Northern Ireland Civil Service, which, in turn, has sought as far as is possible to reflect the priorities of the previous Executive, albeit updated to reflect the changed circumstances as far as has been required. In short, it is the Budget that a returning Executive—had one been formed—would have been presented with. Taken as a whole, it represents a necessary measure, taken at the latest possible point, to secure public finances in Northern Ireland.
We should be absolutely clear that passing this Budget in Westminster does not mean a move to direct rule, any more than did this Parliament legislating to set a regional rate in April. Once the Budget is passed, the detailed decisions on how it is spent will be made by the Northern Ireland Civil Service. If the parties come together to form an Executive in the weeks ahead—as I am sure all noble Lords hope will be the case—those decisions would fall to them. Nothing we are doing today precludes talks from continuing and an agreement being reached.
I now turn briefly to the contents of this short but rather technical Bill. In short, it authorises Northern Ireland departments and certain other bodies to incur expenditure and use resources for the financial year ending on 31 March 2018. Clause 1 authorises the issue of £16.17 billion out of the Northern Ireland Consolidated Fund. The allocation levels for each Northern Ireland department and the other bodies in receipt of these funds are set out in Schedule 1, which also states the purposes for which these funds are to be used.
Clause 2 permits some temporary borrowing powers for cash management purposes. Clause 3 authorises the use of resources amounting to £18 billion in the year ending 31 March 2018 by the Northern Ireland departments and other bodies listed in Clause 3(2). These figures and those in Clause 1 supersede the allocations of cash and resources made by the Permanent Secretary of the Department of Finance up to the end of this month, under the powers I have already mentioned. Similarly to Clause 1, the breakdown between these departments and bodies and the purposes for the authorised use of resources under Clause 3 are set out in the Bill, in the first two columns of Schedule 2.
Clause 4 sets limits on the accruing resources, including both operating and non-operating accruing resources, in the current financial year. These sums relate to those which have already been voted by Parliament via Main Estimates, together with revenue generated locally within Northern Ireland. There is no new money in the Bill: there is simply the explicit authority to spend in full the monies that have already been allocated.
Ordinarily, the Bill would have been taken through the Assembly. As such, in Clause 5, a series of adaptations ensure that—once approved by both Houses in Westminster—the Bill will be treated as such, enabling Northern Ireland public finances to continue to function notwithstanding the absence of an Executive. Clause 6 repeals previous Assembly Budget Acts, relating to the financial years 2013-14 and 2014-15 respectively, which are no longer operative. Such repeals are regularly included in Assembly Budget Bills.
Alongside the introduction of the Bill in the other place yesterday, a set of estimates for the departments and bodies covered by the Budget Bill was laid before the House as a Command Paper. These estimates, which have been prepared by the Northern Ireland Department of Finance, set out the breakdown of the resource allocation in greater detail. As noble Lords may note, this is a different process from that which we might ordinarily see for estimates at Westminster, where the estimates document precedes the formal Budget legislation and is separately approved. That would also be the case at the Assembly. But in these unusual circumstances, the Bill provides that the laying of the Command Paper takes the place of an estimates document laid and approved before the Assembly, again to enable public finances to flow smoothly.
To aid the understanding of these Main Estimates and how the spending will break down, the Northern Ireland Civil Service has published a Budget briefing paper, which was published on the Department of Finance website on Monday morning. It is important to note that the Northern Ireland political parties have also been briefed on this Budget position.
As those clauses demonstrate, this is clearly an unusual Bill to be taken through the UK Parliament, marking as it does an approval by Parliament of spending in the devolved sphere. While being proportionate, the UK Government want to ensure that in the absence of an Assembly there can be appropriate scrutiny by Parliament of how the money it has voted is subsequently spent. In addition to the provision in the Bill for scrutiny by the Northern Ireland Audit Office of the Northern Ireland departments, my right honourable friend the Secretary of State will be writing to the Comptroller and Auditor-General for Northern Ireland asking for a copy of each of the NIAO audit and value for money reports produced after the Bill gains Royal Assent, which will contain the Comptroller and Auditor-General’s view on any shortcomings and his recommendations for improvement. The Secretary of State will ask the Northern Ireland Civil Service to make its responses to those reports available to him. Copies of these reports and correspondence will be placed in the Libraries of both Houses to allow scrutiny by all interested Members and committees.
I have already noted that the Bill deals solely with moneys already voted for by Parliament or raised within Northern Ireland. Those figures do not, though, secure the financial picture for the long term, where real challenges remain. There is a health service in significant need of transformation; there are further steps to take to build the truly connected infrastructure that can boost growth and prosperity throughout Northern Ireland; and there is a need to continue to deal with the legacy of the past. It was in recognition of those unique circumstances that the UK Government were prepared to make additional financial support available earlier this year, following the confidence and supply agreement between the Conservative Party and the DUP. That agreement made it clear that we wanted to see that money made available to a restored Executive, which would decide on a cross-community basis how best to use the funding for the benefit of all in Northern Ireland.
Northern Ireland’s unique circumstances cannot simply be ignored in the meantime, especially given the pressures that we have seen in the continued absence of an Executive. So in addition to the Bill, this Government will commit to making available the £50 million in the agreement for addressing immediate health and education pressures in this financial year. Those sums are not contained in the Bill, because they have not yet been voted by Parliament. If the Northern Ireland Administration confirm their wish to access them, they will be subject to the full authorisation of the UK Parliament, as with all sums discharged from the UK Consolidated Fund, via the estimates process in the new year. From there they will be transferred, along with other sums forming part of the Northern Ireland block grant, into the Northern Ireland Consolidated Fund.
In the absence of an Executive, it would be for the Northern Ireland Civil Service, which is bound by a range of equality and propriety duties, to make the decisions as to whether and how to take account of this funding for the benefit of the whole community. We want to see a restored Executive back in place and deciding on how the additional financial support can best be used for the benefit—I stress again—of the whole community. That remains the case now, as much as it ever was. We believe in devolution. We want to see locally elected politicians taking the strategic decisions about the future direction of their local areas.
In this context, I know the disappointment so many feel that despite the election more than eight months ago, there remains no functioning Assembly in which all those elected may serve. The Government understand the concerns that many have that full salaries continue to be paid to Assembly Members, despite this impasse, but we also recognise that many of those elected have been desperate to serve since March and have continued to provide valuable constituency functions in the meantime. That is why my right honourable friend the Secretary of State told the House of Commons yesterday that he is seeking independent advice on the subject from Mr Trevor Reaney, a former Clerk of the Northern Ireland Assembly. Mr Reaney has agreed to provide an independent assessment of the case for action and the steps he would consider appropriate. He will report to the Secretary of State by 15 December and his advice will help inform the best way to proceed.
I very much hope that his work will not be needed. That is because I still hope that the parties can resolve their differences and an Executive can be formed—an Executive that will come together and take the strategic decisions needed on health transformation, educational reform and building world-class infrastructure to deliver a better future in Northern Ireland. That is what the people of Northern Ireland voted for and want to see. We will continue to work with the parties and support them in their efforts to reach a resolution for, together with the Irish Government, we remain steadfast in our commitment to the 1998 Belfast agreement and its successors, and to the institutions they established.
It remains firmly in the interests of Northern Ireland to see devolved government restored and locally elected politicians making decisions for the people of Northern Ireland on key local matters. Northern Ireland and its people need a properly functioning and inclusive
devolved Government, along with effective structures for co-operation—north-south and east-west. At the same time, the Government are ultimately responsible for good governance in Northern Ireland and we will do whatever is necessary to provide that. The Bill is a reminder of the underlying obligation that we will continue to uphold and I beg to move that it be read a second time.
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