Northern Ireland (Interim Arrangements) Bill - Second Reading

Part of the debate – in the House of Lords at 11:58 am on 18 May 2023.

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Photo of Lord Morrow Lord Morrow DUP 11:58, 18 May 2023

My Lords, we certainly agree with the Minister when he says that it is regrettable that the Northern Ireland Assembly is not up and operating—but we all know perfectly well why. My party gave much notice—in fact, I think that we gave 13 months’ notice—in this House and elsewhere that the Northern Ireland Assembly and Executive were on life support. Now the whole thing has collapsed due to these red lanes, green lanes and border controls. We are no longer strictly a part of the United Kingdom in the same sense as Scotland and Wales.

But the main point I want to make today pertains to Clause 2 in relation to advice and information on options for raising public revenue. The Government are right to be alive to the fact that Northern Ireland needs more public revenue, but the implication of this is that the way forward is through local means. That, however, is to distract attention from the key point at issue. On 2 May, the Northern Ireland Fiscal Council published a report that uses the Holtham formula to calculate what needs to be spent in Northern Ireland in order for needs to be met on the same basis as they are in England. Crucially, the Holtham formula for defining need per head of population is not a random assertion but the result of a government commission that the UK Government have already accepted for Wales, Scotland and Northern Ireland.

Using the formula, the Fiscal Council demonstrated that in order for needs to be met in Northern Ireland on the same basis as England, Northern Ireland needs to receive £124 per head. Crucially, however, the Treasury block grant transparency document shows that spending per head in Northern Ireland for the spending review period of 2022 to 2025 is £121 per head. It is, therefore, no surprise that Northern Ireland is currently in the midst of a very serious funding crisis, with Stormont departments having to make cuts right, left and centre. Today, Northern Ireland is the only part of the UK to be in receipt of below-needs block grant funding. Northern Ireland thus finds itself in a similar position to Wales in 2009-10, but, rather than just being £1 below need for one year, Northern Ireland is £3 below, and not just for this financial year but for the last financial year and for the next financial year.

If we extrapolate for the three-year funding review period, the Fiscal Council report demonstrates that we are currently underfunded to the tune of just over £1.2 billion. The critical point in all this is that after Wales went below need for funding in 2009-10, the UK Government responded in a way that established three critical precedents. First, they accepted the Holtham formula as a definition of need. Secondly, they introduced a 5% transitional needs adjustment for Wales, whose purpose it is to slow down the Barnett squeeze up until reaching the Holtham formula definition of need. This applies when funding per head has not fallen below need. Thirdly, it introduced a Barnett floor for Wales on the basis of the Holtham formula definition of need to introduce a complete needs adjustment at the point where funding per head reaches need and threatens to go below.

In making that arrangement, the UK Government have agreed that it would be wrong for funding per head ever to fall below need, and made provision to prevent this ever happening again. The Government are now duty bound to afford the people of Northern Ireland the same courtesy. As we have already fallen below need, this should result in a full needs adjustment backdated to the beginning of the spending review period. In recent weeks, the Government have sought to press the DUP back into government in various ways. I ask that they reflect very carefully about the implications of trying to use the current funding crisis as a means of doing so. The reason we had to withdraw from Stormont is that we were not prepared to settle for, and thus effectively cement in, a second-class citizenship in which we no longer have the right to stand for election to make the laws to which we are subject and in which we are forced to be presented to the rest of our home economy as if we are a foreign country. I do not think it would reflect well on the Government to do that and I do not think it would be wise.

Finally, in the normal sense of events there would be an opportunity to ask the Minister for a meeting between Committee and Report to discuss the need for a comparable Barnett floor provision for Northern Ireland to that which exists in Wales. However, there will be no time between Committee and Report, as all remaining stages are to be taken on one day, so I will take this opportunity of asking for such a meeting to discuss this ahead of the remaining stages.