Northern Ireland Affairs Committee
Oral evidence: Work of the Secretary of State for Northern Ireland, HC 44
Tuesday 20 February 2024
Ordered by the House of Commons to be published on 20 February 2024.
Members present: Sir Robert Buckland (Chair); Stephen Farry; Sir Robert Goodwill; Claire Hanna; Carla Lockhart; Jim Shannon; Kelly Tolhurst.
Questions 556-611
Witnesses
I: Rt Hon. Chris Heaton-Harris MP, Secretary of State for Northern Ireland, Ciarán Hayes, Deputy Director, Prosperity, Northern Ireland Office, and Mark Davies, Director, Windsor Framework Taskforce, Cabinet Office.
Witnesses: Chris Heaton-Harris, Ciarán Hayes and Mark Davies.
Q556 Chair: This is a meeting of the Northern Ireland Affairs Committee. I am delighted that today we are joined by three witnesses: the Secretary of State for Northern Ireland, the right hon. Chris Heaton-Harris MP—welcome, Secretary of State, to another evidence session; we are grateful for your time—Mark Davies, Director of the Windsor Framework Taskforce at the Cabinet Office; and Ciarán Hayes, Deputy Director of Prosperity at the Northern Ireland Office. Good morning, and thank you for coming before the Committee. Secretary of State, you wanted to make a statement to begin, so please feel free to do so.
Chris Heaton-Harris: First, I welcome you, Sir Robert. This is the first time you have been the Chair when I have been a witness. It is a pleasure to see you in your new role. I also welcome the new member of the Committee, the right hon. Member for Rochester and Strood; it is a pleasure to see her in her place. It was nice to see a number of Committee members in Washington DC a week or so ago. I hope you enjoyed the visit as much as I did, learnt as much as I did from our American colleagues, and were able to have good exchanges. Thank you for inviting me to be here today.
I want to start—this is almost a statement of the blindingly obvious—by welcoming the restoration of power sharing and the Northern Ireland Executive. This is the first time I have delivered evidence before the Committee with an Executive in place. I am delighted to see locally elected representatives back in place, delivering for the people of Northern Ireland. I have always said this, and I say it at the beginning of each session, but as you all know, this Government and I are unwavering in our commitment to all strands of the Belfast/Good Friday agreement. It has always been the view of the Government and I that devolved power-sharing Government is the best framework for good governance in Northern Ireland.
Restoration was the result of successful and extensive discussions with Northern Ireland parties on the deal outlined in the Safeguarding the Union Command Paper, which the Government published on 31 January. That Command Paper was crucial to restoring power sharing. I am confident that it will bring enduring political stability and economic prosperity to Northern Ireland.
My further reason for wanting to make a statement is that this is probably the only opportunity that I will ever get to put on the record my thanks to the small but dedicated team of people who spent a huge amount of time behind the scenes talking to, listening to and reflecting, where we could, the views of all our interlocutors in getting this deal. It simply would not have happened without that group of people doing all the work that they did, as well as the wider group of people in my Department, the Northern Ireland Office. I want to put on the record my thanks to that group of people for all their work. It always takes two to tango, so other people were negotiating in other places as well, but that was an important piece of work to get done.
Q557 Chair: On behalf of the Committee, I thank you and everyone else involved for the hard work that was put in, first, with regard to the financial package, to which we will come and of which all parties were sighted, and, secondly and especially, with regard to the agreement reached on the implementation of and changes to the operation of the Windsor framework.
Hopefully, we are now back to politics as usual, so I will dive straight into a question that has raised its head in the past few days, which is that of fiscal sustainability. You and the Government have made it clear that the expectation was that an important element of the new package that was offered and accepted was the sustainability of the funding arrangements for public services in Northern Ireland. In your mind, that involved an element of fiscal responsibility—in other words, raising funds through taxation in Northern Ireland—but in recent days Ministers in the newly formed Executive seem to have taken a different view. Who is right?
Chris Heaton-Harris: Obviously I’m right! To be serious, although Ministers have been in position for only a very short time, the Government’s responsibility and primary objective is to support the fiscal sustainability and stability of Northern Ireland through the new Executive. I think it has the tools to deliver, with this financial package, better outcomes for the people of Northern Ireland in an affordable way.
The package is fair and generous. It is an unprecedented financial package of £3.3 billion that provides a number of solutions to many of the issues that the parties raised throughout the extensive talks with them, including funding for stabilisation and public sector pay.
Like any other Administration in the United Kingdom, the Executive will need to make strategic choices about how it spends its money and about trade-offs in that space, because it needs to live within its means. Realistically, I believe that will require some revenue raising.
That £3.3 billion package is available for Ministers now to get on with the job of sorting out Northern Ireland public sector pay, which they have started at great pace; health services; and public service transformation. As I say, I think it is fair and generous.
Q558 Chair: You can imagine the Committee’s concern, though, when we see a letter, dated 13 February, from the new Finance Minister to the Chief Secretary to the Treasury which sets out some pretty fundamental objections to the details they were sent about the package settlement and its conditions. Most notably, the write-off of the £559 million debt repayment amount being conditional on the publication and implementation of the sustainability plan is described by the Finance Minister as “not acceptable”.
Secondly, there is a strong objection to the timescale requiring the publication of the sustainability plan by the Executive by May 2024; it is described as “completely unrealistic”. I am quoting the letter from Dr Archibald.
Finally, the requirement that £113 million is raised through locally generated revenue in the next 12 months is described by the Minister as “not consistent with the strategic sustainability plan”. In other words, we have strong divergence between the new Executive and Chief Secretary to the Treasury, at the very least. How are we going to resolve that?
Chris Heaton-Harris: This plan did not come as a surprise to the incoming Executive. Maybe having a new Executive came as a bit of surprise to lots of people, but this plan did not come as a surprise, because it was well talked about in the run-up to Christmas. Indeed, before and over the course of last summer, I was talking to party leaders and their colleagues, both together and individually, about having a programme for government that was affordable and could deliver and transform sustainable public services across Northern Ireland.
It is fair to say that every part of Government, including my own Department, has to live within its means. The Northern Ireland Executive must deliver a balanced budget for 2024-25. I don’t think anybody would disagree with that. That will require it to raise a minimum of £113 million through locally generated income. There are a number of levers available to generate income, and it is absolutely for the Executive to determine what those may be. That figure of £113 million is the minimum we think is needed in revenue raising to put it in a sustainable financial position as it moves forward.
I know you are going to interview Sir Robert Chote, and you have spoken about the Fiscal Council work. As Sir Robert’s report sets out, the Northern Ireland Executive has previously taken decisions on public service provision and revenue raising that are, on balance, more generous than in the rest of Great Britain. I can iterate the figures for the Committee, if required. The Fiscal Council estimates that the super-parity decisions cost the Executive more than £600 million in 2021, for example. Continuing to provide additional levels of public services without raising additional revenue means that public finances are unsustainable. We all want sustainable public finances in Northern Ireland that are equitable for all, and we believe that this is the right way forward.
Chair: I will come back to you about sustainability, but I will bring in Claire Hanna first, and then Stephen Farry.
Q559 Claire Hanna: Secretary of State, the Chair is right to characterise a degree of confusion and I think a bit of “he said, she said” about this issue and about the package. You said that you were speaking directly to the party leaders, and I understand that the parties of the Executive have been discussing a programme for government for 18 months. Did you specifically discuss revenue raising with parties, and what did they say in response to you?
Chris Heaton-Harris: I did, and I think that it is fair to say that they were not keen, but they understood that it was part of this package.
Q560 Claire Hanna: They agreed that it was part of the package that there would be some degree of revenue raising?
Chris Heaton-Harris: Part of the package is that there is some degree of revenue raising, and they accepted the package.
Q561 Claire Hanna: And are the numbers in the package the Treasury’s bottom lines, or are you sort of riffing on their tune? Is there an “or else” attached to the request for revenue raising?
Chris Heaton-Harris: What do you mean by an “or else”?
Q562 Claire Hanna: I mean, is it conditional? Bearing in mind the context of a new Executive, conspicuously underpaid public servants and conspicuously under-provided public services, is the package conditional on revenue raising in the short term?
Chris Heaton-Harris: There is revenue raising that needs to be done in 2024-25, without a shadow of a doubt. Do bear in mind that one of the levers that is available is the regional rate. Last year, it was left to me to set that figure. We set it at 6%, which is in the medium band of other council tax rises and so on in Northern Ireland, and slightly above the national average for council tax in England and Scotland—not that they are massively comparable. If you were to raise—we did talk about this around that table, with all parties—
Q563 Claire Hanna: I think that we are going to get into the detail of some of the levers, but what I am asking you is whether that was agreed with the parties. Did you leave with the understanding that they accepted the need to raise that amount of revenue in the financial year 2024-25?
Chris Heaton-Harris: It is part of this package, and everybody knew what was in this package.
Q564 Claire Hanna: And did you have agreement from the Ministers and the party leaders—
Chris Heaton-Harris: I believe we did.
Q565 Claire Hanna: What is your understanding of the context of the sequential relationship between the Budget Bill that is going on as we speak and the budget and the programme for Government, and then the sustainable fiscal framework? Is there strict timing or a sequence for that?
Chris Heaton-Harris: I believe that the Chief Secretary to the Treasury is just about to reply to the letter that you quoted, and that in her reply she will welcome the Executive’s suggestions on topics to include as part of the forthcoming negotiations on the new fiscal framework. We look forward to starting those conversations. That is part of the future piece.
In the medium-term piece, so let’s say 2024-25 and 2025-26, the package has a whole host of moneys attached to it—new money and other moneys. In the short-short term, there is a whole host of moneys that we have now cleared for public service pay as well. So, yes.
Q566 Claire Hanna: But, just to clarify, contrary to what the Finance Minister has set out in her letter, you say that there was agreement from the parties for that revenue raising in the next financial year?
Chris Heaton-Harris: The revenue raising has always been part of this financial package.
Claire Hanna: Do you want to come in on that, Chair?
Q567 Chair: I am reading the summary from the UK Government. To quote from the UK Government document that we have: “The Executive must deliver a balanced budget for 2024-25 at the outset of the financial year by raising a minimum of £113 million through locally generated income”. There, you are saying basically that in April—the beginning of the financial year—they have to set their Budget, and they have to indicate how they are going to raise that minimum of £113 million. But the Finance Minister is saying, “It’s too soon. We’re not going to be ready.”
Chris Heaton-Harris: I disagree. Actually, there are a number of levers that can be applied. In fact, when there was no Executive, we set in train a number of consultations to show the potential for revenue raising across the whole piece in Northern Ireland’s finances. Some things could be done in the very short term, some are much longer-term pieces, and there is the immediate lever of the regional rate.
Q568 Chair: So you are saying they should not be surprised at any of this because it has been outlined months in advance.
Chris Heaton-Harris: I don’t think they should be surprised, no, but I can understand that there are choices to be made within this. There is a whole host of choices that can be made.
Q569 Chair: Are you surprised that, quite early on, the Finance Minister and presumably the Executive collectively have come back and said, “We’re not happy,” and that they cannot agree to the conditions that you thought were agreed?
Chris Heaton-Harris: Am I surprised? Well, I think this is normal discussion. I would like to think that there will be normal discussion—well, not normal discussion, but discussion—between the Finance Minister and the Chief Secretary to the Treasury as we as we move forward. I am absolutely sure that that goes on between the Administrations in Scotland and Wales and the Chief Secretary as well.
I am sure of one of your questions, because there are other bits in that letter about having a cliff edge in two years’ time.
Chair: Yes, exactly.
Chris Heaton-Harris: That is why the Chief Secretary is going to write back and say the conversation that the Member for Belfast East and the Member for Foyle have been talking about for some time, about having a fiscal framework, which will take a bit of time to sort out—for Wales, it took seven years to get to the point of having a fiscal framework. No one is expecting it to take that long, but it does need to be right, because it needs to be right for Northern Ireland. You can’t just cut and paste what Wales has got. So there is a discussion that needs to be had, and the Chief Secretary is going to welcome that and the points that the Northern Ireland Executive would like to discuss. I think you have got, in this package and beyond it, the signal that the UK Government is more than keen to make sure that Northern Ireland’s finances are sustainable, but equally, there does need to be revenue raising within that package.
Stephen Farry: Once again, I am being confused with Colum Eastwood.
Chris Heaton-Harris: Oh, I’ve done it again! I’m so sorry.
Q570 Stephen Farry: I’m not quite sure which one of us should derive any conclusions from that. Anyway, you are very welcome, Secretary of State.
Before I go into some detailed questions on the finances, I want to put it on the record that we should recognise that the £3.3 billion package is a very significant investment into Northern Ireland, and it is probably bigger than previous financial packages. We should not let that slide before we query some of the details.
Can I read from the document that was presented to the parties on 19 December? It was not agreed as such, but it was presented to the parties as the basis for restoration. It says: “Remaining debt repayments of up to £559 million will be deferred for two years, and we will commit to write these debts off if the Northern Ireland Executive publishes and implements a plan to deliver sustainable public finances and services, including on revenue raising.” It goes on to make reference to how the first lever the Executive has in that regard is the regional rate, and suggests that a 15% rate rise would deliver £113 million. From those words, I do not see a very clear requirement in terms of timescale and the nature of the revenue raising. Obviously, it is there; quite clearly, there is an expectation that that is part of any package.
The overall budget for Northern Ireland is around £13 billion or £14 billion. The Executive has to strike a budget very quickly for the forthcoming financial year, and indeed working through the outgoing financial year. Do you see a danger that we will end up in some sort of stand-off over £113 million, in the big scheme of things, and that we will potentially end up with the Executive struggling to strike a budget due to that one contentious aspect and lose sight of the much bigger picture of the Executive finding its feet? There will be some people saying, “Look, obviously there is a requirement to do revenue raising, but pushing this as more or less the first item on the agenda is potentially counterproductive and self-defeating and could actually make life more difficult, rather than helping a new Executive find its feet.”
Chris Heaton-Harris: I thank the Member for North Down for his excellent question and for being so polite in allowing me to get his seat wrong. I do occasionally make mistakes and I try to apologise when I do.
Chair: You have corrected the record at the earliest opportunity.
Chris Heaton-Harris: What the Member quotes is exactly right. Revenue raising was expected, because the detail is that “the UK Government has agreed to pause the repayment of £559 million of UK Government reserve access granted to the Northern Ireland Executive to allow time for the Executive to stabilise public services and implement a plan to deliver sustainable public finances. Repayment of that will not be required on the condition that the Executive publish a sustainability plan by May 2024”—I actually do think that can be done—“and demonstrate implementation by May 2025”, and I actually think that can be done. “This plan must also include the Executive’s plans to raise additional revenue”.
I think the timeline is fairly explicit in that, and revenue raising was always part of this conversation.
Q571 Stephen Farry: That is the Chief Secretary’s letter, as opposed to the paper that was set out with the parties in December.
Chris Heaton-Harris: I would say that is remarkably similar.
Q572 Stephen Farry: To follow up, the realistic expectations of what can be done on revenue raising in the timescale that the Treasury are expecting would essentially only be the reasonable rate. Everything else has longer lead-in times, in terms of policy work to progress that.
How do you think householders and, in particular, businesses would receive a 15% increase in their rates at this time? We are conscious that the economy is flatlining at present. In particular, the retail and hospitality sectors are expressing major concerns about their ongoing viability. In my constituency—this will be the same elsewhere—hospitality businesses are saying to me that they are absolutely at the wall at the moment, and some are potentially even closing down. How realistic is that in this short period of time, rather than giving the Executive the space to work through this? I am not arguing against doing the revenue raising. The issue for me is essentially the speed at which this is expected.
Chris Heaton-Harris: I don’t think anybody in Northern Ireland is not expecting the regional rate to increase by a percentage. It just so happens that 15% does equate to £113 million. Depending on wherever that might be set, that will obviously be a significant sum of that. There are a whole host of other levers that are available in the short term, some of which were identified by the consultations that I asked the Northern Ireland civil service to launch.
Last year, when I set the regional rate, as I had that responsibility, I tried to make sure that there were the things that you would expect—so the Northern Ireland regional rate is very different from our council tax. It is based solely on the capital value of property, with support and rebate for those on lower incomes. Its benefits and reliefs include: the rate rebate for houses in receipt of universal credit; housing benefit and rate relief for low-income households not eligible to claim universal credit; the lone pensioner allowance, providing a 20% reduction for individuals aged 70 or over who live alone; and the disabled persons allowance, providing a 25% reduction when a property has been suitably adapted to accommodate a disabled person’s special needs.
I think most people here will know that analysis by Ulster University indicated that a discrete capital value system, as used in Northern Ireland, is—to use their phrase—“more progressive” in terms of reducing the liability for lower-value properties and those with a lesser ability to pay compared with other banded systems. When I was taking forward the responsibility to look at what to do on regional rates last year, I wanted to make sure that those on lower incomes would have the ability to pay as well.
I understand the points that you make, but, depending on how you define the word “progressive”, those with a better ability to pay would pay the most, if you were to choose to go down the route of solely relying on the regional rate. But there are other funding streams available to the Executive, should they choose to have them. That is absolutely right. It is down to the Executive to make those choices, because that is what they are there to do.
Q573 Stephen Farry: I have two short questions. First, in terms of the cliff edge, this package works for, essentially, two years. You have helpfully acknowledged that there is a longer-term conversation to happen around the financial formula for Northern Ireland. That would be very welcome—I will take your nod as an affirmation in that regard.
Secondly, in relation to any additional funding that might come to Northern Ireland in the short term, I am particularly mindful that the Irish Government are announcing, via the Shared Island unit, funding for the A5 and hopefully for Casement Park as well. Particularly on the latter point, given the urgent timescales to get ready for the Euros—as a football referee, you have a keen interest in football—where does the UK Government currently stand in terms of a potential contribution to help that project, not least given the pressing timescales?
Chris Heaton-Harris: The announcement was by DCMS rather than NIO, but as you might imagine, we are very, very keen—and I am a football fan, so I am very, very keen—to see games played in Northern Ireland, to see games played at Casement Park and to see Casement Park redeveloped. I will wait to see what the Irish contribution might be. I am sure people will welcome an Irish interest in that space. But we are yet to see, because there have been issues with the contract—so there are no figures are available for what that total cost would be. When we see what the costs are—I have seen a range of figures so far—we can determine what the range of possibilities will be.
I am very wary that contractors, when bidding for a contract like Casement Park, might choose to think that the taxpayers’ largesse is infinite in this space. I am sure there will be a decent taxpayer contribution, but it has to be done on a value for money basis. This Government has demonstrated, through what it has done with HS2, that if something becomes way too expensive, things have to change. That is quite a big caveat, but there are no final figures here to determine what the costs will be.
Stephen Farry: Sure. While noting all those qualifications, it is welcome that the door is open.
Q574 Jim Shannon: Secretary of State, I just want to put on the record our thanks for your endeavours to achieve the return of Stormont. It is correct and right that we should give you some accolades for that. I note that you have accepted—I hope I am quoting you correctly—the principle that the Barnett consequential for Northern Ireland does not reflect the circumstances of where we are. The need to have a Welsh Barnett formula is one I believe that you, the Northern Ireland Office and the Government have committed themselves to.
In answer to the hon. Member for Belfast South, you mentioned that it might take seven years—forgive me; my question is along those lines. We really cannot wait seven years for something that has been out of kilter for some time. We all recognise that. When it comes to addressing the issue of the Barnett consequential formula, we need to quickly, energetically and perhaps even zealously try to achieve that Barnett consequential in less than a seven-year period. Is it possible to achieve that goal in the shorter term? That is my first question.
Chris Heaton-Harris: Yes, I believe it is. Fortunately, it is not for me to negotiate. It is between a devolved Minister and the Executive, and the Chief Secretary to the Treasury and His Majesty’s Treasury generally. However, as I indicated, I know that the Chief Secretary to the Treasury is up for this and that a lot of work has been going on in the background. And I know that the Finance Minister is up for this, too, so I believe it can be done in much quicker time.
You mentioned the level of Barnett. I am keen to set out another thing that the Northern Ireland Fiscal Council reported previously, because there have been some questions about backdating and all that sort of stuff. The Northern Ireland Fiscal Council reported in May last year: “Based on our updated calculation, the relative level of public spending in NI per head of population—23 per cent above England in 2024-25 on current plans”, which have now been changed and moved up—“is currently broadly in line with relative need.”
I think that what we have done in this package, which is based on the £124 figure for that short-term piece, is the right thing to do. The conversation that you have talked about, Mr Shannon, is exactly what needs to happen, in expedited time. The Executive Minister has already written to the Chief Secretary outlining a whole host of things that she would like to include in that conversation, and the Chief Secretary is, I think, indicating that she is completely up for that conversation. We have two willing partners and this is based on lots of evidence. Of course, the UK Government, including my colleague here, Ciarán Hayes, on behalf of the Northern Ireland Office, had to produce estimates and help to produce estimates when we were in control of imparting the finances from HMT into the Northern Ireland civil service when there were no Executive Ministers to take control of it. We have a lot of information available, so I think that this job can be done very speedily indeed.
Q575 Jim Shannon: Thank you for that. It has been indicated to us that the shortfall is 24%, which is substantial. Looked at in general terms, the differential is a quarter of the Northern Ireland budget. We have to try to catch that up—it is a substantial amount of money.
You know that there is a lot of good will, Secretary of State. I think that the people of Northern Ireland have a lot of good will for the process to try to start to deliver the good things that can come from the Assembly. Whenever those things filter out to people and they see the benefits, more people will buy in to the process. That is my theory of where we are, and it is really important. I know, Secretary of State, that you are committed to ensuring that that process can continue and provide more benefit.
The £3.3 billion financial package gives a wage increase to those in education and those in health, which for various reasons has not been delivered over a number of years. It also gives transport and Translink drivers the increase that they want. A lot of things have to happen, no matter what, and by its very nature that absorbs a lot of the money coming through, even though we understand very well the outstanding issues apart from that.
Secretary of State, you mentioned Casement Park. My understanding is that the price for Casement Park today is £220 million. If that is the case for delivering that package, I would suggest that the Northern Ireland Executive will have to ask whether that project can go ahead. The simple reason for that is that it would place a massive burden on the Northern Ireland Executive to deliver something that would clearly impact on other services in Northern Ireland.
What I am saying is that there are hard decisions coming for the Northern Ireland Executive, including on whether that project even goes ahead. I would put forward the point of view that across Northern Ireland, there are many clubs that could benefit from much smaller amounts of money, which would keep the progression and advancement of football and other sports across Northern Ireland. I would even suggest the possibility for my own club, Ards. It is something that we cannot neglect. When you are going to deliver a budget or a programme, it has to be one that everyone can benefit from, not just one section of the community.
The point I am making is that hard decisions will have to be made at the Executive on whether or not that scheme goes ahead, for example, primarily because of the cost.
Chris Heaton-Harris: There are a few items in your question, Mr Shannon. I will try to tackle them and will then ask my colleague to come in, in case I don’t tackle them all appropriately.
Every Government, every Administration, every council in the country has to make tough decisions to balance its books. I completely understand the point you are making.
Actually, having seen what can be done when stadia are built and you have a proper plan for what comes afterwards and what that means, there can be massive economic and financial gain flowing from developing stadia. That has been proven not too far down the road here, at the London Stadium post the Olympic games in 2012. But you do need to have a plan, and not just a plan to build the stadia and run the tournament or games, as it were, but for afterwards as well. That is very important. I know that the football association in Northern Ireland and the GAA understand that, too.
But you are absolutely right: this comes down to choices, and this is why I overlaid the caveat. If the price of this stadium, because contracts have not been awarded or whatever, gets inflated because everybody thinks there is an infinite amount of Government cash, they would be foolishly wrong. We have enough experience in the UK Government of how much it costs to build stadia.
I have seen a whole range of figures. I think they started in the £80 millions and they have bandied upwards. I haven’t actually seen the particular figure you talked about, but there will be a point where Executive Ministers who want to do, and have the ability to do, an amazing job in delivering this and a whole host of other things for Northern Ireland will have the thought, “Well, you can do a lot more good with that money.” But these are choices that devolved Ministers will be making across the whole range of things.
You started with public sector pay, which is a prime example of that. I said a number of times before Christmas, in private and in public, that in this financial package, every penny that is spent on pay is a penny that will not be spent on services. You get services delivered by people, obviously, and that is an important part of it, but you have to understand the choices you are making in apportioning a pay rise, which is why it is unbelievably important to have devolved Ministers in charge of this.
Pay is devolved. You want negotiations to take place. You want productivity to be gained, like in any pay settlement that is done, privately or in the public sector, anywhere across the western world. So a sum of money has been made available and we are keen to support, in this financial package, those public sector pay deals, if the Executive choose to do so, on the condition that a balanced budget is still met at the end of the financial year. It is for the Executive to set pay awards in areas that are devolved, but it is also up to the Executive to manage the recurrent cost of pay awards in future years.
So I absolutely understand—and I have spoken with representatives of all parties about this before Christmas and since, so I know they understand this—that they have to make some quite key decisions in this space at this time. That is why negotiations are key in all pay sector pieces. I hope that goes some way to answer your point. Yes, these are tough decisions, whether they are to do with pay, a football stadium, capital spend on hospitals or schools, or a host of different services.
Jim Shannon: One last point—
Chris Heaton-Harris: Sorry, but can I bring in my colleague for a second?
Ciarán Hayes: Thank you, Secretary of State. Briefly on the public sector pay side of things: within the package we had an extra amount of money set aside for the pay award for this financial year. Across the rest of the country, the pay awards have been funded from within budgets.
We took the view, rightly, that given the timescales that the Executive had to come back, it would not have been able to make those prioritisation decisions to fund public sector pay for this financial year. That is why that is a separate amount that has been put forward within the package.
For next year and subsequent years, there is extra funding within the package as a whole, which of course can go towards public sector pay, but can go towards other things as well. But it is right and proper that those are trade-offs that a returned Executive and Executive Ministers are making. As the Secretary of State set out, there is a trade-off between how much money you spend on public sector pay and how much you spend on other things. Those are the choices and decisions that go across on to the infrastructure side of things as well.
One aspect of the deal is to ask the returned Executive to do a strategic infrastructure plan, so that there is a longer-term view of the priority projects that need to be delivered, and how they can be done in a way that delivers best value for the taxpayer but also makes the greatest impact.
Q576 Jim Shannon: Ever mindful of the good will I referred to earlier, I think every party and person here wants the good will to make the project and process go forward through the Northern Ireland Executive. When it comes to the decision that there must be £113 million tax revenue, my suggestion is something hinted at by the Member for North Down: we maybe need more time.
This is a bedding-in process. There have been a lot of difficult years with a lot of catching-up to do. Maybe when it comes to making those decisions, we need a wee bit more flexibility in the process, looking forward to the future, where all the ginormous problems can at least be addressed in some way to come to a conclusion on that issue. I am probably just asking for a bit more time. Those are my thoughts on the matter; thank you, Secretary of State.
Chris Heaton-Harris: Thank you for making that point. As I indicated earlier, there are elements of revenue raising. That £113 million could be done by regional rate or in a host of different ways. These are proper conversations for the Minister of Finance to have with the Treasury, at the end of the day, because we now have devolved Government making those decisions, hopefully better understanding each day what it costs to run Northern Ireland and its public services.
The Chief Secretary to the Treasury is indicating that her door is open for conversations on a host of things, including the fiscal framework that we talked about. I don’t doubt for one second that the good will is extended on both sides.
Q577 Carla Lockhart: Thank you for your attendance and comments so far, Secretary of State. In relation to finance, I want to make a couple of quick points around the 2026-27 cliff edge that everyone is speaking of. In layman’s terms, I want to understand why for two years the Holtham formula or calculation was accepted by Government, yet come 2026-27, it is not.
There was an indication around the seven-year issue with Wales, and I know there was a lot of work put into that, but my understanding is—we had Professor Holtham here some time ago—that it really didn’t take seven years. For a seven-year period there was above need in Wales, so it wasn’t required, and the Government moved very quickly to implement it as they noted that they were coming towards need. At that point, I think it took maybe two years, which is a long time but certainly a lot less than seven years. I am just keen to understand the thinking around that and to push you and really stress the need to move long term to a needs-based approach and not have this instability hanging over us.
Let me raise one other thing in relation to revenue raising. Look, we all understand—we are in big politics—that difficult decisions have to be taken, but I will just reiterate the comments that my colleague made in relation to the difficulties that our public services and public sector face. Our roads are crumbling, our schools are in need of massive investment, and working parents are really struggling with regard to childcare. We know that the Executive are very keen to do something on that, but I do think that time and space are needed to allow them to do what is needed so that public services are in a proper and good state and people actually wouldn’t mind paying extra for them. I just make that point.
Finally, I have a large manufacturing base in my constituency, and manufacturing employs around 90,000 people across Northern Ireland. In the Department of Finance consultation on the removal of some of the rates relief and allowances, there were some discussions about industrial derating. I am keen to understand if you have any thoughts about that, given how manufacturers continue to be impacted by the protocol—as you know, they have to bring most things through the red lane, which creates additional costs and so on. I am just wondering if, in your two-year period, you recognise that the impact of raising domestic rates would not be acceptable given the dire state of the cost of living and so on, and that there are some measures that businesses could not withstand. I believe it would severely impact the manufacturing base in particular if something like that were to be removed in Northern Ireland.
Ciarán Hayes: On the cliff edge, the way the package has been set up is that the sustainability funding that has been put in for both 2024-25 and 2025-26 gives the equivalent of if the 124% had gone back to the start of the spending review. It gives the same kind of spending power for the returned Executive.
The reason why that goes out for two years and is not done in perpetuity is that there will be a spending review coming up, likely at the end of this calendar year, that will set public spending for UKG Departments, DAs and all that going forward for the next spending period. It is through that process that future spending plans will be set out. It would have been wrong for us to pre-empt that completely as part of this package, because obviously that needs to be looked at in the round as part of a spending review. Obviously, with a returned Executive, and with a Finance Minister and all that in place, those discussions will be had as part of a spending review.
Chris Heaton-Harris: And I would like to think that we would be moving at pace on the fiscal framework piece that we talked about earlier to make sure that that understanding can continue and money can continue to flow appropriately to Northern Ireland. I was genuinely pleased that you outlined the issues that you outlined when you did so, because—there will be English and Welsh Members of Parliament around the Committee—they are exactly the issues that are in my mailbag. I am delighted that it is the same for MPs in Northern Ireland, because Northern Ireland MPs have had other issues that they have had to worry about more, and more so in the past.
A very nice gentleman emailed me at the weekend to tell me that I had not been to his part of the town of Daventry for a period of time, and that I should go and look at the roads because the potholes were so bad. I emailed him straight back—because unfortunately I do that sometimes, especially at weekends; my parliamentary staff are not too keen on that, but I see it as therapy—with the details of Street Doctor in Northamptonshire. That is a local council thing, and local councils fix the potholes, and I wanted to make sure that he was aware that that was how it could be done. I saw the new Executive Ministers—the new MLAs—take a position on childcare, and they are reflecting, exactly correctly, as you are, the needs of their constituents, as they would like to move forward. I see that all as part of a very healthy process.
Within all that is the fact that there is a finite sum of money, which is something that my local council, the UK Government and the devolved Administrations all have to grapple with. But the priorities are set at the appropriate level of governance—in the devolved Administration in Northern Ireland—and indeed, as this Committee knows, I am a big localist, so if I could possibly devolve them even further down in England, I absolutely would. In Northern Ireland, this is a plan that has been set for a long period of time, and that, with a functioning Executive and Assembly, I believe will work. Those decisions will be made, and services will start.
I think you are being an excellent MP in reflecting directly your constituents’ concerns over the key issues of the day. The key issues of the day, actually, for the UK Government, should be—and I know they are—the key issues of the day for the Executive. Therefore, it is a common endeavour to try to find solutions.
Q578 Carla Lockhart: But I think that there needs to be a recognition of the severe underfunding over a number of consecutive years. I know you will come back and say, “Look, Northern Ireland has been given its fair share, and, at times, it is given additional moneys,” but it hasn’t always been needs-based, and I think there has to be a recognition of that. We need to get to a point with the needs-based element. I understand it is part of this process, but I cannot understand how, for two years we can accept a needs-based element but then that kind of falls off the thought process. The underfunding has resulted in a lot of those problems. Therefore, we need to see those addressed before we can actually move forward, because, as I say, people will not pay any more for services that are not adequate.
Chris Heaton-Harris: Thank you for that point. Lots of these services, in UK terms, would be delivered through the local council. People pay a significant sum more in council tax in England, and in local taxes in Scotland and Wales, than they do in Northern Ireland, so it does actually come back, in some ways, to that revenue-raising piece. I want to concentrate on what Mr Shannon was calling the spirit of good will, because I do think that, as I said in my last answer, these are common issues across the whole United Kingdom, which we should be working together on to find better solutions. Yes, we need to fund them appropriately; well, on childcare, across England, families will be getting a boost in childcare payments, and I think that hits their pockets in April this year—I look at the Chair, hoping that he might be aware of that.
Chair: I think that’s right.
Chris Heaton-Harris: These are very important matters; and now that there is a functioning devolved Administration and Assembly Members—working with parliamentarians, talking to the Treasury, working with the appropriate Ministers both in the devolved Administrations and in UK Government Departments—I think there is a way of finding solutions to them in the future. That is a darned sight better than not having a functioning Administration and the Secretary of State not being able to cover all those bases.
Q579 Sir Robert Goodwill: Obviously, it is important that Northern Ireland public services receive adequate funding. It is also important that funding is deployed effectively. When the Committee was in New York two weeks ago—before we joined you in Washington, Secretary of State—we heard that there was, allegedly, £10 million of city funding in Belfast City Council’s account that had not been deployed. After sitting on a town deal board in my constituency, I know that if we don’t get 8% of the money out the door within the timescale, serious questions are asked. Do we know if that is in fact the case, and are there other pots of public money that have been given to Northern Ireland that are not actually being deployed to help the people who need it?
Chris Heaton-Harris: I will pass that over to my colleague. Thank you very kindly, Sir Robert, for contacting me over the weekend with that piece of information, which we will look into appropriately. I think Mr Hayes can answer your question.
Ciarán Hayes: The city and growth deals are multi-year projects, so they do not operate on the same basis of having to be spent within a given financial year; there is a bit of flexibility. There is an overall delivery board that is looking right at delivery across the various city and growth deals, and at what progress has been made. There is a process there, which asks, “Is it on track?” and “Is money being utilised in the best way?” Obviously, the idea behind the city and growth deals is that decisions need to be taken at a local level and all that, but we, the Department of Finance and the Executive are working very closely with all the city deals, including the Belfast one, to ensure that that is happening. We will do a bit more digging on the exact issue of where that funding is at, and I am happy to write to the Committee with further detail.
Q580 Sir Robert Goodwill: Do you run a red, orange and green traffic light system for these schemes?
Ciarán Hayes: We look across the schemes and all the various projects in them. Obviously the responsibility for the delivery rests with the local areas, but there is that overview right across the deals.
Sir Robert Goodwill: Perhaps you could write to the Committee when you get a few more details.
Chair: Thank you.
Q581 Kelly Tolhurst: Thank you, Secretary of State; it is nice to see you here. It is great to be at one of my first sessions on the Select Committee when we are in a positive place compared to the situation of the last two years, so I am very pleased to be taking part today.
Obviously, there’s been two years without any Executive. We have heard in other evidence, and last week on our trip, about public services and the desperate need for them to be improved in Northern Ireland. There are a couple of strands to the issue. Secretary of State, how will you and the Department monitor the implementation and delivery of the commitments made to Northern Ireland in the financial package? As part of the funding agreement, there is £235 million funding for that ringfenced transformation, with the public services transformation board. Could you provide further information on how that board is planned to go ahead? How will you monitor and review its implementation? The people in Northern Ireland obviously want to see those services improved, and we need to make sure that that money is being well used, where it needs to be.
Chris Heaton-Harris: Maybe you have brought that tiny element of luck to timings, along with Sir Robert becoming Chair. If only you two had been in your positions previously, we would have had the Executive up and running so much quicker and things would have been that bit easier. I know you have had an interest in Northern Ireland for a long period, and I know you will make a fantastic contribution to this Committee. I look forward to hosting the Committee whenever I can in Northern Ireland, as and when it goes on its various fact-finding missions, just as I hosted it under the previous Chair.
This is a really important issue, and it goes back to a question asked by the Chair at the very beginning about the Executive publishing and implementing a plan to deliver sustainable finances. With this deal—it seems to me to be a fair and generous financial package—the UK Government is providing money for the Northern Ireland Executive and its Ministers to spend. There has been criticism of how moneys have been transferred across in the past. There has been a stop-start of funding and different packages at different times, which have sometimes not been completely spent or sometimes not been spent as people envisaged at the very start.
So one of the aims, as you step back and look strategically, is, first, to allow as much freedom as possible for the incoming Executive to make its own choices, but, secondly, just to ask it to have a plan. I do not think it is unreasonable to ask it to publish a plan and then to start to show delivery on a plan. I am not a Treasury Minister, so I honestly could not say what I would expect to see from the details of a financial plan, but I would like to think that we are operating in a spirit of good will. The UK Government wants the Executive to succeed, and we want public services to improve across Northern Ireland. But those decisions and choices—some of which we have outlined already today—are down to the Executive, which is why we have asked for the publication and implementation of a plan to deliver on sustainable finances. We are asking for no more than we would expect from any other public body or devolved Administration, which is a balanced budget. Within that quite wide framework, with the new moneys available, there is a huge amount of freedom for the Executive to make those choices, as you would expect.
You asked about the ringfenced money for transformation. I have just talked about how money had come across in the past and maybe not done the job it was meant to, and I wanted to try and learn some of the lessons of the past. The UK Government has previously given money for transformation to the Northern Ireland Executive, which has then been spent on other things. In the talks we had across the summer and in the run-up to Christmas, all parties acknowledged that they wanted to transform public services—the health service, education and all the things you would expect politicians with a feel for what is going on in their constituencies to want.
We really do want to work with the restored Executive to support them where we can to make the necessary decisions to drive forward the transformation of public services. That is why we want this public service transformation body to be set up to enable and support the Executive to make those strategic decisions and maximise the impact of this package and any other, locally generated funding. It is only meant to be an advisory body to the Executive on the long-term transformation of Northern Ireland public services. It has to comprise people who understand Northern Ireland—Northern Ireland’s civil service and UK Government experts—and it can also, as we have said, comprise independent domestic and international experts, as required.
This whole thing has only come to a conclusion and been out there for a couple of weeks, so discussions are ongoing about this body, and everyone will be setting out details in due course. But that is the thrust behind it, the calibre of the people we would like to be on it and its purpose, which is just to advise and, hopefully, get this transformation piece right.
Q582 Chair: You want to get that board up and running—
Chris Heaton-Harris: As soon as possible, but it also has to be appropriate.
Chair: I get that.
Q583 Kelly Tolhurst: I want to go a little further on that. Obviously, health is of importance to our constituents across the United Kingdom, but particularly in Northern Ireland, given the challenges that we have seen. You have outlined the need to get that board in place and why that has been part of the ringfenced funds.
The Northern Ireland Department of Health previously estimated that a five-year plan to tackle waiting lists would cost up to £909 million. However, there is a figure of £34 million towards tackling the waiting list. Obviously, there is a significant difference. Now, I absolutely understand that sometimes there are differences between an aspiration figure and what is actually delivered, but I would like to understand how that £34 million was reached.
Chris Heaton-Harris: Thank you for the question. I do not doubt that the £900 million number is in the right sort of ballpark, but this was a specific initiative to tackle waiting lists and build a quick platform from which to move forward. The Department of Health had identified how that sum of money could start to tackle, in a relatively quick time, some of the folk who had been on waiting lists the longest. So it was felt appropriate—I do not think that anybody disagreed—that doing that would demonstrate how, actually, smaller sums of money can make big differences in this big transformational piece that you want to make. I think I have got that right.
Ciarán Hayes: Yes. To add to that, getting the transformation bit right takes those kind of longer-term strategic decisions. What the £34 million is doing is trying to tackle those who have waited longest and all that. But this also gets you into that wider public sector transformation side of things and the transformation body that we want to set up.
Of course, we want to do this with the returned Executive; it is not being done to them. It is a means to the end of tackling those really wicked issues in public services, and also learning from what has been tried elsewhere—what has worked, what has not worked—so that that learning can be brought to bear to tackle the issues as effectively as possible.
Q584 Chair: Thank you very much. Inevitably, we have spent a lot of time on finance, so I am now going to segue way neatly into the Windsor framework. I have questions to ask you, Secretary of State, and it is good to have Mark Davies here as well.
I want to go straight into the commitment to repeal section 10(1)(b) of the European Union (Withdrawal) Act 2018; you will remember that I have intimate knowledge of that for legislative reasons. I am really interested in the repeal of the legal duty for Ministers to have due regard to the “all-island economy”. Does the repeal relate just to that duty, or to all elements of the late 2017 joint report?
My second question is: how soon do you expect to legislate on further amendment of that Act? Also, what will be the effect of further changes to the internal market Act as well?
Chris Heaton-Harris: On the second question first, because it is a simple one to answer: as a former Chief Whip, I would not ever pledge a timetable or commit the business managers of this place to a timetable, but I will—
Chair: Hypothetically.
Chris Heaton-Harris: Even that has its own dangers, as you might well remember from previous roles you have held, Sir Robert.
I want to move as quickly as possible on this, but obviously I want to do it in a responsible and proper way. I will obviously keep this Committee and the House up to speed on all that. As you will have seen, the Government is working at pace to deliver on the legislative commitments in the Command Paper, of which this was one. As we set out in the Command Paper, this will include removing the reference made in section 10(1)(b) regarding the all-island economy, which will make this position clear.
As with other commitments in the package, my job now is to work across Government and with the business managers to identify exactly what this means—what it means in the legislative world as well as the world of business and so on—and to move forward quickly. Forgive me for not giving you a timetable on that. As a former Chief Whip, I have learned that I should not do that, and I want to make sure that I do everything completely legitimately.
Q585 Chair: I get that, but my point is about the wider elements of the 2017 report. Is it going to be wider?
Chris Heaton-Harris: Mark, you might have to correct me on this point, but I think lots of the elements of the joint report in this space have either been delivered on or have fallen away because other things have taken precedence.
Chair: Yes, it is more than six years old.
Chris Heaton-Harris: Yes, I don’t think there is that much left in this space.
Mark Davies: No, I think that is completely right. But some of the powers under that Act are still being exercised, which is why it is important that we are not leaving extant provision in place that does not correspond to the world as we find it now. That is exactly why it will be targeted: to remove that concept from the legislation. I think you are right—section 10(1)(b) covers the range of things discussed during the joint report. The all-island economy is one aspect that is no longer relevant. The Secretary of State is completely right.
Q586 Chair: Yes, it is a legal duty. I mean, there are other points that one can make about the reality of life on the island of Ireland. The concept of an all-island economy long predates that joint report, as we know.
Chris Heaton-Harris: It is interesting because—I’m not sure if I am allowed to say this—we now get a decent amount of data because of the Windsor framework, so we actually can see the flows of trade. I think if you were trying to rewrite the joint report with the data now, you would probably come up with different things you would want to do.
Chair: Oh yes! I think we can agree on that.
Q587 Stephen Farry: I want to follow up on this issue of the all-island economy concept. A lot of people held their breath to a certain extent over the Command Paper. There was a lot of language in it that people found discomforting in terms of the balance of the different parties and traditions in Northern Ireland for the greater good. To a certain extent, it is only rhetoric, but where it becomes tangible actions, that becomes a real problem for people. Can I maybe get you to put on the record that you actually recognise that the all-island economy is a genuine concept, and that it is something beyond and above Northern Ireland’s relationship with the wider European Union under the Windsor framework?
Chris Heaton-Harris: I would like to think that what we demonstrated in the Windsor framework was a recognition that flows of trade north-south and east-west are vital to the Northern Ireland economy—so, yes.
Q588 Stephen Farry: Yes. Obviously there are tax differences, currency differences and a lot of regulatory differences between north and south on the island, and there are two different sovereign jurisdictions—that is all taken as read—but the reality is that there are north-south supply chains. Agrifood is a classic example; and under the Good Friday agreement, we have the body InterTradeIreland. The concern would be that the way the Command Paper is set up, it is almost saying, “There’s a choice to be made between a UK economy and the all-island economy,” rather than seeing the two as things that hugely support prosperity in Northern Ireland. If there is to be a genuine commitment from the NIO and UK Government more generally to support prosperity in Northern Ireland, how does backtracking away from commitments to the all-island economy support that?
Chris Heaton-Harris: Firstly, I would say it is actually a recognition of some of the things that have gone particularly well in the Command Paper on strengthening the Union. Perhaps copying something is a compliment. When it comes to InterTrade UK, if you have 80% of your trade going east-west, promoting that and making that work as well as the InterTradeIreland piece is a sensible and good thing to do.
On your first point, which is completely legitimate, about the language in the Command Paper, I know that you and others talked about the greater good; as we were negotiating, although we always said we would negotiate the finances, money would always be with all the parties, and that is exactly what we did, but the stumbling block to get the Executive back was with the Democratic Unionist party. You have in front of you both a Conservative and Unionist Government and a Conservative and Unionist Minister, who truly believes in the Union, but my fundamental objective was to get the Executive back and to make sure that a nationalist First Minister could, quite rightly, take her seat as First Minister. I think everybody around this room is a democrat, so that is fundamental to us. To get to that point, it took a lot of working out exactly what was required, and that is where the Command Paper came from.
I do not think anybody should say it is taking it on the chin; it was a recognition that one community felt, following a whole host of things but essentially the Northern Ireland protocol and its consequences, under threat and undermined. This was about trying to strengthen the feeling in that community so that their elected representatives could resume their positions in Stormont, thus allowing all the different strands—the three different strands—of the Belfast/Good Friday agreement and all the institutions within them to flourish. I am very proud of what we have done in strengthening the Union, because I do think it does that, but I do not think it undermines the Belfast/Good Friday Agreement in any way, or any of its elements.
Q589 Stephen Farry: Speaking for myself and my party, we have always tried to be pragmatic around this and recognise that there was a process and a particular problem to be overcome in that regard, provided that it did not in turn compromise any other areas. There are probably three points that arise from this. One is that some of the rhetoric around the constitutional question has received some negative comment, particularly from the nationalist tradition, in terms of how things have been taken forward—Claire may or may not pick up on that in due course—and I have mentioned the reference to the all-island economy angle.
The third one, on which I will ask you a question before handing the baton on to someone else, is around the Stormont brake angle. I appreciate that there has been a lot of rhetoric around the Stormont brake in terms of implying how much of a check and balance it is in terms of updated EU law, but could you also recognise the other side of the equation in this respect? We are trying to attract investors into Northern Ireland, particularly to take advantage of dual market access, and even if, ultimately, the relevant EU law is updated, any uncertainty or delay in that regard may create a certain unease or a problem for investors coming in. I have heard some voices in the business community expressing that concern already. Do you recognise, Secretary State, that if we end up with people—shall we say—playing political games with the Stormont brake, that could send a negative message to the businesses we are trying to bring into Northern Ireland?
Chris Heaton-Harris: I think the Stormont brake adds a very important democratic check that was required on laws or changes to laws that would have affected Northern Ireland, over which elected Members of the Legislative Assembly would previously have had no say whatsoever.
Some people—lots of people, I’m quite sure—would say that I have been in politics for too long, but I am a former businessman too, so I completely understand that business wants continuity and certainty, but it also has to work with the fact that we live in a democracy with regular elections, so Governments, MPs and policies change. I quite understand why business might say, “There are elements of uncertainty that politicians create,” but that is the system we live in, and it is much better than the alternatives on offer elsewhere. This is a very important element of restoring democracy. Giving the people affected by decisions a say in those decisions is an important check and balance.
The Command Paper clarifies, through section 7A of the European Union (Withdrawal) Act 2018, that the operation of EU law, under the Windsor framework, is subject to the democratic safeguards that I have outlined before this Committee previously and in the House a number of times, including the Stormont brake. We have now published clear operational arrangements that underpin the use of the Stormont brake, reflecting the commitments in the Command Paper to ensure that Stormont has the information and tools it needs to do its job, including through the newly formed Democratic Scrutiny Committee. I guess the most important development is that the brake can now be used. We spent a year during which this potentially powerful safeguard could not be used because there was no Assembly, and it is now live.
To emphasise the point that I made on the Floor of the House when we were doing the Stormont brake SI, there are clear legal duties on the Government to trigger the brake where the conditions for its use are met. There is no discretion for the Government to decline to trigger the brake for policy or political reasons where those legal conditions are met. It is now up to the elected Members of the Assembly and those on the Democratic Scrutiny Committee. I would like to think that, as a Government, we are trying to provide as much help and support to them as possible because it is a decent job of work. I have offered, and will continue to offer, the services of the Chairman of the European Scrutiny Committee here to the new Chair of the Democratic Scrutiny Committee—
Stephen Farry: I’m not sure how that will be received.
Chair: That will be a short meeting, then.
Chris Heaton-Harris: I served on that Committee for five years, and I understand how important it can be in making sure Parliament is aware of what is going on. Wherever we can offer support, we will do so, but there is a responsibility that goes with that. One of the elements of the process of pulling the Stormont brake is making sure you have consulted with businesses. My polite, gentle pushback is that businesses now have elected Members of the Assembly they can talk to about any concerns they have, like they would talk to MPs in the Commons previously. That is the right way to do it.
Q590 Claire Hanna: On the issue of constitutional change, you can characterise some of that document as fan fiction about the Union, frankly. Some of it has implications and some of it doesn’t. I am aware you have corrected the record on some of the comments that were made about the mechanisms for constitutional change. To be clear, it is in the agreement. It is for the people of Northern Ireland in all our diversity. You want big numbers, but it is 50% plus 1. On the issue of the island economy, the danger is that some of the document is about not just fixing and salving feelings, but creating imbalances that go beyond constitutional realities. The island economy predates the notion conceived of by Sir George Quigley—by no stretch of the imagination a nationalist—Brexit and the agreement. We take on board the constraints that you were under in terms of trying to coax the DUP back; like the Alliance party, we gave breathing space for that, although we put on record our concerns.
I am talking about the longer-term distortions that some of this risks in practical terms. I will give one example: the new East-West Council. It isn’t clear how that will relate to existing structures like the North South Ministerial Council, the Joint Ministerial Council, the British-Irish Council and InterTrade. There are various gatekeeping and restraint mechanisms on those—rightly and wrongly—that mean, for example, that appointments are agreed by the Executive. In the case of the North South Ministerial Council, you cannot even attend unless you are twinned with a Minister from the Executive, and the Executive has authority over the agenda and lines to take. Will those mechanisms apply to the East-West Council, or does it get to operate on a plane of its own and take on priorities of its own that are not subject to input from the Assembly?
Chris Heaton-Harris: I mean, they are definitely subject to input from the Assembly.
Q591 Claire Hanna: How? In what way?
Chris Heaton-Harris: Because it would be Assembly Members attending the East-West Council. This is not an international agreement between the UK and a third country; it is internal arrangements for the United Kingdom.
Q592 Claire Hanna: Of course, but did it occur to you to look within the Executive? Even when we are talking about things like Assembly reform, which we might pick up, we have tried to reflect mechanisms that are in line with the carefully nuanced existing arrangements, balances and aspirations in the agreement—and this just runs over the top of it. Did it occur to you to look within the agreement for a solution?
Chris Heaton-Harris: We had a whole range of conversations and debates, and indeed conversations with other political parties in Northern Ireland, about what this could look like. I am pretty sure the Prime Minister answered a question from the leader of the DUP on the East-West Council on the Floor of the House in PMQs in November or December, where elements of that were picked up. But it is necessarily not the same as the North South Ministerial Council set up in the Belfast/Good Friday Agreement. This is an internal UK thing, which is absolutely the right thing to do, especially reflecting the fact that 80% of trade flows west-east and east-west.
Q593 Claire Hanna: Well, you acknowledge the point that perhaps a more direct comparison is with InterTrade, which was established under the agreement and which does have guarding and shaping mechanisms from the agreement that this doesn’t have. In fact, I think the proposal was made to this Committee—here, actually—by Mark Durkan about extending the remit of InterTrade to reflect that absolute, very legitimate and economically sensible need to protect the UK internal market. Did you consider something like that, which would place it on an equal footing and be subject to interaction from the agreement?
I suppose what I am asking is: do you acknowledge the concerns that some people have about the imbalance in how this document was arranged—the fact that it seems to go out of its way to be dismissive of the concept of north-south and the economic realities? Even in things like addressing the democratic deficit created by Brexit, there are solutions within the agreement. Does it occur to you to look there for them, and do you understand why people have an attachment to that carefully-arrived-at set of arrangements—not just steamrollering over the top of them?
Chris Heaton-Harris: I absolutely understand why people have that attachment, as you call it, to the existing arrangements. The problem we were trying to solve was that one community in Northern Ireland was having a disattachment from its feeling of being part of the United Kingdom, and that is what we needed to solve. That is why we have come up with a whole host of measures that we believe—
Claire Hanna: That created disattachment for other communities.
Chris Heaton-Harris: No, I disagree. Strand 2 of the Belfast/Good Friday agreement essentially was not working.
Q594 Claire Hanna: Strand 2 is not allowed to work if one of the First Ministers collapses it. These mechanisms are allowed to work, so already they have a superiority that they are allowed to work. Outside of the fact of the cancel culture that we have been subjected to by the DUP and Sinn Féin—of taking down structures—these get to exist separately, so they already exist on a different plane.
Chris Heaton-Harris: Yes, but those exist in an international agreement, embedded in the Northern Ireland Act 1998. These are necessary and—I would say should be to everyone across Northern Ireland—welcome additions to this stable of organisations, because surely everybody wants to promote trade, whether it be north-south or east-west, and promote co-operation, whether it be north-south or east-west, because the mutual beneficiary of that is everyone in Northern Ireland.
Claire Hanna: Absolutely, which is why I think people were a wee bit concerned about the denigration of the concept of the island economy. I know that the Chair is trying to get back in, so we will pick up on some of the reforms later.
Chair: Thank you very much. I call Carla Lockhart.
Q595 Carla Lockhart: Obviously, I welcome some of the progress that has been made, but we are very clearly on the record as saying that there is much more that needs to be done. I want to raise a few points today: maybe a few technical ones and then a few examples of issues that—
Chris Heaton-Harris: I hope you won’t mind if I pass the technicals and the examples to Mark to deal with.
Q596 Carla Lockhart: I don’t mind, as long as I get the right answers—or actually get an answer!
There is obviously much work to do. In chapter 2 of the Command Paper, the Government list the new package of measures—a to x—and point g commits to removing checks, but obviously central to that will be repealing regulation 13 of the Windsor Framework (Retail Movement Scheme) Regulations 2023, which requires by law that a minimum of between 10% and 5% of consignments must be subject to identity checks. I am just keen to understand when that legislation will come forward to give effect to repealing regulation 13.
Chris Heaton-Harris: With the extra caveat that I gave in a previous discussion about legislation: we obviously want to bring it forward as soon as possible, but I not in a position to, and I am definitely not going to—
Chair: The business managers?
Chris Heaton-Harris: Yes—business managers. I just want to make that point again. We want to bring forward all these measures as quickly as possible.
Q597 Carla Lockhart: And there will be a measure to deal with regulation 13.
Mark Davies: As we have set out in terms of the Command Paper and in terms of what this internal market system that we are transitioning to involves, you are right to say that it is removing unnecessary checks—bringing in this risk-based intelligence-led system, so that the only things that are happening are to deal with smuggling, criminality, disease risks and abuse of the scheme.
That will continue to be underpinned, though, as I think the Command Paper makes very clear, by a set of schemes, to ensure that people who are genuine internal market traders are able to make use of the scheme and so that it can be appropriately monitored to avoid abuse by those who might try to use it as a sort of back door into the EU market. That will continue to require the underpinnings of some of the legislation that we have already brought forward.
As the Secretary of State said, we are working at pace on this. There will be new arrangements coming forward regarding some of the legal powers that we said we would be taking in here, some of the new arrangements for the movement of goods that we are talking about, and some of the other guidance and things that are coming forward. Those things will be happening over the course of time, but they are not proposing to remove the fact that we need those schemes and those arrangements in place to make sure that this system continues to function.
Q598 Carla Lockhart: But I think ultimately the deletion of regulation 13 is quite important to ensure that the commitment to remove the checks is followed through on. My understanding was that that was to be dealt with; I know that it was raised in the last debate on this issue and there was some discussion around it. Is there no intention to delete regulation 13?
Mark Davies: I would need to liaise with you separately on which thing you are talking about in terms of regulation 13. We have in place in UK law at the moment a series of things that bring into force the NI retail movement scheme, as you say, and what is currently the UK internal market scheme. There will be additional things that come forward to develop those arrangements.
To your point on checks, and as the Secretary of State noted, we will be taking forward powers to enable us to provide directions to UK authorities, particularly in that case to NI agrifood authorities. But that will still be within the underpinning of a scheme that is there to prevent abuse and for us to retain the ability to perform checks where they are necessary to avoid abuse, disease risks, criminality and smuggling. I am happy to pick that up with you separately, but it is important to note that we are not proposing to remove those fundamental underpinnings of how you can function a scheme and a set of schemes that we have always advocated, since 2021 and beyond, as the means to operate a UK internal market system.
Q599 Carla Lockhart: I think there is still an element around the 10% to 5% checks and that piece of legislation still being very much to the fore. I will certainly pick that up with you after.
In relation to the Stormont brake, obviously some concerns have been raised about when it is pulled; in fact, it slows the process in terms of a new EU law applying. Is it the case, then, that Northern Ireland will be sitting somewhere in the middle, where they are not following the EU movement and it is making its way through Joint Committee and so on, which can take up to six months? I think that was the timeframe that was outlined. Is there a risk that Northern Ireland will be sitting somewhere in the middle? It is not obviously applicable to the UK, because Northern Ireland is still subject to EU law, but will that have an impact on some of the issues that we will see coming through in EU legislation?
Chris Heaton-Harris: I am yet to see one actually spoken about or named. This is for new and amending EU legislation; in other words, it is at a point in the process in EU law where it is not even implemented in the European Union—
Carla Lockhart: Yes, but it is progressing.
Chris Heaton-Harris: Which is why this is at a timely point in that process. Am I correct in saying that?
Mark Davies: Yes. I have heard a bit of this debate in some of the coverage. There are some misunderstandings—or, at least, theoretical rather than practical things being brought into the debate—so it is worthwhile to clarify. Your point is right: once the brake is pulled, the rule is disapplied in Northern Ireland. That does not mean that you revert to some precursor EU rule; when the brake is pulled, it is because there is a concern that a new, forthcoming law will have a disruptive effect.
This will simply maintain the status quo, which could derive from retained EU law. It could derive from a domestic implementing regulation or from EU laws, but that simply reverts to the status quo ante, which means that Northern Ireland businesses—if, as you said, they had raised concerns about the impact—would continue exactly as they were. In the meantime, the unfettered access legislation that we have brought forward maintains market access to GB in full, so there is no impact whatsoever on their ability to access the EU on the UK market. There is no automatic effect either in terms of their access to the EU market, where again they can continue to trade.
There is this idea that there is a singular UK law in all these areas. That does not take account of some aspects. Take agrifood, for instance; there are already four sets of rules circulating in the United Kingdom, because the Welsh and Scottish Governments, just like the Northern Ireland Government, can set their own arrangements. We have the UK internal market Act, which provides for market access principles. On top of that, we have unfettered access, which maintains market access. As I say, the Windsor framework is such that there are unique arrangements where Northern Ireland, even though it is not part of the EU customs territory, is part of the UK’s customs territory and internal market, and maintains full access.
I have certainly seen the debate, but my own sense is that it focuses more on high theory rather than practicality, when the fact is that nothing will change in Northern Ireland and nothing will disrupt the arrangements under which people have been operating. In the meantime, two sets of market access will be maintained. As the Secretary of State said, that is one of the key things that the Windsor framework has been about: recognising the unique, advantageous position of Northern Ireland in having access to the whole EU market without any impact whatsoever on its access to the UK market.
Q600 Carla Lockhart: That is all very convoluted and probably difficult for businesses to keep up with in terms of what is actually applicable to them.
Mark Davies: My only thing on that would be that if the brake is pulled, the benefit for businesses is that it does not entail a change. Where it would be used would be where there were concerns about the disruptive impact of a rule being applied to them. The safeguard the Secretary of State described is that it does not have to apply to them, and they can continue as they were. They do not have to adapt to any different set of arrangements from the ones they are operating under.
Q601 Carla Lockhart: But, ultimately, the EU law will progress through its legislative process, and Northern Ireland will be sitting somewhere not having applied it. Potentially, in six months’ time, when a decision is made, you will have to apply it, which will mean that businesses have to make the change.
Mark Davies: There are things already where there are timelines for legislation to be implemented. There are different ways in which it can be transposed, where it is EU rules and applies to the EU member states. Certainly, the point made about certainty for business will be a very important consideration. Were the brake to be used, I do not think that there are huge advantages to anyone in prolonging indecision about what happens and what the fate of the rule is. But in terms of what the impact is when the brake is pulled and the rule is disapplied, there are a series of safeguards to make sure that NI businesses are not facing disruption and that their market access is maintained. In the same way, we do not necessarily require NI businesses to keep track of Scottish, Welsh and English laws in all of their minutiae; we just say that they have access to these markets because that is what the UK internal market Act provides and that is what our unfettered access regulations provide.
Q602 Carla Lockhart: I am not a fan of indecision, but I am a realist, and I know the level of laws that will come through the system and the potential for clog-up and for quite a number of brakes to be pulled, with the difficulties that that will provide for businesses, but I appreciate your honesty on that.
On veterinary medicines, page 15 of the Command Paper talks about setting out “plans to introduce legislation in the spring that would avoid new regulatory divergence between GB and NI on veterinary medicines.” I know that you are not in the business of timeframes and giving specifics, but spring is nearly upon us, and I am keen to understand where that legislation is, to ensure that the issue of veterinary medicines is resolved.
Chris Heaton-Harris: This is the working group that has been set up—I think it is paragraphs 136 to 141 of the Command Paper. That is all in process. Has the working group met yet, Mark? Remember that this only came to our Parliament two or three weeks ago. But I think everything is in process, if not moving forward quickly.
Mark Davies: Yes, we are working at pace on the full range of commitments that were set out in the Command Paper. You can rest assured that the Secretary of State will hold my feet and the feet of others to the fire on those.
I think that the discussion here is about a separate DEFRA set of arrangements. They launched a consultation even before the framework came forward, and there is a separate process under way on some of that. But the Secretary of State is completely right that, alongside that work, which is about what veterinary medicine regulations and the regime look like in GB, we have a commitment to establish the Veterinary Medicines Working Group. We are looking to do that at pace and also to engage in discussions, and we have been very clear in the Command Paper and otherwise on what we want the position to be and on the paramount importance of maintaining the supply into Northern Ireland.
Q603 Carla Lockhart: This is absolutely an issue that we cannot sit back on, and it frustrates me that it has not been resolved to date, given its significance and importance. The Member for North Antrim has been very involved in this issue, and he spoke on the Floor of the House about the UK Government taking unilateral action by the spring to resolve it, given its significance and importance. I think there is a slight misunderstanding that this is legislation that will set up the working group, as opposed to legislation that—
Chris Heaton-Harris: No, it is not legislation to set up the working group. The working group is being set up to, hopefully, come to a studied conclusion that will then work for everybody, which we can then take forward as our modus operandi to deliver on.
Q604 Carla Lockhart: Again, I would stress its importance within the industry.
A couple of issues have been brought to me regarding the border and the impact that it is having. I am sure that you have seen some of the media attention around horses and the equine side of things. Obviously, since January 2021, the industry has said that it has had to put up with complete chaos when moving horses between Northern Ireland and GB. There were zero checks pre protocol, bar random spot checks. According to an example that a business gave me, pre protocol you were able to deliver four to six animals per month to GB with no checks, no paperwork, no WIT documentation and no reporting to a specialist-built DAERA facility.
Chris Heaton-Harris: This is all post the BSE stuff. There was a previous period where animals were not moving because of BSE.
Q605 Carla Lockhart: So this was pre protocol?
Chris Heaton-Harris: Pre protocol, post BSE.
Q606 Carla Lockhart: There is no criticism of the DAERA staff who are implementing it; it is just about the frustration from the industry. Since the protocol, you need a WIT number if you are travelling with more than one horse from Northern Ireland to GB, or if you are travelling for economic gain. Journeys of more than eight hours, which is essentially Belfast to Liverpool, must have a WIT2 from the Government. That trailer and lorry inspections—the same as for a fully operational equine transporter—for someone who is just doing this on quite a casual basis. That includes pony clubs, which are being subjected to these checks.
In terms of return journeys from GB to NI, most will have made purchases on their return to make their journey and their business viable. They can no longer do this because, with a horse purchased in GB that is then brought to Northern Ireland, a vet has to take a blood sample, and the blood is sent away to be tested. You then have to contact a private vet 48 hours prior to travel from GB to Northern Ireland and visit the vet in GB to have the animals inspected. On those visits, each horse can be up to £500, but most are in the region of £500. It is about the costs to the taxpayer, because the UK Government is picking up that tab. When arriving in Northern Ireland, you are then ordered to attend the purpose-built facility for checks.
I would appreciate it if every effort was made to reach out to the industry, given that we know we have more work to do. Secretary of State, can you meet some of the industry to discuss this? I know that DAERA are very keen to get this on the agenda to resolve it, because it is having a really detrimental impact on the equine industry.
Chris Heaton-Harris: On the global thing, I would be delighted to meet. Mark, have you got any comments?
Mark Davies: There is rightly a lot of fine detail there. Some of that relates to things that people are dealing with when moving animals, which derive from some elements of the framework relating to live animal movements. Some of it, like welfare in transport, is linked to broader animal welfare things. There are some facilitations, like the movement assistance schemes available, which I am glad you recognised there. There is quite a lot of technical stuff within that, and we are already in the process of reaching out to some of the industry, prompted by some of the views raised. I think we can pick that one up ,and the Secretary of State has kindly offered himself as part of that as well.
Q607 Carla Lockhart: Thank you. The other issue is rare breeds, and particularly sheep. I am not totally across every disease and all of that with sheep, but I happened to be travelling back to Northern Ireland a couple of weeks ago and I was sitting beside someone who is very across this and is a member of a rare breeds society. He is looking at having to make his Castlemilk sheep herd extinct because he cannot bring them from GB to Northern Ireland, due to the requirement around scrapie genotype regulations. Because of the rules around that, you cannot get into that system at the moment—after Brexit, you cannot access the monitoring system. Can rare breeds therefore be added to the list needing to be resolved? We all know the importance of trying to retain our native breeds in Northern Ireland and GB—across the United Kingdom. I will send you some more details on that one. It is all around ARR, genotypes and things like that. I ask that that be picked up.
Finally, on plants—I will let others come in after this—some working groups are in the offing. I am keen to understand what stage they are at, because several companies, organisations and groups have been in touch about cut flowers and the fact that they still cannot purchase from GB. The commercial side of it is sorted out, but I am keen to understand where things are for retail customers. These are very real issues that are impacting on a daily basis, and I want to see them resolved.
Chris Heaton-Harris: Mark, I am going to pass that very helpfully to you.
Mark Davies: On plants generally, I think we talked in the Command Paper in February 2023 about some of the high-risk plants that are otherwise prohibited and about lifting restrictions on some of those. The 11 that we targeted in there that were the priorities for industry—I have a very long list of both Latin and English names here, with various kinds of maple and, most recently, English oak—have all seen restrictions lifted. As we set out in the Command Paper, there is also advanced work on another set of six things, such as the common hazel, wild privet hedges and sweet cherry trees. Based on further engagement with industry, there are another 20 we have got in for scientific assessment. That is one aspect of what we are doing.
However, you are right to say that the Horticulture Working Group that we referenced, which we have already had some work with, is very focused on some of those issues about access to these things in garden centres and for consumers. Because of some of the plant health issues, there are arrangements about them moving between operators, but that does not preclude us finding arrangements that mean that consumers can access them. That is set out as a priority in the Command Paper, and that is a piece of work that we will be focusing on intensively over the next while. You are right to raise this issue and to note that the Horticultural Working Group is referenced specifically because of the importance of this issue for people in Northern Ireland.
On sheep and equine movements, I think you are right. We will probably need to pick up some of those subsequently just to understand some of the fine detail.
Q608 Carla Lockhart: Is there any timescale for when that working group will be active and how people will feed into it?
Mark Davies: I can pick that up with you separately, because I think we have already gathered a lot of the interested parties.
Chris Heaton-Harris: We will write to the Committee about that.
Mark Davies: Yes, we absolutely can. We have had some of that engagement already, and I think it is something we want to really intensify over the course of the next while.
Q609 Chair: In the time we have left, very briefly, we saw the proposed changes by Maroš Šefčovič to goods at risk. There clearly must have been some discussion with colleagues in the Commission, and you have the Joint Committee anyway. What indication have you had thus far as to the Commission’s attitude to the proposals in the Command Paper? Are they signalling any problems or is it so far, so good?
Chris Heaton-Harris: There has been pretty constant contact between us and our European Union partners on a whole host of issues—these and a whole host of extras as well. At official level, I think you, Mark, lead on that. I had a conversation with Maroš Šefčovič, the Executive Vice-President of the Commission, ahead of the Command Paper launch. I know that he generally welcomed the measures to get Stormont back up and running and has taken a massive personal interest in that, which has been very helpful to this whole process. I would like to record my thanks to him for doing that, because his portfolio is absolutely massive. He has plenty on his plate, but he has always tried to be helpful in this space, and I thank him for that.
As a whole, this package really concerns Northern Ireland’s place in the Union of the United Kingdom and our internal market, which is overridingly an internal matter for the UK Government, but I very much appreciate the work we continue to do with our European Union partners, because it is important that we get that right.
Q610 Chair: Yes, because some of their agreement will be contingent, won’t it, on some of the issues relating to vet medicines and movements of shrubs—we have had that discussion—so it is clear that that is important.
You have been very good to give us two hours, but before we finish may I draw to your attention to the work the Committee did in the US, which was focused on trade opportunities and trade agreements? I was delighted to have a bilateral with Envoy Kennedy, who has been working in an excellent way to engage all the different communities in a way that is truly inclusive and, with the new Executive, gives us an opportunity.
However, the issue of legacy came up quite a lot in the meetings we had, and we had free and frank exchanges about it. Within this Committee there are different views, and I think people know my view about the issue, but we are now in a position where the Republic has launched its action in the ECHR, and we have domestic challenge anyway. With regard to relations between your Government and Dublin, are you going to use this, rather than as a barrier to diplomacy, as an opportunity to renew the sort of diplomacy that would benefit everybody in these difficult circumstances?
Chris Heaton-Harris: I cannot overstate how disappointing it was that Ireland took the inter-state case up against us. We thought it was not timely while those domestic challenges are going through our courts, and we are robustly defending them, because we believe that this piece of legislation is the appropriate one at this stage. You will have seen that the matter was raised quite forcefully by our Prime Minister in, I think, the last call between the Taoiseach and the Prime Minister. It is something we take very seriously; we do not believe that the Irish Government have noted the changes that were made in the legislation appropriately, or that their advice on the timings within which they had to do this was correct, but they are completely within their rights. I would say that it is deeply unfortunate and it was very unhelpful at the time it was announced, but we are in 2024 now and looking forward, and we will robustly defend our legislation.
I would like to think that, in the time I have been Secretary of State for Northern Ireland, our relationship with Ireland has dramatically improved. I have spent a lot of time trying to improve it, using some of the elements of Belfast/Good Friday agreement strand 3. Last year we had three British–Irish Intergovernmental Conferences; I have attended every BIIGC, and the Prime Minister went to the first BIIGC, two Novembers ago—the first one a Prime Minister had attended in over a decade. We are trying to demonstrate that we take this relationship significantly and seriously; this is a big blip in that relationship, but there are a lot of other things that we need to, and continue to, talk about. There will be another British–Irish Intergovernmental Conference—I think we are mooting a date in April for that—and these things will continue, but it is going to be one of those things that is constantly on the agenda for a period of time.
Q611 Chair: If we put ourselves in the shoes of the families and the victims, they want information—they want to know what happened. How can we better work with the Irish Government, particularly on those cases across the border, to ensure that that information is available?
Chris Heaton-Harris: I have written to the Irish Government to ask what they have done in the past on this and how they are going to help in the future. There is an important moment coming, because I have announced in my time as Secretary of State a public inquiry into elements of the Omagh bombing, following court cases taken by the families. I know that the Tánaiste has met those families. He is someone I truly admire as a politician and as a human being; he is a really good man and I know he wants to do everything for the right reasons. There is an important milestone coming because the Irish Government have to determine how and whether they work with or alongside the Omagh inquiry or do something separate for themselves. That is quite a big moment for the families involved in that space.
I believe that our legislation heads in the right direction, if you look at the vanishingly small number of cases that end in any sort of criminal justice outcome, with no information for families at all. I have met with large numbers of victim groups and victims myself, and I am very pleased that I have done that. I simply cannot put myself in their shoes, but I have sat with them for many hours to talk about individual cases. Some of those cases are over 50 years old now, and the family members directly involved are 50 years past that time too. At the very least, it is important to try to get them as much information as we possibly can.
Chair: Secretary of State, thank you very much indeed. As two hours pass, we are extremely grateful to you for your time—and indeed to Mr Davies and Mr Hayes for giving evidence. On behalf of the Committee, I offer our good wishes and thanks.