Secretary of State's speech - NI Budget (No. 2) Bill Second Reading

The Secretary of State made an opening speech in the House of Commons when the Northern Ireland Budget (No.2) Bill was read a second time

The Rt Hon Chris Heaton-Harris MP

Mr Deputy Speaker, I beg to move that the Bill be now read a second time.

And in doing so, I once again speak with a strong sense of disappointment. At multiple junctures since I became Secretary of State last year, I have stood at this Despatch Box when realistically I should not be doing so. That sentiment very much applies again today.

That’s because I believe these decisions should be being taken by locally elected politicians. The Government has brought forward this Bill because the Northern Ireland parties have been unable to form an Executive and subsequently set a budget for this financial year.

The Government has therefore been compelled to again step in and set another budget for Northern Ireland. I set out the headline departmental budget allocations via Written Ministerial Statement to Parliament on 27 April this year, and this Bill puts those allocations on a statutory footing.

We have also published more detailed information in respect of each of the Northern Ireland Departments’ spending plans through the Main Estimates, which I laid as a Command Paper on 3 July.

Today’s debate is only the second reading of this legislation, with the remaining stages due to take place after the summer recess. The summer therefore presents an opportunity for the Northern Ireland parties to come together as a restored Executive and take their own Budget legislation through the Northern Ireland Assembly, making the remaining stages of the Bill in this place superfluous.

It is no secret that the pressures on Northern Ireland’s public finances are acute. As with the 2022-2023 Budget, setting this Budget was not an easy task. But it was necessary to deliver a balanced budget and provide the Northern Ireland departments with the budget clarity to help get their spending under control.

As far as possible we have aimed to protect front line public services. And in recognition of the pressure on the health service, over half of the total budget is to be spent on health.

Of course, these pressures on Northern Ireland’s finances did not appear overnight. Successive former Executives have failed to make the strategic decisions required to put finances on a sustainable footing and make public services affordable. The unsustainability of Northern Ireland’s finances cannot continue.

It is the fundamental responsibility of the Northern Ireland Executive to run a balanced budget, and until it does, the outcomes for citizens will not improve. That’s why the Government stands ready to work with a restored Executive on budget sustainability including the implementation of revenue raising measures.

In the meantime, we have a responsibility to ensure public services and management of public funds can continue in the future.

And that’s why I have commissioned a range of information and advice from the Northern Ireland Civil Service on potential measures to raise more public revenue, or otherwise improve the sustainability of public finances in Northern Ireland, for an incoming Executive to consider.

This is the first step for the UK Government to support the development of  revenue raising measures in Northern Ireland. It means we can better understand the challenges of taking this work forward, and support the Northern Ireland Civil Service in delivering them.

The Government has, for many years, recognised the unique challenges that Northern Ireland faces. We have provided around £7 billion in extra funding to Northern Ireland since 2014 on top of the Barnett-based block grant.

I am, Mr Deputy Speaker, grateful to officials in the Northern Ireland Civil Service for keeping public services running until an Executive is in place.

The Government will continue to support the Northern Ireland Civil Service where it can but it’s important to note that the difficult spending decisions flowing from this Budget will ultimately continue to rest with the Northern Ireland departments in the absence of an Executive. Now, I don’t want this to happen and I encourage the people of Northern Ireland to urge their locally elected politicians to return to Stormont so that the decisions being taken are taken by those democratically elected to do so by them.

As I said, the difficulties that Northern Ireland departments now face are as a result of tough decisions not being taken by elected representatives in Northern Ireland - not just this year but in successive years previously as before that.

Funding alone will not solve these issues. They need strong and responsible leadership to be shown by, backed by a stable devolved government. We need the Executive back so that they can progress much needed and long promised public service transformation.

Like others, I welcome the parties’ ongoing discussions with the Head of the Northern Ireland Civil Service, and I know that there’s been a great deal of work going on behind the scenes about what the plan for government and a budget for government look like to address the critical issues when the Executive came back. The issues of budget sustainability and better, more efficient public services that should be everyone’s priority.

However, the Head of the Northern Ireland Civil Service has written to me to say that things now need to become more political. And in a way, I agree. But to do this needs all parties to confront the hard choices that they face, and ensure stability rather than regular political crisis in the future. We must restore confidence in the institutions, and show the people of Northern Ireland, and the world, what good devolved government looks like.

I therefore look forward to speaking with all the party representatives in the coming weeks and receiving their proposals for the Budget and a Programme for Government.

I know each of the political parties will require a little time to do that, but I do want to acknowledge that I’ve received proposals put forward by the Alliance Party when it comes to the budget, and I welcome similar engagement from all the other parties.

But returning to the Budget at hand, Mr Deputy Speaker, I will briefly summarise the overall intention of this Bill.

Before I do, though, I should actually express my sincere thanks to the benches opposite for their continued cooperation as the Government seeks to bring this Bill forward at the requisite pace.

I am particularly grateful to the Shadow Northern Ireland Secretary, the Honourable Member for Hove, for his constructive manner as always in which he and others on his Opposition frontbench approach this Bill, as well as my Honourable Friend the Chair of the Select Committee for both his and his Committee’s interest in this Bill.

The Bill itself, then, will place the budget allocations which I outlined to the House via Written Statement on 27 April of this year onto a legal footing.

Mr Deputy Speaker, I am conscious the hour is already relatively late and lots of Honourable and Right Honourable Members want to come in. I therefore do not propose to repeat the contents of that Written Ministerial Statement, which sets out the respective departmental allocations reflected in this Bill.

What I will say is that those budget allocations, as with the 2022-23 Northern Ireland Budget, they were developed through as a result of extensive and sustained engagement with the Northern Ireland Civil Service.

The Bill will mean Northern Ireland departments have a total resource budget available of £14.2 billion and capital budget of £2.2 billion - this includes the Northern Ireland Executive block grant set at the 2021 Spending Review and through the subsequent operation of the Barnett formula, and the income from regional rates.

I emphasise, and I will state a number of times I do not doubt in this debate and elsewhere, that the sum available for this Budget would have been the same provided to an Executive for 2023-2024 if it were in place.

I recognise that the Northern Ireland departments, in the absence of having elected Ministers, will face difficult decisions but it’s necessary to deliver a balanced budget. These decisions rest with the Northern Ireland Civil Service but I will continue to work with them to protect frontline services in Northern Ireland.

The UK Government inherited, when we took over responsibility, an overspend in 2022-2023, and a reserve claim of £297 million was provided to balance last year’s Budget.

Now actually, despite projections of an overspend throughout that year and the UK agreement to this reserve claim, the final budget figures from 2022-2023 show a slight underspend on that of £40 million, so it came in at £257 million.

I know these are still big sums of money that will cause great concern with the budgetary issues in Northern Ireland, but it does demonstrate how actually monitoring spending does bring out amazing behaviours in budgetary purposes. And I’d like to think, working together, we can work in this space in the future. However, the one thing I do know and it’s been demonstrated time and time again, is that work would be better done by a locally elected Executive with ministers accountable to the people that elected them.

With agreement from the Chief Secretary to the Treasury, flexibility has been granted on the repayment of this reserve claim which moves this repayment into the next financial year, not this one.

So before I conclude, Mr Deputy Speaker, I will just run through the Bill clause by clause.

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 for the purposes specified in Part 2 of Schedule 1 and subject to the limits set out in subsections (4) to (7) of clause 2.

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 purposes set out in Part 2 of the Schedule 1.

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, for the purposes specified in part 2 of the Schedule 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 which 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 short title.

Finally, Mr Deputy Speaker, the Schedule to the Bill sets out, for each Northern Ireland Department, 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.

Before I sit down Mr Deputy Speaker, I want to express my very sincere thanks to the ongoing hard work of the Civil Servants in Northern Ireland.

With this Bill, I am only setting out the available total resource and capital budget for the Northern Ireland departments of £14.2 billion and £2.2 billion respectively.

I want to make it clear that in 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 an easy task and does require difficult decisions.

But people in Northern Ireland, I know, rightly expect to see those decisions taken in Stormont. I wholeheartedly agree with them.

However, until a functioning Executive returns, this Bill will allow public services to continue functioning and help to protect the public finances in Northern Ireland. I therefore commend it to the House.

Northern Ireland Office
The Rt Hon Chris Heaton-Harris MP