I beg to move

That this Assembly expresses its grave concern at the significant budgetary pressures facing the Executive; recognises the severe impact of these pressures on the delivery of, and investment in, public services, including policing and justice, health and social care, education, housing, infrastructure and our environment; notes that these pressures have arisen as a result of a failed policy of austerity at Westminster, financial mismanagement by the previous UK Government and underfunding of Northern Ireland below its level of relative need; agrees that, while the interim fiscal framework agreed with the UK Government was an important first step, the proposed 124% relative need factor does not adequately reflect policing and justice need in Northern Ireland and the disproportionate squeeze on the Justice budget; believes that a baselined fiscal floor set at a level greater than 124% should be delivered without further delay; calls on the Minister of Finance to publish the Executive sustainability plan, including steps to tackle the cost of Division in society, which leaves the Executive with hundreds of millions of pounds less to invest in public services each year; and further calls on the UK Government to depart from their austerity policy by reviewing the fiscal rules and pursuing a progressive taxation system.

The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer of the motion will have 10 minutes to propose and 10 minutes to make a winding-up speech. As two amendments have been selected and published on the Marshalled List, the Business Committee has agreed that 30 minutes will be added to the total time for the debate.

Eóin, please open the debate on the motion.

Thank you, Principal Deputy Speaker.

Alliance has consistently warned that the Executive have inherited the worst set of financial circumstances in the history of devolution. Prolonged Westminster austerity, the economic damage of Brexit, a global pandemic, war in Ukraine and the cost-of-living crisis have each taken enormous tolls on the economy, our public finances and the people whom we are all here to represent. That squeeze has been felt across the devolved Administrations. Just last week, the Scottish Government announced emergency saving measures amounting to £500 million in order to balance their Budget mid-year. Here in Northern Ireland, that pain has been compounded even further by a funding formula that has not kept pace with need and a cycle of stop-start government at the behest of the two largest parties, which has done untold damage to our public services.

The starting point for the debate has to be honesty about the enormity of the challenge that we face. We have some of the worst hospital waiting lists anywhere in western Europe; an under-resourced and overstretched Police Service; creaking waste water infrastructure that is polluting our rivers and Lough Neagh; young people being locked out of housing, and too many parents being forced out of work by crippling childcare costs. However, we cannot simply stop there. Alliance comes to the Chamber not to simply bemoan the problem or decry the challenges that we face but to offer solutions and a credible path forward. Yesterday, the Executive set out a Programme for Government, with plans to tackle those issues and many others and to deliver positive change for everyone in our community. Our ability to deliver on those ambitions will be contingent on a reset of fiscal policy at Westminster, a reformulation of our funding model here in Northern Ireland and serious efforts to deliver financial sustainability and reform locally. I will address each of those issues in turn.

It is no secret that the UK Government hold the bulk of the fiscal levers, and so have the greatest influence on the Budget that is ultimately available to the Executive. When the new Government took office, the Chancellor, Rachel Reeves, rightly diagnosed the problem: a £22 billion black hole in our finances as a result of reckless and unfunded commitments that were made by the Conservatives. We are told that the Government will not repeat the mistakes of the previous one, and yet, in June, the Institute for Fiscal Studies pointed out that Labour's plans mean that public services are likely to be seriously squeezed and face real-terms cuts. The Resolution Foundation has warned that, based on our current spending projections, the Government will need to make £19 billion of annual cuts by 2028-29. However you cut it, that is an extension of the very same austerity that decimated public services and communities under the Tories.

In 2010, David Cameron told us that we were all in it together. Since then, the superwealthy have amassed greater affluence and wealth, and big oil companies have obtained record profits. Meanwhile, working people in my Constituency have been hit hard by a stagnation in living standards, the dismantling of the social security system and spiralling costs, so much so that the wealthiest 1% in society now possess more wealth than the poorest 70%. To be frank, austerity is a political choice, and it is a choice that my constituents can no longer bear.

There is an alternative. The UK Government can, and should, take steps towards a more progressive, fair and redistributive system of taxation to end the indignity whereby some of the wealthiest in our society pay a lower overall rate of tax than working people who are struggling to make ends meet. They could, for example, explore a wealth tax or seek to simplify and align capital gains tax more closely with income, as recommended by the Office of Tax Simplification. The Government could also seek to further extend and expand the windfall tax so that energy companies that profit from pollution and rising costs on our constituents pay their fair share.

Fiscal discipline is absolutely essential. There is no question about that. However, self-imposing the fiscal rules of one of the most undisciplined Governments is no way to achieve that. Reforming the fiscal rules to adopt a more long-term approach to investment in order to recognise the indirect costs of environmental inaction is a realistic and credible option to generate additional headroom and unlock additional investment in public services.

For so many reasons, it costs more to deliver public services in Northern Ireland than elsewhere in the UK. Relatively, we have a larger public sector, greater sparsity of population and a greater number of dependants, to name a few factors. However, for many years, the argument that Northern Ireland was underfunded was dismissed. Well, no longer. The concession of the previous Government that we were the only part of the UK that was funded below relative need is significant progress. However, the needs factor that has subsequently been introduced is not a fiscal floor but a fiscal ceiling and does not adequately address that shortfall, nor does the Alliance Party believe that the 124% proffered actually captures our relative need.

Yesterday, we had a debate about the under-resourcing of policing and justice, which is also at the centre of the debate about our funding formula. Although we know that policing a divided society is enormously complicated and costly, the period over which average policing and justice spend was assessed relative to England dramatically underestimated objective need and focused on a period during which the Budget was squeezed for political reasons and spending was obscured by COVID-19. It is our view that the period during which policing and justice ought to be assessed is the ring-fenced period between 2010 and 2015, which actually offers a more reliable reflection of the UK Government's revealed funding preference. That would lift overall relative need to at least 127%, and, by incorporating taxable capacity and benefit-rate sensitivity, there are strong arguments that that should be even higher.

In making the case to the UK Government, however, we cannot shirk our responsibilities. That is why we are also calling in the motion on the Finance Minister to publish the promised sustainability plan, setting out the case not only for a revised fiscal framework but for transformation here at home. Failure to adequately grasp the nettle on transformation has in part walked us to this position. Eight long years after the Bengoa review of our health service was published, we now finally need to see a proper action plan for the transformation and reconfiguration of our services. It is also difficult to make the case to Treasury about our dire financial position while, when some Departments can barely meet the cost of essentials, others are making discretionary spending decisions, such as that of the Education Minister to spend £250,000 on magnetic wallets when, the last time that I checked, phones can be switched off and stored for free. How many police officers could that expenditure have funded? How many nurses?

So, too, must we finally confront the elephant in the room that is the cost of delivering services in a divided society. Estimates place that cost anywhere between £400 million and £800 million every year, and the refusal of some Ministers to even acknowledge the existence of that cost is not tenable and must change. We will, therefore, not support the DUP Amendment, which removes from the motion the very words "cost of Division".

It will be no surprise to anyone in the Chamber to hear me say again that you cannot achieve sustainable finances without sustainable political institutions. Reform of this place to remove the ability of any single party to block government, or, more importantly, to block progress in government, is essential if we are to make the change that is needed to our public services and stabilise our finances.

There is no doubt that the challenges are enormous. They are not, however, insurmountable. With a new Executive in place and a new Government at Westminster, there is a renewed opportunity for change, and, for our part, we in Alliance will not shirk our responsibilities in leading that change.

I call Robbie Butler to move Amendment No 1.

Thank you, Madam Principal Deputy Speaker. This will not take long.

Amendment No 1 not moved.

I beg to move Amendment No 2:

Leave out all after the first "relative need;" and insert: "agrees that, while the interim fiscal framework agreed with the UK Government was an important first step, the proposed 124% relative need factor will, as things stand, only apply to future Barnett consequentials and cannot remedy the damage caused by core funding for Northern Ireland dropping below need, prior to the restoration of devolution in February 2024; stresses that this will have a significant, adverse and recurrent impact on the scale of the Northern Ireland block grant and therefore the delivery of vital front-line services; further notes that the proposed 124% relative need factor does not adequately reflect policing and justice need in Northern Ireland and the disproportionate squeeze on the Justice budget; believes that a baselined fiscal floor, set at a level greater than 124%, should be delivered without further delay; calls on the Minister of Finance to publish the Executive sustainability plan, including steps to tackle inefficiencies and duplication, which leaves the Executive with less to invest in public services each year; and further calls on the UK Government to depart from their austerity policy by agreeing a new, long-term financial settlement with the Executive, reviewing the fiscal rules and pursuing a progressive taxation system."

Thank you, Diane. You will have 10 minutes to propose Amendment No 2 and five minutes in which to make a winding-up speech. All other Members who are called to speak will have five minutes. Please open the debate on amendment No 2.

Thank you, Madam Principal Deputy Speaker. We are all well versed on the current budgetary pressures in Northern Ireland. I welcome Members tabling the motion to keep our finances front and centre of discussions in the Assembly, as the finances available define the parameters of what we and the Executive are able to do. The huge pressures facing departmental budgets and the delivery of public services in Northern Ireland have been building for years largely because of the Barnett formula causing spending to grow at a slower rate than in other parts of the United Kingdom. With a mounting list of inescapable pressures and projected departmental overspends of hundreds of millions of pounds, the Assembly must speak with one voice and make the strongest possible case for change from the UK Government.

In light of that, the DUP successfully led the campaign for a new needs-based funding model for Northern Ireland. The previous Government were forced to accept a new definition of need, which will apply to future Barnett consequentials received by the Executive. While that is a step in the right direction, it does not address the impact of that historical underfunding on the size of our block grant. Had Northern Ireland been funded in keeping with the new 124% relative need factor since April 2022, core budgets in our Province would be worth at least £500 million more every year. The failure of the previous Government to ensure that that was the case has left the Executive's finances in an even more precarious position.

While the other parties welcomed the financial package presented by the Government on the return of devolution earlier this year for those reasons, the DUP made it clear that what was offered fell well short of what was required to put our public finances on a stable footing. The failure to baseline the effect of the new formula from the point at which spending in Northern Ireland dropped below need in 2022 will lead to a further cliff edge in just two years' time. At that point, funding levels will again drop below what is required to fairly and sustainably fund services on a comparable basis to those in England and potentially stay there for decades.

The Alliance Party motion calls for a baselined relative need factor above 124% to take account of our policing and justice requirements. However, it is not entirely clear whether it is advocating that that be applied retrospectively from April 2022 or purely on a prospective basis. That is why we have sought to amend the motion. It is important that, as an Assembly, we are clear and ambitious in pursuing a long-term fiscal framework that is fair and provides the quantum to deliver and transform effective front-line services. The Northern Ireland Fiscal Council made it clear in its updated assessment of relative need in March 2024 that adopting a slightly higher or lower estimate of relative need than 124% will not have much near-time impact on the Executive's spending power if it is not baselined from the point when Northern Ireland dropped below need.

Our Amendment also seeks to amend the reference to the cost of Division in the motion. The Executive's interim fiscal framework makes no reference to that in the context of the Executive's requirement to publish a sustainability plan. We want to see Departments tackle waste and duplication wherever it is found, but we are also aware of the fact that language is important and that streamlining the delivery of services must not be viewed as an attack on the various national and cultural identities in our society. Notably, the independent review of education and previous studies in Scotland have highlighted that the existence of separate school sectors, for example, does not necessarily lead to additional costs. Where savings could be made, they should not be exaggerated. Indeed, the key finding standing out from the independent review is that, even if all the savings identified were realised, a significant funding gap would remain.

The stabilisation package offered by the Government, while welcome, does not provide a long-term solution to the problems that we have outlined, nor will it provide the impetus or space to take forward the public services transformation agenda in a meaningful way. It also comes with —

I thank the Member for giving way. I just double-checked the wording of our motion, which states:

"including steps to tackle the cost of Division".

Are you implying that there are no costs of division, and, if costs could be identified, we should not be tackling them? Is that what you are saying?

I thank the Member. I am not saying that; I am saying that, by quoting the independent review of education in Scotland, the savings should not be exaggerated.

Of course, we are willing to take any steps to identify waste, and we do not want to see it in our finances. There is no room for waste. We need efficiencies to deliver our services.

Going back to the £114 million additional revenue that we have been asked to find, we are clear that it is wrong for Government to simply ask hard-pressed householders to pay more when they have no realistic expectation of seeing better outcomes. Ratepayers in Northern Ireland should not be expected to plug holes in our public services when those holes have been created largely by the Treasury's failure to provide reasonable funding in the first place. Until a fairer, long-term settlement is agreed with Treasury, that will continue to be the DUP's position. I commend the Amendment to the House.

Given that Amendment No 1 was not moved, the length of the debate will be reduced from two hours to one hour and forty-five minutes.

As my party's spokesperson on education, it is with that particular focus that I want to address the debate. There are not enough resources available in the education system to deliver the level of service that we want and expect for our children and young people and for those charged with educating and nurturing them.

I was highly critical of the actions taken in the absence of an Education Minister, when funding for vital programmes was slashed, for example, cutting the holiday hunger grant, ending the Healthy Happy Minds programme, which was designed to provide support for emotional difficulties, and stopping the provision of free digital learning devices for our most disadvantaged. It baffles me that, in a system that is not resourced properly, officials do not seek to protect and prioritise the most disadvantaged. When I challenged the people from the Department on those cuts, they tried to tell me how difficult it was for them to implement the cuts: imagine how difficult it was for the children and their families who had those vital supports taken away.

Now we have Ministers in place, a draft Programme for Government out for consultation and a set of priorities that we can pursue. While a new Prime Minister has taken up residence in 10 Downing Street, it has become clear that the step change in properly funding our public services here has not materialised. Politics and leadership are about decisions and choices. What does it say about the new Administration in London that one of their first major actions is to leave pensioners out in the cold this winter? For example, it was a choice to make pensioners sit in the cold this winter by cutting their fuel payments while continuing to spend billions of pounds on military hardware.

I would much rather see the new Government invest in our public services so that we can transform our education system, reverse the decline in our school estate, support our children and young people with special educational needs (SEN) and ensure that our pupils can reach their full potential. Those are the choices that the new British Government should concern themselves with. I am a realist, though, and accept that getting a fair funding settlement for this place will not happen overnight.

In my role as my party's education spokesperson, I have taken the opportunity to challenge the Education Minister on his responsibility to identify and set out the priorities for his Department. In a system with limited resources, we must make the most of every penny. Targeting investment on the basis of objective need is vital, particularly when it comes to supporting our most vulnerable children and young people. I want to see the Minister set out a comprehensive plan to tackle educational underachievement, deliver affordable and accessible childcare and transform special educational needs provision. The key is early Intervention, and all the evidence tells us that investment at the earlier stage of a child's journey is far more impactful. This is why prioritisation is so important.

Many of the issues that we want to see action on are cross-cutting, and one criticism of the Assembly over the years is that Departments often act in silos and do not talk to each other. It is important to make the point that, where shared objectives exist, Departments should work together and share funding and other resources to achieve them. It makes financial sense; it is a good approach to policy; and, at the end of the day, it is what people want to see: their political representatives working together in the interests of all.

The Ulster Unionist Party will support the motion and the Amendment. The question for many of us is where we sit with the idea of relative need. Any of us who were on the Finance Committee will have listened to the Fiscal Council give the Committee its report and talk about where we sit. One question that we have to ask ourselves is this: are we at 124% already, or, as has been suggested by some on the Fiscal Council, might we be above that figure at 125%, 126% or 127%? For all Members, it is important, particularly as the Finance Minister and the First Minister and deputy First Minister go to meet Rachel Reeves this week, to make our case clear. There is no doubt — any of us who have dealt with the Treasury will understand this — that many questions will be asked about where we are going with revenue raising and, with the resources that we have, what we are doing to grow and develop them. Those will be difficult questions to face, because our Budget is not adequate for all the things that we need to do.

My friend on the other side of the House talked about prioritisation. Like many people in this room, I have sat at various tables, particularly at Hillsborough Castle just before Christmas, where we said, "Health is the number-one priority". Health is expensive. All public services are expensive. How we deliver and support that has to be the key.

There will be difficult choices about prioritisation, and we have to make those difficult choices. The rest of our nation — England, Scotland and Wales — is pushing ahead with above-inflation settlements in health. The indications that we are getting from Treasury — you sometimes have to take what Treasury says with a large and notable pinch of salt, but there is no doubt about this — are about the importance of raising the resources that will be needed for health. When that comes back to Northern Ireland as part of our settlement, we will need to make sure that the appropriate levels are given to the Departments that are in most need. Every Department needs a lot, but there has to be a large degree of prioritisation and realism, particularly if we have to make a strong argument for delaying raising revenue.

I sense that, when she returns, the Finance Minister, in whom and in whose ability I have a lot of faith, will have to have really difficult conversations with her Executive partners and, indeed, the House about where we are and where we are likely to go. Those are the critical issues. Many people accuse the House of lacking realism. We all know what the problems are. We all know where the pressures are. We will have to come up with strong answers about how we will deal with the situations and pay for the issues as they go forward.

Minister, I wish you all the best on Thursday. Everybody in the House who wants to see Northern Ireland work wants you to do your best to get the right results, but it will be a difficult autumn. For budgetary reasons, it will be a difficult autumn in which to try to ensure that the Programme for Government matches the resources and the deliverables. All of us have a difficult task ahead, and that is why my party welcomes the motion and the amendment and will support both.

It is good to be back in the Chamber. It is good to be debating fiscal, financial and budgetary matters, and I look forward to doing more of that with my colleagues on the Finance Committee, several of whom have spoken today, and, indeed, with the Finance Minister. We will support the motion but not the Amendment, because it is important that there is a specific and explicit reference in the motion to looking at the costs of Division.

I say, with some regret, that the costs of division, as far as I am aware, are not mentioned in the Programme for Government. There is therefore a point for us to reflect on, particularly those in the Executive parties. When we come to the Chamber, having tabled motion after motion in order to be declarative, they will be asked and challenged on why those motions do not match what is in Executive policy statements, the Programme for Government and other statements.

When the Executive were restored in February of this year, the SDLP was clear that it would be supportive, cooperative and constructive in its dealings with the Executive and the Executive parties when they sought to maximise the financial settlement for Northern Ireland and make clear arguments for increased funding and a better calculation of need from the British Government. We stuck by that, and we still stick by that. That remains our position. It is clear that the Barnett calculation and the top-up that is used to calculate our funding clearly fell below the level of need. The position was, in a sense, compounded by the overarching question about the austerity policy, on which today's motion reflects.

There are different technical and economic definitions of what "austerity" means, but, generally speaking, it means that the priority for public spending is fiscal restraint, constraining spending and sometimes, although, for the previous British Government, it was usually dominated by spending restraint over raising taxes, it also includes tax increases. Today's motion states that we have borne the brunt of austerity, and no one can argue with that. It is true to say, despite some of the asinine comments in earlier business, that my party has noted and been disappointed by the failure to set a proper trajectory for moving beyond austerity in UK politics and in public spending.

I note, however, that it is also important that, in a devolved context, we here, particularly those who hold power on the Executive, do all in our power to maximise and improve public services and to deliver for the public who elect us here within the constraints that exist, while acknowledging and pushing against those constraints and fighting for more funding.

What I saw yesterday in the Programme for Government was not, I am afraid, a clear set of targets for the public in Northern Ireland. I look forward to a multi-year Budget, and I hope that it is aligned with the rather vague and gauzy targets in yesterday's Programme for Government. I do not agree with the Member who moved the motion that the Programme for Government represents some grand step forward in delivering for the people of Northern Ireland. It is largely a set of hazy, unspecific targets and aspirations rather than specific or promised outcomes with interventions and plans to deliver them.

I also note, unfortunately, although it was mentioned in the proposer's speech, that the motion does not talk about political instability, dysfunction and some of the other decisions that have not been made in Northern Ireland. We have agency. We now have a new Government, and I acknowledge that successive Tory Governments — first the Tory/Lib Dem Coalition Government and then reckless Tory Governments — did not give this place enough funding and as much as we would like and we need. We are here, however. We all sought election and have come to the Chamber to be in devolved government, and Members have taken ministerial office for the purpose of making lives better. It is therefore disappointing that the motion does not talk about having agency and about the actions that can be taken here, because people do not elect us simply to deflect responsibility. Yes, by all means, we need to be clear that the British Government have not funded this place properly, and we need be clear and united in calling for a better funding settlement. The Opposition will be with the Executive parties in doing that, but we also need to see clear plans. I would like to hear from the Minister about when we will see a Budget sustainability plan and when we will have a multi-year Budget. I assume that it will be when there is one from the UK Government, but I would like to hear about those plans being in place.

Time is up.

I would also like to hear about the ambition for this place and the ambition for rescuing public services and growing our economy, with specific targets provided and not the hazy, gauzy aspirations that we got yesterday.

I welcome the motion. It is crucial that we keep this important issue front and centre.

It has been reiterated numerous times during this mandate that the Assembly remains united in the view that we have been and continue to be underfunded by the British Government relative to the level of need across the North. In particular, the current level of funding for health and social care services is unsustainable, given the current demand and the projected need for service capacity now and for the future.

As others highlighted, the waiting lists here are among the worst in western Europe, with thousands of patients awaiting procedures. While waiting, they are in pain and distress, which ensures that their conditions continue to deteriorate. By the time that they are seen, they are much worse than they were at the beginning. Our emergency departments are overcrowded, and many patients wait for unreasonably long periods before being assessed and treated in our hospitals. Hospitals are under constant strain, and overstretched bed capacity is now the norm in wards, with unstaffed beds or beds beyond the capacity of the ward now commonplace. That fails not only patients but staff, who work in the most unsafe conditions under extreme pressure.

Many patients are unable to be discharged when they are medically fit to leave hospital, due to the lack of domiciliary care packages. That needs to be addressed urgently to keep our health service functioning properly. With an ageing population, community care is a vital component of our health and social care system to ensure that patients are discharged when they should be and with the appropriate support to allow them to return to their own homes. It is well-evidenced that people who remain in hospital for prolonged periods are more likely to experience further deterioration in health through mobility problems, infections and other conditions that could have been avoided had they been discharged at the right time. That, in turn, puts increased pressure on our overall health service as patients' medical and care needs increase.

Caring is an extremely important profession, and that cannot be overstated. We need proper investment in social care to ensure that care workers are property valued for the essential role that they play in the functioning of our health service and in ensuring that people can not only live longer but live well for longer. Across our health service, healthcare workers struggle to cope with the demands placed on them in clinical settings. Many professions report high levels of burnout. That has resulted in our losing doctors, nurses, consultants and many other essential staff to other jurisdictions and countries where pay and, most importantly, conditions are much more attractive. There, they can do the job that they trained to do and that they love in a much safer environment.

We have seen the impact of that, particularly on children's social work teams across the North. With staff leaving or going off sick due to the stress and pressure that they are under, some teams have been left with no staff, and others operate with a minimum of staff. That has a detrimental effect on not only staff but children, young people and their families, an effect that will cause untold, long-term damage to their future and for generations to come. It is therefore essential that plans be developed to address the serious recruitment and retention issues facing our health and social care workforce: without people, we have no health service.

Our health service is undoubtedly beyond crisis point and is probably the single biggest issue that I, and many others in the Chamber, will be contacted about in relation to the experience and views of staff, patients and trade unions every single day. It affects us all, including our families and friends. It is crystal clear that, if we want to deliver properly for patients and staff, we need proper transformation and investment in health and social care. It is therefore imperative that the British Government provide the appropriate funding to match the level of need, not just for the here and now but to protect our health service's long-term future.

We must continue to stand together to keep the best interests and health of our people front and centre and to challenge this new Labour Government to step up to the plate and provide the funding that we need now.

Alliance has long highlighted the need for a fairer funding settlement for Northern Ireland, and we have been clear that the fiscal floor needs to be set at a level higher than 124% if we are to address the level of need, particularly in justice and policing, as we debated yesterday, and to address the years of underfunding of the Justice budget. The motion sets out clearly its call on the UK Government in that regard, and I hope that it receives support.

This afternoon, I will reflect on the wider issues around the need for transformation in our public services and for an Executive sustainability plan. I want to look particularly at issues in our education system. The financial pressures in the education system are well rehearsed, and I do not intend to go through them all in detail. Suffice to say, we spend £450 less per pupil per annum than is spent in England. I have no doubt that we all agree that that is unsustainable and that more investment is required. However, the system that we invest that money into matters. Our education system in Northern Ireland is divided, complex and desperately in need of a programme of transformation. Any Executive sustainability plan must commit to "tackle the cost of Division" — it is vital that that wording remains in the motion, particularly when we look at education in Northern Ireland — and it must deliver genuine transformation in our education system.

Research that was carried out by Ulster University into the cost of division in education in Northern Ireland suggested that it could run to the tune of £226 million per year. The Education Department came out very quickly to reject those figures, but I am unaware of any work that has been done subsequently by the Department to assess the cost of division in education.

I appreciate the Member giving way. This is a genuine point of interest, because I agree with him on some of the cost-of-Division points. That is why we have been very loud on the issue of taking money away from integrated schools. I am genuinely interested to know this: if we are spending less per head on pupils than is being spent in GB, but we are also spending too much on education because we have too many school buildings and villages with two schools where there should be one, how do those two things marry up? Is it that we are spending too much on maintenance? How do those two things agree with one another?

The Member has an extra minute.

Thank you. I appreciate that how we have ended up in this situation in our education system is a bit of a conundrum. There is a need for more investment in the system, but the question is about how we invest. We spend too much money on maintaining the divisions in the system, whether that is in a passive sense by not doing anything to tackle it, or, at times, by actively doing something. I appreciate the Member's comments. We are in a conundrum with this, and, often, ministerial questions do not draw out any clarity on that point, unfortunately.

I emphasise that the Education Minister has categorically stated in response to questions on the cost of Division that he has no intention of carrying out any departmental audit on the cost of division to his Department. Therefore, I can see no commitment to tackling the issue, and that must change. Delivering on the clear public demand for integrated education is just one way that the Department could do that. Legal obligations exist in that space, and we need to see real progress on that front as part of any programme of transformation.

The independent review of education was very clear that our current configuration of schools reflects a divided system and creates inefficiencies. Modelling that was undertaken as part of that review was clear that the network of schools could be reduced and that that could generate an estimated cost saving of around £94 million per year. That would require some capital investment — it is important to understand that — but we must begin to think more ambitiously around a programme that is focused on investing to save.

One area where there has been a commitment to transformation work, and it was committed to in the draft Programme for Government, is special educational needs. That is welcome, but the Education Minister must continue to prioritise a clear transformation action plan for SEN. I am very clear that that must be time-bound and have measurable outcomes by which we can measure success. Our SEN services must deliver early identification of need and early Intervention to meet that. Investment in a broken system of SEN services will not deliver for our children, and a meaningful transformation action plan must be delivered without delay.

Finally, if we are discussing responsible and sustainable spending in education, I must highlight the issue of the Strule campus. Contractors have been appointed to deliver that £375 million project, but, in response to a question for written answer that I recently submitted, the Education Minister has confirmed that its business case was unable to demonstrate value for money. I can think of no other education capital project where that would be accepted. The investment in their buildings is, of course, welcome for those schools, but this is not a sustainable way to spend the Executive's money.

A better and fairer financial settlement is needed for Northern Ireland, as is real investment in public services in GB, which would lead to that flow of resource here. However, more than that, an Executive sustainability plan is absolutely vital if we are to be responsible custodians of the resources that we have. Nowhere is that needed more than in education. We have a system that is full of committed and passionate educators and pupils who deserve the very best system in which resources are used effectively. They must not be held back by a system that is divided and in desperate need of reform.

I support the motion, following on from the contributions of my party colleagues from Upper Bann and Strangford. In particular, as one of the Alliance spokespersons on health, I want to discuss the pressures that are facing our health service. There is no question that Northern Ireland has been underfunded by successive UK Governments, and the 14-year term of the previous Conservative Government has had a particularly devastating impact on public services across the UK. Unfortunately, we will continue to be affected by the long-term impacts of austerity, Brexit and the disastrous mini Budget of 2022. We welcome the interim fiscal framework, which was agreed with the UK Government, as an important first step, but the 124% relative need factor is not sufficient for our needs, especially those of the Department of Justice, as my party colleagues and independent analysis have outlined.

Our health service is in crisis, which the Chair of the Health Committee mentioned, and the funding has a role in that. However, we must be honest and acknowledge the fact that additional funding to Health will not solve the many challenges that we face. Per capita, health spending in Northern Ireland has been significantly higher than that in the rest of the UK and has increased at a higher rate than in the rest of the UK, yet we have by far the longest waiting lists in western Europe, as mentioned, and the worst outcomes. We need to discuss why that is. The problem is not exclusively a lack of funding; if anything, the fundamental problem is a lack of reform and transformation.

As the Bengoa report of 2016 stated, the options that we face are to see services deteriorate to the point of collapse or to embrace transformation and create a modern, sustainable service that is properly equipped to help everyone who needs care. However, while parties signed up to Bengoa in principle, that has not always been reflected by action. It has been nearly eight years since Bengoa was published, yet we have seen almost none of the transformation that is required, in part because of the resistance to change in the delivery of services, which may be controversial in the short term but which will deliver better outcomes in the long term. We still have certain parties opposing changes that contradict the principles that are required for transformation. That is disappointing, and we cannot resolve the challenges that face our health service until that is addressed. We know that Professor Bengoa will return to Northern Ireland later this autumn, and I cannot help but wonder what he will make of the situation eight years on.

We also need to acknowledge that we cannot exclusively fund Health to the detriment of other Departments. Health takes up around half of the block grant. That amounts to £7·6 billion in this year's Budget, which the then Health Minister said was still not enough. Notably, that has increased from £4·6 billion in 2015-16, when the Bengoa report was written. If we were to adopt the additional funding that the Health Minister requested, it would result in substantial cuts to other Departments' budgets. As we heard in yesterday's debate on policing resources, the Health Minister's party was critical of what it perceived to be the absence of progress from the Justice Minister on police funding and police officer numbers, yet it has not acknowledged the impact of the repeated underfunding of the Department of Justice relative to other Departments.

That is yet another reason why we need to address the broader under-functioning of the Executive. One issue that we cannot ignore is the need for political reform. Another reason for the crisis in our health service, as well as in other Departments, is the complete absence of political leadership for the last two years and three of the last five years in the previous mandate. The Bengoa report is eight years old, and, in that time, we have had five years of no government. Both the two main parties, Sinn Féin and the DUP, have walked away from the Executive and the Assembly, leaving the rest of us locked out from delivering any change. Until we reform the institutions so that no one party can collapse them and prevent them functioning again, we will not be able to deliver the long-term reforms that are needed for the health service.

For example, we cannot plan for the future through multi-year Budgets if there is no certainty that an Executive will be in place. Political stability is necessary for reforming and addressing the challenges in the health service. It should not be lost on any of us that the Assembly is currently as stable as it was the day before the last collapse. As the chair of the all-party group on climate action, it would be remiss of me not to mention the need for the UK Government to invest if we are not only to tackle the climate crisis but benefit from the opportunities that transitioning to a greener economy will bring.

As a member of the Health Committee, I look forward to working constructively with the Health Minister and to seeing his plan to deliver the transformation that our health service desperately needs in order to begin to address the huge waiting lists and the service's internal pressures.

Gerry, it is normally a courtesy for people to be in the Chamber at least for part of the debate. I am going to call you anyway. You have three minutes.

Thanks, Madam Principal Deputy Speaker. I apologise for not being in earlier. I had a meeting to attend.

The fact that there is a deep crisis in our health and social care system is news to no one.

The chronic underfunding of our schools is not a new problem. This is not the first time that we have discussed the Government's failure to invest in housing, infrastructure or protecting our environment. What is new is that, after some 15 years of implementing austerity on behalf of the British Government, some parties here have suddenly changed tack.

Every bad decision, every cut and every attack on public services by the Tories was, effectively, quietly agreed to by Sinn Féin and the DUP, and by the Alliance Party as well. If members of the public are following the debate today, they might reasonably ask what has caused the change of heart. Was it the people lying in hospital corridors or languishing on a health waiting list? Was it the children whose education is stymied by the under-resourcing of our schools or the special educational needs pupils and their families, referred to earlier, denied a school place in the first instance? Was it the fact that so many poorly paid public-sector workers are struggling to make ends meet? Was it even the many people sleeping rough on our streets or the homeless families whose lives are put on hold and devastated because they do not have a place to call home?

People watching may have thought that those things inspired the change of heart, but they would be mistaken. When you look at the motion in the face of all the suffering that we see in our communities — I mentioned some of it — and in our public services, you see that the Alliance Party motion tells us that the place where the cuts are most sharply felt just so happens to be the Department run by their party leader. If they are seriously telling us that the police are suffering the worst of Stormont's cuts, I would respectfully invite them to think and look at that point again.

I would invite them to tell that to the workers and the patients in our health service, to those on the housing waiting list, to the parents who cannot afford childcare, to the pupils and teachers who, disgracefully, have to fundraise for classroom supplies and to the pensioners who cannot heat their homes thanks to the Government's cuts. However, we should make absolutely no mistake about it: the parties that bemoan the economic policies of Westminster are preparing for more of the same. The Executive parties that implemented the cruel and punishing policies of the Tories for years are now preparing to roll over for Keir Starmer's right-wing Labour party as they promise more years of hardship.

Come next month, when Sinn Féin, the DUP and Alliance sign off lightly on a new austerity Budget and proceed with the cuts as before —

Your time is up, Gerry.

— we will just see how things have changed.

I will call Timothy Gaston. Timothy, you were not in the Chamber when I said to Gerry that it is normally a courtesy to be in for a debate rather than to walk in and expect to get the full five minutes, so you are getting three if you wish to avail yourself of them.

Thank you very much. While it is safe to assume that Alliance did not have this as a consideration when tabling the motion, it does come at an opportune time for the TUV, as my party will today be submitting proposals on the matter to the Treasury, where these decisions are actually made.

Between the mid-1970s and the later parts of the 2010s, Northern Ireland was funded relatively generously by Westminster. During 2020, however, the block grant funding to Northern Ireland fell to the UK Government definition of need. Then, in April 2022, Northern Ireland became the first part of the UK to be funded below the UK Government's own definition of need since its adoption in 2012.

In order to have a sensible discussion about those developments, we need to review them in the context of appreciation of the development of UK policy around need. The first part of the UK to really struggle with the Barnett squeeze was Wales during the noughties. In 2007, the Welsh Government appointed Professor Gerry Holtham to review the impact of the squeeze and to develop a metric for measuring what Wales needed in order to justify Intervention to make sure that the squeeze did not take Wales below that level.

Holtham explained that the only way that he could develop a meaningful metric was on a UK-wide basis, assessing how funds should be allocated across the whole of the UK, mindful of local need, with the objective that, regardless of where people lived, we should all have access to broadly comparable public services. The Holtham formula demonstrated that, in order for people in Wales to enjoy the same level of public services as people in England, the Government, because of the higher need in Wales, needed to spend £115 per head for every £100 spent in England. The equivalent figure for Scotland was £105 per head, and in Northern Ireland it was £121 per head.

Holtham's calculations took place before the devolution of justice in Northern Ireland, and the Northern Ireland Fiscal Council has since made appropriate adjustments to apply the Holtham formula.

Will the Member give way?

In that updated context, the definition of need for Northern Ireland has increased to £124. Go on ahead.

I appreciate the Member giving way. I am interested to hear the very interesting dissection of the politics of devolution and fiscal policy in relation to devolved entities. My assumption or thought was that the TUV completely opposes devolution in all its forms. Is that right? I thought that you did not want this Chamber to exist at all.

The Member has an extra minute. I remind Members that interventions are supposed to be shorter than speeches.

Thank you very much for the Intervention. Indeed, Westminster rule is certainly my preference, but we have to work with what we have.

The UK Government embraced the Holtham formula in 2012 when they committed to intervene to ensure that the block grant funding to Wales would not fall below the Holtham definition of need at £115, and that is something that they started doing every financial year from 2017-18 and have continued to do ever since. The funding of Northern Ireland was £3 below the UK definition of need in 2022-23 and 2023-24, even as the UK Government intervened to make sure that block grant funding to Wales did not fall below need. That constituted an arrangement that was obviously unjust and indefensible. The UK Government cannot have a UK definition of need and then deploy it to protect some UK Welsh citizens while refusing to protect UK Northern Ireland citizens. Northern Ireland was badly let down by the fiscal framework negotiated by the Government at the end of last year.

While we do not argue that Northern Ireland should be funded at £19 above the need like in Scotland, we are equally clear that the trauma of being funded below that need is so serious that we insist on nothing less than that, and the same protections afforded to other parts of the UK threatened by funding below need must now be afforded to us. The fiscal framework denies that on two counts. First, the framework does not hold the UK Government to the Wales precedent in that it does not clearly fund Northern Ireland to the £124 baseline from 2022, so we are denied the clarity afforded to Wales.

Mr Gaston, your time is up.

Thank you very much.

I call the Minister of Finance to respond. I advise you that you have 15 minutes.

Go raibh maith agat, a Phríomh-Leas-Cheann Comhairle.

[Translation: Thank you, Madam Principal Deputy Speaker.]

I welcome the opportunity to provide an update to the Assembly on our budgetary outlook.

It is no secret that the Executive are facing significant budgetary challenges. Since taking up office, I have been consistently clear about the scale of those challenges and also consistent in calling out the underfunding of our public services and the damage caused by 14 years of austerity under the Tories. I have made the case to the new British Government, as I did to the previous Government, that we need to see a change of approach that prioritises investment in public services and public-sector workers.

The Executive are committed to speaking with one voice and will continue to make the case for additional funding for public services, but the reality is, with the Prime Minister and Chancellor at pains to warn of a painful Budget coming in October, there is little hope of additional funding being provided outside of Barnett consequentials, and the Barnett formula will not deliver the additional funding that we need. It is also clear that the previous Government's failure to raise budgets to take account of inflation has greatly contributed to the pressure on our public services.

Members will be well familiar with Ministers speaking to the difficulties of their budgets. I commissioned an urgent exercise over the summer to get a clear picture of the current financial position, and, unfortunately, despite the efforts of many Ministers to manage their budgets, it is clear that it is extremely challenging. I have said many times that the demands on our finances far outstrip the funding available. Departments are currently reporting £767 million of pressures above their budget. The greatest pressures are in Health, Education and Justice, which together account for almost 90% of the total pressure. Some 55% of the total pressure comes from public-sector pay, based upon pay body recommendations. I have been clear with the Chief Secretary to the Treasury that our public-sector workers are critical to service delivery and that it is crucial that the Executive have sufficient funds available to enable them to meet the cost of public-sector pay awards.

We know that there will be further Barnett consequentials this year because of allocations in England, but we will only get full certainty on our share towards the end of the year. I am not willing to delay until then and see services deteriorate further while we wait, so I will bring proposals to the Executive to increase departmental budgets by our latest assessment of what our Barnett share will be for the rest of the year. It is expected that that will allow the allocation of around £500 million. While that will fall short of the overcommitment that Departments are currently reporting, it will go a significant way towards addressing the pressures. However, all Ministers will have to play their part by living within their budget once the funding is provided.

Will the Minister give way?

I have a lot to get through.

Not doing so would have grave consequences for future funding. Any overspend would come off next year's Budget. Even more concerningly, the Treasury has been explicit that not living within budget would result in the Executive having to repay the £559 million that the Treasury had agreed to write off, making an already difficult financial situation even worse.

Along with my Executive colleagues, I will continue to make the case for adequate funding of our public services, but I remain hugely concerned that the ramifications of not living within budget this year would represent a potentially disastrous outcome for the Executive and our public services. At the Executive meeting last week, I outlined to my ministerial colleagues the need for urgent action to be taken. Collectively, we must ensure that a balanced Budget is delivered. I am meeting individual Ministers to discuss the budgetary challenges, and collectively, as an Executive, we will need to chart a way forward. I will continue to make the case to the British Government that more funding is needed for public services to support our workers, families and businesses and will raise that at a meeting with the Chancellor later this week.

Difficult times require courageous leadership. Last week, the Executive agreed the draft Programme for Government (PFG), demonstrating our determination to deliver for people. The draft PFG sets out our immediate priorities and will guide where we invest our funding. One of its priorities is the reform and transformation of our public services. We are committed to delivering positive change and playing our part in making our finances sustainable. We will look at all options to deliver efficiencies, generate revenue, enhance borrowing powers and examine fiscal devolution. Financial sustainability will require collaborative working as well as innovation and efficiency in the delivery of services.

I agree that, in the longer term, we must seek a funding arrangement that provides appropriate levels of funding and fiscal responsibility. I was pleased to sign an interim fiscal framework on behalf of the Executive in May this year, which was an early and significant milestone as we work towards putting our finances on a more sustainable footing. It is already making a difference, with an additional £60 million being provided so far this year, and it will result in further additional funding for the Executive this year and in the years to come. Importantly, it recognises that, until budgets are confirmed at the spending review, the Executive will continue to plan on the assumption that they will be funded at or above the 124% level of relative need in future financial years. It also includes a firm commitment from the British Government to review the Executive's funding, including concerns about the 2026-27 funding, as well as considering a review of our level of need if multiple independent and credible sources provide evidence that our relative need is different from 124%.

I believe that spending on public services by the British Government is too low and that there are unique characteristics that may push our overall level of need above 124%. Members should also recognise the Fiscal Council's assertion that 124% is a reasonable estimate and that socio-economic data would not necessarily support an increase in the need calculation. However, I am focusing on ensuring that we have the evidence base in place to negotiate for a higher needs-based factor in future. My officials are working to build on the robust, independent evidence base that we already have for our level of relative need, thanks to the Fiscal Council. That work includes working with independent experts and other Departments. Further work is also being progressed by the new fiscal team established in my Department on how we can enhance our financial management tools, such as increasing our level of borrowing and taking greater control of fiscal levers through additional fiscal devolution.

Will the Minister give way?

I have a lot to get through, sorry.

We will examine those options as part of the considerations for our final fiscal framework. That will be detailed work, and it will take time to deliver.

Work is also ongoing on developing the Budget sustainability plan. As Treasury was unable to engage formally with us during the pre-election period and given the need to secure formal Executive agreement for the plan, I have agreed a short extension with the Chief Secretary to the Treasury. There is an inherent challenge in presenting a Budget sustainability plan with the current level of overcommitment that I have outlined, but we must strive to bridge the gap. I intend to publish the plan at the end of September, subject, of course, to securing Executive agreement in the next couple of weeks. I confirm to the Leader of the Opposition that it is also my intention to align with the spending review announced by the British Government, one year in October and then in spring in the following two years.

The publication of the sustainability plan is a stepping stone to the Executive's larger ambition of securing and maintaining sustainable Budgets. It is the first stage in a process that will set the Executive's finances on a more stable trajectory. The path to sustainable finances is not straightforward and will require decisions that will impact on the public services that the Executive deliver. With some six months of the current financial year already having passed, achieving fiscal balance in 2024-25 will prove challenging, but, as I have outlined, not delivering a balanced Budget is simply not an option.

Finally, the motion calls on the British Government to depart from their austerity policy and implement different fiscal rules or different taxation systems. I absolutely agree with the wider call to change the approach to austerity and to implement more progressive taxation systems. The new British Government have choices to make about how they spend their money and how they raise their money and who will shoulder the burden. Those who can afford most should pay most. Investing in public services and supporting ordinary workers and families should be the priorities. My Department and I will continue to engage with the Treasury and the British Government on securing a final fiscal framework that provides certainty on finances in the longer term. In the interim, however, we must face up to the challenges, strive to live within our budgets and avoid a scenario in 2025-26 of having to pay back any overspend from this year along with a further £559 million from previous years. We must do that by taking the responsible decisions that are needed in order to achieve financial balance this year.

I call on Members to support Ministers and to work in partnership with us to navigate the challenges ahead, recognising that we cannot do everything that we would want to do. It will not be easy, but it is the right thing to do to help us deliver change in the longer term.

I call Paul Frew to wind on Amendment No 2. Paul, you have five minutes.

Thank you, Madam Principal Deputy Speaker. When it comes to politics and governance, it is all about priorities and choices, especially for sovereign Governments. That is why I despair when I hear Chancellor after Chancellor talk about there being black holes here and black holes there, because there is no such thing as a black hole with a sovereign Government. If they do not have enough money, they raise more money or prioritise what they spend money on. For a sovereign Government such as the UK's, which spends billions, what they spend that money on is a choice. The Labour Government's decision to cut winter fuel payments is disastrous. It will cost them money in the long run, but it will also cost lives.

It is different in the case of a devolved Government. Devolved Governments have to settle for funding settlements: envelopes of money or, more realistically, packages of funding. Although we have limited fiscal powers, we have limited reach when it comes to the ways in which we can raise money. The ways in which we might raise money through revenue raising are primitive. That is a challenge that we have to face. The Finance Minister will have to face that challenge, along with the sustainability plan. Not only do the UK Government want a published sustainability plan but they want to see £113 million in additional revenue. That is a challenge for everyone in the House. How do we get that reve? Do we take it from our people?

Will the Member give way?

No, I will not, because I have only five minutes.

It is about tough decisions in this place. The question that I pose today is this: are we up for making those tough decisions to assist our people?

I am glad that we now have a Programme for Government, because, when you talk about a finance situation and a budgetary burden, money must follow strategy. It is bonkers to have a Budget without a Programme for Government, and it is bonkers to have a Programme for Government that is not aligned to a Budget. The closer we get to the position where the two are aligned and run in parallel, the better it will be for our people and for this place.

I am disappointed that the SDLP and Alliance will not support our Amendment, because we should place it on record every time we get the opportunity that funding for this place has fallen below need and should have been retrospectively paid. Think about it like this: if it were not for the various agreements, including the confidence-and-supply arrangement and the money that came from that, we would be in a much worse place.

I am aggrieved that the mover of the motion, of all the spending that has taken place since the Alliance Party has been in the Executive, picked on the £250,000 of spend by the Education Minister that will assist teachers and principals and assist with addressing cyberbullying and the massive mental health and well-being problem that we have in our country.

Will the Member give way?

I will not, because I have limited time.

The Alliance Party blames not supporting our Amendment on the fact that we have withdrawn the "Division" part of its motion, but I remind the Alliance Party that it supported division. It supported and voted for a vaccine certification scheme on the basis of the lie that it stopped transmission. The scheme coerced and discriminated against people, creating a "them and us" society. Some £21·5 million was spent on that division. The Alliance Party is a party of division. The SDLP, of course, wanted to go further: it wanted to sack nurses. The Alliance Party cannot wash its hands of that recent decision, which, of course, was implemented by the UUP. We will not let it off lightly either.

When we talk about budgetary pressures, we should talk about the cost of the lockdown that those parties also supported. The cost to our people's health was in the millions of pounds, and we still live with those consequences.

The Member's time is up.

The Business Committee has arranged to meet at 1.00 pm today. I propose, therefore, by leave of the Assembly, to suspend the sitting until 2.00 pm. This debate will continue after Question Time, when Nuala McAllister will be the next Member to speak as she winds up on the motion.

The debate stood suspended. The sitting was suspended at 12.53 pm.

On resuming —